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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission File Number: 0-9341
SECURITY NATIONAL FINANCIAL CORPORATION
Exact Name of Registrant.
UTAH 87-0345941
- ----------------------------- ------------------
(State or other jurisdiction IRS Identification
of incorporation or organization) Number
5300 South 360 West, Salt Lake City, Utah 84123
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code (801) 264-1060
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Sections 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES XX NO
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, net of treasury stock, as of
the close of the period covered by this report.
Class A Common Stock, $2.00 par value 3,256,905
- ------------------------------------- -----------------
Title of Class Number of Shares
Outstanding as of
June 30, 1996
Class C Common Stock, $.40 par value 2,354,791
- ------------------------------------- ------------------
Title of Class Number of Shares
Outstanding as of
June 30, 1996
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SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
FORM 10Q
QUARTER ENDED JUNE 30, 1996
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
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Page No.
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Item 1. Financial Statements
Consolidated Statements of Earnings - Six
months ended June 30, 1996 and 1995, and
three months ended June 30, 1996 and 1995. . . . . . 3
Consolidated Balance Sheets - June 30,
1996 and December 31, 1995 . . . . . . . . . . . . 4-5
Consolidated Statements of Cash Flows -
Six months ended June 30, 1996 and
June 30, 1995. . . . . . . . . . . . . . . . . . . 6-7
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . 8
Item 2 Management's Discussion and Analysis
of Summary of Earnings and
Financial Condition. . . . . . . . . . . . . . . .8-13
PART II - OTHER INFORMATION
Other Information. . . . . . . . . . . . . . . . . .14
Signature Page . . . . . . . . . . . . . . . . . . .15
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SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Six Months Ended June 30, Three Months Ended June 30,
1996 1995 1996 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ------------ ----------- ------------
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REVENUES:
Insurance premiums
and other
considerations $ 2,972,085 $ 2,953,272 $1,445,455 $1,459,922
Net investment income 3,865,189 3,215,504 1,942,126 1,535,925
Net mortuary and
cemetery sales 4,294,942 3,859,447 2,153,830 2,310,127
Realized gains on
investments and
other assets (26,024) 544 (31,922) (970)
Mortgage fee income 4,481,704 1,194,823 1,962,344 878,394
Other 42,957 38,355 11,429 (68,322)
------------ ----------- ---------- ----------
Total Revenues $15,630,853 $11,261,945 $7,483,262 $6,115,076
BENEFITS AND EXPENSES:
Death benefits 1,022,159 1,034,684 524,800 521,513
Surrenders and other
policy benefits 2,121,683 1,240,360 1,147,589 519,148
Increase in future
policy benefits 133,006 695,941 (243,325) 373,509
Amortization of
deferred policy
acquisition costs
and cost of insurance
acquired 645,122 501,126 400,855 271,243
General and administrative
expenses:
Commissions 3,005,000 1,349,070 1,420,000 866,857
Salaries 2,402,790 1,591,656 1,319,971 849,996
Other 3,673,707 2,143,731 1,683,929 1,043,657
Interest expense 763,632 505,972 359,148 286,205
Cost of goods and
services sold of the
mortuaries and
cemeteries 1,200,305 1,130,901 611,569 669,756
----------- ----------- ----------- ----------
Total benefits
and expenses 14,967,404 10,193,441 7,224,536 5,401,884
----------- ----------- ----------- ----------
Earnings before income
taxes 663,449 1,068,504 258,726 713,192
Income tax expense (186,045) (273,900) (72,552) (181,935)
----------- ----------- ----------- ----------
Net earnings $ 477,404 $ 794,604 $ 186,174 $ 531,257
=========== =========== =========== ==========
Earnings per share $0.13 $0.24 $0.05 $0.16
===== ===== ===== =====
Weighted average
outstanding common
shares 3,816,832 3,322,310 3,816,832 3,322,310
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
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SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1996 December 31,
(Unaudited) 1995
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Assets:
Investments:
Fixed maturity securities
held to maturity, at
amortized cost $48,037,286 $51,143,361
Equity securities
available for sale, at market 4,416,859 4,556,565
Mortgage loans on real estate 11,890,019 10,434,844
Real estate, net of accumulated
depreciation 7,594,326 7,669,296
Policy loans 3,018,479 3,007,596
Other loans 348,515 294,165
Short-term investments 3,860,863 722,593
Total insurance related
investments 79,166,347 77,828,420
Restricted assets of cemeteries
and mortuaries 3,144,120 2,986,658
Cash 6,078,173 7,710,155
Receivables:
Trade contracts 5,288,049 5,552,888
Mortgage loans sold to investors 8,903,190 19,839,657
Receivable from agents 547,320 471,937
Other 561,227 623,628
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Total receivables 15,299,786 26,488,110
Allowance for doubtful accounts (2,100,110) (2,311,450)
------------ ------------
Net receivables 13,199,676 24,176,660
Land and improvements held for sale 8,041,832 7,568,016
Accrued investment income 1,023,805 1,113,945
Deferred policy acquisition costs 4,387,677 4,509,974
Property, plant and equipment, net 6,412,656 6,432,615
Cost of insurance acquired 3,884,391 4,007,804
Excess of cost over net assets
of acquired subsidiaries 1,414,870 1,461,025
Other 523,035 417,409
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Total Assets $127,276,582 $138,212,681
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</TABLE>
See accompanying notes to consolidated financial statements.
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SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
June 30, 1996 December 31,
(Unaudited) 1995
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Liabilities:
- ------------
Future life, annuity, and other
benefits $77,392,496 $76,867,685
Line of credit of financing
of mortgage loans 3,167,994 14,468,354
Bank loans payable 7,126,581 7,485,391
Notes and contracts payable 4,890,439 5,175,317
Estimated future costs of
pre-need sales 6,013,792 6,065,875
Payable to endowment care fund 146,744 12,520
Accounts payable 1,265,057 1,193,859
Other liabilities and
accrued expenses 2,130,416 2,402,842
Income taxes 2,808,119 2,622,245
------------ ------------
Total Liabilities 104,941,638 116,294,088
Stockholders' Equity:
- ---------------------
Common stock:
Class A: $2 par value,
authorized 10,000,000
shares, issued 3,857,519
shares in 1996 and 3,819,415
shares in 1995 7,715,038 7,638,830
Class C: $0.40 par value,
authorized 7,500,000 shares,
issued 2,380,286 shares
in 1996 and 2,388,040 shares
in 1995 952,114 955,216
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Total common stock 8,667,152 8,594,046
Additional paid-in capital 7,967,851 7,879,578
Unrealized appreciation of
investments 262,197 484,629
Retained earnings 7,237,376 6,759,972
Treasury stock at cost
(600,614 Class A shares
and 25,495 Class C shares
in 1996; 600,614 Class A
shares and 25,495 Class C
shares in 1995, held by
affiliated companies) (1,799,632) (1,799,632)
------------ -----------
Total Stockholders' Equity 22,334,944 21,918,593
------------ -----------
Total Liabilities and
Stockholders' Equity $127,276,582 $138,212,681
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
1996 1995
(Unaudited) (Unaudited)
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Cash flows from operating activities:
Net earnings $477,404 794,604
Adjustments to reconcile net earnings
to net cash (used in) provided by
operating activities:
Realized gains on investments
and other assets 20,226 (544)
Depreciation 717,017 356,098
Provision for losses on accounts
and loans receivable (211,340) 145,875
Amortization of goodwill, premiums,
and discounts 3,364 (868,795)
Income taxes 185,874 273,900
Policy acquisition costs deferred (399,394) (335,291)
Policy acquisition costs amortized 521,691 501,126
Cost of insurance acquired amortized 123,413 26,370
Change in assets and liabilities:
Land and improvements held for sale (473,816) (1,199,233)
Future life and other benefits 1,435,139 1,256,738
Receivables for mortgage loans sold 10,936,467 --
Other operating assets and liabilities 100,347 608,655
------------ ------------
Net cash provided by operating activities 13,436,392 1,559,503
Cash flows from investing activities:
Securities held to maturity:
Purchase of fixed maturity securities (300,752) --
Calls and maturities - fixed
maturity securities 3,426,352 778,053
Securities available for sale:
Purchases - equity securities (5,980) 66,250
Proceeds from sale of equity
securities 101,570 (66,250)
Purchases of short-term investments (5,176,198) (1,114,955)
Sales of short-term investments 2,037,928 3,708,180
Purchases of restricted assets (157,462) (323,839)
Mortgage, policy, and other loans made (2,161,220) (15,080,828)
Payments received for mortgage, policy,
and other loans 657,634 9,826,077
Purchases of property, plant, and
equipment (547,921) (1,866,999)
Purchases of real estate (87,949) (331,624)
Purchase of subsidiary net of cash
acquired -- (342,089)
----------- ------------
Net cash used in investing activitie (2,213,998) (4,748,024)
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SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Six Months Ended June 30,
1996 1995
(Unaudited) (Unaudited)
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Cash flows from financing activities:
Annuity receipts 1,551,084 1,054,465
Annuity withdrawals (2,461,412) (1,108,291)
Repayment of bank loans and
notes and contracts payable (686,177) (676,502)
Proceeds from borrowings on bank
loans and notes and contracts payable 42,489 2,971,405
Net decrease in line of credit for
financing of mortgage loans (11,300,360) (25,652)
------------ ------------
Net cash (used in) provided by
financing activities (12,854,376) 2,215,425
------------ ------------
Net decrease in cash (1,631,982) (973,096)
