Investments

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Investments

2) Investments

The Company’s investments as of December 31, 2021 are summarized as follows:

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2021:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	22,307,736		$	578,567	$	-		$	22,886,303
Obligations of states and political subdivisions		4,649,917			212,803		(1,989	)		4,860,731
Corporate securities including public utilities		174,711,061			21,791,370		(353,668	)		196,148,763
Mortgage-backed securities		34,365,382			905,159		(161,332	)		35,109,209
Redeemable preferred stock		269,214			13,383		-			282,597
Total fixed maturity securities available for sale	$	236,303,310		$	23,501,282	$	(516,989	)	$	259,287,603
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	8,275,772		$	3,626,444	$	(305,802	)	$	11,596,414
Total equity securities at estimated fair value	$	8,275,772		$	3,626,444	$	(305,802	)	$	11,596,414
Mortgage loans held for investment at amortized cost:
Residential	$	53,533,712
Residential construction		175,117,783
Commercial		51,683,022
Less: Unamortized deferred loan fees, net		(918,586	)
Less: Allowance for loan losses		(1,699,902	)
Less: Net discounts		(409,983	)
Total mortgage loans held for investment	$	277,306,046
Real estate held for investment - net of accumulated depreciation:
Residential	$	41,972,462
Commercial		155,393,335
Total real estate held for investment	$	197,365,797
Real estate held for sale:
Residential	$	1,190,602
Commercial		2,540,698
Total real estate held for sale	$	3,731,300
Other investments and policy loans at amortized cost:
Policy loans	$	13,478,214
Insurance assignments		48,632,808
Federal Home Loan Bank stock (1)		2,547,100
Other investments		4,983,251
Less: Allowance for doubtful accounts		(1,686,218	)
Total policy loans and other investments	$	67,955,155
Accrued investment income	$	6,313,012
Total investments	$	823,555,327

(1) Includes $905,700 of Membership stock and $1,641,400 of Activity stock due to short-term advances and letters of credit.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

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 advances and letters of credit.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

Fixed Maturity Securities

The following tables summarize unrealized losses on fixed maturities securities that were carried at estimated fair value at December 31, 2021 and at December 31, 2020. 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, 2021
Obligations of States and Political Subdivisions	$	1,989	$	548,715	$	-	$	-	$	1,989	$	548,715
Corporate Securities		73,507		4,638,750		280,161		3,771,813		353,668		8,410,563
Mortgage and other asset-backed securities		72,952		7,934,760		88,380		1,582,804		161,332		9,517,564
Total unrealized losses	$	148,448	$	13,122,225	$	368,541	$	5,354,617	$	516,989	$	18,476,842
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

There were 55 securities with fair value of 97.3% of amortized cost at December 31, 2021. There were 63 securities with fair value of 94.7% of amortized cost at December 31, 2020. Credit losses of $39,502 and $370,975 have been recognized for the years ended December 31, 2021 and 2020, 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, unless current market or recent company news could lead to a credit downgrade. 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.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

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.

	2021			2020
Balance of credit-related OTTI at January 1	$	370,975		$	-
Additions for credit impairments recognized on:
Securities not previously impaired		39,502			370,975
Securities previously impaired		-			-
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period (realized)		(145,500	)		-
Securities due to an increase in expected cash flows		-			-
Balance of credit-related OTTI at December 31	$	264,977		$	370,975

The following table presents the amortized cost and estimated fair value of fixed maturity securities available for sale at December 31, 2021, by contractual maturity. 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	$	68,966	$	70,024
Due in 2-5 years		62,958,696		65,605,915
Due in 5-10 years		70,740,783		77,346,448
Due in more than 10 years		67,900,269		80,873,410
Mortgage-backed securities		34,365,382		35,109,209
Redeemable preferred stock		269,214		282,597
Total	$	236,303,310	$	259,287,603

The Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”). The Company pledged a total of $28,993,126, at estimated fair value, of fixed maturity securities with the FHLB at December 31, 2021. These securities are used as collateral on any cash borrowings from the FHLB. As of December 31, 2021, the Company owed $-0- to the FHLB and its estimated maximum borrowing capacity was $27,054,347.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

Investment Related Earnings

The following tables presents the 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.

	Years Ended December 31
	2021			2020
Fixed maturity securities available for sale:
Gross realized gains	$	984,740		$	445,749
Gross realized losses		(139,728	)		(77,546	)
Other than temporary impairments		(39,502	)		(370,975	)
Equity securities:
Gains on securities sold		390,597			74,836
Unrealized gains on securities held at the end of the period		2,732,130			1,125,304
Other assets:
Gross realized gains		4,786,535			2,342,418
Gross realized losses		(2,489,140	)		(1,984,911	)
Total	$	6,225,632		$	1,554,875

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.

Information regarding sales of fixed maturity securities available for sale is presented as follows.

