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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2022

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 March 31, 2022.

 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		$	272,213,552			$	-			$	270,201,780			$	2,011,772
Equity securities			11,511,141				11,511,141				-				-
Loans held for sale			234,012,872				-				-				234,012,872
Restricted assets (1)			1,525,252				-				1,525,252				-
Restricted assets (2)			3,727,966				3,727,966				-				-
Cemetery perpetual care trust investments (1)	(1)		745,798				-				745,798				-
Cemetery perpetual care trust investments (2)	(2)		2,665,306				2,665,306				-				-
Derivatives - loan commitments (3)			11,282,703				-				-				11,282,703
Total assets accounted for at fair value on a recurring basis		$	537,684,590			$	17,904,413			$	272,472,830			$	247,307,347
Liabilities accounted for at fair value on a  recurring basis
Derivatives - call options (4)		$	(24,129	)		$	(24,129	)		$	-			$	-
Derivatives - put options (4)			(29,351	)			(29,351	)			-				-
Derivatives - loan commitments (4)			(1,591,817	)			-				-				(1,591,817	)
Total liabilities accounted for at fair value on a recurring basis		$	(1,645,297	)		$	(53,480	)		$	-			$	(1,591,817	)

(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

March 31, 2022 (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, 2021.

		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		$	259,287,603			$	-			$	257,264,255			$	2,023,348
Equity securities			11,596,414				11,596,414				-				-
Loans held for sale			302,776,827				-				-				302,776,827
Restricted assets (1)			1,601,688				-				1,601,688				-
Restricted assets (2)			3,603,822				3,603,822				-				-
Cemetery perpetual care trust investments (1)	(1)		784,765				-				784,765				-
Cemetery perpetual care trust investments (2)	(2)		3,302,480				3,302,480				-				-
Derivatives - loan commitments (3)			8,563,410				-				-				8,563,410
Total assets accounted for at fair value on a recurring basis		$	591,517,009			$	18,502,716			$	259,650,708			$	313,363,585
Liabilities accounted for at fair value on a  recurring basis
Derivatives - call options (4)		$	(50,936	)		$	(50,936	)		$	-			$	-
Derivatives - put options (4)			(4,493	)			(4,493	)			-				-
Derivatives - loan commitments (4)			(1,547,895	)			-				-				(1,547,895	)
Total liabilities accounted for at fair value on a recurring basis		$	(1,603,324	)		$	(55,429	)		$	-			$	(1,547,895	)

(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 March 31, 2022, 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
		3/31/2022				Technique		Input(s)		Value				Value				Average
Loans held for sale		$	234,012,872			Market approach		Investor contract pricing as a percentage of unpaid principal balance			91.0	%			105.6	%			100.3	%
Derivatives - loan commitments (net)			9,690,886			Market approach		Pull-through rate			67.4	%			95.0	%			83.2	%
								Initial-Value			N/A				N/A				N/A
								Servicing			0 bps				244 bps				70 bps
Fixed maturity securities available for sale			2,011,772			Broker quotes		Pricing quotes		$	96.87			$	111.11			$	106.79

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2021, 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
		12/31/2021				Technique		Input(s)		Value				Value				Average
Loans held for sale		$	302,776,827			Market approach		Investor contract pricing as a percentage of unpaid principal balance			95.0	%			109.0	%			103.0	%
Derivatives - loan commitments (net)			7,015,515			Market approach		Pull-through rate			66.0	%			95.0	%			81.0	%
								Initial-Value			N/A				N/A				N/A
								Servicing			0 bps				148 bps				61 bps
Fixed maturity securities available for sale			2,023,348			Broker quotes		Pricing quotes		$	96.87			$	111.11			$	106.73

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

The following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the three months ending March 31, 2022:

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, 2021		$	7,015,515			$	302,776,827			$	2,023,348
Originations and purchases			-				1,039,216,582				-
Sales, maturities and paydowns			-				(1,132,085,830	)			(11,950	)
Transfer to mortgage loans held for investment			-
Total gains (losses):
Included in earnings			2,675,371	(1)			24,105,293	(1)			961	(2)
Included in other comprehensive income			-				-				(587	)
Balance - March 31, 2022		$	9,690,886			$	234,012,872			$	2,011,772

(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

The following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the three months ending March 31, 2021:

		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			-				1,449,841,009				-
Sales, maturities and paydowns			-				(1,614,880,058	)			(11,100	)
Transfer to mortgage loans held for investment			-				(201,951	)			-
Total gains (losses):
Included in earnings			314,466	(1)			46,498,954	(1)			893	(2)
Included in other comprehensive income			-				-				125
Balance - March 31, 2021		$	10,443,076			$	304,030,372			$	2,191,093

(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 table 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 March 31, 2022.

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			718,284				-				-				718,284
Impaired real estate held for sale			191,781				-				-				191,781
Total assets accounted for at fair value on a nonrecurring basis		$	910,065			$	-			$	-			$	910,065

The following table 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, 2021.

		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		$	851,903			$	-			$	-			$	851,903
Impaired real estate held for sale			2,000,000				-				-				2,000,000
Total assets accounted for at fair value on a nonrecurring basis		$	2,851,903			$	-			$	-			$	2,851,903

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 March 31, 2022:

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		$	44,590,436			$	-			$	-			$	46,153,365			$	46,153,365
Residential construction			192,585,898				-				-				192,585,898				192,585,898
Commercial			42,735,505				-				-				42,783,489				42,783,489
Mortgage loans held for investment, net		$	279,911,839			$	-			$	-			$	281,522,752			$	281,522,752
Policy loans			13,261,353				-				-				13,261,353				13,261,353
Insurance assignments, net (1)			52,950,602				-				-				52,950,602				52,950,602
Restricted assets (2)			1,971,838				-				-				1,971,838				1,971,838
Cemetery perpetual care trust investments (2)			1,724,903				-				-				1,724,903				1,724,903
Mortgage servicing rights, net			55,583,962				-				-				87,221,362				87,221,362
Liabilities
Bank and other loans payable		$	(233,626,919	)		$	-			$	-			$	(233,626,919	)		$	(233,626,919	)
Policyholder account balances (3)			(42,541,630	)			-				-				(35,587,466	)			(35,587,466	)
Future policy benefits - annuities (3)			(107,231,307	)			-				-				(116,276,319	)			(116,276,319	)

(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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 (Unaudited)

8) Fair Value of Financial Instruments (Continued)

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, 2021:

		Carrying Value				Level 1				Level 2				Level 3				Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential		$	51,396,172			$	-			$	-			$	55,159,167			$	55,159,167
Residential construction			174,691,408				-				-				174,691,408				174,691,408
Commercial			51,218,466				-				-				51,008,709				51,008,709
Mortgage loans held for investment, net		$	277,306,046			$	-			$	-			$	280,859,284			$	280,859,284
Policy loans			13,478,214				-				-				13,478,214				13,478,214
Insurance assignments, net (1)			46,946,590				-				-				46,946,590				46,946,590
Restricted assets (2)			2,732,320				-				-				2,732,320				2,732,320
Cemetery perpetual care trust investments (2)			1,823,533				-				-				1,823,533				1,823,533
Mortgage servicing rights, net			53,060,455				-				-				68,811,809				68,811,809
Liabilities
Bank and other loans payable		$	(251,286,927	)		$	-			$	-			$	(251,286,927	)		$	(251,286,927	)
Policyholder account balances (3)			(42,939,055	)			-				-				(35,855,934	)			(35,855,934	)
Future policy benefits - annuities (3)			(107,992,830	)			-				-				(116,215,717	)			(116,215,717	)

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