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Note 21: Correction of Errors

12 Months Ended

Dec. 31, 2016

21) Correction of Errors

The accompanying Consolidated Financial Statements include the restatement of the Company’s previously filed consolidated balance sheets and the related consolidated statements of operations, shareholders’ equity and cash flows for the fiscal years ended December 31, 2014, December 31, 2015, and December 31, 2016. For the revised quarterly results of operations for the fiscal years ended December 31, 2014, 2015 and 2016, see “Impact of Restatement Adjustments on Quarterly Financial Statements (Unaudited)” in Note 22 of the accompanying Consolidated Financial Statements.

Immaterial Error in Accounting for Loan Commitments: Subsequent to the issuance of the company’s 2015 consolidated financial statements, the Company identified an error in the accounting for its loan commitments (“Adjustment A”). The Company corrected the presentation of the changes in fair value of its loan commitments to present them as a component of current earnings instead of as a component of other comprehensive income, as previously reported. The Company’s management has concluded that the effect of the correction is not material to any previously issued Consolidated Financial Statements.

Subsequent to the issuance of the company’s 2016 Consolidated Financial Statements, the Company identified the following errors, (“Adjustments B”):

Material Error in Accounting for Repurchase Agreements: The Company has concluded it should account for its Repurchase Agreements with unaffiliated banks as "On-Balance-Sheet" transactions, rather than as "Off-Balance-Sheet" as previously reported. Accordingly, the Company will reflect any outstanding loans as Loans Held for Sale and the corresponding debt as a Bank Loan Payable. The Company has corrected its sale accounting practice to defer revenue and costs on loans that remain as Held for Sale. The Company will recognize these deferred items at the time the loan is purchased by the ultimate investor.

Material Error in Accounting for Tax Valuation Allowance: The Company determined that it should have reversed its valuation allowance in its entirety in 2012 when the Company no longer qualified for the small life insurance company deduction, rather than in other periods as previously reported.

Other Immaterial Corrections and Reclassifications: In addition, the Company has recorded the following additional corrections in the accompanying Consolidated Financial Statements:

Reclassification of Receivables to Loans Held for Sale
Reclassification of the Provision for Loan Loss Reserve to net against Mortgage Fee Income
Correction to Future Life, Annuity and Other Benefits to reverse a deferred profit liability

The tables below present the impact of the restatement on the Company’s Consolidated Balance Sheets for the periods presented:

	As of December 31, 2016
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Loans held for sale (formerly called Mortgage loans sold to investors)	$ 82,491,091	$ -	$ 82,491,091	$ 106,648,741	$ 189,139,832
Receivables, net	18,870,119	-	18,870,119	(12,496,755)	6,373,364
Other assets	6,891,468	-	6,891,468	3,521,926	10,413,394
Total Assets	854,004,671	-	854,004,671	97,673,912	951,678,583
Future life, annuity, and other benefits	585,610,063	-	585,610,063	(1,542,371)	584,067,692
Bank and other loans payable	53,718,548	-	53,718,548	98,422,131	152,140,679
Income taxes	27,904,294	-	27,904,294	(3,585,425)	24,318,869
Total liabilities	725,825,117	-	725,825,117	93,294,335	819,119,452
Accumulated other comprehensive income, net of taxes	264,822	-	264,822	-	264,822
Retained earnings	63,029,627	-	63,029,627	4,379,577	67,409,204
Total stockholders' equity	128,179,554	-	128,179,554	4,379,577	132,559,131
Total Liabilities and Stockholders' Equity	854,004,671	-	854,004,671	97,673,912	951,678,583

	As of December 31, 2015
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Loans held for sale (formerly called Mortgage loans sold to investors)	$ 115,286,455	$ -	$ 115,286,455	$ 96,166,551	$ 211,453,006
Receivables, net	16,026,100	-	16,026,100	(9,965,106)	6,060,994
Other assets	7,100,869	-	7,100,869	4,338,404	11,439,273
Total Assets	749,933,317	-	749,933,317	90,539,849	840,473,166
Future life, annuity, and other benefits	517,177,388	-	517,177,388	(1,388,134)	515,789,254
Bank and other loans payable	40,908,915	-	40,908,915	90,096,699	131,005,614
Income taxes	25,052,059	-	25,052,059	(4,639,170)	20,412,889
Total liabilities	638,687,092	-	638,687,092	84,069,395	722,756,487
Accumulated other comprehensive income, net of taxes	1,533,828	(2,033,186)	(499,358)	-	(499,358)
Retained earnings	52,021,764	2,033,186	54,054,950	6,470,454	60,525,404
Total stockholders' equity	111,246,225	-	111,246,225	6,470,454	117,716,679
Total Liabilities and Stockholders' Equity	749,933,317	-	749,933,317	90,539,849	840,473,166

