What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-11 compared with 2025-11-13 · 141 added, 222 removed, 109 unchanged (77% of the section changed)

3 unchanged sentences

life products;

(ii) increased emphasis on the cemetery and mortuary business;

and (iii) capitalizing on an improving housing market by

originating mortgage loans.

(ii) increased emphasis on the funeral home and cemetery business;

and (iii) capitalizing on the housing market by originating

mortgage loans.

Company’s life insurance business includes funeral plans and interest-sensitive life insurance, as well as other traditional life,

9 unchanged sentences

underwriting practices that result in higher mortality costs.

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

30, 2025, and 2024.

following table shows the condensed financial results of the insurance operations for the three-month periods ended March 31, 2026, and

See Note 16 to the condensed consolidated financial statements.

Three months ended September 30,

(in thousands of dollars)

Nine months ended September 30,

Three months ended March 31,

(in thousands of dollars)

% Increase (Decrease)

Revenues from external customers:

7 unchanged sentences

Profitability

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

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

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

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

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

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

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

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

and Mortuary Operations

Company sells mortuary services and products through its eleven mortuaries in Utah and four mortuaries in New Mexico.

The Company also

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

and one cemetery in Santa Fe, New Mexico.

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

services are performed or when the products are delivered.

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

the merchandise is delivered, or services are performed.

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

and land is removed from inventory.

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

September 30, 2025, and 2024.

for the three-month period ended March 31, 2026 decreased due to (a) a $924,000 decrease in insurance premiums and other considerations,

(b) a $914,000 decrease in net investment income, (c) a $211,000 decrease in other revenues, and (d) a $66,000 increase in amortization

of deferred policy acquisition costs, which were partially offset by (i) a $916,000 decrease in policyholder benefits and claims, (ii)

a $435,000 decrease in selling, general and administrative expenses, (iii) a $203,000 increase in intersegment revenue, (iv) a $122,000

decrease in income tax expense, (v) a $92,000 increase in gains on investments and other assets, (vi) a $49,000 decrease in intersegment

expenses, and (vii) a $14,000 decrease in interest expense.

Home and Cemetery Operations

Company sells funeral home services and products through its eleven funeral homes in Utah and four funeral homes in New Mexico.

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

California, and one cemetery in Santa Fe, New Mexico.

At-need funeral home and cemetery product sales and services are recognized as

revenue when the services are performed or when the products are delivered.

Pre-need funeral home and cemetery product sales and services

are deferred until the merchandise is delivered, or services are performed.

Revenue for pre-need cemetery land sales is recognized at

the time of sale, and land is removed from inventory.

following table shows the condensed financial results of the funeral home and cemetery operations for the three-month periods ended March

31, 2026, and 2025.

See Note 16 to the condensed consolidated financial statements.

Three months ended September 30,

(in thousands of dollars)

Nine months ended September 30,

Three months ended March 31,

(in thousands of dollars)

% Increase (Decrease)

Revenues from external customers:

Cemetery revenues

Mortuary revenues

Funeral home revenues

Net investment income

Gains on investments and other assets

Gains (losses) on investments and other assets

Other revenues

3 unchanged sentences

Profitability

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

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

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

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

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

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

in intersegment expenses.

Company’s wholly owned subsidiary, SecurityNational Mortgage Company (“SecurityNational Mortgage), is a mortgage lender incorporated

under the laws of the State of Utah and approved and regulated by the Federal Housing Administration (FHA), a department of the U.S.

Department of Housing and Urban Development (HUD), which originates mortgage loans that qualify for government insurance in the event

of default by the borrower, in addition to various conventional mortgage loan products.

SecurityNational Mortgage originates and refinances

mortgage loans on a retail basis.

Mortgage loans originated or refinanced by the SecurityNational Mortgage are funded through loan purchase

agreements with Security National Life, Kilpatrick Life and unaffiliated financial institutions.

in the three-month period ended March 31, 2026 decreased due to (a) a $353,000 increase in selling, general and administrative expenses,

primarily attributable to a $195,000 increase in personnel expenses, (b) a $284,000 decrease in gains on investments and other assets,

(c) a $116,000 increase in amortization of deferred policy acquisition costs, (d) a $27,000 decrease in other revenues, and (e) a $4,000

decrease in funeral home at-need sales, which were partially offset by (i) a $305,000 increase in cemetery pre-need sales, (ii) a $231,000

increase in net investment income, (iii) a $133,000 increase in cemetery at-need sales, (iv) a $20,000 decrease in cost of goods and

services sold, and (v) a $16,000 decrease in income tax expense, (vi) a $7,000 decrease in intersegment expenses.

