Investments (Tables)

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Investments

The Company’s investments as of March 31, 2022 are summarized as follows:

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
March 31, 2022:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	51,218,752		$	210,351	$	(740,495	)	$	50,688,608
Obligations of states and political subdivisions		4,638,702			96,125		(45,061	)		4,689,766
Corporate securities including public utilities		175,511,122			10,036,162		(1,505,578	)		184,041,706
Mortgage-backed securities		33,066,449			274,636		(829,922	)		32,511,163
Redeemable preferred stock		269,214			13,095		-			282,309
Total fixed maturity securities available for sale	$	264,704,239		$	10,630,369	$	(3,121,056	)	$	272,213,552
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	8,662,438		$	3,165,378	$	(316,675	)	$	11,511,141
Total equity securities at estimated fair value	$	8,662,438		$	3,165,378	$	(316,675	)	$	11,511,141
Mortgage loans held for investment at amortized cost:
Residential	$	46,552,738
Residential construction		193,151,868
Commercial		43,251,622
Less: Unamortized deferred loan fees, net		(1,075,371	)
Less: Allowance for loan losses		(1,603,676	)
Less: Net discounts		(365,342	)
Total mortgage loans held for investment	$	279,911,839
Real estate held for investment - net of accumulated depreciation:
Residential	$	42,580,341
Commercial		158,798,737
Total real estate held for investment	$	201,379,078
Real estate held for sale:
Residential	$	402,744
Commercial		2,540,698
Total real estate held for sale	$	2,943,442
Other investments and policy loans at amortized cost:
Policy loans	$	13,261,353
Insurance assignments		54,755,913
Federal Home Loan Bank stock (1)		2,588,400
Other investments		4,768,894
Less: Allowance for doubtful accounts		(1,805,311	)
Total policy loans and other investments	$	73,569,249
Accrued investment income	$	5,632,626
Total investments	$	847,160,927

(1) Includes $937,100 of Membership stock and $1,651,300 of Activity stock due to short-term borrowings.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 (Unaudited)

3) Investments (Continued)

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.

Schedule of Fair Value of Fixed Maturity Securities

The following table summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value at March 31, 2022 and at December 31, 2021. 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		Combined Unrealized Loss		Combined Fair Value
At March 31, 2022
U.S. Treasury Securities And Obligations of U.S. Government Agencies	$	740,495	$	29,372,895	$	-	$	-	$	740,495	$	29,372,895
Obligations of States and Political Subdivisions		45,061		1,377,655		-		-		45,061		1,377,655
Corporate Securities		1,026,974		28,212,781		478,604		3,896,622		1,505,578		32,109,403
Mortgage and other asset-backed securities		655,663		22,390,497		174,259		1,670,730		829,922		24,061,227
Totals	$	2,468,193	$	81,353,828	$	652,863	$	5,567,352	$	3,121,056	$	86,921,180
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
Totals	$	148,448	$	13,122,225	$	368,541	$	5,354,617	$	516,989	$	18,476,842

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.

		2022		2021
Balance of credit-related OTTI at January 1	$	264,977	$	370,975
Additions for credit impairments recognized on:
Securities not previously impaired		-		-
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 March 31	$	264,977	$	370,975

Schedule of Investments Classified by Contractual Maturity Date

The following table presents the amortized cost and estimated fair value of fixed maturity securities available for sale at March 31, 2022, 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 Cost		Estimated Fair  Value
Due in 1 year	$	13,431,790	$	13,486,895
Due in 2-5 years		97,740,824		98,279,298
Due in 5-10 years		53,462,561		55,425,119
Due in more than 10 years		66,833,402		72,328,770
Mortgage-backed securities		33,066,449		32,511,163
Redeemable preferred stock		269,214		282,309
Total	$	264,704,239	$	272,213,552

Schedule of Gain (Loss) on Investments

The following table 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.

	Three Months Ended March 31
	2022			2021
Fixed maturity securities:
Gross realized gains	$	46,123		$	97,622
Gross realized losses		(930	)		(24,997	)
Equity securities:
Gains (losses) on securities sold		(10,279	)		106,569
Unrealized gains and (losses) on securities held at the end of the period		(607,047	)		952,030
Other assets:
Gross realized gains		838,508			1,109,358
Gross realized losses		(94,400	)		(280,469	)
Total	$	171,975		$	1,960,113

Schedule of Major Categories of Net Investment Income

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

	Three Months Ended March 31
	2022			2021
Proceeds from sales	$	455,651		$	819,565
Gross realized gains		2,354			59,794
Gross realized losses		(20	)		-

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 (Unaudited)

3) Investments (Continued)

Major categories of net investment income were as follows:

	Three Months Ended March 31
	2022			2021
Fixed maturity securities available for sale	$	2,636,216		$	2,824,111
Equity securities		123,037			128,229
Mortgage loans held for investment		7,960,178			6,084,417
Real estate held for investment and sale		3,040,033			3,042,829
Policy loans		306,282			232,353
Insurance assignments		5,396,987			5,345,729
Other investments		70,645			13,707
Cash and cash equivalents		75,301			39,594
Gross investment income		19,608,679			17,710,969
Investment expenses		(4,414,373	)		(3,417,082	)
Net investment income	$	15,194,306		$	14,293,887

