What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-15 compared with 2022-05-16 · 458 added, 352 removed, 1574 unchanged (34% of the section changed)

Financial Statements.

December 31 2021

Fixed maturity securities, available for sale, at estimated fair value

2 unchanged sentences

$ 259,287,603

Equity securities at estimated fair value (cost of $ 8,662,438 and

for 2022 and 2021)

Mortgage loans held for investment (net of allowances for loan losses

Equity securities at estimated fair value (cost of $ 9,730,028 and $ 8,275,772 for

2022 and 2021)

Mortgage loans held for investment (net of allowances for loan losses of $ 1,476,895

and $ 1,699,902 for 2022 and 2021)

2 unchanged sentences

Real estate held for sale

Other investments and policy loans (net of allowances for doubtful

of $ 1,805,311 and $ 1,686,218 for 2022 and 2021)

Other investments and policy loans (net of allowances for doubtful accounts of $ 1,800,076

and $ 1,686,218 for 2022 and 2021)

Accrued investment income

4 unchanged sentences

Restricted assets (including $ 5,592,898 and $ 5,205,510 for 2022 and 2021 at estimated fair value)

Cemetery perpetual care trust investments (including $ 3,411,104 and

$ 4,087,245 for 2022 and 2021

at estimated fair value)

Cemetery perpetual care trust investments (including $ 3,095,338 and $ 4,087,245 for 2022 and 2021 at

estimated fair value)

Receivable from reinsurers

9 unchanged sentences

CONSOLIDATED BALANCE SHEETS (Continued)

June 30 2022 (Unaudited)

December 31 2021

Liabilities and Stockholders’ Equity

17 unchanged sentences

40,000,000 shares authorized;

issued 17,693,152 shares

in 2022 and 17,642,722 shares in 2021

issued 18,678,688 shares in 2022

and 17,642,722 shares in 2021

non-voting common stock - $ 1.00 par value;

5,000,000 shares

none issued or

5,000,000 shares authorized;

none issued or outstanding

convertible common stock - $ 2.00 par value;

3,000,000 shares

issued 2,866,358

shares in 2022 and 2,866,565 shares in 2021

6,000,000 shares authorized;

issued 2,928,711 shares

in 2022 and 2,866,565 shares in 2021

Common Stock, Value

Additional paid-in capital

Accumulated other comprehensive income, net of taxes

Accumulated other comprehensive income (loss), net of taxes

( 4,430,367 )

Retained earnings

Treasury stock at cost - 746,778 Class A shares and 34,016 Class C shares in 2022;

and 108,079 Class

A shares and 109,193 Class C shares in 2021

and 108,079 Class A shares and 109,193 Class C shares in 2021

( 6,229,574 )

( 1,845,624 )

Total stockholders’ equity

5 unchanged sentences

CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended March 31

Three Months Ended June 30

Six Months Ended June 30

Mortgage fee income

$ 138,156,425

Insurance premiums and other considerations

1 unchanged sentence

Net mortuary and cemetery sales

Gains on investments and other assets

Gains (losses) on investments and other assets

Total revenues

15 unchanged sentences

( 3,419,873 )

( 2,370,195 )

( 7,646,213 )

Net earnings per Class A Equivalent common share (1)

2 unchanged sentences

Weighted-average Class A equivalent common shares outstanding-assuming dilution

Net earnings per share amounts

have been adjusted retroactively for the effect of annual stock dividends.

The weighted-average shares outstanding includes the weighted-average

Class A common shares and the weighted-average Class C common shares determined on an equivalent Class A common stock basis.

per common share represent net earnings per equivalent Class A common share.

(1) Net earnings per

share amounts have been adjusted retroactively for the effect of annual stock dividends.

The weighted-average shares outstanding includes

the weighted-average Class A common shares and the weighted-average Class C common shares determined on an equivalent Class A common

Net earnings per common share represent net earnings per equivalent Class A common share.

accompanying notes to condensed consolidated financial statements (unaudited).

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30

Six Months Ended June 30

Other comprehensive income:

Unrealized losses on fixed maturity securities available for sale

Unrealized gains (losses) on fixed maturity securities available for sale

$ ( 12,995,132 )

( 28,322,034 )

Unrealized losses on restricted assets

Unrealized losses on cemetery perpetual care trust investments

( 2,071,211 )

Unrealized gains (losses) on restricted assets

Unrealized gains (losses) on cemetery perpetual care trust investments

Foreign currency translation adjustments

Other comprehensive loss, before income tax

Other comprehensive gain (loss), before income tax

( 13,054,169 )

( 28,490,377 )

Income tax benefit

Other comprehensive loss, net of income tax

( 2,082,365 )

Income tax benefit (expense)

Other comprehensive gain (loss), net of income tax

( 10,310,485 )

( 22,500,815 )

( 1,644,635 )

Comprehensive income (loss)

$ ( 6,736,036 )

$ ( 15,697,648 )

accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Class A Common Stock

Class C Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Stock

Three Months Ended March 31, 2022

Class A Common Stock

Class C Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Stock

Income (loss)

Six Months Ended June 30, 2022

Comprehensive

Income (loss)

January 1, 2022

14 unchanged sentences

$ 292,300,867

Three Months Ended March 31, 2021

Class A Common Stock

Class C Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Retained Earnings

Treasury Stock

Other comprehensive loss

( 10,310,485 )

Stock-based compensation expense

Exercise of stock options

Sale of treasury stock

Purchase of treasury stock

( 6,505,050 )

Conversion Class C to Class A

Stock dividends

( 8,067,485 )

June 30, 2022

$ ( 4,430,367 )

$ 183,273,171

$ ( 6,229,574 )

$ 280,485,055

Six Months Ended June 30, 2021

Comprehensive

Income (loss)

January 1, 2021

14 unchanged sentences

$ 271,867,841

Beginning, Balance

$ 165,867,882

$ ( 1,111,464 )

$ 271,867,841

Other comprehensive income

Exercise of stock options

Sale of treasury stock

Purchase of treasury stock

( 2,596,006 )

Stock dividends

( 8,710,354 )

June 30, 2021

$ 168,415,007

$ ( 2,207,608 )

$ 285,848,713

Ending, Balance

$ 168,415,007

$ ( 2,207,608 )

$ 285,848,713

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31

Six Months Ended June 30

Cash flows from operating activities:

32 unchanged sentences

Purchases of treasury stock

( 7,277,291 )

( 3,506,239 )

Repayment of bank loans

( 45,217,295 )

( 53,878,750 )

Proceeds from bank loans

15 unchanged sentences

Non Cash Operating, Investing and Financing Activities:

Accrued real estate construction costs and retainage

Benefit plans funded with treasury stock

Accrued real estate construction costs and retainage

Right-of-use assets obtained in exchange for operating lease liabilities

6 unchanged sentences

flows is presented in the table below:

Three Months Ended March 31

Six Months Ended June 30

Cash and cash equivalents

6 unchanged sentences

$ 160,052,237

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

Cash, cash equivalents,

restricted cash and restricted cash equivalents at end of period

$ 142,406,108

1 unchanged sentence

accompanying notes to condensed consolidated financial statements (unaudited).

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

NATIONAL FINANCIAL CORPORATION

Notes to Condensed Consolidated

Financial Statements June 30, 2022 (Unaudited)

Basis of Presentation

9 unchanged sentences

considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2022 are not

necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three and six months ended June 30, 2022 are

not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

22 unchanged sentences

COVID-19, and its variants, pose a threat to the health and economic well-being of the Company’s employees, customers,

The Company continues to closely monitor developments relating to the ongoing COVID-19 pandemic and assessing its impact

on the Company’s business.

The Company continues to closely monitor developments relating to the ongoing COVID-19 pandemic and assess its impact on

the Company’s business.

The continued uncertainty surrounding the COVID-19 pandemic has had and continues to have a significant

5 unchanged sentences

Governments and central banks have

reacted with significant monetary and fiscal interventions designed to stabilize the economic conditions.

reacted with significant monetary and fiscal interventions designed to stabilize economic conditions.

Most monetary and fiscal interventions

have been significantly curtailed.

most businesses, COVID-19 has impacted the Company, including the temporary adoption of work from home arrangements and a restructuring

1 unchanged sentence

The Company also experienced increased expenses for cleaning services of its offices.

Throughout 2021 and the first quarter 2022, the Company continues to adapt to the impact of COVID-19 and its related economic effects.

The Company cannot, with any certainty predict the severity or duration with which COVID-19 will impact the Company’s business,

financial condition, results of operations, and cash flows.

To the extent the COVID-19 pandemic adversely affects the Company’s

business, financial condition, and results of operations, it may also have the effect of heightening many of the other Company risks.

These uncertainties have the potential to negatively affect the risk of credit default for the issuers of the Company’s fixed maturity

debt securities and individual borrowers with mortgage loans held by the Company.

Throughout 2021 and 2022, the Company continued to adapt to the impact of COVID-19 and its related economic effects.

The Company cannot,

with any certainty predict the severity or duration with which COVID-19 will impact the Company’s business, financial condition,

results of operations, and cash flows.

To the extent the COVID-19 pandemic adversely affects the Company’s business, financial

condition, results of operations and cash flows, it may also have the effect of heightening many other risks to the Company.

These uncertainties

have the potential to negatively affect the risk of credit default for the issuers of the Company’s fixed maturity debt securities

and individual borrowers with mortgage loans held by the Company.

Company has implemented risk management, business continuity plans and has taken preventive measures and other precautions, including

36 unchanged sentences

30, 2022 (Unaudited)

Company’s investments as of March 31, 2022 are summarized as follows:

of Investments

Company’s investments as of June 30, 2022 are summarized as follows:

Schedule of Investments

Amortized Cost

2 unchanged sentences

Estimated Fair Value

March 31, 2022:

June 30, 2022:

Fixed maturity securities, available for sale, at estimated fair value:

6 unchanged sentences

Mortgage-backed securities

( 1,772,065 )

Redeemable preferred stock

34 unchanged sentences

Includes $ 937,600 of Membership

stock and $ 1,651,300 of Activity stock due to short-term borrowings.

stock and $ 1,650,800 of Activity stock due to short-term borrowings and letters of credit.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

48 unchanged sentences

$ 823,555,327

Includes $ 905,700 of Membership stock and $ 1,641,400

of Activity stock due to short-term advances and letters of credit.

Includes $ 905,700 of Membership

stock and $ 1,641,400 of Activity stock due to short-term advances and letters of credit.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

following table summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value

at March 31, 2022 and at December 31, 2021.

at June 30, 2022 and at December 31, 2021.

The unrealized losses were primarily related to interest rate fluctuations and uncertainties

1 unchanged sentence

The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:

of Fair Value of Fixed Maturity Securities

Schedule of Fair Value of Fixed Maturity Securities

Unrealized Losses for Less than Twelve Months

2 unchanged sentences

Combined Fair Value

At March 31, 2022

At June 30, 2022

Treasury Securities And Obligations of U.S.

3 unchanged sentences

Mortgage and other asset-backed securities

$ 185,854,542

$ 190,932,856

At December 31, 2021

2 unchanged sentences

Mortgage and other asset-backed securities

were 180 securities with fair value of 96.5 % of amortized cost at March 31, 2022.

There were 55 securities with fair value of 97.3 % of

amortized cost at December 31, 2021.

No additional credit losses have been recognized for the three months ended March 31, 2022 and 2021,

since the increase in unrealized losses is primarily a result of the recent rise in interest rates.

were 508 securities with fair value of 95.2 % of aggregate amortized cost at June 30, 2022.

There were 55 securities with fair value of

97.3 % of aggregate amortized cost at December 31, 2021.

No additional credit losses have been recognized for the three and six months

ended June 30, 2022 and 2021, since the increase in unrealized losses is primarily a result of the recent rise in interest rates.

a quarterly basis, the Company evaluates its fixed maturity securities classified as available for sale.

24 unchanged sentences

recognized in earnings on fixed maturity securities available for sale.

of Earnings on Fixed Maturity Securities

Schedule of Earnings on Fixed Maturity

Balance of credit-related OTTI at January 1

5 unchanged sentences

Securities due to an increase in expected cash flows

Balance of credit-related OTTI at March 31

following table presents the amortized cost and estimated fair value of fixed maturity securities available for sale at March 31, 2022,

Balance of credit-related OTTI at June 30

following table presents the amortized cost and estimated fair value of fixed maturity securities available for sale at June 30, 2022,

by contractual maturity.

1 unchanged sentence

or prepay obligations with or without call or prepayment penalties.

of Investments Classified by Contractual Maturity Date

Schedule of Investments Classified by Contractual

Maturity Date

Estimated Fair

8 unchanged sentences

Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”).

The Company pledged a total of $ 56,741,531 ,

at estimated fair value, of fixed maturity securities with the FHLB at March 31, 2022.

The Company had pledged a total of $ 56,103,252 ,

at estimated fair value, of fixed maturity securities with the FHLB at June 30, 2022.

These securities are used as collateral on any

cash borrowings from the FHLB.

As of March 31, 2022, the Company owed $- 0 - to the FHLB and its estimated maximum borrowing capacity was

As of June 30, 2022, the Company owed nil to the FHLB and its estimated maximum borrowing capacity was

$ 51,524,955 .

6 unchanged sentences

and other than temporary impairments from investments and other assets.

of Gain (Loss) on Investments

Three Months Ended March 31

Schedule of Gain (Loss) on Investments

Fixed maturity securities:

2 unchanged sentences

Equity securities:

Gains (losses) on securities sold

Gains on securities sold

Unrealized gains and (losses) on securities held at the end of the period

( 2,106,375 )

( 2,713,422 )

Other assets:

1 unchanged sentence

Gross realized losses

$ ( 914,395 )

$ ( 742,420 )

net realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined

1 unchanged sentence

regarding sales of fixed maturity securities available for sale is presented as follows.

Schedule of Major

Categories of Net Investment Income

Three Months Ended March 31

Schedule of Major Categories of Net Investment Income

Proceeds from sales

6 unchanged sentences

categories of net investment income were as follows:

Three Months Ended March 31

Fixed maturity securities available for sale

9 unchanged sentences

( 3,008,632 )

( 9,139,005 )

( 6,425,714 )

Net investment income

investment income includes income earned by the restricted assets of the cemeteries and mortuaries of $ 730,534 and $ 190,668 for the three

months ended March 31, 2022 and 2021, respectively.

months ended June 30, 2022 and 2021, respectively, and of $ 1,207,243 and $ 351,879 for the six months ended June 30, 2022 and 2021, respectively.

investment income on real estate consists primarily of rental revenue.

1 unchanged sentence

expenses relating to investment activities.

on deposit with regulatory authorities as required by law amounted to $ 10,169,064 at March 31, 2022 and $ 10,168,853 at December 31, 2021

(December 31, 2021 amount corrected from that previously reported due to a typographical error).

These restricted securities are included

in various assets under investments on the accompanying condensed consolidated balance sheets.

on deposit with regulatory authorities as required by law amounted to $ 10,114,458 at June 30, 2022 and $ 10,168,853 at December 31, 2021

(the December 31, 2021 amount has been corrected from that previously reported due to a typographical error).

These restricted securities

are included in various assets under investments on the accompanying condensed consolidated balance sheets.

were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses on

equity securities and fixed maturity securities) at March 31, 2022, other than investments issued or guaranteed by the United States

equity securities and fixed maturity securities) at June 30, 2022, other than investments issued or guaranteed by the United States Government.

Estate Held for Investment and Held for Sale

25 unchanged sentences

aggregated net ending balance of commercial real estate that serves as collateral for bank loans was $ 134,069,866 and $ 134,251,205 as

of March 31, 2022 and December 31, 2021, respectively.

of June 30, 2022 and December 31, 2021, respectively.

The associated bank loan carrying values totaled $ 100,503,091 and $ 85,663,148 as

of March 31, 2022 and December 31, 2021, respectively.

the three months ended March 31, 2022 and 2021, the Company did not record any impairment losses on commercial real estate held for investment

or held for sale.

Impairment losses, if any, are included in gains (losses) on investment and other assets on the condensed consolidated

statements of earnings.

of June 30, 2022 and December 31, 2021, respectively.

the three and six months ended June 30, 2022 and 2021, the Company did not record any impairment losses on commercial real estate held

for investment or held for sale.

Impairment losses, if any, are included in gains (losses) on investment and other assets on the condensed

consolidated statements of earnings.

Company’s commercial real estate held for investment is summarized as follows:

of Commercial Real Estate Investment

Schedule of Commercial Real Estate Investment

Net Ending Balance

Total Square Footage

December 31 2021

$ 158,068,734

$ 155,393,335

Includes Center53 phase 1 and phase 2

Includes Center53 phase 1

Company’s commercial real estate held for sale is summarized as follows:

1 unchanged sentence

Total Square Footage

December 31 2021

Mississippi (1)

Approximately 93 acres of undeveloped land

Approximately 93 acres of

undeveloped land

properties are all actively being marketed with the assistance of commercial real estate brokers in the markets where the properties

12 unchanged sentences

and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the portfolio of homes across

net ending balance of foreclosed residential real estate included in residential real estate held for investment and sale is $ 210,963

and $ 1,190,602 as of March 31, 2022 and December 31, 2021, respectively.

the three months ended March 31, 2022 and 2021 the Company recorded impairment losses on residential real estate held for sale of $ 94,400

and $- 0 -, respectively.

Impairment losses are included in gains (losses) on investment and other assets on the condensed consolidated

statements of earnings.

net ending balance of foreclosed residential real estate included in residential real estate held for sale was $ 200,962

and $ 1,190,602 as of June 30, 2022 and December 31, 2021, respectively.

the three months ended June 30, 2022 and 2021 the Company did not record any impairment losses on residential real estate held for sale

or held for investment.

