DIG Annual Report 2020

2020 ANNUAL REPORT

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

table of

contents 01

Letter to Shareholders

04

Management’s Discussion & Analysis

07

Results of Operations

35

Balance Sheet

36

Statement of Operations

37

Shareholders’ Equity

38

Cash Flows

39

Shareholders

45

Organizational Structure

46

Board of Directors

47

Corporate Officers

48

Our Visionaries

“…We also glory in our sufferings, because we know that suffering produces perseverance; perseverance, character; and character, hope. And hope does not put us to shame, because God’s love has been poured out into our hearts through the Holy Spirit, who has been given to us.”

THE APOSTLE PAUL (ROMANS 5:3-5)

F E L L O W S H A R E H O L D E R S

The Apostle Paul knew exactly what to say to comfort us when things are not going smoothly. 2020 was definitely a year that did not go smoothly – far from it.

Granted, most of what happened in 2020 was no fault of our own. Think about it – COVID-19, racial tensions, rioting in several large cities, political unrest, a contentious election – shall I continue??? 2020 was a year where “suffering produced perseverance; perseverance, character; and character, hope.”

When faced with extreme challenges, leaders have a choice – fight, flight, or freeze. Fight means to analyze the reality, determine alternate courses of action, and do something to move forward in faith (to persevere). Flight involves analyzing reality and choosing to retreat or give up. Freeze is all about doing nothing different to change the course. True leaders fight, and that is exactly what we did!

The decisions we made throughout the year not only salvaged 2020, but also set up our companies for an incredible future. Here are some things we did to “fight” and to prepare for the future: We decided to have no layoffs due to the COVID-19-related economic shutdown. We announced this to our people early, giving them confidence, easing their minds, and ensuring they would be here to help us to succeed when the crisis ended.

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DIRECTORS INVESTMENT GROUP, INC.

We continued to pay all our people, including commissioned employee-salespeople (Select Producers), who received their full compensation throughout the economic shutdown.

Our companies applied for, and received, the Paycheck Protection Program (PPP) loan, which helped considerably.

In the fourth quarter of 2020, we applied to the Small Business Administration for forgiveness of these loans.

With interest rates at all-time lows, we invested in improving our infrastructure and expanding the Home Office in order to prepare for future growth. The rent associated with the Home Office expansion provided a higher return (5.55%) for FDLIC than we could have achieved elsewhere.

We developed and deployed an online Arrangement GuideTM for people who would like to plan some, or all, of their funeral online, with optional involvement of a salesperson.

For our funeral home clients and preneed funeral sales professionals, our software development team developed an e-signatures process for completing preneed funeral contracts electronically.

We created an online preneed funeral sales presentation for FDLIC to allow families to meet with our sales professionals online, without physical contact.

We quickly expanded our imperative to become a “thought leader” in the funeral profession by providing over 100 helpful webinars and training sessions through virtual meetings during the COVID-19 crisis period of March through December.

Let’s face it, 2020 was a tough year, but as we often reminded ourselves, “it could’ve been worse!” The fact is, I could not be prouder of what we achieved last year. Our team pulled together and operated with true teamwork in ways I have never seen before. Lemons were continually thrown at us, and we just kept making lemonade.

So, let’s take a closer look at the success of DIG’s primary subsidiaries.

Funeral Directors Life Even though FDLIC was adversely impacted financially in 2020, due to the COVID-19 economic shutdown, we achieved some significant wins: The COVID-19 crisis hit us hardest and unrepentantly from April through June. After being over 100% of budget through March, preneed funeral sales were 60% less than budget in April, 40% less than budget in May, and 15% less than budget in June. Yet, new monthly sales records were achieved in eight months of 2020.

The average preneed funeral sale fell from an average of $5,700 to a monthly average of $4,700 in May, but it bounced back to $5,600 by year-end.

Our sales management team continued signing up new funeral home clients even though their travel was restricted for most of the year. More than 170 new funeral homes joined FDLIC’s client base.

We expanded FDLIC’s agency relationships by:

Developing the Proxima product, which resulted in increased production from Laker Planning and Advanced Planning, Inc.

Signing an agreement in late July with the largest preneed funeral agency in the United States – Precoa.

DIG’s assets increased by 5.88% to almost $170 million.

Our stockholders’ equity (book value of DIG) grew 5.19% and passed $160 million.

Signing an agreement with one of the largest preneed funeral agencies in Utah – Family Service Agency, Inc.

Advancing our agreement, signed late in 2019, with one of the largest preneed funeral agencies in Pennsylvania – Vantage Point Preneed.

We continued to set revenue records in Parkway, Passare, and most of our divisions of FDLIC. Let’s look at some of our financial results from 2020:

DIG paid dividends to shareholders of more than $1.75 million.

DIG repurchased $2.14 million of its own stock.

DIG sold $1.73 million of its common stock that had been held as treasury stock.

With dividends included, DIG’s overall return on equity was 7.92%.

A.M. Best Company affirmed our rating of A- with a stable outlook.

We were recognized for the 7th time by Texas Monthly magazine and Best Companies Group as one of the Best Companies to Work for in Texas, and we were certified once again as a Great Place To Work®, which puts us in an elite group among the best workplaces in the United States.

DIRECTORS INVESTMENT GROUP, INC.

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Parkway Advisors 2020 was an incredible year for Parkway – by far the best year in the company’s history. Our Parkway team fought through all the negatives of 2020 and achieved unimaginable positive results.

The successes we achieved were significant: 2020 represented 12 consecutive years of increasing revenue and net income. During these 12 years, we added over $13 million in value to DIG! Total revenue was $4.32 million, 8.60% greater than 2019 – a new record for us!

Net income was $2.3 million for the year, 22.14% higher than our previous record year!

During the year, three new insurance companies signed agreements for asset management.

Distributions to DIG increased by 22.22% over 2019 to $2.2 million!

Parkway did more than persevere in 2020 – the company excelled! It will be exciting to watch as Parkway builds on the momentum created last year.

Passare Passare was another one of our companies that went beyond perseverance. 2020 was a year for the record books for the company. We set the audacious goal to be cash flow positive

by December 2020, and we achieved that goal by September!

We focused and aligned our Passare leadership team on how they could positively affect financial performance. We stayed diligent, watched every expense, and created new revenue opportunities, while increasing our reach in existing funeral home accounts.

In 2020, Passare achieved the following accomplishments: We reached cash flow positive!

We increased revenue 49.09% over 2019.

Although the 2020 income statement showed a loss, that loss was 82.29% less than 2019.

We created new revenue sources – most notably:

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Client Services (to assist funeral home clients with establishing processes to best utilize Passare),

Adoption Plans (to assist funeral home clients with the initial adoption of Passare in their business), and

Premium Support (to supply ongoing help to funeral home clients who desire more proactive customer assistance).

DIRECTORS INVESTMENT GROUP, INC.

We established public and private APIs (Application Programing Interface) to create a foundation for common platform development.

We added several game-changing features – most notably e-signatures, state Electronic Death Registration System (EDRS) integrations, and The Planning Center.

We increased training and accountability, decreasing the amount of time necessary to establish a new funeral home client’s “instance” (initial setup) from 15 hours to 3 hours.

We formed an implementation team to make the process easier for funeral homes to switch software platforms.

As difficult as 2020 was for most businesses, Passare persevered and outperformed, beyond our wildest expectations. The company is now positioned to have a very promising 2021 and beyond. Fortunately, the losses that have occurred in Passare have led to tax savings, which have more than compensated for DIG’s investment in the company.

Conclusion It is worth hearing the words of Paul again: “…We also glory in our sufferings, because we know that suffering produces perseverance; perseverance, character; and character, hope.”

Through perseverance, character, and hope, we accomplished some incredible things last year – “it could’ve been worse!”

I must give honor where honor is due (Romans 13:7). Our management team has been outstanding through all the challenges of 2020! Through their dedication, their care for our people, their trust in my leadership, and frankly, their personal perseverance, our company did more than survive in 2020 – it thrived! We are blessed with strong leadership, and my heart overflows with gratitude and love for them.

