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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 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 September 30, 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		$	320,806,385			$	-			$	319,181,187			$	1,625,198
Equity securities			10,371,032				10,371,032				-				-
Loans held for sale			161,981,923				-				-				161,981,923
Restricted assets (1)			1,210,443				-				1,210,443				-
Restricted assets (2)			4,520,493				4,520,493				-				-
Cemetery perpetual care trust investments (1)			262,494				-				262,494				-
Cemetery perpetual care trust investments (2)			3,177,608				3,177,608				-				-
Derivatives - loan commitments (3)			5,922,415				-				-				5,922,415
Total assets accounted for at fair value on a recurring basis		$	508,252,793			$	18,069,133			$	320,654,124			$	169,529,536
Liabilities accounted for at fair value on a recurring basis
Derivatives - call options (4)		$	(1,688	)		$	(1,688	)		$	-			$	-
Derivatives - put options (4)			(18,982	)			(18,982	)			-				-
Derivatives - loan commitments (4)			(1,750,055	)			-				-				(1,750,055	)
Total liabilities accounted for at fair value on a recurring basis		$	(1,770,725	)		$	(20,670	)		$	-			$	(1,750,055	)

(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, 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)			784,765				-				784,765				-
Cemetery perpetual care trust investments (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 September 30, 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
		9/30/2022				Technique				Input(s)				Value				Value				Average
Loans held for sale		$	161,981,923				Market approach				Investor contract pricing as a percentage of unpaid principal balance				67.4	%			107.7	%			98.9	%
Derivatives - loan commitments (net)			4,172,360				Market approach				Pull-through rate				66.7	%			95.0	%			83.7	%
											Initial-Value				N/A				N/A				N/A
											Servicing				0 bps				197 bps				95 bps
Fixed maturity securities available for sale			1,625,198				Broker quotes				Pricing quotes			$	101.41			$	111.11			$	106.44

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 nine months ending September 30, 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			-				2,837,349,328				-
Sales, maturities and paydowns			-				(2,987,906,269	)			(368,980	)
Transfer to mortgage loans held for investment			-				(49,428,757	)			-
Total gains (losses):
Included in earnings (loss)			(2,843,155	)(1)			59,190,794	(1)			1,957	(2)
Included in other comprehensive income (loss)			-				-				(31,127	)
Balance - September 30, 2022		$	4,172,360			$	161,981,923			$	1,625,198

(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 nine months ending September 30, 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			-				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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2022 (Unaudited)

8) Fair Value of Financial Instruments (Continued)

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 September 30, 2022:

		Net Loan Commitments				Loans Held for Sale				Fixed Maturity Securities Available for Sale
Balance - June 30, 2022		$	7,443,642			$	209,860,409			$	1,962,789
Originations and purchases			-				787,389,868				-
Sales, maturities and paydowns			-				(800,430,402	)			(344,630	)
Transfer to mortgage loans held for investment			-				(49,428,757	)			-
Total gains (losses):
Included in earnings			(3,271,282	)(1)			14,590,805	(1)			-	(2)
Included in other comprehensive income			-				-				7,039
Balance - September 30, 2022		$	4,172,360			$	161,981,923			$	1,625,198

(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 September 30, 2021:

		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	)
Total gains (losses):
Included in earnings			(380,696	)(1)			42,229,391	(1)			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

Schedule of Fair Value Assets Measured on a Nonrecurring Basis

The following table summarizes 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, 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			471,786				-				-				471,786
Total assets accounted for at fair value on a nonrecurring basis		$	471,786			$	-			$	-			$	471,786

The following table summarizes 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 September 30, 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		$	86,591,587			$	-			$	-			$	84,867,935			$	84,867,935
Residential construction			201,127,984				-				-				201,127,984				201,127,984
Commercial			32,844,029				-				-				32,018,351				32,018,351
Mortgage loans held for investment, net		$	320,563,600			$	-			$	-			$	318,014,270			$	318,014,270
Policy loans			13,066,150				-				-				13,066,150				13,066,150
Insurance assignments, net (1)			40,877,511				-				-				40,877,511				40,877,511
Restricted assets (2)			2,357,304				-				-				2,357,304				2,357,304
Cemetery perpetual care trust investments (2)			2,243,307				-				-				2,243,307				2,243,307
Mortgage servicing rights, net (4)			54,379,245				-				-				93,863,177				93,863,177
Liabilities
Bank and other loans payable		$	(201,479,763	)		$	-			$	-			$	(201,479,763	)		$	(201,479,763	)
Policyholder account balances (3)			(41,745,320	)			-				-				(34,331,676	)			(34,331,676	)
Future policy benefits - annuities (3)			(106,760,557	)			-				-				(113,983,260	)			(113,983,260	)

(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

(4) Refer to Note 15 of the Notes to Condensed Consolidated Financial Statements

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 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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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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