ANNUAL REPORT
Security National Financial Corporation
2024
Who We Are...
The roots of our company were planted deep in 1965 with the founding of Security
National Life Insurance Company. Starting with only $543,000 in assets, in a small rented
house in Salt Lake City, Utah, Security National has grown into a strong industry leader in
several fields of service.
Over the past six decades we have grown consistently through new sales and investment
opportunities, and through the acquisition of life insurance companies, funeral homes and
cemeteries, as well as the formation and growth of our mortgage operations.
Profile
Our company operates three main business segments: life insurance, funeral service and
mortgage lending. Our company is designed and structured so each segment relates to
the others, and contributes to the profitability of the whole. For example, our cemetery
and mortuary operations enjoy a high level of public awareness, assisting in the sales and
marketing of our insurance and preneed cemetery and funeral products. Our life insurance
company in turn invests its assets in high quality mortgage loans. Thus, while each segment
is a stand-alone profit center, this horizontal integration is strategically planned to improve
profitability. Additionally, our company actively pursues growth through acquisitions of life
insurance companies and mortuaries, and through expanding our mortgage operations.
expended in better organizing and training our
staff to efficiently provide the best care possible
in the inherently sensitive situations within which
we provide services. It is instructive to note that
our Utah-based Cemetery and Mortuary group has
received the “Best of State” award for the last 7
consecutive years, a very significant recognition of
the quality services we provide. It is one thing to
achieve “Best of State”, it is quite another thing to
remain “Best of State”.
Our
Mortgage
Segment
delivered
a
solid
performance decreasing its annual loss by over $11
million dollars (pre-tax) while increasing its annual
revenue by over 8%. While this segment did lose
money in 2024, I believe it important to point out
that our Mortgage Segment’s improved performance
was the single largest reason for our 100% increase
in total income. It is further instructive to note
that our Mortgage Segment achieved stand-alone
profitability in 2 out of the 4 quarters in 2024.
Nevertheless, it would be a mistake to ignore the
reality that the mortgage industry continues to
be profit-challenged, with Q4 being “Production
Income” negative industrywide according to the
Mortgage Bankers Association. Our talented and
committed management group continues to work
on streamlining, rightsizing, adding quality personnel,
and consolidating operations where possible, to
provide consistently competitive rates and customer
experience in a very tough environment.
Lastly, as an important “third party” recognition
we again received the “Top Workplace Award”
for 2024, which marks the 9th consecutive year
we have received this award. Similar to the “Best
of State” award achieved by our Cemetery and
Mortuary segment, it is one thing to receive the
award for a single year, but quite another to receive
consecutive annual awards. It is axiomatic to quality
customer service to have employees who are and
feel appreciated. This award’s reception highlights
our ongoing commitment to our employees, which
in turn reflects our ongoing commitment to our
businesses and customers.
I thank you for your continued support and I hope
to see you at our Annual Meeting.
Very truly yours,
Scott M. Quist
Chairman, Chief Executive Officer, and President
My Fellow Shareholders:
I am pleased to report on the affairs of our Company
for the year ended December 31, 2024, and invite
you to attend the annual Stockholders Meeting to
be held Friday, June 27, 2025, in Salt Lake City, Utah,
at the Company’s offices.
Last year we, as a total organization, improved
our before-tax income by over 100%. While we
remain committed to increasing our growth rates
and improving our profitability in 2025 and beyond,
that 2024 100% increase marked a very good year.
Looking forward, we view the current economic
uncertainty as an opportune time to improve sales
and profitability in all of our segments.
Our Life Insurance Segment had its best operational
year ever in 2024, delivering a 25% improvement
over 2023 which was its previous best year ever. We
continue to find much opportunity for growth as
we evaluate our competitive positions, improve the
value propositions for our sales force, and increase
premium rates where appropriate. During 2024
we spent much internal effort modernizing our
commission and processing systems with increased
flexibility and capability to better reward our high-
performing sales professionals. Those efforts are
already bearing fruit as we increase our recruiting
efforts.
2024 was our Cemetery and Mortuary Segment’s
best year ever, improving 5% over 2023 which,
similar to our Life Insurance Segment, was also its
previous best year ever. Much time and effort was
Scott M. Quist
Chairman of the Board
Chief Executive Officer
President
SNFC Board of Directors and Officers
Former Executive Vice President,
Chief Financial Officer and Secretary,
USANA Health Sciences, Inc.
Director
Executive Committee
Audit Committee
Compensation Committee
Nominating and Corporate
Governance Committee
Gilbert A. Fuller
Chairman of the Board
President
Chief Executive Officer
Director
Executive Committee
Scott M. Quist
President, Moody & Associates
Director
Executive Committee
Audit Committee
Compensation Committee
Nominating and Corporate
Governance Committee
Past Medical Staff President
Department Head-Otolaryngology,
Head and Neck Surgery
Intermountain Medical Center
Director
Compensation Committee
Nominating and Corporate
Governance Committee
Robert G. Hunter M.D.
H. Craig Moody
Vice President
Tax
Controller
Richard R. Dahl
Jeffrey P. Adams
General Counsel
Matthew G. Bagley
Vice President
Chief Information Officer
Thayne D. Atkinson
Co-Owner & Operator
Cook Brothers Painting, Inc.
Director
Audit Committee
Compensation Committee
Nominating and Corporate
Governance Committee
John L. Cook
Director
Vice President
National Marketing Director
of Life Insurance
Jason G. Overbaugh
Director
President of Mortgage Operations
General Counsel
Executive Committee
S. Andrew Quist
Founder and Chairwoman of Mysoor Industries
Founder and Chief Executive Officer of Alix
Director
Audit Committee
Compensation Committee
Nominating and Corporate
Governance Committee
Alexandra Mysoor
Vice President
Finance
Diana C. Olson
Chief Financial Officer
Treasurer
Garrett S. Sill
Secretary
Senior General Counsel
Jeffrey R. Stephens
Director
President of Memorial Services
President of Life Insurance
Assistant Secretary
General Counsel
Adam G. Quist
A History of Growth
1965
1965 - The founding of Security National Life Insurance
Company
1966 - The acquisition of Grand Canyon Life
1967 - The acquisition of Bankers Trust Life
1969 - The acquisition of American Alliance Life
1970
1970 - The acquisition of Charter Oak Life & Washington
Life Assurance
1972 - The acquisition of Columbia Life
1973 - The acquisition of National Capital Life and
Memorial Estates Companies
1979 - The organization of Security National Financial
Corporation
1980
1981 -The acquisition of American Home Security Life
1984 - The acquisition of Western Investors policy block
1985 - The acquisition of Del Pueblo Life policy block and
Cibola Life policy block
1986 - The acquisition of Investors Equity Life
1987 - IPO of Security National Financial Corporation and
the acquisition of Southwest American policy block
1989 - The acquisition of Paradise Chapel Funeral Home
1990
1991 - The sale of Investors Equity Life and the acquisition
of Deseret Memorial Group
1993 - The formation of SecurityNational Mortgage
Company
1994 - The acquisition of Camelback Sunset Funeral Home
and Capital Investors Life
1995 - The acquisition of Greer Wilson Funeral Home,
Tolleson Funeral Home and Civil Service
Employees Life
1996 - The dedication of Singing Hills Memorial Park
1997 - The acquisition of Crystal Rose Funeral Home and
the formation of Adobe Funeral Home
1998 - The acquisition of Southern Security Life (FL)
1999 - The acquisition of Menlo Life policy block
2000
2000 - The organization of Southern Security Mortgage
Company
2002 - The acquisition of Gulf National Life policy block
and Acadian Life policy block
2004 - The acquisition of Paramount Security Life
2005 - The acquisition of Memorial Insurance Company of
America
2007 - The acquisition of C&J Financial and Capital Reserve
Life Insurance Company
2008 - The acquisition of Southern Security Life (MS)
2010
2011 - The acquisition of North America Life policy block
2012 - The acquisition of Trans-Western Life and the
formation of EverLEND Mortgage Company
2014 - The acquisition of American Funeral Financial
2016 - The acquisition of First Guaranty Insurance
Company
2018 - The acquisition of Beta Capital Corporation
2019 - The acquisition of Probst Family Funeral Homes
2019 - The acquisition of Kilpatrick Life Insurance Company
2020
2021 - The merger of EverLEND Mortgage Company with
SecurityNational Mortgage Company
2021 - The acquisition of Rivera Family Funeral Homes
and Santa Fe Memorial Gardens
2021 - The acquisition of Holbrook Mortuary
2021 - The sale of Memorial Insurance Company
of America
2023 - Aquisition and merger of Foxo Life Insurance
Company
Preneed:
A Gift of Love and Preparation
Your funeral is more than a ceremony—it’s a tribute to your life, a
gift to your loved ones, and a meaningful step in the healing process.
Preneed insurance is a way to plan and fund your funeral in advance,
ensuring your final wishes are honored while easing the burden of
decision making and financial stress on your loved ones. With a pre-
funded funeral plan from Security National Life, you gift your family
guidance, security, and peace of mind when it’s needed most.
Final Expense:
Peace of Mind for Life's Unexpected Costs
The loss of a loved one can usher in many new responsibilities and
unforeseen costs, but Final Expense insurance offers peace of mind
during what can be an overwhelming time. This affordable coverage
helps manage funeral costs and expenses, ensuring your family isn’t
left with a financial hardship. Final Expense insurance provides an extra
layer of protection for your loved ones.
A Better Way to Plan
At Security National Life, we specialize in affordable and
convenient solutions that bring peace of mind to you and your
loved ones. Life’s biggest moments—birthdays, graduations,
and weddings—are carefully planned. Yet, one significant event
is often overlooked: the loss of a loved one and planning a
funeral or memorial service. While we may not know when,
we can ensure our families are protected from financial and
emotional burdens when that time comes.
LEADERSHIP TEAM
Scott Quist
Chief Executive Officer
Jason Richardson
Vice President of Sales
Home Service Division
Jason Overbaugh
Vice President
National Marketing Director
Guy Winstead
Vice President of Sales
Todd Clendennen
Regional Vice President of Sales
Preneed Division
Adam Quist
President
Jon Meredith
Director
Policy Administration
Wendi Beauchaine
Chief Underwriter
Sara McCulley
Director
Marketing and Lead Development
Jo Clark
Director
Kilpatrick Life Policy Administration
KK Kilgore
Director
Claims and Service
Home Service:
Personalized Support When You Need It Most
At Security National Life, alongside Kilpatrick Life Insurance Company,
we believe service goes beyond insurance. Our Home Service Division
provides compassionate, in-home support through dedicated agents
who offer ongoing policy service, insurance reviews, and premium
collections—ensuring families are cared for throughout the duration
of their policies. Rooted in a tradition of home visits, we take pride in
continuing this level of dedication to every family we serve.
A Legacy of Family and Commitment
Openly discussing and preparing for our passing doesn’t have to be
difficult, it can benefit our loved ones and ease their grief when we pass
away. We are committed to raising awareness and offering affordable
financial products that empower individuals to confidently plan for
life's final stages. By creating these products, Security National Life and
its agents bring compassion and guidance for families looking to plan
for their future.
LEADERSHIP TEAM
Marty Rich
Vice President
Marketing & Sales Support
LEADERSHIP TEAM
Scott Quist
Chief Executive Officer
We Are SecurityNational Mortgage
A mortgage company with a rock-solid reputation
2024 was another extremely difficult year for the mortgage industry.
While the Federal Reserve cut overnight interest rates a full percentage
point during 2024, 30-year mortgage rates ended the year higher than
before the Federal Reserve began those rate cuts. 2024 also set a new
29 year low for the fewest number of existing homes sold in the United
States. Notwithstanding this environment, SecurityNational saw green
shoots of growth emerge in 2024. SecurityNational funded $2.3 billion
in residential mortgage loan originations in 2024, which was its first year-
over-year increase in origination volume since 2020. Disappointingly,
this increase in origination volume did not result in a profitable year for
SecurityNational. In 2024 we were able to reduce our pretax loss by more
than $11 million dollars from 2023’s results and were able to improve the
amount of our net loss compared to our origination volume by more than
the industry average, as reported by the Mortgage Bankers Association’s
net production income report. Furthermore, SecurityNational posted
profitable quarters during the second and third quarters of 2024, after
eight consecutive quarters of losses. These green shoots of growth are
the beginnings of returning to full-year profitability.
We believe that SecurityNational’s foundation of financial stability, market
transparency, and expertise in and focus on purchase transactions, provides
a perfect platform to expand our presence in the industry in the current
unsettled and difficult environment. With many competitors retreating
from the market, or exiting entirely, SecurityNational’s strengths shine
more brightly and provide opportunities that few other companies can.
SecurityNational was one of 145 lenders nationwide that funded more
than $2 billion in originations in 2024. In 2023 there were 196 such
lenders. Continued industry consolidation and contraction will provide
opportunities to expand SecurityNational’s brand and market share in
2025.
Mortgage loan sales professionals are looking for the security and stability
that SecurityNational provides, and our results attest to this. In 2024 a
full 16% of our loan originations came from loan officers that were new
to SecurityNational in 2024. In the latter part of 2024, that number grew
to as high as 25%. This result stems directly from our emphasis on and
investment in recruiting over the past two years. While this recruiting has
come with significant expense, we continue to believe that the present
opportunity to attract talented individuals to SecurityNational is the best
in recent history.
In 2024 SecurityNational also continued its trend of adding significant talent
to its leadership team, including hiring a new Vice President of Mortgage
Operations. The Company also hired an experienced team to market
Andrew Quist
President
Mike Brumble
Vice President, Risk Management
Jacob Banks
Chief Financial Officer
Joel Harward
Senior Vice President, Mortgage Production
LEADERSHIP TEAM
Michael Muirbrook
Vice President, Servicing & Audits
SecurityNational’s loan products to customers across the Security National
family of businesses. We have not had this capability in the past and we
believe it will provide another significant growth path for the Company,
while providing valuable and needed products to our customers that will
enhance and deepen our relationships with them.
These individuals chose to join SecurityNational from established
competitors because of the strength of the SecurityNational brand, adding
veteran industry experience with fresh, new perspectives to our long-
tenured existing leadership team which has a deep understanding of what
makes SecurityNational special. This strategic balance allows the Company
to combine world-class technology with production processes in crafting an
exceptional customer experience from the first point-of-contact through
loan closing. Strong relationships with Fannie Mae, Freddie Mac, FHA, VA,
USDA and many other secondary market investors, and tailored portfolio
products provided by its affiliated companies, ensure that SecurityNational
can provide a full complement of mortgage loan products at competitive
prices. These products include unique loan offerings to homebuilders - a
specialty of SecurityNational. The Company’s unparalleled marketing and
business support group helps keep our sales team front-and-center in a
very competitive marketplace. These qualities are just a few of the reasons
why mortgage loan professionals are joining SecurityNational each month,
sustaining our growth into the future.
Although the Company’s reach is nationwide, each branch office is a part
of its local community. SecurityNational’s suite of available loan products
covers most every residential mortgage loan need, but our employees take
extra satisfaction in helping our customers purchase a home, especially
their first home. Home ownership is one of the most important financial
decisions most people will make during their lifetimes. The process of
financing a home purchase is unfamiliar and complicated for many people.
SecurityNational is an expert in originating mortgage loans for low-to-
moderate-income buyers and can match qualifications with a mortgage
loan program and resources specifically designed for each applicant’s
specific needs. Beyond originating loans, many of the Company’s employees
are actively engaged in their cities, towns and neighborhoods feeding the
hungry, sheltering the needy, or adding a splash of color along with a kind
word while cleaning up after a disaster. SecurityNational has industry
leading products, processes and financial strength, all of which contribute
to the most important result for us - Turning Houses Into Homes.
Austin Jacks
Chief Marketing Officer
Rob Coke
Vice President, Appraisal
Tim Yates
Vice President, Capital Markets
Mark Pasternak
Vice President, Operations
$2.3B
2024
Loan Volume
REGIONAL MANAGERS
2024 Statistics
Svetlana Marinkovic
Executive Regional Manager,
Summit Region
Cristie North
Executive Regional Manager,
Mountain West Region
Joe Gregory
Executive Regional Manager,
Pinnacle Region
Troy Mannella
Executive Regional Manager,
Lonestar Region
354 Loan Officers
SNMC Funding Comparison
Year-Over-Year
Purchase
Refinance
2023 2024
$2.0B
$1.75B
$1.5B
$1.25B
$1.0B
$750M
$500M
$250M
$0
212.4M
1.975B
320.4M
1.963B
Dave Pettit
Regional Area Manager,
Salt Lake Region
Jon Reed
Executive Regional Manager,
Empire Region
Chris Garza
Executive Regional Manager,
Empire Region
REGIONAL MANAGERS
Loans Funded
Turning Houses
into Homes®
97 Branches
48 States
7,269
Our Mission
Our mission is to provide our customers
with peace of mind and comfort
throughout both the planning process and
during end-of-life events. We are deeply
committed to fostering a workplace
culture that inspires our employees to
deliver exceptional and compassionate
service. At the heart of everything we do
is our shared purpose to offer hope, honor,
healing, and happiness to those we serve.
Our customer service culture is guided
by five core principles: safety, experience,
efficiency, empathy, and inclusivity. We are
dedicated to treating every family we serve
with the utmost care and respect, holding
ourselves accountable to the highest
ethical standards. Our goal is to provide
thoughtful,
personalized
experiences,
ensuring each family receives the unique
support and attention they deserve.
Providing hope, honor, healing, and
happiness to the families we serve.
Scott Quist
Chief Executive Officer
Adam Quist
President
Steven Kehl
Chief Operating Officer
Jordan Buckner
Executive Vice President
Erin Creger
Chief Sales Officer
LEADERSHIP TEAM
Melissa Loose
Senior Vice President
of Communications
Our Goal
Our goal is growth, which is a direct result of our commitment to
providing excellent service to the families we serve in California,
New Mexico, and Utah. Growth not only benefits the families and
communities we serve, but it also offers our employees opportunities
for career advancement and an improved livelihood. Since 2014,
Security National Funeral Homes & Cemeteries has achieved consistent
double-digit operational net income growth each year, averaging
a compound annual growth rate of over 20%. As a result, Security
KEYS
Security National Funeral Home
& Cemetery Division
5
Winner: Best of State Seven Years in a Row
We are proud to announce that Memorial Mortuaries and Cemeteries
has been honored with the "Best of State" award seven consecutive
times in Utah! Additionally, our Affordable Funerals and Cremations
brand has received this prestigious recognition twice. These awards are
a testament to our unwavering commitment to excellence, quality, and
superior service. The criteria for these honors highlight the exceptional
products, services, and performance that set us apart from our
competitors, all while making a positive impact on the communities we
serve and improving the quality of life for our neighbors. We celebrate
these achievements with immense gratitude for the trust and support
of our valued families and team members!
Joseph Molnar
General Manager
Rivera Family Funerals & Cremations
National has become Utah's largest funeral and cemetery provider, and
Rivera is the largest funeral service provider in Northern New Mexico,
with a market share exceeding 40%.
We operate with a strategic focus on achieving excellence through a
commitment to the basics. By building strong relationships of trust, setting
clear expectations, and maintaining consistent accountability, we create
a culture of excellence. A key part of our strategy involves attracting,
developing, and retaining talented individuals. This approach ensures not
only the success of the organization but also provides an environment
where our employees can thrive and grow in their careers.
Eleni Karahalios
Sales Manager
Utah Cemeteries
Scott Prine
Sales Manager
California & New Mexico
Brian Bartlett
Vice President & General Manager
Memorial Mortuaries
Jeremy Layton
Vice President & General Manager
Probst Family Funerals & Affordable
LEADERSHIP TEAM
Jeff Brinkerhoff
Controller
Commercial real estate –
a wise investment strategy.
Security National Real Estate provides property management and leasing
services for all companies in the Security National family. Investing in
commercial real estate provides predictable returns, steady cashflows, and
is a significant investment category for the company.
An investment in commercial real estate acts as a hedge against the long-
term impact of inflation. Security National seeks long-term, national credit
tenants for its Class A office space and includes annual rate increases as a
part of all leases. Over time, commercial real estate is likely to appreciate,
and due to its fixed nature, Security National is able to carry bank debt,
which allows it to leverage its investment dollar.
Brandon Federico
Manager of Corporate Real Estate
Cambry Brady
Property Manager
Adam Perry
Facilities Manager
LEADERSHIP TEAM
Center 53 Campus
Security National is developing approximately 1,000,000 square feet of
commercial real estate at the center of the Wasatch Front. The project,
Center 53, encompasses over 20 acres in the central valley of Salt Lake
City which is only 30 minutes from anywhere along the Wasatch Front.
The first building was completed in 2018 and includes an on-site fitness
center with cardio and weight stations. Building 1 is 95% leased and its
current full floor tenants include: R1, Code Corporation, and MasterCard.
Each of the buildings on the campus will have the
following features:
• Large floor plates with great views of the Salt
Lake Valley
• Exterior features include natural stone, glass
curtain walls and terraneo finish
• Large modern lobby with wood walls and large
format tile feature walls
• Structured parking
• Easy access to freeway
Center 53 Building 1
Cabela’s
• Purchased in 2018
• 70,000 square feet of retail
• Located in Farmington, Utah at Station Park
• 25 year lease with Cabela’s
Security National
Corporate Headquarters
Security National completed the second, 6-story Class A office
building within its 20-acre office campus in the Fall of 2021. This latest
addition serves as Security National’s corporate headquarters. Building
2 is approximately 217,000 square feet and includes numerous energy
efficient enhancements, employee amenities, spectacular Salt Lake
Valley views, and is fully leased. Security National occupies floors 4,
5, and 6 and R1 – who also occupies the 6th floor of Building 1 –
occupies floors 1 and 2 and has subleased floor 3 to Beyond.
Security National relocated many of its Utah-based operational
functions to this new building, which includes Security National Life,
Memorial Mortuaries and Cemeteries, and SecurityNational Mortgage,
thereby improving efficiency by consolidating several retail mortgage
and other subsidiary offices.
Center 53 Building 2
Our target loan size is between
$1,000,000 and $4,500,000...
Security National Commercial Capital originates
interim/bridge loans to enhance the mortgage
banker’s traditional long-term lender relationships
with a faster closing, flexible, interim loan product
intended to provide a bridge until a property stabilizes
and conventional long-term financing can be obtained.
These loans are designed to facilitate the purchase,
refinance, leveraging or ownership change of good
quality, performing commercial real estate. We lend
on investor or owner/occupied real estate, including
single or multi-tenant office, retail, office, warehouse,
and multifamily properties. We also provide
construction and land development financing that
complements SecurityNational Mortgage on approved
new residential construction and on select commercial
construction projects throughout the United States.
Our passion is commercial and residential real estate finance.
We are your commercial and residential loan source.
We also provide permanent first lien and second lien
interim bridge financing for SBA-504 loans during
debenture funding waiting period. The first lien SBA-
504 long-term loans can be participated or sold on
the secondary market.
We offer flexible fast funding commercial real estate
loans while maintaining our fiduciary responsibility
to our affiliated life insurance company's insureds
by providing secure, higher yielding investments.
We provide competitive products and service to
borrowers and the desired return to our shareholders.
Our loans are generated
using relationships...
Commercial Bridge Lending
Our loans are generated using relationships with
mortgage bankers, other life insurance companies,
commercial banks, website requests, referrals from
past business relationships, commercial lending
institutions, Real Estate professionals, Wall Street
investors, and through publication advertising.
Our target loan size for bridge loans is between
$1,000,000 and $4,500,000, with a maximum term of
3 years (12-month term preferred). We also provide
interim bridge financing for SBA-504 loans waiting for
debenture funding.
Residential Construction Lending
and Land Development
Security National also provides construction and
land development financing that complements
SecurityNational Mortgage on approved new
residential construction and on select commercial
construction projects throughout the United States.
In addition to providing financing for single family
homes and development projects, Security National
also acquires land for its own development. Improved
lots are sold to strategic builder partners and further
complements SecurityNational Mortgage in its long
term mortgage originations.
To learn more, visit www.sncloans.com for a
presentation of commercial loan products offered.
Some of our land development and construction loan projects:
2024 Commercial and Construction
Lending Originations
$192M
Residential Construction
$15M
Commercial Bridge
$49M
Acquisition &
Development
$8M Land
$11M Interim SBA/
504 Bridge
$1M
Residential Bridge
Jeffrey Degraffenried
Construction Loan Manager
Brian Nelsen
Commercial Loan Manager
Shane Wilson
Vice President
LEADERSHIP TEAM
Todd Guymon
Vice President
Commercial Loans
We take the wait off your shoulders
Since 1996, C&J Financial has been dedicated to helping funeral homes and cemeteries eliminate the challenges
and cash flow delays associated with processing life insurance death claims. As North America’s #1 provider of
assignment funding, we have proudly assisted more than 980,000 families in providing a dignified funeral for their
loved ones and have funded over $6.2 billion to thousands of firms across the U.S.
Why Assignment Funding?
When families walk into a funeral home to make
arrangements, many funeral directors prefer payment
via cash, check, or credit card rather than dealing with
life insurance policies. This is understandable, as some
insurance companies can take hours or days to verify
benefits—followed by another 30, 60, 90 days or
longer before payment is received.
With more than half of Americans having less than
$5,000 in savings, yet 60% owning some type of life
insurance, many families would prefer to use their
loved one’s policy to cover funeral expenses. This
makes the funeral a cashless event for the family while
bridging the gap between what they want and what
they can afford.
Studies show that families using life insurance spend
an average of 56% more on funeral arrangements
compared to those paying with cash, check, or credit
card. Insurance eliminates the immediate financial
burden, allowing families to honor their loved ones
the way they see fit, creating a better experience for
everyone involved.
Despite these advantages, only 16% of families use life
insurance to pay for funeral services. Why? Many funeral
directors don’t want to deal with the complexities and
delays involved in processing claims.
How C&J Financial Helps
At C&J Financial, our mission is to help families provide a dignified
and meaningful service for their loved ones by eliminating the hassle,
headache, and cash flow delays associated with insurance assignments.
Using C&J’s Quick Claim™ process, funeral professionals can submit
an assignment in less than 2 minutes. Our team then contacts the
insurance company to verify benefits, and once confirmed, the
beneficiary simply signs C&J’s assignment. Instead of waiting weeks
or months, funds are typically available within 24-48 hours.
