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Bank and Other Loans Payable
 12 Months Ended
Dec. 31, 2024
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, 
   2024   2023 
Total bank and other loans  $49,174,545   $50,129,255 
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 $60,420,000, due June 2032.  $49,174,545   $50,129,255 
           
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 $42,230,000, due April 2031.   37,632,943    38,478,359 
           
4.7865% fixed interest only note payable in monthly installments, collateralized by real property with a book value of approximately $16,240,000, due June 2028.   9,200,000    9,200,000 
           
1 month SOFR rate plus 2% loan purchase agreement with a warehouse line availability of $100,000,000, expired November 2024 and is no longer needed by the Company.   -    114,518 
           
1 month SOFR rate plus 2.0% loan purchase agreement with a warehouse line availability of $25,000,000, matures August 2025.   2,668,519    - 
           
1 month SOFR rate plus 2.1% loan purchase agreement with a warehouse line availability of $15,000,000, matures June 2025.   7,918,930    7,617,455 
           
Finance lease liabilities   145,167    15,550 
           
Total bank and other loans   106,740,104    105,555,137 
           
Less current installments   (12,559,420)   (9,543,052)
Bank and other loans, excluding current installments  $94,180,684   $96,012,085 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

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, 2024, the amount available for borrowings from the FHLB of Des Moines was approximately $41,235,894, compared with $77,324,238 as of December 31, 2023. United States Treasury fixed maturity securities with an estimated fair value of $54,487,812 as of December 31, 2024 have been pledged at the FHLB of Des Moines as collateral for current and potential borrowings compared with $88,400,026 at December 31, 2023. As of December 31, 2024 and 2023, the Company had no outstanding FHLB borrowings. As of December 31, 2024, the Company’s total investment in FHLB stock was $479,100 compared with $453,600 as of December 31, 2023. As of December 31, 2024, the Company was contingently liable under standby letters of credit aggregating $9,670,307. 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 $9,226,549.

 

Federal Home Loan Bank of Dallas

 

As of December 31, 2024, the amount available for borrowings from the FHLB of Dallas was approximately $8,342,442, compared with $5,104,610 as of December 31, 2023. Mortgage-Backed fixed maturity securities with an estimated fair value of $9,312,642 as of December 31, 2024 have been pledged at the FHLB of Dallas as collateral for current and potential borrowings compared with $5,503,063 at December 31, 2023. As of December 31, 2024 and 2023, the Company had no outstanding FHLB borrowings. As of December 31, 2024, the Company’s total investment in FHLB stock was $1,925,800 compared with $1,826,200 as of December 31, 2023.

 

Revolving Lines of Credit

 

The Company has a $5,000,000 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 May 15, 2025, renewable annually. As of December 31, 2024, the Company was contingently liable under standby letters of credit aggregating $622,293, to be used as collateral for residential subdivision land development and $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, 2024, there were no amounts outstanding under the revolving line-of-credit.

 

Debt Covenants for Mortgage Warehouse Lines of Credit

 

The Company, through its subsidiary SecurityNational Mortgage, has two lines of credit for the purpose of funding mortgage loans.

 

The Company’s agreement with U.S. Bank allows SecurityNational Mortgage to borrow up to $15,000,000. 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 June 20, 2025. 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.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

7) Bank and Other Loans Payable (Continued)

 

The Company’s agreement with Western Alliance Bank allows SecurityNational Mortgage to borrow up to $25,000,000. The agreement charges interest at the 1-Month SOFR rate plus 2.0% and matures on August 27, 2025. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income of at least $1.00 on a quarterly basis.

 

The agreements for both 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, 2024, SecurityNational Mortgage was not in compliance with the net income covenants under its 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 from the warehouse banks. In the unlikely event SecurityNational Mortgage is required to repay the outstanding advances of approximately $10,587,449 on the warehouse line of credit that has not provided a covenant waiver, SecurityNational Mortgage 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 done an internal analysis of the 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. 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 current 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 also 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, 2024, the Company was in compliance with all these debt covenants.

 

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

 

2025  $12,559,420 
2026   2,013,541 
2027   2,026,749 
2028   2,096,945 
2029   11,380,242 
Thereafter   76,663,207 
Total  $106,740,104 

 

Interest expense in 2024 and 2023 was $4,254,100 and $4,865,327, respectively.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023