DIG Annual Report 2021

D I R E C TO R S I N V E S T M E N T G R O U P

2021 2020

ANNUAL REPORT

T A B L E

O F

C O N T E N T S

Letter To Our Shareholders

1

Management’s Discussion and Analysis

6

Results of Operations

9

Financial Summary

35

Balance Sheet

36

Statement of Operations

37

Shareholders’ Equity

38

Cash Flows

39

Shareholders

40

Organizational Structure

46

Board of Directors

47

Corporate Officers

48

Our Visionaries

49

KRIS SEALE | PRESIDENT & CHIEF EXECUTIVE OFFICER

FELLOW SHAREHOLDERS The historical account of Nehemiah is my favorite story from the Bible! For years, I wondered why the

around it; he prayed, and God guided him to act.

•

When faced with opposition, you have to take

book of Nehemiah was included in the Bible at all.

a stand and rely on God’s direction. Nehemiah

Then, one day, it hit me, “It’s in the Bible for people

suffered opposition from enemies of the

like me!” Ordinary people to whom God presents an

Jewish people and from the Jewish inhabitants

opportunity and that opportunity touches the heart in

themselves, but he stood up to them and said

a way that a person must respond and act!

consistently, “I am doing a great work, and I cannot come down.”

Here is a quick summary of what Nehemiah has taught

•

As a leader, you have to stand up for what is right. Nehemiah was righteous and just, while

me about leadership:

previous governors of Jerusalem were corrupt

•

No matter who you are or where you are, you can lead. Nehemiah was a Jewish exile and was the cupbearer to the King of Persia, Artaxerxes,

and oppressive.

•

Leaders have to honor God and give Him the glory. Nehemiah did just that!

in the 5th century B.C. (The cupbearer was

•

1

responsible for ensuring that the king’s food and

What really stands out to me about Nehemiah is the

beverages were not spoiled or poisoned – not an

fact that even when God gives us a task and clear

auspicious position.)

direction, we have an enemy (Satan) who wants to

When God places something on your heart, you

stop us. Our enemy wants us to fail. He wants us to

have to act and respond. Nehemiah was burdened

give up, to do anything other than what God wants us

to return to Jerusalem and rebuild the wall

to do, to get distracted. Here is how the enemy has

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Now when Sanballat and Tobiah and Geshem the Arab and the rest of our enemies heard that I had built the wall and that there was no breach left in it, Sanballat and Geshem sent to me, saying, ‘Come and let us meet together at Hakkephirim in the plain of Ono.’ But they intended to do me harm. And I sent messengers to them, saying, ‘I am doing a great work and I cannot come down. Why should the work stop while I leave it and come down to you?’ And they sent to me four times in this way, and I answered them in the same manner.

Nehemiah 6:1-4

tried to distract us from the good work we’re doing

our focus without getting distracted and achieved

here at DIG:

stellar results:

•

Presenting us with other, less important

FUNERAL DIRECTORS LIFE

opportunities (that often appear to be good).

SALES

Remaining focused on what we know are the

•

•

priorities is vital, but it is easy to get distracted by

previous largest growth year was 2019 when sales

the “next shiny thing.”

grew by $33.8 million!

Consuming our attention with naysayers and the

•

opinions of others. There are plenty of critics in our world today, and there is always someone who Threatening our security. Our security has

•

We enrolled 284 new funeral home locations for preneed funeral sales programs.

•

been significantly threatened by the pandemic of COVID-19, political unrest, and racial tension over

We achieved an all-time monthly sales volume record of $36.5 million in August.

wants to bring us down.

•

Sales volume grew by $116 million in 2021 – our

A record 2,054 funeral home locations produced new business for us.

•

the past two years.

A record 1,961 sales professionals/funeral directors wrote business for us.

• Thankfully, God has kept our management team

We set a record with 68 of our sales professionals selling over $1 million.

focused, and we have achieved success well beyond anything we ever expected or imagined. Let’s take a

MARKETING PARTNERS

look at 2021, and allow me to show you how we kept

•

The marketing partner sales segment grew by

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$67.3 million – 162%!

• •

Marketing partner sales were $108.9 million (27.9%

FUNERAL HOME LENDING • We originated $37 million of funeral home loans

of total sales).

for acquisitions, refinancing, improvements,

Directors Agency (a DIG subsidiary) sales were up

and succession.

32% or $15.38 million and set a record for annual

•

sales ($62.78 million).

We hired two positions to continue to drive funeral home lending to the next level: Director of Funeral Home Lending and Loan Operations Specialist.

DIG DEVELOPMENT

•

•

We implemented Robotic Processing Automation

We totally restructured our monthly reporting processes for maximum automation and efficiency.

(RPA) in New Business to save two New Business employees on an annual basis.

•

We launched the Android version of the FDLIC

DIRECTORS BUSINESS SOLUTIONS • We promoted Connor Dale to Accounting

mobile app.

•

We launched “DIG In Week” in order to allow our

Supervisor and added 3 new staff members.

•

development team to have a week to individually focus on projects that could help our Company save

accounting clients.

•

processing time.

We trained 51 employees inside and outside Operations.

developed a podcast focused on accounting services.

•

transactions!

ACCOUNTING & FINANCE

•

Assets showed record growth, growing by more than Net income exceeded 2020 by 193.3%!

The ratio of capital and surplus to assets was

We increased our margin from under 15% of revenue to over 34% of revenue.

PARKWAY ADVISORS • We achieved a new annual net income record in

$135 million!

• •

We ramped up marketing efforts through social media and articles in funeral profession publications, and we

OPERATIONS

We processed more than 700,000 different

We completed 13 funeral home valuations that also set the stage for FDLIC’s funeral home lending program.

• • •

We added 14 new full-service funeral home

2021, closing the year just under $2.4 million.

• •

9.03% at the close of 2021 as compared to 8.89% on

We distributed a record $2.1 million upstream to DIG! For 2021, we served insurance companies with combined assets of over $10 billion!

December 31, 2020.

PASSARE CLAIMCHECK • We implemented the “Perfect Assignment”

We reduced the number of customer satisfaction improvement work tickets for the Passare platform

assignments). The average days to pay the funeral

by 140%, from 1,200 tickets to 500 tickets per month.

262% improvement.

3

•

(an automated process for funding insurance home on an assignment went from 4.23 to 1.62 days, a

•

DIG DEVELOPMENT

The return on investment for CLAIMCHECK was 16.87%.

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• •

We improved page load times by 50% on the platform.

We worked diligently to unify software tools used across the organization to increase visibility and

synchronize Product and Development processes.

•

•

We launched a new podcast for the funeral

We completed a record 1,117 work tickets and

profession called FD Talks™, where we explore

118 software development sprints to continue to

ideas, insights, and solutions for serving families

innovate within the funeral industry.

and employees more effectively.

•

We launched REIGNITE™, a funeral service

PRODUCT

leadership summit and webinar program to

•

We won the National Funeral Directors

promote new ideas and insights in leadership,

Association Innovation Award for the first-ever

work-life balance, and improving culture.

integration with the Pennsylvania Electronic

•

Death Registration System.

•

•

We implemented a new credit card processor

employees and their families.

•

A team of employees and volunteers spent a

for more flexibility and have already doubled the

week during our company-sponsored mission

amount of credit card transactions on the system.

trip giving of themselves to build two homes for

We clarified Support and Implementation

families in Costa Rica.

offerings to allow our Sales and Implementation

•

We hosted six on-site COVID-19 vaccine clinics for

•

We hosted Todd Pierce, former bareback rodeo

teams to offer more value to our customers.

champion, at our “Born Wild” event, where he

We implemented Design System to allow

demonstrated how Jesus pursues, heals, and

Development to move faster.

ultimately becomes one with us as a Father by breaking a wild horse.

OPERATIONS

• •

• •

bodies, and souls with various DIG Wellness

answering customers’ phone calls in just 3 weeks!

Center programs and our monthly Bible study and

We increased per customer revenue by 54% via

quarterly book study programs.

•

We were honored once again to be certified as

We onboarded 5 new hires to help facilitate the

“A Great Place to Work®.” We were named the #7

growth Passare has experienced.

“Best Company to Work for in Texas” by Texas

We received 99.8% positive customer feedback.

Monthly magazine.

Passare made net income for the first time in 2021 and ended the year with $353,000 in cash!

PERFORMANCE

• DIG CULTURE GROWTH & ADVANCEMENT

•

We continued to invest in our employees’ minds,

We improved training to have new employees

Client Services and Premium Services.

•

•

shareholders compared to $1.75 million in 2020.

•

Tom Allen, the head football coach of Indiana University, joined us virtually and shared the meaning behind “L-E-O” (Love Each Other).

DIG paid a record $2.1 million in dividends to Our Modified Book Value increased from $72.85 to $80.36 or 10.31%!

• •

For 2021, net income exceeded 2020 by 95.34%!

The DIG subsidiaries had all Paycheck Protection

His message inspired us to love others and to

Program (PPP) loans forgiven by the Small

not be distracted by a pandemic, contentious

Business Administration – over $3.4 million.

politics, and racial upheaval.

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Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.

Romans 13:7

CONCLUSION As much as our enemy has done to distract us over the

We thank you, fellow shareholders, for your support.

past two years, we have persevered, overcome, and kept

There is no greater responsibility than earning and

our focus! Like Nehemiah, we have chosen to stay on

keeping your trust and confidence. Rest assured,

track and follow through with God’s plan for us, and we

we will continue to work tirelessly to keep our

have quoted Nehemiah 6:3 multiple times per day – “I

commitments and protect and grow the value of your

am doing a GREAT work, and I CANNOT come down!”

investment in DIG.

This quote is now prominently displayed in our Board Room, as shown on the cover of this Annual Report.

With sincere gratitude and blessings,

We consistently want this reminder of Nehemiah’s strength and faithfulness in front of us as we guide and lead our companies. It is worth saying it again, “I am doing a GREAT work, and I CANNOT come down!”

Through focus, perseverance, and God’s guidance, we

KRIS SEALE

accomplished extraordinary results in 2021.

Chairman of the Board President and Chief Executive Officer

I must continue to give honor where honor is due (Romans 13:7). Our management team is incredible!

Through their dedication, their care for our people, their trust in my leadership, and frankly, their personal focus, our Company flourished! We are blessed with strong leadership, and my heart overflows with gratitude and love for them.

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M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S

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Executive Overview

Directors Investment Group, Inc. (DIG), a Nevada corporation, is the parent company for a diverse group of companies with a focus on two strategic industries – life insurance and financial services. The combined financial statements of Directors Investment Group, Inc. include all accounts of DIG and its subsidiaries (the Company) accounted for on a Generally Accepted Accounting Principles basis with the exception of the insurance subsidiaries that are accounted for on a Statutory Accounting Principles basis.

As of December 31, 2021, the subsidiaries of DIG include Directors Capital Ventures, Inc. (DCVI), Directors Holding Corporation (DHC), Parkway Advisors Group, Inc. (PAGI), Parkway Advisors Holdings, Inc. (PAHI), and Funeral Agency, Inc. (FAI). Additionally, the limited partnerships owned by the subsidiaries are included in the combined statement. The limited partnerships are Parkway Advisors LP (PALP) and Directors Agency LP (DALP). Two affiliates – Directors Air Corporation (DAC) and Directors Real Estate Management, LP (DREMLP) – were dissolved at the end of 2021. Effective January 1, 2020, Passare, Inc. was merged into DIG, and as a legal entity, ceased to exist. Passare operations continue to be reported separately but as a division of DIG. The insurance company subsidiaries include Funeral Directors Life Insurance Company (FDLIC), Kentucky Funeral Directors Life Insurance Company (KFDLIC), and Funeral Directors Life of Louisiana (FDLA). The value of the insurance company subsidiaries is recorded on the books of the Company at book value in accordance with the methods set forth by the National Association of Insurance Commissioners (NAIC).

The sections that follow provide information about the important aspects of our operations and investments, both at the combined and subsidiary levels, and includes discussion of our results of operations.

The accounting periods for all of the entities end on December 31.

Earnings Per Share

Basic earnings per share (EPS) is calculated by dividing net income by the average number of common shares issued and outstanding for the current and previous years. Diluted earnings per share is calculated by dividing net income by the average number of common shares issued and outstanding plus stock options issued and outstanding for the current and previous years. For the purpose of these calculations, shares issued and outstanding do not include treasury shares purchased by the Company.

For 2021, the average number of common shares issued and outstanding, basic and diluted, was 2,549,253 and 2,814,901,

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A NNUA L RE POR T 2 0 2 1

respectively. For 2020, the average number of common shares issued and outstanding, basic and diluted, was 2,532,212 and 2,742,984, respectively. The exercise of 19,412 common stock options by employees and directors and the net purchase of 1,514 treasury shares by the Company are reflected in the change in average common shares outstanding.

Basic EPS was $7.57 and diluted EPS was $6.86 for 2021. For 2020, basic and diluted EPS was $3.50 and $3.23 respectively. Increased earnings in FDLIC were largely responsible for the year-over-year increase in earnings per share.

Computation of Share Value

DIG’s Share Value was $80.36 for 2021 and $72.85 for 2020, based on the modified book value calculation. This was an 10.31% increase over 2020.

For 2021 and 2020, Share Value is calculated using the modified book value approach that was approved by the shareholders at the April 1996 annual shareholders’ meeting. The calculation is the 1996 book value method plus an additional amount added for the value of FDLIC’s insurance business and interest maintenance reserve (IMR).

For 2021, the equity component was $177,404,169 and the value of FDLIC’s business and IMR was $28,171,013. Total actual shares issued and outstanding at the end of 2021 were 2,558,202. For 2020, the equity component was $161,180,854, and the value of FDLIC’s business and IMR was $23,883,567. Total actual shares issued and outstanding at the end of 2020 were 2,540,304.

Income Taxes

Directors Investment Group, Inc. and its non-insurance subsidiaries file a consolidated U.S. income tax return. All taxes are booked and paid at the DIG level. In 2020, the Company paid no federal income tax as all available loss carryforwards were utilized to offset taxable income. For 2021, DIG recorded $778.1 thousand in federal income tax. Additional net operating loss carryforwards of $4.4 million can be used once Passare’s net income exceeds the operating expenses of DIG. These remaining carryforwards expire in 2034.

The insurance subsidiaries – FDLIC, KFDLIC, and FDLA – file a separate consolidated U.S. income tax return. The method of allocation between the companies is based upon separate return calculations with current credit for net losses. Intercompany tax balances are settled annually after the federal income tax return is completed and filed.

DALP and FDLIC are also subject to filing state income tax returns for various states in which they are licensed to conduct business.

The corporate federal income tax rate for DIG and the insurance subsidiaries was 21%.

Liquidity and Cash Flows

Management has set forth strategic objectives to help ensure that we keep a focus toward growing our core business and increasing shareholder value and that we are in a position to take advantage of opportunities when they arise. Those objectives include internal investment in our business (e.g., capital expenditures), share repurchases, shareholder dividends, debt reduction and management, and acquisition of businesses that will complement our core operations. The Company believes that cash generated from operations, together with the Company’s existing financial resources, will adequately finance the Company’s planned 2022 cash requirements.

SUMMARY OF CASH ACTIVITIES Principal sources of cash were commissions earned at DALP and FAI, investment advisory and consulting fees earned at PALP, subscription and activations fees earned at Passare, principal and interest payments received on business loans, and proceeds for issuance of common stock options. Our primary uses of cash were for operational expenses, reduction of debt, repurchase of stock, and payment of shareholder dividends. Net increase in cash for 2021 was $781.0 thousand.

INVESTING ACTIVITIES Business loans outstanding at year-end 2021 were $2.3 million compared to $2.8 million at the end of 2020. DIG received principal payments of $469.9 thousand. Remaining loans to funeral home customers earned interest at an average rate of 8.08%. No substantial new loans were extended in 2021. DIG collected interest payments of $200.3 thousand.

In 2016, DIG initiated a short-term investment strategy with Parkway Advisors as a means to earn investment income on excess cash accumulated from net operating earnings, repayment of business loans, or proceeds from the sale of treasury stock. Previously, investments were short term in nature and laddered to throw off approximately $500.0 thousand in cash at the end of each month. In mid-2021, in order to achieve a higher return, DIG revised its investment plan to invest approximately 40% in short-laddered bonds and the remainder invested with a growth and income focus. Total interest collected on investments was $69.6 thousand. At year-end 2021, total invested funds were $9.5 million.

FINANCING ACTIVITIES DIG’s combined debt was comprised of borrowings from FDLIC. These loans originated in 2007 and were used to facilitate the funding of the funeral home financing program mentioned in “Investing Activities.” The loans pay interest at the rate of 9.25% and mature in April 2022. DIG paid FDLIC $486.5 thousand in principal and $351.3 thousand in interest in 2021. At year-end 2021, outstanding borrowings on the loans from FDLIC were $3.5 million. In April 2020, several of the DIG non-insurance companies applied for and received Paycheck Protection Program loans for a total of $1.2 million. A portion of the loans were forgiven in November and December of 2020, leaving a balance of $862.7 thousand that was forgiven in the first half of 2021.

During 2021, the Company offered options on 258,550 shares of common stock at a price range of $52.54 to $80.14. Options on 19,412 shares were exercised at a price range of $52.54 to $72.85, providing $1.1 million in cash resources. 23,334 shares at a price of $52.54 were not exercised and forfeited, leaving 215,804 shares exercisable in 2022, 2023, 2024, 2025, and 2026 at a price range of $57.05 to $80.14. During the year, DIG also repurchased 23,325 shares of common stock for $1.8 million. In July 2010, the Board of Directors approved the annual sale of a limited number of treasury shares. In 2020, DIG sold 25,010 shares of treasury stock for $1.8 million, and in 2021, DIG sold 21,811 shares for $1.7 million.

The Board of Directors approved the payment of quarterly dividends averaging $0.205 per share during 2021 for a total of $2.1 million. DIG paid $1.75 million in dividends in 2020.

SHAREHOLDER LIST & BENEFICIAL OWNERSHIP The table beginning on page 40 sets forth certain information as of March 1, 2022, with respect to each person who owns the Company’s common stock, each director of the Company, and all directors and officers of the Company as a group. Except as otherwise indicated, the persons named in the table have sole voting and investment power with respect to the shares of common stock shown. Each common share is entitled to one vote per share. The Company does have authorized preferred stock; however, none of the preferred stock was issued or outstanding as of December 31, 2021.

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RESULTS OF OPERATIONS Funeral Directors Life Insurance Company

10

Kentucky Funeral Directors Life Insurance Company

13

Funeral Director Life Insurance Company of Louisiana

15

Parkway Advisors, LP

17

Parkway Advisors Group, Inc.

19

Parkway Advisors Holdings, Inc.