Technology-Driven Solutions
Funeral Homes Trust
C&J Financial continues to lead the industry in innovation and
technology, providing funeral homes with tools that streamline
processes, improve efficiency, and save valuable time.
• Assignment Management System: Our advanced platform
provides real-time claim tracking, secure document uploads,
direct communication with Customer Loyalty Representatives,
and a full view of claim statuses.
• Quick Claim Assignment™: Launched in 2021, this industry-
first innovation automatically generates insurance-specific
paperwork for beneficiaries, eliminating confusion and
reducing manual paperwork.
• Electronic Signatures: Our seamless integration with Adobe
Sign—one of the most trusted eSignature platforms in the
world—allows funeral homes to send and receive signed
assignments electronically at no cost. Documents are
automatically uploaded, providing full visibility into the process.
The Future of Assignment Funding
At C&J Financial, we are committed to pushing the boundaries of
innovation in the funeral industry. We continue to enhance our
technology, expand our services, and work closely with funeral
homes and cemeteries across the country to ensure faster, easier,
and more reliable assignment funding solutions.
By eliminating cash flow delays and simplifying the insurance claims
process, we empower funeral professionals to focus on what truly
matters—helping families honor their loved ones.
LEADERSHIP TEAM
Jamie Meredith
Executive Vice President
Chuck Gallagher
Vice President of Sales
Jennifer Oliver
Vice President
Pre-Funding Operations
Jennifer Hill
Vice President
Post-Funding Operations
Where We Are
Indiana
Sales Office
License Held
No License Held
Legend
Corporate
Headquarters
Operations
Security National Life
Kilpatrick Life
First Guaranty
Memorial Mortuaries
& Cemeteries
SecurityNational Mortgage
C&J Financial, LLC
Where We Are
Kilpatrick Life Insurance Company
1818 Marshall St.
Shreveport, LA 71101
Telephone: (800) 235-0555
Fast Funding Offices
C&J Financial, LLC
200 Market Way
Rainbow City, AL 35906
Telephone: (800) 785-0003
Mortuaries & Cemeteries
Security National Funeral Homes
and Cemeteries Operations
433 Ascension Way, 6th Floor
Salt Lake City, UT 84123
Telephone: (801) 268-8771
Memorial Holladay-Cottonwood Mortuary
4670 S. Highland Drive
Salt Lake City, UT 84117
Telephone: (801) 278-2801
Memorial Lake Hills Mortuary &
Cemetery
10055 S. State Street
Sandy, UT 84070
Telephone: (801) 566-1249
Memorial Lake View Mortuary & Cemetery
1640 E. Lakeview Drive
Bountiful, UT 84010
Telephone: (801) 298-1564
Memorial Murray Mortuary
5850 S. 900 E.
Murray, UT 84121
Telephone: (801) 262-4631
Memorial Mountain View Mortuary &
Cemetery
3115 E. 7800 S.
Cottonwood Heights, UT 84121
Telephone: (801) 943-0831
Memorial Redwood Mortuary & Cemetery
6500 S. Redwood Road
West Jordan, UT 84123
Telephone: (801) 969-3456
Memorial Holladay Cemetery
4900 S. Memory Lane
Holladay, UT 84117
Telephone: (801) 278-2803
Singing Hills Memorial Park
2800 Dehesa Road
El Cajon, CA 92019
Telephone: (619) 444-3000
SNFC Corporate Offices
Security National Financial Corporation
433 Ascension Way, 6th Floor
Salt Lake City, UT 84123
P.O. Box 57250
Salt Lake City, UT 84157-0250
Telephone: (801) 264-1060
Toll Free: (800) 574-7117
Form 10-K Offer
If you are a holder or beneficial owner of the
company’s stock, the company will send you, upon
request and at no charge, a copy of the company’s
Annual Report on Form 10-K filed with the Securities
& Exchange Commission for the year 2024 (including
a list of exhibits). All requests must be made in writing
to the Corporate Secretary.
Security National Financial Corporation
P.O. Box 57250
Salt Lake City, Utah 84157-0250
Stock Transfer Agents
Zions First National Bank
P.O. Box 30880
Salt Lake City, UT 84130
Former Holders of Preferred Stock and/or
Promissory Notes
Security National Financial Corporation
Attn: Stock Department
P.O. Box 57250
Salt Lake City, UT 84157-0250
Certified Public Accountants
Deloitte & Touche LLP
Salt Lake City, Utah
Company E-mail Address:
contact@securitynational.com
Company Internet Address:
www.securitynational.com
Life Insurance Offices
Security National Life Insurance Company
433 Ascension Way, 6th Floor
Salt Lake City, UT 84123
Telephone: (800) 574-7117
Security National Life Insurance Company
Home Service Division
1080 River Oaks Drive
Suite #B204
Flowood, MS 39232
Telephone: (800) 826-6803
Security National Life Insurance Company
Preneed Sales Division
1 Sanctuary Blvd Suite 302
Mandeville, LA 70471
Telephone: (800) 574-7117
Affordable Funerals & Cremations
4387 South 500 West
Murray, UT 84123
Telephone: (801) 287-8233
Affordable Funerals & Cremations
St. George Location
157 E. Riverside Drive #3A
St. George, UT 84790
Telephone: (435) 680-7035
Heber Valley Funeral Home
288 N. Main Street
Heber City, UT 84032
Telephone: (435) 654-5458
Probst Family Funeral Home
79 E. Main Street
Midway, UT 84049
Telephone: (435) 654-5959
Holbrook Mortuary
3251 S 2300 E
Millcreek, UT 84109
Telephone: (801) 484-2045
Rivera Family Funeral Home
818 Paseo del Pueblo Sur
Taos, NM 87571
Telephone: (575) 758-3841
Rivera Family Funeral Home & Crematory
305 Calle Salazar
Espanola, NM 87532
Telephone: (505) 753-2288
Rivera Family Funeral Home
& Santa Fe Memorial Gardens
417 East Rodeo Rd.
Santa Fe, NM 87505
Telephone: (505) 989-7032
Rivera Family Funeral Home
1627 A Central Avenue
Los Alamos, NM 87544
Telephone: (505) 663-6880
Mortgage Offices
SecurityNational Mortgage
Company–Operations
433 Ascension Way, 5th Floor
Salt Lake City, UT 84123
Telephone: (801) 264-8111
SecurityNational Mortgage
Company–Sales Offices
ARIZONA
Chandler
1490 S. Price Road, Suite 318
Chandler, AZ 85286
Telephone: (844) 820-8699
Colorado Springs
5475 Tech Center Drive, Suite 215
Colorado Springs, CO 80919
Telephone: (844) 323-4640
Denver
7800 East Union Avenue, Suite 550
Denver, CO 80237
Telephone: (844) 323-4640
Edwards
27 Main Street, Suite C-104B
Edwards, CO 81632
Telephone: (970) 331-2919
CONNECTICUT
Glastonbury
447 Naubuc Ave, Unit 110
Glastonbury, CT 06033
Telephone: (844) 323-4640
Hartford
1939 Broad St, Off B
Hartford, CT 06114
Telephone: (844) 323-4640
Milford
84 Broad St, 2nd Flr, Rm #6
Milford, CT 06460
Telephone: (844) 323-4640
Vernon
15 Lakeview Dr.
Vernon, CT 06066
Telephone: (860) 604-1688
FLORIDA
DeLand
970 Island Grove Drive
DeLand, FL 32724
Telephone: (866) 827-9558
Ft. Myers
8191 College Parkway #302
Ft. Myers, FL 33919
Telephone: (888) 550-9221
Lake Mary
250 International Pkwy, Ste 118 & 120
Lake Mary, FL 32746
Telephone: (407) 302-8384
Pinellas Park
10293 61st Ct
Pinellas Park, FL 33782
Telephone: (877) 518-9450
Punta Gorda
265 E Marion Avenue
Punta Gorda, FL 33950
Telephone: (479) 925-5350
Seminole
5666 Seminole Blvd, Suite 106 & 111
Seminole, FL 33772
Telephone: (727) 498-3570
GEORGIA
Atlanta
900 Circle 75 Parkway, Suite 175
Atlanta, GA 30339
Telephone: (404) 924-6148
HAWAII
Honolulu
677 Ala Moana Boulevard, Suite 609
Honolulu, HI 96813
Telephone: (808) 809-7990
Kapolei
1001 Kamokila Boulevard, Suite 319
Kapolei, HI 96707
Telephone: (808) 427-9960
Lihue
4370 Kukui Grove Street
Suite #201
Lihue, HI 96766
Telephone: (808) 823-8050
ILLINOIS
Bartlett
802 West Bartlett Road
Bartlett, IL 60103
Telephone: (844) 820-8699
KENTUCKY
Elizabethtown
81 Boulder Drive
Elizabethtown, KY 42701
Telephone: (877) 518-9450
Louisville
9300 Shelbyville Rd, Ste 1205
Louisville, KY 40222
Telephone: (844) 323-4640
MINNESOTA
Eagan
860 Blue Gentian Rd
Ste 200, Off 205
Eagan, MN 55121
Telephone: (844) 820-8699
MONTANA
Billings
960 S 24th Street W, Ste I
Billings, MT 59102
Telephone: (844) 323-4640
Missoula
534 N. Higgins Ave.
Missoula, MT 59802
Telephone: (844) 820-8699
Glendale
6751 N Sunset Blvd, Suite E-260
Glendale, AZ 85305
Telephone: (844) 820-8699
Goodyear
1360 N. Bullard Ave
Suite 200, Off I-207 & J-208
Telephone: (844) 820-8699
Mesa
1630 S. Stapley Dr, Ste 206
Mesa, AZ 85210
Telephone: (602) 732-3993
Phoenix
5100 N. 99th Ave, Unit 101 & 103
Phoenix, AZ 85037
Telephone: (602) 273-9610
1951 West Camelback Road, Ste 200
Phoenix, AZ 85015
Telephone: (602) 354-7461
705 E. Coronado Rd
Phoenix, AZ 85006
Telephone: (844) 820-8699
ARKANSAS
Russellville
500 West Main St.
Suite 113
Russellville AR 72801
Telephone: (844) 820-8699
CALIFORNIA
La Quinta
78-065 Main Street, Suite 205-C
La Quinta, CA 92253
Telephone: (844) 820-8699
Santa Rosa
2455 Bennett Valley Rd
Bldg C, Ste C107
Santa Rosa, CA 95404
Telephone: (844) 323-4640
West Covina
2934 E. Garvey Ave., South
Ste #250-N
West Covina, CA 91791
Telephone: (626) 209-2126
Yucca Valley
7398 Fox Trail, Unit B
Yucca Valley, CA 92284
Telephone: (760) 853-2600
COLORADO
Aurora
5982 S. Zeno Ct.
Aurora, CO 80016
Telephone: (844) 820-8699
Where We Are
Where We Are
NORTH CAROLINA
Hickory
739 11th Avenue Blvd SE
Hickory, NC 28602
Telephone: (844) 820-8699
NEVADA
Henderson
650 S. Green Valley Pkwy, Ste 130
Henderson, NV 89052
Telephone: (877) 518-9450
2546 Findlater St.
Henderson, NV 89044
Telephone: (866) 827-9558
2635 St. Rose Parkway, Suite 100
Henderson, NV 89052
Telephone: (702) 487-5626
Las Vegas
630 S 4th St, Ste 100 C
Las Vegas, NV 89101
Telephone: (844) 323-4640
1980 Festival Plaza Drive, Suite 850
Las Vegas, NV 89135
Telephone: (702) 562-8733
Mesquite
840 Pinnacle Court, #3, Suite B
Mesquite, NV 89027
Telephone: (866) 607-3863
Pahrump
401 S Frontage Rd #5
Pahrump, NV 89048
Telephone: (844) 323-4640
OHIO
Westerville
670 Meridian Way, Suite 146
Westerville, OH 43082
Telephone: (614) 441-9978
OKLAHOMA
Oklahoma City
1000 W. Wilshire Blvd, Suite 200
Oklahoma City, OK 73116
Telephone: (855) 203-1300
OREGON
Portland
3115 NE Sandy Blvd. Unit 227
Portland OR 97232
Telephone: (971) 544-7192
Terrebonne
11592 S.W. Roundup Place
Terrebonne, OR 97760
Telephone: (541) 615-7804
Tillamook
709 Pacific Ave.
Tillamook, OR 97141
Telephone: (503) 880-4018
RHODE ISLAND
Warwick
3970 Post Road, Ste 2PH
Warwick, RI 02886
Telephone: (844) 323-4640
TENNESSEE
Memphis
4646 Poplar Avenue, Office 317
Memphis, TN 38117
Telephone: (407) 302-8384
Spring Hill
1607 Solitude Court
Spring Hill, TN 37174
Telephone: (855) 203-1300
TEXAS
Amarillo
4500 I-40 West, Ste B
Amarillo, TX 79106
Telephone: (855) 203-1300
Austin
2100 Kramer Lane, Suite 900
Austin, TX 78758
Telephone: (512) 795-5596
Brownsville
1213 E. Alton Gloor Blvd
Suite H & I
Brownsville, TX 78526
Telephone: (956) 554-0792
Dallas
10000 N. Central Expy, Ste. 400
Off. 453
Dallas, TX 75231
Telephone: (469) 374-9700
El Paso
1600 Lee Trevino, Suite A-1
El Paso, TX 79936
Telephone: (844) 820-8699
Fulshear
5757 Flewellen Oaks Ln, Unit 104
Fulshear, TX 77441
Telephone: (855) 203-1300
30417 Fifth Street, Suite B
Fulshear, TX 77441
Telephone: (855) 203-1300
Houston
800 Town & Country Blvd.
Ste 500, Off 369, 370, 371
Houston, TX 77024
Telephone: (855) 203-1300
Hurst
462 Mid Cities Boulevard
Hurst, TX 76054
Telephone: (214) 444-9250
Jersey Village
17385 Village Green Dr. Ste A
Jersey Village, TX 77040
Telephone: (832) 615-5400
Katy
1526 Katy Gap Rd, Unit 802
Katy, TX 77494
Telephone: (855) 203-1300
23227 Red River Drive
Katy, TX 77494
Telephone: (832) 786-6699
Lake Kiowa
722 Kiowa Drive West
Lake Kiowa, TX 76240
Telephone: (940) 249-9944
Midland
4908 North Midkiff Road
Midland, TX 79705
Telephone: (432) 897-2299
Nacogdoches
338 N University Dr, Ste 200
Nacogdoches, TX 75961
Telephone: (855) 203-1300
Spring
25329 Budde Rd, Ste 1001
Spring, TX 77380
Telephone: (855) 203-1300
Stephenville
299 S Columbia
Stephenville, TX 76401
Telephone: (844) 820-8699
Sugar Land
14090 Southwest Freeway
Ste 300, Off 355
Sugar Land, TX 77478
Telephone: (855) 203-1300
The Woodlands
2001 Timberloch Place
Ste 500, Off 531
The Woodlands, TX 77380
Telephone: (855) 203-1300
Trevor
27903 99th Street
Trevor, WI 53179
Telephone: (262) 997-9444
WYOMING
Powell
255 East 2nd Street, Ste I
Powell, WY 82435
Telephone: (844) 820-8699
Star Valley Ranch
288 Scrub Oak Dr.
Star Valley Ranch, WY 83127
Telephone: (844) 820-8699
UTAH
Ephraim
497 S. Main, Suite E
Ephraim, UT 84627
Telephone: (435) 283-3000
Orem
998 N. 1200 W., Suite 104
Orem, UT 84057
Telephone: (801) 901-6200
Salt Lake City
2455 East Parleys Way, Suite 150
Salt Lake City, UT 84109
Telephone: (801) 713-4800
Sandy
126 West Sego Lily Drive #260
Sandy, UT 84070
Telephone: (801) 571-1313
South Jordan
11240 So. River Heights Drive
Suite 100
South Jordan, UT 84095
Telephone: (801) 508-6300
859 W. South Jordan Pkwy
Bldg A, Ste 1
South Jordan, UT 84095
Telephone: (877) 518-9450
Stansbury Park
500 East Village Blvd., Unit #110
Stansbury Park, UT 84074
Telephone: (435) 843-5340
St. George
162 N. 400 E., Bldg C, Suite 205
St. George, UT 84770
Telephone: (844) 323-4640
WASHINGTON
Vancouver
15650 N.E. Fourth Plain Blvd #101
Vancouver, WA 98682
Telephone: (360) 869-7265
WISCONSIN
Brookfield
15430 Neuberry Ct
Brookfield, WI 53005
Telephone: (844) 820-8699
Kenosha
1508 24th Avenue #23
Kenosha, WI 53140
Telephone: (844) 820-8699
Where We Are
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Security National Financial Corporation:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Security National Financial
Corporation and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related
consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for
each of the years then ended, and the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2024 and 2023, and the results of its operations
and its cash flows for each of the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over financial reporting. As
part of our audits, we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the
financial statements that was communicated or required to be communicated to the audit committee
and that (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Future Policy Benefits for Life Insurance Contracts and Amortization of Deferred Policy
Acquisition Costs for Insurance Contracts and Value of Business Acquired - Refer to Notes 1
and 21 to the financial statements
Critical Audit Matter Description
The Company’s management sets assumptions in (1) estimating a liability for life insurance policy
benefit payments that will be made in the future (future policy benefits for life insurance contracts),
2
(2) determining amortization of deferred policy acquisition costs for insurance contracts and value of
business acquired and (3) performing premium deficiency tests. The most significant assumptions
include mortality, lapse, and projected investment yield. Assumptions are determined based upon
analysis of company specific experience, industry standards, adjusted for changes in exposure and
other relevant factors. Given the inherent uncertainty of these significant assumptions, auditing the
development of such assumptions involved especially subjective judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s judgments regarding the mortality, lapse and projected
investment yield assumptions used in the development of future policy benefits for life insurance
contracts and the amortization of deferred policy acquisition costs for insurance contracts and value of
business acquired, included the following, among others:
• With the assistance of our actuarial specialists, we:
•
evaluated these actuarial assumptions, including testing the accuracy and
completeness of the supporting experience studies,
•
evaluated management’s judgments regarding these assumptions used in the
development of future policy benefits for life insurance contracts and the amortization
of deferred policy acquisition costs and value of business acquired,
•
evaluated the results of the Company’s annual premium deficiency tests.
Salt Lake City, UT
March 31, 2025
We have served as the Company's auditor since 2017.
3
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
2024
2023
Assets
Investments:
Fixed maturity securities, available for sale, at estimated fair value
(amortized cost of $376,012,071 and $390,884,441 for 2024 and 2023,
respectively; net of allowance for credit losses of $420,993 and
$314,549 for 2024 and 2023, respectively)
$
366,546,129
$
381,535,986
Equity securities at estimated fair value (cost of $11,386,454 and
$10,571,505 for 2024 and 2023, respectively)
15,771,681
13,636,071
Mortgage loans held for investment (net of allowance for credit losses
of $1,885,390 and $3,818,653 for 2024 and 2023, respectively)
301,747,358
275,616,837
Real estate held for investment (net of accumulated depreciation
of $31,419,539 and $29,307,791 for 2024 and 2023, respectively)
197,693,338
183,419,292
Real estate held for sale
1,278,033
3,028,973
Other investments and policy loans (net of allowances for credit losses
of $1,536,926 and $1,553,836 for 2024 and 2023, respectively)
74,855,041
69,404,617
Accrued investment income
8,499,168
10,170,790
Total investments
966,390,748
936,812,566
Cash and cash equivalents
140,546,421
126,941,658
Loans held for sale at estimated fair value
131,181,148
126,549,190
Receivables (net of allowance for credit losses of $1,678,531 and
$1,897,887 for 2024 and 2023, respectively)
15,858,743
15,335,315
Restricted assets (including $12,323,535 and $9,239,063 for 2024 and
2023, respectively, at estimated fair value)
23,806,836
20,028,976
Cemetery perpetual care trust investments (including $5,689,706 and
$4,969,005 for 2024 and 2023, respectively, at estimated fair value)
8,836,503
8,082,917
Receivable from reinsurers
13,831,093
14,857,059
Cemetery land and improvements
10,594,632
9,163,691
Deferred policy and pre-need contract acquisition costs
122,661,298
116,351,067
Mortgage servicing rights, net
2,939,878
3,461,146
Property and equipment, net
19,047,688
19,175,099
Value of business acquired
7,491,600
8,467,613
Goodwill
5,253,783
5,253,783
Other
21,366,843
20,072,195
Total Assets
$
1,489,807,214
$
1,430,552,275
See accompanying notes to consolidated financial statements.
4
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
December 31,
2024
2023
Liabilities and Stockholders’ Equity
Liabilities
Future policy benefits and unpaid claims
$
944,811,843
$
916,038,616
Unearned premium reserve
2,011,679
2,543,822
Bank and other loans payable
106,740,104
105,555,137
Deferred pre-need cemetery and mortuary contract revenues
20,168,405
18,237,246
Cemetery perpetual care obligation
5,642,693
5,326,196
Accounts payable
2,937,293
2,936,968
Other liabilities and accrued expenses
55,633,661
53,266,090
Income taxes
13,079,257
13,752,981
Total liabilities
1,151,024,935
1,117,657,056
Stockholders’ Equity
Preferred Stock:
Preferred stock - non-voting-$1.00 par value; 5,000,000 shares authorized;
none issued or outstanding
-
-
Common Stock:
Class A: common stock - $2.00 par value; 40,000,000 shares authorized;
21,255,006 shares issued and outstanding as of December 31, 2024 and
21,052,883 (1) shares issued and outstanding as of December 31, 2023
42,510,012
40,096,004
Class B: non-voting common stock - $1.00 par value; 5,000,000
shares authorized; none issued or outstanding
-
-
Class C: convertible common stock - $2.00 par value; 6,000,000 shares
authorized; 3,321,833 shares issued and outstanding as of December 31, 2024 and 3,120,432 (1)
shares issued and outstanding as of December 31, 2023
6,643,666
5,943,708
Additional paid-in capital
79,698,367
72,424,429
Accumulated other comprehensive loss, net of taxes
(6,951,266)
(6,885,558)
Retained earnings
225,359,186
206,978,373
Treasury stock, at cost - 1,025,784 Class A shares and 99,623 Class C shares
as of December 31, 2024; and 852,338 (1) Class A shares and 35,503 (1) Class C
shares as of December 31, 2023
(8,477,686)
(5,661,737)
Total stockholders’ equity
338,782,279
312,895,219
Total Liabilities and Stockholders’ Equity
$
1,489,807,214
$
1,430,552,275
(1) Issued and outstanding shares have been adjusted retroactively for the effect of annual stock dividends.
See accompanying notes to consolidated financial statements.
5
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Years Ended December 31,
2024
2023
Revenues:
Insurance premiums and other considerations
$
119,655,745
$
114,658,436
Mortgage fee income
107,558,640
98,147,972
Net investment income
71,725,249
72,343,047
Net mortuary and cemetery sales
29,037,173
27,864,811
Gains on investments and other assets
1,941,898
1,837,342
Other
4,603,963
3,645,882
Total revenues
334,522,668
318,497,490
Benefits and expenses:
Death benefits
58,116,837
61,390,517
Surrenders and other policy benefits
4,584,763
4,612,346
Increase in future policy benefits
36,253,859
34,008,997
Amortization of deferred policy and pre-need acquisition costs and value of business acquired
15,940,371
18,024,338
Selling, general and administrative expenses:
Commissions
46,972,909
39,929,556
Personnel
85,084,802
83,141,759
Advertising
3,115,120
3,710,445
Rent and rent related
5,147,069
6,857,137
Depreciation on property and equipment
2,383,621
2,351,661
Costs related to funding mortgage loans
6,134,709
6,440,439
Other
27,627,210
32,058,856
Interest expense
4,254,100
4,865,327
Cost of goods and services sold – cemeteries and mortuaries
4,803,528
4,805,700
Total benefits and expenses
300,418,898
302,197,078
Earnings before income taxes
34,103,770
16,300,412
Income tax expense
(7,568,002)
(1,805,354)
Net earnings
$
26,535,768
$
14,495,058
Net earnings per Class A equivalent common share (1)
$
1.14
$
0.63
Net earnings per Class A equivalent common share -
assuming dilution (1)
$
1.11
$
0.61
Weighted average Class A equivalent common shares
outstanding (1)
23,314,643
23,189,418
Weighted average Class A equivalent common shares outstanding-assuming dilution (1)
23,975,508
23,813,324
(1) Net earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends. The weighted-average shares outstanding includes the
weighted-average Class A common shares and the weighted-average Class C common shares determined on an equivalent Class A Common Stock basis. Net
earnings per common share represent net earnings per equivalent Class A common share.
See accompanying notes to consolidated financial statements.
6
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31,
2024
2023
Net earnings
$
26,535,768
$
14,495,058
Other comprehensive income:
Unrealized gains (losses) on fixed maturity securities available for sale
(79,228)
7,814,324
Unrealized gains on restricted assets
841
11,175
Unrealized gains (losses) on cemetery perpetual care trust investments
(1,403)
2,917
Other comprehensive income (loss), before income tax
(79,790)
7,828,416
Income tax benefit (expense)
14,082
(1,643,697)
Other comprehensive income (loss), net of income tax
(65,708)
6,184,719
Comprehensive income
$
26,470,060
$
20,679,777
See accompanying notes to consolidated financial statements.
7
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Class A
Common
Stock
Class C
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Treasury
Stock
Total
Balance at December 31, 2022
$37,516,062 $ 5,779,718 $64,767,769 $
(13,070,277) $202,160,306 $(4,366,651) $292,786,927
Adoption of ASU 2016-13
-
-
-
-
(671,506)
-
(671,506)
Net earnings
-
-
-
-
14,495,058
-
14,495,058
Other comprehensive income
-
-
-
6,184,719
-
-
6,184,719
Stock based compensation expense
-
-
601,362
-
-
-
601,362
Exercise of stock options
558,354
-
(423,967)
-
-
-
134,387
Vesting of restricted stock units
2,430
-
(2,430)
-
-
-
-
Sale of treasury stock
-
-
76,202
-
- 2,134,517
2,210,719
Purchase of treasury stock
-
-
583,156
-
- (3,429,603)
(2,846,447)
Stock dividends
1,899,960
283,188
6,822,337
-
(9,005,485)
-
-
Conversion Class C to Class A
119,198
(119,198)
-
-
-
-
-
Balance at December 31, 2023
40,096,004 5,943,708 72,424,429
(6,885,558) 206,978,373 (5,661,737) 312,895,219
Net earnings
-
-
-
-
26,535,768
-
26,535,768
Other comprehensive income
-
-
-
(65,708)
-
-
(65,708)
Stock based compensation expense
-
-
800,820
-
-
-
800,820
Exercise of stock options
400,144
403,334
413,835
-
-
(768,191)
449,122
Vesting of restricted stock units
3,570
-
(3,570)
-
-
-
-
Sale of treasury stock
-
-
214,816
-
- 1,005,748
1,220,564
Purchase of treasury stock
-
-
-
-
- (3,053,506)
(3,053,506)
Stock dividends
2,009,762
297,156
5,848,037
-
(8,154,955)
-
-
Conversion Class C to Class A
532
(532)
-
-
-
-
-
Balance at December 31, 2024
$42,510,012 $ 6,643,666 $79,698,367 $
(6,951,266) $225,359,186 $(8,477,686) $338,782,279
See accompanying notes to consolidated financial statements.
