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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value Assets and Liabilities Measured on a Recurring Basis

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the condensed consolidated balance sheet at September 30, 2021.

 Schedule of Fair Value Assets and Liabilities Measured on a Recurring Basis

		Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturity securities available for sale		$	264,844,942			$	—			$	262,794,121			$	2,050,821
Equity securities			10,729,744				10,729,744				—				—
Loans held for sale			312,655,843				—				—				312,655,843
Restricted assets (1)			1,663,903				—				1,663,903				—
Restricted assets (2)			2,932,266				2,932,266				—				—
Cemetery perpetual care trust investments (1)			786,250				—				786,250				—
Cemetery perpetual care trust investments (2)			2,387,408				2,387,408				—				—
Derivatives - loan commitments (3)			10,396,178				—				—				10,396,178
Total assets accounted for at fair value on a recurring basis		$	606,396,534			$	16,049,418			$	265,244,274			$	325,102,842
Liabilities accounted for at fair value on a recurring basis
Derivatives - call options (4)		$	(16,943	)		$	(16,943	)		$	—			$	—
Derivatives – put options (4)			(23,631	)			(23,631	)			—				—
Derivatives - loan commitments (4)			(816,661	)			—				—				(816,661	)
Total liabilities accounted for at fair value on a recurring basis		$	(857,235	)		$	(40,574	)		$	—			$	(816,661	)

(1)	Fixed maturity securities available for sale
(2)	Equity securities
(3)	Included in other assets on the consolidated balance sheets
(4)	Included in other liabilities and accrued expenses on the consolidated balance sheets

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2021 (Unaudited)

8) Fair Value of Financial Instruments (Continued)

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the condensed consolidated balance sheet at December 31, 2020.

		Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturity securities available for sale		$	294,656,679			$	—			$	292,455,504			$	2,201,175
Equity securities			11,324,239				11,324,239				—				—
Loans held for sale			422,772,418				—				—				422,772,418
Restricted assets (1)			1,473,637				—				1,473,637				—
Restricted assets (2)			2,515,778				2,515,778				—				—
Cemetery perpetual care trust investments (1)			747,767				—				747,767				—
Cemetery perpetual care trust investments (2)			2,062,303				2,062,303				—				—
Derivatives - loan commitments (3)			12,592,672				—				—				12,592,672
Total assets accounted for at fair value on a recurring basis		$	748,145,493			$	15,902,320			$	294,676,908			$	437,566,265
Liabilities accounted for at fair value on a recurring basis
Derivatives - call options (4)		$	(43,097	)		$	(43,097	)		$	—			$	—
Derivatives - loan commitments (4)			(2,464,062	)			—				—				(2,464,062	)
Total liabilities accounted for at fair value on a recurring basis		$	(2,507,159	)		$	(43,097	)		$	—			$	(2,464,062	)

(1)	Fixed maturity securities available for sale
(2)	Equity securities
(3)	Included in other assets on the consolidated balance sheets
(4)	Included in other liabilities and accrued expenses on the consolidated balance sheets

Assets and Liabilities Measured at Fair Value on A Recurring Basis

For Level 3 assets and liabilities measured at fair value on a recurring basis as of September 30, 2021, the significant unobservable inputs used in the fair value measurements were as follows:

 Assets and Liabilities Measured at Fair Value on A Recurring Basis

								Significant		Range of Inputs
		Fair Value at				Valuation		Unobservable		Minimum				Maximum				Weighted
		9/30/2021				Technique		Input(s)		Value				Value				Average
Loans held for sale		$	312,655,843			Market approach		Investor contract pricing as a percentage of unpaid principal balance			95.0	%			107.0	%			100.0	%
Derivatives - loan commitments (net)			9,579,517			Market approach		Pull-through rate			61.0	%			92.0	%			82.0	%
								Initial-Value			N/A				N/A				N/A
								Servicing			0 bps				148 bps				62 bps
Fixed maturity securities available for sale			2,050,821			Broker quotes		Pricing quotes		$	90.83			$	111.11			$	107.56

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2020, the significant unobservable inputs used in the fair value measurements were as follows:

								Significant		Range of Inputs
		Fair Value at				Valuation		Unobservable		Minimum				Maximum				Weighted
		12/31/2020				Technique		Input(s)		Value				Value				Average
Loans held for sale		$	422,772,418			Market approach		Investor contract pricing as a percentage of unpaid principal balance			99.0	%			110.0	%			104.0	%
Derivatives - loan commitments (net)			10,128,610			Market approach		Pull-through rate			52.0	%			92.0	%			81.0	%
								Initial-Value			N/A				N/A				N/A
								Servicing			0 bps				184 bps				58 bps
Fixed maturity securities available for sale			2,201,175			Broker quotes		Pricing quotes		$	90.83			$	119.33			$	113.47

Schedule of Changes in the Consolidated Balance Sheet Line Items Measured Using Level 3 Inputs

Following is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the periods presented:

 Schedule of Changes in the Consolidated Balance Sheet Line Items Measured Using Level 3 Inputs

		Net Loan Commitments				Loans Held for Sale				Fixed Maturity Securities Available for Sale
Balance - December 31, 2020		$	10,128,610			$	422,772,418			$	2,201,175
Originations and purchases			—				4,243,072,600				—
Sales, maturities and paydowns			—				(4,484,170,804	)			(33,950	)
Transfer to mortgage loans held for investment			—				(201,951	)			—
Total gains (losses):
Included in earnings			(549,093	)(1)			131,183,580	(1)			2,729	(2)
Included in other comprehensive income			—				—				(119,133	)
Balance – September 30, 2021		$	9,579,517			$	312,655,843			$	2,050,821

(1)	As a component of Mortgage fee income on the condensed consolidated statements of earnings
(2)	As a component of Net investment income on the condensed consolidated statements of earnings

Following is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the periods presented:

		Net Loan Commitments				Loans Held for Sale				Fixed Maturity Securities Available for Sale
Balance - December 31, 2019		$	2,491,233			$	213,457,632			$	3,216,382
Originations and purchases			—				3,824,329,264				-
Sales, maturities and paydowns			—				(3,709,992,155	)			(1,031,500	)
Transfer to mortgage loans held for investment			—				(9,170,610	)			—
Total gains (losses):
Included in earnings			12,454,218	(1)			127,254,848	(1)			2,532	(2)
Included in other comprehensive income			—				—				102,739
Balance - September 30, 2020		$	14,945,451			$	445,878,979			$	2,290,153

(1) As a component of Mortgage fee income on the condensed consolidated statements of earnings

(2) As a component of Net investment income on the condensed consolidated statements of earnings

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2021 (Unaudited)

8) Fair Value of Financial Instruments (Continued)

Following is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the periods presented:

		Net Loan Commitments				Loans Held for Sale				Fixed Maturity Securities Available for Sale
Balance - June 30, 2021		$	9,960,213			$	296,728,086			$	2,180,828
Originations and purchases			—				1,432,842,093				—
Sales, maturities and paydowns			—				(1,459,143,727	)			(11,550	)
Transfer to mortgage loans held for investment			—				—				—
Total gains (losses):
Included in earnings			(380,696	)(1)			42,229,391				928	(2)
Included in other comprehensive income			—				—				(119,385	)
Balance - September 30, 2021		$	9,579,517			$	312,655,843			$	2,050,821

(1)	As a component of Mortgage fee income on the condensed consolidated statements of earnings
(2)	As a component of Net investment income on the condensed consolidated statements of earnings

Following is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the periods presented:

		Net Loan Commitments				Loans Held for Sale				Fixed Maturity Securities Available for Sale
Balance - June 30, 2020		$	11,044,365			$	356,949,958			$	2,221,392
Originations and purchases			—				1,719,281,234				—
Sales, maturities and paydowns			—				(1,692,015,364	)			(10,700	)
Transfer to mortgage loans held for investment			—				(236,934	)			—
Total gains (losses):
Included in earnings			3,901,086	(1)			61,900,085	(1)			860	(2)
Included in other comprehensive income			—				—				78,601
Balance - September 30, 2020		$	14,945,451			$	445,878,979			$	2,290,153

(1)	As a component of Mortgage fee income on the condensed consolidated statements of earnings
(2)	As a component of Net investment income on the condensed consolidated statements of earnings

Schedule of Fair Value Assets Measured on a Nonrecurring Basis

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the condensed consolidated balance sheet at September 30, 2021.

 Schedule of Fair Value Assets Measured on a Nonrecurring Basis

		Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a nonrecurring basis
Impaired mortgage loans held for investment		$	770,140			$	—			$	—			$	770,140
Impaired real estate held for sale			390,000				—				—				390,000
Total assets accounted for at fair value on a nonrecurring basis		$	1,160,140			$	—			$	—			$	1,160,140

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the condensed consolidated balance sheet at December 31, 2020.

		Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a nonrecurring basis
Impaired mortgage loans held for investment		$	1,297,356			$	—			$	—			$	1,297,356
Impaired real estate held for sale			4,249,000				—				—				4,249,000
Total assets accounted for at fair value on a nonrecurring basis		$	5,546,356			$	—			$	—			$	5,546,356

Schedule of Financial Instruments Carried at Other Than Fair Value

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of September 30, 2021:

 Schedule of Financial Instruments Carried at Other Than Fair Value

		Carrying Value				Level 1				Level 2				Level 3				Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential		$	87,090,816			$	—			$	—			$	90,792,471			$	90,792,471
Residential construction			168,696,882				—				—				168,696,882				168,696,882
Commercial			51,602,783				—				—				51,318,799				51,318,799
Mortgage loans held for investment, net		$	307,390,481			$	—			$	—			$	310,808,152			$	310,808,152
Policy loans			13,699,414				—				—				13,699,414				13,699,414
Insurance assignments, net (1)			51,622,313				—				—				51,622,313				51,622,313
Restricted assets (2)			2,848,029				—				—				2,848,029				2,848,029
Cemetery perpetual care trust investments (2)			652,575				—				—				652,575				652,575
Mortgage servicing rights, net			50,360,805				—				—				63,885,183				63,885,183
Liabilities
Bank and other loans payable		$	(263,186,923	)		$	—			$	—			$	(263,186,923	)		$	(263,186,923	)
Policyholder account balances (3)			(43,058,156	)			—				—				(42,144,499	)			(42,144,499	)
Future policy benefits - annuities (3)			(108,252,697	)			—				—				(112,157,034	)			(112,157,034	)

(1)	Included in other investments and policy loans
(2)	Mortgage loans held for investment
(3)	Included in future policy benefits and unpaid claims

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2020:

		Carrying Value				Level 1				Level 2				Level 3				Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential		$	92,757,613			$	—			$	—			$	100,384,283			$	100,384,283
Residential construction			110,849,864				—				—				110,849,864				110,849,864
Commercial			45,736,459				—				—				45,259,425				45,259,425
Mortgage loans held for investment, net		$	249,343,936			$	—			$	—			$	256,493,572			$	256,493,572
Policy loans			14,171,589				—				—				14,171,589				14,171,589
Insurance assignments, net (1)			51,585,656				—				—				51,585,656				51,585,656
Restricted assets (2)			3,317,877				—				—				3,317,877				3,317,877
Cemetery perpetual care trust investments (2)			1,468,600				—				—				1,468,600				1,468,600
Mortgage servicing rights, net			35,210,516				—				—				38,702,358				38,702,358
Liabilities
Bank and other loans payable		$	(297,824,368	)		$	—			$	—			$	(297,824,368	)		$	(297,824,368	)
Policyholder account balances (3)			(44,026,809	)			—				—				(42,220,725	)			(42,220,725	)
Future policy benefits - annuities (3)			(106,522,113	)			—				—				(112,354,186	)			(112,354,186	)

(1)	Included in other investments and policy loans on the condensed consolidated balance sheets
(2)	Mortgage loans held for investment
(3)	Included in future policy benefits and unpaid claims on the condensed consolidated balance sheets

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Schedule of Changes in the Consolidated Balance Sheet Line Items Measured Using Level 3 Inputs [Table Text Block]

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Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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Tabular disclosure of liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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