• Filing Date: 2017-02-22
  • Form Type: 10-K
  • Description: Annual report
v3.6.0.2
Investments
12 Months Ended
Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]  
Investments

Note 4 — Investments

The Company holds investments in fixed-maturity securities and equity securities that are classified as available-for-sale. At December 31, 2016 and 2015, the cost or amortized cost, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale securities by security type were as follows:

 

     Cost or
Amortized
     Gross
Unrealized
     Gross
Unrealized
     Estimated
Fair
 
     Cost      Gain      Loss      Value  

As of December 31, 2016

           

Fixed-maturity securities

           

U.S. Treasury and U.S. government agencies

   $ 1,975       $ —         $ (36    $ 1,939   

Corporate bonds

     75,538         607         (1,641      74,504   

State, municipalities, and political subdivisions

     78,018         776         (488      78,306   

Exchange-traded debt

     11,463         36         (237      11,262   

Redeemable preferred stock

     237         3         (3      237   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     167,231         1,422         (2,405      166,248   

Equity securities

     47,750         5,769         (484      53,035   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 214,981       $ 7,191       $ (2,889    $ 219,283   
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2015

           

Fixed-maturity securities

           

U.S. Treasury and U.S. government agencies

   $ 108       $ 5       $ —         $ 113   

Corporate bonds

     42,560         74         (4,815      37,819   

State, municipalities, and political subdivisions

     75,812         1,632         (120      77,324   

Exchange-traded debt

     9,817         177         (565      9,429   

Redeemable preferred stock

     317         8         (1      324   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     128,614         1,896         (5,501      125,009   

Equity securities

     47,548         2,139         (1,450      48,237   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 176,162       $ 4,035       $ (6,951    $ 173,246   
  

 

 

    

 

 

    

 

 

    

 

 

 

In June 2016, the Company’s Alabama subsidiary, Homeowners Choice Assurance Company, Inc., voluntarily surrendered its certificate of authority to the Alabama Department of Insurance and formally terminated its plan to conduct business in the state of Alabama. As a result, a statutory deposit held in trust for the Treasurer of Alabama was released to the Company in July 2016. At December 31, 2015, the $113 of U.S. Treasury securities noted in the table above was held as a statutory deposit.

Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of fixed-maturity securities at December 31, 2016 and 2015 are as follows:

 

     December 31,  
     2016      2015  
            Estimated             Estimated  
     Amortized      Fair      Amortized      Fair  
     Cost      Value      Cost      Value  

Available-for-sale

           

Due in one year or less

   $ 2,656       $ 2,662       $ 3,282       $ 3,292   

Due after one year through five years

     49,915         50,023         32,833         32,651   

Due after five years through ten years

     90,360         89,332         71,120         67,113   

Due after ten years

     24,300         24,231         21,379         21,953   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 167,231       $ 166,248       $ 128,614       $ 125,009   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Sales of Available-for-Sale Securities

Proceeds received, and the gross realized gains and losses from sales of available-for-sale securities, for the years ended December 31, 2016, 2015 and 2014 were as follows:

 

            Gross
Realized
     Gross
Realized
 
     Proceeds      Gains      Losses  

Year ended December 31, 2016

        

Fixed-maturity securities

   $ 40,454       $ 604       $ (79
  

 

 

    

 

 

    

 

 

 

Equity securities

   $ 23,127       $ 2,656       $ (580
  

 

 

    

 

 

    

 

 

 

Year ended December 31, 2015

        

Fixed-maturity securities

   $ 53,711       $ 253       $ (470
  

 

 

    

 

 

    

 

 

 

Equity securities

   $ 25,695       $ 1,327       $ (1,718
  

 

 

    

 

 

    

 

 

 

Year ended December 31, 2014

        

Fixed-maturity securities

   $ 98,365       $ 4,096       $ (98
  

 

 

    

 

 

    

 

 

 

Equity securities

   $ 16,810       $ 1,372       $ (635
  

 

 

    

 

 

    

 

 

 

Other-than-temporary Impairment

The Company regularly reviews its individual investment securities for other-than-temporary impairment. The Company considers various factors in determining whether each individual security is other-than-temporarily impaired, including-

 

    the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

 

    the length of time and the extent to which the market value of the security has been below its cost or amortized cost;

 

    general market conditions and industry or sector specific factors and other qualitative factors;

 

    nonpayment by the issuer of its contractually obligated interest and principal payments; and

 

    the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

Fixed-maturity Securities

Of two fixed-maturity securities with credit related losses existing at December 31, 2015, one matured with full payment of principal and interest and one was sold due to uncertainties surrounding the issuer’s restructuring plan. Prior to sale, the sold security’s remaining $202 of impairment loss was reclassified from comprehensive income and recognized in total other-than-temporary impairment losses in the Company’s consolidated statement of income. During 2016, three additional fixed-maturity securities were considered other-than-temporarily impaired, one of which the Company intends to sell in the near future. The Company intends to hold until maturity both of the remaining two fixed-maturity securities, each considered to have credit related losses. For the year ended December 31, 2016, the Company recognized $1,565 of impairment losses in the consolidated statement of income, representing $1,335 of additional losses recorded during the period and $230 of the net change recorded in other comprehensive income.

 

At December 31, 2015, the Company held two fixed-maturity securities with credit related losses that it intended to hold until maturity. For the year ended December 31, 2015, the Company recorded $705 of impairment losses on these fixed-maturity securities, of which $111 was considered other-than-temporarily impaired due to credit related losses, with the remaining amount of $594 related to non-credit factors. For the year ended December 31, 2014, there was no other-than-temporary loss related to fixed-maturity securities. The Company did not consider any of its fixed-maturity securities to be other-than-temporarily impaired at December 31, 2014.

The following table presents a rollforward of the cumulative credit losses in other-than-temporary impairments recognized in income for available for sale fixed-maturity securities:

 

     2016      2015  

Balance at January 1

   $ 111       $ —     

Credit impairments on impaired securities

     475         111   

Additional credit impairments on previously impaired securities

     293         —     

Credit impaired security fully disposed of for which there was no prior intent or requirement to sell

     (385      —     

Reduction due to increase in expected cash flows recognized over the remaining life of the previously impaired security

     (19      —     
  

 

 

    

 

 

 

Balance at December 31

   $ 475       $ 111   
  

 

 

    

 

 

 

Equity Securities

In determining whether equity securities are other than temporarily impaired, the Company considers its intent and ability to hold a security for a period of time sufficient to allow for the recovery of cost, the length of time each security has been in an unrealized loss position, the extent of the decline and the near term prospect for recovery. At December 31, 2016, the Company had nine equity securities that were other-than-temporarily impaired. This compares to 17 equity securities and one equity security that were other-than-temporarily impaired at December 31, 2015 and 2014, respectively. The Company recognized impairment losses of $917, $4,570 and $107 in the consolidated statement of income for the years ended December 31, 2016, 2015 and 2014, respectively.

 

Securities with gross unrealized loss positions at December 31, 2016 and 2015, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:

 

     Less Than Twelve Months      Twelve Months or Longer      Total  
     Gross     Estimated      Gross     Estimated      Gross     Estimated  
     Unrealized     Fair      Unrealized     Fair      Unrealized     Fair  
     Loss     Value      Loss     Value      Loss     Value  

As of December 31, 2016

              

Fixed-maturity securities

              

U.S. Treasury and U.S. government agencies

   $ (36   $ 1,939       $ —        $ —         $ (36   $ 1,939   

Corporate bonds

     (1,546     43,859         (95     2,814         (1,641     46,673   

State, municipalities, and political subdivisions

     (441     26,029         (47     3,036         (488     29,065   

Exchange-traded debt

     (191     4,980         (46     1,954         (237     6,934   

Redeemable preferred stock

     (3     47         —          —           (3     47   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total fixed-maturity securities

     (2,217     76,854         (188     7,804         (2,405     84,658   

Equity securities

     (293     10,042         (191     3,209         (484     13,251   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total available-for-sale securities

   $ (2,510   $ 86,896       $ (379   $ 11,013       $ (2,889   $ 97,909   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

At December 31, 2016, there were 134 securities in an unrealized loss position. Of these securities, 20 securities had been in an unrealized loss position for 12 months or longer. The gross unrealized loss of corporate bonds in an unrealized loss position for twelve months or more included $76 of other-than-temporary impairment losses related to non-credit factors.