8
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
2024
2023
Cash flows from operating activities:
Net earnings
$
26,535,768
$
14,495,058
Adjustments to reconcile net earnings to net cash used in operating activities:
Gains on investments and other assets
(1,941,898)
(1,837,342)
Depreciation
8,172,446
8,641,080
Provision for credit losses
55,750
1,959,707
Net amortization of deferred fees and costs, premiums and discounts
(1,992,153)
(2,140,548)
Provision for deferred income taxes
311,971
(2,495,489)
Policy and pre-need acquisition costs deferred
(21,343,031)
(24,432,809)
Policy and pre-need acquisition costs amortized
15,032,413
16,724,336
Value of business acquired amortized
907,958
1,300,002
Mortgage servicing rights, additions
(90,370)
(1,009,312)
Amortization of mortgage servicing rights
611,638
587,931
Stock based compensation expense
800,820
601,362
Benefit plans funded with treasury stock
1,220,564
2,210,719
Net change in fair value of loans held for sale
(2,869,729)
478,460
Originations of loans held for sale
(2,295,830,408)
(2,173,080,584)
Proceeds from sales of loans held for sale
2,338,209,587
2,224,454,040
Net gains on sales of loans held for sale
(45,383,321)
(40,239,112)
Change in assets and liabilities:
Land and improvements held for sale
(1,430,941)
(62,217)
Future policy benefits and unpaid claims
31,595,619
29,745,349
Other operating assets and liabilities
4,747,167
(2,025,510)
Net cash provided by operating activities
57,319,850
53,875,121
Cash flows from investing activities:
Purchases of fixed maturity securities
(85,235,694)
(70,315,501)
Sales, calls and maturities of fixed maturity securities
101,038,735
42,966,901
Purchase of equity securities
(3,098,448)
(6,993,289)
Sales of equity securities
2,321,623
6,346,625
Purchases of restricted assets
(6,039,118)
(3,065,758)
Sales, calls and maturities of restricted assets
1,579,178
840,080
Purchases of cemetery perpetual care trust investments
(4,615,717)
(1,083,550)
Sales, calls and maturities of cemetery perpetual care trust investments
2,607,608
458,046
Mortgage loans held for investment, other investments and policy loans made
(740,739,575)
(645,581,141)
Payments received for mortgage loans held for investment, other investments and policy loans
707,194,046
682,267,677
Purchases of property and equipment
(2,470,032)
(1,109,937)
Sales of property and equipment
365,697
-
Purchases of real estate
(52,348,798)
(22,894,604)
Sales of real estate
36,306,431
32,772,520
Net cash provided by (used in) investing activities
(43,134,064)
14,608,069
9
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31,
2024
2023
Cash flows from financing activities:
Investment contract receipts
13,302,949
12,572,508
Investment contract withdrawals
(15,631,260)
(15,654,593)
Proceeds from stock options exercised
449,122
134,387
Purchase of treasury stock
(3,053,506)
(2,846,447)
Repayment of bank loans
(1,929,346)
(69,602,737)
Proceeds from bank loans
-
68,500,000
Net change in warehouse line borrowings for loans held for sale
2,855,476
(55,146,726)
Net cash used in financing activities
(4,006,565)
(62,043,608)
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents
10,179,221
6,439,582
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year
139,923,399
133,483,817
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year
$
150,102,620
$
139,923,399
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest
$
4,196,139
$
5,136,747
Income taxes
8,227,642
20,406,598
Non Cash Investing and Financing Activities:
Right-of-use assets obtained in exchange for operating lease liabilities
$
1,770,873
$
160,348
Loans held for sale foreclosed into real estate held for sale
858,977
-
Mortgage loans held for investment foreclosed into real estate held for sale
671,480
-
Loans held for sale foreclosed into receivables
382,936
-
Right-of-use assets obtained in exchange for finance lease liabilities
176,040
12,332
Transfer of loans held for sale to mortgage loans held for investment
-
3,017,626
Transfer from mortgage loans held for investment to restricted assets
-
1,625,961
Transfer from mortgage loans held for investment to cemetery perpetual care trust investments
-
1,611,550
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents as shown in the consolidated statements of cash flows is presented in the table
below:
Years Ended December 31,
2024
2023
Cash and cash equivalents
$
140,546,421
$
126,941,658
Restricted assets
8,553,803
10,114,694
Cemetery perpetual care trust investments
1,002,396
2,867,047
Total cash, cash equivalents, restricted cash and restricted cash equivalents
$
150,102,620
$
139,923,399
See accompanying notes to consolidated financial statements.
10
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies
General Overview of Business
Security National Financial Corporation and its wholly owned subsidiaries (the “Company”) operate in three reportable business segments: life insurance, cemetery
and mortuary, and mortgages. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products and
accident and health insurance marketed primarily in the states located in western, mid-western and southern regions of the United States. The cemetery and mortuary
segment of the Company consists of eight mortuaries and five cemeteries in Utah, one cemetery in California, and four mortuaries and one cemetery in New Mexico.
The mortgage segment is an approved government and conventional lender that originates and underwrites residential and commercial loans for new construction,
existing homes, and real estate projects primarily in Florida, Nevada, Texas, and Utah.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
(“GAAP”).
Principles of Consolidation
These consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All intercompany transactions and
accounts have been eliminated in consolidation.
Use of Estimates
Management of the Company has made several estimates and assumptions related to the reported amounts of assets and liabilities, reported amounts of revenues and
expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with GAAP. Actual results could differ from those
estimates.
Material estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative assets and liabilities;
those used in determining deferred acquisition costs and the value of business acquired; those used in determining the liability for future policy benefits; those used in
determining the value of loans held for sale; and those used in determining loan loss reserve. Although some variability is inherent in these estimates, management
believes the amounts provided are fairly stated in all material respects.
Investments
The Company’s management determines the appropriate classifications of investments in fixed maturity securities and equity securities at the acquisition date and re-
evaluates the classifications at each balance sheet date.
Fixed maturity securities available for sale are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded in
accumulated other comprehensive income (loss).
Equity securities are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded through net earnings as a
component of gains (losses) on investments and other assets.
11
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Mortgage loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, charge-offs, premiums, discounts, and the related
allowance for credit losses. Interest income is included in net investment income on the consolidated statements of earnings and is recognized when earned. The
Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans. Origination
fees are included in net investment income on the consolidated statements of earnings. Mortgage loans are secured by the underlying property and require an appraisal
at the time of underwriting and funding. Generally, the Company requires that loans not exceed 80% of the fair market value of the respective loan collateral. For loans
of more than 80% of the fair market value of the respective loan collateral, additional collateral or mortgage insurance by an approved third-party insurer is required.
Real estate held for investment is carried at cost, less accumulated depreciation provided on a straight-line basis over the estimated useful lives of the properties or is
adjusted to a new basis for impairment in value, if any. Included, if any, are foreclosed properties. These properties are recorded at the lower of cost or fair value upon
foreclosure. Also, included is residential subdivision land development which is carried at cost.
Real estate held for sale is carried at lower of cost or fair value, less estimated costs to sell. Depreciation is not recognized on real estate classified as held for sale.
Other investments and policy loans are carried at the aggregate unpaid balances, less allowances for credit losses.
Accrued investment income refers to the income earned from investments that has not yet been received by the Company.
Gains (losses) on investments (except for equity securities carried at fair value through net earnings) arise when investments are sold and are recorded on the trade date
and the cost of the securities sold is determined using the specific identification method. The provision (release) for credit losses for fixed maturity securities held for
sale are also included in gains (losses) on investments. See Note 2 for more information regarding the Company’s evaluation of credit losses.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its
cash in bank deposit accounts, which at times exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not
exposed to any significant credit risk on cash and cash equivalents.
Loans Held for Sale
Accounting Standards Codification (“ASC”) No. 825, “Financial Instruments”, allows for the option to report certain financial assets and liabilities at fair value
initially and at subsequent measurement dates with changes in fair value included in earnings. The option may be applied instrument by instrument, but it is
irrevocable. The Company elected the fair value option for loans held for sale. The Company believes the fair value option most closely aligns the timing of the
recognition of gains and costs. These loans are intended for sale and the Company believes that fair value is the best indicator of the resolution of these loans. Electing
fair value also reduces certain timing differences and better matches changes in the fair value of these assets with changes in the fair value of the related derivatives
used for these assets. See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale.
12
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
The Company, through its mortgage subsidiaries, sells mortgage loans to third-party investors without recourse unless defects are identified in the representations and
warranties made at loan sale. It may be required, however, to repurchase a loan or pay a fee instead of repurchasing under certain events, which include the following:
●
Failure to deliver original documents specified by the investor,
●
The existence of misrepresentation or fraud in the origination of the loan,
●
The loan becomes delinquent due to nonpayment during the first several months after it is sold,
●
Early pay-off of a loan, as defined by the agreements,
●
Excessive time to settle a loan,
●
Investor declines purchase, and
●
Discontinued product and expired commitment.
Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions,
these commitment settlement dates can be extended at a cost to the Company.
It is the Company’s policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month period and to pursue efforts to enforce
loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any
documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:
●
Research reasons for rejection,
●
Provide additional documents,
●
Request investor exceptions,
●
Appeal rejection decision to purchase committee, and
●
Commit to secondary investors.
Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six-month period, the loans are repurchased
and transferred to mortgage loans held for investment at the lower of cost or fair value and previously recorded mortgage fee income that was to be received from a
third-party investor is written off against the loan loss reserve. Any loan that later becomes delinquent is evaluated by the Company at that time and any impairment is
adjusted accordingly.
Determining Fair Value
The cost for loans held for sale is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Fair value is often difficult to
determine and may contain significant unobservable inputs, but is based on the following guidelines:
●
For loans that are committed, the Company uses the commitment price.
●
For loans that are non-committed that have an active market, the Company uses the market price.
●
For loans that are non-committed where there is no market but there is a similar product, the Company uses the fair value for the similar product.
●
For loans that are non-committed where no active market exists, the Company determines that the unpaid principal balance best approximates the
fair value, after considering the fair value of the underlying real estate collateral, estimated future cash flows, and the loan interest rate.
13
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
The appraised value of the real estate underlying the original mortgage loan adds support to the Company’s determination of fair value because if the loan becomes
delinquent the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan, thus minimizing credit losses. Most loans
originated are sold to third-party investors. The amounts expected to be sold to investors are shown on the consolidated balance sheets as loans held for sale.
Mortgage Fee Income
Mortgage fee income consists of origination fees, processing fees, interest income and other income related to the origination and sale of mortgage loans held for sale.
All revenues and costs are recognized when the mortgage loan is funded and any changes in fair value are shown as a component of mortgage fee income. See Note 3
and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale and mortgage fee income.
Loan Loss Reserve
The loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on loans sold to third-party investors
classified as loans held for sale on the consolidated balance sheets. The Company may be required to reimburse third-party investors for costs associated with early
payoff of loans within six months of origination of such loans and to repurchase loans where there is a default, in any, of the first four monthly payments to the
investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of
the probable loan loss liabilities.
Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale
relating to any guarantee or recourse provisions in the event of defects in the representation and warranties made at loan sale. The Company accrues a monthly
allowance for indemnification losses to investors based on total production. This estimate is based on the Company’s historical experience and is included as a
component of mortgage fee income. Subsequent updates to the recorded liability from changes in assumptions are recorded in selling, general and administrative
expenses as a component of provision for loan loss reserve. The estimated liability for indemnification losses is included in other liabilities and accrued expenses.
The loan loss reserve analysis involves mortgage loans that have been sold to third-party investors, which were believed to have met investor underwriting guidelines
at the time of sale, where the Company has received a demand from the investor. There are generally three types of demands: make whole, repurchase, or
indemnification. These types of demands are further described as follows:
Make whole demand — A make whole demand occurs when an investor forecloses on a property and then sells the property. The make whole amount is
calculated as the difference between the original unpaid principal balance, payments received, accrued interest and fees, less the sale proceeds.
Repurchase demand — A repurchase demand usually occurs when there is a significant payment default, error in underwriting or detected loan fraud.
Indemnification demand — On certain loans the Company has negotiated a set fee that is to be paid in lieu of repurchase. The fee varies by investor and by
loan product type.
The Company believes the loan loss reserve represents probable loan losses incurred as of the balance sheet date.
Additional information related to the Loan Loss Reserve is included in Note 3.
14
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Restricted Assets
Restricted assets are assets held in a trust account for future mortuary services and merchandise. Restricted assets also include escrows held for borrowers and
investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds
held in escrow for certain real estate construction development projects. Additionally, the Company funded its medical benefit safe-harbor limit based on the qualified
direct costs and has included this amount as a component of restricted cash. Additional information related to restricted assets is included in Notes 2 and 8 to
Consolidated Financial Statements.
Cemetery Perpetual Care Trust Investments
Cemetery endowment care trusts have been set up for five of the seven cemeteries owned by the Company. Under endowment care arrangements a portion of the price
for each lot sold is withheld and invested in a portfolio of investments like those described in the prior paragraph. The earnings stream from the investments is
designed to fund future maintenance and upkeep of the cemetery. Additional information related to cemetery perpetual care trust investments is included in Notes 2
and 8 to Consolidated Financial Statements.
Cemetery Land and Improvements
The development of a cemetery involves not only the initial acquisition of raw land but also the installation of roads, water lines, landscaping, and other costs to
establish a marketable cemetery lot. The costs of developing the cemetery are shown as an asset on the balance sheet. The amount on the balance sheet is reduced by
the total cost assigned to the development of a particular lot when the criterion for recognizing a sale of that lot is met.
Deferred Policy Acquisition Costs
Commissions and other costs, net of commission and expense allowances for reinsurance ceded, that vary with and are primarily related to the production of new
insurance business have been deferred. Deferred policy acquisition costs (“DAC”) for traditional life insurance are amortized over the premium paying period of the
related policies using assumptions consistent with those used in computing policy benefit reserves. For interest-sensitive insurance products, deferred policy
acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges, investment, mortality, and expense
margins. This amortization is adjusted when estimates of current or future gross profits to be realized from a group of products are reevaluated. Deferred acquisition
costs are written off when policies lapse or are surrendered.
When accounting for DAC, the Company considers internal replacements of insurance and investment contracts. An internal replacement is a modification in product
benefits, features, rights, or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to contract, or by the
election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract are
accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced
contract are written off. Modifications that result in a contract that is substantially unchanged from the replaced contract are accounted for as a continuation of the
replaced contract.
Value of Business Acquired
Value of business acquired (“VOBA”) is the present value of estimated future profits of the acquired business and is amortized like deferred policy acquisition costs.
The critical issues explained for deferred acquisition costs would also apply for the value of business acquired.
15
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Premium Deficiency and Loss Recognition Testing
At least annually, the Company tests the adequacy of the net benefit reserves (liability for future policy benefits, net of DAC and VOBA) recorded for life insurance
and annuity products. The Company tests for recoverability by using the Company’s current best-estimate assumptions as to policyholder mortality, persistency,
maintenance expenses and invested asset returns. These tests evaluate whether the present value of future contract-related cash flows will support the capitalized DAC
and VOBA assets. These cash flows consist primarily of premium income, less benefits, and expenses. If the current contract liabilities plus the present value of future
premiums is greater than the sum of the present values of future policy benefits, commissions, and expenses plus the current DAC and VOBA less unearned premium
reserve balances, then the capitalized assets are deemed recoverable. The present values are calculated using the best estimate of the after-tax net investment earned
rate.
Mortgage Servicing Rights
Mortgage Servicing Rights (“MSR”) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold.
Under these contracts, the Company retains and provides loan servicing functions on loans sold, in exchange for fees and other remuneration. The servicing functions
typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and
interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition
of real estate owned and property dispositions.
The total residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans. The value of MSRs is derived from the net
cash flows associated with the servicing contracts. The Company receives a servicing fee of generally about 0.25% annually on the remaining outstanding principal
balances of the loans. Based on the result of the cash flow analysis, an asset or liability is recorded for mortgage servicing rights. The servicing fees are collected from
the monthly payments made by the mortgagors. The Company generally receives other remuneration including rights to various mortgagor-contracted fees such as late
charges, and collateral reconveyance charges and the Company is generally entitled to retain the interest earned on funds held pending remittance of mortgagor
principal, interest, tax, and insurance payments. Contractual servicing fees and late fees are included in other revenues on the consolidated statements of earnings.
The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans
with an initial term of 30 years and MSRs backed by mortgage loans with an initial term of 15 years. The Company distinguishes between these classes of MSRs due
to their differing sensitivities to change in value as the result of changes in the market. After being initially recorded at fair value, MSRs backed by mortgage loans are
accounted for using the amortization method. Amortization expense is included in other expenses on the consolidated statements of earnings. MSR amortization is
determined by amortizing the MSR balance in proportion to, and over the period of the estimated future net servicing income of the underlying financial assets.
Interest rate risk, prepayment risk, and default risk are inherent risks in MSR valuation. Interest rate changes largely drive prepayment rates. Refinance activity
generally increases as rates decline. A significant decrease in rates beyond expectation could cause a decline in the value of the MSR. On the contrary, if rates increase
borrowers are less likely to refinance or prepay their mortgage, which extends the duration of the loan and MSR values are likely to rise. Because of these risks,
discount rates and prepayment speeds are used to estimate the fair value.
The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying
value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current period earnings and the
carrying value of the MSRs is adjusted through a valuation allowance.
16
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
The Company periodically reviews the various loan strata to determine whether the value of the MSRs in each stratum is impaired and likely to recover. When
management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable
value is charged to the valuation allowance.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is calculated principally on the straight-line method over the estimated useful lives of the assets which range
from three to forty years. Leasehold improvements paid for by the Company as a lessee are amortized over the lesser of the useful life or remaining lease terms.
Long-lived Assets
Long-lived assets to be held and used, including property and equipment and real estate held for investment, are reviewed for impairment whenever events or changes
in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized
based on the fair value of the asset, and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Derivative Instruments
Mortgage Banking Derivatives
Loan Commitments
The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the time a loan commitment is
made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the
ultimate percentage of loan commitments that will be exercised (i.e., the number of loans that will be funded) fluctuates. The probability that a loan will not be funded,
or the loan application is denied or withdrawn within the terms of the commitment is driven by several factors, particularly the change, if any, in mortgage rates
following the issuance of the loan commitment.
In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current
mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is
influenced by the source of the applications (retail, broker, or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance),
product type and the application approval status. The Company has developed fallout estimates using historical data that consider all the variables, as well as
renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the
Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most current data.
The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage-backed
securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms
of the commitment net of estimated commission expense. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is
issued and is shown net of related expenses. Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in
value of the underlying mortgage loans. Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of
mortgage loans that will fund within the terms of the commitments.
17
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Forward Sale Commitments
The Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward commitment
protects the Company from losses on sales of the loans arising from exercise of the loan commitments. Management expects these types of commitments will
experience changes in fair value in contrast to changes in fair value of the loan commitments, thereby reducing earnings volatility related to the recognition in earnings
of changes in the values of the commitments.
The net changes in fair value of loan commitments and forward sale commitments are shown in current earnings as a component of mortgage fee income on the
consolidated statements of earnings. Mortgage banking derivatives are shown in other assets and other liabilities and accrued expenses on the consolidated balance
sheets.
Call and Put Option Derivatives
The Company discontinued its use of selling “out of the money” call options on its equity securities and the use of selling put options as a source of revenue in the first
quarter of 2023. The net changes in the fair value of call and put options are shown in current earnings as a component of realized gains (losses) on investments and
other assets. Call and put options were shown in other liabilities and accrued expenses on the consolidated balance sheets.
Allowances for Credit Losses
The Company records allowances for current expected credit losses from fixed maturity securities available for sale, mortgage loans held for investment, other
investments, and receivables in accordance with GAAP. The allowances for credit losses are valuation accounts that are reported as a reduction of the financial asset’s
cost basis and are measured on a pool basis when similar risk characteristics exist. The Company estimates allowances for credit losses using relevant available
information from both internal and external sources. The Company considers its historical loss experience, analyzes current market conditions and forecasts and uses
third-party assistance to arrive at current expected credit losses. Amounts are written off against the allowance for credit losses when determined to be uncollectible.
See below under Recent Accounting Pronouncements regarding the adoption of ASU 2016-13. See Notes 2 and 4 to Consolidated Financial Statements regarding the
Company’s evaluation of allowances for credit losses.
Future Policy Benefits and Unpaid Claims
Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, lapse rates, surrender
rates, dividend crediting rates, mortality, morbidity, and other assumptions based on the life insurance subsidiaries’ historical experience, industry standards, and best
estimate of future results, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are,
for some plans, graded to equal statutory values or cash values at or prior to maturity, which are deemed a reasonable equivalent for GAAP. The range of assumed
interest rates for all traditional life insurance policy reserves was 4% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the
deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit
claims are charged to expense in the period the claims are incurred. Increases in future policy benefits are charged to expense.
18
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances
before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period more than related policy
account balances. Interest credit rates for interest-sensitive insurance products ranged from 3% to 6.5%.
The Company records an unpaid claims liability for claims in the course of settlement equal to the death benefit amount less any reinsurance recoverable amount for
claims reported. There is also an unpaid claims liability for claims incurred but not reported. This liability is based on the historical experience of the net amount of
claims that were reported in reporting periods subsequent to the reporting period when claims were incurred.
Unearned Premium Reserve
The universal life products the Company services have significant policy initiation fees (front-end load) that are deferred and amortized into revenues over the
estimated expected gross profits from surrender charges and investment, mortality, and expense margins. The same issues that impact deferred acquisition costs apply
to unearned revenue.
Participating Insurance
Participating business constituted 2% of insurance in force for the years ended 2024 and 2023. The provision for policyholders’ dividends included in policyholder
obligations is based on dividend scales anticipated by management. The amounts to be paid are determined by the Company’s Board of Directors. The expense
recognized for policyholder dividends is included in surrenders and other policy benefits on the consolidated statements of earnings.
Recognition of Insurance Premiums and Other Considerations
Premiums and other considerations for traditional life insurance products (which include those products with fixed and guaranteed premiums and benefits and consist
principally of whole life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies) are recognized as revenues when due
from policyholders. Premiums and other consideration for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies,
deferred annuities, and annuities without life contingencies) are reflected as increases in liabilities for policyholder account balances and not as revenues. Revenues
reported for these products consist of policy charges for the cost of insurance, administration charges, amortization of policy initiation fees and surrender charges
assessed against policyholder account balances. Surrender benefits paid relating to these products are reflected as decreases in liabilities for policyholder account
balances and not as expenses. The Company receives investment income earned from the funds deposited into account balances, a portion of which is passed through
to the policyholders in the form of interest credited. Interest credited to policyholder account balances and benefit claims more than policyholder account balances are
reported as expenses, included in death benefits, in the consolidated financial statements.
Reinsurance
The Company follows the procedure of reinsuring risks of more than $100,000 to provide for greater diversification of business to allow management to control
exposure to potential losses arising from large risks and provide additional capacity for growth. The Company remains liable for amounts ceded in the event the
reinsurers are unable to meet their obligations.
The Company entered into coinsurance agreements with unaffiliated insurance companies under which the Company assumed 100% of the risk for certain life
insurance policies and certain other policy-related liabilities of the insurance company.
19
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in
accounting for the original policies issued and the terms of the reinsurance contracts. Expense allowances received in connection with reinsurance ceded are accounted
for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly.
Pre-need Sales and Costs
Pre-need contract sales of funeral services and caskets - revenue and costs associated with the sales of pre-need funeral services and caskets are deferred until the
performance obligations are fulfilled (services are performed or the caskets are delivered).
Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are deferred until 10% of the
sales price has been collected.
Pre-need contract sales of cemetery merchandise (primarily markers and vaults) - revenue and costs associated with the sale of pre-need cemetery merchandise is
deferred until the merchandise is delivered to the Company.
Pre-need contract sales of cemetery services (primarily merchandise delivery, installation fees and burial opening and closing fees) - revenue and costs associated with
the sales of pre-need cemetery services are deferred until the services are performed.
Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral
services, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred
until the merchandise is delivered or services are performed.
Revenues and costs for at-need sales are recorded when a valid contract exists, the services are performed, collection is reasonably assured and there are no significant
performance obligations remaining.
The Company, through its cemetery and mortuary operations, provides guaranteed funeral arrangements wherein a prospective customer can receive future goods and
services at guaranteed prices. To accomplish this, the Company, through its life insurance operations, sells to the customer an increasing benefit life insurance policy
that is assigned to the mortuaries. If, at the time of need, the policyholder/potential mortuary customer utilizes one of the Company’s facilities, the guaranteed funeral
arrangement contract that has been assigned will provide the funeral goods and services at the contracted price. The increasing life insurance policy will cover the
difference between the original contract prices and current prices. Risks may arise if the difference cannot be fully met by the life insurance policy. However,
management believes that given current inflation rates and related price increases of goods and services, the risk of exposure is minimal.
Goodwill
Previous acquisitions have been accounted for as purchases under which assets acquired, and liabilities assumed were recorded at their fair values with the excess
purchase price recognized as goodwill. The Company evaluates annually or when changes in circumstances warrant the recoverability of goodwill and if there is a
decrease in value, the related impairment is recognized as a charge against income.
Other Intangibles
Other intangibles are recognized apart from goodwill whenever an acquired intangible asset arises from contractual or other legal rights, or whenever it is capable of
being separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged, either individually or in combination with a related contract,
asset, or liability. The Company engages a third-party valuation firm to analyze the value of the intangible assets that result from significant acquisitions. The value of
the intangible assets that result from these acquisitions are included in Other Assets and are determined using the income approach, relying on a relief from the royalty
method.
