What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-13 compared with 2025-08-14 · 186 added, 185 removed, 145 unchanged (72% of the section changed)

17 unchanged sentences

underwriting practices that result in higher mortality costs.

following table shows the condensed financial results of the insurance operations for the three and six month periods ended June 30,

following table shows the condensed financial results of the insurance operations for the three- and nine-month periods ended September

30, 2025, and 2024.

See Note 7 to the condensed consolidated financial statements.

months ended June 30,

Three months ended September 30,

(in thousands of dollars)

months ended June 30,

Nine months ended September 30,

(in thousands of dollars)

Increase (Decrease)

Revenues from external customers:

Insurance premiums

Net investment income

Gains (losses) on investments and other

Gains on investments and other assets

Other revenues

3 unchanged sentences

Profitability

for the six month period ended June 30, 2025 decreased due to (a) a $3,493,000 increase in selling, general and administrative expenses,

primarily attributable to a $2,407,000 increase in personnel expenses due to an annual increase in salaries and key new hires as a part

of the Company’s growth strategy, (b) a $1,492,000 increase in amortization of deferred policy acquisition costs, (c) a $1,283,000

increase in death benefits, (d) a $174,000 increase in surrenders and other policy benefits (e) a $137,000 decrease in intersegment revenue,

and (f) a $42,000 increase in interest expense, which were partially offset by (i) a $2,834,000 increase in net investment income, (ii)

a $771,000 decrease in future policy benefits, (iii) a $373,000 decrease in income tax expense, (iv) a $330,000 increase in other revenues,

(v) a $286,000 increase in gains on investments and other assets, (vi) a $153,000 increase in insurance premiums and other considerations,

and (vii) a $95,000 decrease in intersegment expenses.

for the nine month period ended September 30, 2025 decreased due to (a) a $5,991,000 increase in selling, general and administrative

expenses, primarily attributable to a $3,623,000 increase in personnel expenses due to an annual increase in salaries and key new hires

as a part of the Company’s growth strategy, (b) a $4,728,000 increase in amortization of deferred policy acquisition costs, (c)

a $2,896,000 increase in death benefits, (d) a $354,000 increase in surrenders and other policy benefits (e) a $159,000 decrease in intersegment

revenue, and (f) a $22,000 increase in interest expense, which were partially offset by (i) a $5,008,000 increase in net investment income,

(ii) a $1,490,000 decrease in income tax expense, (iii) a $983,000 decrease in future policy benefits, (iv) a $282,000 increase in other

revenues, (v) a $228,000 increase in gains on investments and other assets, (vi) a $157,000 decrease in intersegment expenses, and (vii)

a $22,000 increase in insurance premiums and other considerations.

and Mortuary Operations

1 unchanged sentence

The Company also

sells cemetery products and services through its five cemeteries in Utah, one cemetery in San Diego County, California, and one cemetery

in Santa Fe, New Mexico.

At-need product sales and services are recognized as revenue when the services are performed or when the products

are delivered.

Pre-need cemetery product sales are deferred until the merchandise is delivered and services performed.

Recognition of

revenue for cemetery land sales occurs when 10% of the purchase price is received.

following table shows the condensed financial results of the cemetery and mortuary operations for the three and six month periods ended

June 30, 2025 and 2024.

sells cemetery services, products and land (burial plots) through its five cemeteries in Utah, one cemetery in San Diego County, California,

and one cemetery in Santa Fe, New Mexico.

At-need mortuary and cemetery product sales and services are recognized as revenue when the

services are performed or when the products are delivered.

Pre-need mortuary and cemetery product sales and services are deferred until

the merchandise is delivered, or services are performed.

Revenue for pre-need cemetery land sales is recognized at the time of sale,

and land is removed from inventory.

following table shows the condensed financial results of the cemetery and mortuary operations for the three- and nine-month periods ended

September 30, 2025, and 2024.

See Note 7 to the condensed consolidated financial statements.

months ended June 30,

Three months ended September 30,

(in thousands of dollars)

months ended June 30,

Nine months ended September 30,

(in thousands of dollars)

2 unchanged sentences

Revenues from external customers:

Cemetery revenues

Mortuary revenues

Net investment income

Gains (losses) on investments and other

Gains on investments and other assets

Other revenues

3 unchanged sentences

Profitability

in the six month period ended June 30, 2025 decreased due to (a) a $772,000 decrease in net investment income, (b) a $520,000 increase

in selling, general and administrative expenses, primarily attributable to a $349,000 increase in personnel expenses, (c) a $243,000

decrease in cemetery pre-need sales, (d) a $132,000 decrease in cemetery at-need sales, and (e) a $1,000 decrease in intersegment revenues,

which were partially offset by (i) a $344,000 decrease in income tax expense, (ii) a $216,000 increase in mortuary at-need sales, (iii)

a $103,000 decrease in amortization of deferred policy acquisition costs, (iv) a $102,000 increase in gains on investments and other

assets, (v) a $97,000 decrease in cost of goods and services sold, (vi) a $25,000 increase in other revenues, and (vii) a $14,000 decrease

in the nine month period ended September 30, 2025 decreased due to (a) a $701,000 increase in selling, general and administrative expenses,

primarily attributable to a $555,000 increase in personnel expenses, (b) a $608,000 decrease in net investment income, (c) a $311,000

decrease in gains on investments and other assets, (d) a $240,000 decrease in cemetery pre-need sales, (e) a $108,000 decrease in cemetery

at-need sales, and (f) a $1,000 decrease in intersegment revenues, which were partially offset by (i) a $516,000 increase in mortuary

at-need sales, (ii) a $331,000 increase in other revenues, (iii) a $303,000 decrease in income tax expense, (iv) a $101,000 decrease

in cost of goods and services sold, (v) a $92,000 decrease in amortization of deferred policy acquisition costs, and (vi) a $22,000 decrease

in intersegment expenses.

16 unchanged sentences

Mortgage or an approved third-party sub-servicer.

rates have followed the US Treasury yields up in response to increased inflation.

As expected, the rapid increase in mortgage rates has

resulted in a decrease in loan originations classified as ‘refinance.’ Higher mortgage rates have also had a negative effect

on loan originations classified as ‘purchases,’ although not as significant as those in the refinance classification.

the six month periods ended June 30, 2025 and 2024, SecurityNational Mortgage originated 3,375 loans ($1,134,783,000 total volume) and

3,494 loans ($1,089,824,000 total volume), respectively.

following table shows the condensed financial results of the mortgage operations for the three and six month periods ended June 30, 2025

rates have followed the US Treasury yields in response to inflation and slowing new home sales.

As expected, the lack of mortgage rate

reductions has resulted in a decrease in loan originations classified as ‘refinance.’ Higher than anticipated mortgage rates

have also had a negative effect on loan originations classified as ‘purchases’ although not as significant as those in the

refinance classification.

the nine-month periods ended September 30, 2025, and 2024, SecurityNational Mortgage originated 5,216 loans ($1,756,289,000 total volume)

and 5,505 loans ($1,723,036,000 total volume), respectively.

following table shows the condensed financial results of the mortgage operations for the three- and nine-month periods ended September

30, 2025, and 2024.

See Note 7 to the condensed consolidated financial statements.

months ended June 30,

Three months ended September 30,

(in thousands of dollars)

months ended June 30,

Nine months ended September 30,

(in thousands of dollars)

Increase (Decrease)

Revenues from external customers

8 unchanged sentences

Total segment revenues

Segment net earnings

for the six month period ended June 30, 2025 increased due to (a) a $2,384,000 increase in commissions, (b) a $941,000 increase in personnel

expenses, (c) a $895,000 increase in other expenses, (d) a $560,000 decrease in income from loan originations, (e) a $385,000 decrease

in the fair value of loan commitments, (f) a $324,000 increase in costs related to funding mortgage loans, (g) a $272,000 increase in

advertising expenses, (h) a $270,000 increase in interest expense, (i) a $270,000 decrease in net investment income, (j) a $119,000 decrease

in other revenues, and (k) a $95,000 decrease in intersegment revenues, which were partially offset by (i) a $3,735,000 increase in secondary

gains from investors, (ii) a $717,000 decrease in rent and rent related expenses, (iii) a $483,000 increase in income tax benefit, (iv)

a $124,000 decrease in intersegment expenses, (v) a $53,000 increase in the fair value of loans held for sale, and (vi) a $49,000 increase

in gains on investments and other assets.

Segment net earnings (loss)

for the nine month period ended September 30, 2025 increased due to (a) a $3,452,000 decrease in the fair value of loans held for sale,

(b) a $2,075,000 increase in commissions, (c) a $1,371,000 decrease in other revenues, (d) a $1,197,000 increase in other expenses, (e)

a $1,068,000 decrease in income from loan originations, (f) a $443,000 increase in costs related to funding mortgage loans, (g) a $337,000

increase in advertising expenses, (h) a $296,000 increase in interest expense, (i) a $296,000 decrease in net investment income, and

(j) a $157,000 decrease in intersegment revenues, which were partially offset by (i) a $6,130,000 increase in secondary gains from investors,

(ii) a $1,144,000 increase in gains on investments and other assets, (iii) a $1,132,000 decrease in rent and rent related expenses, (iv)

a $452,000 increase in income tax benefit, (v) a $213,000 decrease in personnel expenses, (vi) a $148,000 increase in the fair value

of loan commitments, and (vii) a $138,000 decrease in intersegment expenses.

Results of Operations

month period ended June 30, 2025, Compared to Three month period ended June 30, 2024

revenues increased by $3,750,000, or 4.4%, to $89,541,000 for the three month period ended June 30, 2025, from $85,791,000 for the comparable

period in 2024.

Contributing to this increase in total revenues was a $2,536,000 increase in net investment income, a $1,520,000 increase

in gains on investments and other assets, a $225,000 increase in insurance premiums and other considerations, and a $114,000 increase

in other revenues, which were partially offset by a $511,000 decrease in net mortuary and cemetery sales and a $134,000 decrease in mortgage

fee income decreased by $134,000, or 0.5%, to $29,485,000, for the three month period ended June 30, 2025, from $29,619,000 for the comparable

period in 2024.

This decrease was primarily due to a $1,511,000 increase in secondary gains from mortgage loans sold to third-party investors

into the secondary market, which was partially offset by a $889,000 decrease in the fair value of loans held for sale, a $459,000 decrease

in loan fees, interest income, and the provision for loan loss reserve, and a $297,000 decrease in the fair value of loan commitments.

premiums and other considerations increased by $225,000, or 0.8%, to $30,186,000 for the three month period ended June 30, 2025, from

$29,961,000 for the comparable period in 2024.

This increase was primarily due to an increase of $587,000 in renewal premiums, which

period ended September 30, 2025, Compared to Three-month period ended September 30, 2024

revenues increased by $1,052,000, or 1.2%, to $89,326,000 for the three-month period ended September 30, 2025, from $88,274,000 for the

comparable period in 2024.

Contributing to this increase in total revenues was a $2,310,000 increase in net investment income, a $624,000

increase in gains on investments and other assets, and a $327,000 increase in net mortuary and cemetery sales, which were partially offset

by a $1,085,000 decrease in mortgage fee income, a $994,000 decrease in other revenues, and a $130,000 decrease in insurance premiums

and other considerations.

fee income decreased by $1,085,000, or 3.6%, to $29,139,000, for the three-month period ended September 30, 2025, from $30,224,000 for

the comparable period in 2024.

This decrease was primarily due to a $3,163,000 decrease in the fair value of loans held for sale

and a $509,000 decrease in income from loan originations, which were partially offset by a $2,396,000 increase in secondary gains from

mortgage loans sold to third-party investors into the secondary market and a $191,000 increase in the fair value of loan commitments.

premiums and other considerations decreased by $130,000, or 0.4%, to $29,881,000 for the three-month period ended September 30, 2025,

from $30,011,000 for the comparable period in 2024.

This decrease was primarily due to an increase of $557,000 in renewal premiums, which

was partially offset by a decrease of $687,000 in first year premiums.

investment income increased by $2,536,000, or 14.1%, to $20,581,000 for the three month period ended June 30, 2025, from $18,045,000

investment income increased by $2,310,000, or 13.0%, to $20,109,000 for the three-month period ended September 30, 2025, from $17,799,000

for the comparable period in 2024.

This increase was primarily attributable to a $3,117,000 increase in mortgage loan interest, a $517,000

increase in fixed maturity securities income, a $252,000 increase in insurance assignment income, a $71,000 increase in equity securities

income, and a $46,000 increase in policy loan interest, which were partially offset by a $2,380,000 increase in investment expenses,

a $762,000 decrease in interest on cash and cash equivalents, a $412,000 decrease in real estate income, and a $119,000 decrease in other

investment income.

mortuary and cemetery sales decreased by $511,000, or 6.6%, to $7,258,000 for the three month period ended June 30, 2025, from $7,769,000

increase in fixed maturity securities income, a $39,000 increase in equity securities income, and a $32,000 increase in policy loan interest,

which were partially offset by a $953,000 decrease in interest on cash and cash equivalents, a $208,000 decrease in real estate income,

a $137,000 increase in investment expenses, a $61,000 decrease in insurance assignment income, and a $36,000 decrease in other investment

mortuary and cemetery sales increased by $327,000, or 4.8%, to $7,141,000 for the three-month period ended September 30, 2025, from $6,814,000

for the comparable period in 2024.

This decrease was primarily due to a $388,000 decrease in cemetery pre-need sales and a $163,000 decrease

in cemetery at-need sales, which were partially offset by a $40,000 increase in mortuary at-need sales.

(losses) on investments and other assets increased by $1,520,000 to $1,143,000 in net gains for the three month period ended June 30,

2025, from $377,000 in net losses for the comparable period in 2024.

This increase in gains on investments and other assets was primarily

due to a $1,190,000 increase in gains on equity securities, primarily attributable to increases in the fair value of these equity securities,

a $164,000 increase in gains on real estate, a $119,000 increase in gains on other assets, and a $47,000 increase in gains on fixed maturity

revenues increased by $114,000, or 14.7%, to $889,000 for the three month period ended June 30, 2025, from $775,000 for the comparable

period in 2024.

This increase was primarily due to an increase of $174,000 in other miscellaneous revenues and a decrease of $60,000

in servicing fee revenue due to a decrease in the retention of mortgage servicing rights.

This increase was primarily due to a $301,000 increase in mortuary at-need sales, a $23,000 increase

in cemetery at-need sales, and a $3,000 increase in cemetery pre-need sales.

(losses) on investments and other assets increased by $624,000 to $1,972,000 in net gains for the three-month period ended September

30, 2025, from $1,348,000 in net gains for the comparable period in 2024.

This increase in gains on investments and other assets was

primarily due to a $1,161,000 increase in gains on mortgage loans held for investment and a $561,000 increase in gains on real estate,

which were partially offset by a $929,000 decrease in gains on equity securities primarily attributable to decreases in the fair value

of these equity securities, a $158,000 decrease in gains on other assets, and a $11,000 decrease in gains on fixed maturity securities.

revenues decreased by $994,000, or 47.8%, to $1,083,000 for the three-month period ended September 30, 2025, from $2,077,000 for the

comparable period in 2024.

This decrease was primarily due to a decrease of $994,000 in other miscellaneous revenues.

benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $1,580,000 or 6.8%, to $24,934,000

for the three month period ended June 30, 2025, from $24,326,000 for the comparable period in 2024.

This increase was primarily the result

of a $951,000 increase in death benefits and a $189,000 increase in surrender and other policy benefits, which were partially offset

by a $413,000 decrease in future policy benefits.

for the three-month period ended September 30, 2025, from $23,354,000 for the comparable period in 2024.

This increase was primarily

the result of a $1,612,000 increase in death benefits and a $180,000 increase in surrender and other policy benefits, which were partially

offset by a $212,000 decrease in future policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $3,246,000, or 142.0%, to $5,533,000 for

the three month period ended June 30, 2025, from $4,301,000 for the comparable period in 2024.

This increase was primarily due to an

increase in the average outstanding balance of deferred policy and pre-need acquisition costs and primarily due to an increase in the

termination rate for deaths and lapses.

general and administrative expenses increased by $2,496,000, or 5.5%, to $47,961,000 for the three month period ended June 30, 2025,

from $45,465,000 for the comparable period in 2024.

This increase was primarily the result of a $1,369,000 increase in personnel expenses

due to an annual increase in salaries and key new hires as a part of the Company’s growth strategy, a $956,000 increase in other

expenses, a $358,000 increase in costs related to funding mortgage loans, a $154,000 increase in advertising expense, a $13,000 increase

in commissions, and a $6,000 increase in depreciation on property and equipment, which were partially offset by a $360,000 decrease in

rent and rent related expenses.

expense increased by $220,000, or 20.5%, to $1,293,000 for the three month period ended June 30, 2025, from $1,073,000 for the comparable

period in 2024.

