What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-11 compared with 2025-11-13 · 1784 added, 1659 removed, 1198 unchanged (74% of the section changed)

Financial Statements.

Fixed maturity

securities, available for sale, at estimated fair value

(amortized cost of $ 388,640,665 and $ 376,012,071 for 2025 and 2024,

respectively;

net of allowance for credit losses of $ 532,868 and $ 420,993

for 2025 and 2024, respectively)

March 31, 2026

December 31, 2025

Fixed maturity securities, available for sale, at estimated fair value (amortized cost of $ 371,602,158 and $ 382,401,293 for 2026 and 2025, respectively;

net of allowance for credit losses of $ 675,997 and $ 579,450 for 2026 and 2025, respectively)

$ 367,565,925

$ 382,777,918

Equity securities at estimated

fair value (cost of $ 12,128,914 and

$ 11,386,454 for 2025 and 2024, respectively)

Mortgage loans held for

investment (net of allowance for credit losses

of $ 2,677,001 and $ 1,885,390 for 2025 and 2024, respectively)

Real estate held for investment

(net of accumulated depreciation of

$ 35,724,258 and $ 31,419,539 for 2025 and 2024, respectively)

Equity securities at estimated fair value (cost of $ 12,477,275 and $ 12,206,559 for 2026 and 2025, respectively)

Mortgage loans held for investment (net of allowance for credit losses of $ 2,553,360 and $ 2,588,918 for 2026 and 2025, respectively)

Real estate held for investment (net of accumulated depreciation of $ 38,595,436 and $ 37,159,212 for 2026 and 2025, respectively)

Real estate held for sale

Other investments and policy

loans (net of allowance for credit losses

of $ 1,534,957 and $ 1,536,926 for 2025 and 2024, respectively)

Other investments and policy loans (net of allowance for credit losses of $ 1,518,047 and $ 1,676,468 for 2026 and 2025, respectively)

Accrued investment income

1 unchanged sentence

1,025,012,731

1,038,862,460

Cash and cash equivalents

Loans held for sale at estimated fair value

Receivables (net of allowance for credit losses

of $ 1,542,731 and $ 1,678,531

for 2025 and 2024, respectively)

Restricted assets (including $ 15,016,744 and

$ 12,323,535 for 2025 and 2024

Receivables (net of allowance for credit losses of $ 1,523,072 and $ 1,428,672 for 2026 and 2025, respectively)

Restricted assets (including $ 16,832,910 and $ 16,106,168 for 2026 and 2025 respectively, at estimated fair value)

Cemetery perpetual care trust investments (including $ 6,787,546 and $ 6,575,744 for 2026 and 2025,

respectively, at estimated fair value)

Cemetery perpetual care trust investments (including

$ 6,154,575 and

$ 5,689,706 for 2025 and 2024, respectively, at estimated fair value)

Receivable from reinsurers

Cemetery land and improvements

Deferred policy and pre-need contract acquisition

Mortgage servicing rights, net

Property and equipment, net

Deferred policy and pre-need contract acquisition costs

Value of business acquired

4 unchanged sentences

CONSOLIDATED BALANCE SHEETS (Continued)

Liabilities and Stockholders’

Future policy benefits and unpaid

March 31, 2026

December 31, 2025

Liabilities and Stockholders’ Equity

Future policy benefits and unpaid claims

$ 790,945,507

$ 799,706,946

Policyholder account balances

Unearned premium reserve

Bank and other loans payable

Deferred pre-need cemetery and mortuary contract

Deferred pre-need funeral home and cemetery contract revenues

Cemetery perpetual care obligation

10 unchanged sentences

40,000,000 shares authorized;

22,395,245 shares issued and outstanding as of September 30, 2025 and

22,321,559 (1) shares issued and outstanding as of

December 31, 2024

non-voting common stock - $ 1.00 par

5,000,000 shares

22,432,763 shares issued and outstanding as of March 31, 2026 and 22,428,625 shares issued and outstanding as of December 31, 2025

non-voting common stock - $ 1.00 par value;

5,000,000 shares authorized;

none issued or outstanding

convertible common stock - $ 2.00 par value;

6,000,000 shares

3,587,237 shares issued and outstanding as of September 30, 2025

and 3,492,674 (1) shares issued and outstanding

as of December 31, 2024

6,000,000 shares authorized;

3,587,237 shares issued and outstanding as of March 31, 2026 and 3,587,237 shares issued and outstanding as of December 31, 2025

Common stock value

Additional paid-in capital

Accumulated other comprehensive gain (loss),

( 6,951,266 )

Accumulated other comprehensive gain, net of taxes

Retained earnings

Treasury stock at cost - 1,180,564 Class A

shares and 104,604 Class C shares

as of September 30, 2025;

and 1,080,243 (1) Class A shares and 104,604

(1) Class C shares

as of December 31, 2024

Treasury stock at cost - 1,137,578 Class A shares and 104,604 Class C shares as of March 31, 2026;

and 1,095,964 Class A shares and 104,604 Class C shares as of December 31, 2025

( 9,552,918 )

( 9,088,357 )

Total stockholders’

Liabilities and Stockholders’ Equity

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

$ 1,580,783,941

$ 1,561,844,604

(1) Issued and outstanding

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

accompanying notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL FINANCIAL CORPORATION

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended September 30,

Nine Months Ended September 30,

Mortgage fee income

Three Months Ended March 31,

Insurance premiums and other considerations

Mortgage fee income

Net investment income

Net mortuary and cemetery sales

Net funeral home and cemetery sales

Gains on investments and other assets

1 unchanged sentence

Benefits and expenses:

Death benefits

Surrenders and other policy benefits

Increase in future policy benefits

Amortization of deferred policy and pre-need acquisition costs and value of business acquired

Policyholder benefits and claims (including the impact of assumption updates to the

liability for future policy benefits of nil and nil for March 31, 2026 and 2025, respectively)

Amortization of deferred policy and pre-need acquisition costs and value of business

Selling, general and administrative expenses:

3 unchanged sentences

Interest expense

Cost of goods and services sold-mortuaries and cemeteries

Cost of goods and services sold-funeral home and cemetery

Total benefits and expenses

3 unchanged sentences

( 1,836,598 )

( 5,400,792 )

( 7,646,071 )

Net earnings per Class A Equivalent common

share-assuming dilution (1)

Weighted-average Class A equivalent common shares

outstanding (1)

Weighted-average Class A equivalent common shares

outstanding-assuming dilution

Net earnings per Class A Equivalent common share (1)

Net earnings per Class A Equivalent common share-assuming

Weighted-average Class A equivalent common shares outstanding (1)

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

(1) Net earnings per

6 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Months Ended September 30,

Other comprehensive income:

Unrealized gains on fixed

maturity securities available for sale

Unrealized gains on restricted

gains on cemetery perpetual care trust investments (1)

comprehensive income, before income tax

Income tax expense

Three Months Ended March 31,

Other comprehensive income (loss):

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

$ ( 4,316,311 )

Unrealized gains (losses) on restricted assets (1)

Unrealized gains on cemetery perpetual care trust investments (1)

Interest rate remeasurement of future policy benefits

( 8,122,845 )

Other comprehensive income (loss), before income tax

( 4,254,485 )

Other comprehensive

income, net of income tax

Income tax benefit (expense)

( 2,142,855 )

Other comprehensive income (loss), net of income tax

( 3,362,137 )

Comprehensive income

(1) Fixed maturity securities available

(1) Fixed maturity

securities available for sale

accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

A Common Stock

C Common Stock

Paid-in Capital

Other Comprehensive Income (Loss)

Months Ended September 30, 2025

A Common Stock

C Common Stock

Paid-in Capital

Other Comprehensive Income (Loss)

Class A Common Stock

Class C Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Treasury Stock

Three Months Ended March 31, 2026

Class A Common Stock

Class C Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Treasury Stock

December 31, 2025

2 unchanged sentences

$ 410,368,728

$ 338,782,279

Other comprehensive income

8 unchanged sentences

$ 425,515,510

$ 346,493,686

Other comprehensive income

Stock-based compensation expense

Vesting of restricted stock units

Sale of treasury stock

Purchase of treasury stock

Conversion Class C to Class A

Stock dividends

( 11,160,040 )

June 30, 2025

$ ( 1,830,143 )

$ 225,043,793

$ ( 9,485,613 )

$ 354,754,718

Other comprehensive income

Stock-based compensation expense

Vesting of restricted stock units

Sale of treasury stock

Purchase of treasury stock

Conversion Class C to Class A

Stock dividends

September 30, 2025

$ 232,857,565

$ ( 9,705,930 )

$ 365,381,858

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

Months Ended September 30, 2024

A Common Stock

C Common Stock

Paid-in Capital

Other Comprehensive Income (Loss)

Three Months Ended March 31, 2025

Class A Common Stock

Class C Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Treasury Stock

December 31, 2024

3 unchanged sentences

$ 227,804,439

Other comprehensive loss

Stock-based compensation expense

Vesting of restricted stock units

Sale of treasury stock

Purchase of treasury stock

Conversion Class C to

March 31, 2024

$ ( 8,477,686 )

$ 381,898,427

$ ( 5,336,081 )

$ 320,103,974

Other comprehensive loss

Stock-based compensation expense

Exercise of stock options

Vesting of restricted stock units

Sale of treasury stock

Purchase of treasury stock

( 3,362,137 )

Conversion Class C to Class A

Stock dividends

( 8,153,824 )

June 30, 2024

$ ( 8,297,785 )

$ 213,570,620

$ ( 6,671,931 )

$ 325,765,993

$ ( 8,297,785 )

$ 213,570,620

$ ( 6,671,931 )

$ 325,765,993

Other comprehensive income

Other comprehensive income (loss)

Stock-based compensation expense

3 unchanged sentences

Purchase of treasury stock

Stock dividends

September 30, 2024

March 31, 2025

$ 234,218,174

6 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Months Ended September 30,

Cash flows from operating

cash provided by operating activities

Cash flows from investing

Three Months Ended March 31,

Cash flows from operating activities:

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of fixed maturity securities

1 unchanged sentence

( 28,292,634 )

Sales, calls and maturities of fixed maturity

Sales, calls and maturities of fixed maturity securities

Purchases of equity securities

4 unchanged sentences

( 2,086,944 )

( 2,536,814 )

Sales, calls and maturities of restricted assets

Purchases of cemetery perpetual care trust

( 2,487,924 )

Sales, calls and maturities of perpetual care

trust investments

Mortgage loans held for investment, other investments

and policy loans made

Purchases of cemetery perpetual care trust investments

Sales, calls and maturities of perpetual care trust investments

Mortgage loans held for investment, other investments and policy loans made

( 180,161,316 )

( 217,905,832 )

Payments received for mortgage loans held for

investment, other investments and policy loans

Payments received for mortgage loans held for investment, other investments and policy loans

Purchases of property and equipment

( 1,591,486 )

Sales of property and equipment

3 unchanged sentences

Sales of real estate

cash provided by (used in) investing activities

Net cash provided by (used in) investing activities

( 29,266,526 )

Cash flows from financing

Investment contract receipts

Investment contract withdrawals

Cash flows from financing activities:

Policyholder account balances - deposits

Policyholder account balances - withdrawals

( 4,707,568 )

2 unchanged sentences

Purchases of treasury stock

( 1,604,613 )

( 1,672,232 )

Repayment of bank loans

( 49,525,258 )

( 1,423,826 )

Proceeds from bank loans

Net change in warehouse

line borrowings for loans held for sale

( 3,174,878 )

cash provided by (used in) financing activities

( 1,683,966 )

change in cash, cash equivalents, restricted cash and restricted cash equivalents

Net change in warehouse line borrowings for loans held for sale

Net cash provided by financing activities

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents

( 4,810,375 )

Cash, cash equivalents,

restricted cash and restricted cash equivalents at beginning of period

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

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

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

$ 162,096,809

$ 145,292,245

Supplemental Disclosure

of Cash Flow Information:

Supplemental Disclosure of Cash Flow Information:

Cash paid during the year for:

Income taxes (net of refunds)

Non Cash Operating, Investing

and Financing Activities:

Transfer from fixed maturity securities available

for sale to other investments

Right-of-use assets obtained in exchange for

operating lease liabilities

Loans held for sale transferred into mortgage

loans held for investment

Federal income taxes

State income taxes

Non Cash Operating, Investing and Financing Activities:

Benefit plans funded with treasury stock

Loans held for sale foreclosed into real estate

held for sale

Mortgage loans held for investment foreclosed

into real estate held for sale

Right-of-use assets obtained in exchange for

finance lease liabilities

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

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

Transfer from fixed maturity securities available for sale to other investments

NATIONAL FINANCIAL CORPORATION

3 unchanged sentences

flows are presented in the table below:

March 31, 2026

March 31, 2025

Cash and cash equivalents

3 unchanged sentences

Cemetery perpetual care trust investments

Total cash, cash equivalents,

restricted cash and restricted cash equivalents

Total cash, cash equivalents, restricted cash and restricted cash equivalents

$ 162,096,809

$ 145,292,245

Cash, cash equivalents,

restricted cash and restricted cash equivalents at end of year

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

$ 162,096,809

4 unchanged sentences

31, 2026 (Unaudited)

Basis of Presentation

1) Basis of Presentation and Recent Accounting Pronouncements

of Presentation

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally

8 unchanged sentences

considered necessary for a fair presentation have been included.

Operating results for the three- and nine-month periods ended September

Operating results for the three-month periods ended March 31, 2026,

are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

16 unchanged sentences

all material respects.

prior-period amounts have been reclassified to conform to the current-period presentation.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2026 (Unaudited)

Recent Accounting Pronouncements

Standards Issued But Not Yet Adopted

1) Basis of Presentation and Recent Accounting Pronouncements (Continued)

Accounting Pronouncements

Standards Adopted in 2025

“Financial Services – Insurance (Topic 944):

15 unchanged sentences

December 15, 2024, and interim reporting periods beginning after December 15, 2025.

The Company will adopt the standard commencing with

its annual reporting period ending December 31, 2025, using the modified retrospective transition method as of the transition date (“Transition

Date”) of January 1, 2024.

The modified retrospective transition method requires the amended guidance be applied to contracts issued

after the beginning of the earliest period presented, or the Transition Date, which will result in the restatement of the 2024 consolidated

financial statements.

Company is nearing completion of its analysis and implementation of the new standard, including the identification of cohorts, system

updates, and design.

The Company has engaged its team of actuaries, accountants, and systems specialists and consulted external system

providers as part of the implementation.

The adoption of this guidance is expected to have an impact on its financial position, results

of operations, and disclosures, as well as systems, processes and controls.

Based upon the modified retrospective transition method,

the Company estimates that the January 1, 2024, Transition Date impact from adoption will include an increase to total stockholders’

equity of approximately $ 4 million to $ 6 million.

This expected increase includes the estimated impact to accumulated other comprehensive

income (“AOCI”), which, as of the Transition Date, is expected to result in an increase of approximately $ 4 million to $ 6

million, net of income tax.

The most significant drivers of the expected increase in AOCI are the anticipated impacts of the changes

in the discount rates as of the Transition Date to be used in measuring the liability for future policy benefits for traditional and

limited payment contracts.

The expected increase to total stockholders’ equity also includes the estimated impact to retained earnings,

which is immaterial.

implementation, cash flow assumptions, such as mortality, lapse, and expense, will be reviewed at least annually and, if necessary, they

will be updated to reflect actual experience and current expectations in the calculation of the Company’s future policy benefits.

Historically, cash flow assumptions were locked in at policy issuance and remained in place for the life of the business—even when

material variances emerged between assumptions and actual experience—except in the case of a premium deficiency.

Under the new

guidance, net premiums are capped at 100 percent of gross premiums at the cohort level.

Adoption of this standard also requires changes

in the future treatment of the Company’s Deferred Acquisition Cost (“DAC”) asset.

On December 31, 2025, the Company adopted ASU No.

2018-12, using the modified retrospective approach, for changes to the liability for future policy benefits and deferred policy acquisition

The Company applied the guidance as of a transition date of January 1, 2024, and retrospectively adjusted prior period amounts

to reflect the new guidance.

The Company’s condensed consolidated financial statements are presented under the new guidance for

reporting periods beginning January 1, 2024.

adoption, cash flow assumptions, such as mortality, lapse, and expense, will be reviewed at least annually and, if necessary, they will

be updated to reflect actual experience and current expectations in the calculation of the Company’s future policy benefits.