We thank you, fellow shareholders, for your support. There is no greater responsibility than earning and keeping your trust and confidence. Rest assured, we will continue to work tirelessly to keep our commitments and protect and grow the value of your investment in DIG. With sincere gratitude and blessings,

KRIS SEALE Chairman of the Board President and Chief Executive Officer

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

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.

The subsidiaries include Directors Capital Ventures, Inc. (DCVI), Directors Holding Corporation (DHC), Directors Air Corporation (DAC), Parkway Advisors Group, Inc. (PAGI), and 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 Directors Real Estate Management LP (DREMLP), Parkway Advisors LP (PALP), and Directors Agency LP (DALP). In April of 2015, DIG acquired 87% majority ownership in Passare, Inc. (Passare) in exchange for outstanding debt. During the second half of 2019, DIG acquired the remaining shares of Passare in exchange for cash or equivalent value in treasury shares. Effective January 1, 2020, Passare was merged into DIG and as a legal entity ceased to exist. Going forward, Passare operations will 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). FDLA was created in June of 2019 in response to the requests of Louisiana funeral home clients in order to address insurance licensing issues in the state.

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.

DIRECTORS INVESTMENT GROUP, INC.

4

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 2020, the average number of common shares issued and outstanding, basic and diluted, was 2,532,212 and 2,742,984, respectively. For 2019, the average number of common shares issued and outstanding, basic and diluted, was 2,523,455 and 2,733,116, respectively. The exercise of 21,779 common stock options by employees and directors and the net purchase of 5,595 treasury shares by the Company are reflected in the change in average common shares outstanding.

Basic EPS was $3.50 and diluted EPS was $3.23 for 2020. For 2019, basic and diluted EPS was $4.62 and $4.27 respectively.

Decreased earnings for FDLIC was largely responsible for the year-over-year decrease in earnings per share.

Computation of Share Value DIG’s Share Value was $72.85 for 2020 and $68.14 for 2019, based on the modified book value calculation. This was a 6.91% increase over 2019.

For 2020 and 2019, 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 2020, the equity component was $161,180,862 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. For 2019, the equity component was $153,231,480 and the value of FDLIC’s business and IMR was $18,763,859. Total actual shares issued and outstanding at the end of 2019 were 2,524,120.

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. There was no federal

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DIRECTORS INVESTMENT GROUP, INC.

income tax expense for the combined group for 2020 as tax loss carryforwards entirely offset taxable income for the year.

Remaining loss carryforwards of approximately $5.5 million will be used to offset future earnings. The Company can offset up to 80% of taxable income going forward.

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.

Due to the Tax Cuts and Jobs Act passed in 2017, 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 acquisitions 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 2021 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 activation fees earned at Passare, principal and interest payments received on business loans, proceeds from Paycheck Protection loans, sale of certain long-term investments, 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 2020 was $1.8 million.

Investing Activities In January of 2020, DIG sold its investment in Community Bank of Snyder stock. Proceeds of $1.0 million were disbursed

as a dividend of $231.5 thousand and a purchase of $771.75 thousand, resulting in a gain on the sale of $83.5 thousand.

Since January 1, 1996, DAC provided a standby corporate aircraft for use in marketing and corporate air travel for DIG and its subsidiaries. When FDLIC directly purchased a newer aircraft in November of 2019, the Cessna Citation Bravo owned by DAC was hangered with the intent of selling the aircraft in 2020. In late December, the aircraft was sold for $1.3 million, resulting in a capital gain of $558.7 thousand.

Business loans outstanding at year-end 2020 were $2.8 million compared to $25.1 million at the end of 2019. The decrease was due largely to the merger of Passare into DIG at the beginning of 2020. Negative investment in Passare of $14.0 million was offset against $19.0 million in loans and interest payable to DIG, resulting in goodwill of $5.5 million. In the first quarter, DIG also received an early payoff on a $2.4 million loan. Remaining loans to funeral home customers earned interest at an average rate of 7.92%. No substantial new loans were extended in 2020. DIG collected principal payments in the amount of $3.2 million and interest payments of $421.4 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 the transfer of business loans to FDLIC, commission income at DALP and/or FAI level, or proceeds from the sale of treasury stocks. Investments are laddered to throw off approximately $500,000 in cash at the end of each month. Throughout 2020, DIG invested excess cash in short-term investments. Total interest collected on short-term investments was $45.2 thousand. At year-end 2020, DIG held $7.9 million in short-term investments.

on 21,779 shares were exercised at a price range of $48.04 to $63.83, providing $1.2 million in cash resources. 24,438 shares at a price of $48.04 were not exercised and forfeited, leaving 210,538 shares exercisable in 2021, 2022, 2023, 2024, and 2025 at a price range of $52.54 to $74.95. During the year, DIG also repurchased 30,605 shares of common stock for $2.1 million. In July of 2010, the Board of Directors approved the annual sale of a limited number of treasury shares. In 2019, DIG sold 17,645 shares of treasury stock for $1.2 million, and in 2020, DIG sold 25,010 shares for $1.7 million.

The Board of Directors approved the payment of quarterly dividends averaging $0.17 per share during 2020 for a total of $1.75 million. DIG paid $1.71 million in dividends in 2019.

Shareholder List & Beneficial Ownership The table on page 39 sets forth certain information as of March 1, 2021, 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, 2020.

Financing Activities DIG’s combined debt was comprised largely of borrowings from FDLIC. These loans originated in 2007 and were used to facilitate the funding of the funeral home financing program mentioned above in investing activities. These loans were renegotiated and extended in April of 2017. The loans pay interest at the rate of 9.25% and mature in April 2022. DIG paid FDLIC $443.7 thousand in principal and $392.0 thousand in interest in 2020. At year-end 2020, outstanding borrowings on the loans from FDLIC were $4.0 million. In April, several of the DIG non-insurance companies applied for and received Paycheck Protection for a total of $1.223 million. A portion of the loans were forgiven in November and December, leaving a balance of $862.7 thousand as of December 31, 2020.

During 2020, the Company offered options on 256,755 shares of common stock at a price range of $48.04 to $74.95. Options DIRECTORS INVESTMENT GROUP, INC.

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results of

operations 08

Funeral Directors Life Insurance Company

11

Kentucky Funeral Directors Life Insurance Company

13

Funeral Directors Life Insurance Company of Louisiana

15

Parkway Advisors, LP

17

Parkway Advisors Group, Inc.

19

Parkway Advisors Holdings, Inc.

21

Directors Real Estate Management, LP

23

Directors Agency, LP

25

Directors Capital Ventures, Inc.

27

Directors Holding Corporation

29

Directors Air Corporation

31

Funeral Agency, Inc.

33

Passare, Inc.

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 2020, FDLIC’s assets grew to $1.583 billion, up $70.9 million or 4.69% over 2019 assets of $1.512 billion. Invested assets are the largest component of assets for an insurance company.

FDLIC’s investments were $1.548 billion for 2020, an increase of 4.77% over 2019 investments of $1.477 billion. The primary investment held by FDLIC was bonds - government, agency, and corporate - representing 83.66% of invested assets or $1.295 billion. There was $1.0 million in preferred stocks at year-end 2020. FDLIC’s total common stock portfolio was $13.7 million, comprised of $11.0 million for investment in KFDLIC and FDLA and $2.67 million invested in the Monteagle Select Value Fund managed by PALP. Investment in real estate includes $15.5 million for the Home Office building. During 2020, FDLIC’s mortgage loan portfolio increased by $22.0 million for the financing of funeral home locations for a total of $200.4 million.

Other invested assets consist of loans to parent of $4.0 million, Surplus Debentures of $2.2 million, and cash and short-term investments of $5.4 million.