This increase was primarily due to an increase of $153,000 in interest expense on mortgage warehouse lines of credit

for loans held for sale and an increase of $67,000 in interest expense on bank loans.

of goods and services sold-mortuaries and cemeteries decreased by $76,000, or 6.2%, to $1,159,000 for the three month period ended June

the three-month period ended September 30, 2025, from $2,287,000 for the comparable period in 2024.

This increase was primarily due to an increase in the termination rate for deaths, lapses, policies moving to a reduced

paid up status, and a shift in product mix.

general and administrative expenses increased by $1,286,000, or 2.8%, to $46,525,000 for the three-month period ended September 30, 2025,

from $45,239,000 for the comparable period in 2024.

This decrease was primarily due to a decrease of $63,000 in at-need sales

and a decrease of $13,000 in pre-need sales.

summary, total benefits and expenses were $81,205,000, or 90.7% of total revenues, for the three month period ended June 30, 2025, as

compared to $76,402,000, or 89.1% of total revenues, for the comparable period in 2024.

month period ended June 30, 2025, Compared to Six month period ended June 30, 2024

revenues increased by $5,301,000, or 3.2%, to $172,281,000 for the six month period ended June 30, 2025, from $166,980,000 for the comparable

period in 2024.

Contributing to this increase in total revenues was a $2,843,000 increase in mortgage fee income, a $1,792,000 increase

in net investment income, a $437,000 increase in gains on investments and other assets, a $236,000 increase in other revenues, and a

$153,000 increase in insurance premiums and other considerations, which were partially offset by a $160,000 decrease in net mortuary

and cemetery sales.

fee income increased by $2,843,000, or 5.5%, to $54,294,000, for the six month period ended June 30, 2025, from $51,451,000 for the comparable

This increase was primarily the result of a $1,409,000 increase in other expenses,

a $269,000 increase in personnel expenses, a $119,000 increase in costs related to funding mortgage loans, and a $76,000 increase in

advertising expense, which were partially offset by a $432,000 decrease in rent and rent related expenses, a $150,000 decrease in commissions,

and a $5,000 decrease in depreciation on property and equipment.

expense increased by $6,000, or 0.6%, to $1,067,000 for the three-month period ended September 30, 2025, from $1,061,000 for the comparable

period in 2024.

This increase was primarily due to a $3,735,000 increase in secondary gains from mortgage loans sold to third-party investors

into the secondary market and a $53,000 increase in the fair value of loans held for sale, which were partially offset by a $560,000

decrease in loan fees, interest income, and the provision for loan loss reserve and an $385,000 decrease in the fair value of loan commitments.

premiums and other considerations increased by $153,000, or 0.3%, to $59,965,000 for the six month period ended June 30, 2025, from $59,812,000

for the comparable period in 2024.

This increase was primarily due to an increase of $847,000 in renewal premiums, which was partially

offset by a decrease of $694,000 in first year premiums.

investment income increased by $1,792,000, or 4.7%, to $39,783,000 for the six month period ended June 30, 2025, from $37,991,000 for

This increase was primarily due to an increase of $26,000 in interest expense on mortgage warehouse lines of credit for

loans held for sale, which was partially offset by a decrease of $20,000 in interest expense on bank loans.

of goods and services sold in mortuaries and cemeteries decreased by $4,000, or 0.4%, to $1,113,000 for the three-month period ended

September 30, 2025, from $1,117,000 for the comparable period in 2024.

This decrease was primarily due to a decrease of $20,000 in pre-need

sales, which was partially offset by an increase of $16,000 in at-need sales.

summary, total benefits and expenses were $79,173,000, or 88.6% of total revenues, for the three-month period ended September 30, 2025,

as compared to $73,059,000, or 82.8% of total revenues, for the comparable period in 2024.

period ended September 30, 2025, Compared to Nine-month period ended September 30, 2024

revenues increased by $6,354,000, or 2.5%, to $261,607,000 for the nine-month period ended September 30, 2025, from $255,253,000 for

the comparable period in 2024.

