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Note 2: Investments | 12 Months Ended
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Dec. 31, 2014
Notes |
Note 2: Investments | 2) Investments The Company’s investments in fixed maturity securities held to maturity and equity securities available for sale as of December 31, 2014 are summarized as follows:
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
December 31, 2014: |  |  |  |  |  |  |  |
Fixed maturity securities held to maturity carried at amortized cost: |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ 1,873,146 |  | $ 345,715 |  | $ - |  | $ 2,218,861
Obligations of states and political subdivisions |  | 1,736,489 |  | 221,893 |  | (5,278) |  | 1,953,104
Corporate securities including public utilities |  | 126,533,483 |  | 15,841,536 |  | (980,357) |  | 141,394,662
Mortgage-backed securities |  | 4,263,206 |  | 305,381 |  | (11,894) |  | 4,556,693
Redeemable preferred stock |  | 612,023 |  | 22,032 |  | - |  | 634,055
Total fixed maturity securities held to maturity |  | $ 135,018,347 |  | $ 16,736,557 |  | $ (997,529) |  | $ 150,757,375
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
December 31, 2014: |  |  |  |  |  |  |  |
Equity securities available for sale at estimated fair value: |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ 7,179,010 |  | $ 393,873 |  | $ (820,133) |  | $ 6,752,750
Total securities available for sale carried at estimated fair value |  | $ 7,179,010 |  | $ 393,873 |  | $ (820,133) |  | $ 6,752,750
Mortgage loans on real estate and construction loans held for investment at amortized cost: |  |  |  |  |  |  |  |
Residential |  | $ 53,592,433 |  |  |  |  |  |
Residential construction |  | 33,071,938 |  |  |  |  |  |
Commercial |  | 35,388,756 |  |  |  |  |  |
Less: Allowance for loan losses |  | (2,003,055) |  |  |  |  |  |
Total mortgage loans on real estate and construction loans held for investment |  | $ 120,050,072 |  |  |  |  |  |
Real estate held for investment - net of depreciation |  | $ 111,411,351 |  |  |  |  |  |
Policy and other loans at amortized cost: |  |  |  |  |  |  |  |
Policy loans |  | $ 7,011,012 |  |  |  |  |  |
Other loans |  | 27,807,829 |  |  |  |  |  |
Less: Allowance for doubtful accounts |  | (693,413) |  |  |  |  |  |
Total policy and other loans at amortized cost |  | $ 34,125,428 |  |  |  |  |  |
Short-term investments at amortized cost |  | $ 27,059,495 |  |  |  |  |  |
The Company’s investments in fixed maturity securities held to maturity and equity securities available for sale as of December 31, 2013 are summarized as follows:
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
December 31, 2013: |  |  |  |  |  |  |  |
Fixed maturity securities held to maturity carried at amortized cost: |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ 2,284,261 |  | $ 298,901 |  | $ - |  | $ 2,583,162
Obligations of states and political subdivisions |  | 1,790,661 |  | 197,340 |  | (9,404) |  | 1,978,597
Corporate securities including public utilities |  | 134,257,468 |  | 10,513,448 |  | (1,394,919) |  | 143,375,997
Mortgage-backed securities |  | 4,522,081 |  | 206,617 |  | (11,351) |  | 4,717,347
Redeemable preferred stock |  | 612,023 |  | 12,994 |  | (5,900) |  | 619,117
Total fixed maturity securities held to maturity |  | $ 143,466,494 |  | $ 11,229,300 |  | $ (1,421,574) |  | $ 153,274,220
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
December 31, 2013: |  |  |  |  |  |  |  |
Equity securities available for sale at estimated fair value: |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ 4,783,936 |  | $ 240,206 |  | $ (525,386) |  | $ 4,498,756
Total securities available for sale carried at estimated fair value |  | $ 4,783,936 |  | $ 240,206 |  | $ (525,386) |  | $ 4,498,756
Mortgage loans on real estate and construction loans held for investment at amortized cost: |  |  |  |  |  |  |  |
Residential |  | $ 49,868,486 |  |  |  |  |  |
Residential construction |  | 12,912,473 |  |  |  |  |  |
Commercial |  | 41,653,009 |  |  |  |  |  |
Less: Allowance for loan losses |  | (1,652,090) |  |  |  |  |  |
Total mortgage loans on real estate and construction loans held for investment |  | $ 102,781,878 |  |  |  |  |  |
Real estate held for investment - net of depreciation |  | $ 99,760,475 |  |  |  |  |  |
Policy and other loans at amortized cost: |  |  |  |  |  |  |  |
Policy loans |  | $ 7,520,376 |  |  |  |  |  |
Other loans |  | 12,472,805 |  |  |  |  |  |
Less: Allowance for doubtful accounts |  | (269,175) |  |  |  |  |  |
Total policy and other loans at amortized cost |  | $ 19,724,006 |  |  |  |  |  |
Short-term investments at amortized cost |  | $ 12,135,719 |  |  |  |  |  |
Fixed Maturity Securities The following tables summarize unrealized losses on fixed maturities securities, which are carried at amortized cost, at December 31, 2014 and 2013. The unrealized losses were primarily related to interest rate fluctuations. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related fixed maturity securities:
|  | Unrealized Losses for Less than Twelve Months |  | No. of Investment Positions |  | Unrealized Losses for More than Twelve Months |  | No. of Investment Positions |  | Total Unrealized Loss
At December 31, 2014 |  |  |  |  |  |  |  |  |  |
Redeemable Preferred Stock |  | $ - |  | 0 |  | $ - |  | 0 |  | $ -
Obligations of States and |  |  |  |  |  |  |  |  |  |
Political Subdivisions |  | - |  | 0 |  | 5,278 |  | 1 |  | 5,278
Corporate Securities |  | 548,310 |  | 21 |  | 432,047 |  | 11 |  | 980,357
Mortgage and other |  |  |  |  |  |  |  |  |  |
asset-backed securities |  | 3,966 |  | 1 |  | 7,928 |  | 0 |  | 11,894
Total unrealized losses |  | $ 552,276 |  | 22 |  | $ 445,253 |  | 12 |  | $ 997,529
Fair Value |  | $ 7,081,352 |  |  |  | $2,777,587 |  |  |  | $9,858,939
At December 31, 2013 |  |  |  |  |  |  |  |  |  |
Redeemable Preferred Stock |  | $ 5,900 |  | 1 |  | $ - |  | 0 |  | $ 5,900
Obligations of States and |  |  |  |  |  |  |  |  |  |
Political Subdivisions |  | 7,131 |  | 1 |  | 2,273 |  | 1 |  | 9,404
Corporate Securities |  | 1,134,415 |  | 72 |  | 260,504 |  | 10 |  | 1,394,919
Mortgage and other |  |  |  |  |  |  |  |  |  |
asset-backed securities |  | 3,109 |  | 1 |  | 8,242 |  | 1 |  | 11,351
Total unrealized losses |  | $ 1,150,555 |  | 75 |  | $ 271,019 |  | 12 |  | $1,421,574
Fair Value |  | $22,002,277 |  |  |  | $2,308,464 |  |  |  | $24,310,741
As of December 31, 2014, the average market value of the related fixed maturities was 90.8% of amortized cost and the average market value was 94.5% of amortized cost as of December 31, 2013. During 2014, 2013 and 2012, an other than temporary decline in market value resulted in the recognition of credit losses on fixed maturity securities of $120,000, $120,000 and $165,000, respectively. On a quarterly basis, the Company reviews its available for sale fixed investment securities related to corporate securities and other public utilities, consisting of bonds and preferred stocks that are in a loss position. The review involves an analysis of the securities in relation to historical values, and projected earnings and revenue growth rates. Based on the analysis, a determination is made whether a security will likely recover from the loss position within a reasonable period of time. If it is unlikely that the investment will recover from the loss position, the loss is considered to be other-than-temporary, the security is written down to the impaired value and an impairment loss is recognized. Equity Securities The following tables summarize unrealized losses on equity securities that were carried at estimated fair value based on quoted trading prices at December 31, 2014 and 2013. The unrealized losses were primarily the result of decreases in market value due to overall equity market declines. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related equity securities available for sale in a loss position:
|  | Unrealized Losses for Less than Twelve Months |  | No. of Investment Positions |  | Unrealized Losses for More than Twelve Months |  | No. of Investment Positions |  | Total Unrealized Losses
At December 31, 2014 |  |  |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ 327,389 |  | 138 |  | $ 492,744 |  | 27 |  | $ 820,133
Total unrealized losses |  | $ 327,389 |  | 138 |  | $ 492,744 |  | 27 |  | $ 820,133
Fair Value |  | $2,162,425 |  |  |  | $ 676,706 |  |  |  | $2,839,131
At December 31, 2013 |  |  |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ 119,449 |  | 28 |  | $ 405,936 |  | 28 |  | $ 525,386
Total unrealized losses |  | $ 119,449 |  | 28 |  | $ 405,936 |  | 28 |  | $ 525,386
Fair Value |  | $ 993,612 |  |  |  | $ 772,345 |  |  |  | $1,765,957
As of December 31, 2014, the average market value of the equity securities available for sale was 77.6% of the original investment and the average market value was 77.1% of the original investment as of December 31, 2013. The intent of the Company is to retain equity securities for a period of time sufficient to allow for the recovery in fair value. However, the Company may sell equity securities during a period in which the fair value has declined below the amount of the original investment. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. During 2014, 2013, and 2012, an other than temporary decline in the market value resulted in the recognition of an impairment loss on equity securities of $44,240, $100,304, and $247,317, respectively. On a quarterly basis, the Company reviews its investment in industrial, miscellaneous and all other equity securities that are in a loss position. The review involves an analysis of the securities in relation to historical values, price earnings ratios, projected earnings and revenue growth rates. Based on the analysis a determination is made whether a security will likely recover from the loss position within a reasonable period of time. If it is unlikely that the investment will recover from the loss position, the loss is considered to be other than temporary, the security is written down to the impaired value and an impairment loss is recognized. The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments. The fair values for equity securities are based on quoted market prices. The amortized cost and estimated fair value of fixed maturity securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
|  | Amortized |  | Estimated Fair
|  | Cost |  | Value
Held to Maturity: |  |  |  |
Due in 2015 |  | $ 4,961,596 |  | $ 5,075,769
Due in 2016 through 2019 |  | 33,920,182 |  | 37,561,840
Due in 2020 through 2024 |  | 25,074,149 |  | 27,690,447
Due after 2024 |  | 66,187,191 |  | 75,238,571
Mortgage-backed securities |  | 4,263,206 |  | 4,556,693
Redeemable preferred stock |  | 612,023 |  | 634,055
Total held to maturity |  | $ 135,018,347 |  | $ 150,757,375
The cost and estimated fair value of available for sale securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Equities are valued using the specific identification method.
|  |  |  | Estimated Fair
|  | Cost |  | Value
Available for Sale: |  |  |  |
Common stock |  | $ 7,179,010 |  | $ 6,752,750
Total available for sale |  | $ 7,179,010 |  | $ 6,752,750
The Company’s realized gains and losses and other than temporary impairments from investments and other assets are summarized as follows:
|  | 2014 |  | 2013 |  | 2012
Fixed maturity securities held |  |  |  |  |  |
to maturity: |  |  |  |  |  |
Gross realized gains |  | $ 390,203 |  | $ 97,238 |  | $ 470,874
Gross realized losses |  | (71,800) |  | (41,164) |  | (3,875)
Other than temporary impairments |  | (120,000) |  | (120,000) |  | (165,000)
Securities available for sale: |  |  |  |  |  |
Gross realized gains |  | 349,207 |  | 540,990 |  | 392,033
Gross realized losses |  | (55,222) |  | (2,678) |  | (5,705)
Other than temporary impairments |  | (44,240) |  | (100,304) |  | (247,317)
Other assets: |  |  |  |  |  |
Gross realized gains |  | 1,445,596 |  | 824,203 |  | 794,346
Gross realized losses |  | (139,808) |  | (538) |  | (223,163)
Other than temporary impairments |  | - |  | (115,922) |  | (795,315)
Total |  | $ 1,753,936 |  | $ 1,081,825 |  | $ 216,878
The net carrying amount for sales of securities classified as held to maturity was $2,840,709, $1,455,835 and $2,174,300, for the years ended December 31, 2014, 2013 and 2012, respectively. The net realized gain related to these sales was $20,722, $12,533 and $271,364, for the years ended December 31, 2014, 2013 and 2012, respectively. Certain circumstances lead to these decisions to sell. There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses on available-for-sale securities) at December 31, 2014, other than investments issued or guaranteed by the United States Government. Major categories of net investment income are as follows:
| 2014 |  | 2013 |  | 2012
Fixed maturity securities | $ 8,229,451 |  | $ 8,265,949 |  | $ 7,731,051
Equity securities | 212,917 |  | 210,491 |  | 264,063
Mortgage loans on real estate | 7,550,110 |  | 4,666,910 |  | 5,543,777
Real estate | 8,433,895 |  | 6,658,185 |  | 4,927,128
Policy, student and other loans | 741,220 |  | 799,703 |  | 830,683
Short-term investments, principally gains on sale of mortgage loans | 12,397,382 |  | 8,952,584 |  | 8,716,257
Gross investment income | 37,564,975 |  | 29,553,822 |  | 28,012,959
Investment expenses | (9,261,235) |  | (9,199,820) |  | (6,097,382)
Net investment income | $ 28,303,740 |  | $ 20,354,002 |  | $ 21,915,577
Net investment income includes net investment income earned by the restricted assets of the cemeteries and mortuaries of $356,369, $341,430 and $352,488 for 2014, 2013 and 2012, respectively. Net investment income on real estate consists primarily of rental revenue received under short-term leases. Investment expenses consist primarily of depreciation, property taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities. Securities on deposit for regulatory authorities as required by law amounted to $8,886,001 at December 31, 2014 and $9,215,222 at December 31, 2013. The restricted securities are included in various assets under investments on the accompanying consolidated balance sheets. Mortgage Loans Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0 % to 10.5%, maturity dates range from three months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At December 31, 2014, the Company has 44%, 17%, 13% and 8% of its mortgage loans from borrowers located in the states of Utah, California, Texas and Florida, respectively. The mortgage loans on real estate balances on the consolidated balance sheet are reflected net of an allowance for loan losses of $2,003,055 and $1,652,090 at December 31, 2014 and 2013, respectively. The Company establishes a valuation allowance for credit losses in its portfolio. The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:
Allowance for Credit Losses and Recorded Investment in Mortgage Loans
For the Years Ended December 31, 2014, and 2013
| Commercial |  | Residential |  | Residential Construction |  | Total
2014 |  |  |  |  |  |  |
Allowance for credit losses: |  |  |  |  |  |  |
Beginning balance | $ 187,129 |  | $ 1,364,847 |  | $ 100,114 |  | $ 1,652,090
Charge-offs | - |  | (38,444) |  | - |  | (38,444)
Provision | - |  | 389,409 |  | - |  | 389,409
Ending balance | $ 187,129 |  | $ 1,715,812 |  | $ 100,114 |  | $ 2,003,055
Ending balance: individually evaluated for impairment | $ - |  | $ 153,446 |  | $ - |  | $ 153,446
Ending balance: collectively evaluated for impairment | $ 187,129 |  | $ 1,562,366 |  | $ 100,114 |  | $ 1,849,609
Ending balance: loans acquired with deteriorated credit quality | $ - |  | $ - |  | $ - |  | $ -
Mortgage loans: |  |  |  |  |  |  |
Ending balance | $ 35,388,756 |  | $ 53,592,433 |  | $ 33,071,938 |  | $ 122,053,127
Ending balance: individually evaluated for impairment | $ - |  | $ 1,556,182 |  | $ 414,499 |  | $ 1,970,681