Premiums deferred and uncollected were $7.5 million, while investment income due and accrued was $15.6 million. Other assets of $12.3 million included $4.2 million in deferred tax assets, $5.7 million in insurance assignment receivables, and $1.79 million of electronic data processing and office equipment. The remainder of other assets was composed of receivables from affiliates and amounts for guaranty fund assessments held as assets.

FDLIC’s primary liability is its reserves for policyholders. For 2020, reserves were $1.399 billion, an increase of 3.86%

over reserves of $1.348 billion in 2019. Premiums received in advance comprised $3.8 million of the claims and premiums liabilities account. Asset Valuation Reserve (AVR) decreased $608.4 thousand or 4.69% compared to the $2.59 million increase from year-end 2018 to year-end 2019. The year-overyear decrease was due to realized capital losses recognized in the income statement. 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 increased $6.99 million from year-end 2019 for net realized capital gains of $7.228 million less amortization of $235.0 thousand. The significant gains were the result of a strategic repositioning that occurred in the first and fourth quarters of 2020. 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. Borrowed funds of $3.663 million include a $2.628 million loan from the Paycheck Protection Program and a $1.035 million grant from the Development Corporation of Abilene (DCOA). The Company submitted an application for forgiveness of the PPP loan on October 1, 2020, and to date has not received a determination from the SBA. The grant from the DCOA was based upon the Company’s expansion of its corporate headquarters and its commitment to create 70 additional positions over a 5-year period and will be converted to income once the terms of the grant have been met.

Dividends to policyholders, representing amounts to be credited to policyholder policies for the upcoming year, were consistent with 2019. Other liabilities of FDLIC included amounts due to affiliates and general expenses payable, commissions to agents’ payable, premium taxes and fees, and other miscellaneous liabilities as well as a federal income tax liability of $1.19 million.

Total capital and surplus increased $6.5 million for 2020 as compared to the increase of $4.2 million in 2019. The increase

DIRECTORS INVESTMENT GROUP, INC.

8

in 2020 consisted of net income of $5.094 million, a $663.8 thousand increase in deferred income tax adjustment, a $608.4 thousand decrease in AVR, and unrealized gains of $441.2 thousand offset by a $286.7 thousand increase in non-admitted assets. The ratio of capital and surplus to total assets was 8.89% at year-end 2020 compared to 8.87% at year-end 2019.

Revenues for FDLIC were primarily premium collections and investment income. When compared to the previous year, 2020 revenues decreased 1.67% or $5.52 million to $325.1 million compared to $330.6 million for 2019. New business issued for 2020 was approximately 3.7% lower than 2019 production due entirely to the onset of COVID-19 and its impact, particularly in the months of April and May. Net investment income increased $4.4 million during 2020 – consistent with the increase from year-end 2018 to year-end 2019.

Policyholder benefits fell slightly below the previous year to $255.2 million for 2020 compared to $257.1 million for 2019.

Death and annuity benefits paid during the year exceeded

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DIRECTORS INVESTMENT GROUP, INC.

2019 by $38.56 million and were $26.1 million above expected. Monthly claims expense averaged $16.8 million in 2020 compared to $13.6 million in 2019. With the year-overyear decrease in new business sales and the extraordinary increase in claims, aggregate reserves from year to year were down $40.3 million or 43.72% from 2019. General insurance expenses exceeded 2019 by only $300 thousand and included commissions paid to agents, taxes licenses and fees, and all other operating expenses of the company.

Net gain from operations was $14.24 million compared to $18.15 million for 2019. Policyholder dividends were consistent between years. Federal income taxes incurred were $3.2 million compared to $2.5 million in 2019 due to increased taxable income. In 2019, the Company was able to take significant tax deductions for 100% first-year depreciation on investment in capital assets. FDLIC realized net capital losses of $4.4 million from the disposal of troubled securities, resulting in net income for the year of $5.01 million compared to $14.3 million in 2019.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets $ 1,547,922.4

$ 1,477,477.2

Premiums & Investment Income Receivable

23,093.9

23,360.0

Other Assets

12,269.7

11,630.2

$ 1,583,286.0

$ 1,512,467.4

$ 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

$ 1,347,599.7 4,897.5 12,982.4 3,826.2 3,762.2 1,000.0 4,180.2

1,442,542.9

1,378,248.2

140,743.1

134,219.2

$ 1,583,286.0

$ 1,512,467.4

Investments

Total Assets 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

Twelve Months Ended December 31,

(Dollars in thousands) Premiums, Investment Income & Other

2020 $

2019

325,090.7

$

330,609.7

255,196.3

257,101.4

General & Administrative Expenses

55,658.6

55,358.6

Operating Income

14,235.8

18,149.7

Dividends to Policyholders

1,503.2

1,435.9

Earnings Before Federal Income Tax Federal Income Tax Provision

12,732.6 3,193.3

16,713.8 2,521.7

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

9,539.3 (4,445.2

14,192.1 82.6

Policyholder Benefits

Net Income

$

5,094.1

$

14,274.7

DIRECTORS INVESTMENT GROUP, INC.

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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. Total assets for 2020 were $24.6 million compared to 2019 assets of $24.1 million. The increase in assets was attributed to the increase in invested assets – a result of new business sales for the year. For 2020, the investments account for KFDLIC was $24.1 million. Government and corporate bonds represented 100% of investments. Premiums due and deferred and investment income due and accrued were $71.5 thousand and $299.2 thousand, respectively. Other assets consisted entirely of $83.7 thousand of deferred tax assets.

Liabilities for KFDLIC ended the year at $18.1 million. Reserves for life policies were $17.7 million or 97.61% of the company’s liabilities. Claims liabilities and premiums received in advance were $20.3 thousand and $47.1 thousand, respectively, for 2020. Asset Valuation Reserve (AVR) was $49.3 thousand compared to $138.5 thousand at the end of 2020. The yearover-year decrease was due to realized capital losses recognized in the income statement. Included in other liabilities was KFDLIC’s allocated portion of federal income taxes due to FDLIC in the amount of $44.7 thousand. Commissions to agents were $52.7 thousand. Other liabilities also included Interest Maintenance Reserve of $140.2 thousand as well as general expenses payable, taxes, licenses and fees payable, and other miscellaneous payables, representing $78.7 thousand.

For 2020, the capital and surplus of KFDLIC increased $176.8 thousand. The increase consisted of net income of $60.0 thousand, a decrease in AVR of $89.2 thousand, a decrease in negative IMR of $18.5 thousand, and an increase in deferred income tax of $8.7 thousand, resulting in an ending balance of

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DIRECTORS INVESTMENT GROUP, INC.

$6.431 million. The capital and surplus of KFDLIC represented the value of the common stock investment that FDLIC holds for KFDLIC. Revenues for KFDLIC were $3.59 million, consistent with 2019, and were composed primarily of premiums and investment income received. 2020 preneed sales production was $2.5 million, up slightly from 2019 production, and approximately 93.7% of expected sales. Premium income was $2.4 million while investment income was $1.2 million. Virtually all of the company’s expenses are variable based upon new business production. Policyholder benefits were $2.65 million. Death claims were $2.4 million – approximately $353.7 thousand higher than 2019 – while reserves increased only $221.6 thousand compared to a $597.7 thousand increase in 2019.

General insurance expenses were up $103.8 thousand due to a $47.3 thousand increase in commissions paid to agents as well as a $30.2 thousand increase in salaries, benefits, and salesrelated expenses.

Operating income for the year was $287.6 thousand compared to $383.6 thousand in 2019. Federal income tax was estimated at $95.5 thousand after the allocation of consolidated tax deductions shared amongst the insurance affiliates. KFDLIC realized net capital losses of $132.1 thousand from the disposal of troubled securities, resulting in net income for the year of $60.0 thousand compared to $309.6 thousand in 2019.