Company’s wholly owned subsidiary, SecurityNational Mortgage Company (“SecurityNational Mortgage”), is a mortgage lender

incorporated under the laws of the State of Utah and approved and regulated by the Federal Housing Administration (FHA), a department

Department of Housing and Urban Development (HUD), which originates mortgage loans that qualify for government insurance

in the event of default by the borrower, in addition to various conventional mortgage loan products.

SecurityNational Mortgage originates

and refinances mortgage loans on a retail basis.

Mortgage loans originated or refinanced by SecurityNational Mortgage are funded through

loan purchase agreements with Security National Life, Kilpatrick Life and unaffiliated financial institutions.

SecurityNational

12 unchanged sentences

refinance classification.

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

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

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

30, 2025, and 2024.

the three-month periods ended March 31, 2026, and 2025, SecurityNational Mortgage originated 1,415 loans ($488,560,000 total loan volume

principal amount) and 1,508 loans ($517,886,000 total loan volume principal amount), respectively.

following table shows the condensed financial results of the mortgage operations for the three-month periods ended March 31, 2026, and

See Note 16 to the condensed consolidated financial statements.

Three months ended September 30,

(in thousands of dollars)

Nine months ended September 30,

Three months ended March 31,

(in thousands of dollars)

% Increase (Decrease)

Revenues from external customers

4 unchanged sentences

Net investment income

Gains (losses) on investments and other assets

Gains on investments and other assets

Other revenues

1 unchanged sentence

Total segment revenues

Segment net earnings (loss)

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

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

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

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

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

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

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

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

Segment net loss

for the three-month period ended March 31, 2026 decreased due to (a) a $1,988,000 decrease in personnel expenses, (b) a $1,285,000 decrease

in commissions, (c) a $910,000 increase in the fair value of loan commitments, (d) a $556,000 increase in income from loan originations,

(e) a $161,000 decrease in rent and rent related expenses, (f) a $110,000 decrease in interest expense, (g) a $35,000 decrease in depreciation

on property and equipment, and (h) a $28,000 decrease in advertising expenses, which were partially offset by (i) a $2,245,000 decrease

in the fair value of loans held for sale, (ii) a $540,000 decrease in secondary gains from investors, (iii) a $352,000 decrease in income

tax benefit, (iv) a $259,000 increase in costs related to funding mortgage loans, (v) a $231,000 increase in other expenses, (vi) a $210,000

increase in intersegment expenses, (vii) a $153,000 increase in data processing and IT related expenses, (viii) a $50,000 decrease in

intersegment revenues, (ix) a $43,000 decrease in gains on investments and other assets, (x) a $26,000 decrease in other revenues, and

(xi) a $19,000 decrease in net investment income.

Results of Operations

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

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

period ended March 31, 2026, Compared to Three-month period ended March 31, 2025

revenues decreased by $3,011,000, or 3.6%, to $79,729,000 for the three-month period ended March 31, 2026, from $82,740,000 for the comparable

period in 2025.

Contributing to this decrease in total revenues was a $1,319,000 decrease in mortgage fee income, a $924,000 decrease

in insurance premiums and other considerations, a $701,000 decrease in net investment income, a $264,000 decrease in other revenues,

and a $235,000 decrease in gains on investments and other assets, which were partially offset by a $434,000 increase in net funeral home

and cemetery sales.

fee income decreased by $1,319,000, or 5.3%, to $23,490,000, for the three-month period ended March 31, 2026, from $24,809,000 for the

comparable period in 2025.

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

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

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

and other considerations.

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

the comparable period in 2024.

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

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

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

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

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

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

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

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

This decrease was primarily due to a $2,245,000 decrease in the fair value of loans held for sale and a $540,000

decrease in secondary gains from mortgage loans sold to third-party investors into the secondary market, which were partially offset

by a $910,000 increase in the fair value of loan commitments and a $556,000 increase in income from loan originations.

premiums and other considerations decreased by $924,000, or 3.1%, to $28,855,000 for the three-month period ended March 31, 2026, from

$29,779,000 for the comparable period in 2025.

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

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

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

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

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

This decrease was primarily due to a decrease of $966,000 in first year premiums, which

was partially offset by an increase of $42,000 in renewal premiums.

investment income decreased by $701,000, or 3.7%, to $18,501,000 for the three-month period ended March 31, 2026, from $19,202,000 for

the comparable period in 2025.

This decrease was primarily attributable to a $560,000 increase in investment expenses, a $355,000 decrease

in interest on cash and cash equivalents, a $288,000 decrease in insurance assignment income, a $22,000 decrease in real estate income,

and a $3,000 decrease in policy loan interest, which were partially offset by a $310,000 increase in mortgage loan interest, a $154,000

increase in other investment income, a $48,000 increase in fixed maturity securities income, and a $15,000 increase in equity securities

funeral home and cemetery sales increased by $434,000, or 5.9%, to $7,734,000 for the three-month period ended March 31, 2026, from $7,300,000

for the comparable period in 2025.

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

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

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

This increase was primarily due to a $305,000 increase in cemetery pre-need sales and a $133,000 increase

in cemetery at-need sales, which were partially offset by a $4,000 decrease in funeral home at-need sales.

(losses) on investments and other assets decreased by $235,000 to $351,000 in net gains for the three-month period ended March 31, 2026,

from $586,000 in net gains for the comparable period in 2025.

This increase in gains on investments and other assets was

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

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

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

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

comparable period in 2024.

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

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

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

This increase was primarily

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

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

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

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

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

paid up status, and a shift in product mix.

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

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

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

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

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

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

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

This decrease in gains on investments and other assets was primarily due

to a $426,000 decrease in gains on equity securities primarily attributable to decreases in the fair value of these equity securities

and a $21,000 decrease in gains on fixed maturity securities, which were partially offset by a $157,000 increase in gains on real estate

and a $55,000 increase in gains on other assets.

revenues decreased by $264,000, or 24.9%, to $798,000 for the three-month period ended March 31, 2026, from $1,062,000 for the comparable

period in 2025.

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

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

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

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

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

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

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

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

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

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

the comparable period in 2024.

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

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

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

$758,000 decrease in other revenues.

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

This decrease was primarily due to a decrease of $264,000 in other miscellaneous revenues.

benefits and claims decreased by $916,000 or 3.6%, to $24,539,000 for the three-month period ended March 31, 2026, from $25,455,000 for

the comparable period in 2025.

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

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

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

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

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

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

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

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

for the comparable period in 2024.

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

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

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

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

other investment income.

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

for the comparable period in 2024.

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

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

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

This decrease was primarily the result of a $679,000 decrease in future policy benefits, a $156,000 decrease

in death benefits, and an $81,000 decrease in surrender and other policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $182,000, or 6.5%, to $2,979,000 for the

three-month period ended March 31, 2026, from $2,797,000 for the comparable period in 2025.

This increase is due to a $192,000 increase

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

This increase

was partially offset by a $10,000 decrease in the amortization of value of business acquired due to no new deferrals and a decreasing

average outstanding balance.

general and administrative expenses decreased by $2,936,000, or 6.7%, to $40,928,000 for the three-month period ended March 31, 2026,

from $43,864,000 for the comparable period in 2025.

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

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

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

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

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

comparable period in 2024.

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

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

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

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

This increase was primarily the

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

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

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

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

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

paid up status, and a shift in product mix.

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

This decrease was primarily the result of a $1,645,000 decrease in commissions, a

$1,581,000 decrease in personnel expenses, a $166,000 decrease in rent and rent related expenses, an $87,000 decrease in advertising

expense, and a $35,000 decrease in depreciation on property and equipment, which were partially offset by a $319,000 increase in other

expenses and a $259,000 increase in costs related to funding mortgage loans.

expense decreased by $123,000, or 11.0%, to $996,000 for the three-month period ended March 31, 2026, from $1,119,000 for the comparable

period in 2025.

This decrease was primarily due to a decrease of $110,000 in interest expense on mortgage warehouse lines of credit for

loans held for sale and a decrease of $13,000 in interest expense on bank loans.

home and cemetery cost of goods and services sold decreased by $20,000, or 1.6%, to $1,233,000 for the three-month period ended March

31, 2026, from $1,253,000 for the comparable period in 2025.

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

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

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

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

in rent and rent related expenses.

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

This decrease was primarily due to a decrease of $18,000 in at-need sales

and decrease of $2,000 in pre-need sales.

tax expense increased by $214,000, or 11.7%, to $2,051,000 for the three-month period ended March 31, 2026, from $1,837,000 for the comparable

period in 2025.

This increase was primarily due to an increase of $296,000 in interest expense on mortgage warehouse lines of credit

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

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

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

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

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

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

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

This increase was primarily due to an increase in earnings before income taxes for 2026 compared to 2025.

The Company’s

overall effective tax rate increased from 22.3% for 2025 to 22.7% in 2026, a 0.4% increase in the effective tax rate or a 1.8% change.

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

and Capital Resources

Company’s life insurance subsidiaries and cemetery and mortuary subsidiaries realize cash flow from premiums, contract payments

and sales on personal services rendered for cemetery and mortuary business, from interest and dividends on invested assets, and from

Company’s life insurance subsidiaries and funeral home and cemetery subsidiaries realize cash flow from premiums, contract payments

and sales on personal services rendered for funeral home and cemetery business, from interest and dividends on invested assets, and from

the proceeds from the sale or maturity of investments.

2 unchanged sentences

be noted that current conditions in the financial markets and economy may affect the realization of these expected cash flows.

considers these sources of cash flow to be adequate to fund future policyholder and cemetery and mortuary liabilities, which generally

considers these sources of cash flow to be adequate to fund future policyholder and funeral home and cemetery liabilities, which generally

are long-term, and adequate to pay current policyholder claims, annuity payments, expenses related to the issuance of new policies, the

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

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

Bank’s warehouse line of credit.

SecurityNational Mortgage is in the process of receiving waivers.

In the unlikely event the Company

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

cash to do so.

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

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

The Company continues to negotiate other warehouse lines of credit

with other lenders.

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

approximately $34,894,000, respectively.

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

the three-month periods ended March 31, 2026, and 2025, the Company’s operations provided cash of approximately $32,940,000 and

of approximately $9,586,000, respectively.

The increase in cash provided by operations was due primarily to a decrease in originations

of loans held for sale and an increase in net earnings.

Company expects to pay out liabilities under its funeral plans over the long term given the nature of those plans.

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the risk of liquidating these long-term investments because of any sudden changes in their fair values.

Company attempts to match the duration of invested assets with its policyholder and cemetery and mortuary liabilities.

The Company may

sell investments other than those held to maturity in the portfolio to help in this timing matching.

Company attempts to match the duration of invested assets with its policyholder and funeral home and cemetery liabilities.

may sell investments other than those held to maturity in the portfolio to help in this timing matching.

The Company purchases short-term

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The Company’s

investment philosophy is intended to provide a rate of return for the expected duration of its cemetery and mortuary policies that will

exceed the accruing of liabilities under those policies regardless of future interest rate movements.

investment philosophy is intended to provide a rate of return for the expected duration of its funeral home and cemetery policies that

will exceed the accruing of liabilities under those policies regardless of future interest rate movements.

Company’s investment policy is also to invest predominantly in fixed maturity securities, real estate, mortgage loans, and warehousing

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Bonds owned by the insurance

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

and December 31, 2024, respectively.

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

and December 31, 2024, respectively.

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

of Insurance Commissioners.

subsidiaries amounted to $350,683,000 (at estimated fair value) and $365,986,000 (at estimated fair value) as of March 31, 2026, and

December 31, 2025, respectively.

This represented 34.2% and 35.2% of the total investments of the Company as of March 31, 2026, and December

31, 2025, respectively.

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

Commissioners.

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

As of September 30, 2025,

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

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

As of March 31, 2026, 1.7% (or $5,945,000)

and as of December 31, 2025, 1.6% (or $5,825,000) of the Company’s total bond investments were invested in bonds in rating categories

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

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

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

As of September 30,

As of March 31, 2026,

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

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

Company’s total capitalization of stockholders’ equity, bank and other loans payable was $534,276,000 as of March 31, 2026,

as compared to $508,757,000 as of December 31, 2025.

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equity and an increase of $10,372,000 in bank loans and other loans payable.

Stockholders’ equity as a percent of total capitalization

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

Stockholders’ equity as a percentage of total capitalization

was 79.6% and 80.7% as of March 31, 2026, and December 31, 2025, respectively.

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

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combined statutory capital and surplus of the Company’s life insurance subsidiaries was approximately $140,204,000 and $139,068,000

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

The life insurance subsidiaries cannot pay a dividend to their parent

company without the approval of state insurance regulatory authorities.

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

income tax law.

The Company is currently assessing its impact;

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

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

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

without the approval of state insurance regulatory authorities.

Quantitative and Qualitative Disclosures About Market Risk.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis