10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____ to _____

Commission File Number 000-09341

SECURITY NATIONAL FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

UTAH	87-0345941
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
121 West Election Road, Draper, Utah		84020
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code:		(801) 264-1060

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of exchange on which registered
Class A Common Stock	SNFCA	The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933, as amended (“Securities Act”).  

[  ] Yes [X] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act.  

[  ] Yes [X] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

[X] Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  

[X] Yes [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ] 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.   

Large accelerated filer [  ]   Accelerated filer [  ]    

Non-accelerated filer [  ]Smaller reporting company [X] 

Emerging growth company [  ] 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          [  ] 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

[  ] Yes [X] No

As of June 30, 2020, the aggregate market value of the registrant’s Class A common stock held by non-affiliates of the registrant was approximately $50,000,000 based on the $6.58 closing sale price of the Class A common stock as reported on The Nasdaq Global Select Market.  

As of March 23, 2021, there were outstanding 16,621,147shares of Class A common stock, $2.00 par value per share, and 2,679,603 shares of Class C common stock, $2.00 par value per share. 

Documents Incorporated by Reference

None.

Security National Financial Corporation

Form 10-K

For the Fiscal Year Ended December 31, 2020

TABLE OF CONTENTS

		Page
	Part I
Item 1.	Business	4
Item 2.	Properties	12
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	16
	Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 8.	Financial Statements and Supplementary Data	33
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	114
Item 9A.	Controls and Procedures	114
Item 9B.	Other Information	115
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	116
Item 11.	Executive Compensation	120
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	131
Item 13.	Certain Relationships and Related Transactions, and Director Independence	133
Item 14.	Principal Accounting Fees and Services	134
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	134

 PART I

Item 1. Business

Security National Financial Corporation (the “Company”) operates in three reportable business segments: life insurance, cemetery and mortuary, and mortgages. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products, and accident and health insurance. These products are marketed in 40 states through a commissioned sales force of independent licensed insurance agents who may also sell insurance products of other companies. The cemetery and mortuary segment consists of eight mortuaries and five cemeteries in the state of Utah and one cemetery in the state of California. The Company also engages in pre-need selling of funeral, cemetery, mortuary, and cremation services through its Utah and California operations. Many of the insurance agents also sell pre-need funeral, cemetery, and cremation services. The mortgage segment originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes, and other real estate projects. The mortgage segment operates through 98 retail offices in 23 states, and is an approved mortgage lender in several other states.

The Company’s design and structure are that each business segment is related to the other business segments and contributes to the profitability of the other segments. The Company’s cemetery and mortuary segment provides a level of public awareness that assists in the sales and marketing of insurance and pre-need cemetery and funeral products. The Company’s insurance segment invests their assets (including, in part, pre-need funeral products and services) in investments authorized by the respective insurance departments of their states of domicile. The Company also pursues growth through acquisitions. The Company’s mortgage segment provides mortgage loans and other real estate investment opportunities.

The Company was organized as a holding company in 1979 when Security National Life Insurance Company (“Security National Life”) became a wholly owned subsidiary of the Company and the former stockholders of Security National Life became stockholders of the Company. Security National Life was formed in 1965 and has acquired or purchased significant blocks of business which include Capital Investors Life Insurance Company (1994), Civil Service Employees Life Insurance Company (1995), Southern Security Life Insurance Company (1998), Menlo Life Insurance Company (1999), Acadian Life Insurance Company (2002), Paramount Security Life Insurance Company (2004), Memorial Insurance Company of America (2005), Capital Reserve Life Insurance Company (2007), Southern Security Life Insurance Company, Inc. (2008), North America Life Insurance Company (2011, 2015), Trans-Western Life Insurance Company (2012), Mothe Life Insurance Company (2012), DLE Life Insurance Company (2012), American Republic Insurance Company (2015), First Guaranty Insurance Company (2016), and Kilpatrick Life Insurance Company (2019).

The cemetery and mortuary operations have also grown through the acquisition of other cemetery and mortuary companies. The cemetery and mortuary companies that the Company has acquired are Holladay Memorial Park, Inc. (1991), Cottonwood Mortuary, Inc. (1991), Deseret Memorial, Inc. (1991), Probst Family Funerals and Cremations L.L.C. (2019), and Heber Valley Funeral Home, Inc. (2019).

In 1993, the Company formed SecurityNational Mortgage Company (“SecurityNational Mortgage”) to originate and refinance residential mortgage loans. In 2012, the Company formed Green Street Mortgage Services, Inc. (now known as EverLEND Mortgage Company) (“EverLEND Mortgage”) also to originate and refinance residential mortgage loans.

See Note 15 of the Notes to Consolidated Financial Statements for additional information regarding business segments of the Company.

Life Insurance

Products 

The Company, through Security National Life, First Guaranty Insurance Company (“First Guaranty”), and Kilpatrick Life Insurance Company (“Kilpatrick”), issues and distributes selected lines of life insurance and annuities. The Company’s life insurance business includes funeral plans and interest-sensitive life insurance, as well as other traditional life, accident, and health insurance products. The Company places specific marketing emphasis on funeral

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plans through pre-need planning. The Company’s insurance subsidiaries, Memorial Insurance Company of America (“Memorial Insurance”), Southern Security Life Insurance Company, Inc. (“Southern Security”), Trans-Western Life Insurance Company (“Trans-Western”), First Guaranty, and Kilpatrick, service and maintain policies that were purchased prior to their acquisition by Security National Life.

A funeral plan is a small face value life insurance policy that generally has face coverage of up to $25,000. The Company believes that funeral plans represent a marketing niche that has lower competition because most insurance companies do not offer similar coverage. The purpose of the funeral plan policy is to pay the costs and expenses incurred at the time of a person’s death. On a per thousand-dollar cost of insurance basis, these policies can be more expensive to the policyholder than many types of non-burial insurance due to their low face amount, requiring the fixed cost of the policy administration to be distributed over a smaller policy size, and the simplified underwriting practices that result in higher mortality costs.

Markets and Distribution 

The Company is licensed to sell insurance in 40 states. The Company, in marketing its life insurance products, seeks to locate, develop and service specific niche markets. The Company’s funeral plan policies are sold primarily to persons who range in age from 45 to 85 and have low to moderate income. A majority of the Company’s funeral plan premiums come from the states of Arkansas, California, Florida, Georgia, Louisiana, Mississippi, Texas, and Utah.

The Company sells its life insurance products through direct agents, brokers, and independent licensed agents who may also sell insurance products of other companies. The commissions on life insurance products range from approximately 50% to 120% of first year premiums. In those cases, where the Company utilizes its direct agents in selling such policies, those agents customarily receive advances against future commissions.

In some instances, funeral plan insurance is marketed in conjunction with the Company’s cemetery and mortuary sales force. When it is marketed by that group, the beneficiary is usually the Company’s cemeteries and mortuaries. Thus, death benefits that become payable under the policy are paid to the Company’s cemetery and mortuary subsidiaries to the extent of services performed and products purchased.

In marketing funeral plan insurance, the Company also seeks and obtains third-party endorsements from other cemeteries and mortuaries within its marketing areas. Typically, these cemeteries and mortuaries will provide letters of endorsement and may share in mailing and other lead-generating costs since these businesses are usually made the beneficiary of the policy. The following table summarizes the life insurance business for the five years ended December 31, 2020:

	2020	2019		2018	2017	2016
Life Insurance
Policy/Cert Count as of December 31	659,237	669,064	(1)	531,831	533,065	531,775	(2)
Insurance in force as of December 31 (omitted 000)	$2,890,791	$2,877,402	(1)	$1,838,488	$1,759,148	$1,672,081	(2)
Premiums Collected (omitted 000)	$92,058	$78,253	(1)	$74,965	$69,565	$65,220	(2)

_____________

(1)Includes the acquisition of Kilpatrick  

(2)Includes the acquisition of First Guaranty and the termination of the reinsurance assumed from Servicemembers’ Group Life Insurance (“SGLI”) 

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Underwriting 

The factors considered in evaluating an application for ordinary life insurance coverage can include the applicant’s age, occupation, general health, and medical history. Upon receipt of a satisfactory (non-funeral plan insurance) application, which contains pertinent medical questions, the Company issues insurance based upon its medical limits and requirements subject to the following general non-medical limits:

Age Nearest Birthday		Non-Medical Limits
0-50	$	100,000
51-up		Medical information
		required (APS or exam)

When underwriting life insurance, the Company will sometimes issue policies with higher premium rates for substandard risks.

The Company’s funeral plan insurance is written on a simplified medical application with underwriting requirements being a completed application, a phone inspection on the applicant, and an intelliscript prescription history inquiry. There are several underwriting classes in which an applicant can be placed.

Annuities

Products 

The Company’s annuity business includes single premium deferred annuities, flexible premium deferred annuities, and immediate annuities. A single premium deferred annuity is a contract where the individual remits a sum of money to the Company, which is retained on deposit until such time as the individual may wish to annuitize or surrender the contract for cash. A flexible premium deferred annuity gives the contract holder the right to make premium payments of varying amounts or to make no further premium payments after his initial payment. These single and flexible premium deferred annuities can have initial surrender charges. The surrender charges act as a deterrent to individuals who may wish to prematurely surrender their annuity contracts. An immediate annuity is a contract in which the individual remits a sum of money to the Company in return for the Company’s obligation to pay a series of payments on a periodic basis over a designated period of time, such as an individual’s life, or for such other period as may be designated.

Annuities have guaranteed interest rates that range from 1% to 6.5% per annum. Rates above the guaranteed interest rate credited are periodically modified by the Board of Directors at its discretion. In order for the Company to realize a profit on an annuity product, the Company must maintain an interest rate spread between its investment income and the interest rate credited to the annuities. Commissions, issuance expenses, and general and administrative expenses are deducted from this interest rate spread.

Markets and Distribution 

The general market for the Company’s annuities is middle to older age individuals. A major source of annuity sales come from direct agents and are sold in conjunction with other insurance sales. If an individual does not qualify for a funeral plan, the agent will often sell that individual an annuity to fund final expenses.

The following table summarizes the annuity business for the five years ended December 31, 2020:

	2020	2019		2018	2017	2016
Annuities Policy/Cert Count as of December 31	25,476	26,565	(1)	22,313	22,729	21,364	(2)
Deposits Collected (omitted 000)	$9,637	$10,400	(1)	$9,644	$10,353	$11,019	(2)

____________

(1)Includes the acquisition of Kilpatrick 

(2)Includes the acquisition of First Guaranty 

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Accident and Health

Products 

With the acquisition of Capital Investors in 1994, the Company acquired a small block of accident and health policies. Since 1999, the Company has offered a low-cost comprehensive diver’s accident policy that provides worldwide coverage for medical expense reimbursement in the event of a diving accident. With the acquisition of Kilpatrick in 2019, the Company also acquired a block of accident and health policies.

Markets and Distribution 

The Company currently markets its diver’s accident policies through the internet.

The following table summarizes the accident and health insurance business for the five years ended December 31, 2020:

	2020	2019		2018	2017	2016
Accident and Health Policy/Cert Count as of December 31	13,735	15,133	(1)	3,763	4,069	4,761
Premiums Collected (omitted 000)	$296	$110	(1)	$98	$104	$113

____________

(1)Includes the acquisition of Kilpatrick 

Reinsurance

The primary purpose of reinsurance is to enable an insurance company to issue an insurance policy in an amount larger than the risk the insurance company is willing to assume for itself. The insurance company remains obligated for the amounts reinsured (ceded) in the event the reinsurers do not meet their obligations.

The Company currently cedes and assumes certain risks with various authorized unaffiliated reinsurers pursuant to reinsurance treaties, which are generally renewed annually. The premiums paid by the Company are based on a number of factors, primarily including the age of the insured and the risk ceded to the reinsurer.

It is the Company’s policy to retain no more than $100,000 of ordinary insurance per insured life, with the excess risk being reinsured. The total amount of life insurance reinsured by other companies as of December 31, 2020, was $377,138,000, which represents approximately 13.0% of the Company’s life insurance in force on that date.

See “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Notes to Consolidated Financial Statements” for additional disclosure and discussion regarding reinsurance.

Investments

The investments that support the Company’s life insurance and annuity obligations are determined by the investment committees of the Company’s subsidiaries and ratified by the full Board of Directors of the respective subsidiaries. A significant portion of the Company’s investments must meet statutory requirements governing the nature and quality of permitted investments by its insurance subsidiaries. The Company maintains a diversified investment portfolio consisting of common stocks, preferred stocks, municipal bonds, corporate bonds, mortgage loans, real estate, and other securities and investments.

See “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Notes to Consolidated Financial Statements” for additional disclosure and discussion regarding investments.

7

Cemetery and Mortuary

Products 

Through its cemetery and mortuary segment, the Company markets a variety of products and services both on a pre-need basis (prior to death) and an at-need basis (at the time of death). The products include: plots, interment vaults, mausoleum crypts, markers, caskets, urns and other death care related products. These services include: professional services of funeral directors, opening and closing of graves, use of chapels and viewing rooms, and use of automobiles and clothing. The Company has a mortuary at each of its cemeteries, other than Holladay Memorial Park and Singing Hills Memorial Park, and has six separate stand-alone mortuary facilities.

Markets and Distribution 

The Company’s pre-need cemetery and mortuary sales are marketed to persons of all ages but are generally purchased by persons 45 years of age and older. The Company is limited in its geographic distribution of these products to areas lying within an approximate 20-mile radius of its mortuaries and cemeteries. The Company’s at-need sales are similarly limited in geographic area.

The Company actively seeks to sell its cemetery and funeral products to customers on a pre-need basis. The Company employs cemetery sales representatives on a commission basis to sell these products. Many of these pre-need cemetery and mortuary sales representatives are also licensed insurance salesmen and sell funeral plan insurance. In some instances, the Company’s cemetery and mortuary facilities are the named beneficiaries of the funeral plan policies.

Potential customers are located via telephone sales prospecting, responses to letters mailed by the pre-planning consultants, newspaper inserts, referrals, and door-to-door canvassing. The Company trains its sales representatives and helps generate leads for them. 

Mortgage Loans

Products 

The Company, through its wholly owned subsidiaries, SecurityNational Mortgage and EverLEND Mortgage, are active in the residential real estate market. SecurityNational Mortgage is approved by the U.S. Department of Housing and Urban Development (HUD), the Federal National Mortgage Association (Fannie Mae), and other secondary market investors, to originate a variety of residential mortgage loan products, which are subsequently sold to investors. EverLEND Mortgage is approved by the U.S. Department of Housing and Urban Development (HUD), and other secondary market investors, to originate a variety of residential mortgage loan products, which are subsequently sold to investors. The Company uses internal and external funding sources to fund mortgage loans.

Security National Life originates and funds commercial real estate loans, residential construction loans, and land development loans for internal investment.

Markets and Distribution 

The Company’s residential mortgage lending services are marketed primarily to real estate brokers, builders and directly with consumers.  The Company has a strong retail origination presence in the Utah, Florida, Texas, Nevada and Arizona markets and is experiencing rapid growth with sales representatives in these and many other states across the country. See “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Notes to Consolidated Financial Statements” for additional disclosure and discussion regarding mortgage loans.

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Recent Acquisitions and Other Business Activities

Acquisitions 

Acquisition of Kilpatrick Life Insurance Company 

On December 13, 2019, the Company, through its wholly-owned subsidiary, Security National Life, completed a stock purchase transaction with Kilpatrick, a Louisiana domiciled insurance company, and Kilpatrick’s shareholders, to purchase all the outstanding shares of common stock of Kilpatrick.

Under the terms of the transaction, as set forth in the Stock Purchase Agreement, dated October 11, 2019, the Company paid purchase consideration at the closing of the transaction equal to $23,779,940 subject to a $1,400,000 holdback that was deposited into an interest bearing escrow account to be held for a period of eighteen months from the closing date. The current amount that is available to be disbursed to the prior owners is $598,949.

Acquisition of Probst Family Funerals and Cremations and Heber Valley Funeral Home 

On February 15, 2019, the Company, through its wholly-owned subsidiary, Memorial Mortuary Inc., completed an asset purchase transaction with Probst Family Funerals and Cremations, LLC. (“Probst Family Funerals”) and Heber Valley Funeral Home, Inc. (“Heber Valley Funeral Home”). These funeral homes are both located in Heber Valley, a community situated about 45 miles southeast of Salt Lake City.

Under the terms of the transaction, as set forth in the Asset Purchase Agreement, dated February 15, 2019, the Company paid the net purchase price of $3,315,647 for the business and assets of Probst Family Funerals and Heber Valley Funeral Home, subject to a $150,000 holdback. In August 2019, this escrow account was settled and $137,550 was paid to the prior owners.

Real Estate Development 

The Company is capitalizing on the opportunity to develop commercial and residential assets on its existing properties. The cost to acquire existing for-sale assets currently exceeds the replacement costs, thus creating the opportunity for development and redevelopment of the land that the Company currently owns. The Company has developed, or is in the process of developing, assets that have an initial development cost exceeding $100,000,000.  The Company plans to continue its development endeavors as the market demands.

Center53 Development

In 2015, the Company broke ground and commenced development on the first phase of its new corporate campus.  The anticipated project, comprising nearly 20 acres of land that is currently owned by the Company in the central valley of Salt Lake City, is envisioned to be a multi-year, phased development. At full development, the project will include nearly one million square-feet in five buildings, ranging from four to ten stories, and will be serviced by three parking structures with about 4,000 stalls. The first phase of the project includes a building and a parking garage consisting of nearly 200,000 square feet of office space with 748 parking stalls. This phase of the campus was completed in July 2017 and is currently 96% occupied. The second phase of the project began in March 2020 and includes a six story building of nearly 218,000 square feet and a parking garage with approximately 870 stalls.  The Company will occupy half of the building as its corporate headquarters, and has leased the remainder of the building. It is anticipated that the Company will occupy the building in September 2021.

Regulation

The Company’s insurance subsidiaries are subject to comprehensive regulation in the jurisdictions in which they do business under statutes and regulations administered by state insurance commissioners. Such regulation relates to, among other things, prior approval of the acquisition of a controlling interest in an insurance company; standards of solvency which must be met and maintained; licensing of insurers and their agents; nature of and limitations on investments; deposits of securities for the benefit of policyholders; approval of policy forms and premium rates; periodic examinations of the affairs of insurance companies; annual and other reports required to be filed on the financial condition of insurers or for other purposes; and requirements regarding aggregate reserves for life policies

9

and annuity contracts, policy claims, unearned premiums, and other matters. The Company’s insurance subsidiaries are subject to this type of regulation in any state in which they are licensed to do business. Such regulation could involve additional costs, restrict operations, or delay implementation of the Company’s business plans.

The Company’s life insurance subsidiaries are currently subject to regulation in Utah, Arkansas, Louisiana, Mississippi and Texas under insurance holding company legislation, and other states where applicable. Generally, intercompany transfers of assets and dividend payments from insurance subsidiaries are subject to prior notice of approval from the state insurance department, if they are deemed “extraordinary” under these statutes. The insurance subsidiaries are required, under state insurance laws, to file detailed annual reports with the supervisory agencies in each of the states in which they do business. Their business and accounts are also subject to examination by these agencies. The Company was notified that all of its life insurance subsidiaries have been selected for examination for the year ended December 31, 2020 and periods since their last examination. The Company was last examined in 2016 (First Guaranty Insurance), 2017 (Security National Life) and 2019 (Kilpatrick Life). The Texas Department of Banking also audits pre-need insurance policies that are issued in the state of Texas.  Pre-need policies are life and annuity products sold as the funding mechanism for funeral plans through funeral homes by Security National agents.  The Company is required to send the Texas Department of Banking an annual report that summarizes the number of policies in force and the face amount or death benefit for each policy.  This annual report also indicates the number of new policies issued for that year, all death claims paid that year, and all premiums received.

The Company’s cemetery and mortuary subsidiaries are subject to the Federal Trade Commission’s comprehensive funeral industry rules and to state regulations in the various states where such operations are domiciled. The morticians must be licensed by the respective state in which they provide their services. Similarly, the mortuaries and cemeteries are governed and licensed by state statutes and city ordinances in Utah and California. Reports are required to be kept on file on a yearly basis which include financial information concerning the number of spaces sold and, where applicable, funds provided to the Endowment Care Trust Fund. Licenses are issued annually on the basis of such reports. The cemeteries maintain city or county licenses where they conduct business.

The Company’s mortgage subsidiaries are subject to the rules and regulations of the U.S. Department of Housing and Urban Development (HUD), and to various state licensing acts and regulations and the Consumer Financial Protection Bureau (CFPB). These regulations, among other things, specify minimum capital requirements, procedures for loan origination and underwriting, licensing of brokers and loan officers, quality review audits and the fees that can be charged to borrowers. Each year, the Company is required to have an audit completed for each mortgage subsidiary by an independent registered public accounting firm to verify compliance under some of these regulations. In addition to the government regulations, the Company must meet loan requirements, and underwriting guidelines of various investors who purchase the loans.

Income Taxes

The Company’s insurance subsidiaries, Security National Life, First Guaranty and Kilpatrick, are taxed under the Life Insurance Company Tax Act of 1984. Under the act, life insurance companies are taxed at standard corporate rates on life insurance company taxable income. Life insurance company taxable income is gross income less general business deductions and reserves for future policyholder benefits (with modifications). The Company may be subject to the corporate Alternative Minimum Tax (AMT) for tax years ending prior to January 1, 2018. The Tax Cuts and Jobs Act (the “Tax Act”) repealed the corporate AMT for tax years beginning after December 31, 2017. Also, under the Tax Act, December 31, 2017 policyholder surplus account balances result in taxable income over a period of eight years.

Security National Life, First Guaranty and Kilpatrick calculate their life insurance taxable income after establishing a provision representing a portion of the costs of acquisition of such life insurance business. The effect of the provision is that a certain percentage of the Company’s premium income is characterized as deferred expenses and recognized over a five or ten-year period. The Tax Act changed this recognition period for amounts deferred after December 31, 2017 to a five or fifteen-year period.

The Company’s non-life insurance company subsidiaries are taxed in general under the regular corporate tax provisions. The following subsidiaries are regulated as life insurance companies but do not meet the Internal Revenue Code definition of a life insurance company, so they are taxed as insurance companies other than life insurance companies: Memorial Insurance, Southern Security, and Trans-Western.  

10

Competition

The life insurance industry is highly competitive. There are approximately 800 legal reserve life insurance companies in business in the United States. These insurance companies differentiate themselves through marketing techniques, product features, price, and customer service. The Company’s insurance subsidiaries compete with a large number of insurance companies, many of which have greater financial resources, a longer business history, and more diversified line of insurance products than the Company. In addition, such companies generally have a larger sales force. Further, the Company competes with mutual insurance companies which may have a competitive advantage because all profits accrue to policyholders. Because the Company is smaller by industry standards and lacks broad diversification of risk, it may be more vulnerable to losses than larger, better-established companies. The Company believes that its policies and rates for the markets it serves are generally competitive.

The cemetery and mortuary industry is also highly competitive. In the Utah and California markets where the Company competes, there are a number of cemeteries and mortuaries which have longer business histories, more established positions in the community, and stronger financial positions than the Company. In addition, some of the cemeteries with which the Company must compete for sales are owned by municipalities and, as a result, can offer lower prices than can the Company. The Company bears the cost of a pre-need sales program that is not incurred by those competitors which do not have a pre-need sales force. The Company believes that its products and prices are generally competitive with those in the industry.

The mortgage industry is highly competitive with a large number of mortgage companies and banks in the same geographic area in which the Company is operating. The mortgage industry in general is sensitive to changes in interest rates and the refinancing market is particularly vulnerable to changes in interest rates.

Employees

As of December 31, 2020, the Company had 1,511 full-time and 197 part-time employees.

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Item 2.  Properties

The following table sets forth the location of the Company’s office facilities and certain other information relating to these properties.

Street	City	State	Function	Owned / Leased	Approximate Square Footage	Lease Amount			Expiration
121 W. Election Rd., Suite 100	Draper	UT	Corporate Headquarters	Owned	14,145	N/A			N/A
5201 S. Green St.	Salt Lake City	UT	Mortgage and Insurance Operations	Owned	28,448	N/A			N/A
1044 River Oaks Dr.	Flowood	MS	Insurance Operations	Owned	5,522	N/A			N/A
1818 Marshall St.	Shreveport	LA	Insurance Operations	Owned	12,274	N/A			N/A
812 Sheppard St.	Minden	LA	Insurance Sales	Owned	1,560	N/A			N/A
909 Foisy Ave.	Alexandria	LA	Insurance Sales	Owned	8,059	N/A			N/A
1550 N. Third St.	Jena	LA	Insurance Sales	Owned	1,737	N/A			N/A
4455 South 700 East	Salt Lake City	UT	Insurance Operations	Leased	16,134	$ 23,196	/	mo	6/30/2021
1 Sanctuary Blvd. Suite 302A	Mandeville	LA	Insurance Sales	Leased	1,337	$  2,196	/	mo	6/30/2023
79 E. Main Street	Midway	UT	Funeral Service Sales	Leased	4,476	$  5,304	/	mo	10/31/2022
200 Market Way	Rainbow City	AL	Fast Funding Operations	Leased	12,850	$ 10,490	/	mo	1/31/2025
6000 Pelham Rd.	Greenville	SC	Fast Funding Operations	Leased	4,483	$  4,233	/	mo	8/31/2022
199 Deauville Dr.	Maumelle	AR	Mortgage Sales	Leased	50	$     100		mo	month to month
1819 S. Dobson Rd., Suite 202/203	Mesa	AZ	Mortgage Sales	Leased	2,397	$  1,633	/	mo	7/31/2021
17015 N. Scottsdale Rd., Suite 125	Scottsdale	AZ	Mortgage Sales	Leased	6,070	$  7,130	/	mo	7/31/2023
4725 N. 19th Ave.	Phoenix	AZ	Mortgage Sales	Leased	1,480	$  1,700	/	mo	month to month
5100 N. 99th Ave., Suite 101/103	Phoenix	AZ	Mortgage Sales	Sub-Leased	3,940	$  5,348	/	mo	month to month
5100 N. 99th Ave., Suite 111	Phoenix	AZ	Mortgage Sales	Sub-Leased	720	$  1,023	/	mo	8/31/2022
10609 N. Hayden Rd., Suite 100	Scottsdale	AZ	Mortgage Sales	Leased	3,585	$  8,500	/	mo	month to month
11225 N. 28th Dr., #C-200	Phoenix	AZ	Mortgage Sales	Leased	1,031	$  2,000	/	mo	month to month
1819 Dobson Rd., Suite 202	Mesa	AZ	Mortgage Sales	Leased	890	$     964	/	mo	7/31/2021
2828 N. Central Ave., Suite 1100A	Phoenix	AZ	Mortgage Sales	Sub-Leased	1,691	$  4,859	/	mo	month to month
2777 S. Arizona Ave., Suite 3169	Chandler	AZ	Mortgage Sales	Leased	100	$     100	/	mo	month to month
1490 S. Price Road, Suite 318	Chandler	AZ	Mortgage Sales	Leased	1,600	$  3,050	/	mo	8/31/2021
2436 E. 4th St., Suite 920	Long Beach	CA	Mortgage Sales	Leased	100	$     100	/	mo	month to month
40977 Oak Dr.	Forest Falls	CA	Mortgage Sales	Leased	250	$       -	/	mo	month to month
2934 E. Garvey Ave. South, Suite 250	West Covina	CA	Mortgage Sales	Leased	500	$     712	/	mo	month to month
1910 Union St., Suite 2020	Anaheim	CA	Mortgage Sales	Sub-Leased	100	$     100	/	mo	month to month
573 Chouinard Cir.	Claremont	CA	Mortgage Sales	Leased	100	$       50	/	mo	month to month
7398 Fox Trail Unit B	Yucca Valley	CA	Mortgage Sales	Leased	900	$     550	/	mo	month to month
26511 Silver Spring	Lake Forest	CA	Mortgage Sales	Leased	100	$       50	/	mo	month to month
18647 Marimba St.	Rowland Heights	CA	Mortgage Sales	Leased	100	$       50	/	mo	month to month
2325 El Empino	La Habra Heights	CA	Mortgage Sales	Leased	100	$       50	/	mo	month to month
445 W. University Ave., Apt. A	San Deigo	CA	Mortgage Sales	Leased	120	$       -	/	mo	month to month
5475 Tech Center Dr., Suite 100	Colorado Springs	CO	Mortgage Sales	Leased	3,424	$  4,565	/	mo	9/30/2023
8480 E. Orchard Rd., Suite 4200	Greenwood Village	CO	Mortgage Sales	Leased	4,631	$ 10,227	/	mo	5/31/2021
1120 W. 122nd Ave., Suite 104	Denver	CO	Mortgage Sales	Leased	2,088	$  3,828	/	mo	10/31/2021
27 Main St., Suite C-104B	Edwards	CO	Mortgage Sales	Leased	680	$  1,600	/	mo	month to month
4501 Mohawk Dr.	Larkspur	CO	Mortgage Sales	Leased	250	$       50	/	mo	month to month
7800 E. Union Ave., Suite 550	Denver	CO	Mortgage Sales	Sub-Leased	4,656	$  9,312	/	mo	9/30/2022
1145 Town Park Ave., Suite 2215	Lake Mary	FL	Mortgage Sales	Leased	5,901	$ 12,835	/	mo	2/28/2023
8191 College Parkway, Suite 201	Ft Myers	FL	Mortgage Sales	Leased	4,676	$  4,006	/	mo	8/21/2021
1545 S. Belcher Rd., Suite B	Clearwater	FL	Mortgage Sales	Leased	100	$  1,573	/	mo	month to month
3180 Curlew Rd. Unit 107	Oldsmar	FL	Mortgage Sales	Leased	1,705	$  2,707	/	mo	2/14/2023
113th St. N. and 82nd Ave. N.	Seminole	FL	Mortgage Sales	Leased	1,400	$  1,692	/	mo	8/31/2023
136 Parliament Loop	Lake Mary	FL	Mortgage Sales	Leased	1,527	$  3,100	/	mo	11/30/2022
6456 Cypressdale Dr., Unit 102	Riverview	FL	Mortgage Sales	Leased	50	$       -	/	mo	month to month
800 Avalon Blvd., Suite 100	Alpharetta	GA	Mortgage Sales	Sub-Leased	1,000	$     841	/	mo	month to month
106 A Adamson Square	Carrolton	GA	Mortgage Sales	Leased	1,000	$  1,550	/	mo	10/31/2021
4370 Kukui Grove St., Suite 201	Lihue	HI	Mortgage Sales	Leased	864	$  1,412	/	mo	2/28/2022
1001 Kamokila Blvd.	Kapolei	HI	Mortgage Sales	Leased	737	$  1,708	/	mo	12/31/2022
116 N. 3rd St., Suite 12	Mccall	ID	Mortgage Sales	Leased	480	$     466	/	mo	month to month
9963 Crosspoint Blvd Suites 101/102	Indianapolis	IN	Mortgage Sales	Leased	1,350	$  1,570	/	mo	month to month
1739 E. Michigan St.	Indianapolis	IN	Mortgage Sales	Leased	200	$     100	/	mo	month to month
568 Greenluster Dr.	Covington	LA	Mortgage Sales	Leased	150	$     750	/	mo	month to month
3828 Veterans Blvd., Suite 101	Metairie	LA	Mortgage Sales	Sub-Leased	80	$     350	/	mo	6/30/2021
8530 Veterans Hwy	Millersville	MD	Mortgage Sales	Leased	4,000	$  6,000	/	mo	4/30/2021
4987 Fall Creek Rd. Suite 1	Branson	MO	Mortgage Sales	Leased	700	$  1,000	/	mo	month to month
330 Camp Rd., Suite B-39	Charlotte	NC	Mortgage Sales	Leased	N/A	$     650	/	mo	month to month
1980 Festival Plaza Dr., Suite 850	Las Vegas	NV	Mortgage Sales	Leased	12,866	$ 44,902	/	mo	10/31/2021

12

Item 2. Properties (Continued)

Street	City	State	Function	Owned / Leased	Approximate Square Footage	Lease Amount			Expiration
840 Pinnacle Ct., Suite 3	Mesquite	NV	Mortgage Sales	Leased	900	$     720	/	mo	3/12/2022
2635 St. Rose Pkwy, Suites D 100, 110, 120	Hendeson	NV	Mortgage Sales	Leased	5,788	$ 11,576	/	mo	9/30/2025
8720 Orion Place, Suite 160	Colombus	OH	Mortgage Sales	Leased	1,973	$  1,809	/	mo	6/30/2023
4294 Martin Dr.	North Olmstead	OH	Mortgage Sales	Leased	100	$       -	/	mo	month to month
3311 NE MLK Jr Blvd., Suite 203	Portland	OR	Mortgage Sales	Leased	1,400	$     875	/	mo	month to month
10365 SE Sunnyside Rd., Suite 310	Clackamus	OR	Mortgage Sales	Leased	1,288	$  2,653	/	mo	11/30/2022
11104 SE Stark St., Suite S	Portland	OR	Mortgage Sales	Sub-Leased	506	$     600	/	mo	month to month
8285 SW Numbus, Suite 160	Beaverton	OR	Mortgage Sales	Sub-Leased	800	$     888	/	mo	month to month
13 Park Shore Dr. North	Columbia	SC	Mortgage Sales	Leased	50	$     100	/	mo	month to month
6263 Poplar Ave., Suite 900	Memphis	TN	Mortgage Sales	Leased	1,680	$  1,921	/	mo	3/31/2022
144 Alf Taylor Rd.	Johnson City	TN	Mortgage Sales	Sub-Leased	1,521	$     800	/	mo	month to month
347 Main St., Suite 200	Franklin	TN	Mortgage Sales	Leased	2,444	$  5,703	/	mo	8/31/2025
3027 Marina Bay Dr., Suite 200	League City	TX	Mortgage Sales	Leased	1,225	$  2,246	/	mo	4/30/2023
11550 Fuqua, Suite 200	Houston	TX	Mortgage Sales	Leased	1,865	$  3,575	/	mo	4/30/2021
1848 Norwood Plaza, Suite 213	Hurst	TX	Mortgage Sales	Sub-Leased	1,596	$  1,031	/	mo	month to month
17347 Village Green Dr., Suite 102	Houston	TX	Mortgage Sales	Sub-Leased	3,300	$  8,970	/	mo	12/1/2024
1626 Lee Trevino, Suite A	El Paso	TX	Mortgage Sales	Leased	4,200	$  7,853	/	mo	12/31/2022
9737 Great Hills Trail, Suites 150, 200, 220	Austin	TX	Mortgage Sales	Leased	19,891	$ 37,710	/	mo	8/31/2024
1213 East Alton Gloor Blvd., Suite H	Brownsville	TX	Mortgage Sales	Leased	2,000	$  2,200	/	mo	2/28/2022
7920 Belt Line Rd., Suite 720	Dallas	TX	Mortgage Sales	Sub-Leased	1,714	$  2,428	/	mo	month to month
5020 Collinwood Ave., Suite 100	Fort Worth	TX	Mortgage Sales	Leased	2,687	$  5,300	/	mo	1/31/2025
3000 Joe DiMaggio Blvd., Bldg 12 Suite 42	Round Rock	TX	Mortgage Sales	Leased	920	$  1,750	/	mo	5/15/2021
2408 Jacaman Road, Suite F	Laredo	TX	Mortgage Sales	Leased	N/A	$     900	/	mo	6/1/2022
1900 Country Club Dr., Suite 150	Mansfield	TX	Mortgage Sales	Leased	175	$     325	/	mo	month to month
3220 Gus Thomasson Rd.	Mesquite	TX	Mortgage Sales	Sub-Leased	130	$  1,000	/	mo	month to month
722 Kiowa Dr. West	Lake Kiowa	TX	Mortgage Sales	Leased	150	$     495	/	mo	month to month
1785 Preston Rd., Suite 550	Dallas	TX	Mortgage Sales	Leased	200	$     657	/	mo	8/31/2021
6860 N. Dallas Pkwy	Plano	TX	Mortgage Sales	Leased	200	$     582	/	mo	2/28/2021
2102 Jitterbug Ln.	Katy	TX	Mortgage Sales	Leased	100	$     100	/	mo	month to month
124 N. Main St.	Mansfield	TX	Mortgage Sales	Sub-Leased	100	$  3,000	/	mo	month to month
4411 W. Illinois, Suite B-4	Midland	TX	Mortgage Sales	Sub-Leased	100	$  1,700	/	mo	month to month
590 W. State Street	Pleasant Grove	UT	Mortgage Sales	Leased	250	$     500	/	mo	month to month
5965 S. Redwood Rd.	Taylorsville	UT	Mortgage Sales	Leased	1,000	$  1,400	/	mo	month to month
6575 S. Redwood Rd.	Taylorsville	UT	Mortgage Sales	Leased	3,323	$  5,491	/	mo	12/31/2022
126 W. Sego Lily Dr., Suite 260	Sandy	UT	Mortgage Sales	Leased	2,794	$  5,944	/	mo	8/31/2021
75 Towne Ridge Parkway, Suite 100	Sandy	UT	Mortgage Sales	Leased	6,867	$ 16,695	/	mo	8/31/2023
1133 North Main St., Suite 150	Layton	UT	Mortgage Sales	Sub-Leased	300	$  1,000	/	mo	month to month
497 S. Main	Ephraim	UT	Mortgage Sales	Leased	1,884	$  1,600	/	mo	4/30/2025
6965 S. Union Park, Suites 100, 190, 260, 300, 460, 470, & 480	Midvale	UT	Mortgage Sales	Leased	39,649	$ 82,465	/	mo	6/30/2021
11240 S. River Heights Dr.	South Jordan	UT	Mortgage Sales	Leased	3,403	$  7,740	/	mo	11/30/2024
500 East Village Blvd.	Stansbury Park	UT	Mortgage Sales	Leased	1,950	$  3,180	/	mo	10/31/2024
833 N. 900 W.	Orem	UT	Mortgage Sales	Leased	2,391	$  3,104	/	mo	1/31/2023
1350 E. 300 S. 3rd Floor	Lehi	UT	Mortgage Sales	Leased	15,446	$ 35,140	/	mo	12/22/2026
2455 E. Parleys Way, Suites 120 & 150	Salt Lake City	UT	Mortgage Sales	Leased	5,256	$  8,322	/	mo	7/31/2030
859 W. South Jordan Pkwy, Suite 101	South Jordan	UT	Mortgage Sales	Leased	3,376	$  5,751	/	mo	3/22/2022
558 E. Riverside Dr., Suite 204	St. George	UT	Mortgage Sales	Leased	1,685	$  2,106	/	mo	8/31/2023
21430 Cedar Dr., Suite 200-202	Sterling	VA	Mortgage Sales	Leased	6,850	$ 12,984	/	mo	3/9/2023
15640 NE Fourth Plain Blvd., Suite 220/221	Vancouver	WA	Mortgage Sales	Leased	360	$     425	/	mo	9/30/2021
2701 Currant St.	Lynden	WA	Mortgage Sales	Leased	1,500	$       50	/	mo	month to month
1508 24th Ave., Suite 23	Kenosha	WI	Mortgage Sales	Leased	250	$     150	/	mo	month to month
27903 99th St.	Trevor	WI	Mortgage Sales	Leased	300	$     150	/	mo	month to month
219 W. Washington St.	Charlestown	WV	Mortgage Sales	Leased	N/A	$  1,700	/	mo	4/14/2023

The Company believes the office facilities it occupies are in good operating condition and adequate for current operations. The Company will enter into additional leases or modify existing leases to meet market demand.  Those leases will be month to month where possible. As leases expire, the Company will either renew or find comparable leases or acquire additional office space.

13

Item 2.  Properties (Continued)

The following table summarizes the location and acreage of the six Company owned cemeteries, each of which includes one or more mausoleums:

				Net Saleable Acreage
Name of Cemetery	Location	Date Acquired	Developed Acreage (1)	Total Acreage (1)	Acres Sold as Cemetery Spaces (2)	Total Available Acreage (1)
Memorial Estates, Inc.
Lakeview Cemetery	1640 East Lakeview Drive Bountiful, Utah	1973	9	39	7	32
Mountain View Cemetery	3115 East 7800 South Salt Lake City, Utah	1973	26	54	20	34
Redwood Cemetery (3)	6500 South Redwood Road West Jordan, Utah	1973	28	71	35	36
Deseret Memorial Inc. Lake Hills Cemetery (3)(6)
Lake Hills Cemetery	10055 South State Street Sandy, Utah	1991	9	28	6	22
Holladay Memorial Park, Inc.
Holladay Memorial Park (3)	4900 South Memory Lane Holladay, Utah	1991	12	14	7	7
California Memorial Estates, Inc.
Singing Hills Memorial Park (4)	2800 Dehesa Road El Cajon, California	1995	8	97	6	91

______________

(1)The acreage represents estimates of acres that are based upon survey reports, title reports, appraisal reports, or the Company’s inspection of the cemeteries. The Company estimates that there are approximately 1,200 spaces per developed acre. 

(2)Includes both reserved and occupied spaces. 

(3)Includes two granite mausoleums. 

(4)Includes an open easement. 

14

Item 2. Properties (Continued)

The following table summarizes the location, square footage and the number of viewing rooms and chapels of the eight Company owned mortuaries:

		Date	Viewing		Square
Name of Mortuary	Location	Acquired	Room(s)	Chapel(s)	Footage
Memorial Mortuary, Inc.
Memorial Mortuary	5850 South 900 East
	Murray, Utah	1973	3	1	20,000
Affordable Funerals and  Cremations, St. George	157 East Riverside Dr., No. 3A	2016	1	1	2,360
	St. George, Utah
Memorial Estates, Inc.
Redwood Mortuary (1)	6500 South Redwood Rd.
	West Jordan, Utah	1973	2	1	10,000
Mountain View Mortuary (1)	3115 East 7800 South
	Salt Lake City, Utah	1973	2	1	16,000
Lakeview Mortuary (1)	1640 East Lakeview Dr.
	Bountiful, Utah	1973	0	1	5,500
Lakehills Mortuary (1)	10055 South State St.
	Sandy, Utah	1991	2	1	18,000
Cottonwood Mortuary, Inc.
Cottonwood Mortuary (1)	4670 South Highland Dr.
	Holladay, Utah	1991	2	1	14,500
SN Probst LLC
Heber Valley Funeral Home	288 North Main St.
	Heber City, Utah	2019	1	1	5,900

__________

(1)These funeral homes also provide burial niches at their respective locations. 

Item 3.  Legal Proceedings

Settlement Agreement and Mutual Release with Lehman Brothers Holdings Inc.

From 2004 to early 2008, SecurityNational Mortgage Company (“SecurityNational Mortgage”), a wholly owned subsidiary of the Company, originated “limited documentation” or “reduced documentation” loans which were sold to certain affiliates of Lehman Brothers Holdings Inc. (“Lehman Holdings”). Certain of these loans became the subject of disputes between SecurityNational Mortgage and Lehman Holdings and certain Lehman Holdings affiliates. Lehman Holdings filed a Petition for Relief under Chapter 11 of the United States Bankruptcy Code in 2008. In May of 2011, SecurityNational Mortgage filed a complaint in U.S. District Court against certain Lehman Holdings affiliates.  In June of 2011, Lehman Holdings filed a complaint in Federal District Court against SecurityNational Mortgage, both of which were later resolved. In 2016, certain other pending loan disputes between SecurityNational Mortgage and Lehman Holdings became the subject of an unsuccessful, non-binding alternate dispute resolution mediation proceeding.  

Thereafter, in 2016, Lehman Holdings filed an adversary proceeding complaint against approximately 150 mortgage loan originators, including SecurityNational Mortgage, in the U.S. Bankruptcy Court of the Southern District of New York, which included seeking damages relating to the alleged obligations of the defendants under indemnification provisions of alleged agreements, in amounts to be determined at trial, including interest, attorneys’

15

fees and costs incurred by Lehman Holdings in enforcing the obligations of the defendants. The complaint was later amended with the latest amended complaint filed against SecurityNational Mortgage on December 27, 2016, seeking damages to be determined at trial, including interest, attorneys’ fees and costs. This complaint involved approximately 135 mortgage loans, there being millions of dollars allegedly in dispute. These claims against SecurityNational Mortgage were asserted as a result of Lehman Holdings’ earlier settlements with the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Corporation (“Freddie Mac”).

In 2018, Lehman Holdings filed a separate adversary proceeding complaint against SecurityNational Mortgage. This adversary proceeding allegedly involved approximately 577 mortgage loans relative to private securitization trusts (“RMBS Loans”) and millions of dollars in damages. Thereafter, Lehman Holdings made a filing that effectively reduced the number of RMBS Loans to 248. This proceeding was in addition to the above-referenced proceeding involving the Fannie Mae and Freddie Mac mortgage loans. As with the above-referenced proceeding, damages were sought including interest, costs, and attorneys’ fees. 

SecurityNational Mortgage, as well as other defendants, have been involved in written discovery, and production of documents relative to the cases, and the filing of motions. The deposition phase of the cases was yet to begin, as well as the later expert witness phase. Those phases would require substantial expenditures of legal fees and costs.

On February 1, 2021, SecurityNational Mortgage executed a settlement agreement with Lehman Holdings in relation to these two adversary proceedings wherein all mortgage loan related claims were resolved, thereby ending all liabilities asserted by Lehman Holdings and conclusively ending all proceedings between SecurityNational Mortgage and Lehman Holdings. In accordance with GAAP, the full amount of SecurityNational Mortgage’s settlement payment has been accounted for in the Company’s loan loss reserve as of December 31, 2020.

Item 4.  Mine Safety Disclosures

Not applicable.

16

PART II

Item 5. Market for the Registrant’s Common Stock, Related Stockholder Matters, and Issuer Purchases of Equity Securities

The Company’s Class A common stock trades on The Nasdaq Global Select Market under the symbol “SNFCA.” As of March 23, 2021, the closing stock price of the Class A common stock was $9.69 per share. The following were the high and low market closing stock prices for the Class A common stock by quarter as reported by NASDAQ since January 1, 2019:

	Price Range (1)
	High	Low
Period (Calendar Year)
2019
First Quarter	$5.21	$4.39
Second Quarter	$5.25	$4.42
Third Quarter	$5.07	$4.44
Fourth Quarter	$5.60	$4.47
2020
First Quarter	$6.10	$3.67
Second Quarter	$7.32	$4.01
Third Quarter	$6.98	$5.55
Fourth Quarter	$8.91	$6.42
2021
First Quarter (through March 23, 2021)	$10.54	$8.48

_____________

(1)Stock prices have been adjusted retroactively for the effect of annual stock dividends. 

The Class C common stock is not registered or traded on a national exchange. See Note 12 of the Notes to Consolidated Financial Statements.

The Company has never paid a cash dividend on its Class A or Class C common stock. The Company currently anticipates that all of its earnings will be retained for use in the operation and expansion of its business and does not intend to pay any cash dividends on its Class A or Class C common stock in the foreseeable future. Any future determination as to cash dividends will depend upon the earnings and financial position of the Company and such other factors as the Board of Directors may deem appropriate. A 5% stock dividend on Class A and Class C common stock has been paid each year from 1990 through 2019 and a 7.5% stock dividend was paid for year 2020.

On September 7, 2018, the Board of Directors of the Company approved a Stock Repurchase Plan that authorized the repurchase of 300,000 shares of the Company's Class A Common Stock in the open market. The Stock Repurchase Plan was amended on December 4, 2020. The amendment authorized the repurchase of a total of 1,000,000 shares of the Company’s Class A Common Stock in the open market. The repurchased shares of Class A common stock will be held as treasury shares to be used as the Company's employer matching contribution to the Employee 401(k) Retirement Savings Plan and for shares held in the Deferred Compensation Plan. The following table shows the Company’s repurchase activity of its common stock during the three months ended December 31, 2020 under its Stock Repurchase Plan.

17

Period	(a) Total Number of Class A Shares Purchased	(b) Average Price Paid per Class A Share	(c) Total Number of Class A Shares Purchased as Part of Publicly Announced Plan or Program	(d) Maximum Number of Class A Shares that May Yet Be Purchased Under the Plan or Program
10/1/2020-10/31/2020	8,630	$               6.46	-	80,488
11/1/2020-11/30/2020	9,960	$               7.55	-	70,528
12/1/2020-12/31/2020	19,551	$               8.36	-	750,977
Total	38,141	$               7.79	-	750,977

The graph below compares the cumulative total stockholder return of the Company’s Class A common stock with the cumulative total return on the Standard & Poor’s 500 Stock Index and the Standard & Poor’s Insurance Index for the period from December 31, 2016 through December 31, 2020. The graph assumes that the value of the investment in the Company’s Class A common stock and in each of the indexes was $100 at December 31, 2016 and that all dividends were reinvested.

The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of the Company’s Class A common stock.

 

	12/31/16	12/31/17	12/31/18	12/31/19	12/31/20
SNFC	100	85	88	104	160
S & P 500	100	119	112	144	168
S & P Insurance	100	114	99	125	121

The stock performance graph set forth above is required by the Securities and Exchange Commission and shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed soliciting material or filed under such acts.

18

Item 6. Selected Financial Data

As a smaller reporting company, the Company is not required to provide information typically disclosed under this item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company’s operations over the last several years generally reflect three trends or events which the Company expects to continue: (i) increased attention to “niche” insurance products, such as the Company’s funeral plan policies and traditional whole life products; (ii) emphasis on cemetery and mortuary business; and (iii) capitalizing on an improving housing market by originating mortgage loans. The Company has adjusted its operations and sales approach to respond to the changing economic circumstances resulting from the COVID-19 pandemic.

Insurance Operations

The following table shows the condensed financial results for the Company’s insurance operations for the years ended December 31, 2020 and 2019.  See Note 15 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2020	2019	2020 vs 2019 % Increase (Decrease)
Revenues from external customers:
Insurance premiums	$    93,021	$    81,861	14%
Net investment income	54,811	41,611	32%
Gains (losses) on investments and other assets	2,089	138	1414%
Other than temporary impairments	(371)	-	(100)%
Other	1,492	2,129	(30%)
Total	$  151,042	$  125,739	20%
Intersegment revenue	$      8,023	$      4,455	80%
Earnings before income taxes	$    11,923	$      6,565	82%

Intersegment revenues for the Company’s insurance operations were primarily interest income from the warehouse lines provided to its mortgage lending affiliates to fund loans held for sale. Profitability in 2020 increased due to a $13,201,000 increase in net investment income, a $11,160,000 increase in insurance premiums and other considerations, a $3,567,000 increase in intersegment revenue, a $1,950,000 increase in gains on investments and other assets primarily due to a decrease in impairment losses on commercial real estate, a $581,000 decrease in amortization of deferred policy acquisition costs, and a $453,000 decrease in interest expense. This increase was partially offset by a $17,930,000 increase in death, surrenders and other policy benefits ($6,239,000 for COVID-19 related deaths), a $6,449,000 increase in selling, general and administrative expenses, and a $637,000 decrease in other revenues. The Company acquired Kilpatrick Life Insurance Company (“Kilpatrick Life”) in December 2019. See Note 15 to the condensed consolidated financial statements. This acquisition is the primary reason for the increases in insurance premiums, net investment income, death, surrenders and other policy benefits, and selling, general and administrative expenses.

In response to the COVID-19 pandemic, the life insurance sales force has transitioned to virtual and tele sales processes and transitioned approximately 95% of office staff to work remotely.

19

Cemetery and Mortuary Operations

The following table shows the condensed financial results for the Company’s cemetery and mortuary operations for the years ended December 31, 2020 and 2019. See Note 15 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2020	2019	2020 vs 2019 % Increase (Decrease)
Revenues from external customers:
Mortuary revenues	$        7,854	$        6,541	20%
Cemetery revenues	12,454	8,755	42%
Net investment income	808	580	39%
Gains on investments and other assets	(163)	530	(131%)
Other	94	95	(1%)
Total	$      21,047	$      16,501	28%
Earnings before income taxes	$        4,399	$        2,660	65%

Profitability in 2020 has increased due to a $2,133,000 increase in cemetery pre-need sales, a $1,566,000 increase in cemetery at-need sales, a $1,312,000 increase in mortuary at-need sales, and a $228,000 increase in net investment income. This increase was partially offset by a $2,178,000 increase in selling, general and administrative expenses, a $693,000 decrease in gains on investments and other assets primarily attributable to a $621,000 decrease in gains on real estate sales and a $72,000 decrease in the fair value of equity securities classified as restricted assets and cemetery perpetual care trust investments due to the recent downturn of the economy caused by the COVID-19 pandemic, and a $374,000 increase in costs of goods sold.

As a result of the COVID-19 pandemic, the Company has seen a decrease in its average case size as funeral services have been limited. The Company has transitioned its pre-need sales force to virtual selling and has done in home sales as local regulations permit.

Mortgage Operations

The Company’s wholly owned subsidiaries, SecurityNational Mortgage and EverLEND Mortgage Company, are mortgage lenders incorporated under the laws of the State of Utah and approved and regulated by the Federal Housing Administration (FHA), a department of the U.S. Department of Housing and Urban Development (HUD), which originate mortgage loans that qualify for government insurance in the event of default by the borrower, in addition to various conventional mortgage loan products. SecurityNational Mortgage and EverLEND Mortgage originate and refinance mortgage loans on a retail basis. Mortgage loans originated or refinanced by the Company’s mortgage subsidiaries are funded through loan purchase agreements with Security National Life, Kilpatrick Life and unaffiliated financial institutions.

The Company’s mortgage subsidiaries receive fees from borrowers that are involved in mortgage loan originations and refinancings, and secondary fees earned from third party investors that purchase the mortgage loans originated by the mortgage subsidiaries. Mortgage loans originated by the mortgage subsidiaries are generally sold with mortgage servicing rights released to third-party investors or retained by SecurityNational Mortgage. SecurityNational Mortgage currently retains the mortgage servicing rights on approximately 67% of its loan origination volume. These mortgage loans are serviced by either SecurityNational Mortgage or an approved third-party sub-servicer.

For the twelve months ended December 31, 2020 and 2019, SecurityNational Mortgage originated 21,206 loans ($5,472,503,000 total volume) and 10,885 loans ($2,534,399,000 total volume), respectively. For the twelve months ended December 31, 2020 and 2019, EverLEND Mortgage originated 511 loans ($154,511,000 total volume) and 275 loans ($72,440,000 total volume), respectively.

During the COVID-19 pandemic, the demand for mortgage loans has increased. The Company has seen most markets increase their demand for new homes and refinances on existing homes. The Company has transitioned 90% of its processes to a remote work environment.

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The following table shows the condensed financial results for the Company’s mortgage operations for the years ended 2020 and 2019.  See Note 15 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2020	2019	2020 vs 2019 % Increase (Decrease)
Revenues from external customers:
Income from loan originations	$      67,174	$      38,394	75%
Secondary gains from investors	231,759	93,582	148%
Net investment income	711	829	(14%)
Gains on investments and other assets	0	60	(100%)
Other	9,732	7,956	22%
Total	$    309,376	$    140,821	120%
Earnings before income taxes	$      55,128	$        4,718	1068%

Included in other revenues is service fee income. The increase in revenues for the Company’s mortgage operations for the twelve months ended December 31, 2020 as compared to December 31, 2019 was due to an increase in mortgage loan originations and refinancings, and subsequent sales of mortgage loans into the secondary market.

Mortgage Loan Loss Settlements

Future loan losses can be extremely difficult to estimate.  However, management believes that the Company’s reserve methodology and its current practice of property preservation allow it to estimate potential losses on mortgage loans sold. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2020 and 2019, the balances were $20,584,000 and $4,046,000, respectively.

Mortgage Loan Loss Litigation

For a description of the litigation involving SecurityNational Mortgage and Lehman Brothers Holdings, see Part I, Item 3. Legal Proceedings.

Significant Accounting Policies

The following is a brief summary of the Company’s significant accounting policies and a review of the Company’s most critical accounting estimates. See Note 1 of the Notes to Consolidated Financial Statements.

Insurance Operations

In accordance with generally accepted accounting principles in the United States of America (“GAAP”), premiums and other considerations received for interest sensitive products are reflected as increases in liabilities for policyholder account balances and not as revenues. Revenues reported for these products consist of policy charges for the cost of insurance, administration charges, amortization of policy initiation fees and surrender charges assessed against policyholder account balances. Surrender benefits paid relating to these products are reflected as decreases in liabilities for policyholder account balances and not as expenses.

The Company receives investment income earned from the funds deposited into account balances, a portion of which is passed through to the policyholders in the form of interest credited. Interest credited to policyholder account balances and benefit claims in excess of policyholder account balances are reported as expenses in the consolidated financial statements.

Premiums and other considerations received for traditional life insurance products are recognized as revenues when due. Future policy benefits are recognized as expenses over the life of the policy by means of the provision for future policy benefits.

The costs related to acquiring new business, including certain costs of issuing policies and other variable selling expenses (principally commissions), defined as deferred policy acquisition costs, are capitalized and amortized into expense. For nonparticipating traditional life products, these costs are amortized over the premium paying period of

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the related policies, in proportion to the ratio of annual premium revenues to total anticipated premium revenues. Such anticipated premium revenues are estimated using the same assumptions used for computing liabilities for future policy benefits and are generally “locked in” at the date the policies are issued. For interest sensitive products, these costs are amortized generally in proportion to expected gross profits from surrender charges and investment, mortality and expense margins. This amortization is adjusted when the Company revises the estimate of current or future gross profits or margins. For example, deferred policy acquisition costs are amortized earlier than originally estimated when policy terminations are higher than originally estimated or when investments backing the related policyholder liabilities are sold at a gain prior to their anticipated maturity.

Death and other policyholder benefits reflect exposure to mortality risk and fluctuate from year to year on the level of claims incurred under insurance retention limits. The profitability of the Company is primarily affected by fluctuations in mortality, other policyholder benefits, expense levels, interest spreads (i.e., the difference between interest earned on investments and interest credited to policyholders) and persistency. The Company has the ability to mitigate adverse experience through sound underwriting, asset and liability duration matching, sound actuarial practices, adjustments to credited interest rates, policyholder dividends and cost of insurance charges.

Cemetery and Mortuary Operations

Pre-need sales of funeral services and caskets, including revenue and costs associated with the sales of pre-need funeral services and caskets, are deferred until the services are performed or the caskets are delivered.

Pre-need sales of cemetery interment rights (cemetery burial property), including revenue and costs associated with the sales of pre-need cemetery interment rights, are recognized in accordance with the retail land sales provisions of GAAP. Under GAAP, recognition of revenue and associated costs from constructed cemetery property must be deferred until a minimum percentage of the sales price has been collected. Revenues related to the pre-need sale of unconstructed cemetery property will be deferred until such property is constructed and meets the criteria of GAAP, described above.

Pre-need sales of cemetery merchandise (primarily markers and vaults), including revenue and costs associated with the sales of pre-need cemetery merchandise, are deferred until the merchandise is delivered, fulfilling the performance obligation.

Pre-need sales of cemetery services (primarily merchandise delivery and installation fees and burial opening and closing fees), including revenue and costs associated with the sales of pre-need cemetery services, are deferred until the services are performed.

Prearranged funeral and pre-need cemetery customer obtaining costs, including costs incurred related to obtaining new pre-need cemetery and prearranged funeral business are accounted for under the guidance of the provisions of GAAP. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral business, are deferred until the merchandise is delivered or services are performed.

Revenues and costs for at-need sales are recorded when a valid contract exists, the services are performed, collection is reasonably assured, and there are no significant company obligations remaining.

Mortgage Operations

Mortgage fee income consists of origination fees, processing fees, interest income and certain other income related to the origination and sale of mortgage loans. The Company has elected to use fair value accounting for all mortgage loans that are held for sale. Accordingly, all revenues and costs are now recognized when the mortgage loan is funded and any changes in fair value are shown as a component of mortgage fee income.

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The Company, through its mortgage subsidiaries, sells mortgage loans to third-party investors without recourse, unless defects are identified in the representations and warranties made at loan sale. It may be required, however, to repurchase a loan or pay a fee instead of repurchase under certain events, which include the following:

·Failure to deliver original documents specified by the investor, 

·The existence of misrepresentation or fraud in the origination of the loan, 

·The loan becomes delinquent due to nonpayment during the first several months after it is sold, 

·Early pay-off of a loan, as defined by the agreements, 

·Excessive time to settle a loan, 

·Investor declines purchase, and 

·Discontinued product and expired commitment. 

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company.

It is the Company’s policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month time period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

·Research reasons for rejection, 

·Provide additional documents, 

·Request investor exceptions, 

·Appeal rejection decision to purchase committee, and 

·Commit to secondary investors. 

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six-month time period, the loans are repurchased and transferred to mortgage loans held for investment at the lower of cost or fair value and the previously recorded sales revenue that was to be received from a third-party investor is written off against the loan loss reserve. Any loan that later becomes delinquent is evaluated by the Company at that time and any impairment is adjusted accordingly.

Determining lower of cost or market. Cost for loans held for sale is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Market value, while often difficult to determine, is based on the following guidelines:

·For loans that are committed, the Company uses the commitment price. 

·For loans that are non-committed that have an active market, the Company uses the market price. 

·For loans that are non-committed where there is no market but there is a similar product, the Company uses the market value for the similar product. 

·For loans that are non-committed where no active market exists, the Company determines that the unpaid principal balance best approximates the market value, after considering the fair value of the underlying real estate collateral, estimated future cash flows, and loan interest rate. 

The appraised value of the real estate underlying the original mortgage loan adds significance to the Company’s determination of fair value because, if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan, thus minimizing credit risk.

The majority of loans originated are sold to third-party investors. The amounts expected to be sold to investors are shown on the consolidated balance sheets as loans held for sale.

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Use of Significant Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. It is reasonably possible that actual experience could differ from the estimates and assumptions utilized which could have a material impact on the financial statements. The following is a summary of our significant accounting estimates, and critical issues that impact them:

Loan Commitments

The Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage backed security (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment net of estimated commission expense. The change in fair value of the underlying mortgage loan is measured from the date the mortgage loan commitment is issued and is shown net of related expenses. Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of mortgage loans that will fund within the terms of the commitments.

Deferred Acquisition Costs

Amortization of deferred policy acquisition costs for interest sensitive products is dependent upon estimates of current and future gross profits or margins on this business. Key assumptions used include the following: yield on investments supporting the liabilities, amount of interest or dividends credited to the policies, amount of policy fees and charges, amount of expenses necessary to maintain the policies, amount of death and surrender benefits, and the length of time the policies will stay in force.

For nonparticipating traditional life products, these costs are amortized over the premium paying period of the related policies in proportion to the ratio of annual premium revenues to total anticipated premium revenues. Such anticipated premium revenues are estimated using the same assumption used for computing liabilities for future policy benefits and are generally “locked in” at the date the policies are issued.

Value of Business Acquired

Value of business acquired is the present value of estimated future profits of the acquired business and is amortized similar to deferred acquisition costs. The critical issues explained for deferred acquisition costs would also apply for value of business acquired.

Mortgage Loans Foreclosed to Real Estate Held for Investment or Sale

These properties are recorded at the lower of cost or fair value upon foreclosure. The Company believes that in an orderly market, fair value approximates the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for estimated future policy benefits. Accordingly, the fair value determination is generally weighted more heavily toward the rental analysis. The fair value is also estimated by obtaining an independent appraisal, which typically considers area comparables and property condition.

Future Policy Benefits

Reserves for future policy benefits for traditional life insurance products requires the use of many assumptions, including the duration of the policies, mortality experience, expenses, investment yield, lapse rates, surrender rates, and dividend crediting rates.

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These assumptions are made based upon historical experience, industry standards and a best estimate of future results and, for traditional life products, include a provision for adverse deviation. For traditional life insurance, once established for a particular series of products, these assumptions are generally held constant.

Unearned Revenue

The universal life products the Company sells have significant policy initiation fees (front-end load) that are deferred and amortized into revenues over the estimated expected gross profits from surrender charges and investment, mortality and expense margins. The same issues that impact deferred acquisition costs would apply to unearned revenue.

Deferred Pre-need Cemetery and Funeral Contracts Revenues and Estimated Future Cost of Pre-need Sales

The revenue and cost associated with the sales of pre-need cemetery merchandise and funeral services are deferred until the merchandise is delivered or the service is performed.

The Company, through its cemetery and mortuary operations, provides a guaranteed funeral arrangement wherein a prospective customer can receive future goods and services at guaranteed prices. To accomplish this, the Company, through its life insurance operations, sells to the customer an increasing benefit life insurance policy that is assigned to the mortuaries. If, at the time of need, the policyholder or potential mortuary customer utilizes one of the Company’s facilities, the guaranteed funeral arrangement contract that has been assigned will provide the funeral goods and services at the contracted price. The increasing life insurance policy will cover the difference between the original contract prices and current prices. Risks may arise if the difference cannot be fully met by the life insurance policy.

Mortgage Servicing Rights

Mortgage Service Rights (“MSR”) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company is obligated to retain and provide loan servicing functions on the loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest; holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of real estate owned and property dispositions. The Company initially accounts for MSRs at fair value and subsequently accounts for them using the amortization method. MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of the estimated future net servicing income of the underlying financial assets. The Company periodically assesses MSRs accounted for using the amortization method for impairment.

Mortgage Allowance for Loan Losses and Loan Loss Reserve

The Company provides for losses on its mortgage loans held for investment through an allowance for loan losses (a contra-asset account) and through the mortgage loan loss reserve (a liability account). The allowance for loan losses is an allowance for losses on the Company’s mortgage loans held for investment. The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired.

Upon determining impairment, the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as real estate held for investment. The Company will rent the properties until it is deemed desirable to sell them.

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on mortgage loans sold to third-party investors. The Company may be required to reimburse third-party investors for costs associated with early payoff of loans within six months of origination of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu

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of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale relating to any guarantee or recourse provisions in the event of defects in the representations and warranties made at loan sale. The Company accrues a monthly allowance for indemnification losses to investors based on total production. This estimate is based on the Company’s historical experience and is included as a component of mortgage fee income. Subsequent updates to the recorded liability from changes in assumptions are recorded in selling, general and administrative expenses. The estimated liability for indemnification losses is included in other liabilities and accrued expenses.

The Company believes the allowance for loan losses and the loan loss reserve represent probable loan losses incurred as of the balance sheet date.

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities require various estimates and judgments and may be affected favorably or unfavorably by various internal and external factors.  These estimates and judgments occur in the calculation of certain deferred tax assets and liabilities that arise from temporary differences in the recognition of revenues and expenses for tax and financial reporting purposes and in estimating the ultimate amount of deferred tax assets recoverable in future periods. Factors affecting the deferred tax assets and liabilities include, but are not limited to, changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws or regulations, and changes to overall levels of pre-tax earnings.  Changes in these estimates, judgments or factors may result in an increase or decrease to the Company’s deferred tax assets and liabilities with a related increase or decrease in the Company’s provision for income taxes.

Results of Consolidated Operations

2020 Compared to 2019

Total revenues increased by $198,402,000, or 70.1%, to $481,463,000 for 2020 from $283,061,000 for the fiscal year 2019. Contributing to this increase in total revenues was a $166,957,000 increase in mortgage fee income, a $13,310,000 increase in net investment income, a $11,160,000 increase in insurance premiums and other considerations, a $5,011,000 increase in net cemetery and mortuary sales, a $1,198,000 increase in gains on investments and other assets, and a $1,137,000 increase in other revenues. This increase in total revenues was offset by a $371,000 increase in other than temporary impairments.

Insurance premiums and other considerations increased by $11,160,000, or 13.6%, to $93,021,000 for 2020, from $81,861,000 for the comparable period in 2019. This increase was primarily due to $10,452,000 from the acquisition of Kilpatrick Life in December 2019. See Note 20 to the consolidated financial statements. This increase was also due to an increase in renewal premiums due to the growth of the Company in recent years, particularly in whole life products, which resulted in more premium paying business in force.

Net investment income increased by $13,310,000, or 30.9%, to $56,330,000 for 2020, from $43,019,000 for the comparable period in 2019. This increase was primarily attributable to a $7,268,000 increase in mortgage loan interest ($4,048,000 due to interest on residential construction loans and $1,763,000 due to the acquisition of Kilpatrick Life), a $3,162,000 increase in rental income from real estate held for investment ($1,711,000 due to the acquisition of Kilpatrick Life and $1,651,000 due to Center53 building 1 now at 96% occupancy), a $1,861,000 increase in fixed maturity securities income ($2,233,000 due to the acquisition of Kilpatrick Life), a $1,752,000 increase in insurance assignment income, a $470,000 increase in policy loan income ($489,000 due to the acquisition of Kilpatrick Life), and a $333,000 increase in equity securities income ($44,000 due to the acquisition of Kilpatrick Life). This increase was partially offset by a $1,398,000 decrease in interest on cash and cash equivalents ($118,000 increase due to the acquisition of Kilpatrick Life), a $79,000 increase in investment expenses ($502,000 due to the acquisition of Kilpatrick Life), and a $59,000 decrease in income from other investments ($25,000 increase due to the acquisition of Kilpatrick Life).

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Net mortuary and cemetery sales increased by $5,011,000, or 32.8%, to $20,307,000 for 2020, from $15,296,000 for the comparable period in 2019. This increase was primarily due to a $2,133,000 increase in cemetery pre-need sales, a $1,566,000 increase in cemetery at-need sales, and a $1,312,000 increase in mortuary at-need sales.

Gains on investments and other assets increased by $1,197,000, or 164.4%, to $1,926,000 for 2020, from $728,000 for the comparable period in 2019. This increase in gains on investments and other assets was primarily due to a $1,268,000 increase in gains on other assets ($341,000 due to the acquisition of Kilpatrick Life) mostly attributable to a decrease in impairment losses on commercial real estate. This increase in gains on investments and other assets was also due to a $71,000 increase in gains on fixed maturity securities ($137,000 due to the acquisition of Kilpatrick Life). This decrease in gains on investments and other assets was partially offset by a $142,000 decrease in gains on equity securities ($549,000 increase due to the acquisition of Kilpatrick Life).

Mortgage fee income increased by $166,957,000, or 126.5%, to $298,933,000 for 2020, from $131,976,000 for the comparable period in 2019. This increase was primarily due to a $138,177,000 increase in secondary gains from mortgage loans sold to third-party investors into the secondary market, a $18,421,000 increase in loan fees and interest income, and a $14,653,000 increase in the fair value of loans held for sale and loan commitments. This increase in mortgage fee income was partially offset by a $4,294,000 increase in the provision for loan loss reserve.

Other revenues increased by $1,137,000, or 11.2%, to $11,317,000 for 2020 from $10,180,000 for the comparable period in 2019. This increase was primarily attributable to an increase in servicing fee revenue.

Total benefits and expenses were $410,013,000, or 85.2% of total revenues for 2020, as compared to $269,117,000, or 95.1% of total revenues for the comparable period in 2019.

Death benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $17,930,000, or 26.2%, to $86,410,000 for 2020, from $68,480,000 for the comparable period in 2019. This increase was primarily the result of a $17,449,000 increase in death benefits ($8,324,000 due to the acquisition of Kilpatrick Life and $6,239,000 for COVID-19 related deaths) and a $481,000 increase in surrender and other policy benefits ($918,000 due to the acquisition of Kilpatrick Life).

Amortization of deferred policy and pre-need acquisition costs and value of business acquired decreased by $327,000, or 2.2%, to $14,307,000 for 2020, from $14,634,000 for the comparable period in 2019. This decrease was primarily due to improved persistency in the payment of premiums in the traditional life business. ($125,000 increase due to the acquisition of Kilpatrick Life).

Selling, general and administrative expenses increased by $121,727,000, or 69.3%, to $297,464,000 for 2020, from $175,737,000 for the comparable period in 2019. This increase was primarily the result of a $67,663,000 increase in commissions, a $20,769,000 increase in personnel expenses, a $16,506,000 increase in the provision for loan loss reserve, a $12,408,000 increase in other expenses, a $3,599,000 increase in costs related to funding mortgage loans, a $596,000 increase in advertising expenses, and a $367,000 increase in depreciation on property and equipment. This increase was partially offset by a $182,000 decrease in rent and rent related expenses. Most of these increases are attributable to the mortgage segment due to the increase in mortgage loan originations and refinancings, most notably $66,600,000 in commissions, $15,140,000 in personnel expenses, $11,192,000 in other expenses, and $554,838 in advertising expenses. Also, these increases are attributable to the acquisition of Kilpatrick Life, most notably $2,027,000 in personnel expenses, $1,329,000 in other expenses, and $1,047,000 in commissions.

Interest expense increased by $1,192,000, or 16.1%, to $8,579,000 for 2020, from $7,387,000 for the comparable period in 2019. This increase was primarily due to an increase of $1,735,000 in interest expense on mortgage warehouse lines for loans held for sale. This increase was partially offset by a $598,000 decrease in interest expense on bank loans collateralized by real estate held for investment.

Cost of goods and services sold of the cemeteries and mortuaries increased by $374,000, or 13.0%, to $3,252,000 for 2020, from $2,878,000 for the comparable period in 2019. This increase was primarily due to an $176,000 increase in mortuary at-need sales, a $126,000 increase in cemetery at-need sales, and a $72,000 increase in cemetery pre-need sales.

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Income tax expense increased by $12,803,000, or 412.4%, to $15,854,000 for 2020, from $3,050,00 for the comparable period in 2019.  This increase was primarily due to an increase in earnings before income taxes for 2020 compared to 2019.

Risks

The following is a description of the most significant risks facing the Company and how it mitigates those risks:

Legal and Regulatory Risks. Changes in the legal or regulatory environment in which the Company operates may create additional expenses and risks not anticipated by the Company in developing and pricing its products. Regulatory initiatives designed to reduce insurer profits, new legal theories or insurance company insolvencies through guaranty fund assessments may create costs for the insurer beyond those recorded in the consolidated financial statements. In addition, changes in tax law with respect to mortgage interest deductions or other public policy or legislative changes may affect the Company’s mortgage sales. Also, the Company may be subject to further regulations in the cemetery and mortuary business. The Company mitigates these risks by offering a wide range of products and by diversifying its operations, thus reducing its exposure to any single product or jurisdiction, and also by employing underwriting practices that identify and minimize the adverse impact of such risks.

Mortgage Industry Risks. Developments in the mortgage industry and credit markets can adversely affect the Company’s ability to sell its mortgage loans to investors, which can impact the Company’s financial results by requiring it to assume the risk of holding and servicing any unsold loans.

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company could realize in the future on mortgage loans sold to third-party investors. The Company’s mortgage subsidiaries may be required to reimburse third-party investors for costs associated with early payoff of loans within the first six months of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

During the twelve months ended December 31, 2020 and 2019 the Company increased its loan loss reserve by $4,938,000 and $643,000, respectively, for loan originations, and the charge has been included in mortgage fee income. During the twelve months ended December 31, 2020 and 2019 the Company increased its loan loss reserve by an additional $16,506,000 and $-0-, respectively, to account for changes in estimates specific to settlements of loan losses. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2020 and 2019, the balances were $20,584,000 and $4,046,000, respectively. The Company believes the loan loss reserve represent probable loan losses incurred as of December 31, 2020. There is a risk, however, that future loan losses may exceed the loan loss reserve.