21

Directors Real Estate Management

23

Directors Holding Corporation

24

Directors Agency, LP

25

Directors Capital Ventures, Inc.

27

Directors Air Corporation

29

Funeral Agency, Inc.

31

Passare, Inc.

33

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FUNERAL DIRECTORS LIFE INSURANCE COMPANY

FDLIC is the primary investment and income source for DIG. FDLIC is in the business of funding prepaid funerals with life insurance and annuities. A simplified financial statement is included herein.

In 2021, FDLIC’s assets grew to $1.72 billion, up $135.5 million or 8.56% over 2020 assets of $1.58 billion. Invested assets are the largest component of assets for an insurance company. FDLIC’s investments were $1.69 billion for 2021, an increase of 9.20% over 2020 investments of $1.55 billion. The primary investment held by FDLIC was bonds - government, agency, and corporate representing 84.78% of invested assets or $1.4 billion. There was $1.0 million in preferred stocks at year-end 2021. FDLIC’s total common stock portfolio was $15.7 million, comprised of $11.8 million for investment in KFDLIC and FDLA and $3.9 million invested in the Monteagle Select Value Fund managed by PALP. Investment in real estate includes $15.7 million for the Home Office building.

During 2021, FDLIC’s mortgage loan portfolio increased by $5.6 million for the financing of funeral home locations for a total of $206.0 million. Other invested assets consist of loans to parent of $3.5 million, surplus debentures of $2.2 million, and cash and short-term investments of $6.6 million.

Other assets remained consistent with the previous year with the exception of a $7.5 million decrease in premiums deferred and uncollected. Effective January 1, 2021, FDLIC elected to change its method of calculating life reserves, resulting in a decrease in premiums deferred and uncollected. The impact of the election was a decrease in total assets of $7.5 million, a decrease in total liabilities of $8.1 million, with an offsetting increase to surplus of $637.1 thousand.

FDLIC’s primary liability is its reserves for policyholders. For 2021, reserves were $1.5 billion, an increase of 8.45% over reserves of $1.4 billion in 2020. Asset valuation reserve (AVR) increased $2.9

million or 23.33% compared to a $608.4 thousand decrease from year-end 2019 to year-end 2020. The year-over-year increase came largely in the month of December due to the NAIC’s changes to the designations for mortgage-backed securities. The $15.3 million in this account represents a loss reserve mandated by the NAIC to offset potential defaults of any of the company’s invested assets.

The interest maintenance reserve of $10.6 million decreased slightly from year-end 2020 for net realized capital gains of $300.0 thousand less amortization of $411.7 thousand. Statutory reporting requirements mandate that gains from the sale of bonds with a future maturity date must be held as a liability and amortized into income over the remaining life of disposed bonds. In April 2020, FDLIC received a $2.6 million loan from the Paycheck Protection Program (PPP) provided through the Small Business Administration (SBA) and established by the Coronavirus Aid, Relief, and Economic Security Act. The loan was used to support our commitment of no layoffs and no reductions in pay during 2020. In June 2021, the PPP loan and any accrued interest was forgiven and recorded as a net capital gain in the summary of operations. The remaining $1.0 million in borrowed funds represents a grant from the Development Corporation of Abilene that was based upon the company’s expansion of the Home Office and its commitment to create 70 new jobs over a 5-year period. Other liabilities of FDLIC included accrued claims, policyholder dividends, premiums received in advance, amounts due to affiliates, general expenses payable, commissions to agents’ payable, premium taxes and fees, and other miscellaneous liabilities for a total of $5.4 million.

Total capital and surplus increased $14.5 million for 2021 as compared to the increase of $6.5 million in 2020. The increase in 2021 consisted of net income of $14.9 million, $1.6 million increase in net deferred income tax, unrealized gains of $1.2 million, and a $637.1 thousand increase for change in reserve valuation basis, offset by a $2.9 million increase in asset valuation reserve and a

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$988.2 thousand increase in non-admitted assets. The ratio of capital and surplus to total assets was 9.03% at year-end 2021 compared to 8.89% at year-end 2020.

Revenues for FDLIC were primarily premium collections and investment income totaling $416.7 million. When compared to the previous year, 2021 revenues increased 28.18% or $91.6 million.

New business issued for 2021 was approximately 45.3% higher than 2020 production, coming in at $374.0 million. Net investment income reflects a $1.2 million decrease due entirely to a $3.4 million decrease in prepayment income from calls and tenders. Income from bond investments actually increased by $2.2 million despite the continued low interest rate environment.

Policyholder benefits increased significantly due to the increase in new business sales. Death and annuity benefits paid during the year exceeded 2020 by $67.8 million and were $34.5 million above expected. Monthly claims expense averaged $16.3 million in 2021 compared to $16.8 million in 2020. With the year-over-year increase in new business sales, aggregate reserves from year to year were up $74.3 million or 143.13%. General insurance expenses exceeded 2020 by $22.6 million and included commissions paid to agents of $43.7 million, general operating expenses of $30.3 million, and taxes licenses and fees of $4.2 million.

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Net gain from operations was $15.5 million compared to $14.2 million for 2020. Policyholder dividends were consistent between years. Federal income taxes incurred were $4.0 million compared to $3.2 million in 2020 due to increased taxable income. FDLIC realized net capital gains of $4.7 million compared to capital losses of $4.4 million in 2020. For 2021, the company posted net income of $14.9 million compared to $5.1 million 2020.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Investments

$

1,690,398.5

$

1,547,922.4

Premiums & Investment Income Receivable

15,948.1

23,093.9

Other Assets

12,446.6

12,269.7

Total Assets

$

1,718,793.2

$

1,583,286.0

$

1,517,806.8 6,973.8 15,260.8 5,440.2 10,642.3 1,000.0 1,035.0 5,395.9

$

1,399,570.3 5,705.4 12,374.0 3,946.6 10,754.8 1,000.0 3,663.6 5,528.2

Liabilities and Capital & Surplus Reserves Claims & Premiums Liabilities Asset Valuation Reserve Commissions to Agents Interest Maintenance Reserve Dividends to Policyholders Borrowed Funds Other Liabilities Total Liabilities Capital & Surplus Total Liabilities and Capital & Surplus

$

STATEMENT OF OPERATIONS

1,442,542.9

155,238.4

140,743.1

1,718,793.2

$

1,583,286.0

Twelve Months Ended December 31,

(Dollars in thousands) Premiums, Investment Income, & Other

1,563,554.8

2021 $

416,702.6

2020 $

325,090.7

322,973.4

255,196.3

General & Administrative Expenses

78,272.7

55,658.6

Operating Income

15,456.5

14,235.8

Dividends to Policyholders

1,300.7

1,503.2

Earnings Before Federal Income Tax Federal Income Tax Provision

14,155.8 3,909.9

12,732.6 3,193.3

Net Gain Before Realized Capital Gains (Losses) Net Realized Capital Gains (Losses)

10,245.9 4,694.9

9,539.3 (4,445.2

Policyholder Benefits

Net Income

$

14,940.8

$

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5,094.1

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KENTUCKY FUNERAL DIRECTORS LIFE INSURANCE COMPANY KFDLIC, a wholly owned stock life insurance company of FDLIC, was incorporated in the state of Kentucky in 2001. KFDLIC is in the business of funding prepaid funerals with life insurance and annuities, similar to FDLIC. As a result of increased new business for the year, the total assets of KFDLIC increased $1.3 million or 5.35% during 2021 compared to $464.4 thousand or 1.93% during 2020. For 2021, the investments account for KFDLIC was $25.5 million. Government and corporate bonds represented 97.89% of investments with cash and shortterm investments representing the balance. Other assets consisted of investment income due and accrued of $307.6 thousand and a net deferred tax asset of $102.2 thousand. Effective January 1, 2021, KFDLIC elected to change its method of calculating life reserves, resulting in a decrease in premiums deferred and uncollected.

The impact of the election was a decrease in total assets of $71.6 thousand, a decrease in total liabilities of $90.1 thousand with an offsetting increase to surplus of $18.5 thousand.

Liabilities for KFDLIC ended the year at $19.3 million. Reserves for life policies were $18.9 million or 97.80% of the company’s liabilities.

Claims liabilities and premiums received in advance were $9.4 thousand and $58.8 thousand, respectively, for 2021. Asset valuation reserve (AVR) was $73.7 thousand compared to $49.3 thousand at the end of 2020. Interest maintenance reserve was $130.1 thousand compared to $140.2 thousand for 2020. Included in other liabilities was KFDLIC’s allocated portion of federal income taxes due to FDLIC in the amount of $11.9 thousand. Commissions to agents were $50.8 thousand. Other liabilities also included general expenses payable, taxes, licenses and fees payable, and other miscellaneous payables, representing $90.5 thousand.

13

A NNUA L RE POR T 2 0 2 1

For 2021, the capital and surplus of KFDLIC increased $179.0 thousand. The increase consisted of net income of $172.6 thousand plus deferred income tax of $34.5 thousand, plus $18.5 thousand in change in reserve valuation basis, offset by a $22.3 thousand increase in non-admitted assets and a $24.4 thousand increase in asset valuation reserve, resulting in an ending balance of $6.6 million. The capital and surplus of KFDLIC represented the value of the common stock investment that FDLIC holds for KFDLIC. Revenues for KFDLIC were $4.6 million, approximately $1.1 million higher than 2020, and composed primarily of premiums and investment income received. 2021 preneed sales production was $4.0 million, up from 2020 production of $2.5 million, and approximately 158.2% of expected sales. Premium income was $3.6 million while investment income was $1.1 million. Virtually all of the company’s expenses are variable based upon new business production.

Policyholder benefits were $3.4 million. Death claims were $2.2 million – approximately $200.0 thousand lower than 2020 – while reserves increased $1.2 million compared to a $221.6 thousand increase in 2020. General insurance expenses were up $282.1 thousand due to an increase of $212.2 thousand in commissions paid to agents and an increase of $80.2 thousand in administrative service fees paid to FDLIC as well as sales-related expenses.

Operating income for the year was $272.8 thousand compared to $287.6 thousand in 2020. Federal income tax was estimated at $88.6 thousand after the allocation of consolidated tax deductions shared amongst the insurance affiliates. KFDLIC realized net capital losses of $11.6 thousand, resulting in net income for the year of $172.6 thousand compared to $60.0 thousand in 2020.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Investments

$

25,484.6

$

24,126.0

Premiums & Investment Income Receivable

307.6

370.7

Other Assets

102.3

83.8

Total Assets

$

25,894.5

$

24,580.5

$

18,859.3

$

17,716.7

Liabilities and Capital & Surplus Reserves Claims & Premiums Liabilities

68.2

67.3

Asset Valuation Reserve

73.7

49.3

Interest Maintenance Reserve

130.1

140.2

Other Liabilities

153.2

176.1

19,284.5

18,149.6

6,610.0

6,430.9

Total Liabilities Capital & Surplus Total Liabilities and Capital & Surplus

$

STATEMENT OF OPERATIONS

$

24,580.5

Twelve Months Ended December 31,

(Dollars in thousands) Premiums, Investment Income, & Other

25,894.5

2021 $

Policyholder Benefits

2020

4,652.3

$

3,587.9

3,445.9

2,648.8

General & Administrative Expenses

933.6

651.5

Operating Income

272.8

287.6

88.6

95.5

Net Gain Before Realized Capital Losses

184.2

192.1

Net Realized Capital Losses

(11.6

(132.1

Federal Income Tax Provision

Net Income

$

172.6

$

DI REC T O RS I NVEST MENT GRO UP

60.0

14

FUNERAL DIRECTORS LIFE INSURANCE COMPANY OF LOUISIANA FDLA was incorporated on June 6, 2019. On June 25, 2019, FDLA issued Funeral Directors Life Insurance Company 100% (100,000 shares) of its outstanding stock in exchange for $4.5 million in cash.

FDLA commenced business on August 1, 2019, and was created in response to unfavorable regulation in Louisiana related to agent licensing requirements for foreign corporations only. 2021 was FDLA’s second full year of operation.

FDLA ended 2021 with $16.8 million in assets compared to $11.3 million at the end of 2020. As of December 31, 2021, 97.89% of FDLA’s total assets were invested assets. The majority of this account was government and corporate bonds, representing 95.31% of invested assets. The remaining investments were cash and shortterm investments.

Other assets consisted of investment income due and accrued of $144.1 thousand and a net deferred tax asset of $195.6 thousand.

Effective January 1, 2021, FDLA elected to change its method of calculating life reserves, resulting in a decrease in premiums deferred and uncollected. The impact of the election was a decrease in total assets of $148.5 thousand, a decrease in total liabilities of $153.4 thousand with an offsetting increase to surplus of $4.9 thousand.

Liabilities for FDLA ended the year at $11.6 million. Reserves for life policies were $10.8 million compared to $6.0 million at yearend 2020, representing 92.78% of the company’s liabilities. Claims liabilities and premiums received in advance were $8.4 thousand and $313.2 thousand, respectively, for 2021. Asset valuation reserve (AVR) was $49.7 thousand. Taxes, licenses, and fees payable were $185.8 thousand while commissions to agents were $164.3 thousand.

Other liabilities also included general expenses payable and other miscellaneous payables, representing $117.3 thousand.

15

A NNUA L RE POR T 2 0 2 1

The company was capitalized with $100.0 thousand of common capital stock and $4.4 million of gross paid in and contributed surplus. For 2021, the capital and surplus of FDLA increased $563.0 thousand. The increase consisted of net income of $524.7 thousand plus deferred income tax of $77.2 thousand, plus $4.9 thousand in change in reserve valuation basis, offset by $21.4 thousand increase in non-admitted assets and $22.3 thousand increase in asset valuation reserve.

Revenues for FDLA were $9.7 million. Premium income was $9.3 million and investment income was $439.7 thousand. New business sales were $11.1 million compared to $9.2 million in 2020. The majority of FDLA’s new business was Individual Life. Virtually all the company’s expenses are variable based upon the level of new business production. For 2021, death claims were $2.0 million of total policy benefits while aggregate reserves for life policies increased by $4.9 million. General insurance expenses were $2.1 million and consisted largely of $1.0 million in commissions to agents, $302.5 thousand in taxes licenses and fees, and $745.1 thousand of administrative service fees paid to FDLIC as well as sales-related expenses.

Gain from operations of $765.3 thousand was offset by federal incomes taxes of $238.7 thousand. Taxable income for FDLA was $1.1 million after adjustments for deferred acquisition expenses and tax reserves. Net income reflects a gain of $524.7 thousand for 2021 compared to $15.2 thousand in 2020.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Investments

$

16,429.3

$

10,913.9

Premiums & Investment Income Receivable

144.1

240.5

Other Assets

209.7

125.0

Total Assets

$

16,783.1

$

11,279.4

$

10,780.7

$

6,039.8

Liabilities and Capital & Surplus Reserves Claims & Premiums Liabilities

321.7

199.9

Commissions to Agents

164.3

99.1

Taxes, Licenses, and Fees

185.8

144.2

Asset Valuation Reserve

49.7

27.3

117.3

168.5

11,619.5

6,678.8

5,163.6

4,600.6

Other Liabilities Total Liabilities Capital & Surplus Total Liabilities and Capital & Surplus

$

STATEMENT OF OPERATIONS

$

11,279.4

Twelve Months Ended December 31,

(Dollars in thousands) Premiums, Investment Income, & Other

16,783.1

2021 $

2020

9,759.0

$

7,382.4

Policyholder Benefits

6,918.3

5,483.0

General & Administrative Expenses

2,075.4

1,713.3

765.3

186.1

Federal Income Tax Provision

238.7

170.9

Net Gain before Realized Capital Losses

526.6

15.2

(1.9

-

Operating Income

Net Realized Capital Losses Net Income

$

524.7

$

DI REC T O RS I NVEST MENT GRO UP

15.2

16

PARKWAY ADVISORS, LP PALP is a Delaware limited partnership that was created on March 22, 2001, and is owned 1% by PAGI and 99% by PAHI, both wholly owned subsidiaries of DIG. PALP is an investment advisory firm in the business of providing discretionary investment advisory, consulting, and investment accounting services to insurance companies.

Total assets for 2021 were $1.1 million compared to $835.0 thousand for 2020. Cash ended the year at $748.0 thousand after partner distributions of $2.1 million. Receivables were $193.1 thousand and represent fees due from advisory clients as well as amounts due from affiliates.

Investments in EDP equipment and software were $102.5 thousand.

Other assets of $55.3 thousand consisted of prepaid expenses.

Liabilities consisted of general payables and payroll liabilities. Total partners’ capital ended the year at $1.1 million after net income for the year of $2.4 million less partner withdrawals of $2.1 million.

17

A NNUA L RE POR T 2 0 2 1

Revenues for 2021 were $4.8 million, exceeding 2020 revenues by $486.1 thousand, and were comprised of advisory service and consulting fees. Assets under management were approximately $3.8 billion at year-end 2021. Assets of consulting and investment reporting clients were $6.6 billion. During the year, Parkway added one new insurance client to asset management and two clients for consulting services. Operating expenses were $2.4 million, of which salaries and benefits comprised $1.5 million. Other operating expenses were general in nature. Net income for 2021 was $2.4 million compared to $2.3 million for 2020.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Cash

$

748.0

$

630.4

Trade Receivables

193.1

121.2

Investments

102.5

38.9

Other Assets

55.3

44.5

Total Assets

$

1,098.9

$

835.0

$

5.5

$

11.6

Liabilities & Capital Accounts Payables and Other Liabilities

5.5

11.6

1,093.4

823.4

Total Liabilities Capital Accounts Total Liabilities & Capital Accounts

STATEMENT OF OPERATIONS

$

1,098.9

2021 $

Expenses Operating Income Other Income (Loss) Net Income

835.0

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

$

$

2020

4,804.7

$

4,318.6

2,434.7

2,215.7

2,370.0

2,102.9

(0.1)

186.6

2,369.9

$

DI REC T O RS I NVEST MENT GRO UP

2,289.5

18

PARKWAY ADVISORS GROUP, INC. PAGI is the sole general partner for the limited partnership, PALP. PAGI is a Nevada corporation created on March 23, 2001.

PAGI ended the year with assets of $14.7 thousand. PAGI owns a 1% interest of the limited partnership that represents $10.9 thousand of its assets. Cash and accounts receivable comprised the remaining assets. Liabilities of $30.0 thousand represent amounts due to PALP. Total capital ended the year at negative $15.3 thousand after dividends to DIG in the amount of $21.0 thousand.

19

A NNUA L RE POR T 2 0 2 1

PAGI had limited expenses for its corporate existence, such as registration fees, telephone charges, and corporate residency expense, resulting in an operating loss of $2.8 thousand.

For 2021, PAGI recorded partnership earnings of $23.7 thousand from its 1% ownership of the limited partnership investment in PALP. Net income for PAGI was $20.9 thousand.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Cash

$

0.9

$

0.9

Receivables and Prepaids

2.9

2.9

Investment in Partnership

10.9

8.2

Total Assets

$

14.7

$

12.0

$

30.0

$

27.2

Liabilities & Equity Payables and Other Liabilities Total Liabilities Total Equity Total Liabilities & Equity

STATEMENT OF OPERATIONS

$

27.2

(15.3

(15.2

14.7

$

12.0

Twelve Months Ended December 31,

(Dollars in thousands) Operating Expenses

30.0

2021 $

2020 2.8

$

2.8

Operating Loss

(2.8

(2.8

Equity in Earnings of Partnership

23.7

22.9

Net Income

$

20.9

$

DI REC T O RS I NVEST MENT GRO UP

20.1

20

PARKWAY ADVISORS HOLDINGS, INC. PAHI is the sole limited partner for the limited partnership, PALP. PAHI is a Nevada corporation created on March 23, 2001.

PAHI ended the year with assets of $1.1 million. PAHI owns a 99% interest of the limited partnership that comprised the majority of its assets with a small amount of cash for remaining assets. Liabilities of $25.6 thousand represent amounts due to PALP. Total capital ended the year at $1.1 million after dividends paid to DIG in the amount of $2.1 million.

21

A NNUA L RE POR T 2 0 2 1

PAHI had expenses for its corporate existence, such as registration fees, telephone charges, and corporate residency expense. Total operating expenses for 2021 were $2.3 thousand.

For 2021, PAHI recorded partnership earnings of $2.3 million from its 99% ownership of the limited partnership investment in PALP. Net income for PAHI was $2.3 million.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Cash

$

4.3

Investment in Partnership Total Assets

$

4.3

1,082.4

815.2

$

1,086.7

$

819.5

$

25.6

$

23.4

Liabilities & Equity Payables and Other Liabilities

25.6

23.4

1,061.1

796.1

Total Liabilities Total Equity Total Liabilities & Equity

STATEMENT OF OPERATIONS

$

1,086.7

2021 $

Operating Loss Equity in Earnings of Partnership Net Income

819.5

Twelve Months Ended December 31,

(Dollars in thousands) Operating Expenses

$

$

2020 2.3

$

2.2

(2.3

(2.2

2,346.2

2,266.6

2,343.9

$

DI REC T O RS I NVEST MENT GRO UP

2,264.4

22

DIRECTORS REAL ESTATE MANAGEMENT, LP DREMLP, a limited Delaware partnership formed in December 1995, was owned 1% by DCVI and 99% by DHC, both wholly owned subsidiaries of DIG. The partnership was originally created to acquire, manage, and sell investment real estate and to maintain a fleet of business vehicles that it leased to affiliates.

In December of 2020, DREMLP sold the entire fleet of automobiles to affiliates and distributed the value of its remaining real estate and the majority of its cash up to DIG. With no other remaining assets or activity, the partnership was dissolved effective December 21, 2021.

BALANCE SHEET

December 31, 2021

(Dollars in thousands)

2020

Assets Cash

$

-

$

8.2

Total Assets

$

-

$

8.2

Capital Accounts

$

-

$

8.2

Total Liabilities & Capital Accounts

$

-

$

8.2

STATEMENT OF OPERATIONS

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

2021 $

Expenses Operating Loss Capital Gain on Sale of Property Net Income (Loss)

23

A NNUA L RE POR T 2 0 2 1

$

2020 -

$

51.8

2.4

64.8

(2.4

(13.0

-

78.8

(2.4

$

65.8

DIRECTORS HOLDING CORPORATION DHC ended 2021 with assets of $162.8 million compared to 2020 assets of $148.6 million. The primary increase in DHC’s assets was in its investments. DHC’s Investment in Subsidiary - FDLIC increased from $13.6 million to $161.7 million. DHC’s investment in DAC ceased upon a final distribution of $72.4 thousand. As of December 31, 2021, DHC owned a 99% limited partner’s interest in DALP. DHC’s investment in DREMLP ceased after a final distribution of $5.7 thousand, and investment in DALP increased $644.3 thousand after distributions from DALP of $2.0 million. Total investments in subsidiaries and partnerships for DHC increased $14.3 million.

DHC’s equity increased 9.60% to $162.8 million. During 2021, DHC declared and paid dividends to DIG in the amount of $2.0 million.

DHC’s operating expenses consisted primarily of corporate residency costs. DHC derived its earnings from equity increases in its subsidiary investments and partnership interest increases in its partnership investments. DHC’s earnings from its investments were $16.4 million in 2021 as compared to $7.3 million in 2020, due to increased earnings from FDLIC. Net income for DHC was $16.3 million for 2021.

BALANCE SHEET

December 31, 2021

(Dollars in thousands)

2020

Assets Cash

$

Investments in Subsidiaries & Partnerships

2.1

$

162,842.7

3.5 148,582.8

Total Assets

$

162,844.8

$

148,586.3

Total Equity

$

162,844.8

$

148,586.3

STATEMENT OF OPERATIONS

Twelve Months Ended December 31,

(Dollars in thousands) Operating Expenses

2021 $

Operating Loss Equity in Earnings of Subsidiaries & Partnerships Net Income

$

2020 1.5

$

1.5

(1.5

(1.5

16,350.7

7,280.4

16,349.2

$

DI REC T O RS I NVEST MENT GRO UP

7,278.9

24

DIRECTORS AGENCY, LP DALP is a Delaware limited partnership formed on February 1, 2002, and owned 1% by DCVI and 99% by DHC, both wholly owned subsidiaries of DIG. DALP provides strategic sales and marketing support for the sale of FDLIC’s insurance products. At year-end 2021, DALP employed 63 sales professionals called Select Producers across the United States to support FDLIC’s active sales program.

For 2021, total assets were $1.6 million compared to $1.2 million at year-end 2020. The net year-over-year increase was due entirely to an increase in cash.

Liabilities decreased to $433.5 thousand due entirely to the forgiveness of the Paycheck Protection Program (PPP) loan that DALP received in April of 2020. Funds, in the amount of $544.4 thousand, were used to provide salaries and benefits to commissioned employee-salespeople during the pandemic. The loan was forgiven in June of 2021 and recorded in the income statement as revenue.

25

A NNUA L RE POR T 2 0 2 1

Other liabilities consisted of amounts due to affiliates as well as general and payroll-related payables. Capital accounts ended the year at $1.2 million after partner distributions of $2.1 million.

Revenues consisted of commissions earned from FDLIC and FAI and were $9.4 million compared to $6.6 million in 2020. The year-overyear increase is due to a 32.5% increase in new business production and forgiveness of the PPP loan. Commission income from the active sales program was $7.7 million compared to $5.4 million in 2020.

Expenses in 2021 consisted primarily of salaries and benefits for insurance agents hired to actively sell preneed. Employment-related expenses totaled $5.8 million. The remaining expenses were mainly related to training, recruiting, and lead generation. Net income for 2021 was $2.7 million – approximately $1.4 million higher than 2020.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Cash

$

1,457.2

$

989.6

Investments

65.1

78.7

Other Assets

97.1

157.9

Total Assets

$

1,619.4

$

1,226.2

$

433.5

$

691.0

Liabilities & Capital Accounts Payables and Other Liabilities Total Liabilities Capital Accounts Total Liabilities & Capital Accounts

STATEMENT OF OPERATIONS

$

1,185.9

535.2

1,619.4

$

2021 $

Expenses Net Income

691.0

1,226.2

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

433.5

9,453.0

2020 $

6,751.2 $

2,701.8

6,617.2 5,310.8

$

DI REC T O RS I NVEST MENT GRO UP

1,306.4

26

DIRECTORS CAPITAL VENTURES, INC. DCVI is the general partner for the limited partnership investments in DREMLP and DALP and is the operating entity for the DIG Wellness Center - a company-provided health and wellness facility for employees of DIG affiliates that opened in February of 2013.

DCVI owns a 1% interest in DALP that represents $11.9 thousand of its assets. Other assets include computer equipment and prepaid expenses. DCVI ended the year with assets of $16.3 thousand compared to $29.2 thousand in 2020.

Liabilities decreased to $14.4 thousand due entirely to forgiveness of the Paycheck Protection Program (PPP) loan that DCVI received in April of 2020. Funds in the amount of $30.1 thousand were used to provide salaries and benefits to employees during the pandemic.

DCVI was granted forgiveness in January of 2021. Equity ended the year at $1.9 thousand. During 2021, DCVI paid dividends to DIG in the amount of $38.4 thousand and received contributions of $33.0 thousand. The contributions from DIG provided operating cash flow for the wellness facility.