Contributing to this increase in total revenues was a $4,103,000 increase in net investment income, a

$1,758,000 increase in mortgage fee income, a $1,061,000 increase in gains on investments and other assets, a $167,000 increase in net

mortuary and cemetery sales, and a $22,000 increase in insurance premiums and other considerations, which were partially offset by a

$758,000 decrease in other revenues.

fee income increased by $1,758,000, or 2.2%, to $83,433,000, for the nine-month period ended September 30, 2025, from $81,675,000 for

the comparable period in 2024.

This increase was primarily due to a $6,130,000 increase in secondary gains from mortgage loans

sold to third-party investors into the secondary market and a $148,000 increase in the fair value of loan commitments, which were partially

offset by a $3,452,000 decrease in the fair value of loans held for sale, and a $1,068,000 decrease in income from loan originations.

premiums and other considerations increased by $22,000, less than a percentage point, to $89,846,000 for the nine-month period ended

September 30, 2025, from $89,824,000 for the comparable period in 2024.

This increase was primarily due to an increase of $1,432,000

in renewal premiums, which was partially offset by a decrease of $1,410,000 in first year premiums.

investment income increased by $4,103,000, or 7.4%, to $59,893,000 for the nine-month period ended September 30, 2025, from $55,790,000

for the comparable period in 2024.

This increase was primarily attributable to a $7,704,000 increase in mortgage loan interest, a $1,183,000

increase in insurance assignment income, a $666,000 increase in fixed maturity securities income, and a $95,000 increase in equity securities

income, which were partially offset by a $2,278,000 increase in investment expenses, a $1,051,000 decrease in interest on cash and cash

equivalents, a $968,000 decrease in real estate income, a $156,000 decrease in other investment income, and a $10,000 decrease in policy

loan interest.

mortuary and cemetery sales decreased by $160,000, or 1.1%, to $14,558,000 for the six month period ended June 30, 2025, from $14,718,000

increase in fixed maturity securities income, a $847,000 increase in insurance assignment income, a $134,000 increase in equity securities

income, and a $21,000 increase in policy loan interest which were partially offset by a $2,415,000 increase in investment expenses, a

$2,004,000 decrease in interest on cash and cash equivalents, a $1,175,000 decrease in real estate income, and a $192,000 decrease in

other investment income.

mortuary and cemetery sales increased by $167,000, or 0.8%, to $21,699,000 for the nine-month period ended September 30, 2025, from $21,532,000

for the comparable period in 2024.

This decrease was primarily due to a $243,000 decrease in cemetery pre-need sales and a $132,000 decrease

in cemetery at-need sales, which were partially offset by a $216,000 increase in mortuary at-need sales.

(losses) on investments and other assets increased by $437,000, or 33.8% to $1,729,000 for the six month period ended June 30, 2025,

This increase was primarily due to a $516,000 increase in mortuary at-need sales, which were partially

offset by a $240,000 decrease in cemetery pre-need sales and a $109,000 decrease in cemetery at-need sales.

(losses) on investments and other assets increased by $1,061,000, or 40.2% to $3,701,000 for the nine-month period ended September 30,

2025, from $2,640,000 for the comparable period in 2024.

This increase in gains on investments and other assets was primarily due to a $308,000

increase in gains on real estate, a $96,000 increase in gains on equity securities, a $17,000 increase in gains on other assets, and

a $16,000 increase in gains on fixed maturity securities.

revenues increased by $236,000, or 13.8%, to $1,951,000 for the six month period ended June 30, 2025, from $1,715,000 for the comparable

period in 2024.

This increase was primarily due to an increase of $324,000 in other miscellaneous revenues and a decrease of $88,000

This increase in gains on investments and other assets was primarily due to

a $1,161,000 increase in gains on mortgage loans held for investment, a $869,000 increase in gains on real estate, and a $6,000 increase

in gains on fixed maturity securities, which were partially offset by a $833,000 decrease in gains on equity securities primarily attributable

to decreases in the fair value of these equity securities and a $142,000 decrease in gains on other assets.

revenues decreased by $758,000, or 20.00%, to $3,034,000 for the nine-month period ended September 30, 2025, from $3,792,000 for the

comparable period in 2024.