As of December 31, 2020, the Company’s mortgage loans held for investment portfolio consisted of $10,282,000 in mortgage loans with delinquencies more than 90 days. Of this amount, $2,464,000 of the loans were in foreclosure proceedings. The Company has not received or recognized any interest income on the $10,282,000 in mortgage loans with delinquencies more than 90 days. During the twelve months ended December 31, 2020 and 2019, the Company increased its allowance for loan losses by $552,000 and by $105,000, respectively, which was charged to bad debt expense and included in selling, general and administrative expenses for the period. The allowances for loan losses on the Company’s held for investment portfolio as of December 31, 2020 and 2019 were $2,005,000 and $1,453,000, respectively.

Interest Rate Risk. The risk that interest rates will change, which may cause a decrease in the value of the Company’s investments or impair the ability of the Company to market its mortgage and cemetery and mortuary products. This change in rates may cause certain interest-sensitive products to become uncompetitive or may cause disintermediation. The Company mitigates this risk by charging fees for non-conformance with certain policy provisions, by offering products that transfer this risk to the purchaser, and by attempting to match the maturity schedule of its assets with the expected payouts of its liabilities. To the extent that liabilities come due more quickly than assets mature, the Company might have to borrow funds or sell assets prior to maturity and potentially recognize a loss on the sale.

Mortality and Morbidity Risks. The risk that the Company’s actuarial assumptions may differ from actual mortality and morbidity experiences may cause the Company’s products to be underpriced, may cause the Company to liquidate

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insurance or other claims earlier than anticipated, and other potentially adverse consequences to the business. The Company minimizes this risk through sound underwriting practices, asset and liability duration matching, and sound actuarial practices.

COVID-19. During 2020, the outbreak of COVID-19 had spread worldwide and was declared a global pandemic by the World Health Organization on March 11, 2020. COVID-19 poses a threat to the health and economic well-being of the Company’s employees, customers, and vendors. The Company is closely monitoring developments relating to the COVID-19 pandemic and assessing its impact on the Company’s business. The COVID-19 pandemic has had and continues to have a major impact on the global economy and financial markets. Governments and businesses have taken numerous measures to try to contain the virus, which include the implementation of travel bans, self-imposed quarantine periods, and social distancing. These measures have disrupted and will continue to disrupt businesses globally. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize the economic conditions.

Like most businesses, COVID-19 has impacted the Company. However, the Company cannot, with any certainty predict the severity or duration with which COVID-19 will impact the Company’s business, financial condition, results of operations, and cash flows. To the extent the COVID-19 pandemic adversely affects the Company’s business, financial condition, and results of operations, it may also have the effect of heightening many of the other risks described in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. These uncertainties have the potential to negatively affect the risk of credit default for the issuers of the Company’s fixed maturity debt securities and individual borrowers with mortgage loans held by the Company.

The Company has implemented risk management, business continuity plans and has taken preventive measures and other precautions, such as business travel restrictions and remote work arrangements. Such measures and precautions have enabled the Company to continue to conduct business.

Estimates.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative assets and liabilities; those used in determining deferred acquisition costs and the value of business acquired; those used in determining the value of mortgage loans foreclosed to real estate held for investment; those used in determining the liability for future policy benefits and unearned revenue; those used in determining the estimated future costs for pre-need sales; those used in determining the value of mortgage servicing rights; those used in determining allowances for loan losses for mortgage loans held for investment; those used in determining loan loss reserve; and those used in determining deferred tax assets and liabilities. Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects.

Liquidity and Capital Resources

The Company’s life insurance subsidiaries and cemetery and mortuary subsidiaries realize cash flow from premiums, contract payments and sales on personal services rendered for cemetery and mortuary business, from interest and dividends on invested assets, and from the proceeds from the maturity of held to maturity investments or sale of other investments. The mortgage subsidiaries realize cash flow from fees generated by originating and refinancing mortgage loans and fees on mortgage loans held for sale that are sold to investors. The Company considers these sources of cash flow to be adequate to fund future policyholder and cemetery and mortuary liabilities, which generally are long-term, and adequate to pay current policyholder claims, annuity payments, expenses related to the issuance of new policies, the maintenance of existing policies, debt service, and to meet current operating expenses. It should be noted that current conditions in the financial markets and economy caused by the COVID-19 pandemic may affect the cash flows of the Company.

During the twelve months ended December 31, 2020 and 2019, the Company's operations used cash of $129,627,000 and $75,602,000, respectively. This increase was primarily due to originations of mortgage loans held for sale.

29

The Company’s liability for future policy benefits is expected to be paid out over the long-term due to the Company’s market niche of selling funeral plans. Funeral plans are small face value life insurance that will pay the costs and expenses incurred at the time of a person’s death. A person generally will keep these policies in force and will not surrender them prior to a person’s death. Because of the long-term nature of these liabilities, the Company is able to hold to maturity its bonds, real estate and mortgage loans thus reducing the risk of liquidating these long-term investments as a result of any sudden changes in market values.

The Company attempts to match the duration of invested assets with its policyholder and cemetery and mortuary liabilities. The Company may sell investments other than those held to maturity in the portfolio to help in this timing. The Company purchases short-term investments on a temporary basis to meet the expectations of short-term requirements of the Company’s products. The Company’s investment philosophy is intended to provide a rate of return, which will persist during the expected duration of policyholder and cemetery and mortuary liabilities regardless of future interest rate movements.

The Company’s investment policy is also to invest predominantly in fixed maturity securities, real estate, mortgage loans, and warehousing of mortgage loans held for sale on a short-term basis before selling the loans to investors in accordance with the requirements and laws governing the life insurance subsidiaries. Bonds owned by the insurance subsidiaries amounted to $294,384,000 (at estimated fair value) and $355,613,000 (at estimated fair value) as of December 31, 2020 and 2019, respectively. This represents 38.0% and 45.5% of the total investments as of December 31, 2020, and 2019, respectively. Generally, all bonds owned by the life insurance subsidiaries are rated by the National Association of Insurance Commissioners. Under this rating system, there are six categories used for rating bonds. At December 31, 2020, 4.2% (or $12,418,000) and at December 31, 2019, 2.2% (or $7,633,000) of the Company’s total bond investments were invested in bonds in rating categories three through six, which are considered non-investment grade.

See Note 2 of the Notes to Consolidated Financial Statements for the schedule of the maturity of fixed maturity securities available for sale and for the schedule of principal payments for mortgage loans held for investment.

See Note 7 of the Notes to Consolidated Financial Statements for a description of the Company’s sources of liquidity.

If market conditions were to cause interest rates to change, the fair value of the Company’s fixed income portfolio (of approximately $544,001,000), which includes bonds, preferred stocks and mortgage loans held for investment, could change by the following amounts based on the respective basis point swing (the change in the fair values were calculated using a modeling technique):

	-200 bps	-100 bps	+100 bps	+200 bps
Change in Fair Value (in thousands)	$15,635	$6,869	$(10,662)	$(19,428)

The Company is subject to risk-based capital guidelines established by statutory regulators requiring minimum capital levels based on the perceived risk of assets, liabilities, disintermediation, and business risk. At December 31, 2020 and 2019, the capital levels of the life insurance subsidiaries exceeded the regulatory criteria.

The Company’s total capitalization of stockholders’ equity, and bank loans and other loans payable was $561,811,000 as of December 31, 2020, as compared to $414,283,000 as of December 31, 2019. Stockholders’ equity as a percent of total capitalization was 47.0% and 47.5% as of December 31, 2020 and December 31, 2019, respectively. Bank loans and other loans payable increased by $80,252,000 for the twelve months ended December 31, 2020 as compared to December 31, 2019, thus limiting the increase in the stockholders’ equity percentage.

Lapse rates measure the amount of insurance terminated during a particular period. The Company’s lapse rate for life insurance was 5.9% in 2020 as compared to a rate of 9.8% for 2019.

The combined statutory capital and surplus of the Company’s life insurance subsidiaries was $78,493,000 and $74,140,000 as of December 31, 2020 and 2019, respectively. The life insurance subsidiaries cannot pay a dividend to its parent company without the approval of state insurance regulatory authorities.

30

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about their businesses without fear of litigation so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in such statements. The Company desires to take advantage of the “safe harbor” provisions of the act.

This Annual Report on Form 10-K contains forward-looking statements, together with related data and projections, about the Company’s projected financial results and its future plans and strategies. However, actual results and needs of the Company may vary materially from forward-looking statements and projections made from time to time by the Company on the basis of management’s then-current expectations. The business in which the Company is engaged involves changing and competitive markets, which may involve a high degree of risk, and there can be no assurance that forward-looking statements and projections will prove accurate.

Factors that may cause the Company’s actual results to differ materially from those contemplated or projected, forecast, estimated or budgeted in such forward looking statements include among others, the following possibilities: (i) heightened competition, including the intensification of price competition, the entry of new competitors, and the introduction of new products by new and existing competitors; (ii) adverse state and federal legislation or regulation, including decreases in rates, limitations on premium levels, increases in minimum capital and reserve requirements, benefit mandates and tax treatment of insurance products; (iii) fluctuations in interest rates causing a reduction of investment income or increase in interest expense and in the market value of interest rate sensitive investment; (iv) failure to obtain new customers, retain existing customers or reductions in policies in force by existing customers; (v) higher service, administrative, or general expenses due to the need for additional advertising, marketing, administrative or management information systems expenditures; (vi) loss or retirement of key executives or employees; (vii) increases in medical costs; (viii) changes in the Company’s liquidity due to changes in asset and liability matching; (ix) restrictions on insurance underwriting based on genetic testing and other criteria; (x) adverse changes in the ratings obtained by independent rating agencies; (xi) failure to maintain adequate reinsurance; (xii) possible claims relating to sales practices for insurance products and claim denials; (xiii) adverse trends in mortality and morbidity; (xiv) deterioration of real estate markets; and (xv) lawsuits in the ordinary course of business.

Off-Balance Sheet Agreements

The Company has entered into commitments to fund construction and land development loans and has also provided financing for land acquisition and development. As of December 31, 2020, the Company’s commitments were approximately $185,751,000 for these loans, of which $115,898,000 had been funded. The Company advances funds once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 80% of appraised value. The Company receives fees and interest for these loans and the interest rate is generally fixed 5.50% to 8.00% per annum. Maturities generally range between six and eighteen months.

Contractual Obligations

The Company’s contractual obligations as of December 31, 2020, and the payments due by period are shown in the following table:

	Less than 1 year	1-3 years	4-5 years	over 5 years	Total
Bank and other loans payable	284,242,327	1,810,569	2,571,472	9,200,000	297,824,368
Non-cancelable operating leases	4,344,756	5,092,299	2,405,450	2,938,906	14,781,411
Future policy benefits (1)	11,428,444	37,020,154	51,077,675	728,904,251	828,430,524
	$ 300,015,527	$ 43,923,022	$ 56,054,597	$ 741,043,157	$ 1,141,036,303

(1)Amounts represent the present value of future policy benefits, net of estimated future premiums.  

31

Casualty Insurance Program

In conjunction with the Company’s casualty insurance program, limited equity interests are held in a captive insurance entity. This program permits the Company to self-insure a portion of losses, to gain access to a wide array of safety-related services, to pool insurance risks and resources in order to obtain more competitive pricing for administration and reinsurance and to limit its risk of loss in any particular year. The maximum exposure to loss related to the Company’s involvement with this entity is limited to approximately $348,183, which is collateralized under a standby letter of credit issued on the insurance entity’s behalf. See Note 10, “Reinsurance, Commitments and Contingencies,” for additional discussion of commitments associated with the insurance program. The Company does not expect any material losses to result from the issuance of the standby letter of credit because claims are not expected to exceed premiums paid.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, the Company is not required to provide information typically disclosed under this item.

32

Item 8.  Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
		Page No.
Financial Statements:
	Report of Independent Registered Public Accounting Firm	34
	Consolidated Balance Sheets, December 31, 2020 and 2019	36
	Consolidated Statements of Earnings for the Years Ended December 31, 2020 and 2019	38
	Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020 and 2019	39
	Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2020 and 2019	40
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019	41
	Notes to Consolidated Financial Statements	43

33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Security National Financial Corporation:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Security National Financial Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years then ended, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Future Policy Benefits and Amortization of Deferred Policy Acquisition Costs for Insurance Contracts and Value of Business Acquired - Refer to Notes 1 and 22 to the financial statements

Critical Audit Matter Description

The Company’s management sets assumptions in (1) recording a liability for policy benefit payments that will be made in the future (future policy benefits) and (2) determining amortization of deferred policy acquisition costs for insurance contracts and value of business acquired. The most significant assumptions include mortality, lapse, and projected investment yield. Assumptions are determined based upon published studies and analysis of Company specific experience, adjusted for changes in exposure and other relevant factors. Given the inherent uncertainty of these significant assumptions, auditing the development of such assumptions involved especially subjective judgment.

34

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s judgments regarding the assumptions used in the development of future policy benefits and the amortization of deferred policy acquisition costs for insurance contracts and value of business acquired, included the following, among others:

•We tested the design and implementation of controls over the assumption development process, the valuation of future policy benefits, and the amortization of deferred policy acquisition costs for insurance contracts and value of business acquired. 

•With the assistance of our actuarial specialists, we: 

•evaluated management’s selected actuarial assumptions, including testing the accuracy and completeness of the supporting experience studies, 

•evaluated management’s judgments regarding the assumptions used in the development of future policy benefits and the amortization of deferred policy acquisition costs and value of business acquired, 

•evaluated the results of the Company’s annual premium deficiency tests.  

/s/ Deloitte & Touche LLP

Salt Lake City, UT

March 31, 2021

We have served as the Company's auditor since 2017.

35

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31
Assets	2020	2019
Investments:
Fixed maturity securities, available for sale, at estimated fair value	$  294,656,679	$    355,977,820
Equity securities at estimated fair value	11,324,239	7,271,165
Mortgage loans held for investment (net of allowances for loan losses of $2,005,127 and $1,453,037 for 2020 and 2019)	249,343,936	236,694,546
Real estate held for investment (net of accumulated depreciation of $13,800,973 and $12,788,739 for 2020 and 2019)	131,684,453	102,756,946
Real estate held for sale	7,878,807	14,097,627
Other investments and policy loans (net of allowances for doubtful accounts of $1,645,475 and $1,448,026 for 2020 and 2019)	73,696,661	60,245,269
Accrued investment income	5,360,523	4,833,232
Total investments	773,945,298	781,876,605
Cash and cash equivalents	106,219,429	127,754,719
Loans held for sale at estimated fair value	422,772,418	213,457,632
Receivables (net of allowances for doubtful accounts of $1,685,382 and $1,724,156 for 2020 and 2019)	10,899,207	9,236,330
Restricted assets (including $3,989,415 and $2,985,347 for 2020 and 2019 at estimated fair value)	16,150,036	13,935,317
Cemetery perpetual care trust investments (including $2,810,070 and $2,581,124 for 2020 and 2019 at estimated fair value)	6,413,167	4,411,864
Receivable from reinsurers	15,569,156	15,747,768
Cemetery land and improvements	8,761,436	9,519,950
Deferred policy and pre-need contract acquisition costs	100,075,276	94,701,920
Mortgage servicing rights, net	35,210,516	17,155,529
Property and equipment, net	12,473,345	14,600,394
Value of business acquired	8,955,249	9,876,647
Goodwill	3,519,588	3,519,588
Other	27,976,357	18,649,812
Total Assets	$1,548,940,478	$ 1,334,444,075

See accompanying notes to consolidated financial statements.

36

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

	December 31
Liabilities and Stockholders' Equity	2020	2019
Liabilities
Future policy benefits and unpaid claims	$   844,790,087	$   825,600,918
Unearned premium reserve	3,328,623	3,621,697
Bank and other loans payable	297,824,368	217,572,612
Deferred pre-need cemetery and mortuary contract revenues	13,080,179	12,607,978
Cemetery perpetual care obligation	4,087,704	3,933,719
Accounts payable	8,932,683	5,056,983
Other liabilities and accrued expenses	87,650,981	50,652,591
Income taxes	25,258,800	18,686,972
Total liabilities	1,284,953,425	1,137,733,470
Stockholders’ Equity
Preferred Stock:
Preferred stock - non-voting-$1.00 par value; 5,000,000 shares authorized; none issued or outstanding	-	-
Common Stock:
Class A: common stock - $2.00 par value; 20,000,000 shares authorized; issued 16,595,783 shares in 2020 and 16,107,779 shares in 2019	33,191,566	32,215,558
Class B: non-voting common stock - $1.00 par value; 5,000,000 shares authorized; none issued or outstanding	-	-
Class C: convertible common stock - $2.00 par value; 3,000,000 shares authorized; issued 2,679,603 shares in 2020 and 2,500,887 shares in 2019	5,359,206	5,001,774
Additional paid-in capital	50,287,253	46,091,112
Accumulated other comprehensive income, net of taxes	23,243,133	13,726,514
Retained earnings	153,739,167	101,256,229
Treasury stock, at cost - 227,852 Class A shares and 10,985 Class C shares in 2020; 490,823 Class A shares and -0- Class C shares in 2019	(1,833,272)	(1,580,582)
Total stockholders’ equity	263,987,053	196,710,605
Total Liabilities and Stockholders’ Equity	$ 1,548,940,478	$ 1,334,444,075

See accompanying notes to consolidated financial statements.

37

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

	Years Ended December 31
	2020	2019
Revenues:
Mortgage fee income	$       298,933,110	$       131,976,082
Insurance premiums and other considerations	93,020,617	81,860,610
Net investment income	56,329,803	43,019,473
Net mortuary and cemetery sales	20,307,435	15,296,235
Gains on investments and other assets	1,925,850	728,367
Other than temporary impairments on investments	(370,975)	-
Other	11,317,482	10,180,163
Total revenues	481,463,322	283,060,930
Benefits and expenses:
Death benefits	59,040,130	41,591,057
Surrenders and other policy benefits	3,801,230	3,320,748
Increase in future policy benefits	23,568,650	23,568,497
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	14,307,425	14,634,577
Selling, general and administrative expenses:
Commissions	124,426,297	56,762,891
Personnel	84,989,971	64,221,270
Advertising	5,380,896	4,784,558
Rent and rent related	6,873,561	7,055,456
Depreciation on property and equipment	2,078,738	1,711,369
Provision for loan loss reserve	16,506,030	-
Costs related to funding mortgage loans	9,877,700	6,278,954
Other	47,331,102	34,922,761
Interest expense	8,578,810	7,386,688
Cost of goods and services sold – cemeteries and mortuaries	3,252,655	2,878,169
Total benefits and expenses	410,013,195	269,116,995
Earnings before income taxes	71,450,127	13,943,935
Income tax expense	(15,853,514)	(3,050,416)
Net earnings	$         55,596,613	$         10,893,519
Net earnings per Class A equivalent common share (1)	$2.95	$0.59
Net earnings per Class A equivalent common share -   assuming dilution (1)	$2.88	$0.58
Weighted average Class A equivalent common shares   outstanding (1)	18,831,991	18,562,056
Weighted average Class A equivalent common shares   outstanding-assuming dilution (1)	19,275,251	18,689,602

(1) Earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends. The weighted-average shares outstanding includes the weighted-average Class A common shares and the weighted-average Class C common shares determined on an equivalent Class A common stock basis. Net earnings per common share represent net earnings per equivalent Class A common share.

See accompanying notes to consolidated financial statements.

38

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Years Ended December 31
	2020	2019
Net earnings	$  55,596,613	$   10,893,519
Other comprehensive income:
Unrealized gains on fixed maturity securities available for sale	12,013,692	17,315,770
Unrealized gains on restricted assets	41,225	35,550
Unrealized gains (losses) on cemetery perpetual care trust investments	(6,817)	29,904
Foreign currency translation adjustments	(46)	972
Other comprehensive income, before income tax	12,048,054	17,382,196
Income tax expense	(2,531,435)	(3,652,859)
Other comprehensive income, net of income tax	9,516,619	13,729,337
Comprehensive income	$  65,113,232	$   24,622,856

See accompanying notes to consolidated financial statements.

39

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Class A Common Stock	Class C Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Treasury Stock	Total
Balance at December 31, 2018	30,609,596	4,387,286	41,821,778	(2,823)	95,201,732	(206,396)	171,811,173
Net earnings	-	-	-	-	10,893,519	-	10,893,519
Other comprehensive income	-	-	-	13,729,337	-	-	13,729,337
Stock based compensation expense	-	-	256,996	-	-	-	256,996
Exercise of stock options	65,034	382,886	415,990	-	-	-	863,910
Sale of treasury stock	-	-	529,858	-	-	165,702	695,560
Purchase of treasury stock	-	-	-	-	-	(1,539,888)	(1,539,888)
Stock dividends	1,534,356	238,174	3,066,490	-	(4,839,022)	-	(2)
Conversion Class C to Class A	6,572	(6,572)	-	-	-	-	-
Balance at December 31, 2019	32,215,558	5,001,774	46,091,112	13,726,514	101,256,229	(1,580,582)	196,710,605
Net earnings	-	-	-	-	55,596,613	-	55,596,613
Other comprehensive income	-	-	-	9,516,619	-	-	9,516,619
Stock based compensation expense	-	-	358,878	-	-	-	358,878
Exercise of stock options	137,940	261,640	432,572	-	-	-	832,152
Sale of treasury stock	-	-	1,224,877	-	-	2,715,071	3,939,948
Purchase of treasury stock	-	-	-	-	-	(2,967,761)	(2,967,761)
Stock dividends	810,420	123,440	2,179,814	-	(3,113,675)	-	(1)
Conversion Class C to Class A	27,648	(27,648)	-	-	-	-	-
Balance at December 31, 2020	$33,191,566	$ 5,359,206	$50,287,253	$    23,243,133	$153,739,167	$(1,833,272)	$263,987,053

See accompanying notes to consolidated financial statements.

40

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Years Ended December 31
			2020	2019
Cash flows from operating activities:
	Net earnings		$   55,596,613	$   10,893,519
		Adjustments to reconcile net earnings to net cash used in operating activities:
		Gains on investments and other assets	(1,925,850)	(728,367)
		Other than temporary impairments on investments	370,975	-
		Depreciation	5,447,363	5,183,658
		Provision for loan losses and doubtful accounts	1,577,370	1,202,688
		Net amortization of deferred fees and costs, premiums and discounts	(1,227,773)	(887,605)
		Provision for deferred income taxes	2,854,669	(1,857,897)
		Policy and pre-need acquisition costs deferred	(18,909,921)	(19,176,531)
		Policy and pre-need acquisition costs amortized	13,520,600	13,787,037
		Value of business acquired amortized	786,825	847,540
		Mortgage servicing rights, additions	(29,896,465)	(4,194,502)
		Amortization of mortgage servicing rights	11,841,478	7,055,795
		Stock based compensation expense	358,878	256,996
		Benefit plans funded with treasury stock	3,939,948	695,560
		Net change in fair value of loans held for sale	(10,413,492)	(2,498,097)
		Originations of loans held for sale	(5,627,013,749)	(2,606,839,175)
		Proceeds from sales of loans held for sale	5,600,045,285	2,580,875,055
		Net gains on sales of loans held for sale	(188,893,379)	(80,666,413)
	Change in assets and liabilities:
		Land and improvements held for sale	758,514	358,477
		Future policy benefits and unpaid claims	25,804,740	18,394,928
		Other operating assets and liabilities	25,750,164	1,695,259
		Net cash used in operating activities	(129,627,207)	(75,602,075)
Cash flows from investing activities:
		Purchases of fixed maturity securities	(58,493,147)	(110,601,438)
		Sales, calls and maturities of fixed maturity securities	131,269,730	26,624,182
		Purchase of equity securities	(6,991,832)	(3,264,028)
		Sales of equity securities	3,902,835	2,639,729
	Net changes in restricted assets		(1,954,437)	(1,254,991)
	Net changes in cemetery perpetual care trust investments		(2,755,856)	299,897
	Mortgage loans held for investment, other investments and policy loans made		(682,170,126)	(572,171,590)
	Payments received for mortgage loans held for investment, other investments and policy loans		672,544,708	556,352,676
	Purchases of property and equipment		(1,630,734)	(1,839,293)
	Sales of property and equipment		194,955	54,496
	Purchases of real estate		(40,190,471)	(8,572,556)
	Sales of real estate		22,418,816	11,614,927
	Cash received for reinsurance assumed		-	158,358,594
	Cash paid for purchase of subsidiaries, net of cash acquired		-	(20,141,074)
	Net cash provided by investing activities		36,144,441	38,099,531

41

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

		Years Ended December 31
		2020	2019
Cash flows from financing activities:
	Investment contract receipts	$   11,511,118	$   12,141,627
	Investment contract withdrawals	(18,235,107)	(16,911,841)
	Proceeds from stock options exercised	832,152	863,910
	Purchase of treasury stock	(2,967,761)	(1,539,888)
	Repayment of bank loans	(174,865,813)	(236,790,722)
	Proceeds from bank loans	164,586,365	196,610,127
	Net change in warehouse line borrowings for loans held for sale	90,351,225	69,928,331
Net cash provided by financing activities		71,212,179	24,301,544
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents		(22,270,587)	(13,201,000)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year		137,735,673	150,936,673
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year		$ 115,465,086	$ 137,735,673
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
	Interest (net of amount capitalized)	$     8,385,270	$     7,284,078
	Income taxes	11,813,120	4,861,318
Non Cash Investing and Financing Activities:
	Transfer of loans held for sale to mortgage loans held for investment	$   16,960,549	$   31,881,851
	Accrued real estate construction costs and retainage	6,365,534	590,256
	Right-of-use assets obtained in exchange for operating lease liabilities	5,631,193	16,544,406
	Mortgage loans held for investment foreclosed into real estate held for investment	686,124	1,704,015
	Right-of-use assets obtained in exchange for finance lease liabilities	8,494	252,763
	Transfer of real estate held for investment to property and equipment	-	3,261,259
	Transfer of property and equipment to real estate held for investment	1,516,700	-
	Mortgage loans held for investment foreclosed into receivables	-	155,347
	See Note 20 regarding non cash transactions included in the acquisitions of Probst Family Funerals and Cremations and Heber Valley Funeral Home and Kilpatrick Life Insurance Company

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents as shown in the consolidated statements of cash flows is presented in the table below:

	Years Ended December 31
	2020	2019
Cash and cash equivalents	$   106,219,429	$    127,754,719
Restricted assets	8,842,744	8,674,214
Cemetery perpetual care trust investments	402,913	1,306,740
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$     115,465,086	$    137,735,673

See accompanying notes to consolidated financial statements.

42

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1) Significant Accounting Policies 

General Overview of Business

Security National Financial Corporation and its wholly owned subsidiaries (the “Company”) operate in three reportable business segments: life insurance, cemetery and mortuary, and mortgages. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products and accident and health insurance marketed primarily in the Intermountain West, California and eleven southern states. The cemetery and mortuary segment of the Company consists of eight mortuaries and five cemeteries in Utah and one cemetery in California. The mortgage segment is an approved government and conventional lender that originates and underwrites residential and commercial loans for new construction, existing homes and real estate projects primarily in Florida, Nevada, Texas, and Utah.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP).

Principles of Consolidation

These consolidated financial statements include the financial statements of the Company and its majority owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

Management of the Company has made a number of estimates and assumptions related to the reported amounts of assets and liabilities, reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with GAAP. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative assets and liabilities; those used in determining deferred acquisition costs and the value of business acquired; those used in determining the value of mortgage loans foreclosed to real estate held for investment; those used in determining the liability for future policy benefits; those used in determining the value of mortgage servicing rights; those used in determining allowances for loan losses for mortgage loans held for investment; those used in determining loan loss reserve; and those used in determining deferred tax assets and liabilities. Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects.

Investments

The Company’s management determines the appropriate classifications of investments in fixed maturity securities and equity securities at the acquisition date and re-evaluates the classifications at each balance sheet date.

Fixed maturity securities available for sale are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded in accumulated other comprehensive income. On December 31, 2019, the Company changed the classification of its bond and preferred stock investments to available for sale from held to maturity. As a result, securities available for sale are carried at estimated fair value.

43

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Equity securities are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded through net earnings.

Mortgage loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, net discounts, charge-offs and the related allowance for loan losses. Interest income is included in net investment income on the consolidated statements of earnings and is recognized when earned. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans. Origination fees are included in net investment income on the consolidated statements of earnings. Mortgage loans are secured by the underlying property and require an appraisal at the time of underwriting and funding.  Generally, the Company will fund a loan not to exceed 80% of the loan’s collateral fair market value.  Amounts over 80% will require additional collateral or mortgage insurance by an approved third-party insurer.

Real estate held for investment is carried at cost, less accumulated depreciation provided on a straight-line basis over the estimated useful lives of the properties, or is adjusted to a new basis for impairment in value, if any. Included are foreclosed properties which the Company intends to hold for investment purposes.  These properties are recorded at the lower of cost or fair value upon foreclosure. Also, included are residential subdivision land developments which are carried at cost.

Real estate held for sale is carried at lower of cost or fair value. Depreciation is not recognized on real estate classified as held for sale.

Other investments and policy loans are carried at the aggregate unpaid balances, less allowances for losses.

Gains and losses on investments (except for equity securities carried at fair value through net earnings) arise when investments are sold (as determined on a specific identification basis) or are other than temporarily impaired. If in management’s judgment a decline in the value of an investment below cost is other than temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in judging whether an impairment is other than temporary include: the financial condition, business prospects and credit worthiness of the issuer, the length of time that fair value has been less than cost, the relative amount of the decline, and the Company’s ability and intent to hold the investment until the fair value recovers, which is not assured.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Loans Held for Sale

Accounting Standards Codification (“ASC”) No. 825, “Financial Instruments”, allows for the option to report certain financial assets and liabilities at fair value initially and at subsequent measurement dates with changes in fair value included in earnings. The option may be applied instrument by instrument, but it is irrevocable. The Company elected the fair value option for loans held for sale. The Company believes the fair value option most closely aligns the timing of the recognition of gains and costs. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Electing fair value also reduces certain timing differences and better matches changes in the fair value of these assets with changes in the fair value of the related derivatives used for these assets. See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

44

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Mortgage Fee Income

Mortgage fee income consists of origination fees, processing fees, interest income and certain other income related to the origination of mortgage loans held for sale. All revenues and costs are recognized when the mortgage loan is funded and any changes in fair value are shown as a component of mortgage fee income.  See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

The Company, through its mortgage subsidiaries, sells mortgage loans to third-party investors without recourse unless defects are identified in the representations and warranties made at loan sale. It may be required, however, to repurchase a loan or pay a fee instead of repurchase under certain events, which include the following:

·Failure to deliver original documents specified by the investor, 

·The existence of misrepresentation or fraud in the origination of the loan, 

·The loan becomes delinquent due to nonpayment during the first several months after it is sold, 

·Early pay-off of a loan, as defined by the agreements, 

·Excessive time to settle a loan, 

·Investor declines purchase, and 

·Discontinued product and expired commitment. 

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company.

It is the Company's policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month time period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

·Research reasons for rejection, 

·Provide additional documents, 

·Request investor exceptions, 

·Appeal rejection decision to purchase committee, and 

·Commit to secondary investors. 

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six-month time period, the loans are repurchased and transferred to the long-term investment portfolio at the lower of cost or fair value and previously recorded mortgage fee income that was to be received from a third-party investor is written off against the loan loss reserve.

Determining Lower of Cost or Fair Value

Cost for loans held for sale is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Fair value is often difficult to determine, but is based on the following:

·For loans that are committed, the Company uses the commitment price. 

·For loans that are non-committed that have an active market, the Company uses the market price. 

·For loans that are non-committed where there is no market but there is a similar product, the Company uses the market value for the similar product. 

45

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

·For loans that are non-committed where no active market exists, the Company determines that the unpaid principal balance best approximates the market value, after considering the fair value of the underlying real estate collateral, estimated future cash flows, and the loan interest rate. 

The appraised value of the real estate underlying the original mortgage loan adds support to the Company’s determination of fair value because if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan, thus minimizing credit losses.

The majority of loans originated are sold to third-party investors. The amounts expected to be sold to investors are shown on the consolidated balance sheets as loans held for sale.

Loan Loss Reserve

The loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on loans sold. The Company may be required to reimburse third-party investors for costs associated with early payoff of loans within six months of origination of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale relating to any guarantee or recourse provisions. The Company accrues a monthly allowance for indemnification losses to investors based on total production. This estimate is based on the Company’s historical experience and is included as a component of mortgage fee income. Subsequent updates to the recorded liability from changes in assumptions are recorded in selling, general and administrative expenses as a component of provision for loan loss reserve. The estimated liability for indemnification losses is included in other liabilities and accrued expenses.

The loan loss reserve analysis involves mortgage loans that have been sold to third-party investors, which were believed to have met investor underwriting guidelines at the time of sale, where the Company has received a demand from the investor. There are generally three types of demands: make whole, repurchase, or indemnification. These types of demands are further described as follows:

Make whole demand – A make whole demand occurs when an investor forecloses on a property and then sells the property. The make whole amount is calculated as the difference between the original unpaid principal balance, payments received, accrued interest and fees, less the sale proceeds.

Repurchase demand – A repurchase demand usually occurs when there is a significant payment default, error in underwriting or detected loan fraud.

Indemnification demand – On certain loans the Company has negotiated a set fee that is to be paid in lieu of repurchase. The fee varies by investor and by loan product type.

The Company believes the allowance for loan losses and the loan loss reserve represent probable loan losses incurred as of the balance sheet date.

Additional information related to the Loan Loss Reserve is included in Note 3.

46

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Restricted Assets

Restricted assets are assets held in a trust account for future mortuary services and merchandise and consist of cash and cash equivalents; participations in mortgage loans held for investment with Security National Life Insurance Company (“Security National Life”); mutual funds carried at estimated fair value; equity securities carried at estimated fair value; and a surplus note with Security National Life (which is eliminated in consolidation). Restricted assets also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company funded its medical benefit safe-harbor limit based on the qualified direct costs, and has included this amount as a component of restricted cash.

Cemetery Perpetual Care Trust Investments

Cemetery endowment care trusts have been set up for four of the six cemeteries owned by the Company. Under endowment care arrangements a portion of the price for each lot sold is withheld and invested in a portfolio of investments similar to those described in the prior paragraph. The earnings stream from the investments is designed to fund future maintenance and upkeep of the cemetery.

Cemetery Land and Improvements

The development of a cemetery involves not only the initial acquisition of raw land but also the installation of roads, water lines, landscaping and other costs to establish a marketable cemetery lot. The costs of developing the cemetery are shown as an asset on the balance sheet. The amount on the balance sheet is reduced by the total cost assigned to the development of a particular lot when the criterion for recognizing a sale of that lot is met.

Deferred Policy Acquisition Costs and Value of Business Acquired

Commissions and other costs, net of commission and expense allowances for reinsurance ceded, that vary with and are primarily related to the production of new insurance business have been deferred. Deferred policy acquisition costs (“DAC”) for traditional life insurance are amortized over the premium paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For interest-sensitive insurance products, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges, investment, mortality and expense margins. This amortization is adjusted when estimates of current or future gross profits to be realized from a group of products are reevaluated. Deferred acquisition costs are written off when policies lapse or are surrendered.

When accounting for DAC, the Company considers internal replacements of insurance and investment contracts. An internal replacement is a modification in product benefits, features, rights or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to contract, or by the election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract are accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced contract are written-off. Modifications that result in a contract that is substantially unchanged from the replaced contract are accounted for as a continuation of the replaced contract.

Value of business acquired is the present value of estimated future profits of the acquired business and is amortized similar to deferred policy acquisition costs.

47

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Mortgage Servicing Rights

Mortgage Servicing Rights (“MSR”) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company is obligated to retain and provide loan servicing functions on loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of real estate owned and property dispositions.

The total residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans.  The value of MSRs is derived from the net cash flows associated with the servicing contracts. The Company receives a servicing fee of generally about 0.250% annually on the remaining outstanding principal balances of the loans. Based on the result of the cash flow analysis, an asset or liability is recorded for mortgage servicing rights. The servicing fees are collected from the monthly payments made by the mortgagors. The Company generally receives other remuneration including rights to various mortgagor-contracted fees such as late charges, and collateral reconveyance charges and the Company is generally entitled to retain the interest earned on funds held pending remittance of mortgagor principal, interest, tax and insurance payments. Contractual servicing fees and late fees are included in other revenues on the consolidated statements of earnings.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. Amortization expense is included in other expenses on the consolidated statements of earnings. MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of the estimated future net servicing income of the underlying financial assets.

Interest rate risk, prepayment risk, and default risk are inherent risks in MSR valuation. Interest rate changes largely drive prepayment rates. Refinance activity generally increases as rates decline. A significant decrease in rates beyond expectation could cause a decline in the value of the MSR. On the contrary, if rates increase borrowers are less likely to refinance or prepay their mortgage, which extends the duration of the loan and MSR values are likely to rise. Because of these risks, discount rates and prepayment speeds are used to estimate the fair value.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is calculated principally on the straight-line method over the estimated useful lives of the assets which range from three to forty years. Leasehold improvements paid for by the Company as a lessee are amortized over the lesser of the useful life or remaining lease terms.

48

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Long-lived Assets

Long-lived assets to be held and used, including property and equipment and real estate held for investment, are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset, and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. No impairment of long-lived assets has been recognized in the accompanying financial statements except for certain impairments of real estate held for investment as disclosed in Note 2.

Derivative Instruments

Mortgage Banking Derivatives

Loan Commitments

The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the time a loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of loan commitments that will be exercised (i.e., the number of loans that will be funded) fluctuates. The probability that a loan will not be funded or the loan application is denied or withdrawn within the terms of the commitment is driven by a number of factors, particularly the change, if any, in mortgage rates following the issuance of the loan commitment.

In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance), product type and the application approval status. The Company has developed fallout estimates using historical data that take into account all of the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most current data.

The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage-backed securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of expenses. Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans.

Forward Sale Commitments

The Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments. Management expects these types of commitments will experience changes in fair value opposite to changes in fair value of the loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

49

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

The net changes in fair value of loan commitments and forward sale commitments are shown in current earnings as a component of mortgage fee income on the consolidated statements of earnings. Mortgage banking derivatives are shown in other assets and other liabilities and accrued expenses on the consolidated balance sheets.

Call and Put Option Derivatives

The Company uses a strategy of selling “out of the money” call options on its equity securities as a source of revenue.  The options give the purchaser the right to buy from the Company specified equity securities at a set price up to a pre-determined date in the future.  The Company uses the strategy of selling put options as a means of generating cash or purchasing equity securities at lower than current market prices.  The Company receives an immediate payment of cash for the value of the option and establishes a liability for the fair value of the option.  The liability for options is adjusted to fair value at each reporting date. In the event a call option is exercised, the Company sells the equity security at a favorable price enhanced by the value of the option that was sold. If the option expires unexercised, the Company recognizes a gain from the expired option. In the event a put option is exercised, the Company acquires an equity security at the strike price of the option reduced by the value received from the sale of the put option. The equity security is then treated as a normal equity security in the Company’s portfolio. The net changes in the fair value of call and put options are shown in current earnings as a component of realized gains (losses) on investments and other assets. Call and put options are shown in other liabilities and accrued expenses on the consolidated balance sheets.

Allowance for Doubtful Accounts and Loan Losses and Impaired Loans

The Company records an allowance and recognizes an expense for potential losses from mortgage loans held for investment, other investments and receivables in accordance with GAAP.

Receivables are the result of cemetery and mortuary operations, mortgage loan operations and life insurance operations. The allowance is based upon the Company’s historical experience for collectively evaluated impairment. Other allowances are based upon receivables individually evaluated for impairment. Collectability of the cemetery and mortuary receivables is significantly influenced by current economic conditions. The critical issues that impact recovery of mortgage loan operations are interest rate risk, loan underwriting, new regulations and the overall economy.

The Company provides for losses on its mortgage loans held for investment through an allowance for loan losses (a contra-asset account). The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment, the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. See the schedules in Note 2 for additional information. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as real estate held for investment. The Company will rent the properties until it is deemed desirable to sell them.

The allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the performance status of the loans, or the Company’s actual collection experience. The actual losses could change, in the near term, from the established allowance, based upon the occurrence or non-occurrence of these events.

For purposes of determining the allowance for losses, the Company has segmented its mortgage loans held for investment by loan type. The Company’s loan types are commercial, residential, and residential construction. The inherent risks within the portfolio vary depending upon the loan type as follows:

50

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Commercial - Underwritten in accordance with the Company’s policies to determine the borrower’s ability to repay the obligation as agreed. Commercial loans are made primarily based on the underlying collateral supporting the loan. Accordingly, the repayment of a commercial loan depends primarily on the collateral and its ability to generate income and secondary on the borrower’s (or guarantors) ability to repay.

Residential – Secured by family dwelling units. These loans are secured by first and second mortgages on the unit. The borrower’s ability to repay is sensitive to the life events and general economic condition of the region. Where loan to values exceed 80%, the loan is generally guaranteed by private mortgage insurance, FHA or VA.

Residential construction (including land acquisition and development) – Underwritten in accordance with the Company’s underwriting policies which include a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent appraisal valuations. These loans will rely on the value associated with the project upon completion. These cost and valuation estimates may be inaccurate. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project and the ability of the borrower to secure long-term financing.  Additionally, land is underwritten according to the Company’s policies, which include independent appraisal valuations as well as the estimated value associated with the land upon completion of development into finished lots. These cost and valuation estimates may be inaccurate. These loans are considered to be of a higher risk than other mortgage loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term or construction financing, and interest rate sensitivity.

Future Policy Benefits and Unpaid Claims

Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, mortality, morbidity, withdrawals, and other assumptions based on the life insurance subsidiaries’ experience, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are, for some plans, graded to equal statutory values or cash values at or prior to maturity, which are deemed a reasonable equivalent for GAAP. The range of assumed interest rates for all traditional life insurance policy reserves was 4% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit claims are charged to expense in the period the claims are incurred. Increases in future policy benefits are charged to expense.

Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 3% to 6.5%.

The Company records an unpaid claims liability for claims in the course of settlement equal to the death benefit amount less any reinsurance recoverable amount for claims reported. There is also an unpaid claims liability for claims incurred but not reported. This liability is based on the historical experience of the net amount of claims that were reported in reporting periods subsequent to the reporting period when claims were incurred.

51

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Participating Insurance

Participating business constituted 2% of insurance in force for the years ended 2020 and 2019. The provision for policyholders’ dividends included in policyholder obligations is based on dividend scales anticipated by management. Amounts to be paid are determined by the Board of Directors.

Recognition of Insurance Premiums and Other Considerations

Premiums and other consideration for traditional life insurance products (which include those products with fixed and guaranteed premiums and benefits and consist principally of whole life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies) are recognized as revenues when due from policyholders. Premiums and other consideration for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies, deferred annuities, and annuities without life contingencies) are recognized when earned and consist of amounts assessed against policyholder account balances during the period for policy administration charges and surrender charges.

Reinsurance

The Company follows the procedure of reinsuring risks in excess of $100,000 to provide for greater diversification of business to allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. The Company remains liable for amounts ceded in the event the reinsurers are unable to meet their obligations.

The Company entered into coinsurance agreements with unaffiliated insurance companies under which the Company assumed 100% of the risk for certain life insurance policies and certain other policy-related liabilities of the insurance company.

Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Expense allowances received in connection with reinsurance ceded are accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly.

Pre-need Sales and Costs

Pre-need contract sales of funeral services and caskets - revenue and costs associated with the sales of pre-need funeral services and caskets are deferred until the performance obligations are fulfilled (services are performed or the caskets are delivered).

Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are recognized in accordance with the retail land sales provisions based on GAAP. Under GAAP, recognition of revenue and associated costs from constructed cemetery property must be deferred until 10% of the sales price has been collected.

Pre-need contract sales of cemetery merchandise (primarily markers and vaults) - revenue and costs associated with the sale of pre-need cemetery merchandise is deferred until the merchandise is delivered.

Pre-need contract sales of cemetery services (primarily merchandise delivery, installation fees and burial opening and closing fees) - revenue and costs associated with the sales of pre-need cemetery services are deferred until the services are performed.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral services are accounted for under the guidance of the provisions based on GAAP. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred until the merchandise is delivered or services are performed.

Revenues and costs for at-need sales are recorded when a valid contract exists, the services are performed, collection is reasonably assured and there are no significant obligations remaining.

The Company, through its cemetery and mortuary operations, provides guaranteed funeral arrangements wherein a prospective customer can receive future goods and services at guaranteed prices. To accomplish this, the Company, through its life insurance operations, sells to the customer an increasing benefit life insurance policy that is assigned to the mortuaries. If, at the time of need, the policyholder/potential mortuary customer utilizes one of the Company’s facilities, the guaranteed funeral arrangement contract that has been assigned will provide the funeral goods and services at the contracted price. The increasing life insurance policy will cover the difference between the original contract prices and current prices. Risks may arise if the difference cannot be fully met by the life insurance policy. However, management believes that given current inflation rates and related price increases of goods and services, the risk of exposure is minimal.

Goodwill

Previous acquisitions have been accounted for as purchases under which assets acquired and liabilities assumed were recorded at their fair values with the excess purchase price recognized as goodwill. The Company evaluates annually or when changes in circumstances warrant the recoverability of goodwill and if there is a decrease in value, the related impairment is recognized as a charge against income. No impairment of goodwill has been recognized in the accompanying financial statements.

Other Intangibles (trade name and customer lists)

Other intangibles are recognized apart from goodwill whenever an acquired intangible asset arises from contractual or other legal rights, or whenever it is capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged, either individually or in combination with a related contract, asset, or liability.  The Company engaged a valuation firm to analyze the value of the Kilpatrick Life name in conjunction with its acquisition.  The value of the trade name is included in Other Assets and was determined using the income approach, relying on a relief from the royalty method.  

Income Taxes

Income taxes include taxes currently payable plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences in the financial reporting basis and tax basis of assets and liabilities and operating loss carry-forwards. Deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.

Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax penalties are included as a component of other expenses.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

Earnings Per Common Share

The Company computes earnings per share which requires presentation of basic and diluted earnings per share. Basic earnings per equivalent Class A common share are computed by dividing net earnings by the weighted-average number of Class A common shares outstanding during each year presented, after the effect of the assumed conversion of Class C common stock to Class A common stock. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the year used to compute basic earnings per share plus dilutive potential incremental shares. Basic and diluted earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

Stock Based Compensation

The cost of employee services received in exchange for an award of equity instruments is recognized in the financial statements and is measured based on the fair value on the grant date of the award. The fair value of stock options is calculated using the Black Scholes Option Pricing Model. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award and is included in personnel expenses on the consolidated statements of earnings.

Concentration of Credit Risk

For a description of the geographic concentration risk regarding mortgage loans held for investment and real estate held for investment, refer to Note 2 of the Notes to Consolidated Financial Statements.

Advertising

The Company expenses advertising costs as incurred.

Recent Accounting Pronouncements

Accounting Standards Adopted in 2020

ASU No. 2018-13: “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” – Issued in August 2018, ASU 2018-13 modifies the disclosure requirements of Topic 820 by removing, modifying or adding certain disclosures. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 does not change the fair value measurements already required or permitted by existing standards. The Company adopted this standard on January 1, 2020. The adoption of this standard did not materially impact the Company’s financial statements. See Note 8 for the Company’s fair value disclosures.

Accounting Standards Adopted in 2019

ASU No. 2016-02: “Leases (Topic 842)” - Issued in February 2016, ASU 2016-02 supersedes the requirements in Accounting Standards Codification (“ASC”) Topic 840, “Leases”, and was issued to increase transparency and comparability among organizations. The new standard sets forth the principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record on the balance sheet right-of-use assets and lease liabilities, equal to the present value of the remaining lease payments. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or a straight-line basis over the term of the leases. The FASB

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

1)Significant Accounting Policies (Continued) 

further clarified ASU 2016-02 and provided targeted improvements by issuing ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20.

The Company adopted this standard on January 1, 2019 using the modified retrospective transition method with no cumulative-effect adjustment to the opening balance of retained earnings. Under this transition method, the application date was the beginning of the reporting period, January 1, 2019, in which the Company first applied the standard. Under this transition option, the Company will apply the legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company has made an accounting policy election not to apply the recognition requirements 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. The new authoritative guidance allows for certain practical expedients to be utilized to assist with the implementation of the new standard. The Company has elected the transition package of practical expedients which allows the Company to not reassess whether any expired or existing contracts are or contain leases, to not reassess the lease classification for any expired or existing leases and to not reassess initial direct costs for any existing leases.

The Company implemented a third-party lease accounting system to assist with the measurement of the lease liabilities and the related right-of-use assets. The Company compiled an inventory of its leases, determined the appropriate discount rates and has determined the impact of this standard which is not material to the Company’s results of operations, but has an effect on the balance sheet presentation for leased assets and obligations. The Company recognized a right-of-use asset and related lease liability for approximately $12,076,000 on January 1, 2019. This standard did not impact the Company’s accounting for leases where the Company is the lessor.

Accounting Standards Issued But Not Yet Adopted

ASU No. 2016-13: “Financial Instruments – Credit Losses (Topic 326)” – Issued in September 2016, ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis (such as mortgage loans and held to maturity debt securities) and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP; however, Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. In October 2019, the FASB proposed an update to ASU No. 2016-13 that would make the ASU effective for the Company on January 1, 2023. The Company is in the process of evaluating the potential impact of this standard, especially as it relates to mortgage loans held for investment.

ASU No. 2018-12: “Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts” – Issued in August 2018, ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future policy benefits on traditional long-duration contracts by requiring that assumptions be updated after contract inception and by modifying the rate used to discount future cash flows. The ASU will simplify and improve the accounting for certain market-based options or guarantees associated with deposit or account balance contracts, simplify amortization of deferred acquisition costs while improving and expanding required disclosures. In November 2020, the FASB issued an update to ASU No. 2018-12 that made the ASU effective for the Company on January 1, 2025. The Company is in the process of evaluating the potential impact of this standard.

The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2) Investments 

The Company’s investments as of December 31, 2020 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2020:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$    42,381,805	$     1,358,562	$                    -	$    43,740,367
Obligations of states and political subdivisions	5,383,762	312,214	(1,261)	5,694,715
Corporate securities including public utilities	186,067,912	27,216,496	(681,478)	212,602,930
Mortgage-backed securities	31,047,791	1,565,377	(267,106)	32,346,062
Redeemable preferred stock	269,214	3,391	-	272,605
Total fixed maturity securities available for sale	$  265,150,484	$   30,456,040	$      (949,845)	$  294,656,679
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$      9,698,490	$     2,376,156	$       (750,407)	$    11,324,239
Total equity securities at estimated fair value	$      9,698,490	$     2,376,156	$       (750,407)	$    11,324,239
Mortgage loans held for investment at amortized cost:
Residential	$    95,822,448
Residential construction	111,111,777
Commercial	46,836,866
Less: Unamortized deferred loan fees, net	(1,161,132)
Less: Allowance for loan losses	(2,005,127)
Less: Net discounts	(1,260,896)
Total mortgage loans held for investment	$  249,343,936
Real estate held for investment - net of accumulated depreciation:
Residential	$    24,843,743
Commercial	106,840,710
Total real estate held for investment	$  131,684,453
Real estate held for sale:
Residential	$      3,478,254
Commercial	4,400,553
Total real estate held for sale	$      7,878,807
Other investments and policy loans at amortized cost:
Policy loans	$    14,171,589
Insurance assignments	53,231,131
Federal Home Loan Bank stock (1)	2,506,600
Other investments	5,432,816
Less: Allowance for doubtful accounts	(1,645,475)
Total policy loans and other investments	$    73,696,661
Accrued investment income	$      5,360,523
Total investments	$  773,945,298
(1) Includes $866,900 of Membership stock and $1,639,700 of Activity stock due to short-term borrowings.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

The Company’s investments as of December 31, 2019 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2019:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$    142,740,641	$      632,185	$   (25,215)	$ 143,347,611
Obligations of states and political subdivisions	7,450,366	87,812	(9,026)	7,529,152
Corporate securities including public utilities	156,599,184	16,768,449	(463,413)	172,904,220
Mortgage-backed securities	31,475,280	597,395	(240,177)	31,832,498
Redeemable preferred stock	364,339	-	-	364,339
Total fixed maturity securities available for sale	$    338,629,810	$ 18,085,841	$ (737,831)	$ 355,977,820
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$        6,900,537	$   1,139,799	$ (769,171)	$     7,271,165
Total equity securities at estimated fair value	$        6,900,537	$   1,139,799	$ (769,171)	$     7,271,165
Mortgage loans held for investment at amortized cost:
Residential	$    113,043,965
Residential construction	89,430,237
Commercial	38,718,220
Less: Unamortized deferred loan fees, net	(2,391,567)
Less: Allowance for loan losses	(1,453,037)
Less: Net discounts	(653,272)
Total mortgage loans held for investment	$    236,694,546
Real estate held for investment - net of accumulated depreciation:
Residential	$      12,530,306
Commercial	90,226,640
Total real estate held for investment	$    102,756,946
Real estate held for sale:
Residential	$        8,021,306
Commercial	6,076,321
Total real estate held for sale	$      14,097,627
Other investments and policy loans at amortized cost:
Policy loans	$      14,762,805
Insurance assignments	41,062,965
Federal Home Loan Bank stock (1)	894,300
Other investments	4,973,225
Less: Allowance for doubtful accounts	(1,448,026)
Total policy loans and other investments	$      60,245,269
Accrued investment income	$        4,833,232
Total investments	$    781,876,605
(1) Includes $894,300 of Membership stock and $-0- of Activity stock due to short-term borrowings.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

Fixed Maturity Securities

On December 31, 2019, the Company changed the classification of its bond and preferred stock investments from held to maturity to available for sale based on the Company’s need to be able to respond proactively to market risks in managing its portfolio. Such investments are carried at fair value with any unrealized gains and losses reported as a component of other accumulated comprehensive income or loss. At the date of the transfer, the carrying value of the Company’s held to maturity securities was $338,629,810, and net unrealized gains of $17,315,770 were recognized in accumulated other comprehensive income.

The following tables summarize unrealized losses on fixed maturities securities that were carried at estimated fair value at December 31, 2020 and at December 31, 2019. The unrealized losses were primarily related to interest rate fluctuations and uncertainties relating to COVID-19. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:

	Unrealized Losses for Less than Twelve Months	Fair Value	Unrealized Losses for More than Twelve Months	Fair Value	Total Unrealized Loss	Fair Value
At December 31, 2020
Obligations of States and Political Subdivisions	$        1,261	$    206,812	$               -	$               -	$        1,261	$    206,812
Corporate Securities	242,596	9,919,298	438,882	2,593,026	681,478	12,512,324
Mortgage and other asset-backed securities	266,522	3,455,574	584	51,961	267,106	3,507,535
Total unrealized losses	$    510,379	$13,581,684	$   439,466	2,644,987	$    949,845	$16,226,671
At December 31, 2019
U.S. Treasury Securities and Obligations
of U.S. Government Agencies	$      20,211	$30,629,288	$        5,004	$10,000,400	$      25,215	$40,629,688
Obligations of States and Political Subdivisions	9,026	3,062,889	-	-	9,026	3,062,889
Corporate Securities	118,746	7,184,311	344,667	3,950,509	463,413	11,134,820
Mortgage and other asset-backed securities	205,470	13,266,443	34,707	502,769	240,177	13,769,212
Total unrealized losses	$    353,453	$54,142,931	$    384,378	$14,453,678	$    737,831	$68,596,609

There were 63 securities with fair value of 94.7% of amortized cost at December 31, 2020. There were 93 securities with fair value of 98.9% of amortized cost at December 31, 2019. Credit losses of $370,975 and $-0- have been recognized for the years ended December 31, 2020 and 2019, respectively.

On a quarterly basis, the Company evaluates its fixed maturity securities classified as available for sale. This evaluation includes a review of current ratings by the National Association of Insurance Commissions (“NAIC”). Securities with a rating of 1 or 2 are considered investment grade and are not reviewed for impairment. Securities with ratings of 3 to 5 are evaluated for impairment. Securities with a rating of 6 are automatically determined to be impaired and are written down. The evaluation involves an analysis of the securities in relation to historical values, interest payment history, projected earnings and revenue growth rates as well as a review of the reason for a downgrade in the NAIC rating. Based on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely make interest and principal payments in accordance with the terms of the financial instrument. If it is unlikely that the security will meet contractual obligations, the loss is considered to be other than temporary, the security is written down to the new anticipated market value and an impairment loss is recognized.

The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

The following table presents a rollforward of the Company's cumulative other than temporary credit impairments (“OTTI”) recognized in earnings on fixed maturity securities available for sale for the years ended December 31:

	2020	2019
Balance of credit-related OTTI at January 1	$                        -	$                       -
Additions for credit impairments recognized on:
Securities not previously impaired	370,975	-
Securities previously impaired	-	-
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period (realized)	-	-
Securities due to an increase in expected cash flows	-	-
Balance of credit-related OTTI at December 31	$            370,975	$                       -

The amortized cost and estimated fair value of fixed maturity securities available for sale at December 31, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Estimated Fair
	Cost	Value
Due in 1 year	$      28,634,042	$        28,831,983
Due in 2-5 years	66,183,907	70,910,775
Due in 5-10 years	70,162,166	78,592,046
Due in more than 10 years	68,853,364	83,703,208
Mortgage-backed securities	31,047,791	32,346,062
Redeemable preferred stock	269,214	272,605
Total	$    265,150,484	$      294,656,679

The Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”). The Company pledged a total of $40,000,000, par value, of United States Treasury fixed maturity securities with the FHLB at December 31, 2020. These securities are used as collateral on any cash borrowings from the FHLB. As of December 31, 2020, the Company did not have any outstanding amounts owed to the FHLB and its estimated maximum borrowing capacity was $39,102,336.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

Investment Related Earnings

The Company’s net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities, and other than temporary impairments from investments and other assets for the years ended December 31 are summarized as follows:

	2020	2019
Fixed maturity securities available for sale:
Gross realized gains	$         445,749	$         459,286
Gross realized losses	(77,546)	(162,649)
Other than temporary impairments	(370,975)	-
Equity securities:
Gains on securities sold	74,836	256,520
Unrealized gains on securities held at the end of the period	1,125,304	1,086,116
Other assets:
Gross realized gains	2,342,418	2,844,673
Gross realized losses	(1,984,911)	(3,755,579)
Total	$      1,554,875	$         728,367

The net realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined using the specific identification method.

On December 31, 2019, the Company changed the classification of its bond and preferred stock investments from held to maturity to available for sale based on the Company’s need to be able to respond proactively to market risks in managing its portfolio. Proceeds received from the sale of fixed maturity securities available for sale securities for the year ended December 31, 2020, were $5,477,438, and resulted in gross realized gains and gross realized losses of $358,236 and $21,137, respectively. The carrying amount of held to maturity securities sold for the year ended December 31, 2019 was $4,950,041 and the net realized gain related to these sales was $43,039.

Major categories of net investment income for the years ended December 31, were as follows:

	2020	2019
Fixed maturity securities available for sale	$ 12,233,394	$ 10,372,559
Equity securities	642,433	309,918
Mortgage loans held for investment	25,672,746	18,405,010
Real estate held for investment and sale	11,945,401	8,782,959
Policy loans	1,025,179	554,969
Insurance assignments	17,837,578	16,086,059
Other investments	126,013	184,439
Cash and cash equivalents	426,623	1,824,443
Gross investment income	69,909,367	56,520,356
Investment expenses	(13,579,564)	(13,500,883)
Net investment income	$ 56,329,803	$ 43,019,473

Net investment income includes  income earned by the restricted assets of the cemeteries and mortuaries of $676,313 and $448,754 for the years ended December 31, 2020 and 2019, respectively.

Net investment income on real estate consists primarily of rental revenue.

Investment expenses consist primarily of depreciation, property taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

Securities on deposit for regulatory authorities as required by law amounted to $9,684,409 and $9,633,818 at December 31, 2020 and 2019, respectively. The restricted securities are included in various assets under investments on the accompanying consolidated balance sheets.

There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses) at December 31, 2020, other than investments issued or guaranteed by the United States Government.

Real Estate Held for Investment and Held for Sale

The Company continues to strategically deploy resources into real estate to match the income and yield durations of its primary obligations. The sources for these real estate assets come through its various business segments in the form of acquisition, development and mortgage foreclosures. The Company reports real estate held for investment and held for sale pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

Commercial Real Estate Held for Investment and Held for Sale

The Company owns and manages commercial real estate assets as a means of generating investment income. These assets are acquired in accordance with the Company’s goals and objectives for risk-adjusted returns. Due diligence is conducted on each asset using internal and third-party reports. Geographic locations and asset classes of the investment activity is determined by senior management under the direction of the Board of Directors.

The Company employs full-time employees to attend to the day-to-day operations of those assets within the greater Salt Lake area and close surrounding markets.  The Company utilizes third-party property managers when the geographic boundary does not warrant full-time staff or through strategic lease-up periods. The Company generally looks to acquire assets in regions that are high growth regions for employment and population and assets that provide operational efficiencies.

The Company currently owns and operates 11 commercial properties in 5 states. These properties include office buildings, a funeral home, flex office space, and includes the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah. The Company also holds undeveloped land that may be used for future commercial developments. The Company does use debt in strategic cases to leverage established yields or to acquire a higher quality or different class of asset. See Note 20 regarding commercial real estate held for investment in Louisiana acquired with the acquisition of Kilpatrick Life Insurance Company.

The aggregated net ending balance of commercial real estate that serves as collateral for bank loans was $71,517,902 and $87,814,860 as of December 31, 2020 and 2019, respectively. The associated bank loan carrying values totaled $46,153,283 and $54,917,279 as of December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020 and 2019, the Company recorded impairment losses on commercial real estate held for sale of $897,980 and $2,768,979, respectively. Impairment losses of $846,980 and of $2,768,979 for the years ended December 31, 2020 and 2019, respectively, relate to an office building located in Kansas held by the life insurance segment. An impairment loss of $51,000 for the year ended December 31, 2020 relates to the improved commercial pad located in Texas held by the life insurance segment. Impairment loss are included in gains (losses) on investments and other assets on the consolidated statements of earnings.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

The Company’s commercial real estate held for investment for the years ended December 31, is summarized as follows:

	Net Ending Balance		Total Square Footage
	2020	2019	2020	2019
Louisiana	$    2,998,684	$  6,009,079	84,841	125,114
Mississippi	2,914,498	2,951,478	21,521	21,521
Utah (1)	100,927,528	81,266,083	379,066	465,230
	$ 106,840,710	$ 90,226,640	485,428	611,865
(1) Includes Center53 phase 1 and phase 2 which is under construction.

The Company’s commercial real estate held for sale for the years ended December 31, is summarized as follows:

	Net Ending Balance		Total Square Footage
	2020	2019	2020	2019
Arizona (1)	$               -	$        2,500	-	-
Kansas	4,000,000	4,800,000	222,679	222,679
Mississippi	151,553	318,322	12,300	12,300
Nevada	-	655,499	-	4,800
Texas (2)	249,000	300,000	-	-
	$  4,400,553	$  6,076,321	234,979	239,779
(1) Undeveloped land
(2) Improved commercial pad

These properties are all actively being marketed with the assistance of commercial real estate brokers in the markets where the properties are located. The Company expects these properties to sell within the coming 12 months.

Residential Real Estate Held for Investment and Held for Sale

The Company owns a small portfolio of residential homes primarily as a result of loan foreclosures.  The Company has the option to sell them or to continue to hold them for cash flow and acceptable returns. The Company also invests in residential subdivision land developments.

The Company established Security National Real Estate Services (“SNRE”) to manage the residential portfolio. SNRE cultivates and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the portfolio of homes across the country.

As of December 31, 2020, SNRE manages 11 residential properties in 5 states across the United States.

During the years ended December 31, 2020 and 2019, the Company recorded impairment losses on residential real estate held for sale of $43,394 and $700,134, respectively. These impairment losses are included in gains (losses) on investments and other assets on the consolidated statements of earnings.

The net ending balance of foreclosed residential real estate included in residential real estate held for investment or sale is $4,327,079 and $12,433,986 as of December 31, 2020 and 2019, respectively.

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

The Company’s residential real estate held for investment for the years ended December 31, is summarized as follows:

	Net Ending Balance
	2020	2019
Florida	-	2,487,723
Nevada	-	293,516
Utah (1)	24,557,562	9,462,886
Washington (2)	286,181	286,181
	$   24,843,743	$ 12,530,306
(1) Including subdivision land developments
(2) Improved residential lots

Additional information regarding the Company’s subdivision land developments in Utah for the years ended December 31, is summarized as follows:

	2020	2019
Lots available for sale	36	48
Lots to be developed	350	174
Ending Balance (1)	$   23,777,478	$  7,889,576
(1) The estimated remaining cost to complete the undeveloped lots is $17,354,000 and $1,900,000 as of December 31, 2020 and 2019, respectively.

The Company’s residential real estate held for sale for the years ended December 31, is summarized as follows:

	Net Ending Balance
	2020	2019
California	-	640,452
Florida	744,322	1,300,641
Nevada	979,640	-
Ohio	10,000	10,000
Utah	1,744,292	5,880,213
Washington	-	190,000
	$    3,478,254	$  8,021,306

These properties are all actively being marketed with the assistance of residential real estate brokers in the markets where the properties are located. The Company expects these properties to sell within the coming 12 months.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

Real Estate Owned and Occupied by the Company

The primary business units of the Company occupy a portion of the commercial real estate owned by the Company. As of December 31, 2020, real estate owned and occupied by the Company is summarized as follows:

Location	Business Segment	Approximate Square Footage	Square Footage Occupied by the Company
121 W. Election Rd., Draper, UT	Corporate Offices, Life Insurance and Cemetery/Mortuary Operations	78,979	18%
5201 Green Street, Salt Lake City, UT (1)	Life Insurance and Mortgage Operations	39,157	73%
1044 River Oaks Dr., Flowood, MS	Life Insurance Operations	19,694	28%
1818 Marshall Street, Shreveport, LA (1)(2)	Life Insurance Operations	12,274	100%
909 Foisy Street, Alexandria, LA (1)(2)	Life Insurance Sales	8,059	100%
812 Sheppard Street, Minden, LA (1)(2)	Life Insurance Sales	1,560	100%
1550 N 3rd Street, Jena, LA (1)(2)	Life Insurance Sales	1,737	100%

(1)Included in property and equipment on the consolidated balance sheets 

(2)See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company 

Mortgage Loans Held for Investment

The Company reports mortgage loans held for investment pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0 % to 10.5%, maturity dates range from nine months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At December 31, 2020, the Company had 57%, 13%, 9%, 4%, 3% and 3% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada and Arizona, respectively. At December 31, 2019, the Company had 48%, 16%, 10%, 6%, 6% and 5% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada and Arizona, respectively.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

The Company establishes a valuation allowance for credit losses in its portfolio. The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:

Allowance for Credit Losses and Recorded Investment in Mortgage Loans Held for Investment
Years Ended December 31
	Commercial	Residential	Residential Construction	Total
2020
Allowance for credit losses:
Beginning balance	$      187,129	$     1,222,706	$        43,202	$     1,453,037
Charge-offs	-	-	-	-
Provision	-	552,090	-	552,090
Ending balance	$      187,129	$     1,774,796	$        43,202	$     2,005,127
Ending balance: individually evaluated for impairment	$                  -	$        219,905	$                  -	$        219,905
Ending balance: collectively evaluated for impairment	$      187,129	$     1,554,891	$        43,202	$     1,785,222
Mortgage loans:
Ending balance	$ 46,836,866	$ 111,111,777	$ 95,822,448	$ 253,771,091
Ending balance: individually evaluated for impairment	$   2,148,827	$     7,932,680	$      200,963	$   10,282,470
Ending balance: collectively evaluated for impairment	$ 44,688,039	$ 103,179,097	$ 95,621,485	$ 243,488,621
2019
Allowance for credit losses:
Beginning balance	$      187,129	$     1,125,623	$        35,220	$     1,347,972
Charge-offs	-	(32,692)	-	(32,692)
Provision	-	129,775	7,982	137,757
Ending balance	$      187,129	$     1,222,706	$        43,202	$     1,453,037
Ending balance: individually evaluated for impairment	$                  -	$        195,993	$                  -	$        195,993
Ending balance: collectively evaluated for impairment	$      187,129	$     1,026,713	$        43,202	$     1,257,044
Mortgage loans:
Ending balance	$ 38,718,220	$ 113,043,965	$ 89,430,237	$ 241,192,422
Ending balance: individually evaluated for impairment	$   4,488,719	$     3,752,207	$      655,000	$     8,895,926
Ending balance: collectively evaluated for impairment	$ 34,229,501	$ 109,291,758	$ 88,775,237	$ 232,296,496

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

The following is a summary of the aging of mortgage loans held for investment for the periods presented.

Age Analysis of  Past Due Mortgage Loans Held for Investment
Years Ended December 31
	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days (1)	In Process of Foreclosure (1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Unamortized deferred loan fees, net	Unamortized discounts, net	Net Mortgage Loans
2020
Commercial	$   233,200	$     812,780	$   2,148,827	$                    -	$  3,194,807	$  43,642,059	$       46,836,866	$    (187,129)	$       (32,557)	$    (880,721)	$  45,736,459
Residential	5,866,505	2,048,148	5,669,583	2,263,097	15,847,333	79,975,115	95,822,448	(1,774,796)	(909,864)	(380,175)	92,757,613
Residential  Construction	127,191	-	-	200,963	328,154	110,783,623	111,111,777	(43,202)	(218,711)	-	110,849,864
Total	$ 6,226,896	$ 2,860,928	$   7,818,410	$   2,464,060	$ 19,370,294	$ 234,400,797	$       253,771,091	$ (2,005,127)	$  (1,161,132)	$  (1,260,896)	$ 249,343,936
2019
Commercial	$ 1,872,000	$                 -	$   4,488,719	$                    -	$  6,360,719	$   32,357,501	$        38,718,220	$    (187,129)	$      (88,918)	$     (653,272)	$   37,788,901
Residential	10,609,296	4,085,767	2,100,742	1,651,465	18,447,270	94,596,695	113,043,965	(1,222,706)	(1,567,581)	-	110,253,678
Residential  Construction	-	-	655,000	-	655,000	88,775,237	89,430,237	(43,202)	(735,068)	-	88,651,967
Total	$ 12,481,296	$ 4,085,767	$ 7,244,461	$     1,651,465	$ 25,462,989	$ 215,729,433	$       241,192,422	$ (1,453,037)	$  (2,391,567)	$     (653,272)	$ 236,694,546
(1)  There was not any interest income recognized on loans past due greater than 90 days or in foreclosure.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

Impaired Mortgage Loans Held for Investment

Impaired mortgage loans held for investment include loans with a related specific valuation allowance or loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary. The recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting period and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:

Impaired Loans
Years Ended December 31
	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
2020
With no related allowance recorded:
Commercial	$ 2,148,827	$   2,148,827	$                -	$       1,866,819	$                -
Residential	6,415,419	6,415,419	-	5,010,078	-
Residential construction	200,963	200,963	-	555,278	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,517,261	1,517,261	219,905	1,182,368	-
Residential construction	-	-	-	-	-
Total:
Commercial	$ 2,148,827	$   2,148,827	$                -	$       1,866,819	$                -
Residential	7,932,680	7,932,680	219,905	6,192,446	-
Residential construction	200,963	200,963	-	555,278	-
2019
With no related allowance recorded:
Commercial	$ 4,488,719	$   4,488,719	$                -	$       1,499,043	$                -
Residential	2,254,189	2,254,189	-	3,367,151	-
Residential construction	655,000	655,000	-	1,457,278	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,498,018	1,498,018	195,993	665,270	-
Residential construction	-	-	-	-	-
Total:
Commercial	$ 4,488,719	$   4,488,719	$                -	$       1,499,043	$                -
Residential	3,752,207	3,752,207	195,993	4,032,421	-
Residential construction	655,000	655,000	-	1,457,278	-

Credit Risk Profile Based on Performance Status

The Company’s mortgage loan held for investment portfolio is monitored based on performance of the loans. Monitoring a mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment. The Company defines non-performing mortgage loans as loans 90 days or greater delinquent or on non-accrual status.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

2)Investments (Continued) 

The Company’s performing and non-performing mortgage loans held for investment were as follows:

Mortgage Loans Held for Investment Credit Exposure
Credit Risk Profile Based on Payment Activity
Years Ended December 31
	Commercial		Residential		Residential Construction		Total
	2020	2019	2020	2019	2020	2019	2020	2019
Performing	$ 44,688,039	$ 34,229,501	$   87,889,768	$109,291,758	$   110,910,814	$  88,775,237	$     243,488,621	$ 232,296,496
Non-performing	2,148,827	4,488,719	7,932,680	3,752,207	200,963	655,000	10,282,470	8,895,926
Total	$ 46,836,866	$ 38,718,220	$   95,822,448	$113,043,965	$   111,111,777	$  89,430,237	$     253,771,091	$ 241,192,422

Non-Accrual Mortgage Loans Held for Investment

Once a loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and write off any income that had been accrued. Payments received for loans on a non-accrual status are recognized on a cash basis. Interest income recognized from any payments received for loans on a non-accrual status was immaterial. Accrual of interest resumes if a loan is brought current. Interest not accrued on these loans totals approximately $491,000 and $203,000 as of December 31, 2020 and 2019, respectively.

The following is a summary of mortgage loans held for investment on a non-accrual status for the periods presented.

	Mortgage Loans on Non-accrual Status
	Years Ended December 31
	2020	2019
Commercial	$           2,148,827	$            4,488,719
Residential	7,932,680	3,752,207
Residential construction	200,963	655,000
Total	$         10,282,470	$            8,895,926

Principal Amounts Due

The amortized cost and contractual payments on mortgage loans held for investment by category as of December 31, 2020 are shown below. Expected principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment penalties.

		Principal	Principal	Principal
		Amounts	Amounts	Amounts
		Due in	Due in	Due
	Total	1 Year	2-5 Years	Thereafter
Residential	$      95,822,448	$  11,202,899	$ 17,774,238	$   66,845,311
Residential Construction	111,111,777	$ 103,391,044	$   7,720,733	-
Commercial	46,836,866	27,111,325	11,101,138	8,624,403
Total	$    253,771,091	$ 141,705,268	$ 36,596,109	$   75,469,714

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

3)Loans Held for Sale 

The Company has elected the fair value option for loans held for sale as disclosed in Note 1. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on mortgage loans held for investment and is included in mortgage fee income on the consolidated statement of earnings. There are three loans with an aggregate unpaid principal balance of $208,636 that are 90 or more days past due and on a nonaccrual status as of December 31, 2020. See Note 17 of the Notes to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

The following is a summary of the aggregate fair value and the aggregate unpaid principal balance of loans held for sale for the periods presented:

	As of December 31 2020	As of December 31 2019
Aggregate fair value	$          422,772,418	$          213,457,632
Unpaid principal balance	406,407,323	206,417,122
Unrealized gain	16,365,095	7,040,510

Mortgage Fee Income

Mortgage fee income consists of origination fees, processing fees, interest income and certain other income related to the origination and sale of mortgage loans held for sale.

