Security National Financial Corporation Partial Explanation of August 4, 2017 8-K
August 07 2017 - 1:16PM
In partial explanation of the August 4th 8-K regarding our
financial statements, to address speculation as to the reasons for
the 8-K and their effects, Scott Quist, President of Security
National (Nasdaq:SNFCA) said, "I think it is important for the
investment community and our shareholders to understand what
accounting changes are being made. While there are several
items that will be addressed, the two major items are the
re-characterization of the Company’s repurchase warehouse
agreements, and the release of a deferred tax valuation
allowance.
"The company’s outside warehouse lines are, in legal terms,
repurchase agreements. We have always treated those
agreements as off balance sheet transactions, given their terms
where a financed loan is sold then repurchased. The legal
terms of those agreements have not changed. The best
accounting practice for such agreements has changed and now appears
that such agreements should be carried on balance sheet rather than
off balance sheet. The repurchase agreements have always been
disclosed in the notes to our financial statement.
Essentially, we will be increasing assets for loans held for sale,
and correspondingly, increasing liabilities for amounts carried
under those agreements. In general terms this is not a
revaluation of assets previously shown on our balance sheet, but
instead is a re-characterization of long standing existing
agreements. There are other ramifications to our derivative
income calculations when you disregard the repurchase agreement’s
terms; income will shift between periods, amongst other
impacts.
"With regards to the tax valuation allowance, I would note that
overall we do not anticipate income to decrease. Release of
the tax valuation allowance will change income between periods, and
for periods not shown in the current period financials, retained
earnings will be adjusted accordingly. As with the repurchase
agreement, the tax valuation allowance has always been disclosed in
the deferred tax section of our financial statements.
"There are several other lessor changes/reclasses that will
affect income between periods. We are working diligently to
amend our filings and thus we will not give precise numerical
guidance at this time."
If there are any questions, please contact Mr. Garrett S. Sill, Mr. Brian Nelsen or Mr. Scott Quist at:
Security National Financial Corporation
P.O. Box 57250
Salt Lake City, Utah 84157
Phone (801) 264-1060
Fax (801) 265-9882
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