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2) Investments | 12 Months Ended
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Dec. 31, 2020
Disclosure Text Block [Abstract] |
2) Investments | 2) Investments The Company’s investments as of December 31, 2020 are summarized as follows:
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
December 31, 2020: |  |  |  |  |  |  |  |
Fixed maturity securities, available for sale, at estimated fair value: |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ 42,381,805 |  | $ 1,358,562 |  | $ - |  | $ 43,740,367
Obligations of states and political subdivisions |  | 5,383,762 |  | 312,214 |  | (1,261) |  | 5,694,715
Corporate securities including public utilities |  | 186,067,912 |  | 27,216,496 |  | (681,478) |  | 212,602,930
Mortgage-backed securities |  | 31,047,791 |  | 1,565,377 |  | (267,106) |  | 32,346,062
Redeemable preferred stock |  | 269,214 |  | 3,391 |  | - |  | 272,605
Total fixed maturity securities available for sale |  | $ 265,150,484 |  | $ 30,456,040 |  | $ (949,845) |  | $ 294,656,679
Equity securities at estimated fair value: |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ 9,698,490 |  | $ 2,376,156 |  | $ (750,407) |  | $ 11,324,239
Total equity securities at estimated fair value |  | $ 9,698,490 |  | $ 2,376,156 |  | $ (750,407) |  | $ 11,324,239
Mortgage loans held for investment at amortized cost: |  |  |  |  |  |  |  |
Residential |  | $ 95,822,448 |  |  |  |  |  |
Residential construction |  | 111,111,777 |  |  |  |  |  |
Commercial |  | 46,836,866 |  |  |  |  |  |
Less: Unamortized deferred loan fees, net |  | (1,161,132) |  |  |  |  |  |
Less: Allowance for loan losses |  | (2,005,127) |  |  |  |  |  |
Less: Net discounts |  | (1,260,896) |  |  |  |  |  |
Total mortgage loans held for investment |  | $ 249,343,936 |  |  |  |  |  |
Real estate held for investment - net of accumulated depreciation: |  |  |  |  |  |  |  |
Residential |  | $ 24,843,743 |  |  |  |  |  |
Commercial |  | 106,840,710 |  |  |  |  |  |
Total real estate held for investment |  | $ 131,684,453 |  |  |  |  |  |
Real estate held for sale: |  |  |  |  |  |  |  |
Residential |  | $ 3,478,254 |  |  |  |  |  |
Commercial |  | 4,400,553 |  |  |  |  |  |
Total real estate held for sale |  | $ 7,878,807 |  |  |  |  |  |
Other investments and policy loans at amortized cost: |  |  |  |  |  |  |  |
Policy loans |  | $ 14,171,589 |  |  |  |  |  |
Insurance assignments |  | 53,231,131 |  |  |  |  |  |
Federal Home Loan Bank stock (1) |  | 2,506,600 |  |  |  |  |  |
Other investments |  | 5,432,816 |  |  |  |  |  |
Less: Allowance for doubtful accounts |  | (1,645,475) |  |  |  |  |  |
Total policy loans and other investments |  | $ 73,696,661 |  |  |  |  |  |
Accrued investment income |  | $ 5,360,523 |  |  |  |  |  |
Total investments |  | $ 773,945,298 |  |  |  |  |  |
(1) Includes $866,900 of Membership stock and $1,639,700 of Activity stock due to short-term borrowings.
The Company’s investments as of December 31, 2019 are summarized as follows:
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
December 31, 2019: |  |  |  |  |  |  |  |
Fixed maturity securities, available for sale, at estimated fair value: |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ 142,740,641 |  | $ 632,185 |  | $ (25,215) |  | $ 143,347,611
Obligations of states and political subdivisions |  | 7,450,366 |  | 87,812 |  | (9,026) |  | 7,529,152
Corporate securities including public utilities |  | 156,599,184 |  | 16,768,449 |  | (463,413) |  | 172,904,220
Mortgage-backed securities |  | 31,475,280 |  | 597,395 |  | (240,177) |  | 31,832,498
Redeemable preferred stock |  | 364,339 |  | - |  | - |  | 364,339
Total fixed maturity securities available for sale |  | $ 338,629,810 |  | $ 18,085,841 |  | $ (737,831) |  | $ 355,977,820
Equity securities at estimated fair value: |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ 6,900,537 |  | $ 1,139,799 |  | $ (769,171) |  | $ 7,271,165
Total equity securities at estimated fair value |  | $ 6,900,537 |  | $ 1,139,799 |  | $ (769,171) |  | $ 7,271,165
Mortgage loans held for investment at amortized cost: |  |  |  |  |  |  |  |
Residential |  | $ 113,043,965 |  |  |  |  |  |
Residential construction |  | 89,430,237 |  |  |  |  |  |
Commercial |  | 38,718,220 |  |  |  |  |  |
Less: Unamortized deferred loan fees, net |  | (2,391,567) |  |  |  |  |  |
Less: Allowance for loan losses |  | (1,453,037) |  |  |  |  |  |
Less: Net discounts |  | (653,272) |  |  |  |  |  |
Total mortgage loans held for investment |  | $ 236,694,546 |  |  |  |  |  |
Real estate held for investment - net of accumulated depreciation: |  |  |  |  |  |  |  |
Residential |  | $ 12,530,306 |  |  |  |  |  |
Commercial |  | 90,226,640 |  |  |  |  |  |
Total real estate held for investment |  | $ 102,756,946 |  |  |  |  |  |
Real estate held for sale: |  |  |  |  |  |  |  |
Residential |  | $ 8,021,306 |  |  |  |  |  |
Commercial |  | 6,076,321 |  |  |  |  |  |
Total real estate held for sale |  | $ 14,097,627 |  |  |  |  |  |
Other investments and policy loans at amortized cost: |  |  |  |  |  |  |  |
Policy loans |  | $ 14,762,805 |  |  |  |  |  |
Insurance assignments |  | 41,062,965 |  |  |  |  |  |
Federal Home Loan Bank stock (1) |  | 894,300 |  |  |  |  |  |
Other investments |  | 4,973,225 |  |  |  |  |  |
Less: Allowance for doubtful accounts |  | (1,448,026) |  |  |  |  |  |
Total policy loans and other investments |  | $ 60,245,269 |  |  |  |  |  |
Accrued investment income |  | $ 4,833,232 |  |  |  |  |  |
Total investments |  | $ 781,876,605 |  |  |  |  |  |
(1) Includes $894,300 of Membership stock and $-0- of Activity stock due to short-term borrowings.
Fixed Maturity Securities On December 31, 2019, the Company changed the classification of its bond and preferred stock investments from held to maturity to available for sale based on the Company’s need to be able to respond proactively to market risks in managing its portfolio. Such investments are carried at fair value with any unrealized gains and losses reported as a component of other accumulated comprehensive income or loss. At the date of the transfer, the carrying value of the Company’s held to maturity securities was $338,629,810, and net unrealized gains of $17,315,770 were recognized in accumulated other comprehensive income. The following tables summarize unrealized losses on fixed maturities securities that were carried at estimated fair value at December 31, 2020 and at December 31, 2019. The unrealized losses were primarily related to interest rate fluctuations and uncertainties relating to COVID-19. 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 December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |
Obligations of States and Political Subdivisions |  | $ 1,261 |  | $ 206,812 |  | $ - |  | $ - |  | $ 1,261 |  | $ 206,812
Corporate Securities |  | 242,596 |  | 9,919,298 |  | 438,882 |  | 2,593,026 |  | 681,478 |  | 12,512,324
Mortgage and other asset-backed securities |  | 266,522 |  | 3,455,574 |  | 584 |  | 51,961 |  | 267,106 |  | 3,507,535
Total unrealized losses |  | $ 510,379 |  | $13,581,684 |  | $ 439,466 |  | 2,644,987 |  | $ 949,845 |  | $16,226,671
At December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury Securities and Obligations |  |  |  |  |  |  |  |  |  |  |  |
of U.S. Government Agencies |  | $ 20,211 |  | $30,629,288 |  | $ 5,004 |  | $10,000,400 |  | $ 25,215 |  | $40,629,688
Obligations of States and Political Subdivisions |  | 9,026 |  | 3,062,889 |  | - |  | - |  | 9,026 |  | 3,062,889
Corporate Securities |  | 118,746 |  | 7,184,311 |  | 344,667 |  | 3,950,509 |  | 463,413 |  | 11,134,820
Mortgage and other asset-backed securities |  | 205,470 |  | 13,266,443 |  | 34,707 |  | 502,769 |  | 240,177 |  | 13,769,212
Total unrealized losses |  | $ 353,453 |  | $54,142,931 |  | $ 384,378 |  | $14,453,678 |  | $ 737,831 |  | $68,596,609
There were 63 securities with fair value of 94.7% of amortized cost at December 31, 2020. There were 93 securities with fair value of 98.9% of amortized cost at December 31, 2019. Credit losses of $370,975 and $-0- have been recognized for the years ended December 31, 2020 and 2019, respectively. On a quarterly basis, the Company evaluates its fixed maturity securities classified as available for sale. 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. 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 following table presents a rollforward of the Company's cumulative other than temporary credit impairments (“OTTI”) recognized in earnings on fixed maturity securities available for sale for the years ended December 31:
| 2020 | 2019
Balance of credit-related OTTI at January 1 | $ - | $ -
Additions for credit impairments recognized on: |  |
Securities not previously impaired | 370,975 | -
Securities previously impaired | - | -
Reductions for credit impairments previously recognized on: |  |
Securities that matured or were sold during the period (realized) | - | -
Securities due to an increase in expected cash flows | - | -
Balance of credit-related OTTI at December 31 | $ 370,975 | $ -
The amortized cost and estimated fair value of fixed maturity securities available for sale at December 31, 2020, 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
Due in 1 year |  | $ 28,634,042 |  | $ 28,831,983
Due in 2-5 years |  | 66,183,907 |  | 70,910,775
Due in 5-10 years |  | 70,162,166 |  | 78,592,046
Due in more than 10 years |  | 68,853,364 |  | 83,703,208
Mortgage-backed securities |  | 31,047,791 |  | 32,346,062
Redeemable preferred stock |  | 269,214 |  | 272,605
Total |  | $ 265,150,484 |  | $ 294,656,679
The Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”). The Company pledged a total of $40,000,000, par value, of United States Treasury fixed maturity securities with the FHLB at December 31, 2020. These securities are used as collateral on any cash borrowings from the FHLB. As of December 31, 2020, the Company did not have any outstanding amounts owed to the FHLB and its estimated maximum borrowing capacity was $39,102,336. 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 from investments and other assets for the years ended December 31 are summarized as follows:
| 2020 |  | 2019
Fixed maturity securities available for sale: |  |  |
Gross realized gains | $ 445,749 |  | $ 459,286
Gross realized losses | (77,546) |  | (162,649)
Other than temporary impairments | (370,975) |  | -
Equity securities: |  |  |
Gains on securities sold | 74,836 |  | 256,520
Unrealized gains on securities held at the end of the period | 1,125,304 |  | 1,086,116
Other assets: |  |  |
Gross realized gains | 2,342,418 |  | 2,844,673
Gross realized losses | (1,984,911) |  | (3,755,579)
Total | $ 1,554,875 |  | $ 728,367
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. On December 31, 2019, the Company changed the classification of its bond and preferred stock investments from held to maturity to available for sale based on the Company’s need to be able to respond proactively to market risks in managing its portfolio. Proceeds received from the sale of fixed maturity securities available for sale securities for the year ended December 31, 2020, were $5,477,438, and resulted in gross realized gains and gross realized losses of $358,236 and $21,137, respectively. The carrying amount of held to maturity securities sold for the year ended December 31, 2019 was $4,950,041 and the net realized gain related to these sales was $43,039. Major categories of net investment income for the years ended December 31, were as follows:
| 2020 |  | 2019
Fixed maturity securities available for sale | $ 12,233,394 |  | $ 10,372,559
Equity securities | 642,433 |  | 309,918
Mortgage loans held for investment | 25,672,746 |  | 18,405,010
Real estate held for investment and sale | 11,945,401 |  | 8,782,959
Policy loans | 1,025,179 |  | 554,969
Insurance assignments | 17,837,578 |  | 16,086,059
Other investments | 126,013 |  | 184,439
Cash and cash equivalents | 426,623 |  | 1,824,443
Gross investment income | 69,909,367 |  | 56,520,356
Investment expenses | (13,579,564) |  | (13,500,883)
Net investment income | $ 56,329,803 |  | $ 43,019,473
Net investment income includes income earned by the restricted assets of the cemeteries and mortuaries of $676,313 and $448,754 for the years ended December 31, 2020 and 2019, 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 for regulatory authorities as required by law amounted to $9,684,409 and $9,633,818 at December 31, 2020 and 2019, respectively. The restricted securities are included in various assets under investments on the accompanying consolidated balance sheets. There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses) at December 31, 2020, other than investments issued or guaranteed by the United States Government. Real Estate Held for Investment and Held for Sale 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 segments in the form of acquisition, development and mortgage foreclosures. The Company reports real estate held for investment and held for sale pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements. Commercial Real Estate Held for Investment and Held for Sale 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 assets that provide operational efficiencies. The Company currently owns and operates 11 commercial properties in 5 states. These properties include office buildings, a funeral home, flex office space, 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 does use debt in strategic cases to leverage established yields or to acquire a higher quality or different class of asset. See Note 20 regarding commercial real estate held for investment in Louisiana acquired with the acquisition of Kilpatrick Life Insurance Company. The aggregated net ending balance of commercial real estate that serves as collateral for bank loans was $71,517,902 and $87,814,860 as of December 31, 2020 and 2019, respectively. The associated bank loan carrying values totaled $46,153,283 and $54,917,279 as of December 31, 2020 and 2019, respectively. During the years ended December 31, 2020 and 2019, the Company recorded impairment losses on commercial real estate held for sale of $897,980 and $2,768,979, respectively. Impairment losses of $846,980 and of $2,768,979 for the years ended December 31, 2020 and 2019, respectively, relate to an office building located in Kansas held by the life insurance segment. An impairment loss of $51,000 for the year ended December 31, 2020 relates to the improved commercial pad located in Texas held by the life insurance segment. Impairment loss are included in gains (losses) on investments and other assets on the consolidated statements of earnings. The Company’s commercial real estate held for investment for the years ended December 31, is summarized as follows:
|  | Net Ending Balance |  | Total Square Footage
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Louisiana |  | $ 2,998,684 |  | $ 6,009,079 |  | 84,841 |  | 125,114
Mississippi |  | 2,914,498 |  | 2,951,478 |  | 21,521 |  | 21,521
Utah (1) |  | 100,927,528 |  | 81,266,083 |  | 379,066 |  | 465,230
|  | $ 106,840,710 |  | $ 90,226,640 |  | 485,428 |  | 611,865
(1) Includes Center53 phase 1 and phase 2 which is under construction.
The Company’s commercial real estate held for sale for the years ended December 31, is summarized as follows:
|  | Net Ending Balance |  | Total Square Footage
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Arizona (1) |  | $ - |  | $ 2,500 |  | - |  | -
Kansas |  | 4,000,000 |  | 4,800,000 |  | 222,679 |  | 222,679
Mississippi |  | 151,553 |  | 318,322 |  | 12,300 |  | 12,300
Nevada |  | - |  | 655,499 |  | - |  | 4,800
Texas (2) |  | 249,000 |  | 300,000 |  | - |  | -
|  | $ 4,400,553 |  | $ 6,076,321 |  | 234,979 |  | 239,779
(1) Undeveloped land |  |  |  |  |  |
(2) Improved commercial pad |  |  |  |  |  |
These properties are all actively being marketed with the assistance of commercial real estate brokers in the markets where the properties are located. The Company expects these properties to sell within the coming 12 months. Residential Real Estate Held for Investment and Held for Sale The Company owns a small portfolio of residential homes primarily as a result of loan foreclosures. The Company has the option to sell them or to continue to hold them for cash flow and acceptable returns. The Company also invests in residential subdivision land developments. 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 December 31, 2020, SNRE manages 11 residential properties in 5 states across the United States. During the years ended December 31, 2020 and 2019, the Company recorded impairment losses on residential real estate held for sale of $43,394 and $700,134, respectively. These impairment losses are included in gains (losses) on investments and other assets on the consolidated statements of earnings. The net ending balance of foreclosed residential real estate included in residential real estate held for investment or sale is $4,327,079 and $12,433,986 as of December 31, 2020 and 2019, respectively. The Company’s residential real estate held for investment for the years ended December 31, is summarized as follows:
|  | Net Ending Balance
|  | 2020 |  | 2019
Florida |  | - |  | 2,487,723
Nevada |  | - |  | 293,516
Utah (1) |  | 24,557,562 |  | 9,462,886
Washington (2) |  | 286,181 |  | 286,181
|  | $ 24,843,743 |  | $ 12,530,306
(1) Including subdivision land developments
(2) Improved residential lots
Additional information regarding the Company’s subdivision land developments in Utah for the years ended December 31, is summarized as follows:
|  | 2020 |  | 2019
Lots available for sale |  | 36 |  | 48
Lots to be developed |  | 350 |  | 174
Ending Balance (1) |  | $ 23,777,478 |  | $ 7,889,576
(1) The estimated remaining cost to complete the undeveloped lots is $17,354,000 and $1,900,000 as of December 31, 2020 and 2019, respectively.
The Company’s residential real estate held for sale for the years ended December 31, is summarized as follows:
|  | Net Ending Balance
|  | 2020 |  | 2019
California |  | - |  | 640,452
Florida |  | 744,322 |  | 1,300,641
Nevada |  | 979,640 |  | -
Ohio |  | 10,000 |  | 10,000
Utah |  | 1,744,292 |  | 5,880,213
Washington |  | - |  | 190,000
|  | $ 3,478,254 |  | $ 8,021,306
These properties are all actively being marketed with the assistance of residential real estate brokers in the markets where the properties are located. The Company expects these properties to sell within the coming 12 months. Real Estate Owned and Occupied by the Company The primary business units of the Company occupy a portion of the commercial real estate owned by the Company. As of December 31, 2020, real estate owned and occupied by the Company is summarized as follows:
Location |  | Business Segment |  | Approximate Square Footage |  | Square Footage Occupied by the Company
121 W. Election Rd., Draper, UT |  | Corporate Offices, Life Insurance and Cemetery/Mortuary Operations |  | 78,979 |  | 18%
5201 Green Street, Salt Lake City, UT (1) |  | Life Insurance and Mortgage Operations |  | 39,157 |  | 73%
1044 River Oaks Dr., Flowood, MS |  | Life Insurance Operations |  | 19,694 |  | 28%
1818 Marshall Street, Shreveport, LA (1)(2) |  | Life Insurance Operations |  | 12,274 |  | 100%
909 Foisy Street, Alexandria, LA (1)(2) |  | Life Insurance Sales |  | 8,059 |  | 100%
812 Sheppard Street, Minden, LA (1)(2) |  | Life Insurance Sales |  | 1,560 |  | 100%
1550 N 3rd Street, Jena, LA (1)(2) |  | Life Insurance Sales |  | 1,737 |  | 100%
(1) Included in property and equipment on the consolidated balance sheets |  |  |  |
(2) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company |  |  |  |
Mortgage Loans Held for Investment The Company reports mortgage loans held for investment pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements. 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 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 December 31, 2020, the Company had 57%, 13%, 9%, 4%, 3% and 3% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada and Arizona, respectively. At December 31, 2019, the Company had 48%, 16%, 10%, 6%, 6% and 5% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada and Arizona, 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 Held for Investment
Years Ended December 31
| Commercial |  | Residential |  | Residential Construction |  | Total
2020 |  |  |  |  |  |  |
Allowance for credit losses: |  |  |  |  |  |  |
Beginning balance | $ 187,129 |  | $ 1,222,706 |  | $ 43,202 |  | $ 1,453,037
Charge-offs | - |  | - |  | - |  | -
Provision | - |  | 552,090 |  | - |  | 552,090
Ending balance | $ 187,129 |  | $ 1,774,796 |  | $ 43,202 |  | $ 2,005,127
Ending balance: individually evaluated for impairment | $ - |  | $ 219,905 |  | $ - |  | $ 219,905
Ending balance: collectively evaluated for impairment | $ 187,129 |  | $ 1,554,891 |  | $ 43,202 |  | $ 1,785,222
Mortgage loans: |  |  |  |  |  |  |
Ending balance | $ 46,836,866 |  | $ 111,111,777 |  | $ 95,822,448 |  | $ 253,771,091
Ending balance: individually evaluated for impairment | $ 2,148,827 |  | $ 7,932,680 |  | $ 200,963 |  | $ 10,282,470
Ending balance: collectively evaluated for impairment | $ 44,688,039 |  | $ 103,179,097 |  | $ 95,621,485 |  | $ 243,488,621
2019 |  |  |  |  |  |  |
Allowance for credit losses: |  |  |  |  |  |  |
Beginning balance | $ 187,129 |  | $ 1,125,623 |  | $ 35,220 |  | $ 1,347,972
Charge-offs | - |  | (32,692) |  | - |  | (32,692)
Provision | - |  | 129,775 |  | 7,982 |  | 137,757
Ending balance | $ 187,129 |  | $ 1,222,706 |  | $ 43,202 |  | $ 1,453,037
Ending balance: individually evaluated for impairment | $ - |  | $ 195,993 |  | $ - |  | $ 195,993
Ending balance: collectively evaluated for impairment | $ 187,129 |  | $ 1,026,713 |  | $ 43,202 |  | $ 1,257,044
Mortgage loans: |  |  |  |  |  |  |
Ending balance | $ 38,718,220 |  | $ 113,043,965 |  | $ 89,430,237 |  | $ 241,192,422
Ending balance: individually evaluated for impairment | $ 4,488,719 |  | $ 3,752,207 |  | $ 655,000 |  | $ 8,895,926
Ending balance: collectively evaluated for impairment | $ 34,229,501 |  | $ 109,291,758 |  | $ 88,775,237 |  | $ 232,296,496
Age Analysis of Past Due Mortgage Loans Held for Investment
Years Ended December 31
| 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 | Unamortized discounts, net | Net Mortgage Loans
2020 |  |  |  |  |  |  |  |  |  |  |
Commercial | $ 233,200 | $ 812,780 | $ 2,148,827 | $ - | $ 3,194,807 | $ 43,642,059 | $ 46,836,866 | $ (187,129) | $ (32,557) | $ (880,721) | $ 45,736,459
Residential | 5,866,505 | 2,048,148 | 5,669,583 | 2,263,097 | 15,847,333 | 79,975,115 | 95,822,448 | (1,774,796) | (909,864) | (380,175) | 92,757,613
Residential Construction | 127,191 | - | - | 200,963 | 328,154 | 110,783,623 | 111,111,777 | (43,202) | (218,711) | - | 110,849,864
Total | $ 6,226,896 | $ 2,860,928 | $ 7,818,410 | $ 2,464,060 | $ 19,370,294 | $ 234,400,797 | $ 253,771,091 | $ (2,005,127) | $ (1,161,132) | $ (1,260,896) | $ 249,343,936
2019 |  |  |  |  |  |  |  |  |  |  |
Commercial | $ 1,872,000 | $ - | $ 4,488,719 | $ - | $ 6,360,719 | $ 32,357,501 | $ 38,718,220 | $ (187,129) | $ (88,918) | $ (653,272) | $ 37,788,901
Residential | 10,609,296 | 4,085,767 | 2,100,742 | 1,651,465 | 18,447,270 | 94,596,695 | 113,043,965 | (1,222,706) | (1,567,581) | - | 110,253,678
Residential Construction | - | - | 655,000 | - | 655,000 | 88,775,237 | 89,430,237 | (43,202) | (735,068) | - | 88,651,967
Total | $ 12,481,296 | $ 4,085,767 | $ 7,244,461 | $ 1,651,465 | $ 25,462,989 | $ 215,729,433 | $ 241,192,422 | $ (1,453,037) | $ (2,391,567) | $ (653,272) | $ 236,694,546
(1) There was not any interest income recognized on loans past due greater than 90 days or in foreclosure. |  |  |  |  |
The following is a summary of the aging of mortgage loans held for investment for the periods presented. 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
Years Ended December 31
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized
2020 |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ 2,148,827 |  | $ 2,148,827 |  | $ - |  | $ 1,866,819 |  | $ -
Residential | 6,415,419 |  | 6,415,419 |  | - |  | 5,010,078 |  | -
Residential construction | 200,963 |  | 200,963 |  | - |  | 555,278 |  | -
With an allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | 1,517,261 |  | 1,517,261 |  | 219,905 |  | 1,182,368 |  | -
Residential construction | - |  | - |  | - |  | - |  | -
Total: |  |  |  |  |  |  |  |  |
Commercial | $ 2,148,827 |  | $ 2,148,827 |  | $ - |  | $ 1,866,819 |  | $ -
Residential | 7,932,680 |  | 7,932,680 |  | 219,905 |  | 6,192,446 |  | -
Residential construction | 200,963 |  | 200,963 |  | - |  | 555,278 |  | -
2019 |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ 4,488,719 |  | $ 4,488,719 |  | $ - |  | $ 1,499,043 |  | $ -
Residential | 2,254,189 |  | 2,254,189 |  | - |  | 3,367,151 |  | -
Residential construction | 655,000 |  | 655,000 |  | - |  | 1,457,278 |  | -
With an allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | 1,498,018 |  | 1,498,018 |  | 195,993 |  | 665,270 |  | -
Residential construction | - |  | - |  | - |  | - |  | -
Total: |  |  |  |  |  |  |  |  |
Commercial | $ 4,488,719 |  | $ 4,488,719 |  | $ - |  | $ 1,499,043 |  | $ -
Residential | 3,752,207 |  | 3,752,207 |  | 195,993 |  | 4,032,421 |  | -
Residential construction | 655,000 |  | 655,000 |  | - |  | 1,457,278 |  | -
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
Years Ended December 31
| Commercial |  | Residential |  | Residential Construction |  | Total |
| 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019 |
Performing | $ 44,688,039 |  | $ 34,229,501 |  | $ 87,889,768 |  | $109,291,758 |  | $ 110,910,814 |  | $ 88,775,237 |  | $ 243,488,621 |  | $ 232,296,496 |
Non-performing | 2,148,827 |  | 4,488,719 |  | 7,932,680 |  | 3,752,207 |  | 200,963 |  | 655,000 |  | 10,282,470 |  | 8,895,926 |
Total | $ 46,836,866 |  | $ 38,718,220 |  | $ 95,822,448 |  | $113,043,965 |  | $ 111,111,777 |  | $ 89,430,237 |  | $ 253,771,091 |  | $ 241,192,422 |
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 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 $491,000 and $203,000 as of December 31, 2020 and 2019, 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
| Years Ended December 31
| 2020 |  | 2019
Commercial | $ 2,148,827 |  | $ 4,488,719
Residential | 7,932,680 |  | 3,752,207
Residential construction | 200,963 |  | 655,000
Total | $ 10,282,470 |  | $ 8,895,926
Principal Amounts Due The amortized cost and contractual payments on mortgage loans held for investment by category as of December 31, 2020 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 |  | 1 Year |  | 2-5 Years |  | Thereafter
Residential | $ 95,822,448 |  | $ 11,202,899 |  | $ 17,774,238 |  | $ 66,845,311
Residential Construction | 111,111,777 |  | $ 103,391,044 |  | $ 7,720,733 |  | -
Commercial | 46,836,866 |  | 27,111,325 |  | 11,101,138 |  | 8,624,403
Total | $ 253,771,091 |  | $ 141,705,268 |  | $ 36,596,109 |  | $ 75,469,714

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