Major categories of mortgage fee income for loans held for sale for the years ended December 31, were as follows:

	2020	2019
Loan fees	$    43,432,532	$    28,660,966
Interest income	10,628,581	6,978,930
Secondary gains	231,759,342	93,581,956
Change in fair value of loan commitments	7,637,377	899,417
Change in fair value of loans held for sale	10,413,492	2,498,097
Provision for loan loss reserve	(4,938,214)	(643,284)
Mortgage fee income	$   298,933,110	$   131,976,082

Loan Loss Reserve

When a repurchase demand corresponding to a mortgage loan previously held for sale and sold to a third-party investor is received from a third-party investor, the relevant data is reviewed and captured so that an estimated future loss can be calculated. The key factors that are used in the estimated loss calculation are as follows: (i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the Company is able to resolve the issues relating to the repurchase demand by the third-party investor without having to make any payments to the investor.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

3)Loans Held for Sale (Continued) 

The following is a summary of the loan loss reserve which is included in other liabilities and accrued expenses:

	December 31
	2020	2019
Balance, beginning of period	$          4,046,288	$          3,604,869
Provision for current loan originations (1)	4,938,214	643,284
Additional provision for loan loss reserve	16,506,030	-
Charge-offs, net of recaptured amounts	(4,906,914)	(201,865)
Balance, at December 31	$        20,583,618	$          4,046,288
(1) Included in Mortgage fee income

The Company maintains reserves for estimated losses on current production volumes. For the year ended December 31, 2020, $4,938,214 in reserves were added at a rate of 8.9 basis points per loan, the equivalent of $890 per $1,000,000 in loans originated. This is an increase over the year ended December 31, 2019, when $643,284 in reserves were added at a rate of 2.5 basis points per loan originated, the equivalent of $250 per $1,000,000 in loans originated. The Company also increased its loan loss reserve for the year ended December 31, 2020 by an additional $16,506,030 to account for changes in estimates specific to settlements of loan losses. See Note 10 for additional information regarding mortgage loan loss settlements. The economic impact of COVID-19 and subsequent government action has increased the potential for losses due to early payoff penalties and potential for losses due to increased delinquency.  The unique nature of these current events creates significant difficulty for forecasting potential future losses.  The Company will continue to monitor data and economic conditions in order to maintain adequate loss reserves on current production. Thus, the Company believes that the final loan loss reserve as of December 31, 2020, represents its best estimate for adequate loss reserves on loans sold.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

4)Receivables 

Receivables consist of the following:

	December 31
	2020	2019
Trade contracts	$          4,119,988	$          2,795,471
Receivables from sales agents	2,677,774	2,962,571
Other	5,786,827	5,202,444
Total receivables	12,584,589	10,960,486
Allowance for doubtful accounts	(1,685,382)	(1,724,156)
Net receivables	$        10,899,207	$          9,236,330

5) Value of Business Acquired, Intangible Assets and Goodwill 

Information with regard to value of business acquired was as follows:

	December 31
	2020	2019
Balance at beginning of year	$      9,876,647	$      5,765,190
Value of  business acquired	-	4,962,831	(1)
Imputed interest at 7% included in earnings	670,565	472,916
Amortization included in earnings	(1,457,390)	(1,320,456)
Shadow amortization included in other   comprehensive income	(134,573)	(3,834)
Net amortization	(921,398)	(851,374)
Balance at end of year	$      8,955,249	$      9,876,647
(1) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

Presuming no additional acquisitions, net amortization charged to income is expected to approximate $1,019,000, $918,000, $854,000, $784,000, and $707,000 for the years 2021 through 2026 . Actual amortization may vary based on changes in assumptions or experience. As of December 31, 2020, value of business acquired is being amortized over a weighted average life of 6.9 years.

The carrying value of the Company’s intangible assets were as follows which is included in other assets:

		December 31
	Useful Life	2020	2019
Intangible asset - customer lists	15 years	$         890,000	$      890,000
Intangible asset - trade name (1)	15 years	$         610,000	$      610,000
Less accumulated amortization		(197,334)	(98,222)
Balance at end of year		$      1,302,666	$    1,401,778
(1) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

5)Value of Business Acquired, Intangible Assets and Goodwill (Continued) 

Information regarding goodwill by segment was as follows:

	Life Insurance	Cemetery/Mortuary		Total
Balance at January 1, 2019:
Goodwill	$ 2,765,570	$           -		$ 2,765,570
Accumulated impairment	-	-		-
Total goodwill, net	2,765,570	-		2,765,570
Acquisition	-	754,018	(1)	754,018
Balance at December 31, 2019:
Goodwill	2,765,570	754,018		3,519,588
Accumulated impairment	-	-		-
Total goodwill, net	2,765,570	754,018		3,519,588
Acquisition	-	-		-
Balance at December 31, 2020:
Goodwill	2,765,570	754,018		3,519,588
Accumulated impairment	-	-		-
Total goodwill, net	$ 2,765,570	$ 754,018		$ 3,519,588
(1) See Note 20 regarding the acquisition of Probst Family Funerals and Cremations and Heber Valley Funeral Home

Goodwill of $3,519,588 is not amortized but is tested annually for impairment. The annual impairment tests resulted in no impairment of goodwill for the years ended December 31, 2020 and 2019.

6) Property and Equipment 

The cost of property and equipment is summarized below:

	December 31
	2020	2019
Land and buildings	$        11,972,802	$        15,131,301
Furniture and equipment	19,679,682	18,987,984
	31,652,484	34,119,285
Less accumulated depreciation	(19,179,139)	(19,518,891)
Total	$        12,473,345	$        14,600,394

Depreciation expense for the years ended December 31, 2020 and 2019 was $2,078,738 and $1,711,369, respectively. During 2020, the Company demolished a building with a gross building cost of $1,723,000 with its associated accumulated depreciation (net book value of $-0-) and transferred land with a cost of $1,516,700 to real estate held for investment to make way for phase 2 of the redevelopment and expansion of Center53. During 2019, the Company transferred $3,261,259 from real estate held for investment to property and equipment. The transfers are shown as a non cash items on the consolidated statements of cash flows. See Note 20 for additional information regarding property and equipment acquired through acquisitions.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

7)Bank and Other Loans Payable  

Bank and other loans payable are summarized as follows:

	December 31
	2020	2019
2.25% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate note payable in   monthly principal payments of $13,167 plus interest, collateralized by real property, paid in   full November 2020.	$               -	$    2,659,769
4.27% fixed note payable in monthly installments of $53,881 including principal and interest,    collateralized by shares of Security National Life Insurance Company stock, due    December 2021.	633,890	1,238,619
Prime rate note payable in monthly installments of $75,108 including principal and interest,   collateralized by shares of Security National Life Insurance Company stock, due   December 2024.	3,257,113	4,000,000
4.40% fixed note payable in monthly installments of $46,825 including principal and interest,    collateralized by real property, paid in full April 2020.	-	7,247,651
4.329% fixed note payable in monthly installments of $9,775 including principal and interest,   collateralized by real property with a book value of approximately $3,174,000, due   September 2025.	1,861,920	1,896,450
2.5% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate construction loan   payable in monthly principal payments of $113,000 plus interest, collateralized by real property  with a book value of approximately $50,689,000, due March 2021.	35,091,364	33,811,559
4.7865% fixed interest only note payable in monthly installments, collateralized by real property   with a book value of approximately $17,655,000, due June 2028.	9,200,000	9,200,000
1 month LIBOR rate plus 2.1% loan purchase agreement with a warehouse line availability of   $150,000,000, matures June 2021.	116,598,834	88,509,536
1 month LIBOR rate plus 3% loan purchase agreement with a warehouse line availability of   $175,000,000, matures November 2021.	68,766,572	67,537,600
1 month LIBOR rate plus 2.5% loan purchase agreement with a warehouse line availability of   $90,000,000, matures May 2021.	60,715,374	-
1 month LIBOR rate plus 2.5% loan purchase agreement with a warehouse line availability of   $5,000,000, matures August 2021.	317,582	-
Other short-term borrowings (1)	1,250,000	1,250,000
Finance lease liabilities	104,951	153,439
Other loans payable	26,768	67,989
Total bank and other loans	297,824,368	217,572,612
Less current installments	284,250,996	192,985,602
Bank and other loans, excluding current installments	$   13,573,372	$  24,587,010
(1) Revolving Line of Credit

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

7)Bank and Other Loans Payable (Continued) 

Sources of Liquidity

Federal Home Loan Bank Membership

The Federal Home Loan Banks (“the FHLBs”) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities.  The Company is a member of the FHLB based in Des Moines, Iowa and based in Dallas, Texas.  As a member of the FHLB, the Company is required to maintain a minimum investment in capital stock of the FHLB and may pledge collateral to the bank for advances of funds to be used in its operations. 

Federal Home Loan Bank of Des Moines

At December 31, 2020, the amount available for borrowings from the FHLB of Des Moines was approximately $39,102,336, compared with $57,727,738 at December 31, 2019. United States Treasury fixed maturity securities with an estimated fair value of $40,729,400 at December 31, 2020 have been pledged at the FHLB of Des Moines as collateral for current and potential borrowings compared with $59,877,900 at December 31, 2019.  At December 31, 2020 and 2019, the Company had no outstanding FHLB borrowings. At December 31, 2020, the Company’s total investment in FHLB stock was $786,300 compared with $806,500 at December 31, 2019. The Company’s decreased investment in FHLB stock was a result of its decrease in short-term FHLB borrowings during 2020.

Federal Home Loan Bank of Dallas

The membership of the FHLB of Dallas was acquired with the acquisition of Kilpatrick Life Insurance Company. See Note 20 regarding this acquisition. At December 31, 2020, the Company’s total investment in FHLB stock was $1,720,300 compared with $87,800 at December 31, 2019. The Company does not have any collateral pledged at the FHLB of Dallas or any outstanding borrowings.

Revolving Lines of Credit

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75%, secured by the capital stock of Security National Life and maturing September 30, 2021, renewable annually. At December 31, 2020, the Company was contingently liable under a standby letter of credit aggregating $348,183, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company's captive insurance program and was contingently liable under standby letters of credit aggregating $1,585,063, to be used as collateral for residential subdivision land developments. The standby letters of credit will draw on the line of credit if necessary. The Company does not expect any material losses to result from the issuance of the standby letters of credit. As of December 31, 2020, there were no amounts outstanding under the revolving line-of-credit.

The Company also has a $2,500,000 revolving line-of-credit with a bank with interest payable at the overnight LIBOR rate plus 2.25% maturing September 30, 2021. As of December 31, 2020, there was $1,250,000 outstanding under the revolving line-of-credit.

Debt Covenants for Mortgage Warehouse Lines of Credit

The Company, through its subsidiary SecurityNational Mortgage, has a $150,000,000 line of credit with Wells Fargo Bank N.A. The agreement charges interest at the 1-Month LIBOR rate plus 2.1% and matures on June 24, 2021. SecurityNational Mortgage is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, the ratio of indebtedness to adjusted tangible net worth, and the liquidity overhead coverage ratio, and a quarterly gross profit of at least $1.00.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

7)Bank and Other Loans Payable (Continued) 

The Company, through its subsidiary SecurityNational Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement with the bank allows SecurityNational Mortgage to borrow up to $175,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 3% and matures on November 15, 2021. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling four-quarter basis.

The Company through its subsidiary SecurityNational Mortgage, has a line of credit with Comerica Bank. This agreement with the bank allows SecurityNational Mortgage to borrow up to $90,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2.5% and matures on May 27, 2021. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling twelve months.

The Company, through its subsidiary EverLEND Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement with the bank allows EverLEND Mortgage to borrow up to $5,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2.5% and matures on August 1, 2021. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling four-quarter basis.  

The agreements for warehouse lines include cross default provisions in that a covenant violation under one agreement constitutes a covenant violation under the other agreement.  As of December 31, 2020, the Company believes that it was in compliance with all debt covenants.

The following tabulation shows the combined maturities of bank and other loans payable:

2021	$  284,242,327
2022	884,383
2023	926,186
2024	937,315
2025	1,634,157
Thereafter	9,200,000
Total	$  297,824,368

Interest expense in 2020 and 2019 was $8,578,810 and $7,386,688, respectively. Interest paid in 2020 and 2019 was $8,385,270 and $7,284,078, respectively.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets 

State law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment rights for cemeteries that have established an endowment care trust. These endowment care trusts are defined as variable interest entities pursuant to GAAP. Also, management has determined that the Company is the primary beneficiary of these trusts, as it absorbs both a majority of the losses and returns associated with the trusts. The Company has consolidated cemetery endowment care trust investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets.

The components of the cemetery perpetual care investments and obligation are as follows:

	December 31
	2020	2019
Cash and cash equivalents	$       402,913	$     1,306,740
Fixed maturity securities, available for sale, at estimated fair value	747,767	975,673
Equity securities, at estimated fair value	2,062,303	1,605,451
Commerical mortgage loans held for investment	-	524,000
Participating interests in residential construction mortgage loans    held for investment with Security National Life	1,468,600	-
Real estate held for investment	1,731,584	-
Note receivables from Cottonwood Mortuary, Singing Hills
Cemetery and Memorial Estates eliminated in consolidation	-	1,541,120
Total cemetery perpetual care trust investments	6,413,167	5,952,984
Cemetery perpetual care obligation	(4,087,704)	(3,933,719)
Trust investments in excess of trust obligations	$     2,325,463	$     2,019,265

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

8)Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Continued) 

The Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection with its pre-need sales for its cemetery and mortuary segment.

Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company elected to maintain its medical benefit fund without change from the prior year and has included this amount as a component of restricted cash. These restricted cash items are for the Company’s life insurance and mortgage segments.

Restricted assets are summarized as follows:

	December 31
	2020	2019
Cash and cash equivalents (1)	$     8,842,744	$     8,674,214
Fixed maturity securities, available for sale, at estimated fair value	1,473,637	1,008,867
Equity securities, at estimated fair value	2,515,778	1,976,480
Participating interests in mortgage loans held for investment   with Security National Life	3,317,877	2,275,756
Total	$   16,150,036	$   13,935,317

(1)Including cash and cash equivalents of $8,524,999 and $7,170,092 as of December 31, 2020 and 2019, respectively, for the life insurance and mortgage segments. 

A surplus note receivable in the amount of $4,000,000 at December 31, 2020 and 2019, from Security National Life, was eliminated in consolidation.

See Notes 1 and 17 for additional information regarding restricted assets.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

9)Income Taxes 

The Company’s income tax liability is summarized as follows:

	December 31
	2020	2019
Current	$    2,595,877	$    1,410,153
Deferred	22,662,923	17,276,819
Total	$  25,258,800	$   18,686,972

Significant components of the Company’s deferred tax (assets) and liabilities are approximately as follows:

	December 31
	2020	2019
Assets
Future policy benefits	$  (12,657,045)	$  (12,450,229)
Loan loss reserve	(5,352,942)	(1,053,256)
Unearned premium	(699,011)	(760,556)
Net operating loss	(334,085)	(438,420)
Deferred compensation	(2,833,298)	(1,996,865)
Deposit obligations	(610,041)	(619,633)
Other	(1,269,533)	(1,020,718)
Less: Valuation allowance	961,920	2,439,394
Total deferred tax assets	(22,794,035)	(15,900,283)
Liabilities
Deferred policy acquisition costs	16,430,001	15,536,717
Basis difference in property, equipment and real estate	5,312,787	3,638,512
Value of business acquired	1,880,602	2,074,096
Deferred gains	12,124,226	5,169,104
Trusts	1,064,387	1,064,387
Tax on unrealized appreciation	8,644,955	5,694,286
Total deferred tax liabilities	45,456,958	33,177,102
Net deferred tax liability	$  22,662,923	$   17,276,819

The valuation allowance relates to differences between recorded deferred tax assets and liabilities and ultimate anticipated realization.  The Company has recorded a valuation allowance related to Kilpatrick Life Insurance Company that was acquired in December 2019.

The Company paid $11,813,120 and $4,861,318 in income taxes for the years ended December 31, 2020 and 2019, respectively.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

9)Income Taxes (Continued) 

The Company’s income tax expense is summarized as follows for the years ended December 31:

	2020	2019
Current
Federal	$  10,678,612	$    4,404,041
State	2,320,233	504,272
	12,998,845	4,908,313
Deferred
Federal	2,677,943	(1,551,725)
State	176,726	(306,172)
	2,854,669	(1,857,897)
Total	$  15,853,514	$    3,050,416

The reconciliation of income tax expense at the U.S. federal statutory rates is as follows:

	2020	2019
Computed expense at statutory rate	$  15,004,527	$    2,928,226
State tax expense, net of federal tax benefit	1,972,598	156,499
Change in valuation allowance	(1,477,474)	194,364
Other, net	353,863	(228,673)
Income tax expense	$  15,853,514	$    3,050,416

The Company’s overall effective tax rate for the years ended December 31, 2020 and 2019 was 22.2% and 21.9% respectively.  The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% partially due to its provision for state income taxes and a decrease to the valuation allowance related to Kilpatrick Life Insurance Company that decreased the effective income tax rate when compared to the prior year.

At December 31, 2020, the Company had no significant unrecognized tax benefits. As of December 31, 2020, the Company does not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months. Federal and state income tax returns for 2017 through 2020 are subject to examination by taxing authorities.

Net Operating Losses and Tax Credit Carryforwards:

Year of Expiration
2021	$       17,100
2022	-
2023	-
2024	-
2025	-
Thereafter up through 2037	1,405,155
	$   1,422,255

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

10)Reinsurance, Commitments and Contingencies 

Reinsurance

The Company follows the procedure of reinsuring risks in excess of a specified limit, which ranged from $25,000 to $100,000 during the years 2020 and 2019. The Company is liable for these amounts in the event such reinsurers are unable to pay their portion of the claims. The Company has also assumed insurance from other companies having insurance in force amounting to approximately $96,000,000 and approximately $99,000,000 at December 31, 2020 and 2019, respectively.

Mortgage Loan Loss Settlements

Future loan losses can be extremely difficult to estimate. However, the Company believes that its reserve methodology and its current practice of property preservation allow it to estimate potential losses on loans sold. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2020 and 2019, the balances were $20,584,000 and $4,046,000, respectively. The Company believes that the final loan loss reserve as of December 31, 2020, represents its best estimate for adequate loss reserves on loans sold.

Mortgage Loan Loss Litigation

Settlement Agreement and Mutual Release with Lehman Brothers Holdings Inc.

From 2004 to early 2008, SecurityNational Mortgage Company (“SecurityNational Mortgage”), a wholly owned subsidiary of the Company, originated “limited documentation” or “reduced documentation” loans which were sold to certain affiliates of Lehman Brothers Holdings Inc. (“Lehman Holdings”). Certain of these loans became the subject of disputes between SecurityNational Mortgage and Lehman Holdings and certain Lehman Holdings affiliates. Lehman Holdings filed a Petition for Relief under Chapter 11 of the United States Bankruptcy Code in 2008. In May of 2011, SecurityNational Mortgage filed a complaint in U.S. District Court against certain Lehman Holdings affiliates.  In June of 2011, Lehman Holdings filed a complaint in Federal District Court against SecurityNational Mortgage, both of which were later resolved. In 2016, certain other pending loan disputes between SecurityNational Mortgage and Lehman Holdings became the subject of an unsuccessful, non-binding alternate dispute resolution mediation proceeding.  

Thereafter, in 2016, Lehman Holdings filed an adversary proceeding complaint against approximately 150 mortgage loan originators, including SecurityNational Mortgage, in the U.S. Bankruptcy Court of the Southern District of New York, which included seeking damages relating to the alleged obligations of the defendants under indemnification provisions of alleged agreements, in amounts to be determined at trial, including interest, attorneys’ fees and costs incurred by Lehman Holdings in enforcing the obligations of the defendants. The complaint was later amended with the latest amended complaint filed against SecurityNational Mortgage on December 27, 2016, seeking damages to be determined at trial, including interest, attorneys’ fees and costs. This complaint involved approximately 135 mortgage loans, there being millions of dollars allegedly in dispute. These claims against SecurityNational Mortgage were asserted as a result of Lehman Holdings’ earlier settlements with the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Corporation (“Freddie Mac”).

In 2018, Lehman Holdings filed a separate adversary proceeding complaint against SecurityNational Mortgage. This adversary proceeding allegedly involved approximately 577 mortgage loans relative to private securitization trusts (“RMBS Loans”) and millions of dollars in damages. Thereafter, Lehman Holdings made a filing that effectively reduced the number of RMBS Loans to 248. This proceeding was in addition to the above-referenced proceeding involving the Fannie Mae and Freddie Mac mortgage loans. As with the above-referenced proceeding, damages were sought including interest, costs, and attorneys’ fees.

80

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

10)Reinsurance, Commitments and Contingencies (Continued) 

 SecurityNational Mortgage, as well as other defendants, have been involved in written discovery, and production of documents relative to the cases, and the filing of motions. The deposition phase of the cases was yet to begin, as well as the later expert witness phase. Those phases would require substantial expenditures of legal fees and costs.

On February 1, 2021, SecurityNational Mortgage executed a settlement agreement with Lehman Holdings in relation to these two adversary proceedings wherein all mortgage loan related claims were resolved, thereby ending all liabilities asserted by Lehman Holdings and conclusively ending all proceedings between SecurityNational Mortgage and Lehman Holdings. In accordance with GAAP, the full amount of SecurityNational Mortgage’s settlement payment has been accounted for in the Company’s loan loss reserve as of December 31, 2020.

Non-Cancelable Leases

The Company leases office space and equipment under various non-cancelable agreements. See Note 24 regarding leases.

Other Contingencies and Commitments

The Company has entered into commitments to fund construction and land development loans and has also provided financing for land acquisition and development. As of December 31, 2020, the Company’s commitments were approximately $185,751,000, for these loans of which $115,898,000 had been funded. The Company advances funds once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 80% of appraised value. The Company receives fees and interest for these loans and the interest rate is generally fixed 5.50% to 8.00% per annum. Maturities range between six and eighteen months.

The Company belongs to a captive insurance group for certain casualty insurance, worker compensation and liability programs. Insurance reserves are maintained relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive insurance management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. If actual claims or adverse development of loss reserves occurs and exceed these estimates, additional reserves may be required. The estimation process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date.

The Company is a defendant in various other legal actions arising from the normal conduct of business. Management believes that none of the actions will have a material effect on the Company’s financial position or results of operations. Based on management’s assessment and legal counsel’s representations concerning the likelihood of unfavorable outcomes, no amounts have been accrued for the above claims in the consolidated financial statements.

The Company is not a party to any other material legal proceedings outside the ordinary course of business or to any other legal proceedings, which, if adversely determined, would have a material adverse effect on its financial condition or results of operations.

81

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

11)Retirement Plans 

The Company and its subsidiaries have a noncontributory Employee Stock Ownership Plan (“ESOP”) for all eligible employees. Eligible employees are primarily those with more than one year of service, who work in excess of 1,000 hours per year. Contributions, which may be in cash or stock of the Company, are determined annually by the Board of Directors. The Company’s contributions are allocated to eligible employees based on the ratio of each eligible employee’s compensation to total compensation for all eligible employees during each year. The Company did not make any contributions for the years ended December 31, 2020 and 2019. On November 25, 2019, the Company distributed a “Notice of Intent to Terminate” the ESOP Plan to all current plan participants.  The Company also filed Form 5310 “Application for Determination for Terminating Plan”, with the IRS on December 6, 2019.  Beginning in the 4^th quarter of 2020, the Company began to distribute the ESOP Plan assets to participants that had made a distribution election. The Company is awaiting approval of its application from the IRS prior to its final distribution of the ESOP Plan assets to the participants. At December 31, 2020, the ESOP held 231,312 shares of Class A and 118,880 shares of Class C common stock of the Company. All shares held by the ESOP have been allocated to the participating employees and all shares held by the ESOP are considered outstanding for purposes of computing earnings per share.

The Company has three 401(k) savings plans covering all eligible employees, as defined above, which includes employer participation in accordance with the provisions of Section 401(k) of the Internal Revenue Code. The plans allow participants to make pretax contributions up to a maximum of $19,500 and $19,000 for the years 2020 and 2019, respectively or the statutory limits. Beginning January 1, 2008, the Company elected to be a “Safe Harbor” Plan for its matching 401(k) contributions. The Company matched 100% of up to 3% of an employee’s total annual compensation and matched 50% of 4% to 5% of an employee’s annual compensation. The match was in Company stock. The Company’s contribution for the years ended December 31, 2020 and 2019 was $1,690,568 and $695,560, respectively under the “Safe Harbor” plan.

In 2001, the Company’s Board of Directors adopted a Non-Qualified Deferred Compensation Plan, and this plan was amended in 2005. Under the terms of the Plan, the Company will provide deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Board has appointed a Committee of the Company to be the Plan Administrator and to determine the employees who are eligible to participate in the plan. The employees who participate may elect to defer a portion of their compensation into the plan. The Company may contribute into the plan at the discretion of the Company’s Board of Directors. The Company did not make any contributions for 2020 and 2019.

Effective December 4, 2018, the Board members approved a motion to extend the Chief Executive Officer’s employment agreement, dated December 4, 2012, for an additional four-year term ending December 2022. In the event of disability, the Chief Executive Officer’s salary would be continued for up to five years at 75% of its current level of compensation. In the event of a sale or merger of the Company and the Chief Executive Officer is not retained in his current position, the Company would be obligated to continue paying the Chief Executive Officer’s current compensation and benefits for seven years following the merger or sale. The agreement further provides that the Chief Executive Officer is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 65), (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of twenty years in annual installments in the amount equal to 75% of his then current level of compensation. In the event that the Chief Executive Officer dies prior to receiving all retirement benefits thereunder, the remaining benefits are to be paid to his heirs. The Company expensed $900,000 and $660,000 during the years ended December 31, 2020 and 2019, respectively, to cover the present value of anticipated retirement benefits under the employment agreement. The liability accrued was $6,656,363 and $5,722,837 as of December 31, 2020 and 2019, respectively.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

11)Retirement Plans (Continued) 

The Company, through its wholly owned subsidiary, SecurityNational Mortgage, also has an employment agreement with its former Vice President of Mortgage Operations and President of SecurityNational Mortgage, who retired from the Company on December 31, 2015. Under the terms of the employment agreement, this individual is entitled to receive retirement benefits from the Company for a period of ten years in an amount equal to 50% of his rate of compensation at the time of his retirement, which was $267,685 for the year ended December 31, 2015. Such retirement payments are paid monthly during the ten-year period. In the event that this individual dies prior to receiving all of his retirement benefits under his employment agreement, the remaining benefits will be made to his heirs. The company paid $133,843 and $133,843 in retirement compensation to this individual during the years ended December 31, 2020 and 2019, respectively. The liability accrued was $669,212 and $803,055 as of December 31, 2020 and 2019, respectively and is included in Other liabilities and accrued expenses on the consolidated balance sheets.

12)Capital Stock 

The Company has one class of preferred stock of $1.00 par value, 5,000,000 shares authorized, of which none are issued. The preferred stock is non-voting.

The Company has two classes of common stock with shares outstanding, Class A common shares and Class C common shares. Class C shares have 10 votes per share on all matters except for the election of one third of the directors who are elected solely by the Class A shares. Class C shares are convertible into Class A shares at any time on a one to one ratio. The decrease in treasury stock was the result of treasury stock being used to fund the company’s 401(k) Plans.

Stockholders of both Class A and Class C common stock have received 5% stock dividends in the years 1990 through 2019, and a 7.5% stock dividend in the year 2020, as authorized by the Company’s Board of Directors.

The Company has Class B common stock of $1.00 par value, 5,000,000 shares authorized, of which none are issued. Class B shares are non-voting stock except to any proposed amendment to the Articles of Incorporation which would affect Class B common stock.

The following table summarizes the activity in shares of capital stock for the two-year period ended December 31, 2020:

	Class A	Class C
Outstanding shares at December 31, 2018	15,304,798	2,193,643
Exercise of stock options	32,517	191,443
Stock dividends	767,178	119,087
Conversion of Class C to Class A	3,286	(3,286)
Outstanding shares at December 31, 2019	16,107,779	2,500,887
Exercise of stock options	68,970	130,820
Stock dividends	405,210	61,720
Conversion of Class C to Class A	13,824	(13,824)
Outstanding shares at December 31, 2020	16,595,783	2,679,603

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

12)Capital Stock (Continued) 

Earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. In accordance with GAAP, the basic and diluted earnings per share amounts were calculated as follows:

	2020	2019
Numerator:
Net earnings	$   55,596,613	$   10,893,519
Denominator:
Denominator for basic earnings
per share-weighted-average shares	18,831,991	18,562,056
Effect of dilutive securities
Employee stock options	443,260	127,608
Dilutive potential common shares	443,260	127,608
Denominator for diluted earnings
per share-adjusted weighted-average
shares and assumed conversions	19,275,251	18,689,664
Basic earnings per share	$2.95	$0.59
Diluted earnings per share	$2.88	$0.58

For the years ended December 31, 2020 and 2019, there were -0- and 382,289 of anti-dilutive employee stock option shares, respectively, that were not included in the computation of diluted net earnings per common share as their effect would be anti-dilutive.

84

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

13)Stock Compensation Plans 

The Company has two fixed option plans (the “2013 Plan” and the “2014 Director Plan”). Compensation expense for options issued of $358,878 and $256,996 has been recognized under these plans for the years ended December 31, 2020 and 2019, respectively, and is included in personnel expenses on the consolidated statements of earnings. As of December 31, 2020, the total unrecognized compensation expense related to the options issued was $39,152, which is expected to be recognized over the vesting period of one year.

The fair value of each option granted is estimated on the date of grant using the Black Scholes Option Pricing Model. The Company estimates the expected life of the options using the simplified method.Future volatility is estimated based upon the weighted historical volatility of the Company’s Class A common stock over a period equal to the expected life of the options. The risk-free interest rate for the expected life of the options is based upon the Federal Reserve Board’s daily interest rates in effect at the time of the grant.

The following table summarizes the assumptions used in estimating the fair value of each option granted along with the weighted-average fair value of the options granted:

			Assumptions
Grant Date	Plan	Weighted-Average Fair Value of Each Option	Expected Dividend Yield	Underlying stock FMV	Weighted-Average Volatility	Weighted-Average Risk-Free Interest Rate	Weighted-Average Expected Life (years)
March 27, 2020	All Plans	$            0.65	5%	$      3.76	32.29%	1.64%	4.82
December 6, 2019	All Plans	$            0.96	5%	$      5.19	32.79%	1.64%	4.83
January 17, 2019	All Plans	$            1.12	5%	$      4.98	36.04%	2.56%	5.31

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

13)Stock Compensation Plans (Continued) 

Activity of the stock option plans is summarized as follows:

	Number of Class A Shares	Weighted Average Exercise Price	Number of Class C Shares	Weighted Average Exercise Price
Outstanding at January 1, 2019	1,011,274	$    4.49	577,280	$    5.15
Adjustment for the effect of stock dividends	51,018		28,295
Granted	81,000		180,000
Exercised	(45,834)		(191,443)
Cancelled	(11,405)		-
Outstanding at December 31, 2019	1,086,053	$    4.41	594,132	$    5.36
Adjustment for the effect of stock dividends	27,968		19,354
Granted	77,000		180,000
Exercised	(116,487)		(130,820)
Cancelled	(1,671)		-
Outstanding at December 31, 2020	1,072,863	$    4.33	662,666	$    4.73
Exercisable at end of year	1,053,903	$    4.45	616,542	$    4.91
Available options for future grant	325,372		266,500
Weighted average contractual term of options
outstanding at December 31, 2020	5.50 years		6.71 years
Weighted average contractual term of options
exercisable at December 31, 2020	5.43 years		6.63 years
Aggregated intrinsic value of options outstanding
at December 31, 2020 (1)	$4,311,983		$2,396,954
Aggregated intrinsic value of options exercisable
at December 31, 2020 (1)	$4,223,251		$2,183,399

(1)The Company used a stock price of $8.35 as of December 31, 2020 to derive intrinsic value. 

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the years ended December 31, 2020 and 2019 was $663,901 and $271,220, respectively.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

14)Statutory Financial Information and Dividend Limitations 

The Company’s insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the NAIC, as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed.

All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner and/or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis.

Statutory net income and capital and surplus of the Company’s insurance subsidiaries, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities are as follows:

	Statutory Net Income			Statutory Capital and Surplus
	2020	2019		2020	2019
Amounts by insurance subsidiary:
Security National Life Insurance Company	$  6,054,764	$  3,589,552		$  53,089,185	$  49,390,181
Kilpatrick Life Insurance Company	1,574,128	12,752,100	(1)	15,177,996	15,208,071
First Guaranty Insurance Company	790,221	1,078,733		7,045,644	6,352,670
Memorial Insurance Company of America	55	(107)		1,088,034	1,088,559
Southern Security Life Insurance Company, Inc.	183	87		1,581,647	1,588,396
Trans-Western Life Insurance Company	(1,527)	3,773		510,636	512,163
Total	$  8,417,824	$17,424,138		$  78,493,142	$  74,140,040

(1)Includes 12 months even though Kilpatrick Life Insurance Company wasn't acquired by the Company until December 2019. 

The Utah, Arkansas, Louisiana, Mississippi and Texas Insurance Departments impose minimum risk-based capital (RBC) requirements that were developed by the NAIC on insurance enterprises. The formulas for determining the RBC specify various factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio (the Ratio) of the enterprise’s regulatory total adjusted capital, as defined by the NAIC, to its authorized control level, as defined by the NAIC. Enterprises below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The life insurance subsidiaries each have a ratio that is greater than the first level of regulatory action as of December 31, 2020.

Generally, the net assets of the life insurance subsidiaries available for transfer to the Company are limited to the amounts of the life insurance subsidiaries net assets, as determined in accordance with statutory accounting practices, that exceed minimum statutory capital requirements. Additional requirements must be met depending on the state, and payments of such amounts as dividends are subject to approval by regulatory authorities.

Under the Utah Insurance Code, Security National Life Insurance Company is permitted to pay a stockholder dividend to the Company as long as the Company provides the Utah Insurance Commissioner (the “Utah Commissioner”) with at least 30 days notice and the aggregate amount of all such dividends in any 12 month period does not exceed the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year, or (ii) net gain from operations, not including realized capital gains, for the immediately preceding calendar year, not including

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

14)Statutory Financial Information and Dividend Limitations (Continued) 

pro rata distributions of the Company’s own securities. In determining whether a dividend is extraordinary, the Company may include carryforward net income from the previous two calendar years, excluding realized capital gains less dividends paid in the second and immediately preceding calendar years. Security National Life Insurance Company will be permitted to pay a dividend to the Company in excess of the lesser of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Utah Commissioner and the Utah Commissioner either approves the distribution of the dividend or does not disapprove the distribution within 30 days of its filing. In all cases, a dividend may not be paid that would reduce the insurer’s total adjusted capital below the insurer’s company action level risk-based capital, as defined for statutory reporting purposes. Amounts available to be paid as dividends in the next 12 months totals approximately $5,309,000.

Under the Louisiana Insurance Code, First Guaranty Insurance Company and Kilpatrick Life Insurance Company are permitted to pay a stockholder dividend to Security National Life as long as their capital has been (i) fully paid in cash, (ii) is unimpaired, (iii) has a surplus beyond its capital stock and (iv) has a surplus beyond its minimum required surplus. In 2019, First Guaranty Insurance Company paid to Security National Life a cash dividend of $500,000 and Kilpatrick Life Insurance Company paid a cash dividend of $3,000,000. Amounts available to be paid as dividends at December 31, 2020 totaled approximately $3,146,000 for First Guaranty Insurance Company and totaled approximately $11,478,000 for Kilpatrick Life Insurance Company.

15)Business Segment Information  

Description of Products and Services by Segment

The Company has three reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment consists of life insurance premiums and operating expenses from the sale of insurance products sold by the Company’s independent agency force and net investment income derived from investing policyholder and segment surplus funds. The Company’s cemetery and mortuary segment consists of revenues and operating expenses from the sale of at-need cemetery and mortuary merchandise and services at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10% or more of the purchase price and the net investment income from investing segment surplus funds. The Company’s mortgage segment consists of fee income and expenses from the originations of residential mortgage loans and interest earned and interest expenses from warehousing pre-sold loans before the funds are received from financial institutional investors.

Measurement of Segment Profit or Loss and Segment Assets

The accounting policies of the reportable segments are the same as those described in the Significant Accounting Principles. Intersegment revenues are recorded at cost plus an agreed upon intercompany profit, and are eliminated upon consolidation.

Factors Management Used to Identify the Enterprise’s Reportable Segments

The Company’s reportable segments are business units that are managed separately due to the different products provided and the need to report separately to the various regulatory jurisdictions. The Company regularly reviews the quantitative thresholds and other criteria to determine when other business segments may need to be reported.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

15)Business Segment Information (Continued) 

	2020
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       93,020,617	$       20,307,435	$     298,933,110	$                         -	$     412,261,162
Net investment income	54,811,486	807,695	710,622	-	56,329,803
Gains on investments and other assets	2,088,541	(162,652)	(39)	-	1,925,850
Other than temporary impairments	(370,975)	-	-	-	(370,975)
Other revenues	1,491,585	94,349	9,731,548	-	11,317,482
Intersegment revenues:
Net investment income	8,022,503	351,505	716,240	(9,090,248)	-
Total revenues	159,063,757	21,398,332	310,091,481	(9,090,248)	481,463,322
Expenses:
Death, surrenders and other policy benefits	62,841,360	-	-	-	62,841,360
Increase in future policy benefits	23,568,650	-	-	-	23,568,650
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	13,618,204	689,221	-	-	14,307,425
Selling, general and administrative expenses:
Commissions	4,149,241	1,506,320	118,770,736	-	124,426,297
Personnel	25,449,100	5,669,367	53,871,504	-	84,989,971
Advertising	614,114	391,836	4,374,946	-	5,380,896
Rent and rent related	861,602	89,253	5,922,706	-	6,873,561
Depreciation on property and equipment	843,335	488,570	746,833	-	2,078,738
Provision for loan loss reserve	-	-	16,506,030	-	16,506,030
Cost related to funding mortgage loans	-	-	9,877,700	-	9,877,700
Intersegment	621,161	142,999	580,976	(1,345,136)	-
Other	11,808,818	4,417,805	31,104,479	-	47,331,102
Interest expense:
Intersegment	410,024	152,175	7,182,913	(7,745,112)	-
Other	2,354,760	198,968	6,025,082	-	8,578,810
Costs of goods and services sold-mortuaries and cemeteries	-	3,252,655	-	-	3,252,655
Total benefits and expenses	147,140,369	16,999,169	254,963,905	(9,090,248)	410,013,195
Earnings before income taxes	$       11,923,388	$         4,399,163	$       55,127,576	$                         -	$       71,450,127
Income tax benefit (expense)	(1,433,901)	(1,009,137)	(13,410,476)	-	(15,853,514)
Net earnings	$       10,489,487	$         3,390,026	$       41,717,100	$                         -	$       55,596,613
Identifiable assets	$  1,171,158,235	$       56,335,498	$     408,325,196	$       (90,398,039)	$  1,545,420,890
Goodwill	$         2,765,570	$            754,018	$                        -	$                         -	$         3,519,588

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

15)Business Segment Information (Continued) 

	2019
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       81,860,610	$       15,296,235	$     131,976,082	$                         -	$     229,132,927
Net investment income	41,610,831	579,995	828,647	-	43,019,473
Gains on investments and other assets	138,330	530,098	59,939	-	728,367
Other revenues	2,128,961	95,197	7,956,005	-	10,180,163
Intersegment revenues:
Net investment income	4,455,034	443,548	508,637	(5,407,219)	-
Total revenues	130,193,766	16,945,073	141,329,310	(5,407,219)	283,060,930
Expenses:
Death, surrenders and other policy benefits	44,911,805	-	-	-	44,911,805
Increase in future policy benefits	23,568,497	-	-	-	23,568,497
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	14,199,152	435,425	-	-	14,634,577
Selling, general and administrative expenses:
Commissions	3,632,780	1,084,079	52,046,032	-	56,762,891
Personnel	20,311,591	5,177,810	38,731,869	-	64,221,270
Advertising	595,118	368,173	3,821,267	-	4,784,558
Rent and rent related	451,380	47,525	6,556,551	-	7,055,456
Depreciation on property and equipment	477,247	428,633	805,489	-	1,711,369
Cost related to funding mortgage loans	-	-	6,278,954	-	6,278,954
Intersegment	412,853	180,594	544,463	(1,137,910)	-
Other	11,769,097	3,241,023	19,912,641	-	34,922,761
Interest expense:
Intersegment	490,756	154,615	3,623,938	(4,269,309)	-
Other	2,808,081	288,768	4,289,839	-	7,386,688
Costs of goods and services sold-mortuaries and cemeteries	-	2,878,169	-	-	2,878,169
Total benefits and expenses	123,628,357	14,284,814	136,611,043	(5,407,219)	269,116,995
Earnings before income taxes	$         6,565,409	$         2,660,259	$         4,718,267	$                         -	$       13,943,935
Income tax benefit (expense)	(1,085,848)	(649,144)	(1,315,424)	-	(3,050,416)
Net earnings	$         5,479,561	$         2,011,115	$         3,402,843	$                         -	$       10,893,519
Identifiable assets	$  1,110,641,526	$       81,014,182	$     249,970,323	$     (110,701,544)	$  1,330,924,487
Goodwill	$         2,765,570	$            754,018	$                        -	$                         -	$         3,519,588

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

16)Related Party Transactions 

The Company’s Board of Directors has a written procedure, which requires disclosure to the Board of any material interest or any affiliation on the part of any of its officers, directors or employees that is in conflict or may be in conflict with the interests of the Company. The Company and its Board of Directors is unaware of any related party transactions that require disclosure as of December 31, 2020.

17)Fair Value of Financial Instruments 

GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. GAAP also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value measurements are classified under the following hierarchy:

Level 1:Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. 

Level 2: Financial assets and financial liabilities whose values are based on the following:

a) Quoted prices for similar assets or liabilities in active markets;

b) Quoted prices for identical or similar assets or liabilities in non-active markets; or

c)Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. 

Level 3:Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect the Company’s estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.  

The Company utilizes a combination of third-party valuation service providers, brokers, and internal valuation models to determine fair value.

The following methods and assumptions were used by the Company in estimating the fair value disclosures related to significant financial instruments:

The items shown under Level 1 and Level 2 are valued as follows:

Fixed Maturity Securities Available for Sale: The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements (considered Level 3 investments), are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments.

Equity Securities: The fair values for equity securities are based on quoted market prices.

Loans Held for Sale: The Company elected the fair value option for loans held for sale. The fair value is based on quoted market prices, when available.  When a quoted market price is not readily available, the Company uses the market price from its last sale of similar assets.

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

17)Fair Value of Financial Instruments (Continued) 

Restricted Assets: A portion of these assets include mutual funds, equity securities and fixed maturity securities that have quoted market prices that are used to determine fair value. Also included are cash and cash equivalents and participations in mortgage loans. The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature.

Cemetery Perpetual Care Trust Investments:  A portion of these assets include equity securities and fixed maturity securities that have quoted market prices that are used to determine fair value. Also included are cash and cash equivalents. The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature

Call and Put Options: The Company uses quoted market prices to value its call and put options.

Additionally, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

The items shown under Level 3 are valued as follows:

Loan Commitments and Forward Sale Commitments: The Company’s mortgage segment enters into loan commitments with potential borrowers and forward sale commitments to sell loans to third-party investors. The Company also uses a hedging strategy for these transactions. A loan commitment binds the Company to lend funds to a qualified borrower at a specified interest rate and within a specified period of time, generally up to 30 days after issuance of the loan commitment. Loan commitments are defined to be derivatives under GAAP and are recognized at fair value on the consolidated balance sheets with changes in their fair values recorded in current earnings.

The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted MBS prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of mortgage loans that will fund within the terms of the commitments.

Impaired Mortgage Loans Held for Investment: The Company believes that the fair value of these nonperforming loans will approximate the unpaid principal balance expected to be recovered based on the fair value of the underlying collateral.  For residential and commercial properties, the collateral value is estimated by obtaining an independent appraisal.  The appraisal typically considers area comparables and property condition as well as potential rental income that could be generated (particularly for commercial properties).  For residential construction loans, the collateral is typically incomplete, so fair value is estimated as the replacement cost using data from a provider of building cost information to the real estate construction.

Impaired Real Estate Held for Investment: The Company believes that in an orderly market, fair value will approximate the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for future estimated policy claims.

It should be noted that for replacement cost, when determining the fair value of real estate held for investment, the Company uses a provider of building cost information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and projected the present

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

17)Fair Value of Financial Instruments (Continued) 

value of the net rental income over seven years. The Company also considers area comparables and property condition when determining fair value.

In addition to this analysis performed by the Company, the Company depreciates Real Estate Held for Investment. This depreciation reduces the book value of these properties and lessens the exposure to the Company from further deterioration in real estate values.

Mortgage Servicing Rights: The Company initially recognizes MSRs at their estimated fair values derived from the net cash flows associated with the servicing contracts, where the Company assumes the obligation to service the loan in the sale transaction.

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the 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 

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

17)Fair Value of Financial Instruments (Continued) 

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the consolidated balance sheet at December 31, 2019.

	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	$       355,977,820	$                        -	$ 352,761,438	$          3,216,382
Equity securities	7,271,165	7,271,165	-	-
Loans held for sale	213,457,632	-	-	213,457,632
Restricted assets (1)	1,008,867	-	1,008,867	-
Restricted assets (2)	1,976,480	1,976,480	-	-
Cemetery perpetual care trust investments (1)	975,673	-	975,673	-
Cemetery perpetual care trust investments (2)	1,605,451	1,605,451	-	-
Derivatives - loan commitments (3)	2,722,580	-	-	2,722,580
Total assets accounted for at fair value on a   recurring basis	$       584,995,668	$        10,853,096	$ 354,745,978	$      219,396,594
Liabilities accounted for at fair value on a   recurring basis
Derivatives - call options (4)	$              (62,265)	$             (62,265)	$                    -	$                         -
Derivatives - put options (4)	(22,282)	(22,282)	-	-
Derivatives - loan commitments (4)	(231,347)	-	-	(231,347)
Total liabilities accounted for at fair value   on a recurring basis	$            (315,894)	$             (84,547)	$                    -	$           (231,347)

(1)Fixed maturity securities available for sale 

(2)Mutual funds and 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 

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

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

17)Fair Value of Financial Instruments (Continued) 

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2019, 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
	12/31/2019	Technique	Input(s)	Value	Value	Average
Loans held for sale	$213,457,632	Market approach	Investor contract pricing as a percentage of unpaid principal balance	98.0%	109.0%	103.0%
Derivatives - loan commitments (net)	2,491,233	Market approach	Pull-through rate	1.0%	92.0%	81.0%
			Initial-Value	N/A	N/A	N/A
			Servicing	0 bps	318 bps	79 bps
Fixed maturity securities available for sale	3,216,382	Broker quotes	Pricing quotes	$    95.02	$  115.80	$   107.98

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

	Net Derivatives 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/purchases	-		5,627,013,749		-
Sales, maturities and paydowns	-		(5,600,045,285)		(1,042,400)
Transfer to mortgage loans held for investment	-		(16,960,549)		-
Total gains (losses):
Included in earnings	7,637,377	(1)	199,306,871	(1)	3,408	(2)
Included in other comprehensive income	-		-		23,785
Balance - December 31, 2020	$         10,128,610		$      422,772,418		$              2,201,175

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

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

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

	Net Derivatives Loan Commitments	Loans Held for Sale	Fixed Maturity Securities Available for Sale
Balance - December 31, 2018	$           1,591,816	$      136,210,853	$                             -
Originations/purchases	-	2,606,839,175	-
Sales, maturities and paydowns	-	(2,580,875,055)	-
Transfer to mortgage loans held for investment	-	(31,881,851)	-
Transfer from fixed maturity securities held to maturity	-		3,216,382
Total gains (losses):
Included in earnings (1)	899,417	83,164,510	-
Balance - December 31, 2019	$           2,491,233	$      213,457,632	$              3,216,382

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

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SECURITY NATIONAL FINANCIAL CORPORATION

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Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

17)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 nonrecurring basis by their classification in the 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

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 consolidated balance sheet at December 31, 2019.

	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	$        1,302,025	$                        -	$                -	$        1,302,025
Impaired real estate held for investment	8,375,884	-	-	8,375,884
Total assets accounted for at fair value on   a nonrecurring basis	$        9,677,909	$                        -	$                -	$        9,677,909

96

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

17)Fair Value of Financial Instruments (Continued) 

Fair Value of Financial Instruments Carried at Other Than Fair Value

ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 2020 and 2019.

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 consolidated balance sheets 

(2)Mortgage loans held for investment 

(3)Included in future policy benefits and unpaid claims on the consolidated balance sheets 

97

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

17)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, 2019:

	Carrying Value	Level 1	Level 2	Level 3	Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential	$   110,253,678	$                -	$                -	$   115,320,638	$   115,320,638
Residential construction	88,651,967	-	-	88,651,967	88,651,967
Commercial	37,788,901	-	-	39,289,462	39,289,462
Mortgage loans held for investment, net	236,694,546	$                -	$                -	$  243,262,067	$   243,262,067
Policy loans	14,762,805	-	-	14,762,805	14,762,805
Insurance assignments, net (1)	39,614,939	-	-	39,614,939	39,614,939
Restricted assets (2)	2,275,756	-	-	2,289,679	2,289,679
Cemetery perpetual care trust investments (2)	524,000	-	-	536,553	536,553
Mortgage servicing rights, net	17,155,529	-	-	22,784,571	22,784,571
Liabilities
Bank and other loans payable	$ (217,572,612)	$                -	$                -	$ (217,572,612)	$ (217,572,612)
Policyholder account balances (3)	(45,154,180)	-	-	(41,828,469)	(41,828,469)
Future policy benefits - annuities (3)	(113,579,830)	-	-	(117,304,614)	(117,304,614)

(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 

The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of financial instruments are summarized as follows:

Mortgage Loans Held for Investment: The estimated fair value of the Company’s mortgage loans held for investment is determined using various methods. The Company’s mortgage loans are grouped into three categories: Residential, Residential Construction and Commercial. When estimating the expected future cash flows, it is assumed that all loans will be held to maturity, and any loans that are non-performing are evaluated individually for impairment.

Residential – The estimated fair value of mortgage loans is determined through a combination of discounted cash flows (estimating expected future cash flows of payments and discounting them using current interest rates from single family mortgages) and considering pricing of similar loans that were sold recently.

Residential Construction – These loans are primarily short in maturity. Accordingly, the estimated fair value is determined to be the carrying value.

Commercial – The estimated fair value is determined by estimating expected future cash flows of payments and discounting them using current interest rates for commercial mortgages.

Policy Loans: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values because they are fully collateralized by the cash surrender value of the underlying insurance policies.

Insurance Assignments, Net: These investments are short in maturity. Accordingly, the carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

98

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

17)Fair Value of Financial Instruments (Continued) 

Bank and Other Loans Payable: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values due to their relatively short-term maturities and variable interest rates.

Policyholder Account Balances and Future Policy Benefits-Annuities: Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 1.5% to 6.5%. The fair values for these investment-type insurance contracts are estimated based on the present value of liability cash flows. The fair values for the Company’s insurance contracts other than investment-type contracts are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk, such that the Company’s exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts.

18)Accumulated Other Comprehensive Income 

The following summarizes the changes in accumulated other comprehensive income:

	December 31
	2020	2019
Unrealized gains on fixed maturity securities available for sale	$    12,016,464	$    17,315,770
Amounts reclassified into net earnings	(2,772)	-
Net unrealized gains before taxes	12,013,692	17,315,770
Tax expense	(2,522,876)	(3,636,311)
Net	9,490,816	13,679,459
Unrealized gains on restricted assets (1)	41,225	35,550
Tax expense	(10,269)	(8,856)
Net	30,956	26,694
Unrealized gains on cemetery perpetual care trust investments (1)	(6,817)	29,904
Tax expense	1,698	(7,449)
Net	(5,119)	22,455
Unrealized gains for foreign currency translations adjustments	(46)	972
Tax expense	12	(243)
Net	(34)	729
Other comprehensive income changes	$      9,516,619	$    13,729,337
_______________

(1)Fixed maturity securities available for sale 

99

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

18)Accumulated Other Comprehensive Income (Continued) 

The following is the accumulated balances of other comprehensive income as of December 31, 2020:

	Beginning Balance December 31, 2019	Change for the period	Ending Balance December 31, 2020
Unrealized gains on fixed maturity securities available for sale	$   13,679,459	$     9,490,816	$   23,170,275
Unrealized gains on restricted assets (1)	26,694	30,956	57,650
Unrealized gains (losses) on cemetery perpetual   care trust investments (1)	22,455	(5,119)	17,336
Foreign currency translation adjustments	(2,094)	(34)	(2,128)
Other comprehensive income	$   13,726,514	$     9,516,619	$   23,243,133

(1)Fixed maturity securities available for sale 

The following is the accumulated balances of other comprehensive income as of December 31, 2019:

	Beginning Balance December 31, 2018	Change for the period	Ending Balance December 31, 2019
Unrealized gains on fixed maturity securities available for sale	$                    -	$   13,679,459	$   13,679,459
Unrealized gains on restricted assets (1)	-	26,694	26,694
Unrealized gains on cemetery perpetual care trust investments (1)	-	22,455	22,455
Foreign currency translation adjustments	(2,823)	729	(2,094)
Other comprehensive income (loss)	$         (2,823)	$   13,729,337	$   13,726,514

(1)Fixed maturity securities available for sale 

100

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

19)Derivative Instruments 

The following table shows the fair value and notional amounts of derivative instruments as of December 31, 2020 and 2019.

	Fair Values and Notional Amounts of Derivative Instruments
		December 31, 2020			December 31, 2019
	Balance Sheet Location	Notional Amount	Asset Fair Value	Liability Fair Value	Notional Amount	Asset Fair Value	Liability Fair Value
Derivatives not designated as hedging instruments:
Loan commitments	Other assets and Other liabilities	$659,245,038	$12,592,672	$2,464,062	$224,202,514	$2,722,580	$231,347
Call options	Other liabilities	1,873,200	--	43,097	1,813,500	--	62,265
Put options	Other liabilities	--	--	--	1,573,100	--	22,282
Total		$661,118,238	$12,592,672	$2,507,159	$227,589,114	$2,722,580	$315,894

The following table shows the gain (loss) on derivatives for the periods presented. There were no gains or losses reclassified from accumulated other comprehensive income into income or gains or losses recognized in income on derivatives ineffective portion or any amounts excluded from effective testing.

		Net Amount Gain (Loss)
		Years ended December 31
Derivative	Classification	2020	2019
Loan commitments	Mortgage fee income	$        7,637,377	$             899,417
Call and put options	Gains on investments and other assets	$           272,758	$             626,208

101

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

20)Acquisitions 

Kilpatrick Life Insurance Company

On December 13, 2019, the Company, through its wholly owned subsidiary, Security National Life Insurance Company (“Security National Life”) completed a stock purchase transaction with Kilpatrick Life Insurance Company, a Louisiana domiciled life insurance company (“Kilpatrick Life”) and its shareholders, which resulted in the purchase of all the outstanding shares of common stock of Kilpatrick Life. The closing of the transaction was subject to approval by the Louisiana Department of Insurance of the change of control of Kilpatrick Life, which was received on December 12, 2019.  Under the terms of the transaction, the total Purchase Price that Security National Life paid for all the shares held by the Kilpatrick shareholders was $23,779,940 subject to a $1,400,000 holdback deposited into an interest bearing escrow account, as agreed with the shareholders. The current amount that is available to be disbursed to the prior owners is $598,949.

Kilpatrick Life has been in operation since 1932 and provides life insurance products and services through insurance plans such as permanent and term life insurance, asset protection plans, graded whole life insurance, and annuities.  Additionally, it provides insurance services for emergencies and pre‐arranged funeral services. Kilpatrick Life is based in Shreveport, Louisiana with additional offices in Jena, Alexandria, Minden, and Arcadia, Louisiana.

Kilpatrick Life employs a staff of almost 120 associates in four offices in Louisiana and is licensed to operate in Louisiana, Texas, Arkansas, Oklahoma, and Mississippi with the home office located in Shreveport, LA.  It is the mission of Kilpatrick Life to continue providing the utmost service and protection for its policyholders for generations to come.

Prior to the stock purchase transaction, Security National life and Kilpatrick Life entered into a coinsurance agreement, effective October 1, 2019. After the effective date, Security National Life, as coinsurer, agreed to be responsible for and was obligated with respect to 100% of the contractual liabilities under the Kilpatrick Life’s life insurance policies in accordance with the terms and conditions of the policies and applicable law. Unless otherwise directed by Security National Life, as coinsurer, Kilpatrick Life continued to administer the policies on behalf of Security National Life, as coinsurer, for the duration of the coinsurance agreement.

As part of the coinsurance agreement, effective October 1, 2019, Security National Life acquired the following assets and assumed the following contractual liabilities.

Other investments and policy loans	$      9,124,459
Real estate held for investment	2,850,000
Mortgage loans held for investment	200,000
Receivables	131,258
Total assets acquired	12,305,717
Future policy benefits and unpaid claims	(165,404,970)
Other liabilities and accrued expenses	(5,259,341)
Total liabilities assumed	(170,664,311)
Cash received for reinsurance assumed	$  158,358,594

Contemporaneous with the stock purchase transaction, both Kilpatrick Life and Security National Life, as coinsurer, agreed to terminate the coinsurance agreement, to require the recapture of the life insurance policies by Kilpatrick Life and provided notification to the Louisiana Department of Insurance. The final settlement and transfer of the coinsurance trust assets from Security National Life back to Kilpatrick Life occurred shortly thereafter.

102

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

20)Acquisitions (Continued) 

The estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition, on December 13, 2019, are shown in the following table. At the time of acquisition some of these assets and liabilities became intercompany items, and the Company has eliminated them for consolidation.

Fixed maturity securities, available for sale	$     22,766,520
Fixed maturity securities, held to maturity	16,436
Mortgage loans held for investment	8,011,660
Real estate held for investment	2,708,557
Other investments	446,655
Accrued investment income	183,527
Total investments	34,133,355
Cash and cash equivalents	6,900,654
Receivables, net	5,407,736	(1)
Receivables from reinsurers	168,105,064	(1)
Property and equipment, net	1,498,245
Value of business acquired	4,962,831
Deferred taxes	167,344
Other	712,323
Total assets acquired	221,887,552
Future policy benefits and unpaid claims	(189,071,407)
Accounts payable	(283,304)
Other liabilities and accrued expenses	(7,870,944)
Income taxes	(881,957)
Total liabilities assumed	(198,107,612)
Fair value of net assets acquired/consideration paid	$     23,779,940
Fair value of net assets acquired/consideration paid, net of cash acquired	$     16,879,286
(1) Receivable from reinsurers of $162,907,008 and receivables, net of $5,000,000 were settled with the recapture of the coinsurance agreement by Kilpatrick Life from Security National Life.

Kilpatrick Life’s revenues and net loss since the date of acquisition for the year ended December 31, 2019 were $1,461,011 and $848,031, respectively.

Probst Family Funerals and Cremations and Heber Valley Funeral Home

On February 15, 2019, the Company, through its wholly-owned subsidiary, Memorial Mortuary Inc., completed an asset purchase transaction with Probst Family Funerals and Cremations, LLC. (“Probst Family Funerals”) and Heber Valley Funeral Home, Inc. (“Heber Valley Funeral Home”). These funeral homes are both located in Heber Valley, a community situated about 45 miles southeast of Salt Lake City.

Under the terms of the transaction, as set forth in the Asset Purchase Agreement, dated February 15, 2019, Memorial Mortuary Inc. paid a net purchase price of $3,315,647 for the business and assets of Probst Family Funerals and Heber Valley Funeral Home, subject to a $150,000 holdback deposited into an escrow account. In August 2019, this escrow account was settled and $137,550 was paid to the prior owners.

103

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

20)Acquisitions (Continued) 

The estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition were as follows:

Cash	$     53,859
Property and equipment	2,475,526
Receivables	13,620
Goodwill	754,018
Other	21,800
Total assets acquired	3,318,823
Bank and other loans payable	(3,176)
Total liabilities assumed	(3,176)
Fair value of net assets acquired/consideration paid	$ 3,315,647
Fair value of net assets acquired/consideration paid, net of cash acquired	$ 3,261,788

Probst Family Funerals and Heber Valley Funeral Home’s revenues and net earnings since the date of acquisition for the year ended December 31, 2019 were $796,992 and $97,400, respectively.

104

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

21)Mortgage Servicing Rights 

The Company reports MSRs pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

The following table presents the MSR activity for the periods presented.

	December 31
	2020	2019
Amortized cost:
Balance before valuation allowance at beginning of year	$ 17,155,529	$ 20,016,822
MSR additions resulting from loan sales	29,896,465	4,194,502
Amortization (1)	(11,841,478)	(7,055,795)
Application of valuation allowance to write down MSRs   with other than temporary impairment	-	-
Balance before valuation allowance at year end	$ 35,210,516	$ 17,155,529
Valuation allowance for impairment of MSRs:
Balance at beginning of year	$                -	$                -
Additions	-	-
Application of valuation allowance to write down MSRs   with other than temporary impairment	-	-
Balance at year end	$                -	$                -
Mortgage servicing rights, net	$ 35,210,516	$ 17,155,529
Estimated fair value of MSRs at year end	$ 38,702,358	$ 22,784,571
(1) Included in other expenses on the consolidated statements of earnings

The following table summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the assumptions made by management in its December 31, 2020 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

	Estimated MSR Amortization
2021	$        4,724,439
2022	3,582,811
2023	3,030,850
2024	2,574,323
2025	2,200,840
Thereafter	19,097,253
Total	$      35,210,516

105

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

21)Mortgage Servicing Rights (Continued) 

During the years ended December 31, 2020 and 2019, the Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the consolidated statements of earnings:

	2020	2019
Contractual servicing fees	$    8,940,612	$    7,212,164
Late fees	305,962	365,477
Total	$    9,246,574	$    7,577,641

The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio for the periods presented:

	Years Ended December 31
	2020	2019
Servicing UPB	$   5,070,287,864	$   2,804,139,415

The following key assumptions were used in determining MSR value:

	Prepayment Speeds	Average Life(Years)	Discount Rate
December 31, 2020	15.60	5.30	9.50
December 31, 2019	15.30	5.27	9.51

106

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

22)Future Policy Benefits and Unpaid Claims 

The Company reports future policy benefits and unpaid claims pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

The following table provides information regarding future policy benefits and unpaid claims and the related receivable from reinsurers.

	Years Ended September 30
	2020	2019
Life	$   674,230,463	$654,585,723
Annuities	109,522,112	113,579,831
Policyholder account balances	44,026,809	45,154,180
Accident and health	651,140	667,428
Other policyholder funds	4,354,746	4,530,227
Reported but unpaid claims	8,689,723	4,891,922
Incurred but not reported claims	3,315,094	2,191,607
Gross future policy benefits and unpaid claims	$   844,790,087	$825,600,918
Receivable from reinsurers
Life	10,841,567	11,040,398
Annuities	4,047,301	4,038,007
Accident and health	90,231	90,113
Reported but unpaid claims	571,057	569,250
Incurred but not reported claims	19,000	10,000
Total receivable from reinsurers	15,569,156	15,747,768
Net future policy benefits and unpaid claims	$   829,220,931	$809,853,150

107

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

23) Revenues from Contracts with Customers 

The Company reports revenues from contracts with customers pursuant to ASC No. 606, Revenue from Contracts with Customers.

Contracts with Customers

Information about Performance Obligations and Contract Balances

The Company’s cemetery and mortuary segment sells a variety of goods and services to customers in both at-need and pre-need situations. Due to the timing of the fulfillment of the obligation, revenue is deferred until that obligation is fulfilled. The total contract liability for future obligations is included in deferred pre-need cemetery and mortuary contract revenues on the consolidated balance sheets and, as of December 31, 2020 and 2019, the balances were $13,080,179 and 12,607,978, respectively.

The Company’s three types of future obligations are as follows:

Pre-need Merchandise and Service Revenue: All pre-need merchandise and service revenue is deferred and the funds are placed in trust until the need arises, the merchandise is received or the service is performed. The trust is then relieved, and the revenue and commissions are recognized. As of December 31, 2020 and 2019, the balances were $12,545,753 and $12,325,437, respectively.

At-need Specialty Merchandise Revenue: At-need specialty merchandise revenue consists of customizable merchandise ordered from a manufacturer such as markers and bases. When specialty merchandise is ordered, it can take time to manufacture and deliver the product. Revenue is deferred until the at-need merchandise is received. As of December 31, 2020 and 2019, the balances were $534,426 and $282,541, respectively. Deferred revenue for at-need specialty revenue is not placed in trust.

Deferred Pre-need Land Revenue: Deferred pre-need revenue and corresponding commissions are deferred until 10% of the funds are received from the customer through regular monthly payments. As of December 31, 2020 and 2019, the balances were $-0- and $-0-, respectively. Deferred pre-need land revenue is not placed in trust.

Complete payment of the contract does not constitute fulfillment of the performance obligation. Goods or services are deferred until such time the service is performed or merchandise is received. Pre-need contracts are required to be paid in full prior to a customer using a good or service from a pre-need contract. Goods and services from pre-need contracts can be transferred when paid in full from one owner to another. In such cases, the Company will act as an agent in transferring the requested goods and services. A transfer of goods and services does not fulfill an obligation and revenue remains deferred.

108

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

23)Revenues from Contracts with Customers (Continued) 

The opening and closing balances of the Company’s receivables, contract assets and contract liabilities are as follows:

	Contract Balances
	Receivables (1)	Contract Asset	Contract Liability
Opening (1/1/2020)	$       2,778,879	$                         -	$              12,607,978
Closing (12/31/2020)	4,119,988	-	13,080,179
Increase/(decrease)	1,341,109	-	472,201
	Contract Balances
	Receivables (1)	Contract Asset	Contract Liability
Opening (1/1/2019)	$       2,816,225	$                         -	$              12,508,625
Closing (12/31/2019)	2,778,879	-	12,607,978
Increase/(decrease)	(37,346)	-	99,353
(1) Included in Receivables, net on the consolidated balance sheets

The following table disaggregates the opening and closing balances of the Company’s contract balances.

	Contract Balances
	Contract Asset	Contract Liability
Pre-need merchandise and services	$                         -	$              12,325,437
At-need specialty merchandise	-	282,541
Pre-need land sales	-	-
Opening (1/1/2020)	$                         -	$              12,607,978
Pre-need merchandise and services	$                         -	$              12,545,753
At-need specialty merchandise	-	534,426
Pre-need land sales	-	-
Closing (12/31/2020)	$                         -	$              13,080,179
	Contract Balances
	Contract Asset	Contract Liability
Pre-need merchandise and services	$                         -	$              12,175,943
At-need specialty merchandise	-	327,302
Pre-need land sales	-	5,380
Opening (1/1/2019)	$                         -	$              12,508,625
Pre-need merchandise and services	$                         -	$              12,325,437
At-need specialty merchandise	-	282,541
Pre-need land sales	-	-
Closing (12/31/2019)	$                         -	$              12,607,978

109

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

23)Revenues from Contracts with Customers (Continued) 

The amount of revenue recognized for the years ended December 31, 2020 and 2019 that was included in the opening contract liability balance was $4,359,709 and $3,558,103, respectively.

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment.

Disaggregation of Revenue

The following table disaggregates revenue for the Company’s cemetery and mortuary contracts.

	Years Ended December 31
	2020	2019
Major goods/service lines
At-need	$    15,212,822	$    12,334,777
Pre-need	5,094,613	2,961,458
	$    20,307,435	$    15,296,235
Timing of Revenue Recognition
Goods transferred at a point in time	$    13,438,592	$    10,133,723
Services transferred at a point in time	6,868,843	5,162,512
	$    20,307,435	$    15,296,235

Significant Judgments and Estimates

The Company's cemetery and mortuary segment recognizes revenue on future performance obligations when goods are delivered and when services are performed and is not determined by the terms or payments of the contract as long as any good or service is paid in full prior to delivery. Prices are determined based on the market at the time a contract is created. Goods or services are not partially completed. There are no significant judgements, estimations or allocation methods when revenue should be recognized.

Practical Expedients

The Company has not elected to use any of the practical expedients under ASC 606.

Contract Costs

The Company's cemetery and mortuary segment defers certain costs associated with obtaining a contract on future obligations.

Pre-need Merchandise and Service Revenue: Pre-need merchandise and service revenues are deferred until the goods or services are delivered. Recognition can be years until the obligations are satisfied. Commissions and other costs are capitalized and deferred until the obligation is satisfied. Other costs include rent on pre-need offices and training rooms, and call center costs. Costs that are allocated based on a percentage include family service advisor compensation, bonuses, utilities and supplies that are all used to procure a pre-need sale.

At-need Specialty Merchandise Revenue: At-need specialty merchandise is ordered from a third-party manufacturer. Generally, at-need specialty merchandise is ordered and received within 90 days of order. These orders are also short-term in nature and are deferred until the product is received from the manufacturer and the obligation is satisfied.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

23)Revenues from Contracts with Customers (Continued) 

Deferred Pre-need Land Revenue: Revenue is recognized on pre-need land sales when the customer has paid at least 10% toward the land price. In cases, where customers pay less than 10%, the revenue and associated commissions are deferred until such time when 10% of the contract price is received.

The following table disaggregates contract costs that are included in deferred policy and pre-need contract acquisition costs on the consolidated balances sheets.

	Years Ended December 31
	2020	2019
Pre-need merchandise and services	$           3,601,638	$           3,590,266
At-need specialty merchandise	5,302	10,688
Pre-need land sales	-	-
	$           3,606,940	$           3,600,954

24)Leases 

On January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02 regarding Leases ASC Topic 842. See Note 1 regarding the adoption of this standard.

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, 2020.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

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 for the period presented:

	Year Ended December 31	Year Ended December 31
	2020	2019
Lease Cost
Finance lease cost:
Amortization of right-of-use assets (1)	$           58,576	$       38,351
Interest on lease liabilities (2)	7,341	9,001
Operating lease cost (3)	5,408,737	5,706,490
Short-term lease cost (3)(4)	222,311	233,318
Sublease income (3)	(394,758)	(663,242)
Total lease cost	$      5,302,207	$   5,323,918
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$      5,293,901	$   5,567,761
Operating cash flows from finance leases	7,341	9,001
Financing cash flows from finance leases	56,982	95,931
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$      5,631,193	$ 16,544,406
Finance leases	8,494	252,763
Weighted-average remaining lease term (in years)
Finance leases	2.74	3.23
Operating leases	5.40	4.67
Weighted-average discount rate
Finance leases	5.59%	5.47%
Operating leases	4.87%	5.06%

(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 

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020 and 2019

24)Leases (Continued) 

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

	Finance Leases	Operating Leases
Lease payments due in:
2021	$          46,898	$         4,344,756
2022	34,458	3,004,271
2023	27,220	2,088,028
2024	4,354	1,567,924
2025	692	837,526
Thereafter	-	2,938,906
Total undiscounted lease payments	113,622	14,781,411
Less: Discount on cash flows	(8,671)	(2,859,527)
Present value of lease liabilities	$        104,951	$       11,921,884

The following table presents the Company’s right-of-use assets and lease liabilities for the period presented:

	Balance Sheet Location	Year Ended December 31 2020	Year Ended December 31 2019
Operating Leases
Right-of-use assets	Other assets	$      11,663,245	$     11,267,247
Lease liabilities	Other liabilities and accrued expenses	$      11,921,884	$     11,405,976
Finance Leases
Right-of-use assets		$          254,276	$         248,565
Accumulated amortization		(154,144)	(98,351)
Right-of-use assets, net	Property and equipment, net	$          100,132	$         150,214
Lease liabilities	Bank and other loans payable	$          104,951	$         153,439

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.

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Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.  Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

(a)     Management’s annual report on internal control over financial reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”), and includes those policies and procedures that:

·Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company,  

·Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors of the Company, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements. 

As disclosed in Item 8: Financial Statements, the Company acquired Kilpatrick Life in December 2019. Prior to the acquisition, the Company identified a material weakness in Kilpatrick Life’s internal control over financial reporting related to change management and segregation of duties for the policy administration system. As of December 31, 2020, the known deficiencies have been remediated to the extent that they no longer give rise to a material weakness with the following controls implemented by management.

·Execution of a formal consultant agreement with the former system developer. 

·Creation of unique login credentials for system users. 

·Implementation of system change control processes, including the installation of a third-party database logging software. 

In addition to the steps taken above, the Company will also transition Kilpatrick Life’s policies to its own Policy Administration System, which has appropriate controls in place.

As of March 31, 2021, the Company has performed additional analysis and procedures to conclude that it believes the consolidated financial statements included in this Form 10-K present fairly, in all material respects, the Company’s financial position, results of operations, comprehensive income (loss) and cash flows for the periods presented in conformity with U.S. GAAP.

The Company is committed to continuous improvement of its internal control processes and will continue to diligently review its financial reporting controls and procedures as it works to remedy Kilpatrick Life’s internal controls.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become

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inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management performed an assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2020 based on the framework in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether the Company's internal control over financial reporting was effective as of December 31, 2020. Based on that assessment management believes that at December 31, 2020, the Company’s internal control over financial reporting was effective.

This annual report on internal control over financial reporting does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

(b) Changes in internal control over financial reporting.

Except for the remediation steps taken to address the material weakness related to the acquisition of Kilpatrick Life, there have not been significant changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None

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PART III

Item 10.  Directors, Executive Officers and Corporate Governance

The Company’s Board of Directors consists of eight persons, five of whom are not employees of the Company. There are no family relationships between or among any of the directors and executive officers, except that S. Andrew Quist and Adam G. Quist are sons of Scott M. Quist, and Jason G. Overbaugh is a nephew of Scott M. Quist. The following table sets forth certain information with respect to the directors and executive officers of the Company.