Historically,

cash flow assumptions were locked in at policy issuance and remained in place for the life of the business—even when material variances

emerged between assumptions and actual experience—except in the case of a premium deficiency.

Under the new guidance, net premiums

are capped at 100 percent of gross premiums at the cohort level.

Adoption of this standard also requires changes in the future treatment

of the Company’s Deferred Acquisition Cost (“DAC”) asset.

Historically,

the interest rate used to calculate the Company’s future policy benefits was set at policy issuance and remained in effect for

3 unchanged sentences

To accomplish this, future

policy benefits will be calculated using a discount rate based on an upper-medium-grade (A-rated) fixed income instrument.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Recent Accounting Pronouncements (Continued)

policy benefits are calculated using a discount rate based on an upper-medium-grade (A-rated) fixed income instrument.

initial future policy benefit for each cohort is calculated using the original discount rate and then remeasured using the current discount

6 unchanged sentences

is used by insurance companies to defer costs related to acquiring insurance policies.

Under the new guidance, amortization methods will

be simplified, and DAC for all insurance contracts will be subject to straight-line amortization over the lifetime of the policy.

Historically,

traditional life contracts were amortized in proportion to premiums over the expected premium-paying period.

Additionally, shadow DAC

will no longer be reported and will be removed from AOCI, net of tax.

The impact of the removal of shadow DAC is immaterial.

expects the impact on net earnings due to the decrease in amortization of DAC to be in the range of $ 3 million to $ 4 million, net of

tax for 2024.

the requirements of the new guidance represents a change from existing standard, the new guidance will not impact capital and surplus

or net income under statutory accounting practices, cash flows on the Company’s policies, or the underlying economics of the Company’s

“Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” — Issued in December 2023, ASU

2023-09 requires that public business entities, on an annual basis:

(i) disclose specific categories in the rate reconciliation and (ii)

provide additional information for reconciling items that meet a quantitative threshold.

In addition, the amendments in this update require

that all entities disclose on an annual basis the following information about income taxes paid:

(i) the amount of income taxes paid

(net of refunds received) disaggregated by federal (national), state, and foreign taxes and (ii) the amount of income taxes paid (net

of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater

than 5 percent of total income taxes paid (net of refunds received).

ASU 2023-09 is effective for the Company for the annual reporting

periods beginning January 1, 2025.

The Company will adopt the standard commencing with its annual reporting period ending December 31,

The Company does not anticipate that the adoption of this standard will have a material impact on the consolidated financial statements.

Under the new guidance, amortization methods are

simplified, and DAC for all insurance contracts will be subject to constant-level basis amortization over the lifetime of the policy.

Historically, traditional life contracts were amortized in proportion to premiums over the expected premium-paying period.

Additionally,

shadow DAC is no longer reported.

requirements of the new guidance did not impact capital and surplus or net income under statutory accounting practices, cash flows on

the Company’s policies, or the underlying economics of the Company’s business.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

1) Basis of Presentation and Recent Accounting Pronouncements (Continued)

following tables present amounts as previously reported in 2025, the effect upon those amounts from the adoption of the new guidance

under ASU No.

2018-12, and the resulting adjusted amounts that are reflected in the condensed consolidated financial statements included

The following tables only include those line items impacted by the adoption of the new guidance.

of Error Correcetion Prior Period Adjustments

As Previously

Consolidated Statements of Earnings:

Three Months Ended March 31, 2025

As Previously

Benefits and expenses:

Policyholder benefits and claims

$ ( 779,903 )

Amortization of deferred policy and pre-need acquisition costs and value of business acquired

( 1,899,536 )

Total benefits and expenses

( 2,679,439 )

Earnings before income taxes

Income tax expense

( 1,232,602 )

( 1,836,598 )

Net earnings per Class A equivalent common share (1)

Net earnings per Class A equivalent common share - assuming dilution (1)

(1) Adjusted retroactively

for the effect of annual stock dividends

As Previously Reported

As Currently Reported

Consolidated Statements of Comprehensive Income:

Three Months Ended March 31, 2025

As Previously Reported

As Currently Reported

Other comprehensive income:

Unrealized gains on fixed maturity securities available for sale

Interest rate remeasurement of future policy benefits

( 8,122,845 )

Other comprehensive income (loss), before income tax

( 8,050,317 )

( 4,254,485 )

Income tax benefit (expense)

Other comprehensive income (loss), net of income tax

( 6,359,749 )

( 3,362,137 )

Comprehensive income (loss)

$ ( 4,284,306 )

As Previously Reported

As Currently Reported

Consolidated Statements of Stockholders’ Equity:

Three Months Ended March 31, 2025

As Previously Reported

As Currently Reported

Accumulated other comprehensive income (loss)

$ ( 3,953,654 )

Retained earnings

Total stockholders’ equity

$ 346,493,686

$ 385,325,528

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

1) Basis of Presentation and Recent Accounting Pronouncements (Continued)

Standards Issued But Not Yet Adopted

“Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40):

10 unchanged sentences

The Company is in the process of estimating the potential impact of this new standard on the consolidated financial statements.

“Interim Reporting (Topic 270):

Narrow-Scope Improvements” — Issued in December 2025, ASU 2025-11

clarifies the form, content, and disclosure requirements for interim financial statements and the application of Topic 270.

differentiates requirements by entity type:

SEC registrants must continue to follow SEC rules for condensed financial statements;

registrants may present either full or condensed statements, using either the ASU’s guidance or SEC-style condensed guidance;

not-for-profit entities follow the non-SEC model with additional presentation considerations specific to NFP reporting.

compiles a comprehensive list of required interim disclosures for condensed statements from across the Codification, supported by conforming

edits, to improve usability (while not replacing underlying guidance).

In addition, the ASU reinforces a disclosure principle requiring

entities to provide interim disclosures for significant events or transactions that have had a material effect since the most recent

year-end, such as changes in accounting principles, key estimates, financing arrangements, long-term contracts, or the reporting entity.

The amendments are effective for public business entities for interim periods within annual periods beginning after December 15, 2027,

with early adoption permitted.

The guidance may be applied prospectively or retrospectively.

The Company is in the process of estimating

the potential impact of this new standard on the consolidated financial statements.

Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s

3 unchanged sentences

31, 2026 (Unaudited)

Company’s investments as of September 30, 2025, are summarized as follows:

2) Investments

Company’s investments as of March 31, 2026, are summarized as follows:

of Investments

Unrealized Gains

Unrealized Losses (1)

for Credit Losses

September 30,

Fixed maturity securities, available for sale,

at estimated fair value:

securities and obligations of U.S.

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses (1)

Allowance for Credit Losses

Estimated Fair Value

March 31, 2026:

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

Treasury securities and obligations of U.S.

Government agencies

$ ( 105,766 )

Obligations of states and

political subdivisions

Corporate securities including

public utilities

Obligations of states and political subdivisions

Corporate securities including public utilities

( 4,529,438 )

1 unchanged sentence

( 3,607,509 )

preferred stock

fixed maturity securities available for sale

Redeemable preferred stock

Total fixed maturity securities available for sale

$ 371,602,158

4 unchanged sentences

Common stock:

Industrial, miscellaneous

and all other

Industrial, miscellaneous and all other

$ ( 353,380 )

equity securities at estimated fair value

Total equity securities at estimated fair value

$ ( 353,380 )

Mortgage loans held for investment at amortized

Mortgage loans held for investment at amortized cost:

Residential construction

Unamortized deferred

loan fees, net

Unamortized deferred loan fees, net

( 1,664,276 )

Allowance for credit

Allowance for credit losses

( 2,553,360 )

Net discounts

Total mortgage loans

held for investment

Total mortgage loans held for investment

$ 305,268,440

Real estate held for investment - net of accumulated

depreciation:

Total real estate

held for investment

Real estate held for investment - net of accumulated depreciation:

$ 114,491,810

Total real estate held for investment

$ 234,345,333

Real estate held for sale:

Total real estate

held for sale

Other investments and policy loans at amortized

Total real estate held for sale

Other investments and policy loans at amortized cost:

Insurance assignments

Federal Home Loan Bank

Federal Home Loan Bank stock (2)

Other investments

Allowance for

credit losses for insurance assignments

Allowance for credit losses for insurance assignments

( 1,518,047 )

Total other investments

and policy loans

Accrued investment

Total other investments and policy loans

Accrued investment income

Total investments

$ 1,025,012,731

(1) Gross unrealized losses are net

of allowance for credit losses

(2) Includes $ 581,600 of Membership

stock and $ 1,008,800 of Activity stock attributable to short-term borrowings and letters of credit.

(1) Gross unrealized

losses are net of allowance for credit losses

(2) Includes $ 612,300

of Membership stock and $ 64,800 of Activity stock attributable to short-term borrowings and letters of credit.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

Company’s investments as of December 31, 2025, are summarized as follows:

Unrealized Gains

Unrealized Losses (1)

for Credit Losses

Fixed maturity securities, available for sale,

at estimated fair value:

Treasury securities and obligations

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses (1)

Allowance for Credit Losses

Estimated Fair Value

December 31, 2025:

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

Treasury securities and obligations of U.S.

Government agencies

$ ( 486,976 )

Obligations of states and political subdivisions

4 unchanged sentences

Redeemable preferred stock

Total fixed maturity

securities available for sale

Total fixed maturity securities available for sale

$ 382,401,293

4 unchanged sentences

Common stock:

Industrial, miscellaneous

and all other

Industrial, miscellaneous and all other

$ ( 332,937 )

Total equity securities

at estimated fair value

Total equity securities at estimated fair value

$ ( 332,937 )

Mortgage loans held for investment at amortized

Mortgage loans held for investment at amortized cost:

Residential construction

4 unchanged sentences

Net discounts

Total mortgage loans

held for investment

Total mortgage loans held for investment

$ 322,435,385

Real estate held for investment - net of

accumulated depreciation:

Total real estate

held for investment

Real estate held for investment - net of accumulated depreciation:

Total real estate held for investment

$ 214,897,130

Real estate held for sale:

Total real estate

held for sale

Other investments and policy loans at amortized

Total real estate held for sale

Other investments and policy loans at amortized cost:

Insurance assignments

1 unchanged sentence

Other investments

Allowance for credit

losses for insurance assignments

Allowance for credit losses for insurance assignments

( 1,676,468 )

Total policy loans and

other investments

Accrued investment

Total policy loans and other investments

Accrued investment income

Total investments

$ 1,038,862,460

(1) Gross unrealized losses are net

of allowance for credit losses

(2) Includes $ 553,900 of Membership

stock and $ 1,851,000 of Activity stock due to short-term advances and letters of credit.

(1) Gross unrealized

losses are net of allowance for credit losses

(2) Includes $ 581,600

of Membership stock and $ 64,900 of Activity stock due to short-term advances and letters of credit.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

were no investments in fixed maturity securities or equity securities, aggregated by issuer, of more than 10% of shareholders’

equity (before net unrealized gains and losses on equity securities and fixed maturity securities) as of September 30, 2025, other than

investments issued or guaranteed by the United States Government.

equity (before net unrealized gains and losses on equity securities and fixed maturity securities) as of March 31, 2026, other than investments

issued or guaranteed by the United States Government.

Maturity Securities

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

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

The fair values of fixed maturity securities that are actively traded are based on quoted

market prices.

of March 31, 2026, and December 31, 2025.

The fair values of fixed maturity securities that are actively traded are based on quoted market

For fixed maturity securities that are not actively traded, fair values are estimated using values obtained from independent

3 unchanged sentences

with the fair value of the related fixed maturity securities.

Schedule of Fair Value of Fixed Maturity Securities

September 30, 2025

Treasury securities and obligations

of Fair Value of Fixed Maturity Securities

Unrealized Losses for Less than Twelve Months

Unrealized Losses for More than Twelve Months

Total Unrealized Loss

Combined Fair Value

March 31, 2026

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities

Corporate securities including public utilities

Mortgage-backed securities

2 unchanged sentences

December 31, 2025

Treasury securities and obligations of

Treasury securities and obligations of U.S.

Government agencies

2 unchanged sentences

Mortgage-backed securities

$ 122,136,098

Redeemable preferred stock

$ 106,054,507

holdings were comprised of 359 securities with fair values aggregating 94.1 % of the aggregate amortized cost as of September 30, 2025,

compared to 706 securities with fair values aggregating 94.9 % of the aggregate amortized cost as of December 31, 2024.

A credit loss

provision of $ 45,882 and of $ 20,342 have been recognized for the three-month periods ended September 30, 2025, and 2024, respectively.

A credit loss provision of $ 111,875 and of $ 100,053 have been recognized for the nine-month periods ended September 30, 2025, and 2024,

respectively.

Credit losses are included in gains (losses) on investments and other assets on the condensed consolidated statements of

Other unrealized losses for which no credit loss was recognized are primarily the result of increases in interest rates.

holdings were comprised of 506 securities with fair values aggregating 94.6 % of the aggregate amortized cost as of March 31, 2026, compared

to 338 securities with fair values aggregating 93.6 % of the aggregate amortized cost as of December 31, 2025.

A credit loss provision

of $ 96,547 and of $ 86,307 have been recognized for the three-month periods ended March 31, 2026, and 2025, respectively.

Credit losses

are included in gains (losses) on investments and other assets on the condensed consolidated statements of earnings.

Other unrealized

losses for which no credit loss was recognized are primarily the result of increases in interest rates.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

42 unchanged sentences

Quality Indicators

on the NAIC securities designations, the Company had 98.5 % and 97.7 % of its fixed maturity securities rated investment grade as of September

on the NAIC securities designations, the Company had 98.4 % and 98.5 % of its fixed maturity securities rated investment grade as of March

31, 2026, and December 31, 2025, respectively.

1 unchanged sentence

fixed maturity securities available for sale, excluding redeemable preferred stock.

Schedule of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation

of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation

March 31, 2026

December 31, 2025

NAIC Designation

Estimated Fair

$ 188,389,332

7 unchanged sentences

following tables present a roll forward of the Company’s allowance for credit losses on fixed maturity securities available for

sale for the three-month periods ended September 30, 2025, and 2024:

Schedule of Allowance for Credit Losses on Fixed Maturity Securities Available for Sale

securities and

obligations of

of states and

Months Ended September 30, 2025

securities and

obligations of

of states and

Beginning balance - June 30, 2025

Additions for credit losses

not previously recorded

Change in allowance on

securities with previous allowance

Reductions for securities

sold during the period

Reductions for securities

with credit losses due to intent to sell

Write-offs charged against

the allowance

of amounts previously written off

Ending Balance - September 30, 2025

Three Months Ended September 30, 2024

securities and

obligations of

and political

backed securities

Beginning balance - June 30, 2024

Additions for credit losses

not previously recorded

Change in allowance on

securities with previous allowance

Reductions for securities

sold during the period

Reductions for securities

with credit losses due to intent to sell

Write-offs charged against

the allowance

of amounts previously written off

Ending Balance - September 30, 2024

sale for the three-month periods ended March 31, 2026, and 2025:

of Allowance for Credit Losses on Fixed Maturity Securities Available for Sale

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Mortgage-backed securities

Three Months Ended March 31, 2026

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Mortgage-backed securities

Beginning balance - December 31, 2025

Additions for credit losses not previously recorded

Change in allowance on securities with previous allowance

Reductions for securities sold during the period

Reductions for securities with credit losses due to intent to sell

Write-offs charged against the allowance

Recoveries of amounts previously written off

Ending Balance - March 31, 2026

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Mortgage-backed securities

Three Months Ended March 31, 2025

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Mortgage-backed securities

Beginning balance - December 31, 2024

Additions for credit losses not previously recorded

Change in allowance on securities with previous allowance

Reductions for securities sold during the period

Reductions for securities with credit losses due to intent to sell

Write-offs charged against the allowance

Recoveries of amounts previously written off

Ending Balance - March 31, 2025

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

2) Investments (Continued)

following tables present a roll forward of the Company’s allowance for credit losses on fixed maturity securities available for

sale for the nine-month periods ended September 30, 2025, and 2024:

Months Ended Sepember 30, 2025

securities and

obligations of

and political

backed securities

Beginning balance - December 31, 2024

Additions for credit losses

not previously recorded

Change in allowance on

securities with previous allowance

Reductions for securities

sold during the period

Reductions for securities

with credit losses due to intent to sell

Write-offs charged against

the allowance

of amounts previously written off

Ending Balance - September 30, 2025

Months Ended Sepember 30, 2024

securities and

obligations of

and political

backed securities

Beginning balance - December 31, 2023

Additions for credit losses

not previously recorded

Change in allowance on

securities with previous allowance

Reductions for securities

sold during the period

Reductions for securities

with credit losses due to intent to sell

Write-offs charged against

the allowance

of amounts previously written off

Ending Balance - September 30, 2024

table below presents the amortized cost and the estimated fair value of fixed maturity securities available for sale as of September

table below presents the amortized cost and the estimated fair value of fixed maturity securities available for sale as of March 31,

2026, by contractual maturity.

