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Note 6: Bank and Other Loans Payable
 12 Months Ended
Dec. 31, 2014
Notes  
Note 6: Bank and Other Loans Payable

6)      Bank and Other Loans Payable

 

Bank loans payable are summarized as follows:

 

 December 31

 

2014

2013

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.

 $      466,937

 $      612,068

5.75% note payable in monthly installments of $28,271 including principal and interest, collateralized by real property with a book value of approximately $5,890,000 due March 2015.

      3,398,099

      3,509,944

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

          31,370

          58,310

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.

        461,889

      1,377,925

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.

      2,994,999

      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.

      8,333,550

      8,500,000

2.75% above the 90-day LIBOR rate (3.0052% at December 31, 2014) construction and term loan payable, collateralized by real property with a book value of approximately $22,855,000 due July 2017.

    13,085,189

                  -

Other collateralized bank loans payable

        247,384

        338,304

Other notes payable

              961

              961

Total bank and other loans

    29,020,378

    18,289,438

Less current installments

      5,248,043

      5,849,926

Bank and other loans, excluding current installments

 $ 23,772,335

 $ 12,439,512

 

 

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, 2014 and 2013, the fair value of the interest rate swap was an unrealized loss of $31,370 and $58,310, respectively, 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 $31,370 and $58,310 and has been reflected in accumulated other comprehensive income. The change in accumulated other comprehensive income from the interest rate swap in 2014 and 2013 was $26,940 and $32,262, respectively. 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, 2014), secured by the capital stock of Security National Life and maturing June 30, 2015, renewable annually. At December 31, 2014, the Company was contingently liable under a standby letter of credit aggregating $699,671, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company's captive insurance program. The Company does not expect any material losses to result from the issuance of the standby letter of credit because claims are not expected to exceed premiums paid. As of December 31, 2014, 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% (2.1146% at December 31, 2014), secured by bond investments of the Company and maturing June 30, 2015. At December 31, 2014, the Company was contingently liable under two standby letters of credit aggregating $139,220, issued as security deposits to guarantee payment of final bills for electric and gas utility services for a commercial real estate property owned by the Company in Wichita, Kansas. As of December 31, 2014, 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% (4.50% at December 31, 2014), secured by the capital stock of Security National Life and maturing June 30, 2015. At December 31, 2014, SecurityNational Mortgage was contingently liable under a standby letter of credit aggregating $1,250,000, to be used as collateral to cover any contingency relating to claims filed in states where SecurityNational Mortgage is licensed. The Company does not expect any material losses to result from the issuance of the standby letter of credit. As of December 31, 2014, 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, 2014, the amount outstanding under this agreement was $13,085,189.

 

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

 

2015

$     5,248,043

2016

        1,395,942

2017

      14,586,183

2018

           246,769

2019

           246,336

Thereafter

        7,297,105

Total

$    29,020,378

 

Interest paid approximated interest expense in 2014, 2013 and 2012, which was $2,994,429, $2,853,701 and $3,744,293, respectively.