BALANCE SHEET

December 31, 2020

(Dollars in thousands)

2019

Assets

Investments

Premiums & Investment Income Receivable

Other Assets

Total Assets

$

24,126.0

$

23,677.4

370.7

363.7

83.8

75.0

$

24,580.5

$

24,116.1

$

17,716.7

$

17,495.0

Liabilities and Capital & Surplus

Reserves Claims & Premiums Liabilities

67.3

46.3

Asset Valuation Reserve

49.3

138.5

316.3

182.2

18,149.6

17,862.0

6,430.9

6,254.1

Other Liabilities

Total Liabilities Capital & Surplus Total Liabilities and Capital & Surplus

STATEMENT OF OPERATIONS

$

$

24,116.1

Twelve Months Ended December 31,

(Dollars in thousands) Premiums, Investment Income & Other

24,580.5

2020 $

2019

3,587.9

$

3,592.1

2,648.8

2,660.8

General & Administrative Expenses

651.5

547.7

287.6

383.6

95.5

73.4

192.1

310.2

(132.1

(0.6

Policyholder Benefits

Operating Income

Federal Income Tax Provision Net Gain Before Realized Capital Losses Net Realized Capital Losses

Net Income

$

60.0

$

309.6

DIRECTORS INVESTMENT GROUP, INC.

12

FUNERAL DIRECTORS LIFE INSURANCE COMPANY OF LOUISIANA Funeral Directors Life Insurance Company of Louisiana (FDLA) was incorporated 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 regulations in Louisiana related to agent licensing requirements for foreign corporations only. 2020 was FDLA’s first full year of operation.

FDLA ended 2020 with $11.3 million in assets compared to $6.59 million at the end of 2019. As of December 31, 2020, 97.76% of FDLA’s total assets were invested assets.

The majority of this account was government and corporate bonds, representing 86.12% of invested assets. The remaining investments were cash and short-term investments.

Premiums and investment income receivable consisted of investment income due and accrued of $92.0 thousand and premiums due and deferred of $148.5 thousand. Other assets include a net deferred tax asset of $123.5 thousand.

Liabilities for FDLA ended the year at $6.68 million. Reserves for life policies were $6.04 million compared to $1.76 million at year-end 2019, representing 90.43% of the company’s liabilities.

Claims liabilities and premiums received in advance were $21.1 thousand and $178.8 thousand, respectively, for 2020. Asset Valuation Reserve (AVR) was $27.3 thousand. Other liabilities included taxes, licenses and fees of $144.2 thousand, FDLA’s allocated portion of federal income taxes due to FDLIC in the amount of $69.5 thousand, and commissions to agents were $99.1 thousand. Other liabilities also included general expenses payable and other miscellaneous payables, representing $99.0 thousand. The company was capitalized with $100,000 of common capital stock and $4,400,000 of gross paid-in and contributed surplus. For 2020, the capital and surplus of FDLA

13

DIRECTORS INVESTMENT GROUP, INC.

increased $77.5 thousand. The increase consisted of net income of $15.2 thousand plus deferred income tax of $129.6 thousand offset by $49.0 thousand in non-admitted assets and $18.3 thousand in Asset Valuation Reserve.

Revenues for FDLA were $7.382 million. Premium income was $7.135 million and investment income was $241.8 thousand.

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 2020, death claims were $1.2 million of total policy benefits while aggregate reserves for life policies increased by $4.3 million. General Insurance Expenses were $1.713 million and consisted largely of administrative service fees in the amount of $240.5 thousand paid to Funeral Directors Life Insurance Company, $857.9 thousand in commissions to agents, $161.0 thousand in taxes licenses and fees, and $377.6 thousand of sales-related expenses.

Gain from operations of $186.1 thousand was offset by federal income taxes of $170.9 thousand. Taxable income for FDLA was $806.4 thousand after adjustments for deferred acquisition expenses and tax reserves. Net Income reflects a gain of $15.2 thousand for 2020 compared to a small loss in 2019.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets $

10,913.9

$

6,434.2

Investments

Premiums & Investment Income Receivable

240.5

120.0

Other Assets

125.0

36.4

Total Assets

$

11,279.4

$

6,590.6

$

6,039.8

$

1,755.6

Liabilities and Capital & Surplus

Reserves

199.9

28.7

27.3

9.0

411.8

274.2

Total Liabilities

6,678.8

2,067.5

Capital & Surplus

4,600.6

4,523.1

Claims & Premiums Liabilities Asset Valuation Reserve Other Liabilities

Total Liabilities and Capital & Surplus

STATEMENT OF OPERATIONS

$

$

6,590.6

Twelve Months Ended December 31,

(Dollars in thousands) Premiums, Investment Income & Other

11,279.4

2020 $

2019

7,382.4

$

2,665.9

Policyholder Benefits

5,483.0

1,926.1

General & Administrative Expenses

1,713.3

677.2

186.1

62.6

170.9

65.1

Operating Income

Federal Income Tax Provision

Net Income (Loss)

$

15.2

$

(2.5

DIRECTORS INVESTMENT GROUP, INC.

14

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 2020 were $835.0 thousand compared to $744.8 thousand for 2019. Cash ended the year at $630.4 thousand after partner distributions of $2.2 million. Receivables were $121.2 thousand and represent fees due from advisory clients as well as amounts due from affiliates. Investments in EDP equipment and software were $38.9 thousand. Other assets of $44.5 thousand consisted of prepaid expenses.

Liabilities consisted of general payables and payroll liabilities. In April, Parkway applied for and received a Paycheck Protection Program loan in the amount of $185.3 thousand. The loan was forgiven by the SBA in November of 2020. Total partners’ capital ended the year at $823.4 thousand after net income for the

15

DIRECTORS INVESTMENT GROUP, INC.

year of $2.290 million, less partner withdrawals of $2.2 million.

The partner withdrawals represented distribution of earnings, and ultimately, a return to DIG of 75%.

Revenues for 2020 were $4.3 million, exceeding 2019 revenues by $341.9 thousand, and were comprised of advisory service and consulting fees. Assets under management were approximately $4.0 billion at year-end 2020 compared to $3.4 billion at year-end 2019. Assets of consulting and investment reporting clients were $5.3 billion. During the year, Parkway added three new insurance clients to asset management and one new client to a multi-tiered consulting project. Operating expenses were $2.2 million, of which salaries and benefits comprised $1.4 million. Other operating expenses were general in nature. Net income for 2020 was $ 2.289 million compared to $1.875 million for 2019 – an increase of 22.14% and included other income of $185.3 thousand for forgiveness of the PPP loan.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Trade Receivables

$

630.4

$

437.6

121.2

164.4

Investments

38.9

20.3

Other Assets

44.5

122.5

Total Assets

$

835.0

$

744.8

$

11.6

$

10.8

Liabilities & Capital Accounts

Payables and Other Liabilities

Total Liabilities Capital Accounts Total Liabilities & Capital Accounts

STATEMENT OF OPERATIONS

$

10.8

823.4

734.0

835.0

$

744.8

Twelve Months Ended December 31,

(Dollars in thousands)

2020 $

Revenue

11.6

2019

4,318.6

$

3,976.7

Expenses

2,215.7

2,103.5

2,102.9

1,873.2

186.6

1.3

Operating Income

Other Income

Net Income

$

2,289.5

$

1,874.5

DIRECTORS INVESTMENT GROUP, INC.

16

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 $12.0 thousand. PAGI owns a 1% interest of the limited partnership that represents $8.2 thousand of its assets. Cash and accounts receivable comprised the remaining assets. Liabilities of $27.2 thousand represent amounts due to PALP. Total capital ended the year at negative $15.2 thousand after dividends to DIG in the amount of $21.9 thousand.

17

DIRECTORS INVESTMENT GROUP, INC.