During the six months ended June 30, 2022 and 2021 the Company recorded impairment losses on residential real

estate held for sale of $ 94,400 and nil , respectively.

Impairment losses are included in gains (losses) on investment and other assets

on the condensed consolidated statements of earnings.

Company’s residential real estate held for investment is summarized as follows:

of Residential Real Estate Investment

Schedule of Residential Real Estate Investment

Net Ending Balance

December 31 2021

Washington (2)

Includes subdivision land developments

Includes subdivision land

(2) Improved residential lots

following table presents additional information regarding the Company’s subdivision land developments in Utah.

December 31 2021

Lots developed

5 unchanged sentences

December 31 2021

Washington (1)

Real estate held for

Improved residential lots

Real estate held for sale

properties are all actively being marketed with the assistance of residential real estate brokers in the markets where the properties

6 unchanged sentences

primary business units of the Company occupy a portion of the real estate owned by the Company.

As of March 31, 2022, real estate owned

As of June 30, 2022, real estate owned

and occupied by the Company is summarized as follows:

15 unchanged sentences

Life Insurance Sales

Included in property and equipment on the consolidated

balance sheets

Included in property and

equipment on the consolidated balance sheets

Loans Held for Investment

8 unchanged sentences

of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors

At March 31, 2022, the Company had 75 %, 6 %, 4 %, 4 %, 3 % and 3 % of its mortgage loans from borrowers located in the states

of Utah, Florida, Texas, Nevada, California, and Arizona, respectively.

At June 30, 2022, the Company had 79 % , 5 % , 4 % , 4 % , 2 % and 2 % of its mortgage loans from borrowers located in the states

of Utah, Florida, Texas, California, Nevada, and Arizona, respectively.

At December 31, 2021, the Company had 70 % , 7 % , 5 % , 4 % , 4 % and

10 unchanged sentences

Generally, the Company

will fund a loan not to exceed 80% of the loan’s collateral fair market value.

Amounts over 80% will require additional collateral

or mortgage insurance by an approved third-party insurer.

will fund a loan not to exceed 80% of the fair market value of the loan’s collateral.

Amounts over 80% will require additional

collateral or mortgage insurance by an approved third-party insurer.

Company provides for losses on its mortgage loans held for investment through an allowance for loan losses (a contra-asset account).

27 unchanged sentences

Accordingly, the repayment of

a commercial loan depends primarily on the collateral and its ability to generate income and secondary on the borrower’s (or guarantors)

ability to repay.

a commercial loan depends primarily on the collateral and its ability to generate income and secondarily on the borrower’s (or

guarantors) ability to repay.

— Secured by family dwelling units.

2 unchanged sentences

ability to repay is sensitive to the life events and general economic condition of the region.

Where loan to values exceed 80%, the loan

Where loan to value exceeds 80%, the loan

is generally guaranteed by private mortgage insurance, FHA or VA.

18 unchanged sentences

presents the valuation allowance for loan losses as a contra-asset account.

of Allowance for Loan Losses as Contra- Asset Account

Schedule of Allowance for Loan Losses as

Contra -Asset Account

Residential Construction

March 31, 2022

June 30, 2022

Allowance for credit losses:

Beginning balance - January 1, 2022

Ending balance - March 31, 2022

Ending balance - June 30, 2022

Ending balance:

3 unchanged sentences

Mortgage loans:

Ending balance - March 31, 2022

Ending balance - June 30, 2022

$ 203,130,224

24 unchanged sentences

$ 276,062,489 (1)

Amount corrected from that previously reported due to

a typographical error.

Amount corrected from that

previously reported due to a typographical error.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

Schedule of Aging of Mortgage Loans

March 31, 2022

June 30, 2022

30-59 Days Past Due

40 unchanged sentences

period and the average recorded investment and interest income recognized during the time the loans were impaired are summarized as follows:

Schedule of Impaired Mortgage Loans

Recorded Investment

Unpaid Principal Balance

Related Allowance

Average Recorded Investment

Interest Income Recognized

March 31, 2022

of Impairment Mortgage Loans

June 30, 2022

With no related allowance recorded:

22 unchanged sentences

Residential Construction

March 31, 2022

December 31, 2021

March 31, 2022

December 31, 2021

March 31, 2022

December 31, 2021

March 31, 2022

December 31, 2021

$ 202,714,320

14 unchanged sentences

Accrual of interest resumes if a loan is brought current.

Interest not accrued on these loans totals approximately $ 254,000 and $ 236,000 as of March 31, 2022 and December 31, 2021, respectively.

Interest not accrued on these loans totaled approximately $ 135,000 and $ 236,000 as of June 30, 2022 and December 31, 2021, respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

19 unchanged sentences

categories of mortgage fee income for loans held for sale are summarized as follows:

Schedule of Mortgage Fee Income for Loans Held for Sale

Three Months Ended March 31

Schedule of Mortgage Fee Income for Loans Held

Interest income

1 unchanged sentence

Change in fair value of loan commitments

( 2,247,244 )

Change in fair value of loans held for sale

1 unchanged sentence

( 1,114,632 )

( 6,210,487 )

( 8,060,513 )

Provision for loan loss reserve

( 1,269,232 )

Mortgage fee income

$ 138,156,425

a repurchase demand corresponding to a mortgage loan previously held for sale and sold to a third-party investor is received from a third-party

14 unchanged sentences

30, 2022 (Unaudited)

Loans Held for Sale (Continued)

loan loss reserve, which is included in other liabilities and accrued expenses, is summarized as follows:

Summary of Loan Loss Reserve Included in Other Liabilities and Accrued Expenses

As of March 31

Loans Held for Sale (Continued)

Summary of Loan Loss Reserve Included in Other Liabilities and

Accrued Expenses

As of December

3 unchanged sentences

( 1,105,275 )

( 20,347,709 )

Balance, end of period

1 unchanged sentence

Company maintains reserves for estimated losses on current production volumes.

For the three months ended March 31, 2022, $ 306,026 in

reserves were added at a rate of 2.9 basis points per loan, the equivalent of $ 290 per $ 1,000,000 in loans originated.