 

     Less Than Twelve Months      Twelve Months or Longer      Total  
     Gross     Estimated      Gross     Estimated      Gross     Estimated  
     Unrealized     Fair      Unrealized     Fair      Unrealized     Fair  
     Loss     Value      Loss     Value      Loss     Value  

As of December 31, 2015

              

Fixed-maturity securities

              

Corporate bonds

   $ (3,667   $ 24,196       $ (1,148   $ 3,278       $ (4,815   $ 27,474   

State, municipalities, and political subdivisions

     (107     6,587         (13     184         (120     6,771   

Exchange-traded debt

     (565     5,559         —          —           (565     5,559   

Redeemable preferred stock

     (1     129         —          —           (1     129   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total fixed-maturity securities

     (4,340     36,471         (1,161     3,462         (5,501     39,933   

Equity securities

     (1,350     15,748         (100     1,460         (1,450     17,208   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total available-for-sale securities

   $ (5,690   $ 52,219       $ (1,261   $ 4,922       $ (6,951   $ 57,141   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

At December 31, 2015, there were 101 securities in an unrealized loss position. Of these securities, 10 securities had been in an unrealized loss position for 12 months or longer. The gross unrealized loss of corporate bonds in an unrealized loss position for twelve months or more included $581 of other-than-temporary impairment losses related to non-credit factors.

Limited Partnership Investments

The Company has interests in limited partnerships that are not registered or readily tradeable on a securities exchange. These partnerships are private equity funds managed by general partners who make decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships. The following table provides information related to the Company’s investments in limited partnerships:

 

     December 31, 2016      December 31, 2015  
     Carrying      Unfunded             Carrying      Unfunded         
Investment Strategy    Value      Balance      (%)(a)      Value      Balance      (%)(a)  

Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower-middle-market companies. (b)(c)(e)

   $ 6,246       $ 6,428         16.50       $ 4,774       $ 7,888         16.50   

Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e)

     7,358         1,360         1.76         4,713         3,320         1.76   

Maximum long-term capital appreciation through long and short positions in equity and/or debt securities of publicly traded U.S. and non-U.S. issuers, derivative instruments and certain other financial instruments. (f)

     11,333         —           66.58         11,689         —           65.79   

High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(g)(h)

     4,326         5,766         0.18         2,754         7,016         0.18   
  

 

 

    

 

 

       

 

 

    

 

 

    

Total

   $ 29,263       $ 13,554          $ 23,930       $ 18,224      
  

 

 

    

 

 

       

 

 

    

 

 

    

 

(a) Represents the Company’s percentage investment in the fund at each balance sheet date.
(b) Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.
(c) Expected to have a 10-year term and the capital commitment is expected to expire on September 3, 2019.
(d) Expected to have a three-year term from the end of the capital commitment period, which is March 31, 2018.
(e) At the fund manager’s discretion, the term of the fund may be extended for up to two additional one-year periods.
(f) Withdrawal is permitted upon at least 45 days’ written notice to the general partner. In December 2016, the Company provided notice of its intent to withdraw from this fund. Such withdrawal will be effective February 15, 2017.
(g) Expected to have a 10-year term and the capital commitment is expected to expire on June 30, 2020.
(h) With the consent of a super majority, the term of the fund may be extended for up to three additional one-year periods.

The following is the aggregated summarized unaudited financial information of limited partnerships included in the investment strategy table above, which in certain cases is presented on a three-month lag due to the unavailability of information at the Company’s respective balance sheet dates. In applying the equity method of accounting, the Company uses the most recently available financial information provided by the general partner of each of these partnerships. The financial statements of these limited partnerships are audited annually.

