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Leases

12 Months Ended

Dec. 31, 2022

24) Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company determines if a contract is a lease at the inception of the contract. At the commencement date of a lease, the Company measures the lease liability at the present value of the lease payments over the lease term, discounted using the discount rate for the lease. The Company uses the rate implicit in the lease, if available, otherwise the Company uses its incremental borrowing rate. Also, at the commencement date of a lease, the Company measures the cost of the related right-of-use asset which consists of the amount of the initial measurement of the lease liability, any lease payments made to the lessor at or before the commencement date, minus any lease incentives received and any initial direct costs incurred by the Company.

Information about the Nature of Leases and Subleases

The Company leases office space and equipment from third-parties under various non-cancelable agreements. The Company has operating leases for office space for its segments in areas where it conducts business. The Company subleases some of this office space. The Company also has finance leases for certain equipment, such as copy machines and postage machines. The Company does not have any lease agreements with variable lease payments. The Company has not included any options to extend or terminate leases in the recognition of the right-of-use assets or lease liabilities because of the uncertainty that they will be exercised. No residual value guarantees have been provided to the Company. The Company does not have any restrictions or covenants imposed by leases.

Leases that have not Commenced

The Company does not have any leases that have not commenced that create significant rights or obligations for the Company.

Related Party Lease Transactions

The Company does not have any related party lease transactions that require disclosure as of December 31, 2022.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021

24) Leases (Continued)

Short-term Leases

The Company made an accounting policy election not to apply the recognition requirements of ASC 842 to short-term leases, which are leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying assets that the lessee is reasonably certain to exercise.

Significant Judgments and Assumptions

The Company does not use any significant judgments or assumptions regarding the determination of whether a contract contains a lease; the allocation of the consideration in a contract between lease and nonlease components; or the determination of the discount rates for the leases. The following table presents the Company’s total lease cost recognized in earnings, amounts capitalized as right-of-use assets and cash flows from lease transactions.

2022 2021

Years Ended December 31

2022 2021

Lease Cost

Finance lease cost:

Amortization of right-of-use assets (1) $ 30,163 $ 41,925

Interest on lease liabilities (2) 2,773 4,713

Operating lease cost (3) 4,498,894 4,896,315

Short-term lease cost (3)(4) 1,135,003 167,551

Sublease income (3) (209,455 ) (275,038 )

Total lease cost $ 5,457,378 $ 4,835,466

Other Information

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 4,250,630 $ 4,697,819

Operating cash flows from finance leases 2,773 4,713

Financing cash flows from finance leases 31,685 42,184

Right-of-use assets obtained in exchange for lease liabilities:

Operating leases $ 2,054,534 $ 5,216,048

Finance leases - -

Weighted-average remaining lease term (in years)

Finance leases 1.25 2.07

Operating leases 3.46 6.04

Weighted-average discount rate

Finance leases 5.78 % 5.74 %

Operating leases 4.50 % 4.14 %

(1) Included in Depreciation on property and equipment on the consolidated statements of earnings

(2) Included in Interest expense on the consolidated statements of earnings

(3) Included in Rent and rent related expenses on the consolidated statements of earnings

(4) Includes leases with a term of 12 months or less

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021

24) Leases (Continued)

The following table presents the maturity analysis of the Company’s lease liabilities.

Finance Leases Operating Leases

Lease payments due in:

2023 $ 27,220 $ 3,929,227

2024 4,354 3,328,744

2025 692 2,166,880

2026 - 1,454,848

2027 - 340,112

Thereafter - 324,548

Total undiscounted lease payments 32,266 11,544,359

Less: Discount on cash flows (1,184 ) (947,888 )

Present value of lease liabilities $ 31,082 $ 10,596,471

The following table presents the Company’s right-of-use assets and lease liabilities.

Year Ended December 31

Balance Sheet Location 2022 2021

Operating Leases

Right-of-use assets Other assets $ 9,987,699 $ 12,483,638

Right-of-use assets Other assets $ 9,987,699 $ 12,483,638

Lease liabilities Other liabilities and accrued expenses $ 10,596,471 $ 12,939,691

Lease liabilities Other liabilities and accrued expenses $ 10,596,471 $ 12,939,691

Finance Leases

Right-of-use assets $ 228,221 $ 235,867

Accumulated amortization (200,178 ) (177,660 )

Right-of-use assets, net Property and equipment, net $ 28,043 $ 58,207

Right-of-use assets, net Property and equipment, net $ 28,043 $ 58,207

Lease liabilities Bank and other loans payable $ 31,082 $ 62,767

Lease liabilities Bank and other loans payable $ 31,082 $ 62,767

The Company is also a lessor and has operating lease agreements with various tenants that lease its commercial and residential properties. See Note 2 for information about the Company’s real estate held for investment.