This is a decrease

over the three months ended March 31, 2021, when reserves of $ 660,663 were added at a rate of 4.5 basis points per loan originated, the

equivalent of $ 450 per $ 1,000,000 in loans originated.

The unique nature of COVID-19 creates significant difficulty for forecasting potential

For the six months ended June 30, 2022, $ 598,922 in reserves

were added at a rate of 2.9 basis points per loan, the equivalent of $ 290 per $ 1,000,000 in loans originated.

This is a decrease over

the three months ended June 30, 2021, when reserves of $ 1,269,232 were added at a rate of 4.5 basis points per loan originated, the equivalent

of $ 450 per $ 1,000,000 in loans originated.

On February 1, 2021, SecurityNational Mortgage executed a settlement agreement with Lehman

Holdings in relation to two adversary proceedings wherein all mortgage loan related claims were resolved, thereby ending all liabilities

asserted by Lehman Holdings and conclusively ending all proceedings between SecurityNational Mortgage and Lehman Holdings.

The full amount

of SecurityNational Mortgage’s settlement payment was accounted for in the Company’s loan loss reserve as of December 31,

2020 and was paid during the first quarter 2021.The unique nature of COVID-19 creates significant difficulty for forecasting potential

future losses.

The Company will continue to monitor data and economic conditions in order to maintain adequate loss reserves on current

Thus, the Company believes that the final loan loss reserve as of March 31, 2022, represents its best estimate for adequate

Thus, the Company believes that the final loan loss reserve as of June 30, 2022, represents its best estimate for adequate

loss reserves on loans sold.

3 unchanged sentences

Stock Compensation Plans

Company has two fixed option plans (the “2013 Plan” and the “2014 Director Plan”).

Compensation expense for options

issued of $ 271,747 and $ 39,153 has been recognized for these plans for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the total unrecognized compensation expense related to the options issued was $ 610,889 .

Company has three fixed option plans (the “2013 Plan”, the “2014 Director Plan” and the “2022 Plan”).

Compensation expense for options issued of $ 220,175 and nil has been recognized for these plans for the three months ended June 30, 2022

and 2021, respectively, and $ 491,922 and $ 39,153 has been recognized for these plans for the six months ended June 30, 2022 and 2021,

respectively.

As of June 30, 2022, the total unrecognized compensation expense related to the options issued was $ 390,714 .

fair value of each option granted is estimated on the date of grant using the Black Scholes Option Pricing Model.

5 unchanged sentences

the expected life of the options is based upon the Federal Reserve Board’s daily interest rates in effect at the time of the grant.

summary of the status of the Company’s stock compensation plans as of March 31, 2022, and the changes during the three months ended

March 31, 2022, are presented below:

summary of the status of the Company’s stock compensation plans as of June 30, 2022, and the changes during the six months ended

June 30, 2022, are presented below:

Schedule of Activity of Stock Option Plans

Class A Shares

Weighted Average Exercise Price

Class C Shares

Weighted Average Exercise Price

Outstanding at January 1, 2022

Adjustment for effect of stock dividends

Outstanding at March 31, 2022

As of March 31, 2022:

Outstanding at June 30, 2022

As of June 30, 2022:

Options exercisable

As of March 31, 2022:

As of June 30, 2022:

Available options for future grant

Weighted average contractual term of options outstanding at March 31, 2022

Weighted average contractual term of options exercisable at March 31, 2022

Aggregated intrinsic value of options outstanding at March 31, 2022 (1)

Aggregated intrinsic value of options exercisable at March 31, 2022 (1)

The Company used a stock price of $ 10.00 as of March

31, 2022 to derive intrinsic value.

Weighted average contractual term of options outstanding at June 30, 2022

Weighted average contractual term of options exercisable at June 30, 2022

Aggregated intrinsic value of options outstanding at June 30, 2022 (1)

Aggregated intrinsic value of options exercisable at June 30, 2022 (1)

The Company used a stock

price of $ 8.46 as of June 30, 2022 to derive intrinsic value.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Stock Compensation Plans (Continued)

summary of the status of the Company’s stock compensation plans as of March 31, 2021, and the changes during the three months ended

March 31, 2021, are presented below:

Class A Shares

Weighted Average Exercise Price

Class C Shares

Weighted Average Exercise Price

summary of the status of the Company’s stock compensation plans as of June 30, 2021, and the changes during the six months ended

June 30, 2021, are presented below:

Exercise Price

Outstanding at January 1, 2021

Adjustment for effect of stock dividends

Outstanding at March 31, 2021

As of March 31, 2021:

Outstanding at June 30, 2021

As of June 30, 2021:

Options exercisable

As of March 31, 2021:

As of June 30, 2021:

Available options for future grant

Weighted average contractual term of options outstanding at March 31, 2021

Weighted average contractual term of options exercisable at March 31, 2021

Aggregated intrinsic value of options outstanding at March 31, 2021 (1)

Aggregated intrinsic value of options exercisable at March 31, 2021 (1)

The Company used a stock price of $ 9.35 as of March 31,

2021 to derive intrinsic value.

Weighted average contractual term of options outstanding at June 30, 2021

Weighted average contractual term of options exercisable at June 30, 2021

Aggregated intrinsic value of options

outstanding at June 30, 2021 (1)

Aggregated intrinsic value of options

exercisable at June 30, 2021 (1)

The Company used a stock

price of $ 8.33 as of June 30, 2021, which was the closing price of the Company’s Class A shares on Nasdaq for that day, to derive

intrinsic value.

total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on

the exercise date) of stock options exercised during the three months March 31, 2022 and 2021 was $ 395,831 and $ 139,035 , respectively.

the exercise date) of stock options exercised during the six months June 30, 2022 and 2021 was $ 521,527 and $ 434,318 , respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

5 unchanged sentences

earnings per share amounts were calculated as follows:

Schedule of Earnings Per Share, Basic and Diluted

Schedule of Earning Per Share, Basic and Diluted

Three Months Ended

Six Months Ended

Basic weighted-average shares outstanding

4 unchanged sentences

Diluted net earnings per share

the three months March 31, 2022 and 2021, there were no anti-dilutive employee stock option shares.

