XML 149 R13.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 6: Bank and Other Loans Payable
 12 Months Ended
Dec. 31, 2013
Notes  
Note 6: Bank and Other Loans Payable

 

6)      Bank and Other Loans Payable

 

Bank loans payable are summarized as follows:

 

 

 

 December 31

 

 

 2013

 

 2012

  6.34% note payable in monthly installments of $13,556 including principal and interest, collateralized by real property with a book value of approximately $498,000, due November 2017.

 

 $      612,068

 

 $     748,612

 

 

 

 

 

 5.75% note payable in monthly installments of $28,271 including principal and interest, collateralized by real property with a book value of approximately $6,033,000 due December 2014.

 

      3,509,944

 

     3,643,192

 

 

 

 

 

 Bank prime rate less .75% (2.50% at December 31, 2013) note payable in quarterly installments of $75,000 plus interest collateralized by shares of Security National Life Insurance Company stock, paid in full in 2013. 

 

                  -

 

        225,000

 

 

 

 

 

 Mark to market of interest rate swaps (discussed below) adjustment

 

          58,310

 

         93,572

 

 

 

 

 

 3.85% note payable in monthly installments of $79,468 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due June 2015.

 

      1,377,925

 

     2,258,968

 

 

 

 

 

 3.85% note payable in monthly installments of $86,059 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due December 2017.

 

      3,891,926

 

                  -

 

 

 

 

 

 4.40% note payable in monthly installments of $46,825 including principal and interest, collateralized by real property with a book value of approximately $12,450,000 due January 2026.

 

      8,500,000

 

                  -

 

 

 

 

 

 Revolving line-of-credit, interest payable at the prime rate minus .75% (2.5% as of December 31, 2013) secured by shares of Security National Life Insurance Company stock, matures June 2014.

 

                  -

 

     4,608,204

 

 

 

 

 

 Other collateralized bank loans payable

 

        338,304

 

        331,834

 Other notes payable

 

              961

 

              961

Total bank and other loans

 

    18,289,438

 

   11,910,343

 

 

 

 

 

 Less current installments

 

      5,849,926

 

     6,266,765

 Bank and other loans, excluding current installments

 

 $ 12,439,512

 

 $  5,643,578

 

 

During 2001, the Company entered into an interest rate swap instrument that effectively fixed the interest rate on the note payable at 6.34% per annum. Management considers the interest rate swap instrument an effective cash flow hedge against the variable interest rate on the bank note since the interest rate swap mirrors the term of the note payable and expires on the maturity date of the bank loan it hedges. The interest rate swap is a derivative financial instrument carried at its fair value.

 

In the event the swap is terminated, any resulting gain or loss would be deferred and amortized to interest expense over the remaining life of the bank loan it hedged. In the event of early extinguishment of the hedged bank loan, any realized or unrealized gain or loss from the hedging swap would be recognized in income coincident with the extinguishment.

 

At December 31, 2013, the fair value of the interest rate swap was an unrealized loss of $58,310 and was computed based on the underlying variable Libor rate plus 1.65%, or 2.65% per annum. The unrealized loss resulted in a derivative liability of $58,310 and has been reflected in accumulated other comprehensive income. The change in accumulated other comprehensive income from the interest rate swap in 2013 was $35,262. The fair value of the interest rate swap was derived from a proprietary model of the bank from whom the interest rate swap was purchased and to whom the note is payable.

 

At December 31, 2012, the fair value of the interest rate swap was an unrealized loss of $93,572 and was computed based on the underlying variable Libor rate plus 1.65%, or 2.65% per annum. The unrealized loss resulted in a derivative liability of $93,572 and has been reflected in accumulated other comprehensive income. The change in accumulated other comprehensive income from the interest rate swap in 2012 was $24,240. The fair value of the interest rate swap was derived from a proprietary model of the bank from whom the interest rate swap was purchased and to whom the note is payable.

 

 The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75% ( 2.50% at December 31, 2013), secured by the capital stock of Security National Life and maturing June 30, 2014, renewable annually. As of December 31, 2013, $697,001, was reserved for two outstanding letters of credit. As of December 31, 2013, there were no amounts outstanding under the revolving line-of-credit.

 

 The Company has a $15,000,000 revolving line-of-credit with a bank with interest payable at the variable overnight Libor rate plus 2% ( 2.1875% at December 31, 2013), secured by bond investments of the Company and maturing June 30, 2014. As of December 31, 2013, $91,000 was reserved for an outstanding letter of credit. As of December 31, 2013, there were no amounts outstanding under the revolving line-of-credit.

 

 The Company has a $2,150,000 revolving line-of-credit with a bank with interest payable at the prime rate plus 1.25% ( 4.5% at December 31, 2013), secured by the capital stock of Security National Life and maturing June 30, 2014. As of December 31, 2013, $1,250,000 was reserved for an outstanding letter of credit. As of December 31, 2013, there were no amounts outstanding under the revolving line-of-credit.

 

The Company has entered into a Construction and Term Loan Agreement (“Agreement”) between Zions First National Bank, a national banking association, and Dry Creek Property Development, Inc., the Company’s wholly owned subsidiary. Under the terms of this Agreement the Company promises to pay Zions First National Bank the principal sum of $27,500,000 plus interest. These funds will be used for the construction of a 282-unit multifamily development in Sandy City Utah. As of December 31, 2013, the amount outstanding under this agreement was $0.

 

The following tabulation shows the combined maturities of bank loans payable, lines of credit and notes and contracts payable:

 

2014

  $     5,849,926

2015

         1,748,708

2016

         1,399,264

2017

         1,504,037

2018

            247,065

Thereafter

         7,540,438

Total

  $    18,289,438

 

 

Interest paid approximated interest expense in 2013, 2012 and 2011, which was $2,853,701, $3,744,293 and $1,961,249 respectively.