This decrease was primarily due to a decrease of $713,000 in other miscellaneous revenues and a decrease of

$45,000 in servicing fee revenue due to a decrease in the retention of mortgage servicing rights.

benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $2,267,000 or 3.1%, to $76,223,000

for the six month period ended June 30, 2025, from $50,601,000 for the comparable period in 2024.

This increase was primarily the result

of a $1,283,000 increase in death benefits and a $175,000 increase in surrender and other policy benefits, which were partially offset

by $771,000 decrease in future policy benefits.

for the nine-month period ended September 30, 2025, from $73,956,000 for the comparable period in 2024.

This increase was primarily the

result of a $2,896,000 increase in death benefits and a $354,000 increase in surrender and other policy benefits, which were partially

offset by $983,000 decrease in future policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $4,635,000, or 40.9%, to $15,968,000 for

the six month period ended June 30, 2025, from $9,045,000 for the comparable period in 2024.

This increase was primarily due to an increase

in the average outstanding balance of deferred policy and pre-need acquisition costs and primarily due to an increase in the termination

rate for deaths and lapses.

general and administrative expenses increased by $8,112,000, or 9.7%, to $91,825,000 for the six month period ended June 30, 2025, from

$83,713,000 for the comparable period in 2024.

the nine-month period ended September 30, 2025, from $11,332,000 for the comparable period in 2024.

This increase was primarily due to an increase in the termination rate for deaths, lapses, policies moving to a reduced

paid up status, and a shift in product mix.

general and administrative expenses increased by $9,399,000, or 7.3%, to $138,351,000 for the nine-month period ended September 30, 2025,

from $128,952,000 for the comparable period in 2024.

This increase was primarily the result of a $3,966,000 increase in personnel expenses

due to an annual increase in salaries and key new hires as a part of the Company’s growth strategy, a $2,469,000 increase in commissions,

a $2,071,000 increase in other expenses, a $324,000 increase in costs related to funding mortgage loans, a $291,000 increase in advertising

expense, and a $34,000 increase in depreciation on property and equipment, which were partially offset by a $773,000 decrease in rent

and rent related expenses.

expense increased by $312,000, or 14.8%, to $2,413,000 for the six month period ended June 30, 2025, from $2,101,000 for the comparable

due to an annual increase in salaries and key new hires as a part of the Company’s growth strategy, a $3,480,000 increase in other

expenses, a $2,319,000 increase in commissions, a $443,000 increase in costs related to funding mortgage loans, a $366,000 increase in

advertising expense, and a $30,000 increase in depreciation on property and equipment, which were partially offset by a $1,205,000 decrease

in rent and rent related expenses.

expense increased by $317,000, or 10.0%, to $3,479,000 for the nine-month period ended September 30, 2025, from $3,162,000 for the comparable

period in 2024.

1 unchanged sentence

for loans held for sale and an increase of $21,000 in interest expense on bank loans.

of goods and services sold-mortuaries and cemeteries decreased by $97,000, or 3.9%, to $2,413,000 for the six month period ended June

30, 2025, from $2,510,000 for the comparable period in 2024.

This decrease was primarily due to a decrease of $103,000 in at-need sales,

which was partially offset by an increase of $6,000 in pre-need sales.

summary, total benefits and expenses were $158,373,000, or 91.9% of total revenues, for the six month period ended June 30, 2025, as

compared to $147,971,000, or 88.6% of total revenues, for the comparable period in 2024.

of goods and services sold in mortuaries and cemeteries decreased by $101,000, or 2.8%, to $3,526,000 for the nine-month period ended

September 30, 2025, from $3,627,000 for the comparable period in 2024.

This decrease was primarily due to a decrease of $87,000 in at-need

sales and a decrease of $14,000 in pre-need sales.

summary, total benefits and expenses were $237,547,000, or 90.8% of total revenues, for the nine-month period ended September 30, 2025,

as compared to $221,030,000, or 86.6% of total revenues, for the comparable period in 2024.

and Capital Resources

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maintenance of existing policies, debt service, and to meet current operating expenses.

As of June 30, 2025, SecurityNational Mortgage was not in compliance with

the net income covenant of Western Alliance Bank’s warehouse line of credit.

SecurityNational Mortgage is in the process of receiving

In the unlikely event the Company is required to repay the outstanding advances of approximately $12,751,822 on the warehouse

lines of credit, the Company has sufficient cash to do so.