Basic and diluted earnings per share

amounts are the same for each class of common stock.

the six months June 30, 2022 and 2021, there were 52,500 and nil anti-dilutive employee stock option shares, respectively, that were

not included in the computation of diluted net earnings per common share as their effect would be anti-dilutive.

Basic and diluted earnings

per share amounts are the same for each class of common stock.

following table summarizes the activity in shares of capital stock.

2 unchanged sentences

Exercise of stock options

Stock dividends

Conversion of Class C to Class A

Outstanding shares at March 31, 2021

Outstanding shares at June 30, 2021

Outstanding shares at December 31, 2021

Exercise of stock options

Stock dividends

Conversion of Class C to Class A

Outstanding shares at March 31, 2022

Outstanding shares at June 30, 2022

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

30, 2022 (Unaudited)

Segment Information

Business Segment Information

of Products and Services by Segment

24 unchanged sentences

Business Segment Information (Continued)

Schedule of Revenues and Expenses by Reportable Segment

Life Insurance

Schedule of Revenues and Expenses by

Reportable Segment

Life Insurance

For the Three Months Ended

March 31, 2022

June 30, 2022

Revenues from external customers

Intersegment revenues

( 2,238,964 )

Segment profit (loss) before income taxes

For the Six Months Ended

June 30, 2022

Revenues from external customers

$ 100,570,271

$ 197,992,561

Intersegment revenues

9 unchanged sentences

For the Three Months Ended

March 31, 2021

June 30, 2021

Revenues from external customers

3 unchanged sentences

Segment profit before income taxes

For the Six Months Ended

June 30, 2021

Revenues from external customers

$ 146,000,507

$ 239,408,921

Intersegment revenues

( 4,125,822 )

Segment profit before income taxes

Identifiable Assets

16 unchanged sentences

value measurements are classified under the following hierarchy:

Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or

liabilities in an active market that the Company can access.

Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities

in an active market that the Company can access.

Financial assets and financial liabilities whose values are based on the following:

2 unchanged sentences

models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that

are both unobservable and significant to the overall fair value measurement.

These inputs may reflect the Company’s estimates

of the assumptions that market participants would use in valuing the financial assets and financial liabilities.

Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are

both unobservable and significant to the overall fair value measurement.

These inputs may reflect the Company’s estimates of the

assumptions that market participants would use in valuing the financial assets and financial liabilities.

Company utilizes a combination of third-party valuation service providers, brokers, and internal valuation models to determine fair value.

85 unchanged sentences

following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by

their classification in the condensed consolidated balance sheet at March 31, 2022.

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

Quoted Prices in Active Markets for Identical Assets

Significant Observable Inputs

Significant Unobservable Inputs

their classification in the condensed consolidated balance sheet at June 30, 2022.

of Fair Value Assets and Liabilities Measured on a Recurring Basis

Quoted Prices in

Active Markets

for Identical

Assets accounted for at fair value on a recurring basis

19 unchanged sentences

( 2,420,571 )

Total liabilities accounted for at fair value

on a recurring basis

Total liabilities accounted for at fair value on a recurring basis

$ ( 2,453,799 )

$ ( 2,420,571 )

Fixed maturity securities available for sale

(1) Fixed maturity

securities available for sale

(2) Equity securities

Included in other assets on the consolidated balance sheets

Included in other liabilities and accrued expenses on the consolidated

balance sheets

(3) Included in other

assets on the consolidated balance sheets

(4) Included in other

liabilities and accrued expenses on the consolidated balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

18 unchanged sentences

Derivatives - loan commitments (3)

Total assets accounted for at fair value on a

recurring basis

Total assets accounted for at fair value on a recurring basis

$ 591,517,009

1 unchanged sentence

$ 313,363,585

Liabilities accounted for at fair value on a

recurring basis

Liabilities accounted for at fair value on a recurring basis

Derivatives - call options (4)

3 unchanged sentences

( 1,547,895 )

Total liabilities accounted for at fair value

on a recurring basis

Total liabilities accounted for at fair value on a recurring basis

$ ( 1,603,324 )

$ ( 1,547,895 )

Fixed maturity securities available for sale

(1) Fixed maturity

securities available for sale

(2) Equity securities

Included in other assets on the consolidated balance sheets

Included in other liabilities and accrued expenses on the consolidated

balance sheets

(3) Included in other

assets on the consolidated balance sheets

(4) Included in other

liabilities and accrued expenses on the consolidated balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

30, 2022 (Unaudited)

Value of Financial Instruments (Continued)

Level 3 assets and liabilities measured at fair value on a recurring basis as of March 31, 2022, the significant unobservable inputs

used in the fair value measurements were as follows:

Assets and Liabilities Measured at Fair Value on A Recurring Basis

Range of Inputs

Fair Value of Financial Instruments (Continued)

For Level 3 assets and liabilities measured at fair value on a recurring

basis as of June 30, 2022, the significant unobservable inputs used in the fair value measurements were as follows:

and Liabilities Measured at Fair Value on A Recurring Basis

Fair Value at

Loans held for sale

$ 234,012,872

Market approach

Investor contract pricing as a percentage of unpaid principal balance

Investor contract pricing as a percentage

of unpaid principal balance

Derivatives - loan commitments (net)

7 unchanged sentences

used in the fair value measurements were as follows:

Range of Inputs

Fair Value at

Loans held for sale

$ 302,776,827

Market approach

Investor contract pricing as a percentage of unpaid principal balance

Derivatives - loan commitments (net)

Market approach

Pull-through rate

held for sale

contract pricing as a percentage of unpaid principal balance

- loan commitments (net)

Initial-Value

Fixed maturity securities available for sale

Broker quotes

Pricing quotes

maturity securities available for sale

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the

three months ending March 31, 2022:

Schedule of Changes in the Consolidated Balance Sheet Line Items Measured Using Level 3 Inputs

Net Loan Commitments

Loans Held for Sale

Fixed Maturity Securities Available for Sale

six months ending June 30, 2022:

of Changes in the Consolidated Balance Sheet Line Items Measured Using Level 3 Inputs

