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Security National Financial Corp. Message Board

  • dalton880 dalton880 Apr 13, 2013 12:08 PM Flag

    SNFCA downslide

    Investors have sold off this stock for almost three straight months, but why ? I mean the company has been doing so well, and has increased revenues and earnings now for several qtrs sequentially. The answer IMO lies with the Wells Fargo and JP Morgan Mar qtr reports yesterday showing slowing revenues and earnings from their mortgage banking sector. Wells Fargo said that their mortgage banking sector has slowed for two qtrs in a row, and that trend could continue as the bank's pipeline of applications for home loans that have not yet closed was $74 billion at the end of the first quarter, down from $81 billion at the end of the fourth quarter.

    So what does this mean for SNFCA ? Investors obviously feel it's negative for SNFCA, but here's some facts for SNFCA that don't coincide with the slowdown Wells Fargo is seeing. While Wells Fargo decreased revenues from originations from the Sept qtr 2012 to the Dec qtr, SNFCA increased revenues and earnings substantially... For the Sept & Dec qtr respectively, SNFCA posted revenues from their mortgage division of $44.698M and $48.309M, with earnings before taxess of $5.286M and $6.931M. Important to note also is that they are adding offices and hiring like crazy lately, and a whopping 57% of their loans are now purchase related. This means less reliance on refis and more on a continued housing recovery for their growth in mortgage origination revenues and earnings.

    So now the big question. Can SNFCA continue to grow its mortgage division, while banks like Wells Fargo are sighting at least a short term slowdown ? Well SNFCA sure bucked the trend so far, and if they continue to post on par or greater revenues and earnings as in the last couple qtrs, the stock will fly again. With the stock now having priced in much gloom and doom, the decison to hold or buy at present prices is an easy one.

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    • look at unxl lol

    • Dalton, I like the company, they are doing great things. I think one reason why it has traded back down here is that the market does not think that the mortgage side can continue to make the earnings it has. A lot of people are saying the spread has tightened on mortgage re-fi and the boom from the favorable spreads are over. If you put the cemetary side at break even and the life insurance side stabilized at $4mill earnings, thats .37EPS...the wildcard is the mortgage long can they continue to make that type of money and in a stabilized environment what will the normal earnings from the mortgage side be?

      I would love to load the boat, but I do not have any mathematical or logical answers to my questions, and I'm not good enough at this to dig deeper to run theory structures. But I think that's the concern.

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