XML 37 R27.htm IDEA: XBRL DOCUMENT v3.22.2.2
Fair Value of Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2022
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 June 30, 2022.

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

   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  $270,676,282   $-   $268,713,493   $1,962,789 
Equity securities   11,198,403    11,198,403    -    - 
Loans held for sale   209,860,409    -    -    209,860,409 
Restricted assets (1)   1,851,887    -    1,851,887    - 
Restricted assets (2)   3,741,011    3,741,011    -    - 
Cemetery perpetual care trust investments (1)  653,462    -    653,462    - 
Cemetery perpetual care trust investments (2)  2,441,876    2,441,876    -    - 
Derivatives - loan commitments (3)   9,864,213    -    -    9,864,213 
Total assets accounted for at fair value on a recurring basis  $510,287,543   $17,381,290   $271,218,842   $221,687,411 
                     
Liabilities accounted for at fair value on a recurring basis                    
Derivatives - call options (4)  $(13,683)  $(13,683)  $-   $- 
Derivatives - put options (4)   (19,545)   (19,545)   -    - 
Derivatives - loan commitments (4)   (2,420,571)   -    -    (2,420,571)
Total liabilities accounted for at fair value on a recurring basis  $(2,453,799)  $(33,228)  $-   $(2,420,571)

 

 

(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

June 30, 2022 (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, 2021.

 

   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  $259,287,603   $-   $257,264,255   $2,023,348 
Equity securities   11,596,414    11,596,414    -    - 
Loans held for sale   302,776,827    -    -    302,776,827 
Restricted assets (1)   1,601,688    -    1,601,688    - 
Restricted assets (2)   3,603,822    3,603,822    -    - 
Cemetery perpetual care trust investments (1)  784,765    -    784,765    - 
Cemetery perpetual care trust investments (2)  3,302,480    3,302,480    -    - 
Derivatives - loan commitments (3)   8,563,410    -    -    8,563,410 
Total assets accounted for at fair value on a recurring basis  $591,517,009   $18,502,716   $259,650,708   $313,363,585 
                     
Liabilities accounted for at fair value on a recurring basis                    
Derivatives - call options (4)  $(50,936)  $(50,936)  $-   $- 
Derivatives - put options (4)   (4,493)   (4,493)   -    - 
Derivatives - loan commitments (4)   (1,547,895)   -    -    (1,547,895)
Total liabilities accounted for at fair value on a recurring basis  $(1,603,324)  $(55,429)  $-   $(1,547,895)

 

 

(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 June 30, 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  
    6/30/2022     Technique     Input(s)     Value     Value     Average  
Loans held for sale   $ 209,860,409       Market approach       Investor contract pricing as a percentage of unpaid principal balance       86.9 %     106.1 %     100.8 %
                                                 
Derivatives - loan commitments (net)     7,443,642       Market approach       Pull-through rate       60.0 %     95.0 %     79.0 %
                      Initial-Value       N/A       N/A       N/A  
                      Servicing       0 bps       167 bps       60 bps  
                                                 
Fixed maturity securities available for sale     1,962,789       Broker quotes       Pricing quotes     $ 96.87     $ 111.11     $ 104.86  

 

 

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2021, 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  
    12/31/2021     Technique     Input(s)     Value     Value     Average  
Loans held for sale   $ 302,776,827       Market approach       Investor contract pricing as a percentage of unpaid principal balance       95.0 %     109.0 %     103.0 %
                                                 
Derivatives - loan commitments (net)     7,015,515       Market approach       Pull-through rate       66.0 %     95.0 %     81.0 %
                      Initial-Value       N/A       N/A       N/A  
                      Servicing       0 bps       148 bps       61 bps  
                                                 
Fixed maturity securities available for sale     2,023,348       Broker quotes       Pricing quotes     $ 96.87     $ 111.11     $ 106.73  
Schedule of Changes in the 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 six months ending June 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   -    2,049,959,460    - 
Sales, maturities and paydowns   -    (2,187,475,867)   (24,350)
Total gains (losses):               
Included in earnings   428,127(1)   44,599,989(1)   1,957(2)
Included in other comprehensive income   -    -    (38,166)
                
Balance - June 30, 2022  $7,443,642   $209,860,409   $1,962,789 

 

 

(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 six months ending June 30, 2021:

 

   Net Loan
Commitments		   Loans Held
for Sale		   Fixed Maturity
Securities
Available for Sale		 
Balance - December 31, 2020  $10,128,610   $422,772,418   $2,201,175 
Originations and purchases   -    2,810,230,507    - 
Sales, maturities and paydowns   -    (3,025,027,077)   (22,400)
Transfer to mortgage loans held for investment   -    (201,951)   - 
Total gains (losses):               
Included in earnings   (168,397)(1)   88,954,189(1)   1,801(2)
Included in other comprehensive income   -    -    252 
                