The Company has also performed an analysis of its funding capacities of both

internal and external sources and has determined that there are sufficient funds to continue its current business model.

The Company continues

to negotiate other warehouse lines of credit with other lenders.

the six month periods ended June 30, 2025 and 2024, the Company’s operations provided cash of approximately $1,905,000 and of approximately

$8,104,000, respectively.

of September 30, 2025, SecurityNational Mortgage was not in compliance with the adjusted tangible net worth covenant of Western Alliance

Bank’s warehouse line of credit.

SecurityNational Mortgage is in the process of receiving waivers.

In the unlikely event the Company

is required to repay the outstanding advances of approximately $7,412,571 on the warehouse lines of credit, the Company has sufficient

cash to do so.

The Company has also performed an analysis of its funding capacities of both internal and external sources and has determined

that there are sufficient funds to continue its current business model.

The Company continues to negotiate other warehouse lines of credit

with other lenders.

the nine-month periods ended September 30, 2025, and 2024, the Company’s operations provided cash of approximately $27,553,000 and of

approximately $34,894,000, respectively.

The decrease in cash provided by operations was due primarily to the decrease in net earnings.

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Bonds owned by the insurance

subsidiaries amounted to $372,354,000 (at estimated fair value) and $348,774,000 (at estimated fair value) as of June 30, 2025 and December

31, 2024, respectively.

This represented 35.7% and 38.0% of the total investments of the Company as of June 30, 2025 and December 31,

2024, respectively.

Generally, all bonds owned by the life insurance subsidiaries are rated by the National Association of Insurance

Commissioners.

subsidiaries amounted to $370,953,000 (at estimated fair value) and $348,774,000 (at estimated fair value) as of September 30, 2025,

and December 31, 2024, respectively.

This represented 35.4% and 38.0% of the total investments of the Company as of September 30, 2025,

and December 31, 2024, respectively.

Generally, all bonds owned by the life insurance subsidiaries are rated by the National Association

of Insurance Commissioners.

Under this rating system, there are six categories used for the rating of bonds.

As of June 30, 2025, 2.0% (or $7,314,000)

and as of December 31, 2024, 2.4% (or $8,431,000) of the Company’s total bond investments were invested in bonds in rating categories

three through six, which are considered non-investment grade.

As of September 30, 2025,

1.6% (or $5,882,000) and as of December 31, 2024, 2.4% (or $8,431,000) of the Company’s total bond investments were invested in

bonds in rating categories three through six, which are considered non-investment grade.

Company’s life insurance subsidiaries are subject to risk-based capital guidelines established by statutory regulators requiring

minimum capital levels based on the perceived risk of assets, liabilities, disintermediation, and business risk.

As of June 30, 2025

As of September 30,

2025, and December 31, 2024, the life insurance subsidiaries were in compliance with the regulatory criteria.

Company’s total capitalization of stockholders’ equity, bank and other loans payable was $477,687,000 as of June 30, 2025,

Company’s total capitalization of stockholders’ equity, bank and other loans payable was $488,478,000 as of September 30,

2025, as compared to $445,522,000 as of December 31, 2024.

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Stockholders’ equity as a percent of total capitalization

was 74.3% and 76.1% as of June 30, 2025 and December 31, 2024, respectively.

was 74.8% and 76.1% as of September 30, 2025, and December 31, 2024, respectively.

rates measure the amount of insurance terminated during a particular period.

3 unchanged sentences

combined statutory capital and surplus of the Company’s life insurance subsidiaries was approximately $133,949,000 and $120,216,000

as of June 30, 2025, and December 31, 2024, respectively.

The life insurance subsidiaries cannot pay a dividend to their parent company

without the approval of state insurance regulatory authorities.

as of September 30, 2025, and December 31, 2024, respectively.

The life insurance subsidiaries cannot pay a dividend to their parent

company without the approval of state insurance regulatory authorities.

One Big Beautiful Bill Act (“OBBBA”), which was signed into law on July 4, 2025, significantly affected U.S.

income tax law.

The Company is currently assessing its impact, however the Company does not expect a material impact to its consolidated financial statements.

The Company is currently assessing its impact;

however, the Company does not expect a material impact to its consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

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 2. Management’s Discussion and Analysis