Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value Assets and Liabilities Measured on a Recurring Basis

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the condensed consolidated balance sheet at March 31, 2023.

	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	$	357,570,527		$	-	$	356,135,008	$	1,435,519
Equity securities		12,354,007			12,354,007		-		-
Loans held for sale		173,015,404			-		-		173,015,404
Restricted assets (1)		1,217,307			-		1,217,307		-
Restricted assets (2)		5,660,427			5,660,427		-		-
Cemetery perpetual care trust investments (1)		256,422			-		256,422		-
Cemetery perpetual care trust investments (2)		3,691,958			3,691,958		-		-
Derivatives - loan commitments (3)		6,560,948			-		-		6,560,948
Total assets accounted for at fair value on a recurring basis	$	560,327,000		$	21,706,392	$	357,608,737	$	181,011,871
Liabilities accounted for at fair value on a recurring basis
Derivatives - loan commitments (4)		(3,176,119	)		-		-		(3,176,119	)
Total liabilities accounted for at fair value on a recurring basis	$	(3,176,119	)	$	-	$	-	$	(3,176,119	)

(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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2023 (Unaudited)

8) 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 recurring basis by their classification in the condensed consolidated balance sheet at December 31, 2022.

	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	$	345,858,492		$	-		$	344,422,973	$	1,435,519
Equity securities		11,682,526			11,682,526			-		-
Loans held for sale		141,179,620			-			-		141,179,620
Restricted assets (1)		1,217,308			-			1,217,308		-
Restricted assets (2)		5,348,244			5,348,244			-		-
Cemetery perpetual care trust investments (1)		254,731			-			254,731		-
Cemetery perpetual care trust investments (2)		3,605,162			3,605,162			-		-
Derivatives - loan commitments (3)		4,089,856			-			-		4,089,856
Total assets accounted for at fair value on a recurring basis	$	513,235,939		$	20,635,932		$	345,895,012	$	146,704,995
Liabilities accounted for at fair value on a recurring basis
Derivatives - call options (4)	$	(29,715	)	$	(29,715	)	$	-	$	-
Derivatives - put options (4)		(13,888	)		(13,888	)		-		-
Derivatives - loan commitments (4)		(1,382,979	)		-			-		(1,382,979	)
Total liabilities accounted for at fair value on a recurring basis	$	(1,426,582	)	$	(43,603	)	$	-	$	(1,382,979	)

(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

Assets and Liabilities Measured at Fair Value on A Recurring Basis

For Level 3 assets and liabilities measured at fair value on a recurring basis as of March 31, 2023, 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
	3/31/2023		Technique	Input(s)	Value			Value			Average
Loans held for sale	$	173,015,404	Market approach	Investor contract pricing as a percentage of unpaid principal balance		70.0	%		111.0	%		100.0	%
Derivatives - loan commitments (net)		3,384,829	Market approach	Pull-through rate		65.0	%		95.0	%		85.0	%
				Initial-Value		N/A			N/A			N/A
				Servicing		0 bps			149 bps			45 bps
Fixed maturity securities available for sale		1,435,519	Broker quotes	Pricing quotes	$	100.00		$	111.11		$	104.97

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2022, 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
	12/31/2022		Technique	Input(s)	Value			Value			Average
Loans held for sale	$	141,179,620	Market approach	Investor contract pricing as a percentage of unpaid principal balance		69.9	%		106.1	%		99.8	%
Derivatives - loan commitments (net)		2,706,877	Market approach	Pull-through rate		65.0	%		95.0	%		82.2	%
				Initial-Value		N/A			N/A			N/A
				Servicing		0 bps			153 bps			73 bps
Fixed maturity securities available for sale		1,435,519	Broker quotes	Pricing quotes	$	100.00		$	111.11		$	104.97

Schedule of Changes in the Condensed Consolidated Balance Sheet Line Items Measured Using Level 3 Inputs

The following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the three month periods ended March 31, 2023:

	Net Loan Commitments			Loans Held for Sale			Fixed Maturity Securities Available for Sale
Balance - December 31, 2022	$	2,706,877		$	141,179,620		$	1,435,519
Originations and purchases		-			531,867,796			-
Sales, maturities and paydowns		-			(511,909,942	)		-
Total gains (losses):
Included in earnings		677,952	(1)		11,877,930	(1)		-	(2)
Balance - March 31, 2023	$	3,384,829		$	173,015,404		$	1,435,519

(1)	As a component of Mortgage fee income on the condensed consolidated statements of earnings
(2)	As a component of Net investment income on the condensed consolidated statements of earnings

The following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the three month periods ended March 31, 2022:

	Net Loan Commitments			Loans Held for Sale			Fixed Maturity Securities Available for Sale
Balance - December 31, 2021	$	7,015,515		$	302,776,827		$	2,023,348
Originations and purchases		-			1,039,216,582			-
Sales, maturities and paydowns		-			(1,132,085,830	)		(11,950	)
Total gains (losses):
Included in earnings		2,675,371	(1)		24,105,293	(1)		961	(2)
Included in other comprehensive income		-			-			(587	)
Balance - March 31, 2022	$	9,690,886		$	234,012,872		$	2,011,772

(1)	As a component of Mortgage fee income on the condensed consolidated statements of earnings
(2)	As a component of Net investment income on the condensed consolidated statements of earnings

Schedule of Fair Value Assets Measured on a Nonrecurring Basis

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the condensed consolidated balance sheet at December 31, 2022.

	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	$	794,224	$	-	$	-	$	794,224
Total assets accounted for at fair value on a nonrecurring basis	$	794,224	$	-	$	-	$	794,224

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 March 31, 2023:

	Carrying Value			Level 1		Level 2		Level 3			Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential	$	91,417,171		$	-	$	-	$	89,949,922		$	89,949,922
Residential construction		145,531,682			-		-		145,531,682			145,531,682
Commercial		49,597,786			-		-		48,049,451			48,049,451
Mortgage loans held for investment, net	$	286,546,639		$	-	$	-	$	283,531,055		$	283,531,055
Policy loans		13,012,347			-		-		13,012,347			13,012,347
Insurance assignments, net (1)		43,887,930			-		-		43,887,930			43,887,930
Restricted assets (2)		2,936,896			-		-		2,936,896			2,936,896
Cemetery perpetual care trust investments (2)		2,709,339			-		-		2,709,339			2,709,339
Mortgage servicing rights, net		3,166,133			-		-		4,164,686			4,164,686
Liabilities
Bank and other loans payable	$	(138,391,846	)	$	-	$	-	$	(138,391,846	)	$	(138,391,846	)
Policyholder account balances (3)		(40,865,405	)		-		-		(41,529,360	)		(41,529,360	)
Future policy benefits - annuities (3)		(106,474,611	)		-		-		(128,238,451	)		(128,238,451	)

(1)	Included in other investments and policy loans on the condensed consolidated balance sheets
(2)	Mortgage loans held for investment
(3)	Included in future policy benefits and unpaid claims on the condensed consolidated balance sheets

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2023 (Unaudited)

8) 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, 2022:

	Carrying Value			Level 1		Level 2		Level 3			Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential	$	90,290,776		$	-	$	-	$	88,575,293		$	88,575,293
Residential construction		172,139,077			-		-		172,139,077			172,139,077
Commercial		45,694,074			-		-		44,079,537			44,079,537
Mortgage loans held for investment, net	$	308,123,927		$	-	$	-	$	304,793,907		$	304,793,907
Policy loans		13,095,473			-		-		13,095,473			13,095,473
Insurance assignments, net (1)		45,332,585			-		-		45,332,585			45,332,585
Restricted assets (2)		1,731,469			-		-		1,731,469			1,731,469
Cemetery perpetual care trust investments (2)		1,506,517			-		-		1,506,517			1,506,517
Mortgage servicing rights, net		3,039,765			-		-		3,927,877			3,927,877
Liabilities
Bank and other loans payable	$	(161,712,804	)	$	-	$	-	$	(161,712,804	)	$	(161,712,804	)
Policyholder account balances (3)		(41,146,171	)		-		-		(42,181,089	)		(42,181,089	)
Future policy benefits - annuities (3)		(106,637,094	)		-		-		(126,078,031	)		(126,078,031	)

(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