Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

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.

	December 31
	2022			2021
Amortized cost:
Balance before valuation allowance at beginning of year	$	53,060,455		$	35,210,516
MSR additions resulting from loan sales		10,243,922			32,701,819
Amortization (1)		(9,078,706	)		(14,851,880	)
Sale of MSRs		(51,185,906	)		-
Application of valuation allowance to write down MSRs with other than temporary impairment		-			-
Balance before valuation allowance at year end	$	3,039,765		$	53,060,455
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	$	3,039,765		$	53,060,455
Estimated fair value of MSRs at year end	$	3,927,877		$	68,811,809

(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, 2022 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
2023	$	316,449
2024		286,934
2025		260,259
2026		234,139
2027		211,523
Thereafter		1,730,461
Total	$	3,039,765

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021

21) Mortgage Servicing Rights (Continued)

The Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the consolidated statements of earnings.

	Years Ended December 31
	2022		2021
Contractual servicing fees	$	15,792,105	$	15,471,307
Late fees		398,754		321,337
Total	$	16,190,859	$	15,792,644

The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio.

	December 31
	2022		2021
Servicing UPB	$	360,023,384	$	7,060,536,350

The following key assumptions were used in determining MSR value.

	Prepayment Speeds		Average Life(Years)		Discount Rate
December 31, 2022		8.12		8.49		11.95
December 31, 2021		11.60		6.64		9.50

On October 31, 2022, the Company sold certain of its MSRs. The MSRs related to mortgage loans previously originated by the Company in aggregate unpaid principal amount of approximately $7.02 billion. As a result of the sale, the book value of the Company’s MSRs decreased $51,185,906 and generated a gain of $34,051,938 included in mortgage fee income on the consolidated statements of earnings. Substantially all of the consideration was received by the Company with the remainder subject to certain holdbacks during transfer of the MSRs. The Company completed the physical transfer of files prior to its deadline and anticipates the release of the holdbacks in the first quarter of 2023.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021