Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 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 as of September 30, 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	$	356,448,259		$	-	$	355,216,072	$	1,232,187
Equity securities		12,309,544			12,309,544		-		-
Loans held for sale		152,546,566			-		-		152,546,566
Restricted assets (1)		1,534,526			-		1,534,526		-
Restricted assets (2)		6,312,610			6,312,610		-		-
Cemetery perpetual care trust investments (1)		367,392			-		367,392		-
Cemetery perpetual care trust investments (2)		3,855,805			3,855,805		-		-
Derivatives - loan commitments (3)		4,817,703			-		-		4,817,703
Total assets accounted for at fair value on a recurring basis	$	538,192,405		$	22,477,959	$	357,117,990	$	158,596,456
Liabilities accounted for at fair value on a recurring basis
Derivatives - loan commitments (4)		(3,088,542	)		-		-		(3,088,542	)
Total liabilities accounted for at fair value on a recurring basis	$	(3,088,542	)	$	-	$	-	$	(3,088,542	)

(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

September 30, 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 as of 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

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

For Level 3 assets and liabilities measured at fair value on a recurring basis as of September 30, 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
	September 30, 2023		Technique	Input(s)	Value			Value			Average
Loans held for sale	$	152,546,566	Market approach	Investor contract pricing as a percentage of unpaid principal balance		70.0	%		107.0	%		99.0	%
Derivatives - loan commitments (net)		1,729,161	Market approach	Pull-through rate		70.0	%		95.0	%		88.0	%
				Initial-Value		N/A			N/A			N/A
				Servicing		0 bps			138 bps			61 bps
Fixed maturity securities available for sale		1,232,187	Broker quotes	Pricing quotes	$	98.40		$	100.00		$	99.32

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
	December 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 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 nine month period ended September 30, 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		-			1,708,831,185			-
Sales, maturities and paydowns		-			(1,726,023,095	)		(129,521	)
Transfer to mortgage loans held for investment		-			(3,017,626	)		-
Total gains (losses):
Included in earnings		(977,716	)(1)		31,576,482	(1)		(109	)(2)
Included in other comprehensive income		-			-			(73,702	)
Balance - September 30, 2023	$	1,729,161		$	152,546,566		$	1,232,187

(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 nine month period ended September 30, 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		-			2,837,349,328			-
Sales, maturities and paydowns		-			(2,987,906,269	)		(368,980	)
Transfer to mortgage loans held for investment		-			(49,428,757	)		-
Total gains (losses):
Included in earnings		(2,843,155	)(1)		59,190,794	(1)		1,957	(2)
Included in other comprehensive income		-			-			(31,127	)
Balance - September 30, 2022	$	4,172,360		$	161,981,923		$	1,625,198

(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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2023 (Unaudited)

8) Fair Value of Financial Instruments (Continued)

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 period ended September 30, 2023:

	Net Loan Commitments			Loans Held for Sale			Fixed Maturity Securities Available for Sale
Balance - June 30, 2023	$	3,233,447		$	161,310,060		$	1,431,874
Originations and purchases		-			569,095,944			-
Sales, maturities and paydowns		-			(585,545,472	)		(129,521	)
Transfer to mortgage loans held for investment		-			(1,867,552	)
Total gains (losses):
Included in earnings		(1,504,286	)(1)		9,553,586	(1)		(109	)(2)
Included in other comprehensive income		-			-			(70,057	)
Balance - September 30, 2023	$	1,729,161		$	152,546,566		$	1,232,187

(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 period ended September 30, 2022:

	Net Loan Commitments			Loans Held for Sale			Fixed Maturity Securities Available for Sale
Balance - June 30, 2022	$	7,443,642		$	209,860,409		$	1,962,789
Originations and purchases		-			787,389,868			-
Sales, maturities and paydowns		-			(800,430,402	)		(344,630	)
Transfer to mortgage loans held for investment		-			(49,428,757	)		-
Total gains (losses):
Included in earnings		(3,271,282	)(1)		14,590,805	(1)		-	(2)
Included in other comprehensive income		-			-			7,039
Balance - September 30, 2022	$	4,172,360		$	161,981,923		$	1,625,198

(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 as of 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	$	471,786	$	-	$	-	$	471,786
Total assets accounted for at fair value on a nonrecurring basis	$	471,786	$	-	$	-	$	471,786

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 September 30, 2023:

	Carrying Value			Level 1		Level 2		Level 3			Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential	$	93,753,399		$	-	$	-	$	91,471,266		$	91,471,266
Residential construction		100,738,702			-		-		100,740,713			100,740,713
Commercial		54,814,997			-		-		53,928,941			53,928,941
Mortgage loans held for investment, net	$	249,307,098		$	-	$	-	$	246,140,920		$	246,140,920
Policy loans		13,154,845			-		-		13,154,845			13,154,845
Insurance assignments, net (1)		41,068,740			-		-		41,068,740			41,068,740
Restricted assets (2)		1,113,970			-		-		1,113,970			1,113,970
Cemetery perpetual care trust investments (2)		1,962,587			-		-		1,962,587			1,962,587
Mortgage servicing rights, net		3,494,723			-		-		5,012,375			5,012,375
Liabilities
Bank and other loans payable	$	(108,431,028	)	$	-	$	-	$	(108,431,028	)	$	(108,431,028	)
Policyholder account balances (3)		(39,988,385	)		-		-		(41,141,921	)		(41,141,921	)
Future policy benefits - annuities (3)		(106,278,388	)		-		-		(123,165,600	)		(123,165,600	)

(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

September 30, 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