Actual or expected maturities may differ from contractual maturities because certain securities afford

the issuer the right to call or prepay its obligations.

Schedule of Investments Classified by Contractual Maturity Date

the issuer the right to call or prepay their obligations.

of Investments Classified by Contractual Maturity Date

Estimated Fair

Due in 1 year

6 unchanged sentences

$ 367,565,925

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Investments (Continued)

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

Schedule of Major Categories of Net Investment Income

September 30,

of Major Categories of Net Investment Income

Three Months Ended

Proceeds from sales

3 unchanged sentences

on deposit with life insurance regulatory authorities as required by law were as follows:

Schedule of Assets on Deposit With Life Insurance

September 30, 2025

Fixed maturity securities available

for sale at estimated fair value

of Assets on Deposit with Life Insurance

March 31, 2026

December 31, 2025

Fixed maturity securities available for sale at estimated fair value

Other investments

2 unchanged sentences

held in trust related to third-party reinsurance agreements were as follows:

September 30, 2025

March 31, 2026

December 31, 2025

Fixed maturity securities available

for sale at estimated fair value

Fixed maturity securities available for sale at estimated fair value

Other investments

Cash and cash equivalents

Total assets on deposit

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

2) Investments (Continued)

Company, through two of its life insurance subsidiaries, is a member of the Federal Home Loan Banks of Des Moines and Dallas (“FHLBs”).

1 unchanged sentence

These pledged securities are used as collateral for any FHLB cash advances.

As of September 30, 2025, the Company owed $ 21,000,000 to the FHLBs for advances, which is included in Bank and other loans payable on

the condensed consolidated balance sheets.

The Company received $ 69,000,000 in advances and repaid $ 48,000,000 of these advances during

the nine months ended September 30, 2025.

September 30, 2025

As of March 31, 2026, the Company owed nil to the FHLBs for advances.

Amounts owed, if any, are included in Bank and other loans payable

on the condensed consolidated balance sheets.

The Company did not receive or repay any advances during the three months ended March 31,

March 31, 2026

December 31, 2025

Fixed maturity securities available

for sale at estimated fair value

Fixed maturity securities available for sale at estimated fair value

Total assets pledged as collateral

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Investments (Continued)

Estate Held for Investment and Held for Sale

13 unchanged sentences

The Company generally acquires commercial real estate in connection with company acquisitions

or that are in regions expected to have high growth in employment and population and that provide operational efficiencies.

or those that are in regions that are expected to have high growth in employment and population and that provide operational efficiencies.

Company currently owns and operates six commercial properties in two states.

4 unchanged sentences

class diversification.

aggregate net book value of commercial real estate serving as collateral for bank loans was $ 116,012,235 and $ 119,889,846 as of September

aggregate net book value of commercial real estate serving as collateral for bank loans was $ 113,348,613 and $ 114,683,175 as of March

31, 2026, and December 31, 2025, respectively.

The associated bank loan carrying values totaled $ 94,597,809 and $ 96,007,488 as of September

The associated bank loan carrying values totaled $ 93,638,639 and $ 94,120,446 as of March

31, 2026, and December 31, 2025, respectively.

the three- and nine-month periods ended September 30, 2025, and 2024, 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.

the three-month periods ended September 30, 2025, and 2024, the Company recorded depreciation expense on commercial real estate held

for investment of $ 1,432,750 and $ 1,420,367 , respectively, and of $ 4,287,687 and $ 4,366,462 during the nine-month periods ended September

30, 2025, and 2024, respectively.

Commercial real estate held for investment is stated at cost and is depreciated over the estimated

useful life, primarily using the straight-line method.

Depreciation is included in net investment income on the condensed consolidated

statements of earnings.

the three-month periods ended March 31, 2026, and 2025, 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.

the three-month periods ended March 31, 2026, and 2025, the Company recorded depreciation expense on commercial real estate held for

investment of $ 1,433,507 and $ 1,422,016 , respectively.

Commercial real estate held for investment is stated at cost and is depreciated

over the estimated useful life, primarily using the straight-line method.

Depreciation is included in net investment income on the condensed

consolidated statements of earnings.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

2) Investments (Continued)

Company’s commercial real estate held for investment is summarized as follows as of the respective dates indicated:

Schedule of Commercial Real Estate Investment

Square Footage

of Commercial Real Estate Investment

Net Book Value

Total Square Footage

March 31, 2026

December 31, 2025

March 31, 2026

December 31, 2025

$ 119,835,765

3 unchanged sentences

(1) Includes Center53

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Investments (Continued)

Company’s commercial real estate held for sale is summarized as follows as of the respective dates indicated:

Net Book Value

March 31, 2026

December 31, 2025

Mississippi (1)

(1) Consists of approximately 93 acres

of undeveloped land

(1) Consists of approximately

93 acres of undeveloped land

Real Estate Owned and Occupied by the Company

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

As of September 30, 2025, real estate

owned and occupied by the Company is summarized as follows:

As of March 31, 2026, real estate owned

and occupied by the Company is summarized as follows:

of Real Estate Owned and Occupied by the Company

Business Segment

Square Footage

Footage Occupied by the Company

433 Ascension Way, Floors 4, 5

and 6, Salt Lake City, UT - Center53 Building 2 (1)

Corporate Offices, Life Insurance,

Cemetery/Mortuary Operations, and Mortgage Operations and Sales

Approximate Square Footage

Square Footage Occupied by the Company

433 Ascension Way, Floors 4, 5 and 6, Salt Lake City, UT - Center53 Building 2 (1)

Corporate Offices, Life Insurance, Funeral Home/Cemetery Operations, and Mortgage Operations and Sales

1818 Marshall Street, Shreveport, LA (2) (3)

Life Insurance Operations

812 Sheppard Street, Minden, LA (2) (3)

Life Insurance Sales

(1) Included in real

estate held for investment on the condensed consolidated balance sheets

(2) Included in property

and equipment on the condensed consolidated balance sheets

Included in real estate held for investment on the condensed consolidated balance sheets

Included in property and equipment on the condensed consolidated balance sheets

Listed for sale

6 unchanged sentences

Once developed, finished lots are sold to builder partners and others.

the three- and nine-month periods ended September 30, 2025, and 2024 the Company did not record any impairment losses on residential

real estate held for investment.

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

consolidated statements of earnings.

the three-month periods ended September 30, 2025, and 2024, the Company recorded depreciation expense on residential real estate held

for investment of $ 2,732 and $ 2,653 , respectively, and $ 8,139 and $ 7,958 during the nine-month periods ended September 30, 2025, and

2024, respectively.

Residential real estate held for investment is stated at cost and is depreciated over the estimated useful life,

primarily using the straight-line method.

Depreciation is included in net investment income on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Investments (Continued)

the three-month periods ended March 31, 2026, and 2025 the Company recorded impairment losses of $ 35,651 and nil on residential real

estate held for sale.

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

the three-month periods ended March 31, 2026, and 2025, the Company recorded depreciation expense on residential real estate held for

investment of $ 2,718 and $ 2,676 , respectively.

Residential real estate held for investment is stated at cost and is depreciated over

the estimated useful life, primarily using the straight-line method.

Depreciation is included in net investment income on the condensed

consolidated statements of earnings.

Company’s residential real estate held for investment is summarized as follows as of the respective dates indicated:

Schedule of Residential Real Estate Investment

of Residential Real Estate Investment

Net Book Value

March 31, 2026

December 31, 2025

$ 114,491,810

(1) Includes multiple

residential subdivision development projects, refer to the following tables.

residential subdivision development projects, refer to the following table

Company also invests in residential subdivision developments.

1 unchanged sentence

residential subdivision development projects in Utah:

March 31, 2026

December 31, 2025

Lots developed

Lots to be developed

$ 114,330,346

Company’s residential real estate held for sale is summarized as follows as of the respective dates indicated:

Net Book Value

March 31, 2026

December 31, 2025

net book value of foreclosed residential real estate included in residential real estate held for sale was $ 1,235,017 and $ 1,270,669

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

as of March 31, 2026, and December 31, 2025, respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

2) Investments

Loans Held for Investment

11 unchanged sentences

of the geographic region in which the debtors do business or are employed.

As of September 30, 2025, the Company had 59 %, 8 %, 6 %, 6 %,

and 4 %, of its mortgage loans from borrowers located in the states of Utah, Florida, Arizona, California, and Texas, respectively.

of December 31, 2024, the Company had 56 %, 8 %, 9 %, and 6 % of its mortgage loans from borrowers located in the states of Utah, Florida,

Arizona, and Texas, respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Investments (Continued)

following table presents the distribution of the Company’s mortgage loans held for investment across the various states.

of Mortgage Loans Held for Investment

Residential Construction

As of March 31, 2026:

As of December 31, 2025:

loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, charge-offs, premiums, discounts,

9 unchanged sentences

requires that loans not exceed 80% of the fair market value of the respective loan collateral.

For loans of more than 80% of the fair

market value of the respective loan collateral, additional collateral or mortgage insurance by an approved third-party insurer is generally

Loans that exceed 80% of the fair market

value of the respective loan collateral require additional collateral or mortgage insurance by an approved third-party insurer.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

2) Investments (Continued)

of Allowance for Credit Losses

6 unchanged sentences

a mortgage loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and reverse any

interest income that had been accrued.

Given this policy, the Company does not measure a credit loss allowance on accrued interest receivable.

Accrued interest receivable is included in accrued investment income on the condensed consolidated balance sheets.

Payments received

for mortgage loans on a non-accrual status are recognized when received.

The interest income recognized from payments received for mortgage

loans on a non-accrual status was immaterial.

interest income that had been accrued and the fair value is reassessed.

Accrual of interest resumes if a mortgage loan is brought current.

Interest not accrued

on these loans totaled approximately $ 1,043,517 and $ 244,000 as of September 30, 2025, and December 31, 2024, respectively.

Given this policy, the Company does not measure a credit loss allowance on accrued interest receivable, which is included in accrued

investment income on the condensed consolidated balance sheets.

Payments received for mortgage loans on a non-accrual status are recognized

when received.

The interest income recognized from payments received for mortgage loans on a non-accrual status was immaterial.

income not accrued on these loans totaled approximately $ 1,315,892 and $ 1,042,325 as of March 31, 2026, and December 31, 2025, respectively.

Company measures expected credit losses based on the fair value of the collateral when the Company determines that foreclosure is probable.

When a mortgage loan becomes delinquent, the Company proceeds to foreclose.

Once foreclosed, the property is classified as real estate held for investment or held for sale.

determine the allowance for credit losses, the Company has segmented its mortgage loans held for investment by loan type.

The Company’s

loan types are commercial, residential, and residential construction.

The inherent risks within the portfolio vary depending upon the

loan type as follows:

Once foreclosed, the property is classified as real estate

held for investment or held for sale.

determine the allowance for credit losses, the Company has segmented its mortgage loans held for investment into the following loan types:

commercial, residential, and residential construction.

The inherent risks within each loan type vary as follows:

- Underwritten in accordance with the Company’s policies to determine the borrower’s ability to repay the obligation as agreed.

3 unchanged sentences

ability to repay.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Investments (Continued)

loans are evaluated for credit loss by analyzing common metrics that are predictors for future credit losses such as debt service coverage

1 unchanged sentence

The fair value of the underlying collateral is based on a third-party appraisal of the property at origination of the loan.

value is assessed if the loan becomes 90 days delinquent.

The Company uses these metrics to pool similar loans.

The allowance for credit

losses is based on estimates, historical experience, probability of loss, value of the underlying collateral, and other factors that

affect the collectability of the loan.

The Company applies a future loss factor to the outstanding balance of each group to arrive at

the allowance for credit losses.

uses these metrics to pool similar loans.

The allowance for credit losses is based on estimates, historical experience, probability of

loss, value of the underlying collateral, and other factors that affect the collectability of the loan.

The Company applies a future

loss factor to the outstanding balance of each group to arrive at the allowance for credit losses.

— These loans are secured by first and second mortgages on single-family dwellings.

The borrower’s ability to repay is sensitive

to the life events and the general economic condition of the region.

Where LTV exceeds 80%, the loan is generally guaranteed by private

mortgage insurance, the FHA, or VA.

to life events and the general economic condition of the region.

Where LTV exceeds 80%, the loan is generally guaranteed by private mortgage

insurance, the FHA, or VA.

loans are evaluated for credit loss by using relevant available information from both internal and external sources.

15 unchanged sentences

project and the ability of the borrower to secure long-term financing.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

2) Investments (Continued)

Additionally,

3 unchanged sentences

availability of long-term or construction financing, and interest rate sensitivity.

Company has commitments to fund existing construction and land development loans pursuant to the various loan agreements.

31, 2026, the Company’s commitments were approximately $ 193,773,996 for these loans, of which $ 152,238,001 had been funded.

Company advances funds in accordance with the loan agreements once the work has been completed, and an independent inspection is made.

3 unchanged sentences

Maturities range between six and eighteen months.

The Company has

commitments to fund existing construction and land development loans pursuant to the various loan agreements.

As of September 30, 2025,

the Company’s commitments were approximately $ 221,215,527 for these loans, of which $ 168,880,381 had been drawn.

construction mortgage loans are evaluated for credit loss by considering historical activity and current housing market trends to arrive

2 unchanged sentences

at least annually or as loan losses or market trends require.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Investments (Continued)

following table presents a roll forward of the allowance for credit losses as of the dates indicated:

Schedule of Allowance for Loan Losses

Beginning balance - June 30, 2025

Change in provision for

credit losses (1)

Ending balance - September 30, 2025

Beginning balance - June 30, 2024

Change in provision for

credit losses (1)

( 1,095,485 )

Ending balance - September 30, 2024

of Allowance for Loan Losses

Three Months Ended

Residential Construction

Beginning balance - December 31, 2025

Change in provision for

credit losses (1)

Ending balance - September 30, 2025

Change in provision for credit losses (1)

Ending balance - March 31, 2026

Beginning balance - December 31, 2024

Change in provision for

credit losses (1)

( 1,143,422 )

( 1,095,485 )

Ending balance - September 30, 2024

(1) Included in other

expenses on the condensed consolidated statements of earnings

Change in provision for credit losses (1)

Ending balance - March 31, 2025

(1) Included in other expenses on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

following table presents the aging of mortgage loans held for investment by loan type as of the dates indicated:

Schedule of Aging of Mortgage Loans

September 30,

of Aging of Mortgage Loans

March 31, 2026

30-59 days past due

60-89 days past due

Over 90 days past due (1)

process of foreclosure (1)

mortgage loans

In process of foreclosure (1)

Total past due

Total mortgage loans

Allowance for credit losses

1 unchanged sentence

( 2,553,360 )

Unamortized deferred loan

Unamortized deferred loan fees, net

( 1,173,134 )

( 1,664,276 )

discounts, net

mortgage loans held for investment

Unamortized discounts, net

Net mortgage loans held for investment

$ 149,053,960

4 unchanged sentences

Over 90 days past due (1)

process of foreclosure (1)

mortgage loans

In process of foreclosure (1)

Total past due

Total mortgage loans

Allowance for credit losses

( 1,368,121 )

Unamortized deferred loan

( 2,588,918 )

Unamortized deferred loan fees, net

( 1,283,049 )

discounts, net

mortgage loans held for investment

( 1,995,795 )

Unamortized discounts, net

Net mortgage loans held for investment

$ 156,744,272

$ 322,435,385

(1) Interest income

9 unchanged sentences

aggregate unpaid principal balance of commercial mortgage loans by credit quality indicator and origination year was as follows as of

September 30, 2025:

March 31, 2026:

of Commercial and Residential Mortgage Loans By Credit Quality Indicator

Credit Quality

Credit Quality Indicator

Less than 65%

3 unchanged sentences

December 31, 2025:

Credit Quality

Less than 65%

10 unchanged sentences

aggregate unpaid principal balance of residential mortgage loans by credit quality indicator and origination year was as follows as of

September 30, 2025:

Credit Quality

March 31, 2026:

Credit Quality Indicator

Performance Indicators:

9 unchanged sentences

Non-performing (1)

(1) Includes residential mortgage loans

in the process of foreclosure of $ 3,942,392

(1) Includes residential

mortgage loans in the process of foreclosure of $ 616,430

Less than 65%

9 unchanged sentences

aggregate unpaid principal balance of residential construction mortgage loans by credit quality indicator and origination year was as

follows as of September 30, 2025:

Schedule of Residential Construction Mortgage Loans

Credit Quality

follows as of March 31, 2026:

of Residential Construction Mortgage Loans

Credit Quality Indicator

Performance Indicators:

7 unchanged sentences

follows as of December 31, 2025:

Credit Quality

Credit Quality Indicator

Performance Indicators:

14 unchanged sentences

balance sheets:

Schedule of Aging of Insurance Assignments

September 30, 2025

of Aging of Insurance Assignments

March 31, 2026

December 31, 2025

12 unchanged sentences

following table presents a roll forward of the allowance for credit losses for insurance assignments as of the dates indicated:

Schedule of Allowance for Credit Losses

Beginning balance - June 30, 2025

Change in provision for

credit losses (1)

Ending balance - September 30, 2025

Beginning balance - June 30, 2024

Change in provision for

credit losses (1)

Ending balance - September 30, 2024

of Allowance for Credit Losses for Insurance Assignments

Three Months Ended

Beginning balance - December 31, 2025

Change in provision for

credit losses (1)

Ending balance - September 30, 2025

Change in provision for credit losses (1)

Ending balance - March 31, 2026

Beginning balance - December 31, 2024

Change in provision for

credit losses (1)

Ending balance - September 30, 2024

(1) Included in other

expenses on the condensed consolidated statements of earnings

Change in provision for credit losses (1)

Ending balance - March 31, 2025

(1) Included in other expenses on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

Interest Entities (“VIE”)

Company has a 50 % ownership interest in three VIEs;

HHH Real Estate LLC (“HHH”), SN Oquirrh LLC (“Oquirrh”),

and SN Towns LLC (“Towns”).