Ending balance: collectively evaluated for impairment | $ 35,388,756 |  | $ 52,036,251 |  | $ 32,657,439 |  | $ 120,082,446
Ending balance: loans acquired with deteriorated credit quality | $ - |  | $ - |  | $ - |  | $ -
2013 |  |  |  |  |  |  |
Allowance for credit losses: |  |  |  |  |  |  |
Beginning balance | $ - |  | $ 4,193,674 |  | $ 46,187 |  | $ 4,239,861
Charge-offs | - |  | (2,670,794) |  | (137,629) |  | (2,808,423)
Provision | 187,129 |  | (158,033) |  | 191,556 |  | 220,652
Ending balance | $ 187,129 |  | $ 1,364,847 |  | $ 100,114 |  | $ 1,652,090
Ending balance: individually evaluated for impairment | $ - |  | $ 152,745 |  | $ - |  | $ 152,745
Ending balance: collectively evaluated for impairment | $ 187,129 |  | $ 1,212,102 |  | $ 100,114 |  | $ 1,499,345
Ending balance: loans acquired with deteriorated credit quality | $ - |  | $ - |  | $ - |  | $ -
Mortgage loans: |  |  |  |  |  |  |
Ending balance | $ 41,653,009 |  | $ 49,868,486 |  | $ 12,912,473 |  | $ 104,433,968
Ending balance: individually evaluated for impairment | $ - |  | $ 1,518,327 |  | $ - |  | $ 1,518,327
Ending balance: collectively evaluated for impairment | $ 41,653,009 |  | $ 48,350,159 |  | $ 12,912,473 |  | $ 102,915,641
Ending balance: loans acquired with deteriorated credit quality | $ - |  | $ - |  | $ - |  | $ -
The following is a summary of the aging of mortgage loans for the periods presented.
Age Analysis of Past Due Mortgage Loans
Years Ended December 31, 2014 and 2013
| 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 90 Days 1) | In Foreclosure 1) | Total Past Due | Current | Total Mortgage Loans | Allowance for Loan Losses | Net Mortgage Loans
2014 |  |  |  |  |  |  |  |  |
Commercial | $ - | $ - | $ - | $ - | $ - | $ 35,388,756 | $ 35,388,756 | $ (187,129) | $ 35,201,627
Residential | 1,631,142 | 1,174,516 | 5,464,901 | 1,556,182 | 9,826,741 | 43,765,692 | 53,592,433 | (1,715,812) | 51,876,621
Residential Construction | - | - | 64,895 | 414,499 | 479,394 | 32,592,544 | 33,071,938 | (100,114) | 32,971,824
Total | $ 1,631,142 | $ 1,174,516 | $ 5,529,796 | $ 1,970,681 | $ 10,306,135 | $ 111,746,992 | $ 122,053,127 | $ (2,003,055) | $ 120,050,072
2013 |  |  |  |  |  |  |  |  |
Commercial | $ - | $ - | $ - | $ 4,973,745 | $ 4,973,745 | $ 36,679,264 | $ 41,653,009 | $ (187,129) | $ 41,465,880
Residential | 1,646,953 | 1,604,847 | 5,867,501 | 1,518,327 | 10,637,628 | 39,230,858 | 49,868,486 | (1,364,847) | 48,503,639
Residential Construction | - | - | 64,895 | - | 64,895 | 12,847,578 | 12,912,473 | (100,114) | 12,812,359
Total | $ 1,646,953 | $ 1,604,847 | $ 5,932,396 | $ 6,492,072 | $ 15,676,268 | $ 88,757,700 | $ 104,433,968 | $ (1,652,090) | $ 102,781,878
1) There was not any interest income recognized on loans past due greater than 90 days or in foreclosure. |  |  |
Impaired Mortgage Loans Impaired mortgage loans include loans with a related specific valuation allowance or loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary. The recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting period and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:
Impaired Loans
For the Years Ended December 31, 2014, and 2013
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized
2014 |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | - |  | - |  | - |  | - |  | -
Residential construction | 414,499 |  | 414,499 |  | - |  | 414,499 |  | -
With an allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | 1,556,182 |  | 1,556,182 |  | 153,446 |  | 1,556,182 |  | -
Residential construction | - |  | - |  | - |  | - |  | -
Total: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | 1,556,182 |  | 1,556,182 |  | 153,446 |  | 1,556,182 |  | -
Residential construction | 414,499 |  | 414,499 |  | - |  | 414,499 |  | -
2013 |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | - |  | - |  | - |  | - |  | -
Residential construction | - |  | - |  | - |  | - |  | -
With an allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | 1,518,327 |  | 1,518,327 |  | 152,745 |  | 1,518,327 |  | -
