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Security National Financial Corp. Reports Operating Results (10-Q)

November 13, 2009 | About:
10qk

10qk

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Security National Financial Corp. (SNFCA) filed Quarterly Report for the period ended 2009-09-30.

SECURITY NATIONAL FIN L CORP. is a holding company whose subsidiaries are engaged in the business of selling and servicing selected lines of life, accident and health insurance and annuity products, and in selling cemetery and funeral products and services. Co. is licensed to sell insurance in Washington, Oregon, Idaho, Montana, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico, Texas, North Dakota, Nebraska, Kansas, Oklahoma, Alaska, and Hawaii. Security National Financial Corp. has a market cap of $67.5 million; its shares were traded at around $3.945 with a P/E ratio of 8.9 and P/S ratio of 0.3. Security National Financial Corp. had an annual average earning growth of 31.9% over the past 5 years.

Highlight of Business Operations:

As of September 30, 2009, the Company s long term mortgage loan portfolio had $18,295,000 in unpaid principal with delinquencies more than 90 days. Of this amount, $11,105,000 was in foreclosure proceedings. The Company has not received any interest income on the $18,295,000 in mortgage loans with delinquencies more than 90 days. During the three and nine months ended September 30, 2009, the Company increased its allowance for mortgage losses by $1,066,136 and $1,908,473, respectively, which allowance was charged to loan loss expense and included in selling general and administrative expenses for the period. The allowance for mortgage loan losses as of September 30, 2009 was $6,249,000.

Total revenues decreased by $4,429,000, or 8.3%, to $48,655,000 for the three months ended September 30, 2009, from $53,084,000 for the three months ended September 30, 2008. Contributing to this decrease in total revenues was a $4,022,000 decrease in mortgage fee income, a $1,988,000 decrease in investment income, and a $466,000 decrease in net mortuary and cemetery sales. This decrease in total revenues was partially offset by a $295,000 increase in insurance premiums and other considerations, a $1,566,000 increase in realized gains on investments and other assets, and a $186,000 increase in other revenues.

Selling, general and administrative expenses decreased by $4,227,000, or 10.2%, to $37,175,000 for the three months ended September 30, 2009, from $41,402,000 for the comparable period in 2008. Salaries increased by $391,000 from $6,638,000 in 2008 to $7,029 000 in 2009, primarily due to merit increases in salaries of existing employees. Other expenses increased by $1,043,000 from $7,911,000 in 2008 to $8,954,000 in 2009 due to increased processing fees, loan costs, and foreclosure expenses. Provision for loan losses increased by $1,232,000 from $2,258,000 in 2008 to $3,490,000 in 2009 due primarily to increased loan loss reserve and loan allowance balances at SecurityNational Mortgage Company. Commission expenses decreased by $6,893,000, from $24,595,000 in the third quarter of 2008 to $17,702,000 in the third quarter of 2009, due to a reduction in mortgage loan origination costs made by SecurityNational Mortgage, a decrease in sales at the cemetery operations, and a decrease in life insurance renewal commissions during the third quarter of 2009.

Total revenues decreased by $551,000, or 0.3%, to $166,157,000 for the nine months ended September 30, 2009, from $166,708,000 for the nine months ended September 30, 2008. Contributing to this decrease in total revenues was a decrease of $5,437,000 in investment income and a $1,074,000 decrease in net mortuary and cemetery sales. This decrease in total revenues was partially offset by a $2,182,000 increase in mortgage fee income, a $1,538,000 increase in insurance premiums and other considerations, a $1,819,000 increase in realized gains on investments and other assets, and a $421,000 increase in other revenues.

Selling, general and administrative expenses decreased by $3,984,000, or 3.2%, to $121,275,000 for the nine months ended September 30, 2009, from $125,259,000 for the comparable period in 2008. This decrease was the result of a reduction in commission expenses of $15,110,000, from $74,258,000 in the first nine months of 2008 to $59,148,000 in the first nine months of 2009, due to reduced mortgage loan origination costs made by SecurityNational Mortgage, a decrease in sales at the cemetery operations, and a decrease in life insurance renewal commissions during the first nine months of 2009. This decrease was partially offset by an increase in salaries of $1,103,000 from $19,553,000 in 2008 to $20,656,000 in 2009, primarily due to merit increases in salaries of existing employees. Other expenses increased by $3,385,000 from $24,161,000 in 2008 to $27,546,000 in 2009 due to increased processing fees, loan costs and foreclosure expenses. Provision for loan losses increased by $6,638,000 from $7,287,000 in 2008 to $13,925,000 in 2009 due primarily to increased loan loss reserve and loan allowance balances at SecurityNational Mortgage Company.

For the nine months ended September 30, 2009 and 2008, total comprehensive income amounted to $7,557,000 and $3,795,000, respectively. This increase of $3,762,000 was primarily the result of a $3,678,000 increase in net income and a $1,515,000 increase in unrealized gains in securities available for sale, which was partially offset by a $1,431,000 decrease in derivative gains related to mortgage loans.

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