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 2020, PAGI recorded partnership earnings of $22.9 thousand from its 1% ownership of the limited partnership investment in PALP. Net income for PAGI was $20.1 thousand compared to $15.9 thousand for 2019.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Receivables and Prepaids

2.9

2.9

Investment in Partnership

8.2

7.3

Total Assets

$

$

0.9

0.9

$

12.0

$

11.1

$

27.2

$

24.5

Liabilities & Equity

Payables and Other Liabilities

Total Liabilities Total Equity Total Liabilities & Equity

STATEMENT OF OPERATIONS

$

24.5

(15.2

(13.4

12.0

$

11.1

Twelve Months Ended December 31,

(Dollars in thousands) Operating Expenses

27.2

2020 $

2019 2.8

$

2.8

Operating Loss

(2.8

(2.8

Equity in Earnings of Partnership

22.9

18.7

Net Income

$

20.1

$

15.9

DIRECTORS INVESTMENT GROUP, INC.

18

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 $819.5 thousand. PAHI owns a 99% interest of the limited partnership that represents $815.2 thousand of its assets. Cash comprised the remaining assets.

Liabilities of $23.4 thousand represent amounts due to PALP. Total capital ended the year at $796.1 thousand after dividends paid to DIG in the amount of $2.178 million.

19

DIRECTORS INVESTMENT GROUP, INC.

PAHI had expenses for its corporate existence, such as registration fees, telephone charges, and corporate residency expense. Total operating expenses for 2020 were $2.2 thousand.

For 2020, PAHI recorded partnership earnings of $2.267 million from its 99% ownership of the limited partnership investment in PALP. Net income for PAHI was $2.27 million compared to $1.85 million for 2019.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Investment in Partnership

Total Assets

$

4.3

$

4.3

815.2

726.6

$

819.5

$

730.9

$

23.4

$

21.1

Liabilities & Equity

Payables and Other Liabilities

Total Liabilities Total Equity Total Liabilities & Equity

STATEMENT OF OPERATIONS

$

$

Operating Loss

Net Income

796.1

709.8

819.5

$

2020

Equity in Earnings of Partnership

21.1

730.9

Twelve Months Ended December 31,

(Dollars in thousands) Operating Expenses

23.4

$

2019 2.2

$

2.4

(2.2

(2.4

2,266.6

1,855.8

2,264.4

$

1,853.4

DIRECTORS INVESTMENT GROUP, INC.

20

DIRECTORS REAL ESTATE MANAGEMENT, LP DREMLP, a limited Delaware partnership formed in December 1995, is 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.

Over the years, DREMLP has divested of a significant portion of its initial investment property - approximately 7.85 acres of undeveloped land remains and has been earmarked for future expansion of the Home Office. With no viable purpose to continue its existence, the majority of DREMLP’s assets were either sold to an affiliate or contributed to DIG with the idea that the partnership would be dissolved sometime in 2021.

At year-end 2019, the assets of DREMLP consisted primarily of investment in real estate of $330.3 thousand, investment in automobiles totaling $108.2 thousand, and cash for a total

21

DIRECTORS INVESTMENT GROUP, INC.

of $464.2 thousand. At year-end 2020, total assets were only $8.2 thousand, consisting entirely of cash. 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. The partnership capital accounts ended the year at $8.2 thousand after net income of $65.8 thousand plus partner contributions of $505.3 thousand.

The revenues of $51.8 thousand for 2020 represent lease income on business vehicles provided to DREMLP’s affiliates.

Operating expenses were $64.8 thousand, consisting primarily of property taxes and depreciation. Other expenses were general in nature. Upon the sale of the automobiles, DREMLP recorded a capital gain of $78.8 thousand. Partnership net income for 2020 was $65.8 thousand compared to a loss of $7.1 thousand in 2019.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Investments

-

438.5

Other Assets

-

0.1

Total Assets

$

8.2

$

25.6

$

8.2

$

464.2

$

-

$

16.5

Liabilities & Capital Accounts

Payables and Other Liabilities

Total Liabilities Capital Accounts Total Liabilities & Capital Accounts

STATEMENT OF OPERATIONS

$

16.5

8.2

447.7

8.2

$

464.2

Twelve Months Ended December 31,

(Dollars in thousands)

2020 $

Revenue

-

2019 51.8

$

49.5

64.8

56.6

Operating Loss

(13.0

(7.1

Capital Gain on Sale of Property

78.8

-

Expenses

Net Income (Loss)

$

65.8

$

(7.1

DIRECTORS INVESTMENT GROUP, INC.

22

DIRECTORS AGENCY, LP DALP is a Delaware limited partnership formed 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 2020, DALP employed 57 sales professionals, called Select Producers, across the United States to support FDLIC’s active sales program.

For 2020, total assets were $1.2 million compared to $622.4 thousand at year-end 2019. The net year-over-year increase of $603.8 thousand was due largely to an increase in cash.

Liabilities increased to $691.0 thousand due entirely to the Paycheck Protection Program 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 employeesalespeople during the pandemic. For the months of April to July, DALP continued to pay Select Producer salaries comparable to commissions lost during the COVID-19 pandemic. DALP

23

DIRECTORS INVESTMENT GROUP, INC.

applied for forgiveness of the loan on October 1, 2020 but has yet to receive a determination from the SBA. Other liabilities included amounts due to affiliates as well as general and payroll-related payables. Capital accounts ended the year at $535.2 thousand after partner distributions of $1.3 million.

Revenues consisted of commissions earned from FDLIC and FAI and were $6.6 million compared to $5.5 million in 2019.

The year-over-year increase is due to an 18.7% increase in new business production. Commission income from the active sales program was $5.5 million compared to $4.3 million in 2019.

Expenses in 2020 consisted primarily of salaries and benefits for insurance agents hired to actively sell preneed. Employmentrelated expenses totaled $4.6 million. The remaining expenses were mainly related to training, recruiting, and lead generation.

Net income for 2020 was $1.3 million - consistent with 2019 earnings.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Investments

78.7

62.8

Other Assets

157.9

76.4

Total Assets

$

989.6

$

483.2

$

1,226.2

$

622.4

$

691.0

$

126.2

Liabilities & Capital Accounts

Payables and Other Liabilities

Total Liabilities

691.0

126.2

Capital Accounts

535.2

496.2

Total Liabilities & Capital Accounts

STATEMENT OF OPERATIONS

$

2020 $

Expenses

Net Income

$

622.4

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

1,226.2

2019

6,617.2

$

5,295.6 $

1,321.6

5,482.4 4,143.8

$

1,338.6

DIRECTORS INVESTMENT GROUP, INC.

24

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 the limited partnerships that represents $23.2 thousand of its assets.

Other assets include cash, computer equipment, and prepaid expenses. DCVI ended the year with assets of $29.2 thousand compared to $33.5 thousand in 2019.

Liabilities increased to $40.2 thousand due entirely to the Paycheck Protection Program 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 applied for forgiveness of the loan on October 1, 2020 and was granted forgiveness in January of 2021. Equity ended the year at negative $11.0 thousand. During 2020, DCVI declared and paid dividends to DIG in the amount of $7.7 thousand and received contributions of $5.0 thousand. The contributions from DIG provided operating cash flow for the

25

DIRECTORS INVESTMENT GROUP, INC.

wellness facility.

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. In June of 2014, DCVI entered into a service agreement with FDLIC to oversee the Company’s wellness program and to maintain the fitness and locker room facilities owned by FDLIC. During the year, DCVI received $150.0 thousand in service fees from FDLIC and $62.9 thousand in reimbursements from BCBS and employees. DCVI had $250.5 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 of the limited partnership investments. Partnership income in the amount of $13.7 thousand was reported for 2020 – consistent with 2019.

DCVI reported a net loss of $24.0 thousand compared to a loss of $66.2 thousand in 2019.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Investments in Partnerships

Other Assets

Total Assets

$

1.3

$

3.9

23.2

27.3

4.7

2.3

$

29.2

$

33.5

$

40.2

$

7.7

Liabilities

Other Payables

Total Liabilities Equity Total Liabilities & Equity

STATEMENT OF OPERATIONS

$

7.7

(11.0

25.8

29.2

$

33.5

Twelve Months Ended December 31,

(Dollars in thousands)

2020 $

Revenue

40.2

2019 212.8

$

148.8

Expenses

250.5

228.3

Operating Loss

(37.7

(79.5

Equity in Earnings of Partnerships

13.7

13.3

Net Loss

$

(24.0

$

(66.2

DIRECTORS INVESTMENT GROUP, INC.

