XML 26 R11.htm IDEA: XBRL DOCUMENT

3) Investments

3 Months Ended

Mar. 31, 2019

The Company’s investments as of March 31, 2019 are summarized as follows:

	Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
March 31, 2019
Fixed maturity securities held to maturity carried at amortized cost:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies	$ 52,162,274	$ 376,785	$ (456,728)	$ 52,082,331
Obligations of states and political subdivisions	6,131,310	42,653	(55,394)	6,118,569
Corporate securities including public utilities	157,343,929	9,982,667	(1,445,027)	165,881,569
Mortgage-backed securities	15,637,703	358,905	(127,773)	15,868,835
Redeemable preferred stock	103,197	3,872		107,069
Total fixed maturity securities held to maturity	$ 231,378,413	$ 10,764,882	$ (2,084,922)	$ 240,058,373


Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$ 6,974,259	$ 739,022	$ (785,929)	$ 6,927,352

Total equity securities at estimated fair value	$ 6,974,259	$ 739,022	$ (785,929)	$ 6,927,352

Mortgage loans held for investment at amortized cost:
Residential		$ 89,241,344
Residential construction		75,484,460
Commercial		34,258,354
Less: Unamortized deferred loan fees, net		(1,261,587)
Less: Allowance for loan losses		(1,378,215)
Total mortgage loans held for investment		$ 196,344,356

Real estate held for investment net of accumulated depreciation:
Residential		$ 27,856,849
Commercial		93,425,898
Total real estate held for investment		$ 121,282,747

Other investments and policy loans at amortized cost:
Policy loans		$ 6,354,430
Insurance assignments		38,823,751
Federal Home Loan Bank stock (1)		2,686,500
Other investments		4,048,750
Less: Allowance for doubtful accounts		(1,263,475)

Total other investments and policy loans		$ 50,649,956

Accrued investment income		$ 3,712,606

Total investments		$ 610,295,430

(1) Includes $806,500 of Membership stock and $1,880,000 of Activity stock due to short-term borrowings.

The Company’s investments as of December 31, 2018 are summarized as follows:

	Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2018:

Fixed maturity securities held to maturity carried at amortized cost:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies	$ 52,017,683	$ 264,891	$ (727,798)	$ 51,554,776
Obligations of states and political subdivisions	6,959,237	32,274	(111,271)	6,880,240
Corporate securities including public utilities	157,639,860	7,002,864	(3,704,137)	160,938,587
Mortgage-backed securities	15,358,746	227,398	(308,864)	15,277,280
Redeemable preferred stock	103,197	1,903	(5,125)	99,975
Total fixed maturity securities held to maturity	$ 232,078,723	$ 7,529,330	$ (4,857,195)	$ 234,750,858


Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$ 6,312,158	$ 422,528	$ (1,176,075)	$ 5,558,611

Total equity securities at estimated fair value	$ 6,312,158	$ 422,528	$ (1,176,075)	$ 5,558,611

Mortgage loans held for investment at amortized cost:
Residential		$ 89,935,600
Residential construction		71,366,544
Commercial		27,785,927
Less: Unamortized deferred loan fees, net		(1,275,030)
Less: Allowance for loan losses		(1,347,972)

Total mortgage loans held for investment		$ 186,465,069

Real estate held for investment net of accumulated depreciation:
Residential		$ 29,507,431
Commercial		92,050,791
Total real estate held for investment		$ 121,558,222

Other investments and policy loans at amortized cost:
Policy loans		$ 6,424,325
Insurance assignments		35,239,396
Federal Home Loan Bank stock (1)		2,548,700
Other investments		3,497,762
Less: Allowance for doubtful accounts		(1,092,528)

Total other investments and policy loans		$ 46,617,655


Accrued investment income		$ 3,566,146

Total investments		$ 595,844,426
(1) Includes $708,700 of Membership stock and $1,840,000 of Activity stock due to short-term borrowings.