27

A NNUA L RE POR T 2 0 2 1

Revenues consist of reimbursements from Blue Cross Blue Shield (BCBS) for services provided to DIG’s employees as well as monthly service fees from FDLIC. During the year, DCVI received $150.0 thousand in service fees from FDLIC and $75.7 thousand in reimbursements from BCBS and employees. DCVI had $264.7 thousand in expenses for operating the DIG Wellness Clinic as well as corporate existence expenses, such as registration fees and corporate residency expense. The DIG Wellness Center employs a nurse practitioner and a fitness director. DCVI’s equity in earnings was derived from its 1% ownership in DALP. Partnership income in the amount of $27.0 thousand was reported for 2021 – up from $13.7 thousand in 2020. DCVI also reported a $30.1 thousand gain for forgiveness of the PPP loan, resulting in net income of $18.2 thousand compared to a loss of $24.0 thousand in 2020.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Cash

$

(0.2

Investments in Partnerships Other Assets Total Assets

$

1.3

29.7

23.2

4.6

4.7

$

34.1

$

29.2

$

14.4

$

40.2

Liabilities Other Payables Total Liabilities

14.4

40.2

Equity

19.7

(11.0

Total Liabilities & Equity

$

STATEMENT OF OPERATIONS

$

29.2

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

34.1

2021 $

Expenses

2020 225.7

$

212.8

264.7

250.5

Operating Loss

(39.0

(37.7

Equity in Earnings of Partnerships

27.0

13.7

Other Income Net Income (Loss)

$

30.3

$

-

$

18.3

$

(24.0

DI REC T O RS I NVEST MENT GRO UP

28

DIRECTORS AIR CORPORATION DAC was a wholly owned subsidiary of DHC. It began operations January 1, 1996, providing DIG and its subsidiaries with a standby corporate aircraft for use in marketing and corporate air travel.

Historically the corporate aircraft was owned and operated by DAC, but in November of 2019, FDLIC directly purchased a newer aircraft and the Cessna Citation Bravo owned by DAC was hangered with the intent of selling the aircraft. In December 2020, the aircraft was sold, and the vast majority of DAC’s assets were distributed to DIG. With no viable purpose to continue its existence, DAC was dissolved effective December 21, 2021.

29

A NNUA L RE POR T 2 0 2 1

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Cash

$

-

$

87.9

Investments

-

1.0

Other Assets

-

27.7

Total Assets

$

-

$

116.6

$

-

$

48.1

Liabilities & Equity Payables and Other Liabilities Total Liabilities

-

48.1

Equity

-

68.5

Total Liabilities & Equity

$

STATEMENT OF OPERATIONS

-

116.6

Twelve Months Ended December 31,

(Dollars in thousands) Operating Expenses

$

2021 $

2020 (3.9

$

339.7

Operating Gain (Loss)

3.9

(339.7)

Capital Gain on Sale of Aircraft

-

558.7

Net Income

$

3.9

$

DI REC T O RS I NVEST MENT GRO UP

219.0

30

FUNERAL AGENCY, INC. FAI is a marketer and seller of prepaid funerals and various insurance products on behalf of FDLIC in the states of Texas and Colorado. FAI is a licensed insurance agency and holds a prepaid funeral permit issued by the Texas Department of Banking and the Colorado Department of Insurance. A Texas corporation organized on June 18, 1982, FAI was acquired by DIG on January 1, 2006.

FAI ended the year with assets of $2.0 million, consisting mostly of cash, claims receivable from FDLIC, and goodwill. Liabilities of $2.7 million consisted largely of agent credit balances and suspense items.

Equity ended the year at negative $721.0 thousand.

31

A NNUA L RE POR T 2 0 2 1

Through an agency agreement with FDLIC, FAI received commission income on premiums collected by FDLIC on preneed funeral business written in Texas. Revenues for 2021 were $2.5 million – exceeding 2020 by 16.71%. FAI contributed approximately 23.4% of FDLIC’s preneed sales volume during 2021, producing just over $91.0 million in new business. Expenses consisted mostly of salaries and benefits of sales managers employed by the company and sales-related incentive programs. Net income for 2021 was $9.7 thousand compared to net income of $267.2 thousand in 2020, which included $175.1 thousand in other income from the forgiveness of the PPP loan.

BALANCE SHEET

December 31,

(Dollars in thousands)

2021

2020

Assets Cash

$

1,110.3

$

964.2

Receivables and Prepaids

228.7

125.8

Other Assets

666.2

509.2

Total Assets

$

2,005.2

$

1,559.2

Liabilities & Equity Payables and Other Liabilities

$

Total Liabilities

2,726.2

$

STATEMENT OF OPERATIONS

2,329.9

(721.0

(730.7 $

1,599.2

2021 $

Operating Expenses Operating Income (Loss) Other Income Net Income

2,005.2

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

2,329.9

2,726.2

Equity Total Liabilities & Equity

$

$

2020

2,484.1

$

2,128.5

2,504.3

2,079.8

(20.2)

48.7

29.9

218.5

9.7

$

DI REC T O RS I NVEST MENT GRO UP

267.2

32

A DIVISION OF DIG Originally a Delaware corporation created on November 26, 2012, Passare was merged into DIG, effective January 1, 2020. Passare is a software-as-a-service company providing an online administrative platform specifically designed for funeral homes. DIG initially invested in Passare in 2013 and also provided an operating line of credit to sustain Passare’s operations. In April of 2015, DIG negotiated an exchange of all outstanding debt with Passare in return for additional shares of stock, resulting in majority ownership. In 2019, DIG gained 100% ownership in Passare after an exchange of cash or stock for remaining minority interests in Passare. Gaining 100% control of Passare paved the way to substantial expense reduction and sharing of resources between Passare and other DIG affiliates as reflected in the 2021 financial results.

While Passare’s assets and liabilities were combined with DIG’s due to the merger, the operations of Passare are monitored and recorded as a separate division within DIG.

During 2021, Passare increased revenues by 40.23%, ending the year with approximately 851 customers, representing a year-end base of 183,000 subscription calls. Passare continued to improve features to the software in line with the company’s vision to “make Passare the system through which a funeral home can run its entire business.”

Passare also expanded on its consulting services, such as premium support and client services. Revenues were $3.3 million compared to $2.4 million in 2020. Total expenses in 2021 were $3.6 million compared to $3.2 million in 2020 – a $348.0 thousand increase.

The increase in expenses was due largely to an increase in contract labor expense. Labor-related expenses account for approximately 89% of total operating expenses with the majority of those expenses dedicated to further development of the software. Operating losses decreased by $602.1 thousand from 2020. Net income was $12.4 thousand after reporting $288.2 thousand in gain from forgiveness of the PPP loan received in April 2020.

STATEMENT OF OPERATIONS

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

2021 $

Expenses Operating Loss Miscellaneous Income Interest Income (Expense) Net Income (Loss)

33

A NNUA L RE POR T 2 0 2 1

$

2020

3,311.1

$

2,361.2

3,589.2

3,241.4

(278.1

(880.2

288.4 2.1

2.2 (2.1

12.4

$

(880.1

F I N A N C I A L S

DI REC T O RS I NVEST MENT GRO UP

34

FINANCIAL SUMMARY

2021

2020

% Change

FINANCIAL Total Assets Shareholders' Equity

$ $

186,053,403 177,404,169

$ $

169,952,628 161,180,862

9.47% 10.07%

PER COMMON SHARE DATA Share Value

$

80.36

$

72.85

10.31%

2,558,202

2,540,304

0.70%

260

244

6.56%

SHARES ISSUED AND OUTSTANDING SHAREHOLDERS

35

A NNUA L RE POR T 2 0 2 1

BALANCE SHEET

Year Ended 2021

Year Ended 2020

ASSETS CASH TRADE RECEIVABLES INVESTMENTS - Short Term INVESTMENTS - Long Term: Investment in Subsidiary - FDLIC Investment in Land Investment in Furniture & Fixtures - NET Investment in Autos - NET Investment in EDP Equipment - NET Notes Receivable GOODWILL OTHER ASSETS - Net

$

TOTAL ASSETS

$

186,053,403

$

169,952,628

$

621,076 390,273 536,939 2,249,832 1,176,635 166,662 3,507,817 8,649,234

$

405,051 277,451 457,255 1,972,276 700,604 102,060 4,857,069 8,771,766

4,825,432 193,072 9,477,136

$

161,668,637 330,302 3,735 60,256 136,637 2,310,062 5,946,289 1,101,845

4,044,450 121,196 7,919,799 147,994,226 330,302 6,211 14,752 114,645 2,779,936 5,946,289 680,822

LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Intercompany Payables General Expense Payable Dividends Payable Agent Credit Balances Unearned Income Miscellaneous Liabilities Notes Payable TOTAL LIABILITIES STOCKHOLDERS’ EQUITY Common Stock (2,878,960 and 2,859,548 shares, respectively @ $.01 Par)

Additional Paid-In Capital Treasury Stock (320,758 and 319,244 shares respectively) Dividends Retained Earnings TOTAL STOCKHOLDERS’ EQUITY TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

28,790 21,066,966 (6,389,886 (22,986,503 185,684,802

28,595 19,918,402 (6,231,066 (20,887,535 168,352,466

177,404,169

161,180,862

186,053,403

$

169,952,628

DI REC T O RS I NVEST MENT GRO UP

36

STATEMENT OF OPERATIONS

Year Ended 2021 NET INCOME OF SUBSIDIARIES AND PARTNERSHIPS Net Income - Parkway Advisors, LP Net Loss - Parkway Advisors Group, Inc. Net Loss - Parkway Advisors Holdings, Inc. Net Income - Directors Agency, LP Net Income (Loss) - Directors Real Estate Management, LP Net Loss - Directors Capital Ventures, Inc. Net Loss - Directors Holding Corporation Net Income - Directors Air Corporation Net Income - Funeral Agency, Inc. Total Net Income of Subsidiaries and Partnerships OPERATING EXPENSES- Directors Investment Group, Inc. Legal and Accounting Fees Travel, Meals, and Entertainment Directors Fees Insurance Expense Other Operating Expenses Total Operating Expenses - Directors Investment Group, Inc.

$ 2,369,933 (2,807 (2,269 2,701,790 (2,413 (8,749 (1,450 3,927 9,672 $ 5,067,634

$ 2,289,473 (2,775 (2,246 1,306,362 65,738 (37,758 (1,450 219,035 267,143 $ 4,103,522

55.79% -0.07% -0.05% 31.84% 1.60% -0.92% -0.04% 5.34% 6.51% 100.00%

33,216 137,003 316,400 33,075 45,039 564,733

0.66% 2.70% 6.24% 0.65% 0.89% 11.14%

$

40,163 98,845 249,600 29,161 13,250 431,019

0.98% 2.41% 6.08% 0.71% 0.32% 10.50%

COMBINED INCOME BEFORE OTHER INCOME/EXPENSE

$ 4,502,901

88.86%

$ 3,672,503

89.50%

OTHER INCOME Equity in Earnings of Funeral Directors Life Insurance Company GAAP Adjustment for Statutory Accounting Equity in Earnings of Passare, Inc. Interest Income - Business Loans Interest Income - Investments Dividend Income - Community Bank of Snyder Capital Gain on Sale of Assets

$14,495,292 (820,880 12,397 196,598 69,584 -

286.04% -16.20% 0.24% 3.88% 1.37% 0.00% 0.00%

$ 6,523,881 (820,880 (880,102 403,999 47,151 231,525 83,472

158.98% -20.00% -21.45% 9.85% 1.15% 5.64% 2.03%

345,443

6.82%

388,601

9.47%

18,110,449

357.37%

8,872,948

216.23%

778,113

15.35%

-

0.00%

$17,332,336

342.02%

$ 8,872,948

216.23%

OTHER EXPENSE Interest Expense to FDLIC INCOME BEFORE INCOME TAXES FEDERAL INCOME TAX EXPENSE NET INCOME

37

A NNUA L RE POR T 2 0 2 1

$

46.77% -0.06% -0.04% 53.31% -0.05% -0.17% -0.03% 0.08% 0.19% 100.00%

Year Ended 2020

SHAREHOLDERS’ EQUITY

COMMON STOCK

Ending Balance, December 31, 2020 Common Stock Issued Through Exercise of Stock Options

TREASURY STOCK

Number of Shares

Amount

Number of Shares

2,859,548

$28,596

319,244

19,412

195

Amount

$(6,231,068

Additional Paid-in Capital

$19,918,403

Retained Earnings

Total

$147,464,931

$161,180,862

1,148,563

1,148,758

Common Stock Purchased by the Company

23,325

(1,809,566

(1,809,566

Treasury Stock Sold by the Company

(21,811

1,650,747

1,650,747

Dividends on Common Stock, $.82 per share

(2,098,968

(2,098,968

Net Income

17,332,336

17,332,336

$162,698,299

$177,404,169

Ending Balance, December 31, 2021

2,878,960

$28,791

320,758

$(6,389,887

$21,066,966

DI REC T O RS I NVEST MENT GRO UP

38

CASH FLOWS

Cash Flows from Operating Activities: Net Income

Year Ended 2021

Year Ended 2020

$

$

17,332,336 )

8,872,948)

Adjustments to Reconcile Net Income to Net Cash from Operating Activities: Depreciation and Amortization Change in Current Assets and Liabilities: Increase in Receivables and Other Assets Increase in Payables Net Cash Provided by Operating Activities

65,491)

197,527)

(492,897) 363,995) 17,268,925)

(5,464,896) 1,067,803) 4,673,382)

Cash Flows from Investing Activities: Increase in Short-Term Investments Increase In Investment in Affiliate - FDLIC Increase in Investment - Passare, Inc. Decrease in Investment in Community Bank Of Snyder Decrease in Notes Receivable Net Decrease in Investment in Airplane Net Increase in Furniture & Fixtures, Autos, and Equipment Net Cash Used In Investing Activity

(1,557,338) (13,674,412) 469,874) (130,512) (14,892,388)

(6,388,790) (5,703,002) (14,028,181) 688,278) 22,285,985) 931,751) (139,737) (2,353,696)

(486,526) 1,148,758) 1,650,747) (1,809,566) (2,098,968) (1,595,555)

(443,698) 862,728) 1,239,846) 1,730,181) (2,141,121) (1,752,495) (504,559)

780,982) 4,044,450)

1,815,127) 2,229,323)

Cash Flows from Financing Activities: Payments of Long-Term Debt Proceeds from Paycheck Protection Loans Proceeds from Issuance of Common Stock Proceeds from Sale of Treasury Stock Repurchases of Common Stock Common Stock Dividends Net Cash Used in Financing Activity Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Period Cash and Cash Equivalents at End of Period

$

4,825,432)

$

4,044,450)

Supplemental Disclosure of Cash Flow Information: Cash Paid During the Period for: Interest Taxes

$ $

351,291) 845,231)

$ $

391,051) -)

39

A NNUA L RE POR T 2 0 2 1

SHAREHOLDERS

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2022 The Seale Family L. P., Kris Seale General Ptr Jeff Harper Elizabeth Gay Schulze B. Kris Seale as Trustee for the Dylan Moore Trust Amy Paquette Robert Elliott Hamil Trust Angela Jo Hamil Willis Trust TT Welch Investments, LLC Phillip Welch Mike Lemons Rudy Jack Cypert Pam Welch Amy Paquette as Trustee for the Paquette Children’s Trust Robert E. Hamil William L. McReavy Ray Harper The Allan and Gail Adams Revocable Trust Bob and Carolynn White Forward Investment LTD, Forward Mgt. Inc. General Ptr Lois Dodds Sid Grant Mark S. France Thomas W. Branon Darrell W. Rains Pat Baxter Bobby B. Connell T. Duane Connell Leslie Branon Montz Teresa Carol Davis Branon Sidney C. Grant, Self Directed IRA Jay J. Kelly Legacy Funeral Holdings, Inc. W. Brown Claybar Self-Directed IRA Stuart Ford Judy K. Storm Bowers Michael L. Soper Washburn McReavy Funeral Chapels, Inc Susan P. Branon Robby & Deana Morris

Director/Officer DO D

D D

D

D D

D D

D

Total Common 545,918 215,913 160,794 136,665 127,479 115,826 115,825 84,987 75,035 64,688 63,092 61,221 51,273 47,479 46,884 43,117 39,839 39,200 30,816 28,718 25,000 23,000 18,995 18,902 18,000 16,690 16,690 16,499 15,640 13,920 11,712 11,249 10,625 10,000 9,753 9,425 9,383 9,000 9,000

DI REC T O RS I NVEST MENT GRO UP

Common % 21.376% 8.454% 6.296% 5.351% 4.992% 4.535% 4.535% 3.328% 2.938% 2.533% 2.470% 2.397% 2.008% 1.859% 1.836% 1.688% 1.560% 1.535% 1.207% 1.124% 0.979% 0.901% 0.744% 0.740% 0.705% 0.654% 0.654% 0.646% 0.612% 0.545% 0.459% 0.440% 0.416% 0.392% 0.382% 0.369% 0.367% 0.352% 0.352%

40

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2022

Director/Officer

Betty S. Alvey Ann M. Swanson Angela Hamil-Willis Mark Cypert Patricia Angeley Addison Templeton Patrick C. Patton & Suzanne E. Patton, Trustees of Patton Living Trust 401k FBO Sam J Chase Taylor Greene Reagan Ramsower Kasi Welch-Baker Thomas M. Vertin Jerry Willingham Mark Owen Terry Groban Royce Rampy Terri Bannister Roy Carroway, Jr. Jenifer Hoff Cliff Pollack Drew Seale John W. & Grace Eirkson W.B. Claybar B. Kris Seale Childrens’ Trust John Harrington 401k FBO Linda Chase Gregg A. Havlak Gerald D. Runnels Amanda Farrow Nadene Smith Ray Thompson Jeffery W. Stewart Zachary O. Schulze First Financial Trust & Asset Management Co.,N.A. FBO Jeannette Waddell McQueen Tim Hoff Theron Holladay First Financial Trust & Asset Management Co.,N.A. FBO David Lee McQueen Gloria Skinner Mark Willingham Pamela Ulery Elizabeth Harper Schulze Edwards Lori Owen Sonia DeLeon Harry C. Drew Mark Childs Victor E. Schulze Kyle Swearingen

41

A NNUA L RE POR T 2 0 2 1

O D

D

O O

D

O

Total Common 8,824 8,815 8,427 8,039 7,523 6,600 6,350 6,027 5,000 5,000 5,000 5,000 4,809 4,700 4,600 3,800 3,300 3,114 2,900 2,850 2,501 2,300 2,290 2,152 2,148 2,100 2,100 2,000 1,830 1,811 1,766 1,750 1,610 1,512 1,500 1,500 1,475 1,430 1,405 1,380 1,220 1,200 1,200 1,200 1,150 1,130 1,064

Common % 0.346% 0.345% 0.330% 0.315% 0.295% 0.258% 0.249% 0.236% 0.196% 0.196% 0.196% 0.196% 0.188% 0.184% 0.180% 0.149% 0.129% 0.122% 0.114% 0.112% 0.098% 0.090% 0.090% 0.084% 0.084% 0.082% 0.082% 0.078% 0.072% 0.071% 0.069% 0.069% 0.063% 0.059% 0.059% 0.059% 0.058% 0.056% 0.055% 0.054% 0.048% 0.047% 0.047% 0.047% 0.045% 0.044% 0.042%