26

DIRECTORS HOLDING CORPORATION DHC ended 2020 with assets of $148.6 million compared to 2019 assets of $144.3 million. The primary increase in DHC’s assets was in its investments. DHC’s Investment in Subsidiary - FDLIC increased $5.7 million to $148.0 million.

DHC’s investment in DAC decreased $983.0 thousand for net earnings of $219.0 thousand, offset by contributions of $1.25 million. As of December 31, 2020, DHC owned a 99% limited partner’s interest in both DREMLP and DALP. DHC’s investment in DREMLP decreased by $435.2 thousand after distributions of $500.0 thousand were paid, and investment in DALP increased $38.6 thousand after distributions from DALP of $1.25 million.

Total investments in subsidiaries and partnerships for DHC increased $4.3 million.

27

DIRECTORS INVESTMENT GROUP, INC.

DHC’s equity increased 3.0% to $148.6 million. During 2020, DHC received contributions from DIG of $48.0 thousand and declared and paid dividends to DIG in the amount of $3.0 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 $7.3 million in 2020 as compared to $13.66 million in 2019 due to decreased earnings from FDLIC. Net income for DHC was $7.3 million for 2020.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Investments in Subsidiaries & Partnerships

$

3.5

$

5.0

148,582.8

144,259.3

Total Assets

$

148,586.3

$

144,264.3

Total Equity

$

148,586.3

$

144,264.3

STATEMENT OF OPERATIONS

Twelve Months Ended December 31,

(Dollars in thousands) Operating Expenses

2020 $

Operating Loss

Equity in Earnings of Subsidiaries & Partnerships

Net Income

$

2019 1.5

$

0.7

(1.5

(0.7

7,280.4

13,657.1

7,278.9

$

13,656.4

DIRECTORS INVESTMENT GROUP, INC.

28

DIRECTORS AIR CORPORATION DAC is 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 2020. In late December, the aircraft was sold for $1.3 million, resulting in a capital gain of $558.7 thousand.

With no viable purpose to continue its existence, the vast majority of DAC’s assets (namely cash from the sale of the Bravo) was contributed to DIG with the idea that the company would be dissolved sometime in 2021.

29

DIRECTORS INVESTMENT GROUP, INC.

DAC ended 2020 with total assets of $116.6 thousand compared to $1.1 million in 2019. Cash was $87.9 thousand and other assets consisted of prepaid expenses. DAC’s liabilities consisted largely of intercompany amounts due to FDLIC. Equity was $68.5 thousand after distributions to DIG of $1.2 million.

There were no revenues for DAC in 2020 as the operational expenses for maintaining the aircraft owned by FDLIC were paid directly out of FDLIC. Operating expenses were $339.7 thousand versus $846.0 thousand in 2019. In 2020, operating expenses consisted of depreciation, insurance, hanger rent, and repairs and maintenance expense for the Bravo.

Net income for 2020 was $219.0 thousand compared to net income of $55.8 thousand for 2019.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Investments

1.0

933.0

Other Assets

27.7

28.2

Total Assets

$

87.9

$

94.4

$

116.6

$

1,055.6

$

48.1

$

4.2

Liabilities & Equity

Payables and Other Liabilities

Total Liabilities

48.1

4.2

Equity

68.5

1,051.4

Total Liabilities & Equity

STATEMENT OF OPERATIONS

$

$

1,055.6

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

116.6

2020 $

2019 $

-

901.8

Operating Expenses

Operating Gain (Loss)

339.7

846.0

(339.7

55.8

Capital Gain on Sale of Aircraft

558.7

-

Net Income

$

219.0

$

55.8

DIRECTORS INVESTMENT GROUP, INC.

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 $1.599 million, consisting mostly of cash, claims receivable from FDLIC, and goodwill.

Liabilities of $2.33 million consisted largely of agent credit balances and suspense items. In April, FAI applied for and received a Paycheck Protection Program loan in the amount of $175.1 thousand. The loan was forgiven by the SBA in December of 2020. Equity ended the year at negative $730.7 thousand.

31

DIRECTORS INVESTMENT GROUP, INC.

Through an agency agreement with FDLIC, FAI received commission income on premiums collected by FDLIC on preneed funeral business written in Texas. Revenues for 2020 were $2.1 million – consistent with 2019. FAI contributed approximately 26.8% of FDLIC’s preneed sales volume during 2020. Expenses consisted mostly of salaries and benefits of sales managers employed by the company and sales-related incentive programs. Net income for 2020 was $267.2 thousand compared to a net income of $17.4 thousand in 2019 and included $175.1 thousand in other income from the forgiveness of the PPP loan.

BALANCE SHEET

December 31,

(Dollars in thousands)

2020

2019

Assets

Cash

Receivables and Prepaids

125.8

129.2

Other Assets

509.2

503.0

Total Assets

$

964.2

$

563.7

$

1,599.2

$

1,195.9

$

2,329.9

$

2,193.7

Liabilities & Equity

Payables and Other Liabilities

Total Liabilities

2,329.9

2,193.7

(730.7

(997.8

Equity Total Liabilities & Equity

STATEMENT OF OPERATIONS

$

2020 $

Operating Expenses

Operating Income (Loss)

Other Income

Net Income

$

1,195.9

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

1,599.2

$

2019

2,128.5

$

2,106.4

2,079.8

2,129.8

48.7

(23.4

218.5

40.8

267.2

$

17.4

DIRECTORS INVESTMENT GROUP, INC.

32

A DIVISION OF DIG Originally a Delaware corporation created 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 2020 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.

STATEMENT OF OPERATIONS

During 2020, Passare increased revenues by 49.09%, ending the year with approximately 755 customers, representing a year-end base of 160,000 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.” Revenues were $2.36 million compared to $1.58 million in 2019. Total expenses in 2020 were $3.2 million compared to $4.6 million in 2019 – a 30% reduction. The decrease in expenses was due largely to the $1.2 million decrease in contract labor expenses – a result of bringing much of the development in-house. 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 $2.16 million from 2019. Net losses were $880.1 thousand compared to net losses of $5.0 million for 2019 that included $1.9 million of interest expense to DIG.

Twelve Months Ended December 31,

(Dollars in thousands) Revenue

2020 $

Expenses

Operating Loss

Miscellaneous Income Interest Expense

33

Net Loss

DIRECTORS INVESTMENT GROUP, INC.

$

2019

2,361.2

$

1,583.7

3,241.4

4,622.3

(880.2

(3,038.6

2.2 (2.1

2.1 (1,931.9

(880.1

$

(4,968.4

F I N A N C I A L S

DIRECTORS INVESTMENT GROUP, INC.

34

BALANCE SHEET

Year Ended 2020

Year Ended 2019

ASSETS CASH TRADE RECEIVABLES INVESTMENTS - Short Term INVESTMENTS - Long Term: Investment in Community Bank of Snyder Investment in Passare, Inc. Investment in Subsidiary - FDLIC Investment in Land Investment in Furn. & Fixt. - NET Investment in Airplane - NET Investment in Autos - NET Investment in EDP Equipment - NET Notes Receivable GOODWILL OTHER ASSETS - Net

$

TOTAL ASSETS

$

169,952,628

$

160,516,437

$

405,051 277,452 457,255 2,774,939 4,857,069 8,771,766

$

325,643 176,382 427,887 1,916,981 4,438,041 7,284,934

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

2,229,323 164,386 1,531,009 688,278 (14,028,181 142,291,224 330,302 2,787 931,751 108,240 82,370 25,065,921 467,310 651,717

LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Intercompany Payables General Expense Payable Dividends Payable Miscellaneous Liabilities Notes Payable TOTAL LIABILITIES STOCKHOLDERS’ EQUITY Common Stock (2,859,548 and 2,837,769 shares, 28,595 19,918,402 (6,231,066 (20,887,535 168,352,466 161,180,862

respectively @ $.01 Par)

Additional Paid-In Capital Treasury Stock (319,244 and 313,649 shares respectively) Dividends Retained Earnings TOTAL STOCKHOLDERS’ EQUITY TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

35

DIRECTORS INVESTMENT GROUP, INC.