Schedule of Commercial Real Estate Investment

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

	Net Ending Balance				Total Square Footage
	March 31 2022		December 31 2021		March 31 2022		December 31 2021
Utah (1)		153,457,809		150,105,948		625,920		675,920
Louisiana		2,415,170		2,426,612		31,778		31,778
Mississippi		2,925,758		2,860,775		19,694		19,694
	$	158,798,737	$	155,393,335		677,392		727,392

(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
	March 31 2022		December 31 2021		March 31 2022		December 31 2021
Kansas		2,000,000		2,000,000		222,679		222,679
California		389,145		389,145		2,872		2,872
Mississippi (1)		151,553		151,553		-		-
	$	2,540,698	$	2,540,698		225,551		225,551

(1) Approximately 93 acres of undeveloped land

Schedule of Residential Real Estate Investment

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

	Net Ending Balance
	March 31 2022		December 31 2021
Utah (1)		42,580,341	$	41,686,281
Washington (2)		-		286,181
	$	42,580,341	$	41,972,462

(1)	Includes subdivision land developments
(2)	Improved residential lots

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

	March 31 2022		December 31 2021
Lots developed		68		67
Lots to be developed		548		548
Ending Balance	$	42,376,141	$	41,479,434

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

	Net Ending Balance
	March 31 2022		December 31 2021
Nevada	$	-	$	979,640
Texas		200,963		200,962
Ohio		10,000		10,000
Washington (1)		191,781		-
Real estate held for sale	$	402,744	$	1,190,602

(1) Improved residential lots

Schedule of Real Estate Owned and Occupied by the Company

The primary business units of the Company occupy a portion of the real estate owned by the Company. As of March 31, 2022, 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 Building 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

Schedule of Allowance for Loan Losses as Contra- Asset Account

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
March 31, 2022
Allowance for credit losses:
Beginning balance - January 1, 2022	$	187,129	$	1,469,571		$	43,202	$	1,699,902
Charge-offs		-		-			-		-
Provision		-		(96,226	)		-		(96,226	)
Ending balance - March 31, 2022	$	187,129	$	1,373,345		$	43,202	$	1,603,676
Ending balance: individually evaluated for impairment	$	-	$	99,036		$	-	$	99,036
Ending balance: collectively evaluated for impairment	$	187,129	$	1,274,309		$	43,202	$	1,504,640
Mortgage loans:
Ending balance - March 31, 2022	$	43,251,622	$	46,552,738		$	193,151,868	$	282,956,228
Ending balance: individually evaluated for impairment	$	1,736,752	$	1,863,882		$	-	$	3,600,634
Ending balance: collectively evaluated for impairment	$	41,514,870	$	44,688,856		$	193,151,868	$	279,355,594
December 31, 2021
Allowance for credit losses:
Beginning balance - January 1, 2021	$	187,129	$	1,774,796		$	43,202	$	2,005,127
Charge-offs		-		-			-		-
Provision		-		(305,225	)		-		(305,225	)
Ending balance - December 31, 2021	$	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 - December 31, 2021	$	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	$	276,062,489	(1)

(1) Amount corrected from that previously reported due to a typographical error.

Schedule of Aging of Mortgage Loans

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

	Commercial			Residential			Residential  Construction			Total
March 31, 2022
30-59 Days Past Due	$	-		$	1,294,666		$	-		$	1,294,666
60-89 Days Past Due		-			978,669			-			978,669
Greater Than 90 Days (1)		1,233,200			1,153,957			-			2,387,157
In Process of Foreclosure (1)		503,552			709,925			-			1,213,477
Total Past Due		1,736,752			4,137,217			-			5,873,969
Current		41,514,870			42,415,521			193,151,868			277,082,259
Total Mortgage Loans		43,251,622			46,552,738			193,151,868			282,956,228
Allowance for Loan Losses		(187,129	)		(1,373,345	)		(43,202	)		(1,603,676	)
Unamortized deferred loan fees, net		(84,626	)		(467,977	)		(522,768	)		(1,075,371	)
Unamortized discounts, net		(244,362	)		(120,980	)		-			(365,342	)
Net Mortgage Loans	$	42,735,505		$	44,590,436		$	192,585,898		$	279,911,839
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

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

Schedule of Impaired Mortgage Loans

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2022
With no related allowance recorded:
Commercial	$	1,736,752	$	1,736,752	$	-	$	1,736,752	$	-
Residential		1,046,562		1,046,562		-		1,046,563		-
Residential construction				-		-				-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		817,320		817,320		99,036		817,320		-
Residential construction		-		-		-		-		-
Total:
Commercial	$	1,736,752	$	1,736,752	$	-	$	1,736,752	$	-
Residential		1,863,882		1,863,882		99,036		1,863,883		-
Residential construction		-		-		-		-		-
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		-

Schedule of Credit Risk of Mortgage Loans Based on Performance Status

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

	Commercial				Residential				Residential Construction				Total
	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Performing	$	41,514,870	$	49,959,650	$	44,688,856	$	50,985,056	$	193,151,868	$	175,117,783	$	279,355,594	$	276,062,489
Non-performing		1,736,752		1,723,372		1,863,882		2,548,656		-		-		3,600,634		4,272,028
Total	$	43,251,622	$	51,683,022	$	46,552,738	$	53,533,712	$	193,151,868	$	175,117,783	$	282,956,228	$	280,334,517