Fixed Maturity Securities

The following tables summarize unrealized losses on fixed maturity securities held to maturity, which are carried at amortized cost, at March 31, 2019 and December 31, 2018. The unrealized losses were primarily related to interest rate fluctuations. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:

	Unrealized Losses for Less than Twelve Months	Fair Value	Unrealized Losses for More than Twelve Months	Fair Value	Total Unrealized Loss	Fair Value
At March 31, 2019
U.S. Treasury securities and obligations of U.S. Government Agencies	$ 767	$ 495,115	$ 455,961	$ 40,408,121	$ 456,728	$ 40,903,236
Obligations of states and political subdivisions	-	-	55,394	3,032,383	55,394	3,032,383
Corporate securities	392,239	11,641,590	1,052,788	23,415,999	1,445,027	35,057,589
Mortgage and other asset-backed securities	24,997	389,730	102,776	1,804,667	127,773	2,194,397
Total unrealized losses	$ 418,003	$ 12,526,435	$ 1,666,919	$ 68,661,170	$ 2,084,922	$ 81,187,605


At December 31, 2018
U.S. Treasury securities and obligations of U.S. Government Agencies	$ 10,519	$ 695,863	$ 717,279	$ 39,930,052	$ 727,798	$ 40,625,915
Obligations of states and political subdivisions	6,643	1,791,257	104,628	2,889,517	111,271	4,680,774
Corporate securities	2,514,549	61,090,431	1,189,588	11,767,349	3,704,137	72,857,780
Mortgage and other asset-backed securities	79,896	1,705,296	228,968	2,690,065	308,864	4,395,361
Redeemable preferred stock	5,125	90,000	-	-	5,125	90,000
Total unrealized losses	$ 2,616,732	$ 65,372,847	$ 2,240,463	$ 57,276,983	$ 4,857,195	$ 122,649,830

There were 186 securities with fair value of 97.5% of amortized cost at March 31, 2019. There were 361 securities with fair value of 96.2% of amortized cost at December 31, 2018. No credit losses have been recognized for the three months ended March 31, 2019 and 2018.

On a quarterly basis, the Company evaluates its fixed maturity securities held to maturity. This evaluation includes a review of current ratings by the National Association of Insurance Commissions (“NAIC”). Securities with a rating of 1 or 2 are considered investment grade and are not reviewed for impairment. Securities with ratings of 3 to 5 are evaluated for impairment. Securities with a rating of 6 are automatically determined to be impaired and are written down. The evaluation involves an analysis of the securities in relation to historical values, interest payment history, projected earnings and revenue growth rates as well as a review of the reason for a downgrade in the NAIC rating. Based on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely make interest and principal payments in accordance with the terms of the financial instrument. If it is unlikely that the security will meet contractual obligations, the loss is considered to be other than temporary, the security is written down to the new anticipated market value and an impairment loss is recognized. Impairment losses are treated as credit losses as the Company holds fixed maturity securities to maturity unless the underlying conditions have changed in the financial instrument to require an impairment.

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 amortized cost and estimated fair value of fixed maturity securities held to maturity, at March 31, 2019, 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 Cost	Estimated Fair Value
Held to Maturity:
Due in 1 year	$ 16,752,164	$ 16,817,929
Due in 2-5 years	66,507,390	67,272,309
Due in 5-10 years	66,149,179	67,744,587
Due in more than 10 years	66,228,780	72,247,644
Mortgage-backed securities	15,637,703	15,868,835
Redeemable preferred stock	103,197	107,069
Total held to maturity	$ 231,378,413	$ 240,058,373

The Company is a member of the Federal Home Loan Bank of Des Moines (“FHLB”). The Company currently has deposited a total of $50,000,000, par value, of United States Treasury fixed maturity securities with FHLB. These securities generate interest income for the Company and are available to use as collateral on any cash borrowings from the FHLB. As of March 31, 2019, the Company owed $47,000,000 to the FHLB. This amount owed was paid in April 2019.

Equity Securities

The fair values for equity securities are based on quoted market prices. The Company recognizes the changes (unrealized gains and losses) in the fair value of these equity securities through earnings as part of gains on investments and other assets on the condensed consolidated statements of earnings instead of other comprehensive income on the condensed consolidated balance sheets.

Investment Related Earnings

The Company’s net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities, and other than temporary impairments are summarized as follows:

	Three Months Ended March 31
	2019	2018
Fixed maturity securities held to maturity:
Gross realized gains	$ 85,587	$ 28,133
Gross realized losses	(35,393)	(308,931)

Equity securities:
Gains on securities sold	11,576	14,650
Unrealized gains and (losses) on securities held at the end of the period	761,208	(372,042)

Other assets:
Gross realized gains	1,104,935	22,951,723	(1)
Gross realized losses	(121,252)	(292,594)
Total	$ 1,806,661	$ 22,020,939

(1) Includes a one-time gain of $22,252,000 from the sale of Dry Creek at East Village Apartments.

The net realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined using the specific identification method.

The carrying amount of held to maturity securities sold was $369,263 and $472,883 for the three months ended March 31, 2019 and 2018, respectively. The net realized loss related to these sales was $35,388 and $306,851 for the three months ended March 31, 2019 and 2018, respectively. Although the Company has the positive intent and ability to buy and hold a fixed maturity security to maturity, the Company will sell a security prior to maturity if conditions and circumstances have changed within the entity that issued the security to increase the risk of default to an unacceptable level.

Major categories of net investment income are as follows:

	Three Months Ended March 31
	2019	2018
Fixed maturity securities held to maturity	$ 2,503,865	$ 2,529,841
Equity securities	77,921	58,292
Mortgage loans held for investment	4,103,367	4,531,927
Real estate held for investment	1,910,294	2,670,440
Policy loans	88,137	102,866
Insurance assignments	4,212,120	3,860,937
Other investments	54,548	53,673
Cash and cash equivalents	498,918	137,368
Gross investment income	13,449,170	13,945,344
Investment expenses	(3,407,502)	(3,870,913)
Net investment income	$ 10,041,668	$ 10,074,431

Net investment income includes income earned by the restricted assets cemeteries and mortuaries of $86,288 and $110,802 for the three months ended March 31, 2019 and 2018, respectively.

Net investment income on real estate consists primarily of rental revenue.

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 with regulatory authorities as required by law amounted to $9,807,938 at March 31, 2019 and $9,220,520 at December 31, 2018. These restricted securities are included in various assets under investments on the accompanying condensed consolidated balance sheets.

There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses on equity securities) at March 31, 2019, other than investments issued or guaranteed by the United States Government.

Real Estate Held for Investment

The Company continues to strategically deploy resources into real estate to match the income and yield durations of its primary obligations. The sources for these real estate assets come through its various business units in the form of acquisition, development and mortgage foreclosures.

Commercial Real Estate Held for Investment

The Company owns and manages commercial real estate assets as a means of generating investment income. These assets are acquired in accordance with the Company’s goals and objectives for risk-adjusted returns. Due diligence is conducted on each asset using internal and third-party reports. Geographic locations and asset classes of the investment activity is determined by senior management under the direction of the Board of Directors.

The Company employs full-time employees to attend to the day-to-day operations of those assets within the greater Salt Lake area and close surrounding markets. The Company utilizes third party property managers when the geographic boundary does not warrant full-time staff or through strategic lease-up periods. The Company generally looks to acquire assets in regions that are high growth regions for employment and population and in assets that provide operational efficiencies.

The Company currently owns and operates 11 commercial properties in 4 states. These properties include industrial warehouses, office buildings, retail centers, a restaurant, and includes the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah. The Company also holds undeveloped land that may be used for future commercial developments. The Company uses bank debt in strategic cases to leverage established yields or to acquire a higher quality or different class of asset.

The aggregated net ending balance of commercial real estate that serves as collateral for bank borrowings was approximately $85,950,000 and $84,880,000 as of March 31, 2019 and December 31, 2018, respectively. The associated bank loan carrying values totaled approximately $52,395,000 and $52,237,000 as of March 31, 2019 and December 31, 2018, respectively.

During the three months ended March 31, 2019 and 2018, the Company did not record any impairment losses on commercial real estate held for investment. Impairment losses, if any, are included in gains (losses) on investment and other assets on the condensed consolidated statements of earnings.

The following is a summary of the Company’s commercial real estate held for investment for the periods presented:

	Net Ending Balance				Total Square Footage
	March 31		December 31		March 31	December 31
	2019		2018		2019	2018
Arizona	$ 4,000	(1)	$ 4,000	(1)	-	-
Kansas	7,210,017		6,861,898		222,679	222,679
Louisiana	461,319		467,694		7,063	7,063
Mississippi	3,309,692		3,329,948		33,821	33,821
New Mexico	7,000	(1)	7,000	(1)	-	-
Texas	300,000	(2)	300,000	(2)	-	-
Utah	82,133,870		81,080,251		502,129	502,129

	$ 93,425,898		$ 92,050,791		765,692	765,692


(1) Undeveloped land
(2) Improved commercial pad

Residential Real Estate Held for Investment

The Company owns a portfolio of residential homes primarily as a result of loan foreclosures. The strategy has been to lease these homes to produce cash flow and allow time for the economic fundamentals to return to the various markets. As an orderly and active market for these homes returns, the Company has the option to dispose or to continue and hold them for cash flow and acceptable returns.

The Company established Security National Real Estate Services (“SNRE”) to manage the residential portfolio. SNRE cultivates and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the portfolio of homes across the country.

As of March 31, 2019, SNRE manages 65 residential properties in 6 states across the United States.

The net ending balance of foreclosed residential real estate included in residential real estate held for investment is $21,645,000 and $23,532,000 as of March 31, 2019 and December 31, 2018, respectively.

During the three months ended March 31, 2019 and 2018, the Company recorded impairment losses on residential real estate held for investment of $-0- and $147,925, respectively. These impairment losses are included in gains (losses) on investment and other assets on the condensed consolidated statements of earnings.

The following is a summary of the Company’s residential real estate held for investment for the periods presented:

	Net Ending Balance
	March 31	December 31
	2019	2018
California	$ 2,256,741	$ 2,644,321
Florida	6,093,133	6,534,277
Ohio	10,000	10,000
Tennessee	105,260	105,260
Texas	-	139,174
Utah	18,915,534	19,598,218
Washington	476,181	476,181
	$ 27,856,849	$ 29,507,431

Real Estate Owned and Occupied by the Company

The primary business units of the Company occupy a portion of the real estate owned by the Company. Currently, the Company occupies nearly 70,000 square feet, or approximately 10% of the overall commercial real estate holdings.

As of March 31, 2019, real estate owned and occupied by the Company is summarized as follows:

Location	Business Segment	Approximate Square Footage	Square Footage Occupied by the Company
5300 South 360 West, Salt Lake City, UT (1)	Corporate Offices, Life Insurance and Cemetery/Mortuary Operations	36,000	100%
5201 Green Street, Salt Lake City, UT	Mortgage Operations	36,899	34%
1044 River Oaks Dr., Flowood, MS	Life Insurance Operations	21,521	27%
121 West Election Road, Draper, UT	Mortgage Sales	78,978	19%

(1) This asset is included in property and equipment on the condensed consolidated balance sheets

Mortgage Loans Held for Investment

Mortgage loans held for investment consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0% to 10.5%, maturity dates range from nine 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 March 31, 2019, the Company had 48%, 14%, 14%, 7%, 6%, 4% and 2% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada, Arizona, and Tennessee, respectively.

Mortgage loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, charge-offs and the related allowance for loan losses. Interest income is included in net investment income on the condensed consolidated statements of earnings and is recognized when earned. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans. Origination fees are included in net investment income on the condensed consolidated statements of earnings.

Mortgage loans are secured by the underlying property and require an appraisal at the time of underwriting and funding. Generally, the Company will fund a loan not to exceed 80% of the loan’s collateral fair market value. Amounts over 80% will require additional collateral or mortgage insurance by an approved third-party insurer.

The Company provides for losses on its mortgage loans held for investment through an allowance for loan losses (a contra-asset account). The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment, the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as real estate held for investment. The Company will rent the properties until it is deemed desirable to sell them.

The allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the performance status of the loans, or the Company’s actual collection experience. The actual losses could change, in the near term, from the established allowance, based upon the occurrence or non-occurrence of these events.

For purposes of determining the allowance for losses, the Company has segmented its mortgage loans held for investment by loan type. The Company’s loan types are commercial, residential, and residential construction. The inherent risks within the portfolio vary depending upon the loan type as follows:

Commercial - Underwritten in accordance with the Company’s policies to determine the borrower’s ability to repay the obligation as agreed. Commercial loans are made primarily based on the underlying collateral supporting the loan. Accordingly, the repayment of a commercial loan depends primarily on the collateral and its ability to generate income and secondary on the borrower’s (or guarantors) ability to repay.

Residential – Secured by family dwelling units. These loans are secured by first mortgages on the unit, which are generally the primary residence of the borrower, generally at a loan-to-value ratio (“LTV”) of 80% or less.

Residential construction (including land acquisition and development) – Underwritten in accordance with the Company’s underwriting policies which include a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent appraisal valuations. These loans will rely on the value associated with the project upon completion. These cost and valuation estimates may be inaccurate. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project and the ability of the borrower to secure long-term financing. Additionally, land is underwritten according to the Company’s policies, which include independent appraisal valuations as well as the estimated value associated with the land upon completion of development into finished lots. These cost and valuation estimates may be inaccurate. These loans are considered to be of a higher risk than other mortgage loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term or construction financing, and interest rate sensitivity.

Allowance for Credit Losses and Recorded Investment in Mortgage Loans

	Commercial	Residential	Residential Construction	Total
March 31, 2019
Allowance for credit losses:
Beginning balance - January 1, 2019	$ 187,129	$ 1,125,623	$ 35,220	$ 1,347,972
Charge-offs	-	(24,141)	-	(24,141)
Provision	-	46,402	7,982	54,384
Ending balance - March 31, 2019	$ 187,129	$ 1,147,884	$ 43,202	$ 1,378,215

Ending balance: individually evaluated for impairment	$ -	$ 39,884	$ -	$ 39,884

Ending balance: collectively evaluated for impairment	$ 187,129	$ 1,108,000	$ 43,202	$ 1,338,331

Mortgage loans:
Ending balance	$ 34,258,354	$ 89,241,344	$ 75,484,460	$ 198,984,158

Ending balance: individually evaluated for impairment	$ 851,953	$ 3,317,070	$ 502,991	$ 4,672,014

Ending balance: collectively evaluated for impairment	$ 33,406,401	$ 85,924,274	$ 74,981,469	$ 194,312,144

December 31, 2018
Allowance for credit losses:
Beginning balance - January 1, 2018	$ 187,129	$ 1,546,447	$ 35,220	$ 1,768,796
Charge-offs	-	(5,725)	-	(5,725)
Provision	-	(415,099)	-	(415,099)
Ending balance - December 31, 2018	$ 187,129	$ 1,125,623	$ 35,220	$ 1,347,972

Ending balance: individually evaluated for impairment	$ -	$ 74,185	$ -	$ 74,185

Ending balance: collectively evaluated for impairment	$ 187,129	$ 1,051,438	$ 35,220	$ 1,273,787

Mortgage loans:
Ending balance	$ 27,785,927	$ 89,935,600	$ 71,366,544	$ 189,088,071

Ending balance: individually evaluated for impairment	$ 196,182	$ 2,939,651	$ 502,991	$ 3,638,824

Ending balance: collectively evaluated for impairment	$ 27,589,745	$ 86,995,949	$ 70,863,553	$ 185,449,247

The following is a summary of the aging of mortgage loans held for investment for the periods presented:

Age Analysis of Mortgage Loans Held for Investment

	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days (1)	In Process of Foreclosure (1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Unamortized deferred loan fees, net	Net Mortgage Loans
March 31, 2019
Commercial	$ 3,626,950	$ -	$ -	$ 851,953	$ 4,478,903	$ 29,779,451	$ 34,258,354	$ (187,129)	$ 25,582	$ 34,096,807
Residential	9,148,810	2,888,568	2,306,154	1,010,916	15,354,448	73,886,896	89,241,344	(1,147,884)	(833,055)	87,260,405
Residential Construction	-	-	-	502,991	502,991	74,981,469	75,484,460	(43,202)	(454,114)	74,987,144

