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3) Investments | 3 Months Ended
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Mar. 31, 2021
Disclosure Text Block [Abstract] |
3) Investments | 3) Investments The Company’s investments as of March 31, 2021 are summarized as follows:
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
March 31, 2021: |  |  |  |  |  |  |  |
Fixed maturity securities, available for sale, at estimated fair value: |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ 42,427,856 |  | $ 1,099,519 |  | $ - |  | $ 43,527,375
Obligations of states and political subdivisions |  | 5,370,754 |  | 209,554 |  | (24,569) |  | 5,555,739
Corporate securities including public utilities |  | 179,026,864 |  | 21,203,792 |  | (501,358) |  | 199,729,298
Mortgage-backed securities |  | 29,799,733 |  | 892,449 |  | (236,547) |  | 30,455,635
Redeemable preferred stock |  | 269,214 |  | 13,267 |  | - |  | 282,481
Total fixed maturity securities available for sale |  | $ 256,894,421 |  | $ 23,418,581 |  | $ (762,474) |  | $ 279,550,528
Equity securities at estimated fair value: |  |  |  |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |
Industrial, miscellaneous and all other |  | $ 8,913,275 |  | $ 2,586,343 |  | $ (345,123) |  | $ 11,154,495
Total equity securities at estimated fair value |  | $ 8,913,275 |  | $ 2,586,343 |  | $ (345,123) |  | $ 11,154,495
Mortgage loans held for investment at amortized cost: |  |  |  |  |  |  |  |
Residential |  | $ 88,266,355 |  |  |  |  |  |
Residential construction |  | 105,450,591 |  |  |  |  |  |
Commercial |  | 55,065,455 |  |  |  |  |  |
Less: Unamortized deferred loan fees, net |  | (1,223,014) |  |  |  |  |  |
Less: Allowance for loan losses |  | (1,897,155) |  |  |  |  |  |
Less: Net discounts |  | (710,280) |  |  |  |  |  |
Total mortgage loans held for investment |  | $ 244,951,952 |  |  |  |  |  |
Real estate held for investment - net of accumulated depreciation: |  |  |  |  |  |  |  |
Residential |  | $ 39,752,530 |  |  |  |  |  |
Commercial |  | 117,288,006 |  |  |  |  |  |
Total real estate held for investment |  | $ 157,040,536 |  |  |  |  |  |
Real estate held for sale: |  |  |  |  |  |  |  |
Residential |  | $ 1,156,313 |  |  |  |  |  |
Commercial |  | 4,400,553 |  |  |  |  |  |
Total real estate held for sale |  | $ 5,556,866 |  |  |  |  |  |
Other investments and policy loans at amortized cost: |  |  |  |  |  |  |  |
Policy loans |  | $ 13,946,739 |  |  |  |  |  |
Insurance assignments |  | 54,618,319 |  |  |  |  |  |
Federal Home Loan Bank stock (1) |  | 2,544,700 |  |  |  |  |  |
Other investments |  | 5,242,786 |  |  |  |  |  |
Less: Allowance for doubtful accounts |  | (1,662,394) |  |  |  |  |  |
Total policy loans and other investments |  | $ 74,690,150 |  |  |  |  |  |
Accrued investment income |  | $ 6,266,403 |  |  |  |  |  |
Total investments |  | $ 779,210,930 |  |  |  |  |  |
| (1) | Includes $905,700 of Membership stock and $1,639,000 of Activity stock due to short-term borrowings.
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. Fixed Maturity Securities The following tables summarize unrealized losses on fixed maturity securities available for sale, which were carried at estimated fair value, at March 31, 2021 and December 31, 2020. 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 March 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |
Obligations of States and Political Subdivisions |  | $ 24,569 |  | $ 778,979 |  | $ - |  | $ - |  | $ 24,569 |  | $ 778,979
Corporate Securities |  | 137,661 |  | 9,760,180 |  | 363,697 |  | 9,199,818 |  | 501,358 |  | 18,959,998
Mortgage and other asset-backed securities |  | 90,713 |  | 5,235,918 |  | 145,834 |  | 2,026,009 |  | 236,547 |  | 7,261,927
Total unrealized losses |  | $ 252,943 |  | $ 15,775,077 |  | $ 509,531 |  | $ 11,225,827 |  | $ 762,474 |  | $ 27,000,904
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
There were 79 securities with fair value of 97.3% of amortized cost at March 31, 2021. There were 63 securities with fair value of 94.7% of amortized cost at December 31, 2020. No credit losses have been recognized for the three months ended March 31, 2021 and 2020. On a quarterly basis, the Company evaluates its fixed maturity securities 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 three months ended March 31:
|  | 2021 |  | 2020
Balance of credit-related OTTI at January 1 |  | $ 370,975 |  | $ -
Additions for credit impairments recognized on: |  |  |  |
Securities not previously impaired |  | - |  | -
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 March 31 |  | $ 370,975 |  | $ -
The amortized cost and estimated fair value of fixed maturity securities available for sale at March 31, 2021, 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
Due in 1 year |  | $ 21,362,110 |  | $ 21,444,660
Due in 2-5 years |  | 66,817,800 |  | 71,062,356
Due in 5-10 years |  | 70,609,309 |  | 77,487,611
Due in more than 10 years |  | 68,036,255 |  | 78,817,785
Mortgage-backed securities |  | 29,799,733 |  | 30,455,635
Redeemable preferred stock |  | 269,214 |  | 282,481
Total |  | $ 256,894,421 |  | $ 279,550,528
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 March 31, 2021. These securities are used as collateral on any cash borrowings from the FHLB. As of March 31, 2021, the Company did not have any amounts outstanding with the FHLB and its estimated remaining maximum borrowing capacity was $38,559,265. 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
|  | 2021 |  | 2020
Fixed maturity securities: |  |  |  |
Gross realized gains |  | $ 97,622 |  | $ 95,821
Gross realized losses |  | (24,997) |  | -
Equity securities: |  |  |  |
Gains (losses) on securities sold |  | 106,569 |  | (57,442)
Unrealized gains and (losses) on securities held at the end of the period |  | 952,030 |  | (2,761,856)
Other assets: |  |  |  |
Gross realized gains |  | 1,109,358 |  | 457,028
Gross realized losses |  | (280,469) |  | (945,798)
Total |  | $ 1,960,113 |  | $ (3,212,247)
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. Information regarding sales of fixed maturity securities available for sale is summarized as follows:
|  | Three Months Ended March 31
|  | 2021 |  | 2020
Proceeds from sales |  | $ 819,565 |  | $ 645,750
Gross realized gains |  | 59,794 |  | 79,411
Gross realized losses |  | - |  | -
Major categories of net investment income are as follows:
| Three Months Ended March 31
| 2021 |  | 2020
Fixed maturity securities | $ 2,824,111 |  | $ 2,924,714
Equity securities | 128,229 |  | 92,042
Mortgage loans held for investment | 6,084,417 |  | 5,653,890
Real estate | 3,042,829 |  | 3,153,385
Policy loans | 232,353 |  | 233,966
Insurance assignments | 5,345,729 |  | 4,299,205
Other investments | 13,707 |  | 25,023
Cash and cash equivalents | 39,594 |  | 298,005
Gross investment income | 17,710,969 |  | 16,680,230
Investment expenses | (3,417,082) |  | (3,279,731)
Net investment income | $ 14,293,887 |  | $ 13,400,499
Net investment income includes income earned by the restricted assets cemeteries and mortuaries of $161,211 and $110,639 for the three months ended March 31, 2021 and 2020, 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 $9,864,903 at March 31, 2021 and $9,684,409 at December 31, 2020. 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 and fixed maturity securities) at March 31, 2021, other than investments issued or guaranteed by the United States Government. Real Estate Held for Investment and Held for Sale The Company strategically deploys 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 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 in 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 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 loans was $99,547,615 and $71,517,902 as of March 31, 2021 and December 31, 2020, respectively. The associated bank loan carrying values totaled $55,831,600 and $46,153,283 as of March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021 and 2020, the Company recorded impairment losses on commercial real estate held for sale of $-0- and $31,429, respectively. These impairment losses relate to an office building held by the life insurance segment. 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 commercial real estate held for investment for the periods presented:
|  | Net Ending Balance |  | Total Square Footage
|  | March 31 2021 |  | December 31 2020 |  | March 31 2021 |  | December 31 2020
Utah (1) |  | $ 111,008,057 |  | $ 100,927,528 |  | 379,066 |  | 379,066
Louisiana |  | 2,981,296 |  | 2,998,684 |  | 84,841 |  | 84,841
Mississippi |  | 2,909,508 |  | 2,914,498 |  | 21,521 |  | 21,521
California |  | 389,145 |  | - |  | 2,872 |  | -
|  | $ 117,288,006 |  | $ 106,840,710 |  | 488,300 |  | 485,428
(1) Includes Center53 phase 1 and phase 2 which is under construction. The following is a summary of the Company’s commercial real estate held for sale for the periods presented:
|  | Net Ending Balance |  | Total Square Footage
|  | March 31 2021 |  | December 31 2020 |  | March 31 2021 |  | December 31 2020
Kansas |  | 4,000,000 |  | 4,000,000 |  | 222,679 |  | 222,679
Texas (1) |  | 249,000 |  | 249,000 |  | - |  | -
Mississippi |  | 151,553 |  | 151,553 |  | - |  | -
|  | $ 4,400,553 |  | $ 4,400,553 |  | 222,679 |  | 222,679
(1) 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 March 31, 2021, SNRE manages 5 residential properties in 4 states across the United States. The net ending balance of foreclosed residential real estate included in residential real estate held for investment and sale is $1,657,285 and $4,327,079 as of March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021 and 2020 the Company did not record any impairment losses on residential real estate held for investment or held for sale. 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 residential real estate held for investment for the periods presented:
|  | Net Ending Balance
|  | March 31 2021 |  | December 31 2020
Utah (1) |  | 39,466,349 |  | $ 24,557,562
Washington (2) |  | 286,181 |  | 286,181
|  | $ 39,752,530 |  | $ 24,843,743
(1) Includes subdivision land developments (2) Improved residential lots Additional information regarding the Company’s subdivision land developments in Utah is summarized as follows:
|  | March 31 2021 |  | December 31 2020
Lots available for sale |  | 81 |  | 36
Lots to be developed |  | 369 |  | 350
Ending Balance (1) |  | $ 39,251,557 |  | $ 23,777,478
(1) The estimated remaining cost to complete the undeveloped lots is $15,613,000 and $17,354,000 as of March 31, 2021 and December 31, 2020, respectively. The following is a summary of the Company’s residential real estate held for sale for the periods presented:
|  | Net Ending Balance
|  | March 31 2021 |  | December 31 2020
Nevada |  | $ 979,640 |  | $ 979,640
Florida |  | 166,673 |  | 744,322
Ohio |  | 10,000 |  | 10,000
Utah |  | - |  | 1,744,292
|  | $ 1,156,313 |  | $ 3,478,254
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 real estate owned by the Company. As of March 31, 2021, 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) |  | Life Insurance Operations |  | 12,274 |  | 100%
909 Foisy Street, Alexandria, LA (1) |  | Life Insurance Sales |  | 8,059 |  | 100%
812 Sheppard Street, Minden, LA (1) |  | Life Insurance Sales |  | 1,560 |  | 100%
1550 N 3rd Street, Jena, LA (1) |  | Life Insurance Sales |  | 1,737 |  | 100%
(1) 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, 2021, the Company had 54%, 14%, 9%, 3%, 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, 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. Mortgage loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, charge-offs, premiums, discounts 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 or held for sale. 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. The Company establishes a valuation allowance for credit losses in its mortgage loans held for investment portfolio. The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:
| Commercial |  | Residential |  | Residential Construction |  | Total
March 31, 2021 |  |  |  |  |  |  |
Allowance for credit losses: |  |  |  |  |  |  |
Beginning balance - January 1, 2021 | $ 187,129 |  | $ 1,774,796 |  | $ 43,202 |  | $ 2,005,127
Charge-offs | - |  | - |  | - |  | -
Provision | - |  | (107,972) |  | - |  | (107,972)
Ending balance - March 31, 2021 | $ 187,129 |  | $ 1,666,824 |  | $ 43,202 |  | $ 1,897,155
Ending balance: individually evaluated for impairment | $ - |  | $ 207,578 |  | $ - |  | $ 207,578
Ending balance: collectively evaluated for impairment | $ 187,129 |  | $ 1,459,246 |  | $ 43,202 |  | $ 1,689,577
Mortgage loans: |  |  |  |  |  |  |
Ending balance | $ 55,065,455 |  | $ 88,266,355 |  | $ 105,450,591 |  | $ 248,782,401
Ending balance: individually evaluated for impairment | $ 1,068,365 |  | $ 4,436,082 |  | $ 200,963 |  | $ 5,705,410
Ending balance: collectively evaluated for impairment | $ 53,997,090 |  | $ 83,830,273 |  | $ 105,249,628 |  | $ 243,076,991
December 31, 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
The following is a summary of the aging of mortgage loans held for investment for the periods presented:
|  | Commercial |  | Residential |  | Residential Construction |  | Total
March 31, 2021 |  |  |  |  |  |  |  |
30-59 Days Past Due |  | $ - |  | $ 4,352,659 |  | $ 301,071 |  | $ 4,653,730
60-89 Days Past Due |  | 2,027,048 |  | 1,317,057 |  | - |  | 3,344,105
Greater Than 90 Days (1) |  | 817,429 |  | 2,522,314 |  | - |  | 3,339,743
In Process of Foreclosure (1) |  | 250,936 |  | 1,913,768 |  | 200,963 |  | 2,365,667
Total Past Due |  | 3,095,413 |  | 10,105,798 |  | 502,034 |  | 13,703,245
Current |  | 51,970,042 |  | 78,160,557 |  | 104,948,557 |  | 235,079,156
Total Mortgage Loans |  | 55,065,455 |  | 88,266,355 |  | 105,450,591 |  | 248,782,401
Allowance for Loan Losses |  | (187,129) |  | (1,666,824) |  | (43,202) |  | (1,897,155)
Unamortized deferred loan fees, net |  | (115,893) |  | (951,108) |  | (156,013) |  | (1,223,014)
Unamortized discounts, net |  | (358,587) |  | (351,693) |  | - |  | (710,280)
Net Mortgage Loans |  | $ 54,403,846 |  | $ 85,296,730 |  | $ 105,251,376 |  | $ 244,951,952
December 31, 2020 |  |  |  |  |  |  |  |
30-59 Days Past Due |  | $ 233,200 |  | $ 5,866,505 |  | $ 127,191 |  | $ 6,226,896
60-89 Days Past Due |  | 812,780 |  | 2,048,148 |  | - |  | 2,860,928
Greater Than 90 Days (1) |  | 2,148,827 |  | 5,669,583 |  | - |  | 7,818,410
In Process of Foreclosure (1) |  | - |  | 2,263,097 |  | 200,963 |  | 2,464,060
Total Past Due |  | 3,194,807 |  | 15,847,333 |  | 328,154 |  | 19,370,294
Current |  | 43,642,059 |  | 79,975,115 |  | 110,783,623 |  | 234,400,797
Total Mortgage Loans |  | 46,836,866 |  | 95,822,448 |  | 111,111,777 |  | 253,771,091
Allowance for Loan Losses |  | (187,129) |  | (1,774,796) |  | (43,202) |  | (2,005,127)
Unamortized deferred loan fees, net |  | (32,557) |  | (909,864) |  | (218,711) |  | (1,161,132)
Unamortized discounts, net |  | (880,721) |  | (380,175) |  | - |  | (1,260,896)
Net Mortgage Loans |  | $ 45,736,459 |  | $ 92,757,613 |  | $ 110,849,864 |  | $ 249,343,936
(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:
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized
March 31, 2021 |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ 1,068,365 |  | $ 1,068,365 |  | $ - |  | $ 1,068,365 |  | $ -
Residential | 3,054,262 |  | 3,054,262 |  | - |  | 3,054,262 |  | -
Residential construction | 200,963 |  | 200,963 |  | - |  | 200,963 |  | -
With an allowance recorded: |  |  |  |  |  |  |  |  |
Commercial | $ - |  | $ - |  | $ - |  | $ - |  | $ -
Residential | 1,381,820 |  | 1,381,820 |  | 207,578 |  | 1,381,820 |  | -
Residential construction | - |  | - |  | - |  | - |  | -
Total: |  |  |  |  |  |  |  |  |
Commercial | $ 1,068,365 |  | $ 1,068,365 |  | $ - |  | $ 1,068,365 |  | $ -
Residential | 4,436,082 |  | 4,436,082 |  | 207,578 |  | 4,436,082 |  | -
Residential construction | 200,963 |  | 200,963 |  | - |  | 200,963 |  | -
December 31, 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 |  | -
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:
| Commercial |  | Residential |  | Residential Construction |  | Total
| March 31, 2021 |  | December 31, 2020 |  | March 31, 2021 |  | December 31, 2020 |  | March 31, 2021 |  | December 31, 2020 |  | March 31, 2021 |  | December 31, 2020
Performing | $ 53,997,090 |  | $ 44,688,039 |  | $ 83,830,273 |  | $ 87,889,768 |  | $ 105,249,628 |  | $ 110,910,814 |  | $ 243,076,991 |  | $ 243,488,621
Non-performing | 1,068,365 |  | 2,148,827 |  | 4,436,082 |  | 7,932,680 |  | 200,963 |  | 200,963 |  | 5,705,410 |  | 10,282,470
Total | $ 55,065,455 |  | $ 46,836,866 |  | $ 88,266,355 |  | $ 95,822,448 |  | $ 105,450,591 |  | $ 111,111,777 |  | $ 248,782,401 |  | $ 253,771,091
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 $321,000 and $491,000 as of March 31, 2021 and December 31, 2020, respectively. The following is a summary of mortgage loans held for investment on a non-accrual status for the periods presented.
| As of March 31 2021 |  | As of December 31 2020
Commercial | $ 1,068,365 |  | $ 2,148,827
Residential | 4,436,082 |  | 7,932,680
Residential construction | 200,963 |  | 200,963
Total | $ 5,705,410 |  | $ 10,282,470

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