Name	Age	Position with the Company
Scott M. Quist	67	Chairman of the Board, President, Chief Executive Officer, and Director
Garrett S. Sill	50	Chief Financial Officer and Treasurer
Jason G. Overbaugh	46	Vice President, National Marketing Director of Life Insurance and Director
S. Andrew Quist	40	Vice President, General Counsel, and Director
Jeffrey R. Stephens	67	Senior General Counsel and Secretary
Stephen C. Johnson	64	Vice President - Mortgage Operations
Adam G. Quist	35	Vice President - Memorial Services, Assistant Secretary, and General Counsel
John L. Cook	66	Director
Gilbert A. Fuller	80	Director
Robert G. Hunter	61	Director
H. Craig Moody	69	Director
Norman G. Wilbur	82	Director

Directors

The following is a description of the business experience of each of the Company’s directors.

Scott M. Quist has served as Chairman of the Board and Chief Executive Officer of the Company since 2012. Mr. Quist also serves as the Company’s President, a position he has held since 2002. He has additionally served as a director of the Company since 1986.  From 1993 to 2013, Mr. Quist served as Treasurer and a director of the National Alliance of Life Companies (NALC), a national trade association of over 200 life insurance companies, and as its President from 1990 to 2000. From 1986 to 1991, Mr. Quist was Treasurer and a director of The National Association of Life Companies, a trade association of 642 insurance companies until its merger with the American Council of Life Companies.  Mr. Quist has been a member of the Board of Governors of the Forum 500 Section (representing small insurance companies) of the American Council of Life Insurance.  He has also served as a regional director of Key Bank of Utah since 1993.  Mr. Quist holds a B.S. degree in Accounting from Brigham Young University and received his law degree also from Brigham Young University.  Mr. Quist’s significant expertise and deep understanding of the technical, organizational and strategic business aspects of the insurance industry, his management expertise, his 19 year tenure as President of the Company and 34 year tenure as a director, and his years of business and leadership experience led the Board of Directors to conclude that Mr. Quist should serve as Chairman of the Board, President, and Chief Executive Officer of the Company. 

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Jason G. Overbaugh has served as a director of the Company since 2013. Mr. Overbaugh has also served as a Vice President and the Assistant Secretary of the Company from 2002 to 2013. Mr. Overbaugh has additionally served as Vice President and National Marketing Director of Security National Life Insurance Company since 2006. From 2003 to 2006, he served as a Vice President of Security National Life Insurance Company with responsibilities as an investment manager over construction lending and commercial real estate investments. From 2000 to 2003, he served as a Vice President of Memorial Estates, Inc., with responsibilities over operations and sales. Mr. Overbaugh has served since 2007 as a director of the LOMA Life Insurance Council, a trade association of life insurance companies. He is also a member of the NFDA Trade Association. Mr. Overbaugh received a B.S. degree in Finance from the University of Utah. Mr. Overbaugh’s expertise in insurance and marketing, and his 24 years of experience with the Company in its insurance, real estate, and mortuary and cemetery operations led the Board of Directors to conclude that he should serve as a director of the Company. 

 S. Andrew Quist has served as a director of the Company since 2013. Mr. Quist has also served as a Vice President of the Company since 2010. In addition, from 2007 to December 2017, he served as the Company’s Associate General Counsel and since December 2017 as the Company’s General Counsel, where his responsibilities have included the Company’s regulatory matters and acquisitions. In addition, Mr. Quist has served as Executive Vice President and Chief Operating Officer since 2010, and as Vice President from 2008 to 2010, of C&J Financial, LLC, which funds the purchase of funeral and burial policies from funeral homes after the death of the insureds. Mr. Quist has also served since 2013 as a director of the National Alliance of Life Companies (NALC), a national trade association of over 200 life insurance companies. From 2014 to 2016, he served as President of the NALC. Mr. Quist previously served as President of the Utah Life Convention, a consortium of Utah domestic life insurers. Mr. Quist holds a B.S. degree in Accounting from Brigham Young University and received his law degree from the University of Southern California. Mr. Quist is a member of the State Bar of California.  Mr. Quist’s expertise in insurance, legal and regulatory matters led the Board of Directors to conclude that he should serve as a director of the Company. 

John L. Cook has served as a director of the Company since 2013.  Mr. Cook has served since 1982 as co-owner and operator of Cook Brothers Painting, Inc., a company that provides painting services for contractors and builders of residential and commercial properties. In addition, Mr. Cook attended the University of Utah. As a director, Mr. Cook advised the Board concerning the Company’s investments in commercial and residential real estate projects. Moreover, Mr. Cook’s extensive background in construction and building is important as the Company continues to acquire new real estate holdings and develop its current portfolio of undeveloped land. Mr. Cook’s years of experience in the construction industry and with construction projects led the Board of Directors to conclude that he should serve as a director of the Company.  

Gilbert A. Fuller has served as a director of the Company since 2012. From 2006 until his retirement in 2008, Mr. Fuller served as Executive Vice President, Chief Financial Officer and Secretary of USANA Health Sciences, Inc., a multinational manufacturer and direct seller of nutritional supplements. Mr. Fuller joined USANA in 1996 as the Vice President of Finance and served in that role until 1999 when he was appointed as its Senior Vice President. Mr. Fuller has served as a member of the Board of Directors of USANA since 2008. Mr. Fuller received a B.S. degree in Accounting and an M.B.A. degree from the University of Utah. Mr. Fuller’s accounting, finance and corporate strategy expertise and his years of financial, accounting and business experience with public and private companies, including USANA Health Sciences, Inc., which is listed on the New York Stock Exchange, where he served as an executive officer and continues to serve as a director, led the Board of Directors to conclude that he should serve as a director of the Company.

Robert G. Hunter, M.D. has served as a director of the Company since 1998.  Dr. Hunter is currently a practicing physician in private practice. Dr. Hunter is Department Head of Otolaryngology, Head and Neck Surgery at Intermountain Medical Center and a past President of the medical staff of the Intermountain Medical Center.  He is also a delegate to the Utah Medical Association and has served as a delegate representing the State of Utah to the American Medical Association.  Dr. Hunter holds a B.S. degree in Microbiology from the University of Utah and received his medical degree from the University of Utah College of Medicine.  Dr. Hunter’s medical expertise and experience, and his administrative and leadership experience from serving in a number of administrative positions in the medical profession led the Board of Directors to conclude that he should serve as a director of the Company. 

H. Craig Moody has served as a director of the Company since 1995.  Mr. Moody is owner of Moody & Associates, a political consulting and real estate company.  He is a former Speaker and House Majority Leader of  

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the House of Representatives of the State of Utah.  From 1989 to 1992, Mr. Moody was Co-Chairman of the Utah Legislative Audit Committee. Mr. Moody holds a B.S. degree in Political Science from the University of Utah.  Mr. Moody’s real estate and governmental affairs expertise and years of business and leadership experience led the Board of Directors to conclude that he should serve as a director of the Company.

Norman G. Wilbur has served as a director of the Company since 1998.  Mr. Wilbur worked for J.C. Penny's regional offices in budget and analysis.  His final position was Manager of Planning and Reporting for J.C. Penny's stores.  After 36 years with J.C. Penny's, Mr. Wilbur opted for early retirement in 1997.  Mr. Wilbur holds a B.S. degree in Accounting from the University of Utah.  Mr. Wilbur’s financial expertise and business experience from a successful career at JC Penny’s led the Board of Directors to conclude that he should serve as a director of the Company.  In addition, the Board of Directors’ determination that Mr. Wilbur is the Audit Committee “financial expert” lends further support to his financial acumen and qualification for serving as a director of the Company. 

The Board of Directors, Board Committees, and Meetings

The Company's Bylaws provide that the Board of Directors shall consist of not less than five or more than twelve members.  The term of office of each director is for a period of one year or until the election and qualification of his successor.  A director is not required to be a resident of the State of Utah or a stockholder of the Company.  The Board of Directors held a total of five meetings during the fiscal year ended December 31, 2020. Each of the directors attended 75% or more of the meetings of the Board of Directors during 2020.

The size of the Board of Directors of the Company is eight members.  A majority of the Board of Directors must qualify as "independent" as that term is defined in Rule 4200 of the listing standards of the Nasdaq Stock Market.  The Board of Directors has affirmatively determined that five of the eight members of the Board of Directors, namely Messrs. John L. Cook, Gilbert A. Fuller, Robert G. Hunter, M.D., H. Craig Moody and Norman G. Wilbur, are independent under the listing standards of the Nasdaq Stock Market.

There are four committees of the Board of Directors, which meet periodically during the year: the Audit Committee, the Compensation Committee, the Executive Committee, and the Nominating and Corporate Governance Committee.

The Audit Committee directs the auditing activities of the Company's internal auditors and outside public accounting firm and approves the services of the outside public accounting firm.  The Audit Committee consists of Messrs. John L. Cook, Gilbert A. Fuller, H. Craig Moody, and Norman G. Wilbur (Chairman of the committee).  During 2020, the Audit Committee met on three occasions.

The Compensation Committee is responsible for recommending to the Board of Directors for approval the annual compensation of each executive officer of the Company and the executive officers of the Company's subsidiaries, developing policy in the areas of compensation and fringe benefits, contributions under the 401(k) Retirement Savings Plans, Non-Qualified Deferred Compensation Plan, granting of options under the stock option plans, and creating other employee compensation plans.  The Compensation Committee consists of Messrs. John L. Cook, Gilbert A. Fuller, Robert G. Hunter, M.D., H. Craig Moody and Norman G. Wilbur (Chairman of the committee).  During 2020, the Compensation Committee met on two occasions.

The Executive Committee reviews Company policy, major investment activities and other pertinent transactions of the Company.   The Executive Committee consists of Messrs. Gilbert A. Fuller, H. Craig Moody, S. Andrew Quist and Scott M. Quist (Chairman of the committee).  During 2020, the Executive Committee met on one occasion.

The Nominating and Corporate Governance Committee identifies individuals qualified to become Board members consistent with criteria approved by the Board, recommends to the Board the persons to be nominated by the Board for election as directors at a meeting of stockholders, and develops and recommends to the Board a set of corporate governance principles.  The Nominating and Corporate Governance Committee consists of Messrs. John L. Cook, Gilbert A. Fuller, Robert G. Hunter, M.D., H. Craig Moody (Chairman of the committee), and Norman G. Wilbur.  The Nominating and Corporate Governance Committee is composed solely of independent directors, as defined in the listing standards of the Nasdaq Stock Market.  During 2020, the Nominating and Corporate Governance Committee met on two occasions.

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Director Nominating Process

The process for identifying and evaluating nominees for directors include the following steps: (1) the Nominating and Corporate Governance Committee, Chairman of the Board or other board members identify a need to fill vacancies or add newly created directorships; (2) the Chairman of the Nominating and Corporate Governance Committee initiates a search and seeks input from board members and senior management and, if necessary, obtains advice from legal or other advisors (but does not hire an outside search firm); (3) director candidates, including any candidates properly proposed by stockholders in accordance with the Company's Bylaws, are identified and presented to the Nominating and Corporate Governance Committee; (4) initial interviews with candidates are conducted by the Chairman of the Nominating and Corporate Governance Committee; (5) the Nominating and Corporate Governance Committee meets to consider and approve final candidate(s) and conduct further interviews as necessary; and (6) the Nominating and Corporate Governance Committee makes recommendations to the board for inclusion in the slate of directors at the annual meeting.  The evaluation process will be the same whether the nominee is recommended by a stockholder or by a member of the Board of Directors.

Meetings of Non-Management Directors

The Company's independent directors meet regularly in executive session without management.  The Board of Directors has designated a lead director to preside at executive sessions of independent directors.  Mr. H. Craig Moody is currently the lead director.

Executive Officers

Garrett S. Sill has served as Chief Financial Officer and Treasurer since 2013. From 2011 to 2013, Mr. Sill served as Vice President and Assistant Treasurer of Security National Life Insurance Company, a wholly owned subsidiary of the Company. From 2002 to 2011, Mr. Sill was Chief Financial Officer and Treasurer of SecurityNational Mortgage, a wholly owned subsidiary of the Company. Mr. Sill is a certified public accountant, having been licensed since 2002. He holds a B.A. degree in Accounting from Weber State University and a Master’s degree in Business Administration from the University of Utah. Mr. Sill also serves as a member of the Advisory Council of the School of Accounting and Taxation at Weber State University. 

Jeffrey R. Stephens has served as Senior General Counsel of the Company since 2017, as General Counsel from 2006 to 2017, and as Secretary of the Company since 2008. Mr. Stephens was in private practice from 1981 to 2006 in the states of Washington and Utah. Mr. Stephens holds a B.A. degree in Geography from the University of Utah and received his law degree from Brigham Young University.  Mr. Stephens is a member of the Utah State Bar Association and the Washington State Bar Association. 

Stephen C. Johnson began serving as the Vice President of Mortgage Operations of the Company and as the President of SecurityNational Mortgage in 2016. Prior to Mr. Johnson’s appointment as President of SecurityNational Mortgage, Mr. Johnson served as Executive Vice President and Chief Operating Officer of SecurityNational Mortgage. Mr. Johnson has over 30 years of experience at the executive management level in the mortgage banking industry. Mr. Johnson holds a B.A. degree in International Relations from Brigham Young University and Master's degree in International Management and Finance from the American Graduate School of International Management (Thunderbird).  

Adam G. Quist has served as Vice President – Memorial Services and Assistant Secretary of the Company since 2015. From 2015 to 2017, he also served as the Company’s Associate General Counsel. Since 2017, Mr. Quist has served as the Company’s General Counsel. Mr. Quist has also served since 2015 as Vice President of Memorial Estates, Inc. (“Memorial Estates”) and since 2016 as Chief Operating Officer of Memorial Estates. Additionally, Mr. Quist has further served since 2015 as Vice President of Memorial Mortuary, Inc. (“Memorial Mortuary”) and since 2016 as Chief Operating Officer of Memorial Mortuary. Both Memorial Estates and Memorial Mortuary are wholly owned subsidiaries of the Company. Mr. Quist hold a B.S. degree and a Master’s degree in Accounting with an emphasis on taxation from Brigham Young University. He received his law degree from the University of Utah. Mr. Quist is a member of the Utah State Bar.  

The Board of Directors of the Company has a written procedure, which requires disclosure to the board of any material interest or any affiliation on the part of any of its officers, directors or employees that is in conflict or may be in conflict with the Company’s interests.

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All executive officers and directors of the Company hold office until the next Annual Meeting of Stockholders and until their successors have been elected and qualified.

Corporate Governance

Corporate Governance Guidelines. The Board of Directors has adopted the Security National Financial Corporation Corporate Governance Guidelines. These guidelines outline the functions of the board, director qualifications and responsibilities, and various processes and procedures designed to insure effective and responsive governance. The Board of Directors has also adopted a written committee charter for its Audit Committee and Compensation Committee. The guidelines and committee charters are reviewed from time to time in response to regulatory requirements and best practices and are revised accordingly. The full text of the guidelines and the committee charters are available on the Company’s website at www.securitynational.com. A copy of the Corporate Governance Guidelines may also be obtained at no charge by written request to the attention of Jeffrey R. Stephens, Secretary, Security National Financial Corporation, 121 West Election Road., Suite 100, Draper, Utah 84020.

Code of Business Conduct and Ethics. All of the Company’s officers, employees, and directors are required to comply with the Company’s Code of Business Conduct and Ethics to help ensure that the Company’s business is conducted in accordance with appropriate standards of ethical behavior. The Company’s Code of Business Conduct and Ethics covers all areas of professional conduct, including customer relationships, conflicts of interest, insider trading, financial disclosures, intellectual property, and confidential information, as well as requiring adherence to all laws and regulations applicable to the Company’s business. Employees are required to report any violations or suspected violations of the Code. The Code includes an anti-retaliation statement. The full text of the Code of Business Conduct and Ethics is available on the Company’s website at www.securitynational.com. A copy of the Code of Business Conduct and Ethics may also be obtained at no charge by written request to the attention of Jeffrey R. Stephens, Secretary, Security National Financial Corporation, 121 West Election Road., Suite 100, Draper, Utah 84020.

Item 11. Executive Compensation

The following table sets forth, for each of the last two fiscal years, the compensation received by the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and the Company’s three other most highly compensated executive officers who were serving as executive officers at the end of 2020 (collectively, the “Named Executive Officers”).

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)	Bonus ($)	Options Awards ($)	Non-Equity Incentive Plan Compen-sation ($)	Change in Pension Value Non-qualified Deferred Compensation Earnings (1) ($)	All Other Compen-sation (2) ($)	Total ($)
Scott M. Quist  Chairman of the Board, President  and Chief Executive Officer	2020	$ 558,950	$ 157,800	--	--	--	$    49,969	$ 766,719
	2019	528,498	151,300	--	--	--	48,012	727,810
Garrett S. Sill  Chief Financial Officer  and Treasurer	2020	$ 239,333	$ 112,000	--	--	--	$    37,986	$ 389,319
	2019	223,373	36,200	--	--	--	36,934	296,507
Stephen C. Johnson  Vice President of Mortgage   Operations	2020	$ 360,000	$ 284,828	--	--	--	$    24,400	$ 669,228
	2019	325,841	87,617	--	--	--	11,706	425,164
S. Andrew Quist  Vice President and  General Counsel	2020	$ 265,667	$ 138,325	--	--	--	$    33,561	$ 437,553
	2019	245,440	92,325	--	--	--	31,686	369,451
Jeffrey R. Stephens  Senior General Counsel and  Secretary	2020	$ 205,167	$   30,275	--	--	--	$    24,928	$ 260,370
	2019	197,205	15,875	--	--	--	23,201	236,281

_____________

(1)The amounts indicated under “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” consist of amounts that the Company contributed into a trust for the benefit of the Named Executive Officers under the Company’s Non-Qualified Deferred Compensation Plan. 

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(2)The amounts indicated under “All Other Compensation” consist of the following amounts that the Company paid for the benefit of the Named Executive Officers: 

a)payments related to the operation of automobiles for Scott M. Quist ($7,200 for each of the years 2020 and 2019); Garrett S. Sill ($4,400 for 2020 and $5,400 for 2019) and, Stephen C. Johnson, S. Andrew Quist, and Jeffrey R. Stephens ($-0- for each of the years 2020 and 2019). However, such payments do not include the furnishing of an automobile by the Company to Scott M. Quist, nor the payment of insurance and property taxes with respect to the automobile operated by such executive officer;  

b)group life insurance premiums that the Company paid to a group life insurance plan for Scott M. Quist, Garrett S. Sill, Stephen C. Johnson, S. Andrew Quist, and Jeffrey R. Stephens ($114 for 2020 and $176 for 2019);  

c)life insurance premiums that the Company paid for the benefit of Scott M. Quist ($15,765 for 2020 and $14,934 for 2019); and Garrett S. Sill, Stephen C. Johnson, S. Andrew Quist, and Jeffrey R. Stephens ($-0- for each of the years 2020 and 2019); 

d)medical insurance premiums that the Company paid to a medical insurance plan for Scott M. Quist ($15,118 for 2020 and $14,251 for 2019); Garrett S. Sill ($21,756 for 2020 and $20,508 for 2019); Stephen C. Johnson ($11,764 for 2020 and $11,079 for 2019); S. Andrew Quist ($21,756 for 2020 and $20,508 for 2019); and Jeffrey R. Stephens ($15,118 for 2020 and $14,251 for 2019); 

e)long term disability insurance premiums that the Company paid to a provider of such insurance for Scott M. Quist ($372 for 2020 and $251 for 2019), Garrett S. Sill ($316 for 2020 and $251 for 2019), Stephen C. Johnson ($372 for 2020 and $251 for 2019),S. Andrew Quist ($339 for 2020 and $251 for 2019), and Jeffrey R. Stephens ($278 for 2020 and $251 for 2019); 

f)contributions that the Company made to defined contribution plans for Scott M. Quist ($11,400 for 2020 and $11,200 for 2019); Garrett S. Sill ($11,400 for 2020 and $10,599 for 2019); Stephen C. Johnson ($11,400 for 2020 and $-0- for 2019); S. Andrew Quist ($10,927 for 2020 and $10,344 for 2019); and Jeffrey R. Stephens ($9,418 for 2020 and $8,523 for 2019); and 

g)contributions that the Company made to health savings accounts for Scott M. Quist, Garrett S. Sill, S. Andrew Quist and Jeffrey R. Stephens ($-0- for each of the years 2020 and 2019); and Stephen C. Johnson ($750 for 2020 and $200 for 2019); 

h)gym membership incentives for Scott M. Quist, Garrett S. Sill, and Stephen C. Johnson ($-0- for each of the years 2020 and 2019); S. Andrew Quist ($425 for 2020 and $407 for 2019); and Jeffrey R. Stephens ($-0- for each of the years 2020 and 2019); 

SUPPLEMENTAL ALL OTHER COMPENSATION TABLE

The following table sets forth all other compensation provided the Named Executive Officers for fiscal years 2020 and 2019.

Name of Executive Officer	Year	Perks and Other Personal Benefits	Tax Reimburse-ments	Discounted Securities Purchases	Payments/ Accruals on Termination Plans	Registrant Contributions to Defined Contribution Plans	Insurance Premiums	Dividends or Earnings on Stock or Option Awards	Other (1)
Scott M. Quist	2020	$    7,200	-	-	-	$       11,400	$   31,369	-	-
	2019	7,200	-	-	-	11,200	29,612	-	-
Garrett S. Sill	2020	4,400	-	-	-	$       11,400	$   22,186	-	-
	2019	5,400	-	-	-	10,599	20,935	-	-
Stephen C. Johnson	2020	-	-	-	-	$       11,400	$   13,000	-	-
	2019	-	-	-	-	-	11,706	-	-
S. Andrew Quist	2020	425	-	-	-	$       10,927	$   22,209	-	-
	2019	407	-	-	-	10,344	20,935	-	-
Jeffrey R. Stephens	2020	-	-	-	-	$         9,418	$   15,510	-	-
	2019	-	-	-	-	8,523	14,678	-	-

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GRANTS OF PLAN-BASED AWARDS

The following table sets forth certain information regarding options granted to the Named Executive Officers during the fiscal year ended December 31, 2020.

Name of Executive Officer	Grant Date	Estimated Future Payouts Under Equity Incentive Plan Awards			All Other Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Closing Price on Grant Date ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)
		Threshold ($)	Target ($)	Maximum ($)
Scott M. Quist	3/27/20	--	--	--	51,250	(1)	$    3.85	(2)	3.67	(2)	$   29,289
Garrett S. Sill	3/27/20	--	--	--	25,625	(1)	3.67	(2)	3.67	(2)	17,243
Stephen C. Johnson	3/27/20	--	--	--	10,250	(1)	3.67	(2)	3.67	(2)	6,896
S. Andrew Quist	3/27/20	--	--	--	41,000	(1)	3.67	(2)	3.67	(2)	27,589
Jeffrey R. Stephens	3/27/20	--	--	--	7,688	(1)	3.67	(2)	3.67	(2)	5,172

_________________________

(1)The stock options have been adjusted for the 2.5% annual stock dividend declared on June 26, 2020 and paid on July 17, 2020. 

(2)The stock options have been adjusted for the 2.5% annual stock dividend declared on June 26, 2020 and paid on July 17, 2020. 

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OUTSTANDING EQUITY AWARDS

The following table sets forth information concerning outstanding equity awards held by Named Executive Officers at December 31, 2020.

	Option Awards							Stock Awards
Name of Executive Officer	Option Grant Date	Number of Securities Underlying Unexercised Options Exercisable (1) (#)		Number of Securities Underlying Unexercised Options Unexercisable (1) (#)		Option Exercise Price          (2) ($)	Option Expiration Date	Stock Award Grant Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Scott M. Quist	12/2/16	99,672	(3)	--		6.14	12/02/21	--	--	--	--	--
	12/1/17	88,993		--		4.65	12/02/22	--	--	--	--	--
	11/30/18	79,104		--		5.34	11/30/23	--	--	--	--	--
	12/6/19	53,813	(6)	--		5.30	12/06/24	--	--	--	--	--
	3/27/20	38,438	(7)	12,812	(7)(8)	3.85	03/27/25	--	--	--	--	--
Garrett S. Sill	12/6/13	5,770		--		$      3.30	12/06/23	--	--	--	--	--
	7/2/14	5,495		--		3.08	07/02/24	--	--	--	--	--
	12/5/14	10,989		--		3.61	12/05/24	--	--	--	--	--
	12/1/17	17,799	(4)	--		4.22	12/01/27	--	--	--	--	--
	11/30/18	22,601	(5)	--		4.86	11/30/28	--	--	--	--	--
	12/6/19	26,906	(6)	--		5.06	12/06/29	--	--	--	--	--
	3/27/20	19,219	(7)	6,406	(7)(8)	3.67	03/27/30	--	--	--	--	--
Stephen C. Johnson	4/13/12	4,543		--		$      1.01	04/13/22	--	--	--	--	--
	12/6/13	4,327		--		3.30	12/06/23	--	--	--	--	--
	7/2/14	4,121		--		3.08	07/02/24	--	--	--	--	--
	12/5/14	8,242		--		3.61	12/05/24	--	--	--	--	--
	12/4/15	13,082		--		5.07	12/04/25	--	--	--	--	--
	12/2/16	6,230		--		5.59	12/02/26	--	--	--	--	--
	12/1/17	11,865		--		4.22	12/01/27	--	--	--	--	--
	12/6/19	10,763		--		5.06	12/06/29	--	--	--	--	--
	3/27/20	7,688		2,562	(8)	3.67	03/27/30	--	--	--	--	--
S. Andrew Quist	4/13/12	22,716		--		$      1.01	04/13/22	--	--	--	--	--
	12/6/13	14,423		--		3.30	12/06/23	--	--	--	--	--
	7/2/14	13,736		--		3.08	07/02/24	--	--	--	--	--
	12/5/14	27,473		--		3.61	12/05/24	--	--	--	--	--
	12/4/15	26,165		--		5.07	12/04/25	--	--	--	--	--
	12/2/16	24,919		--		5.59	12/02/26	--	--	--	--	--
	12/1/17	23,732	(4)	--		4.22	12/01/27	--	--	--	--	--
	11/30/18	28,252	(5)	--		4.86	11/30/28	--	--	--	--	--
	12/6/19	43,050	(6)	--		5.06	12/06/29	--	--	--	--	--
	3/27/20	30,750	(7)	10,250	(7)(8)	3.67	03/27/30	--	--	--	--	--
Jeffrey R. Stephens	4/13/12	3,787		--		$      1.01	04/13/22	--	--	--	--	--
	12/6/13	3,607		--		3.30	12/06/23	--	--	--	--	--
	7/2/14	3,435		--		3.08	07/02/24	--	--	--	--	--
	12/5/14	6,869		--		3.61	12/05/24	--	--	--	--	--
	12/4/15	6,542		--		5.07	12/04/25	--	--	--	--	--
	12/2/16	6,230		--		5.59	12/02/26	--	--	--	--	--
	12/1/17	5,934		--		4.22	12/01/27	--	--	--	--	--
	11/30/18	8,476		--		4.86	11/30/28	--	--	--	--	--
	12/6/19	8,072		--		5.06	12/06/29	--	--	--	--	--
	3/27/20	5,765		1,923	(8)	3.67	03/27/30	--	--	--	--	--

________________

(1)Except for options granted to Scott M. Quist that have five-year terms, such grants have ten year terms. The vesting of any unvested shares is subject to the recipient’s continuous employment. This reflects the equivalent of Class A common shares. 

(2)Exercise prices have been adjusted for the effect of annual stock dividends. 

(3)On December 2, 2016, Scott Quist was granted stock options to purchase 80,000 shares of Class A common stock at an exercise price of $6.14 per share or 80,000 shares of Class C common stock at an exercise price of $6.14 per share, or any combination thereof. 

(4)On December 1, 2017, Garrett S. Sill was granted stock options to purchase 15,000 shares of Class A common stock at an exercise price of $4.22 per share or 15,000 shares of Class C common stock at an exercise price of $4.22 per share, or any combination thereof. Also, on December 1, 2017, S. Andrew Quist was granted stock options to purchase 20,000 shares of Class A common stock at an exercise price of $4.22 per share or 20,000 shares of Class C common stock at an exercise price of $4.22 per share, or any combination thereof.  

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(5)On November 30, 2018, Garrett S. Sill was granted stock options to purchase 20,000 shares of Class A common stock at an exercise price of $4.86 per share or 20,000 shares of Class C common stock at an exercise price of $4.86 per share, or any combination thereof. Also, on November 30, 2018, S. Andrew Quist was granted stock options to purchase 25,000 shares of Class A common stock at an exercise price of $4.86 per share or 20,000 shares of Class C common stock at an exercise price of $4.86 per share, or any combination thereof. 

(6)On December 6, 2019, Scott M. Quist was granted stock options to purchase 50,000 shares of Class A common stock at an exercise price of $5.30 per share or 50,000 shares of Class C common stock at an exercise price of $5.30 per share, or any combination thereof.  Also, on December 6, 2019, Garrett S. Sill was granted stock options to purchase 25,000 shares of Class A common stock at an exercise price of $5.06 per share or 25,000 shares of Class C common stock at an exercise price of $5.06 per share, or any combination thereof. Also, on December 6, 2019, S. Andrew Quist was granted stock options to purchase 40,000 shares of Class A common stock at an exercise price of $5.06 per share or 40,000 shares of Class C common stock at an exercise price of $5.06 per share, or any combination thereof.  

(7)On March 27, 2020, Scott M. Quist was granted stock options to purchase 50,000 shares of Class A common stock at an exercise price of $3.85 per share or 50,000 shares of Class C common stock at an exercise price of $3.85 per share, or any combination thereof.  Also, on March 27, 2020, Garrett S. Sill was granted stock options to purchase 25,000 shares of Class A common stock at an exercise price of $3.67 per share or 25,000 shares of Class C common stock at an exercise price of $3.67 per share, or any combination thereof. Also, on March 27, 2020, S. Andrew Quist was granted stock options to purchase 40,000 shares of Class A common stock at an exercise price of $3.67 per share or 40,000 shares of Class C common stock at an exercise price of $3.67 per share, or any combination thereof.  

(8)Stock options vest at the rate of 25% of the total number of shares per quarter over a one year period after the grant date. 

OPTION AWARDS VESTING SCHEDULE

The following table sets forth the vesting schedule of unexercisable options reported in the “Number of Securities Underlying Unexercised Options – Unexercisable” column of the table above.

Grant Date	Vesting
4/13/12	These options vested 25% per quarter over a one year period after the grant date.
12/06/13	These options vested 25% per quarter over a one year period after the grant date.
07/02/14	These options vested 25% per quarter over a one year period after the grant date.
12/05/14	These options vested 25% per quarter over a one year period after the grant date.
12/04/15	These options vested 25% per quarter over a one year period after the grant date.
12/02/16	These options vested 25% per quarter over a one year period after the grant date.
12/01/17	These options vested 25% per quarter over a one year period after the grant date.
11/30/18	These options vested 25% per quarter over a one year period after the grant date.
12/06/19	These options vested 25% per quarter over a one year period after the grant date.
03/27/20	These options vest 25% per quarter over a one year period after the grant date.

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OPTION EXERCISES AND STOCK VESTED

The following table sets forth all stock options exercised and value received upon exercise, and all stock awards vested and value realized upon vesting, by the Named Executive Officers during the year ended December 31, 2020.

	Option Awards		Stock Awards
	Number of Shares Acquired on Exercise	Value Realized on Exercise	Number of Shares Acquired on Vesting	Value Realized on Vesting
Name of Executive Officer	(#)	($)	(#)	($)
Scott M. Quist	130,820	$  294,792	--	--
Garrett S. Sill	6,758	$    13,963	--	--
Stephen C. Johnson	--	--	--	--
S. Andrew Quist	--	--	--	--
Jeffrey R. Stephens	--	--	--	--

PENSION BENEFITS

The following table sets forth the present value as of December 31, 2020 of the benefit of the Named Executive Officers under the defined benefit pension plan.

Name of Executive Officer	Plan Name	Number of Years Credited Service (#)	Present Value of Accumulated Benefit ($)	Payments During Last Fiscal Year ($)
Scott M. Quist	None	--	--	--
Garrett S. Sill	None	--	--	--
Stephen C. Johnson	None	--	--	--
S. Andrew Quist	None	--	--	--
Jeffrey R.Stephens	None	--	--	--

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth certain information as of December 31, 2020 with respect to compensation plans (including individual compensation arrangements) under which the Company’s equity securities are authorized for issuance, aggregated as follows:

·All compensation plans previously approved by security holders; and  

·All compensation plans not previously approved by security holders.  

	A	B	C
Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights	Weighted Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column A)
Equity compensation plans               approved by stockholders (1)	1,735,529 (2)	$4.33 (2)	591,872 (3)
Equity compensation plans not approved by stockholders	0	-	0

_____________________

(1)This reflects the 2013 Stock Option Plan (the "2013 Plan") and the 2014 Director Stock Option Plan (the "2014 Director Plan"). The 2013 Plan was approved by the stockholders at the annual stockholders meeting held on July 12, 2013, which reserved 450,000 shares of Class A common stock of which 150,000 shares of Class A common stock could be issued in place of up to 150,000 shares of Class C common stock for issuance thereunder. The 2014 Director Plan was approved by stockholders at the annual stockholders meeting held on July 2, 2014, which reserved 150,000 shares of Class A common stock for issuance thereunder. The 2013 Plan was amended by the stockholders at the annual stockholders meeting held on July 1, 2015 to authorize an additional 450,000 shares of Class A common stock to be available for issuance under the Plan, of which up to 200,000 Class A common shares may be issued as up to 200,000 shares of Class C common stock. The 2013 Plan was further amended by the stockholders at the annual stockholders meeting held on June 29, 2017 to authorize an additional 500,000 shares of Class A common stock to be available for issuance under the Plan, of which up to 250,000 Class A common shares may be issued in place of up to 250,000 shares of Class C common stock. The 2013 Plan was further amended by the stockholders at the annual stockholders meeting  

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held on June 26, 2020 to authorize an additional 500,000 shares of Class A common stock to be available for issuance under the Plan, of which up to 350,000 Class A common shares may be issued in place of up to 350,000 shares of Class C common stock. The 2014 Director Plan was amended by the stockholders at the annual stockholders meeting held on June 26, 2020 to authorize an additional 100,000 shares of Class A common stock to be available for issuance under the Plan.

(2)The weighted average exercise prices reflect solely the shares of Class A common stock that will be issued upon exercise of outstanding options. 

(3)This number includes 502,072 shares of Class A common stock available for future issuance under the 2013 Plan, and 89,800 shares of Class A common stock available for future issuance under the 2014 Director Plan. 

Employment Agreement with Scott M. Quist

On December 4, 2012, the Company entered into an employment agreement with Scott M. Quist, Chairman of the Board, President, and Chief Executive Officer of the Company. The agreement was for a six-year term beginning on December 4, 2012 and ending on December 4, 2018. Under the terms of the Agreement, the Board of Directors may, in its sole discretion, extend the term of the agreement for an additional four-year term provided that Mr. Quist has continued to perform his duties with usual and customary care, diligence and prudence commensurate with his position with the Company. In addition, Mr. Quist is required to perform such additional duties as may be assigned to him from time to time by the Company’s Board of Directors.

Effective December 4, 2018, the Board members approved a motion to extend Mr. Quist’s employment agreement for an additional four-year term ending December 2022. Mr. Quist abstained from voting on the motion to extend his employment agreement for the additional four-year term. Under the terms of the agreement, Mr. Quist is to devote his full time to the Company, serving as Chairman of the Board, President and Chief Executive Officer at not less than his current salary and benefits. The Company also agrees to maintain a group term life insurance policy of not less than $1,000,000 and a whole life insurance policy in the amount of $500,000 on Mr. Quist’s life. In the event of disability, Mr. Quist’s salary would be continued for up to five years at 75% of its current level of compensation.

In the event of a sale or merger of the Company and Mr. Quist is not retained in his current position, the Company would be obligated to continue paying Mr. Quist’s current compensation and benefits for seven years following the merger or sale. The employment agreement further provides that Mr. Quist is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 65), (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of twenty years in annual installments in the amount equal to 75% of his then current level of compensation. In the event that Mr. Quist dies prior to receiving all retirement benefits thereunder, the remaining benefits are to be paid to his heirs. The Company expensed $900,000 and $660,000 during the years ended December 31, 2020 and 2019, respectively, to cover the present value of anticipated retirement benefits under the employment agreement. The liability accrued was $6,656,363 and $5,851,670 as of December 31, 2020 and 2019, respectively.

Independent Director Compensation

Independent directors of the Company (but not including directors who are employees) are currently paid a director’s fee of $21,600 per year ($1,800 monthly) by the Company for their services and are reimbursed for their expenses in attending board and committee meetings. An additional fee of $750 is paid to each audit committee member for each audit committee meeting attended. Each independent director is provided with an annual grant of stock options to purchase 1,000 shares of Class A common stock. During 2020 each independent director was granted additional

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stock options to purchase 5,000 shares of Class A common stock. Upon retirement from the board, each independent director will receive “retirement compensation” equal to one month director’s fee for every year of service.

DIRECTOR COMPENSATION

The following table sets forth the compensation of the Company’s non-employee directors for fiscal 2020.

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings	All Other Compensation ($)	Total ($)
John L. Cook (1)	$23,850	--	$  4,138	--	--	--	$27,988
Gilbert A. Fuller (2)	23,850	--	4,138	--	--	--	27,988
Robert G. Hunter, M.D. (3)	21,600	--	4,138	--	--	--	25,738
H. Craig Moody (4)	23,850	--	4,138	--	--	--	27,988
Norman G. Wilbur (5)	23,850	--	4,138	--	--	--	27,988

_______________________

(1)Mr. Cook has options to purchase 52,572 shares of the Company’s Class A common stock. 

(2)Mr. Fuller has options to purchase 52,572 shares of the Company’s Class A common stock. 

(3)Dr. Hunter has options to purchase 71,202 shares of the Company’s Class A common stock. 

(4)Mr. Moody has options to purchase 71,202 shares of the Company’s Class A common stock. 

(5)Mr. Wilbur has options to purchase 37,418 shares of the Company’s Class A common stock.  

Employee 401(k) Retirement Savings Plan

In 1995, the Company’s Board of Directors adopted a 401(k) Retirement Savings Plan. Under the terms of the 401(k) plan, effective as of January 1, 1995, the Company made discretionary employer matching contributions to its employees who choose to participate in the plan. The plan allowed the board to determine the amount of the contribution at the end of each year. During the period from January 1, 1995 to December 31, 2007 the Board had adopted a contribution formula specifying that such discretionary employer matching contributions would equal 50% of the participating employee’s contribution to the plan to purchase the Company’s stock up to a maximum discretionary employee contribution of 1/2 of 1% of participating employees’ compensation, as defined by the plan.

All persons who have completed at least one year’s service with the Company and satisfy other plan requirements are eligible to participate in the 401(k) plan. All Company matching contributions are invested in the Company’s Class A common stock. Also, the Company may contribute at the discretion of the Company’s Board of Directors an Employer Profit Sharing Contribution to the 401(k) plan. The Employer Profit Sharing Contribution is to be divided among three different classes of participants in the plan based upon the participant’s title in the Company. All amounts contributed to the plan are deposited into a trust fund administered by an independent trustee.

Beginning January 1, 2008, the Company elected to be a “Safe Harbor” Plan for its matching 401(k) contributions. The Company will match 100% of up to 3% of an employee’s total annual compensation and 50% of 4% to 5% of an employee’s annual compensation. The match is in shares of the Company’s Class A common stock. The Company’s contribution for 2020 and 2019 was $1,690,568 and $695,560 respectively, under the “Safe Harbor” plan.

Stock Repurchase Plan

On September 7, 2018, the Board of Directors of the Company approved a Stock Repurchase Plan that authorized the repurchase of 300,000 shares of the Company's Class A Common Stock in the open market. The Stock Repurchase Plan was amended on December 4, 2020. The amendment authorized the repurchase of a total of 1,000,000 shares of the Company’s Class A Common Stock in the open market. The repurchased shares of Class A common stock will be held as treasury shares to be used as the Company's employer matching contribution to the Employee 401(k) Retirement Savings Plan.

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Employee Stock Ownership Plan (ESOP)

Effective January 1, 1980, the Company adopted an employee stock ownership plan (the “ESOP Plan”) for the benefit of career employees of the Company and its subsidiaries. Under the ESOP Plan, the Company used discretionary power to make contributions on behalf of all eligible employees into a trust created under the ESOP Plan. Employees became eligible to participate in the ESOP Plan when they attained the age of 19 and completed one year of service (a twelve month period in which the Employee completes at least 1,040 hours of service).

The Company’s contributions under the ESOP Plan were allocated to eligible employees on the same ratio that each eligible employee’s compensation bears to total compensation for all eligible employees during each year. Benefits under the ESOP Plan vested as follows: 20% after the second year of eligible service by an employee and an additional 20% each year thereafter of eligible service until 100% vested.  Benefits under the ESOP Plan will be paid out in one lump sum or in installments in the event the employee becomes disabled, reaches the age of 65, or is terminated by the Company or demonstrates financial hardship.

On November 25, 2019, the Company distributed a “Notice of Intent to Terminate” the ESOP Plan to all current plan participants.  The Company also filed Form 5310 “Application for Determination for Terminating Plan”, with the IRS on December 6, 2019.  Beginning in the 4th quarter of 2020, the Company began to distribute the ESOP Plan assets to participants that had made a distribution election. The Company is awaiting approval of its application from the IRS prior to its final distribution of the ESOP Plan assets to the participants. At December 31, 2020, the ESOP held 231,312 shares of Class A and 118,880 shares of Class C common stock of the Company. The trustees of the trust fund under the ESOP Plan are Scott M. Quist (Chairman), S. Andrew Quist, and Robert G. Hunter, who each serve as a director of the Company.

Non-Qualified Deferred Compensation Plan

In 2001, the Company’s Board of Directors adopted a Non-Qualified Deferred Compensation Plan, and this plan was amended in 2005 and later in 2019. Under the terms of the plan, the Company will provide deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The board has appointed a committee of the Company to be the plan administrator and to determine the employees who are eligible to participate in the plan. The employees who participate may elect to defer a portion of their compensation into the plan. The Company may contribute into the plan at the discretion of the Company’s Board of Directors. The Company did not make any contributions for 2020 and 2019. The investment committees of the Company’s Non-Qualified Deferred Compensation Plan consists of Scott M. Quist, Stephen C. Johnson, and Garrett S. Sill.

NON-QUALIFIED DEFERRED COMPENSATION

The following table sets forth the balances of the non-qualified deferred compensation account of the Named Executive Officers in fiscal 2020 and the aggregate balance of deferred compensation of the Named Executive Officers at December 31, 2020.

	Executive	Registrant	Aggregate	Aggregate	Aggregate
	Contributions	Contributions	Earnings	Withdrawals	Balance
	In Last FY	In Last FY	in last FY	Distributions	at last FYE
Name	($)	($)	($)	($)	($)
Scott M. Quist	--	--	--	--	--
Garrett S. Sill	--	--	--	--	81,471	(1)
Stephen C. Johnson	--	--	--	--	99,457	(2)
S. Andrew Quist	--	--	--	--	--
Jeffrey R. Stephens	--	--	--	--	--

_______________________

(1)Includes 9,757 shares of the Company’s Class A common stock, based on the closing price of $8.35 at December 31, 2020. 

(2)Includes 11,911 shares of the Company’s Class A common stock, based on the closing price of $8.35 at December 31, 2020. 

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2013 Stock Option Plan

On August 24, 2013, the Company adopted the Security National Financial Corporation 2013 Stock Option Plan (the “2013 Plan”), which reserved 450,000 shares of Class A common stock to be made available for issuance thereunder, of which up to 150,000 shares of Class C common stock could be issued in place of up to 150,000 shares of Class A common stock. The 2013 Plan provides for the grant of options and the award or sale of stock to officers, directors, and employees of the Company. Both “incentive stock options”, as defined under Section 422A of the Internal Revenue Code of 1986 and “non-qualified options” may be granted under the 2013 Plan.

On July 1, 2015, the stockholders approved an amendment to the 2013 Plan to authorize an additional 450,000 shares of Class A common stock under the Plan, of which up to 200,000 Class C common stock may be issued in place of up to 200,000 shares of Class A common stock. On June 29, 2017, the stockholders approved an amendment to the 2013 Plan to authorize an additional 500,000 shares of Class A common stock under the Plan, of which up to 250,000 Class C common stock may be issued in place of up to 250,000 shares of Class A common stock. On June 26, 2020, the stockholders approved an amendment to the 2013 Plan to authorize an additional 500,000 shares of Class A common stock under the Plan, of which up to 350,000 Class C common stock may be issued in place of up to 350,000 shares of Class A common stock.

The 2013 Plan is to be administered by the Board of Directors or by a committee designated by the Board. The terms of options granted or stock awards or sales affected under the 2013 Plan are to be determined by the Board of Directors or its committee. No options may be exercised for a term of more than ten years from the date of the grant. Options intended as incentive stock options may be issued only to employees, and must meet certain conditions imposed by the Internal Revenue Code, including a requirement that the option exercise price be no less than the fair market value of the option shares on the date of grant. The 2013 Plan provides that the exercise price for non-qualified options will not be less than at least 50% of the fair market value of the stock subject to such option as of the date of grant of such options, as determined by the Company’s Board of Directors.

The 2013 Plan also provides that if the shares of common stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of common stock as a stock dividend on its outstanding common stock, the number of shares of common stock deliverable upon the exercise of options shall be increased or decreased proportionately, an appropriate adjustments shall be made in the purchase prices to reflect such subdivision, combination or stock dividend. In addition, the number of shares of common stock reserved for purposes of the plan shall be adjusted by the same proportion. No options may be exercised for a term of more than ten years from the date of grant.

On December 4, 2015, the Board of Directors approved a resolution to amend the Company’s 2013 Stock Option Plan to include additional equity incentive awards. These additional incentive awards in the plan consist of Stock Appreciation Rights (SARs), Restricted Stock Units (RSUs) and Performance Share Awards. Stock Appreciation Rights are awards that entitle the recipient to receive cash or stock equal to the excess of the Company’s stock price on the date the SAR is exercised. Restricted Stock Units entitle the recipient to receive RSUs that require the Company on the distribution dates to transfer to the recipient one unrestricted, fully transferable share of stock for each RSU scheduled to be paid out on that date. Performance Share Awards entitle the recipient to receive stock based on the Company meeting certain performance goals.

The 2013 Plan has a term of ten years. The Board of Directors may amend or terminate the 2013 Plan at any time, from time to time, subject to approval of certain modifications to the 2013 Plan by the stockholders of the Company as may be required by law or the 2013 Plan.

2014 Director Stock Option Plan

On May 16, 2014, the Company adopted the 2014 Director Stock Option Plan (the “2014 Director Plan”). The 2014 Director Plan provides for the grant by the Company of options to purchase up to an aggregate of 150,000 shares of Class A common stock for issuance there under. The 2014 Director Plan provides that each member of the Company’s Board of Directors who is not an employee or paid consultant of the Company is automatically eligible to receive options to purchase the Company’s Class A common stock under the plan. The 2014 Director Plan replaces the Company’s 2006 Director Plan, which was terminated on July 2, 2014. On June 26, 2020, the stockholders approved

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an amendment to the 2014 Director Plan to authorize an additional 100,000 shares of Class A common stock under the Plan.

In addition, the 2014 Director Plan provides that beginning on December 7, 2014, and on each anniversary date thereof during the term plan, each outside director shall automatically receive an option to purchase 1,000 shares of Class A common stock. Also, each new outside director who joins the Board after the effective date shall be granted an option to purchase 1,000 shares of Class A common stock upon the date which such person first becomes an outside director and an annual grant of an option to purchase 1,000 shares of Class A common stock on each anniversary date thereof during the term of the 2014 Director Plan. The options granted to outside directors shall vest in four equal quarterly installments over a one year period from the date of grant, until such shares are fully vested. The primary purposes of the 2014 Director Plan are to enhance the Company’s ability to attract and retain well-qualified persons for service as directors and to provide incentives to such directors to continue their association with the Company.

In the event of a merger of the Company with or into another company, or a consolidation, acquisition of stock or assets or other change in control transaction involving the Company, each option granted under the 2014 Director Plan becomes exercisable in full, unless such option is assumed by the successor corporation. In the event the transaction is not approved by a majority of the “Continuing Directors” (as defined in the 2014 Director Plan), each option becomes fully vested and exercisable in full immediately prior to the consummation of such transaction, whether or not assumed by the successor corporation.

Stock Purchase Plan

On September 11, 2015, the Board approved the Security National Financial Corporation Stock Purchase Plan for the mutual benefit of the Company and its stockholders. Under the terms of the Plan, the Company has the option to purchase shares of Class A common stock from its officers and directors who exercise the stock options granted to them under any of the Company’s stock option plans with the proceeds from such purchase to be used to pay the taxes owed by such officers and directors as a result of the exercise of their stock options. Additionally, the officers and directors who exercise their stock options may, in their discretion, request that the Company purchase shares of their Class A common stock with the proceeds from such sale to be used to pay the taxes owed by such officers and directors as a result of the exercise of their stock options.

The Company is authorized under the plan to purchase no more than 60,000 shares of Class A common stock in any calendar year to pay the taxes owed by the officers and directors who exercise their stock options under the Stock Purchase Plan. The Company’s purchase price for the Class A common stock under the Stock Purchase Plan shall be equal to the closing sales price of the Company’s Class A common stock as reported by The Nasdaq National Market on the day that the applicable stock options are exercised by such officers and directors. The Company may only purchase shares of Class A common stock from the officers and directors exercising their stock options under the Stock Purchase Plan during the “Trading Window” as defined in the Company’s Insider Trading Policy and Guidelines.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers, directors and persons who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and periodic changes in ownership of the Company’s Class A and Class C common stock with the Securities and Exchange Commission. Such persons are also required to furnish the Company with copies of all Section 16(a) reports they file.

Based solely on its review of the copies of stock reports received by the Company with respect to fiscal 2020, or written representations from certain reporting persons, the Company believes that its directors, executive officers and greater than 10% beneficial owners complied with all Section 16(a) filing requirements applicable to them, except the timely filing of Form 4 reports disclosing the granting and exercise of stock options.

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Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth security ownership information of the Company’s Class A and Class C common stock as of March 31, 2021, (i) for persons who own beneficially more than 5% of the Company’s outstanding Class A or Class C common stock, (ii) for each director of the Company, and (iii) for all executive officers and directors of the Company as a group. 

	Class A Common Stock		Class C Common Stock		Class A and Class C Common Stock
Name and Address (1)	Amount Beneficially Owned	Percent of Class	Amount Beneficially Owned	Percent of Class	Amount Beneficially Owned	Percent of Class
401(k) Retirement Savings Plan (2)	2,553,413	15.5%	212,058	8.1%	2,765,471	14.5%
Scott M. and Lisa J. Quist Family Trust (3)	423,477	2.6%	1,467,026	55.9%	1,890,503	9.9%
George R. and Shirley C. Quist Partnership, Ltd. (4)	1,068,883	6.5%	746,559	28.5%	1,815,442	9.5%
M3 Funds, LLC (5)	1,427,060	8.7%	-	-	1,427,060	7.5%
Non-Qualified Deferred Compensation Plan (6)	1,288,334	7.8%	-	-	1,288,334	6.7%
Scott M. Quist (7)(8)(9)(10)(11)(12)	433,231	2.6%	281,602	10.0%	714,833	3.7%
Jason G. Overbaugh (13)	269,068	1.6%	115,022	4.2%	384,090	2.0%
S. Andrew Quist (7)(10)(14)	216,711	1.3%	136,034	4.9%	352,745	1.8%
Employee Stock Ownership Plan (ESOP) (15)	189,053	1.1%	73,589	2.8%	262,642	1.4%
Associated Investors (16)	87,214	*	136,174	5.2%	223,388	1.2%
Estate of George R. Quist	130,895	*	83,355	3.2%	214,250	1.1%
Garrett S. Sill (9)(11)(17)	102,064	*	92,931	3.4%	194,995	1.0%
Adam G. Quist (7)(18)	45,546	*	113,944	4.2%	159,490	*
Jeffrey R. Stephens (19)	155,414	*	-	-	155,414	*
Stephen C. Johnson (9)(11)(20)	113,338	*	-	-	113,338	*
H. Craig Moody (21)	84,802	*	-	-	84,802	*
Robert G. Hunter, M.D. (10)(22)	92,560	*	-	-	92,560	*
Gilbert A. Fuller (23)	53,681	*	-	-	53,681	*
John L. Cook (24)	52,572	*	-	-	52,572	*
Norman G. Wilbur (25)	33,268	*	-	-	33,268	*
All directors and executive officers
(12 persons)	1,652,255	9.5%	739,533	22.5%	2,391,788	11.6%

* Less than 1%

(1)Unless otherwise indicated, the address of each listed stockholder is c/o Security National Financial Corporation, 121 West Election Road, Suite 100, Draper, Utah 84020. 

(2)The investment committee of the 401(k) Retirement Savings Plan consists of Scott M. Quist, Stephen C. Johnson and Garrett S. Sill, who exercise shared voting and investment powers with respect to such shares. 

(3)This stock is owned by the Scott M. and Lisa J. Quist Family Trust, of which S. Andrew Quist, Amanda J. Nelson and Adam G. Quist are the trustees and, accordingly, exercise shared voting and investment powers with respect to such shares.  

(4)This stock is owned by the George R. and Shirley C. Quist Partnership, Ltd., of which Scott M. Quist is the managing general partner and, accordingly, exercises sole voting and investment powers with respect to such shares. 

(5)Based solely on the Schedule 13G/A filed on February 12, 2021, Jason A. Stock, Manager of M3 Partners, LP, a Delaware limited partnership, and M3 Funds, LLC, a Delaware limited liability company, General Partner of M3 Partners, LP; Jason A. Stock, Manager of M3 Funds, LLC;  Jason A. Stock, Managing Director of M3F, Inc., a Utah corporation; Jason A. Stock, individually, and William C. Waller, individually, exercise shared voting and investment powers with respect to 1,427,060 shares of the Company’s Class A common stock, or 8.7% of the outstanding shares of the Company’s Class A common stock. The address of all entities and individuals filing the Schedule 13G/A is 10 Exchange Place, Suite 510, Salt Lake City, Utah 84111. 

(6)The investment committee of the Company’s Non-Qualified Deferred Compensation Plan consists of Scott M. Quist, Stephen C. Johnson, and Garrett S. Sill, who exercise shared voting and investment powers with respect to such shares. 

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(7)Does not include 423,477 of Class A common stock and 1,467,026 shares of Class C common stock owned by the Scott M. Quist and Lisa J. Quist Family Trust, of which S. Andrew Quist, Amanda J. Nelson and Adam G. Quist are the trustees and, accordingly, exercise shared voting and investment powers with respect to such shares.  

(8)Mr. Scott Quist is the Company’s Chairman of the Board, President, and Chief Executive Officer. Includes options to purchase 168,097 shares of Class A common stock and 204,735 shares of Class C common stock that are currently exercisable. Mr. Quist’s options to purchase 204,735 shares of Class C common stock may also, at Mr. Quist’s election, consist of options to purchase 204,735 shares of Class A common stock, or any combination thereof. Mr. Quist has elected to purchase Class C common shares with such options to the extent there are sufficient authorized but unissued Class C common shares available for issuance with respect to such options. Otherwise, Mr. Quist will elect to purchase shares of Class A common stock with respect to such options. 

(9)Does not include 2,550,857 shares of Class A common stock and 212,058 shares of Class C common stock owned by the Company’s 401(k) Retirement Savings Plan, of which Scott M. Quist, Stephen C. Johnson and Garrett S. Sill are members of the investment committee and, accordingly, exercise shared voting and investment powers with respect to such shares. 

(10)Does not include 189,053 shares of Class A common stock and 73,589 shares of Class C common stock owned by the Company’s Employee Stock Ownership Plan (ESOP), of which Scott M. Quist, S. Andrew Quist and Robert G. Hunter are the trustees and, accordingly, exercise shared voting and investment powers with respect to such shares. 

(11)Does not include 1,288,334 shares of Class A common stock owned by the Company’s Non-Qualified Deferred Compensation Plan, of which Scott M. Quist, Stephen C. Johnson and Garrett S. Sill are members of the investment committee and, accordingly, exercise shared voting and investment powers with respect to such shares. 

(12)Does not include 87,214 shares of Class A common stock and 136,174 shares of Class C common stock owned by Associated Investors, a Utah general partnership, of which Scott M. Quist is the managing partner and, accordingly, exercises sole voting and investment powers with respect to such shares. 

(13)Mr. Overbaugh is the Company’s Vice President, National Marketing Director of Life Insurance, and a director. Includes options to purchase 78,557 shares of Class A common stock and options to purchase 115,022 shares of Class C common stock that are currently exercisable. The options to purchase 78,557 shares of Class C common stock may also, at Mr. Overbaugh’s election, consist of options to purchase 78,557 shares of Class A common stock, or any combination thereof. Mr. Overbaugh has elected to purchase Class C common shares with such options to the extent there are sufficient authorized but unissued Class C common shares available for issuance with respect to such options. Otherwise, Mr. Overbaugh will elect to purchase shares of Class A common stock with respect to such options. 

(14)Mr. Andrew Quist is the Company’s Vice President, General Counsel, and a director. Includes options to purchase 129,432 shares of Class A common stock and options to purchase 136,034 shares of Class C common stock that are currently exercisable. The options to purchase 136,034 shares of Class C common stock may also, at Mr. Quist’s election, consist of options to purchase 136,034 shares of Class A common stock, or any combination thereof. Mr. Andrew Quist has elected to purchase Class C common shares with such options to the extent there are sufficient authorized but unissued Class C common shares available for issuance with respect to such options. Otherwise, Mr. Quist will elect to purchase shares of Class A common stock with respect to such options. 

(15)The trustees of the Employee Stock Ownership Plan (ESOP) consist of Scott M. Quist, S. Andrew Quist, and Robert G. Hunter who exercise shared voting and investment powers with respect to such shares. 

(16)The managing general partner of Associated Investors is Scott M. Quist, who exercises sole voting and investment powers with respect to such shares. 

(17)Mr. Sill is the Company’s Chief Financial Officer and Treasurer. Includes options to purchase 22,254 shares of Class A common stock and options to purchase 92,931 shares of Class C common stock that are currently exercisable. The options to purchase 92,931 shares of Class C common stock may also, at Mr. Sill’s election, consist of options to purchase 92,931 shares of Class A common stock, or any combination thereof. Mr. Sill has elected to purchase Class C common shares with such options to the extent there are sufficient authorized but unissued Class C common shares available for issuance with respect to such options. Otherwise, Mr. Sill will elect to purchase shares of Class A common stock with respect to such options. 

(18)Mr. Adam Quist is the Vice President – Memorial Services, Assistant Secretary, and General Counsel of the Company. Includes options to purchase 28,289 shares of Class A common stock and options to purchase 113,944 shares of Class C common stock that are currently exercisable. The options to purchase 113,944 shares of Class C common stock may also, at Mr. Quist’s election, consist of options to purchase 113,944  

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shares of Class A common stock, or any combination thereof. Mr. Adam Quist has elected to purchase Class C common shares with such options to the extent there are sufficient authorized but unissued Class C common shares available for issuance with respect to such options. Otherwise, Mr. Quist will elect to purchase shares of Class A common stock with respect to such options.

(19)Mr. Stephens is the Company’s Senior General Counsel and Secretary. Includes options to purchase 60,640 shares of Class A common stock granted to Mr. Stephens that are currently exercisable. 

(20)Mr. Johnson is the Company’s Vice President of Mortgage Operations. Includes options to purchase 73,423 shares of Class A common stock granted to Mr. Johnson that are currently exercisable. 

(21)Mr. Moody is a director of the Company. Includes options to purchase 71,202 shares of Class A common stock granted to Mr. Moody that are currently exercisable. 

(22)Dr. Hunter is a director of the Company. Includes options to purchase 71,202 shares of Class A common stock granted to Dr. Hunter that are currently exercisable. 

(23)Mr. Fuller is a director of the Company. Includes options to purchase 52,572 shares of Class A common stock granted to Mr. Fuller that are currently exercisable. 

(24)Mr. Cook is a director of the Company. Includes options to purchase 52,572 shares of Class A common stock granted to Mr. Cook that are currently exercisable. 

(25)Mr. Wilbur is a director of the Company. Includes options to purchase 30,103 shares of Class A common stock granted to Mr. Wilbur that are currently exercisable. 

The Company’s executive officers and directors, as a group, own beneficially approximately 11.6% of the outstanding shares of the Company’s Class A and Class C common stock.

Item 13. Certain Relationships and Related Transactions and Director Independence

The Company’s Board of Directors has a written procedure, which requires disclosure to the Board of any material interest or any affiliation on the part of any of its officers, directors or employees that is in conflict or may be in conflict with the interests of the Company.

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Item 14. Principal Accounting Fees and Services

The following table summarizes the fees of the Company’s current independent auditors, billed to the Company for each of the last two fiscal years for audit and other services. All of these fees were reviewed and approved by the Audit Committee of the Board of Directors:

Fee Category	2020	2019
Audit Fees (1)	$           1,047,488	$              917,200
Audit-Related Fees (2)	36,000	26,250
Tax Fees (3)	106,010	92,350
All Other Fees (4)	98,865	-
	$           1,288,363	$           1,035,800

_____________

(1)Audit fees consist of aggregate fees billed for professional services rendered for the audit of the Company’s annual financial statements and review of the interim financial statements included in quarterly reports or services that are normally provided by the independent auditor in connection with statutory and regulatory filings for the years ended December 31, 2020 and 2019. 

(2)Audit related fees consist of aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees”. These fees include review of registration statements, and audits of the Company’s ESOP and 401(k) Plans. 

(3)Tax fees consist of aggregate fees billed for professional services for tax compliance, tax advice, and tax planning. 

(4)All other fees consist of aggregate fees billed for products and services by the independent auditors, other than those disclosed above.  

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)(1) Financial Statements

See “Index to Consolidated Financial Statements” under Item 8 above. 

(a)(2)Financial Statement Schedules 

II.Condensed Balance Sheets as of December 31, 2020 and 2019 and Condensed 

Statement of Earnings and Cash Flows for the years ended 2020 and 2019 

IV.Reinsurance 

V.Valuation and Qualifying Accounts 

All other schedules to the consolidated financial statements required by Article 7 of Regulation S-X are not required under the related instructions or are inapplicable and therefore have been omitted.

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(a)(3)Exhibits 

The following Exhibits are filed herewith pursuant to Rule 601 of Regulation S-K or are incorporated by reference to previous filings.

3.1	Amended and Restated Articles of Incorporation (5)
3.2	Amended and Restated Bylaws (8)
4.1	Specimen Class A Stock Certificate (1)
4.2	Specimen Class C Stock Certificate (1)
4.3	Specimen Preferred Stock Certificate and Certificate of Designation of Preferred Stock (1)
10.1	Employee Stock Ownership Plan, as amended and restated (ESOP) and Trust Agreement (1)
10.2	Amended and Restated 2013 Stock Option and Other Equity Incentive Awards Plan (3)
10.3	Amended and Restated 2014 Director Stock Option Plan (12)
10.4	Employment Agreement with Scott M. Quist (2)
10.5	Stock Repurchase Plan (6)
10.6	Asset Purchase Agreement among SN Probst LLC, Probst Family Funerals and Cremations, LLC, Heber Valley Funeral Home, Inc., Joe T. Probst, Clinton Wayne Probst, Calle J. Probst, and Marsha J. Probst (7)
10.7	Coinsurance Agreement between Kilpatrick Life Insurance Company and Security National Life Insurance Company (9)
10.8	Stock Purchase Agreement among Security National Financial Corporation, Kilpatrick Life Insurance Company, and the shareholders of Kilpatrick Life Insurance Company (9)
10.9	Consolidated Statement of Assets Acquired and Liabilities Assumed at December 31, 2019 (10)
14	Code of Business Conduct and Ethics (8)
21	Subsidiaries of the Registrant
23.1	Consent of Eide Bailly LLP (4)
23.2	Consent of Mackey Price & Mecham (4)
31.1	Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.xml	Instance Document
101.xsd	Taxonomy Extension Schema Document
101.cal	Taxonomy Extension Calculation Linkbase Document
101.def	Taxonomy Extension Definition Linkbase Document
101.lab	Taxonomy Extension Label Linkbase Document
101.pre	Taxonomy Extension Presentation Linkbase Document

(1)Incorporated by reference from Registration Statement on Form S-1, as filed on June 29, 1987 

(2)Incorporated by reference from Report on Form 10-Q, as filed on November 13, 2015 

(3)Incorporated by reference from Report on Form 10-Q, as filed on August 15, 2016 

(4)Incorporated by reference from Registration Statement on Form S-8, as filed on September 7, 2016 

(5)Incorporated by reference from Report on Form 10-K, as filed on March 31, 2017 

(6)Incorporated by reference from Report on Form 10-Q, as filed on November 13, 2018 

(7)Incorporated by reference from Report on Form 8-K, as filed on February 28, 2019 

(8)Incorporated by reference from Report on Form 10-Q, as filed on May 15, 2019 

(9)Incorporated by reference from Report on Form 8-K, as filed on November 12, 2019 

(10)Incorporated by reference from Report on Form 8-K/A, as filed on February 26, 2020 

(11)Incorporated by reference from Report on Form 10-Q, as filed on August 14, 2020 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SECURITY NATIONAL FINANCIAL CORPORATION 

Dated: March 31, 2021	By:	/s/ Scott M. Quist
		Scott M. Quist
		Chairman of the Board, President, and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

SIGNATURE	TITLE	DATE
/s/ Scott M. Quist	Chairman of the Board, President,
Scott M. Quist	and Chief Executive Officer
	(Principal Executive Officer)	March 31, 2021
/s/ Garrett S. Sill	Chief Financial Officer and
Garrett S. Sill	Treasurer (Principal Financial
	and Accounting Officer)	March 31, 2021
/s/ Jason G. Overbaugh	Vice President and Director	March 31, 2021
Jason G. Overbaugh
/s/ S. Andrew Quist	Vice President and Director	March 31, 2021
S. Andrew Quist
/s/ John L. Cook	Director	March 31, 2021
John L. Cook
/s/ Gilbert A. Fuller	Director	March 31, 2021
Gilbert A. Fuller
/s/ Robert G. Hunter	Director	March 31, 2021
Robert G. Hunter
/s/ H. Craig Moody	Director	March 31, 2021
H. Craig Moody
/s/ Norman G. Wilbur	Director	March 31, 2021
Norman G. Wilbur

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Schedule II

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Condensed Balance Sheets

	December 31
	2020	2019
Assets
Mortgage loans held for investment	$       2,338,000	$      2,952,000
Accrued investment income	-	192,608
Cash	6,042,663	1,432,830
Investment in subsidiaries (equity method)	253,972,662	188,187,440
Receivable from affiliates	9,016,823	13,190,260
Restricted cash	3,180,382	3,180,382
Other	14,793	2,422
Total assets	$   274,565,323	$  209,137,942

See accompanying notes to condensed financial statements.

137

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Condensed Balance Sheets (Continued)

	December 31
	2020	2019
Liabilities and Stockholders’ Equity Liabilities
Bank and other loans payable:
Current installments	$      1,408,141	$      1,334,798
Long-term	2,482,862	3,903,821
Advances from affiliated companies	39,513	640,774
Other liabilities and accrued expenses	2,135,515	1,847,705
Income taxes	4,512,239	4,700,239
Total liabilities	10,578,270	12,427,337
Stockholders’ Equity
Preferred stock - non-voting - $1.00 par value;   5,000,000 shares authorized; none issued or   outstanding	-	-
Class A common stock $2.00 par value;   20,000,000 shares authorized;   issued 16,595,783 shares in 2020 and   16,107,779 shares in 2019	33,191,566	32,215,558
Class B non-voting common stock-$1.00 par value;   5,000,000 shares authorized; none issued or   outstanding	-	-
Class C convertible common stock, $2.00 par value;   3,000,000 shares authorized; issued 2,679,603   shares in 2020 and 2,500,887 shares in 2019	5,359,206	5,001,774
Additional paid-in capital	50,287,253	46,091,112
Accumulated other comprehensive income, net of taxes	23,243,133	13,726,514
Retained Earnings	153,739,167	101,256,229
Treasury stock at cost - 227,852 Class A shares   and 10,985 Class C shares in 2020; 490,823   Class A shares and -0- Class C shares   in 2019	(1,833,272)	(1,580,582)
Total stockholders’ equity	263,987,053	196,710,605
Total Liabilities and Stockholders’ Equity	$   274,565,323	$   209,137,942

See accompanying notes to condensed financial statements.

138

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Condensed Statements of Earnings

	Years Ended December 31
	2020	2019
Revenue
Net investment income	$         235,761	$         260,022
Fees from affiliates	1,119,172	1,152,480
Other income	522	23,864
Total revenue	1,355,455	1,436,366
Benefits and Expenses:
General and administrative expenses	1,797,872	1,100,010
Interest expense	179,799	68,821
Total benefits and expenses	1,977,671	1,168,831
Earnings before income taxes,   and earnings of subsidiaries	(622,216)	267,535
Income tax benefit	97,217	304,548
Equity in earnings of subsidiaries	56,121,612	10,321,436
Net earnings	$     55,596,613	$     10,893,519

See accompanying notes to condensed financial statements.

139

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Condensed Statements of Cash Flow

	Years Ended December 31
	2020	2019
Cash flows from operating activities:
Net earnings	$     55,596,613	$     10,893,519
Adjustments to reconcile net earnings to net cash provided by operating activities:
Undistributed earnings of affiliates	56,121,612	10,321,436
Provision for deferred and other income taxes	(188,000)	(1,508,011)
Stock based compensation expense	358,878	256,996
Benefit plans funded with treasury stock	3,939,948	695,560
Change in assets and liabilities:
Other assets	(12,371)	(2,422)
Other liabilities	287,809	(44,558)
Net cash provided by operating activities	116,104,489	20,612,520
	-	-
Cash flows from investing activities:
Investment in subsidiaries	(112,390,215)	(18,759,314)
Mortgage loans held for investment made	-	(2,593,000)
Payments received for mortgage loans held for investment	614,000	1,820,000
Net cash used in investing activities	(111,776,215)	(19,532,314)
Cash flows from financing activities:
Advances to affiliates	3,764,784	(8,694,702)
Purchase of treasury stock	(2,967,761)	(1,539,888)
Proceeds from stock options exercised	832,152	863,910
Repayment of bank loans	(1,347,616)	(579,286)
Proceeds from borrowing on bank loans	-	4,000,000
Net cash provided by (used in) financing activities	281,559	(5,949,966)
Net change in cash, cash equivalents, restricted cash and   restricted cash equivalents	4,609,833	(4,869,760)
Cash, cash equivalents, restricted cash and restricted cash   equivalents at beginning of year	4,613,212	9,482,972
Cash, cash equivalents, restricted cash and restricted   cash equivalents at end of year	$       9,223,045	$       4,613,212

See accompanying notes to condensed financial statements.

140

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Notes to Condensed Financial Statements

1)Bank and Other Loans Payable 

	December 31
	2019	2019
4.27% fixed note payable in monthly installments of $53,881 including     principal and interest, collateralized by shares of Security National     Life Insurance Company stock, due December 2021.	$     633,890	$  1,238,619
Prime rate note payable in monthly installements of $75,108 including   principal and interest, collateralized by shares of Security National   Life Insurance Company stock, due December 2024	3,257,113	4,000,000
Total bank and other loans	3,891,003	5,238,619
Less current installments	1,408,141	1,334,798
Bank and other loans, excluding current installments	$  2,482,862	$  3,903,821

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75%, secured by the capital stock of Security National Life and maturing September 30, 2021, renewable annually. At December 31, 2020, the Company was contingently liable under a standby letter of credit aggregating $348,183, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company's captive insurance program and was contingently liable under standby letters of credit aggregating $1,585,063, to be used as collateral for residential subdivision land developments. The standby letters of credit will draw on the line of credit if necessary. The Company does not expect any material losses to result from the issuance of the standby letters of credit. As of December 31, 2020, there were no amounts outstanding under the revolving line-of-credit.

The following tabulation shows the combined maturities of bank and other loans payable:

2021	$ 1,408,141
2022	799,648
2023	825,877
2024	857,337
2025	-
Thereafter	-
Total	$ 3,891,003

141

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Notes to Condensed Financial Statements

2)     Advances from Affiliated Companies

	December 31
	2020	2019
Non-interest bearing advances from affiliates:
Cemetery and Mortuary subsidiary	$               -	$     638,418
Life insurance subsidiaries	39,513	2,356
	$       39,513	$     640,774

3) Dividends and Capital Contributions 

In 2020 and 2019, SecurityNational Mortgage Company paid the Company cash dividends of $5,894,018 and $1,199,865, respectively.

In 2020, the Company made capital contributions to its subsidiaries in the amounts of $1,371,958 to Memorial Estates, Inc. and $500,000 to C&J Financial, LLC. In 2019, the Company made capital contributions to its subsidiaries in the amounts of $2,983,493 to Memorial Estates, Inc., $37,430 to Memorial Mortuary, Inc., $160,799 to Greer Wilson Funeral Home, Inc., $150,000 to Beta Capital Corp., $550,000 to C&J Financial, LLC and $4,000,000 to Security National Life. 

142

Schedule IV

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Reinsurance

					Percentage
		Ceded to	Assumed		of Amount
	Direct	Other	from Other	Net	Assumed
	Amount	Companies	Companies	Amount	to Net
2020
Life Insurance in force ($000)	$  2,795,019	$   377,138	$     95,772	$  2,513,653		3.8%
Premiums:
Life Insurance	$ 94,558,587	$ 2,275,654	$    441,997	$ 92,724,930		0.5%
Accident and Health Insurance	295,675	-	12	295,687		0.0%
Total premiums	$ 94,854,262	$ 2,275,654	$    442,009	$ 93,020,617		0.5%
2019
Life Insurance in force ($000)	$  2,778,103	$   465,460	$     99,299	$  2,411,942		4.1%
Premiums:
Life Insurance	$ 81,825,194	$   547,762	$    472,886	$ 81,750,318		0.6%
Accident and Health Insurance	110,282	-	10	110,292		0.0%
Total premiums	$ 81,935,476	$   547,762	$    472,896	$ 81,860,610		0.6%

143

Schedule V

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Valuation and Qualifying Accounts

		Additions	Deductions
	Balance at	Charged to	Disposals		Balance
	Beginning	Costs and	and		at End of
	of Year	Expenses	Write-offs	Reclassifications	Year
For the Year Ended December 31, 2020
Accumulated depreciation on real estate
held for investment	$     12,788,739	$    3,160,428	$    (1,237,500)	$            (910,694)	$     13,800,973
Allowance for losses on mortgage loans
held for investment	1,453,037	552,090	-	-	2,005,127
Accumulated depreciation
on property and equipment	19,518,891	2,078,738	(2,418,490)	-	19,179,139
Allowance for doubtful accounts
on receivables	1,724,156	142,946	(181,720)	-	1,685,382
Allowance for doubtful accounts
on other investments	1,448,026	882,334	(684,885)	-	1,645,475
For the Year Ended December 31, 2019
Accumulated depreciation on real estate
held for investment	$     16,739,578	$    3,472,289	$    (2,093,633)	$         (5,329,495)	$     12,788,739
Allowance for losses on mortgage loans
held for investment	1,347,972	137,757	(32,692)	-	1,453,037
Accumulated depreciation
on property and equipment	17,496,601	1,711,369	(69,878)	380,799	19,518,891
Allowance for doubtful accounts
on receivables	1,519,842	267,374	(63,060)	-	1,724,156
Allowance for doubtful accounts
on other investments	1,092,528	797,557	(442,059)	-	1,448,026

144

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Year Ended December 31, 2020

SECURITY NATIONAL FINANCIAL CORPORATION

Commission File No. 0-9341

E X H I B I T S

Exhibit Index

Exhibit No.	Document Name
21	Subsidiaries of the Registrant
31.1	Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.xml	Instance Document
101.xsd	Taxonomy Extension Schema Document
101.cal	Taxonomy Extension Calculation Linkbase Document
101.def	Taxonomy Extension Definition Linkbase Document
101.lab	Taxonomy Extension Label Linkbase Document
101.pre	Taxonomy Extension Presentation Linkbase Document

145

EX-21

EXHIBIT 21

Subsidiaries of Security National

Financial Corporation

as of March 31, 2021

Life Insurance Segment

Security National Life Insurance Company

Reppond Holding Company

First Guaranty Insurance Company

Kilpatrick Life Insurance Company

Bluebonnet Properties, LLC

Kilpatrick Financial, Inc.