Total	$ 12,775,760	$ 2,888,568	$ 2,306,154	$ 2,365,860	$ 20,336,342	$ 178,647,816	$ 198,984,158	$ (1,378,215)	$ (1,261,587)	$ 196,344,356

December 31, 2018
Commercial	$ 4,588,424	$ -	$ 196,182	$ -	$ 4,784,606	$ 23,001,321	$ 27,785,927	$ (187,129)	$ 32,003	$ 27,630,801
Residential	9,899,380	2,312,252	1,715,362	1,224,289	15,151,283	74,784,317	89,935,600	(1,125,623)	(862,411)	87,947,566
Residential Construction	-	-	-	502,991	502,991	70,863,553	71,366,544	(35,220)	(444,622)	70,886,702

Total	$ 14,487,804	$ 2,312,252	$ 1,911,544	$ 1,727,280	$ 20,438,880	$ 168,649,191	$ 189,088,071	$ (1,347,972)	$ (1,275,030)	$ 186,465,069


(1) Interest income is not recognized on loans past due greater than 90 days or in foreclosure.

Impaired Mortgage Loans Held for Investment

Impaired mortgage loans held for investment 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

	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
March 31, 2019
With no related allowance recorded:
Commercial	$ 851,953	$ 851,953	$ -	$ 851,953	$ -
Residential	2,565,738	2,565,738	-	2,565,738	-
Residential construction	502,991	502,991	-	502,991	-

With an allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	751,332	751,332	39,884	751,332	-
Residential construction	-	-	-	-	-

Total:
Commercial	$ 851,953	$ 851,953	$ -	$ 851,953	$ -
Residential	3,317,070	3,317,070	39,884	3,317,070	-
Residential construction	502,991	502,991	-	502,991	-

December 31, 2018
With no related allowance recorded:
Commercial	$ 196,182	$ 196,182	$ -	$ 98,023	$ -
Residential	1,612,164	1,612,164	-	2,423,135	-
Residential construction	502,991	502,991	-	675,950	-

With an allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	1,327,487	1,327,487	74,185	1,543,416	-
Residential construction	-	-	-	-	-

Total:
Commercial	$ 196,182	$ 196,182	$ -	$ 98,023	$ -
Residential	2,939,651	2,939,651	74,185	3,966,551	-
Residential construction	502,991	502,991	-	675,950	-

Credit Risk Profile Based on Performance Status

The Company’s mortgage loan held for investment 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 held for investment were as follows:

Mortgage Loans Held for Investment Credit Exposure
Credit Risk Profile Based on Payment Activity

	Commercial		Residential		Residential Construction		Total
	March 31, 2019	December 31, 2018	March 31, 2019	December 31, 2018	March 31, 2019	December 31, 2018	March 31, 2019	December 31, 2018

Performing	$ 33,406,401	$ 27,589,745	$ 85,924,274	$ 86,995,949	$ 74,981,469	$ 70,863,553	$ 194,312,144	$ 185,449,247
Non-performing	851,953	196,182	3,317,070	2,939,651	502,991	502,991	4,672,014	3,638,824

Total	$ 34,258,354	$ 27,785,927	$ 89,241,344	$ 89,935,600	$ 75,484,460	$ 71,366,544	$ 198,984,158	$ 189,088,071

Non-Accrual Mortgage Loans Held for Investment

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 interest income that had been accrued. Payments received for loans on a non-accrual status are recognized on a cash basis. Interest income recognized from any payments received for loans on a non-accrual status was immaterial. Accrual of interest resumes if a loan is brought current. Interest not accrued on these loans totals approximately $150,000 and $151,000 as of March 31, 2019 and December 31, 2018, respectively.

The following is a summary of mortgage loans held for investment on a non-accrual status for the periods presented.

	Mortgage Loans on Non-Accrual Status

	As of March 31 2019	As of December 31 2018
Commercial	$ 851,953	$ 196,182
Residential	3,317,070	2,939,651
Residential construction	502,991	502,991
Total	$ 3,820,061	$ 3,442,642