Cash at beginning of year 7,710,155 2,060,876
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Cash at end of year $ 6,078,173 $ 1,087,780
============= ============
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SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1996 and 1995
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
six months ended June 30, 1996, are not necessarily indicative
of the results that may be expected for the year ending
December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto for
the year ended December 31, 1995, included in the Company's
Annual Report on Form 10-K (file number 0-9341).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
Results of Operations
Overview
The Company's operations over the last three years generally
reflect four trends or events which the Company expects to
continue: (i) increased attention to "niche" insurance
products, such as the Company's funeral plan policies,
annuities, and limited pay accident policies; (ii) decreased
general and administrative costs as a percentage of revenue
through efforts to reduce operating costs and through
eliminating unnecessary duplication of costs at acquired
companies; (iii) emphasis on high margin cemetery and mortuary
business; and (iv) capitalizing on the strong economy in the
intermountain west by originating and refinancing mortgage
loans.
Three Months Ended June 30, 1996 as Compared to Three Months
Ended June 30, 1995
Total revenues have increased by $1,368,000 (22%), from
$6,115,000 for the three months ended June 30, 1995 as
compared to $7,483,000 for the three months ended June 30,
1996. Contributing to this increase in total revenues was a
$1,084,000 increase in mortgage fee income and a $406,000
increase in net investment income. Also, mortuary and
cemetery sales have decreased by $156,000, from $2,310,000 for
the second quarter of 1995 to $2,154,000 for the second
quarter of 1996. This decrease in mortuary and cemetery sales
was attributable to a decline in sales in the Arizona mortuary
division and in the Utah cemetery sales.
Net investment income increased $406,000 from $1,536,000 for
the second quarter of 1995 to $1,942,000 for the second
quarter of 1996. This increase was attributable to a larger
investment base due to the acquisition of Civil Service
Employees Life Insurance Company ("CSE Life") and the
Company's emphasis on investing its cash and short term
investments in higher yielding investments, particularly
warehouse lending for mortgage loans.
Mortgage fee income increased by $1,084,000, from $878,000 for
the second quarter of 1995 to $1,962,000 for the second
quarter of 1996. This increase was the result of a strong
economy and increased demand for housing in the intermountain
area which has created activity for loan originations.
Total benefits and expenses were $5,402,000 for the second
quarter of 1995, which were 88% of the total revenues of the
Company, as compared to $7,225,000 or 97% of the total revenue
of the Company for the second quarter of 1996.
Surrenders and other policy benefits increased by $628,000,
from $519,000 for the second quarter of 1995 to $1,147,000 for
the second quarter of 1996. This increase was primarily due
to the increase in the withdrawals of annuities purchased from
Capital Investors Life Insurance Company ("Capital Investors
Life") and the additional policies as the result of the
acquisition of CSE Life at December 31, 1995. Increase in
future policy benefits decreased by $617,000, from $374,000
for the second quarter of 1995 to a negative $243,000 for the
second quarter of 1996, due to the release of reserves which
offset the increase in withdrawals of Capital Investors Life
and the increased number of policies resulting from the
acquisition of CSE Life.
Amortization of deferred policy acquisition costs increased by
$130,000, from $271,000 for the second quarter of 1995 to
$401,000 for the second quarter of 1996. This increase was
primarily due to the increased number of policies resulting
from the acquisition of CSE Life.
<PAGE>
General and administrative expenses increased by $1,663,000,
from $2,761,000 for the second quarter of 1995 to $4,424,000
for the second quarter of 1996. This increase was due to the
increase in commission expenses, salaries and other expenses.
Commission expense increased by $553,000, from $867,000 for
the second quarter of 1995 to $1,420,000 for the second
quarter of 1996. This increase was due to a greater number of
mortgage loans processed by Security National Mortgage
Company. Salaries increased by $470,000, from $850,000 for
the second quarter of 1995 to $1,320,000 for the second
quarter of 1996. This increase was attributable to the
increased number of employees resulting from the increased
business operations of Security National Mortgage Company and
the acquisition of CSE Life at December 31, 1995.
Other expenses have increased by $640,000, from $1,044,000 for
the second quarter of 1995 to $1,684,000 for the second
quarter of 1996. This increase was primarily due to the
increased business operations of Security National Mortgage
and the increased maintenance costs for the Company's
facilities.
Interest expenses increased by $73,000, from $286,000 for the
second quarter of 1995 to $359,000 for the second quarter of
1996. This increase was primarily due to the greater number
of loans advanced through warehouse lending at Security
National Mortgage Company and the increased indebtedness
resulting from the acquisition of CSE Life.
Cost of goods and services sold for the mortuaries and cemeteries
decreased by $58,000, from $670,000 for the second
quarter of 1995 to $612,000 for the second quarter of 1996.
This decrease was consistent with the decrease in mortuary and
cemetery sales.
Six Months Ended June 30, 1996 as Compared to Six Months Ended
June 30, 1995
Total revenues increased by $4,369,000, or 39%, from
$11,262,000 for the six months ended June 30, 1995 as compared
to $15,631,000 for the six months ended June 30, 1996.
Contributing to this increase in total revenues was a $650,000
increase in net investment income, a $435,000 increase in net
mortuary and cemetery sales and a $3,287,000 increase in
mortgage fee income.
Net investment income increased by $650,000, from $3,216,000
for the six months ended June 30, 1995 to $3,866,000 for the
six months ended June 30, 1996. This increase was
attributable to two factors. First, the Company's emphasis on
investing its cash and short-term investments in higher
yielding investments, particularly warehouse lending for
mortgage loans. Second, the increase was attributable to a
larger investment base due to the acquisition of CSE Life.
Net mortuary and cemetery sales increased by $435,000, from
$3,859,000 as of the six months ended June 30, 1995 to
$4,295,000 for the six months ended June 30, 1996. This
increase was primarily related to the acquisition of Greer-
Wilson Funeral Home. The acquisition of Greer-Wilson Funeral
Home was completed in April 1995, thereby providing additional
income for only three months for the period ending June 30,
1995 and six months of additional income for the period ending
June 30, 1996.
Mortgage fee income increased by $3,287,000, from $1,195,000
for the six months ended June 30, 1995 to $4,482,000 for the
six months ended June 30, 1996. This increase was the result
of the strong economy and increased demand for housing in the
intermountain area, which has created activity for loan
originations.
Total benefits and expenses were $10,193,000 for the six
months ended June 30, 1995, which was 91% of the total
revenues of the Company as compared to $14,967,000 for the six
months ended June 30, 1996, or 96% of the total revenues of
the Company.
Death benefits, surrenders and other policyholder benefits and
increase in future policy benefits increased in the aggregate
by $306,000, from $2,971,000 for the six months ended June 30,
1995 to $3,277,000 for the six months ended June 30, 1996.
This increase was primarily due to the increase in the
withdrawals of annuities purchased from Capital Investors Life
and the additional policies as the result of CSE Life.
Amortization of deferred policy acquisition costs increased by
$144,000, from $501,000 for the six months ended June 30, 1995
to $645,000 for the six months ended June 30, 1996. This
increase was primarily due to the increased number of policies
resulting from the acquisition of CSE Life.
General and administrative expenses increased by $3,997,000,
from $5,084,000 for the six months ended June 30, 1995 to
$9,081,000 for the six months ended June 30, 1996. This
increase was due to increases in commissions, salaries and
other expenses.
Commission expenses increased by $1,656,000, from $1,349,000,
for the six months ended June 30, 1995 to $3,005,000 for the
six months ended June 30, 1996. This increase was primarily
due to a greater number of mortgage loans processed by
Security National Mortgage Company. Salaries increased by
$811,000, from $1,592,000 for the six months ended June 30,
1995 to $2,403,000 for the six months ended June 30, 1996.
This increase was attributable to the increased number of
employees resulting from increased business operations of
Security National Mortgage Company and the acquisition of CSE
Life. Also contributing to this increase was the additional
three months of salaries resulting from the acquisition of
Greer-Wilson Funeral Home as of April 1995.
Other expenses increased by $1,530,000, from $2,144,000 for
the six months ended June 30, 1995 to $3,674,000 for the six
months ended June 30, 1996. This increase was primarily due
to the increased business operations of Security National
Mortgage and increased maintenance costs for the Company's
facilities.
Interest expense increased by $258,000, from $506,000 for the
six months ended June 30, 1995 to $764,000 for the six months
ended June 30, 1996. This increase was primarily due to the
increased activity in the warehouse lending of Security
National Mortgage Company and the increased indebtedness
resulting from the acquisitions of CSE Life and Greer-Wilson
Funeral Home.
Cost of goods and services sold of the mortuaries and
cemeteries increased by $69,000, from $1,131,000 for the six
months ended June 30, 1995 to $1,200,000 for the six months
ended June 30, 1996. This increase was consistent with the
increase in mortuary and cemetery sales.
Liquidity and Capital Resources
The Company's life insurance subsidiary and cemetery and
mortuary subsidiaries realize cash flow from premiums,
contract payments and sales on personal services rendered for
cemetery and mortuary business, from interest and dividends on
invested assets, and from the proceeds from the maturity of
held-to-maturity investments, or sale of other investments.
The mortgage subsidiary realizes cash flow from fees generated
by originating and refinancing mortgage loans and interest
earned on mortgages sold to investors. The Company considers
these sources of cash flow to be adequate to fund future
policyholder and cemetery and mortuary liabilities which
generally are long-term and adequate to pay current
policyholder claims, annuity payments, expenses on the
issuance of new policies, the maintenance of existing
policies, debt service, and to meet operating expenses.
<PAGE>
The Company attempts to match the duration of invested assets
with its policyholder and cemetery and mortuary liabilities.
The Company may sell investments other than those held to
maturity in the portfolio to help in this timing; however, to
date, that has not been necessary. The Company purchases
short-term investments on a temporary basis to meet the
expectations of short-term requirements of the Company's
products. The Company's investment philosophy is intended to
provide a rate of return which will persist during the
expected duration of policyholder and cemetery and mortuary
liabilities regardless of future interest rate movements.
The Company's investment policy is to invest predominately in
fixed maturity securities and warehouse mortgage loans on a
short-term basis before selling the loans to investors in
accordance with the requirements and laws governing the life
insurance subsidiary. Bonds owned by the insurance subsidiary
amounted to $48,037,000, at amortized cost as of June 30, 1996
compared to $51,143,000 at amortized cost as of December 31,
1995. This represents 61% of the total insurance related
investments in 1996 as compared to 66% in 1995. Generally all
bonds owned by the life insurance subsidiary are rated by the
National Association of Insurance Commissioners (NAIC). Under
this rating system, there are six categories used for rating
bonds. At June 30, 1996, 3.8% ($1,846,000) and at December
31, 1995, 3.6% ($1,851,000) of the Company's total investment
in bonds were invested in bonds in rating categories three
through six which are considered non-investment grade.
Based on preliminary information, the Company plans to hold
its fixed income securities, including high-yield securities,
in its portfolio to maturity. Business conditions, however,
may develop in the future which may indicate a need for a
higher level of liquidity in the investment portfolio. In
that event the Company believes it could sell short-term
investment grade securities before liquidating high-yielding
longer term securities.
The Company is subject to risk based capital guidelines
established by statutory regulators requiring minimum capital
levels based on the perceived risk of assets, liabilities,
disintermediation, and business risk. At December 31, 1995
and 1994, the life subsidiary exceeded the regulatory
criteria.
Stockholders' equity as a percent of assets is one measure of
capital strength. At June 30, 1996 the Company's ratio
increased to 17% up from 16% at December 31, 1995. The
mortgage company acts as a warehouse by financing mortgage
loans through a warehouse line of credit, and then selling
them to investors within 45 days, and repaying the debt. This
transaction results in a receivable for mortgage loans sold to
investors which are offset by a warehouse line of credit.
Computations without this transaction results in the Company's
debt to total assets at 10% as of June 30, 1996 and 11% at
December 31, 1995 and the Company's equity to total assets to
19% as of June 30, 1996 and 18% at December 31, 1995.
In February 1995, the Company purchased approximately 100
acres of real property (the "property") located in San Diego,
California; approximately 35 acres of which will be used for
the development of a cemetery. The purchase price of the
property was $1,162,000, $100,000 of which was paid in cash
and the balance of $1,062,000, together with interest thereon
<PAGE>
at the rate of nine percent per annum, to be paid in 12
monthly payments of $5,000, thereafter in equal monthly
payments of $10,000; however, interest does not accrue on any
part of the principal balance until February 3, 1996. A
principal payment of $100,000 was made in December 1995. The
Company has obtained approval from the federal government and
the California Cemetery Board to operate a cemetery on the
property. The development of the cemetery will be financed
internally. Initial development of 35 acres to operate as a
cemetery is estimated to cost approximately $560,000.
In March 1995, the Company purchased 97,800 shares of common
stock of Greer-Wilson Funeral Home, Inc., ("Greer-Wilson")
representing 97.8% of the total issued and outstanding shares
of common stock of Greer-Wilson for a total consideration of
$1,218,000, which included a note to the former owners for
$588,000.
In November 1995, the Company entered into a purchase sale
agreement with Myers Mortuary for the sale of the Company's
65% interest in Evergreen Memorial Partnership and the
Company's 50% interest in Evergreen Management Corporation.
As consideration for the sale of these entities, Myers
Mortuary paid $746,123 in satisfaction of the indebtedness
that Evergreen Memorial Partnership owes to the Company.
Myers Mortuary has also agreed to pay $200,000 to the Company
in four equal annual installments of $50,000, beginning as of
October 31, 1996. In addition, Myers Mortuary will pay a
$10.00 royalty to the Company for each adult space sold in
Evergreen Memorial Park over the next ten years, beginning as
of January 1, 1996.
In December 1995, the Company purchased all of the outstanding
shares of common stock of Civil Service Employees Life
Insurance Company from Civil Service Employees Insurance
Company for a total cost of $5,200,000, which included a
promissory note in the amount of $1,063,000. Interest on the
promissory note accrues at 7% per annum. Principal payments
are to be made in seven equal annual installments of $151,857,
beginning on December 29, 1996. Accrued interest will be
payable annually beginning on December 29, 1996.
At June 30, 1996, $9,928,000 of the Company's consolidated
stockholders' equity represents the statutory stockholders'
equity of the Company's insurance subsidiary. The life
insurance subsidiary cannot pay a dividend to its parent
company without the approval of insurance regulatory
authorities.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Part II Other Information:
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
The Company filed a report on Form 8-K with the
Securities and Exchange Commission on January 16,
1996. The report supplied information under
Section 2 thereof, captioned "Acquisition or
Disposition of Assets," which was related to the
acquisition of Civil Service Employees Life
Insurance Company.
(a)(3) Exhibits
</TABLE>
The following Exhibits are filed herewith pursuant to Rule
601 of Regulation S-K or are incorporated by reference to
previous filings.
Exhibit
Table No Document
(a)(3) Exhibits:
EX-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
REGISTRANT
SECURITY NATIONAL FINANCIAL CORPORATION
Registrant
DATED: August 19, 1996 By: George R. Quist,
Chairman of the Board,
President and Chief Executive
Officer (Principal Executive
Officer)
DATED: August 19, 1996 By: Scott M. Quist
First Vice President, General
Counsel and Treasurer
(Principal Financial and
Accounting Officer)<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 48,037,286
<DEBT-MARKET-VALUE> 0
<EQUITIES> 4,416,859
<MORTGAGE> 11,890,019
<REAL-ESTATE> 7,594,326
<TOTAL-INVEST> 79,166,347
<CASH> 6,078,173
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 4,387,677
<TOTAL-ASSETS> 127,276,582
<POLICY-LOSSES> 74,978,090
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 555,978
<POLICY-HOLDER-FUNDS> 1,858,428
<NOTES-PAYABLE> 15,185,014
<COMMON> 8,667,152
0
0
<OTHER-SE> 13,667,792
<TOTAL-LIABILITY-AND-EQUITY> 127,276,582
2,972,085
<INVESTMENT-INCOME> 3,865,189
<INVESTMENT-GAINS> (26,024)
<OTHER-INCOME> 8,819,603
<BENEFITS> 3,276,848
<UNDERWRITING-AMORTIZATION> 645,122
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 663,449
<INCOME-TAX> 186,045
<INCOME-CONTINUING> 477,404
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 477,404
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
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