20
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Income Taxes
Income taxes include taxes currently payable plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the
temporary differences in the financial reporting basis and tax basis of assets and liabilities and operating loss carry-forwards. Deferred tax assets are measured using
enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. Liabilities are
established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based
on the technical merits of the positions. Deferred tax assets and liabilities require various estimates and judgments and may be affected favorably or unfavorably by
various internal and external factors. Factors affecting the deferred tax assets and liabilities include, but are not limited to, changes in tax laws, regulations and/or rates,
changing interpretations of existing tax laws or regulations, and changes to overall levels of pre-tax earnings. Changes in these estimates, judgments or factors may
result in an increase or decrease to the Company’s deferred tax assets and liabilities with a related increase or decrease in the Company’s provision for income taxes.
Estimated interest and penalties related to uncertain tax penalties are included as a component of income tax expense.
Earnings Per Common Share
The Company computes earnings per share, which requires a presentation of basic and diluted earnings per share. Basic earnings per equivalent Class A common
share are computed by dividing net earnings by the weighted-average number of Class A common shares outstanding during each year presented, after the effect of the
assumed conversion of Class C Common Stock to Class A Common Stock. Diluted earnings per share is computed by dividing net earnings by the weighted-average
number of common shares outstanding during the year used to compute basic earnings per share plus dilutive potential incremental shares by application of the
treasury stock method. Basic and diluted earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.
Stock Based Compensation
The cost of employee services received in exchange for an award of equity instruments is recognized in the financial statements and is measured based on the fair
value on the grant date of the award. The fair value of stock options is calculated using the Black Scholes Option Pricing Model. Stock option compensation expense
is recognized over the period during which an employee is required to provide service in exchange for the award and is included in personnel expenses on the
consolidated statements of earnings.
Concentration of Credit Risk
For a description of the concentration risk regarding available for sale debt securities, mortgage loans held for investment and real estate held for investment, refer to
Note 2, and for receivables from reinsurers, refer to Note 10 of the Notes to Consolidated Financial Statements.
Advertising
The Company expenses advertising costs as incurred.
21
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Recent Accounting Pronouncements
Accounting Standards Adopted in 2024
ASU No. 2023-07: “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” — Issued in November 2023, ASU 2023-07 requires
enhanced disclosures about significant segment expenses. The key amendments include: (i) disclosures on significant segment expenses that are regularly provided to
the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss on an annual and interim basis; (ii) disclosures on an
amount for other segment items by reportable segment and a description of its composition on an annual and interim basis. The other segment items category is the
difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss; (iii) providing all annual disclosures
on a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting in interim periods; and (iv) specifying the title and
position of the CODM. The Company adopted ASU 2023-07 retrospectively for the annual period beginning January 1, 2024, and for the interim periods beginning
January 1, 2025. The adoption of ASU 2023-07 did not affect the Company’s financial position or results of operations. Refer to Note 15 for the disclosures regarding
the Company’s business segments.
Accounting Standards Adopted in 2023
ASU No. 2016-13: “Financial Instruments – Credit Losses (Topic 326)” — Issued in September 2016, ASU 2016-13 amends guidance on reporting credit losses for
assets held at amortized cost basis (such as mortgage loans held for investment and held to maturity debt securities) and available for sale debt securities. For assets
held at an amortized cost basis, Topic 326 eliminates the probable initial recognition threshold and, instead, requires an entity to reflect its current estimate of all
expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net
amount expected to be collected. For available for sale debt securities Topic 326 requires that credit losses be presented as an allowance rather than as a write-down.
The Company adopted this standard on January 1, 2023, and after a review of the affected assets, decreased the opening balance of retained earnings in stockholders’
equity by $671,506 on January 1, 2023. The allowances for credit losses increased (decreased) by the following amounts.
Amount
Mortgage loans held for investment:
Residential
$
(192,607)
Residential construction
301,830
Commercial
555,807
Total
665,030
Restricted assets - mortgage loans held for investment:
Residential construction
3,463
Cemetery perpetual care trust investments - mortgage loans held for investment:
Residential construction
3,013
Grand Total
671,506
22
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1) Significant Accounting Policies (Continued)
Accounting Standards Issued But Not Yet Adopted
ASU No. 2018-12: “Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts” — Issued in August 2018,
ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future policy benefits on traditional long-duration contracts by requiring
that assumptions be updated after contract inception and by modifying the rate used to discount future cash flows. The standard is aimed at improving the accounting
for certain market-based options or guarantees associated with deposit or account balance contracts, simplifying amortization of deferred acquisition costs while
improving and expanding required disclosures. In November 2020, ASU No. 2020-11: “Financial Services – Insurance (Topic 944): Effective Date and Early
Application,” was issued. This ASU was issued to provide additional time for the implementation of ASU No. 2018-12 by deferring the effective date by one year. For
smaller reporting companies, this update is effective for annual reporting periods beginning after December 15, 2024, and interim reporting periods beginning after
December 15, 2025. The Company will adopt the standard commencing with its annual reporting period ending December 31, 2025. The Company is nearing
completion of its analysis and implementation of the new standard, including the identification of cohorts, system updates, and design. The Company has engaged its
team of actuaries, accountants, and systems specialists and consulted external system providers as part of the implementation. The adoption of this guidance is
expected to have an impact on its financial position, results of operations, and disclosures, as well as systems, processes and controls. The Company continues to
evaluate the impact of the new guidance on its consolidated financial statements.
ASU No. 2023-09: “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” — Issued in December 2023, ASU 2023-09 requires that public business
entities, on an annual basis: (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a
quantitative threshold. In addition, the amendments in this update require that all entities disclose on an annual basis the following information about income taxes
paid: (i) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and (ii) the amount of income taxes
paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of
total income taxes paid (net of refunds received). ASU 2023-09 is effective for the Company for the annual reporting periods beginning January 1, 2025. The
Company will adopt the standard commencing with its annual reporting period ending December 31, 2025. The Company does not anticipate that the adoption of ASU
2023-09 will have a material impact on the consolidated financial statements.
ASU No. 2024-03: “Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income
Statement Expenses” — Issued in November 2024, ASU 2024-03 requires public business entities to disclose, in the notes to the consolidated financial statements,
specified information about certain expenses at each interim and annual reporting period. ASU 2024-03 requires disclosures about specific types of expenses (i.e., (a)
purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization) included in the expense captions presented on the face of
the statement of earnings as well as disclosures about selling expenses. ASU 2024-03 does not change the requirements for the presentation of expenses on the
statement of earnings. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after
December 15, 2027. Accordingly, the Company will adopt the standard commencing with its annual reporting period ending December 31, 2027. The Company is in
the process of estimating the potential impact of the new guidance on the consolidated financial statements.
The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or
financial position.
23
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments
The Company’s investments as of December 31, 2024 are summarized as follows:
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses (1)
Allowance for
Credit Losses
Estimated Fair
Value
December 31, 2024:
Fixed maturity securities, available for sale, at estimated
fair value:
U.S. Treasury securities and obligations of U.S.
Government agencies
$
74,680,606
$
327,618
$
(486,976)
$
-
$
74,521,248
Obligations of states and political subdivisions
6,416,751
1,762
(290,448)
-
6,128,065
Corporate securities including public utilities
262,954,278
2,444,842
(6,922,871)
(408,944)
258,067,305
Mortgage-backed securities
31,710,436
125,764
(4,244,640)
(12,049)
27,579,511
Redeemable preferred stock
250,000
-
-
-
250,000
Total fixed maturity securities available for sale
$
376,012,071
$
2,899,986
$
(11,944,935)
$
(420,993)
$
366,546,129
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other
$
11,386,454
$
4,976,567
$
(591,340)
$
15,771,681
Total equity securities at estimated fair value
$
11,386,454
$
4,976,567
$
(591,340)
$
15,771,681
Mortgage loans held for investment at amortized cost:
Residential
$
92,061,787
Residential construction
151,172,733
Commercial
62,753,085
Less: Unamortized deferred loan fees, net
(2,082,241)
Less: Allowance for credit losses
(1,885,390)
Less: Net discounts
(272,616)
Total mortgage loans held for investment
$
301,747,358
Real estate held for investment - net of accumulated
depreciation:
Residential
$
71,618,410
Commercial
126,074,928
Total real estate held for investment
$
197,693,338
Real estate held for sale:
Residential
$
1,126,480
Commercial
151,553
Total real estate held for sale
$
1,278,033
24
Other investments and policy loans at amortized cost:
Policy loans
$
14,019,248
Insurance assignments
48,493,858
Federal Home Loan Bank stock (2)
2,404,900
Other investments
11,473,961
Less: Allowance for credit losses for insurance
assignments
(1,536,926)
Total policy loans and other investments
$
74,855,041
Accrued investment income
$
8,499,168
Total investments
$
966,390,748
(1) Gross unrealized losses are net of allowance for credit losses
(2) Includes $553,900 of Membership stock and $1,851,000 of Activity stock due to short-term advances and letters of credit.
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments
The Company’s investments as of December 31, 2024 are summarized as follows:
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses (1)
Allowance for
Credit Losses
Estimated Fair
Value
2) Investments (Continued)
25
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
The Company’s investments as of December 31, 2023 are summarized as follows:
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses (1)
Allowance for
Credit Losses
Estimated Fair
Value
December 31, 2023:
Fixed maturity securities, available for sale, at estimated
fair value:
U.S. Treasury securities and obligations of U.S.
Government agencies
$
111,450,753
$
344,425
$
(1,416,448)
$
-
$
110,378,730
Obligations of states and political subdivisions
6,524,083
500
(319,260)
-
6,205,323
Corporate securities including public utilities
232,299,727
3,688,642
(7,145,507)
(308,500)
228,534,362
Mortgage-backed securities
40,359,878
506,647
(4,702,905)
(6,049)
36,157,571
Redeemable preferred stock
250,000
10,000
-
-
260,000
Total fixed maturity securities available for sale
$
390,884,441
$
4,550,214
$
(13,584,120)
$
(314,549)
$
381,535,986
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other
$
10,571,505
$
3,504,141
$
(439,575)
$
13,636,071
Total equity securities at estimated fair value
$
10,571,505
$
3,504,141
$
(439,575)
$
13,636,071
Mortgage loans held for investment at amortized cost:
Residential
$
103,153,587
Residential construction
104,052,748
Commercial
74,176,538
Less: Unamortized deferred loan fees, net
(1,623,226)
Less: Allowance for credit losses
(3,818,653)
Less: Net discounts
(324,157)
Total mortgage loans held for investment
$
275,616,837
Real estate held for investment - net of accumulated
depreciation:
Residential
$
40,924,865
Commercial
142,494,427
Total real estate held for investment
$
183,419,292
Real estate held for sale:
Residential
$
-
Commercial
3,028,973
Total real estate held for sale
$
3,028,973
26
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
The Company’s investments as of December 31, 2023 are summarized as follows:
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses (1)
Allowance for
Credit Losses
Estimated Fair
Value
Other investments and policy loans at amortized cost:
Policy loans
$
13,264,183
Insurance assignments
45,605,322
Federal Home Loan Bank stock (2)
2,279,800
Other investments
9,809,148
Less: Allowance for credit losses for insurance
assignments
(1,553,836)
Total policy loans and other investments
$
69,404,617
Accrued investment income
$
10,170,790
Total investments
$
936,812,566
(1) Gross unrealized losses are net of allowance for credit losses
(2) Includes $530,900 of Membership stock and $1,748,900 of Activity stock due to short-term advances and letters of credit.
27
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
There were no investments, aggregated by issuer, of more than 10% of shareholders’ equity (before net unrealized gains and losses on equity securities and fixed
maturity securities) as of December 31, 2024, other than investments issued or guaranteed by the United States Government.
Fixed Maturity Securities
The table below summarizes unrealized losses on fixed maturities securities available for sale that were carried at estimated fair value as of December 31, 2024 and
2023. The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are
estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using
a current market value applicable to the coupon rate, credit, and maturity of the investments. 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
Total
Unrealized
Loss
Fair Value
At December 31, 2024
U.S. Treasury securities and obligations of U.S.
Government agencies
$
8,737
$
986,365
$
478,239
$ 22,110,495
$
486,976
$ 23,096,860
Obligations of states and political subdivisions
15,003
2,167,918
275,445
3,008,385
290,448
5,176,303
Corporate securities including public utilities
1,888,022
93,562,219
5,034,849
77,975,776
6,922,871
171,537,995
Mortgage-backed securities
32,150
2,915,192
4,212,490
19,041,442
4,244,640
21,956,634
Totals
$ 1,943,912
$99,631,694
$10,001,023 $122,136,098 $11,944,935 $221,767,792
At December 31, 2023
U.S. Treasury securities and obligations of U.S.
Government agencies
$
29,394
$ 9,436,090
$ 1,387,054
$ 70,885,403
$ 1,416,448
$ 80,321,493
Obligations of states and political subdivisions
11,105
470,325
308,155
5,284,498
319,260
5,754,823
Corporate securities including public utilities
529,660
32,507,773
6,615,847
107,556,216
7,145,507
140,063,989
Mortgage-backed securities
29,799
2,260,445
4,673,106
22,184,174
4,702,905
24,444,619
Totals
$
599,958
$44,674,633
$12,984,162 $205,910,291 $13,584,120 $250,584,924
Relevant holdings were comprised of 706 securities with fair values aggregating 94.9% of the aggregated amortized cost as of December 31, 2024. Relevant holdings
were comprised of 606 securities with fair values aggregating 94.9% of the aggregated amortized cost as of December 31, 2023. Credit loss provision of $106,444 and
$325,314 have been recognized for 2024 and 2023, respectively. Credit losses are included in gains (losses) on investments and other assets on the consolidated
statements of earnings. Other unrealized losses for which no credit loss was recognized are primarily the result of increases in interest rates.
28
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Evaluation of Allowance for Credit Losses
See Note 1 regarding the adoption of ASU 2016-13.
On a quarterly basis, the Company evaluates its fixed maturity securities classified as available for sale to identify any potential credit losses. This evaluation includes
a review of current ratings by the National Association of Insurance Commissions (“NAIC”) and other industry rating agencies. Securities with a rating of 1 or 2 are
considered investment grade and are not reviewed for credit loss unless current market data or recent company news could lead to a credit downgrade. Securities with
ratings of 3 to 5 are evaluated for credit loss. The evaluation involves assessing all facts and circumstances surrounding each security including, but not limited to,
historical values, interest payment history, projected earnings, and revenue growth rates as well as a review of the reason for a downgrade in the NAIC rating. Based
on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely make interest and principal payments in accordance with the
terms of the financial instrument. Securities with a rating of 6 are automatically determined to be impaired and a credit loss is recognized in earnings.
Where the decline in fair value of fixed maturity securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread
widening, and the Company anticipates recovery of all contractual or expected cash flows, the Company does not consider these securities to have credit loss because
the Company does not intend to sell these securities and it is not more likely than not the Company will be required to sell these securities before a recovery of
amortized cost, which may be at maturity.
If the Company intends to sell a fixed maturity security or if it is more likely than not that the Company will be required to sell a security before recovery of its
amortized cost basis, a credit loss has occurred and the difference between the amortized cost and the fair value that relates to the expected credit loss is recognized as
a loss in earnings, included in gains (losses) on investments and other assets on the consolidated statements of earnings.
If the Company does not intend to sell a debt security and it is less likely than not that the Company will be required to sell the debt security but the Company also
does not expect to recover the entire amortized cost basis of the security, a credit loss is recognized in earnings for the amount of the expected credit loss with a
corresponding allowance for credit losses as a contra-asset account. The credit loss is included in gains (losses) on investments and other assets on the consolidated
statements of earnings. The recognized credit loss is limited to the total unrealized loss on the security due to a change in credit.
Amounts on available for sale fixed maturities that are deemed to be uncollectible are written off and removed from the allowance for credit loss. A write-off may also
occur if the Company intends to sell a security or when it is more likely than not that the Company will be required to sell the security before the recovery of its
amortized cost.
The Company does not measure a credit loss allowance on accrued interest receivable, included in accrued investment income on the consolidated balance sheets, as
the Company writes off any accrued interest receivable balance to net investment income in a timely manner (after 90 days) when the Company has concerns
regarding collectability.
29
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Credit Quality Indicators
The NAIC assigns designations to fixed maturity securities. These designations range from Class 1 (highest quality) to Class 6 (lowest quality). The NAIC
designations are utilized by insurers in preparing their annual statutory statements. NAIC Class 1 and 2 are considered investment grade while the NAIC Class 3
through 6 designations are considered non-investment grade. Based on the NAIC designations, the Company had 97.7% and 98.2% of its fixed maturity securities
rated investment grade as of December 31, 2024 and 2023, respectively. The following table summarizes the credit quality, by NAIC designation, of the Company’s
fixed maturity securities available for sale, excluding redeemable preferred stock.
December 31, 2024
December 31, 2023
NAIC Designation
Amortized
Cost
Estimated Fair
Value
Amortized
Cost
Estimated Fair
Value
1
$
188,386,980
$
183,460,027
$
221,933,425
$
216,975,288
2
178,060,265
174,405,442
161,062,016
157,346,803
3
7,961,422
7,342,220
6,418,829
5,953,542
4
649,592
600,459
982,290
948,478
5
702,643
487,981
236,648
51,875
6
1,169
-
1,233
-
Total
$
375,762,071
$
366,296,129
$
390,634,441
$
381,275,986
The following tables present a roll forward of the Company’s allowance for credit losses on fixed maturity securities available for sale:
Year Ended December 31, 2024
U.S. Treasury
securities and
obligations of
U.S.
Government
agencies
Obligations of
states and
political
subdivisions
Corporate
securities
including
public utilities
Mortgage-
backed
securities
Total
Beginning balance - December 31, 2023
$
-
$
-
$
308,500
$
6,049
$
314,549
Additions for credit losses not previously
recorded
-
-
55,000
-
55,000
Change in allowance on securities with previous
allowance
-
-
60,000
6,000
66,000
Reductions for securities sold during the period
-
-
-
-
-
Reductions for securities with credit losses due to
intent to sell
-
-
-
-
-
Write-offs charged against the allowance
-
-
-
-
-
Recoveries of amounts previously written off
-
-
(14,556)
-
(14,556)
Ending Balance - December 31, 2024
$
-
$
-
$
408,944
$
12,049
$
420,993
30
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Year Ended December 31, 2023
U.S. Treasury
securities and
obligations of
U.S.
Government
agencies
Obligations of
states and
political
subdivisions
Corporate
securities
including
public utilities
Mortgage-
backed
securities
Total
Beginning balance - December 31, 2022
$
-
$
-
$
-
$
-
$
-
Additions for credit losses not previously
recorded
-
-
261,500
6,049
267,549
Change in allowance on securities with previous
allowance
-
-
57,764
-
57,764
Reductions for securities sold during the period
-
-
(10,764)
-
(10,764)
Reductions for securities with credit losses due to
intent to sell
-
-
-
-
-
Write-offs charged against the allowance
-
-
-
-
-
Recoveries of amounts previously written off
-
-
-
-
-
Ending Balance - December 31, 2023
$
-
$
-
$
308,500
$
6,049
$
314,549
The following table presents the amortized cost and estimated fair value of fixed maturity securities available for sale at December 31, 2024, 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
Estimated Fair
Cost
Value
Due in 1 year
$
44,055,016 $
43,765,347
Due in 2-5 years
126,512,253
125,295,048
Due in 5-10 years
107,397,297
106,707,517
Due in more than 10 years
66,087,069
62,948,706
Mortgage-backed securities
31,710,436
27,579,511
Redeemable preferred stock
250,000
250,000
Total
$
376,012,071 $
366,546,129
Information regarding sales of fixed maturity securities available for sale is presented as follows.
Years Ended December 31,
2024
2023
Proceeds from sales
$
2,629,493 $
2,557,074
Gross realized gains
233
11,508
Gross realized losses
(1,407)
(57,861)
31
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Assets on Deposit, Held in Trust, and Pledged as Collateral
Assets on deposit with life insurance regulatory authorities as required by law were as follows:
Years Ended December 31,
2024
2023
Fixed maturity securities available for sale at estimated fair value
$
6,126,589
$
6,206,650
Other investments
400,000
400,000
Cash and cash equivalents
1,444,654
1,909,215
Total assets on deposit
$
7,971,243
$
8,515,865
Assets held in trust related to third-party reinsurance agreements were as follows:
Years Ended December 31,
2024
2023
Fixed maturity securities available for sale at estimated fair value
$
25,309,270
$
27,903,952
Cash and cash equivalents
4,417,683
2,101,052
Total assets on deposit
$
29,726,953
$
30,005,004
The Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”). Assets pledged as collateral with the FHLB are presented below.
These pledged securities are used as collateral for any FHLB cash advances. See Note 7 of the Notes to the Consolidated Financial Statements for more information
about the FHLB.
Years Ended December 31,
2024
2023
Fixed maturity securities available for sale at estimated fair value
$
63,800,454
$
93,903,089
Real Estate Held for Investment and Held for Sale
The Company strategically deploys resources into real estate assets to match the income and yield durations of its primary obligations. The sources for these real estate
assets come through its various business segments in the form of acquisition, development, and mortgage foreclosures. The Company reports real estate held for
investment and held for sale pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.
Commercial Real Estate Held for Investment and Held for Sale
The Company owns and manages commercial real estate assets as a means of both generating investment income and providing workspace for its employees. These
assets are acquired in accordance with the Company’s goals and objectives for risk-adjusted returns. Due diligence is conducted on each asset using internal and third-
party resources. The geographic locations and asset classes of investments are determined by senior management under the direction of the Company’s Board of
Directors.
32
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
The Company employs full-time employees to attend to the day-to-day operations of those assets within the greater Salt Lake area and close surrounding markets. The
Company utilizes third party property managers where the geographic location does not warrant full-time staff or through strategic lease-up periods. The Company
will generally acquire assets as a result of company acquisitions or that are in regions expected to have high growth in employment and population and that provide
operational efficiencies.
The Company currently owns and operates six commercial properties in three states. These properties include office buildings, flex office space, and the
redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah. The Company uses bank debt in strategic cases, primarily where it is
anticipated to improve yields, or facilitate the acquisition of higher quality assets or asset class diversification.
The aggregated net book value of commercial real estate serving as collateral for bank loans was $119,889,846 and $124,381,467 as of December 31, 2024 and 2023,
respectively. The associated bank loan carrying values totaled $96,007,488 and $97,807,614 as of December 31, 2024 and 2023, respectively.
During 2024 and 2023, the Company did not record any impairment losses on commercial real estate held for investment or held for sale. Impairment losses, if any,
are included in gains (losses) on investments and other assets on the consolidated statements of earnings.
During 2024 and 2023, the Company recorded depreciation expense on commercial real estate held for investment of $5,778,214 and $6,278,828, respectively.
Commercial real estate held for investment is stated at cost and is depreciated over the estimated useful life, primarily using the straight-line method. Depreciation is
included in net investment income on the consolidated statements of earnings.
The Company’s commercial real estate held for investment is summarized as follows:
Net Book Value
Total Square Footage
December 31,
December 31,
2024
2023
2024
2023
Utah (1)
$ 126,056,342 $142,475,177
546,941
625,920
Louisiana
18,586
19,250
1,622
1,622
$ 126,074,928 $142,494,427
548,563
627,542
(1) Includes Center53
33
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Operating leases arise from the leasing of the Company’s commercial real estate held for investment. Initial lease terms generally range from three to ten years.
The following is a maturity analysis of the annual undiscounted cash flows of the operating lease payments expected to be received.
2025
$
10,947,238
2026
9,938,966
2027
8,833,459
2028
8,700,328
2029
8,085,786
Thereafter
38,741,022
Total
$
85,246,799
The Company’s commercial real estate held for sale is summarized as follows:
Net Book Value
Total Square Footage
December 31,
December 31,
2024
2023
2024
2023
Mississippi (1)
$
151,553 $
3,028,973
-
19,694
$
151,553 $
3,028,973
-
19,694
(1) Consists of approximately 93 acres of undeveloped land for $151,553 for 2024 and 2023. The remaining property for $2,877,420 was sold in February 2024 for a
gain of approximately $250,000.
Residential Real Estate Held for Investment and Held for Sale
The Company occasionally acquires residential homes through the mortgage loan foreclosure process. The Company has the option to sell these properties or to
continue to hold them for expected cash flow and price appreciation.
The Company established Security National Real Estate Services (“SNRE”) to manage its residential property portfolio. SNRE cultivates and maintains the preferred
vendor relationships necessary to manage costs and quality of work performed on the Company’s entire residential property portfolio.
During 2024 and 2023, the Company did not record any impairment losses on residential real estate held for investment or held for sale. Impairment losses, if any, are
included in gains (losses) on investments and other assets on the consolidated statements of earnings.
During 2024 and 2023, the Company recorded depreciation expense on residential real estate held for investment of $10,611 and $10,592, respectively. Residential
real estate held for investment is stated at cost and is depreciated over the estimated useful life, primarily using the straight-line method. Depreciation is included in net
investment income on the consolidated statements of earnings.
34
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
The Company’s residential real estate held for investment is summarized as follows:
Net Book Value
December 31,
2024
2023
Utah (1)
$
71,618,410 $
40,924,865
$
71,618,410 $
40,924,865
(1) Includes multiple residential subdivision development projects, refer to the following table.
The following table presents additional information regarding the Company’s residential subdivision development in Utah.
December 31,
2024
2023
Lots available for sale
231
42
Lots to be developed
1,046
1,145
Ending Balance
$
71,443,356 $
40,739,201
The Company’s residential real estate held for sale is summarized as follows:
Net Book Value
December 31,
2024
2023
Florida
$
276,580 $
-
Utah
849,900
-
$
1,126,480 $
-
The net book value of foreclosed residential real estate included in residential real estate held for investment or sale was $1,126,480 and nil as of December 31, 2024
and 2023, respectively.