	Years Ended December 31
	2021			2020
Proceeds from sales	$	2,896,351		$	5,477,438
Gross realized gains		208,698			358,236
Gross realized losses		(4,046	)		(21,137	)

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

Major categories of net investment income were as follows:

	Years Ended December 31
	2021			2020
Fixed maturity securities available for sale	$	10,769,979		$	12,233,394
Equity securities		446,337			642,433
Mortgage loans held for investment		28,758,614			25,672,746
Real estate held for investment and sale		12,334,989			11,945,401
Policy loans		940,890			1,025,179
Insurance assignments		19,062,052			17,837,578
Other investments		131,145			126,013
Cash and cash equivalents		235,470			426,623
Gross investment income		72,679,476			69,909,367
Investment expenses		(14,414,793	)		(13,579,564	)
Net investment income	$	58,264,683		$	56,329,803

Net investment income includes income earned by the restricted assets of the cemeteries and mortuaries of $1,472,295 and $676,313 for the years ended December 31, 2021 and 2020, 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 $101,681,853 and $9,684,409 at December 31, 2021 and 2020, 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, 2021, other than investments issued or guaranteed by the United States Government.

Real Estate Held for Investment and Held for Sale

The Company strategically deploys 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.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

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, flex office space, and includes the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah. The Company does use debt in strategic cases to leverage established yields or to acquire a higher quality or different class of asset.

The aggregated net ending balance of commercial real estate that serves as collateral for bank loans was $134,251,205 and $71,517,902 as of December 31, 2021 and 2020, respectively. The associated bank loan carrying values totaled $85,663,148 and $46,153,283 as of December 31, 2021 and 2020, respectively.

During the years ended December 31, 2021 and 2020, the Company recorded impairment losses on commercial real estate held for sale of $2,028,378 and $897,980, respectively. These impairment losses relate to a funeral home and an office building held by the life insurance segment. The funeral home was subsequently sold. Impairment losses 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 is summarized as follows:

	Net Ending Balance				Total Square Footage
	December 31				December 31
	2021		2020		2021		2020
Utah (1)	$	150,105,948	$	100,927,528		675,920		379,066
Louisiana		2,426,612		2,998,684		31,778		84,841
Mississippi		2,860,775		2,914,498		19,694		21,521
	$	155,393,335	$	106,840,710		727,392		485,428

(1) Includes Center53 phase 1 and phase 2

The Company’s commercial real estate held for sale is summarized as follows:

	Net Ending Balance				Total Square Footage
	December 31				December 31
	2021		2020		2021		2020
Kansas	$	2,000,000	$	4,000,000		222,679		222,679
Louisiana		389,145		-		2,872		-
Mississippi (1)		151,553		151,553		-		12,300
Texas (2)				249,000		-		-
	$	2,540,698	$	4,400,553		225,551		234,979

(1) Approximately 93 acres of undeveloped land, in 2021, the existing building was removed

(2) Improved commercial pad

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

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.

During the years ended December 31, 2021 and 2020, the Company recorded impairment losses on residential real estate held for sale of $-0- and $43,394, 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 $1,190,602 and $4,327,079 as of December 31, 2021 and 2020, respectively.

The Company’s residential real estate held for investment is summarized as follows:

	Net Ending Balance
	December 31
	2021		2020
Utah (1)	$	41,686,281	$	24,557,562
Washington (2)		286,181		286,181
	$	41,972,462	$	24,843,743

(1) Including subdivision land developments

(2) Improved residential lots

The following table presents additional information regarding the Company’s subdivision land developments in Utah.

	December 31
	2021		2020
Lots available for sale		67		36
Lots to be developed		548		350
Ending Balance	$	41,479,434	$	23,777,478

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

The Company’s residential real estate held for sale is summarized as follows:

	Net Ending Balance
	December 31
	2021		2020
Nevada	$	979,640	$	979,640
Texas		200,962		-
Ohio		10,000		10,000
Florida		-		744,322
Utah		-		1,744,292
	$	1,190,602	$	3,478,254

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, 2021, real estate owned and occupied by the Company is summarized as follows:

Location	Business Segment	Approximate Square Footage		Square Footage Occupied by the Company
433 West Ascension Way, Salt Lake City, UT - Center53 Phase 2	Corporate Offices, Life Insurance, Cemetery/Mortuary Operations, and Mortgage Operations and Sales		221,000		50	%
1044 River Oaks Dr., Flowood, MS	Life Insurance Operations		19,694		28	%
1818 Marshall Street, Shreveport, LA (1)	Life Insurance Operations		12,274		100	%
909 Foisy Street, Alexandria, LA (1)	Life Insurance Sales		8,059		100	%
812 Sheppard Street, Minden, LA (1)	Life Insurance Sales		1,560		100	%
1550 N 3rd Street, Jena, LA (1)	Life Insurance Sales		1,737		100	%

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

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, 2021, the Company had 70%, 7%, 5%, 4%, 4% and 2% of its mortgage loans from borrowers located in the states of Utah, Florida, California, Texas, Nevada and Arizona, respectively. 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.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

The Company establishes a valuation allowance for credit losses in its mortgage loans held for investment portfolio. The following table presents the valuation allowance for loan losses as a contra-asset account.

	Commercial		Residential			Residential Construction		Total
December 31, 2021
Allowance for credit losses:
Beginning balance	$	187,129	$	1,774,796		$	43,202	$	2,005,127
Charge-offs		-		-			-		-
Provision		-		(305,225	)		-		(305,225	)
Ending balance	$	187,129	$	1,469,571		$	43,202	$	1,699,902
Ending balance: individually evaluated for impairment	$	-	$	105,384		$	-	$	105,384
Ending balance: collectively evaluated for impairment	$	187,129	$	1,364,187		$	43,202	$	1,594,518
Mortgage loans:
Ending balance	$	51,683,022	$	53,533,712		$	175,117,783	$	280,334,517
Ending balance: individually evaluated for impairment	$	1,723,372	$	2,548,656		$	-	$	4,272,028
Ending balance: collectively evaluated for impairment	$	49,959,650	$	50,985,056		$	175,117,783	$	2,760,162,489
December 31, 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

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

The following table presents the aging of mortgage loans held for investment.

	Commercial			Residential			Residential  Construction			Total
December 31, 2021
30-59 Days Past Due	$	-		$	3,117,826		$	1,363,127		$	4,480,953
60-89 Days Past Due		100,204			580,815			-			681,019
Greater Than 90 Days (1)		1,723,372			2,052,062			-			3,775,434
In Process of Foreclosure (1)		-			496,594			-			496,594
Total Past Due		1,823,576			6,247,297			1,363,127			9,434,000
Current		49,859,446			47,286,415			173,754,656			270,900,517
Total Mortgage Loans		51,683,022			53,533,712			175,117,783			280,334,517
Allowance for Loan Losses		(187,129	)		(1,469,571	)		(43,202	)		(1,699,902	)
Unamortized deferred loan fees, net		(36,813	)		(498,600	)		(383,173	)		(918,586	)
Unamortized discounts, net		(240,614	)		(169,369	)		-			(409,983	)
Net Mortgage Loans	$	51,218,466		$	51,396,172		$	174,691,408		$	277,306,046
December 31, 2020
30-59 Days Past Due	$	233,200		$	5,866,505		$	127,191		$	6,226,896
60-89 Days Past Due		812,780			2,048,148			-			2,860,928
Greater Than 90 Days (1)		2,148,827			5,669,583			-			7,818,410
In Process of Foreclosure (1)		-			2,263,097			200,963			2,464,060
Total Past Due		3,194,807			15,847,333			328,154			19,370,294
Current		43,642,059			79,975,115			110,783,623			234,400,797
Total Mortgage Loans		46,836,866			95,822,448			111,111,777			253,771,091
Allowance for Loan Losses		(187,129	)		(1,774,796	)		(43,202	)		(2,005,127	)
Unamortized deferred loan fees, net		(32,557	)		(909,864	)		(218,711	)		(1,161,132	)
Unamortized discounts, net		(880,721	)		(380,175	)		-			(1,260,896	)
Net Mortgage Loans	$	45,736,459		$	92,757,613		$	110,849,864		$	249,343,936

(1) Interest income is not recognized on loans past due greater than 90 days or in foreclosure.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

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 are summarized as follows:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2021
With no related allowance recorded:
Commercial	$	1,723,372	$	1,723,372	$	-	$	1,053,865	$	-
Residential		1,591,368		1,591,368		-		2,731,421		-
Residential construction		-		-		-		100,481		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		957,288		957,288		105,384		726,449		-
Residential construction		-		-		-		-		-
Total:
Commercial	$	1,723,372	$	1,723,372	$	-	$	1,053,865	$	-
Residential		2,548,656		2,548,656		105,384		3,457,870		-
Residential construction		-		-		-		100,481		-
December 31, 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		-

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.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

2) Investments (Continued)

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

	Commercial				Residential				Residential Construction				Total
	December 31				December 31				December 31				December 31
	2021		2020		2021		2020		2021		2020		2021		2020
Performing	$	49,959,650	$	44,688,039	$	50,985,056	$	87,889,768	$	175,117,783	$	110,910,814	$	276,062,489	$	243,488,621
Non-performing		1,723,372		2,148,827		2,548,656		7,932,680		-		200,963		4,272,028		10,282,470
Total	$	51,683,022	$	46,836,866	$	53,533,712	$	95,822,448	$	175,117,783	$	111,111,777	$	280,334,517	$	253,771,091

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 $236,000 and $491,000 as of December 31, 2021 and 2020, respectively.

Principal Amounts Due

The following table presents the amortized cost and contractual payments on mortgage loans held for investment by category as of December 31, 2021. 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	$	53,533,712	$	7,451,252	$	6,031,628	$	40,050,832
Residential Construction		175,117,783		145,711,262		29,406,521		-
Commercial		51,683,022		17,007,282		25,761,914		8,913,826
Total	$	280,334,517	$	170,169,796	$	61,200,063	$	48,964,658

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020