 

     Years Ended December 31,  
     2016      2015  

Operating results:

     

Total income

   $ 310,998       $ 4,350   

Total expenses

     185,126         77,508   
  

 

 

    

 

 

 

Net income (loss)

   $ 125,872       $ (73,158
  

 

 

    

 

 

 
     December 31,  
     2016      2015  

Balance Sheet:

     

Total assets

   $ 2,956,327       $ 288,351   

Total liabilities

   $ 63,813       $ 28,105   

For the year ended December 31, 2016, the Company recognized net investment income of $1,207 for these investments. For the year ended December 31, 2015, the Company recognized net investment loss of $3,244. At December 31, 2016 and 2015, the Company’s cumulative contributed capital to the partnerships totaled $31,946 and $27,276, respectively, and the Company’s maximum exposure to loss aggregated $29,263 and $23,930, respectively. During the year ended December 31, 2016, the Company received total cash distributions of $544. There were no cash distributions received by the Company during the year ended December 31, 2015.

For the years ended December 31, 2016 and 2015, the Company recognized its share of earnings or losses based on the respective partnership’s statement of income. The carrying value of these investments approximates the amount the Company expected to recover at December 31, 2016 and 2015.

Investment in Unconsolidated Joint Venture

In 2014, Melbourne FMA, LLC, a wholly owned subsidiary, entered into an agreement with FMKT Sponsor, LLC to organize FMKT Mel JV, LLC (“FMJV”), a Florida limited liability company treated as a joint venture under U.S. GAAP to construct a retail shopping center for lease or for sale in Melbourne, Florida. Melbourne FMA and FMKT Sponsor initially contributed cash of $4,500 and $500, respectively, for equity interests in FMJV of 90% and 10%, respectively. The Company subsequently contributed additional cash of $525 to FMJV. FMJV is deemed a variable interest entity due to its lack of sufficient equity to finance its operations without direct or indirect additional financial support from parties to the joint venture. Although Melbourne FMA holds a majority interest in FMJV, certain major economic decisions specified in the agreement are not under Melbourne FMA’s control. As a result, Melbourne FMA is not the primary beneficiary and is not required to consolidate FMJV.

In addition, the agreement included FMKT Sponsor’s right of sale and first offer as well as an embedded option under which Melbourne FMA could purchase the entire interest of FMKT Sponsor. Under the right of sale and first offer, Melbourne FMA could either choose to purchase the interest of FMKT Sponsor in the developed property or approve the sale of the developed property to a third party buyer. Either party could initiate these provisions after the expiration of a restricted period.

In January 2016, FMJV sold a portion of its outparcel land for gross proceeds of $829, of which $515 was used to repay a portion of the construction loan obtained for this project. FMJV recognized a $404 gain on the outparcel sale of which $383 was allocated to the Company in accordance with the profit allocation specified in the operating agreement. On December 15, 2016, FMJV distributed its entire equity interest in FMKT Mel Manager, LLC (“FMKT MGA”), its wholly owned subsidiary, to Melbourne FMA and FMKT Sponsor, each of which received 90% and 10%, respectively. In addition to operating a retail shopping center business, FMKT MGA owns land which includes two outparcels. Melbourne FMA accounted for this transaction as a business step acquisition using the fair value method and, as a result, recognized a $4,005 gain on remeasurement of previously held interest. The gain represents the difference between the fair value of the 90% equity interest and its carrying value under the equity method. The fair value of the equity interest is comprised of the fair value of FMKT MGA’s underlying assets primarily determined by an independent appraiser offset by the fair value of liabilities assumed on the date of distribution. Inputs used by the appraiser included, but were not limited to, information about market and surrounding environments, demographics, and the sale or rent of similar types of property within the vicinity. Due to their short-term nature, the carrying value of current assets and assumed liabilities, including a variable interest rate revolving credit line, approximated fair value. See Pineda Landings - Melbourne, Florida in Note 6 — “Business Acquisitions” for additional information. Subsequent to this distribution, both limited liability company members agreed to amend the operating agreement and remove the provisions with regard to Melbourne FMA’s purchase option as described above. As a result, Melbourne FMA does not have the purchase option with respect to certain outparcels that continue to be owned by the limited liability company.