35
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Real Estate Owned and Occupied by the Company
The primary business units of the Company occupy a portion of the commercial real estate owned by the Company. As of December 31, 2024, 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 Ascension Way, Floors 4, 5 and 6, Salt Lake
City, UT - Center53 Building 2 (1)
Corporate Offices, Life Insurance,
Cemetery/Mortuary Operations, and
Mortgage Operations and Sales
221,000
50%
1818 Marshall Street, Shreveport, LA (2)
Life Insurance Operations
12,274
100%
812 Sheppard Street, Minden, LA (2) (3)
Life Insurance Sales
1,560
100%
(1) Included in real estate held for investment on the consolidated balance sheets
(2) Included in property and equipment on the consolidated balance sheets
(3) Listed for sale
Mortgage Loans Held for Investment
The Company reports mortgage loans held for investment pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.
Concentrations of credit risk arise when several mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual
obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential
mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of the relevant debtors’ ability
to honor obligations is dependent upon the economic stability of the geographic region in which the debtors do business or are employed. As of December 31, 2024,
the Company had 56%, 8%, 9% and 6% of its mortgage loans from borrowers located in the states of Utah, Florida, Arizona, and Texas, respectively. As of December
31, 2023, the Company had 44%, 11%, 10%, 7% and 6% of its mortgage loans from borrowers located in the states of Utah, Florida, California, Texas, and Arizona,
respectively.
Evaluation of Allowance for Credit Losses
See Note 1 regarding the adoption of ASU 2016-13.
The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the Company’s mortgage loans held for investment to present
the net amount expected to be collected. The Company reports in net earnings, as a credit loss expense, the amount necessary to adjust the allowance for credit losses
for the Company’s current estimate of expected credit losses on mortgage loans held for investment. This credit loss expense is included in other expenses on the
consolidated statements of earnings.
Once a mortgage loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and reverse any interest income that had
been accrued. Given this policy, the Company does not measure a credit loss allowance on accrued interest receivable. Accrued interest receivable is included in
accrued investment income on the consolidated balance sheets. Payments received for mortgage loans on a non-accrual status are recognized when received. The
interest income recognized from payments received for mortgage loans on a non-accrual status was immaterial. Accrual of interest resumes if a mortgage loan is
brought current. Interest not accrued on these loans totaled approximately $244,000 and $237,000 as of December 31, 2024 and 2023, respectively.
36
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
The Company measures expected credit losses based on the fair value of the collateral when the Company determines that foreclosure is probable. When a mortgage
loan becomes delinquent, the Company proceeds to foreclose, and all expenses of foreclosure are expensed as incurred. Once foreclosed, the property is classified as
real estate held for investment or held for sale.
To determine the allowance for credit losses, the Company has segmented its mortgage loans held for investment by loan type. The Company’s loan types are
commercial, residential, and residential construction. The inherent risks within the portfolio vary depending upon the loan type as follows:
Commercial - Underwritten in accordance with the Company’s policies to determine the borrower’s ability to repay the obligation as agreed. Commercial loans are
made primarily based on the underlying collateral supporting the loan. Accordingly, the repayment of a commercial loan depends primarily on the collateral and its
ability to generate income and secondarily on the borrower’s (or guarantor’s) ability to repay.
Commercial loans are evaluated for credit loss by analyzing common metrics that are predictors for future credit losses such as debt service coverage ratio (“DSCR”),
loan to value (“LTV”), local market conditions, borrower quality, and underlying collateral. The fair value of the underlying collateral is based on a third-party
appraisal of the property at origination of the loan. The fair value is assessed if the loan becomes 90 days delinquent. The Company uses these metrics to pool similar
loans. The allowance for credit losses is based on estimates, historical experience, probability of loss, value of the underlying collateral, and other factors that affect
the collectability of the loan. The Company applies a future loss factor to the outstanding balance of each group to arrive at the allowance for credit losses.
Residential — These loans are secured by first and second mortgages on single-family dwellings. The borrower’s ability to repay is sensitive to life events and the
general economic condition of the region. Where loan to value exceeds 80%, the loan is generally guaranteed by private mortgage insurance, the FHA, or VA.
Residential loans are evaluated for credit loss by using relevant available information from both internal and external sources. Among other things, the Company uses
its historical delinquency information and considers current and forecasted economic conditions. External sources include a monthly analysis of its residential
portfolio by a third party. The third party uses the Company’s current loan data and runs it through various models to project cash flows and provide a projected life of
loan loss. The models consider loan features such as loan type, loan to value, payment status, age, and current property values. Analyzing the information from the
various sources allows the Company to arrive at the allowance for credit losses.
Residential construction (including land acquisition and development) – These loans are underwritten in accordance with the Company’s underwriting policies, which
include a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent appraisal valuations, and factor in estimates of the
value of construction projects upon completion. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment
substantially dependent upon the success of the completed project and the ability of the borrower to secure long-term financing.
Additionally, land acquisition and development loans are underwritten in accordance with the Company’s underwriting policies, which include independent appraisal
valuations as well as the estimated value associated with the land upon completion of development into finished lots. These loans are of a higher risk than other
mortgage loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term or construction financing, and interest rate
sensitivity.
37
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Residential construction mortgage loans are evaluated for credit loss by considering historical activity and current housing market trends to arrive at a per loan basis
point allowance that is recognized at loan origination and for subsequent draws. The per loan basis point is reviewed at least annually or as loan losses or market
trends require.
The following table presents a roll forward of the allowance for credit losses as of the dates indicated:
Commercial
Residential
Residential
Construction
Total
December 31, 2024
Allowance for credit losses:
Beginning balance - January 1, 2023
$
1,219,653
$
2,390,894
$
208,106
$
3,818,653
Change in provision for credit losses (2)
(487,159)
(444,859)
94,240
(837,778)
Charge-offs
-
(1,095,485)
-
(1,095,485)
Ending balance - December 31, 2024
$
732,494
$
850,550
$
302,346
$
1,885,390
December 31, 2023
Allowance for credit losses:
Beginning balance - January 1, 2023
$
187,129
$
1,739,980
$
43,202
$
1,970,311
Adoption of ASU 2016-13 (1)
555,807
(192,607)
301,830
665,030
Change in provision for credit losses (2)
476,717
843,521
(136,926)
1,183,312
Charge-offs
-
-
-
-
Ending balance - December 31, 2023
$
1,219,653
$
2,390,894
$
208,106
$
3,818,653
(1) See Note 1 of the notes to the consolidated financial statements
(2) Included in other expenses on the consolidated statements of earnings
38
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
The following table presents the aging of mortgage loans held for investment by loan type.
Commercial
Residential
Residential
Construction
Total
December 31, 2024
30-59 days past due
$
2,100,000
$
5,818,334
$
-
$
7,918,334
60-89 days past due
-
845,980
-
845,980
Over 90 days past due (1)
4,205,000
3,061,450
-
7,266,450
In process of foreclosure (1)
191,508
3,942,392
-
4,133,900
Total past due
6,496,508
13,668,156
-
20,164,664
Current
56,256,577
78,393,631
151,172,733
285,822,941
Total mortgage loans
62,753,085
92,061,787
151,172,733
305,987,605
Allowance for credit losses
(732,494)
(850,550)
(302,346)
(1,885,390)
Unamortized deferred loan fees, net
(115,555)
(1,307,539)
(659,147)
(2,082,241)
Unamortized discounts, net
(149,268)
(123,348)
-
(272,616)
Net mortgage loans held for investment
$
61,755,768
$
89,780,350
$
150,211,240
$
301,747,358
December 31, 2023
30-59 days past due
$
-
$
3,387,673
$
-
$
3,387,673
60-89 days past due
-
3,472,760
-
3,472,760
Over 90 days past due (1)
405,000
3,480,931
-
3,885,931
In process of foreclosure (1)
1,241,508
1,021,790
-
2,263,298
Total past due
1,646,508
11,363,154
-
13,009,662
Current
72,530,030
91,790,433
104,052,748
268,373,211
Total mortgage loans
74,176,538
103,153,587
104,052,748
281,382,873
Allowance for credit losses
(1,219,653)
(2,390,894)
(208,106)
(3,818,653)
Unamortized deferred loan fees, net
(172,989)
(1,135,491)
(314,746)
(1,623,226)
Unamortized discounts, net
(216,705)
(107,452)
-
(324,157)
Net mortgage loans held for investment
$
72,567,191
$
99,519,750
$
103,529,896
$
275,616,837
(1) Interest income is not recognized on loans which are more than 90 days past due or in foreclosure.
39
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Credit Quality Indicators
The Company evaluates and monitors the credit quality of its commercial loans by analyzing LTV and DSCR. Monitoring a commercial mortgage loan increases when
the loan is delinquent or earlier if there is an indication of impairment.
The aggregate unpaid principal balance of commercial mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2024:
Credit Quality Indicator
2024
2023
2022
2021
2020
Prior
Total
% of
Total
LTV:
Less than 65%
$ 7,653,600
$24,600,000
$ 2,352,150
$
864,128
$
-
$ 8,867,779
$44,337,657
70.65%
65% to 80%
10,432,942
1,840,776
823,397
-
4,913,313
-
18,010,428
28.70%
Greater than 80%
-
-
-
405,000
-
-
405,000
0.65%
Total
$18,086,542
$26,440,776
$ 3,175,547
$ 1,269,128
$ 4,913,313
$ 8,867,779
$62,753,085
100.00%
DSCR
>1.20x
$16,300,000
$20,990,000
$ 1,000,000
$
-
$ 4,913,313
$ 5,414,274
$48,617,587
77.47%
1.00x - 1.20x
432,942
5,450,776
2,175,547
1,269,128
-
3,453,505
12,781,898
20.37%
<1.00x
1,353,600
-
-
-
-
-
1,353,600
2.16%
Total
$18,086,542
$26,440,776
$ 3,175,547
$ 1,269,128
$ 4,913,313
$ 8,867,779
$62,753,085
100.00%
The Company evaluates and monitors the credit quality of its residential mortgage loans by analyzing LTV and loan performance. The Company defines non-
performing mortgage loans as loans more than 90 days past due and on a non-accrual status. Monitoring a residential mortgage loan increases when the loan is
delinquent or earlier if there is an indication of impairment.
The aggregate unpaid principal balance of residential mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2024:
Credit Quality Indicator
2024
2023
2022
2021
2020
Prior
Total
% of
Total
Performance Indicators:
Performing
$14,861,098
$10,030,848
$42,634,670
$ 3,076,901
$ 5,513,462
$ 8,940,966
$85,057,945
92.39%
Non-performing (1)
-
3,442,992
1,451,039
291,359
311,116
1,507,336
7,003,842
7.61%
Total
$14,861,098
$13,473,840
$44,085,709
$ 3,368,260
$ 5,824,578 $10,448,302 $92,061,787
100.00%
(1) Includes residential mortgage loans in the process of foreclosure of $3,942,392
LTV:
Less than 65%
$ 6,241,730
$ 4,931,376
$ 5,488,954
$ 1,790,036
$ 2,440,002
$ 5,273,672
$26,165,770
28.42%
65% to 80%
7,802,984
7,662,200
37,509,634
1,578,224
2,701,008
5,107,289
62,361,339
67.74%
Greater than 80%
816,384
880,264
1,087,121
-
683,568
67,341
3,534,678
3.84%
Total
$14,861,098
$13,473,840
$44,085,709 $ 3,368,260 $ 5,824,578 $10,448,302
$92,061,787
100.00%
40
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
The company evaluates and monitors the credit quality of its residential construction loans (including land acquisition and development loans) by analyzing LTV and
loan performance. Monitoring a residential construction mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment.
The aggregate unpaid principal balance of residential construction mortgage loans by credit quality indicator and origination year was as follows as of December 31,
2024:
Credit Quality Indicator
2024
2023
2022
2021
Total
% of
Total
Performance Indicators:
Performing
$ 118,863,944
$21,375,552
$ 972,468
$ 9,960,769
$151,172,733
100.00%
Non-performing
-
-
-
-
-
0.00%
Total
$ 118,863,944
$21,375,552 $ 972,468 $ 9,960,769 $151,172,733
100.00%
LTV:
Less than 65%
$ 48,065,177
$21,375,552
$ 518,590
$ 9,960,769
$ 79,920,088
52.87%
65% to 80%
70,798,767
-
453,878
-
71,252,645
47.13%
Greater than 80%
-
-
-
-
0.00%
Total
$ 118,863,944
$21,375,552 $ 972,468 $ 9,960,769 $151,172,733
100.00%
Principal Amounts Due
The following table presents the amortized cost and contractual payments on mortgage loans held for investment by category as of December 31, 2024. Expected
principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment
penalties.
Principal
Principal
Principal
Amounts
Amounts
Amounts
Due in
Due in
Due
Total
1 Year
2-5 Years
Thereafter
Residential
$
92,061,787
$
1,433,574
$
5,749,140
$
84,879,073
Residential Construction
151,172,733
108,067,038
43,105,695
-
Commercial
62,753,085
30,839,972
26,023,731
5,889,382
Total
$
305,987,605
$
140,340,584
$
74,878,566
$
90,768,455
41
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Insurance Assignments
The following table presents the aging of insurance assignments, included in other investments and policy loans on the consolidated balance sheets:
Years Ended December 31,
2024
2023
30-59 days past due
$
8,785,184 $
10,829,629
60-89 days past due
4,046,731
3,709,754
Over 90 days past due
5,320,216
4,329,468
Total past due
18,152,131
18,868,851
Current
30,341,727
26,736,471
Total insurance assignments
48,493,858
45,605,322
Allowance for credit losses
(1,536,926)
(1,553,836)
Net insurance assignments
$
46,956,932 $
44,051,486
The Company records an allowance for credit losses when the insurance assignment is funded. Once an insurance assignment moves to 90 days or legal proceedings, it
is monitored for write-off and collectability, and any adjustments to the allowance are recorded at that time. See Note 1 regarding the adoption of ASU 2016-13.
The following table presents a roll forward of the allowance for credit losses for insurance assignments:
Allowance
Beginning balance - January 1, 2024
$
1,553,836
Change in provision for credit losses (1)
1,033,277
Charge-offs
(1,050,187)
Ending balance - December 31, 2024
$
1,536,926
Beginning balance - January 1, 2023
$
1,609,951
Change in provision for credit losses (1)
891,959
Charge-offs
(948,074)
Ending balance - December 31, 2023
$
1,553,836
(1) Included in other expenses on the consolidated statements of earnings
42
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Investment Related Earnings
The following table presents the net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities from investments and
other assets.
2024
2023
Years Ended December 31
2024
2023
Fixed maturity securities available for sale:
Gross realized gains
$
12,906
$
67,686
Gross realized losses
(63,024)
(106,760)
Net credit loss (provision) release
(106,444)
(325,314)
Equity securities:
Gains (losses) on securities sold
(42,680)
254,917
Unrealized gains (losses) on securities held at the end of the period
2,290,252
1,782,219
Mortgage loans held for investment:
Gross realized gains
-
-
Gross realized losses
(1,161,363)
-
Real estate held for investment and sale:
Gross realized gains
739,107
197,194
Gross realized losses
-
(71,792)
Other assets, including call and put option derivatives:
Gross realized gains
293,657
214,349
Gross realized losses
(20,513)
(175,157)
Total
$
1,941,898
$
1,837,342
The net realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined using the specific
identification method.
Net realized gains and losses includes gains and losses by the restricted assets and cemetery perpetual care trust investments of the cemeteries and mortuaries of
$888,788 in net gains and $730,259 in net losses for 2024 and 2023, respectively.
43
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
2) Investments (Continued)
Major categories of net investment income were as follows:
2024
2023
Years Ended December 31
2024
2023
Fixed maturity securities available for sale
$
17,332,753 $
16,871,558
Equity securities
698,484
616,989
Mortgage loans held for investment
29,952,242
33,242,094
Real estate held for investment and sale
11,369,546
14,786,017
Policy loans
953,489
816,711
Insurance assignments
19,971,108
18,118,391
Other investments
806,032
617,420
Cash and cash equivalents
6,676,563
4,250,029
Gross investment income
87,760,217
89,319,209
Investment expenses
(16,034,968)
(16,976,162)
Net investment income
$
71,725,249 $
72,343,047
Net investment income includes income earned by the restricted assets and cemetery perpetual care trust investments of the cemeteries and mortuaries of $2,009,719
and $2,365,378 for 2024 and 2023, respectively.
Net investment income on real estate consists primarily of rental revenue. Investment expenses consist primarily of depreciation, property taxes, operating expenses of
real estate and an estimated portion of administrative expenses relating to investment activities.
Accrued Investment Income
Accrued investment income consists of the following:
Years Ended December 31,
2024
2023
Fixed maturity securities available for sale
$
3,795,581
$
3,984,695
Equity securities
11,049
20,451
Mortgage loans held for investment
1,049,489
2,661,092
Real estate held for investment
3,559,463
3,486,115
Cash and cash equivalents
83,586
18,437
Total accrued investment income
$
8,499,168
$
10,170,790
44
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
3) Loans Held for Sale
The Company’s loans held for sale portfolio is valued using the fair value option. Changes in the fair value of the loans are included in mortgage fee income. Interest
income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on recognition of mortgage loan interest income and is
included in mortgage fee income on the consolidated statement of earnings. Included in loans held for sale are loans in the process of foreclosure with an aggregate
unpaid principal balance of nil and $1,636,090 as of December 31, 2024 and 2023, respectively. See Note 17 of the Notes to Consolidated Financial Statements for
additional disclosures regarding loans held for sale.
The following table presents the aggregate fair value and the aggregate unpaid principal balance of loans held for sale.
December 31,
2024
2023
Aggregate fair value
$
131,181,148
$
126,549,190
Unpaid principal balance
128,948,072
127,185,867
Unrealized gain (loss)
2,233,076
(636,677)
Mortgage Fee Income
Mortgage fee income consists of origination fees, processing fees, interest income and other income related to the origination and sale of mortgage loans held for sale.
Major categories of mortgage fee income for loans held for sale are summarized as follows:
Years Ended December 31
2024
2023
Loan fees
$
26,343,919
$
21,724,456
Interest income
8,192,353
9,547,741
Secondary gains
70,354,845
68,505,014
Change in fair value of loan commitments
729,948
(1,123,615)
Change in fair value of loans held for sale
2,869,729
(478,460)
Provision for loan loss reserve
(932,154)
(27,164)
Mortgage fee income
$
107,558,640
$
98,147,972
45
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
3) Loans Held for Sale (Continued)
Loan Loss Reserve
Repurchase demands from third party investors that correspond to mortgage loans previously held for sale and sold are reviewed and relevant data is captured so that
an estimated future loss can be calculated. The key factors that are used in the estimated future loss calculation are as follows: (i) lien position, (ii) payment status, (iii)
claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual
estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the
Company can resolve the issues relating to the repurchase demand by the third-party investor without having to make any payments to the investor.
The loan loss reserve, which is included in other liabilities and accrued expenses, is summarized as follows:
December 31,
2024
2023
Beginning Balance
$
547,233
$
1,725,667
Provision for current loan originations (1)
932,154
27,164
Charge-offs, net of recaptured amounts
(782,761)
(1,205,598)
Ending Balance
$
696,626
$
547,233
(1) Included in Mortgage fee income on the consolidated statements of earnings
The Company maintains reserves for estimated losses on current production volumes. For 2024, $932,154 in reserves were added at a rate of 4.1 basis points per loan,
the equivalent of $410 per $1,000,000 in loans originated. This is a decrease over 2023, when $27,164 in reserves were added at a rate of 4.3 basis points per loan
originated, the equivalent of $430 per $1,000,000 in loans originated. The Company monitors market data and trends, economic conditions (including forecasts) and
its own experience to maintain adequate loss reserves on current production.
46
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
4) Receivables
Receivables consist of the following:
December 31,
2024
2023
Contracts with customers
$
7,095,589
$
6,321,573
Receivables from sales agents
4,028,881
3,252,840
Other
6,412,804
7,658,789
Total receivables
17,537,274
17,233,202
Allowance for credit losses
(1,678,531)
(1,897,887)
Net receivables
$
15,858,743
$
15,335,315
The Company records an allowance for credit losses for its receivables in accordance with GAAP. See Note 1 regarding the adoption of ASU 2016-13.
The following table presents a roll forward of the allowance for credit losses:
Allowance
Beginning balance - January 1, 2024
$
1,897,887
Change in provision for credit losses (1)
(140,277)
Charge-offs
(79,079)
Ending balance - December 31, 2024
$
1,678,531
Beginning balance - January 1, 2023
$
2,229,791
Change in provision for credit losses (1)
(110,935)
Charge-offs
(220,969)
Ending balance - December 31, 2023
$
1,897,887
(1) Included in other expenses on the consolidated statements of earnings
47
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
5) Value of Business Acquired, Goodwill and Other Intangible Assets
Information regarding the value of business acquired was as follows:
December 31,
2024
2023
Balance at beginning of year
$
8,467,613
$
9,803,736
Value of business acquired
-
-
Imputed interest at 7% included in earnings
558,569(1)
626,666(1)
Amortization included in earnings
(1,466,527
)
(1)
(1,926,668
)
(1)
Shadow amortization included in other
comprehensive income
(68,055)
(36,121)
Net amortization
(976,013)
(1,336,123)
Balance at end of year
$
7,491,600
$
8,467,613
(1) Included in Amortization of deferred policy and pre-need acquisition costs and value of business acquired on the consolidated statements of earnings
Presuming no additional acquisitions, net amortization charged to income is expected to approximate the following:
2025
$
867,499
2026
827,016
2027
774,850
2028
713,969
2029
647,332
Thereafter
3,660,934
Total
$ 7,491,600
Actual amortization may vary based on changes in assumptions or experience. As of December 31, 2024, value of business acquired is being amortized over a
weighted average life of 6.1 years.
48
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
5) Value of Business Acquired, Goodwill and Other Intangible Assets (Continued)
Information regarding goodwill by segment was as follows:
Life Insurance
Cemetery/
Mortuary
Total
Balance at January 1, 2023:
Goodwill
$
2,765,570
$
2,488,213
$
5,253,783
Accumulated impairment
-
-
-
Total goodwill, net
2,765,570
2,488,213
5,253,783
Acquisition
-
-
-
Balance at December 31, 2023:
Goodwill
2,765,570
2,488,213
5,253,783
Accumulated impairment
-
-
-
Total goodwill, net
2,765,570
2,488,213
5,253,783
Acquisition
-
-
-
Balance at December 31, 2024:
Goodwill
2,765,570
2,488,213
5,253,783
Accumulated impairment
-
-
-
Total goodwill, net
$
2,765,570
$
2,488,213
$
5,253,783
Goodwill is not amortized but is tested annually for impairment. The annual impairment tests resulted in no impairment of goodwill for 2024 and 2023.
49
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
5) Value of Business Acquired, Goodwill and Other Intangible Assets (Continued)
The carrying value of the Company’s other intangible assets were as follows, which are included in other assets on the consolidated balance sheets:
December 31,
Useful Life
2024
2023
Intangible asset - trade name (1)
15 years
$
2,100,000
$
2,100,000
Intangible assets - other (1)
15 years
210,000
210,000
Intangible asset - trade name (2)
15 years
610,000
610,000
Intangible asset - customer lists (2)
15 years
2,290,000
890,000
Less accumulated amortization
(1,131,333)
(807,333)
Balance at end of year
$
4,078,667
$
3,002,667
(1) Cemetery/Mortuary Segment
(2) Life Insurance Segment
Amortization expense for 2024 and 2023 was $324,000 and $254,000, respectively, and is amortized over the estimated useful life using the straight-line method.
Amortization expense is included in other expenses on the consolidated statements of earnings.
The following table summarizes the Company’s estimate of future amortization for the other intangible assets:
2025
$
347,333
2026
347,333
2027
347,333
2028
347,333
2029
347,333
Thereafter
2,342,002
Total
$ 4,078,667
50
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
6) Property and Equipment
Property and equipment is summarized below:
December 31,
2024
2023
Land and buildings
$
17,194,972
$
16,567,819
Furniture and equipment
15,998,717
16,315,061
33,193,689
32,882,880
Less accumulated depreciation
(14,146,001)
(13,707,781)
Total
$
19,047,688
$
19,175,099
Depreciation expense for 2024 and 2023 was $2,383,621 and $2,351,661, respectively. Property and equipment are stated at cost and are depreciated over their
estimated useful lives, primarily using the straight-line method. The Company recognized an impairment loss of $122,229 in 2023 on a property held by the life
segment. This property was sold in 2024. Impairment losses are included in gains (losses) on the consolidated statements of earnings.
7) Bank and Other Loans Payable
Bank and other loans payable are summarized as follows:
December 31,
2024
2023
3.85% fixed note payable in monthly installments of $243,781 including principal and interest,
collateralized by real property with a book value of approximately $60,420,000, due June 2032.
$
49,174,545
$
50,129,255
3.30% fixed note payable in monthly installments of $179,562 including principal and interest,
collateralized by real property with a book value of approximately $42,230,000, due April 2031.
37,632,943
38,478,359
4.7865% fixed interest only note payable in monthly installments, collateralized by real property
with a book value of approximately $16,240,000, due June 2028.
9,200,000
9,200,000
1 month SOFR rate plus 2% loan purchase agreement with a warehouse line availability of
$100,000,000, expired November 2024 and is no longer needed by the Company.
-
114,518
1 month SOFR rate plus 2.0% loan purchase agreement with a warehouse line availability of
$25,000,000, matures August 2025.
2,668,519
-
1 month SOFR rate plus 2.1% loan purchase agreement with a warehouse line availability of
$15,000,000, matures June 2025.
7,918,930
7,617,455
Finance lease liabilities
145,167
15,550
Total bank and other loans
106,740,104
105,555,137
Less current installments
(12,559,420)
(9,543,052)
Bank and other loans, excluding current installments
$
94,180,684
$
96,012,085
51
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
7) Bank and Other Loans Payable (Continued)
Sources of Liquidity
Federal Home Loan Bank Membership
The Federal Home Loan Banks (“the FHLBs”) are a group of cooperatives that lending institutions use to finance housing and economic development in local
communities. The Company is a member of the FHLB based in Des Moines, Iowa and based in Dallas, Texas. As a member of the FHLB, the Company is required to
maintain a minimum investment in capital stock of the FHLB and may pledge collateral to the bank for advances of funds to be used in its operations.