Company has 50 % ownership interests in three VIEs:

HHH Real Estate LLC (“HHH”), SN Oquirrh LLC (“Oquirrh”), and

SN Towns LLC (“Towns”).

These entities hold and develop single family lots for residential construction.

In accordance

with the operating agreements for these entities, net profits or losses are allocated to the members in accordance with their ownership

The investments in HHH, Oquirrh and Towns are accounted for under the equity method of accounting.

The carrying value of the

equity investment in HHH was $ 11,163,125 and nil at September 30, 2025, and December 31, 2024, respectively, which is included in other

In accordance with

the operating agreements for these entities, net profits and losses are allocated to the members in accordance with their ownership interests.

The investments in all three VIEs are accounted for under the equity method of accounting.

The Company classifies distributions received

using the cumulative earnings approach.

following table presents the carrying value of the investments as of the dates indicated:

of Carrying Value of Investments

March 31, 2026

December 31, 2025

(1) Included in other

investments and policy loans on the condensed consolidated balance sheets

The carrying value of the equity investment in Oquirrh was

$ 870,063 and $ 1,500,000 at September 30, 2025, and December 31, 2024, respectively, which is included in other investments and policy

loans on the condensed consolidated balance sheets.

The carrying value of the equity investment in Towns was $ 2,614,037 and $ 4,063,537

at September 30, 2025, and December 31, 2024, respectively.

$ 1,445,769 and $ 1,939,269 of which at September 30, 2025, and December 31,

2024, respectively, is included in restricted assets and $ 1,168,268 and $ 2,124,268 of which at September 30, 2025, and December 31, 2024,

respectively, is included in cemetery perpetual care trust investments on the condensed consolidated balance sheets.

(2) Out of these totals,

$ 1,155,507 and $ 1,467,058 of which at March 31, 2026, and December 31, 2025, respectively, were included in restricted assets and $ 1,202,531

and $ 1,189,558 of which at March 31, 2026, and December 31, 2025, respectively, were included in cemetery perpetual care trust investments

on the condensed consolidated balance sheets

Company has determined that HHH, Oquirrh and Towns are VIEs for which the Company is not the primary beneficiary for the following reasons:

4 unchanged sentences

the Company’s investments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Investments (Continued)

Related Earnings

1 unchanged sentence

from investments and other assets:

Schedule of Gain (Loss) on Investments

Months Ended September 30,

of Gain (Loss) on Investments

Three Months Ended March 31,

Fixed maturity securities:

Gross realized

Gross realized gains

Gross realized losses

1 unchanged sentence

Equity securities:

Gains (losses) on securities

Unrealized gains on securities

held at the end of the period

Mortgage loans held for investment:

Gross realized gains

Gross realized losses

( 1,161,364 )

Gains on securities sold

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

Real estate held for investment and sale:

3 unchanged sentences

Gross realized gains

realized losses

Gross realized losses

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

using the specific identification method.

realized gains and losses include gains and losses from cemetery perpetual care trust investments and the restricted assets of cemeteries

and mortuaries and totaled $ 74,328 in net losses and $ 213,979 in net gains for the three-month periods ended March 31, 2026 and 2025,

respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Investments (Continued)

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

using the specific identification method.

realized gains and losses includes gains and losses from cemetery perpetual care trust investments and the restricted assets of cemeteries

and mortuaries and totaled $ 711,436 and $ 1,140,136 in net gains for the three-month periods ended September 30, 2025 and 2024, respectively,

and of $ 1,196,591 and $ 1,519,487 in net gains for the nine-month periods ended September 30, 2025 and 2024, respectively.

categories of net investment income were as follows:

Fixed maturity securities available

Three Months Ended March 31,

Fixed maturity securities available for sale

Equity securities

8 unchanged sentences

( 4,119,967 )

( 14,420,029 )

( 12,005,256 )

Net investment income

investment income includes income earned from cemetery perpetual care trust investments and the restricted assets of cemeteries and mortuaries

and totaled $ 319,480 and $ 393,811 for the three-month periods ended September 30, 2025, and 2024, respectively, and $ 686,952 and $ 1,798,170

for the nine-month periods ended September 30, 2025, and 2024, respectively.

and totaled $ 207,132 and $ 146,838 for the three-month periods ended March 31, 2026, and 2025, respectively.

investment income on real estate consists primarily of rental revenue.

3 unchanged sentences

investment income consists of the following:

Schedule of Accrued Investment Income

September 30, 2025

Fixed maturity securities available

of Accrued Investment Income

March 31, 2026

December 31, 2025

Fixed maturity securities available for sale

Equity securities

3 unchanged sentences

Cash and cash equivalents

Total accrued investment

Total accrued investment income

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

10 unchanged sentences

of Aggregate Fair Value Loans Held for Sale

September 30, 2025

March 31, 2026

December 31, 2025

8 unchanged sentences

of Mortgage Fee Income for Loans Held for Sale

Three Months Ended March 31,

Interest income

2 unchanged sentences

Change in fair value of loans held for sale

Provision for loan

( 1,603,988 )

Provision for loan loss reserve

Mortgage fee income

17 unchanged sentences

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

March 31, 2026

December 31, 2025

Balance, beginning of period

2 unchanged sentences

Charge-offs, net of recaptured amounts

( 1,157,960 )

Balance, end of period

2 unchanged sentences

Company maintains reserves for estimated losses on current production volumes.

For the nine-month period ended September 30, 2025, $ 616,524

For the three-month period ended March 31, 2026, $ 170,996

in reserves were added at a rate of 3.5 basis points per loan, the equivalent of $ 350 per $ 1,000,000 in loans originated.

For the nine-month

period ended September 30, 2024, $ 729,734 in reserves were added at a rate of 4.2 basis points per loan, the equivalent of $ 420 per $ 1,000,000

For the three-month

period ended March 31, 2025, $ 183,034 in reserves were added at a rate of 3.5 basis points per loan, the equivalent of $ 350 per $ 1,000,000

in loans originated.

4 unchanged sentences

31, 2026 (Unaudited)

Stock Compensation Plans

Company has three active equity incentive plans (the “2013 Plan”, the “2014 Director Plan” and the “2022

Plan” or “the Plans”).

based compensation expense for stock options issued of $ 310,165 and $ 195,431 has been recognized for these Plans for the three-month

periods ended September 30, 2025, and 2024, respectively, and $ 919,868 and $ 577,613 has been recognized for these Plans for the nine-month

periods ended September 30, 2025, and 2024, respectively, and is included in personnel expenses on the condensed consolidated statements

As of September 30, 2025, the total unrecognized compensation expense related to the options issued was $ 238,128 which is

expected to be recognized over the remaining vesting period.

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

The Company estimates

the expected life of the options using the simplified method.

Future volatility is estimated based upon the weighted historical volatility

of the Company’s Class A common stock over a period equal to the expected life of the options.

The risk-free interest rate for

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.

activity of the Plans during the nine-month period ended September 30, 2025, is summarized as follows:

Schedule of Activity of Stock Option Plans

Class A Shares

Average Exercise Price (2)

Class C Shares

Average Exercise Price (2)

Outstanding at December 31, 2024

Adjustment for the effect of stock dividends

Outstanding at September 30, 2025

As of September 30, 2025:

Options exercisable

As of September 30, 2025:

Available options for

Weighted average contractual term of options

outstanding at September 30, 2025

Weighted average contractual term of options

exercisable at September 30, 2025

Aggregated intrinsic value of options

outstanding at September 30, 2025 (1)

Aggregated intrinsic value of options

exercisable at September 30, 2025 (1)

(1) The Company used

a stock price of $ 8.67 as of September 30, 2025 to derive intrinsic value.

(2) Adjusted for the

effect of annual stock dividends.

consist of the following:

of Receivable

March 31, 2026

December 31, 2025

Contracts with customers

Receivables from sales agents

Insurance premiums due

Total receivables

Allowance for credit losses

( 1,523,072 )

( 1,428,672 )

Net receivables

Company records an allowance for credit losses for its receivables in accordance with GAAP.

following table presents a roll forward of the allowance for credit losses as of the dates indicated:

of Allowance for Credit Losses

Three Months Ended

Beginning balance - December 31, 2025

Change in provision for credit losses (1)

Ending balance - March 31, 2026

Beginning balance - December 31, 2024

Change in provision for credit losses (1)

Ending balance - March 31, 2025

(1) Included in other

expenses on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2026 (Unaudited)

Stock Compensation Plans (Continued)

activity of the Plans during the nine-month period ended September 30, 2024, is summarized as follows:

Class A Shares

Average Exercise Price (2)

Class C Shares

Average Exercise Price (2)

Outstanding at December 31, 2023

Adjustment for the effect of stock dividends

Outstanding at September 30, 2024

As of September 30, 2024:

Options exercisable

As of September 30, 2024:

Available options for

Weighted average contractual term of options

outstanding at September 30, 2024

Weighted average contractual term of options

exercisable at September 30, 2024

Aggregated intrinsic value of options

outstanding at September 30, 2024 (1)

Aggregated intrinsic value of options

exercisable at September 30, 2024 (1)

(1) The Company used

a stock price of $ 9.20 as of September 30, 2024 to derive intrinsic value.

(2) Adjusted for the

effect of annual stock dividends.

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 nine-month periods ended September 30, 2025, and 2024 was $1,357,776 and $290,159,

respectively.

Receivables (Continued)

with Customers

Company reports revenues from contracts with customers pursuant to ASC No.

606, Revenue from Contracts with Customers .

about Performance Obligations and Contract Balances

Company’s funeral home and cemetery segment sells a variety of goods and services to customers in both at-need and pre-need situations.

Due to the timing of the fulfillment of the obligation, revenue is deferred until that obligation is fulfilled.

Company’s two types of future obligations are as follows:

Merchandise and Service Revenue :

All pre-need merchandise and service revenue are deferred, and the funds are placed in trust

until the need arises;

the merchandise is received, or the service is performed.

The trust is then relieved, and the revenue and commissions

are recognized.

Pre-need contracts are required to be paid in full prior to a customer using a good or service from a pre-need contract.

Goods and services from pre-need contracts can be transferred when paid in full from one owner to another.

In such cases, the Company

will act as an agent in transferring the requested goods and services.

The transfer of goods and services does not fulfill the contract

and revenue remains deferred.

Specialty Merchandise Revenue :

At-need specialty merchandise revenue consists of customizable merchandise ordered from manufacturers

such as markers and bases.

When specialty merchandise is ordered, it can take time to manufacture and deliver the product.

deferred until the at-need merchandise is received.

payment does not constitute fulfillment of the contract.

Goods or services are deferred until such a time the service is performed, or

merchandise is received.

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

Contract Balances

Receivables (1)

Contract Asset

Contract Liability

Opening (December 31, 2025)

Closing (March 31, 2026)

Increase/(decrease)

Contract Balances

Receivables (1)

Contract Asset

Contract Liability

Opening (December 31, 2024)

Closing (December 31, 2025)

Increase/(decrease)

(1) 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-month periods ended March 31, 2026,

and 2025 was $ 1,723,991 and $ 1,159,212 , respectively.

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

from the timing difference between the Company’s performance and the customer’s payment.

Disaggregation

following table disaggregates revenue for the Company’s funeral home and cemetery contracts:

of Revenues of the Cemetery and Mortuary Contracts

Three Months Ended

Major goods/service lines

mortuary and cemetery sales

Timing of Revenue Recognition

Goods transferred at a point in time

Services transferred at a point in time

mortuary and cemetery sales

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2026 (Unaudited)

Stock Compensation Plans (Continued)

Stock Units (“RSUs”)

based compensation expense for RSUs issued of $ 10,076 and $ 895 has been recognized under these plans for the three-month periods ended

September 30, 2025, and 2024, respectively, and $ 30,012 and $ 2,666 has been recognized under these plans for the nine-month periods ended

September 30, 2025, and 2024, and is included in personnel expenses on the condensed consolidated statements of earnings.

The fair value

of each RSU granted is determined by the Company’s stock price on the date of the grant.

As of September 30, 2025, the total unrecognized

compensation expense related to the RSUs issued was $ 7,286 , which is expected to be recognized over the remaining vesting period.

of the RSUs during the nine-month period ended September 30, 2025, is summarized as follows:

Schedule of Activity Restricted Stock Units

Class A Shares

Average Grant Date Fair Value

Non-vested at December 31, 2024

Non-vested at September 30, 2025

Available RSUs for future

of the RSUs during the nine-month period ended September 30, 2024, is summarized as follows:

Class A Shares

Average Grant Date Fair Value

Non-vested at December 31, 2023

Non-vested at September 30, 2024

Available RSUs for future

Restricted Assets

Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection

with its pre-need sales for its funeral home and cemetery segment.

Additionally,

restricted cash represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans,

funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction

development projects.

Additionally, the Company elected to maintain its medical benefit fund without change from the prior year and has

included this amount as a component of restricted cash.

These restricted cash items are for the Company’s life insurance and mortgage

assets as of March 31, 2026, are summarized as follows:

of Restricted Assets in Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

March 31, 2026:

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

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Total fixed maturity securities available for sale

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other

$ ( 504,294 )

Total equity securities at estimated fair value

$ ( 504,294 )

Mortgage loans held for investment at amortized cost:

Residential construction

Allowance for credit losses

Total mortgage loans held for investment

Other investments

Cash and cash equivalents (1)

Accrued investment income

Total restricted assets

(1) Including cash

and cash equivalents of $ 8,965,571 for the life insurance and mortgage segments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2026 (Unaudited)

Earnings Per Share

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

In accordance with GAAP, the basic and diluted earnings

per share were calculated as follows:

Schedule of Earnings Per Share, Basic and Diluted

September 30,

weighted-average shares outstanding

Effect of dilutive securities:

Employee stock options

weighted-average shares outstanding

Basic net earnings per share

Diluted net earnings per share

the nine-month periods ended September 30, 2025, and 2024, there were 403,514 and nil anti-dilutive 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.

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

Restricted Assets (Continued)

assets as of December 31, 2025, are summarized as follows:

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

December 31, 2025:

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

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Total fixed maturity securities available for sale

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other

$ ( 344,319 )

Total equity securities at estimated fair value

$ ( 344,319 )

Mortgage loans held for investment at amortized cost:

Residential construction

Allowance for credit losses

Total mortgage loans held for investment

Other investments

Cash and cash equivalents (1)

Accrued investment income

Total restricted assets

(1) Including cash

and cash equivalents of $ 8,383,847 for the life insurance and mortgage segments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Restricted Assets (Continued)

Maturity Securities

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

of March 31, 2026, and December 31, 2025.

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

maturity securities.

Schedule of Fair Value of Fixed Maturity Securities

Unrealized Losses for Less than Twelve Months

Unrealized Losses for More than Twelve Months

Total Unrealized Loss

At March 31, 2026

Obligations of states and political subdivisions

Corporate securities including public utilities

Total unrealized losses

At December 31, 2025

Obligations of states and political subdivisions

Corporate securities including public utilities

Total unrealized losses

holdings were comprised of three securities with fair values aggregating 98.4 % of the aggregate amortized cost as of March 31, 2026.

Relevant holdings were comprised of two securities with fair values aggregating 99.4 % of the aggregate amortized cost as of December

No credit losses have been recognized for the three-month periods ended March 31, 2026, and 2025, since the unrealized losses

are primarily the result of increases in interest rates.

See Note 2 for additional information regarding the Company’s evaluation

of the allowance for credit losses for fixed maturity securities available for sale.

table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of March 31, 2026,

by contractual maturity.

Actual or expected maturities may differ from contractual maturities because certain securities afford the issuer

the right to call or prepay their obligations.

of Investments Classified by Contractual Maturity Date

Estimated Fair

Due in 1 year

Due in 2-5 years

Due in 5-10 years

Due in more than 10 years

Notes 2 and 17 for additional information regarding restricted assets.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligation

law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment

rights for cemeteries that have established an endowment care trust.

These endowment care trusts are defined as Variable Interest Entities

pursuant to GAAP.

The Company is the primary beneficiary of these trusts, as it absorbs both the losses and any expenses associated with

The Company has consolidated cemetery endowment care trust investments with a corresponding amount recorded as Cemetery Perpetual

Care Obligation in the accompanying consolidated balance sheets .

components of cemetery perpetual care investments and obligation as of March 31, 2026, are as follows:

of Investments and Obligation

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

March 31, 2026:

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

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Total fixed maturity securities available for sale

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other

$ ( 172,761 )

Total equity securities at estimated fair value

$ ( 172,761 )

Mortgage loans held for investment at amortized cost:

Residential construction

Allowance for credit losses

Total mortgage loans held for investment

Other investments

Cash and cash equivalents

Accrued investment income

Total cemetery perpetual care trust investments

Cemetery perpetual care obligation

$ ( 5,998,538 )

Trust investments in excess of trust obligations

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligation (Continued)

components of cemetery perpetual care investments and obligation as of December 31, 2025, are as follows:

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

December 31, 2025:

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

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Total fixed maturity securities available for sale

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other

$ ( 169,485 )

Total equity securities at estimated fair value

$ ( 169,485 )

Mortgage loans held for investment at amortized cost:

Residential construction

Allowance for credit losses

Total mortgage loans held for investment

Cash and cash equivalents

Other investments

Accrued investment income

Total cemetery perpetual care trust investments

Cemetery perpetual care obligation

$ ( 5,918,776 )

Trust investments in excess of trust obligations

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligation (Continued)

Maturity Securities

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

of March 31, 2026, and December 31, 2025.

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

Unrealized Losses for Less than Twelve Months

Unrealized Losses for More than Twelve Months

Total Unrealized Loss

March 31, 2026

Obligations of states and political subdivisions

December 31, 2025

Obligations of states and political subdivisions

holdings were comprised of two securities with fair values aggregating 98.4 % of the aggregate amortized cost as of March 31, 2026.

holdings were comprised of two securities with fair values aggregating 97.5 % of aggregate amortized cost as of December 31, 2025.

credit losses have been recognized for the three-month periods ended March 31, 2026, and 2025, since the unrealized losses are primarily

the result of increases in interest rates.

See Note 2 for additional information regarding the Company’s evaluation of the allowance

for credit losses for fixed maturity securities available for sale.

table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of March 31, 2026,

by contractual maturity.

Actual or expected maturities may differ from contractual maturities because certain securities afford the issuer

the right to call or prepay their obligations.

of Investments Classified by Contractual Maturity Date

Estimated Fair

Due in 1 year

Due in 2-5 years

Due in 5-10 years

Due in more than 10 years

Notes 2 and 17 for additional information regarding cemetery perpetual care trust investments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Servicing Rights

Company initially records its MSRs at fair value.

After being initially recorded at fair value, MSRs backed by mortgage loans are accounted

for using the amortization method.

Amortization expenses are included in other expenses on the condensed consolidated statements of earnings.

MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of, the estimated future net servicing

income of the underlying financial assets.

Company periodically assesses MSRs for impairment.

Impairment occurs when the current fair value of the MSR falls below the carrying

value (carrying value is the amortized cost reduced by any related valuation allowance).

If MSRs are impaired, the impairment is recognized

in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Company periodically reviews the various loan strata to determine whether the value of the MSRs in each stratum is impaired and likely

If the Company deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs

for that stratum to its estimated recoverable value is charged to the valuation allowance.

following table presents the MSR activity:

of Mortgage Servicing Rights

March 31, 2026

December 31, 2025

Amortized cost:

Balance before valuation allowance at beginning of year

MSR additions resulting from loan sales (1)

Amortization (2)

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

Balance before valuation allowance at end of period

Valuation allowance for impairment of MSRs:

Balance at beginning of year

Application of valuation allowance to write down MSRs with other than

temporary impairment

Balance at end of period

Mortgage servicing rights, net

Estimated fair value of MSRs at end of period

(1) Included in mortgage

fee income on the condensed consolidated statements of earnings

(2) Included in other

expenses on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Mortgage Servicing Rights (Continued)

table below summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost.

This projection

was developed using the Company’s assumptions in its March 31, 2026, valuation of MSRs.

The assumptions used in the following table

are likely to change as market conditions, portfolio composition and borrower behavior change, causing both actual and projected amortization

levels to change over time.

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

Estimated MSR Amortization

Company collected the following contractual service fee income and late fee income as reported in other revenues on the condensed consolidated

statement of earnings.

of Other Revenues

Three Months Ended

Contractual service fees

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

of Unpaid Principal Balances of the Servicing Portfolio

March 31, 2026

December 31, 2025

Servicing UPB

$ 358,018,607

$ 361,632,543

following key assumptions were used in determining MSR value:

of Assumptions Used in Determining MSR Value

March 31, 2026

December 31, 2025

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Deferred Policy and Pre-need Contract Acquisition Costs, Value of Business Acquired, and Unearned Premium Reserve

to Note 1 regarding the adoption of ASU 2018-12.

Policy and Pre-need Contract Acquisition Costs (“DAC”)

following tables show a roll forward for the lines of business that contain DAC balances, along with a reconciliation to the Company’s

total DAC balance:

of Roll Forward for the Lines of Business that Contain DAC Balances

Traditional Life

Fixed Annuities

Universal Life

Accident and Health

Pre-need Contracts

Balance at December 31, 2025

$ 127,639,286

$ 135,978,803

( 2,460,830 )

( 2,865,495 )

Balance at March 31, 2026

$ 129,310,145

$ 137,601,837

Traditional Life

Fixed Annuities

Universal Life

Accident and Health

Pre-need Contracts

Balance at December 31, 2024

$ 118,803,677

$ 127,219,907

Balance, beginning of period

$ 118,803,677

$ 127,219,907

( 2,390,105 )

( 2,673,743 )

Balance at March 31, 2025

$ 121,713,487

$ 130,070,899

Balance, end of period

$ 121,713,487

$ 130,070,899

of Business Acquired (“VOBA”)

following tables show a roll forward for the lines of business that contain VOBA balances, along with a reconciliation to the Company’s

total VOBA balance:

of Roll Forward for the Lines of Business That Contain VOBA Balances

Traditional Life

Fixed Annuities

Universal Life

Accident and Health

Balance at December 31, 2025

Balance at March 31, 2026

Traditional Life

Fixed Annuities

Universal Life

Accident and Health

Balance at December 31, 2024

Balance, beginning of period

Balance at March 31, 2025

Balance, end of period

Premium Reserve

balance and the changes in Unearned Premium Reserve are as follows:

of Balance and the Changes in Unearned Premium Reserve

Three Months Ended March 31,

Universal Life

Balance, beginning of period

Amortization (1)

Unearned premium reserve, end of period

(1) Included in premiums

and other considerations on the condensed consolidated statements of earnings.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Derivative Instruments

Banking Derivatives

Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the

time a loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded.

Managing price risk is complicated by the fact that the ultimate percentage of loan commitments that will be exercised (i.e., the number

of loans that will be funded) fluctuates.

The probability that a loan will not be funded, or the loan application is denied or withdrawn

within the terms of the commitment is driven by several factors, particularly the change, if any, in mortgage rates following the issuance

of the loan commitment.

general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall.

This is due primarily to the

relative attractiveness of current mortgage rates compared to the applicant’s committed rate.

The probability that a loan will

not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or

correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance), product type and the application

approval status.

The Company has developed fallout estimates using historical data that consider all the variables, as well as renegotiations

of rate and point commitments that tend to occur when mortgage rates fall.

These fallout estimates are used to estimate the number of

loans that the Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most

current data.

Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted

mortgage-backed securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the

probability that the mortgage loan will fund within the terms of the commitment net of estimated commission expense.

The change in fair

value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of related expenses.

issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage

Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of

mortgage loans that will be funded within the terms of the commitments.

Sale Commitments

Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments.

A forward commitment protects the Company from losses on sales of the loans arising from the exercise of the loan commitments.

expects these types of commitments will experience changes in fair value in contrast to changes in fair value of the loan commitments,

thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

net changes in fair value of loan commitments and forward sale commitments are shown in current earnings as a component of mortgage fee

income on the consolidated statements of earnings.

Mortgage banking derivatives are shown in other assets and other liabilities and accrued

expenses on the condensed consolidated balance sheets.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Derivative Instruments (Continued)

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

Schedule of Derivative Assets at Fair Value

March 31, 2026

December 31, 2025

Balance Sheet Location

Notional Amount

Asset Fair Value

Liability Fair Value

Notional Amount

Asset Fair Value

Liability Fair Value

Derivatives not designated as hedging instruments:

Loan commitments

Other assets and Other liabilities

$ 182,729,508

$ 132,887,592

$ 182,729,508

$ 132,887,592

table below presents the gains (losses) on derivatives.

There were no gains or losses reclassified from accumulated other comprehensive

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

Three Months Ended March 31,

Classification

Loan commitments

Mortgage fee income

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Future Policy Benefits and Unpaid Claims

Company establishes liabilities for amounts payable under insurance policies.

These liabilities are comprised of traditional and limited-payment

contracts and associated deferred profit liabilities, unpaid claims, and additional insurance liabilities.

Also, refer to Note 1 regarding

the adoption of ASU 2018-12.

following table provides a reconciliation of future policy benefits and unpaid claims and the related receivable from reinsurers to the

condensed consolidated balance sheets.

Schedule of Liability for Future Policy Benefits, by Product Segment

March 31, 2026

December 31, 2025

Traditional and limited-payment life

$ 570,378,453

$ 581,389,399

Deferred profit liability - traditional and limited-payment life

Payout annuities

Accident and health

Other policyholder funds

Reported but unpaid claims

Incurred but not reported claims

Gross future policy benefits and unpaid claims

$ 790,945,507

$ 799,706,946

Receivable from reinsurers

Traditional and limited-payment life

Deferred profit liability - traditional and limited-payment life

Accident and health

Reported but unpaid claims

Incurred but not reported claims

Total receivable from reinsurers

Net future policy benefits and unpaid claims

$ 780,577,538

$ 789,326,820

Net unpaid claims

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Future Policy Benefits and Unpaid Claims (Continued)

and Limited-Payment Life

following table summarizes the balance of and changes in the liability for future policy benefits for traditional and limited-payment

of Balances of and Changes in the Liability for Future Policy Benefits

Three Months Ended March 31,

Present Value of Expected Net Premiums:

Balance, beginning of year

$ 250,450,302

$ 252,828,339

Beginning balance at original discount rate

Effect of changes in cash flow assumptions

Effect of actual variances from expected experience (1)

( 3,405,648 )

( 3,096,557 )

Adjusted beginning of year balance

Interest accrual

Net premiums collected (2)

( 12,686,388 )

( 12,953,003 )

Ending balance at original discount rate

Effect of changes in discount rate assumptions

( 3,606,047 )

( 3,196,885 )

Balance, end of period

$ 245,635,020

$ 256,021,391

Present Value of Expected Future Policy Benefits:

Balance, beginning of year

$ 831,839,700

$ 800,812,826

Beginning balance at original discount rate

Effect of changes in cash flow assumptions

Effect of actual variances from expected experience (1)

( 2,090,326 )

( 1,872,267 )

Adjusted beginning of year balance

Interest accrual

Benefit payments

( 17,940,051 )

( 17,455,096 )

Ending balance at original discount rate

Effect of changes in discount rate assumptions

( 53,598,477 )

( 46,816,274 )

Balance, end of period

$ 816,013,473

$ 816,145,226

Net liability for future policy benefits, pre-flooring

$ 570,379,368

$ 560,112,641

Flooring impact, end of period

Net liability for future policy benefits, post-flooring

Receivable from reinsurers

Net liability for future policy benefits, after reinsurance

$ 561,324,747

$ 550,861,463

(1) For the three months

ended March 31, 2026, and 2025, the net effect of actual variances from expected experience was primarily due to lapses.

Actual mortality

and surrenders were close to expected.

(2) Net premiums collected

represent the portion of gross premiums collected from policyholders that is used to fund expected benefit payments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Future Policy Benefits and Unpaid Claims (Continued)

following table summarizes the amount of undiscounted and discounted expected gross premiums and expected future benefit payments for

traditional and limited-payment life:

of Amount of Undiscounted and Discounted Expected Gross Premiums and Expected Future Benefit Payments

Three Months Ended March 31,

Undiscounted expected future benefit payments

$ 1,932,292,660

$ 1,935,169,657

Discounted expected future benefit payments (at original discount rate)

Discounted expected future benefit payments (at current discount rate)

Undiscounted expected future gross premiums

$ 809,818,009

$ 839,169,818

Discounted expected future gross premiums (at original discount rate)

Discounted expected future gross premiums (at current discount rate)

following table summarizes the amount of gross premiums and interest accretion recognized in insurance premiums and other considerations

and policyholder benefits and claims, respectively, in the condensed consolidated statements of earnings for traditional and limited-payment

of Gross Premiums and Interest Accretion

Three Months Ended

Gross premiums

Interest accretion

following table summarizes the weighted-average interest rates for traditional and limited-payment life:

of Weighted-average Interest Rates

As of March 31,

Interest accretion rate

Current discount rate

following table summarizes the weighted-average duration of the liability for traditional and limited-payment life:

of Weighted Average Duration of the Liability

As of March 31,

Duration of the liability in years (at original discount rate)

Duration of the liability in years (at current discount rate)

the three months ended March 31, 2026 and 2025, respectively, there were immaterial impacts to net earnings for traditional and limited-payment

life, where net premiums exceeded gross premiums for certain issue-year cohorts.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Future Policy Benefits and Unpaid Claims (Continued)

Profit Liability

following table summarizes the balances of and changes in deferred profit liability for traditional and limited-payment life:

of Balances of and Changes in Deferred Profit Liability for Traditional and Limited- Payment Life

Three Months Ended March 31,

Balance, beginning of year

$ 205,802,774

$ 192,278,993

Effect of actual variances from expected experience (1)

( 1,026,648 )

( 1,320,624 )

Adjusted balance, beginning of period

Profits deferred

Interest accrual

( 14,934,255 )

( 14,635,574 )

Other adjustments

Balance, end of period

Receivable from reinsurers

Deferred profit liability, net of reinsurance

$ 207,514,525

$ 194,337,995

(1) For the three months

ended March 31, 2026, and 2025, the net effect of actual variances from expected experience was primarily due to lapses.