At December 31, 2016 and 2015, the Company’s maximum exposure to loss relating to the variable interest entity was $2,102 and $4,787, respectively, representing the carrying value of the investment. At December 31, 2016 and 2015, there were undistributed losses of $147 and $148, respectively, from this equity method investment, the amounts of which were included in the Company’s consolidated retained income. The limited liability company members received no cash distributions during 2016, 2015 and 2014. The following tables provide FMJV’s summarized unaudited financial results and the unaudited financial positions:

 

     Years Ended December 31,  
     2016      2015      2014  

Operating results:

        

Total revenues

   $ —         $ 118       $ —     

Total expenses

     —           257         25   
     

 

 

    

 

 

 

Net income (loss)

   $ —         $ (139    $ (25
     

 

 

    

 

 

 

The Company’s share of net loss(a)

   $ —         $ (125    $ (23

 

(a) Included in net investment income in the Company’s consolidated statements of income.
     December 31,  
     2016      2015  

Balance Sheet:

     

Construction in progress - real estate

   $ 334       $ 277   

Property and equipment, net

     1,654         11,806   

Cash

     179         570   

Accounts receivable

     —           3   

Other

     180         1,008   
  

 

 

    

 

 

 

Total assets

   $ 2,347       $ 13,664   
  

 

 

    

 

 

 

Accounts payable

   $ 11       $ 125   

Construction loan

     —           8,063   

Other liabilities

     —           157   

Members’ capital

     2,336         5,319   
  

 

 

    

 

 

 

Total liabilities and members’ capital

   $ 2,347       $ 13,664   
  

 

 

    

 

 

 

Investment in unconsolidated joint venture, at equity*

   $ 2,102       $ 4,787   

 

* Included the 90% share of FMKT Mel JV’s operating results.

After the aforementioned distribution, FMJV’s assets at December 31, 2016 included primarily outparcels for lease or sale which has increased in value since the retail shopping center was completed. The Company determined that there was no impairment loss associated with these assets for the year ended December 31, 2016. The 2015 and 2014 results reflected expenses incurred during the initial development stage. Because the Company expected to incur such expenses during development of the property and prior to its occupancy, the Company determined there was no impairment loss for the years ended December 31, 2015 and 2014.

Real Estate Investments

Real estate investments include office and retail space that is leased to tenants, wet and dry boat storage, one restaurant, and fuel services with respect to marina clients and recreational boaters. There was one ADC Arrangement which terminated August 16, 2016. Real estate investments consist of the following as of December 31, 2016 and 2015:

 

     December 31,  
     2016      2015  

Land

   $ 17,592       $ 13,134   

Land improvements

     9,336         1,505   

Building

     16,154         3,116   

Tenant and leasehold improvements

     872         —     

Construction in progress*

     3,404         2,906   

Other

     2,683         1,523   
  

 

 

    

 

 

 

Total, at cost

     50,041         22,184   

Less: accumulated depreciation and amortization

     (1,955      (1,430
  

 

 

    

 

 

 

Real estate, net

     48,086         20,754   

ADC Arrangement classified as real estate investment

     —           10,200   
  

 

 

    

 

 

 

Real estate investments

   $ 48,086       $ 30,954   
  

 

 

    

 

 

 

 

* The project is being developed by the Company’s consolidated variable interest entity.

During 2016, the Company acquired properties through two business acquisitions. See Note 6 — “Business Acquisitions” for additional information. Depreciation and amortization expense related to real estate investments was $531, $370 and $402, respectively, for the years ended December 31, 2016, 2015 and 2014.