Federal Home Loan Bank of Des Moines
As of December 31, 2024, the amount available for borrowings from the FHLB of Des Moines was approximately $41,235,894, compared with $77,324,238 as of
December 31, 2023. United States Treasury fixed maturity securities with an estimated fair value of $54,487,812 as of December 31, 2024 have been pledged at the
FHLB of Des Moines as collateral for current and potential borrowings compared with $88,400,026 at December 31, 2023. As of December 31, 2024 and 2023, the
Company had no outstanding FHLB borrowings. As of December 31, 2024, the Company’s total investment in FHLB stock was $479,100 compared with $453,600 as
of December 31, 2023. As of December 31, 2024, the Company was contingently liable under standby letters of credit aggregating $9,670,307. These letters of credit
are to be used to cover any contingency related to additional risk assessments pertaining to the Company’s captive insurance program for $443,758 and for bonding of
residential land development for $9,226,549.
Federal Home Loan Bank of Dallas
As of December 31, 2024, the amount available for borrowings from the FHLB of Dallas was approximately $8,342,442, compared with $5,104,610 as of December
31, 2023. Mortgage-Backed fixed maturity securities with an estimated fair value of $9,312,642 as of December 31, 2024 have been pledged at the FHLB of Dallas as
collateral for current and potential borrowings compared with $5,503,063 at December 31, 2023. As of December 31, 2024 and 2023, the Company had no
outstanding FHLB borrowings. As of December 31, 2024, the Company’s total investment in FHLB stock was $1,925,800 compared with $1,826,200 as of December
31, 2023.
Revolving Lines of Credit
The Company has a $5,000,000 revolving line-of-credit with a bank with interest payable at the Prime rate plus 0.75% with a 3% prime floor, secured by the capital
stock of Security National Life and maturing May 15, 2025, renewable annually. As of December 31, 2024, the Company was contingently liable under standby letters
of credit aggregating $622,293, to be used as collateral for residential subdivision land development and $1,250,000, to be used as collateral for SecurityNational
Mortgage’s state licensing. The standby letters of credit will draw on the line of credit if necessary. The Company does not expect any material losses to result from
the issuance of the standby letters of credit. As of December 31, 2024, there were no amounts outstanding under the revolving line-of-credit.
Debt Covenants for Mortgage Warehouse Lines of Credit
The Company, through its subsidiary SecurityNational Mortgage, has two lines of credit for the purpose of funding mortgage loans.
The Company’s agreement with U.S. Bank allows SecurityNational Mortgage to borrow up to $15,000,000. The agreement charges interest at 2.10% plus the greater
of (i) 0%, and (ii) the one-month forward-looking term rate based on SOFR and matures on June 20, 2025. The Company is required to comply with covenants for
adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights)
of at least $1.00 on a rolling twelve months.
52
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
7) Bank and Other Loans Payable (Continued)
The Company’s agreement with Western Alliance Bank allows SecurityNational Mortgage to borrow up to $25,000,000. The agreement charges interest at the 1-
Month SOFR rate plus 2.0% and matures on August 27, 2025. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash
balance, and minimum combined pre-tax income of at least $1.00 on a quarterly basis.
The agreements for both warehouse lines of credit include cross default provisions where certain events of default under other of SecurityNational Mortgage’s
obligations constitute events of default under the warehouse lines of credit. As of December 31, 2024, SecurityNational Mortgage was not in compliance with the net
income covenants under its warehouse lines of credit and its operating cash flow covenant for its standby letter of credit with its primary bank. SecurityNational
Mortgage has received or is in the process of receiving waivers from the warehouse banks. In the unlikely event SecurityNational Mortgage is required to repay the
outstanding advances of approximately $10,587,449 on the warehouse line of credit that has not provided a covenant waiver, SecurityNational Mortgage has sufficient
cash and borrowing capacity on the warehouse lines of credit that have provided covenant waivers to fund its origination activities. The Company has done an internal
analysis of the funding capacities of both internal and external sources and has determined that there are sufficient funds to continue its business model. The Company
continues to negotiate other warehouse lines of credit with other lenders. The Company has performed an internal analysis of its funding capacities of both internal and
external sources and has determined that there are sufficient funds to continue its current business model. The Company continues to negotiate other warehouse lines
of credit with other lenders.
Debt Covenants for Revolving Lines of Credit and Bank Loans
The Company also has debt covenants on its revolving lines of credit and is required to comply with minimum operating cash flow ratios and minimum net worth for
each of its business segments. The Company also has debt covenants for one of its loans on real estate for a minimum consolidated operating cash flow ratio,
minimum liquidity, and consolidated net worth. In addition to these financial debt covenants, the Company is required to provide segment specific financial statements
and building specific financial statements on all bank loans. As of December 31, 2024, the Company was in compliance with all these debt covenants.
The following tabulation shows the combined maturities of bank and other loans payable:
2025
$ 12,559,420
2026
2,013,541
2027
2,026,749
2028
2,096,945
2029
11,380,242
Thereafter
76,663,207
Total
$106,740,104
Interest expense in 2024 and 2023 was $4,254,100 and $4,865,327, respectively.
53
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets
Cemetery Perpetual Care Trust Investments and Obligation
State law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment rights for cemeteries
that have established an endowment care trust. These endowment care trusts are defined as Variable Interest Entities pursuant to GAAP. The Company is the primary
beneficiary of these trusts, as it absorbs both the losses and any expenses associated with the trusts. The Company has consolidated cemetery endowment care trust
investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets.
The components of the cemetery perpetual care investments and obligation as of December 31, 2024 are as follows:
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Estimated Fair
Value
December 31, 2024:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies
$
651,428
$
-
$
(2,010)
$
649,418
Obligations of states and political subdivisions
125,194
-
(4,950)
120,244
Total fixed maturity securities available for sale
$
776,622
$
-
$
(6,960)
$
769,662
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other
$
3,874,522
$
1,271,529
$
(226,007)
$
4,920,044
Total equity securities at estimated fair value
$
3,874,522
$
1,271,529
$
(226,007)
$
4,920,044
Mortgage loans held for investment at amortized cost:
Residential construction
$
202,600
Less: Allowance for credit losses
(405)
Commercial
1,939,269
Less: Allowance for credit losses
-
Total mortgage loans held for investment
$
2,141,464
Cash and cash equivalents
$
1,002,396
Accrued investment income
$
2,937
Total cemetery perpetual care trust investments
$
8,836,503
Cemetery perpetual care obligation
$
(5,642,693)
Trust investments in excess of trust obligations
$
3,193,810
54
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Continued)
The components of the cemetery perpetual care investments and obligation as of December 31, 2023 are as follows:
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Estimated Fair
Value
December 31, 2023:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies
$
477,797
$
302
$
(574)
$
477,525
Obligations of states and political subdivisions
115,792
-
(5,114)
110,678
Corporate securities including public utilities
53,672
-
(171)
53,501
Total fixed maturity securities available for sale
$
647,261
$
302
$
(5,859)
$
641,704
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other
$
3,614,392
$
859,680
$
(146,771)
$
4,327,301
Total equity securities at estimated fair value
$
3,614,392
$
859,680
$
(146,771)
$
4,327,301
Mortgage loans held for investment at amortized cost:
Residential construction
$
247,360
Less: Allowance for credit losses
(495)
Total mortgage loans held for investment
$
246,865
Cash and cash equivalents
$
2,867,047
Total cemetery perpetual care trust investments
$
8,082,917
Cemetery perpetual care obligation
$
(5,326,196)
Trust investments in excess of trust obligations
$
2,756,721
Fixed Maturity Securities
The table below summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value as of December 31, 2024 and
2023. The unrealized losses were primarily related to interest rate fluctuations. 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
Total
Unrealized
Loss
Fair Value
At December 31, 2024
U.S. Treasury securities and obligations of U.S. Government
agencies
$
2,010
$
649,419
$
-
$
-
$
2,010
$
649,419
Obligations of states and political subdivisions
4,950
120,243
-
-
4,950
120,243
Total unrealized losses
$
6,960
$
769,662
$
-
$
-
$
6,960
$
769,662
At December 31, 2023
U.S. Treasury securities and obligations of U.S. Government
agencies
$
574
$
143,448
$
-
$
-
$
574
$
143,448
Obligations of states and political subdivisions
-
-
5,114
110,678
5,114
110,678
Corporate securities including public utilities
-
-
171
53,501
171
53,501
Total unrealized losses
$
574
$
143,448
$
5,285
$
164,179
$
5,859
$
307,627
55
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Continued)
Relevant holdings were comprised of four securities with fair values aggregating 99.1% of aggregate amortized cost as of December 31, 2024. There were four
securities with fair values aggregating 98.1% of aggregate amortized cost as of December 31, 2023. No credit losses have been recognized for 2024 and 2023, since
the increase in unrealized losses is primarily a result of increases in interest rates. See Note 2 for additional information regarding the Company’s evaluation of the
allowance for credit losses for fixed maturity securities available for sale.
The table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of December 31, 2024, 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
Estimated Fair
Cost
Value
Due in 1 year
$
503,125 $
501,375
Due in 2-5 years
221,021
216,687
Due in 5-10 years
52,476
51,600
Due in more than 10 years
-
-
Total
$
776,622 $
769,662
56
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Continued)
Restricted Assets
The Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection with its pre-need sales for
its cemetery and mortuary segment.
Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by
warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the
Company elected to maintain its medical benefit fund without change from the prior year and has included this amount as a component of restricted cash. These
restricted cash items are for the Company’s life insurance and mortgage segments.
Restricted assets as of December 31, 2024 are summarized as follows:
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Estimated Fair
Value
December 31, 2024:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies
$
1,741,029
$
2,256
$
(1,511)
$
1,741,774
Obligations of states and political subdivisions
471,217
180
(4,223)
467,174
Corporate securities including public utilities
144,616
32
(2,227)
142,421
Total fixed maturity securities available for sale
$
2,356,862
$
2,468
$
(7,961)
$
2,351,369
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other
$
8,547,709
$
1,914,309
$
(489,852)
$
9,972,166
Total equity securities at estimated fair value
$
8,547,709
$
1,914,309
$
(489,852)
$
9,972,166
Mortgage loans held for investment at amortized cost:
Residential construction
$
985,806
Less: Allowance for credit losses
(1,972)
Total mortgage loans held for investment
$
983,834
Other investments
$
1,939,269
Cash and cash equivalents (1)
$
8,553,803
Accrued investment income
$
6,395
Total restricted assets
$
23,806,836
(1) Including cash and cash equivalents of $7,657,958 for the life insurance and mortgage segments.
57
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Continued)
Restricted assets as of December 31, 2023 are summarized as follows:
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Estimated Fair
Value
December 31, 2023:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies
$
932,737
$
1,433
$
(1,000)
$
933,170
Obligations of states and political subdivisions
652,770
305
(4,542)
648,533
Corporate securities including public utilities
274,688
209
(2,740)
272,157
Total fixed maturity securities available for sale
$
1,860,195
$
1,947
$
(8,282)
$
1,853,860
Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other
$
6,516,044
$
1,117,155
$
(247,996)
$
7,385,203
Total equity securities at estimated fair value
$
6,516,044
$
1,117,155
$
(247,996)
$
7,385,203
Mortgage loans held for investment at amortized cost:
Residential construction
$
676,572
Less: Allowance for credit losses
(1,353)
Total mortgage loans held for investment
$
675,219
Cash and cash equivalents (1)
$
10,114,694
Total restricted assets
$
20,028,976
(1) Including cash and cash equivalents of $6,930,933 for the life insurance and mortgage segments.
A surplus note receivable in the amount of $4,000,000 at December 31, 2024 and 2023, from Security National Life, was eliminated in consolidation.
Fixed Maturity Securities
The table below summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value as of December 31, 2024 and
2023. The unrealized losses were primarily related to interest rate fluctuations. 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
Total
Unrealized
Loss
Fair Value
At December 31, 2024
U.S. Treasury securities and obligations of U.S. Government
agencies
$
1,511
$
558,707
$
-
$
-
$
1,511
$
558,707
Obligations of states and political subdivisions
2,004
237,636
2,219
129,358
4,223
366,994
Corporate securities including public utilities
1,316
51,685
911
65,704
2,227
117,389
Total unrealized losses
$
4,831
$
848,028
$
3,130
$
195,062
$
7,961
$ 1,043,090
At December 31, 2023
U.S. Treasury securities and obligations of U.S. Government
agencies
$
1,000
$
249,877
$
-
$
-
$
1,000
$
249,877
Obligations of states and political subdivisions
-
-
4,542
451,985
4,542
451,985
Corporate securities including public utilities
-
-
2,740
221,334
2,740
221,334
Total unrealized losses
$
1,000
$
249,877
$
7,282
$
673,319
$
8,282
$
923,196
58
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Continued)
Relevant holdings were comprised of 15 securities with fair values aggregating 99.2% of aggregate amortized cost as of December 31, 2024. Relevant holdings were
comprised of 12 securities with fair values aggregating of 99.1% of aggregate amortized cost at December 31, 2023. No credit losses have been recognized for 2024
and 2023, since the increase in unrealized losses is primarily a result of increases in interest rates. See Note 3 for additional information regarding the Company’s
evaluation of the allowance for credit losses for fixed maturity securities available for sale.
The table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of December 31, 2024, 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
Estimated Fair
Cost
Value
Due in 1 year
$
1,539,890 $
1,539,487
Due in 2-5 years
308,335
307,820
Due in 5-10 years
100,606
100,648
Due in more than 10 years
408,031
403,414
Total
$
2,356,862 $
2,351,369
See Notes 1, 2 and 17 for additional information regarding restricted assets and cemetery perpetual care trust investments.
59
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
9) Income Taxes
The Company’s income tax liability is summarized as follows:
December 31,
2024
2023
Current
$
(725,175) $
246,437
Deferred
13,804,432
13,506,544
Total
$
13,079,257 $
13,752,981
The significant components of the Company’s deferred tax assets and liabilities are approximately as follows:
December 31,
2024
2023
Assets
Future policy benefits
$
15,144,640
$
14,902,816
Loan loss reserve and allowances
1,395,203
1,908,243
Unearned premium
422,453
534,203
Net operating loss
1,245,888
1,050,770
Deferred compensation
2,033,686
2,138,385
Tax on unrealized appreciation
-
491,271
Total deferred tax assets
20,241,870
21,025,688
Liabilities
Deferred policy acquisition costs
19,104,454
18,478,562
Basis difference in property, equipment and real estate
8,973,198
11,054,092
Value of business acquired
1,573,236
1,778,199
Deferred gains
1,365,803
1,308,365
Trusts
1,064,387
1,064,387
Intangibles
717,336
516,210
Other
534,311
332,417
Tax on unrealized appreciaton
713,577
-
Total deferred tax liabilities
34,046,302
34,532,232
Net deferred tax liability
$
13,804,432
$
13,506,544
Prior period amounts have been adjusted to conform to the current period presentation.
60
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
9) Income Taxes (Continued)
The Company’s income tax expense is summarized as follows:
December 31,
2024
2023
Current
Federal
$
7,182,377
$
4,091,306
State
73,654
209,537
7,256,031
4,300,843
Deferred
Federal
189,698
(2,139,124)
State
122,273
(356,365)
311,971
(2,495,489)
Total
$
7,568,002
$
1,805,354
The reconciliation of income tax expense at the U.S. federal statutory rates is as follows:
December 31,
2024
2023
Computed expense at statutory rate
$
7,161,792
$
3,423,086
State tax expense (benefit), net of federal tax benefit
154,782
(115,994)
Change in valuation allowance
-
(1,506,144)
Other, net
251,428
4,406
Income tax expense
$
7,568,002
$
1,805,354
The Company’s overall effective tax rate for 2024 and 2023 was 22.2% and 11.1% respectively. The Company’s effective tax rates differ from the U.S. federal
statutory rate of 21% partially due to its provision for state income taxes. The increase in the effective tax rate when compared to the prior year is partially due to the
prior period reducing the valuation allowance related to Kilpatrick Life Insurance Company to zero and no valuation allowance adjustment in the current period.
As of December 31, 2024, the Company had no significant unrecognized tax benefits. As of December 31, 2024, the Company does not expect any material changes
to the estimated amount of unrecognized tax benefits in the next twelve months. Federal and state income tax returns for 2021 through 2024 are subject to examination
by taxing authorities.
Net Operating Losses and Tax Credit Carryforwards:
Year of Expiration
2025
$
-
2026
-
2027
-
2028
-
2029
-
Thereafter up through 2037
735,671
Indefinite carryforwards
2,436,242
$
3,171,913
61
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
10) Reinsurance, Commitments and Contingencies
Reinsurance
The Company follows the procedure of reinsuring risks of more than a specified limit, which ranges from $25,000 to $100,000 on newly issued policies. The
Company has also assumed various reinsurance agreements through acquisition of various life companies and has assets held in trust related to certain agreements.
The Company is ultimately liable for these reinsured amounts in the event such reinsurers are unable to pay their portion of the claims. The Company evaluates the
financial condition of reinsurers and monitors the concentration of credit risk. The Company had a significant concentration of credit risk with a single reinsurer of
94.4% and 94.0% of ceded life insurance in force as of December 31, 2024 and 2023, respectively. This represented approximately 7.8% and 8.8% of the Company’s
total life insurance in force as of December 31, 2024 and 2023, respectively.
The Company’s life insurance in force and premiums for reinsurance are summarized as follows:
Percentage
Ceded to
Assumed
of Amount
Direct
Other
from Other
Net
Assumed
Amount
Companies
Companies
Amount
to Net
2024
Life Insurance in force ($000)
$
3,914,583
$
325,189
$
33,088
$
3,622,482
0.9%
Premiums:
Life Insurance
$
121,392,765
$
2,142,678
$
217,701
$
119,467,788
0.2%
Accident and Health Insurance
187,949
-
8
187,957
0.0%
Total premiums
$
121,580,714
$
2,142,678
$
217,709
$
119,655,745
0.2%
2023
Life Insurance in force ($000)
$
3,517,812
$
333,211
$
34,742
$
3,219,343
1.1%
Premiums:
Life Insurance
$
116,141,852
$
1,938,610
$
239,744
$
114,442,986
0.2%
Accident and Health Insurance
215,442
-
8
215,450
0.0%
Total premiums
$
116,357,294
$
1,938,610
$
239,752
$
114,658,436
0.2%
Mortgage Loan Loss Settlements
Future loan losses can be extremely difficult to estimate. However, the Company believes that the Company’s reserve methodology and its current practice of property
preservation allow it to estimate potential losses on loans sold. See Note 3 for additional information about the Company’s loan loss reserve.
Non-Cancelable Leases
The Company leases office space and equipment under various non-cancelable agreements. See Note 23 regarding leases.
62
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
10) Reinsurance, Commitments and Contingencies (Continued)
Other Contingencies and Commitments
The Company has commitments to fund existing construction and land development loans pursuant to the various loan agreements. As of December 31, 2024, the
Company’s commitments were approximately $216,368,000 for these loans, of which $152,361,000 had been funded. The Company advances funds in accordance
with the loan agreements once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 80% of
appraised value. The Company receives fees and interest for these loans and the interest rate is generally fixed at 5.25% to 8.50% per annum. Maturities range between
six and eighteen months.
The Company belongs to a captive insurance group (“the captive group”) for certain casualty insurance, worker compensation and general liability programs. The
captive group maintains insurance reserves relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and
aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive group considers several factors, which include
historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. If actual claims or adverse
development of loss reserves occurs and exceed these estimates, additional reserves may be required from the Company and its members. The estimation process
contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported
claims for incidents incurred but not reported as of the balance sheet date.
The Company is a defendant in various other legal actions arising from the normal conduct of business. The Company believes that none of the actions, if adversely
determined, will have a material effect on the Company’s financial position or results of operations. Based on the Company’s assessment and legal counsel’s
representations concerning the likelihood of unfavorable outcomes, no amounts have been accrued for the above claims in the consolidated financial statements. The
Company is not a party to any other material legal proceedings outside the ordinary course of business or to any other legal proceedings, which, if adversely
determined, would have a material adverse effect on its financial condition or results of operations.
63
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
11) Retirement Plans
The Company has three 401(k) savings plans covering all eligible employees which include employer participation in accordance with the provisions of Section
401(k) of the Internal Revenue Code. The plans allow participants to make pretax contributions up to a maximum of $23,000 and $22,500 for the years 2024 and
2023, respectively or the statutory limits. The Company matched 100% of up to 3% of an employee’s total annual compensation and matched 50% of 4% to 5% of an
employee’s annual compensation. The match was in Company stock. The Company’s contribution for 2024 and 2023 was $768,288 and $1,819,275, respectively
under the plan.
The Company has a Non-Qualified Deferred Compensation Plan. Under the terms of the Plan, the Company will provide deferred compensation for a select group of
management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of
1974, as amended. The Board has appointed a Committee of the Company to be the Plan Administrator and to determine the employees who are eligible to participate
in the plan. The employees who participate may elect to defer a portion of their compensation into the plan. The Company may contribute into the plan at the
discretion of the Company’s Board of Directors. The Company did not make any contributions for 2024 and 2023.
In June 2024, the Board members approved a motion to extend the Chief Executive Officer’s employment agreement, dated December 4, 2012, for an additional six-
year term ending December 31, 2030. In the event of disability, the Chief Executive Officer’s salary would be continued for up to five years at 75% of its current level
of compensation. In the event of a sale or merger of the Company and the Chief Executive Officer is not retained in his current position, the Company would be
obligated to continue paying the Chief Executive Officer’s current compensation and benefits for seven years following the merger or sale. The agreement further
provides that the Chief Executive Officer is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no
sooner than age 65), (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid
for a period of twenty years in annual installments in the amount equal to 75% of his then current level of compensation. If the Chief Executive Officer dies prior to
receiving all retirement benefits thereunder, the remaining benefits are to be paid to his heirs. The Company adjusted the accrual by $340,557 and nil during 2024 and
2023, respectively, to cover the present value of anticipated retirement benefits under the employment agreement. The liability accrued was $7,215,806 and
$7,556,363 as of December 31, 2024 and 2023, respectively.
The Company also has an employment agreement with its former Vice President of Mortgage Operations and President of SecurityNational Mortgage, who retired
from the Company on December 31, 2015. Under the terms of the employment agreement, this individual is entitled to receive retirement benefits from the Company
for a period of ten years in an amount equal to 50% of his rate of compensation at the time of his retirement, which was $267,685 for the year ended December 31,
2015. If this individual dies prior to receiving all his retirement benefits under his employment agreement, the remaining benefits will be made to his heirs. The
company has paid monthly installments that equal an annual payment of $133,843 to this individual each year since 2016. The liability accrued was $133,843 and
$267,686 as of December 31, 2024 and 2023, respectively and is included in other liabilities and accrued expenses on the consolidated balance sheets.
64
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
12) Capital Stock
The Company has one class of preferred stock of $1.00 par value, 5,000,000 shares authorized, of which none are issued. The preferred stock is non-voting.
The Company has two classes of common stock with shares outstanding, Class A common shares and Class C common shares. Class C shares have 10 votes per share
on all matters except for the election of one third of the directors who are elected solely by the Class A shares. Class C shares are convertible into Class A shares at
any time on a one-to-one ratio.
Stockholders of both Class A and Class C Common Stock have received 5% stock dividends in the years 1990 through 2019, a 7.5% stock dividend in the year 2020,
and a 5% stock dividend in the years 2021 through 2024, as authorized by the Company’s Board of Directors.
The Company has Class B common stock of $1.00 par value, 5,000,000 shares authorized, of which none are issued. Class B shares are non-voting stock except to any
proposed amendment to the Articles of Incorporation which would affect Class B common stock.
The following table summarizes the activity in shares of capital stock.
Class A
Class C
Outstanding shares at December 31, 2022 (1)
20,712,892
3,180,031
Exercise of stock options
279,177
-
Vesting of restricted stock units
1,215
-
Conversion of Class C to Class A
59,599
(59,599)
Outstanding shares at December 31, 2023 (1)
21,052,883
3,120,432
Exercise of stock options
200,072
201,667
Vesting of restricted stock units
1,785
-
Conversion of Class C to Class A
266
(266)
Outstanding shares at December 31, 2024
21,255,006
3,321,833
(1) Adjusted retroactively for the effect of annual stock dividends
65
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
12) Capital Stock (Continued)
Earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. In accordance with GAAP, the basic and diluted earnings per
share amounts were calculated as follows:
Years Ended December 31,
2024
2023
Numerator:
Net earnings
$
26,535,768
$
14,495,058
Denominator:
Denominator for basic earnings per share-weighted-average shares
23,314,643
23,189,418
Effect of dilutive securities
Employee stock options
660,835
623,906
Unvested restricted stock units
30
-
Dilutive potential common shares
660,865
623,906
Denominator for diluted earnings per share-adjusted weighted-average shares
and assumed conversions
23,975,508
23,813,324
Basic earnings per share
$
1.14
$
0.63
Diluted earnings per share
$
1.11
$
0.61
For 2024 and 2023, there were 363,700 and nil of anti-dilutive employee stock option shares, respectively, that were not included in the computation of diluted net
earnings per common share as their effect would be anti-dilutive. Basic and diluted earnings per share amounts are the same for each class of common stock.
66
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
13) Stock Compensation Plans
The Company has equity incentive plans (the “2013 Plan”, the “2014 Director Plan” and the “2022 Plan”).
Stock Options
Stock based compensation expense for stock options issued of $794,654 and $601,058 has been recognized under these plans for 2024 and 2023, respectively, and is
included in personnel expenses on the consolidated statements of earnings. As of December 31, 2024, the total unrecognized compensation expense related to the
stock options issued was $1,096,891, which is expected to be recognized over the remaining vesting period.
The fair value of each stock option granted is estimated on the date of grant using the Black Scholes Option Pricing Model. The Company estimates the expected life
of the options using the simplified method. Future volatility is estimated based upon the weighted historical volatility of the Company’s Class A Common Stock over a
period equal to the expected life of the options. The risk-free interest rate for the expected life of the options is based upon the Federal Reserve Board’s daily interest
rates in effect at the time of the grant.
The following table summarizes the assumptions used in estimating the fair value of each stock option granted along with the weighted-average fair value of the stock
options granted.
Assumptions
Grant Date
Plan
Weighted-
Average
Fair Value
of Each
Option
Expected
Dividend
Yield (1)
Underlying
stock
FMV
Weighted-
Average
Volatility
Weighted-
Average
Risk-Free
Interest
Rate
Weighted-
Average
Expected
Life
(years)
December 26, 2024
All Plans
$ 3.01
5% $
11.87
38.41%
4.38%
5.31
December 6, 2024
All Plans
$
3.17
5% $
13.08
38.17%
4.00%
5.12
January 12, 2024
All Plans
$
2.01
5% $
8.35
37.51%
3.81%
5.31
January 8, 2024
All Plans
$
2.16
5% $
8.93
37.50%
3.93%
5.31
December 1, 2023
All Plans
$
1.88
5% $
7.99
36.76%
4.14%
4.90
January 30, 2023
All Plans
$
1.65
5% $
7.10
36.73%
3.64%
5.31
January 18, 2023
All Plans
$
1.70
5% $
7.37
36.79%
3.40%
5.31
(1) Stock dividend
67
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
13) Stock Compensation Plans (Continued)
The activity of the stock option plans is summarized as follows:
Number of
Class A Shares
Weighted Average
Exercise Price (2)
Number of
Class C Shares
Weighted Average
Exercise Price (2)
Outstanding at January 1, 2023
976,605
$
4.33
1,157,203
$
5.04
Adjustment for the effect of stock dividends
38,266
57,859
Granted
106,500
305,000
Exercised
(286,965)
-
Cancelled
(836)
-
Outstanding at December 31, 2023
833,570
$
4.91
1,520,062
$
5.57
Adjustment for the effect of stock dividends
38,724
76,005
Granted
59,200
330,000
Exercised
(267,491)
(201,667)
Cancelled
(17,409)
-
Outstanding at December 31, 2024
646,594
$
5.93
1,724,400
$
7.23
Exercisable at end of year
599,769
$
5.42
1,394,400
$
5.82
Available options for future grant
79,281
146,238
Weighted average contractual term of options
outstanding at December 31, 2024
5.55 years
6.71 years
Weighted average contractual term of options
exercisable at December 31, 2024
5.36 years
6.05 years
Aggregated intrinsic value of options outstanding at
December 31, 2024 (1)
$
3,944,715
$
8,269,398
Aggregated intrinsic value of options exercisable at
December 31, 2024 (1)
$
3,962,435
$
8,652,316
(1) The Company used a stock price of $12.03 as of December 31, 2024 to derive intrinsic value.
(2) Adjusted for the effect of annual stock dividends.
The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock
options exercised during 2024 and 2023 was $3,104,163 and $657,354, respectively.
68
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
13) Stock Compensation Plans (Continued)
Restricted Stock Units (“RSUs”)
Stock based compensation expense for RSUs issued of $6,166 and $304 has been recognized under these plans for the 2024 and 2023, respectively, and is included in
personnel expenses on the consolidated statements of earnings. As of December 31, 2024, the total unrecognized compensation expense related to the RSUs issued
was $37,299, which is expected to be recognized over the remaining vesting period.
The activity of the RSUs is summarized as follows:
Number of
Class A Shares
Weighted Average
Grant Date Fair Value
Non-vested at January 1, 2023
1,620
$
6.48
Granted
1,840
Vested
(1,215)
Non-vested at December 31, 2023
2,245
$
7.72
Granted
12,353
Vested
(1,785)
Non-vested at December 31, 2024
12,813
$
12.90
Available RSUs for future grant
4,187
69
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
14) Statutory Financial Information and Dividend Limitations
The Company’s insurance subsidiaries are also required to prepare statutory-basis financial statements in conformity with accounting practices prescribed or permitted
by the insurance department of the applicable state of domicile. The prescribed statutory accounting practices include the Accounting Practices and Procedures Manual
of the NAIC, a variety of publications of the NAIC, as well as state laws, regulations, and general administrative rules. Statutory accounting practices differ from
GAAP primarily since they require expensing policy acquisition and certain sales inducement costs as incurred, establishing life insurance reserves based on different
actuarial assumptions, applying different valuing methods for certain investments and accounting for deferred taxes on a different basis.
The statutory net income and capital and surplus of the Company’s insurance subsidiaries, determined in accordance with statutory accounting practices prescribed by
insurance regulatory authorities are as follows:
Statutory Net Income
Statutory Capital and Surplus
Years Ended December 31,
December 31,
2024
2023
2024
2023
Amounts by insurance subsidiary:
Security National Life Insurance Company
$
9,618,883
$
7,419,511
$
87,559,495
$
76,330,794
Kilpatrick Life Insurance Company
2,749,370
2,967,779
21,419,520
20,535,591
First Guaranty Insurance Company
1,336,977
958,497
9,140,283
8,427,355
Southern Security Life Insurance Company, Inc.
24
35
1,584,583
1,578,322
Trans-Western Life Insurance Company
41
15
512,612
512,570
Total
$
13,705,295
$
11,345,837
$
120,216,493
$
107,384,632
State Insurance Departments impose minimum risk-based capital (“RBC”) requirements that were developed by the NAIC on insurance enterprises. The formulas for
determining the RBC specify various factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory
compliance is determined by a ratio (the Ratio) of the enterprise’s regulatory total adjusted capital, as defined by the NAIC, to its authorized control level, as defined
by the NAIC. Enterprises below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The life
insurance subsidiaries each have a ratio that is greater than the first level of regulatory action as of December 31, 2024. The Company does not have any guarantees to
maintain the capital and surplus of any affiliates except for the Company’s agreement to provide additional capital to Security National Life Insurance Company in the
event risk-based capital drops below 350% of the authorized control level.
Generally, the net assets of the life insurance subsidiaries available for transfer to the Company are limited to the amounts of the life insurance subsidiaries net assets,
as determined in accordance with statutory accounting practices, that exceed minimum statutory capital requirements. Additional requirements must be met depending
on the state, and payments of such amounts as dividends are subject to approval by regulatory authorities.
70
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
14. Statutory Financial Information and Dividend Limitations (Continued)
Under the Utah Insurance Code, Security National Life Insurance Company is permitted to pay stockholder dividends, or otherwise make distributions, to the
Company subject to certain limitations. Security National Life Insurance Company must ensure that its surplus held for policyholders is reasonable in relation to its
outstanding liabilities and adequate to its financial needs after payment of any such dividend or distribution. Furthermore, where any dividend or distribution, together
with all other dividends and distributions made within the preceding 12 months, exceeds the lesser of (i) 10% of its surplus held for policyholders as of the next
preceding December 31; or (ii) its net gain from operations, not including realized capital gains, for the 12-month period ending the next preceding December 31, such
dividend or distribution constitutes “extraordinary” under Utah law and Security National Life Insurance Company would be required to file notice of its intention to
declare such a dividend or make such a distribution with the Utah Commissioner and the Utah Commissioner must either approve the distribution or dividend or not
disapprove the dividend or distribution within 30 days’ of the notice filing. Based on Security National Life Insurance Company’s surplus held for policyholders and
net gain from operations as of December 31, 2024, the maximum aggregate amount of dividends and distributions that it could pay or make in 2024 and which would
not constitute an “extraordinary” dividend or distribution under Utah law and would therefore not require notice and approval or lack of disproval from the Utah
Commissioner, would be approximately $7,358,000.
Under the Louisiana Insurance Code, First Guaranty Insurance Company and Kilpatrick Life Insurance Company are permitted to pay stockholder dividends, or
otherwise make distributions, to the Company subject to certain limitations. First Guaranty Insurance Company and Kilpatrick Life Insurance Company must ensure
that its surplus held for policyholders is reasonable in relation to its outstanding liabilities and adequate to its financial needs after payment of any such dividend or
distribution. Furthermore, where any dividend or distribution, together with all other dividends and distributions made within the preceding 12 months, exceeds the
lesser of (i) 10% of its surplus held for policyholders as of the next preceding December 31; or (ii) its net gain from operations, not including realized capital gains, for
the 12-month period ending the next preceding December 31, such dividend or distribution constitutes “extraordinary” under Louisiana law and First Guaranty
Insurance Company and Kilpatrick Life Insurance Company would be required to file notice of its intention to declare such a dividend or make such a distribution
with the Louisiana Commissioner and the Louisiana Commissioner must either approve the distribution or dividend or not disapprove the dividend or distribution
within 30 days’ of the notice filing. Based on First Guaranty Insurance Company’s and Kilpatrick Life Insurance Company’s surplus held for policyholders and net
gain from operations as of December 31, 2024, the maximum aggregate amount of dividends and distributions that it could pay or make in 2024 and which would not
constitute an “extraordinary” dividend or distribution under Louisiana law and would therefore not require notice and approval or lack of disproval from the Louisiana
Commissioner, would be approximately $742,000 for First Guaranty Insurance Company and $1,974,000 for Kilpatrick Life Insurance Company.
71
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
15) Business Segment Information
See Note 1 regarding the adoption of ASU 2023-07.
Description of Products and Services by Segment
The Company has three operating and reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment’s
revenue consists of life insurance premiums, fees earned on factored life insurance policies and net investment income derived from investing policyholder and surplus
funds. Its expenses include operating expenses to collect insurance premiums and insurance policy receivables, administer claims, and commissions related to the sale
of insurance products sold by the Company’s independent agency force. The Company’s cemetery and mortuary segment’s revenue consists of fees from the sale of at-
need cemetery and mortuary merchandise, services at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10% or more of the purchase
price and the net investment income from investing surplus cash. Its expenses include operating expenses to maintain mortuary and cemetery operations and
commissions related to the sale of insurance products sold by the Company’s agents. The Company’s mortgage segment’s revenue consists of residential mortgage
origination fee income and mortgage interest income. Its expenses include normal operating expenses related to the origination and sale of residential mortgage loans,
loan servicing and warehouse interest and fee expenses.
Services and Cost Sharing Policies
The accounting policies of the Company’s operating and reportable segments are the same as those described in the Significant Accounting Principles. Intersegment
revenues are recorded at cost plus an agreed upon intercompany profit and are eliminated upon consolidation. In addition to revenues, the reportable segments share in
business services and costs including personnel expenses, rent, information technology, software, interest expense, and other similar operating costs. These shared
services and costs are allocated between the segments using prevailing market rates and other agreed upon allocation methods.
Factors Management Used to Identify the Company’s Operating and Reportable Segments
The Company’s operating and reportable segments are business units that are managed separately due to the different products provided and the need to report
separately to the various regulatory jurisdictions.
Chief Operating Decision Maker (“CODM”)
The Company’s CODM is the Chief Executive Officer. The following table summarizes significant segment expenses. The significant expenses are based on the
information that the CODM is regularly provided to assess segment performance. The CODM reviews the regularly provided information for each segment monthly
and gives added emphasis on month over month and year over year comparative results. The CODM considers these comparative results when making decisions about
the allocation of the Company’s resources to each segment. The measure of segment profit or loss for the Company’s three operating and reportable business segments
is net earnings.
72
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
15) Business Segment Information (Continued)
Year Ended December 31, 2024
Life
Cemetery/
Insurance
Mortuary
Mortgage
Total
Revenues:
From external sources:
Revenue from external customers
$
119,655,745
$
29,037,173
$
107,558,640
$
256,251,558
Net investment income
68,254,989
2,568,511
901,749
71,725,249
Gains (losses) on investments and other assets
2,054,994
873,166
(986,262)
1,941,898
Other revenues
1,563,812
543,354
2,496,797
4,603,963
Intersegment revenues
7,272,110
340,933
573,449
8,186,492
Total segment revenues
198,801,650
33,363,137
110,544,373
342,709,160
Elimination of intersegment revenues
(8,186,492)
Total consolidated revenues
334,522,668
Less:
Death benefits
58,116,837
-
-
Surrenders and other policy benefits
4,584,763
-
-
Increase in future policy benefits
36,253,859
-
-
Amortization of deferred policy and pre-need acquisition costs and value
of business acquired
15,162,995
777,376
-
Selling, general and administrative expenses:
Commissions
3,809,118
1,564,426
41,599,365
Personnel
30,396,560
10,215,565
44,472,677
Advertising
466,821
568,597
2,079,702
Rent and rent related
434,604
158,950
4,553,515
Depreciation on property and equipment
923,365
830,855
629,401
Cost related to funding mortgage loans
-
-
6,134,709
Data processing and IT related (1)
847,845
240,946
3,453,741
Premium taxes on insurance premiums and other considerations (1)
3,067,467
-
-
Other segment items (1)(2)
8,640,857
4,975,269
6,401,085
Intersegment expenses (3)
913,279
365,635
6,907,578
Interest expense
3,727,514
827
525,759
Costs of goods and services sold-mortuaries and cemeteries
-
4,803,528
-
Income tax expense (benefit)
6,604,520
2,227,353
(1,263,871)
Segment net earnings (loss)
24,851,246
6,633,810
(4,949,288)
26,535,768
Net earnings
$
26,535,768
Segment assets
$
1,396,093,195
$
101,524,343
$
85,174,812
$ 1,582,792,350
Elimination of intersegment assets
(92,985,136)
Total consolidated assets
$
1,489,807,214
Expenditures for long-lived assets
$
52,414,507
$
2,185,269
$
219,054
$
54,818,830
(1)Included in other expenses on the consolidated statements of earnings. Data processing and IT related expenses includes various software subscriptions,
maintenance, consulting, support and storage fees.
(2) For each reportable segment, other segment items includes:
Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible assets, and certain
overhead expenses.
Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes, amortization of
intangible assets, and certain overhead expenses.
Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions, amortization expense
of mortgage servicing rights, and certain overhead expenses.
(3) For each reportable segment, intersegment expenses includes:
Life Insurance - mortgage servicing fees and interest expense.
Cemetery/Mortuary - rent expense, data processing and IT related expenses, and interest expense.
Mortgage - rent expense and interest expense.
73
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
15) Business Segment Information (Continued)
Year Ended December 31, 2023
Life
Cemetery/
Insurance
Mortuary
Mortgage
Total
Revenues:
From external sources:
Revenue from external customers
$
114,735,304
$
27,864,811
$
98,071,104
$
240,671,219
Net investment income
67,811,926
2,951,577
1,579,544
72,343,047
Gains (losses) on investments and other assets
962,824
717,312
157,206
1,837,342
Other revenues
1,666,020
404,256
1,575,606
3,645,882
Intersegment revenues
8,203,306
340,001
531,406
9,074,713
Total segment revenues
193,379,380
32,277,957
101,914,866
327,572,203
Elimination of intersegment revenues
(9,074,713)
Total consolidated revenues
318,497,490
Less:
Death benefits
61,390,517
-
-
Surrenders and other policy benefits
4,612,346
-
-
Increase in future policy benefits
34,008,997
-
-
Amortization of deferred policy and pre-need acquisition costs and value
of business acquired
17,485,699
538,639
-
Selling, general and administrative expenses:
Commissions
3,963,185
1,777,071
34,189,300
Personnel
26,769,211
9,722,659
46,649,889
Advertising
638,071
663,113
2,409,261
Rent and rent related
414,564
159,877
6,282,696
Depreciation on property and equipment
880,116
812,641
658,904
Cost related to funding mortgage loans
-
-
6,440,439
Data processing and IT related (1)
1,007,023
227,599
4,107,542
Premium taxes on insurance premiums and other considerations (1)
2,939,828
-
-
Other segment items (1)(2)
9,045,037
4,733,721
9,998,106
Intersegment expenses (3)
871,407
391,316
7,811,990
Interest expense
4,081,348
955
783,024
Costs of goods and services sold-mortuaries and cemeteries
-
4,805,700
-
Income tax expense (benefit)
3,655,148
2,131,289
(3,981,083)
Segment net earnings (loss)
21,616,883
6,313,377
(13,435,202)
14,495,058
Net earnings
$
14,495,058
Segment assets
$
1,329,049,024
$
97,547,937
$
97,018,754
$
1,523,615,715
Elimination of intersegment assets
(93,063,440)
Total consolidated assets
$
1,430,552,275
Expenditures for long-lived assets
$
23,010,579
$
856,716
$
137,246
$
24,004,541
(1)Included in other expenses on the consolidated statements of earnings. Data processing and IT related expenses includes various software subscriptions,
maintenance, consulting, support and storage fees.
(2) For each reportable segment, other segment items includes:
Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible assets, and certain
overhead expenses.
Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes, amortization of
intangible assets, and certain overhead expenses.
Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions, amortization expense
of mortgage servicing rights, and certain overhead expenses.
(3) For each reportable segment, intersegment expenses includes:
Life Insurance - mortgage servicing fees and interest expense.
Cemetery/Mortuary - rent expense, data processing and IT related expenses, and interest expense.
Mortgage - rent expense and interest expense.
74
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
16) Related Party Transactions
The Company’s Board of Directors has a written procedure, which requires disclosure to the Board of any material interest or any affiliation on the part of any of its
officers, directors or employees that is in conflict or may conflict with the interests of the Company. The Company and its Board of Directors are unaware of any
related party transactions that require disclosure as of December 31, 2024.
17) Fair Value of Financial Instruments
GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants. GAAP also specifies a fair value hierarchy based upon the observability of inputs
used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect
internally developed market assumptions. Fair value measurements are classified under the following hierarchy:
Level 1: Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the
Company can access.
Level 2: Financial assets and financial liabilities whose values are based on the following:
a)
Quoted prices for similar assets or liabilities in active markets;
b)
Quoted prices for identical or similar assets or liabilities in non-active markets; or
c)
Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant
to the overall fair value measurement. These inputs may reflect the Company’s estimates of the assumptions that market participants would use in valuing financial
assets and financial liabilities.
The Company utilizes a combination of third-party valuation service providers, brokers, and internal valuation models to determine fair value.
The following methods and assumptions were used by the Company in estimating the fair value disclosures related to significant financial instruments:
The items shown under Level 1 and Level 2 are valued as follows:
Fixed Maturity Securities Available for Sale: The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity
securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements (considered Level
3 financial assets), are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit, and maturity of the
investments.
Equity Securities: The fair values for equity securities are based on quoted market prices.
75
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
17) Fair Value of Financial Instruments (Continued)
Restricted Assets: A portion of these assets include equity securities and fixed maturity securities available for sale that have quoted market prices that are used to
determine fair value. Also included are cash and cash equivalents and participations in mortgage loans. The carrying amounts reported in the accompanying
consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature.
Cemetery Perpetual Care Trust Investments: A portion of these assets include equity securities and fixed maturity securities available for sale that have quoted market
prices that are used to determine fair value. Also included are cash and cash equivalents. The carrying amounts reported in the accompanying consolidated balance
sheets for these financial instruments approximate their fair values due to their short-term nature
Additionally, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.
The items shown under Level 3 are valued as follows:
Loans Held for Sale: The Company elected the fair value option for loans held for sale. The fair value is based on quoted market prices, when available. When a
quoted market price is not readily available, the Company uses the market price from its last sale of similar assets. Fair value is often difficult to determine and may
contain significant unobservable inputs.
Loan Commitments and Forward Sale Commitments: The Company’s mortgage segment enters into loan commitments with potential borrowers and forward sale
commitments to sell loans to third-party investors. The Company also uses a hedging strategy for these transactions. A loan commitment binds the Company to lend
funds to a qualified borrower at a specified interest rate and within a specified period, generally up to 30 days after issuance of the loan commitment. Loan
commitments are defined to be derivatives under GAAP and are recognized at fair value on the consolidated balance sheets with changes in their fair values recorded
in current earnings.
The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted MBS prices,
estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The
change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued. Following issuance, the value of a mortgage loan
commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates and other factors from the
Company’s recent historical data are used to estimate the quantity and value of mortgage loans that will fund within the terms of the commitments.
Impaired Mortgage Loans Held for Investment: The Company believes that the fair value of these nonperforming loans will approximate the unpaid principal balance
expected to be recovered based on the fair value of the underlying collateral. For residential and commercial properties, the collateral value is estimated by obtaining
an independent appraisal. The appraisal typically considers area comparable properties and property condition as well as potential rental income that could be
generated (particularly for commercial properties). For residential construction loans, the collateral is typically incomplete, so fair value is estimated as the
replacement cost using data from a provider of building cost information to the real estate construction.
Impaired Real Estate Held for Investment: Fair value is generally determined by obtaining an independent appraisal, which typically considers area comparable
properties and property condition. The Company believes that in an orderly market, fair value approximates the replacement cost of a home and will list for sale any
foreclosed properties. In a disorderly market, the Company believes the highest and best use of the properties is as income producing assets and will hold the
properties as rental properties, matching the income from the investment in rental properties with the funds required for estimated future policy benefits. Accordingly,
in addition to an appraisal, the fair value determination will generally be weighed more heavily toward the rental analysis.
76
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
17) Fair Value of Financial Instruments (Continued)
It should be noted that for replacement cost, when determining the fair value of real estate held for investment, the Company uses a provider of building cost
information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and
projected the present value of the net rental income over seven years. The Company also considers area comparable properties and property condition when
determining fair value.
In addition to this analysis performed by the Company, the Company depreciates Real Estate Held for Investment. This depreciation reduces the book value of these
properties and lessens the exposure to the Company from further deterioration in real estate values.
Mortgage Servicing Rights: The Company initially recognizes MSRs at their estimated fair values derived from the net cash flows associated with the servicing
contracts, where the Company assumes the obligation to service the loan in the sale transaction.
The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the
consolidated balance sheet as of December 31, 2024.
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
$
366,546,129
$
-
$
365,396,203
$
1,149,926
Equity securities
15,771,681
15,771,681
-
-
Loans held for sale
131,181,148
-
-
131,181,148
Restricted assets (1)
2,351,369
-
2,351,369
-
Restricted assets (2)
9,972,166
9,972,166
-
-
Cemetery perpetual care trust investments (1)
769,662
-
769,662
-
Cemetery perpetual care trust investments (2)
4,920,044
4,920,044
-
-
Derivatives - loan commitments (3)
5,348,089
-
-
5,348,089
Total assets accounted for at fair value on a
recurring basis
$
536,860,288
$
30,663,891
$
368,517,234
$
137,679,163
Liabilities accounted for at fair value on a
recurring basis
Derivatives - loan commitments (4)
$
(3,034,879)
$
-
$
-
$
(3,034,879)
Total liabilities accounted for at fair value on a recurring
basis
$
(3,034,879)
$
-
$
-
$
(3,034,879)
(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
77
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
17) Fair Value of Financial Instruments (Continued)
The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the
consolidated balance sheet as of December 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
$
381,535,986
$
-
$
380,297,330
$
1,238,656
Equity securities
13,636,071
13,636,071
-
-
Loans held for sale
126,549,190
-
-
126,549,190
Restricted assets (1)
1,853,860
-
1,853,860
-
Restricted assets (2)
7,385,203
7,385,203
-
-
Cemetery perpetual care trust investments (1)
641,704
-
641,704
-
Cemetery perpetual care trust investments (2)
4,327,301
4,327,301
-
-
Derivatives - loan commitments (3)
4,995,486
-
-
4,995,486
Total assets accounted for at fair value on a
recurring basis
$
540,924,801
$
25,348,575
$
382,792,894
$
132,783,332
Liabilities accounted for at fair value on a
recurring basis
Derivatives - loan commitments (4)
$
(3,412,224)
$
-
$
-
$
(3,412,224)
Total liabilities accounted for at fair value
on a recurring basis
$
(3,412,224)
$
-
$
-
$
(3,412,224)
(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
For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2024, 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
12/31/2024
Technique
Input(s)
Value
Value
Average
Loans held for sale
$131,181,148
Market approach
Investor contract pricing as a
percentage of unpaid
principal balance
84.0%
109.0%
102.0%
Derivatives - loan commitments (net)
2,313,210
Market approach
Pull-through rate
63.0%
100.0%
83.0%
Initial-Value
N/A
N/A
N/A
Servicing
0 bps
242 bps
47 bps
Fixed maturity securities available for
sale
1,149,926
Broker quotes
Pricing quotes
$
100.00
$
101.20
$
100.16
78
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
17) Fair Value of Financial Instruments (Continued)
For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 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
12/31/2023
Technique
Input(s)
Value
Value
Average
Loans held for sale
$126,549,190
Market approach
Investor contract pricing as a
percentage of unpaid
principal balance
70.0%
121.0%
100.0%
Derivatives - loan commitments (net)
1,583,262
Market approach
Pull-through rate
70.0%
99.0%
86.0%
Initial-Value
N/A
N/A
N/A
Servicing
0 bps
119 bps
49 bps
Fixed maturity securities available for
sale
1,238,656
Broker quotes
Pricing quotes
$
98.40
$
102.46
$
99.86
The following table is a summary of changes in the consolidated balance sheet line items measured using level 3 inputs:
Net Derivatives
Loan
Commitments
Loans Held for
Sale
Fixed Maturity
Securities
Available for Sale
Balance - December 31, 2023
$
1,583,262
$
126,549,190
$
1,238,656
Originations/purchases
-
2,295,830,408
-
Sales, maturities and paydowns
-
(2,338,209,587)
(92,593)
Foreclosed into real estate held for sale
-
(858,977)
-
Foreclosed into receivables
-
(382,936)
-
Total gains (losses):
Included in earnings
729,948(1)
48,253,050(1)
-(2)
Included in other comprehensive income
-
-
3,863
Balance - December 31, 2024
$
2,313,210
$
131,181,148
$
1,149,926
(1) As a component of mortgage fee income on the consolidated statements of earnings
(2) As a component of net investment income on the consolidated statements of earnings
The following table is a summary of changes in the consolidated balance sheet line items measured using level 3 inputs:
Net Derivatives
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/purchases
-
2,173,080,584
-
Sales, maturities and paydowns
-
(2,224,454,040)
(129,521)
Transfer to mortgage loans held for investment
-
(3,017,626)
-
Total gains (losses):
Included in earnings
(1,123,615) (1)
39,760,652(1)
(108) (2)
Included in other comprehensive income
-
-
(67,234)
Balance - December 31, 2023
$
1,583,262
$
126,549,190
$
1,238,656
(1) As a component of mortgage fee income on the consolidated statements of earnings
(2) As a component of net investment income on the consolidated statements of earnings
79
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
17) Fair Value of Financial Instruments (Continued)
The Company did not have any financial assets and financial liabilities measured at fair value on a nonrecurring basis as of December 31, 2024 and 2023, respectively.
Fair Value of Financial Instruments Carried at Other Than Fair Value
ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments whether or not recognized in the balance sheet, for which it
is practicable to estimate that value.
The Company uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation
technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company
could have realized in a sales transaction as of December 31, 2024 and 2023.
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, 2024:
Carrying Value
Level 1
Level 2
Level 3
Total Estimated
Fair Value
Assets
Mortgage loans held for investment
Residential
$
89,780,350
$
-
$
-
$
90,168,328
$
90,168,328
Residential construction
150,211,240
-
-
150,211,240
150,211,240
Commercial
61,755,768
-
-
60,864,775
60,864,775
Mortgage loans held for investment, net
$
301,747,358
$
-
$
-
$
301,244,343
$
301,244,343
Policy loans
14,019,248
-
-
14,019,248
14,019,248
Insurance assignments, net (1)
46,956,932
-
-
46,956,932
46,956,932
Restricted assets (2)
983,834
-
-
983,834
983,834
Cemetery perpetual care trust investments (2)
2,141,464
-
-
2,141,464
2,141,464
Mortgage servicing rights, net
2,939,878
-
-
4,552,316
4,552,316
Liabilities
Bank and other loans payable
$
(106,740,104)
$
-
$
-
$
(90,455,678)
$
(90,455,678)
Policyholder account balances (3)
(37,066,043)
-
-
(37,626,593)
(37,626,593)
Future policy benefits - annuities (3)
(105,716,087)
-
-
(104,611,544)
(104,611,544)
(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
80
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
17) 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, 2023:
Carrying Value
Level 1
Level 2
Level 3
Total Estimated
Fair Value
Assets
Mortgage loans held for investment
Residential
$
99,519,750
$
-
$
-
$
96,998,106
$
96,998,106
Residential construction
103,529,896
-
-
103,529,896
103,529,896
Commercial
72,567,191
-
-
72,149,530
72,149,530
Mortgage loans held for investment, net
$
275,616,837
$
-
$
-
$
272,677,532
$
272,677,532
Policy loans
13,264,183
-
-
13,264,183
13,264,183
Insurance assignments, net (1)
44,051,486
-
-
44,051,486
44,051,486
Restricted assets (2)
675,219
-
-
675,219
675,219
Cemetery perpetual care trust investments (2)
246,865
-
-
246,865
246,865
Mortgage servicing rights, net
3,461,146
-
-
4,543,657
4,543,657
Liabilities
Bank and other loans payable
$
(105,555,137)
$
-
$
-
$
(105,555,137)
$
(105,555,137)
Policyholder account balances (3)
(39,245,123)
-
-
(48,920,691)
(48,920,691)
Future policy benefits - annuities (3)
(106,285,010)
-
-
(102,177,585)
(102,177,585)
(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
The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of financial instruments are summarized as follows:
Mortgage Loans Held for Investment: The estimated fair value of the Company’s mortgage loans held for investment is determined using various methods. The
Company’s mortgage loans are grouped into three categories: Residential, Residential Construction and Commercial. When estimating the expected future cash flows,
it is assumed that all loans will be held to maturity, and any loans that are non-performing are evaluated individually for impairment.
Residential — The estimated fair value is determined by estimating expected future cash flows of payments and discounting them using current interest rates
for single family mortgages and considering pricing of similar loans that were sold recently.
Residential Construction — These loans are primarily short in maturity. Accordingly, the estimated fair value is determined to be the carrying value.
Commercial — The estimated fair value is determined by estimating expected future cash flows of payments and discounting them using current interest rates
for commercial mortgages.
Policy Loans: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values because
they are fully collateralized by the cash surrender value of the underlying insurance policies.
Insurance Assignments, Net: These investments are short in maturity. Accordingly, the carrying amounts reported in the accompanying consolidated balance sheet for
these financial instruments approximate their fair values.
81
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
17) Fair Value of Financial Instruments (Continued)
Bank and Other Loans Payable: The carrying amounts reported in the accompanying consolidated balance sheet for warehouse lines of credit approximate their fair
values due to their relatively short-term maturities and variable interest rates. The estimated fair value for bank loans collateralized by real estate is determined by
estimating future cash flows of payments and discounting them using current market rates.
Policyholder Account Balances and Future Policy Benefits-Annuities: Future policy benefit reserves for interest-sensitive insurance products are computed under a
retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include
benefit claims incurred in the period more than related policy account balances. Interest credit rates for interest-sensitive insurance products ranged from 1.5% to
6.5%. The fair values for these investment-type insurance policies are estimated based on the present value of liability cash flows. The fair values for the Company’s
insurance policies other than investment-type policies are not required to be disclosed. However, the fair values of liabilities under all insurance policies are taken into
consideration in the Company’s overall management of interest rate risk, such that the Company’s exposure to changing interest rates is minimized through the
matching of investment maturities with amounts due under insurance policies.
18) Accumulated Other Comprehensive Income (loss)
The following summarizes the changes in accumulated other comprehensive income (loss):
December 31
2024
2023
Unrealized gains on fixed maturity securities available for sale
$
77,334
$
7,853,398
Amounts reclassified into net earnings
(156,562)
(39,074)
Net unrealized gains (losses) before taxes
(79,228)
7,814,324
Tax benefit (expense)
13,942
(1,640,186)
Net
(65,286)
6,174,138
Unrealized gains on restricted assets (1)
841
11,175
Tax expense
(210)
(2,784)
Net
631
8,391
Unrealized gains (losses) on cemetery perpetual care trust investments (1)
(1,403)
2,917
Tax benefit (expense)
350
(727)
Net
(1,053)
2,190
Other comprehensive income (loss) changes
$
(65,708)
$
6,184,719
(1) Fixed maturity securities available for sale
82
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
18) Accumulated Other Comprehensive Income (loss) (Continued)
The following is the accumulated balances of other comprehensive income (loss) as of December 31, 2024:
Beginning Balance
December 31,
2023
Change for the
period
Ending Balance
December 31,
2023
Unrealized gains on fixed maturity securities
available for sale
$
(6,876,629)
$
(65,286)
$
(6,941,915)
Unrealized gains (losses) on restricted assets (1)
(4,757)
631
(4,126)
Unrealized losses on cemetery perpetual
care trust investments (1)
(4,172)
(1,053)
(5,225)
Other comprehensive loss
$
(6,885,558)
$
(65,708)
$
(6,951,266)
(1) Fixed maturity securities available for sale
The following is the accumulated balances of other comprehensive income (loss) as of December 31, 2023:
Beginning Balance
December 31,
2022
Change for the
period
Ending Balance
December 31,
2023
Unrealized gains (losses) on fixed maturity securities
available for sale
$
(13,050,767)
$
6,174,138
$
(6,876,629)
Unrealized gains (losses) on restricted assets (1)
(13,148)
8,391
(4,757)
Unrealized gains (losses) on cemetery perpetual
care trust investments (1)
(6,362)
2,190
(4,172)
Other comprehensive income (loss)
$
(13,070,277)
$
6,184,719
$
(6,885,558)
(1) Fixed maturity securities available for sale
83
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
19) Derivative Instruments
The Company reports derivative instruments pursuant to the accounting policy discussed in Note 1.
The following table shows the fair value and notional amounts of derivative instruments.
December 31, 2024
December 31, 2023
Balance Sheet
Location
Notional
Amount
Asset Fair
Value
Liability
Fair Value
Notional
Amount
Asset Fair
Value
Liability
Fair Value
Derivatives not designated as hedging
instruments:
Loan commitments
Other assets and
Other liabilities
$210,597,657
$ 5,348,089
$ 3,034,879
$161,832,250
$ 4,995,486
$ 3,412,224
Total
$210,597,657
$ 5,348,089
$ 3,034,879
$161,832,250
$ 4,995,486
$ 3,412,224
The following table presents the gains (losses) on derivatives. There were no gains or losses reclassified from accumulated other comprehensive income into income,
or gains or losses recognized into income on the ineffective portion of the derivatives or any amounts excluded from effective testing.
Years ended December 31,
Derivative
Classification
2024
2023
Loan commitments
Mortgage fee income
$
729,948
$
(1,123,615)
Call and put options
Gains on investments and other assets
$
-
$
49,963
84
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
20) Mortgage Servicing Rights
The Company reports MSRs pursuant to the accounting policy discussed in Note 1.
The following table presents the MSR activity.
December 31,
2024
2023
Amortized cost:
Balance before valuation allowance at beginning of year
$
3,461,146
$
3,039,765
MSR additions resulting from loan sales
90,370
1,009,312
Amortization (1)
(611,638)
(587,931)
Sale of MSRs
-
-
Application of valuation allowance to write down MSRs
with other than temporary impairment
-
-
Balance before valuation allowance at year end
$
2,939,878
$
3,461,146
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
$
2,939,878
$
3,461,146
Estimated fair value of MSRs at year end
$
4,552,316
$
4,543,657
(1)Included in other expenses on the consolidated statements of earnings
The table below summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the
Company’s assumptions in its December 31, 2024, valuation of MSRs. The assumptions used in the following table are likely to change as market conditions,
portfolio composition and borrower behavior change, causing both actual and projected amortization levels to change over time.
Estimated
MSR
Amortization
2025
$
305,312
2026
272,903
2027
249,515
2028
224,804
2029
202,811
Thereafter
1,684,533
Total
$
2,939,878
85
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
20) 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,
2024
2023
Contractual servicing fees
$
968,814 $
1,144,540
Late fees
77,123
97,300
Total
$
1,045,937 $
1,241,840
The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio.
December 31,
2024
2023
Servicing UPB
$ 385,134,774 $ 414,147,436
The following key assumptions were used in determining MSR value.
Prepayment
Speeds
Average
Life(Years)
Discount
Rate
December 31, 2024
8.79
8.28
12.14
December 31, 2023
9.70
7.79
11.85
86
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
21) Future Policy Benefits and Unpaid Claims
The Company reports future policy benefits and unpaid claims pursuant to the accounting policy discussed in Note 1.
The following table provides information regarding future policy benefits and unpaid claims and the related receivable from reinsurers.
December 31,
2024
2023
Life
$
790,212,538
$
756,936,902
Annuities
105,815,690
106,285,010
Policyholder account balances
37,066,043
39,245,123
Accident and health
543,792
572,689
Other policyholder funds
4,482,462
4,411,108
Reported but unpaid claims
2,463,220
3,525,774
Incurred but not reported claims
4,228,098
5,062,010
Gross future policy benefits and unpaid claims
$
944,811,843
$
916,038,616
Receivable from reinsurers
Life
10,285,092
10,478,863
Annuities
3,415,644
4,238,934
Accident and health
74,762
77,917
Reported but unpaid claims
45,595
48,345
Incurred but not reported claims
10,000
13,000
Total receivable from reinsurers
13,831,093
14,857,059
Net future policy benefits and unpaid claims
$
930,980,750
$
901,181,557
Net unpaid claims
$
6,635,723
$
8,526,439
The following table provides a roll forward of the Company’s liability for reported but unpaid claims and incurred but not reported claims, net of the related receivable
from reinsurers.
Life
Annuities
Accident and Health
Total
Balance at 12/31/2022
$
9,404,263
$
649,452
$
17,000
$
10,070,715
Incurred
61,390,517(1)
12,669,463(2)
30,408(3)
74,090,388
Settled
(62,665,619)
(12,939,637)
(29,408)
(75,634,664)
Balance at 12/31/2023
8,129,161
379,278
18,000
8,526,439
Incurred
58,116,837(1)
12,416,335(2)
2,767(3)
70,535,939
Settled
(59,882,755)
(12,540,133)
(3,767)
(72,426,655)
Balance at 12/31/2024
$
6,363,243
$
255,480
$
17,000
$
6,635,723
(1) See death benefits on the consolidated statements of earnings
(2) Included in increase in future benefits on the consolidated statements of earnings
(3) Included in surrender and other policy benefits on the consolidated statements of earnings
87
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
22) Revenues from Contracts with Customers
The Company reports revenues from contracts with customers pursuant to ASC No. 606, Revenue from Contracts with Customers.
Contracts with Customers
Information about Performance Obligations and Contract Balances
The Company’s cemetery and mortuary segment sells a variety of goods and services to customers in both at-need and pre-need situations. Due to the timing of the
fulfillment of the obligation, revenue is deferred until that obligation is fulfilled. The total contract liability for future obligations is included in deferred pre-need
cemetery and mortuary contract revenues on the consolidated balance sheets and, as of December 31, 2024 and 2023, the balances were $20,168,405 and $18,237,246,
respectively.
The Company’s three types of future obligations are as follows:
Pre-need Merchandise and Service Revenue: All pre-need merchandise and service revenue is deferred, and the funds are placed in trust until the need arises, the
merchandise is received, or the service is performed. The trust is then relieved, and the revenue and commissions are recognized. As of December 31, 2024 and 2023,
the balances were $19,511,868 and $17,424,764, respectively.
At-need Specialty Merchandise Revenue: At-need specialty merchandise revenue consists of customizable merchandise ordered from a manufacturer such as markers
and bases. When specialty merchandise is ordered, it can take time to manufacture and deliver the product. Revenue is deferred until the at-need merchandise is
received. As of December 31, 2024 and 2023, the balances were $656,537 and $812,482, respectively. Deferred revenue for at-need specialty revenue is not placed in
trust.
Deferred Pre-need Land Revenue: Deferred pre-need revenue and corresponding commissions are deferred until 10% of the funds are received from the customer
through regular monthly payments. As of December 31, 2024 and 2023, the balances were nil and nil, respectively. Deferred pre-need land revenue is not placed in
trust.
Complete payment of the contract does not constitute fulfillment of the performance obligation. Goods or services are deferred until such a time the service is
performed, or merchandise is received. Pre-need contracts are required to be paid in full prior to a customer using a good or service from a pre-need contract. Goods
and services from pre-need contracts can be transferred when paid in full from one owner to another. In such cases, the Company will act as an agent in transferring
the requested goods and services. A transfer of goods and services does not fulfill an obligation and revenue remains deferred.
88
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
22) Revenues from Contracts with Customers (Continued)
The opening and closing balances of the Company’s receivables, contract assets and contract liabilities are as follows:
Contract Balances
Receivables (1)
Contract Asset
Contract Liability
Opening (1/1/2024)
$
6,321,573
$
-
$
18,237,246
Closing (12/31/2024)
7,095,589
-
20,168,405
Increase/(decrease)
774,016
-
1,931,159
Contract Balances
Receivables (1)
Contract Asset
Contract Liability
Opening (1/1/2023)
$
5,392,779
$
-
$
16,226,836
Closing (12/31/2023)
6,321,573
-
18,237,246
Increase/(decrease)
928,794
-
2,010,410
(1)Included in Receivables, net on the consolidated balance sheets
The following table disaggregates the opening and closing balances of the Company’s contract balances.
Contract Balances
Contract Asset
Contract Liability
Pre-need merchandise and services
$
-
$
17,424,764
At-need specialty merchandise
-
812,482
Pre-need land sales
-
-
Opening (1/1/2024)
$
-
$
18,237,246
Pre-need merchandise and services
$
-
$
19,511,868
At-need specialty merchandise
-
656,537
Pre-need land sales
-
-
Closing (12/31/2024)
$
-
$
20,168,405
Contract Balances
Contract Asset
Contract Liability
Pre-need merchandise and services
$
-
$
15,289,901
At-need specialty merchandise
-
936,935
Pre-need land sales
-
-
Opening (1/1/2023)
$
-
$
16,226,836
Pre-need merchandise and services
$
-
$
17,424,764
At-need specialty merchandise
-
812,482
Pre-need land sales
-
-
Closing (12/31/2023)
$
-
$
18,237,246
89
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
22) Revenues from Contracts with Customers (Continued)
The amount of revenue recognized for 2024 and 2023 that was included in the opening contract liability balance was $5,324,668 and $4,539,540, respectively.
The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between
the Company’s performance and the customer’s payment.
Disaggregation of Revenue
The following table disaggregates revenue for the Company’s cemetery and mortuary contracts.
Years Ended
December 31
2024
2023
Major goods/service lines
At-need
$
19,989,995 $
19,957,735
Pre-need
9,047,178
7,907,076
$
29,037,173 $
27,864,811
Timing of Revenue Recognition
Goods transferred at a point in time
$
18,147,136 $
17,560,899
Services transferred at a point in time
10,890,037
10,303,912
$
29,037,173 $
27,864,811
Significant Judgments and Estimates
The Company’s cemetery and mortuary segment recognizes revenue on future performance obligations when goods are delivered and when services are performed
and is not determined by the terms or payments of the contract as long as any good or service is paid in full prior to delivery. Prices are determined based on the
market at the time a contract is created. Goods or services are not partially completed. There are no significant judgements, estimations, or allocation methods for
when revenue should be recognized.
Practical Expedients
The Company has not elected to use any of the practical expedients.
Contract Costs
The Company’s cemetery and mortuary segment defer certain costs associated with obtaining a contract on future obligations.
Pre-need Merchandise and Service Revenue: Pre-need merchandise and service revenues are deferred until the goods or services are delivered. Recognition can be
years until the obligations are satisfied. Commissions and other costs are capitalized and deferred until the obligation is satisfied. Other costs include rent on pre-need
offices and training rooms, and call center costs. Costs that are allocated based on a percentage include family service advisor compensation, bonuses, utilities, and
supplies that are all used to procure a pre-need sale.
At-need Specialty Merchandise Revenue: At-need specialty merchandise is ordered from a third-party manufacturer. Generally, at-need specialty merchandise is
ordered and received within 90 days of order. These orders are also short-term in nature and are deferred until the product is received from the manufacturer and the
obligation is satisfied.
90
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
22) Revenues from Contracts with Customers (Continued)
Deferred Pre-need Land Revenue: Revenue is recognized on pre-need land sales when the customer has paid at least 10% toward the land price. In cases where
customers pay less than 10% of the revenue and associated commissions are deferred until such a time when 10% of the contract price is received.
The following table disaggregates contract costs that are included in the deferred policy and pre-need contract acquisition costs on the consolidated balances sheets.
Years Ended
December 31
2024
2023
Pre-need merchandise and services
$
4,113,793 $
3,951,267
At-need specialty merchandise
11,268
23,090
Pre-need land sales
-
-
$
4,125,061 $
3,974,357
23) Leases
A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a
period in exchange for consideration. The Company determines if a contract is a lease at the inception of the contract. At the commencement date of a lease, the
Company measures the lease liability at the present value of the lease payments over the lease term, discounted using the discount rate for the lease. The Company
uses the rate implicit in the lease, if available, otherwise the Company uses its incremental borrowing rate. Also, at the commencement date of a lease, the Company
measures the cost of the related right-of-use asset which consists of the amount of the initial measurement of the lease liability, any lease payments made to the lessor
at or before the commencement date, minus any lease incentives received and any initial direct costs incurred by the Company.
Information about the Nature of Leases and Subleases
The Company leases office space and equipment from third parties under various non-cancelable agreements. The Company has operating leases for office space for
its segments in areas where it conducts business. The Company subleases some of this office space. The Company also has finance leases for certain equipment, such
as copy machines and postage machines. The Company does not have any lease agreements with variable lease payments. The Company has not included any options
to extend or terminate leases in the recognition of the right-of-use assets or lease liabilities because of the uncertainty that they will be exercised. No residual value
guarantees have been provided to the Company. The Company does not have any restrictions or covenants imposed by leases.
Leases that have not Commenced
The Company does not have any leases that have not commenced that create significant rights or obligations for the Company.
Related Party Lease Transactions
The Company does not have any related party lease transactions that require disclosure as of December 31, 2024.
91
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
23) Leases (Continued)
Short-term Leases
The Company made an accounting policy election not to apply the recognition requirements of ASC 842 to short-term leases, which are leases that, at the
commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying assets that the lessee is reasonably certain to
exercise.
Significant Judgments and Assumptions
The Company does not use any significant judgments or assumptions regarding the determination of whether a contract contains a lease; the allocation of the
consideration in a contract between lease and non-lease components; or the determination of the discount rates for the leases. The following table presents the
Company’s total lease cost recognized in earnings, amounts capitalized as right-of-use assets and cash flows from lease transactions.
Years Ended December 31
2024
2023
Lease Cost
Finance lease cost:
Amortization of right-of-use assets (1)
$
48,687
$
25,573
Interest on lease liabilities (2)
6,553
1,713
Operating lease cost (3)
3,102,662
3,914,954
Short-term lease cost (3)(4)
1,419,524
1,874,556
Sublease income (3)
(562,675)
(323,272)
Total lease cost
$
4,014,751
$
5,493,524
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
3,622,607
$
4,007,919
Operating cash flows from finance leases
6,553
1,713
Financing cash flows from finance leases
46,425
27,868
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases
$
1,770,873
$
160,348
Finance leases
176,040
12,332
Weighted-average remaining lease term (in years)
Finance leases
1.80
3.29
Operating leases
2.66
2.88
Weighted-average discount rate
Finance leases
7.89%
6.81%
Operating leases
5.37%
4.54%
(1)Included in Depreciation on property and equipment on the consolidated statements of earnings
(2)Included in Interest expense on the consolidated statements of earnings
(3)Included in Rent and rent related expenses on the consolidated statements of earnings
(4)Includes leases with a term of 12 months or less
92
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
23) Leases (Continued)
The following table presents the maturity analysis of the Company’s lease liabilities.
Finance Leases
Operating Leases
Lease payments due in:
2025
$
88,504
$
2,532,116
2026
63,751
1,956,436
2027
2,833
643,208
2028
1,181
304,099
2029
-
207,649
Thereafter
-
72,751
Total undiscounted lease payments
156,269
5,716,259
Less: Discount on cash flows
(11,102)
(430,819)
Present value of lease liabilities
$
145,167
$
5,285,440
The following table presents the Company’s right-of-use assets and lease liabilities.
Year Ended December 31,
Balance Sheet Location
2024
2023
Operating Leases
Right-of-use assets
Other assets
$
4,837,045
$
6,374,336
Lease liabilities
Other liabilities and accrued expenses
$
5,285,440
$
6,888,542
Finance Leases
Right-of-use assets
$
207,127
$
130,367
Accumulated amortization
(64,971)
(115,565)
Right-of-use assets, net
Property and equipment, net
$
142,156
$
14,802
Lease liabilities
Bank and other loans payable
$
145,167
$
15,550
The Company is also a lessor and has operating lease agreements with various tenants that lease its commercial properties. See Note 2 for information about the
Company’s real estate held for investment.
93
The Company’s Class A Common Stock trades on The Nasdaq Global Select Market under the symbol “SNFCA.” As of March 27, 2025, the closing stock price of the
Class A Common Stock was $12.61 per share. As of March 27, 2025, there were 1,605 registered stockholders of record of the Company’s Class A Common Stock
and 45 registered stockholders of record of the Company’s Class C Common Stock. Because many of the Company’s shares of Class A Common Stock are held by
brokers and other institutions on behalf of the stockholders, the Company is unable to estimate the total number of stockholders represented by these record holders.
The following were the high and low market closing stock prices for the Class A Common Stock by quarter as reported by NASDAQ since January 1, 2023:
Price Range (1)
High
Low
Period (Calendar Year)
2023
First Quarter
$
6.85 $
5.44
Second Quarter
$
8.05 $
5.74
Third Quarter
$
8.41 $
7.22
Fourth Quarter
$
9.14 $
6.56
2024
First Quarter
$
9.04 $
7.26
Second Quarter
$
8.00 $
6.19
Third Quarter
$
9.20 $
7.45
Fourth Quarter
$
13.42 $
9.12
2025
First Quarter (through March 27, 2025)
$
13.46 $
11.31
(1) Stock prices have been adjusted retroactively for the effect of annual stock dividends.
The Class C Common Stock is not registered or traded on a national exchange. See Note 12 of the Notes to Consolidated Financial Statements.
The Company has never paid a cash dividend on its Class A or Class C Common Stock. The Company currently anticipates that all its earnings will be retained for use
in the operation and expansion of its business and does not intend to pay any cash dividends on its Class A or Class C Common Stock in the foreseeable future. Any
future determination as to cash dividends will depend upon the earnings and financial position of the Company and such other factors as its Board of Directors may
deem appropriate. The Company paid a 5% stock dividend on Class A and Class C Common Stock each year from 1990 through 2019, a 7.5% stock dividend for the
year 2020, and a 5.0% stock dividend for the years 2021 through 2024.
On April 15, 2024, the Company executed a 10b5-1 agreement with a broker to repurchase shares of the Company’s Class A Common Stock. Under the terms of the
agreement, the broker is permitted to repurchase up to $1,000,000 of the Company’s Class A Common Stock. Purchases commenced May 15, 2024. The agreement is
subject to the daily time, price and volume conditions of Rule 10b-18. The agreement expired on December 31, 2024.
The following table shows the Company’s repurchase activity of its common stock during the three-month period ended December 31, 2024, under the 10b5-1
agreement.
Period
(a) Total Number
of Class A Shares
Purchased
(b) Average Price
Paid per Class A
Share (1)
(c) Total Number
of Class A Shares
Purchased as Part
of Publicly
Announced Plan
or Program
(d) Maximum
Number of Class
A Shares that
May Yet Be
Purchased Under
the Plan or
Program (2)
10/1/2024-10/31/2024
-
$
-
-
194,612
11/1/2024-11/30/2024
-
-
-
194,612
12/1/2024-12/31/2024
-
-
-
194,612
Total
-
$
-
-
194,612
(1) Includes fees and commissions paid on stock repurchases.
(2) In September 2018, the Board of Directors of the Company approved a Stock Repurchase Plan that authorized the repurchase of 300,000 shares of the Company’s
Class A Common Stock in the open market. The Company amended the Stock Repurchase Plan on December 4, 2020. The amendment authorized the repurchase
of a total of 1,000,000 shares of the Company’s Class A Common Stock in the open market. Any repurchased shares of Class A Common Stock are to be held as
treasury shares to be used as the Company’s employer matching contribution to the Employee 401(k) Retirement Savings Plan and for shares held in the Deferred
Compensation Plan.
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Market for the Registrant's Common Stock, Related Stockholder Matters, and Issuer Purchases of Equity Securities
94
The graph below compares the cumulative total stockholder return of the Company’s Class A Common Stock with the cumulative total return on the Standard &
Poor’s 500 Stock Index and the Standard & Poor’s Insurance Index for the period from December 31, 2020 through December 31, 2024. The graph assumes that the
value of the investment in the Company’s Class A Common Stock and in each of the indexes was $100 as of December 31, 2020 and that all dividends were
reinvested.
The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of the Company’s Class A Common
Stock.
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
SNFC
100
116
96
125
175
S & P 500
100
128
103
128
158
S & P Insurance
100
125
135
145
181
The stock performance graph set forth above is required by the Securities and Exchange Commission and shall not be deemed to be incorporated by reference by any
general statement incorporating by reference this Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed soliciting material
or filed under such acts.
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
Market for the Registrant's Common Stock, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Security National Financial Corporation
433 Ascension Way, 6th Floor
Salt Lake City, UT 84123
www.SecurityNational.com