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Bank and Other Loans Payable
 12 Months Ended
Dec. 31, 2023
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, 
   2023   2022 
    -    1,690,892 
Prime rate note payable in monthly installments of $75,108 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, paid in full in
June 2023.		  $-   $1,690,892 
           
3.85% fixed note payable in monthly installments of $243,781 including principal and interest, collateralized by real property with a book value of approximately $62,977,000, due June 2032.   50,129,255    48,613,833 
           
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 $44,811,000, due April 2031.   38,478,359    39,298,298 
           
4.7865% fixed interest only note payable in monthly installments, collateralized by real property with a book value of approximately $16,594,000, due June 2028.   9,200,000    9,200,000 
           
1 month SOFR rate plus 2.1% loan purchase agreement with a warehouse line availability of $100,000,000, expired December 2023 due to the lender exiting the market place.   -    17,978,527 
           
1 month SOFR rate plus 2% loan purchase agreement with a warehouse line availability of $100,000,000, matures November 2024.   114,518    29,768,762 
           
1 month SOFR rate plus 2.5% loan purchase agreement with a warehouse line availability of $75,000,000, expired December 2023 due to the lender exiting the market place.   -    15,131,410 
           
1 month SOFR rate plus 2.1% loan purchase agreement with a warehouse line availability of $15,000,000, matures May 2024.   7,617,455    - 
           
Finance lease liabilities   15,550    31,082 
           
Total bank and other loans   105,555,137    161,712,804 
           
Less current installments   (9,543,052)   (65,560,608)
Bank and other loans, excluding current installments  $96,012,085   $96,152,196 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2023 and 2022

 

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

 

As of December 31, 2023, the amount available for borrowings from the FHLB of Des Moines was approximately $77,324,238, compared with $80,312,445 as of December 31, 2022. United States Treasury fixed maturity securities with an estimated fair value of $88,400,026 as of December 31, 2023 have been pledged at the FHLB of Des Moines as collateral for current and potential borrowings compared with $86,338,880 at December 31, 2022. As of December 31, 2023 and 2022, the Company had no outstanding FHLB borrowings. As of December 31, 2023, the Company’s total investment in FHLB stock was $453,600 compared with $856,800 as of December 31, 2022. As of December 31, 2023, the Company was contingently liable under standby letters of credit aggregating $5,823,496. These letters of credit are to be used to cover any contingency related to additional risk assessments pertaining to the Company’s captive insurance program for $443,758 and for bonding of residential land development for $5,379,738.

 

Federal Home Loan Bank of Dallas

 

As of December 31, 2023, the amount available for borrowings from the FHLB of Dallas was approximately $5,104,610, compared with $5,719,671 as of December 31, 2022. Mortgage-Backed fixed maturity securities with an estimated fair value of $5,503,063 as of December 31, 2023 have been pledged at the FHLB of Dallas as collateral for current and potential borrowings compared with $6,696,100 at December 31, 2022. As of December 31, 2023 and 2022, the Company had no outstanding FHLB borrowings. As of December 31, 2023, the Company’s total investment in FHLB stock was $1,826,200 compared with $1,743,500 as of December 31, 2022.

 

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 plus 0.75% with a 3% prime floor, secured by the capital stock of Security National Life and maturing March 31, 2024, renewable annually. As of December 31, 2023, the Company was contingently liable under standby letters of credit aggregating $38,290, to be used as collateral for residential subdivision land development. 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, 2023, 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 daily simple SOFR plus 2.35%, which includes a mandatory .10% credit spread adjustment, maturing March 31, 2024. As of December 31, 2023, the Company was contingently liable under standby letters of credit aggregating $1,250,000, to be used as collateral for SecurityNational Mortgage’s state licensing. 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, 2023, there were no amounts outstanding under the revolving line-of-credit.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2023 and 2022

 

7) Bank and Other Loans Payable (Continued)

 

Debt Covenants for Mortgage Warehouse Lines of Credit

 

The Company, through its subsidiary SecurityNational Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement allows SecurityNational Mortgage to borrow up to $100,000,000 for the sole purpose of funding mortgage loans (the “Texas Capital Bank Warehouse Line of Credit”). The agreement charges interest at the 1-Month SOFR rate plus 2.0% and matures on November 30, 2024. 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 U.S Bank. This agreement allows SecurityNational Mortgage to borrow up to $15,000,000 for the sole purpose of funding mortgage loans (the “U.S. Bank Warehouse Line of Credit” and, together with the Texas Capital Bank Warehouse Line of Credit, the “Warehouse Lines of Credit”). The agreement charges interest at 2.10% plus the greater of (i) 0%, and (ii) the one-month forward-looking term rate based on SOFR and matures on May 26, 2024. 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 the warehouse lines of credit include cross default provisions where certain events of default under other of SecurityNational Mortgage’s obligations constitute events of default under the warehouse lines of credit. As of December 31, 2023, the Company was not in compliance with the net income covenant of the warehouse lines of credit and its operating cash flow covenant for its standby letter of credit with its primary bank. SecurityNational Mortgage has received or is in the process of receiving waivers under the warehouse lines of credit from the warehouse banks. In the unlikely event the Company is required to repay the outstanding advances of approximately $7,732,000 on the warehouse line of credit that has not provided a covenant waiver, the Company has sufficient cash and borrowing capacity on the warehouse lines of credit that have provided covenant waivers to fund its origination activities. The Company has performed an internal analysis of its funding capacities of both internal and external sources and has determined that there are sufficient funds to continue its business model. The Company continues to negotiate other warehouse lines of credit with other lenders.

 

Debt Covenants for Revolving Lines of Credit and Bank Loans

 

The Company has debt covenants on its revolving lines of credit and is required to comply with minimum operating cash flow ratios and minimum net worth for each of its business segments. The Company also has debt covenants for one of its loans on real estate for a minimum consolidated operating cash flow ratio, minimum liquidity, and consolidated net worth. In addition to these financial debt covenants, the company is required to provide segment specific financial statements and building specific financial statements on all bank loans. As of December 31, 2023, the Company was in compliance with all these debt covenants.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2023 and 2022

 

7) Bank and Other Loans Payable (Continued)

 

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

 

2024  $9,543,052 
2025   1,881,631 
2026   1,952,430 
2027   2,026,547 
2028   11,296,737 
Thereafter   78,854,740 
Total  $105,555,137 

 

Interest expense in 2023 and 2022 was $4,865,327 and $7,830,443, respectively.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2023 and 2022