ADC Arrangement

In June 2014, the Company’s wholly owned subsidiary, Greenleaf Capital, LLC, entered into the ADC Arrangement under which it agreed to provide financing up to a maximum of $9,785 for the acquisition, development and construction of a retail shopping center and appurtenant facilities. The loan amount was later increased from $9,785 to $10,200. Greenleaf Capital had an option to purchase the property upon the completion of the project with tenant rental commitments for at least 90% of the rentable space being secured. The purchase price would be calculated at maturity of the loan using a predetermined capitalization rate and the projected net operating income of the developed property. The loan had an initial term of 24 months and was extended until August 2016. The loan bore a fixed annual interest rate of 6% due monthly in arrears.

Under this ADC Arrangement, Greenleaf Capital provided substantially all funds necessary to complete the development and Greenleaf Capital would receive the entire residual profit of the developed property if it exercised the purchase option. Based on the characteristics of this ADC Arrangement, which were similar to those of an investment, combined with the expected residual profit being greater than 50%, the arrangement was accounted for and reported in the balance sheet at December 31, 2015 as a real estate investment.

Because of the purchase option and the substantial financial support provided by Greenleaf Capital, the developer, who had no equity interest in the property, was a variable interest entity. However, Greenleaf Capital’s involvement was solely as the lender on the mortgage loan with protective rights as the lender. Greenleaf Capital did not have power to direct the activities that most significantly impact economic performance of the variable interest entity. As a result, Greenleaf Capital was not the primary beneficiary and was not required to consolidate the variable interest entity. At December 31, 2015, the Company’s maximum exposure to loss relating to the variable interest entity was $10,200 representing the carrying value of the ADC Arrangement. There was no credit loss allowance established as of December 31, 2015 as management believed the credit risk associated with the ADC Arrangement was mitigated by the collateral used to secure the loan.

On August 16, 2016, the Company exercised the purchase option and acquired the retail shopping center and its appurtenant facilities. The transaction was accounted for as a business acquisition. See Sorrento Hills Village - Sorrento, Florida in Note 6 — “Business Acquisitions” for additional information. In addition, the Company received $10,200 plus accrued investment income of $74 in full settlement of the note receivable associated with the ADC Arrangement.

Consolidated Variable Interest Entity

The Company has an ongoing real estate development project in Riverview, Florida through a limited liability company treated under U.S. GAAP as a joint venture in which the Company’s subsidiary has a controlling financial interest and, as a result, it is the primary beneficiary. In addition, the Company is the sole source of funding for the development project. The following table summarizes the assets and liabilities related to this variable interest entity which are included in the accompanying consolidated balance sheets.

 

     December 31,  
     2016      2015  

Cash and cash equivalents

   $ 65       $ 57   

Construction in progress included in real estate investments

   $ 3,404       $ 2,906   

Accrued expenses

   $ 68       $ 21   

Net Investment Income

Net investment income (loss), by source, is summarized as follows:

 

     Years Ended December 31,  
     2016      2015      2014  

Available-for-sale securities:

        

Fixed-maturity securities

   $ 4,641       $ 3,946       $ 3,343   

Equity securities

     3,452         3,710         2,364   

Investment expense

     (651      (673      (436

Limited partnership investments

     1,207         (3,244      (90

Real estate investments

     (592      (343      (932

Loss from unconsolidated joint venture

     —           (125      (23

Cash and cash equivalents

     984         650         662   

Other

     46         57         —     
  

 

 

    

 

 

    

 

 

 

Net investment income

   $ 9,087       $ 3,978       $ 4,888   
  

 

 

    

 

 

    

 

 

 

At December 31, 2016, $203,139 or 72.6% of the Company’s cash and cash equivalents were deposited at three national banks and included $28,431 in three custodial accounts. At December 31, 2015, $150,048 or 56.0% of the Company’s cash and cash equivalents were deposited at three national banks and included $65,291 in three custodial accounts. At December 31, 2016 and 2015, the Company’s cash deposits at any one bank generally exceed the Federal Deposit Insurance Corporation’s $250 coverage limit for insured deposit accounts.