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2022 Stephen R. Storm Pat Zalusky Shaun Gaffney Paul Lovelace Warren Family Trust - Larry Warren Jeffery Stewart Jay Thomas Foresight Family Funeral Homes, LLC Charles M Walls Amy Biggs Angie Dobbs Sam Chase Kevin Gaffney Alvino Sanchez Gary Boulicault Stephen Etter Bassett Brian K. Nichols Kelsey Swearingen Larry Anderson Theodore Beck Frank Downing Zach Sims Angela Holmes Annette Parmelly William P. Wimberly Vicki Dickson Matthew Waldrip Craig Loper Steven Dantzler Lisa Davidson Rex Miley Charles Eric Espinosa Deanna Reyes Steven Moore White Dove Holdings Business Trust Melissa Magers David McQueen Sarah Jane Branon Yancey D J Jons Ester Johnson Melanie Carr Rodolfo D. Robles, Jr Kyle Timmermann Marcus Wilson Thomas & Maria Hartsfield Joe Ramos Joshua Koehler

Director/Officer

O

Total Common 1,000 1,000 975 907 900 900 897 767 700 700 700 681 658 635 600 600 600 600 500 500 450 450 422 400 400 350 350 311 310 300 300 300 280 272 250 240 217 200 200 200 200 200 200 200 200 200 200

DI REC T O RS I NVEST MENT GRO UP

Common % 0.039% 0.039% 0.038% 0.036% 0.035% 0.006% 0.035% 0.030% 0.027% 0.027% 0.027% 0.027% 0.026% 0.025% 0.023% 0.023% 0.023% 0.023% 0.020% 0.020% 0.018% 0.018% 0.017% 0.016% 0.016% 0.014% 0.014% 0.012% 0.012% 0.012% 0.012% 0.012% 0.011% 0.011% 0.010% 0.009% 0.008% 0.008% 0.008% 0.008% 0.008% 0.008% 0.008% 0.008% 0.008% 0.008% 0.008%

42

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2022

Director/Officer

Barry R. Henderson Krause Investments, LLC Ben Ciani Dawson Rodriguez Proko-Wall and Associates, LLC Albert Jonas Vanessa Callari Paul Dercks Frank and Amy Downing Denise Chabarria Gibraltar Remembrance Services Jessica Ahrens Gloria & Jim Skinner Karen Toms Todd Carlson Mandi Faulks Kim J. Beckerman Spring Grove Cemetery and Arboretum GCT, LLC Heather Guitar Sherri Miller Chad Hoes Kylee Stockard Susan Condry Mary Beth Hensley Judy Webb Jacob Kramar Suzann Sharp Kelly Gilgenbach Stephen Patrick McKee and Denise McKee Trustees of the McKee Revocable Trust Eric M. and Nancy N. Siegel Trust William T. & Diana R. Turner Trust Jill Lopez William F Krause III Donald F. Swan Kim Halfmann Brennan Arthur Lantzy Kylie Eileen Lantzy Westin Reid Lantzy Scott Schaake Lei Ann Lantzy Jayce Parker Lantzy Cooper James Lantzy Delia Villanueva Schoedinger Funeral and Cremation Service Tammy Dermody Iris Williams

43

A NNUA L RE POR T 2 0 2 1

O

O

Total Common 200 179 175 160 157 156 150 150 150 150 149 148 140 129 125 120 120 119 119 117 108 100 100 100 100 100 100 100 100 97 93 93 90 89 83 80 80 80 80 80 80 80 80 76 74 74 70

Common % 0.008% 0.007% 0.007% 0.006% 0.006% 0.006% 0.006% 0.006% 0.006% 0.006% 0.006% 0.006% 0.005% 0.005% 0.005% 0.005% 0.005% 0.005% 0.005% 0.005% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003% 0.003%

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2022 Anissa Minatra Julie Hofmann Patrick Walker Jason Gazaille Laurie Mitchell J. Mark Busch James H. Busch Nelida Clark Doug Diener Judy Farmer Alec Hartman Nicholas Tunheim Kelly Johnson Tracy Bell Ezmeralda Bueno Stephen Vermilya Colin Nguyen Shannon Stih-Zaun Susie Daniel David S. J. Anderson John G. Fidel Charles W. Hammond Steve & Michele Ferree James A. Clair Barry L. Noffze Charles E. Young Millennium Trust Company, LLC Custodian FBO Mark Gonzales Traditional IRA Daniel R. Neal Jessica Minor Jennifer Flores Brandon Byerly National Advisers Trust FBO Steve P. McKee Simple IRA Shawna Thomas Jama Lea Wiggins Dawn Garrett Koetta Carrell Kathy Byram Tina Steele Clint Eastman Jane Howell LeAndra Pruett Stacy M. Foley Haley Cooke Maria Cervantes Beth Ann Carpenter Bonafair Capital Partners, LLC Jeremy Miles

Director/Officer

Total Common 65 65 65 60 60 59 59 50 50 50 50 50 50 50 50 50 50 50 49 46 46 46 46 46 46 46 46 46 40 40 38 37 35 30 30 30 30 30 30 30 30 30 30 30 30 27 24

DI REC T O RS I NVEST MENT GRO UP

Common % 0.003% 0.003% 0.003% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.002% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001%

44

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2022 Leslie Oglesby Greg Neeley Zack Shahan Laurie Burton Jessie Caffey Sam Corbett Ryon Allen Kyle Williams Nathan Kesler Hillary Madeline Rex Johnson Alyssa Alvarez McKee Wallwork + Company, LLC Kim Kent Chris Baber Deonna Walker Jessie Martin Joyce Kiser Christy Bechtel Darrell Richardson Jamin Phillips Teresa Mansker Allison Condry Jennifer Richardson Carlos Pena Zackary Keene Patrick Messersmith Taylor Stokes Nicolas Alvarez David Fuentes Michael Robinson Grand Total Issued and Outstanding Treasury Stock Held By Company Grand Total Issued and Outstanding and in Treasury All Directors (D) and Officers (O) as a Group

45

A NNUA L RE POR T 2 0 2 1

Director/Officer

Total Common

24 20 20 20 20 20 20 20 20 20 16 15 11 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 2,553,849 326,621 2,880,470 1,097,439 Seale Family Harper Family Hamil Family Other Shareholders

Common % 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 88.661% 11.339% 100.000% 38.099% 33.981% 16.594% 11.260% 38.165%

ORGANIZATIONAL STRUCTURE

Other Shareholders 38.165%

Harper Family 16.594%

Seale Family 33.981%

Hamil Family 11.260%

100%

Directors Investment Group, Inc.

100%

100%

Parkway Advisors Holdings, Inc.

100%

Parkway Advisors Group, Inc.

Passare, Inc. Division of DIG

100%

100%

Directors Holding

Directors Capital Ventures, Inc.

Funeral Agency, Inc.

1% 99% 99%

Parkway Advisors, LP Delaware Limited Partnership

1%

Directors Agency, LP Delaware Limited Partnership

100% Funeral Directors Life Insurance Company Texas Legal Reserve

100% Funeral Directors Life Insurance Company of Louisiana

100% Kentucky Funeral Directors Life Insurance Company Kentucky Legal Reserve

DI REC T O RS I NVEST MENT GRO UP

46

BOARD OF DIRECTORS

ALLAN ADAMS Denton

LESLIE BRANON MONTZ Brownwood

JACK CYPERT Snyder

JERRY EDWARDS Granbury

MARK FRANCE Austin

ROBERT HAMIL Abilene

JEFF HARPER San Angelo

MIKE LEMONS Austin

PAT PATTON Sauk Centre, MN

DARRELL RAINS Austin

DR. REAGAN RAMSOWER Waco

DREW SEALE Abilene

KRIS SEALE Abilene

KASI WELCH-BAKER Midland

TOMMY WELCH Emeritus Director Abilene

BOB WHITE Emeritus Director Weatherford

47

A NNUA L RE POR T 2 0 2 1

CORPORATE OFFICERS

KRIS SEALE

President & Chief Executive Officer, Chairman of the Board

TERRY GROBAN

TERRI BANNISTER

TODD CARLSON

Executive Vice President & Chief Learning Officer

Executive Vice President & Chief Sales Officer

Executive Vice President & Chief Financial Officer

Executive Vice President & Chief Corporate Development Officer

PAUL LOVELACE

DWAYNE MCGRAW

DAWSON RODRIGUEZ

JEFF STEWART

ADDISON TEMPLETON

Executive Vice President & Chief Information Security Officer

Executive Vice President & Chief Marketing Officer

Executive Vice President & Chief Actuary

Executive Vice President & Chief Operations Officer

DI REC T O RS I NVEST MENT GRO UP

48

our

visionaries Jay Kelly............................................................................................... 1932 - 2022 Ernest Welch, Jr....................................................................... 1925 - 2016 Mike Branon................................................................................. 1953 - 2015 Billy Ray Harper....................................................................... 1931 - 2013 Avery Connell.............................................................................. 1922 - 2008 Bill Seale............................................................................................. 1927 - 2005 Benjamin Burton.................................................................... 1930 - 2004 Melvin Storm............................................................................... 1921 - 2004 Wendell Dodds........................................................................... 1938 - 2000 John Hamil....................................................................................... 1935 - 1998 Haynie Sides................................................................................. 1917 - 1998 Tom Branon................................................................................... 1929 - 1988

49

A NNUA L RE POR T 2 0 2 1

DI REC T O RS I NVEST MENT GRO UP

50

6550 DIRECTORS PARKWAY ABILENE, TEXAS 79606 800-692-9515 WWW.FUNERALDIRECTORSLIFE.COM

ITEM NUMBER 200