$

169,952,628

28,377 18,678,775 (5,820,127 (19,135,040 159,479,518 153,231,503 $

160,516,437

STATEMENT OF OPERATIONS

Year Ended 2020 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. COMBINED INCOME BEFORE OTHER INCOME/EXPENSE 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 Capital Gain on Sale of Assets OTHER EXPENSE Interest Expense to FDLIC Capital Loss on Disposal of Assets INCOME BEFORE INCOME TAXES FEDERAL INCOME TAX EXPENSE (CREDIT) NET INCOME

Year Ended 2019

$ 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%

$ 1,874,564 (2,756 (2,436 1,338,570 (7,011 (79,461 (700 55,804 17,410 3,193,984

58.69% -0.09% -0.08% 41.91% -0.22% -2.49% -0.02% 1.75% 0.55% 100.00%

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

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

31,324 80,735 246,200 28,900 71,531 458,690

0.98% 2.53% 7.71% 0.90% 2.24% 14.36%

3,672,503

89.50%

2,735,294

85.64%

6,523,881 (820,880 (880,102 403,999 278,676 83,472

158.98% -20.00% -21.45% 9.85% 6.79% 2.03%

4,211,040 8,071,987 (4,968,489 2,384,097 44,089 -

131.84% 252.72% -155.56% 74.64% 1.38% 0.00%

388,601 -

9.47% 0.00%

427,959 396,364

13.40% 12.41%

8,872,948

216.23%

11,653,695

364.86%

-

0.00%

(8,142

-0.25%

$ 8,872,948

216.23%

$ 11,661,837

365.12%

DIRECTORS INVESTMENT GROUP, INC.

36

SHAREHOLDERS’ EQUITY

COMMON STOCK

Ending Balance, December 31, 2019 Common Stock Issued Through Exercise of Stock Options

Number of Shares

Amount

Number of Shares

2,837,769

$28,378

313,649

21,779

218

Amount

$(5,820,128

Additional Paid-in Capital

$18,678,775

Retained Earnings

Total

$140,344,478

$153,231,503

1,239,628

1,239,846

Common Stock Purchased by the Company

30,605

(2,141,121

(2,141,121

Treasury Stock Sold by the Company

(25,010

1,730,181

1,730,181

Dividends on Common Stock, $.69 per share

(1,752,495

(1,752,495

Net Income

8,872,948

8,872,948

$147,464,931

$161,180,862

Ending Balance, December 31, 2020

37

TREASURY STOCK

2,859,548

DIRECTORS INVESTMENT GROUP, INC.

$28,596

319,244

$(6,231,068

$19,918,403

CASH FLOWS

Year Ended 2020 Cash flows from operating activities: Net income

$

Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization Change in current assets and liabilities: (Increase) decrease in receivables and other assets Increase (decrease) in payables Net cash provided by operating activities

8,872,948)

Year Ended 2019

$

11,661,837)

197,527)

215,669)

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

30,456) (521,802) 11,386,160)

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

1,540,137) (12,283,026) 4,703,968 -) (3,463,449) (112,620) (201,996) (9,816,986)

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

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

(404,641) -) 873,541) 1,159,949) (2,087,256) (1,708,757) (2,167,164)

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

$

1,815,127) 2,229,323) 4,044,450)

$

(597,990) 2,827,313) 2,229,323)

Supplemental disclosure of cash flow information: Cash paid during the period for: Interest Taxes

$ $

391,051) -)

$ $

431,078) (8,142)

Cash flows from investing activities: (Increase) decrease in short-term investments Increase in investment in affiliate - FDLIC (Increase) decrease in investment - Passare, Inc. Decrease in investment in Community Bank of Snyder (Increase) decrease in notes receivable Net (increase) decrease in investment in airplane Net increase in furniture & fixtures, autos and equipment Net cash used in investing activity

DIRECTORS INVESTMENT GROUP, INC.

38

SHAREHOLDERS

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2020 The Seale Family L. P., Kris Seale General Ptr Jeff Harper B. Kris Seale 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 Pam Welch Rudy Jack Cypert Ray Harper Robert E. Hamil Amy Paquette as Trustee for the Paquette Children’s Trust William L. McReavy The Allan and Gail Adams Revocable Trust Bob and Carolynn White Forward Investment LTD, Forward Mgt. Inc. General Ptr Lois Dodds Mark S. France Darrell W. Rains Thomas W. Branon Pat Baxter Bobby B Connell T Duane Connell Leslie Branon Montz Melvin R. Storm Family Partners, L.P. Teresa Carol Davis Branon Sid Grant Sidney C Grant, Self Directed IRA Jay J. Kelly W. Brown Claybar Self-Directed IRA Stuart Ford Susan P Branon Michael L. Soper Washburn McReavy Funeral Chapels, Inc

39

DIRECTORS INVESTMENT GROUP, INC.

Director/Officer DO D DO

D D D

D D D D

D

Total Common 379,457 215,913 166,461 160,794 136,665 127,479 115,826 115,825 84,987 75,035 64,688 61,221 61,092 53,905 51,505 51,273 46,884 41,075 39,200 30,816 28,718 23,000 19,902 18,995 18,000 16,690 16,690 16,499 16,469 15,640 15,000 13,920 12,943 10,625 10,000 9,600 9,425 9,383

Common % 14.931% 8.496% 6.550% 6.327% 5.377% 5.016% 4.557% 4.557% 3.344% 2.952% 2.545% 2.409% 2.404% 2.121% 2.027% 2.017% 1.845% 1.616% 1.542% 1.213% 1.130% 0.905% 0.783% 0.747% 0.708% 0.657% 0.657% 0.649% 0.648% 0.615% 0.590% 0.548% 0.509% 0.418% 0.393% 0.378% 0.371% 0.369%

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2020

Director/Officer

Patricia Angeley Legacy Funeral Holdings, LLC Angela Hamil-Willis Mark Cypert Robby & Deana Morris 401k FBO Sam J Chase Judy K. Storm Bowers Patrick C. Patton & Suzanne E. Patton, Trustees of Patton Living Trust dated 6-2-2020 Reagan Ramsower Kasi Welch Baker Thomas M. Vertin Jerry Willingham Terry Groban Mark Owen E. Ray Templeton Betty S. Alvey Ann M. Swanson Taylor Greene Cliff Pollack Royce Rampy Drew Seale John W. & Grace Eirkson Terri Bannister W.B Claybar B. Kris Seale Childrens’ Trust 401k FBO Linda Chase Gerald D. Runnels John Harrington Jenifer Hoff Roy Carroway, Jr. Ray Thompson Amanda Farrow Zachary O. Schulze Nadene Smith Tim Hoff Gregg A Havlak Jeff W. Stewart Theron Holladay Gloria Skinner First Financial Trust & Asset Management Co.,N.A. FBO Jeannette Waddell McQueen Mark Willingham Pamela Ulery First Financial Trust & Asset Management Co.,N.A. FBO David Lee McQueen Elizabeth Harper Schulze Edwards Victor E Schulze Addison Templeton Mark Childs

D D

O

D O

O

O

Total Common 9,323 8,749 8,427 7,763 7,000 6,027 5,506 5,300 5,000 5,000 5,000 4,809 4,300 3,700 3,500 3,329 3,320 3,000 2,850 2,700 2,501 2,300 2,300 2,290 2,152 2,100 2,000 1,973 1,900 1,787 1,666 1,625 1,610 1,511 1,500 1,500 1,500 1,500 1,430 1,410 1,405 1,380 1,374 1,220 1,130 1,100 1,050

Common % 0.367% 0.344% 0.332% 0.305% 0.275% 0.237% 0.217% 0.209% 0.197% 0.197% 0.197% 0.189% 0.169% 0.146% 0.138% 0.131% 0.131% 0.118% 0.112% 0.106% 0.098% 0.090% 0.090% 0.090% 0.085% 0.083% 0.079% 0.078% 0.075% 0.070% 0.066% 0.064% 0.063% 0.059% 0.059% 0.059% 0.059% 0.059% 0.056% 0.055% 0.055% 0.054% 0.054% 0.048% 0.044% 0.043% 0.041%

DIRECTORS INVESTMENT GROUP, INC.

