Security National Financial Corporation Reports Financial Results for the Year Ended December 31, 2016
April 03 2017 - 9:30AM
Security National Financial Corporation (SNFC) (NASDAQ:SNFCA)
announced financial results for the year ended December 31, 2016.
For the twelve months ended December 31, 2016,
SNFC’s after-tax earnings from operations increased 5.9% from
$13,479,000 in 2015 to $14,280,000 in 2016, on an 8% increase in
revenues to $307,208,000.
Scott Quist, Chairman of the Board, President
and Chief Executive Officer of SNFC, said, “Even though we lost
some earnings increase momentum in the 4th quarter due to the
post-election rapid rise in interest rates, 2016 was a very solid
year for our Company. 2016 was the second-best year in
company history for after-tax earnings, is the first year we have
topped $300,000,000 in annual revenue, our return on equity topped
15%, we accomplished the acquisition of First Guaranty Insurance
Company, we settled a longstanding dispute with the Department of
Justice relating to mortgage loans originated prior to 2008, and we
settled two suits involving the bankrupt Lehman Brothers.
Ignoring realized gains our operating earnings increased 11% over
2015.”
Mr. Quist went on to say, “Looking at our Life
Segment, per the table below, profitability decreased 9% year over
year. That is not the full story. Removing realized gains for
comparison purposes, on an operations basis our pre-tax profit
actually increased 28% on a 10% revenue increase. First-year
life insurance sales continue to be robust with a 15% increase in
first-year sales as measured by premium volume and a 21% increase
as measured by application count.
“As alluded to, the post-election rapid rise in
interest rates hurt our Mortgage Segment profitability. Rapid
rises in interest rates are difficult to hedge against because the
rise in rates changes the loan origination to closing pull through
metrics. Essentially, loans that are locked at the lower
interest rates close at a higher than anticipated rate, and
therefore not hedged, thereby causing losses. I think it fair
to say that industry wide there were several mortgage companies
that were thrown into a loss position due to the rise in
rates. While our Mortgage Segment did suffer in the 4th
quarter, we still were profitable for the quarter, and
profitability for the year essentially equaled 2015’s, which I took
as a victory given the circumstances. For the year, revenue
increased 7.3%. We continue to believe that our emphasis on
purchase related loans is the more sustainable strategy and that
our realtor and builder based marketing models are providing
admirable results.
“As has been noted in many of our filings, the
operating results of our Death Care Segment are difficult to
analyze given the REO rental income and depreciation that is
included in its statements. We have put much of our REO into
that segment to take advantage of its property management
expertise. Referring now to only the operational results of
our Death Care Segment for 2016, we improved profitability 35% on
basically a 6% revenue increase, and EBITDA as a percentage of
gross revenue increased to over 15%. Our preneed cemetery
sales, which are a primary profit driver, showed significant
improvement, particularly in the 4th quarter, and I am quite
optimistic that preneed cemetery sales will improve even more in
the future.”
Lastly, Mr. Quist said, “I would note that,
using the SEC disclosure criteria, $100 invested in our stock at
12-31-2011 would have grown 507% to $507.00 as of 12-31-2016,
versus $100 invested in the S&P 500 index which only would have
grown 78% to $178.00 over the same time period.”
SNFC has three business segments. The
following table shows the revenues and earnings before taxes for
the twelve months ended December 31, 2016, as compared to 2015, for
each of the three business segments:
|
Revenues |
|
Earnings before Taxes |
|
|
|
2016 |
|
|
2015 |
|
|
|
|
2016 |
|
|
2015 |
|
|
|
Life
Insurance |
$ |
95,605,000 |
|
$ |
86,925,000 |
|
10.0 |
% |
|
$ |
7,704,000 |
|
$ |
8,465,000 |
|
(9.0 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cemeteries/Mortuaries |
$ |
12,880,000 |
|
$ |
12,487,000 |
|
3.1 |
% |
|
$ |
1,219,000 |
|
$ |
914,000 |
|
33.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages |
$ |
198,723,000 |
|
$ |
185,152,000 |
|
7.3 |
% |
|
$ |
11,817,000 |
|
$ |
11,846,000 |
|
(0.2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
307,208,000 |
|
$ |
284,564,000 |
|
8.0 |
% |
|
$ |
20,740,000 |
|
$ |
21,225,000 |
|
(2.3 |
%) |
|
Net earnings per common share was $0.94 for the twelve months
ended December 31, 2016, compared to net earnings of $0.90 per
share for the prior year, as adjusted for the effect of annual
stock dividends. Book value per common share was $8.54 as of
December 31, 2016, compared to $8.01 as of December 31,
2015.
The Company has two classes of common stock
outstanding, Class A and Class C. There were 15,017,113 Class
A equivalent shares outstanding as of December 31, 2016.
If there are any questions, please contact Mr.
Garrett S. Sill, Mr. Brian Nelsen or Mr. Scott Quist at:
Security National Financial CorporationP.O. Box
57250Salt Lake City, Utah 84157Phone (801) 264-1060Fax (801)
265-9882
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