Memorial Insurance Company of America

Southern Security Life Insurance Company, Inc.

Trans-Western Life Insurance Company

SN Farmington LLC

5300 Development LLC

Ascension 433 LLC

SN Diamond LLC

Security National Real Estate Services, Inc. also dba Security National Commercial Capital

Marketing Source Center, Inc. dba Security National Travel Services

SNFC Subsidiary, LLC

American Funeral Financial, LLC

FFC Acquisition Co., LLC dba Funeral Funding Center

Canadian Funeral Financial, LLC

Mortician's Choice, LLC

C & J Financial, LLC

Beta Capital Corp.

Beneficiary Advance LLC

SNA-Venture LLC

SNA-VR LLC

SNA-AM LLC

SNA-GV LLC

SNA-MM LLC

SNA-RP LLC

SNA-SP LLC

SNA-SR LLC

SNA-WC LLC

SNA-MB LLC

SNA-AS LLC

SNA-SE LLC

SNA-TC LLC

SNA-ST LLC

SNA-SW LLC

SNA-MP LLC

SNA-TR LLC

SNA-CV LLC

SNA-MV LLC

SNA-DM LLC

SNA-WF LLC

Mortgage Segment

SecurityNational Mortgage Company

EverLEND Mortgage Company

SN Sunset LLC

Cemetery/Mortuary Segment

California Memorial Estates, Inc.

Paradise Chapel Funeral Home

Holladay Memorial Park, Inc.

Cottonwood Mortuary, Inc.

Deseret Memorial, Inc.

Holladay Cottonwood Memorial Foundation

Memorial Estates, Inc.

Memorial Mortuary, Inc.

Affordable Funerals and Cremations of America, Inc.

SN Probst LLC

SN Silver Creek LLC

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. § 1350,

AS REQUIRED BY

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott M. Quist, certify that:

1. I have reviewed this annual report on Form 10-K of Security National Financial Corporation.

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period covered in which this report is being prepared; 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date: March 31, 2021

By:	/s/ Scott M. Quist
	Scott M. Quist
	Chairman of the Board, President, and
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. § 1350,

AS REQUIRED BY

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Garrett S. Sill, certify that:

1. I have reviewed this annual report on Form 10-K of Security National Financial Corporation.

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period covered in which this report is being prepared; 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date: March 31, 2021

By:	/s/ Garrett S. Sill
	Garrett S. Sill
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. § 1350,

AS REQUIRED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Security National Financial Corporation (the “Company”) on Form 10-K for the period ending December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott M. Quist, Chairman of the Board, President, and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. 

By:	/s/ Scott M. Quist
	Scott M. Quist
	Chairman of the Board, President,
	and Chief Executive Officer
	(Principal Executive Officer)

March 31, 2021

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. § 1350,

AS REQUIRED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Security National Financial Corporation (the “Company”) on Form 10-K for the period ending December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Garrett S. Sill, Vice President, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. 

By:	/s/ Garrett S. Sill
	Garrett S. Sill
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

March 31, 2021

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2020	Mar. 23, 2021	Jun. 30, 2020
Registrant CIK	0000318673
Fiscal Year End	--12-31
Registrant Name	Security National Financial Corporation
SEC Form	10-K
Period End date	Dec. 31, 2020
Tax Identification Number (TIN)	87-0345941
Entity Public Float			$ 50,000,000
Filer Category	Non-accelerated Filer
Current with reporting	Yes
Interactive Data Current	Yes
Entity Well Known Seasoned Issuer	No
Entity Voluntary Filers	No
Shell Company	false
Small Business	true
Emerging Growth Company	false
Entity Incorporation, State or Country Code	UT
Entity File Number	000-09341
Entity Address, Address Line One	121 West Election Road
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Draper
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84020
City Area Code	(801)
Local Phone Number	264-1060
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Document Annual Report	true
Document Transition Report	false
Common Class A
Number of common stock shares outstanding		16,621,147
Common Class C
Number of common stock shares outstanding		2,679,603

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Investments:
Fixed maturity securities, available for sale, at estimated fair value	$ 294,656,679	$ 355,977,820
Equity securities at estimated fair value	11,324,239	7,271,165
Mortgage loans held for investment (net of allowances for loan losses of $2,005,127 and $1,453,037 for 2020 and 2019)	249,343,936	236,694,546
Real estate held for investment (net of accumulated depreciation of $13,800,973 and $12,788,739 for 2020 and 2019)	131,684,453	102,756,946
Real estate held for sale	7,878,807	14,097,627
Other investments and policy loans (net of allowances for doubtful accounts of $1,645,475 and $1,448,026 for 2020 and 2019)	73,696,661	60,245,269
Accrued investment income	5,360,523	4,833,232
Total investments	773,945,298	781,876,605
Cash and cash equivalents	106,219,429	127,754,719
Loans held for sale at estimated fair value	422,772,418	213,457,632
Receivables (net of allowances for doubtful accounts of $1,685,382 and $1,724,156 for 2020 and 2019)	10,899,207	9,236,330
Restricted assets (including $3,989,415 and $2,985,347 for 2020 and 2019 at estimated fair value)	16,150,036	13,935,317
Cemetery perpetual care trust investments (including $2,810,070 and $2,581,124 for 2020 and 2019 at estimated fair value)	6,413,167	4,411,864
Receivable from reinsurers	15,569,156	15,747,768
Cemetery land and improvements	8,761,436	9,519,950
Deferred plicy and pre-need contract acquisition costs	100,075,276	94,701,920
Mortgage servicing rights, net	35,210,516	17,155,529
Property and equipment, net	12,473,345	14,600,394
Value of business acquired	8,955,249	9,876,647
Goodwill	3,519,588	3,519,588
Other	27,976,357	18,649,812
Total Assets	1,548,940,478	1,334,444,075
Liabilities
Future policy benefits and unpaid claims	844,790,087	825,600,918
Unearned premium reserve	3,328,623	3,621,697
Bank and other loans payable	297,824,368	217,572,612
Deferred pre-need cemetery and mortuary contract revenues	13,080,179	12,607,978
Cemetery Perpetual Care Trust Obligation	4,087,704	3,933,719
Accounts payable	8,932,683	5,056,983
Other liabilities and accrued expenses	87,650,981	50,652,591
Income Taxes	25,258,800	18,686,972
Total liabilities	1,284,953,425	1,137,733,470
Stockholders' Equity
Preferred stock - non-voting-$1.00 par value; 5,000,000 shares authorized; none issued or outstanding	0	0
Additional paid-in capital	50,287,253	46,091,112
Accumulated other comprehensive income, net of taxes	23,243,133	13,726,514
Retained earnings	153,739,167	101,256,229
Treasury stock, at cost - 227,852 Class A shares and 10,985 Class C shares in 2020; 490,823 Class A shares and -0- Class C shares in 2019	(1,833,272)	(1,580,582)
Total stockholders' equity	263,987,053	196,710,605
Total Liabilities and Stockholders' Equity	1,548,940,478	1,334,444,075
Common Class A
Stockholders' Equity
Common Stock, Value, Issued	33,191,566	32,215,558
Common Class B
Stockholders' Equity
Common Stock, Value, Issued	0	0
Common Class C
Stockholders' Equity
Common Stock, Value, Issued	$ 5,359,206	$ 5,001,774

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Allowance for Loan and Lease Losses, Real Estate	$ 2,005,127	$ 1,453,037
Real Estate Investment Property, Accumulated Depreciation	13,800,973	12,788,739
Allowance for Doubtful Accounts, Premiums and Other Receivables	1,645,475	1,448,026
Accounts Receivable, Allowance for Credit Loss	1,685,382	1,724,156
Aggregate Fair Value, Restricted Assets	3,989,415	2,985,347
Aggregate Fair Value, Cemetary Perpetual Care Trust Investments	$ 2,810,070	$ 2,581,124
Preferred Stock, Par or Stated Value Per Share	$ 1.00	$ 1.00
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Class A
Common Stock, Par or Stated Value Per Share	$ 2.00	$ 2.00
Common Stock, Shares Authorized	20,000,000	20,000,000
Common Stock, Shares, Issued	16,595,783	16,107,779
Common Stock, Shares, Outstanding	0	0
Common Class B
Common Stock, Par or Stated Value Per Share	$ 1.00	$ 1.00
Common Stock, Shares Authorized	5,000,000	5,000,000
Common Stock, Shares, Issued	0	0
Common Stock, Shares, Outstanding	0	0
Common Class C
Common Stock, Par or Stated Value Per Share	$ 2.00	$ 2.00
Common Stock, Shares Authorized	3,000,000	3,000,000
Common Stock, Shares, Issued	2,679,603	2,500,887
Common Stock, Shares, Outstanding	0	0
Treasury Class A
Treasury Stock, Shares	227,852	490,823
Treasury Class C
Treasury Stock, Shares	10,985	0

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CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Revenues:
Mortgage fee income	$ 298,933,110	$ 131,976,082
Insurance premiums and other considerations	93,020,617	81,860,610
Net investment income	56,329,803	43,019,473
Net mortuary and cemetery sales	20,307,435	15,296,235
Gains on investments and other assets	1,925,850	728,367
Other than temporary impairments on investments	(370,975)	0
Other	11,317,482	10,180,163
Total revenues	481,463,322	283,060,930
Benefits and expenses:
Death benefits	59,040,130	41,591,057
Surrenders and other policy benefits	3,801,230	3,320,748
Increase in future policy benefits	23,568,650	23,568,497
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	14,307,425	14,634,577
Selling, general and administrative expenses:
Commissions	124,426,297	56,762,891
Personnel	84,989,971	64,221,270
Advertising	5,380,896	4,784,558
Rent and rent related	6,873,561	7,055,456
Depreciation on property and equipment	2,078,738	1,711,369
Provision for loan loss reserve	16,506,030	0
Costs related to funding mortgage loans	9,877,700	6,278,954
Other	47,331,102	34,922,761
Interest expense	8,578,810	7,386,688
Cost of goods and services sold - cemeteries and mortuaries	3,252,655	2,878,169
Total benefits and expenses	410,013,195	269,116,995
Earnings before income taxes	71,450,127	13,943,935
Income tax expense	(15,853,514)	(3,050,416)
Net earnings	$ 55,596,613	$ 10,893,519
Net earnings per Class A Equivalent common share	$ 2.95	$ 0.59
Net earnings per Class A Equivalent common share-assuming dilution	$ 2.88	$ 0.58
Weighted-average Class A equivalent common share outstanding	18,831,991	18,562,056
Weighted-average Class A equivalent common shares outstanding-assuming dilution	19,275,251	18,689,602

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Net earnings	$ 55,596,613	$ 10,893,519
Other comprehensive income:
Unrealized gains on fixed maturity securities available for sale	12,013,692	17,315,770
Unrealized gains on restricted assets	41,225	35,550
Unrealized gains (losses) on cemetery perpetual care trust investments	(6,817)	29,904
Foreign currency translation adjustments	(46)	972
Other comprehensive income, before income tax	12,048,054	17,382,196
Income tax benefit (expense)	(2,531,435)	(3,652,859)
Other comprehensive income, net of income tax	9,516,619	13,729,337
Comprehensive income	$ 65,113,232	$ 24,622,856

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Class A Common Stock	Class C Common Stock	Additional Paid-In Capital	Other Comprehensive Income / Loss	Retained Earnings	Treasury Stock	Total
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2018	$ 30,609,596	$ 4,387,286	$ 41,821,778	$ (2,823)	$ 95,201,732	$ (206,396)	$ 171,811,173
Net earnings					10,893,519		10,893,519
Other comprehensive income				13,729,337			13,729,337
Stock based compensation expense			256,996				256,996
Exercise of stock options	65,034	382,886	415,990				863,910
Sale of treasury stock			529,858			165,702	695,560
Purchase of treasury stock						(1,539,888)	1,539,888
Stock dividends	1,534,356	238,174	3,066,490		(4,839,022)		(2)
Conversion Class C to Class A	6,572	(6,572)
Stockholders' Equity Attributable to Parent, Ending Balance at Dec. 31, 2019	32,215,558	5,001,774	46,091,112	13,726,514	101,256,229	(1,580,582)	196,710,605
Net earnings					55,596,613		55,596,613
Other comprehensive income				9,516,619			9,516,619
Stock based compensation expense			358,878				358,878
Exercise of stock options	137,940	261,640	432,572				832,152
Sale of treasury stock			1,224,877			2,715,071	3,939,948
Purchase of treasury stock						(2,967,761)	2,967,761
Stock dividends	810,420	123,440	2,179,814		(3,113,675)		(1)
Conversion Class C to Class A	27,648	(27,648)
Stockholders' Equity Attributable to Parent, Ending Balance at Dec. 31, 2020	$ 33,191,566	$ 5,359,206	$ 50,287,253	$ 23,243,133	$ 153,739,167	$ (1,833,272)	$ 263,987,053

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net earnings	$ 55,596,613	$ 10,893,519
Adjustments to reconcile net earnings to net cash used in operating activities:
Gains on investments and other assets	(1,925,850)	(728,367)
Other than temporary impairments on investments	370,975	0
Depreciation	5,447,363	5,183,658
Provision for loan losses and doubtful accounts	1,577,370	1,202,688
Net amortization of deferred fees and costs, premiums and discounts	(1,227,773)	(887,605)
Provision for deferred income taxes	2,854,669	(1,857,897)
Policy and pre-need acquisition costs deferred	(18,909,921)	(19,176,531)
Policy and pre-need acquisition costs amortized	13,520,600	13,787,037
Value of business acquired amortized	786,825	847,540
Mortgage servicing rights, additions	(29,896,465)	(4,194,502)
Amortization of mortgage servicing rights	11,841,478	7,055,795
Stock based compensation expense	358,878	256,996
Benefit plans funded with treasury stock	3,939,948	695,560
Net change in fair value of loans held for sale	(10,413,492)	(2,498,097)
Originations of loans held for sale	(5,627,013,749)	(2,606,839,175)
Proceeds from sales of loans held for sale	5,600,045,285	2,580,875,055
Net gains on sales of loans held for sale	(188,893,379)	(80,666,413)
Change in assets and liabilities:
Land and improvements held for sale	758,514	358,477
Future policy benefits and unpaid claims	25,804,740	18,394,928
Other operating assets and liabilities	25,750,164	1,695,259
Net cash used in operating activities	(129,627,207)	(75,602,075)
Cash flows from investing activities:
Purchases of fixed maturity securities	(58,493,147)	(110,601,438)
Sales, calls and maturities of fixed maturity securities	131,269,730	26,624,182
Purchases of equity securities	(6,991,832)	(3,264,028)
Sales of equity securities	3,902,835	2,639,729
Net changes in restricted assets	(1,954,437)	(1,254,991)
Net changes in perpetual care trusts	(2,755,856)	299,897
Mortgage loans held for investment, other investments and policy loans made	(682,170,126)	(572,171,590)
Payments received for mortgage loans held for investment, other investments and policy loans	672,544,708	556,352,676
Purchase of property and equipment	(1,630,734)	(1,839,293)
Sale of property and equipment	194,955	54,496
Purchases of real estate	(40,190,471)	(8,572,556)
Sales of real estate	22,418,816	11,614,927
Cash received for reinsurance assumed	0	158,358,594
Cash paid for purchase of subsidiaries, net of cash acquired	0	(20,141,074)
Net cash provided by investing activities	36,144,441	38,099,531
Cash flows from financing activities:
Investment contract receipts	11,511,118	12,141,627
Investment contract withdrawals	(18,235,107)	(16,911,841)
Proceeds from stock options exercised	832,152	863,910
Purchase of treasury stock	(2,967,761)	(1,539,888)
Repayment of bank loans	(174,865,813)	(236,790,722)
Proceeds from bank loans	164,586,365	196,610,127
Net change in warehouse line borrowings for loans held for sale	90,351,225	69,928,331
Net cash provided by financing activities	71,212,179	24,301,544
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	(22,270,587)	(13,201,000)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	137,735,673	150,936,673
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	115,465,086	137,735,673
Cash paid during the year for:
Interest (net of amount capitalized)	8,385,270	7,284,078
Income taxes	11,813,120	4,861,318
Non Cash Investing and Financing Activities:
Transfer of loans held for sale to mortgage loans held for investment	16,960,549	31,881,851
Accrued real estate construction costs and retainage	6,365,534	590,256
Right-of-use assets obtained in exchange for operating lease liabilities	5,631,193	16,544,406
Mortgage loans held for investment foreclosed into real estate held for investment	686,124	1,704,015
Right-of-use assets obtained in exchange for finance lease liabilities	8,494	252,763
Transfer of real estate held for investment to property and equipment	0	3,261,259
Transfer of property and equipment to real estate held for investment	1,516,700	0
Mortgage loans held for investment foreclosed into receivables	$ 0	$ 155,347

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Cash and cash equivalents	$ 106,219,429	$ 127,754,719
Restricted assets	8,842,744	8,674,214
Cemetery perpetual care trust investments	402,913	1,306,740
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$ 115,465,086	$ 137,735,673

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1) Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

1) Significant Accounting Policies

1)        Significant Accounting Policies

General Overview of Business

Security National Financial Corporation and its wholly owned subsidiaries (the “Company”) operate in three reportable business segments: life insurance, cemetery and mortuary, and mortgages. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products and accident and health insurance marketed primarily in the Intermountain West, California and eleven southern states. The cemetery and mortuary segment of the Company consists of eight mortuaries and five cemeteries in Utah and one cemetery in California. The mortgage segment is an approved government and conventional lender that originates and underwrites residential and commercial loans for new construction, existing homes and real estate projects primarily in Florida, Nevada, Texas, and Utah.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP).

Principles of Consolidation

These consolidated financial statements include the financial statements of the Company and its majority owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

Management of the Company has made a number of estimates and assumptions related to the reported amounts of assets and liabilities, reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with GAAP. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative assets and liabilities; those used in determining deferred acquisition costs and the value of business acquired; those used in determining the value of mortgage loans foreclosed to real estate held for investment; those used in determining the liability for future policy benefits; those used in determining the value of mortgage servicing rights; those used in determining allowances for loan losses for mortgage loans held for investment; those used in determining loan loss reserve; and those used in determining deferred tax assets and liabilities. Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects.

Investments

The Company’s management determines the appropriate classifications of investments in fixed maturity securities and equity securities at the acquisition date and re-evaluates the classifications at each balance sheet date.

Fixed maturity securities available for sale are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded in accumulated other comprehensive income. On December 31, 2019, the Company changed the classification of its bond and preferred stock investments to available for sale from held to maturity. As a result, securities available for sale are carried at estimated fair value.

Equity securities are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded through net earnings.

Mortgage loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, net discounts, charge-offs and the related allowance for loan losses. Interest income is included in net investment income on the consolidated statements of earnings and is recognized when earned. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans. Origination fees are included in net investment income on the consolidated statements of earnings. Mortgage loans are secured by the underlying property and require an appraisal at the time of underwriting and funding. Generally, the Company will fund a loan not to exceed 80% of the loan’s collateral fair market value. Amounts over 80% will require additional collateral or mortgage insurance by an approved third-party insurer.

Real estate held for investment is carried at cost, less accumulated depreciation provided on a straight-line basis over the estimated useful lives of the properties, or is adjusted to a new basis for impairment in value, if any. Included are foreclosed properties which the Company intends to hold for investment purposes. These properties are recorded at the lower of cost or fair value upon foreclosure. Also, included are residential subdivision land developments which are carried at cost.

Real estate held for sale is carried at lower of cost or fair value. Depreciation is not recognized on real estate classified as held for sale.

Other investments and policy loans are carried at the aggregate unpaid balances, less allowances for losses.

Gains and losses on investments (except for equity securities carried at fair value through net earnings) arise when investments are sold (as determined on a specific identification basis) or are other than temporarily impaired. If in management’s judgment a decline in the value of an investment below cost is other than temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in judging whether an impairment is other than temporary include: the financial condition, business prospects and credit worthiness of the issuer, the length of time that fair value has been less than cost, the relative amount of the decline, and the Company’s ability and intent to hold the investment until the fair value recovers, which is not assured.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Loans Held for Sale

Accounting Standards Codification (“ASC”) No. 825, “Financial Instruments”, allows for the option to report certain financial assets and liabilities at fair value initially and at subsequent measurement dates with changes in fair value included in earnings. The option may be applied instrument by instrument, but it is irrevocable. The Company elected the fair value option for loans held for sale. The Company believes the fair value option most closely aligns the timing of the recognition of gains and costs. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Electing fair value also reduces certain timing differences and better matches changes in the fair value of these assets with changes in the fair value of the related derivatives used for these assets. See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

Mortgage Fee Income

Mortgage fee income consists of origination fees, processing fees, interest income and certain other income related to the origination of mortgage loans held for sale. All revenues and costs are recognized when the mortgage loan is funded and any changes in fair value are shown as a component of mortgage fee income.  See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

The Company, through its mortgage subsidiaries, sells mortgage loans to third-party investors without recourse unless defects are identified in the representations and warranties made at loan sale. It may be required, however, to repurchase a loan or pay a fee instead of repurchase under certain events, which include the following:

· Failure to deliver original documents specified by the investor,

· The existence of misrepresentation or fraud in the origination of the loan,

· The loan becomes delinquent due to nonpayment during the first several months after it is sold,

· Early pay-off of a loan, as defined by the agreements,

· Excessive time to settle a loan,

· Investor declines purchase, and

· Discontinued product and expired commitment.

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company.

It is the Company's policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month time period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

· Research reasons for rejection,

· Provide additional documents,

· Request investor exceptions,

· Appeal rejection decision to purchase committee, and

· Commit to secondary investors.

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six-month time period, the loans are repurchased and transferred to the long-term investment portfolio at the lower of cost or fair value and previously recorded mortgage fee income that was to be received from a third-party investor is written off against the loan loss reserve.

Determining Lower of Cost or Fair Value

Cost for loans held for sale is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Fair value is often difficult to determine, but is based on the following:

· For loans that are committed, the Company uses the commitment price.

· For loans that are non-committed that have an active market, the Company uses the market price.

· For loans that are non-committed where there is no market but there is a similar product, the Company uses the market value for the similar product.

· For loans that are non-committed where no active market exists, the Company determines that the unpaid principal balance best approximates the market value, after considering the fair value of the underlying real estate collateral, estimated future cash flows, and the loan interest rate.

The appraised value of the real estate underlying the original mortgage loan adds support to the Company’s determination of fair value because if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan, thus minimizing credit losses.

The majority of loans originated are sold to third-party investors. The amounts expected to be sold to investors are shown on the consolidated balance sheets as loans held for sale.

Loan Loss Reserve

The loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on loans sold. The Company may be required to reimburse third-party investors for costs associated with early payoff of loans within six months of origination of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale relating to any guarantee or recourse provisions. The Company accrues a monthly allowance for indemnification losses to investors based on total production. This estimate is based on the Company’s historical experience and is included as a component of mortgage fee income. Subsequent updates to the recorded liability from changes in assumptions are recorded in selling, general and administrative expenses as a component of provision for loan loss reserve. The estimated liability for indemnification losses is included in other liabilities and accrued expenses.

The loan loss reserve analysis involves mortgage loans that have been sold to third-party investors, which were believed to have met investor underwriting guidelines at the time of sale, where the Company has received a demand from the investor. There are generally three types of demands: make whole, repurchase, or indemnification. These types of demands are further described as follows:

Make whole demand – A make whole demand occurs when an investor forecloses on a property and then sells the property. The make whole amount is calculated as the difference between the original unpaid principal balance, payments received, accrued interest and fees, less the sale proceeds.

Repurchase demand – A repurchase demand usually occurs when there is a significant payment default, error in underwriting or detected loan fraud.

Indemnification demand – On certain loans the Company has negotiated a set fee that is to be paid in lieu of repurchase. The fee varies by investor and by loan product type.

The Company believes the allowance for loan losses and the loan loss reserve represent probable loan losses incurred as of the balance sheet date.

Additional information related to the Loan Loss Reserve is included in Note 3.

Restricted Assets

Restricted assets are assets held in a trust account for future mortuary services and merchandise and consist of cash and cash equivalents; participations in mortgage loans held for investment with Security National Life Insurance Company (“Security National Life”); mutual funds carried at estimated fair value; equity securities carried at estimated fair value; and a surplus note with Security National Life (which is eliminated in consolidation). Restricted assets also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company funded its medical benefit safe-harbor limit based on the qualified direct costs, and has included this amount as a component of restricted cash.

Cemetery Perpetual Care Trust Investments

Cemetery endowment care trusts have been set up for four of the six cemeteries owned by the Company. Under endowment care arrangements a portion of the price for each lot sold is withheld and invested in a portfolio of investments similar to those described in the prior paragraph. The earnings stream from the investments is designed to fund future maintenance and upkeep of the cemetery.

Cemetery Land and Improvements

The development of a cemetery involves not only the initial acquisition of raw land but also the installation of roads, water lines, landscaping and other costs to establish a marketable cemetery lot. The costs of developing the cemetery are shown as an asset on the balance sheet. The amount on the balance sheet is reduced by the total cost assigned to the development of a particular lot when the criterion for recognizing a sale of that lot is met.

Deferred Policy Acquisition Costs and Value of Business Acquired

Commissions and other costs, net of commission and expense allowances for reinsurance ceded, that vary with and are primarily related to the production of new insurance business have been deferred. Deferred policy acquisition costs (“DAC”) for traditional life insurance are amortized over the premium paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For interest-sensitive insurance products, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges, investment, mortality and expense margins. This amortization is adjusted when estimates of current or future gross profits to be realized from a group of products are reevaluated. Deferred acquisition costs are written off when policies lapse or are surrendered.

When accounting for DAC, the Company considers internal replacements of insurance and investment contracts. An internal replacement is a modification in product benefits, features, rights or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to contract, or by the election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract are accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced contract are written-off. Modifications that result in a contract that is substantially unchanged from the replaced contract are accounted for as a continuation of the replaced contract.

Value of business acquired is the present value of estimated future profits of the acquired business and is amortized similar to deferred policy acquisition costs.

Mortgage Servicing Rights

Mortgage Servicing Rights (“MSR”) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company is obligated to retain and provide loan servicing functions on loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of real estate owned and property dispositions.

The total residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans. The value of MSRs is derived from the net cash flows associated with the servicing contracts. The Company receives a servicing fee of generally about 0.250% annually on the remaining outstanding principal balances of the loans. Based on the result of the cash flow analysis, an asset or liability is recorded for mortgage servicing rights. The servicing fees are collected from the monthly payments made by the mortgagors. The Company generally receives other remuneration including rights to various mortgagor-contracted fees such as late charges, and collateral reconveyance charges and the Company is generally entitled to retain the interest earned on funds held pending remittance of mortgagor principal, interest, tax and insurance payments. Contractual servicing fees and late fees are included in other revenues on the consolidated statements of earnings.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. Amortization expense is included in other expenses on the consolidated statements of earnings. MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of the estimated future net servicing income of the underlying financial assets.

Interest rate risk, prepayment risk, and default risk are inherent risks in MSR valuation. Interest rate changes largely drive prepayment rates. Refinance activity generally increases as rates decline. A significant decrease in rates beyond expectation could cause a decline in the value of the MSR. On the contrary, if rates increase borrowers are less likely to refinance or prepay their mortgage, which extends the duration of the loan and MSR values are likely to rise. Because of these risks, discount rates and prepayment speeds are used to estimate the fair value.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is calculated principally on the straight-line method over the estimated useful lives of the assets which range from three to forty years. Leasehold improvements paid for by the Company as a lessee are amortized over the lesser of the useful life or remaining lease terms.

Long-lived Assets

Long-lived assets to be held and used, including property and equipment and real estate held for investment, are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset, and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. No impairment of long-lived assets has been recognized in the accompanying financial statements except for certain impairments of real estate held for investment as disclosed in Note 2.

Derivative Instruments

Mortgage Banking Derivatives

Loan Commitments

The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the time a loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of loan commitments that will be exercised (i.e., the number of loans that will be funded) fluctuates. The probability that a loan will not be funded or the loan application is denied or withdrawn within the terms of the commitment is driven by a number of factors, particularly the change, if any, in mortgage rates following the issuance of the loan commitment.

In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance), product type and the application approval status. The Company has developed fallout estimates using historical data that take into account all of the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most current data.

The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage-backed securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of expenses. Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans.

Forward Sale Commitments

The Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments. Management expects these types of commitments will experience changes in fair value opposite to changes in fair value of the loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

The net changes in fair value of loan commitments and forward sale commitments are shown in current earnings as a component of mortgage fee income on the consolidated statements of earnings. Mortgage banking derivatives are shown in other assets and other liabilities and accrued expenses on the consolidated balance sheets.

Call and Put Option Derivatives

The Company uses a strategy of selling “out of the money” call options on its equity securities as a source of revenue. The options give the purchaser the right to buy from the Company specified equity securities at a set price up to a pre-determined date in the future. The Company uses the strategy of selling put options as a means of generating cash or purchasing equity securities at lower than current market prices. The Company receives an immediate payment of cash for the value of the option and establishes a liability for the fair value of the option. The liability for options is adjusted to fair value at each reporting date. In the event a call option is exercised, the Company sells the equity security at a favorable price enhanced by the value of the option that was sold. If the option expires unexercised, the Company recognizes a gain from the expired option. In the event a put option is exercised, the Company acquires an equity security at the strike price of the option reduced by the value received from the sale of the put option. The equity security is then treated as a normal equity security in the Company’s portfolio. The net changes in the fair value of call and put options are shown in current earnings as a component of realized gains (losses) on investments and other assets. Call and put options are shown in other liabilities and accrued expenses on the consolidated balance sheets.

Allowance for Doubtful Accounts and Loan Losses and Impaired Loans

The Company records an allowance and recognizes an expense for potential losses from mortgage loans held for investment, other investments and receivables in accordance with GAAP.

Receivables are the result of cemetery and mortuary operations, mortgage loan operations and life insurance operations. The allowance is based upon the Company’s historical experience for collectively evaluated impairment. Other allowances are based upon receivables individually evaluated for impairment. Collectability of the cemetery and mortuary receivables is significantly influenced by current economic conditions. The critical issues that impact recovery of mortgage loan operations are interest rate risk, loan underwriting, new regulations and the overall economy.

The Company provides for losses on its mortgage loans held for investment through an allowance for loan losses (a contra-asset account). The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment, the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. See the schedules in Note 2 for additional information. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as real estate held for investment. The Company will rent the properties until it is deemed desirable to sell them.

The allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the performance status of the loans, or the Company’s actual collection experience. The actual losses could change, in the near term, from the established allowance, based upon the occurrence or non-occurrence of these events.

For purposes of determining the allowance for losses, the Company has segmented its mortgage loans held for investment by loan type. The Company’s loan types are commercial, residential, and residential construction. The inherent risks within the portfolio vary depending upon the loan type as follows:

Commercial - Underwritten in accordance with the Company’s policies to determine the borrower’s ability to repay the obligation as agreed. Commercial loans are made primarily based on the underlying collateral supporting the loan. Accordingly, the repayment of a commercial loan depends primarily on the collateral and its ability to generate income and secondary on the borrower’s (or guarantors) ability to repay.

Residential – Secured by family dwelling units. These loans are secured by first and second mortgages on the unit. The borrower’s ability to repay is sensitive to the life events and general economic condition of the region. Where loan to values exceed 80%, the loan is generally guaranteed by private mortgage insurance, FHA or VA.

Residential construction (including land acquisition and development) – Underwritten in accordance with the Company’s underwriting policies which include a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent appraisal valuations. These loans will rely on the value associated with the project upon completion. These cost and valuation estimates may be inaccurate. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project and the ability of the borrower to secure long-term financing.  Additionally, land is underwritten according to the Company’s policies, which include independent appraisal valuations as well as the estimated value associated with the land upon completion of development into finished lots. These cost and valuation estimates may be inaccurate. These loans are considered to be of a higher risk than other mortgage loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term or construction financing, and interest rate sensitivity.

Future Policy Benefits and Unpaid Claims

Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, mortality, morbidity, withdrawals, and other assumptions based on the life insurance subsidiaries’ experience, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are, for some plans, graded to equal statutory values or cash values at or prior to maturity, which are deemed a reasonable equivalent for GAAP. The range of assumed interest rates for all traditional life insurance policy reserves was 4% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit claims are charged to expense in the period the claims are incurred. Increases in future policy benefits are charged to expense.

Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 3% to 6.5%.

The Company records an unpaid claims liability for claims in the course of settlement equal to the death benefit amount less any reinsurance recoverable amount for claims reported. There is also an unpaid claims liability for claims incurred but not reported. This liability is based on the historical experience of the net amount of claims that were reported in reporting periods subsequent to the reporting period when claims were incurred.

Participating Insurance

Participating business constituted 2% of insurance in force for the years ended 2020 and 2019. The provision for policyholders’ dividends included in policyholder obligations is based on dividend scales anticipated by management. Amounts to be paid are determined by the Board of Directors.

Recognition of Insurance Premiums and Other Considerations

Premiums and other consideration for traditional life insurance products (which include those products with fixed and guaranteed premiums and benefits and consist principally of whole life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies) are recognized as revenues when due from policyholders. Premiums and other consideration for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies, deferred annuities, and annuities without life contingencies) are recognized when earned and consist of amounts assessed against policyholder account balances during the period for policy administration charges and surrender charges.

Reinsurance

The Company follows the procedure of reinsuring risks in excess of $100,000 to provide for greater diversification of business to allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. The Company remains liable for amounts ceded in the event the reinsurers are unable to meet their obligations.

The Company entered into coinsurance agreements with unaffiliated insurance companies under which the Company assumed 100% of the risk for certain life insurance policies and certain other policy-related liabilities of the insurance company.

Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Expense allowances received in connection with reinsurance ceded are accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly.

Pre-need Sales and Costs

Pre-need contract sales of funeral services and caskets - revenue and costs associated with the sales of pre-need funeral services and caskets are deferred until the performance obligations are fulfilled (services are performed or the caskets are delivered).

Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are recognized in accordance with the retail land sales provisions based on GAAP. Under GAAP, recognition of revenue and associated costs from constructed cemetery property must be deferred until 10% of the sales price has been collected.

Pre-need contract sales of cemetery merchandise (primarily markers and vaults) - revenue and costs associated with the sale of pre-need cemetery merchandise is deferred until the merchandise is delivered.

Pre-need contract sales of cemetery services (primarily merchandise delivery, installation fees and burial opening and closing fees) - revenue and costs associated with the sales of pre-need cemetery services are deferred until the services are performed.

Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral services are accounted for under the guidance of the provisions based on GAAP. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred until the merchandise is delivered or services are performed.

Revenues and costs for at-need sales are recorded when a valid contract exists, the services are performed, collection is reasonably assured and there are no significant obligations remaining.

The Company, through its cemetery and mortuary operations, provides guaranteed funeral arrangements wherein a prospective customer can receive future goods and services at guaranteed prices. To accomplish this, the Company, through its life insurance operations, sells to the customer an increasing benefit life insurance policy that is assigned to the mortuaries. If, at the time of need, the policyholder/potential mortuary customer utilizes one of the Company’s facilities, the guaranteed funeral arrangement contract that has been assigned will provide the funeral goods and services at the contracted price. The increasing life insurance policy will cover the difference between the original contract prices and current prices. Risks may arise if the difference cannot be fully met by the life insurance policy. However, management believes that given current inflation rates and related price increases of goods and services, the risk of exposure is minimal.

Goodwill

Previous acquisitions have been accounted for as purchases under which assets acquired and liabilities assumed were recorded at their fair values with the excess purchase price recognized as goodwill. The Company evaluates annually or when changes in circumstances warrant the recoverability of goodwill and if there is a decrease in value, the related impairment is recognized as a charge against income. No impairment of goodwill has been recognized in the accompanying financial statements.

Other Intangibles (trade name and customer lists)

Other intangibles are recognized apart from goodwill whenever an acquired intangible asset arises from contractual or other legal rights, or whenever it is capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged, either individually or in combination with a related contract, asset, or liability. The Company engaged a valuation firm to analyze the value of the Kilpatrick Life name in conjunction with its acquisition. The value of the trade name is included in Other Assets and was determined using the income approach, relying on a relief from the royalty method.

Income Taxes

Income taxes include taxes currently payable plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences in the financial reporting basis and tax basis of assets and liabilities and operating loss carry-forwards. Deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.

Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax penalties are included as a component of other expenses.

Earnings Per Common Share

The Company computes earnings per share which requires presentation of basic and diluted earnings per share. Basic earnings per equivalent Class A common share are computed by dividing net earnings by the weighted-average number of Class A common shares outstanding during each year presented, after the effect of the assumed conversion of Class C common stock to Class A common stock. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the year used to compute basic earnings per share plus dilutive potential incremental shares. Basic and diluted earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

Stock Based Compensation

The cost of employee services received in exchange for an award of equity instruments is recognized in the financial statements and is measured based on the fair value on the grant date of the award. The fair value of stock options is calculated using the Black Scholes Option Pricing Model. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award and is included in personnel expenses on the consolidated statements of earnings.

Concentration of Credit Risk

For a description of the geographic concentration risk regarding mortgage loans held for investment and real estate held for investment, refer to Note 2 of the Notes to Consolidated Financial Statements.

Advertising

The Company expenses advertising costs as incurred.

Recent Accounting Pronouncements

Accounting Standards Adopted in 2020

ASU No. 2018-13: “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” – Issued in August 2018, ASU 2018-13 modifies the disclosure requirements of Topic 820 by removing, modifying or adding certain disclosures. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 does not change the fair value measurements already required or permitted by existing standards. The Company adopted this standard on January 1, 2020. The adoption of this standard did not materially impact the Company’s financial statements. See Note 8 for the Company’s fair value disclosures.

Accounting Standards Adopted in 2019

ASU No. 2016-02: “Leases (Topic 842)” - Issued in February 2016, ASU 2016-02 supersedes the requirements in Accounting Standards Codification (“ASC”) Topic 840, “Leases”, and was issued to increase transparency and comparability among organizations. The new standard sets forth the principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record on the balance sheet right-of-use assets and lease liabilities, equal to the present value of the remaining lease payments. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or a straight-line basis over the term of the leases. The FASB further clarified ASU 2016-02 and provided targeted improvements by issuing ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20.

The Company adopted this standard on January 1, 2019 using the modified retrospective transition method with no cumulative-effect adjustment to the opening balance of retained earnings. Under this transition method, the application date was the beginning of the reporting period, January 1, 2019, in which the Company first applied the standard. Under this transition option, the Company will apply the legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company has made an accounting policy election not to apply the recognition requirements 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. The new authoritative guidance allows for certain practical expedients to be utilized to assist with the implementation of the new standard. The Company has elected the transition package of practical expedients which allows the Company to not reassess whether any expired or existing contracts are or contain leases, to not reassess the lease classification for any expired or existing leases and to not reassess initial direct costs for any existing leases.

The Company implemented a third-party lease accounting system to assist with the measurement of the lease liabilities and the related right-of-use assets. The Company compiled an inventory of its leases, determined the appropriate discount rates and has determined the impact of this standard which is not material to the Company’s results of operations, but has an effect on the balance sheet presentation for leased assets and obligations. The Company recognized a right-of-use asset and related lease liability for approximately $12,076,000 on January 1, 2019. This standard did not impact the Company’s accounting for leases where the Company is the lessor.

Accounting Standards Issued But Not Yet Adopted

ASU No. 2016-13: “Financial Instruments – Credit Losses (Topic 326)” – Issued in September 2016, ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis (such as mortgage loans and held to maturity debt securities) and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP; however, Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. In October 2019, the FASB proposed an update to ASU No. 2016-13 that would make the ASU effective for the Company on January 1, 2023. The Company is in the process of evaluating the potential impact of this standard, especially as it relates to mortgage loans held for investment.

ASU No. 2018-12: “Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts” – Issued in August 2018, ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future policy benefits on traditional long-duration contracts by requiring that assumptions be updated after contract inception and by modifying the rate used to discount future cash flows. The ASU will simplify and improve the accounting for certain market-based options or guarantees associated with deposit or account balance contracts, simplify amortization of deferred acquisition costs while improving and expanding required disclosures. In November 2020, the FASB issued an update to ASU No. 2018-12 that made the ASU effective for the Company on January 1, 2025. The Company is in the process of evaluating the potential impact of this standard.

The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.

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2) Investments

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

2) Investments

2)        Investments

The Company’s investments as of December 31, 2020 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2020:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$    42,381,805	$     1,358,562	$                    -	$    43,740,367
Obligations of states and political subdivisions	5,383,762	312,214	(1,261)	5,694,715
Corporate securities including public utilities	186,067,912	27,216,496	(681,478)	212,602,930
Mortgage-backed securities	31,047,791	1,565,377	(267,106)	32,346,062
Redeemable preferred stock	269,214	3,391	-	272,605
Total fixed maturity securities available for sale	$  265,150,484	$   30,456,040	$      (949,845)	$  294,656,679
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$      9,698,490	$     2,376,156	$       (750,407)	$    11,324,239
Total equity securities at estimated fair value	$      9,698,490	$     2,376,156	$       (750,407)	$    11,324,239
Mortgage loans held for investment at amortized cost:
Residential	$    95,822,448
Residential construction	111,111,777
Commercial	46,836,866
Less: Unamortized deferred loan fees, net	(1,161,132)
Less: Allowance for loan losses	(2,005,127)
Less: Net discounts	(1,260,896)
Total mortgage loans held for investment	$  249,343,936
Real estate held for investment - net of accumulated depreciation:
Residential	$    24,843,743
Commercial	106,840,710
Total real estate held for investment	$  131,684,453
Real estate held for sale:
Residential	$      3,478,254
Commercial	4,400,553
Total real estate held for sale	$      7,878,807
Other investments and policy loans at amortized cost:
Policy loans	$    14,171,589
Insurance assignments	53,231,131
Federal Home Loan Bank stock (1)	2,506,600
Other investments	5,432,816
Less: Allowance for doubtful accounts	(1,645,475)
Total policy loans and other investments	$    73,696,661
Accrued investment income	$      5,360,523
Total investments	$  773,945,298
(1) Includes $866,900 of Membership stock and $1,639,700 of Activity stock due to short-term borrowings.

The Company’s investments as of December 31, 2019 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2019:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$    142,740,641	$      632,185	$   (25,215)	$ 143,347,611
Obligations of states and political subdivisions	7,450,366	87,812	(9,026)	7,529,152
Corporate securities including public utilities	156,599,184	16,768,449	(463,413)	172,904,220
Mortgage-backed securities	31,475,280	597,395	(240,177)	31,832,498
Redeemable preferred stock	364,339	-	-	364,339
Total fixed maturity securities available for sale	$    338,629,810	$ 18,085,841	$ (737,831)	$ 355,977,820
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$        6,900,537	$   1,139,799	$ (769,171)	$     7,271,165
Total equity securities at estimated fair value	$        6,900,537	$   1,139,799	$ (769,171)	$     7,271,165
Mortgage loans held for investment at amortized cost:
Residential	$    113,043,965
Residential construction	89,430,237
Commercial	38,718,220
Less: Unamortized deferred loan fees, net	(2,391,567)
Less: Allowance for loan losses	(1,453,037)
Less: Net discounts	(653,272)
Total mortgage loans held for investment	$    236,694,546
Real estate held for investment - net of accumulated depreciation:
Residential	$      12,530,306
Commercial	90,226,640
Total real estate held for investment	$    102,756,946
Real estate held for sale:
Residential	$        8,021,306
Commercial	6,076,321
Total real estate held for sale	$      14,097,627
Other investments and policy loans at amortized cost:
Policy loans	$      14,762,805
Insurance assignments	41,062,965
Federal Home Loan Bank stock (1)	894,300
Other investments	4,973,225
Less: Allowance for doubtful accounts	(1,448,026)
Total policy loans and other investments	$      60,245,269
Accrued investment income	$        4,833,232
Total investments	$    781,876,605
(1) Includes $894,300 of Membership stock and $-0- of Activity stock due to short-term borrowings.

Fixed Maturity Securities

On December 31, 2019, the Company changed the classification of its bond and preferred stock investments from held to maturity to available for sale based on the Company’s need to be able to respond proactively to market risks in managing its portfolio. Such investments are carried at fair value with any unrealized gains and losses reported as a component of other accumulated comprehensive income or loss. At the date of the transfer, the carrying value of the Company’s held to maturity securities was $338,629,810, and net unrealized gains of $17,315,770 were recognized in accumulated other comprehensive income.

The following tables summarize unrealized losses on fixed maturities securities that were carried at estimated fair value at December 31, 2020 and at December 31, 2019. The unrealized losses were primarily related to interest rate fluctuations and uncertainties relating to COVID-19. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:

	Unrealized Losses for Less than Twelve Months	Fair Value	Unrealized Losses for More than Twelve Months	Fair Value	Total Unrealized Loss	Fair Value
At December 31, 2020
Obligations of States and Political Subdivisions	$        1,261	$    206,812	$               -	$               -	$        1,261	$    206,812
Corporate Securities	242,596	9,919,298	438,882	2,593,026	681,478	12,512,324
Mortgage and other asset-backed securities	266,522	3,455,574	584	51,961	267,106	3,507,535
Total unrealized losses	$    510,379	$13,581,684	$   439,466	2,644,987	$    949,845	$16,226,671
At December 31, 2019
U.S. Treasury Securities and Obligations
of U.S. Government Agencies	$      20,211	$30,629,288	$        5,004	$10,000,400	$      25,215	$40,629,688
Obligations of States and Political Subdivisions	9,026	3,062,889	-	-	9,026	3,062,889
Corporate Securities	118,746	7,184,311	344,667	3,950,509	463,413	11,134,820
Mortgage and other asset-backed securities	205,470	13,266,443	34,707	502,769	240,177	13,769,212
Total unrealized losses	$    353,453	$54,142,931	$    384,378	$14,453,678	$    737,831	$68,596,609

There were 63 securities with fair value of 94.7% of amortized cost at December 31, 2020. There were 93 securities with fair value of 98.9% of amortized cost at December 31, 2019. Credit losses of $370,975 and $-0- have been recognized for the years ended December 31, 2020 and 2019, respectively.

On a quarterly basis, the Company evaluates its fixed maturity securities classified as available for sale. This evaluation includes a review of current ratings by the National Association of Insurance Commissions (“NAIC”). Securities with a rating of 1 or 2 are considered investment grade and are not reviewed for impairment. Securities with ratings of 3 to 5 are evaluated for impairment. Securities with a rating of 6 are automatically determined to be impaired and are written down. The evaluation involves an analysis of the securities in relation to historical values, interest payment history, projected earnings and revenue growth rates as well as a review of the reason for a downgrade in the NAIC rating. Based on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely make interest and principal payments in accordance with the terms of the financial instrument. If it is unlikely that the security will meet contractual obligations, the loss is considered to be other than temporary, the security is written down to the new anticipated market value and an impairment loss is recognized.

The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments.

The following table presents a rollforward of the Company's cumulative other than temporary credit impairments (“OTTI”) recognized in earnings on fixed maturity securities available for sale for the years ended December 31:

	2020	2019
Balance of credit-related OTTI at January 1	$                        -	$                       -
Additions for credit impairments recognized on:
Securities not previously impaired	370,975	-
Securities previously impaired	-	-
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period (realized)	-	-
Securities due to an increase in expected cash flows	-	-
Balance of credit-related OTTI at December 31	$            370,975	$                       -

The amortized cost and estimated fair value of fixed maturity securities available for sale at December 31, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Estimated Fair
	Cost	Value
Due in 1 year	$      28,634,042	$        28,831,983
Due in 2-5 years	66,183,907	70,910,775
Due in 5-10 years	70,162,166	78,592,046
Due in more than 10 years	68,853,364	83,703,208
Mortgage-backed securities	31,047,791	32,346,062
Redeemable preferred stock	269,214	272,605
Total	$    265,150,484	$      294,656,679

The Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”). The Company pledged a total of $40,000,000, par value, of United States Treasury fixed maturity securities with the FHLB at December 31, 2020. These securities are used as collateral on any cash borrowings from the FHLB. As of December 31, 2020, the Company did not have any outstanding amounts owed to the FHLB and its estimated maximum borrowing capacity was $39,102,336.

Investment Related Earnings

The Company’s net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities, and other than temporary impairments from investments and other assets for the years ended December 31 are summarized as follows:

	2020	2019
Fixed maturity securities available for sale:
Gross realized gains	$         445,749	$         459,286
Gross realized losses	(77,546)	(162,649)
Other than temporary impairments	(370,975)	-
Equity securities:
Gains on securities sold	74,836	256,520
Unrealized gains on securities held at the end of the period	1,125,304	1,086,116
Other assets:
Gross realized gains	2,342,418	2,844,673
Gross realized losses	(1,984,911)	(3,755,579)
Total	$      1,554,875	$         728,367

The net realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined using the specific identification method.

On December 31, 2019, the Company changed the classification of its bond and preferred stock investments from held to maturity to available for sale based on the Company’s need to be able to respond proactively to market risks in managing its portfolio. Proceeds received from the sale of fixed maturity securities available for sale securities for the year ended December 31, 2020, were $5,477,438, and resulted in gross realized gains and gross realized losses of $358,236 and $21,137, respectively. The carrying amount of held to maturity securities sold for the year ended December 31, 2019 was $4,950,041 and the net realized gain related to these sales was $43,039.

Major categories of net investment income for the years ended December 31, were as follows:

	2020	2019
Fixed maturity securities available for sale	$ 12,233,394	$ 10,372,559
Equity securities	642,433	309,918
Mortgage loans held for investment	25,672,746	18,405,010
Real estate held for investment and sale	11,945,401	8,782,959
Policy loans	1,025,179	554,969
Insurance assignments	17,837,578	16,086,059
Other investments	126,013	184,439
Cash and cash equivalents	426,623	1,824,443
Gross investment income	69,909,367	56,520,356
Investment expenses	(13,579,564)	(13,500,883)
Net investment income	$ 56,329,803	$ 43,019,473

Net investment income includes income earned by the restricted assets of the cemeteries and mortuaries of $676,313 and $448,754 for the years ended December 31, 2020 and 2019, respectively.

Net investment income on real estate consists primarily of rental revenue.

Investment expenses consist primarily of depreciation, property taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities.

Securities on deposit for regulatory authorities as required by law amounted to $9,684,409 and $9,633,818 at December 31, 2020 and 2019, respectively. The restricted securities are included in various assets under investments on the accompanying consolidated balance sheets.

There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses) at December 31, 2020, other than investments issued or guaranteed by the United States Government.

Real Estate Held for Investment and Held for Sale

The Company continues to strategically deploy resources into real estate to match the income and yield durations of its primary obligations. The sources for these real estate assets come through its various business segments in the form of acquisition, development and mortgage foreclosures. The Company reports real estate held for investment and held for sale pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

Commercial Real Estate Held for Investment and Held for Sale

The Company owns and manages commercial real estate assets as a means of generating investment income. These assets are acquired in accordance with the Company’s goals and objectives for risk-adjusted returns. Due diligence is conducted on each asset using internal and third-party reports. Geographic locations and asset classes of the investment activity is determined by senior management under the direction of the Board of Directors.

The Company employs full-time employees to attend to the day-to-day operations of those assets within the greater Salt Lake area and close surrounding markets. The Company utilizes third-party property managers when the geographic boundary does not warrant full-time staff or through strategic lease-up periods. The Company generally looks to acquire assets in regions that are high growth regions for employment and population and assets that provide operational efficiencies.

The Company currently owns and operates 11 commercial properties in 5 states. These properties include office buildings, a funeral home, flex office space, and includes the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah. The Company also holds undeveloped land that may be used for future commercial developments. The Company does use debt in strategic cases to leverage established yields or to acquire a higher quality or different class of asset. See Note 20 regarding commercial real estate held for investment in Louisiana acquired with the acquisition of Kilpatrick Life Insurance Company.

The aggregated net ending balance of commercial real estate that serves as collateral for bank loans was $71,517,902 and $87,814,860 as of December 31, 2020 and 2019, respectively. The associated bank loan carrying values totaled $46,153,283 and $54,917,279 as of December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020 and 2019, the Company recorded impairment losses on commercial real estate held for sale of $897,980 and $2,768,979, respectively. Impairment losses of $846,980 and of $2,768,979 for the years ended December 31, 2020 and 2019, respectively, relate to an office building located in Kansas held by the life insurance segment. An impairment loss of $51,000 for the year ended December 31, 2020 relates to the improved commercial pad located in Texas held by the life insurance segment. Impairment loss are included in gains (losses) on investments and other assets on the consolidated statements of earnings.

The Company’s commercial real estate held for investment for the years ended December 31, is summarized as follows:

	Net Ending Balance		Total Square Footage
	2020	2019	2020	2019
Louisiana	$    2,998,684	$  6,009,079	84,841	125,114
Mississippi	2,914,498	2,951,478	21,521	21,521
Utah (1)	100,927,528	81,266,083	379,066	465,230
	$ 106,840,710	$ 90,226,640	485,428	611,865
(1) Includes Center53 phase 1 and phase 2 which is under construction.

The Company’s commercial real estate held for sale for the years ended December 31, is summarized as follows:

	Net Ending Balance		Total Square Footage
	2020	2019	2020	2019
Arizona (1)	$               -	$        2,500	-	-
Kansas	4,000,000	4,800,000	222,679	222,679
Mississippi	151,553	318,322	12,300	12,300
Nevada	-	655,499	-	4,800
Texas (2)	249,000	300,000	-	-
	$  4,400,553	$  6,076,321	234,979	239,779
(1) Undeveloped land
(2) Improved commercial pad

These properties are all actively being marketed with the assistance of commercial real estate brokers in the markets where the properties are located. The Company expects these properties to sell within the coming 12 months.

Residential Real Estate Held for Investment and Held for Sale

The Company owns a small portfolio of residential homes primarily as a result of loan foreclosures. The Company has the option to sell them or to continue to hold them for cash flow and acceptable returns. The Company also invests in residential subdivision land developments.

The Company established Security National Real Estate Services (“SNRE”) to manage the residential portfolio. SNRE cultivates and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the portfolio of homes across the country.

As of December 31, 2020, SNRE manages 11 residential properties in 5 states across the United States.

During the years ended December 31, 2020 and 2019, the Company recorded impairment losses on residential real estate held for sale of $43,394 and $700,134, respectively. These impairment losses are included in gains (losses) on investments and other assets on the consolidated statements of earnings.

The net ending balance of foreclosed residential real estate included in residential real estate held for investment or sale is $4,327,079 and $12,433,986 as of December 31, 2020 and 2019, respectively.

The Company’s residential real estate held for investment for the years ended December 31, is summarized as follows:

	Net Ending Balance
	2020	2019
Florida	-	2,487,723
Nevada	-	293,516
Utah (1)	24,557,562	9,462,886
Washington (2)	286,181	286,181
	$   24,843,743	$ 12,530,306
(1) Including subdivision land developments
(2) Improved residential lots

Additional information regarding the Company’s subdivision land developments in Utah for the years ended December 31, is summarized as follows:

	2020	2019
Lots available for sale	36	48
Lots to be developed	350	174
Ending Balance (1)	$   23,777,478	$  7,889,576
(1) The estimated remaining cost to complete the undeveloped lots is $17,354,000 and $1,900,000 as of December 31, 2020 and 2019, respectively.

The Company’s residential real estate held for sale for the years ended December 31, is summarized as follows:

	Net Ending Balance
	2020	2019
California	-	640,452
Florida	744,322	1,300,641
Nevada	979,640	-
Ohio	10,000	10,000
Utah	1,744,292	5,880,213
Washington	-	190,000
	$    3,478,254	$  8,021,306

These properties are all actively being marketed with the assistance of residential real estate brokers in the markets where the properties are located. The Company expects these properties to sell within the coming 12 months.

Real Estate Owned and Occupied by the Company

The primary business units of the Company occupy a portion of the commercial real estate owned by the Company. As of December 31, 2020, real estate owned and occupied by the Company is summarized as follows:

Location	Business Segment	Approximate Square Footage	Square Footage Occupied by the Company
121 W. Election Rd., Draper, UT	Corporate Offices, Life Insurance and Cemetery/Mortuary Operations	78,979	18%
5201 Green Street, Salt Lake City, UT (1)	Life Insurance and Mortgage Operations	39,157	73%
1044 River Oaks Dr., Flowood, MS	Life Insurance Operations	19,694	28%
1818 Marshall Street, Shreveport, LA (1)(2)	Life Insurance Operations	12,274	100%
909 Foisy Street, Alexandria, LA (1)(2)	Life Insurance Sales	8,059	100%
812 Sheppard Street, Minden, LA (1)(2)	Life Insurance Sales	1,560	100%
1550 N 3rd Street, Jena, LA (1)(2)	Life Insurance Sales	1,737	100%
(1) Included in property and equipment on the consolidated balance sheets
(2) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

Mortgage Loans Held for Investment

The Company reports mortgage loans held for investment pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0 % to 10.5%, maturity dates range from nine months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At December 31, 2020, the Company had 57%, 13%, 9%, 4%, 3% and 3% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada and Arizona, respectively. At December 31, 2019, the Company had 48%, 16%, 10%, 6%, 6% and 5% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada and Arizona, respectively.

The Company establishes a valuation allowance for credit losses in its portfolio. The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:

Allowance for Credit Losses and Recorded Investment in Mortgage Loans Held for Investment
Years Ended December 31
	Commercial	Residential	Residential Construction	Total
2020
Allowance for credit losses:
Beginning balance	$      187,129	$     1,222,706	$        43,202	$     1,453,037
Charge-offs	-	-	-	-
Provision	-	552,090	-	552,090
Ending balance	$      187,129	$     1,774,796	$        43,202	$     2,005,127
Ending balance: individually evaluated for impairment	$                  -	$        219,905	$                  -	$        219,905
Ending balance: collectively evaluated for impairment	$      187,129	$     1,554,891	$        43,202	$     1,785,222
Mortgage loans:
Ending balance	$ 46,836,866	$ 111,111,777	$ 95,822,448	$ 253,771,091
Ending balance: individually evaluated for impairment	$   2,148,827	$     7,932,680	$      200,963	$   10,282,470
Ending balance: collectively evaluated for impairment	$ 44,688,039	$ 103,179,097	$ 95,621,485	$ 243,488,621
2019
Allowance for credit losses:
Beginning balance	$      187,129	$     1,125,623	$        35,220	$     1,347,972
Charge-offs	-	(32,692)	-	(32,692)
Provision	-	129,775	7,982	137,757
Ending balance	$      187,129	$     1,222,706	$        43,202	$     1,453,037
Ending balance: individually evaluated for impairment	$                  -	$        195,993	$                  -	$        195,993
Ending balance: collectively evaluated for impairment	$      187,129	$     1,026,713	$        43,202	$     1,257,044
Mortgage loans:
Ending balance	$ 38,718,220	$ 113,043,965	$ 89,430,237	$ 241,192,422
Ending balance: individually evaluated for impairment	$   4,488,719	$     3,752,207	$      655,000	$     8,895,926
Ending balance: collectively evaluated for impairment	$ 34,229,501	$ 109,291,758	$ 88,775,237	$ 232,296,496

Age Analysis of  Past Due Mortgage Loans Held for Investment
Years Ended December 31
	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days (1)	In Process of Foreclosure (1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Unamortized deferred loan fees, net	Unamortized discounts, net	Net Mortgage Loans
2020
Commercial	$   233,200	$     812,780	$   2,148,827	$                    -	$  3,194,807	$  43,642,059	$       46,836,866	$    (187,129)	$       (32,557)	$    (880,721)	$  45,736,459
Residential	5,866,505	2,048,148	5,669,583	2,263,097	15,847,333	79,975,115	95,822,448	(1,774,796)	(909,864)	(380,175)	92,757,613
Residential  Construction	127,191	-	-	200,963	328,154	110,783,623	111,111,777	(43,202)	(218,711)	-	110,849,864
Total	$ 6,226,896	$ 2,860,928	$   7,818,410	$     2,464,060	$ 19,370,294	$ 234,400,797	$       253,771,091	$ (2,005,127)	$  (1,161,132)	$  (1,260,896)	$ 249,343,936
2019
Commercial	$ 1,872,000	$                 -	$   4,488,719	$                    -	$  6,360,719	$   32,357,501	$        38,718,220	$    (187,129)	$      (88,918)	$     (653,272)	$   37,788,901
Residential	10,609,296	4,085,767	2,100,742	1,651,465	18,447,270	94,596,695	113,043,965	(1,222,706)	(1,567,581)	-	110,253,678
Residential  Construction	-	-	655,000	-	655,000	88,775,237	89,430,237	(43,202)	(735,068)	-	88,651,967
Total	$ 12,481,296	$ 4,085,767	$ 7,244,461	$     1,651,465	$ 25,462,989	$ 215,729,433	$       241,192,422	$ (1,453,037)	$  (2,391,567)	$     (653,272)	$ 236,694,546
(1)  There was not any interest income recognized on loans past due greater than 90 days or in foreclosure.

The following is a summary of the aging of mortgage loans held for investment for the periods presented.

Impaired Mortgage Loans Held for Investment

Impaired mortgage loans held for investment include loans with a related specific valuation allowance or loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary. The recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting period and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:

Impaired Loans
Years Ended December 31
	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
2020
With no related allowance recorded:
Commercial	$ 2,148,827	$   2,148,827	$                -	$       1,866,819	$                -
Residential	6,415,419	6,415,419	-	5,010,078	-
Residential construction	200,963	200,963	-	555,278	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,517,261	1,517,261	219,905	1,182,368	-
Residential construction	-	-	-	-	-
Total:
Commercial	$ 2,148,827	$   2,148,827	$                -	$       1,866,819	$                -
Residential	7,932,680	7,932,680	219,905	6,192,446	-
Residential construction	200,963	200,963	-	555,278	-
2019
With no related allowance recorded:
Commercial	$ 4,488,719	$   4,488,719	$                -	$       1,499,043	$                -
Residential	2,254,189	2,254,189	-	3,367,151	-
Residential construction	655,000	655,000	-	1,457,278	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,498,018	1,498,018	195,993	665,270	-
Residential construction	-	-	-	-	-
Total:
Commercial	$ 4,488,719	$   4,488,719	$                -	$       1,499,043	$                -
Residential	3,752,207	3,752,207	195,993	4,032,421	-
Residential construction	655,000	655,000	-	1,457,278	-

Credit Risk Profile Based on Performance Status

The Company’s mortgage loan held for investment portfolio is monitored based on performance of the loans. Monitoring a mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment. The Company defines non-performing mortgage loans as loans 90 days or greater delinquent or on non-accrual status.

The Company’s performing and non-performing mortgage loans held for investment were as follows:

Mortgage Loans Held for Investment Credit Exposure
Credit Risk Profile Based on Payment Activity
Years Ended December 31
	Commercial		Residential		Residential Construction		Total
	2020	2019	2020	2019	2020	2019	2020	2019
Performing	$ 44,688,039	$ 34,229,501	$   87,889,768	$109,291,758	$   110,910,814	$  88,775,237	$     243,488,621	$ 232,296,496
Non-performing	2,148,827	4,488,719	7,932,680	3,752,207	200,963	655,000	10,282,470	8,895,926
Total	$ 46,836,866	$ 38,718,220	$   95,822,448	$113,043,965	$   111,111,777	$  89,430,237	$     253,771,091	$ 241,192,422

Non-Accrual Mortgage Loans Held for Investment

Once a loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and write off any income that had been accrued. Payments received for loans on a non-accrual status are recognized on a cash basis. Interest income recognized from any payments received for loans on a non-accrual status was immaterial. Accrual of interest resumes if a loan is brought current. Interest not accrued on these loans totals approximately $491,000 and $203,000 as of December 31, 2020 and 2019, respectively.

The following is a summary of mortgage loans held for investment on a non-accrual status for the periods presented.

	Mortgage Loans on Non-accrual Status
	Years Ended December 31
	2020	2019
Commercial	$           2,148,827	$            4,488,719
Residential	7,932,680	3,752,207
Residential construction	200,963	655,000
Total	$         10,282,470	$            8,895,926

Principal Amounts Due

The amortized cost and contractual payments on mortgage loans held for investment by category as of December 31, 2020 are shown below. Expected principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment penalties.

		Principal	Principal	Principal
		Amounts	Amounts	Amounts
		Due in	Due in	Due
	Total	1 Year	2-5 Years	Thereafter
Residential	$      95,822,448	$  11,202,899	$ 17,774,238	$   66,845,311
Residential Construction	111,111,777	$ 103,391,044	$   7,720,733	-
Commercial	46,836,866	27,111,325	11,101,138	8,624,403
Total	$    253,771,091	$ 141,705,268	$ 36,596,109	$   75,469,714

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3) Loans Held For Sale

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

3) Loans Held For Sale

3)       Loans Held for Sale

The Company has elected the fair value option for loans held for sale as disclosed in Note 1. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on mortgage loans held for investment and is included in mortgage fee income on the consolidated statement of earnings. There are three loans with an aggregate unpaid principal balance of $208,636 that are 90 or more days past due and on a nonaccrual status as of December 31, 2020. See Note 17 of the Notes to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

The following is a summary of the aggregate fair value and the aggregate unpaid principal balance of loans held for sale for the periods presented:

	As of December 31 2020	As of December 31 2019
Aggregate fair value	$          422,772,418	$          213,457,632
Unpaid principal balance	406,407,323	206,417,122
Unrealized gain	16,365,095	7,040,510

Mortgage Fee Income

Mortgage fee income consists of origination fees, processing fees, interest income and certain other income related to the origination and sale of mortgage loans held for sale.

Major categories of mortgage fee income for loans held for sale for the years ended December 31, were as follows:

	2020	2019
Loan fees	$    43,432,532	$    28,660,966
Interest income	10,628,581	6,978,930
Secondary gains	231,759,342	93,581,956
Change in fair value of loan commitments	7,637,377	899,417
Change in fair value of loans held for sale	10,413,492	2,498,097
Provision for loan loss reserve	(4,938,214)	(643,284)
Mortgage fee income	$   298,933,110	$   131,976,082

Loan Loss Reserve

When a repurchase demand corresponding to a mortgage loan previously held for sale and sold to a third-party investor is received from a third-party investor, the relevant data is reviewed and captured so that an estimated future loss can be calculated. The key factors that are used in the estimated loss calculation are as follows: (i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the Company is able to resolve the issues relating to the repurchase demand by the third-party investor without having to make any payments to the investor.

The following is a summary of the loan loss reserve which is included in other liabilities and accrued expenses:

	December 31
	2020	2019
Balance, beginning of period	$          4,046,288	$          3,604,869
Provision for current loan originations (1)	4,938,214	643,284
Additional provision for loan loss reserve	16,506,030	-
Charge-offs, net of recaptured amounts	(4,906,914)	(201,865)
Balance, at December 31	$        20,583,618	$          4,046,288
(1) Included in Mortgage fee income

The Company maintains reserves for estimated losses on current production volumes. For the year ended December 31, 2020, $4,938,214 in reserves were added at a rate of 8.9 basis points per loan, the equivalent of $890 per $1,000,000 in loans originated. This is an increase over the year ended December 31, 2019, when $643,284 in reserves were added at a rate of 2.5 basis points per loan originated, the equivalent of $250 per $1,000,000 in loans originated. The Company also increased its loan loss reserve for the year ended December 31, 2020 by an additional $16,506,030 to account for changes in estimates specific to settlements of loan losses. See Note 10 for additional information regarding mortgage loan loss settlements. The economic impact of COVID-19 and subsequent government action has increased the potential for losses due to early payoff penalties and potential for losses due to increased delinquency. The unique nature of these current events creates significant difficulty for forecasting potential future losses. The Company will continue to monitor data and economic conditions in order to maintain adequate loss reserves on current production. Thus, the Company believes that the final loan loss reserve as of December 31, 2020, represents its best estimate for adequate loss reserves on loans sold.

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4) Receivables

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

4) Receivables

4)       Receivables

Receivables consist of the following:

	December 31
	2020	2019
Trade contracts	$          4,119,988	$          2,795,471
Receivables from sales agents	2,677,774	2,962,571
Other	5,786,827	5,202,444
Total receivables	12,584,589	10,960,486
Allowance for doubtful accounts	(1,685,382)	(1,724,156)
Net receivables	$        10,899,207	$          9,236,330

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5) Value of Business Acquired, Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

5) Value of Business Acquired, Intangible Assets and Goodwill

5)        Value of Business Acquired, Intangible Assets and Goodwill

Information with regard to value of business acquired was as follows:

	December 31
	2020	2019
Balance at beginning of year	$      9,876,647	$      5,765,190
Value of  business acquired	-	4,962,831	(1)
Imputed interest at 7% included in earnings	670,565	472,916
Amortization included in earnings	(1,457,390)	(1,320,456)
Shadow amortization included in other    comprehensive income	(134,573)	(3,834)
Net amortization	(921,398)	(851,374)
Balance at end of year	$      8,955,249	$      9,876,647
(1) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

Presuming no additional acquisitions, net amortization charged to income is expected to approximate $1,019,000, $918,000, $854,000, $784,000, and $707,000 for the years 2021 through 2026 . Actual amortization may vary based on changes in assumptions or experience. As of December 31, 2020, value of business acquired is being amortized over a weighted average life of 6.9 years.

The carrying value of the Company’s intangible assets were as follows which is included in other assets:

		December 31
	Useful Life	2020	2019
Intangible asset - customer lists	15 years	$         890,000	$      890,000
Intangible asset - trade name (1)	15 years	$         610,000	$      610,000
Less accumulated amortization		(197,334)	(98,222)
Balance at end of year		$      1,302,666	$    1,401,778
(1) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

Information regarding goodwill by segment was as follows:

	Life Insurance	Cemetery/Mortuary		Total
Balance at January 1, 2019:
Goodwill	$ 2,765,570	$           -		$ 2,765,570
Accumulated impairment	-	-		-
Total goodwill, net	2,765,570	-		2,765,570
Acquisition	-	754,018	(1)	754,018
Balance at December 31, 2019:
Goodwill	2,765,570	754,018		3,519,588
Accumulated impairment	-	-		-
Total goodwill, net	2,765,570	754,018		3,519,588
Acquisition	-	-		-
Balance at December 31, 2020:
Goodwill	2,765,570	754,018		3,519,588
Accumulated impairment	-	-		-
Total goodwill, net	$ 2,765,570	$ 754,018		$ 3,519,588
(1) See Note 20 regarding the acquisition of Probst Family Funerals and Cremations and Heber Valley Funeral Home

Goodwill of $3,519,588 is not amortized but is tested annually for impairment. The annual impairment tests resulted in no impairment of goodwill for the years ended December 31, 2020 and 2019.

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6) Property and Equipment

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

6) Property and Equipment

6)        Property and Equipment

The cost of property and equipment is summarized below:

	December 31
	2020	2019
Land and buildings	$        11,972,802	$        15,131,301
Furniture and equipment	19,679,682	18,987,984
	31,652,484	34,119,285
Less accumulated depreciation	(19,179,139)	(19,518,891)
Total	$        12,473,345	$        14,600,394

Depreciation expense for the years ended December 31, 2020 and 2019 was $2,078,738 and $1,711,369, respectively. During 2020, the Company demolished a building with a gross building cost of $1,723,000 with its associated accumulated depreciation (net book value of $-0-) and transferred land with a cost of $1,516,700 to real estate held for investment to make way for phase 2 of the redevelopment and expansion of Center53. During 2019, the Company transferred $3,261,259 from real estate held for investment to property and equipment. The transfers are shown as a non cash items on the consolidated statements of cash flows. See Note 20 for additional information regarding property and equipment acquired through acquisitions.

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7) Bank and Other Loans Payable

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

7) Bank and Other Loans Payable

7)       Bank and Other Loans Payable

Bank and other loans payable are summarized as follows:

	December 31
	2020	2019
2.25% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate note payable in    monthly principal payments of $13,167 plus interest, collateralized by real property, paid in    full November 2020.	$               -	$    2,659,769
4.27% fixed note payable in monthly installments of $53,881 including principal and interest,     collateralized by shares of Security National Life Insurance Company stock, due     December 2021.	633,890	1,238,619
Prime rate note payable in monthly installments of $75,108 including principal and interest,    collateralized by shares of Security National Life Insurance Company stock, due    December 2024.	3,257,113	4,000,000
4.40% fixed note payable in monthly installments of $46,825 including principal and interest,     collateralized by real property, paid in full April 2020.	-	7,247,651
4.329% fixed note payable in monthly installments of $9,775 including principal and interest,    collateralized by real property with a book value of approximately $3,174,000, due    September 2025.	1,861,920	1,896,450
2.5% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate construction loan    payable in monthly principal payments of $113,000 plus interest, collateralized by real property   with a book value of approximately $50,689,000, due March 2021.	35,091,364	33,811,559
4.7865% fixed interest only note payable in monthly installments, collateralized by real property    with a book value of approximately $17,655,000, due June 2028.	9,200,000	9,200,000
1 month LIBOR rate plus 2.1% loan purchase agreement with a warehouse line availability of    $150,000,000, matures June 2021.	116,598,834	88,509,536
1 month LIBOR rate plus 3% loan purchase agreement with a warehouse line availability of    $175,000,000, matures November 2021.	68,766,572	67,537,600
1 month LIBOR rate plus 2.5% loan purchase agreement with a warehouse line availability of    $90,000,000, matures May 2021.	60,715,374	-
1 month LIBOR rate plus 2.5% loan purchase agreement with a warehouse line availability of    $5,000,000, matures August 2021.	317,582	-
Other short-term borrowings (1)	1,250,000	1,250,000
Finance lease liabilities	104,951	153,439
Other loans payable	26,768	67,989
Total bank and other loans	297,824,368	217,572,612
Less current installments	284,250,996	192,985,602
Bank and other loans, excluding current installments	$   13,573,372	$  24,587,010
(1) Revolving Line of Credit

Sources of Liquidity

Federal Home Loan Bank Membership

The Federal Home Loan Banks (“the FHLBs”) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities.  The Company is a member of the FHLB based in Des Moines, Iowa and based in Dallas, Texas.  As a member of the FHLB, the Company is required to maintain a minimum investment in capital stock of the FHLB and may pledge collateral to the bank for advances of funds to be used in its operations. 

Federal Home Loan Bank of Des Moines

At December 31, 2020, the amount available for borrowings from the FHLB of Des Moines was approximately $39,102,336, compared with $57,727,738 at December 31, 2019. United States Treasury fixed maturity securities with an estimated fair value of $40,729,400 at December 31, 2020 have been pledged at the FHLB of Des Moines as collateral for current and potential borrowings compared with $59,877,900 at December 31, 2019. At December 31, 2020 and 2019, the Company had no outstanding FHLB borrowings. At December 31, 2020, the Company’s total investment in FHLB stock was $786,300 compared with $806,500 at December 31, 2019. The Company’s decreased investment in FHLB stock was a result of its decrease in short-term FHLB borrowings during 2020.

Federal Home Loan Bank of Dallas

The membership of the FHLB of Dallas was acquired with the acquisition of Kilpatrick Life Insurance Company. See Note 20 regarding this acquisition. At December 31, 2020, the Company’s total investment in FHLB stock was $1,720,300 compared with $87,800 at December 31, 2019. The Company does not have any collateral pledged at the FHLB of Dallas or any outstanding borrowings.

Revolving Lines of Credit

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75%, secured by the capital stock of Security National Life and maturing September 30, 2021, renewable annually. At December 31, 2020, the Company was contingently liable under a standby letter of credit aggregating $348,183, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company's captive insurance program and was contingently liable under standby letters of credit aggregating $1,585,063, to be used as collateral for residential subdivision land developments. The standby letters of credit will draw on the line of credit if necessary. The Company does not expect any material losses to result from the issuance of the standby letters of credit. As of December 31, 2020, there were no amounts outstanding under the revolving line-of-credit.

The Company also has a $2,500,000 revolving line-of-credit with a bank with interest payable at the overnight LIBOR rate plus 2.25% maturing September 30, 2021. As of December 31, 2020, there was $1,250,000 outstanding under the revolving line-of-credit.

Debt Covenants for Mortgage Warehouse Lines of Credit

The Company, through its subsidiary SecurityNational Mortgage, has a $150,000,000 line of credit with Wells Fargo Bank N.A. The agreement charges interest at the 1-Month LIBOR rate plus 2.1% and matures on June 24, 2021. SecurityNational Mortgage is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, the ratio of indebtedness to adjusted tangible net worth, and the liquidity overhead coverage ratio, and a quarterly gross profit of at least $1.00.

The Company, through its subsidiary SecurityNational Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement with the bank allows SecurityNational Mortgage to borrow up to $175,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 3% and matures on November 15, 2021. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling four-quarter basis.

The Company through its subsidiary SecurityNational Mortgage, has a line of credit with Comerica Bank. This agreement with the bank allows SecurityNational Mortgage to borrow up to $90,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2.5% and matures on May 27, 2021. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling twelve months.

The Company, through its subsidiary EverLEND Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement with the bank allows EverLEND Mortgage to borrow up to $5,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2.5% and matures on August 1, 2021. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least $1.00 on a rolling four-quarter basis.  

The agreements for warehouse lines include cross default provisions in that a covenant violation under one agreement constitutes a covenant violation under the other agreement. As of December 31, 2020, the Company believes that it was in compliance with all debt covenants.

The following tabulation shows the combined maturities of bank and other loans payable:

2021	$  284,242,327
2022	884,383
2023	926,186
2024	937,315
2025	1,634,157
Thereafter	9,200,000
Total	$  297,824,368

Interest expense in 2020 and 2019 was $8,578,810 and $7,386,688, respectively. Interest paid in 2020 and 2019 was $8,385,270 and $7,284,078, respectively.

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8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

8)        Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

State law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment rights for cemeteries that have established an endowment care trust. These endowment care trusts are defined as variable interest entities pursuant to GAAP. Also, management has determined that the Company is the primary beneficiary of these trusts, as it absorbs both a majority of the losses and returns associated with the trusts. The Company has consolidated cemetery endowment care trust investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets.

The components of the cemetery perpetual care investments and obligation are as follows:

	December 31
	2020	2019
Cash and cash equivalents	$       402,913	$     1,306,740
Fixed maturity securities, available for sale, at estimated fair value	747,767	975,673
Equity securities, at estimated fair value	2,062,303	1,605,451
Commerical mortgage loans held for investment	-	524,000
Participating interests in residential construction mortgage loans     held for investment with Security National Life	1,468,600	-
Real estate held for investment	1,731,584	-
Note receivables from Cottonwood Mortuary, Singing Hills
Cemetery and Memorial Estates eliminated in consolidation	-	1,541,120
Total cemetery perpetual care trust investments	6,413,167	5,952,984
Cemetery perpetual care obligation	(4,087,704)	(3,933,719)
Trust investments in excess of trust obligations	$     2,325,463	$     2,019,265

The Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection with its pre-need sales for its cemetery and mortuary segment.

Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company elected to maintain its medical benefit fund without change from the prior year and has included this amount as a component of restricted cash. These restricted cash items are for the Company’s life insurance and mortgage segments.

Restricted assets are summarized as follows:

	December 31
	2020	2019
Cash and cash equivalents (1)	$     8,842,744	$     8,674,214
Fixed maturity securities, available for sale, at estimated fair value	1,473,637	1,008,867
Equity securities, at estimated fair value	2,515,778	1,976,480
Participating interests in mortgage loans held for investment    with Security National Life	3,317,877	2,275,756
Total	$   16,150,036	$   13,935,317
(1) Including cash and cash equivalents of $8,524,999 and $7,170,092 as of December 31, 2020 and 2019, respectively, for the life insurance and mortgage segments.

A surplus note receivable in the amount of $4,000,000 at December 31, 2020 and 2019, from Security National Life, was eliminated in consolidation.

See Notes 1 and 17 for additional information regarding restricted assets.

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9) Income Taxes

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

9) Income Taxes

9)       Income Taxes

The Company’s income tax liability is summarized as follows:

	December 31
	2020	2019
Current	$    2,595,877	$    1,410,153
Deferred	22,662,923	17,276,819
Total	$  25,258,800	$   18,686,972

Significant components of the Company’s deferred tax (assets) and liabilities are approximately as follows:

	December 31
	2020	2019
Assets
Future policy benefits	$  (12,657,045)	$  (12,450,229)
Loan loss reserve	(5,352,942)	(1,053,256)
Unearned premium	(699,011)	(760,556)
Net operating loss	(334,085)	(438,420)
Deferred compensation	(2,833,298)	(1,996,865)
Deposit obligations	(610,041)	(619,633)
Other	(1,269,533)	(1,020,718)
Less: Valuation allowance	961,920	2,439,394
Total deferred tax assets	(22,794,035)	(15,900,283)
Liabilities
Deferred policy acquisition costs	16,430,001	15,536,717
Basis difference in property, equipment and real estate	5,312,787	3,638,512
Value of business acquired	1,880,602	2,074,096
Deferred gains	12,124,226	5,169,104
Trusts	1,064,387	1,064,387
Tax on unrealized appreciation	8,644,955	5,694,286
Total deferred tax liabilities	45,456,958	33,177,102
Net deferred tax liability	$  22,662,923	$   17,276,819

The valuation allowance relates to differences between recorded deferred tax assets and liabilities and ultimate anticipated realization.  The Company has recorded a valuation allowance related to Kilpatrick Life Insurance Company that was acquired in December 2019.

The Company paid $11,813,120 and $4,861,318 in income taxes for the years ended December 31, 2020 and 2019, respectively.

The Company’s income tax expense is summarized as follows for the years ended December 31:

	2020	2019
Current
Federal	$  10,678,612	$    4,404,041
State	2,320,233	504,272
	12,998,845	4,908,313
Deferred
Federal	2,677,943	(1,551,725)
State	176,726	(306,172)
	2,854,669	(1,857,897)
Total	$  15,853,514	$    3,050,416

The reconciliation of income tax expense at the U.S. federal statutory rates is as follows:

	2020	2019
Computed expense at statutory rate	$  15,004,527	$    2,928,226
State tax expense, net of federal tax benefit	1,972,598	156,499
Change in valuation allowance	(1,477,474)	194,364
Other, net	353,863	(228,673)
Income tax expense	$  15,853,514	$    3,050,416

The Company’s overall effective tax rate for the years ended December 31, 2020 and 2019 was 22.2% and 21.9% respectively.  The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% partially due to its provision for state income taxes and a decrease to the valuation allowance related to Kilpatrick Life Insurance Company that decreased the effective income tax rate when compared to the prior year.

At December 31, 2020, the Company had no significant unrecognized tax benefits. As of December 31, 2020, the Company does not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months. Federal and state income tax returns for 2017 through 2020 are subject to examination by taxing authorities.

Net Operating Losses and Tax Credit Carryforwards:

Year of Expiration
2021	$       17,100
2022	-
2023	-
2024	-
2025	-
Thereafter up through 2037	1,405,155
	$   1,422,255

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10) Reinsurance, Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

10) Reinsurance, Commitments and Contingencies

10)       Reinsurance, Commitments and Contingencies

Reinsurance

The Company follows the procedure of reinsuring risks in excess of a specified limit, which ranged from $25,000 to $100,000 during the years 2020 and 2019. The Company is liable for these amounts in the event such reinsurers are unable to pay their portion of the claims. The Company has also assumed insurance from other companies having insurance in force amounting to approximately $96,000,000 and approximately $99,000,000 at December 31, 2020 and 2019, respectively.

Mortgage Loan Loss Settlements

Future loan losses can be extremely difficult to estimate. However, the Company believes that its reserve methodology and its current practice of property preservation allow it to estimate potential losses on loans sold. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2020 and 2019, the balances were $20,584,000 and $4,046,000, respectively. The Company believes that the final loan loss reserve as of December 31, 2020, represents its best estimate for adequate loss reserves on loans sold.

Mortgage Loan Loss Litigation

Settlement Agreement and Mutual Release with Lehman Brothers Holdings Inc.

From 2004 to early 2008, SecurityNational Mortgage Company (“SecurityNational Mortgage”), a wholly owned subsidiary of the Company, originated “limited documentation” or “reduced documentation” loans which were sold to certain affiliates of Lehman Brothers Holdings Inc. (“Lehman Holdings”). Certain of these loans became the subject of disputes between SecurityNational Mortgage and Lehman Holdings and certain Lehman Holdings affiliates. Lehman Holdings filed a Petition for Relief under Chapter 11 of the United States Bankruptcy Code in 2008. In May of 2011, SecurityNational Mortgage filed a complaint in U.S. District Court against certain Lehman Holdings affiliates.  In June of 2011, Lehman Holdings filed a complaint in Federal District Court against SecurityNational Mortgage, both of which were later resolved. In 2016, certain other pending loan disputes between SecurityNational Mortgage and Lehman Holdings became the subject of an unsuccessful, non-binding alternate dispute resolution mediation proceeding.  

Thereafter, in 2016, Lehman Holdings filed an adversary proceeding complaint against approximately 150 mortgage loan originators, including SecurityNational Mortgage, in the U.S. Bankruptcy Court of the Southern District of New York, which included seeking damages relating to the alleged obligations of the defendants under indemnification provisions of alleged agreements, in amounts to be determined at trial, including interest, attorneys’ fees and costs incurred by Lehman Holdings in enforcing the obligations of the defendants. The complaint was later amended with the latest amended complaint filed against SecurityNational Mortgage on December 27, 2016, seeking damages to be determined at trial, including interest, attorneys’ fees and costs. This complaint involved approximately 135 mortgage loans, there being millions of dollars allegedly in dispute. These claims against SecurityNational Mortgage were asserted as a result of Lehman Holdings’ earlier settlements with the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Corporation (“Freddie Mac”).

In 2018, Lehman Holdings filed a separate adversary proceeding complaint against SecurityNational Mortgage. This adversary proceeding allegedly involved approximately 577 mortgage loans relative to private securitization trusts (“RMBS Loans”) and millions of dollars in damages. Thereafter, Lehman Holdings made a filing that effectively reduced the number of RMBS Loans to 248. This proceeding was in addition to the above-referenced proceeding involving the Fannie Mae and Freddie Mac mortgage loans. As with the above-referenced proceeding, damages were sought including interest, costs, and attorneys’ fees.

SecurityNational Mortgage, as well as other defendants, have been involved in written discovery, and production of documents relative to the cases, and the filing of motions. The deposition phase of the cases was yet to begin, as well as the later expert witness phase. Those phases would require substantial expenditures of legal fees and costs.

On February 1, 2021, SecurityNational Mortgage executed a settlement agreement with Lehman Holdings in relation to these two adversary proceedings wherein all mortgage loan related claims were resolved, thereby ending all liabilities asserted by Lehman Holdings and conclusively ending all proceedings between SecurityNational Mortgage and Lehman Holdings. In accordance with GAAP, the full amount of SecurityNational Mortgage’s settlement payment has been accounted for in the Company’s loan loss reserve as of December 31, 2020.

Non-Cancelable Leases

The Company leases office space and equipment under various non-cancelable agreements. See Note 24 regarding leases.

Other Contingencies and Commitments

The Company has entered into commitments to fund construction and land development loans and has also provided financing for land acquisition and development. As of December 31, 2020, the Company’s commitments were approximately $185,751,000, for these loans of which $115,898,000 had been funded. The Company advances funds once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 80% of appraised value. The Company receives fees and interest for these loans and the interest rate is generally fixed 5.50% to 8.00% per annum. Maturities range between six and eighteen months.

The Company belongs to a captive insurance group for certain casualty insurance, worker compensation and liability programs. Insurance reserves are maintained relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive insurance management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. If actual claims or adverse development of loss reserves occurs and exceed these estimates, additional reserves may be required. The estimation process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date.

The Company is a defendant in various other legal actions arising from the normal conduct of business. Management believes that none of the actions will have a material effect on the Company’s financial position or results of operations. Based on management’s assessment and legal counsel’s representations concerning the likelihood of unfavorable outcomes, no amounts have been accrued for the above claims in the consolidated financial statements.

The Company is not a party to any other material legal proceedings outside the ordinary course of business or to any other legal proceedings, which, if adversely determined, would have a material adverse effect on its financial condition or results of operations.

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11) Retirement Plans

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

11) Retirement Plans

11)       Retirement Plans

The Company and its subsidiaries have a noncontributory Employee Stock Ownership Plan (“ESOP”) for all eligible employees. Eligible employees are primarily those with more than one year of service, who work in excess of 1,000 hours per year. Contributions, which may be in cash or stock of the Company, are determined annually by the Board of Directors. The Company’s contributions are allocated to eligible employees based on the ratio of each eligible employee’s compensation to total compensation for all eligible employees during each year. The Company did not make any contributions for the years ended December 31, 2020 and 2019. On November 25, 2019, the Company distributed a “Notice of Intent to Terminate” the ESOP Plan to all current plan participants. The Company also filed Form 5310 “Application for Determination for Terminating Plan”, with the IRS on December 6, 2019. Beginning in the 4^th quarter of 2020, the Company began to distribute the ESOP Plan assets to participants that had made a distribution election. The Company is awaiting approval of its application from the IRS prior to its final distribution of the ESOP Plan assets to the participants. At December 31, 2020, the ESOP held 231,312 shares of Class A and 118,880 shares of Class C common stock of the Company. All shares held by the ESOP have been allocated to the participating employees and all shares held by the ESOP are considered outstanding for purposes of computing earnings per share.

The Company has three 401(k) savings plans covering all eligible employees, as defined above, which includes employer participation in accordance with the provisions of Section 401(k) of the Internal Revenue Code. The plans allow participants to make pretax contributions up to a maximum of $19,500 and $19,000 for the years 2020 and 2019, respectively or the statutory limits. Beginning January 1, 2008, the Company elected to be a “Safe Harbor” Plan for its matching 401(k) contributions. The Company matched 100% of up to 3% of an employee’s total annual compensation and matched 50% of 4% to 5% of an employee’s annual compensation. The match was in Company stock. The Company’s contribution for the years ended December 31, 2020 and 2019 was $1,690,568 and $695,560, respectively under the “Safe Harbor” plan.

In 2001, the Company’s Board of Directors adopted a Non-Qualified Deferred Compensation Plan, and this plan was amended in 2005. Under the terms of the Plan, the Company will provide deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Board has appointed a Committee of the Company to be the Plan Administrator and to determine the employees who are eligible to participate in the plan. The employees who participate may elect to defer a portion of their compensation into the plan. The Company may contribute into the plan at the discretion of the Company’s Board of Directors. The Company did not make any contributions for 2020 and 2019.

Effective December 4, 2018, the Board members approved a motion to extend the Chief Executive Officer’s employment agreement, dated December 4, 2012, for an additional four-year term ending December 2022. In the event of disability, the Chief Executive Officer’s salary would be continued for up to five years at 75% of its current level of compensation. In the event of a sale or merger of the Company and the Chief Executive Officer is not retained in his current position, the Company would be obligated to continue paying the Chief Executive Officer’s current compensation and benefits for seven years following the merger or sale. The agreement further provides that the Chief Executive Officer is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 65), (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of twenty years in annual installments in the amount equal to 75% of his then current level of compensation. In the event that the Chief Executive Officer dies prior to receiving all retirement benefits thereunder, the remaining benefits are to be paid to his heirs. The Company expensed $900,000 and $660,000 during the years ended December 31, 2020 and 2019, respectively, to cover the present value of anticipated retirement benefits under the employment agreement. The liability accrued was $6,656,363 and $5,722,837 as of December 31, 2020 and 2019, respectively.

The Company, through its wholly owned subsidiary, SecurityNational Mortgage, also has an employment agreement with its former Vice President of Mortgage Operations and President of SecurityNational Mortgage, who retired from the Company on December 31, 2015. Under the terms of the employment agreement, this individual is entitled to receive retirement benefits from the Company for a period of ten years in an amount equal to 50% of his rate of compensation at the time of his retirement, which was $267,685 for the year ended December 31, 2015. Such retirement payments are paid monthly during the ten-year period. In the event that this individual dies prior to receiving all of his retirement benefits under his employment agreement, the remaining benefits will be made to his heirs. The company paid $133,843 and $133,843 in retirement compensation to this individual during the years ended December 31, 2020 and 2019, respectively. The liability accrued was $669,212 and $803,055 as of December 31, 2020 and 2019, respectively and is included in Other liabilities and accrued expenses on the consolidated balance sheets.

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12) Capital Stock

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

12) Capital Stock

12)       Capital Stock

The Company has one class of preferred stock of $1.00 par value, 5,000,000 shares authorized, of which none are issued. The preferred stock is non-voting.

The Company has two classes of common stock with shares outstanding, Class A common shares and Class C common shares. Class C shares have 10 votes per share on all matters except for the election of one third of the directors who are elected solely by the Class A shares. Class C shares are convertible into Class A shares at any time on a one to one ratio. The decrease in treasury stock was the result of treasury stock being used to fund the company’s 401(k) Plans.

Stockholders of both Class A and Class C common stock have received 5% stock dividends in the years 1990 through 2019, and a 7.5% stock dividend in the year 2020, as authorized by the Company’s Board of Directors.

The Company has Class B common stock of $1.00 par value, 5,000,000 shares authorized, of which none are issued. Class B shares are non-voting stock except to any proposed amendment to the Articles of Incorporation which would affect Class B common stock.

The following table summarizes the activity in shares of capital stock for the two-year period ended December 31, 2020:

	Class A	Class C
Outstanding shares at December 31, 2018	15,304,798	2,193,643
Exercise of stock options	32,517	191,443
Stock dividends	767,178	119,087
Conversion of Class C to Class A	3,286	(3,286)
Outstanding shares at December 31, 2019	16,107,779	2,500,887
Exercise of stock options	68,970	130,820
Stock dividends	405,210	61,720
Conversion of Class C to Class A	13,824	(13,824)
Outstanding shares at December 31, 2020	16,595,783	2,679,603

Earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. In accordance with GAAP, the basic and diluted earnings per share amounts were calculated as follows:

	2020	2019
Numerator:
Net earnings	$   55,596,613	$   10,893,519
Denominator:
Denominator for basic earnings
per share-weighted-average shares	18,831,991	18,562,056
Effect of dilutive securities
Employee stock options	443,260	127,608
Dilutive potential common shares	443,260	127,608
Denominator for diluted earnings
per share-adjusted weighted-average
shares and assumed conversions	19,275,251	18,689,664
Basic earnings per share	$2.95	$0.59
Diluted earnings per share	$2.88	$0.58

For the years ended December 31, 2020 and 2019, there were -0- and 382,289 of anti-dilutive employee stock option shares, respectively, that were not included in the computation of diluted net earnings per common share as their effect would be anti-dilutive.

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13) Stock Compensation Plans

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

13) Stock-based Compensation

13)       Stock Compensation Plans

The Company has two fixed option plans (the “2013 Plan” and the “2014 Director Plan”). Compensation expense for options issued of $358,878 and $256,996 has been recognized under these plans for the years ended December 31, 2020 and 2019, respectively, and is included in personnel expenses on the consolidated statements of earnings. As of December 31, 2020, the total unrecognized compensation expense related to the options issued was $39,152, which is expected to be recognized over the vesting period of one year.

The fair value of each option granted is estimated on the date of grant using the Black Scholes Option Pricing Model. The Company estimates the expected life of the options using the simplified method. Future volatility is estimated based upon the weighted historical volatility of the Company’s Class A common stock over a period equal to the expected life of the options. The risk-free interest rate for the expected life of the options is based upon the Federal Reserve Board’s daily interest rates in effect at the time of the grant.

The following table summarizes the assumptions used in estimating the fair value of each option granted along with the weighted-average fair value of the options granted:

			Assumptions
Grant Date	Plan	Weighted-Average Fair Value of Each Option	Expected Dividend Yield	Underlying stock FMV	Weighted-Average Volatility	Weighted-Average Risk-Free Interest Rate	Weighted-Average Expected Life (years)
March 27, 2020	All Plans	$            0.65	5%	$      3.76	32.29%	1.64%	4.82
December 6, 2019	All Plans	$            0.96	5%	$      5.19	32.79%	1.64%	4.83
January 17, 2019	All Plans	$            1.12	5%	$      4.98	36.04%	2.56%	5.31

Activity of the stock option plans is summarized as follows:

	Number of Class A Shares	Weighted Average Exercise Price	Number of Class C Shares	Weighted Average Exercise Price
Outstanding at January 1, 2019	1,011,274	$    4.49	577,280	$    5.15
Adjustment for the effect of stock dividends	51,018		28,295
Granted	81,000		180,000
Exercised	(45,834)		(191,443)
Cancelled	(11,405)		-
Outstanding at December 31, 2019	1,086,053	$    4.41	594,132	$    5.36
Adjustment for the effect of stock dividends	27,968		19,354
Granted	77,000		180,000
Exercised	(116,487)		(130,820)
Cancelled	(1,671)		-
Outstanding at December 31, 2020	1,072,863	$    4.33	662,666	$    4.73
Exercisable at end of year	1,053,903	$    4.45	616,542	$    4.91
Available options for future grant	325,372		266,500
Weighted average contractual term of options
outstanding at December 31, 2020	5.50 years		6.71 years
Weighted average contractual term of options
exercisable at December 31, 2020	5.43 years		6.63 years
Aggregated intrinsic value of options outstanding
at December 31, 2020 (1)	$4,311,983		$2,396,954
Aggregated intrinsic value of options exercisable
at December 31, 2020 (1)	$4,223,251		$2,183,399
(1) The Company used a stock price of $8.35 as of December 31, 2020 to derive intrinsic value.

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the years ended December 31, 2020 and 2019 was $663,901 and $271,220, respectively.

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14) Statutory Financial Information and Dividend Limitations

12 Months Ended

Dec. 31, 2020

Insurance [Abstract]

14) Statutory Financial Information and Dividend Limitations

14)       Statutory Financial Information and Dividend Limitations

The Company’s insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the NAIC, as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed.

All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner and/or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis.

Statutory net income and capital and surplus of the Company’s insurance subsidiaries, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities are as follows:

	Statutory Net Income			Statutory Capital and Surplus
	2020	2019		2020	2019
Amounts by insurance subsidiary:
Security National Life Insurance Company	$  6,054,764	$  3,589,552		$  53,089,185	$  49,390,181
Kilpatrick Life Insurance Company	1,574,128	12,752,100	(1)	15,177,996	15,208,071
First Guaranty Insurance Company	790,221	1,078,733		7,045,644	6,352,670
Memorial Insurance Company of America	55	(107)		1,088,034	1,088,559
Southern Security Life Insurance Company, Inc.	183	87		1,581,647	1,588,396
Trans-Western Life Insurance Company	(1,527)	3,773		510,636	512,163
Total	$  8,417,824	$17,424,138		$  78,493,142	$  74,140,040
(1) Includes 12 months even though Kilpatrick Life Insurance Company wasn't acquired by the Company until December 2019.

The Utah, Arkansas, Louisiana, Mississippi and Texas Insurance Departments impose minimum risk-based capital (RBC) requirements that were developed by the NAIC on insurance enterprises. The formulas for determining the RBC specify various factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio (the Ratio) of the enterprise’s regulatory total adjusted capital, as defined by the NAIC, to its authorized control level, as defined by the NAIC. Enterprises below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The life insurance subsidiaries each have a ratio that is greater than the first level of regulatory action as of December 31, 2020.

Generally, the net assets of the life insurance subsidiaries available for transfer to the Company are limited to the amounts of the life insurance subsidiaries net assets, as determined in accordance with statutory accounting practices, that exceed minimum statutory capital requirements. Additional requirements must be met depending on the state, and payments of such amounts as dividends are subject to approval by regulatory authorities.

Under the Utah Insurance Code, Security National Life Insurance Company is permitted to pay a stockholder dividend to the Company as long as the Company provides the Utah Insurance Commissioner (the “Utah Commissioner”) with at least 30 days notice and the aggregate amount of all such dividends in any 12 month period does not exceed the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year, or (ii) net gain from operations, not including realized capital gains, for the immediately preceding calendar year, not including pro rata distributions of the Company’s own securities. In determining whether a dividend is extraordinary, the Company may include carryforward net income from the previous two calendar years, excluding realized capital gains less dividends paid in the second and immediately preceding calendar years. Security National Life Insurance Company will be permitted to pay a dividend to the Company in excess of the lesser of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Utah Commissioner and the Utah Commissioner either approves the distribution of the dividend or does not disapprove the distribution within 30 days of its filing. In all cases, a dividend may not be paid that would reduce the insurer’s total adjusted capital below the insurer’s company action level risk-based capital, as defined for statutory reporting purposes. Amounts available to be paid as dividends in the next 12 months totals approximately $5,309,000.

Under the Louisiana Insurance Code, First Guaranty Insurance Company and Kilpatrick Life Insurance Company are permitted to pay a stockholder dividend to Security National Life as long as their capital has been (i) fully paid in cash, (ii) is unimpaired, (iii) has a surplus beyond its capital stock and (iv) has a surplus beyond its minimum required surplus. In 2019, First Guaranty Insurance Company paid to Security National Life a cash dividend of $500,000 and Kilpatrick Life Insurance Company paid a cash dividend of $3,000,000. Amounts available to be paid as dividends at December 31, 2020 totaled approximately $3,146,000 for First Guaranty Insurance Company and totaled approximately $11,478,000 for Kilpatrick Life Insurance Company.

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15) Business Segment Information

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

15) Business Segment Information

15)       Business Segment Information

Description of Products and Services by Segment

The Company has three reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment consists of life insurance premiums and operating expenses from the sale of insurance products sold by the Company’s independent agency force and net investment income derived from investing policyholder and segment surplus funds. The Company’s cemetery and mortuary segment consists of revenues and operating expenses from the sale of at-need cemetery and mortuary merchandise and services at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10% or more of the purchase price and the net investment income from investing segment surplus funds. The Company’s mortgage segment consists of fee income and expenses from the originations of residential mortgage loans and interest earned and interest expenses from warehousing pre-sold loans before the funds are received from financial institutional investors.

Measurement of Segment Profit or Loss and Segment Assets

The accounting policies of the reportable segments are the same as those described in the Significant Accounting Principles. Intersegment revenues are recorded at cost plus an agreed upon intercompany profit, and are eliminated upon consolidation.

Factors Management Used to Identify the Enterprise’s Reportable Segments

The Company’s reportable segments are business units that are managed separately due to the different products provided and the need to report separately to the various regulatory jurisdictions. The Company regularly reviews the quantitative thresholds and other criteria to determine when other business segments may need to be reported.

	2020
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       93,020,617	$       20,307,435	$     298,933,110	$                         -	$     412,261,162
Net investment income	54,811,486	807,695	710,622	-	56,329,803
Gains on investments and other assets	2,088,541	(162,652)	(39)	-	1,925,850
Other than temporary impairments	(370,975)	-	-	-	(370,975)
Other revenues	1,491,585	94,349	9,731,548	-	11,317,482
Intersegment revenues:
Net investment income	8,022,503	351,505	716,240	(9,090,248)	-
Total revenues	159,063,757	21,398,332	310,091,481	(9,090,248)	481,463,322
Expenses:
Death, surrenders and other policy benefits	62,841,360	-	-	-	62,841,360
Increase in future policy benefits	23,568,650	-	-	-	23,568,650
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	13,618,204	689,221	-	-	14,307,425
Selling, general and administrative expenses:
Commissions	4,149,241	1,506,320	118,770,736	-	124,426,297
Personnel	25,449,100	5,669,367	53,871,504	-	84,989,971
Advertising	614,114	391,836	4,374,946	-	5,380,896
Rent and rent related	861,602	89,253	5,922,706	-	6,873,561
Depreciation on property and equipment	843,335	488,570	746,833	-	2,078,738
Provision for loan loss reserve	-	-	16,506,030	-	16,506,030
Cost related to funding mortgage loans	-	-	9,877,700	-	9,877,700
Intersegment	621,161	142,999	580,976	(1,345,136)	-
Other	11,808,818	4,417,805	31,104,479	-	47,331,102
Interest expense:
Intersegment	410,024	152,175	7,182,913	(7,745,112)	-
Other	2,354,760	198,968	6,025,082	-	8,578,810
Costs of goods and services sold-mortuaries and cemeteries	-	3,252,655	-	-	3,252,655
Total benefits and expenses	147,140,369	16,999,169	254,963,905	(9,090,248)	410,013,195
Earnings before income taxes	$       11,923,388	$         4,399,163	$       55,127,576	$                         -	$       71,450,127
Income tax benefit (expense)	(1,433,901)	(1,009,137)	(13,410,476)	-	(15,853,514)
Net earnings	$       10,489,487	$         3,390,026	$       41,717,100	$                         -	$       55,596,613
Identifiable assets	$  1,171,158,235	$       56,335,498	$     408,325,196	$       (90,398,039)	$  1,545,420,890
Goodwill	$         2,765,570	$            754,018	$                        -	$                         -	$         3,519,588

	2019
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       81,860,610	$       15,296,235	$     131,976,082	$                         -	$     229,132,927
Net investment income	41,610,831	579,995	828,647	-	43,019,473
Gains on investments and other assets	138,330	530,098	59,939	-	728,367
Other revenues	2,128,961	95,197	7,956,005	-	10,180,163
Intersegment revenues:
Net investment income	4,455,034	443,548	508,637	(5,407,219)	-
Total revenues	130,193,766	16,945,073	141,329,310	(5,407,219)	283,060,930
Expenses:
Death, surrenders and other policy benefits	44,911,805	-	-	-	44,911,805
Increase in future policy benefits	23,568,497	-	-	-	23,568,497
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	14,199,152	435,425	-	-	14,634,577
Selling, general and administrative expenses:
Commissions	3,632,780	1,084,079	52,046,032	-	56,762,891
Personnel	20,311,591	5,177,810	38,731,869	-	64,221,270
Advertising	595,118	368,173	3,821,267	-	4,784,558
Rent and rent related	451,380	47,525	6,556,551	-	7,055,456
Depreciation on property and equipment	477,247	428,633	805,489	-	1,711,369
Cost related to funding mortgage loans	-	-	6,278,954	-	6,278,954
Intersegment	412,853	180,594	544,463	(1,137,910)	-
Other	11,769,097	3,241,023	19,912,641	-	34,922,761
Interest expense:
Intersegment	490,756	154,615	3,623,938	(4,269,309)	-
Other	2,808,081	288,768	4,289,839	-	7,386,688
Costs of goods and services sold-mortuaries and cemeteries	-	2,878,169	-	-	2,878,169
Total benefits and expenses	123,628,357	14,284,814	136,611,043	(5,407,219)	269,116,995
Earnings before income taxes	$         6,565,409	$         2,660,259	$         4,718,267	$                         -	$       13,943,935
Income tax benefit (expense)	(1,085,848)	(649,144)	(1,315,424)	-	(3,050,416)
Net earnings	$         5,479,561	$         2,011,115	$         3,402,843	$                         -	$       10,893,519
Identifiable assets	$  1,110,641,526	$       81,014,182	$     249,970,323	$     (110,701,544)	$  1,330,924,487
Goodwill	$         2,765,570	$            754,018	$                        -	$                         -	$         3,519,588

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16) Related Party Transactions

12 Months Ended

Dec. 31, 2020

Related Party Transactions [Abstract]

16) Related Party Transactions

16)       Related Party Transactions

The Company’s Board of Directors has a written procedure, which requires disclosure to the Board of any material interest or any affiliation on the part of any of its officers, directors or employees that is in conflict or may be in conflict with the interests of the Company. The Company and its Board of Directors is unaware of any related party transactions that require disclosure as of December 31, 2020.

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17) Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

17) Fair Value of Financial Instruments

17)       Fair Value of Financial Instruments

GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. GAAP also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value measurements are classified under the following hierarchy:

Level 1: Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.

Level 2: Financial assets and financial liabilities whose values are based on the following:

a) Quoted prices for similar assets or liabilities in active markets;

b) Quoted prices for identical or similar assets or liabilities in non-active markets; or

c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect the Company’s estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.

The Company utilizes a combination of third-party valuation service providers, brokers, and internal valuation models to determine fair value.

The following methods and assumptions were used by the Company in estimating the fair value disclosures related to significant financial instruments:

The items shown under Level 1 and Level 2 are valued as follows:

Fixed Maturity Securities Available for Sale: The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements (considered Level 3 investments), are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments.

Equity Securities: The fair values for equity securities are based on quoted market prices.

Loans Held for Sale: The Company elected the fair value option for loans held for sale. The fair value is based on quoted market prices, when available.  When a quoted market price is not readily available, the Company uses the market price from its last sale of similar assets.

Restricted Assets: A portion of these assets include mutual funds, equity securities and fixed maturity securities that have quoted market prices that are used to determine fair value. Also included are cash and cash equivalents and participations in mortgage loans. The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature.

Cemetery Perpetual Care Trust Investments: A portion of these assets include equity securities and fixed maturity securities that have quoted market prices that are used to determine fair value. Also included are cash and cash equivalents. The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature

Call and Put Options: The Company uses quoted market prices to value its call and put options.

Additionally, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

The items shown under Level 3 are valued as follows:

Loan Commitments and Forward Sale Commitments: The Company’s mortgage segment enters into loan commitments with potential borrowers and forward sale commitments to sell loans to third-party investors. The Company also uses a hedging strategy for these transactions. A loan commitment binds the Company to lend funds to a qualified borrower at a specified interest rate and within a specified period of time, generally up to 30 days after issuance of the loan commitment. Loan commitments are defined to be derivatives under GAAP and are recognized at fair value on the consolidated balance sheets with changes in their fair values recorded in current earnings.

The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted MBS prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of mortgage loans that will fund within the terms of the commitments.

Impaired Mortgage Loans Held for Investment: The Company believes that the fair value of these nonperforming loans will approximate the unpaid principal balance expected to be recovered based on the fair value of the underlying collateral.  For residential and commercial properties, the collateral value is estimated by obtaining an independent appraisal.  The appraisal typically considers area comparables and property condition as well as potential rental income that could be generated (particularly for commercial properties).  For residential construction loans, the collateral is typically incomplete, so fair value is estimated as the replacement cost using data from a provider of building cost information to the real estate construction.

Impaired Real Estate Held for Investment: The Company believes that in an orderly market, fair value will approximate the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for future estimated policy claims.

It should be noted that for replacement cost, when determining the fair value of real estate held for investment, the Company uses a provider of building cost information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and projected the present value of the net rental income over seven years. The Company also considers area comparables and property condition when determining fair value.

In addition to this analysis performed by the Company, the Company depreciates Real Estate Held for Investment. This depreciation reduces the book value of these properties and lessens the exposure to the Company from further deterioration in real estate values.

Mortgage Servicing Rights: The Company initially recognizes MSRs at their estimated fair values derived from the net cash flows associated with the servicing contracts, where the Company assumes the obligation to service the loan in the sale transaction.

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the 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

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the consolidated balance sheet at December 31, 2019.

	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	$       355,977,820	$                        -	$ 352,761,438	$          3,216,382
Equity securities	7,271,165	7,271,165	-	-
Loans held for sale	213,457,632	-	-	213,457,632
Restricted assets (1)	1,008,867	-	1,008,867	-
Restricted assets (2)	1,976,480	1,976,480	-	-
Cemetery perpetual care trust investments (1)	975,673	-	975,673	-
Cemetery perpetual care trust investments (2)	1,605,451	1,605,451	-	-
Derivatives - loan commitments (3)	2,722,580	-	-	2,722,580
Total assets accounted for at fair value on a    recurring basis	$       584,995,668	$        10,853,096	$ 354,745,978	$      219,396,594
Liabilities accounted for at fair value on a    recurring basis
Derivatives - call options (4)	$              (62,265)	$             (62,265)	$                    -	$                         -
Derivatives - put options (4)	(22,282)	(22,282)	-	-
Derivatives - loan commitments (4)	(231,347)	-	-	(231,347)
Total liabilities accounted for at fair value    on a recurring basis	$            (315,894)	$             (84,547)	$                    -	$           (231,347)
(1) Fixed maturity securities available for sale
(2) Mutual funds and 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

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

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2019, 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
	12/31/2019	Technique	Input(s)	Value	Value	Average
Loans held for sale	$213,457,632	Market approach	Investor contract pricing as a percentage of unpaid principal balance	98.0%	109.0%	103.0%
Derivatives - loan commitments (net)	2,491,233	Market approach	Pull-through rate	1.0%	92.0%	81.0%
			Initial-Value	N/A	N/A	N/A
			Servicing	0 bps	318 bps	79 bps
Fixed maturity securities available for sale	3,216,382	Broker quotes	Pricing quotes	$    95.02	$  115.80	$   107.98

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

	Net Derivatives 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/purchases	-		5,627,013,749		-
Sales, maturities and paydowns	-		(5,600,045,285)		(1,042,400)
Transfer to mortgage loans held for investment	-		(16,960,549)		-
Total gains (losses):
Included in earnings	7,637,377	(1)	199,306,871	(1)	3,408	(2)
Included in other comprehensive income	-		-		23,785
Balance - December 31, 2020	$         10,128,610		$      422,772,418		$              2,201,175
(1) As a component of mortgage fee income on the consolidated statements of earnings
(2) As a component of net investment income on the consolidated statements of earnings

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

	Net Derivatives Loan Commitments	Loans Held for Sale	Fixed Maturity Securities Available for Sale
Balance - December 31, 2018	$           1,591,816	$      136,210,853	$                             -
Originations/purchases	-	2,606,839,175	-
Sales, maturities and paydowns	-	(2,580,875,055)	-
Transfer to mortgage loans held for investment	-	(31,881,851)	-
Transfer from fixed maturity securities held to maturity	-		3,216,382
Total gains (losses):
Included in earnings (1)	899,417	83,164,510	-
Balance - December 31, 2019	$           2,491,233	$      213,457,632	$              3,216,382
(1) As a component of mortgage fee income on the consolidated statements of earnings

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 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

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 consolidated balance sheet at December 31, 2019.

	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	$        1,302,025	$                        -	$                -	$        1,302,025
Impaired real estate held for investment	8,375,884	-	-	8,375,884
Total assets accounted for at fair value on    a nonrecurring basis	$        9,677,909	$                        -	$                -	$        9,677,909

Fair Value of Financial Instruments Carried at Other Than Fair Value

ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 2020 and 2019.

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

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, 2019:

	Carrying Value	Level 1	Level 2	Level 3	Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential	$   110,253,678	$                -	$                -	$   115,320,638	$   115,320,638
Residential construction	88,651,967	-	-	88,651,967	88,651,967
Commercial	37,788,901	-	-	39,289,462	39,289,462
Mortgage loans held for investment, net	236,694,546	$                -	$                -	$  243,262,067	$   243,262,067
Policy loans	14,762,805	-	-	14,762,805	14,762,805
Insurance assignments, net (1)	39,614,939	-	-	39,614,939	39,614,939
Restricted assets (2)	2,275,756	-	-	2,289,679	2,289,679
Cemetery perpetual care trust investments (2)	524,000	-	-	536,553	536,553
Mortgage servicing rights, net	17,155,529	-	-	22,784,571	22,784,571
Liabilities
Bank and other loans payable	$ (217,572,612)	$                -	$                -	$ (217,572,612)	$ (217,572,612)
Policyholder account balances (3)	(45,154,180)	-	-	(41,828,469)	(41,828,469)
Future policy benefits - annuities (3)	(113,579,830)	-	-	(117,304,614)	(117,304,614)
(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

The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of financial instruments are summarized as follows:

Mortgage Loans Held for Investment: The estimated fair value of the Company’s mortgage loans held for investment is determined using various methods. The Company’s mortgage loans are grouped into three categories: Residential, Residential Construction and Commercial. When estimating the expected future cash flows, it is assumed that all loans will be held to maturity, and any loans that are non-performing are evaluated individually for impairment.

Residential – The estimated fair value of mortgage loans is determined through a combination of discounted cash flows (estimating expected future cash flows of payments and discounting them using current interest rates from single family mortgages) and considering pricing of similar loans that were sold recently.

Residential Construction – These loans are primarily short in maturity. Accordingly, the estimated fair value is determined to be the carrying value.

Commercial – The estimated fair value is determined by estimating expected future cash flows of payments and discounting them using current interest rates for commercial mortgages.

Policy Loans: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values because they are fully collateralized by the cash surrender value of the underlying insurance policies.

Insurance Assignments, Net: These investments are short in maturity. Accordingly, the carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Bank and Other Loans Payable: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values due to their relatively short-term maturities and variable interest rates.

Policyholder Account Balances and Future Policy Benefits-Annuities: Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 1.5% to 6.5%. The fair values for these investment-type insurance contracts are estimated based on the present value of liability cash flows. The fair values for the Company’s insurance contracts other than investment-type contracts are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk, such that the Company’s exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts.

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18) Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

18) Accumulated Other Comprehensive Income

18)       Accumulated Other Comprehensive Income

The following summarizes the changes in accumulated other comprehensive income:

	December 31
	2020	2019
Unrealized gains on fixed maturity securities available for sale	$    12,016,464	$    17,315,770
Amounts reclassified into net earnings	(2,772)	-
Net unrealized gains before taxes	12,013,692	17,315,770
Tax expense	(2,522,876)	(3,636,311)
Net	9,490,816	13,679,459
Unrealized gains on restricted assets (1)	41,225	35,550
Tax expense	(10,269)	(8,856)
Net	30,956	26,694
Unrealized gains on cemetery perpetual care trust investments (1)	(6,817)	29,904
Tax expense	1,698	(7,449)
Net	(5,119)	22,455
Unrealized gains for foreign currency translations adjustments	(46)	972
Tax expense	12	(243)
Net	(34)	729
Other comprehensive income changes	$      9,516,619	$    13,729,337
_______________
(1) Fixed maturity securities available for sale

The following is the accumulated balances of other comprehensive income as of December 31, 2020:

	Beginning Balance December 31, 2019	Change for the period	Ending Balance December 31, 2020
Unrealized gains on fixed maturity securities available for sale	$   13,679,459	$     9,490,816	$   23,170,275
Unrealized gains on restricted assets (1)	26,694	30,956	57,650
Unrealized gains (losses) on cemetery perpetual    care trust investments (1)	22,455	(5,119)	17,336
Foreign currency translation adjustments	(2,094)	(34)	(2,128)
Other comprehensive income	$   13,726,514	$     9,516,619	$   23,243,133
(1) Fixed maturity securities available for sale

The following is the accumulated balances of other comprehensive income as of December 31, 2019:

	Beginning Balance December 31, 2018	Change for the period	Ending Balance December 31, 2019
Unrealized gains on fixed maturity securities available for sale	$                    -	$   13,679,459	$   13,679,459
Unrealized gains on restricted assets (1)	-	26,694	26,694
Unrealized gains on cemetery perpetual care trust investments (1)	-	22,455	22,455
Foreign currency translation adjustments	(2,823)	729	(2,094)
Other comprehensive income (loss)	$         (2,823)	$   13,729,337	$   13,726,514
(1) Fixed maturity securities available for sale

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19) Derivative Instruments

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

19) Derivative Instruments

19) Derivative Instruments

The following table shows the fair value and notional amounts of derivative instruments as of December 31, 2020 and 2019.

	Fair Values and Notional Amounts of Derivative Instruments
		December 31, 2020			December 31, 2019
	Balance Sheet Location	Notional Amount	Asset Fair Value	Liability Fair Value	Notional Amount	Asset Fair Value	Liability Fair Value
Derivatives not designated as hedging instruments:
Loan commitments	Other assets and Other liabilities	$659,245,038	$12,592,672	$2,464,062	$224,202,514	$2,722,580	$231,347
Call options	Other liabilities	1,873,200	--	43,097	1,813,500	--	62,265
Put options	Other liabilities	--	--	--	1,573,100	--	22,282
Total		$661,118,238	$12,592,672	$2,507,159	$227,589,114	$2,722,580	$315,894

The following table shows the gain (loss) on derivatives for the periods presented. There were no gains or losses reclassified from accumulated other comprehensive income into income or gains or losses recognized in income on derivatives ineffective portion or any amounts excluded from effective testing.

		Net Amount Gain (Loss)
		Years ended December 31
Derivative	Classification	2020	2019
Loan commitments	Mortgage fee income	$        7,637,377	$             899,417
Call and put options	Gains on investments and other assets	$           272,758	$             626,208

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20) Acquisitions

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

20) Acquisitions

20)       Acquisitions

Kilpatrick Life Insurance Company

On December 13, 2019, the Company, through its wholly owned subsidiary, Security National Life Insurance Company (“Security National Life”) completed a stock purchase transaction with Kilpatrick Life Insurance Company, a Louisiana domiciled life insurance company (“Kilpatrick Life”) and its shareholders, which resulted in the purchase of all the outstanding shares of common stock of Kilpatrick Life. The closing of the transaction was subject to approval by the Louisiana Department of Insurance of the change of control of Kilpatrick Life, which was received on December 12, 2019. Under the terms of the transaction, the total Purchase Price that Security National Life paid for all the shares held by the Kilpatrick shareholders was $23,779,940 subject to a $1,400,000 holdback deposited into an interest bearing escrow account, as agreed with the shareholders. The current amount that is available to be disbursed to the prior owners is $598,949.

Kilpatrick Life has been in operation since 1932 and provides life insurance products and services through insurance plans such as permanent and term life insurance, asset protection plans, graded whole life insurance, and annuities. Additionally, it provides insurance services for emergencies and pre-arranged funeral services. Kilpatrick Life is based in Shreveport, Louisiana with additional offices in Jena, Alexandria, Minden, and Arcadia, Louisiana.

Kilpatrick Life employs a staff of almost 120 associates in four offices in Louisiana and is licensed to operate in Louisiana, Texas, Arkansas, Oklahoma, and Mississippi with the home office located in Shreveport, LA. It is the mission of Kilpatrick Life to continue providing the utmost service and protection for its policyholders for generations to come.

Prior to the stock purchase transaction, Security National life and Kilpatrick Life entered into a coinsurance agreement, effective October 1, 2019. After the effective date, Security National Life, as coinsurer, agreed to be responsible for and was obligated with respect to 100% of the contractual liabilities under the Kilpatrick Life’s life insurance policies in accordance with the terms and conditions of the policies and applicable law. Unless otherwise directed by Security National Life, as coinsurer, Kilpatrick Life continued to administer the policies on behalf of Security National Life, as coinsurer, for the duration of the coinsurance agreement.

As part of the coinsurance agreement, effective October 1, 2019, Security National Life acquired the following assets and assumed the following contractual liabilities.

Other investments and policy loans	$      9,124,459
Real estate held for investment	2,850,000
Mortgage loans held for investment	200,000
Receivables	131,258
Total assets acquired	12,305,717
Future policy benefits and unpaid claims	(165,404,970)
Other liabilities and accrued expenses	(5,259,341)
Total liabilities assumed	(170,664,311)
Cash received for reinsurance assumed	$  158,358,594

Contemporaneous with the stock purchase transaction, both Kilpatrick Life and Security National Life, as coinsurer, agreed to terminate the coinsurance agreement, to require the recapture of the life insurance policies by Kilpatrick Life and provided notification to the Louisiana Department of Insurance. The final settlement and transfer of the coinsurance trust assets from Security National Life back to Kilpatrick Life occurred shortly thereafter.

The estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition, on December 13, 2019, are shown in the following table. At the time of acquisition some of these assets and liabilities became intercompany items, and the Company has eliminated them for consolidation.

Fixed maturity securities, available for sale	$     22,766,520
Fixed maturity securities, held to maturity	16,436
Mortgage loans held for investment	8,011,660
Real estate held for investment	2,708,557
Other investments	446,655
Accrued investment income	183,527
Total investments	34,133,355
Cash and cash equivalents	6,900,654
Receivables, net	5,407,736	(1)
Receivables from reinsurers	168,105,064	(1)
Property and equipment, net	1,498,245
Value of business acquired	4,962,831
Deferred taxes	167,344
Other	712,323
Total assets acquired	221,887,552
Future policy benefits and unpaid claims	(189,071,407)
Accounts payable	(283,304)
Other liabilities and accrued expenses	(7,870,944)
Income taxes	(881,957)
Total liabilities assumed	(198,107,612)
Fair value of net assets acquired/consideration paid	$     23,779,940
Fair value of net assets acquired/consideration paid, net of cash acquired	$     16,879,286
(1) Receivable from reinsurers of $162,907,008 and receivables, net of $5,000,000 were settled with the recapture of the coinsurance agreement by Kilpatrick Life from Security National Life.

Kilpatrick Life’s revenues and net loss since the date of acquisition for the year ended December 31, 2019 were $1,461,011 and $848,031, respectively.

Probst Family Funerals and Cremations and Heber Valley Funeral Home

On February 15, 2019, the Company, through its wholly-owned subsidiary, Memorial Mortuary Inc., completed an asset purchase transaction with Probst Family Funerals and Cremations, LLC. (“Probst Family Funerals”) and Heber Valley Funeral Home, Inc. (“Heber Valley Funeral Home”). These funeral homes are both located in Heber Valley, a community situated about 45 miles southeast of Salt Lake City.

Under the terms of the transaction, as set forth in the Asset Purchase Agreement, dated February 15, 2019, Memorial Mortuary Inc. paid a net purchase price of $3,315,647 for the business and assets of Probst Family Funerals and Heber Valley Funeral Home, subject to a $150,000 holdback deposited into an escrow account. In August 2019, this escrow account was settled and $137,550 was paid to the prior owners.

The estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition were as follows:

Cash	$     53,859
Property and equipment	2,475,526
Receivables	13,620
Goodwill	754,018
Other	21,800
Total assets acquired	3,318,823
Bank and other loans payable	(3,176)
Total liabilities assumed	(3,176)
Fair value of net assets acquired/consideration paid	$ 3,315,647
Fair value of net assets acquired/consideration paid, net of cash acquired	$ 3,261,788

Probst Family Funerals and Heber Valley Funeral Home’s revenues and net earnings since the date of acquisition for the year ended December 31, 2019 were $796,992 and $97,400, respectively.

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21) Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

21) Mortgage Servicing Rights

21)       Mortgage Servicing Rights

The Company reports MSRs pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

The following table presents the MSR activity for the periods presented.

	December 31
	2020	2019
Amortized cost:
Balance before valuation allowance at beginning of year	$ 17,155,529	$ 20,016,822
MSR additions resulting from loan sales	29,896,465	4,194,502
Amortization (1)	(11,841,478)	(7,055,795)
Application of valuation allowance to write down MSRs    with other than temporary impairment	-	-
Balance before valuation allowance at year end	$ 35,210,516	$ 17,155,529
Valuation allowance for impairment of MSRs:
Balance at beginning of year	$                -	$                -
Additions	-	-
Application of valuation allowance to write down MSRs    with other than temporary impairment	-	-
Balance at year end	$                -	$                -
Mortgage servicing rights, net	$ 35,210,516	$ 17,155,529
Estimated fair value of MSRs at year end	$ 38,702,358	$ 22,784,571
(1) Included in other expenses on the consolidated statements of earnings

The following table summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the assumptions made by management in its December 31, 2020 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

	Estimated MSR Amortization
2021	$        4,724,439
2022	3,582,811
2023	3,030,850
2024	2,574,323
2025	2,200,840
Thereafter	19,097,253
Total	$      35,210,516

During the years ended December 31, 2020 and 2019, the Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the consolidated statements of earnings:

	2020	2019
Contractual servicing fees	$    8,940,612	$    7,212,164
Late fees	305,962	365,477
Total	$    9,246,574	$    7,577,641

The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio for the periods presented:

	Years Ended December 31
	2020	2019
Servicing UPB	$   5,070,287,864	$   2,804,139,415

The following key assumptions were used in determining MSR value:

	Prepayment Speeds	Average Life(Years)	Discount Rate
December 31, 2020	15.60	5.30	9.50
December 31, 2019	15.30	5.27	9.51

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22) Future Policy Benefits and Unpaid Claims

12 Months Ended

Dec. 31, 2020

Insurance [Abstract]

22) Future Policy Benefits and Unpaid Claims

22)       Future Policy Benefits and Unpaid Claims

The Company reports future policy benefits and unpaid claims pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

The following table provides information regarding future policy benefits and unpaid claims and the related receivable from reinsurers.

	Years Ended September 30
	2020	2019
Life	$   674,230,463	$654,585,723
Annuities	109,522,112	113,579,831
Policyholder account balances	44,026,809	45,154,180
Accident and health	651,140	667,428
Other policyholder funds	4,354,746	4,530,227
Reported but unpaid claims	8,689,723	4,891,922
Incurred but not reported claims	3,315,094	2,191,607
Gross future policy benefits and unpaid claims	$   844,790,087	$825,600,918
Receivable from reinsurers
Life	10,841,567	11,040,398
Annuities	4,047,301	4,038,007
Accident and health	90,231	90,113
Reported but unpaid claims	571,057	569,250
Incurred but not reported claims	19,000	10,000
Total receivable from reinsurers	15,569,156	15,747,768
Net future policy benefits and unpaid claims	$   829,220,931	$809,853,150

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23) Revenues From Contracts With Customers

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

23) Revenues From Contracts With Customers

23)        Revenues from Contracts with Customers

The Company reports revenues from contracts with customers pursuant to ASC No. 606, Revenue from Contracts with Customers.

Contracts with Customers

Information about Performance Obligations and Contract Balances

The Company’s cemetery and mortuary segment sells a variety of goods and services to customers in both at-need and pre-need situations. Due to the timing of the fulfillment of the obligation, revenue is deferred until that obligation is fulfilled. The total contract liability for future obligations is included in deferred pre-need cemetery and mortuary contract revenues on the consolidated balance sheets and, as of December 31, 2020 and 2019, the balances were $13,080,179 and 12,607,978, respectively.

The Company’s three types of future obligations are as follows:

Pre-need Merchandise and Service Revenue: All pre-need merchandise and service revenue is deferred and the funds are placed in trust until the need arises, the merchandise is received or the service is performed. The trust is then relieved, and the revenue and commissions are recognized. As of December 31, 2020 and 2019, the balances were $12,545,753 and $12,325,437, respectively.

At-need Specialty Merchandise Revenue: At-need specialty merchandise revenue consists of customizable merchandise ordered from a manufacturer such as markers and bases. When specialty merchandise is ordered, it can take time to manufacture and deliver the product. Revenue is deferred until the at-need merchandise is received. As of December 31, 2020 and 2019, the balances were $534,426 and $282,541, respectively. Deferred revenue for at-need specialty revenue is not placed in trust.

Deferred Pre-need Land Revenue: Deferred pre-need revenue and corresponding commissions are deferred until 10% of the funds are received from the customer through regular monthly payments. As of December 31, 2020 and 2019, the balances were $-0- and $-0-, respectively. Deferred pre-need land revenue is not placed in trust.

Complete payment of the contract does not constitute fulfillment of the performance obligation. Goods or services are deferred until such time the service is performed or merchandise is received. Pre-need contracts are required to be paid in full prior to a customer using a good or service from a pre-need contract. Goods and services from pre-need contracts can be transferred when paid in full from one owner to another. In such cases, the Company will act as an agent in transferring the requested goods and services. A transfer of goods and services does not fulfill an obligation and revenue remains deferred.

The opening and closing balances of the Company’s receivables, contract assets and contract liabilities are as follows:

	Contract Balances
	Receivables (1)	Contract Asset	Contract Liability
Opening (1/1/2020)	$       2,778,879	$                         -	$              12,607,978
Closing (12/31/2020)	4,119,988	-	13,080,179
Increase/(decrease)	1,341,109	-	472,201
	Contract Balances
	Receivables (1)	Contract Asset	Contract Liability
Opening (1/1/2019)	$       2,816,225	$                         -	$              12,508,625
Closing (12/31/2019)	2,778,879	-	12,607,978
Increase/(decrease)	(37,346)	-	99,353
(1) Included in Receivables, net on the consolidated balance sheets

The following table disaggregates the opening and closing balances of the Company’s contract balances.

	Contract Balances
	Contract Asset	Contract Liability
Pre-need merchandise and services	$                         -	$              12,325,437
At-need specialty merchandise	-	282,541
Pre-need land sales	-	-
Opening (1/1/2020)	$                         -	$              12,607,978
Pre-need merchandise and services	$                         -	$              12,545,753
At-need specialty merchandise	-	534,426
Pre-need land sales	-	-
Closing (12/31/2020)	$                         -	$              13,080,179
	Contract Balances
	Contract Asset	Contract Liability
Pre-need merchandise and services	$                         -	$              12,175,943
At-need specialty merchandise	-	327,302
Pre-need land sales	-	5,380
Opening (1/1/2019)	$                         -	$              12,508,625
Pre-need merchandise and services	$                         -	$              12,325,437
At-need specialty merchandise	-	282,541
Pre-need land sales	-	-
Closing (12/31/2019)	$                         -	$              12,607,978

The amount of revenue recognized for the years ended December 31, 2020 and 2019 that was included in the opening contract liability balance was $4,359,709 and $3,558,103, respectively.

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment.

Disaggregation of Revenue

The following table disaggregates revenue for the Company’s cemetery and mortuary contracts.

	Years Ended December 31
	2020	2019
Major goods/service lines
At-need	$    15,212,822	$    12,334,777
Pre-need	5,094,613	2,961,458
	$    20,307,435	$    15,296,235
Timing of Revenue Recognition
Goods transferred at a point in time	$    13,438,592	$    10,133,723
Services transferred at a point in time	6,868,843	5,162,512
	$    20,307,435	$    15,296,235

Significant Judgments and Estimates

The Company's cemetery and mortuary segment recognizes revenue on future performance obligations when goods are delivered and when services are performed and is not determined by the terms or payments of the contract as long as any good or service is paid in full prior to delivery. Prices are determined based on the market at the time a contract is created. Goods or services are not partially completed. There are no significant judgements, estimations or allocation methods when revenue should be recognized.

Practical Expedients

The Company has not elected to use any of the practical expedients under ASC 606.

Contract Costs

The Company's cemetery and mortuary segment defers certain costs associated with obtaining a contract on future obligations.

Pre-need Merchandise and Service Revenue: Pre-need merchandise and service revenues are deferred until the goods or services are delivered. Recognition can be years until the obligations are satisfied. Commissions and other costs are capitalized and deferred until the obligation is satisfied. Other costs include rent on pre-need offices and training rooms, and call center costs. Costs that are allocated based on a percentage include family service advisor compensation, bonuses, utilities and supplies that are all used to procure a pre-need sale.

At-need Specialty Merchandise Revenue: At-need specialty merchandise is ordered from a third-party manufacturer. Generally, at-need specialty merchandise is ordered and received within 90 days of order. These orders are also short-term in nature and are deferred until the product is received from the manufacturer and the obligation is satisfied.

Deferred Pre-need Land Revenue: Revenue is recognized on pre-need land sales when the customer has paid at least 10% toward the land price. In cases, where customers pay less than 10%, the revenue and associated commissions are deferred until such time when 10% of the contract price is received.

The following table disaggregates contract costs that are included in deferred policy and pre-need contract acquisition costs on the consolidated balances sheets.

	Years Ended December 31
	2020	2019
Pre-need merchandise and services	$           3,601,638	$           3,590,266
At-need specialty merchandise	5,302	10,688
Pre-need land sales	-	-
	$           3,606,940	$           3,600,954

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24) Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

24) Leases

24)       Leases

On January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02 regarding Leases ASC Topic 842. See Note 1 regarding the adoption of this standard.

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, 2020.

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 for the period presented:

	Year Ended December 31	Year Ended December 31
	2020	2019
Lease Cost
Finance lease cost:
Amortization of right-of-use assets (1)	$           58,576	$       38,351
Interest on lease liabilities (2)	7,341	9,001
Operating lease cost (3)	5,408,737	5,706,490
Short-term lease cost (3)(4)	222,311	233,318
Sublease income (3)	(394,758)	(663,242)
Total lease cost	$      5,302,207	$   5,323,918
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$      5,293,901	$   5,567,761
Operating cash flows from finance leases	7,341	9,001
Financing cash flows from finance leases	56,982	95,931
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$      5,631,193	$ 16,544,406
Finance leases	8,494	252,763
Weighted-average remaining lease term (in years)
Finance leases	2.74	3.23
Operating leases	5.40	4.67
Weighted-average discount rate
Finance leases	5.59%	5.47%
Operating leases	4.87%	5.06%
(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

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

	Finance Leases	Operating Leases
Lease payments due in:
2021	$          46,898	$         4,344,756
2022	34,458	3,004,271
2023	27,220	2,088,028
2024	4,354	1,567,924
2025	692	837,526
Thereafter	-	2,938,906
Total undiscounted lease payments	113,622	14,781,411
Less: Discount on cash flows	(8,671)	(2,859,527)
Present value of lease liabilities	$        104,951	$       11,921,884

The following table presents the Company’s right-of-use assets and lease liabilities for the period presented:

	Balance Sheet Location	Year Ended December 31 2020	Year Ended December 31 2019
Operating Leases
Right-of-use assets	Other assets	$      11,663,245	$     11,267,247
Lease liabilities	Other liabilities and accrued expenses	$      11,921,884	$     11,405,976
Finance Leases
Right-of-use assets		$          254,276	$         248,565
Accumulated amortization		(154,144)	(98,351)
Right-of-use assets, net	Property and equipment, net	$          100,132	$         150,214
Lease liabilities	Bank and other loans payable	$          104,951	$         153,439

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.

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1) Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

General Overview of Business

General Overview of Business

Security National Financial Corporation and its wholly owned subsidiaries (the “Company”) operate in three reportable business segments: life insurance, cemetery and mortuary, and mortgages. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products and accident and health insurance marketed primarily in the Intermountain West, California and eleven southern states. The cemetery and mortuary segment of the Company consists of eight mortuaries and five cemeteries in Utah and one cemetery in California. The mortgage segment is an approved government and conventional lender that originates and underwrites residential and commercial loans for new construction, existing homes and real estate projects primarily in Florida, Nevada, Texas, and Utah.

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP).

Principles of Consolidation

Principles of Consolidation

These consolidated financial statements include the financial statements of the Company and its majority owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

Use of Estimates

Management of the Company has made a number of estimates and assumptions related to the reported amounts of assets and liabilities, reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with GAAP. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative assets and liabilities; those used in determining deferred acquisition costs and the value of business acquired; those used in determining the value of mortgage loans foreclosed to real estate held for investment; those used in determining the liability for future policy benefits; those used in determining the value of mortgage servicing rights; those used in determining allowances for loan losses for mortgage loans held for investment; those used in determining loan loss reserve; and those used in determining deferred tax assets and liabilities. Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects.

Investments

Investments

The Company’s management determines the appropriate classifications of investments in fixed maturity securities and equity securities at the acquisition date and re-evaluates the classifications at each balance sheet date.

Fixed maturity securities available for sale are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded in accumulated other comprehensive income. On December 31, 2019, the Company changed the classification of its bond and preferred stock investments to available for sale from held to maturity. As a result, securities available for sale are carried at estimated fair value.

Equity securities are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded through net earnings.

Mortgage loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, net discounts, charge-offs and the related allowance for loan losses. Interest income is included in net investment income on the consolidated statements of earnings and is recognized when earned. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans. Origination fees are included in net investment income on the consolidated statements of earnings. Mortgage loans are secured by the underlying property and require an appraisal at the time of underwriting and funding. Generally, the Company will fund a loan not to exceed 80% of the loan’s collateral fair market value. Amounts over 80% will require additional collateral or mortgage insurance by an approved third-party insurer.

Real estate held for investment is carried at cost, less accumulated depreciation provided on a straight-line basis over the estimated useful lives of the properties, or is adjusted to a new basis for impairment in value, if any. Included are foreclosed properties which the Company intends to hold for investment purposes. These properties are recorded at the lower of cost or fair value upon foreclosure. Also, included are residential subdivision land developments which are carried at cost.

Real estate held for sale is carried at lower of cost or fair value. Depreciation is not recognized on real estate classified as held for sale.

Other investments and policy loans are carried at the aggregate unpaid balances, less allowances for losses.

Gains and losses on investments (except for equity securities carried at fair value through net earnings) arise when investments are sold (as determined on a specific identification basis) or are other than temporarily impaired. If in management’s judgment a decline in the value of an investment below cost is other than temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in judging whether an impairment is other than temporary include: the financial condition, business prospects and credit worthiness of the issuer, the length of time that fair value has been less than cost, the relative amount of the decline, and the Company’s ability and intent to hold the investment until the fair value recovers, which is not assured.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Loans Held for Sale

Loans Held for Sale

Accounting Standards Codification (“ASC”) No. 825, “Financial Instruments”, allows for the option to report certain financial assets and liabilities at fair value initially and at subsequent measurement dates with changes in fair value included in earnings. The option may be applied instrument by instrument, but it is irrevocable. The Company elected the fair value option for loans held for sale. The Company believes the fair value option most closely aligns the timing of the recognition of gains and costs. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Electing fair value also reduces certain timing differences and better matches changes in the fair value of these assets with changes in the fair value of the related derivatives used for these assets. See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

Mortgage Fee Income

Mortgage Fee Income

Mortgage fee income consists of origination fees, processing fees, interest income and certain other income related to the origination of mortgage loans held for sale. All revenues and costs are recognized when the mortgage loan is funded and any changes in fair value are shown as a component of mortgage fee income.  See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

The Company, through its mortgage subsidiaries, sells mortgage loans to third-party investors without recourse unless defects are identified in the representations and warranties made at loan sale. It may be required, however, to repurchase a loan or pay a fee instead of repurchase under certain events, which include the following:

· Failure to deliver original documents specified by the investor,

· The existence of misrepresentation or fraud in the origination of the loan,

· The loan becomes delinquent due to nonpayment during the first several months after it is sold,

· Early pay-off of a loan, as defined by the agreements,

· Excessive time to settle a loan,

· Investor declines purchase, and

· Discontinued product and expired commitment.

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company.

It is the Company's policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month time period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

· Research reasons for rejection,

· Provide additional documents,

· Request investor exceptions,

· Appeal rejection decision to purchase committee, and

· Commit to secondary investors.

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six-month time period, the loans are repurchased and transferred to the long-term investment portfolio at the lower of cost or fair value and previously recorded mortgage fee income that was to be received from a third-party investor is written off against the loan loss reserve.

Determining Lower of Cost or Fair Value

Determining Lower of Cost or Fair Value

Cost for loans held for sale is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Fair value is often difficult to determine, but is based on the following:

· For loans that are committed, the Company uses the commitment price.

· For loans that are non-committed that have an active market, the Company uses the market price.

· For loans that are non-committed where there is no market but there is a similar product, the Company uses the market value for the similar product.

· For loans that are non-committed where no active market exists, the Company determines that the unpaid principal balance best approximates the market value, after considering the fair value of the underlying real estate collateral, estimated future cash flows, and the loan interest rate.

The appraised value of the real estate underlying the original mortgage loan adds support to the Company’s determination of fair value because if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan, thus minimizing credit losses.

The majority of loans originated are sold to third-party investors. The amounts expected to be sold to investors are shown on the consolidated balance sheets as loans held for sale.

Loan Loss Reserve

Loan Loss Reserve

The loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on loans sold. The Company may be required to reimburse third-party investors for costs associated with early payoff of loans within six months of origination of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale relating to any guarantee or recourse provisions. The Company accrues a monthly allowance for indemnification losses to investors based on total production. This estimate is based on the Company’s historical experience and is included as a component of mortgage fee income. Subsequent updates to the recorded liability from changes in assumptions are recorded in selling, general and administrative expenses as a component of provision for loan loss reserve. The estimated liability for indemnification losses is included in other liabilities and accrued expenses.

The loan loss reserve analysis involves mortgage loans that have been sold to third-party investors, which were believed to have met investor underwriting guidelines at the time of sale, where the Company has received a demand from the investor. There are generally three types of demands: make whole, repurchase, or indemnification. These types of demands are further described as follows:

Make whole demand – A make whole demand occurs when an investor forecloses on a property and then sells the property. The make whole amount is calculated as the difference between the original unpaid principal balance, payments received, accrued interest and fees, less the sale proceeds.

Repurchase demand – A repurchase demand usually occurs when there is a significant payment default, error in underwriting or detected loan fraud.

Indemnification demand – On certain loans the Company has negotiated a set fee that is to be paid in lieu of repurchase. The fee varies by investor and by loan product type.

The Company believes the allowance for loan losses and the loan loss reserve represent probable loan losses incurred as of the balance sheet date.

Additional information related to the Loan Loss Reserve is included in Note 3.

Restricted Assets

Restricted Assets

Restricted assets are assets held in a trust account for future mortuary services and merchandise and consist of cash and cash equivalents; participations in mortgage loans held for investment with Security National Life Insurance Company (“Security National Life”); mutual funds carried at estimated fair value; equity securities carried at estimated fair value; and a surplus note with Security National Life (which is eliminated in consolidation). Restricted assets also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company funded its medical benefit safe-harbor limit based on the qualified direct costs, and has included this amount as a component of restricted cash.

Cemetery Perpetual Care Trust Investments

Cemetery Perpetual Care Trust Investments

Cemetery endowment care trusts have been set up for four of the six cemeteries owned by the Company. Under endowment care arrangements a portion of the price for each lot sold is withheld and invested in a portfolio of investments similar to those described in the prior paragraph. The earnings stream from the investments is designed to fund future maintenance and upkeep of the cemetery.

Cemetery Land and Improvements

Cemetery Land and Improvements

The development of a cemetery involves not only the initial acquisition of raw land but also the installation of roads, water lines, landscaping and other costs to establish a marketable cemetery lot. The costs of developing the cemetery are shown as an asset on the balance sheet. The amount on the balance sheet is reduced by the total cost assigned to the development of a particular lot when the criterion for recognizing a sale of that lot is met.

Deferred Policy Acquisition Costs and Value of Business Acquired

Deferred Policy Acquisition Costs and Value of Business Acquired

Commissions and other costs, net of commission and expense allowances for reinsurance ceded, that vary with and are primarily related to the production of new insurance business have been deferred. Deferred policy acquisition costs (“DAC”) for traditional life insurance are amortized over the premium paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For interest-sensitive insurance products, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges, investment, mortality and expense margins. This amortization is adjusted when estimates of current or future gross profits to be realized from a group of products are reevaluated. Deferred acquisition costs are written off when policies lapse or are surrendered.

When accounting for DAC, the Company considers internal replacements of insurance and investment contracts. An internal replacement is a modification in product benefits, features, rights or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to contract, or by the election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract are accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced contract are written-off. Modifications that result in a contract that is substantially unchanged from the replaced contract are accounted for as a continuation of the replaced contract.

Value of business acquired is the present value of estimated future profits of the acquired business and is amortized similar to deferred policy acquisition costs.

Mortgage Servicing Rights

Mortgage Servicing Rights

Mortgage Servicing Rights (“MSR”) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company is obligated to retain and provide loan servicing functions on loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of real estate owned and property dispositions.

The total residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans. The value of MSRs is derived from the net cash flows associated with the servicing contracts. The Company receives a servicing fee of generally about 0.250% annually on the remaining outstanding principal balances of the loans. Based on the result of the cash flow analysis, an asset or liability is recorded for mortgage servicing rights. The servicing fees are collected from the monthly payments made by the mortgagors. The Company generally receives other remuneration including rights to various mortgagor-contracted fees such as late charges, and collateral reconveyance charges and the Company is generally entitled to retain the interest earned on funds held pending remittance of mortgagor principal, interest, tax and insurance payments. Contractual servicing fees and late fees are included in other revenues on the consolidated statements of earnings.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. Amortization expense is included in other expenses on the consolidated statements of earnings. MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of the estimated future net servicing income of the underlying financial assets.

Interest rate risk, prepayment risk, and default risk are inherent risks in MSR valuation. Interest rate changes largely drive prepayment rates. Refinance activity generally increases as rates decline. A significant decrease in rates beyond expectation could cause a decline in the value of the MSR. On the contrary, if rates increase borrowers are less likely to refinance or prepay their mortgage, which extends the duration of the loan and MSR values are likely to rise. Because of these risks, discount rates and prepayment speeds are used to estimate the fair value.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost. Depreciation is calculated principally on the straight-line method over the estimated useful lives of the assets which range from three to forty years. Leasehold improvements paid for by the Company as a lessee are amortized over the lesser of the useful life or remaining lease terms.

Long-lived Assets

Long-lived Assets

Long-lived assets to be held and used, including property and equipment and real estate held for investment, are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset, and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. No impairment of long-lived assets has been recognized in the accompanying financial statements except for certain impairments of real estate held for investment as disclosed in Note 2.

Derivative Instruments

Derivative Instruments

Mortgage Banking Derivatives

Loan Commitments

The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the time a loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of loan commitments that will be exercised (i.e., the number of loans that will be funded) fluctuates. The probability that a loan will not be funded or the loan application is denied or withdrawn within the terms of the commitment is driven by a number of factors, particularly the change, if any, in mortgage rates following the issuance of the loan commitment.

In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance), product type and the application approval status. The Company has developed fallout estimates using historical data that take into account all of the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most current data.

The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage-backed securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of expenses. Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans.

Forward Sale Commitments

The Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments. Management expects these types of commitments will experience changes in fair value opposite to changes in fair value of the loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

The net changes in fair value of loan commitments and forward sale commitments are shown in current earnings as a component of mortgage fee income on the consolidated statements of earnings. Mortgage banking derivatives are shown in other assets and other liabilities and accrued expenses on the consolidated balance sheets.

Call and Put Option Derivatives

The Company uses a strategy of selling “out of the money” call options on its equity securities as a source of revenue. The options give the purchaser the right to buy from the Company specified equity securities at a set price up to a pre-determined date in the future. The Company uses the strategy of selling put options as a means of generating cash or purchasing equity securities at lower than current market prices. The Company receives an immediate payment of cash for the value of the option and establishes a liability for the fair value of the option. The liability for options is adjusted to fair value at each reporting date. In the event a call option is exercised, the Company sells the equity security at a favorable price enhanced by the value of the option that was sold. If the option expires unexercised, the Company recognizes a gain from the expired option. In the event a put option is exercised, the Company acquires an equity security at the strike price of the option reduced by the value received from the sale of the put option. The equity security is then treated as a normal equity security in the Company’s portfolio. The net changes in the fair value of call and put options are shown in current earnings as a component of realized gains (losses) on investments and other assets. Call and put options are shown in other liabilities and accrued expenses on the consolidated balance sheets.

Allowance for Doubtful Accounts and Loan Losses and Impaired Loans

Allowance for Doubtful Accounts and Loan Losses and Impaired Loans

The Company records an allowance and recognizes an expense for potential losses from mortgage loans held for investment, other investments and receivables in accordance with GAAP.

Receivables are the result of cemetery and mortuary operations, mortgage loan operations and life insurance operations. The allowance is based upon the Company’s historical experience for collectively evaluated impairment. Other allowances are based upon receivables individually evaluated for impairment. Collectability of the cemetery and mortuary receivables is significantly influenced by current economic conditions. The critical issues that impact recovery of mortgage loan operations are interest rate risk, loan underwriting, new regulations and the overall economy.

The Company provides for losses on its mortgage loans held for investment through an allowance for loan losses (a contra-asset account). The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment, the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. See the schedules in Note 2 for additional information. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as real estate held for investment. The Company will rent the properties until it is deemed desirable to sell them.

The allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the performance status of the loans, or the Company’s actual collection experience. The actual losses could change, in the near term, from the established allowance, based upon the occurrence or non-occurrence of these events.

For purposes of determining the allowance for losses, the Company has segmented its mortgage loans held for investment by loan type. The Company’s loan types are commercial, residential, and residential construction. The inherent risks within the portfolio vary depending upon the loan type as follows:

Commercial - Underwritten in accordance with the Company’s policies to determine the borrower’s ability to repay the obligation as agreed. Commercial loans are made primarily based on the underlying collateral supporting the loan. Accordingly, the repayment of a commercial loan depends primarily on the collateral and its ability to generate income and secondary on the borrower’s (or guarantors) ability to repay.

Residential – Secured by family dwelling units. These loans are secured by first and second mortgages on the unit. The borrower’s ability to repay is sensitive to the life events and general economic condition of the region. Where loan to values exceed 80%, the loan is generally guaranteed by private mortgage insurance, FHA or VA.

Residential construction (including land acquisition and development) – Underwritten in accordance with the Company’s underwriting policies which include a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent appraisal valuations. These loans will rely on the value associated with the project upon completion. These cost and valuation estimates may be inaccurate. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project and the ability of the borrower to secure long-term financing.  Additionally, land is underwritten according to the Company’s policies, which include independent appraisal valuations as well as the estimated value associated with the land upon completion of development into finished lots. These cost and valuation estimates may be inaccurate. These loans are considered to be of a higher risk than other mortgage loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term or construction financing, and interest rate sensitivity.

Future Policy Benefits and Unpaid Claims

Future Policy Benefits and Unpaid Claims

Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, mortality, morbidity, withdrawals, and other assumptions based on the life insurance subsidiaries’ experience, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are, for some plans, graded to equal statutory values or cash values at or prior to maturity, which are deemed a reasonable equivalent for GAAP. The range of assumed interest rates for all traditional life insurance policy reserves was 4% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit claims are charged to expense in the period the claims are incurred. Increases in future policy benefits are charged to expense.

Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 3% to 6.5%.

The Company records an unpaid claims liability for claims in the course of settlement equal to the death benefit amount less any reinsurance recoverable amount for claims reported. There is also an unpaid claims liability for claims incurred but not reported. This liability is based on the historical experience of the net amount of claims that were reported in reporting periods subsequent to the reporting period when claims were incurred.

Participating Insurance

Participating Insurance

Participating business constituted 2% of insurance in force for the years ended 2020 and 2019. The provision for policyholders’ dividends included in policyholder obligations is based on dividend scales anticipated by management. Amounts to be paid are determined by the Board of Directors.

Recognition of Insurance Premiums and Other Considerations

Recognition of Insurance Premiums and Other Considerations

Premiums and other consideration for traditional life insurance products (which include those products with fixed and guaranteed premiums and benefits and consist principally of whole life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies) are recognized as revenues when due from policyholders. Premiums and other consideration for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies, deferred annuities, and annuities without life contingencies) are recognized when earned and consist of amounts assessed against policyholder account balances during the period for policy administration charges and surrender charges.

Reinsurance

Reinsurance

The Company follows the procedure of reinsuring risks in excess of $100,000 to provide for greater diversification of business to allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. The Company remains liable for amounts ceded in the event the reinsurers are unable to meet their obligations.

The Company entered into coinsurance agreements with unaffiliated insurance companies under which the Company assumed 100% of the risk for certain life insurance policies and certain other policy-related liabilities of the insurance company.

Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Expense allowances received in connection with reinsurance ceded are accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly.

Pre-need Sales and Costs

Pre-need Sales and Costs

Pre-need contract sales of funeral services and caskets - revenue and costs associated with the sales of pre-need funeral services and caskets are deferred until the performance obligations are fulfilled (services are performed or the caskets are delivered).

Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are recognized in accordance with the retail land sales provisions based on GAAP. Under GAAP, recognition of revenue and associated costs from constructed cemetery property must be deferred until 10% of the sales price has been collected.

Pre-need contract sales of cemetery merchandise (primarily markers and vaults) - revenue and costs associated with the sale of pre-need cemetery merchandise is deferred until the merchandise is delivered.

Pre-need contract sales of cemetery services (primarily merchandise delivery, installation fees and burial opening and closing fees) - revenue and costs associated with the sales of pre-need cemetery services are deferred until the services are performed.

Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral services are accounted for under the guidance of the provisions based on GAAP. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred until the merchandise is delivered or services are performed.

Revenues and costs for at-need sales are recorded when a valid contract exists, the services are performed, collection is reasonably assured and there are no significant obligations remaining.

The Company, through its cemetery and mortuary operations, provides guaranteed funeral arrangements wherein a prospective customer can receive future goods and services at guaranteed prices. To accomplish this, the Company, through its life insurance operations, sells to the customer an increasing benefit life insurance policy that is assigned to the mortuaries. If, at the time of need, the policyholder/potential mortuary customer utilizes one of the Company’s facilities, the guaranteed funeral arrangement contract that has been assigned will provide the funeral goods and services at the contracted price. The increasing life insurance policy will cover the difference between the original contract prices and current prices. Risks may arise if the difference cannot be fully met by the life insurance policy. However, management believes that given current inflation rates and related price increases of goods and services, the risk of exposure is minimal.

Goodwill

Goodwill

Previous acquisitions have been accounted for as purchases under which assets acquired and liabilities assumed were recorded at their fair values with the excess purchase price recognized as goodwill. The Company evaluates annually or when changes in circumstances warrant the recoverability of goodwill and if there is a decrease in value, the related impairment is recognized as a charge against income. No impairment of goodwill has been recognized in the accompanying financial statements.

Other Intangibles (trade name and customer lists)

Other Intangibles (trade name and customer lists)

Other intangibles are recognized apart from goodwill whenever an acquired intangible asset arises from contractual or other legal rights, or whenever it is capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged, either individually or in combination with a related contract, asset, or liability. The Company engaged a valuation firm to analyze the value of the Kilpatrick Life name in conjunction with its acquisition. The value of the trade name is included in Other Assets and was determined using the income approach, relying on a relief from the royalty method.

Income Taxes

Income Taxes

Income taxes include taxes currently payable plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences in the financial reporting basis and tax basis of assets and liabilities and operating loss carry-forwards. Deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.

Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax penalties are included as a component of other expenses.

Earnings Per Common Share

Earnings Per Common Share

The Company computes earnings per share which requires presentation of basic and diluted earnings per share. Basic earnings per equivalent Class A common share are computed by dividing net earnings by the weighted-average number of Class A common shares outstanding during each year presented, after the effect of the assumed conversion of Class C common stock to Class A common stock. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the year used to compute basic earnings per share plus dilutive potential incremental shares. Basic and diluted earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

Stock Based Compensation

Stock Based Compensation

The cost of employee services received in exchange for an award of equity instruments is recognized in the financial statements and is measured based on the fair value on the grant date of the award. The fair value of stock options is calculated using the Black Scholes Option Pricing Model. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award and is included in personnel expenses on the consolidated statements of earnings.

Concentration of Credit Risk

Concentration of Credit Risk

For a description of the geographic concentration risk regarding mortgage loans held for investment and real estate held for investment, refer to Note 2 of the Notes to Consolidated Financial Statements.

Advertising

Advertising

The Company expenses advertising costs as incurred.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Standards Adopted in 2020

ASU No. 2018-13: “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” – Issued in August 2018, ASU 2018-13 modifies the disclosure requirements of Topic 820 by removing, modifying or adding certain disclosures. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 does not change the fair value measurements already required or permitted by existing standards. The Company adopted this standard on January 1, 2020. The adoption of this standard did not materially impact the Company’s financial statements. See Note 8 for the Company’s fair value disclosures.

Accounting Standards Adopted in 2019

ASU No. 2016-02: “Leases (Topic 842)” - Issued in February 2016, ASU 2016-02 supersedes the requirements in Accounting Standards Codification (“ASC”) Topic 840, “Leases”, and was issued to increase transparency and comparability among organizations. The new standard sets forth the principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record on the balance sheet right-of-use assets and lease liabilities, equal to the present value of the remaining lease payments. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or a straight-line basis over the term of the leases. The FASB further clarified ASU 2016-02 and provided targeted improvements by issuing ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20.

The Company adopted this standard on January 1, 2019 using the modified retrospective transition method with no cumulative-effect adjustment to the opening balance of retained earnings. Under this transition method, the application date was the beginning of the reporting period, January 1, 2019, in which the Company first applied the standard. Under this transition option, the Company will apply the legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company has made an accounting policy election not to apply the recognition requirements 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. The new authoritative guidance allows for certain practical expedients to be utilized to assist with the implementation of the new standard. The Company has elected the transition package of practical expedients which allows the Company to not reassess whether any expired or existing contracts are or contain leases, to not reassess the lease classification for any expired or existing leases and to not reassess initial direct costs for any existing leases.

The Company implemented a third-party lease accounting system to assist with the measurement of the lease liabilities and the related right-of-use assets. The Company compiled an inventory of its leases, determined the appropriate discount rates and has determined the impact of this standard which is not material to the Company’s results of operations, but has an effect on the balance sheet presentation for leased assets and obligations. The Company recognized a right-of-use asset and related lease liability for approximately $12,076,000 on January 1, 2019. This standard did not impact the Company’s accounting for leases where the Company is the lessor.

Accounting Standards Issued But Not Yet Adopted

ASU No. 2016-13: “Financial Instruments – Credit Losses (Topic 326)” – Issued in September 2016, ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis (such as mortgage loans and held to maturity debt securities) and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP; however, Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. In October 2019, the FASB proposed an update to ASU No. 2016-13 that would make the ASU effective for the Company on January 1, 2023. The Company is in the process of evaluating the potential impact of this standard, especially as it relates to mortgage loans held for investment.

ASU No. 2018-12: “Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts” – Issued in August 2018, ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future policy benefits on traditional long-duration contracts by requiring that assumptions be updated after contract inception and by modifying the rate used to discount future cash flows. The ASU will simplify and improve the accounting for certain market-based options or guarantees associated with deposit or account balance contracts, simplify amortization of deferred acquisition costs while improving and expanding required disclosures. In November 2020, the FASB issued an update to ASU No. 2018-12 that made the ASU effective for the Company on January 1, 2025. The Company is in the process of evaluating the potential impact of this standard.

The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.

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2) Investments (Tables)

12 Months Ended

Dec. 31, 2020

Table Text Block Supplement [Abstract]

Available for sale

The Company’s investments as of December 31, 2020 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2020:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$    42,381,805	$     1,358,562	$                    -	$    43,740,367
Obligations of states and political subdivisions	5,383,762	312,214	(1,261)	5,694,715
Corporate securities including public utilities	186,067,912	27,216,496	(681,478)	212,602,930
Mortgage-backed securities	31,047,791	1,565,377	(267,106)	32,346,062
Redeemable preferred stock	269,214	3,391	-	272,605
Total fixed maturity securities available for sale	$  265,150,484	$   30,456,040	$      (949,845)	$  294,656,679
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$      9,698,490	$     2,376,156	$       (750,407)	$    11,324,239
Total equity securities at estimated fair value	$      9,698,490	$     2,376,156	$       (750,407)	$    11,324,239
Mortgage loans held for investment at amortized cost:
Residential	$    95,822,448
Residential construction	111,111,777
Commercial	46,836,866
Less: Unamortized deferred loan fees, net	(1,161,132)
Less: Allowance for loan losses	(2,005,127)
Less: Net discounts	(1,260,896)
Total mortgage loans held for investment	$  249,343,936
Real estate held for investment - net of accumulated depreciation:
Residential	$    24,843,743
Commercial	106,840,710
Total real estate held for investment	$  131,684,453
Real estate held for sale:
Residential	$      3,478,254
Commercial	4,400,553
Total real estate held for sale	$      7,878,807
Other investments and policy loans at amortized cost:
Policy loans	$    14,171,589
Insurance assignments	53,231,131
Federal Home Loan Bank stock (1)	2,506,600
Other investments	5,432,816
Less: Allowance for doubtful accounts	(1,645,475)
Total policy loans and other investments	$    73,696,661
Accrued investment income	$      5,360,523
Total investments	$  773,945,298
(1) Includes $866,900 of Membership stock and $1,639,700 of Activity stock due to short-term borrowings.

The Company’s investments as of December 31, 2019 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2019:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$    142,740,641	$      632,185	$   (25,215)	$ 143,347,611
Obligations of states and political subdivisions	7,450,366	87,812	(9,026)	7,529,152
Corporate securities including public utilities	156,599,184	16,768,449	(463,413)	172,904,220
Mortgage-backed securities	31,475,280	597,395	(240,177)	31,832,498
Redeemable preferred stock	364,339	-	-	364,339
Total fixed maturity securities available for sale	$    338,629,810	$ 18,085,841	$ (737,831)	$ 355,977,820
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$        6,900,537	$   1,139,799	$ (769,171)	$     7,271,165
Total equity securities at estimated fair value	$        6,900,537	$   1,139,799	$ (769,171)	$     7,271,165
Mortgage loans held for investment at amortized cost:
Residential	$    113,043,965
Residential construction	89,430,237
Commercial	38,718,220
Less: Unamortized deferred loan fees, net	(2,391,567)
Less: Allowance for loan losses	(1,453,037)
Less: Net discounts	(653,272)
Total mortgage loans held for investment	$    236,694,546
Real estate held for investment - net of accumulated depreciation:
Residential	$      12,530,306
Commercial	90,226,640
Total real estate held for investment	$    102,756,946
Real estate held for sale:
Residential	$        8,021,306
Commercial	6,076,321
Total real estate held for sale	$      14,097,627
Other investments and policy loans at amortized cost:
Policy loans	$      14,762,805
Insurance assignments	41,062,965
Federal Home Loan Bank stock (1)	894,300
Other investments	4,973,225
Less: Allowance for doubtful accounts	(1,448,026)
Total policy loans and other investments	$      60,245,269
Accrued investment income	$        4,833,232
Total investments	$    781,876,605
(1) Includes $894,300 of Membership stock and $-0- of Activity stock due to short-term borrowings.

Schedule of Unrealized Loss on Investments

The unrealized losses were primarily related to interest rate fluctuations and uncertainties relating to COVID-19. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:

	Unrealized Losses for Less than Twelve Months	Fair Value	Unrealized Losses for More than Twelve Months	Fair Value	Total Unrealized Loss	Fair Value
At December 31, 2020
Obligations of States and Political Subdivisions	$        1,261	$    206,812	$               -	$               -	$        1,261	$    206,812
Corporate Securities	242,596	9,919,298	438,882	2,593,026	681,478	12,512,324
Mortgage and other asset-backed securities	266,522	3,455,574	584	51,961	267,106	3,507,535
Total unrealized losses	$    510,379	$13,581,684	$   439,466	2,644,987	$    949,845	$16,226,671
At December 31, 2019
U.S. Treasury Securities and Obligations
of U.S. Government Agencies	$      20,211	$30,629,288	$        5,004	$10,000,400	$      25,215	$40,629,688
Obligations of States and Political Subdivisions	9,026	3,062,889	-	-	9,026	3,062,889
Corporate Securities	118,746	7,184,311	344,667	3,950,509	463,413	11,134,820
Mortgage and other asset-backed securities	205,470	13,266,443	34,707	502,769	240,177	13,769,212
Total unrealized losses	$    353,453	$54,142,931	$    384,378	$14,453,678	$    737,831	$68,596,609

Schedule of earnings on fixed maturity securities

The following table presents a rollforward of the Company's cumulative other than temporary credit impairments (“OTTI”) recognized in earnings on fixed maturity securities available for sale for the years ended December 31:

	2020	2019
Balance of credit-related OTTI at January 1	$                        -	$                       -
Additions for credit impairments recognized on:
Securities not previously impaired	370,975	-
Securities previously impaired	-	-
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period (realized)	-	-
Securities due to an increase in expected cash flows	-	-
Balance of credit-related OTTI at December 31	$            370,975	$                       -

Investments Classified by Contractual Maturity Date

Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Estimated Fair
	Cost	Value
Due in 1 year	$      28,634,042	$        28,831,983
Due in 2-5 years	66,183,907	70,910,775
Due in 5-10 years	70,162,166	78,592,046
Due in more than 10 years	68,853,364	83,703,208
Mortgage-backed securities	31,047,791	32,346,062
Redeemable preferred stock	269,214	272,605
Total	$    265,150,484	$      294,656,679

Gain (Loss) on Investments

The Company’s net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities, and other than temporary impairments from investments and other assets for the years ended December 31 are summarized as follows:

	2020	2019
Fixed maturity securities available for sale:
Gross realized gains	$         445,749	$         459,286
Gross realized losses	(77,546)	(162,649)
Other than temporary impairments	(370,975)	-
Equity securities:
Gains on securities sold	74,836	256,520
Unrealized gains on securities held at the end of the period	1,125,304	1,086,116
Other assets:
Gross realized gains	2,342,418	2,844,673
Gross realized losses	(1,984,911)	(3,755,579)
Total	$      1,554,875	$         728,367

Schedule of Major categories of net investment income

Major categories of net investment income for the years ended December 31, were as follows:

	2020	2019
Fixed maturity securities available for sale	$ 12,233,394	$ 10,372,559
Equity securities	642,433	309,918
Mortgage loans held for investment	25,672,746	18,405,010
Real estate held for investment and sale	11,945,401	8,782,959
Policy loans	1,025,179	554,969
Insurance assignments	17,837,578	16,086,059
Other investments	126,013	184,439
Cash and cash equivalents	426,623	1,824,443
Gross investment income	69,909,367	56,520,356
Investment expenses	(13,579,564)	(13,500,883)
Net investment income	$ 56,329,803	$ 43,019,473

Commercial Real Estate Investment

The Company’s commercial real estate held for investment for the years ended December 31, is summarized as follows:

	Net Ending Balance		Total Square Footage
	2020	2019	2020	2019
Louisiana	$    2,998,684	$  6,009,079	84,841	125,114
Mississippi	2,914,498	2,951,478	21,521	21,521
Utah (1)	100,927,528	81,266,083	379,066	465,230
	$ 106,840,710	$ 90,226,640	485,428	611,865
(1) Includes Center53 phase 1 and phase 2 which is under construction.

The Company’s commercial real estate held for sale for the years ended December 31, is summarized as follows:

	Net Ending Balance		Total Square Footage
	2020	2019	2020	2019
Arizona (1)	$               -	$        2,500	-	-
Kansas	4,000,000	4,800,000	222,679	222,679
Mississippi	151,553	318,322	12,300	12,300
Nevada	-	655,499	-	4,800
Texas (2)	249,000	300,000	-	-
	$  4,400,553	$  6,076,321	234,979	239,779
(1) Undeveloped land
(2) Improved commercial pad

Residential Real Estate Investment

The Company’s residential real estate held for investment for the years ended December 31, is summarized as follows:

	Net Ending Balance
	2020	2019
Florida	-	2,487,723
Nevada	-	293,516
Utah (1)	24,557,562	9,462,886
Washington (2)	286,181	286,181
	$   24,843,743	$ 12,530,306
(1) Including subdivision land developments
(2) Improved residential lots

The Company’s residential real estate held for sale for the years ended December 31, is summarized as follows:

	Net Ending Balance
	2020	2019
California	-	640,452
Florida	744,322	1,300,641
Nevada	979,640	-
Ohio	10,000	10,000
Utah	1,744,292	5,880,213
Washington	-	190,000
	$    3,478,254	$  8,021,306

Schedule of subdivision land development

Additional information regarding the Company’s subdivision land developments in Utah for the years ended December 31, is summarized as follows:

	2020	2019
Lots available for sale	36	48
Lots to be developed	350	174
Ending Balance (1)	$   23,777,478	$  7,889,576
(1) The estimated remaining cost to complete the undeveloped lots is $17,354,000 and $1,900,000 as of December 31, 2020 and 2019, respectively.

Real Estate Owned and Occupied by the Company

As of December 31, 2020, real estate owned and occupied by the Company is summarized as follows:

Location	Business Segment	Approximate Square Footage	Square Footage Occupied by the Company
121 W. Election Rd., Draper, UT	Corporate Offices, Life Insurance and Cemetery/Mortuary Operations	78,979	18%
5201 Green Street, Salt Lake City, UT (1)	Life Insurance and Mortgage Operations	39,157	73%
1044 River Oaks Dr., Flowood, MS	Life Insurance Operations	19,694	28%
1818 Marshall Street, Shreveport, LA (1)(2)	Life Insurance Operations	12,274	100%
909 Foisy Street, Alexandria, LA (1)(2)	Life Insurance Sales	8,059	100%
812 Sheppard Street, Minden, LA (1)(2)	Life Insurance Sales	1,560	100%
1550 N 3rd Street, Jena, LA (1)(2)	Life Insurance Sales	1,737	100%
(1) Included in property and equipment on the consolidated balance sheets
(2) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

Schedule of Allowance for loan losses as a contra-asset account

The Company establishes a valuation allowance for credit losses in its portfolio. The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:

Allowance for Credit Losses and Recorded Investment in Mortgage Loans Held for Investment
Years Ended December 31
	Commercial	Residential	Residential Construction	Total
2020
Allowance for credit losses:
Beginning balance	$      187,129	$     1,222,706	$        43,202	$     1,453,037
Charge-offs	-	-	-	-
Provision	-	552,090	-	552,090
Ending balance	$      187,129	$     1,774,796	$        43,202	$     2,005,127
Ending balance: individually evaluated for impairment	$                  -	$        219,905	$                  -	$        219,905
Ending balance: collectively evaluated for impairment	$      187,129	$     1,554,891	$        43,202	$     1,785,222
Mortgage loans:
Ending balance	$ 46,836,866	$ 111,111,777	$ 95,822,448	$ 253,771,091
Ending balance: individually evaluated for impairment	$   2,148,827	$     7,932,680	$      200,963	$   10,282,470
Ending balance: collectively evaluated for impairment	$ 44,688,039	$ 103,179,097	$ 95,621,485	$ 243,488,621
2019
Allowance for credit losses:
Beginning balance	$      187,129	$     1,125,623	$        35,220	$     1,347,972
Charge-offs	-	(32,692)	-	(32,692)
Provision	-	129,775	7,982	137,757
Ending balance	$      187,129	$     1,222,706	$        43,202	$     1,453,037
Ending balance: individually evaluated for impairment	$                  -	$        195,993	$                  -	$        195,993
Ending balance: collectively evaluated for impairment	$      187,129	$     1,026,713	$        43,202	$     1,257,044
Mortgage loans:
Ending balance	$ 38,718,220	$ 113,043,965	$ 89,430,237	$ 241,192,422
Ending balance: individually evaluated for impairment	$   4,488,719	$     3,752,207	$      655,000	$     8,895,926
Ending balance: collectively evaluated for impairment	$ 34,229,501	$ 109,291,758	$ 88,775,237	$ 232,296,496

Schedule of aging of mortgage loans

Age Analysis of  Past Due Mortgage Loans Held for Investment
Years Ended December 31
	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days (1)	In Process of Foreclosure (1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Unamortized deferred loan fees, net	Unamortized discounts, net	Net Mortgage Loans
2020
Commercial	$   233,200	$     812,780	$   2,148,827	$                    -	$  3,194,807	$  43,642,059	$       46,836,866	$    (187,129)	$       (32,557)	$    (880,721)	$  45,736,459
Residential	5,866,505	2,048,148	5,669,583	2,263,097	15,847,333	79,975,115	95,822,448	(1,774,796)	(909,864)	(380,175)	92,757,613
Residential  Construction	127,191	-	-	200,963	328,154	110,783,623	111,111,777	(43,202)	(218,711)	-	110,849,864
Total	$ 6,226,896	$ 2,860,928	$   7,818,410	$     2,464,060	$ 19,370,294	$ 234,400,797	$       253,771,091	$ (2,005,127)	$  (1,161,132)	$  (1,260,896)	$ 249,343,936
2019
Commercial	$ 1,872,000	$                 -	$   4,488,719	$                    -	$  6,360,719	$   32,357,501	$        38,718,220	$    (187,129)	$      (88,918)	$     (653,272)	$   37,788,901
Residential	10,609,296	4,085,767	2,100,742	1,651,465	18,447,270	94,596,695	113,043,965	(1,222,706)	(1,567,581)	-	110,253,678
Residential  Construction	-	-	655,000	-	655,000	88,775,237	89,430,237	(43,202)	(735,068)	-	88,651,967
Total	$ 12,481,296	$ 4,085,767	$ 7,244,461	$     1,651,465	$ 25,462,989	$ 215,729,433	$       241,192,422	$ (1,453,037)	$  (2,391,567)	$     (653,272)	$ 236,694,546
(1)  There was not any interest income recognized on loans past due greater than 90 days or in foreclosure.

Schedule of Impaired Mortgage Loans

The recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting period and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:

Impaired Loans
Years Ended December 31
	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
2020
With no related allowance recorded:
Commercial	$ 2,148,827	$   2,148,827	$                -	$       1,866,819	$                -
Residential	6,415,419	6,415,419	-	5,010,078	-
Residential construction	200,963	200,963	-	555,278	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,517,261	1,517,261	219,905	1,182,368	-
Residential construction	-	-	-	-	-
Total:
Commercial	$ 2,148,827	$   2,148,827	$                -	$       1,866,819	$                -
Residential	7,932,680	7,932,680	219,905	6,192,446	-
Residential construction	200,963	200,963	-	555,278	-
2019
With no related allowance recorded:
Commercial	$ 4,488,719	$   4,488,719	$                -	$       1,499,043	$                -
Residential	2,254,189	2,254,189	-	3,367,151	-
Residential construction	655,000	655,000	-	1,457,278	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,498,018	1,498,018	195,993	665,270	-
Residential construction	-	-	-	-	-
Total:
Commercial	$ 4,488,719	$   4,488,719	$                -	$       1,499,043	$                -
Residential	3,752,207	3,752,207	195,993	4,032,421	-
Residential construction	655,000	655,000	-	1,457,278	-

Schedule Of Credit Risk Of Mortgage Loans Based On Performance Status:

The Company’s performing and non-performing mortgage loans held for investment were as follows:

Mortgage Loans Held for Investment Credit Exposure
Credit Risk Profile Based on Payment Activity
Years Ended December 31
	Commercial		Residential		Residential Construction		Total
	2020	2019	2020	2019	2020	2019	2020	2019
Performing	$ 44,688,039	$ 34,229,501	$   87,889,768	$109,291,758	$   110,910,814	$  88,775,237	$     243,488,621	$ 232,296,496
Non-performing	2,148,827	4,488,719	7,932,680	3,752,207	200,963	655,000	10,282,470	8,895,926
Total	$ 46,836,866	$ 38,718,220	$   95,822,448	$113,043,965	$   111,111,777	$  89,430,237	$     253,771,091	$ 241,192,422

Schedule of Mortgage loans on a nonaccrual status

The following is a summary of mortgage loans held for investment on a non-accrual status for the periods presented.

	Mortgage Loans on Non-accrual Status
	Years Ended December 31
	2020	2019
Commercial	$           2,148,827	$            4,488,719
Residential	7,932,680	3,752,207
Residential construction	200,963	655,000
Total	$         10,282,470	$            8,895,926

Schedule of principal payments

Expected principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment penalties.

		Principal	Principal	Principal
		Amounts	Amounts	Amounts
		Due in	Due in	Due
	Total	1 Year	2-5 Years	Thereafter
Residential	$      95,822,448	$  11,202,899	$ 17,774,238	$   66,845,311
Residential Construction	111,111,777	$ 103,391,044	$   7,720,733	-
Commercial	46,836,866	27,111,325	11,101,138	8,624,403
Total	$    253,771,091	$ 141,705,268	$ 36,596,109	$   75,469,714

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3) Loans Held For Sale (Tables)

12 Months Ended

Dec. 31, 2020

Table Text Block Supplement [Abstract]

Aggregate fair value - Loans Held for Sale

The following is a summary of the aggregate fair value and the aggregate unpaid principal balance of loans held for sale for the periods presented:

	As of December 31 2020	As of December 31 2019
Aggregate fair value	$          422,772,418	$          213,457,632
Unpaid principal balance	406,407,323	206,417,122
Unrealized gain	16,365,095	7,040,510

Schedule of Mortgage Fee Income for Loans Held for Sale

Major categories of mortgage fee income for loans held for sale for the years ended December 31, were as follows:

	2020	2019
Loan fees	$    43,432,532	$    28,660,966
Interest income	10,628,581	6,978,930
Secondary gains	231,759,342	93,581,956
Change in fair value of loan commitments	7,637,377	899,417
Change in fair value of loans held for sale	10,413,492	2,498,097
Provision for loan loss reserve	(4,938,214)	(643,284)
Mortgage fee income	$   298,933,110	$   131,976,082

Schedule of loan loss reserve which is included in other liabilities and accrued expenses

The following is a summary of the loan loss reserve which is included in other liabilities and accrued expenses:

	December 31
	2020	2019
Balance, beginning of period	$          4,046,288	$          3,604,869
Provision for current loan originations (1)	4,938,214	643,284
Additional provision for loan loss reserve	16,506,030	-
Charge-offs, net of recaptured amounts	(4,906,914)	(201,865)
Balance, at December 31	$        20,583,618	$          4,046,288
(1) Included in Mortgage fee income

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4) Receivables (Tables)

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

Schedule of Receivables

Receivables consist of the following:

	December 31
	2020	2019
Trade contracts	$          4,119,988	$          2,795,471
Receivables from sales agents	2,677,774	2,962,571
Other	5,786,827	5,202,444
Total receivables	12,584,589	10,960,486
Allowance for doubtful accounts	(1,685,382)	(1,724,156)
Net receivables	$        10,899,207	$          9,236,330

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5) Value of Business Acquired, Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Value of Business Acquired

Information with regard to value of business acquired was as follows:

	December 31
	2020	2019
Balance at beginning of year	$      9,876,647	$      5,765,190
Value of  business acquired	-	4,962,831	(1)
Imputed interest at 7% included in earnings	670,565	472,916
Amortization included in earnings	(1,457,390)	(1,320,456)
Shadow amortization included in other    comprehensive income	(134,573)	(3,834)
Net amortization	(921,398)	(851,374)
Balance at end of year	$      8,955,249	$      9,876,647
(1) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

Schedule of Carrying Value of Intangible Asset

The carrying value of the Company’s intangible assets were as follows which is included in other assets:

		December 31
	Useful Life	2020	2019
Intangible asset - customer lists	15 years	$         890,000	$      890,000
Intangible asset - trade name (1)	15 years	$         610,000	$      610,000
Less accumulated amortization		(197,334)	(98,222)
Balance at end of year		$      1,302,666	$    1,401,778
(1) See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

Schedule of Goodwill by Segment

Information regarding goodwill by segment was as follows:

	Life Insurance	Cemetery/Mortuary		Total
Balance at January 1, 2019:
Goodwill	$ 2,765,570	$           -		$ 2,765,570
Accumulated impairment	-	-		-
Total goodwill, net	2,765,570	-		2,765,570
Acquisition	-	754,018	(1)	754,018
Balance at December 31, 2019:
Goodwill	2,765,570	754,018		3,519,588
Accumulated impairment	-	-		-
Total goodwill, net	2,765,570	754,018		3,519,588
Acquisition	-	-		-
Balance at December 31, 2020:
Goodwill	2,765,570	754,018		3,519,588
Accumulated impairment	-	-		-
Total goodwill, net	$ 2,765,570	$ 754,018		$ 3,519,588
(1) See Note 20 regarding the acquisition of Probst Family Funerals and Cremations and Heber Valley Funeral Home

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6) Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

The cost of property and equipment is summarized below:

	December 31
	2020	2019
Land and buildings	$        11,972,802	$        15,131,301
Furniture and equipment	19,679,682	18,987,984
	31,652,484	34,119,285
Less accumulated depreciation	(19,179,139)	(19,518,891)
Total	$        12,473,345	$        14,600,394

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7) Bank and Other Loans Payable (Tables)

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Summary of Bank Loans Payable

Bank and other loans payable are summarized as follows:

	December 31
	2020	2019
2.25% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate note payable in    monthly principal payments of $13,167 plus interest, collateralized by real property, paid in    full November 2020.	$               -	$    2,659,769
4.27% fixed note payable in monthly installments of $53,881 including principal and interest,     collateralized by shares of Security National Life Insurance Company stock, due     December 2021.	633,890	1,238,619
Prime rate note payable in monthly installments of $75,108 including principal and interest,    collateralized by shares of Security National Life Insurance Company stock, due    December 2024.	3,257,113	4,000,000
4.40% fixed note payable in monthly installments of $46,825 including principal and interest,     collateralized by real property, paid in full April 2020.	-	7,247,651
4.329% fixed note payable in monthly installments of $9,775 including principal and interest,    collateralized by real property with a book value of approximately $3,174,000, due    September 2025.	1,861,920	1,896,450
2.5% above the monthly LIBOR rate plus 1/16th of the monthly LIBOR rate construction loan    payable in monthly principal payments of $113,000 plus interest, collateralized by real property   with a book value of approximately $50,689,000, due March 2021.	35,091,364	33,811,559
4.7865% fixed interest only note payable in monthly installments, collateralized by real property    with a book value of approximately $17,655,000, due June 2028.	9,200,000	9,200,000
1 month LIBOR rate plus 2.1% loan purchase agreement with a warehouse line availability of    $150,000,000, matures June 2021.	116,598,834	88,509,536
1 month LIBOR rate plus 3% loan purchase agreement with a warehouse line availability of    $175,000,000, matures November 2021.	68,766,572	67,537,600
1 month LIBOR rate plus 2.5% loan purchase agreement with a warehouse line availability of    $90,000,000, matures May 2021.	60,715,374	-
1 month LIBOR rate plus 2.5% loan purchase agreement with a warehouse line availability of    $5,000,000, matures August 2021.	317,582	-
Other short-term borrowings (1)	1,250,000	1,250,000
Finance lease liabilities	104,951	153,439
Other loans payable	26,768	67,989
Total bank and other loans	297,824,368	217,572,612
Less current installments	284,250,996	192,985,602
Bank and other loans, excluding current installments	$   13,573,372	$  24,587,010
(1) Revolving Line of Credit

Schedule of combined maturities of bank loans payable, lines of credit and notes and contracts payable

The following tabulation shows the combined maturities of bank and other loans payable:

2021	$  284,242,327
2022	884,383
2023	926,186
2024	937,315
2025	1,634,157
Thereafter	9,200,000
Total	$  297,824,368

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8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Tables)

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Schedule of the components of the cemetery perpetual care obligation

The components of the cemetery perpetual care investments and obligation are as follows:

	December 31
	2020	2019
Cash and cash equivalents	$       402,913	$     1,306,740
Fixed maturity securities, available for sale, at estimated fair value	747,767	975,673
Equity securities, at estimated fair value	2,062,303	1,605,451
Commerical mortgage loans held for investment	-	524,000
Participating interests in residential construction mortgage loans     held for investment with Security National Life	1,468,600	-
Real estate held for investment	1,731,584	-
Note receivables from Cottonwood Mortuary, Singing Hills
Cemetery and Memorial Estates eliminated in consolidation	-	1,541,120
Total cemetery perpetual care trust investments	6,413,167	5,952,984
Cemetery perpetual care obligation	(4,087,704)	(3,933,719)
Trust investments in excess of trust obligations	$     2,325,463	$     2,019,265

Schedule of Restricted Assets in Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds

Restricted assets are summarized as follows:

	December 31
	2020	2019
Cash and cash equivalents (1)	$     8,842,744	$     8,674,214
Fixed maturity securities, available for sale, at estimated fair value	1,473,637	1,008,867
Equity securities, at estimated fair value	2,515,778	1,976,480
Participating interests in mortgage loans held for investment    with Security National Life	3,317,877	2,275,756
Total	$   16,150,036	$   13,935,317
(1) Including cash and cash equivalents of $8,524,999 and $7,170,092 as of December 31, 2020 and 2019, respectively, for the life insurance and mortgage segments.

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9) Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Disclosure Text Block [Abstract]

Summary of Income Tax Liability

The Company’s income tax liability is summarized as follows:

	December 31
	2020	2019
Current	$    2,595,877	$    1,410,153
Deferred	22,662,923	17,276,819
Total	$  25,258,800	$   18,686,972

Schedule of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax (assets) and liabilities are approximately as follows:

	December 31
	2020	2019
Assets
Future policy benefits	$  (12,657,045)	$  (12,450,229)
Loan loss reserve	(5,352,942)	(1,053,256)
Unearned premium	(699,011)	(760,556)
Net operating loss	(334,085)	(438,420)
Deferred compensation	(2,833,298)	(1,996,865)
Deposit obligations	(610,041)	(619,633)
Other	(1,269,533)	(1,020,718)
Less: Valuation allowance	961,920	2,439,394
Total deferred tax assets	(22,794,035)	(15,900,283)
Liabilities
Deferred policy acquisition costs	16,430,001	15,536,717
Basis difference in property, equipment and real estate	5,312,787	3,638,512
Value of business acquired	1,880,602	2,074,096
Deferred gains	12,124,226	5,169,104
Trusts	1,064,387	1,064,387
Tax on unrealized appreciation	8,644,955	5,694,286
Total deferred tax liabilities	45,456,958	33,177,102
Net deferred tax liability	$  22,662,923	$   17,276,819

Schedule of Components of Income Tax Expense (Benefit)

The Company’s income tax expense is summarized as follows for the years ended December 31:

	2020	2019
Current
Federal	$  10,678,612	$    4,404,041
State	2,320,233	504,272
	12,998,845	4,908,313
Deferred
Federal	2,677,943	(1,551,725)
State	176,726	(306,172)
	2,854,669	(1,857,897)
Total	$  15,853,514	$    3,050,416

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation of income tax expense at the U.S. federal statutory rates is as follows:

	2020	2019
Computed expense at statutory rate	$  15,004,527	$    2,928,226
State tax expense, net of federal tax benefit	1,972,598	156,499
Change in valuation allowance	(1,477,474)	194,364
Other, net	353,863	(228,673)
Income tax expense	$  15,853,514	$    3,050,416

Summary of Operating Loss Carryforwards

Net Operating Losses and Tax Credit Carryforwards:

Year of Expiration
2021	$       17,100
2022	-
2023	-
2024	-
2025	-
Thereafter up through 2037	1,405,155
	$   1,422,255

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12) Capital Stock (Tables)

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

Earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. In accordance with GAAP, the basic and diluted earnings per share amounts were calculated as follows:

	2020	2019
Numerator:
Net earnings	$   55,596,613	$   10,893,519
Denominator:
Denominator for basic earnings
per share-weighted-average shares	18,831,991	18,562,056
Effect of dilutive securities
Employee stock options	443,260	127,608
Dilutive potential common shares	443,260	127,608
Denominator for diluted earnings
per share-adjusted weighted-average
shares and assumed conversions	19,275,251	18,689,664
Basic earnings per share	$2.95	$0.59
Diluted earnings per share	$2.88	$0.58

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13) Stock Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2020

Table Text Block Supplement [Abstract]

Schedule of Assumptions Used

The following table summarizes the assumptions used in estimating the fair value of each option granted along with the weighted-average fair value of the options granted:

			Assumptions
Grant Date	Plan	Weighted-Average Fair Value of Each Option	Expected Dividend Yield	Underlying stock FMV	Weighted-Average Volatility	Weighted-Average Risk-Free Interest Rate	Weighted-Average Expected Life (years)
March 27, 2020	All Plans	$            0.65	5%	$      3.76	32.29%	1.64%	4.82
December 6, 2019	All Plans	$            0.96	5%	$      5.19	32.79%	1.64%	4.83
January 17, 2019	All Plans	$            1.12	5%	$      4.98	36.04%	2.56%	5.31

Schedule of Activity of Stock Option Plans

Activity of the stock option plans is summarized as follows:

	Number of Class A Shares	Weighted Average Exercise Price	Number of Class C Shares	Weighted Average Exercise Price
Outstanding at January 1, 2019	1,011,274	$    4.49	577,280	$    5.15
Adjustment for the effect of stock dividends	51,018		28,295
Granted	81,000		180,000
Exercised	(45,834)		(191,443)
Cancelled	(11,405)		-
Outstanding at December 31, 2019	1,086,053	$    4.41	594,132	$    5.36
Adjustment for the effect of stock dividends	27,968		19,354
Granted	77,000		180,000
Exercised	(116,487)		(130,820)
Cancelled	(1,671)		-
Outstanding at December 31, 2020	1,072,863	$    4.33	662,666	$    4.73
Exercisable at end of year	1,053,903	$    4.45	616,542	$    4.91
Available options for future grant	325,372		266,500
Weighted average contractual term of options
outstanding at December 31, 2020	5.50 years		6.71 years
Weighted average contractual term of options
exercisable at December 31, 2020	5.43 years		6.63 years
Aggregated intrinsic value of options outstanding
at December 31, 2020 (1)	$4,311,983		$2,396,954
Aggregated intrinsic value of options exercisable
at December 31, 2020 (1)	$4,223,251		$2,183,399
(1) The Company used a stock price of $8.35 as of December 31, 2020 to derive intrinsic value.

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14) Statutory Financial Information and Dividend Limitations (Tables)

12 Months Ended

Dec. 31, 2020

Insurance [Abstract]

Schedule of statutory accounting practices

Statutory net income and capital and surplus of the Company’s insurance subsidiaries, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities are as follows:

	Statutory Net Income			Statutory Capital and Surplus
	2020	2019		2020	2019
Amounts by insurance subsidiary:
Security National Life Insurance Company	$  6,054,764	$  3,589,552		$  53,089,185	$  49,390,181
Kilpatrick Life Insurance Company	1,574,128	12,752,100	(1)	15,177,996	15,208,071
First Guaranty Insurance Company	790,221	1,078,733		7,045,644	6,352,670
Memorial Insurance Company of America	55	(107)		1,088,034	1,088,559
Southern Security Life Insurance Company, Inc.	183	87		1,581,647	1,588,396
Trans-Western Life Insurance Company	(1,527)	3,773		510,636	512,163
Total	$  8,417,824	$17,424,138		$  78,493,142	$  74,140,040
(1) Includes 12 months even though Kilpatrick Life Insurance Company wasn't acquired by the Company until December 2019.

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15) Business Segments Information (Tables)

12 Months Ended

Dec. 31, 2020

Table Text Block Supplement [Abstract]

Schedule of Revenues and Expenses by Reportable Segment

The Company regularly reviews the quantitative thresholds and other criteria to determine when other business segments may need to be reported.

	2020
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       93,020,617	$       20,307,435	$     298,933,110	$                         -	$     412,261,162
Net investment income	54,811,486	807,695	710,622	-	56,329,803
Gains on investments and other assets	2,088,541	(162,652)	(39)	-	1,925,850
Other than temporary impairments	(370,975)	-	-	-	(370,975)
Other revenues	1,491,585	94,349	9,731,548	-	11,317,482
Intersegment revenues:
Net investment income	8,022,503	351,505	716,240	(9,090,248)	-
Total revenues	159,063,757	21,398,332	310,091,481	(9,090,248)	481,463,322
Expenses:
Death, surrenders and other policy benefits	62,841,360	-	-	-	62,841,360
Increase in future policy benefits	23,568,650	-	-	-	23,568,650
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	13,618,204	689,221	-	-	14,307,425
Selling, general and administrative expenses:
Commissions	4,149,241	1,506,320	118,770,736	-	124,426,297
Personnel	25,449,100	5,669,367	53,871,504	-	84,989,971
Advertising	614,114	391,836	4,374,946	-	5,380,896
Rent and rent related	861,602	89,253	5,922,706	-	6,873,561
Depreciation on property and equipment	843,335	488,570	746,833	-	2,078,738
Provision for loan loss reserve	-	-	16,506,030	-	16,506,030
Cost related to funding mortgage loans	-	-	9,877,700	-	9,877,700
Intersegment	621,161	142,999	580,976	(1,345,136)	-
Other	11,808,818	4,417,805	31,104,479	-	47,331,102
Interest expense:
Intersegment	410,024	152,175	7,182,913	(7,745,112)	-
Other	2,354,760	198,968	6,025,082	-	8,578,810
Costs of goods and services sold-mortuaries and cemeteries	-	3,252,655	-	-	3,252,655
Total benefits and expenses	147,140,369	16,999,169	254,963,905	(9,090,248)	410,013,195
Earnings before income taxes	$       11,923,388	$         4,399,163	$       55,127,576	$                         -	$       71,450,127
Income tax benefit (expense)	(1,433,901)	(1,009,137)	(13,410,476)	-	(15,853,514)
Net earnings	$       10,489,487	$         3,390,026	$       41,717,100	$                         -	$       55,596,613
Identifiable assets	$  1,171,158,235	$       56,335,498	$     408,325,196	$       (90,398,039)	$  1,545,420,890
Goodwill	$         2,765,570	$            754,018	$                        -	$                         -	$         3,519,588

	2019
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       81,860,610	$       15,296,235	$     131,976,082	$                         -	$     229,132,927
Net investment income	41,610,831	579,995	828,647	-	43,019,473
Gains on investments and other assets	138,330	530,098	59,939	-	728,367
Other revenues	2,128,961	95,197	7,956,005	-	10,180,163
Intersegment revenues:
Net investment income	4,455,034	443,548	508,637	(5,407,219)	-
Total revenues	130,193,766	16,945,073	141,329,310	(5,407,219)	283,060,930
Expenses:
Death, surrenders and other policy benefits	44,911,805	-	-	-	44,911,805
Increase in future policy benefits	23,568,497	-	-	-	23,568,497
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	14,199,152	435,425	-	-	14,634,577
Selling, general and administrative expenses:
Commissions	3,632,780	1,084,079	52,046,032	-	56,762,891
Personnel	20,311,591	5,177,810	38,731,869	-	64,221,270
Advertising	595,118	368,173	3,821,267	-	4,784,558
Rent and rent related	451,380	47,525	6,556,551	-	7,055,456
Depreciation on property and equipment	477,247	428,633	805,489	-	1,711,369
Cost related to funding mortgage loans	-	-	6,278,954	-	6,278,954
Intersegment	412,853	180,594	544,463	(1,137,910)	-
Other	11,769,097	3,241,023	19,912,641	-	34,922,761
Interest expense:
Intersegment	490,756	154,615	3,623,938	(4,269,309)	-
Other	2,808,081	288,768	4,289,839	-	7,386,688
Costs of goods and services sold-mortuaries and cemeteries	-	2,878,169	-	-	2,878,169
Total benefits and expenses	123,628,357	14,284,814	136,611,043	(5,407,219)	269,116,995
Earnings before income taxes	$         6,565,409	$         2,660,259	$         4,718,267	$                         -	$       13,943,935
Income tax benefit (expense)	(1,085,848)	(649,144)	(1,315,424)	-	(3,050,416)
Net earnings	$         5,479,561	$         2,011,115	$         3,402,843	$                         -	$       10,893,519
Identifiable assets	$  1,110,641,526	$       81,014,182	$     249,970,323	$     (110,701,544)	$  1,330,924,487
Goodwill	$         2,765,570	$            754,018	$                        -	$                         -	$         3,519,588

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17) Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2020

Table Text Block Supplement [Abstract]

Schedule of fair value assets and liabilities measured on a recurring basis

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the 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

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the consolidated balance sheet at December 31, 2019.

	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	$       355,977,820	$                        -	$ 352,761,438	$          3,216,382
Equity securities	7,271,165	7,271,165	-	-
Loans held for sale	213,457,632	-	-	213,457,632
Restricted assets (1)	1,008,867	-	1,008,867	-
Restricted assets (2)	1,976,480	1,976,480	-	-
Cemetery perpetual care trust investments (1)	975,673	-	975,673	-
Cemetery perpetual care trust investments (2)	1,605,451	1,605,451	-	-
Derivatives - loan commitments (3)	2,722,580	-	-	2,722,580
Total assets accounted for at fair value on a    recurring basis	$       584,995,668	$        10,853,096	$ 354,745,978	$      219,396,594
Liabilities accounted for at fair value on a    recurring basis
Derivatives - call options (4)	$              (62,265)	$             (62,265)	$                    -	$                         -
Derivatives - put options (4)	(22,282)	(22,282)	-	-
Derivatives - loan commitments (4)	(231,347)	-	-	(231,347)
Total liabilities accounted for at fair value    on a recurring basis	$            (315,894)	$             (84,547)	$                    -	$           (231,347)
(1) Fixed maturity securities available for sale
(2) Mutual funds and 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

Schedule of Effect of Significant Unobservable Inputs, Changes in Plan Assets

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

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2019, 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
	12/31/2019	Technique	Input(s)	Value	Value	Average
Loans held for sale	$213,457,632	Market approach	Investor contract pricing as a percentage of unpaid principal balance	98.0%	109.0%	103.0%
Derivatives - loan commitments (net)	2,491,233	Market approach	Pull-through rate	1.0%	92.0%	81.0%
			Initial-Value	N/A	N/A	N/A
			Servicing	0 bps	318 bps	79 bps
Fixed maturity securities available for sale	3,216,382	Broker quotes	Pricing quotes	$    95.02	$  115.80	$   107.98

Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs

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

	Net Derivatives 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/purchases	-		5,627,013,749		-
Sales, maturities and paydowns	-		(5,600,045,285)		(1,042,400)
Transfer to mortgage loans held for investment	-		(16,960,549)		-
Total gains (losses):
Included in earnings	7,637,377	(1)	199,306,871	(1)	3,408	(2)
Included in other comprehensive income	-		-		23,785
Balance - December 31, 2020	$         10,128,610		$      422,772,418		$              2,201,175
(1) As a component of mortgage fee income on the consolidated statements of earnings
(2) As a component of net investment income on the consolidated statements of earnings

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

	Net Derivatives Loan Commitments	Loans Held for Sale	Fixed Maturity Securities Available for Sale
Balance - December 31, 2018	$           1,591,816	$      136,210,853	$                             -
Originations/purchases	-	2,606,839,175	-
Sales, maturities and paydowns	-	(2,580,875,055)	-
Transfer to mortgage loans held for investment	-	(31,881,851)	-
Transfer from fixed maturity securities held to maturity	-		3,216,382
Total gains (losses):
Included in earnings (1)	899,417	83,164,510	-
Balance - December 31, 2019	$           2,491,233	$      213,457,632	$              3,216,382
(1) As a component of mortgage fee income on the consolidated statements of earnings

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 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

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 consolidated balance sheet at December 31, 2019.

	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	$        1,302,025	$                        -	$                -	$        1,302,025
Impaired real estate held for investment	8,375,884	-	-	8,375,884
Total assets accounted for at fair value on    a nonrecurring basis	$        9,677,909	$                        -	$                -	$        9,677,909

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

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, 2019:

	Carrying Value	Level 1	Level 2	Level 3	Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential	$   110,253,678	$                -	$                -	$   115,320,638	$   115,320,638
Residential construction	88,651,967	-	-	88,651,967	88,651,967
Commercial	37,788,901	-	-	39,289,462	39,289,462
Mortgage loans held for investment, net	236,694,546	$                -	$                -	$  243,262,067	$   243,262,067
Policy loans	14,762,805	-	-	14,762,805	14,762,805
Insurance assignments, net (1)	39,614,939	-	-	39,614,939	39,614,939
Restricted assets (2)	2,275,756	-	-	2,289,679	2,289,679
Cemetery perpetual care trust investments (2)	524,000	-	-	536,553	536,553
Mortgage servicing rights, net	17,155,529	-	-	22,784,571	22,784,571
Liabilities
Bank and other loans payable	$ (217,572,612)	$                -	$                -	$ (217,572,612)	$ (217,572,612)
Policyholder account balances (3)	(45,154,180)	-	-	(41,828,469)	(41,828,469)
Future policy benefits - annuities (3)	(113,579,830)	-	-	(117,304,614)	(117,304,614)
(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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18) Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

Schedule of Changes in accumulated other comprehensive income

The following summarizes the changes in accumulated other comprehensive income:

	December 31
	2020	2019
Unrealized gains on fixed maturity securities available for sale	$    12,016,464	$    17,315,770
Amounts reclassified into net earnings	(2,772)	-
Net unrealized gains before taxes	12,013,692	17,315,770
Tax expense	(2,522,876)	(3,636,311)
Net	9,490,816	13,679,459
Unrealized gains on restricted assets (1)	41,225	35,550
Tax expense	(10,269)	(8,856)
Net	30,956	26,694
Unrealized gains on cemetery perpetual care trust investments (1)	(6,817)	29,904
Tax expense	1,698	(7,449)
Net	(5,119)	22,455
Unrealized gains for foreign currency translations adjustments	(46)	972
Tax expense	12	(243)
Net	(34)	729
Other comprehensive income changes	$      9,516,619	$    13,729,337
_______________
(1) Fixed maturity securities available for sale

Accumulated Balances of Other Comprehensive Income

The following is the accumulated balances of other comprehensive income as of December 31, 2020:

	Beginning Balance December 31, 2019	Change for the period	Ending Balance December 31, 2020
Unrealized gains on fixed maturity securities available for sale	$   13,679,459	$     9,490,816	$   23,170,275
Unrealized gains on restricted assets (1)	26,694	30,956	57,650
Unrealized gains (losses) on cemetery perpetual    care trust investments (1)	22,455	(5,119)	17,336
Foreign currency translation adjustments	(2,094)	(34)	(2,128)
Other comprehensive income	$   13,726,514	$     9,516,619	$   23,243,133
(1) Fixed maturity securities available for sale

The following is the accumulated balances of other comprehensive income as of December 31, 2019:

	Beginning Balance December 31, 2018	Change for the period	Ending Balance December 31, 2019
Unrealized gains on fixed maturity securities available for sale	$                    -	$   13,679,459	$   13,679,459
Unrealized gains on restricted assets (1)	-	26,694	26,694
Unrealized gains on cemetery perpetual care trust investments (1)	-	22,455	22,455
Foreign currency translation adjustments	(2,823)	729	(2,094)
Other comprehensive income (loss)	$         (2,823)	$   13,729,337	$   13,726,514
(1) Fixed maturity securities available for sale

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19) Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2020

Table Text Block Supplement [Abstract]

Schedule of Derivative Assets at Fair Value

The following table shows the fair value and notional amounts of derivative instruments as of December 31, 2020 and 2019.

	Fair Values and Notional Amounts of Derivative Instruments
		December 31, 2020			December 31, 2019
	Balance Sheet Location	Notional Amount	Asset Fair Value	Liability Fair Value	Notional Amount	Asset Fair Value	Liability Fair Value
Derivatives not designated as hedging instruments:
Loan commitments	Other assets and Other liabilities	$659,245,038	$12,592,672	$2,464,062	$224,202,514	$2,722,580	$231,347
Call options	Other liabilities	1,873,200	--	43,097	1,813,500	--	62,265
Put options	Other liabilities	--	--	--	1,573,100	--	22,282
Total		$661,118,238	$12,592,672	$2,507,159	$227,589,114	$2,722,580	$315,894

Schedule of Gains and Losses on Derivatives

The following table shows the gain (loss) on derivatives for the periods presented. There were no gains or losses reclassified from accumulated other comprehensive income into income or gains or losses recognized in income on derivatives ineffective portion or any amounts excluded from effective testing.

		Net Amount Gain (Loss)
		Years ended December 31
Derivative	Classification	2020	2019
Loan commitments	Mortgage fee income	$        7,637,377	$             899,417
Call and put options	Gains on investments and other assets	$           272,758	$             626,208

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20) Acquisitions (Tables)

12 Months Ended

Dec. 31, 2020

Probst Family Funerals and Cremations and Heber Valley Funeral Home

Estimated Fair Values of Assets Acquired and Liabilities Assumed

The estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition were as follows:

Cash	$     53,859
Property and equipment	2,475,526
Receivables	13,620
Goodwill	754,018
Other	21,800
Total assets acquired	3,318,823
Bank and other loans payable	(3,176)
Total liabilities assumed	(3,176)
Fair value of net assets acquired/consideration paid	$ 3,315,647
Fair value of net assets acquired/consideration paid, net of cash acquired	$ 3,261,788

Kilpatrick

Estimated Fair Values of Assets Acquired and Liabilities Assumed

As part of the coinsurance agreement, effective October 1, 2019, Security National Life acquired the following assets and assumed the following contractual liabilities.

Other investments and policy loans	$      9,124,459
Real estate held for investment	2,850,000
Mortgage loans held for investment	200,000
Receivables	131,258
Total assets acquired	12,305,717
Future policy benefits and unpaid claims	(165,404,970)
Other liabilities and accrued expenses	(5,259,341)
Total liabilities assumed	(170,664,311)
Cash received for reinsurance assumed	$  158,358,594

At the time of acquisition some of these assets and liabilities became intercompany items, and the Company has eliminated them for consolidation.

Fixed maturity securities, available for sale	$     22,766,520
Fixed maturity securities, held to maturity	16,436
Mortgage loans held for investment	8,011,660
Real estate held for investment	2,708,557
Other investments	446,655
Accrued investment income	183,527
Total investments	34,133,355
Cash and cash equivalents	6,900,654
Receivables, net	5,407,736	(1)
Receivables from reinsurers	168,105,064	(1)
Property and equipment, net	1,498,245
Value of business acquired	4,962,831
Deferred taxes	167,344
Other	712,323
Total assets acquired	221,887,552
Future policy benefits and unpaid claims	(189,071,407)
Accounts payable	(283,304)
Other liabilities and accrued expenses	(7,870,944)
Income taxes	(881,957)
Total liabilities assumed	(198,107,612)
Fair value of net assets acquired/consideration paid	$     23,779,940
Fair value of net assets acquired/consideration paid, net of cash acquired	$     16,879,286
(1) Receivable from reinsurers of $162,907,008 and receivables, net of $5,000,000 were settled with the recapture of the coinsurance agreement by Kilpatrick Life from Security National Life.

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21) Mortgage Servicing Rightss (Tables)

12 Months Ended

Dec. 31, 2020

Table Text Block Supplement [Abstract]

Schedule of Mortgage Servicing Rights

The following table presents the MSR activity for the periods presented.

	December 31
	2020	2019
Amortized cost:
Balance before valuation allowance at beginning of year	$ 17,155,529	$ 20,016,822
MSR additions resulting from loan sales	29,896,465	4,194,502
Amortization (1)	(11,841,478)	(7,055,795)
Application of valuation allowance to write down MSRs    with other than temporary impairment	-	-
Balance before valuation allowance at year end	$ 35,210,516	$ 17,155,529
Valuation allowance for impairment of MSRs:
Balance at beginning of year	$                -	$                -
Additions	-	-
Application of valuation allowance to write down MSRs    with other than temporary impairment	-	-
Balance at year end	$                -	$                -
Mortgage servicing rights, net	$ 35,210,516	$ 17,155,529
Estimated fair value of MSRs at year end	$ 38,702,358	$ 22,784,571
(1) Included in other expenses on the consolidated statements of earnings

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense, Mortgage Servicing Rights

Therefore, the following estimates will change in a manner and amount not presently determinable by management.

	Estimated MSR Amortization
2021	$        4,724,439
2022	3,582,811
2023	3,030,850
2024	2,574,323
2025	2,200,840
Thereafter	19,097,253
Total	$      35,210,516

Schedule of Other Revenues

During the years ended December 31, 2020 and 2019, the Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the consolidated statements of earnings:

	2020	2019
Contractual servicing fees	$    8,940,612	$    7,212,164
Late fees	305,962	365,477
Total	$    9,246,574	$    7,577,641

Summary of Unpaid Principal Balances of the Servicing Portfolio

The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio for the periods presented:

	Years Ended December 31
	2020	2019
Servicing UPB	$   5,070,287,864	$   2,804,139,415

Assumptions used in determining MSR value

The following key assumptions were used in determining MSR value:

	Prepayment Speeds	Average Life(Years)	Discount Rate
December 31, 2020	15.60	5.30	9.50
December 31, 2019	15.30	5.27	9.51

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22) Future Policy Benefits and Unpaid Claims (Tables)

12 Months Ended

Dec. 31, 2020

Insurance [Abstract]

Schedule of Liability for Future Policy Benefits, by Product Segment

The following table provides information regarding future policy benefits and unpaid claims and the related receivable from reinsurers.

	Years Ended September 30
	2020	2019
Life	$   674,230,463	$654,585,723
Annuities	109,522,112	113,579,831
Policyholder account balances	44,026,809	45,154,180
Accident and health	651,140	667,428
Other policyholder funds	4,354,746	4,530,227
Reported but unpaid claims	8,689,723	4,891,922
Incurred but not reported claims	3,315,094	2,191,607
Gross future policy benefits and unpaid claims	$   844,790,087	$825,600,918
Receivable from reinsurers
Life	10,841,567	11,040,398
Annuities	4,047,301	4,038,007
Accident and health	90,231	90,113
Reported but unpaid claims	571,057	569,250
Incurred but not reported claims	19,000	10,000
Total receivable from reinsurers	15,569,156	15,747,768
Net future policy benefits and unpaid claims	$   829,220,931	$809,853,150

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23) Revenues From Contracts With Customers (Tables)

12 Months Ended

Dec. 31, 2020

Table Text Block Supplement [Abstract]

Schedule of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities

The opening and closing balances of the Company’s receivables, contract assets and contract liabilities are as follows:

	Contract Balances
	Receivables (1)	Contract Asset	Contract Liability
Opening (1/1/2020)	$       2,778,879	$                         -	$              12,607,978
Closing (12/31/2020)	4,119,988	-	13,080,179
Increase/(decrease)	1,341,109	-	472,201
	Contract Balances
	Receivables (1)	Contract Asset	Contract Liability
Opening (1/1/2019)	$       2,816,225	$                         -	$              12,508,625
Closing (12/31/2019)	2,778,879	-	12,607,978
Increase/(decrease)	(37,346)	-	99,353
(1) Included in Receivables, net on the consolidated balance sheets

Schedule of Opening and Closing Balances of the Assets and Liabilities

The following table disaggregates the opening and closing balances of the Company’s contract balances.

	Contract Balances
	Contract Asset	Contract Liability
Pre-need merchandise and services	$                         -	$              12,325,437
At-need specialty merchandise	-	282,541
Pre-need land sales	-	-
Opening (1/1/2020)	$                         -	$              12,607,978
Pre-need merchandise and services	$                         -	$              12,545,753
At-need specialty merchandise	-	534,426
Pre-need land sales	-	-
Closing (12/31/2020)	$                         -	$              13,080,179
	Contract Balances
	Contract Asset	Contract Liability
Pre-need merchandise and services	$                         -	$              12,175,943
At-need specialty merchandise	-	327,302
Pre-need land sales	-	5,380
Opening (1/1/2019)	$                         -	$              12,508,625
Pre-need merchandise and services	$                         -	$              12,325,437
At-need specialty merchandise	-	282,541
Pre-need land sales	-	-
Closing (12/31/2019)	$                         -	$              12,607,978

Revenues of the Cemetery and Mortuary Contracts

The following table disaggregates revenue for the Company’s cemetery and mortuary contracts.

	Years Ended December 31
	2020	2019
Major goods/service lines
At-need	$    15,212,822	$    12,334,777
Pre-need	5,094,613	2,961,458
	$    20,307,435	$    15,296,235
Timing of Revenue Recognition
Goods transferred at a point in time	$    13,438,592	$    10,133,723
Services transferred at a point in time	6,868,843	5,162,512
	$    20,307,435	$    15,296,235

Reconciliation of Revenues from Cemetery and mortuary contracts to Business Segment Information

The following table disaggregates contract costs that are included in deferred policy and pre-need contract acquisition costs on the consolidated balances sheets.

	Years Ended December 31
	2020	2019
Pre-need merchandise and services	$           3,601,638	$           3,590,266
At-need specialty merchandise	5,302	10,688
Pre-need land sales	-	-
	$           3,606,940	$           3,600,954

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24) Leases (Tables)

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Schedule of Lease Cost Recognized in Earnings

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 for the period presented:

	Year Ended December 31	Year Ended December 31
	2020	2019
Lease Cost
Finance lease cost:
Amortization of right-of-use assets (1)	$           58,576	$       38,351
Interest on lease liabilities (2)	7,341	9,001
Operating lease cost (3)	5,408,737	5,706,490
Short-term lease cost (3)(4)	222,311	233,318
Sublease income (3)	(394,758)	(663,242)
Total lease cost	$      5,302,207	$   5,323,918
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$      5,293,901	$   5,567,761
Operating cash flows from finance leases	7,341	9,001
Financing cash flows from finance leases	56,982	95,931
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$      5,631,193	$ 16,544,406
Finance leases	8,494	252,763
Weighted-average remaining lease term (in years)
Finance leases	2.74	3.23
Operating leases	5.40	4.67
Weighted-average discount rate
Finance leases	5.59%	5.47%
Operating leases	4.87%	5.06%
(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

Schedule of Future Minimum Rental Payments for Operating Leases

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

	Finance Leases	Operating Leases
Lease payments due in:
2021	$          46,898	$         4,344,756
2022	34,458	3,004,271
2023	27,220	2,088,028
2024	4,354	1,567,924
2025	692	837,526
Thereafter	-	2,938,906
Total undiscounted lease payments	113,622	14,781,411
Less: Discount on cash flows	(8,671)	(2,859,527)
Present value of lease liabilities	$        104,951	$       11,921,884

Right-of-Use Assets and Lease Liabilities TextBlock

The following table presents the Company’s right-of-use assets and lease liabilities for the period presented:

	Balance Sheet Location	Year Ended December 31 2020	Year Ended December 31 2019
Operating Leases
Right-of-use assets	Other assets	$      11,663,245	$     11,267,247
Lease liabilities	Other liabilities and accrued expenses	$      11,921,884	$     11,405,976
Finance Leases
Right-of-use assets		$          254,276	$         248,565
Accumulated amortization		(154,144)	(98,351)
Right-of-use assets, net	Property and equipment, net	$          100,132	$         150,214
Lease liabilities	Bank and other loans payable	$          104,951	$         153,439

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2) Investments: Available for sale (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020		Dec. 31, 2019
Available for sale securities, Amortized Cost	$ 265,150,484		$ 338,629,810
Available for sale securities, Estimated fair value	294,656,679		355,977,820
Mortgage loans on real estate and construction	249,343,936		236,694,546
Mortgage loans on real estate and construction, unamortized deferred loan fees, net	(1,161,132)		(2,391,567)
Mortgage loans on real estate and construction, allowance for losses	(2,005,127)		(1,453,037)
Mortgage loans on real estate and construction, Discount	(1,260,896)		(653,272)
Real estate held for investment, net of depreciation	131,684,453		102,756,946
Real estate held for sale	7,878,807		14,097,627
Policy loans	14,171,589		14,762,805
Insurance assignments	53,231,131		41,062,965
Federal Home Loan Bank stock	2,506,600	[1]	894,300	[2]
Other investments	5,432,816		4,973,225
Allowance for doubtful accounts	(1,645,475)		(1,448,026)
Total policy loans and other investments	73,696,661		60,245,269
Accrued investment income	5,360,523		4,833,232
Total investments	773,945,298		781,876,605
Total
Available for sale securities, Amortized Cost	265,150,484		338,629,810
Available for sale securities, Unrecognized Holding Gain	30,456,040		18,085,841
Available for sale securities, Unrecognized Holding Loss	(949,845)		(737,831)
Available for sale securities, Estimated fair value			355,977,820
US Treasury Securities
Available for sale securities, Amortized Cost	42,381,805		142,740,641
Available for sale securities, Unrecognized Holding Gain	1,358,562		632,185
Available for sale securities, Unrecognized Holding Loss	0		(25,215)
Available for sale securities, Estimated fair value			143,347,611
US States and Political Subdivisions Debt Securities
Available for sale securities, Amortized Cost	5,383,762		7,450,366
Available for sale securities, Unrecognized Holding Gain	312,214		87,812
Available for sale securities, Unrecognized Holding Loss	(1,261)		(9,026)
Available for sale securities, Estimated fair value			7,529,152
Corporate Debt Securities
Available for sale securities, Amortized Cost	186,067,912		156,599,184
Available for sale securities, Unrecognized Holding Gain	27,216,496		16,768,449
Available for sale securities, Unrecognized Holding Loss	(681,478)		(463,413)
Available for sale securities, Estimated fair value			172,904,220
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Available for sale securities, Amortized Cost	31,047,791		31,475,280
Available for sale securities, Unrecognized Holding Gain	1,565,377		597,395
Available for sale securities, Unrecognized Holding Loss	(267,106)		(240,177)
Available for sale securities, Estimated fair value			31,832,498
Redeemable Preferred Stock
Available for sale securities, Amortized Cost	269,214		364,339
Available for sale securities, Unrecognized Holding Gain	3,391		0
Available for sale securities, Unrecognized Holding Loss	0		0
Available for sale securities, Estimated fair value			364,339
Industrial, miscellaneous and all other
Available-for-sale Securities, Amortized Cost Basis	9,698,490		6,900,537
Available-for-sale Securities, Gross Unrealized Gain	2,376,156		1,139,799
Available For Sale Securities - Gross Unrealized Losses	(750,407)		(769,171)
Available for Sale Securities - Estimated Fair Value	11,324,239		7,271,165
Equity Securities
Available-for-sale Securities, Amortized Cost Basis	9,698,490		6,900,537
Available-for-sale Securities, Gross Unrealized Gain	2,376,156		1,139,799
Available For Sale Securities - Gross Unrealized Losses	(750,407)		(769,171)
Available for Sale Securities - Estimated Fair Value	11,324,239		7,271,165
Residential Mortgage
Mortgage loans on real estate and construction	95,822,448		113,043,965
Real estate held for investment, net of depreciation	24,843,743		12,530,306
Real estate held for sale	3,478,254		8,021,306
Residential construction
Mortgage loans on real estate and construction	111,111,777		89,430,237
Commercial
Mortgage loans on real estate and construction	46,836,866		38,718,220
Real estate held for investment, net of depreciation	106,840,710		90,226,640
Real estate held for sale	$ 4,400,553		$ 6,076,321

[1] Includes $866,900 of Membership stock and $1,639,700 of Activity stock due to short-term borrowings.

[2] Includes $894,300 of Membership stock and $-0- of Activity stock due to short-term borrowings.