40

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2020 Stephen R. Storm Pat Zalusky Lori Owen Paul Lovelace Warren Family Trust - Larry Warren Shaun Gaffney Jay Thomas Kyle Swearingen Harry C. Drew Foresight Family Funeral Homes, LLC Sonia DeLeon Jeffery “Stewy” Stewart Leon Stone Charles M Walls Sam Chase Gary Boulicault Amy Biggs Angie Dobbs Kevin Gaffney Alvino Sanchez Larry Anderson Theodore Beck Kelsey Swearingen Frank Downing Angela Holmes Stephen Etter Bassett Brian K Nichols Craig Loper Steven Dantzler Lisa Davidson Rex Miley Annette Parmelly Charles Eric Espinosa Steven Moore Zach Sims White Dove Holdings Business Trust David McQueen Sarah Jane Branon Yancey D J Jons Ester Johnson Rodolfo D. Robles, Jr Joe Ramos William P. Wimberly Krause Investments, LLC Deanna Reyes Dawson Rodriguez Proko-Wall and Associates, LLC

41

DIRECTORS INVESTMENT GROUP, INC.

Director/Officer

O

O

Total Common 1,000 1,000 1,000 907 900 900 897 864 800 767 760 705 700 700 681 600 600 600 558 525 500 500 500 450 422 400 400 311 310 300 300 300 300 272 250 250 217 200 200 200 200 200 200 179 170 160 157

Common % 0.039% 0.039% 0.039% 0.036% 0.035% 0.035% 0.035% 0.034% 0.031% 0.030% 0.030% 0.028% 0.028% 0.028% 0.027% 0.024% 0.024% 0.024% 0.022% 0.021% 0.020% 0.020% 0.020% 0.018% 0.017% 0.016% 0.016% 0.012% 0.012% 0.012% 0.012% 0.012% 0.012% 0.011% 0.010% 0.010% 0.009% 0.008% 0.008% 0.008% 0.008% 0.008% 0.008% 0.007% 0.007% 0.006% 0.006%

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2020

Director/Officer

Albert Jonas Mike Frock Vanessa Callari Melanie Carr Matthew Waldrip Frank and Amy Downing Gibraltar Remembrance Services Gloria & Jim Skinner Patricia J. Wallwork Spring Grove Cemetery and Arboretum GCT, LLC Heather Guitar Chad Hoes Kylee Stockard Susan Condry Vicki Dickson Mary Beth Hensley Mandi Faulks Paul Dercks Kyle Timmermann Jessica Ahrens Ben Ciani Denise Chabarria Marcus Wilson Thomas & Maria Hartsfield Joshua Koehler Stephen Patrick McKee and Denise McKee Trustees of the McKee Revocable Trust Eric M and Nancy N Siegel Trust under agreement dated February 12, 2019 William T. & Diana R. Turner Trust Jill Lopez Judy Webb Melissa Magers William F Krause III Donald F. Swan Karen Toms Kim Halfmann Brennan Arthur Lantzy Kylie Eileen Lantzy Westin Reid Lantzy Lei Ann Lantzy Jayce Parker Lantzy Cooper James Lantzy Delia Villanueva Schoedinger Funeral and Cremation Service Tammy Dermody Iris Williams Scott Schaake

Total Common 156 150 150 150 150 150 149 140 125 119 119 117 100 100 100 100 100 100 100 100 100 100 100 100 100 100 97 93 93 90 90 90 89 83 82 80 80 80 80 80 80 80 76 74 74 70 70

Common % 0.006% 0.006% 0.006% 0.006% 0.006% 0.006% 0.006% 0.006% 0.005% 0.005% 0.005% 0.005% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 0.004% 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%

DIRECTORS INVESTMENT GROUP, INC.

42

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2020 Sherri Miller J. Mark Busch James H. Busch Nelida Clark Doug Diener Anissa Minatra Alec Hartman Nicholas Tunheim Kelly Johnson Jacob Kramar Susie Daniel David S. J. Anderson John G. Fidel Charles W. Hammond Steve & Michele Ferree James A. Clair Barry L. Noffze Charles E Young Sunwest Trust, as custodian for Mark Gonzales IRA Daniel R Neal Judy Farmer Jessica Minor Jennifer Flores Brandon Byerly National Advisers Trust FBO Steve P. McKee Simple IRA Acct. #11440002274 Shawna Thomas Jama Lea Wiggins Dawn Garrett Koetta Carrell Kathy Byram Tina Steele Clint Eastman Julie Hofmann Stacy M Foley Bonafair Capital Partners, LLC Todd Carlson Patrick Walker Jeremy Miles Greg Neeley Zack Shahan Laurie Burton Jane Howell Jason Gazaille LeAndra Pruett Suzann Sharp Rex Johnson Alyssa Alvarez

43

DIRECTORS INVESTMENT GROUP, INC.

Director/Officer

O

Total Common 68 59 59 50 50 50 50 50 50 50 49 46 46 46 46 46 46 46 46 46 40 40 40 38 37 35 30 30 30 30 30 30 30 30 27 25 25 24 20 20 20 20 20 20 20 16 15

Common % 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% 0.001% 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% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001% 0.001%

SHAREHOLDERS OF RECORD AS OF MARCH 1, 2020

Director/Officer

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 Haley Cooke Jessie Caffey Maria Cervantes Zackary Keene Ezmeralda Bueno Patrick Messersmith 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

Total Common

11 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 2,541,467 321,544 2,863,011 1,093,501 Seale Family Harper Family Hamil Family Other shareholders

Common % 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% 0.000% 88.769% 11.231% 100.000% 38.194% 34.138% 17.095% 11.473% 37.293%

DIRECTORS INVESTMENT GROUP, INC.

44

ORGANIZATIONAL STRUCTURE

45

DIRECTORS INVESTMENT GROUP, INC.

BOARD OF DIRECTORS

ALLAN ADAMS Denton

LESLIE BRANON MONTZ Brownwood

JACK CYPERT Snyder

JERRY EDWARDS Palo Pinto

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

JAY KELLY Emeritus Director Odessa

TOMMY WELCH Emeritus Director Big Spring

BOB WHITE Emeritus Director Weatherford

DIRECTORS INVESTMENT GROUP, INC.

46

CORPORATE OFFICERS

KRIS SEALE

President & Chief Executive Officer, Chairman of the Board

TERRY GROBAN

Executive Vice President & Chief Financial Officer

DAWSON RODRIGUEZ

Executive Vice President & Chief Information Security Officer 47

DIRECTORS INVESTMENT GROUP, INC.

TERRI BANNISTER

TODD CARLSON

Executive Vice President & Chief Learning Officer

Executive Vice President & Chief Sales Officer

PAUL LOVELACE

DWAYNE MCGRAW

JEFF STEWART

ADDISON TEMPLETON

Executive Vice President & Chief Corporate Development Officer

Executive Vice President & Chief Marketing Officer

Executive Vice President & Chief Actuary

Executive Vice President & Chief Operations Officer

our

visionaries 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 DIRECTORS INVESTMENT GROUP, INC.

48

notes

DIRECTORS INVESTMENT GROUP, INC. 4600 KIETZKE LN. | SUITE N254 RENO, NV 89502 PHONE | 775-329-3311 FAX | 866-848-2498