Bank and Other Loans Payable

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Bank and Other Loans Payable

7) Bank and Other Loans Payable

Bank and other loans payable are summarized as follows:

	December 31
	2022		2021
Prime rate note payable in monthly installments of $75,108 including principal and interest,collateralized by shares of Security National Life Insurance Company stock, due December 2024.	$	1,690,892	$	2,481,878
4.329% fixed note payable in monthly installments of $9,775 including principal and interest,collateralized by real property with a book value of approximately $3,023,000, paid in full April 2022.		-		1,825,608
4.00% variable with LIBOR at a 1% floor and a spread at 3% rate construction loan collateralized by real property with a book value of approximately $65,422,000, paid off with long term financing in May 2022.		-		34,547,181
3.85% fixed note payable in monthly installments of $243,781 including principal and interest, collateralized by real property with a book value of approximately $65,422,000, due June 2032.		48,613,833		-
3.30% fixed note payable in monthly installments of $179,562 including principal and interest, collateralized by real property with a book value of approximately $46,960,000, due April 2031.		39,298,298		40,090,359
4.7865% fixed interest only note payable in monthly installments, collateralized by real property with a book value of approximately $16,948,000, due June 2028.		9,200,000		9,200,000
1 month SOFR rate plus 2.1% loan purchase agreement with a warehouse line availability of $100,000,000, matures June 2023.		17,978,527		66,305,025
1 month SOFR rate plus 2% loan purchase agreement with a warehouse line availability of $100,000,000, matures November 2023.		29,768,762		50,555,909
1 month SOFR rate plus 2.5% loan purchase agreement with a warehouse line availability of $75,000,000, matures May 2023.		15,131,410		43,196,986
1 month SOFR rate plus 2.1% loan purchase agreement with a warehouse line availability of $50,000,000, matures June 2023.		-		1,764,386
Other short-term borrowings (1)		-		1,250,000
Finance lease liabilities		31,082		62,767
Other loans payable		-		6,828
Total bank and other loans		161,712,804		251,286,927
Less current installments		65,560,608		164,747,672
Bank and other loans, excluding current installments	$	96,152,196	$	86,539,255

(1) Revolving Line of Credit

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021

7) Bank and Other Loans Payable (Continued)

Sources of Liquidity

Federal Home Loan Bank Membership

The Federal Home Loan Banks (“the FHLBs”) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. The Company is a member of the FHLB based in Des Moines, Iowa and based in Dallas, Texas. As a member of the FHLB, the Company is required to maintain a minimum investment in capital stock of the FHLB and may pledge collateral to the bank for advances of funds to be used in its operations.

Federal Home Loan Bank of Des Moines

At December 31, 2022, the amount available for borrowings from the FHLB of Des Moines was approximately $80,312,445, compared with $19,259,722 at December 31, 2021. United States Treasury fixed maturity securities with an estimated fair value of $86,338,880 at December 31, 2022 have been pledged at the FHLB of Des Moines as collateral for current and potential borrowings compared with $20,244,900 at December 31, 2021. At December 31, 2022 and 2021, the Company had no outstanding FHLB borrowings. At December 31, 2022, the Company’s total investment in FHLB stock was $856,800 compared with $826,800 at December 31, 2021. At December 31, 2022, the Company was contingently liable under standby letters of credit aggregating $968,903, $443,758 to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company’s captive insurance program and $525,145 for land developments.

Federal Home Loan Bank of Dallas

At December 31, 2022, the amount available for borrowings from the FHLB of Dallas was approximately $5,719,671, compared with $7,794,625 at December 31, 2021. Mortgage-Backed fixed maturity securities with an estimated fair value of $6,696,100 at December 31, 2022 have been pledged at the FHLB of Dallas as collateral for current and potential borrowings compared with $8,774,352 at December 31, 2021. At December 31, 2022 and 2021, the Company had no outstanding FHLB borrowings. At December 31, 2022, the Company’s total investment in FHLB stock was $1,743,500 compared with $1,720,300 at December 31, 2021.

Revolving Lines of Credit

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate plus 1.25% with a 3% prime floor, secured by the capital stock of Security National Life and maturing December 31, 2023, renewable annually. At December 31, 2022, the Company was contingently liable under standby letters of credit aggregating $622,293, to be used as collateral for residential subdivision land developments. The standby letters of credit will draw on the line of credit if necessary. The Company does not expect any material losses to result from the issuance of the standby letters of credit. As of December 31, 2022, there were no amounts outstanding under the revolving line-of-credit.

The Company also has a $2,500,000 revolving line-of-credit with a bank with interest payable at the daily simple SOFR plus 2.35%, which includes a mandatory .10% credit spread adjustment, maturing December 31, 2023. As of December 31, 2022, there were no amounts outstanding under the revolving line-of-credit.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021

7) Bank and Other Loans Payable (Continued)

Debt Covenants for Mortgage Warehouse Lines of Credit

The Company, through its subsidiary SecurityNational Mortgage, has a $100,000,000 line of credit with Wells Fargo Bank N.A. The agreement charges interest at the 1-Month SOFR rate plus 2.1% and matures on June 2, 2023. SecurityNational Mortgage is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, the ratio of indebtedness to adjusted tangible net worth, and the liquidity overhead coverage ratio, and a quarterly gross profit of at least $1.00.

The Company, through its subsidiary SecurityNational Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement with the bank allows SecurityNational Mortgage to borrow up to $100,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month SOFR rate plus 2% and matures on November 9, 2023. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling four-quarter basis.

The Company through its subsidiary SecurityNational Mortgage, has a line of credit with Comerica Bank. This agreement with the bank allows SecurityNational Mortgage to borrow up to $75,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month SOFR rate plus 2.50% and matures on May 26, 2023. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling twelve months.

The Company through its subsidiary SecurityNational Mortgage, has a line of credit with U.S Bank. This agreement with the bank allows SecurityNational Mortgage to borrow up to $50,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at 2.10% plus the greater of (i) 0%, and (ii) the one-month forward-looking term rate based on SOFR and matures on June 2, 2023. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling twelve months.

The agreements for warehouse lines include cross default provisions in that a covenant violation under one agreement constitutes a covenant violation under the other agreement. As of December 31, 2022, the Company was in compliance with all debt covenants.

The following tabulation shows the combined maturities of bank and other loans payable:

2023	$	65,560,608
2024		2,785,674
2025		1,981,991
2026		1,883,515
2027		1,997,551
Thereafter		87,503,465
Total	$	161,712,804

Interest expense in 2022 and 2021 was $7,830,443 and $7,127,516, respectively. Interest paid in 2022 and 2021 was $7,697,921 and $7,290,867, respectively.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021