Balance - June 30, 2021  $9,960,213   $296,728,086   $2,180,828 

 

 

(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

June 30, 2022 (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 months ending June 30, 2022:

 

   Net Loan
Commitments		   Loans Held
for Sale		   Fixed Maturity
Securities
Available for Sale		 
Balance - March 31, 2022  $9,690,886   $234,012,872   $2,011,772 
Originations and purchases   -    1,010,742,878    - 
Sales, maturities and paydowns   -    (1,055,390,037)   (12,400)
Total gains (losses):               
Included in earnings   (2,247,244)(1)   20,494,696(1)   996(2)
Included in other comprehensive income   -    -    (37,579)
                
Balance - June 30, 2022  $7,443,642   $209,860,409   $1,962,789 

 

 

(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 months ending June 30, 2021:

 

   Net Loan Commitments   Loans Held for Sale   Fixed Maturity Securities Available for Sale 
Balance - March 31, 2021  $10,443,076   $304,030,372   $2,191,093 
Originations and purchases   -    1,360,389,498    - 
Sales, maturities and paydowns   -    (1,410,147,019)   (11,300)
Total gains (losses):               
Included in earnings   (482,863)(1)   42,455,235(1)   908(2)
Included in other comprehensive income   -    -    127 
                
Balance - June 30, 2021  $9,960,213   $296,728,086   $2,180,828 

 

(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 June 30, 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   580,714               -                      -    580,714 
Total assets accounted for at fair value on a nonrecurring basis  $580,714   $-   $-   $580,714 

 

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, 2021.

 

   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  $851,903   $         -   $             -   $851,903 
Impaired real estate held for sale   2,000,000    -    -    2,000,000 
Total assets accounted for at fair value on a nonrecurring basis  $2,851,903   $-   $-   $2,851,903 
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 June 30, 2022:

 

   Carrying Value   Level 1   Level 2   Level 3   Total Estimated Fair Value 
Assets                         
Mortgage loans held for investment                         
Residential  $38,609,423   $-   $-   $37,669,281   $37,669,281 
Residential construction   202,529,166    -    -    202,529,166    202,529,166 
Commercial   33,553,037    -    -    33,070,818    33,070,818 
Mortgage loans held for investment, net  $274,691,626   $-   $-   $273,269,265   $273,269,265 
Policy loans   13,130,188    -    -    13,130,188    13,130,188 
Insurance assignments, net (1)   41,514,424    -    -    41,514,424    41,514,424 
Restricted assets (2)   2,284,145    -    -    2,284,145    2,284,145 
Cemetery perpetual care trust investments (2)   2,275,145    -    -    2,275,145    2,275,145 
Mortgage servicing rights, net   56,289,255    -    -    95,644,506    95,644,506 
                          
Liabilities                         
Bank and other loans payable  $(200,344,907)  $-   $-   $(200,344,907)  $(200,344,907)
Policyholder account balances (3)   (42,060,137)   -    -    (35,231,639)   (35,231,639)
Future policy benefits - annuities (3)   (106,972,838)   -    -    (115,674,814)   (115,674,814)

 

 

(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

June 30, 2022 (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, 2021:

 

   Carrying Value   Level 1   Level 2   Level 3   Total Estimated Fair Value 
Assets                         
Mortgage loans held for investment                         
Residential  $51,396,172   $-   $-   $55,159,167   $55,159,167 
Residential construction   174,691,408    -    -    174,691,408    174,691,408 
Commercial   51,218,466    -    -    51,008,709    51,008,709 
Mortgage loans held for investment, net  $277,306,046   $-   $-   $280,859,284   $280,859,284 
Policy loans   13,478,214    -    -    13,478,214    13,478,214 
Insurance assignments, net (1)   46,946,590    -    -    46,946,590    46,946,590 
Restricted assets (2)   2,732,320    -    -    2,732,320    2,732,320 
Cemetery perpetual care trust investments (2)   1,823,533    -    -    1,823,533    1,823,533 
Mortgage servicing rights, net   53,060,455    -    -    68,811,809    68,811,809 
                          
Liabilities                         
Bank and other loans payable  $(251,286,927)  $-   $-   $(251,286,927)  $(251,286,927)
Policyholder account balances (3)   (42,939,055)   -    -    (35,855,934)   (35,855,934)
Future policy benefits - annuities (3)   (107,992,830)   -    -    (116,215,717)   (116,215,717)

 

 

(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