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2) Investments: Schedule of Unrealized Loss on Investments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
US States and Political Subdivisions Debt Securities
Available for sale Securities, Unrecognized Holding Loss	$ 1,261	$ 9,026
Available for sale Securities, Fair Value	206,812	3,062,889
US States and Political Subdivisions Debt Securities | Less Than 12 Months
Available for sale Securities, Unrecognized Holding Loss	1,261	9,026
Available for sale Securities, Fair Value	206,812	3,062,889
US States and Political Subdivisions Debt Securities | More Than 12 Months
Available for sale Securities, Unrecognized Holding Loss	0	0
Available for sale Securities, Fair Value	0	0
Corporate Securities
Available for sale Securities, Unrecognized Holding Loss	681,478	463,413
Available for sale Securities, Fair Value	12,512,324	11,134,820
Corporate Securities | Less Than 12 Months
Available for sale Securities, Unrecognized Holding Loss	242,596	118,746
Available for sale Securities, Fair Value	9,919,298	7,184,311
Corporate Securities | More Than 12 Months
Available for sale Securities, Unrecognized Holding Loss	438,882	344,667
Available for sale Securities, Fair Value	2,593,026	3,950,509
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Available for sale Securities, Unrecognized Holding Loss	267,106	240,177
Available for sale Securities, Fair Value	3,507,535	13,769,212
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises | Less Than 12 Months
Available for sale Securities, Unrecognized Holding Loss	266,522	205,470
Available for sale Securities, Fair Value	3,455,574	13,266,443
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises | More Than 12 Months
Available for sale Securities, Unrecognized Holding Loss	584	34,707
Available for sale Securities, Fair Value	51,961	502,769
Total unrealized losses
Available for sale Securities, Unrecognized Holding Loss	949,845	737,831
Available for sale Securities, Fair Value	16,226,671	68,596,609
Total unrealized losses | Less Than 12 Months
Available for sale Securities, Unrecognized Holding Loss	510,379	353,453
Available for sale Securities, Fair Value	13,581,684	54,142,931
Total unrealized losses | More Than 12 Months
Available for sale Securities, Unrecognized Holding Loss	439,466	384,378
Available for sale Securities, Fair Value	$ 2,644,987	14,453,678
US Treasury Securities [Member]
Available for sale Securities, Unrecognized Holding Loss		25,215
Available for sale Securities, Fair Value		40,629,688
US Treasury Securities [Member] | Less Than 12 Months
Available for sale Securities, Unrecognized Holding Loss		20,211
Available for sale Securities, Fair Value		30,629,288
US Treasury Securities [Member] | More Than 12 Months
Available for sale Securities, Unrecognized Holding Loss		5,004
Available for sale Securities, Fair Value		$ 10,000,400

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2) Investments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Available for sale securities, Amortized Cost	$ 265,150,484	$ 338,629,810
Fixed maturity securities unrealized gains	$ 12,013,692	$ 17,315,770
Average market value over amortized cost	94.70%	98.90%
Credit losses	$ 370,975	$ 0
Total
Available for sale securities, Amortized Cost	$ 265,150,484	$ 338,629,810

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2) Investments: Other than temporary credit impairments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Balance of credit-related OTTI at beginning	$ 0	$ 0
Additions for credit impairments recognized on:
Securities not previously impaired	370,975	0
Securities previously impaired	0	0
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period (realized)	0	0
Securities due to an increase in expected cash flows	0	0
Balance of credit-related OTTI at ending	$ 370,975	$ 0

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2) Investments: Investments Classified by Contractual Maturity Date (Details)	Dec. 31, 2020 USD ($)
Amortized Cost	$ 265,150,484
Estimated fair value	294,656,679
Due in 1 year
Amortized Cost	28,634,042
Estimated fair value	28,831,983
Due in 2-5 years
Amortized Cost	66,183,907
Estimated fair value	70,910,775
Due in 5-10 years
Amortized Cost	70,162,166
Estimated fair value	78,592,046
Due in more than 10 years
Amortized Cost	68,853,364
Estimated fair value	83,703,208
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Amortized Cost	31,047,791
Estimated fair value	32,346,062
Redeemable Preferred Stock
Amortized Cost	269,214
Estimated fair value	$ 272,605

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2) Investments: Gain (Loss) on Investments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Fixed maturity securities available for sale:	$ 1,554,875	$ 728,367
Fixed maturity securities available for sale
Gross Realized Gains	445,749	459,286
Gross Realized Losses	77,546	162,649
Other than temporary impairments	(370,975)	0
Equity Securities
Gains on securities sold	74,836	256,520
Unrealized Gains and Losses on securities held at end of period	1,125,304	1,086,116
Other Assets {1}
Gross Realized Gains	2,342,418	2,844,673
Gross Realized Losses	$ (1,984,911)	$ (3,755,579)

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2) Investments: Net carrying amount of held to maturity securities (Details) - Fixed maturity securities available for sale - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Net carrying amount for sales of securities		$ 4,950,041
Net realized loss related to sales of securities		$ 43,039
Proceeds received from sale of fixed maturity available for sale securities	$ 5,477,438
Gross realized gains	358,236
Gross realized losses	$ 21,137

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2) Investments: Schedule of Major categories of net investment income (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Gross investment income	$ 69,909,367	$ 56,520,356
Investment Income, Investment Expense	(13,579,564)	(13,500,883)
Net investment income	56,329,803	43,019,473
Fixed Maturities
Gross investment income	12,233,394	10,372,559
Equity Securities
Gross investment income	642,433	309,918
Mortgage Loans Real Estate
Gross investment income	25,672,746	18,405,010
Real Estate
Gross investment income	11,945,401	8,782,959
Policy Student and Other Loans
Gross investment income	1,025,179	554,969
Insurance Assignments
Gross investment income	17,837,578	16,086,059
Other Investments {1}
Gross investment income	126,013	184,439
Cash and Cash Equivalents
Gross investment income	$ 426,623	$ 1,824,443

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2) Investments: Net Investment Income - Additional (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Net investment income	$ 56,329,803	$ 43,019,473
Securities on deposit for regulatory authorities	9,684,409	9,633,818
Cemeteries And Mortuaries
Net investment income	$ 676,313	$ 448,754

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2) Investments: Commercial Real Estate Held for Investment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Bank and other loans payable	$ 297,824,368	$ 217,572,612
Impairment losses on commercial real estate held for sale	897,980	2,768,979
Kansas
Impairment losses on commercial real estate held for sale	846,980	2,768,979
Texas
Impairment losses on commercial real estate held for sale	51,000
Commercial Real Estate
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate, Gross	71,517,902	87,814,860
Bank and other loans payable	$ 46,153,283	$ 54,917,279

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2) Investments: Commercial Real Estate Investment (Details)		Dec. 31, 2020 USD ($) Decimal	Dec. 31, 2019 USD ($) Decimal
Real estate held for investment (net of accumulated depreciation)		$ 131,684,453	$ 102,756,946
Real estate held for sale		7,878,807	14,097,627
Commercial Real Estate
Real estate held for investment (net of accumulated depreciation)		$ 106,840,710	$ 90,226,640
Total Square Footage | Decimal		485,428	611,865
Real estate held for sale		$ 4,400,553	$ 6,076,321
Square Footage | Decimal		234,979	239,779
Louisiana | Commercial Real Estate
Real estate held for investment (net of accumulated depreciation)		$ 2,998,684	$ 6,009,079
Total Square Footage | Decimal		84,841	125,114
Utah
Real estate held for investment (net of accumulated depreciation)	[1]	$ 23,777,478	$ 7,889,576
Utah | Commercial Real Estate
Real estate held for investment (net of accumulated depreciation)	[2]	$ 100,927,528	$ 81,266,083
Total Square Footage | Decimal	[2]	379,066	465,230
Arizona | Commercial Real Estate
Real estate held for sale	[3]	$ 0	$ 2,500
Square Footage | Decimal	[3]	0	0
Kansas | Commercial Real Estate
Real estate held for sale		$ 4,000,000	$ 4,800,000
Square Footage | Decimal		222,679	222,679
Mississippi | Commercial Real Estate
Real estate held for investment (net of accumulated depreciation)		$ 2,914,498	$ 2,951,478
Total Square Footage | Decimal		21,521	21,521
Real estate held for sale		$ 151,553	$ 318,322
Square Footage | Decimal		12,300	12,300
Nevada | Commercial Real Estate
Real estate held for sale		$ 0	$ 655,499
Square Footage | Decimal		0	4,800
Texas | Commercial Real Estate
Real estate held for sale	[4]	$ 249,000	$ 300,000
Square Footage | Decimal	[4]	0	0

[1] The estimated remaining cost to complete the undeveloped lots is $17,354,000 and $1,900,000 as of December 31, 2020 and 2019, respectively

[2] Includes Center53 phase 1 and phase 2 which is under construction

[3] Undeveloped land

[4] Improved commercial pad

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2) Investments: Residential Real Estate Held for Investment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Impairment losses on residential real estate held for investment	$ 43,394	$ 700,134
Residential Real Estate
Foreclosed Residential Real Estate included in Residential Real Estate Held for Investment	$ 4,327,079	$ 12,433,986

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2) Investments: Residential Real Estate Investment (Details) - USD ($)		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Real estate held for investment (net of accumulated depreciation)		$ 131,684,453	$ 102,756,946
Real estate held for sale		7,878,807	14,097,627
Residential Real Estate
Real estate held for investment (net of accumulated depreciation)		24,843,743	12,530,306
Real estate held for sale		3,478,254	8,021,306
California | Residential Real Estate
Real estate held for sale		0	640,452
Florida | Residential Real Estate
Real estate held for investment (net of accumulated depreciation)		0	2,487,723
Real estate held for sale		744,322	1,300,641
Nevada | Residential Real Estate
Real estate held for investment (net of accumulated depreciation)		0	293,516
Real estate held for sale		979,640	0
Ohio | Residential Real Estate
Real estate held for sale		10,000	10,000
Utah
Real estate held for investment (net of accumulated depreciation)	[1]	23,777,478	7,889,576
Utah | Residential Real Estate
Real estate held for investment (net of accumulated depreciation)	[2]	24,557,562	9,462,886
Real estate held for sale		1,744,292	5,880,213
Lots available for sale		36	48
Lots to be developed		350	174
Washington | Residential Real Estate
Real estate held for investment (net of accumulated depreciation)	[3]	286,181	286,181
Real estate held for sale		$ 0	$ 190,000

[1] The estimated remaining cost to complete the undeveloped lots is $17,354,000 and $1,900,000 as of December 31, 2020 and 2019, respectively

[2] Including subdivision land developments

[3] Improved residential lots

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2) Investments: Real Estate Owned and Occupied by the Company (Details)	Dec. 31, 2020 Decimal
Corporate Offices, Life Insurance and Cemetery/Mortuary Operations
Approximate Square Footage	78,979
Square Footage Occupied by the Company	18.00%
Mortgage
Approximate Square Footage	39,157
Square Footage Occupied by the Company	73.00%
Life Insurance Operations
Approximate Square Footage	19,694
Square Footage Occupied by the Company	28.00%
Life Insurance Operations 1
Approximate Square Footage	12,274
Square Footage Occupied by the Company	100.00%
Mortgage Sales
Approximate Square Footage	8,059
Square Footage Occupied by the Company	100.00%
Mortgage Sales
Approximate Square Footage	1,560
Square Footage Occupied by the Company	100.00%
Mortgage Sales
Approximate Square Footage	1,737
Square Footage Occupied by the Company	100.00%

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2) Investments: Schedule of Allowance for loan losses as a contra-asset account (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Financing Receivable, Allowance for Credit Loss	$ 1,453,037	$ 1,347,972
Allowance for credit losses, Charge-offs	0	(32,692)
Allowance for Credit Losses, Provision	552,090	137,757
Financing Receivable, Allowance for Credit Loss	2,005,127	1,453,037
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	219,905	195,993
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,785,222	1,257,044
Mortgage loans	253,771,091	241,192,422
Financing Receivable, Individually Evaluated for Impairment	10,282,470	8,895,926
Financing Receivable, Collectively Evaluated for Impairment	243,488,621	232,296,496
Commercial Loan
Financing Receivable, Allowance for Credit Loss	187,129	187,129
Allowance for credit losses, Charge-offs	0	0
Allowance for Credit Losses, Provision	0	0
Financing Receivable, Allowance for Credit Loss	187,129	187,129
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	187,129	187,129
Mortgage loans	46,836,866	38,718,220
Financing Receivable, Individually Evaluated for Impairment	2,148,827	4,488,719
Financing Receivable, Collectively Evaluated for Impairment	44,688,039	34,229,501
Residential Mortgage
Financing Receivable, Allowance for Credit Loss	1,222,706	1,125,623
Allowance for credit losses, Charge-offs	0	(32,692)
Allowance for Credit Losses, Provision	552,090	129,775
Financing Receivable, Allowance for Credit Loss	1,774,796	1,222,706
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	219,905	195,993
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,554,891	1,026,713
Mortgage loans	95,822,448	113,043,965
Financing Receivable, Individually Evaluated for Impairment	7,932,680	3,752,207
Financing Receivable, Collectively Evaluated for Impairment	103,179,097	109,291,758
Residential construction
Financing Receivable, Allowance for Credit Loss	43,202	35,220
Allowance for credit losses, Charge-offs	0	0
Allowance for Credit Losses, Provision	0	7,982
Financing Receivable, Allowance for Credit Loss	43,202	43,202
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	43,202	43,202
Mortgage loans	111,111,777	89,430,237
Financing Receivable, Individually Evaluated for Impairment	200,963	655,000
Financing Receivable, Collectively Evaluated for Impairment	$ 95,621,485	$ 88,775,237

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2) Investments: Schedule of aging of mortgage loans (Details) - USD ($)		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Mortgage Loans during period		$ 253,771,091	$ 241,192,422
Mortgage Loans, Allowance for Loan Losses		(2,005,127)	(1,453,037)
Mortgage Loans, Unamortized deferred loan fees, net		(1,161,132)	(2,391,567)
Mortgage Loans, Unamortized discounts, net		(1,260,896)	(653,272)
Past Due 30 to 59 Days
Mortgage Loans during period		6,226,896	12,481,296
Past Due 60 to 89 Days
Mortgage Loans during period		2,860,928	4,085,767
Past Due 90 or More Days
Mortgage Loans during period	[1]	7,818,410	7,244,461
In Foreclosure
Mortgage Loans during period	[1]	2,464,060	1,651,465
Total Past Due
Mortgage Loans during period		19,370,294	25,462,989
Current
Mortgage Loans during period		234,400,797	215,729,433
Net Mortgage Loans
Mortgage Loans during period		249,343,936	236,694,546
Commercial Loan
Mortgage Loans during period		46,836,866	38,718,220
Mortgage Loans, Allowance for Loan Losses		(187,129)	(187,129)
Mortgage Loans, Unamortized deferred loan fees, net		(32,557)	(88,918)
Mortgage Loans, Unamortized discounts, net		(880,721)	(653,272)
Commercial Loan | Past Due 30 to 59 Days
Mortgage Loans during period		233,200	1,872,000
Commercial Loan | Past Due 60 to 89 Days
Mortgage Loans during period		812,780	0
Commercial Loan | Past Due 90 or More Days
Mortgage Loans during period	[1]	2,148,827	4,488,719
Commercial Loan | In Foreclosure
Mortgage Loans during period	[1]	0	0
Commercial Loan | Total Past Due
Mortgage Loans during period		3,194,807	6,360,719
Commercial Loan | Current
Mortgage Loans during period		43,642,059	32,357,501
Commercial Loan | Net Mortgage Loans
Mortgage Loans during period		45,736,459	37,788,901
Residential Mortgage
Mortgage Loans during period		95,822,448	113,043,965
Mortgage Loans, Allowance for Loan Losses		(1,774,796)	(1,222,706)
Mortgage Loans, Unamortized deferred loan fees, net		(909,864)	(1,567,581)
Mortgage Loans, Unamortized discounts, net		(380,175)	0
Residential Mortgage | Past Due 30 to 59 Days
Mortgage Loans during period		5,866,505	10,609,296
Residential Mortgage | Past Due 60 to 89 Days
Mortgage Loans during period		2,048,148	4,085,767
Residential Mortgage | Past Due 90 or More Days
Mortgage Loans during period	[1]	5,669,583	2,100,742
Residential Mortgage | In Foreclosure
Mortgage Loans during period	[1]	2,263,097	1,651,465
Residential Mortgage | Total Past Due
Mortgage Loans during period		15,847,333	18,447,270
Residential Mortgage | Current
Mortgage Loans during period		79,975,115	94,596,695
Residential Mortgage | Net Mortgage Loans
Mortgage Loans during period		92,757,613	110,253,678
Residential construction
Mortgage Loans during period		111,111,777	89,430,237
Mortgage Loans, Allowance for Loan Losses		(43,202)	(43,202)
Mortgage Loans, Unamortized deferred loan fees, net		(218,711)	(735,068)
Mortgage Loans, Unamortized discounts, net		0	0
Residential construction | Past Due 30 to 59 Days
Mortgage Loans during period		127,191	0
Residential construction | Past Due 60 to 89 Days
Mortgage Loans during period		0	0
Residential construction | Past Due 90 or More Days
Mortgage Loans during period	[1]	0	655,000
Residential construction | In Foreclosure
Mortgage Loans during period	[1]	200,963	0
Residential construction | Total Past Due
Mortgage Loans during period		328,154	655,000
Residential construction | Current
Mortgage Loans during period		110,783,623	88,775,237
Residential construction | Net Mortgage Loans
Mortgage Loans during period		$ 110,849,864	$ 88,651,967

[1] There was not any interest income recognized on loans past due greater than 90 days or in foreclosure

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2) Investments: Schedule of Impaired Mortgage Loans (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Commercial Loan
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	$ 2,148,827	$ 4,488,719
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	2,148,827	4,488,719
Impaired Financing Receivable, with No Related Allowance	0	0
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	1,866,819	1,499,043
Impaired Financing Receivable, with No Interest Income Recognized	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0	0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	0	0
Impaired Financing Receivable, Related Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	0	0
Impaired Financing Receivable, with Interest Income Recognized	0	0
Commercial Loan | Total
Impaired Financing Receivable, with Related Allowance, Recorded Investment	2,148,827	4,488,719
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	2,148,827	4,488,719
Impaired Financing Receivable, Related Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	1,866,819	1,499,043
Impaired Financing Receivable, with Interest Income Recognized	0	0
Residential Mortgage
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	6,415,419	2,254,189
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	6,415,419	2,254,189
Impaired Financing Receivable, with No Related Allowance	0	0
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	5,010,078	3,367,151
Impaired Financing Receivable, with No Interest Income Recognized	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	1,517,261	1,498,018
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	1,517,261	1,498,018
Impaired Financing Receivable, Related Allowance	219,905	195,993
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	1,182,368	665,270
Impaired Financing Receivable, with Interest Income Recognized	0	0
Residential Mortgage | Total
Impaired Financing Receivable, with Related Allowance, Recorded Investment	7,932,680	3,752,207
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	7,932,680	3,752,207
Impaired Financing Receivable, Related Allowance	219,905	195,993
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	6,192,446	4,032,421
Impaired Financing Receivable, with Interest Income Recognized	0	0
Residential construction
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	200,963	655,000
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	200,963	655,000
Impaired Financing Receivable, with No Related Allowance	0	0
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	555,278	1,457,278
Impaired Financing Receivable, with No Interest Income Recognized	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0	0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	0	0
Impaired Financing Receivable, Related Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	0	0
Impaired Financing Receivable, with Interest Income Recognized	0	0
Residential construction | Total
Impaired Financing Receivable, with Related Allowance, Recorded Investment	200,963	655,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	200,963	655,000
Impaired Financing Receivable, Related Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	555,278	1,457,278
Impaired Financing Receivable, with Interest Income Recognized	$ 0	$ 0

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2) Investments: Schedule Of Credit Risk Of Mortgage Loans Based On Performance Status (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Mortgage loans	$ 253,771,091	$ 241,192,422
Commercial Loan
Mortgage loans	46,836,866	38,718,220
Residential Mortgage
Mortgage loans	95,822,448	113,043,965
Residential construction
Mortgage loans	111,111,777	89,430,237
Performing Financing Receivable
Mortgage loans	243,488,621	232,296,496
Performing Financing Receivable | Commercial Loan
Mortgage loans	44,688,039	34,229,501
Performing Financing Receivable | Residential Mortgage
Mortgage loans	87,889,768	109,291,758
Performing Financing Receivable | Residential construction
Mortgage loans	110,910,814	88,775,237
Nonperforming Financing Receivable
Mortgage loans	10,282,470	8,895,926
Nonperforming Financing Receivable | Commercial Loan
Mortgage loans	2,148,827	4,488,719
Nonperforming Financing Receivable | Residential Mortgage
Mortgage loans	7,932,680	3,752,207
Nonperforming Financing Receivable | Residential construction
Mortgage loans	$ 200,963	$ 655,000

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2) Investments: Summary of Interest not accrued on non-performing mortgage loans (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Interest not accrued on non-performing loans	$ 491,000	$ 203,000

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2) Investments: Schedule of Mortgage loans on a nonaccrual status (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 10,282,470	$ 8,895,926
Commercial
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	2,148,827	4,488,719
Residential Mortgage
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	7,932,680	3,752,207
Residential construction
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 200,963	$ 655,000

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2) Investments: Contractual obligations (Details)	Dec. 31, 2020 USD ($)
Principal Amounts Due in 1 Year	$ 141,705,268
Principal Amounts Due in 2-5 Year	36,596,109
Principal Amounts Due Thereafter	75,469,714
Total	253,771,091
Residential Mortgage
Principal Amounts Due in 1 Year	11,202,899
Principal Amounts Due in 2-5 Year	17,774,238
Principal Amounts Due Thereafter	66,845,311
Total	95,822,448
Residential construction
Principal Amounts Due in 1 Year	103,391,044
Principal Amounts Due in 2-5 Year	7,720,733
Principal Amounts Due Thereafter	0
Total	111,111,777
Commercial
Principal Amounts Due in 1 Year	27,111,325
Principal Amounts Due in 2-5 Year	11,101,138
Principal Amounts Due Thereafter	8,624,403
Total	$ 46,836,866

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3) Loans Held For Sale: Aggregate fair value - Loans Held for Sale (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Aggregate Fair Value - Loans Held For Sale	$ 422,772,418	$ 213,457,632
Aggregate unpaid principal balance - Loans Held for Sale	406,407,323	206,417,122
Unrealized gain - Loans Held for Sale	$ 16,365,095	$ 7,040,510

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3) Loans Held For Sale: Schedule of Mortgage Fee Income for Loans Held for Sale (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Mortgage fee income	$ 298,933,110	$ 131,976,082
Loans Held For Sale
Loan fees	43,432,532	28,660,966
Interest Income	10,628,581	6,978,930
Secondary gains	231,759,342	93,581,956
Change in fair value of loan commitments	7,637,377	899,417
Change in fair value of loans held for sale	10,413,492	2,498,097
Provision for loan loss reserve	(4,938,214)	(643,284)
Mortgage fee income	$ 298,933,110	$ 131,976,082

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3) Loans Held For Sale: Schedule of loan loss reserve which is included in other liabilities and accrued expenses (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Beginning, Loan Loss Reserve	$ 4,046,288	$ 3,604,869
Loan loss reserve, Provisions for losses	4,938,214	643,284
Loan loss reserve, Additional	16,506,030	0
Loan loss reserve, Charge-offs	(4,906,914)	(201,865)
Ending, Loan Loss Reserve	$ 20,583,618	$ 4,046,288

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4) Receivables (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Receivables [Abstract]
Trade contracts	$ 4,119,988	$ 2,795,471
Receivables from sales agents	2,677,774	2,962,571
Other Receivables	5,786,827	5,202,444
Total receivables	12,584,589	10,960,486
Allowance for doubtful accounts	(1,685,382)	(1,724,156)
Net receivables	$ 10,899,207	$ 9,236,330

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5) Value of Business Acquired, Intangible Assets and Goodwill: Schedule of Value of Business Acquired (Details) - USD ($)	12 Months Ended
	Dec. 31, 2025	Dec. 31, 2024	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Value of business acquired, balance at start of period					$ 8,955,249	$ 9,876,647	$ 5,765,190
Value of business acquired						0	4,962,831
Imputed interest at 7% included in earnings						670,565	472,916
Amortization included in earnings						(1,457,390)	(1,320,456)
Shadow amortization included in other comprehensive income						(134,573)	(3,834)
Net amortization	$ (707,000)	$ (784,000)	$ (854,000)	$ (918,000)	$ (1,019,000)	(921,398)	(851,374)
Value of business acquired, balance at start of period						$ 8,955,249	$ 9,876,647

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5) Value of Business Acquired, Intangible Assets and Goodwill: Net amortization charged to income (Details) - USD ($)	12 Months Ended
	Dec. 31, 2025	Dec. 31, 2024	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Value of business acquired - net amortization charged to income	$ 707,000	$ 784,000	$ 854,000	$ 918,000	$ 1,019,000	$ 921,398	$ 851,374
Weighted average amortization period						6 years 1 month 2 days

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5) Value of Business Acquired, Intangible Assets and Goodwill: Schedule of Carrying Value of Intangible Asset (Details) - USD ($)		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets, Accumulated Amortization		$ (197,334)	$ (98,222)
Finite-Lived Intangible Assets, Net		$ 1,302,666	1,401,778
Customer Lists [Member]
Finite-Lived Intangible Asset, Useful Life		15 years
Finite-Lived Intangible Assets, Gross		$ 890,000	890,000
Trade Names [Member]
Finite-Lived Intangible Asset, Useful Life	[1]	15 years
Finite-Lived Intangible Assets, Gross	[1]	$ 610,000	$ 610,000

[1] See Note 20 regarding the acquisition of Kilpatrick Life Insurance Company

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5) Value of Business Acquired, Intangible Assets and Goodwill: Schedule of Goodwill by Segment (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Goodwill, Gross	$ 3,519,588	$ 3,519,588	$ 2,765,570
Accumulated impairment	0	0	0
Total goodwill, net	3,519,588	3,519,588	2,765,570
Acquisition		0	754,018
LifeInsurance
Goodwill, Gross	2,765,570	2,765,570	2,765,570
Accumulated impairment	0	0	0
Total goodwill, net	2,765,570	2,765,570	2,765,570
Acquisition		0	0
Cemetery/Mortuary
Goodwill, Gross	754,018	754,018	0
Accumulated impairment	0	0	0
Total goodwill, net	$ 754,018	754,018	0
Acquisition		$ 0	$ 754,018	[1]

[1] See Note 20 regarding the acquisition of Probst Family Funerals and Cremations and Heber Valley Funeral Home

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5) Value of Business Acquired, Intangible Assets and Goodwill (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 3,519,588	$ 3,519,588	$ 2,765,570

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6) Property and Equipment: Property, Plant and Equipment (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment, Gross	$ 31,652,484	$ 34,119,285
Less accumulated depreciation	(19,179,139)	(19,518,891)
Property and equipment, net	12,473,345	14,600,394
Land and Building [Member]
Property, Plant and Equipment, Gross	11,972,802	15,131,301
Furniture and equipment [Member]
Property, Plant and Equipment, Gross	$ 19,679,682	$ 18,987,984

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6) Property and Equipment: (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Depreciation expense	$ 2,078,738	$ 1,711,369
Property and equipment, net	12,473,345	14,600,394
Transfer of Cemetery Land and Improvements to Property and Equipment		$ 3,261,259
Building [Member]
Property and equipment, net	1,723,000
Land [Member]
Property and equipment, net	$ 1,516,700

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7) Bank and Other Loans Payable: Summary of Bank Loans Payable (Details) - USD ($)		Dec. 31, 2020	Dec. 31, 2019
Total bank and other loans		$ 297,824,368	$ 217,572,612
Finance lease liabilities		104,951	153,439
Current Installment		284,250,996	192,985,602
Bank and other loans, excluding current installments		13,573,372	24,587,010
Note Payable 1
Total bank and other loans		0	2,659,769
Note Payable 2
Total bank and other loans		633,890	1,238,619
Note Payable 3
Total bank and other loans		3,257,113	4,000,000
Note Payable 4
Total bank and other loans		0	7,247,651
Note Payable 5
Total bank and other loans		1,861,920	1,896,450
Note Payable 6
Total bank and other loans		35,091,364	33,811,559
Note Payable 7
Total bank and other loans		9,200,000	9,200,000
Note Payable 8
Total bank and other loans		116,598,834	88,509,536
Note Payable 9
Total bank and other loans		68,766,572	67,537,600
Note Payable 10
Total bank and other loans		60,715,374	0
Note Payable 11
Total bank and other loans		317,582	0
Other short-term borrowings
Total bank and other loans	[1]	1,250,000	1,250,000
Other loans payable
Total bank and other loans		$ 26,768	$ 67,989

[1] Revolving Line of Credit

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7) Bank and Other Loans Payable (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Investment	$ 773,945,298	$ 781,876,605
Interest expense	8,578,810	7,386,688
Interest Paid, Including Capitalized Interest, Operating and Investing Activities	$ 8,385,270	7,284,078
Mortgage Warehouse Line of Credit 1
Line of Credit Facility, Description	The Company, through its subsidiary SecurityNational Mortgage, has a $150,000,000 line of credit with Wells Fargo Bank N.A. The agreement charges interest at the 1-Month LIBOR rate plus 2.1% and matures on June 24, 2021
Mortgage Warehouse Line of Credit 2
Line of Credit Facility, Description	The Company, through its subsidiary SecurityNational Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement with the bank allows SecurityNational Mortgage to borrow up to $175,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 3% and matures on November 15, 2021
Comerica Bank
Line of Credit Facility, Description	The Company through its subsidiary SecurityNational Mortgage, has a line of credit with Comerica Bank. This agreement with the bank allows SecurityNational Mortgage to borrow up to $90,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2.5% and matures on May 27, 2021
Texas Capital Bank
Line of Credit Facility, Description	The Company, through its subsidiary EverLEND Mortgage, has a line of credit with Texas Capital Bank N.A. This agreement with the bank allows EverLEND Mortgage to borrow up to $5,000,000 for the sole purpose of funding mortgage loans. The agreement charges interest at the 1-Month LIBOR rate plus 2.5% and matures on August 1, 2021
Kilpatrick Life Insurance Company
Investment	$ 1,720,300	87,800
FHLB
Line of Credit Facility, Maximum Borrowing Capacity	39,102,336	57,727,738
Line of credit	0	0
Mortage property, fair value	40,729,400	59,877,900
Investment	786,300	$ 806,500
Bank
Line of Credit Facility, Maximum Borrowing Capacity	2,000,000
Line of credit	0
Mortage property, fair value	$ 348,183
Maturity	Sep. 30, 2021
Bank
Line of Credit Facility, Maximum Borrowing Capacity	$ 2,500,000
Line of credit	$ 1,250,000
Maturity	Sep. 30, 2021

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7) Bank and Other Loans Payable: Schedule of combined maturities of bank loans payable, lines of credit and notes (Details)	Dec. 31, 2020 USD ($)
Bank loans payable, lines of credit and notes and contracts payable	$ 297,824,368
Due in Year One
Bank loans payable, lines of credit and notes and contracts payable	284,242,327
Due in Year Two
Bank loans payable, lines of credit and notes and contracts payable	884,383
Due in Year Three
Bank loans payable, lines of credit and notes and contracts payable	926,186
Due in Year Four
Bank loans payable, lines of credit and notes and contracts payable	937,315
Due in Year Five
Bank loans payable, lines of credit and notes and contracts payable	1,634,157
DueThereafter
Bank loans payable, lines of credit and notes and contracts payable	$ 9,200,000

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8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets: Schedule of cemetery perpetual (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Total Cemetery Perpetual Care Trust Investments	$ 6,413,167	$ 5,952,984
Cemetery perpetual care obligation	(4,087,704)	(3,933,719)
Trust investments in excess of trust obligations	2,325,463	2,019,265
Cash and cash equivalents
Total Cemetery Perpetual Care Trust Investments	402,913	1,306,740
Fixed Maturities
Total Cemetery Perpetual Care Trust Investments	747,767	975,673
Equity Securities
Total Cemetery Perpetual Care Trust Investments	2,062,303	1,605,451
Commercial Mortgage Loans Held for Investment
Total Cemetery Perpetual Care Trust Investments	0	524,000
Residential Mortgage
Total Cemetery Perpetual Care Trust Investments	1,468,600	0
Real estate
Total Cemetery Perpetual Care Trust Investments	1,731,584	0
Note receivables
Total Cemetery Perpetual Care Trust Investments	0	0
Cemetery and Memorial Estates
Total Cemetery Perpetual Care Trust Investments	$ 0	$ 1,541,120

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8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets: Schedule of Restricted Assets (Details) - USD ($)		Dec. 31, 2020	Dec. 31, 2019
Restricted assets		$ 16,150,036	$ 13,935,317
Cash and cash equivalents
Restricted assets	[1]	8,842,744	8,674,214
Fixed maturity securities
Restricted assets		1,473,637	1,008,867
Equity Securities
Restricted assets		2,515,778	1,976,480
Restricted Assets, Participating Interests in Mortgage Loans Held for Investment
Restricted assets		$ 3,317,877	$ 2,275,756

[1] Including cash and cash equivalents of $8,524,999 and $7,170,092 as of December 31, 2020 and 2019, respectively, for the life insurance and mortgage segments

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9) Income Taxes: Summary of Income Tax Liability (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Disclosure Text Block [Abstract]
Current Income Tax Liability	$ 2,595,877	$ 1,410,153
Income Tax Liability	22,662,923	17,276,819
Income Taxes	$ 25,258,800	$ 18,686,972

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9) Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Disclosure Text Block [Abstract]
Deferred Tax, Future policy benefits	$ (12,657,045)	$ (12,450,229)
Deferred Tax, Loan Loss Reserve	(5,352,942)	(1,053,256)
Deferred Tax, Unearned premium	(699,011)	(760,556)
Deferred Tax Net Operating Loss	(334,085)	(438,420)
Deferred Tax, Deferred Compensation	(2,833,298)	(1,996,865)
Deferred Tax, Deposit Obligations	(610,041)	(619,633)
Deferred Tax, Other	(1,269,533)	(1,020,718)
Deferred Tax Assets, Valuation Allowance	961,920	2,439,394
Deferred Tax Assets, Net of Valuation Allowance	(22,794,035)	(15,900,283)
Deferred Tax, Deferred policy acquisition costs	16,430,001	15,536,717
Deferred Tax, Basis difference in property and equipment	5,312,787	3,638,512
Deferred Tax, Value of business acquired	1,880,602	2,074,096
Deferred Tax, Deferred Gains	12,124,226	5,169,104
Deferred Tax, Trusts	1,064,387	1,064,387
Deferred Tax, Tax on Unrealized Appreciation	8,644,955	5,694,286
Deferred Tax Liabilities, Net	45,456,958	33,177,102
Income Tax Liability	$ 22,662,923	$ 17,276,819

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9) Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Disclosure Text Block [Abstract]
Income Taxes Paid	$ 11,813,120	$ 4,861,318
Effective Income Tax Rate Reconciliation, Percent	22.20%	21.90%

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9) Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Current
Federal	$ 10,678,612	$ 4,404,041
State	2,320,233	504,272
Current Income Tax Expense (Benefit)	12,998,845	4,908,313
Deferred
Federal	2,677,943	(1,551,725)
State	176,726	(306,172)
Provision for deferred income taxes	2,854,669	(1,857,897)
Income Tax Expense (Benefit)	$ 15,853,514	$ 3,050,416

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9) Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Disclosure Text Block [Abstract]
Computed expense at statutory rate	$ (15,004,527)	$ (2,928,226)
State tax expense, net of federal tax benefit	1,972,598	156,499
Change in valuation allowance	(1,477,474)	194,364
Other, net	353,863	(228,673)
Income tax expense	$ 15,853,514	$ 3,050,416

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9) Income Taxes: Unrecognized tax benefits, interest and penalties (Details)	Dec. 31, 2020 USD ($)
Disclosure Text Block [Abstract]
Unrecognized Tax Benefits	$ 0

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9) Income Taxes: Summary of Operating Loss Carryforwards (Details)	Dec. 31, 2020 USD ($)
Deferred Tax Assets, Operating Loss Carryforwards	$ 1,422,255
Year of Expiration 2021
Deferred Tax Assets, Operating Loss Carryforwards	17,100
Year of Expiration 2022
Deferred Tax Assets, Operating Loss Carryforwards	0
Year of Expiration 2023
Deferred Tax Assets, Operating Loss Carryforwards	0
Year of Expiration 2024
Deferred Tax Assets, Operating Loss Carryforwards	0
Year of Expiration 2025
Deferred Tax Assets, Operating Loss Carryforwards	0
Year of Expiration Thereafter up through 2037
Deferred Tax Assets, Operating Loss Carryforwards	$ 1,405,155

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10) Reinsurance, Commitments and Contingencies Reinsurance (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Disclosure Text Block [Abstract]
Insurance assumed from other companies	$ 96,000,000	$ 99,000,000

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10) Reinsurance, Commitments and Contingencies: Mortgage Loan Loss Settlements (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Amounts accrued for loan losses	$ 20,584,000	$ 4,046,000

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10) Reinsurance, Commitments and Contingencies: Other Contingencies and Commitments (Details)	Dec. 31, 2020 USD ($)
Text Block [Abstract]
Commitments to fund new residential construction loans	$ 185,751,000
Commitments to fund new residential construction loans funded	$ 115,898,000

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11) Retirement Plans: Deferred Compensation Plans (Details) - Employee Stock Ownership Plan - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Pretax contributions	$ 19,500	$ 19,000
Contribution to plan	1,690,568	695,560
Compensation expenses	900,000	660,000
Present value of anticipated benefits	6,656,363	5,722,837
Payment to retirement compensation	133,843	133,843
Deferred Compensation Arrangement with Individual, Recorded Liability	$ 669,212	$ 803,055
Common Class A
Shares reserved for future issuance	231,312
Common Class C
Shares reserved for future issuance	118,880

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12) Capital Stock: Share-based Payment Arrangement, Option, Activity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Common Class A
Common Stock, Shares, Outstanding	16,107,779	15,304,798
Exercise of stock options	68,970	32,517
Dividends	$ 405,210	$ 767,178
Conversion of Class C to Class A	13,824	3,286
Common Stock, Shares, Outstanding	16,595,783	16,107,779
Common Class C
Common Stock, Shares, Outstanding	2,500,887	2,193,643
Exercise of stock options	130,820	191,443
Dividends	$ 61,720	$ 119,087
Conversion of Class C to Class A	(13,824)	(3,286)
Common Stock, Shares, Outstanding	2,679,603	2,500,887

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12) Capital Stock: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Numerator:
Net earnings	$ 55,596,613	$ 10,893,519
Denominator:
Denominator for basic earnings per share-weighted-average shares	18,831,991	18,562,056
Effect of dilutive securities Employee stock options	443,260	127,608
Effect of dilutive securities Dilutive potential common shares	443,260	127,608
Denominator for diluted earnings per share-adjusted weighted-average shares and assumed conversions	19,275,251	18,689,664
Basic earnings per share	$ 2.95	$ 0.59
Diluted earnings per share	$ 2.88	$ 0.58

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12) Capital Stock (Details) - shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Employee stock option
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	382,289

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13) Stock Compensation Plans (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Share-based Payment Arrangement, Amount Capitalized	$ 358,878	$ 256,996
Unrecognized compensation expense related to the options issued in December 2014	39,152
Total intrinsic value	$ 663,901	$ 271,220

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13) Stock Compensation Plans: Schedule of Assumptions Used (Details)	12 Months Ended
	Dec. 31, 2020 $ / shares
All Plans - March 27 2020
Weighted Average Fair Value of Each Option	$ 0.65
Expected Dividend Yield	5.00%
Underlying stock FMV	$ 3.76
Weighted Average Volatility	32.29%
Weighted Average Risk Free Interest Rate	1.64%
Weighted Average Expected Life (Term)	4 years 9 months 25 days
All Plans - December 6, 2019
Weighted Average Fair Value of Each Option	$ 0.96
Expected Dividend Yield	5.00%
Underlying stock FMV	$ 5.19
Weighted Average Volatility	32.79%
Weighted Average Risk Free Interest Rate	1.64%
Weighted Average Expected Life (Term)	4 years 9 months 29 days
All Plans - January 17, 2019
Weighted Average Fair Value of Each Option	$ 1.12
Expected Dividend Yield	5.00%
Underlying stock FMV	$ 4.98
Weighted Average Volatility	36.04%
Weighted Average Risk Free Interest Rate	2.56%
Weighted Average Expected Life (Term)	5 years 3 months 22 days

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13) Stock Compensation Plans: Schedule of stock inventive plan changes (Details) - USD ($)		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Common Class A
Shares, Outstanding, beginning		1,086,053	1,011,274
Adjustment for effect of stock dividends		27,968	51,018
Shares Granted		77,000	81,000
Shares Exercised		(116,487)	(45,834)
Shares Cancelled		(1,671)	(11,405)
Shares, Outstanding, ending		1,072,863	1,086,053
Shares outstanding, beginning		$ 4.41	$ 4.49
Per Share Shares Granted		0.00	0.00
Per Share Shares Exercised		0.00	0.00
Per Share Shares cancelled		0.00	0.00
Shares, Outstanding, ending		$ 4.33	$ 4.41
Options Exercisable		1,053,903
Available options for future grant		$ 325,372
Weighted average contractual term of options outstanding		P5Y6M
Weighted average contractual term of options exercisable		P5Y5M5D
Aggregated intrinsic value of options outstanding	[1]	$ 4,311,983
Aggregated intrinsic value of options exercisable	[1]	$ 4,223,251
Common Class C
Shares, Outstanding, beginning		594,132	577,280
Adjustment for effect of stock dividends		19,354	28,295
Shares Granted		180,000	180,000
Shares Exercised		(130,820)	(191,443)
Shares Cancelled		0	0
Shares, Outstanding, ending		662,666	594,132
Shares outstanding, beginning		$ 5.36	$ 5.15
Per Share Shares Granted		0.00	0.00
Per Share Shares Exercised		0.00	0.00
Per Share Shares cancelled		0.00	0.00
Shares, Outstanding, ending		$ 4.73	$ 5.36
Options Exercisable		616,542
Available options for future grant		$ 266,500
Weighted average contractual term of options outstanding		P6Y8M16D
Weighted average contractual term of options exercisable		P6Y7M17D
Aggregated intrinsic value of options outstanding	[1]	$ 2,396,954
Aggregated intrinsic value of options exercisable	[1]	$ 2,183,399

[1] The Company used a stock price of $8.35 as of December 31, 2020 to derive intrinsic value.

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14) Statutory Financial Information and Dividend Limitations: Schedule of statutory accounting practices (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Statutory Net Income Amount	$ 8,417,824	$ 17,424,138
Statutory Capital and Surplus, Balance	78,493,142	74,140,040
Security National Life Insurance
Statutory Net Income Amount	6,054,764	3,589,552
Statutory Capital and Surplus, Balance	53,089,185	49,390,181
Kilpatrick Life Insurance Company
Statutory Net Income Amount	1,574,128	12,752,100
Statutory Capital and Surplus, Balance	15,177,996	15,208,071
First Guaranty Insurance Company
Statutory Net Income Amount	790,221	1,078,733
Statutory Capital and Surplus, Balance	7,045,644	6,352,670
Memorial Insurance Company of America
Statutory Net Income Amount	55	(107)
Statutory Capital and Surplus, Balance	1,088,034	1,088,559
Southern Security Life Insurance Company Inc
Statutory Net Income Amount	183	87
Statutory Capital and Surplus, Balance	1,581,647	1,588,396
Trans-Western Life Insurance Company
Statutory Net Income Amount	(1,527)	3,773
Statutory Capital and Surplus, Balance	$ 510,636	$ 512,163

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14) Statutory Financial Information and Dividend Limitations (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash dividend paid	$ 5,309,000
First Guaranty Insurance Company
Cash dividend paid	3,146,000	$ 500,000
Kilpatrick Life Insurance Company
Cash dividend paid	$ 11,478,000	$ 3,000,000

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15) Business Segments Information : Schedule of reporting segment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenues:
Other revenues	$ 9,246,574	$ 7,577,641
Net investment income	56,329,803	43,019,473
Total revenues	481,463,322	283,060,930
Selling, general and administrative expenses:
Commissions	124,426,297	56,762,891
Personnel	84,989,971	64,221,270
Advertising	5,380,896	4,784,558
Rent and rent related	6,873,561	7,055,456
Depreciation on property and equipment	2,078,738	1,711,369
Costs related to funding mortgage loans	9,877,700	6,278,954
Interest expense:
Cost of goods and services sold - cemeteries and mortuaries	3,252,655	2,878,169
Income tax benefit (expense)	(15,853,514)	(3,050,416)
Net Earnings (Loss)	55,596,613	10,893,519
Goodwill	3,519,588	3,519,588	$ 2,765,570
Life Insurance Product Line
Revenues:
Revenue from customers	93,020,617	81,860,610
Net investment income	54,811,486	41,610,831
Gains on investments and other assets	2,088,541	138,330
Other than temporary impairments	(370,975)
Other revenues	1,491,585	2,128,961
Net investment income	8,022,503	4,455,034
Total revenues	159,063,757	130,193,766
Expenses:
Death, surrenders and other policy benefits	62,841,360	44,911,805
Increase in future policy benefits	23,568,650	23,568,497
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	13,618,204	14,199,152
Selling, general and administrative expenses:
Commissions	4,149,241	3,632,780
Personnel	25,449,100	20,311,591
Advertising	614,114	595,118
Rent and rent related	861,602	451,380
Depreciation on property and equipment	843,335	477,247
Provision for loan loss reserve	0
Costs related to funding mortgage loans	0	0
Intersegment	621,161	412,853
Other	11,808,818	11,769,097
Interest expense:
Intersegment	410,024	490,756
Other	2,354,760	2,808,081
Cost of goods and services sold - cemeteries and mortuaries	0	0
Total benefits and expenses	147,140,369	123,628,357
Earnings before income taxes	11,923,388	6,565,409
Income tax benefit (expense)	(1,433,901)	(1,085,848)
Net Earnings (Loss)	10,489,487	5,479,561
Identifiable Assets	1,171,158,235	1,110,641,526
Goodwill	2,765,570	2,765,570
Cemetery and Mortuary
Revenues:
Revenue from customers	20,307,435	15,296,235
Net investment income	807,695	579,995
Gains on investments and other assets	(162,652)	530,098
Other than temporary impairments	0
Other revenues	94,349	95,197
Net investment income	351,505	443,548
Total revenues	21,398,332	16,945,073
Expenses:
Death, surrenders and other policy benefits	0	0
Increase in future policy benefits	0	0
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	689,221	435,425
Selling, general and administrative expenses:
Commissions	1,506,320	1,084,079
Personnel	5,669,367	5,177,810
Advertising	391,836	368,173
Rent and rent related	89,253	47,525
Depreciation on property and equipment	488,570	428,633
Provision for loan loss reserve	0
Costs related to funding mortgage loans	0	0
Intersegment	142,999	180,594
Other	4,417,805	3,241,023
Interest expense:
Intersegment	152,175	154,615
Other	198,968	288,768
Cost of goods and services sold - cemeteries and mortuaries	3,252,655	2,878,169
Total benefits and expenses	16,999,169	14,284,814
Earnings before income taxes	4,399,163	2,660,259
Income tax benefit (expense)	(1,009,137)	(649,144)
Net Earnings (Loss)	3,390,026	2,011,115
Identifiable Assets	56,335,498	81,014,182
Goodwill	754,018	754,018
Mortgage
Revenues:
Revenue from customers	298,933,110	131,976,082
Net investment income	710,622	828,647
Gains on investments and other assets	(39)	59,939
Other than temporary impairments	0
Other revenues	9,731,548	7,956,005
Net investment income	716,240	508,637
Total revenues	310,091,481	141,329,310
Expenses:
Death, surrenders and other policy benefits	0	0
Increase in future policy benefits	0	0
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	0	0
Selling, general and administrative expenses:
Commissions	118,770,736	52,046,032
Personnel	53,871,504	38,731,869
Advertising	4,374,946	3,821,267
Rent and rent related	5,922,706	6,556,551
Depreciation on property and equipment	746,833	805,489
Provision for loan loss reserve	16,506,030
Costs related to funding mortgage loans	9,877,700	6,278,954
Intersegment	580,976	544,463
Other	31,104,479	19,912,641
Interest expense:
Intersegment	7,182,913	3,623,938
Other	6,025,082	4,289,839
Cost of goods and services sold - cemeteries and mortuaries	0	0
Total benefits and expenses	254,963,905	136,611,043
Earnings before income taxes	55,127,576	4,718,267
Income tax benefit (expense)	(13,410,476)	(1,315,424)
Net Earnings (Loss)	41,717,100	3,402,843
Identifiable Assets	408,325,196	249,970,323
Goodwill	0	0
Intercompany Eliminations
Revenues:
Revenue from customers	0	0
Net investment income	0	0
Gains on investments and other assets	0	0
Other than temporary impairments	0
Other revenues	0	0
Net investment income	(9,090,248)	(5,407,219)
Total revenues	(9,090,248)	(5,407,219)
Expenses:
Death, surrenders and other policy benefits	0	0
Increase in future policy benefits	0	0
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	0	0
Selling, general and administrative expenses:
Commissions	0	0
Personnel	0	0
Advertising	0	0
Rent and rent related	0	0
Depreciation on property and equipment	0	0
Provision for loan loss reserve	0
Costs related to funding mortgage loans	0	0
Intersegment	(1,345,136)	(1,137,910)
Other	0	0
Interest expense:
Intersegment	(7,745,112)	(4,269,309)
Other	0	0
Cost of goods and services sold - cemeteries and mortuaries	0	0
Total benefits and expenses	(9,090,248)	(5,407,219)
Earnings before income taxes	0	0
Income tax benefit (expense)	0	0
Net Earnings (Loss)	0	0
Identifiable Assets	(90,398,039)	(110,701,544)
Goodwill	0	0
Consolidated
Revenues:
Revenue from customers	412,261,162	229,132,927
Net investment income	56,329,803	43,019,473
Gains on investments and other assets	1,925,850	728,367
Other than temporary impairments	(370,975)
Other revenues	11,317,482	10,180,163
Net investment income	0	0
Total revenues	481,463,322	283,060,930
Expenses:
Death, surrenders and other policy benefits	62,841,360	44,911,805
Increase in future policy benefits	23,568,650	23,568,497
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	14,307,425	14,634,577
Selling, general and administrative expenses:
Commissions	124,426,297	56,762,891
Personnel	84,989,971	64,221,270
Advertising	5,380,896	4,784,558
Rent and rent related	6,873,561	7,055,456
Depreciation on property and equipment	2,078,738	1,711,369
Provision for loan loss reserve	16,506,030	0
Costs related to funding mortgage loans	9,877,700	6,278,954
Intersegment	0	0
Other	47,331,102	34,922,761
Interest expense:
Intersegment	0	0
Other	8,578,810	7,386,688
Cost of goods and services sold - cemeteries and mortuaries	3,252,655	2,878,169
Total benefits and expenses	410,013,195	269,116,995
Earnings before income taxes	71,450,127	13,943,935
Income tax benefit (expense)	(15,853,514)	(3,050,416)
Net Earnings (Loss)	55,596,613	10,893,519
Identifiable Assets	1,545,420,890	1,330,924,487
Goodwill	$ 3,519,588	$ 3,519,588

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17) Fair Value of Financial Instruments: Schedule of fair value assets and liabilities measured recurring basis (Details) - USD ($)		Dec. 31, 2020	Dec. 31, 2019
Fixed maturity securities available for sale		$ 294,656,679	$ 355,977,820
Equity securities		11,324,239	7,271,165
Loans Held-for-sale		422,772,418	213,457,632
Restricted assets of cemeteries and mortuaries	[1]	1,473,637	1,008,867
Restricted assets of cemeteries and mortuaries	[2]	2,515,778	1,976,480
Cemetery perpetual care trust investments	[1]	747,767	975,673
Cemetery perpetual care trust investments	[2]	2,062,303	1,605,451
Derivatives - loan commitments	[3]	12,592,672	2,722,580
Total assets accounted for at fair value on a recurring basis		748,145,493	584,995,668
Derivatives - call options	[4]	(43,097)	(62,265)
Derivatives - loan commitments	[4]	(2,464,062)	(22,282)
Derivatives - bank loan interest rate swaps, loan commitments	[4]		(231,347)
Total liabilities accounted for at fair value on a recurring basis		(2,507,159)	(315,894)
Fair Value, Inputs, Level 1
Fixed maturity securities available for sale		0	0
Equity securities		11,324,239	7,271,165
Loans Held-for-sale		0	0
Restricted assets of cemeteries and mortuaries	[1]	0	0
Restricted assets of cemeteries and mortuaries	[2]	2,515,778	1,976,480
Cemetery perpetual care trust investments	[1]	0	0
Cemetery perpetual care trust investments	[2]	2,062,303	1,605,451
Derivatives - loan commitments	[3]	0	0
Total assets accounted for at fair value on a recurring basis		15,902,320	10,853,096
Derivatives - call options	[4]	(43,097)	(62,265)
Derivatives - loan commitments	[4]	0	(22,282)
Derivatives - bank loan interest rate swaps, loan commitments	[4]		0
Total liabilities accounted for at fair value on a recurring basis		(43,097)	(84,547)
Fair Value, Inputs, Level 2
Fixed maturity securities available for sale		292,455,504	352,761,438
Equity securities		0	0
Loans Held-for-sale		0	0
Restricted assets of cemeteries and mortuaries	[1]	1,473,637	1,008,867
Restricted assets of cemeteries and mortuaries	[2]	0	0
Cemetery perpetual care trust investments	[1]	747,767	975,673
Cemetery perpetual care trust investments	[2]	0	0
Derivatives - loan commitments	[3]	0	0
Total assets accounted for at fair value on a recurring basis		294,676,908	354,745,978
Derivatives - call options	[4]	0	0
Derivatives - loan commitments	[4]	0	0
Derivatives - bank loan interest rate swaps, loan commitments	[4]		0
Total liabilities accounted for at fair value on a recurring basis		0	0
Fair Value, Inputs, Level 3
Fixed maturity securities available for sale		2,201,175	3,216,382
Equity securities		0	0
Loans Held-for-sale		422,772,418	213,457,632
Restricted assets of cemeteries and mortuaries	[1]	0	0
Restricted assets of cemeteries and mortuaries	[2]	0	0
Cemetery perpetual care trust investments	[1]	0	0
Cemetery perpetual care trust investments	[2]	0	0
Derivatives - loan commitments	[3]	12,592,672	2,722,580
Total assets accounted for at fair value on a recurring basis		437,566,265	219,396,594
Derivatives - call options	[4]	0	0
Derivatives - loan commitments	[4]	(2,464,062)	0
Derivatives - bank loan interest rate swaps, loan commitments	[4]		(231,347)
Total liabilities accounted for at fair value on a recurring basis		$ (2,464,062)	$ (231,347)

[1] Fixed maturity securities available for sale

[2] Mutual funds and 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

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17) Fair Value of Financial Instruments: Schedule of Effect of Significant Unobservable Inputs (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Loans Held For Sale
Fair Value Balance	$ 422,772,418	$ 213,457,632
Fair Value Measurement With Unobservable Inputs Reconciliation, Recurring Basis, Asset And Liability, Range of Inputs minimum	99.00%	98.00%
Fair Value Measurement With Unobservable Inputs Reconciliation, Recurring Basis, Asset And Liability, Range of Inputs maximum	110.00%	109.00%
Fair Value Measurement With Unobservable Inputs Reconciliation, Recurring Basis, Asset And Liability, Weighted Average	104.00%	103.00%
Net Derivatives Loan Commitments
Fair Value Balance	$ 10,128,610	$ 2,491,233
Fair Value Measurement With Unobservable Inputs Reconciliation, Recurring Basis, Asset And Liability, Range of Inputs minimum	52.00%	1.00%
Fair Value Measurement With Unobservable Inputs Reconciliation, Recurring Basis, Asset And Liability, Range of Inputs maximum	92.00%	92.00%
Fair Value Measurement With Unobservable Inputs Reconciliation, Recurring Basis, Asset And Liability, Weighted Average	81.00%	81.00%
Fixed maturity securities available for sale
Fair Value Balance	$ 2,201,175	$ 3,216,382

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17) Fair Value of Financial Instruments: Schedule of Changes in the consolidated balance sheet line items measured (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020		Dec. 31, 2019
Net Derivatives Loan Commitments
Fair Value Balance	$ 2,491,233		$ 1,591,816
Originations/purchases	0		0
Sales, maturities and paydowns	0		0
Transfer to mortgage loans held for investment	0		0
Transfer from fixed maturity securities held to maturity			0
Fair Value, Gains (Losses) included in earnings	7,637,377	[1]	899,417	[2]
Total gains (losses) included in other comprehensive income	0
Fair Value Balance	10,128,610		2,491,233
Loans Held For Sale
Fair Value Balance	213,457,632		136,210,853
Originations/purchases	5,627,013,749		2,606,839,175
Sales, maturities and paydowns	(5,600,045,285)		(2,580,875,055)
Transfer to mortgage loans held for investment	(16,960,549)		(31,881,851)
Transfer from fixed maturity securities held to maturity			0
Fair Value, Gains (Losses) included in earnings	199,306,871	[1]	83,164,510	[2]
Total gains (losses) included in other comprehensive income	0
Fair Value Balance	422,772,418		213,457,632
Fixed maturity securities available for sale
Fair Value Balance	3,216,382		0
Originations/purchases	0		0
Sales, maturities and paydowns	(1,042,400)		0
Transfer to mortgage loans held for investment	0		0
Transfer from fixed maturity securities held to maturity			3,216,382
Fair Value, Gains (Losses) included in earnings	3,408	[3]	0	[2]
Total gains (losses) included in other comprehensive income	23,785
Fair Value Balance	$ 2,201,175		$ 3,216,382

[1] As a component of mortgage fee income on the consolidated statements of earnings

[2] Included in other expenses on the consolidated statements of earnings

[3] As a component of net investment income on the consolidated statements of earnings

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17) Fair Value of Financial Instruments: Fair Value Assets Measured on a Nonrecurring Basis (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Impaired mortgage loans held for investment	$ 1,297,356	$ 1,302,025
Impaired real estate held for investment	4,249,000	8,375,884
Total assets accounted for at fair value on a nonrecurring basis	5,546,356	9,677,909
Fair Value, Inputs, Level 1
Impaired mortgage loans held for investment	0	0
Impaired real estate held for investment	0	0
Total assets accounted for at fair value on a nonrecurring basis	0	0
Fair Value, Inputs, Level 2
Impaired mortgage loans held for investment	0	0
Impaired real estate held for investment	0	0
Total assets accounted for at fair value on a nonrecurring basis	0	0
Fair Value, Inputs, Level 3
Impaired mortgage loans held for investment	1,297,356	1,302,025
Impaired real estate held for investment	4,249,000	8,375,884
Total assets accounted for at fair value on a nonrecurring basis	$ 5,546,356	$ 9,677,909

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17) Fair Value of Financial Instruments: Schedule of Financial Instruments Carried at Other Than Fair Value (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Residential Mortgage
Carrying Value	$ 92,757,613	$ 110,253,678
Estimated Carrying Value	100,384,283	115,320,638
Residential construction
Carrying Value	110,849,864	88,651,967
Estimated Carrying Value	110,849,864	88,651,967
Commercial Loan
Carrying Value	45,736,459	37,788,901
Estimated Carrying Value	45,259,425	39,289,462
Mortgage Loans Net
Carrying Value	249,343,936	236,694,546
Estimated Carrying Value	256,493,572	243,262,067
Policy Loan
Carrying Value	14,171,589	14,762,805
Estimated Carrying Value	14,171,589	14,762,805
Insurance Assignments
Carrying Value	51,585,656	39,614,939
Estimated Carrying Value	51,585,656	39,614,939
Restricted Assets 1
Carrying Value	3,317,877	2,275,756
Estimated Carrying Value	3,317,877	2,289,679
Cemetery Perpetual Care Trust Investments
Carrying Value	1,468,600	524,000
Estimated Carrying Value	1,468,600	536,553
Mortgage Servicing Rights
Carrying Value	35,210,516	17,155,529
Estimated Carrying Value	38,702,358	22,784,571
Bank And Other Loans Payable
Carrying Value	(297,824,368)	(217,572,612)
Estimated Carrying Value	(297,824,368)	(217,572,612)
Policyholder Account Balances
Carrying Value	(44,026,809)	(45,154,180)
Estimated Carrying Value	(42,220,725)	(41,828,469)
Future Policy Benefits Annuities
Carrying Value	(106,522,113)	(113,579,830)
Estimated Carrying Value	(112,354,186)	(117,304,614)
Fair Value, Inputs, Level 1 | Residential Mortgage
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Residential construction
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Commercial Loan
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Mortgage Loans Net
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Policy Loan
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Insurance Assignments
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Restricted Assets 1
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Cemetery Perpetual Care Trust Investments
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Mortgage Servicing Rights
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Bank And Other Loans Payable
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Policyholder Account Balances
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 1 | Future Policy Benefits Annuities
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Residential Mortgage
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Residential construction
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Commercial Loan
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Mortgage Loans Net
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Policy Loan
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Insurance Assignments
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Restricted Assets 1
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Cemetery Perpetual Care Trust Investments
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Mortgage Servicing Rights
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Bank And Other Loans Payable
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Policyholder Account Balances
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 2 | Future Policy Benefits Annuities
Estimated Carrying Value	0	0
Fair Value, Inputs, Level 3 | Residential Mortgage
Estimated Carrying Value	100,384,283	115,320,638
Fair Value, Inputs, Level 3 | Residential construction
Estimated Carrying Value	110,849,864	88,651,967
Fair Value, Inputs, Level 3 | Commercial Loan
Estimated Carrying Value	45,259,425	39,289,462
Fair Value, Inputs, Level 3 | Mortgage Loans Net
Estimated Carrying Value	256,493,572	243,262,067
Fair Value, Inputs, Level 3 | Policy Loan
Estimated Carrying Value	14,171,589	14,762,805
Fair Value, Inputs, Level 3 | Insurance Assignments
Estimated Carrying Value	51,585,656	39,614,939
Fair Value, Inputs, Level 3 | Restricted Assets 1
Estimated Carrying Value	3,317,877	2,289,679
Fair Value, Inputs, Level 3 | Cemetery Perpetual Care Trust Investments
Estimated Carrying Value	1,468,600	536,553
Fair Value, Inputs, Level 3 | Mortgage Servicing Rights
Estimated Carrying Value	38,702,358	22,784,571
Fair Value, Inputs, Level 3 | Bank And Other Loans Payable
Estimated Carrying Value	(297,824,368)	(217,572,612)
Fair Value, Inputs, Level 3 | Policyholder Account Balances
Estimated Carrying Value	(42,220,725)	(41,828,469)
Fair Value, Inputs, Level 3 | Future Policy Benefits Annuities
Estimated Carrying Value	$ (112,354,186)	$ (117,304,614)

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18) Accumulated Other Comprehensive Income: Schedule of Changes in accumulated other comprehensive income (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Equity [Abstract]
Unrealized gains on fixed maturity securities available for sale	$ 12,016,464	$ 17,315,770
Amounts reclassified into net earnings	(2,772)	0
Net unrealized gains before taxes	12,013,692	17,315,770
Tax expense	(2,522,876)	(3,636,311)
Net Unrealized Gain (Loss)	9,490,816	13,679,459
Unrealized gains on restricted assets	41,225	35,550
Tax expense	(10,269)	(8,856)
Net	30,956	26,694
Unrealized gains on cemetery perpetual care trust investments	(6,817)	29,904
Tax expense	1,698	(7,449)
Net	(5,119)	22,455
Unrealized gains for foreign currency translation adjustments	(46)	972
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax	12	(243)
Other comprehensive income balance, net	(34)	729
Other comprehensive income changes	$ 9,516,619	$ 13,729,337

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18) Accumulated Other Comprehensive Income: Accumulated Balances of Other Comprehensive Income (Details) - USD ($)		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Equity [Abstract]
Increase (Decrease) in Unrealized gains on fixed maturity securities available-for-sale		$ 9,490,816	$ 13,679,459
Unrealized gains on fix maturity securities available-for-sale		23,170,275	13,679,459	$ 0
Increase Dececrease in Unrealized gains on restricted assets	[1]	30,956	26,694
Unrealized gains on restricted assets	[1]	57,650	26,694	0
Increase Dececrease in Unrealized gains on cemetery perpetual care trust investments	[1]	(5,119)	22,455
Unrealized gains on cemetery perpetual care trust investments	[1]	17,336	22,455	0
Increase Decrease Foreign currency translation adjustments		(34)	729
Foreign currency translation adjustments		(2,128)	(2,094)	(2,823)
Increase (Decrease) in Other comprehensive income (loss), Balance		9,516,619	13,729,337
Other comprehensive income (loss), Balance		$ 23,243,133	$ 13,726,514	$ (2,823)

[1] Included in other expenses on the consolidated statements of earnings

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19) Derivative Instruments: Schedule of Derivative Assets at Fair Value (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Loan Commitments
Derivative, Notional Amount	$ 659,245,038	$ 224,202,514
Derivative Asset, Notional Amount	12,592,672	2,722,580
Derivative Liability, Notional Amount	2,464,062	231,347
Call Options
Derivative, Notional Amount	1,873,200	1,813,500
Derivative Asset, Notional Amount	0	0
Derivative Liability, Notional Amount	43,097	62,265
Put Options
Derivative, Notional Amount	0	1,573,100
Derivative Asset, Notional Amount	0	0
Derivative Liability, Notional Amount	0	22,282
Net Derivatives Loan Commitments
Derivative, Notional Amount	661,118,238	227,589,114
Derivative Asset, Notional Amount	12,592,672	2,722,580
Derivative Liability, Notional Amount	$ 2,507,159	$ 315,894

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19) Derivative Instruments: Schedule of Gains and Losses on Derivatives (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Gain (Loss) on Derivatives, Loan Commitments	$ 7,637,377	$ 899,417
Gain (Loss) on Derivatives, Call and put options	$ 272,758	$ 626,208

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20) Acquisitions: Estimated Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash received for reinsurance assumed	$ 0	$ 158,358,594
Coinsurance Agreement
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Other investments and policy loans	9,124,459
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Real estate held for investment	2,850,000
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Mortgage loans held for investment	200,000
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Future policy benefits and unpaid claims	(165,404,970)
Cash received for reinsurance assumed	158,358,594
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	12,305,717
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities	(170,664,311)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables	131,258
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable	(5,259,341)
Kilpatrick Life Insurance Co
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Real estate held for investment	2,708,557
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Mortgage loans held for investment	8,011,660
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Future policy benefits and unpaid claims	(189,071,407)
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Fixed maturity securities, available for sale	22,766,520
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Fixed maturity securities, held to maturity	16,436
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Other investments	446,655
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Accrued investment income	183,527
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Investments	34,133,355
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Receivables from reinsurers	168,105,064
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,498,245
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Value of business acquired	4,962,831
Fair Value of Assets Acquired	23,779,940
Fair Value of Net Assets Acquired / Consideration Paid, Net of Cash Acquired	16,879,286
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	221,887,552
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other	(7,870,944)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities	(198,107,612)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents	6,900,654
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables	5,407,736
Business Combination Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets	167,344
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other	712,323
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable	(283,304)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities	(881,957)
Probst Family Funerals and Cremations and Heber Valley Funeral Home
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,475,526
Fair Value of Assets Acquired	3,315,647
Fair Value of Net Assets Acquired / Consideration Paid, Net of Cash Acquired	3,261,788
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net	754,018
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	3,318,823
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities	(3,176)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents	53,859
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables	13,620
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other	21,800
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable	$ (3,176)

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20) Acquisitions (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Revenues	$ 481,463,322	$ 283,060,930
Net earnings	$ 55,596,613	10,893,519
Kilpatrick Life Insurance Co
Revenues		1,461,011
Net earnings		848,031
Probst Family Funerals and Cremations and Heber Valley Funeral Home
Revenues		796,992
Net earnings		$ 97,400

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21) Mortgage Servicing Rights: Schedule of Mortgage Servicing Rights (Details) - USD ($)		Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Balance before valuation allowance at beginning of year		$ 17,155,529	$ 20,016,822
MSR additions resulting from loan sales		29,896,465	4,194,502
Amortization	[1]	(11,841,478)	(7,055,795)
Application of valuation allowance to write down MSRs with other than temporary impairment		0	0
Balance before valuation allowance at year end		35,210,516	17,155,529
Mortgage servicing rights, net		35,210,516	17,155,529
Estimated fair value of MSRs at end of period		$ 38,702,358	$ 22,784,571

[1] Included in other expenses on the consolidated statements of earnings

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21) Mortgage Servicing Rights: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details)	Dec. 31, 2020 USD ($)
Text Block [Abstract]
Finite-Lived Intangible Assets, Amortization Expense, Year One	$ 4,724,439
Finite-Lived Intangible Assets, Amortization Expense, Year Two	3,582,811
Finite-Lived Intangible Assets, Amortization Expense, Year Three	3,030,850
Finite-Lived Intangible Assets, Amortization Expense, Year Four	2,574,323
Finite-Lived Intangible Assets, Amortization Expense, Year Five	2,200,840
Finite-Lived Intangible Assets, Amortization Expense, after Year Five	19,097,253
Finite-Lived Intangible Assets, Accumulated Amortization	$ 35,210,516

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21) Mortgage Servicing Rights: Schedule of Other Revenues (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Other Income	$ 9,246,574	$ 7,577,641
Contractual Servicing Fees
Other Income	8,940,612	7,212,164
Late Fees
Other Income	$ 305,962	$ 365,477

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21) Mortgage Servicing Rights: Summary of Unpaid Principal Balances of the Servicing Portfolio (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Servicing Unpaid Principal Balance	$ 5,070,287,864	$ 2,804,139,415

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21) Mortgage Servicing Rights: Assumptions used in determining MSR value (Details) - Decimal	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Text Block [Abstract]
Prepayment Speeds	15.60	15.30
Average Life in Years of MSR	5 years 3 months 19 days	5 years 3 months 8 days
Discount Rate	9.50	9.51

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22) Future Policy Benefits and Unpaid Claims: Schedule of Liability for Future Policy Benefits (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Gross future policy benefits and unpaid claims	$ 844,790,087	$ 825,600,918
Total receivable from reinsurers	15,569,156	15,747,768
Net future policy benefits and unpaid claims	829,220,931	809,853,150
Life Insurance Product Line
Gross future policy benefits and unpaid claims	674,230,463	654,585,723
Total receivable from reinsurers	10,841,567	11,040,398
Fixed Annuity [Member]
Gross future policy benefits and unpaid claims	109,522,112	113,579,831
Total receivable from reinsurers	4,047,301	4,038,007
Accident and health
Gross future policy benefits and unpaid claims	651,140	667,428
Total receivable from reinsurers	90,231	90,113
Reported but unpaid claims
Gross future policy benefits and unpaid claims	8,689,723	4,891,922
Total receivable from reinsurers	571,057	569,250
Incurred but not reported claims
Gross future policy benefits and unpaid claims	3,315,094	2,191,607
Total receivable from reinsurers	19,000	10,000
Policyholder Account Balances
Gross future policy benefits and unpaid claims	44,026,809	45,154,180
Other policyholder funds
Gross future policy benefits and unpaid claims	$ 4,354,746	$ 4,530,227

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23) Revenues From Contracts With Customers (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Disclosure Text Block [Abstract]
Deferred pre-need cemetery and mortuary contract revenues	$ 13,080,179	$ 12,607,978
Pre-need merchandise and services	12,545,753	12,325,437
At-need specialty merchandise	534,426	282,541
Pre-need land sales	0	0
Revenue Included in Opening Contract Liability	$ 4,359,709	$ 3,558,103

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23) Revenues From Contracts With Customers: Schedule of Balances of Receivables, Assets and Liabilities (Details) - USD ($)		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Receivables		$ 10,899,207	$ 9,236,330
Deferred pre-need cemetery and mortuary contract revenues		13,080,179	12,607,978
Receivables
Receivables	[1]	4,119,988	2,778,879	$ 2,816,225
Increase (Decrease) in Accounts Receivable	[1]	1,341,109	(37,346)
Contract Asset
Deferred pre-need cemetery and mortuary contract revenues		0	0	0
Increase (Decrease) in Deferred Revenue		0	0
Contract Liability
Deferred pre-need cemetery and mortuary contract revenues		13,080,179	12,607,978	$ 12,508,625
Increase (Decrease) in Deferred Revenue		$ 472,201	$ 99,353

[1] Included in Receivables, net on the consolidated balance sheets

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23) Revenues From Contracts With Customers: Contract Assets and Contract Liabilities (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Pre-need merchandise and services	$ 12,545,753	$ 12,325,437
At-need specialty merchandise	534,426	282,541
Pre-need land sales	0	0
Deferred pre-need cemetery and mortuary contract revenues	13,080,179	12,607,978
Contract Asset
Pre-need merchandise and services	0	0	$ 0
At-need specialty merchandise	0	0	0
Pre-need land sales	0	0	0
Deferred pre-need cemetery and mortuary contract revenues	0	0	0
Contract Liabilities
Pre-need merchandise and services	12,545,753	12,325,437	12,175,943
At-need specialty merchandise	534,426	282,541	327,302
Pre-need land sales	0	0	5,380
Deferred pre-need cemetery and mortuary contract revenues	$ 13,080,179	$ 12,607,978	$ 12,508,625

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23) Revenues From Contracts With Customers: Revenues of the Cemetery and Mortuary Contracts (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Net mortuary and cemetery sales	$ 20,307,435	$ 15,296,235
Major Goods Or Services Lines, at Need
Net mortuary and cemetery sales	15,212,822	12,334,777
Major Goods Or Services Lines, Pre Need
Net mortuary and cemetery sales	5,094,613	2,961,458
Timing Of Revenue Recognition, Goods Transferred At A Point In Time
Net mortuary and cemetery sales	13,438,592	10,133,723
Timing Of Revenue Recognition, Services Transferred At A Point In Time
Net mortuary and cemetery sales	$ 6,868,843	$ 5,162,512

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23) Revenues From Contracts With Customers: Schedule of Contract Costs Included in Deferred Policy (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Disclosure Text Block [Abstract]
Pre-need merchandise and services	$ 3,601,638	$ 3,590,266
At-need specialty merchandise	5,302	10,688
Pre-need land sales	0	0
Deferred plicy and pre-need contract acquisition costs	$ 3,606,940	$ 3,600,954

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24) Leases: Schedule of Lease Cost Recognized in Earnings (Details) - USD ($)		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Finance Lease, Right-of-Use Asset, Amortization	[1]	$ 58,576	$ 38,351
Finance Lease, Interest Expense	[2]	7,341	9,001
Operating Lease, Cost	[3]	5,408,737	5,706,490
Short-term Lease, Cost	[4]	222,311	233,318
Sublease Income	[3]	(394,758)	(663,242)
Total lease cost		5,302,207	5,323,918
Operating Cash Flows from Operating Leases		5,293,901	5,567,761
Operating Cash Flows from Finance Leases		7,341	9,001
Financing Cash Flows from Finance Leases		56,982	95,931
Right-of-use assets obtained in exchange for operating lease liabilities		5,631,193	16,544,406
Right-of-use assets obtained in exchange for finance lease liabilities		$ 8,494	$ 252,763
Finance Lease, Weighted Average Remaining Lease Term		2 years 8 months 26 days	3 years 2 months 23 days
Operating Lease, Weighted Average Remaining Lease Term		5 years 4 months 24 days	4 years 8 months 2 days
Finance Lease, Weighted Average Discount Rate, Percent		5.59%	5.47%
Operating Lease, Weighted Average Discount Rate, Percent		4.87%	5.06%

[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

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24) Leases: Schedule of Future Minimum Rental Payments for Operating Leases (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Present value of lease liabilities	$ 11,921,884	$ 11,405,976
Finance Leases
2021	46,898
2022	34,458
2023	27,220
2024	4,354
2025	692
Thereafter	0
Total undiscounted lease payments	113,622
Less: Discount on cash flows	(8,671)
Present value of lease liabilities	104,951
Operating Leases
2021	4,344,756
2022	3,004,271
2023	2,088,028
2024	1,567,924
2025	837,526
Thereafter	2,938,906
Total undiscounted lease payments	14,781,411
Less: Discount on cash flows	(2,859,527)
Present value of lease liabilities	$ 11,921,884

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24) Leases: Right-of-Use Assets and Lease Liabilities (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Operating Lease, Right-of-Use Asset	$ 11,663,245	$ 11,267,247
Present value of lease liabilities	11,921,884	11,405,976
Right-of-use assets	254,276	248,565
Accumulated amortization	(154,144)	(98,351)
Right-of-use assets, net	100,132	150,214
Finance lease liabilities	$ 104,951	$ 153,439