Actual mortality

and surrenders were close to expected.

following table provides a roll forward of the Company’s liability for reported but unpaid claims and incurred but not reported

claims, net of the related receivable from reinsurers.

of Liability for Reported but Unpaid Claims and Incurred but not Reported

Accident and Health

Balance at 12/31/2025

15,889,797 (1)

3,602,875 (2)

( 16,474,852 )

( 3,563,861 )

( 20,040,088 )

Balance at 3/31/2026

Accident and Health

Balance at 12/31/2024

16,045,465 (1)

3,208,604 (2)

( 15,559,375 )

( 2,938,897 )

( 18,498,572 )

Balance at 3/31/2025

(1) Included in policyholder

benefits and claims on the condensed consolidated statements of earnings

(2) Released from policyholder

account balances

(3) Included in policyholder

benefits and claims on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Policyholder Account Balances

Company establishes liabilities for policyholder account balances, which are generally equal to the account value, and which include

interest credited.

following table provides a reconciliation of policyholder account balances and the related receivable from reinsurers to the condensed

consolidated balance sheets.

of Reconciliation of Policyholder Account Balances and the Related Receivable from Reinsurers to the Consolidated

Balance Sheets

March 31, 2026

December 31, 2025

Policyholder account balances - fixed annuities

$ 103,029,371

$ 104,233,454

Deferred profit liability - fixed annuities

Policyholder account balances - universal life

Gross policyholder account balances

$ 138,842,575

$ 140,605,750

Receivable from reinsurers

Policyholder account balances - fixed annuities

Total receivable from reinsurers

Net policyholder account balances

$ 135,749,704

$ 137,330,503

following table summarizes the balances and changes in policyholder account balances for the lines of business indicated:

of Balances and Changes in Policyholder Account Balances

Three Months Ended

March 31, 2026

Three Months Ended

March 31, 2025

Universal Life

Fixed Annuities

Universal Life

Fixed Annuities

Balance, beginning of year

$ 104,233,454

$ 105,088,621

Interest credited

Policy charges (1)

Surrenders, withdrawals and benefit payments

( 4,169,578 )

( 3,713,105 )

Balance, end of period

Receivable from reinsurers

Policyholder account balances, net of reinsurance

$ 101,414,357

Weighted-average crediting rate

Net amount at risk (2)

Cash surrender value

(1) Contracts included

in the policyholder account balances are generally charged a premium and/or monthly assessments on the basis of the account balance.

Included in premiums and other considerations on the consolidated statements of earnings.

(2) For those guarantees

of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death

benefit in excess of the current account balance at the balance sheet date

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Policyholder Account Balances (Continued)

following table summarizes the balances of and changes in deferred profit liability for fixed annuities:

of Balances of and Changes in Deferred Profit Liability for Fixed Annuities

Three Months Ended March 31,

Balance, beginning of year

Effect of actual variances from expected experience

Adjusted balance, beginning of period

Profits deferred

Interest accrual

Other adjustments

Balance, end of period

Receivable from reinsurers

Deferred profit liability, net of reinsurance

balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between

rates being credited to policyholders and the respective guaranteed minimums for the lines of business indicated are as follows:

Schedule of Account

Values by Range of Guaranteed Minimum Crediting Rates and the Related Range of Difference

March 31, 2026

Range of Guaranteed Minimum Crediting Rate

At guaranteed minimum

1-50 bps above guaranteed minimum

51-150 bps above guaranteed minimum

Greater than 150 bps above guaranteed minimum

Universal Life

Less than 1.00%

1.00% - 1.99%

2.00% - 2.99%

Greater than 4.00%

Fixed Annuities

Less than 1.00%

1.00% - 1.99%

2.00% - 2.99%

Greater than 4.00%

$ 103,029,371

March 31, 2025

Range of Guaranteed Minimum Crediting Rate

At guaranteed minimum

1-50 bps above guaranteed minimum

51-150 bps above guaranteed minimum

Greater than 150 bps above guaranteed minimum

Universal Life

Less than 1.00%

1.00% - 1.99%

2.00% - 2.99%

Greater than 4.00%

Fixed Annuities

Less than 1.00%

1.00% - 1.99%

2.00% - 2.99%

Greater than 4.00%

$ 104,853,296

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Company follows the procedure of reinsuring risks of more than a specified limit, which ranges from $ 25,000 to $ 100,000 on newly issued

The Company has also assumed various reinsurance agreements through acquisition of life companies.

The Company is ultimately

liable for these reinsured amounts in the event such reinsurers are unable to pay their portion of the claims.

The Company evaluates

the financial condition of reinsurers and monitors the concentration of credit risk.

The Company is also a reinsurer of insurance with

other companies.

July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes provisions that allow for

the immediate expensing of domestic research and development expenses, immediate expensing of certain capital expenditures, and other

changes to the U.S.

taxation of profits derived from foreign operations.

OBBBA did not have a material impact on the Company’s

estimated effective tax rate for 2025.

Company’s overall effective tax rate for the three-month periods ended March 31, 2026 and 2025 was 22.7 % and 22.3 %, respectively,

which resulted in a provision for income taxes of $ 2,050,892 and $ 1,836,598 , respectively.

The Company’s effective tax rate is

higher than the U.S.

federal statutory rate of 21 % due to, among other factors, state taxes as offset by certain state income tax benefits,

along with certain permanent tax adjustments such as meals and entertainment and stock-based compensation.

The increase in the effective

tax rate when compared to the prior year was primarily due to certain permanent tax adjustments that are higher when compared to the

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

tax items in the period in which they occur.

Although the Company believes its tax estimates are reasonable, the Company can make no

assurance that the final tax outcome of these matters will not be different from that which it has reflected in its historical income

tax provisions and accruals.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

following table summarizes the activity in shares of capital stock.

4 unchanged sentences

Conversion of Class C to Class A

Outstanding shares at September 30, 2025

Outstanding shares at March 31, 2026

Outstanding shares at December 31, 2024 (1)

2 unchanged sentences

Vesting of restricted stock units

Conversion of Class C to Class A

Outstanding shares at September 30, 2024

Outstanding shares at March 31, 2025

Outstanding shares, ending

1 unchanged sentence

for the effect of annual stock dividends

Other Comprehensive Income (Loss)

to Note 1 regarding the adoption of ASU 2018-12.

following table summarizes the changes in accumulated other comprehensive income (loss):

of Changes in Accumulated Other Comprehensive Income (Loss)

Three Months Ended March 31,

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

$ ( 4,167,685 )

Amounts reclassified into net earnings

Net unrealized gains (losses) before taxes

( 4,316,311 )

Tax (expense) benefit

( 3,407,329 )

Unrealized gains (losses) on restricted assets (1)

Tax (expense) benefit

Unrealized gains on cemetery perpetual care trust investments (1)

Unrealized gains (losses)

Tax (expense)

Interest rate remeasurement of future policy benefits

( 8,122,845 )

Tax (expense) benefit

( 3,052,578 )

( 6,417,048 )

Other comprehensive income (loss) changes

$ ( 3,362,137 )

(1) Fixed maturity

securities available for sale

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2026 (Unaudited)

Equity (Continued)

following table presents the accumulated balances of other comprehensive income (loss) as of March 31, 2026:

of Accumulated Balances of Other Comprehensive Income

Beginning Balance

December 31, 2025

Change for the period

Ending Balance

March 31, 2026

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

$ ( 3,407,329 )

$ ( 2,654,778 )

Unrealized gains (losses) on restricted assets (1)

Unrealized gains (losses) on cemetery perpetual care trust investments (1)

Interest rate remeasurement of future policy benefits

Other comprehensive income

(1) Fixed maturity

securities available for sale

following table presents the accumulated balances of other comprehensive income (loss) as of December 31, 2025:

Beginning Balance

December 31, 2024

Change for the period

Ending Balance

December 31, 2025

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

$ ( 7,147,384 )

Unrealized gains (losses) on restricted assets (1)

Unrealized gains (losses) on cemetery perpetual care trust investments (1)

Interest rate remeasurement of future policy benefits

$ ( 12,865,848 )

Other comprehensive income (loss)

$ ( 4,957,506 )

(1) Fixed maturity

securities available for sale

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2026 (Unaudited)

Earnings Per Share

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

In accordance with GAAP, the basic and diluted earnings

per share were calculated as follows:

Schedule of Earnings Per Share, Basic and Diluted

Three Months Ended

Basic weighted-average shares outstanding

Effect of dilutive securities:

Employee stock options

Unvested restricted stock units

Diluted weighted-average shares outstanding

Basic net earnings per share

Diluted net earnings per share

the three-month periods ended March 31, 2026, and 2025, there were 402,994 and 382,700 anti-dilutive 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.

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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Business Segment Information

1 unchanged sentence

Company has identified three operating and reportable business segments:

life insurance, cemetery and mortuary, and mortgage.

The Company’s

life insurance segment revenue consists of life insurance premiums;

fees earned on factored life insurance policies and net investment

income derived from investing policyholder and surplus funds.

Its expenses include operating expenses to collect insurance premiums and

insurance policy receivables, and administer claims, and commissions payable related to the sale of insurance products sold by the Company’s

independent agency force.

The Company’s cemetery and mortuary segment revenue consists of fees from the sale of at-need cemetery

and mortuary merchandise, services at its mortuaries and cemeteries, pre-need sales of cemetery spaces and the net investment income

from investing surplus cash.

Its expenses include operating expenses to maintain mortuary and cemetery operations and commissions related

to the sale of insurance products sold by the Company’s agents.

The Company’s mortgage segment revenue consists of residential

mortgage origination fee income and mortgage interest income.

Its expenses include normal operating expenses related to the origination

and sale of residential mortgage loans, loan servicing, and warehouse interest and fee expenses.

life insurance, funeral home and cemetery, and mortgage.

Company’s life insurance segment revenue consists of life insurance premiums;

fees earned on factored life insurance policies and

net investment income derived from investing policyholder and surplus funds.

Its expenses include operating expenses to collect insurance

premiums and insurance policy receivables, and administer claims, and commissions payable related to the sale of insurance products sold

by the Company’s independent agency force.

The Company’s funeral home and cemetery segment revenue consists of fees from

the sale of at-need cemetery and funeral home merchandise, services at its funeral homes and cemeteries, pre-need sales of cemetery spaces

and the net investment income from investing surplus cash.

Its expenses include operating expenses to maintain funeral home and cemetery

operations and commissions related to the sale of insurance products sold by the Company’s agents.

The Company’s mortgage

segment revenue consists of residential mortgage origination fee income and mortgage interest income.

Its expenses include normal operating

expenses related to the origination and sale of residential mortgage loans, loan servicing, and warehouse interest and fee expenses.

and Cost Sharing Policies

22 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Business Segment Information (Continued)

Schedule of Revenues and Expenses by Reportable Segment

For the Three Months Ended September 30, 2025

From external sources:

Revenue from external customers

Net investment income

Gains on investments and other assets

Other revenues

Intersegment revenues

Total segment revenues

Elimination of intersegment revenues

( 2,206,115 )

Total consolidated revenues

Death benefits

Surrenders and other policy benefits

Increase in future policy benefits

Amortization of deferred policy and pre-need acquisition costs and value of business acquired

Selling, general and administrative expenses:

Rent and rent related

Depreciation on property and equipment

Cost related to funding mortgage loans

Data processing and IT related (1)

Premium taxes on insurance premiums and other considerations (1)

Other segment items (1)(2)

Intersegment expenses (3)

Interest expense

Costs of goods and services sold-mortuaries and cemeteries

Income tax expense

Segment net earnings

in other expenses on the condensed consolidated statements of earnings.

Data processing and IT related expenses includes

various software subscriptions, maintenance, consulting, support and storage fees.

each reportable segment, other segment items includes:

Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible

assets, and certain overhead expenses.

Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes,

amortization of intangible assets, and certain overhead expenses.

Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions,

amortization expense of mortgage servicing rights, and certain overhead expenses.

each reportable segment, intersegment expenses includes:

Insurance - mortgage servicing fees and interest expense.

Cemetery/Mortuary

- rent expense, data processing and IT related expenses, and interest expense.

- rent expense and interest expense.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Business Segment Information (Continued)

For the Three Months Ended September 30, 2024

From external sources:

Revenue from external customers

Net investment income

Gains (losses) on investments and other assets

( 1,093,530 )

Other revenues

Intersegment revenues

Total segment revenues

Elimination of intersegment revenues

( 2,289,697 )

Total consolidated revenues

Death benefits

Surrenders and other policy benefits

Increase in future policy benefits

Amortization of deferred policy and pre-need acquisition costs and value of business acquired

Selling, general and administrative expenses:

Rent and rent related

Depreciation on property and equipment

Cost related to funding mortgage loans

Data processing and IT related (1)

Premium taxes on insurance premiums and other considerations (1)

Other segment items (1)(2)

Intersegment expenses (3)

Interest expense

Costs of goods and services sold-mortuaries and cemeteries

Income tax expense

Segment net earnings

Included in other expenses on the condensed consolidated statements of earnings.

Data processing and IT related expenses includes

various software subscriptions, maintenance, consulting, support and storage fees.

For each reportable segment, other segment items includes:

Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of

intangible assets, and certain overhead expenses.

Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes,

amortization of intangible assets, and certain overhead expenses.

Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions,

amortization expense of mortgage servicing rights, and certain overhead expenses.

For each reportable segment, intersegment expenses includes:

Life Insurance - mortgage servicing fees and interest expense.

Cemetery/Mortuary - rent expense, data processing and IT related expenses, and interest expense.

Mortgage - rent expense and interest expense.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Business Segment Information (Continued)

For the Nine Months Ended September 30, 2025

the Three Months Ended March 31, 2026

From external sources:

Revenue from external customers

$ 194,978,634

Revenue from external

Net investment income

Gains on investments and other assets

Gains (losses) on investments

and other assets

Other revenues

Intersegment revenues

Total segment revenues

Elimination of intersegment revenues

segment revenues

of intersegment revenues

( 1,679,288 )

Total consolidated revenues

Death benefits

Surrenders and other policy benefits

Increase in future policy benefits

Amortization of deferred policy and pre-need acquisition costs and value of business acquired

Selling, general and administrative expenses:

Rent and rent related

Depreciation on property and equipment

Cost related to funding mortgage loans

Data processing and IT related (1)

Premium taxes on insurance premiums and other considerations (1)

Other segment items (1)(2)

consolidated revenues

Policyholder benefits and

Amortization of deferred policy

and pre-need acquisition costs and value of business acquired

Selling, general and administrative

on property and equipment

to funding mortgage loans

Data processing

and IT related (1)

taxes on insurance premiums and other considerations (1)

segment items (1)(2)

Intersegment expenses (3)

Interest expense

Costs of goods and services sold-mortuaries and cemeteries

Income tax expense (benefit)

Costs of goods and services

sold-mortuaries and cemeteries

tax expense (benefit)

Segment net earnings (loss)

$ 1,412,106,259

Segment assets

$ 108,161,913

$ 1,602,037,081

$ 1,598,481,116

Elimination of intersegment assets

of intersegment assets

( 21,253,140 )

Total consolidated assets

consolidated assets

$ 1,580,783,941

Expenditures for long-lived assets

Included in other expenses on the condensed consolidated statements

Data processing and IT related expenses includes various software subscriptions, maintenance, consulting, support

and storage fees.

For each reportable segment, other segment items includes:

Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization

for long-lived assets

Included in other expenses

on the condensed consolidated statements of earnings.

Data processing and IT related expenses includes various software subscriptions,

maintenance, consulting, support and storage fees.

For each reportable segment,

other segment items includes:

Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible

assets, and certain overhead expenses.

Home and Cemetery - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes, amortization

of intangible assets, and certain overhead expenses.

Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes,

amortization of intangible assets, and certain overhead expenses.

Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees dues and subscriptions,

amortization expense of mortgage servicing rights, and certain overhead expenses.

each reportable segment, intersegment expenses includes:

- bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions, amortization

expense of mortgage servicing rights, and certain overhead expenses.

For each reportable segment,

intersegment expenses includes:

Insurance - mortgage servicing fees and interest expense.

Cemetery/Mortuary

- rent expense, data processing and IT related expenses, and interest expense.

- rent expense and interest expense.

Home and Cemetery - rent expense, data processing and IT related expenses, and interest expense.

Mortgage - rent expense and interest

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Business Segment Information (Continued)

For the Nine Months Ended September 30, 2024

the Three Months Ended March 31, 2025

From external sources:

Revenue from external customers

$ 193,030,779

Revenue from external

Net investment income

Gains on investments and other assets

( 1,058,594 )

Gains on investments and other

Other revenues

Intersegment revenues

Total segment revenues

Elimination of intersegment revenues

segment revenues

of intersegment revenues

( 1,525,627 )

Total consolidated revenues

Death benefits

Surrenders and other policy benefits

Increase in future policy benefits

Amortization of deferred policy and pre-need acquisition costs and value of business acquired

Selling, general and administrative expenses:

Rent and rent related

Depreciation on property and equipment

Cost related to funding mortgage loans

Data processing and IT related (1)

Premium taxes on insurance premiums and other considerations (1)

Other segment items (1)(2)

consolidated revenues

Policyholder benefits and

Amortization of deferred policy

and pre-need acquisition costs and value of business acquired

Selling, general and administrative

on property and equipment

to funding mortgage loans

Data processing

and IT related (1)

taxes on insurance premiums and other considerations (1)

segment items (1)(2)

Intersegment expenses (3)

Interest expense

Costs of goods and services sold-mortuaries and cemeteries

Income tax expense (benefit)

Costs of goods and services

sold-mortuaries and cemeteries

tax expense (benefit)

Segment net earnings (loss)

( 1,511,121 )

Segment assets

$ 1,360,748,004

$ 100,073,999

Elimination of intersegment assets

$ 100,755,930

Total consolidated assets

$ 1,561,577,933

Expenditures for long-lived assets

in other expenses on the condensed consolidated statements of earnings.

Data processing and IT related expenses includes various

software subscriptions, maintenance, consulting, support and storage fees.

each reportable segment, other segment items includes:

Life Insurance - bad debt, insurance expenses,

professional service expenses, state insurance department fees, amortization of intangible assets, and certain overhead expenses.

Cemetery/Mortuary - bad debt, insurance expenses,

professional service expenses, maintenance and utility expenses, property taxes, amortization of intangible assets, and certain overhead

Mortgage - bad debt, insurance expenses, professional

service expenses, business license and registration fees, dues and subscriptions, amortization expense of mortgage servicing rights,

and certain overhead expenses.

For each reportable segment, intersegment expenses includes:

Life Insurance - mortgage servicing fees and interest expense.

Cemetery/Mortuary - rent expense, data processing and IT related expenses, and interest expense.

Mortgage - rent expense and interest expense.

of intersegment assets

( 30,644,368 )

consolidated assets

$ 1,530,933,565

for long-lived assets

Included in other expenses

on the condensed consolidated statements of earnings.

Data processing and IT related expenses includes various software subscriptions,

maintenance, consulting, support and storage fees.

For each reportable segment,

other segment items includes:

Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible

assets, and certain overhead expenses.

Home and Cemetery - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes, amortization

of intangible assets, and certain overhead expenses.

- bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions, amortization

expense of mortgage servicing rights, and certain overhead expenses.

For each reportable segment,

intersegment expenses includes:

Insurance - mortgage servicing fees and interest expense.

Home and Cemetery - rent expense, data processing and IT related expenses, and interest expense.

Mortgage - rent expense and interest

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments

9 unchanged sentences

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

Quoted prices for similar assets or liabilities in active markets.

Quoted prices for identical or similar assets or liabilities

in non-active markets;

Valuation models whose inputs are observable, directly or indirectly,

for substantially the full term of the asset or liability.

prices for similar assets or liabilities in active markets.

prices for identical or similar assets or liabilities in non-active markets;

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

28 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

4 unchanged sentences

(when available).

When a quoted market price is not readily available, the Company uses the market price from its last sale of

similar assets.

When a quoted market price is not readily available, the Company uses the market price from its last sale of similar

Fair value is often difficult to determine in volatile markets and may contain significant unobservable inputs.

21 unchanged sentences

properties, the collateral value is estimated by obtaining an independent appraisal.

The appraisal typically considers comparable

sales in the area, property condition, and potential rental income that could be generated (particularly for commercial properties).

For residential construction loans, the collateral is typically incomplete, so the fair value is estimated as the replacement cost using

data from a provider of building cost information to the real estate construction.

The appraisal typically considers comparable sales

in the area, property condition, and potential rental income that could be generated (particularly for commercial properties).

For residential

construction loans, the collateral is typically incomplete, so the fair value is estimated as the replacement cost using data from a

provider of building cost information to the real estate construction.

Real Estate Held for Investment :

5 unchanged sentences

of the properties is as income producing assets and will hold the properties as rental properties, matching the income from the investment

in rental properties with the funds required for estimated future policy benefits.

in rental property with the funds required for estimated future policy benefits.

Accordingly, in addition to an appraisal, the determination

14 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

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 as of September 30, 2025:

their classification in the condensed consolidated balance sheet as of March 31, 2026:

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

Assets accounted for at fair value on a recurring basis

15 unchanged sentences

Derivatives - loan commitments (4)

Total liabilities accounted for at fair value

on a recurring basis

Total liabilities accounted for at fair value on a recurring basis

maturity securities available for sale

2 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

1 unchanged sentence

their classification in the condensed consolidated balance sheet as of December 31, 2025:

Quoted Prices in Active Markets for Identical Assets

Significant Observable Inputs

Significant Unobservable Inputs

Assets accounted for at fair value on a recurring basis

17 unchanged sentences

$ ( 220,605 )

Total liabilities accounted for at fair value

on a recurring basis

Total liabilities accounted for at fair value on a recurring basis

$ ( 220,605 )

4 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

Level 3 assets and liabilities measured at fair value on a recurring basis as of September 30, 2025, the significant unobservable inputs

Level 3 assets and liabilities measured at fair value on a recurring basis as of March 31, 2026, the significant unobservable inputs

used in the fair value measurements were as follows:

2 unchanged sentences

Fair Value at

September 30, 2025

March 31, 2026

Loans held for sale

26 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (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-month period ended September 30, 2025:

three-month period ended March 31, 2026:

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

Loans Held for

Fixed Maturity

Available for Sale

Balance - June 30, 2025

$ 165,876,119

Originations and purchases

Sales, maturities and paydowns

( 642,485,858 )

Total gains (losses):

Included in earnings

( 202,896 )(1)

14,563,996 (1)

Included in other comprehensive income

Balance - September 30, 2025

$ 159,460,525

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

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

three-month period ended September 30, 2024:

Loans Held for

Fixed Maturity

Available for Sale

Balance - June 30, 2024

$ 150,196,416

Originations and purchases

Sales, maturities and paydowns

( 655,088,969 )

Total gains (losses):

Included in earnings

( 179,836 )(1)

14,576,935 (1)

Included in other comprehensive income

Balance - September 30, 2024

$ 142,897,741

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, 2025 (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

nine-month period ended September 30, 2025:

Loans Held for

Fixed Maturity

Available for

Net Loan Commitments

Loans Held for Sale

Fixed Maturity Securities Available for Sale

Balance - December 31, 2025

1 unchanged sentence

Originations and purchases

1,756,289,354

Sales, maturities and paydowns

( 516,712,505 )

Transfer to mortgage loans held for investment

Loans held for sale foreclosed into real estate held for sale

Total gains (losses):

1 unchanged sentence

1,384,727 (1)

9,791,628 (1)

Included in other comprehensive income

Balance - September 30, 2025

Balance - March 31, 2026

$ 137,607,689

2 unchanged sentences

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

nine-month period ended September 30, 2024:

Loans Held for

Fixed Maturity

Available for

three-month period ended March 31, 2025:

Loan Commitments

Held for Sale

Maturity Securities Available for Sale

Balance - December

1 unchanged sentence

Originations and purchases

1,723,036,874

Sales, maturities and paydowns

( 521,382,576 )

Foreclosed into real estate held for sale

Total gains (losses):

1 unchanged sentence

12,149,277 (1)

Included in other comprehensive income

Balance - September 30, 2024

Included in other comprehensive

- March 31, 2025

$ 139,834,226

2 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

Company did not have any financial assets and financial liabilities measured at fair value on a nonrecurring basis as of September 30,

2025, or as of December 31, 2024.

Company did not have any financial assets and financial liabilities measured at fair value on a nonrecurring basis as of March 31, 2026,

or as of March 31, 2025.

Value of Financial Instruments Carried at Other Than Fair Value

3 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 as of September 30, 2025, and December

are not necessarily indicative of the amounts the Company could have realized in a sales transaction as of March 31, 2026, and December

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 September 30, 2025:

are summarized as follows as of March 31, 2026:

Schedule of Financial Instruments Carried at Other Than Fair Value

Carrying Value

Total Estimated Fair Value

Mortgage loans held for investment

4 unchanged sentences

$ 308,962,665

Policy loans (1)

Insurance assignments, net (1)

6 unchanged sentences

$ ( 97,468,978 )

Policyholder account balances (3)

Policyholder account balances - universal life

( 35,289,278 )

1 unchanged sentence

( 35,358,733 )

Future policy benefits - annuities (3)

Policyholder account balances - fixed annuities

( 103,553,297 )

3 unchanged sentences

loans held for investment

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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

1 unchanged sentence

are summarized as follows as of December 31, 2025:

Carrying Value

Total Estimated Fair Value

Mortgage loans held for investment

4 unchanged sentences

$ 324,746,047

Policy loans (1)

Insurance assignments, net (1)

6 unchanged sentences

$ ( 87,490,315 )

Policyholder account balances (3)

Policyholder account balances - universal life

( 35,825,494 )

1 unchanged sentence

( 35,986,392 )

Future policy benefits - annuities (3)

Policyholder account balances - fixed annuities

( 104,780,256 )

3 unchanged sentences

loans held for investment

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

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

23 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

5 unchanged sentences

using current market rates.

Account Balances and Future Policy Benefits-Annuities :

Future policy benefit reserves for interest-sensitive insurance products

are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.

Policy benefits

and claims that are charged to expense include benefit claims incurred in the period of more than related policy account balances.

crediting rates for interest-sensitive insurance products ranged from 1.5 % to 6.5 %.

The fair values for these investment-type insurance

contracts are estimated based on the present value of liability cash flows.

The fair values for the Company’s insurance contracts

other than investment-type contracts are not required to be disclosed.

However, the fair values of liabilities under all insurance contracts

are taken into consideration in the Company’s overall management of interest rate risk, such that the Company’s exposure

to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts.

Derivative Instruments

Banking Derivatives

Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the

time a loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded.

Managing price risk is complicated by the fact that the ultimate percentage of loan commitments that will be exercised (i.e., the number

of loans that will be funded) fluctuates.

The probability that a loan will not be funded, or the loan application is denied or withdrawn

within the terms of the commitment is driven by several factors, particularly the change, if any, in mortgage rates following the issuance

of the loan commitment.

general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall.

This is due primarily to the

relative attractiveness of current mortgage rates compared to the applicant’s committed rate.

The probability that a loan will

not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or

correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance), product type and the application

approval status.

The Company has developed fallout estimates using historical data that consider all the variables, as well as renegotiations

of rate and point commitments that tend to occur when mortgage rates fall.

These fallout estimates are used to estimate the number of

loans that the Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most

current data.

Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted

mortgage-backed securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the

probability that the mortgage loan will fund within the terms of the commitment net of estimated commission expense.

The change in fair

value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of related expenses.

issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage

Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of

mortgage loans that will be funded within the terms of the commitments.

Account Balances :

Policyholder account balances for interest-sensitive insurance products are computed under a retrospective

deposit method and represent policy account balances before applicable surrender charges.

Policy benefits and claims that are charged

to expense include benefit claims incurred in the period of more than related policy account balances.

Interest crediting rates for interest-sensitive

insurance products ranged from 1.5 % to 6.5 %.

The fair values for these investment-type insurance policies are estimated based on the

present value of liability cash flows.

The fair values for the Company’s insurance contracts other than investment-type contracts

are not required to be disclosed.

However, the fair values of liabilities under all insurance contracts are taken into consideration

in the Company’s overall management of interest rate risk, such that the Company’s exposure to changing interest rates is

minimized through the matching of investment maturities with amounts due under insurance policies.

Stock Compensation Plans

Company has three active equity incentive plans (the “2013 Plan”, the “2014 Director Plan” and the “2022

Plan” or “the Plans”).

based compensation expense for stock options issued of $ 463,699 and $ 299,272 has been recognized for these Plans for the three-month

periods ended March 31, 2026, and 2025, respectively, and is included in personnel expenses on the condensed consolidated statements

As of March 31, 2026, the total unrecognized compensation expense related to the options issued was $ 1,233,463 which is

expected to be recognized over the remaining vesting period.

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

The Company estimates

the expected life of the options using the simplified method.

Future volatility is estimated based upon the weighted historical volatility

of the Company’s Class A common stock over a period equal to the expected life of the options.

The risk-free interest rate for

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.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Derivative Instruments (Continued)

Sale Commitments

Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments.

A forward commitment protects the Company from losses on sales of the loans arising from the exercise of the loan commitments.

expects these types of commitments will experience changes in fair value opposite to changes in fair value of the loan commitments, thereby

reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

net changes in fair value of loan commitments and forward sale commitments are shown in current earnings as a component of mortgage fee

income on the consolidated statements of earnings.

Mortgage banking derivatives are shown in other assets and other liabilities and accrued

expenses on the condensed consolidated balance sheets.

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

Schedule of Derivative Assets at Fair Value

September 30, 2025

December 31, 2024

Balance Sheet Location

Notional Amount

Asset Fair Value

Liability Fair Value

Notional Amount

Asset Fair Value

Liability Fair Value

Derivatives not designated as hedging instruments:

Loan commitments

Other assets and Other liabilities

$ 185,579,856

$ 210,597,657

$ 185,579,856

$ 210,597,657

table below presents the gains (losses) on derivatives.

There were no gains or losses reclassified from accumulated other comprehensive

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

Net Amount loss

Net Amount Gain

Three Months Ended September 30,

Nine Months Ended September 30,

Classification

Loan commitments

Mortgage fee income

$ ( 202,896 )

$ ( 179,836 )

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Stock Compensation Plans (Continued)

activity of the Plans during the three-month period ended March 31, 2026, is summarized as follows:

Schedule of Activity of Stock Option Plans

Class A Shares

Weighted Average Exercise Price (2)

Class C Shares

Weighted Average Exercise Price (2)

Outstanding at December 31, 2025

Outstanding at March 31, 2026

As of March 31, 2026:

Options exercisable

As of March 31, 2026:

Available options for future grant

Weighted average contractual term of options

outstanding at March 31, 2026

Weighted average contractual term of options

exercisable at March 31, 2026

Aggregated intrinsic value of options

outstanding at March 31, 2026 (1)

Aggregated intrinsic value of options

exercisable at March 31, 2026 (1)

Company used a stock price of $ 9.48 as of March 31, 2026 to derive intrinsic value.

for the effect of annual stock dividends.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Reinsurance, Commitments and Contingencies

Company follows the procedure of reinsuring risks of more than a specified limit, which ranges from $ 25,000 to $ 100,000 on newly issued

The Company has also assumed various reinsurance agreements through acquisition of life companies.

The Company is ultimately

liable for these reinsured amounts in the event such reinsurers are unable to pay their portion of the claims.

The Company evaluates

the financial condition of reinsurers and monitors the concentration of credit risk.

The Company is also a reinsurer of insurance with

other companies.

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Stock Compensation Plans (Continued)

activity of the Plans during the three-month period ended March 31, 2025, is summarized as follows:

Class A Shares

Weighted Average Exercise Price (2)

Class C Shares

Weighted Average Exercise Price (2)

Outstanding at December 31, 2024

Outstanding at March 31, 2025

As of March 31, 2025:

Options exercisable

As of March 31, 2025:

Available options for future grant

Weighted average contractual term of options

outstanding at March 31, 2025

Weighted average contractual term of options

exercisable at March 31, 2025

Aggregated intrinsic value of options

outstanding at March 31, 2025 (1)

Aggregated intrinsic value of options

exercisable at March 31, 2025 (1)

Company used a stock price of $ 12.10 as of March 31, 2025 to derive intrinsic value.

for the effect of annual stock dividends.

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-month periods ended March 31, 2026, and 2025 were $ 2,449 and $ 1,357,776 ,

respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Stock Compensation Plans (Continued)

Stock Units (“RSUs”)

based compensation expense for RSUs issued of $ 5,431 and $ 9,988 has been recognized under these plans for the three-month periods ended

March 31, 2026, and 2025, respectively, and is included in personnel expenses on the condensed consolidated statements of earnings.

fair value of each RSU granted is determined by the Company’s stock price on the date of the grant.

As of March 31, 2026, the total

unrecognized compensation expense related to the RSUs issued was $ 21,194 , which is expected to be recognized over the remaining vesting

of the RSUs during the three-month period ended March 31, 2026, is summarized as follows:

Schedule of Activity Restricted Stock Units

Class A Shares

Weighted Average Grant Date Fair Value

Non-vested at December 31, 2025

Non-vested at March 31, 2026

Available RSUs for future grant

of the RSUs during the three-month period ended March 31, 2025, is summarized as follows:

Class A Shares

Weighted Average Grant Date Fair Value

Non-vested at December 31, 2024

Non-vested at March 31, 2025

Available RSUs for future grant

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Commitments and Contingencies

Loan Loss Settlements

5 unchanged sentences

Covenants for Mortgage Warehouse Lines of Credit

Company, through its subsidiary SecurityNational Mortgage, has three lines of credit for the purpose of funding mortgage loans-one through

Company, through its subsidiary SecurityNational Mortgage, has three lines of credit agreements for funding mortgage loans held for sale:

one through U.S.

Bank, a second through Western Alliance Bank, and a third through JPMorgan Chase Bank.

The Company anticipates renewing

all agreements in 2026.

Bank warehouse line of credit agreement allows SecurityNational Mortgage to borrow up to $ 15,000,000 .

3 unchanged sentences

The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and a

minimum net income of $ 1 for the quarter.

minimum net loss of $ 2.5 million for the quarter.

Western Alliance Bank warehouse line of credit agreement allows SecurityNational Mortgage to borrow up to $ 25,000,000 .

2 unchanged sentences

The Company is required to

comply with covenants for adjusted tangible net worth, unrestricted cash balance, and a minimum pre-tax income of $ 1 for the year.

comply with covenants for adjusted tangible net worth, unrestricted cash balance, and a minimum pre-tax loss of $ 2.5 million for the

JPMorgan Chase Bank warehouse line of credit agreement allows SecurityNational Mortgage to borrow up to $ 35,000,000 .

3 unchanged sentences

comply with covenants for adjusted tangible net worth, unrestricted cash balance, and a minimum pre-tax income of $ 1 for the year.

agreements for US Bank and JP Morgan Chase Bank warehouse lines of credit include a cross-default provision where certain events

of default under other of SecurityNational Mortgage’s obligations constitute events of default under the warehouse lines of credit.

As 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.

agreements for US Bank and JP Morgan Chase Bank warehouse lines of credit include a cross-default provision where certain events of default

under other of SecurityNational Mortgage’s obligations constitute events of default under the warehouse lines of credit.

March 31, 2026, SecurityNational Mortgage was in compliance with all covenants under its warehouse lines of credit.

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.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

19) Commitments and Contingencies

Covenants for Revolving Lines of Credit and Bank Loans

6 unchanged sentences

financial statements and building specific financial statements under the agreements for each of its bank loans.

As of September 30,

As of March 31, 2026,

the Company was in compliance with all of those debt covenants.

Contingencies and Commitments

Company belongs to a captive insurance group (“the captive group”) for certain casualty insurance, worker compensation

and general liability programs.

Company belongs to a captive insurance group (“the captive group”) for certain casualty insurance, worker compensation and

general liability programs.

The captive group maintains insurance reserves relative to these programs.

The level of exposure from

catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage.

When estimating the insurance

liabilities and related reserves, the captive group considers several factors, which include historical claims experience, demographic

factors, severity factors and valuations provided by independent third-party actuaries.

If actual claims or adverse development of loss

reserves occurs and exceed these estimates, additional reserves may be required from the Company and its subsidiaries.

The estimation

process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred

to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date.

The level of exposure from catastrophic

events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage.

When estimating the insurance liabilities

and related reserves, the captive group considers several factors, which include historical claims experience, demographic factors, severity

factors and valuations provided by independent third-party actuaries.

If actual claims or adverse development of loss reserves occurs

and exceed these estimates, additional reserves may be required from the Company and its subsidiaries.

The estimation process contains

uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported

claims and unreported claims for incidents incurred but not reported as of the balance sheet date.

Company is a defendant in various legal actions arising from the normal conduct of business.

7 unchanged sentences

its financial condition or results of operations.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Mortgage Servicing Rights

Company initially records its MSRs at fair value as discussed in Note 8.

being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method.

Amortization expense

is included in other expenses on the condensed consolidated statements of earnings.

MSR amortization is determined by amortizing the

MSR balance in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

Company periodically assesses MSRs for impairment.

Impairment occurs when the current fair value of the MSR falls below the carrying

value (carrying value is the amortized cost reduced by any related valuation allowance).

If MSRs are impaired, the impairment is recognized

in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Company periodically reviews the various loan strata to determine whether the value of the MSRs in each stratum is impaired and likely

If the Company deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs

for that stratum to its estimated recoverable value is charged to the valuation allowance.

following table presents the MSR activity:

of Mortgage Servicing Rights

September 30,

Amortized cost:

Balance before valuation allowance at beginning of year

MSR additions resulting from loan sales (1)

Amortization (2)

Application of valuation allowance to write down MSRs

with other than temporary impairment

Balance before valuation allowance at end of period

Valuation allowance for impairment of MSRs:

Balance at beginning of year

Application of valuation allowance to write down MSRs

with other than temporary impairment

Balance at end of period

Mortgage servicing rights, net

Estimated fair value of MSRs at end of period

in mortgage fee income on the condensed consolidated statements of earnings

in other expenses on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Mortgage Servicing Rights (Continued)

table below summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost.

This projection

was developed using the Company’s assumptions in its September 30, 2025, valuation of MSRs.

The assumptions used in the following

table are likely to change as market conditions, portfolio composition and borrower behavior change, causing both actual and projected

amortization levels to change over time.

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

Estimated MSR Amortization

Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the condensed consolidated

statement of earnings.

of Other Revenues

September 30,

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

September 30,

Servicing UPB

$ 366,929,184

$ 385,134,774

following key assumptions were used in determining MSR value:

of Assumptions Used in Determining MSR Value

September 30, 2025

December 31, 2024

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Company’s overall effective tax rate for the three month periods ended September 30, 2025 and 2024 was 23.0 % and 22.2 % , respectively,

which resulted in a provision for income taxes of $ 2,337,926 and $ 3,383,238 , respectively, and for the nine month periods ended September

30, 2025 and 2024 was 22.4 % and 22.3 % , respectively, which resulted in a provision for income taxes of $ 5,400,792 and $ 7,646,071 , respectively.

The Company’s effective tax rate is higher than the U.S.

federal statutory rate of 21 % due to, among other factors, state taxes as offset

by certain state income tax benefits, along with certain permanent tax adjustments such as meals and entertainment and stock-based compensation.

The increase in the effective tax rate when compared to the prior year was primarily due to certain permanent tax adjustments that, as

a ratio of lower pre-tax book income, are higher than when compared to the prior year.

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

tax items in the period in which they occur.

Although the Company believes its tax estimates are reasonable, the Company can make no

assurance that the final tax outcome of these matters will not be different from that which it has reflected in its historical income

tax provisions and accruals.

July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes provisions that allow for

the immediate expensing of domestic research and development expenses, immediate expensing of certain capital expenditures, and other

changes to the U.S.

taxation of profits derived from foreign operations.

The Company continues to evaluate the impact the new legislation

will have on its estimated annual effective tax rate and cash tax position;

however, the Company does not expect a material impact to

its estimated effective tax rate in 2025.

Revenues from Contracts with Customers

Company reports revenues from contracts with customers pursuant to ASC No.

606, Revenue from Contracts with Customers .

about Performance Obligations and Contract Balances

Company’s cemetery and mortuary segment sells a variety of goods and services to customers in both at-need and pre-need situations.

Due to the timing of the fulfillment of the obligation, revenue is deferred until that obligation is fulfilled.

Company’s two types of future obligations are as follows:

Merchandise and Service Revenue :

All pre-need merchandise and service revenue are deferred, and the funds are placed in trust

until the need arises;

the merchandise is received, or the service is performed.

The trust is then relieved, and the revenue and commissions

are recognized.

Pre-need contracts are required to be paid in full prior to a customer using a good or service from a pre-need contract.

Goods and services from pre-need contracts can be transferred when paid in full from one owner to another.

In such cases, the Company

will act as an agent in transferring the requested goods and services.

The transfer of goods and services does not fulfill the contract

and revenue remains deferred.

Specialty Merchandise Revenue :

At-need specialty merchandise revenue consists of customizable merchandise ordered from manufacturers

such as markers and bases.

When specialty merchandise is ordered, it can take time to manufacture and deliver the product.

deferred until the at-need merchandise is received.

payment does not constitute fulfillment of the contract.

Goods or services are deferred until such a time the service is performed, or

merchandise is received.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Revenues from Contracts with Customers (Continued)

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

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

Contract Balances

Receivables (1)

Contract Asset

Opening (December 31, 2024)

Closing (September 30, 2025)

Increase/(decrease)

Contract Balances

Receivables (1)

Contract Asset

Opening (December 31, 2023)

Closing (December 31, 2024)

Increase/(decrease)

in Receivables, net on the condensed consolidated balance sheets

amount of revenue recognized and included in the opening contract liability balance for the three-month periods ended September 30, 2025,

and 2024 was $ 1,326,702 and $ 1,320,688 , respectively, and for the nine-month periods ended September 30, 2025, and 2024 was $ 3,650,091

and $ 4,256,184 , respectively.

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

from the timing difference between the Company’s performance and the customer’s payment.

Disaggregation

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

of Revenues of the Cemetery and Mortuary Contracts

Three Months Ended

September 30,

Nine Months Ended

September 30,

Major goods/service lines

Net mortuary and cemetery

Timing of Revenue Recognition

Goods transferred at a point in time

Services transferred at a point in time

Net mortuary and cemetery

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

consist of the following:

of Receivable

September 30,

Contracts with customers

Receivables from sales agents

Total receivables

Allowance for credit losses

( 1,542,731 )

( 1,678,531 )

Net receivables

Company records an allowance for credit losses for its receivables in accordance with GAAP.

following table presents a roll forward of the allowance for credit losses as of the dates indicated:

of Allowance Credit Losses

Beginning balance - June 30, 2025

Change in provision for credit losses (1)

Ending balance - September 30, 2025

Beginning balance - June 30, 2024

Change in provision for credit losses (1)

Ending balance - September 30, 2024

Included in other expenses on the condensed consolidated statements

Beginning balance - December 31, 2024

Change in provision for credit losses (1)

Ending balance - September 30, 2025

Beginning balance - December 31, 2023

Change in provision for credit losses (1)

Ending balance - September 30, 2024

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

Perpetual Care Trust Investments and Obligation

law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment

rights for cemeteries that have established an endowment care trust.

These endowment care trusts are defined as Variable Interest Entities

pursuant to GAAP.

The Company is the primary beneficiary of these trusts, as it absorbs both the losses and any expenses associated with

The Company has consolidated cemetery endowment care trust investments with a corresponding amount recorded as Cemetery Perpetual

Care Obligation in the accompanying consolidated balance sheets .

components of cemetery perpetual care investments and obligation as of September 30, 2025, are as follows:

of Investments and Obligation

Estimated Fair

September 30, 2025:

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

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Total fixed maturity securities available for sale

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other

$ ( 135,365 )

Total equity securities at estimated fair value

$ ( 135,365 )

Mortgage loans held for investment at amortized cost:

Residential construction

Allowance for credit losses

Total mortgage loans held for investment

Other investments

Cash and cash equivalents

Accrued investment income

Total cemetery perpetual care trust investments

Cemetery perpetual care obligation

$ ( 5,838,879 )

Trust investments in excess of trust obligations

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

components of cemetery perpetual care investments and obligation as of December 31, 2024, are as follows:

Estimated Fair

December 31, 2024:

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

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Total fixed maturity securities available for sale

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other

$ ( 226,007 )

Total equity securities at estimated fair value

$ ( 226,007 )

Mortgage loans held for investment at amortized cost:

Residential construction

Allowance for credit losses

Total mortgage loans held for investment

Cash and cash equivalents

Accrued investment income

Total cemetery perpetual care trust investments

Cemetery perpetual care obligation

$ ( 5,642,693 )

Trust investments in excess of trust obligations

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

Maturity Securities

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

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

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

September 30, 2025

Obligations of states and political subdivisions

December 31, 2024

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

holdings were comprised of two securities with fair values aggregating 97.5 % of the aggregate amortized cost as of September 30, 2025.

Relevant holdings were comprised of four securities with fair values aggregating 99.1 % of aggregate amortized cost as of December 31,

No credit losses have been recognized for the three- and nine-month periods ended September 30, 2025, and 2024, since the unrealized

losses are primarily the result of increases in interest rates.

See Note 3 for additional information regarding the Company’s evaluation

of the allowance for credit losses for fixed maturity securities available for sale.

table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of September 30,

2025, by contractual maturity.

Expected maturities may differ from contractual maturities because certain borrowers may have the right

to call or prepay obligations with or without call or prepayment penalties.

of Investments Classified by Contractual Maturity Date

Estimated Fair

Due in 1 year

Due in 2-5 years

Due in 5-10 years

Due in more than 10 years

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection

with its pre-need sales for its cemetery and mortuary segment.

Additionally,

restricted cash represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans,

funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction

development projects.

Additionally, the Company elected to maintain its medical benefit fund without change from the prior year and has

included this amount as a component of restricted cash.

These restricted cash items are for the Company’s life insurance and mortgage

assets as of September 30, 2025, are summarized as follows:

of Restricted Assets in Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds

Estimated Fair

September 30, 2025:

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

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Total fixed maturity securities available for sale

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other

$ ( 337,799 )

Total equity securities at estimated fair value

$ ( 337,799 )

Mortgage loans held for investment at amortized cost:

Residential construction

Allowance for credit losses

Total mortgage loans held for investment

Other investments

Cash and cash equivalents (1)

Accrued investment income

Total restricted assets

Including cash and cash equivalents of $ 12,375,579 for the

life insurance and mortgage segments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

assets as of December 31, 2024, are summarized as follows:

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

December 31, 2024:

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

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Total fixed maturity securities available for sale

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other

$ ( 489,852 )

Total equity securities at estimated fair value

$ ( 489,852 )

Mortgage loans held for investment at amortized cost:

Residential construction

Allowance for credit losses

Total mortgage loans held for investment

Other investments

Cash and cash equivalents (1)

Accrued investment income

Total restricted assets

Including cash and cash equivalents of $ 7,657,958 for the

life insurance and mortgage segments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

Maturity Securities

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

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

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

At September 30, 2025

Obligations of states and political subdivisions

Corporate securities including public utilities

Total unrealized losses

At December 31, 2024

Treasury securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Total unrealized losses

holdings were comprised of four securities with fair values aggregating 98.8 % of the aggregate amortized cost as of September 30, 2025.

Relevant holdings were comprised of 15 securities with fair values aggregating 99.2 % of the aggregate amortized cost as of December 31,

No credit losses have been recognized for the three- and nine-month periods ended September 30, 2025, and 2024, since the unrealized

losses are primarily the result of increases in interest rates.

See Note 3 for additional information regarding the Company’s evaluation

of the allowance for credit losses for fixed maturity securities available for sale.

table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of September 30,

2025, by contractual maturity.

Expected maturities may differ from contractual maturities because certain borrowers may have the right

to call or prepay obligations with or without call or prepayment penalties.

of Investments Classified by Contractual Maturity Date

Estimated Fair

Due in 1 year

Due in 2-5 years

Due in 5-10 years

Due in more than 10 years

Notes 3 and 8 for additional information regarding restricted assets and cemetery perpetual care trust investments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2025 (Unaudited)

Accumulated Other Comprehensive Income (loss)

following table summarizes the changes in accumulated other comprehensive income (loss):

of Changes in Accumulated Other Comprehensive Income (Loss)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Unrealized gains on fixed maturity securities

available for sale

Amounts reclassified into net earnings

Net unrealized gains before taxes

Tax (expense)

( 2,198,474 )

( 2,066,384 )

( 1,824,502 )

Unrealized gains on restricted assets (1)

Tax (expense)

Unrealized gains on cemetery perpetual care

trust investments (1)

Unrealized gains

Tax (expense)

Other comprehensive income changes

Fixed maturity securities available for sale

following table presents the accumulated balances of other comprehensive income (loss) as of September 30, 2025:

of Accumulated Balances of Other Comprehensive Income

December 31, 2024

Change for the

Ending Balance

September 30,

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

$ ( 6,941,915 )

Unrealized gains (losses) on restricted assets (1)

Unrealized gains (losses) on cemetery perpetual

care trust investments (1)

Other comprehensive income (loss)

$ ( 6,951,266 )

Fixed maturity securities available for sale

following table presents the accumulated balances of other comprehensive income (loss) as of December 31, 2024:

Beginning Balance December 31, 2023

Change for the period

Ending Balance December 31,

Unrealized losses on fixed maturity securities

available for sale

$ ( 6,876,629 )

$ ( 6,941,915 )

Unrealized gains (losses) on restricted assets (1)

Unrealized losses on cemetery perpetual

care trust investments (1)

Other comprehensive loss

$ ( 6,885,558 )

$ ( 6,951,266 )

Fixed maturity securities available for sale

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