	As of January 1, 2014
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Accumulated other comprehensive income, net of taxes	$ 1,218,396	$ (907,624)	$ 310,772	$ -	$ 310,772
Retained earnings	39,666,587	907,624	40,574,211	6,405,271	46,979,482

	As of December 31, 2014
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Accumulated other comprehensive income, net of taxes	1,438,566	(1,177,209)	261,357	-	261,357
Retained earnings	44,101,252	1,177,209	45,278,461	6,597,870	51,876,331

The tables below present the impact of the restatement on the Company’s Consolidated Statements of Earnings for the periods presented:

	Year Ended December 31, 2016
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Mortgage fee income	$ 186,416,311	$ -	$ 186,416,311	$ (2,873,515)	$ 183,542,796
Total revenues	307,208,416	-	307,208,416	(2,873,515)	304,334,901
Increase in future policy benefits	21,476,432	-	21,476,432	(154,237)	21,322,195
Commissions	87,762,583	-	87,762,583	871,911	88,634,494
Provision for loan loss reserve	4,688,754	-	4,688,754	(2,988,754)	1,700,000
Cost related to funding mortgage loans	8,756,791	-	8,756,791	434,697	9,191,488
Total benefits and expenses	286,468,053	-	286,468,053	(1,836,383)	284,631,670
Earnings before income taxes	20,740,363	-	20,740,363	(1,037,132)	19,703,231
Income tax expense	(6,460,859)	-	(6,460,859)	(1,053,745)	(7,514,604)
Net earnings	14,279,504	-	14,279,504	(2,090,877)	12,188,627
Net earnings per common share (1)	$0.96	$0.00	$0.96	($0.14)	$0.82
Net earnings per common share assuming dilution (1)	$0.94	$0.00	$0.94	($0.14)	$0.81

	Year Ended December 31, 2015
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Mortgage fee income	$ 174,323,452	$ 1,403,240	$ 175,726,692	$ (4,209,408)	$ 171,517,284
Total revenues	283,161,000	1,403,240	284,564,240	(4,209,408)	280,354,832
Increase in future policy benefits	17,212,001	-	17,212,001	(154,237)	17,057,764
Commissions	81,935,623	-	81,935,623	(1,035,005)	80,900,618
Provision for loan loss reserve	6,295,043	-	6,295,043	(2,845,940)	3,449,103
Cost related to funding mortgage loans	8,864,404	-	8,864,404	37,107	8,901,511
Total benefits and expenses	263,339,435	-	263,339,435	(3,998,075)	259,341,360
Earnings before income taxes	19,821,565	1,403,240	21,224,805	(211,333)	21,013,472
Income tax expense	(7,198,685)	(547,263)	(7,745,948)	83,917	(7,662,031)
Net earnings	12,622,880	855,977	13,478,857	(127,416)	13,351,441
Net earnings per common share (1)	$0.87	$0.06	$0.93	($0.01)	$0.92
Net earnings per common share assuming dilution (1)	$0.84	$0.06	$0.90	($0.01)	$0.89

	Year Ended December 31, 2014
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Mortgage fee income	$ 128,696,998	$ 441,943	$ 129,138,941	$ (2,331,468)	$ 126,807,473
Total revenues	226,936,674	441,943	227,378,617	(2,331,468)	225,047,149
Increase in future policy benefits	18,060,151	-	18,060,151	(154,237)	17,905,914
Commissions	59,876,675	-	59,876,675	(502,133)	59,374,542
Provision for loan loss reserve	3,053,403	-	3,053,403	(2,053,403)	1,000,000
Cost related to funding mortgage loans	6,877,069	-	6,877,069	(425,750)	6,451,319
Total benefits and expenses	214,455,721	-	214,455,721	(3,135,523)	211,320,198
Earnings before income taxes	12,480,953	441,943	12,922,896	804,055	13,726,951
Income tax expense	(4,726,305)	(172,358)	(4,898,663)	(611,456)	(5,510,119)
Net earnings	7,754,648	269,585	8,024,233	192,599	8,216,832
Net earnings per common share (1)	$0.56	$0.02	$0.58	$0.01	$0.59
Net earnings per common share assuming dilution (1)	$0.54	$0.02	$0.56	$0.01	$0.57

(1) Earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

The tables below present the impact of the restatement on the Company’s Consolidated Statements of Comprehensive Income for the periods presented:

	Year Ended December 31, 2016
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Net earnings	$ 14,279,504	$ -	$ 14,279,504	$ (2,090,877)	$ 12,188,627
Net unrealized gains (losses) on derivative instruments	6,490	-	6,490	-	6,490
Other comprehensive gain (loss)	764,180	-	764,180	-	764,180

	Year Ended December 31, 2015
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Net earnings	$ 12,622,880	$ 855,977	$ 13,478,857	$ (127,416)	$ 13,351,441
Net unrealized gains (losses) on derivative instruments	866,605	(855,977)	10,628	-	10,628
Other comprehensive gain (loss)	95,262	(855,977)	(760,715)	-	(760,715)

	Year Ended December 31, 2014
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Net earnings	$ 7,754,648	$ 269,585	$ 8,024,233	$ 192,599	$ 8,216,832
Net unrealized gains (losses) on derivative instruments	286,018	(269,585)	16,433	-	16,433
Other comprehensive gain (loss)	220,170	(269,585)	(49,415)	-	(49,415)

The tables below present the impact of the restatement on the Company’s Consolidated Statements of Cash Flows for the periods presented:

	Year Ended December 31, 2016
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Net earnings	$ 14,279,504	$ -	$ 14,279,504	$ (2,090,877)	$ 12,188,627
Provision for deferred and other income taxes	5,076,899	-	5,076,899	1,053,745	6,130,644
Loans originated for sale	-	-	-	(3,098,710,299)	(3,098,710,299)
Proceeds from loans sold	-	-	-	3,246,127,714	3,246,127,714
Net gains on loans sold	-	-	-	(137,682,984)	(137,682,984)
Future life and other benefits	18,143,832	-	18,143,832	(154,237)	17,989,595
Receivables for mortgage loans sold	20,216,621	-	20,216,621	(20,216,621)	-
Other operating assets and liabilities	(8,473,503)	-	(8,473,503)	3,348,127	(5,125,376)
Net cash provided by (used in) operating activities	43,860,446	-	43,860,446	(8,325,432)	35,535,014
Net change in warehouse line borrowings	-		-	8,325,432	8,325,432
Net cash provided by financing activities	10,664,656	-	10,664,656	8,325,432	18,990,088

	Year Ended December 31, 2015
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Net earnings	$ 12,622,880	$ 855,977	$ 13,478,857	$ (127,416)	$ 13,351,441
Provision for deferred and other income taxes	4,909,927	-	4,909,927	(83,917)	4,826,010
Loans originated for sale	-	-	-	(2,861,404,239)	(2,861,404,239)
Proceeds from loans sold	-	-	-	2,933,300,742	2,933,300,742
Net gains on loans sold	-	-	-	(131,130,447)	(131,130,447)
Future life and other benefits	15,232,634	-	15,232,634	(154,237)	15,078,397
Receivables for mortgage loans sold	(47,752,055)	-	(47,752,055)	47,752,055	-
Other operating assets and liabilities	4,890,770	-	4,890,770	(434,680)	4,456,090
Net cash provided by (used in) operating activities	(15,831,248)	-	(15,831,248)	(12,282,139)	(28,113,387)
Net change in warehouse line borrowings	-		-	12,282,139	12,282,139
Net cash provided by financing activities	9,656,561	-	9,656,561	12,282,139	21,938,700

	Year Ended December 31, 2014
	As Originally Reported	Adjustment (A)	As Previously Reported	Adjustments (B)	As Restated
Net earnings	$ 7,754,648	$ 269,585	$ 8,024,233	$ 192,599	$ 8,216,832
Provision for deferred and other income taxes	3,245,004	-	3,245,004	611,452	3,856,456
Loans originated for sale	-	-	-	(2,044,909,613)	(2,044,909,613)
Proceeds from loans sold	-	-	-	2,102,740,825	2,102,740,825
Net gains on loans sold	-	-	-	(93,144,155)	(93,144,155)
Future life and other benefits	14,084,894	-	14,084,894	(154,237)	13,930,657
Receivables for mortgage loans sold	7,362,353	-	7,362,353	(7,362,353)	-
Other operating assets and liabilities	(135,279)	-	(135,279)	(1,453,885)	(1,589,164)
Net cash provided by (used in) operating activities	31,015,809	-	31,015,809	(43,479,367)	(12,463,558)
Net change in warehouse line borrowings	-		-	43,479,367	43,479,367
Net cash provided by financing activities	6,364,003	-	6,364,003	43,479,367	49,843,370