Investments (Tables)

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Investments

The Company’s investments as of June 30, 2022 are summarized as follows:

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2022:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	51,273,582		$	61,437	$	(1,160,899	)	$	50,174,120
Obligations of states and political subdivisions		6,051,648			69,721		(163,527	)		5,957,842
Corporate securities including public utilities		187,219,967			3,656,829		(6,622,423	)		184,254,373
Mortgage-backed securities		31,598,530			191,301		(1,772,065	)		30,017,766
Redeemable preferred stock		261,142			11,039		-			272,181
Total fixed maturity securities available for sale	$	276,404,869		$	3,990,327	$	(9,718,914	)	$	270,676,282
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	9,730,028		$	2,309,512	$	(841,137	)	$	11,198,403
Total equity securities at estimated fair value	$	9,730,028		$	2,309,512	$	(841,137	)	$	11,198,403
Mortgage loans held for investment at amortized cost:
Residential	$	40,355,630
Residential construction		203,130,224
Commercial		34,050,215
Less: Unamortized deferred loan fees, net		(1,015,336	)
Less: Allowance for loan losses		(1,476,895	)
Less: Net discounts		(352,212	)
Total mortgage loans held for investment	$	274,691,626
Real estate held for investment - net of accumulated depreciation:
Residential	$	38,486,971
Commercial		158,068,734
Total real estate held for investment	$	196,555,705
Real estate held for sale:
Residential	$	200,962
Commercial		2,540,698
Total real estate held for sale	$	2,741,660
Other investments and policy loans at amortized cost:
Policy loans	$	13,130,188
Insurance assignments		43,314,500
Federal Home Loan Bank stock (1)		2,588,400
Other investments		9,177,176
Less: Allowance for doubtful accounts		(1,800,076	)
Total policy loans and other investments	$	66,410,188
Accrued investment income	$	8,240,805
Total investments	$	830,514,669

(1) Includes $937,600 of Membership stock and $1,650,800 of Activity stock due to short-term borrowings and letters of credit.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 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 June 30, 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 June 30, 2022
U.S. Treasury Securities And Obligations of U.S. Government Agencies	$	1,160,899	$	48,902,750	$	-	$	-	$	1,160,899	$	48,902,750
Obligations of States and Political Subdivisions		163,527		3,492,894		-		-		163,527		3,492,894
Corporate Securities		5,750,763		109,748,965		871,660		3,502,210		6,622,423		113,251,175
Mortgage and other asset-backed securities		1,533,826		23,709,933		238,239		1,576,104		1,772,065		25,286,037
Totals	$	8,609,015	$	185,854,542	$	1,109,899	$	5,078,314	$	9,718,914	$	190,932,856
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)		(39,502	)		-
Securities due to an increase in expected cash flows		-			-
Balance of credit-related OTTI at June 30	$	225,475		$	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 June 30, 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	$	12,212,759	$	12,193,769
Due in 2-5 years		96,106,175		94,530,894
Due in 5-10 years		59,527,119		58,074,435
Due in more than 10 years		76,699,144		75,587,237
Mortgage-backed securities		31,598,530		30,017,766
Redeemable preferred stock		261,142		272,181
Total	$	276,404,869	$	270,676,282

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 June 30						Six Months Ended June 30
	2022			2021			2022			2021
Fixed maturity securities:
Gross realized gains	$	129,512		$	188,266		$	175,635		$	273,659
Gross realized losses		(9,828	)		(2,119	)		(10,758	)		(14,886	)
Equity securities:
Gains on securities sold		81,596			146,011			71,317			252,580
Unrealized gains and (losses) on securities held at the end of the period		(2,106,375	)		490,394			(2,713,422	)		1,442,424
Other assets:
Gross realized gains		994,522			737,443			1,833,030			1,846,801
Gross realized losses		(3,822	)		(82,791	)		(98,222	)		(363,261	)
Total	$	(914,395	)	$	1,477,204		$	(742,420	)	$	3,437,317

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 June 30					Six Months Ended June 30
	2022			2021		2022			2021
Proceeds from sales	$	233,000		$	1,163,366	$	688,651		$	1,982,931
Gross realized gains		-			149,338		2,354			209,132
Gross realized losses		(7,825	)		-		(7,845	)		-

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2022 (Unaudited)

3) Investments (Continued)

Major categories of net investment income were as follows:

	Three Months Ended June 30						Six Months Ended June 30
	2022			2021			2022			2021
Fixed maturity securities available for sale	$	2,811,650		$	2,698,011		$	5,447,866		$	5,522,122
Equity securities		119,798			106,041			242,834			234,270
Mortgage loans held for investment		9,244,464			6,902,466			17,204,642			12,986,883
Real estate held for investment and sale		4,012,192			3,002,650			7,052,226			6,045,479
Policy loans		207,301			232,135			513,583			464,488
Insurance assignments		4,093,723			4,171,318			9,490,710			9,517,047
Other investments		98,361			39,299			169,006			53,006
Cash and cash equivalents		108,431			34,030			183,732			73,624
Gross investment income		20,695,920			17,185,950			40,304,599			34,896,919
Investment expenses		(4,724,632	)		(3,008,632	)		(9,139,005	)		(6,425,714	)
Net investment income	$	15,971,288		$	14,177,318		$	31,165,594		$	28,471,205

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
	June 30 2022		December 31 2021		June 30 2022		December 31 2021
Utah (1)		152,758,740		150,105,948		625,920		625,920
Louisiana		2,403,729		2,426,612		31,778		31,778
Mississippi		2,906,265		2,860,775		19,694		19,694
	$	158,068,734	$	155,393,335		677,392		677,392

(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
	June 30 2022		December 31 2021		June 30 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
	June 30 2022		December 31 2021
Utah (1)		38,486,971	$	41,686,281
Washington (2)		-		286,181
	$	38,486,971	$	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.

	June 30 2022		December 31 2021
Lots developed		48		67
Lots to be developed		1,348		548
Ending Balance	$	38,285,419	$	41,479,434

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

	Net Ending Balance
	June 30 2022		December 31 2021
Texas	$	200,962	$	200,962
Nevada		-		979,640
Ohio		-		10,000
	$	200,962	$	1,190,602

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 June 30, 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
June 30, 2022
Allowance for credit losses:
Beginning balance - January 1, 2022	$	187,129	$	1,469,571		$	43,202	$	1,699,902
Charge-offs		-		-			-		-
Provision		-		(223,007	)		-		(223,007	)
Ending balance - June 30, 2022	$	187,129	$	1,246,564		$	43,202	$	1,476,895
Ending balance: individually evaluated for impairment	$	-	$	63,310		$	-	$	63,310
Ending balance: collectively evaluated for impairment	$	187,129	$	1,183,254		$	43,202	$	1,413,585
Mortgage loans:
Ending balance - June 30, 2022	$	34,050,215	$	40,355,630		$	203,130,224	$	277,536,069
Ending balance: individually evaluated for impairment	$	501,949	$	1,294,512		$	415,904	$	2,212,365
Ending balance: collectively evaluated for impairment	$	33,548,266	$	39,061,118		$	202,714,320	$	275,323,704
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
June 30, 2022
30-59 Days Past Due	$	2,824,716		$	2,433,116		$	683,087		$	5,940,919
60-89 Days Past Due		-			341,870			-			341,870
Greater Than 90 Days (1)		-			917,135			415,904			1,333,039
In Process of Foreclosure (1)		501,949			377,377			-			879,326
Total Past Due		3,326,665			4,069,498			1,098,991			8,495,154
Current		30,723,550			36,286,132			202,031,233			269,040,915
Total Mortgage Loans		34,050,215			40,355,630			203,130,224			277,536,069
Allowance for Loan Losses		(187,129	)		(1,246,564	)		(43,202	)		(1,476,895	)
Unamortized deferred loan fees, net		(71,921	)		(385,559	)		(557,856	)		(1,015,336	)
Unamortized discounts, net		(238,128	)		(114,084	)		-			(352,212	)
Net Mortgage Loans	$	33,553,037		$	38,609,423		$	202,529,166		$	274,691,626
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 Impairment Mortgage Loans

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
June 30, 2022
With no related allowance recorded:
Commercial	$	501,949	$	501,949	$	-	$	1,119,350	$	-
Residential		650,488		650,488		-		848,525		-
Residential construction		415,904		415,904		-		207,952		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		644,024		644,024		63,310		730,672		-
Residential construction		-		-		-		-		-
Total:
Commercial	$	501,949	$	501,949	$	-	$	1,119,350	$	-
Residential		1,294,512		1,294,512		63,310		1,579,197		-
Residential construction		415,904		415,904		-		207,952		-
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
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Performing	$	33,548,266	$	49,959,650	$	39,061,118	$	50,985,056	$	202,714,320	$	175,117,783	$	275,323,704	$	276,062,489
Non-performing		501,949		1,723,372		1,294,512		2,548,656		415,904		-		2,212,365		4,272,028
Total	$	34,050,215	$	51,683,022	$	40,355,630	$	53,533,712	$	203,130,224	$	175,117,783	$	277,536,069	$	280,334,517