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Bank and Other Loans Payable
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Bank and Other Loans Payable

7) Bank and Other Loans Payable

 

Bank and other loans payable are summarized as follows:

 

   December 31 
   2021   2020 
        
         
4.27% fixed note payable in monthly installments of $53,881 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, paid in full December 2021.   -    633,890 
           
Prime rate note payable in monthly installments of $75,108 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due December 2024.   2,481,878    3,257,113 
           
4.329% fixed note payable in monthly installments of $9,775 including principal and interest, collateralized by real property with a book value of approximately $3,103,000, due September 2025.   1,825,608    1,861,920 
           
4.00% variable with LIBOR at a 1% floor and a spread at 3% rate construction loan collateralized by real property with a book value of approximately $64,730,000, due March 2024.   34,547,181    - 
           
2.5% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate construction loan payable in monthly principal payments of $113,000 plus interest, collateralized by real property with a book value of approximately $49,118,000, paid in full March 2021.   -    35,091,364 
           
3.30% fixed note payable in monthly installments of $179,562 including principal and interest, collateralized by real property with a book value of approximately $49,118,000, due April 2051.   40,090,359    - 
           
4.7865% fixed interest only note payable in monthly installments, collateralized by real property with a book value of approximately $17,301,000, due June 2028.   9,200,000    9,200,000 
           
1 month LIBOR rate plus 2.1% loan purchase agreement with a warehouse line availability of $100,000,000, matures June 2022.   66,305,025    116,598,834 
           
1 month LIBOR rate plus 2% loan purchase agreement with a warehouse line availability of $100,000,000, matures August 2022.   50,555,909    68,766,572 
           
1 month LIBOR rate plus 2.15% loan purchase agreement with a warehouse line availability of $75,000,000, matures May 2022.   43,196,986    60,715,374 
           
1 month LIBOR rate plus 2.0% loan purchase agreement with a warehouse line availability of $100,000,000, matures June 2022.   1,764,386    - 
           
1 month LIBOR rate plus 2.5% loan purchase agreement with a warehouse line availability of $5,000,000, matured August 2021.   -    317,582 
           
Other short-term borrowings (1)   1,250,000    1,250,000 
           
Finance lease liabilities   62,767    104,951 
           
Other loans payable   6,828    26,768 
Total bank and other loans   251,286,927    297,824,368 
           
Less current installments   164,747,672    284,250,996 
Bank and other loans, excluding current installments  $86,539,255   $13,573,372 

 

 
(1) Revolving Line of Credit

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

 

7) Bank and Other Loans Payable (Continued)

 

Sources of Liquidity

 

Federal Home Loan Bank Membership

 

The Federal Home Loan Banks (“the FHLBs”) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. The Company is a member of the FHLB based in Des Moines, Iowa and based in Dallas, Texas. As a member of the FHLB, the Company is required to maintain a minimum investment in capital stock of the FHLB and may pledge collateral to the bank for advances of funds to be used in its operations.

 

Federal Home Loan Bank of Des Moines

 

At December 31, 2021, the amount available for borrowings from the FHLB of Des Moines was approximately $19,259,722, compared with $39,102,336 at December 31, 2020. United States Treasury fixed maturity securities with an estimated fair value of $20,244,900 at December 31, 2021 have been pledged at the FHLB of Des Moines as collateral for current and potential borrowings compared with $40,729,400 at December 31, 2020. At December 31, 2021 and 2020, the Company had no outstanding FHLB borrowings. At December 31, 2021, the Company’s total investment in FHLB stock was $826,800 compared with $786,300 at December 31, 2020. The Company’s increased investment in FHLB stock was a result of its increase in short-term FHLB borrowings during 2021. At December 31, 2021, the Company was contingently liable under a standby letter of credit aggregating $443,758, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company’s captive insurance program.

 

Federal Home Loan Bank of Dallas

 

At December 31, 2021, the amount available for borrowings from the FHLB of Dallas was approximately $7,794,625, compared with $-0- at December 31, 2020. Mortgage-Backed fixed maturity securities with an estimated fair value of $8,774,352 at December 31, 2021 have been pledged at the FHLB of Dallas as collateral for current and potential borrowings compared with $-0- at December 31, 2020. At December 31, 2021 and 2020, the Company had no outstanding FHLB borrowings. At December 31, 2021, the Company’s total investment in FHLB stock was $1,720,300 compared with $1,720,300 at December 31, 2020.

 

Revolving Lines of Credit

 

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75%, secured by the capital stock of Security National Life and maturing December 31, 2022, renewable annually. At December 31, 2021, the Company was contingently liable under standby letters of credit aggregating $941,711, to be used as collateral for residential subdivision land developments. The standby letters of credit will draw on the line of credit if necessary. The Company does not expect any material losses to result from the issuance of the standby letters of credit. As of December 31, 2021, there were no amounts outstanding under the revolving line-of-credit.

 

The Company also has a $2,500,000 revolving line-of-credit with a bank with interest payable at the overnight LIBOR rate plus 2.25% maturing December 31, 2022. As of December 31, 2021, there was $1,250,000 outstanding under the revolving line-of-credit.

 

Debt Covenants for Mortgage Warehouse Lines of Credit

 

The Company, through its subsidiary SecurityNational Mortgage, has a $100,000,000 line of credit with Wells Fargo Bank N.A. The agreement charges interest at the 1-Month LIBOR rate plus 2.1% and matures on June 9, 2022. SecurityNational Mortgage is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, the ratio of indebtedness to adjusted tangible net worth, and the liquidity overhead coverage ratio, and a quarterly gross profit of at least $1.00.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

 

7) Bank and Other Loans Payable (Continued)

 

The Company, through its subsidiary SecurityNational Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement with the bank allows SecurityNational Mortgage to borrow up to $100,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2% and matures on August 9, 2022. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling four-quarter basis.

 

The Company through its subsidiary SecurityNational Mortgage, has a line of credit with Comerica Bank. This agreement with the bank allows SecurityNational Mortgage to borrow up to $75,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2.15% and matures on May 27, 2022. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling twelve months.

 

The Company through its subsidiary SecurityNational Mortgage, has a line of credit with U.S Bank. This agreement with the bank allows SecurityNational Mortgage to borrow up to $100,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2.0% and matures on June 4, 2022. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling twelve months.

 

The agreements for warehouse lines include cross default provisions in that a covenant violation under one agreement constitutes a covenant violation under the other agreement. As of December 31, 2021, the Company was in compliance with all debt covenants.

 

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

 

2022  $164,747,672 
2023   1,745,541 
2024   36,333,278 
2025   2,512,683 
2026   735,981 
Thereafter   45,211,772 
Total  $251,286,927 

 

Interest expense in 2021 and 2020 was $7,127,516 and $8,578,810, respectively. Interest paid in 2021 and 2020 was $7,290,867 and $8,385,270, respectively.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020