Security National Financial Corporation Reports Financial Results For the Third Quarter of 2017
15 November 2017 - 5:30AM
Security National Financial Corporation (SNFC) (NASDAQ:SNFCA)
announced financial results for the quarter ended September 30,
2017.
For the three months ended September 30, 2017,
SNFC’s pre-tax earnings from operations decreased from $6,574,000
in 2016 to $1,138,000 in 2017, on a 13% decrease in revenues to
$71,972,000. After tax earnings also decreased from
$4,183,000 in 2016 to $1,097,000 in 2017.
Scott Quist, Chairman of the Board, and Chief Executive Officer
of the Company, commenting on the current earnings, said:
“While we are not pleased with any year over year decline in
profitability, I would note that this quarter we surpassed a
significant financial milestone with our assets growing to over $1
billion for the first time. Furthermore, I think it's important to
note that even with the decrease in earnings, our ytd pre-tax
return on equity is essentially 8%.
“Nevertheless, this year continues to be challenging for our
Company. To our understanding, the mortgage market has
continued to contract nationwide. For Security National, our
2017 Q3 dollar volume, as compared to 2016 Q3, declined 16%.
But, I would note that using the 2017 Q3 reports of major regional
publicly-traded banks as a comparison, one reported a volume
decrease of 22%, another reported a decrease of 48%, and a third
announced it was exiting the business altogether, presumably due to
market conditions. Our goal is absolutely to grow
profitability, but we are experiencing margin compression and it is
taking time to adjust many of the fixed costs that are the nature
of the mortgage business.
“On the life insurance side, we are experiencing 16.5% higher
death claims than in 2016. Our analysis shows those claims
primarily coming from business older than 5 years, and some older
than 10 years. Thus, we continue to believe that our
underwriting and new business quality are good. We have
experienced a general decline in investment income due to the
reduced mortgage volumes in our mortgage segment, the impairment of
some energy related bonds that we inherited through a business
acquisition, and the amortization of financing fees received on
residential construction loans over the life of the loan (less than
one year) rather than recognizing them when received.
Additionally, our depreciation and interest costs related to
the Center 53 development have increased since receiving our
certificate of occupancy for Building 1. We continue to
believe that there is good market acceptance of our Center 53
development, but do not anticipate the first building to be leased
up until well into 2018.
“Our cemetery and mortuary segment continues to see a 7 to 8%
decrease in case counts versus 2016. We believe that this
decline is consistent with our local market because we see a higher
decline in the pre-need related deaths than in the at need related
deaths. Our sales force has worked hard to make up for the
revenue decline attributable to the decreased case counts by
increasing pre-need sales.”
SNFC has three business segments. The following
table shows the revenues and earnings before taxes for the three
months ended September 30, 2017, as compared to 2016 for each of
the segments:
|
|
|
|
|
Revenues |
|
Earnings before Taxes |
|
2017 |
|
2016 |
|
% |
|
2017 |
|
|
2016 |
|
% |
Life
Insurance |
$ |
25,230,000 |
|
$ |
24,972,000 |
|
1.0% |
|
$ |
523,000 |
|
|
$ |
2,140,000 |
|
(75.6%) |
|
|
|
|
|
|
|
|
|
|
|
|
Cemeteries/Mortuaries |
|
2,988,000 |
|
|
2,901,000 |
|
3.0% |
|
|
237,000 |
|
|
|
55,000 |
|
330.9% |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages |
|
43,754,000 |
|
|
55,076,000 |
|
(20.6%) |
|
|
378,000 |
|
|
|
4,379,000 |
|
(91.4%) |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
71,972,000 |
|
$ |
82,949,000 |
|
(13.2%) |
|
$ |
1,138,000 |
|
|
$ |
6,574,000 |
|
(82.7%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2017:
|
|
Revenues |
|
Earnings before Taxes |
|
2017 |
|
2016 |
|
% |
|
2017 |
|
2016 |
|
% |
Life
Insurance |
$ |
77,112,000 |
|
$ |
70,617,000 |
|
9.2% |
|
$ |
4,825,000 |
|
$ |
5,785,000 |
|
(16.6%) |
|
|
|
|
|
|
|
|
|
|
|
|
Cemeteries/Mortuaries |
|
9,907,000 |
|
|
10,045,000 |
|
(1.4%) |
|
|
1,332,000 |
|
|
1,284,000 |
|
3.7% |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages |
|
128,954,000 |
|
|
151,830,000 |
|
(15.1%) |
|
|
1,873,000 |
|
|
11,561,000 |
|
(83.8%) |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
215,973,000 |
|
$ |
232,492,000 |
|
(7.1%) |
|
$ |
8,030,000 |
|
$ |
18,630,000 |
|
(56.9%) |
|
|
|
|
|
|
|
|
|
|
|
|
The net gain per common share was $.07 for the three months
ended September 30, 2017, compared to a net gain of $.27 per share
for the same period last year, as adjusted for the effect of annual
stock dividends. Book value per common share was $9.13 as of
September 30, 2017, compared to $8.83 as of December 31,
2016. The Company has two classes of common stock
outstanding, Class A and Class C. As of September 30, 2017,
there were 15,265,500 shares outstanding.
If there are any questions, please contact Mr.
Scott M. Quist or Mr. Garrett S. Sill at:
Security National Financial CorporationP.O. Box
57250Salt Lake City, Utah 84157Phone (801) 264-1060Fax (801)
265-9882
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