Fixed Maturity

Available for Sale

Balance - December 31, 2021

4 unchanged sentences

( 2,187,475,867 )

Transfer to mortgage loans held for investment

Total gains (losses):

1 unchanged sentence

44,599,989 (1)

24,105,293 (1)

Included in other comprehensive income

Balance - June 30, 2022

$ 209,860,409

As a component of Mortgage fee income on the condensed consolidated statements of earnings

As a component of Net investment income on the condensed consolidated statements of earnings

following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the

six months ending June 30, 2021:

Available for Sale

- December 31, 2020

$ 422,772,418

and purchases

2,810,230,507

maturities and paydowns

( 3,025,027,077 )

to mortgage loans held for investment

gains (losses):

( 168,397 )(1)

88,954,189 (1)

in other comprehensive income

- June 30, 2021

$ 296,728,086

a component of Mortgage fee income on the condensed consolidated statements of earnings

a component of Net investment income on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2022 (Unaudited)

Fair Value of Financial Instruments (Continued)

following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the

three months ending June 30, 2022:

Fixed Maturity

Available for Sale

Balance - March 31, 2022

$ 234,012,872

Originations and purchases

1,010,742,878

Sales, maturities and paydowns

( 1,055,390,037 )

Total gains (losses):

Included in earnings

( 2,247,244 )(1)

20,494,696 (1)

Included in other comprehensive income

Balance - June 30, 2022

$ 209,860,409

As a component of Mortgage fee income on the condensed consolidated

3 unchanged sentences

following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the

three months ending March 31, 2021:

three months ending June 30, 2021:

Net Loan Commitments

1 unchanged sentence

Fixed Maturity Securities Available for Sale

Balance - December 31, 2020

Balance - March 31, 2021

$ 304,030,372

3 unchanged sentences

( 1,410,147,019 )

Transfer to mortgage loans held for investment

Total gains (losses):

1 unchanged sentence

( 482,863 )(1)

42,455,235 (1)

Included in other comprehensive income

Balance - March 31, 2021

Balance - June 30, 2021

$ 296,728,086

7 unchanged sentences

Fair Value of Financial Instruments (Continued)

following table summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis

by their classification in the condensed consolidated balance sheet at March 31, 2022.

following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis

by their classification in the condensed consolidated balance sheet at June 30, 2022.

of Fair Value Assets Measured on a Nonrecurring Basis

4 unchanged sentences

Impaired mortgage loans held for investment

Impaired real estate held for sale

Total assets accounted for at fair value on a nonrecurring basis

following table summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis

following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis

by their classification in the condensed consolidated balance sheet at December 31, 2021.

17 unchanged sentences

Therefore, for substantially all financial instruments, the fair value estimates presented herein are not

necessarily indicative of the amounts the Company could have realized in a sales transaction at March 31, 2022 and December 31, 2021.

necessarily indicative of the amounts the Company could have realized in a sales transaction at June 30, 2022 and December 31, 2021.

carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy,

are summarized as follows as of March 31, 2022:

Schedule of Financial Instruments Carried at Other Than Fair Value

are summarized as follows as of June 30, 2022:

of Financial Instruments Carried at Other Than Fair Value

Carrying Value

22 unchanged sentences

( 115,674,814 )

Included in other investments and policy loans on the condensed

consolidated balance sheets

Mortgage loans held for investment

Included in future policy benefits and unpaid claims on the

condensed consolidated balance sheets

in other investments and policy loans on the condensed consolidated balance sheets

loans held for investment

in future policy benefits and unpaid claims on the condensed consolidated balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

28 unchanged sentences

( 116,215,717 )

Included in other investments and policy loans on the consolidated

balance sheets

Mortgage loans held for investment

Included in future policy benefits and unpaid claims on the

consolidated balance sheets

in other investments and policy loans on the condensed consolidated balance sheets

loans held for investment

in future policy benefits and unpaid claims on the condensed consolidated balance sheets

methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of these financial instruments are

113 unchanged sentences

following table shows the fair value and notional amounts of derivative instruments.

Schedule of Derivative Assets at Fair Value

March 31, 2022

of Derivative Assets at Fair Value

June 30, 2022

December 31, 2021

Balance Sheet

Balance Sheet Location

Notional Amount

6 unchanged sentences

Loan commitments

Other assets and Other liabilities

assets and Other liabilities

$ 692,681,295

$ 862,568,967

Other liabilities

$ 693,860,695

7 unchanged sentences

income into income or gains or losses recognized in income on derivatives ineffective portion or any amounts excluded from effective

Schedule of Gains and Losses on Derivatives

of Gains and Losses on Derivatives

Net Amount Gain (Loss)

Three Months Ended March 31

Net Amount Gain (Loss)

Classification

Loan commitments

Mortgage fee income

$ ( 2,247,244 )

$ ( 482,863 )

$ ( 168,397 )

Call and put options

Gains on investments and other assets

on investments and other assets

Reinsurance, Commitments and Contingencies

12 unchanged sentences

The agreement

charges interest at the 1-Month LIBOR rate plus 2.1% and matures on June 9, 2022 .

charges interest at the 1-Month SOFR rate plus 2.1% and matures on June 2, 2023 .

SecurityNational Mortgage is required to comply with

5 unchanged sentences

The agreement charges

interest at the 1-Month LIBOR rate plus 2% and matures on August 9, 2022 .

interest at the 1-Month LIBOR rate plus 2% and matures on November 9, 2022 .

The Company is required to comply with covenants for adjusted

5 unchanged sentences

The agreement charges interest

at the 1-Month LIBOR rate plus 2.15% and matures on May 27, 2022 .

at the 1-Month SOFR rate plus 2.50% and matures on May 26, 2023 .

The Company is required to comply with covenants for adjusted tangible

1 unchanged sentence

rights) of at least $ 1.00 on a rolling twelve months.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

SECURITY NATIONAL FINANCIAL

CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

June 30, 2022 (Unaudited)

Reinsurance, Commitments and Contingencies (Continued)

2 unchanged sentences

Mortgage to borrow up to $ 100,000,000 for the sole purpose of funding mortgage loans.