Residential construction | - |  | - |  | - |  | - |  | -
Total: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | 1,518,327 |  | 1,518,327 |  | 152,745 |  | 1,518,327 |  | -
Residential construction | - |  | - |  | - |  | - |  | -
Credit Risk Profile Based on Performance Status The Company’s mortgage loan portfolio is monitored based on performance of the loans. Monitoring a mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment. The Company defines non-performing mortgage loans as loans 90 days or greater delinquent or on non-accrual status. The Company’s performing and non-performing mortgage loans were as follows:
Mortgage Loan Credit Exposure
Credit Risk Profile Based on Payment Activity
As of December 31, 2014, and 2013
| Commercial |  | Residential |  | Residential Construction |  | Total
| 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013
Performing | $ 35,388,756 |  | $ 36,679,264 |  | $ 46,571,350 |  | $ 42,482,658 |  | $ 32,592,544 |  | $ 12,847,578 |  | $ 114,552,650 |  | $ 92,009,500
Non-performing | - |  | 4,973,745 |  | 7,021,083 |  | 7,385,828 |  | 479,394 |  | 64,895 |  | 7,500,477 |  | 12,424,468
Total | $ 35,388,756 |  | $ 41,653,009 |  | $ 53,592,433 |  | $ 49,868,486 |  | $ 33,071,938 |  | $ 12,912,473 |  | $ 122,053,127 |  | $ 104,433,968
Non-Accrual Mortgage Loans Once a loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and write off any income that had been accrued. Interest not accrued on these loans totals $535,000 and $678,000 as of December 31, 2014 and 2013, respectively. The following is a summary of mortgage loans on a non-accrual status for the periods presented.
| Mortgage Loans on Non-accrual Status
| As of December 31, 2014, and 2013
| 2014 |  | 2013
Commercial | $ - |  | $ 4,973,745
Residential | 7,021,083 |  | 7,385,828
Residential construction | 479,394 |  | 64,895
Total | $ 7,500,477 |  | $ 12,424,468
Principal Amounts Due The amortized cost and contractual payments on mortgage loans on real estate and construction loans held for investment by category as of December 31, 2014 are shown below. Expected principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment penalties.
|  |  | Principal |  | Principal |  | Principal
|  |  | Amounts |  | Amounts |  | Amounts
|  |  | Due in |  | Due in |  | Due
| Total |  | 2015 |  | 2016-2019 |  | Thereafter
Residential | $ 53,592,433 |  | $ 3,748,893 |  | $ 17,225,255 |  | $ 32,618,285
Residential Construction | 33,071,938 |  | 32,648,470 |  | 423,468 |  | -
Commercial | 35,388,756 |  | 18,652,738 |  | 13,279,688 |  | 3,456,330
Total | $ 122,053,127 |  | $ 55,050,101 |  | $ 30,928,411 |  | $ 36,074,615
Loan Loss Reserve When a repurchase demand is received from a third party investor, the relevant data is reviewed and captured so that an estimated future loss can be calculated. The key factors that are used in the estimated loss calculation are as follows: (i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the Company is able to resolve the issues relating to the repurchase demand by the third party investor without having to make any payments to the investor. The following is a summary of the loan loss reserve which is included in other liabilities and accrued expenses:
|  | Years Ended December 31
|  | 2014 |  | 2013
Balance, beginning of period |  | $ 5,506,532 |  | $ 6,035,295
Provisions for losses |  | 3,053,403 |  | 1,846,285
Charge-offs and settlements |  | (6,841,785) |  | (2,375,048)
Balance, at December 31 |  | $ 1,718,150 |  | $ 5,506,532
The Company believes the loan loss reserve represents probable loan losses incurred as of the balance sheet date. Actual loan loss experience could change, in the near-term, from the established reserve based upon claims that could be asserted by third party investors. SecurityNational Mortgage believes there is potential to resolve any alleged claims by third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.

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