SALT LAKE CITY, UTAH: Security National Financial Corporation (SNFC) (NASDAQ symbol “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 ever. I think it further important to note that even with the decrease in earnings, our ytd pre-tax return on equity is essentially 8%.
This year, nevertheless, continues to be challenging for our Company. The mortgage market nationwide continues to contract in our belief. For Security National, our Q3 dollar volume, as compared to 2016 Q3, declined 16%. But, I would note that using 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 our fixed costs that are the nature of the mortgage business.
On the life side we are experiencing 16.5% higher death claims than 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 our underwriting is good and our new business quality is good. We have experienced a general decline in investment income due to lower mortgage volumes at our mortgage segment, impairing some energy related debt we inherited in an acquisition, and amortizing financing fees received on residential construction over the loan life (less than one year) rather than recognizing them when received. Our depreciation and interest costs related to our Center 5300 development have increased since receiving the certificate of occupancy on Building 1. We continue to believe we have good market acceptance of our development but do not anticipate the first building to be leased up until well into 2018.
Our Memorial segment continues to see a 7-8% decrease in case counts versus 2016. We believe that decline is consistent with our local market since we see a higher decline in pre-need related deaths than in 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:
For the nine months ended September 30, 2017:
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 Corporation
P.O. Box 57250
Salt Lake City, Utah 84157
Phone (801) 264-1060
Fax (801) 265-9882