XML 30 R15.htm IDEA: XBRL DOCUMENT v3.19.1

7) Bank and Other Loans Payable

12 Months Ended

Dec. 31, 2018

Notes

7) Bank and Other Loans Payable

7)         Bank and Other Loans Payable

Bank and other loans payable are summarized as follows:

		December 31
		2018		2017
6.50% note payable in monthly installments of $1,702 including principal and interest, collateralized by real property, paid in full in February 2018.		$               -		$       246,847
3.85% fixed note payable in monthly installments of $85,419 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, paid in full in January 2018.		-		85,419
2.25% above 90 day LIBOR rate note payable in monthly installments of  approximately $125,000, collateralized by real property, paid in full in March 2018.		-		26,773,058
2.25% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate note payable in monthly principal payments of $13,167 plus interest, collateralized by real property with a book value of approximately $4,350,000, due September 2021.		2,817,775		2,975,781
4.27% fixed note payable in monthly installments of $53,881 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due November 2021.		1,817,905		2,372,690
4.40% fixed note payable in monthly installments of $46,825 including principal and interest, collateralized by real property with a book value of approximately $12,479,000, due January 2026.		7,492,140		7,712,854
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 $3,596,000, due September 2025.		1,929,725		1,961,573
2.5% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate construction loan payable, collateralized by real property with a book value of approximately $46,093,000, due August 2019.		30,796,861		28,343,684
4.7865% fixed interest only note payable in monthly installments, collateralized by real property with a book value of approximately $18,362,000, due June 2028.		9,200,000		-
1 month LIBOR rate plus 3% loan purchase agreement with a warehouse line availability of $100,000,000, matures June 2019.		60,438,156		61,298,220
1 month LIBOR rate plus 3% loan purchase agreement with a warehouse line availability of $100,000,000, matures September 2019.		25,680,649		25,538,378
Other short-term borrowings (1)		47,250,000		-
Other loans payable		97,977		142,421
Total bank and other loans		187,521,188		157,450,925
Less current installments		165,219,632		88,437,940
Bank and other loans, excluding current installments		$   22,301,556		$  69,012,985
(1) Federal Home Loan Bank and Revolving Lines of Credit

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.  As a member of the FHLB, the Company is required to maintain a minimum investment in capital stock of the FHLB of Des Moines and may pledge collateral to the bank for advances of funds to be used in its operations. 

At December 31, 2018, the amount available for additional FHLB borrowings was approximately $534,579, compared with $47,252,871 at December 31, 2017. United States Treasury fixed maturity securities with a carrying value of $49,342,210 at December 31, 2018 have been pledged at the FHLB of Des Moines as collateral for current and potential borrowings compared with $49,892,726 at December 31, 2017.  At December 31, 2018, the Company had $46,000,000 of short-term FHLB borrowings outstanding and no long-term FHLB borrowings outstanding. These borrowings bear interest at 2.58% as of December 31, 2018.  At December 31, 2018, the Company’s total investment in FHLB stock was $2,548,700 compared with $689,400 at December 31, 2017. The Company’s increased investment in FHLB stock was a result of its increase in short-term FHLB borrowings during 2018.

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 minus .75%, secured by the capital stock of Security National Life and maturing September 30, 2019, renewable annually. At December 31, 2018, the Company was contingently liable under a standby letter of credit aggregating $625,405, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company's captive insurance program and under a standby letter of credit aggregating $48,220 issued as a security deposit 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. These 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 letter of credit because claims are not expected to exceed premiums paid. As of December 31, 2018, 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 overnight LIBOR rate plus 2.25% maturing September 30, 2019. As of December 31, 2018, there was $1,250,000 outstanding under the revolving line-of-credit.

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 LIBOR rate plus 3% and matures on June 16, 2019. SecurityNational Mortgage is required to maintain an adjusted tangible net worth of $19,000,000, unrestricted cash of $10,000,000, indebtedness to adjusted tangible net worth of 12:1, liquidity overhead coverage of 1.75:1, and a quarterly gross profit of at least $1.

The Company, through its subsidiary SecurityNational Mortgage, also uses 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.  SecurityNational Mortgage is currently approved to borrow $30,000,000 of the $100,000,000 available.  The agreement charges interest at the 1-Month LIBOR rate plus 3% and matures on September 7, 2019. The Company is required to maintain an adjusted tangible net worth of $70,000,000, unrestricted cash of $15,000,000, and no two consecutive quarters with a net loss. The Company obtained a waiver from Texas Capital Bank as SecurityNational Mortgage did not meet the requirement of no two consecutive quarters with a loss at December 31, 2018.

The agreements for both warehouse lines include cross default provisions in that a covenant violation under one agreement constitutes a covenant violation under the other agreement.  SecurityNational Mortgage requested and received a waiver from Wells Fargo in regard to its covenant violation with Texas Capital Bank.  SecurityNational Mortgage anticipates that it will not meet the profitability covenant with Texas Capital Bank at the end of the first quarter of 2019, which will trigger a default with Wells Fargo under the cross default provisions, and will seek new waivers at that time.  In the unlikely event the Company is required to repay both warehouse lines, the Company has sufficient cash and borrowing capacity to do so and to continue to fund its origination activities through the other internal funding sources. 

SecurityNational Mortgage believes that it has taken appropriate actions to return to meeting all the covenant requirements of Texas Capital Bank and that it will continue to meet the financial covenant requirements of Wells Fargo.  The current outstanding amounts on both warehouse lines are shown in the current portion of the maturity table listed below.

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

2019	165,219,632
2020	1,080,597
2021	3,451,136
2022	321,182
2023	356,142
Thereafter	17,092,499
Total	$  187,521,188

Interest expense in 2018 and 2017 was $6,956,707 and $6,037,332, respectively.

X

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

+ Details

Name:	us-gaap_DebtDisclosureTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- References

No definition available.

+ Details

Name:	us-gaap_DisclosureTextBlockAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration