Security National : Annual Report

SECURITY NATIONAL CORPORATION

Annual Report 2021

FINANCIAL HIGHLIGHTS

CONSOLIDATED DATA FOR SECURITY NATIONAL CORPORATION

(Dollar amounts in thousands, except for share and per share information)

2021 2020 2019 2018

2017

Net Interest Income	$40,551	$40,504	$42,641	$43,055	$39,601
Net Income	22,472	19,617	21,209	22,176	11,837
Return on Average Assets	1.18%	1.18%	1.49%	1.57%	0.83%
Return on Average Equity	11.28%	10.66%	12.29%	14.02%	7.52%
Earnings Per Share
Basic	$13.14	$11.33	$12.02	$12.50	$6.63
Diluted	12.96	11.16	11.85	12.33	6.55
Assets	1,958,819	1,807,719	1,474,811	1,417,166	1,397,334
Deposits	1,515,530	1,404,580	1,128,639	1,109,088	1,119,438
Net Loans	944,211	947,553	911,460	873,508	829,943
Investment Securities	503,370	355,340	340,651	352,920	366,073
Shareholders' Equity	195,932	191,190	174,094	161,227	151,633
Allowance for Loan Losses	17,755	17,673	18,107	17,909	17,789
Shares Outstanding	1,683,998	1,734,875	1,779,915	1,794,631	1,801,196
Shareholders of Record	193	195	198	206	208

1

FROM THE CHAIRMAN, PRESIDENT AND CEO

To our shareholders:

I begin with a note of reflection as 2021 marked my 50th year at Security National Corporation. I have been fortunate to interact with so many exceptional people during my career and have seen significant change during my five decades in banking. One thing remains constant, however, the hard work and dedication of our employees. It has been truly rewarding to be part of such an outstanding organization.

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Record results benefited shareholders in the following ways:

• • Payment of a $3 per share special dividend;

• • Enhanced earnings per share through the repurchase of a significant number of shares from shareholders wishing to sell; and,

• • Maintenance of strong capital ratios to support future asset agsrosewttghr. owth.

The balance sheet experienced significant expansion in 2021 as total assets rose to $1.96 billion and total deposits climbed to $1.52 billion. Shareholders' equity - your ownership - reached $195.9 million at year end. All represent new peaks in the Corporation's long history.

Interest margins remained suppressed, a situation that maycontinue into 2022. Competitive pressures will not abate, on either deposit or loan rates. We will work to provideinnovative solutions, clearly superior service, and fair and consistent pricing. This combination has served our customers and communities well for generations; we expect it will continue to do so.

Net interest income - the difference between interest earned and paid - rose to $40.6 million in 2021. Total loan volume declined fractionally to $963 million at year end, still the second highest in our history. Three factors impacted the loan side. The Federal Paycheck Protection Program (PPP) started to wind down, and we witnessed a growing volume of loan redemptions as the year progressed. In the agriculture sector, rising commodity prices benefited farmers resulting in seasonal lending activity that was more subdued than in most years. Increasing commercial opportunities in both our Sioux City and Sioux Falls markets added value to the region and, by extension, to our banks.

L to R: Jeremy Uhl, Treasurer; D. Douglas Rice, Chairman, President & CEO; Jeremy Craighead, Executive Vice President of Security National Corporation

Non-interest income - that received from fees for services - set a record in 2021, rising 10.3% to $26.7 million. Monetary and fiscal policies created massive amounts of investable funds and, with supply chain issues and labor shortages, fewer opportunities to employ it for goods and services. Financial markets were a beneficiary. In addition, we continued to develop both new and existing customer relationships. Our Wealth Management Division ended the year responsible for $4.7 billion in assets. Of particular note, the Investment Services group was recognized as the top-rated production team amongsimilar-size bank advisors by Cetera Financial Services, its sponsoring broker. Congratulations to our brokers and staff - this achievement reflects their commitment to doing the right things for our customers, the right way.

Looking ahead, you will see some changes in titles and responsibilities. As I write this letter, some of those transitions have already taken place. Although I will remain Chairman and CEO, Jeremy Craighead was named President and Jeremy Uhl Executive Vice President and CFO for Security National Bank, both effective January 25th, 2022. I believe they are outstanding professionals in every regard. Their combination of financial expertise, leadership and devotion to our community will guide SNB and ensure itscontinued stability, growth and success well into the future.

L to R: Joe Twidwell, Senior Vice President & Trust Officer; Ellen Prescott, Senior Vice President & General Auditor; Cindy Schubert, Senior Vice President, Bank Operations of Security National Bank

We will continue to emphasize our strengths - people, products and services. While dedicated to all the communities we serve, additional focus will be placed on our Sioux Falls presence in 2022, one of the fastest-growing cities in the nation. There, as in all of our locations, we have a good foundation in place with a strong and experienced staff.

To close, as always, we deeply appreciate the support and confidence you show in Security National Corporation.

D. Douglas Rice

Chairman, President & CEO