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Investments
 6 Months Ended
Jun. 30, 2021
Investments, Debt and Equity Securities [Abstract]  
Investments

3)       Investments

 

The Company’s investments as of June 30, 2021 are summarized as follows:

 

            
   Amortized Cost  Gross Unrealized Gains  Gross Unrealized Losses  Estimated Fair Value
June 30, 2021:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $22,260,808   $907,733   $—     $23,168,541 
                     
Obligations of states and political subdivisions   5,158,473    242,668    (4,769)   5,396,372 
                     
Corporate securities including public utilities   177,621,795    25,368,792    (243,492)   202,747,095 
                     
Mortgage-backed securities   28,259,360    1,239,004    (135,522)   29,362,842 
                     
Redeemable preferred stock   269,214    13,612    —      282,826 
                     
Total fixed maturity securities available for sale  $233,569,650   $27,771,809   $(383,783)  $260,957,676 
                     
Equity securities at estimated fair value:                    
                     
Common stock:                    
                     
Industrial, miscellaneous and all other  $7,810,399   $2,797,881   $(285,824)  $10,322,456 
                     
Total equity securities at estimated fair value  $7,810,399   $2,797,881   $(285,824)  $10,322,456 
                     
Mortgage loans held for investment at amortized cost:                    
Residential  $83,195,347                
Residential construction   135,728,280                
Commercial   47,440,235                
Less: Unamortized deferred loan fees, net   (1,725,718)               
Less: Allowance for loan losses   (1,900,935)               
Less: Net discounts   (577,202)               
                     
Total mortgage loans held for investment  $262,160,007                
                     
Real estate held for investment - net of accumulated depreciation:                    
Residential  $50,268,513                
Commercial   128,169,133                
                     
Total real estate held for investment  $178,437,646                
                     
Real estate held for sale:                    
Residential  $1,330,611                
Commercial   4,890,553                
                     
Total real estate held for sale  $6,221,164                
                     
Other investments and policy loans at amortized cost:                    
Policy loans  $13,734,049                
Insurance assignments   42,029,299                
Federal Home Loan Bank stock (1)   2,545,000                
Other investments   5,256,014                
Less: Allowance for doubtful accounts   (1,676,618)               
                     
Total policy loans and other investments  $61,887,744                
                     
Accrued investment income  $5,484,182                
                     
Total investments  $785,470,875                

 

(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 June 30, 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 June 30, 2021                              
Obligations of States and Political Subdivisions  $4,769   $757,348   $—     $—     $4,769   $757,348 
Corporate Securities   28,595    4,269,265    214,897    4,618,270    243,492    8,887,535 
Mortgage and other asset-backed securities   25,176    1,952,135    110,346    1,836,960    135,522    3,789,095 
Total unrealized losses  $58,540   $6,978,748   $325,243   $6,455,230   $383,783   $13,433,978 
                               
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 51 securities with fair value of 97.2% of amortized cost at June 30, 2021. There were 63 securities with fair value of 94.7% of amortized cost at December 31, 2020. No additional credit losses have been recognized for the three and six months ended June 30, 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. Securities with ratings of 3 to 5 are considered non-investment grade and 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 six months ended June 30:

 

      
   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 June 30   370,975    —   

 

The amortized cost and estimated fair value of fixed maturity securities available for sale at June 30, 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  $470,918   $479,754 
Due in 2-5 years   65,576,854    69,598,648 
Due in 5-10 years   71,005,630    79,264,125 
Due in more than 10 years   67,987,674    81,969,481 
Mortgage-backed securities   28,259,360    29,362,842 
Redeemable preferred stock   269,214    282,826 
Total  $233,569,650   $260,957,676 

 

The Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”). The Company pledged a total of $20,000,000, par value, of United States Treasury fixed maturity securities with the FHLB at June 30, 2021. These securities are used as collateral on any cash borrowings from the FHLB. As of June 30, 2021, the Company did not have any amounts outstanding with the FHLB and its estimated remaining maximum borrowing capacity was $19,152,949.

 

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 June 30  Six Months Ended June 30
   2021  2020  2021  2020
Fixed maturity securities:                    
Gross realized gains  $188,266   $55,138   $273,659   $150,959 
Gross realized losses   (2,119)   (12,089)   (14,886)   (12,089)
                     
Equity securities:                    
Gains (losses) on securities sold   146,011    (50,029)   252,580    (107,471)
Unrealized gains and (losses) on securities held at the end of the period   490,394    1,738,059    1,442,424    (1,023,797)
                     
Other assets:                    
Gross realized gains   737,443    48,736    1,846,801    505,764 
Gross realized losses   (82,791)   458,464    (363,261)   (487,334)
Total  $1,477,204   $2,238,279   $3,437,317   $(973,968)

 

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 June 30  Six Months Ended June 30
   2021  2020  2021  2020
Proceeds from sales  $1,163,366   $2,107,581   $1,982,931   $2,753,331 
Gross realized gains   149,338    53,928    209,132    133,339 
Gross realized losses   —      137    —      137 

 

Major categories of net investment income are as follows: 

   Three Months Ended June 30  Six Months Ended June 30
   2021  2020  2021  2020
Fixed maturity securities  $2,698,011   $3,143,072   $5,522,122   $6,067,786 
Equity securities   106,041    111,122    234,270    203,164 
Mortgage loans held for investment   6,902,466    5,582,152    12,986,883    11,236,042 
Real estate   3,002,650    2,787,881    6,045,479    5,941,267 
Policy loans   232,135    257,527    464,488    491,492 
Insurance assignments   4,171,318    4,383,398    9,517,047    8,682,602 
Other investments   39,299    398    53,006    25,421 
Cash and cash equivalents   34,030    22,385    73,624    320,390 
Gross investment income   17,185,950    16,287,935    34,896,919    32,968,164 
Investment expenses   (3,008,632)   (3,325,190)   (6,425,714)   (6,604,920)
Net investment income  $14,177,318   $12,962,745   $28,471,205   $26,363,244 

 

Net investment income includes income earned by the restricted assets cemeteries and mortuaries of $190,668 and $140,093 for the three months ended June 30, 2021 and 2020, respectively, and $351,879 and $250,732 for the six months ended June 30, 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 $10,263,529 at June 30,2021 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 June 30, 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 (“Center 53”) 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 $110,763,510 and $71,517,902 as of June 30, 2021 and December 31, 2020, respectively. The associated bank loan carrying values totaled $66,163,722 and $46,153,283 as of June 30, 2021 and December 31, 2020, respectively. 

During the three months ended June 30, 2021 and 2020, the Company recorded impairment losses on commercial real estate held for sale of $28,378 and $15,551, respectively. During the six months ended June 30, 2021 and 2020, the Company recorded impairment losses on commercial real estate held for sale of $28,378 and $46,980, respectively. These impairment losses relate to an office building and a funeral home 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
   June 30
2021		  December 31
2020		  June 30
2021		  December 31
2020
Utah (1)  $122,439,551   $100,927,528    379,066    379,066 
Louisiana   2,449,494    2,998,684    31,778    84,841 
Mississippi   2,890,943    2,914,498    21,521    21,521 
California   389,145    —      2,872    —   
                     
   $128,169,133   $106,840,710    435,237    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
   June 30
2021		  December 31
2020		  June 30
2021		  December 31
2020
Kansas   4,000,000    4,000,000    222,679    222,679 
Louisiana   490,000    —      53,063    —   
Texas (1)   249,000    249,000    —      —   
Mississippi   151,553    151,553    —      12,300 
                     
   $4,890,553   $4,400,553    275,742    234,979 
                     

 

(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. 

The net ending balance of foreclosed residential real estate included in residential real estate held for investment and sale is $1,828,936 and $4,327,079 as of June 30, 2021 and December 31, 2020, respectively. 

During the three and six months ended June 30, 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
   June 30
2021		  December 31
2020
Utah (1)   49,982,332   $24,557,562 
Washington (2)   286,181    286,181 
   $50,268,513   $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: 

   June 30
2021		  December 31
2020
Lots available for sale   91    36 
Lots to be developed   469    350 
Ending Balance (1)  $49,770,193   $23,777,478 

 

(1) The estimated remaining cost to complete the undeveloped lots is $42,965,000 and $17,354,000 as of June 30, 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
   June 30
2021		  December 31
2020
 Nevada   $979,640   $979,640 
 Florida    340,971    744,322 
 Ohio    10,000    10,000 
 Utah    —      1,744,292 
     $1,330,611   $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 June 30, 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 June 30,2021, the Company had 60%, 13%, 8%, 4%, 3%,2%, 2% and 2% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas,Nevada, Arizona, Colorado, Hawaii, and Louisiana, 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
June 30, 2021                    
Allowance for credit losses:                    
Beginning balance - January 1, 2021  $187,129   $1,774,796   $43,202   $2,005,127 
   Charge-offs   —      —      —      —   
   Provision   —      (104,192)   —      (104,192)
Ending balance - June 30, 2021  $187,129   $1,670,604   $43,202   $1,900,935 
                     
Ending balance: individually evaluated for impairment  $—     $192,266   $—     $192,266 
                     
Ending balance: collectively evaluated for impairment  $187,129   $1,478,338   $43,202   $1,708,669 
                     
Mortgage loans:                    
Ending balance  $47,440,235   $83,195,347   $135,728,280   $266,363,862 
                     
Ending balance: individually evaluated for impairment  $848,464   $3,676,282   $200,963   $4,725,709 
                     
Ending balance: collectively evaluated for impairment  $46,591,771   $79,519,065   $135,527,317   $261,638,153 
                     
December 31, 2020                    
Allowance for credit losses:                    
Beginning balance - January 1, 2020  $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 - December 31, 2020  $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
June 30, 2021                    
 30-59 Days Past Due  $6,000,000   $4,328,577   $494,665   $10,823,242 
 60-89 Days Past Due   554,638    3,338,670    965,186    4,858,494 
 Greater Than 90 Days (1)   599,291    2,433,426    —      3,032,717 
 In Process of Foreclosure (1)   249,173    1,242,856    200,963    1,692,992 
 Total Past Due   7,403,102    11,343,529    1,660,814    20,407,445 
 Current   40,037,133    71,851,818    134,067,466    245,956,417 
 Total Mortgage Loans   47,440,235    83,195,347    135,728,280    266,363,862 
 Allowance for Loan Losses   (187,129)   (1,670,604)   (43,202)   (1,900,935)
 Unamortized deferred loan fees, net   (83,409)   (1,160,086)   (482,223)   (1,725,718)
 Unamortized discounts, net   (295,255)   (281,947)   —      (577,202)
 Net Mortgage Loans  $46,874,442   $80,082,710   $135,202,855   $262,160,007 
                     
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
June 30, 2021                         
With no related allowance recorded:                         
   Commercial  $848,464   $848,464   $—     $958,414   $—   
   Residential   2,392,109    2,392,109    —      3,118,925    —   
   Residential construction   200,963    200,963    —      200,963    —   
                          
With an allowance recorded:                         
   Commercial  $—     $—     $—     $—     $—   
   Residential   1,284,173    1,284,173    192,266    937,257    —   
   Residential construction   —      —      —      —      —   
                          
Total:                         
   Commercial  $848,464   $848,464   $—     $958,414   $—   
   Residential   3,676,282    3,676,282    192,266    4,056,182    —   
   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
   June  
30, 2021		  December
31, 2020		  June  
30, 2021		  December
31, 2020		  June  
30, 2021		  December
31, 2020		  June  
30, 2021		  December
31, 2020
                         
 Performing   $46,591,771   $44,688,039   $79,519,065   $87,889,768   $135,527,317   $110,910,814   $261,638,153   $243,488,621 
 Non-performing    848,464    2,148,827    3,676,282    7,932,680    200,963    200,963    4,725,709    10,282,470 
                                           
 Total   $47,440,235   $46,836,866   $83,195,347   $95,822,448   $135,728,280   $111,111,777   $266,363,862   $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 $316,000 and $491,000 as of June 30, 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 June 30
2021		  As of December 31
2020
Commercial  $848,464   $2,148,827 
Residential   3,676,282    7,932,680 
Residential construction   200,963    200,963 
Total  $4,725,709   $10,282,470