The agreement charges interest at the 1-Month LIBOR

rate plus 2.0% and matures on June 4, 2022 .

The agreement charges interest at 2.10% plus the

greater of (i) 0% , and (ii) the one-month forward-looking term rate based on SOFR and matures on June 2, 2023 .

Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax

2 unchanged sentences

violation under the other agreement.

As of March 31, 2022, the Company was in compliance with all debt covenants.

As of June 30, 2022, the Company was in compliance with all debt covenants.

Contingencies and Commitments

1 unchanged sentence

and development.

As of March 31, 2022, the Company’s commitments were approximately $ 335,619,000 for these loans, of which $ 196,848,609

As of June 30, 2022, the Company’s commitments were approximately $ 328,580,000 for these loans, of which $ 207,689,514

had been funded.

25 unchanged sentences

which, if adversely determined, would have a material adverse effect on its financial condition or results of operations.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

SECURITY NATIONAL FINANCIAL

CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

June 30, 2022 (Unaudited)

Mortgage Servicing Rights

14 unchanged sentences

following table presents the MSR activity.

Schedule of Mortgage Servicing Rights

As of March 31

of Mortgage Servicing Rights

As of June 30

As of December 31

5 unchanged sentences

( 14,851,880 )

Application of valuation allowance to write down MSRs

with other than temporary impairment

Application of valuation allowance to write down MSRs with other than temporary

Balance before valuation allowance at end of period

1 unchanged sentence

Balance at beginning of year

Application of valuation allowance to write down MSRs

with other than temporary impairment

Application of valuation allowance to write down MSRs with other than temporary

Balance at end of period

2 unchanged sentences

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

SECURITY NATIONAL FINANCIAL

CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

June 30, 2022 (Unaudited)

Mortgage Servicing Rights (Continued)

1 unchanged sentence

This projection

was developed using the assumptions made by management in its March 31, 2022 valuation of MSRs.

was developed using the assumptions made by management in its June 30, 2022 valuation of MSRs.

The assumptions underlying the following

2 unchanged sentences

Therefore, the following estimates will change in a manner and amount not presently determinable by management.

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense, Mortgage Servicing Rights

of Finite-Lived Intangible Assets, Future Amortization Expense, Mortgage Servicing Rights

Estimated MSR Amortization

1 unchanged sentence

statement of earnings.

Schedule of Other Revenues

of Other Revenues

Three Months Ended

Six Months Ended

Contractual servicing fees

following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio.

Summary of Unpaid Principal Balances of the Servicing Portfolio

As of March 31

of Unpaid Principal Balances of the Servicing Portfolio

As of June 30

As of December 31 2021

3 unchanged sentences

following key assumptions were used in determining MSR value:

Schedule of Assumptions Used in Determining MSR Value

March 31, 2022

of Assumptions Used in Determining MSR Value

June 30, 2022

December 31, 2021

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Company’s overall effective tax rate for the three months ended March 31, 2022 and 2021 was 27.3 % and 25.8 %, respectively, which

SECURITY NATIONAL FINANCIAL

CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

June 30, 2022 (Unaudited)

Company’s overall effective tax rate for the three months ended June 30, 2022 and 2021 was 24.4 % and 23.3 %, respectively, which

resulted in a provision for income taxes of $ 1,155,397 and $ 3,419,873 , respectively.

The Company’s effective tax rates differ from

federal statutory rate of 21 % partially due to its provision for state income taxes.

The increase in the effective tax rate

when compared to the prior year is partially due to a larger increase to the valuation allowance in the current period when compared

to the prior period year.

The Company’s overall effective tax rate for

the six months ended June 30, 2022 and 2021 was 25.8 % and 24.6 %, respectively, which resulted in a provision for income taxes of $ 2,370,195

and $ 7,646,213 , respectively.

The Company’s effective tax rates differ from the U.S.

federal statutory rate of 21 % partially due

to its provision for state income taxes.

The increase in the effective tax rate when compared to the prior year is partially due to a

larger increase to the valuation allowance in the current period when compared to the prior period year.

income taxes are based on an estimated annualized effective tax rate applied to the respective quarterly periods, adjusted for discrete

34 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Notes to Condensed Consolidated

Financial Statements

June 30, 2022 (Unaudited)

Revenues from Contracts with Customers (Continued)

opening and closing balances of the Company’s receivables, contract assets and contract liabilities are as follows:

Schedule of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities

of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities

Contract Balances

12 unchanged sentences

Increase/(decrease)

Included in Receivables, net on the condensed consolidated balance sheets

amount of revenue recognized and included in the opening contract liability balance for the three months ended March 31, 2022 and 2021

was $ 1,064,104 and $ 1,135,001 , respectively.

Included in Receivables, net on the condensed consolidated

balance sheets

amount of revenue recognized and included in the opening contract liability balance for the three months ended June 30, 2022 and 2021

was $ 1,526,324 and $ 1,309,936 , respectively, and for the six months ended June 30, 2022 and 2021 was $ 2,590,428 and $ 2,444,937 , respectively.

difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results

2 unchanged sentences

following table disaggregates revenue for the Company’s cemetery and mortuary contracts.

Schedule of Revenues of the Cemetery and Mortuary Contracts

of Revenues of the Cemetery and Mortuary Contracts

Three Months Ended

Six Months Ended

Major goods/service lines

4 unchanged sentences

Net mortuary and cemetery

SECURITY NATIONAL FINANCIAL

CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

June 30, 2022 (Unaudited)

Revenues from Contracts with Customers (Continued)

following table reconciles revenues from cemetery and mortuary contracts to Note 7 – Business Segment Information for the Cemetery/Mortuary

Segment for the periods presented:

Schedule of Reconciliation of Revenues from Cemetery and Mortuary Contracts to Business Segment Information

of Reconciliation of Revenues from Cemetery and Mortuary Contracts to Business Segment Information

Three Months Ended

Six Months Ended

Net mortuary and cemetery sales

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements