What changed in this filing

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Item 1. Financial Statements

2026-08-10 compared with 2026-05-11 · 1069 added, 947 removed, 2035 unchanged (50% of the section changed)

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;

Fixed maturity

securities, available for sale, at estimated fair value (amortized cost of $ 385,103,571 and $ 382,401,293 for 2026 and 2025, respectively;

net of allowance for credit losses of $ 840,660 and $ 579,450 for 2026 and 2025, respectively)

1 unchanged sentence

$ 382,777,918

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)

Equity securities at estimated

fair value (cost of $ 12,540,527 and $ 12,206,559 for 2026 and 2025, respectively)

Mortgage loans held for

investment (net of allowance for credit losses of $ 2,255,193 and $ 2,588,918 for 2026 and 2025, respectively)

Real estate held for investment

(net of accumulated depreciation of $ 40,031,834 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 $ 1,518,047 and $ 1,676,468 for 2026 and 2025, respectively)

Accrued investment income

Total investments

Other investments and policy

loans (net of allowance for credit losses of $ 1,476,295 and $ 1,676,468 for 2026 and 2025, respectively)

investment income

1,025,995,589

2 unchanged sentences

Loans held for sale at estimated fair value

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)

Receivables (net of allowance for credit

losses of $ 1,546,298 and $ 1,428,672 for 2026 and 2025, respectively)

Restricted assets (including $ 18,729,073 and

$ 16,106,168 for 2026 and 2025 respectively, at estimated fair value)

Cemetery perpetual care trust investments (including

$ 7,141,438 and $ 6,575,744 for 2026 and 2025, respectively, at estimated fair value)

Receivable from reinsurers

2 unchanged sentences

Property and equipment, net

Deferred policy and pre-need contract acquisition costs

Deferred policy and pre-need contract acquisition

Value of business acquired

4 unchanged sentences

CONSOLIDATED BALANCE SHEETS (Continued)

March 31, 2026

December 31, 2025

Liabilities and Stockholders’ Equity

Future policy benefits and unpaid claims

Liabilities and Stockholders’

Future policy benefits and unpaid

$ 799,072,640

3 unchanged sentences

Bank and other loans payable

Deferred pre-need funeral home and cemetery contract revenues

Deferred pre-need funeral home and cemetery

contract revenues

Cemetery perpetual care obligation

10 unchanged sentences

40,000,000 shares authorized;

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;

23,583,948 shares issued and outstanding as of June 30, 2026 and 23,551,670 (1) shares issued and outstanding as of December 31,

non-voting common stock - $ 1.00 par

5,000,000 shares authorized;

2 unchanged sentences

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

3,789,130 shares issued and outstanding as of June 30, 2026 and

3,767,672 (1) shares issued and outstanding as of December 31, 2025

Common stock value

Additional paid-in capital

Accumulated other comprehensive gain, net of taxes

Accumulated other comprehensive gain, net of

Retained earnings

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

Treasury stock at cost - 1,221,516 Class A

shares and 117,184 Class C shares as of June 30, 2026;

and 1,154,131 (1) Class A shares and 110,184 (1) Class C shares as of

December 31, 2025

( 9,914,561 )

1 unchanged sentence

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

Liabilities and Stockholders’ Equity

$ 1,609,314,968

$ 1,561,844,604

Issued and outstanding shares have been adjusted retroactively for the

effect of annual stock dividends.

accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended March 31,

Months Ended June 30,

Insurance premiums and other considerations

5 unchanged sentences

Benefits and expenses:

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

Policyholder benefits and claims (including

the impact of assumption updates to the liability for future policy benefits of nil and nil for the three and six months ended June

30, 2026 and 2025, respectively)

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

Costs related to funding mortgage loans

Depreciation on property

and equipment

Costs related to funding

mortgage loans

Interest expense

Cost of goods and services sold-funeral home and cemetery

Cost of goods and services

sold-funeral home and cemetery

Total benefits and expenses

3 unchanged sentences

( 2,367,914 )

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

( 4,727,904 )

( 4,204,512 )

Net earnings per

Class A Equivalent common share (1)

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 (1)

(1) Net earnings per

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

5 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

Other comprehensive income (loss):

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

Months Ended June 30,

Other comprehensive income

Unrealized gains (losses)

on fixed maturity securities available for sale

$ ( 473,827 )

Unrealized gains (losses) on restricted assets (1)

Unrealized gains on cemetery perpetual care trust investments (1)

Interest rate remeasurement of future policy benefits

$ ( 4,790,137 )

Other comprehensive income (loss), before income tax

Unrealized gains (losses)

on restricted assets (1)

Unrealized gains (losses)

on cemetery perpetual care trust investments (1)

Interest rate remeasurement

of future policy benefits

( 1,632,362 )

( 2,038,836 )

( 10,161,681 )

Other comprehensive income

(loss), before income tax

( 2,105,208 )

( 3,527,057 )

Income tax benefit (expense)

( 1,699,006 )

Other comprehensive income (loss), net of income tax

Other comprehensive income (loss), net of

( 1,661,358 )

( 2,786,905 )

Comprehensive income

(1) Fixed maturity

securities available for sale

Fixed maturity securities available for sale

accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Class A Common Stock

Class C Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income (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

Months Ended June 30, 2026

A Common Stock

C Common Stock

Paid-in Capital

Other Comprehensive Income (Loss)

December 31, 2025

12 unchanged sentences

$ 425,515,510

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

Other comprehensive loss

( 1,661,358 )

Stock-based compensation expense

Exercise of stock options

Vesting of restricted stock units

Sale of treasury stock

Purchase of treasury stock

Conversion Class C to Class A

Stock dividends

( 12,943,556 )

June 30, 2026

$ 101,194,577

1 unchanged sentence

$ ( 9,914,561 )

$ 433,035,918

Months Ended June 30, 2025

A Common Stock

C Common Stock

Paid-in Capital

Other Comprehensive Income (Loss)

December 31, 2024

$ 227,804,439

$ ( 8,477,686 )

$ 381,898,427

Other comprehensive loss

10 unchanged sentences

$ 385,325,528

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

$ 231,428,889

$ ( 9,485,613 )

$ 393,902,681

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Cash flows from operating activities:

Net cash provided by operating activities

Cash flows from investing activities:

Months Ended June 30,

Cash flows from operating

cash provided by operating activities

Cash flows from investing

Purchases of fixed maturity securities

1 unchanged sentence

( 54,885,176 )

Sales, calls and maturities of fixed maturity securities

Sales, calls and maturities of fixed maturity

Purchases of equity securities

4 unchanged sentences

( 3,971,938 )

( 2,397,575 )

Sales, calls and maturities of restricted assets

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

Purchases of cemetery perpetual care trust

Sales, calls and maturities of perpetual care

trust investments

Mortgage loans held for investment, other investments

and policy loans made

( 361,275,839 )

( 446,677,580 )

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

4 unchanged sentences

Sales of real estate

Net cash provided by (used in) investing activities

cash provided by (used in) investing activities

( 72,442,859 )

Cash flows from financing activities:

Cash flows from financing

Policyholder account balances - deposits

4 unchanged sentences

Purchases of treasury stock

( 1,336,526 )

( 1,203,684 )

Repayment of bank loans

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

( 1,058,580 )

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

( 18,012,268 )

Proceeds from bank loans

Net change in warehouse

line borrowings for loans held for sale

cash provided by financing activities

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

( 57,699,157 )

Supplemental Disclosure of Cash Flow Information:

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

$ 176,488,670

Supplemental Disclosure

of Cash Flow Information:

Cash paid during the year for:

1 unchanged sentence

State income taxes

Non Cash Operating, Investing and Financing Activities:

Non Cash Operating, Investing

and Financing Activities:

Mortgage loans held for investment foreclosed

into real estate held for sale

Benefit plans funded with treasury stock

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

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

Loans held for sale foreclosed into real estate

held for sale

Transfer of loans held for sale to mortgage

loans held for investment

NATIONAL FINANCIAL CORPORATION

3 unchanged sentences

flows are presented in the table below:

March 31, 2026

March 31, 2025

Cash and cash equivalents

$ 163,441,869

$ 132,946,068

Restricted assets

Cemetery perpetual care trust investments

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

$ 162,096,809

Cemetery perpetual care

trust investments

Total cash, cash equivalents,

restricted cash and restricted cash equivalents

$ 176,488,670

1 unchanged sentence

$ 176,488,670

$ 145,292,245

accompanying notes to condensed consolidated financial statements (unaudited).

14 unchanged sentences

considered necessary for a fair presentation have been included.

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

Operating results for the three and six month periods ended June 30,

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.

prior-period amounts related to accounting standards adopted have been reclassified to conform to the current-period presentation.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

67 unchanged sentences

of Error Correcetion Prior Period Adjustments

As Previously

Previously Reported

Currently Reported

Previously Reported

Currently Reported

Consolidated Statements of Earnings:

Three Months Ended March 31, 2025

As Previously

Months Ended June 30, 2025

Previously Reported

Currently Reported

Previously Reported

Currently Reported

Benefits and expenses:

1 unchanged sentence

$ ( 317,785 )

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

Amortization of deferred policy and pre-need

acquisition costs and value of business acquired

( 2,864,168 )

( 4,763,704 )

Total benefits and expenses

( 2,402,050 )

( 5,081,489 )

Earnings before income taxes

2 unchanged sentences

( 2,367,914 )

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

( 3,062,866 )

( 1,141,646 )

( 4,204,512 )

Net earnings per Class A equivalent common

share - assuming dilution (1)

Adjusted retroactively for the effect of annual stock

Previously Reported

Currently Reported

Previously Reported

Currently Reported

Consolidated Statements of Comprehensive Income:

Three Months Ended March 31, 2025

As Previously Reported

As Currently Reported

Months Ended June 30, 2025

Previously Reported

Currently Reported

Previously Reported

Currently Reported

Other comprehensive income:

Unrealized gains on fixed maturity securities available for sale

Interest rate remeasurement of future policy benefits

Unrealized gains on fixed maturity securities

available for sale

Interest rate remeasurement of future policy

( 2,038,836 )

Other comprehensive income (loss), before income tax

( 10,161,681 )

Other comprehensive income (loss), before income

( 1,959,847 )

( 10,010,164 )

( 3,527,057 )

Income tax benefit (expense)

Other comprehensive income (loss), net of income tax

( 1,361,984 )

Other comprehensive income (loss), net of income

( 1,548,279 )

( 7,908,028 )

( 2,786,905 )

Comprehensive income (loss)

$ ( 3,968,185 )

As Previously Reported

As Currently Reported

As Previously

Consolidated Statements of Stockholders’ Equity:

Three Months Ended March 31, 2025

As Previously Reported

As Currently Reported

Accumulated other comprehensive income (loss)

Months Ended June 30, 2025

As Previously

Accumulated other comprehensive

income (loss)

$ ( 1,830,143 )

42 unchanged sentences

30, 2026 (Unaudited)

2) Investments

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

Company’s investments as of June 30, 2026, are summarized as follows:

of Investments

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.

Estimated Fair

June 30, 2026:

Fixed maturity securities, available for sale,

at estimated fair value:

securities and obligations of U.S.

Government agencies

$ ( 337,267 )

Obligations of states and political subdivisions

Corporate securities including public utilities

Obligations of states and

political subdivisions

Corporate securities including

public utilities

( 4,153,173 )

2 unchanged sentences

Redeemable preferred stock

Total fixed maturity securities available for sale

fixed maturity securities available for sale

$ 385,103,571

4 unchanged sentences

Common stock:

Industrial, miscellaneous and all other

Industrial, miscellaneous

and all other

$ ( 237,925 )

Total equity securities at estimated fair value

equity securities at estimated fair value

$ ( 237,925 )

Mortgage loans held for investment at amortized cost:

Mortgage loans held for investment at amortized

Residential construction

Unamortized deferred loan fees, net

Unamortized deferred

loan fees, net

( 1,552,440 )

Allowance for credit losses

Allowance for credit

( 2,255,193 )

Net discounts

Total mortgage loans held for investment

Total mortgage loans

held for investment

$ 290,685,188

Real estate held for investment - net of accumulated depreciation:

Real estate held for investment - net of accumulated

depreciation:

$ 116,634,085

Total real estate held for investment

Total real estate

held for investment

$ 235,071,387

Real estate held for sale:

Total real estate held for sale

Other investments and policy loans at amortized cost:

Real estate held for

Total real estate

held for sale

Other investments and policy loans at amortized

Insurance assignments

Federal Home Loan Bank stock (2)

Federal Home Loan Bank

Other investments

1 unchanged sentence

( 1,476,295 )

Total other investments and policy loans

Accrued investment income

Total other investments

and policy loans

Accrued investment

Total investments

$ 1,025,995,589

(1) Gross unrealized

losses are net of allowance for credit losses

(2) Includes $ 612,300

unrealized losses are net of allowance for credit losses

$ 612,800 of Membership stock and $ 67,400 of Activity stock attributable to short-term borrowings and letters of credit.

4 unchanged sentences

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

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.

Fixed maturity securities,

available for sale, at estimated fair value:

securities and obligations of U.S.

Government agencies

Obligations of states and political subdivisions

Corporate securities including public utilities

Obligations of states and

political subdivisions

Corporate securities including

public utilities

( 3,387,651 )

2 unchanged sentences

Redeemable preferred stock

Total fixed maturity securities available for sale

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

equity securities at estimated fair value

$ ( 332,937 )

Mortgage loans held for investment at amortized cost:

Mortgage loans held for investment at amortized

Residential construction

Unamortized deferred loan fees, net

Unamortized deferred

loan fees, net

( 1,995,795 )

Allowance for credit losses

Allowance for credit

( 2,588,918 )

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 cost:

Total real estate

held for sale

Other investments and policy loans at amortized

Insurance assignments

Federal Home Loan Bank stock (2)

Federal Home Loan Bank

Other investments

1 unchanged sentence

( 1,676,468 )

Total policy loans and other investments

Accrued investment income

Total policy loans and

other investments

Accrued investment

Total investments

$ 1,038,862,460

(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.

Gross unrealized losses are net of allowance

for credit losses

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 March 31, 2026, other than investments

equity (before net unrealized gains and losses on equity securities and fixed maturity securities) as of June 30, 2026, other than investments

issued or guaranteed by the United States Government.

1 unchanged sentence

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.

of June 30, 2026, and December 31, 2025.

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

5 unchanged sentences

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.

Combined Fair

June 30, 2026

Treasury securities and

obligations of U.S.

Government agencies

4 unchanged sentences

$ 120,547,516

$ 176,009,200

December 31, 2025

Treasury securities and obligations of U.S.

Treasury securities and obligations of

Government agencies

4 unchanged sentences

$ 106,054,507

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

holdings were comprised of 549 securities with fair values aggregating 95.6 % of the aggregate amortized cost as of June 30, 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.

of $ 164,663 and of $ 20,313 have been recognized for the three-month periods ended June 30, 2026, and 2025, respectively.

A credit loss

provision of $ 261,210 and of $ 65,993 have been recognized for the six-month periods ended June 30, 2026, and 2025, respectively.

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

Other unrealized

44 unchanged sentences

Quality Indicators

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

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

30, 2026, and December 31, 2025, respectively.

2 unchanged sentences

of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation

March 31, 2026

December 31, 2025

NAIC Designation

10 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 March 31, 2026, and 2025:

sale for the three-month periods ended June 30, 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

Months Ended June 30, 2026

Obligations of

public utilities

Beginning balance - March 31, 2026

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

Ending Balance - June 30, 2026

public utilities

Months Ended June 30, 2025

obligations of

Obligations of

including public

Beginning balance - March 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

Ending Balance - June 30, 2025

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Investments (Continued)

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

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

sale for the six-month periods ended June 30, 2026, and 2025:

Months Ended June 30, 2026

securities and

obligations of

Obligations of

public utilities

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

Ending Balance - June 30, 2026

securities and

Months Ended June 30, 2025

securities and

Obligations of

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

Ending Balance - June 30, 2025

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

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

6 unchanged sentences

$ 380,428,850

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Investments (Continued)

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

of Major Categories of Net Investment Income

Three Months Ended

Months Ended June 30,

Proceeds from sales

4 unchanged sentences

of Assets on Deposit with Life Insurance

March 31, 2026

December 31, 2025

Fixed maturity securities available for sale at estimated fair value

June 30, 2026

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:

March 31, 2026

December 31, 2025

Fixed maturity securities available for sale at estimated fair value

June 30, 2026

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)

assets on deposit

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

As of June 30, 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

The Company did not receive or repay any advances during the six months ended June 30,

June 30, 2026

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, 2026 (Unaudited)

Investments (Continued)

Estate Held for Investment and Held for Sale

14 unchanged sentences

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.

These properties include office buildings, flex office space,

and the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah.

The Company uses bank debt

in strategic cases, primarily where it is anticipated to improve yields, or facilitate the acquisition of higher quality assets or asset

class diversification.

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

Company currently owns and operates commercial properties in Utah, California, Mississippi and Louisiana.

These properties include office

buildings, flex office space, and the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City,

The Company uses bank debt in strategic cases, primarily where it is anticipated to improve yields, or facilitate the acquisition

of higher quality assets or asset class diversification.

aggregate net book value of commercial real estate serving as collateral for bank loans was $ 112,006,917 and $ 114,683,175 as of June

30, 2026, and December 31, 2025, respectively.

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

The associated bank loan carrying values totaled $ 93,152,192 and $ 94,120,446 as of June

30, 2026, and December 31, 2025, respectively.

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)

the three and six month periods ended June 30, 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 June 30, 2026, and 2025, the Company recorded depreciation expense on commercial real estate held for investment

of $ 1,433,680 and $ 1,432,921 , respectively, and of $ 2,867,187 and $ 2,854,937 during the six-month periods ended June 30, 2026 and 2025,

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.

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

of Commercial Real Estate Investment

Net Book Value

Total Square Footage

March 31, 2026

December 31, 2025

March 31, 2026

December 31, 2025

Square Footage

$ 118,419,709

3 unchanged sentences

(1) Includes Center53

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2026 (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

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 March 31, 2026, real estate owned

As of June 30, 2026, real estate owned

and occupied by the Company is summarized as follows:

of Real Estate Owned and Occupied by the Company

Business Segment

Approximate Square Footage

Square Footage Occupied by the Company

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

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

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

Life Insurance Operations

Insurance Operations

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

Included in property and equipment 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-month periods ended June 30, 2026, and 2025 the Company recorded impairment losses on residential real estate held for sale

nil and nil , respectively, and of $ 35,651 and nil during the six months ended June 30, 2026 and 2025, respectively.

Impairment losses

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

the three-month periods ended June 30, 2026, and 2025, the Company recorded depreciation expense on residential real estate held for

investment of $ 2,718 and $ 2,732 , respectively, and of $ 5,436 and $ 5,408 during the six- month periods ended June 30, 2026 and 2025, 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.

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:

of Residential Real Estate Investment

Net Book Value

March 31, 2026

December 31, 2025

$ 116,634,085

(1) Includes multiple

residential subdivision development projects, refer to the following table

Includes multiple 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

to be developed

$ 116,475,338

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 $ 1,343,223 and $ 1,270,669

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

as of June 30, 2026, and December 31, 2025, respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

30, 2026 (Unaudited)

2) Investments

Investments (Continued)

Loans Held for Investment

13 unchanged sentences

of Mortgage Loans Held for Investment

Residential Construction

As of March 31, 2026:

As of June 30, 2026:

As of December 31,

31 unchanged sentences

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.

income not accrued on these loans totaled approximately $ 603,912 and $ 1,042,325 as of June 30, 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.

62 unchanged sentences

of Allowance for Loan Losses

Three Months Ended

Residential Construction

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

balance - March 31, 2026

in provision for credit losses (1)

balance - June 30, 2026

Beginning balance

- March 31, 2025

in provision for credit losses (1)

balance - June 30, 2025

Included in other expenses on the condensed consolidated statements of earnings

balance - December 31, 2025

in provision for credit losses (1)

balance - June 30, 2026

Beginning balance

- December 31, 2024

in provision for credit losses (1)

balance - June 30, 2025

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

of Aging of Mortgage Loans

March 31, 2026

days past due

Over 90 days past due (1)

In process of foreclosure (1)

Total past due

Total mortgage loans

Allowance for credit losses

90 days past due (1)

process of foreclosure (1)

mortgage loans

for credit losses

( 1,217,775 )

( 2,255,193 )

Unamortized deferred loan fees, net

deferred loan fees, net

( 1,162,227 )

( 1,552,440 )

Unamortized discounts, net

Net mortgage loans held for investment

discounts, net

mortgage loans held for investment

$ 140,177,507

$ 290,685,188

December 31, 2025

days past due

Over 90 days past due (1)

In process of foreclosure (1)

Total past due

Total mortgage loans

Allowance for credit losses

90 days past due (1)

process of foreclosure (1)

mortgage loans

for credit losses

( 1,368,121 )

( 2,588,918 )

Unamortized deferred loan fees, net

deferred loan fees, net

( 1,283,049 )

( 1,995,795 )

Unamortized discounts, net

Net mortgage loans held for investment

discounts, net

mortgage loans held for investment

$ 156,744,272

$ 322,435,385

(1) Interest income

is not recognized on loans which are more than 90 days past due or in foreclosure.

Interest income is not recognized on loans which are more than 90 days past due or in foreclosure.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

7 unchanged sentences

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

March 31, 2026:

June 30, 2026:

of Commercial and Residential Mortgage Loans By Credit Quality Indicator

Credit Quality Indicator

Less than 65%

Greater than 80%

Quality Indicator

1.00x - 1.20x

1 unchanged sentence

December 31, 2025:

Less than 65%

Greater than 80%

Quality Indicator

1.00x - 1.20x

8 unchanged sentences

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

March 31, 2026:

Credit Quality Indicator

Performance Indicators:

June 30, 2026:

Quality Indicator

Non-performing

(1) Includes residential

mortgage loans in the process of foreclosure of $ 1,462,111

Less than 65%

Greater than 80%

Includes residential mortgage loans in the process of foreclosure

of $1,053,434

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

December 31, 2025:

Credit Quality Indicator

Performance Indicators:

Quality Indicator

Non-performing

(1) Includes residential

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

Less than 65%

Greater than 80%

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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

7 unchanged sentences

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

follows as of March 31, 2026:

follows as of June 30, 2026:

of Residential Construction Mortgage Loans

Credit Quality Indicator

Performance Indicators:

Quality Indicator

$ 140,692,240

1 unchanged sentence

$ 140,692,240

Less than 65%

Greater than 80%

$ 140,692,240

1 unchanged sentence

follows as of December 31, 2025:

Credit Quality Indicator

Performance Indicators:

Quality Indicator

$ 105,516,880

3 unchanged sentences

$ 157,398,705

Less than 65%

Greater than 80%

$ 105,516,880

7 unchanged sentences

of Aging of Insurance Assignments

March 31, 2026

December 31, 2025

days past due

Over 90 days past due

Total past due

Total insurance assignments

Allowance for credit losses

90 days past due

insurance assignments

for credit losses

( 1,476,295 )

( 1,676,468 )

Net insurance assignments

insurance assignments

Company records an allowance for credit losses when the insurance assignment is funded.

3 unchanged sentences

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 - March 31, 2026

Beginning balance - December 31, 2024

Change in provision for credit losses (1)

Ending balance - March 31, 2025

balance - March 31, 2026

in provision for credit losses (1)

balance - June 30, 2026

balance - March 3, 2025

in provision for credit losses (1)

balance - June 30, 2025

Included in other expenses on the condensed consolidated statements of earnings

balance - December 31, 2025

in provision for credit losses (1)

balance - June 30, 2026

Beginning balance

- December 31, 2024

in provision for credit losses (1)

balance - June 30, 2025

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

14 unchanged sentences

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

(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

Included in other investments and policy loans on the condensed

consolidated balance sheets

Out of these totals, $ 1,174,675 and $ 1,467,058 of which at

June 30, 2026, and December 31, 2025, respectively, were included in restricted assets and $ 1,232,942 and $ 1,189,558 of which at June

30, 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:

(1) the at-risk equity holders, as a group, lack the characteristics of a controlling financial interest, (2) the General Manager directs

(1) the at-risk equity holders, as a group, lack the characteristics of a controlling financial interest, (2) the Company does not direct

the activities and legal operations that most significantly affect the entity’s economic performance and (3) the Company does not

10 unchanged sentences

of Gain (Loss) on Investments

Three Months Ended March 31,

Fixed maturity securities:

Gross realized gains

Gross realized losses

Net credit loss provision

Equity securities:

Gains on securities sold

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

Real estate held for investment and sale:

Gross realized gains

Gross realized losses

Other assets:

Gross realized gains

Gross realized losses

Months Ended June 30,

maturity securities:

realized gains

realized losses

credit loss provision

(losses) on securities sold

gains on securities held at the end of the period

estate held for investment and sale:

realized gains

realized losses

realized gains

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

1 unchanged sentence

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.

and mortuaries and totaled $ 1,510,457 in net gains and $ 271,176 in net gains for the three-month periods ended June 30, 2026 and 2025,

respectively, and of $ 1,436,129 in net gains and $ 485,155 in net gains for the six-month periods ended June 30, 2026 and 2025, respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

categories of net investment income were as follows:

Three Months Ended March 31,

Fixed maturity securities available for sale

Equity securities

Mortgage loans held for investment

Real estate held for investment and sale

Insurance assignments

Other investments

Cash and cash equivalents

Gross investment income

Investment expenses

Months Ended June 30,

maturity securities available for sale

loans held for investment

estate held for investment and sale

and cash equivalents

investment income

( 4,233,114 )

( 6,156,472 )

Net investment income

( 8,912,834 )

( 10,276,439 )

investment income

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

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

of $ 231,327 and $ 220,634 for the three-month periods ended June 30, 2026, and 2025, respectively, and of $ 438,459 and $ 367,472 for the

six-month periods ended June 30, 2026, and 2025, respectively.

investment income on real estate consists primarily of rental revenue.

4 unchanged sentences

of Accrued Investment Income

March 31, 2026

December 31, 2025

Fixed maturity securities available for sale

Equity securities

Mortgage loans held for investment

Real estate held for investment

Other investments

Cash and cash equivalents

Total accrued investment income

maturity securities available for sale

loans held for investment

estate held for investment

and cash equivalents

accrued investment income

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

10 unchanged sentences

of Aggregate Fair Value Loans Held for Sale

March 31, 2026

December 31, 2025

Aggregate fair value

$ 146,871,985

$ 155,968,266

Unpaid principal balance

Unrealized gain

principal balance

fee income consists of origination fees, processing fees, interest income, and other income related to the origination and sale of mortgage

2 unchanged sentences

of Mortgage Fee Income for Loans Held for Sale

Three Months Ended March 31,

Interest income

Secondary gains

Change in fair value of loan commitments

Change in fair value of loans held for sale

( 1,603,988 )

Provision for loan loss reserve

Mortgage fee income

Months Ended June 30,

in fair value of loan commitments

in fair value of loans held for sale

for loan loss reserve

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Loans Held for Sale (Continued)

Loan Loss Reserve

demands (“demand(s)”) from third party investors for mortgage loans previously held for sale and sold are reviewed, and relevant

12 unchanged sentences

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

March 31, 2026

December 31, 2025

Balance, beginning of period

Provision on current loan originations (1)

Additional provision (2)

Charge-offs, net of recaptured amounts

beginning of period

on current loan originations (1)

provision (2)

net of recaptured amounts

( 1,157,960 )

Balance, end of period

(1) Included in mortgage

(2) Included in other

end of period

Included in mortgage fee income

Included in other expenses

Company maintains reserves for estimated losses on current production volumes.

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

For the six-month period ended June 30, 2026, $ 364,293

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 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

For the six-month

period ended June 30, 2025, $ 398,937 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.

6 unchanged sentences

of Receivable

March 31, 2026

December 31, 2025

Contracts with customers

Receivables from sales agents

Insurance premiums due

Total receivables

Allowance for credit losses

with customers

from sales agents

for credit losses

( 1,546,298 )

( 1,428,672 )

Net receivables

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

1 unchanged sentence

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

balance - March 31, 2026

in provision for credit losses (1)

balance - June 30, 2026

balance - March 31, 2025

in provision for credit losses (1)

balance - June 30, 2025

Included in other expenses on the condensed consolidated statements

balance - December 31, 2025

in provision for credit losses (1)

balance - June 30, 2026

balance - December 31, 2024

in provision for credit losses (1)

balance - June 30, 2025

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

31 unchanged sentences

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)

(December 31, 2025)

(June 30, 2026)

Increase/(decrease)

Contract Balances

Receivables (1)

Contract Asset

Contract Liability

Opening (December 31, 2024)

Closing (December 31, 2025)

(December 31, 2024)

(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.

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 June 30, 2026,

and 2025 was $ 1,327,299 and $ 1,164,177 , respectively, and for the six-month periods ended June 30, 2026 and 2025 was $ 3,051,290 and $ 2,323,389 ,

respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Receivables (Continued)

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

3 unchanged sentences

of Revenues of the Cemetery and Mortuary Contracts

Three Months Ended

Major goods/service lines

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

of Revenue Recognition

transferred at a point in time

mortuary and cemetery sales

12 unchanged sentences

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

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

assets as of June 30, 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

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

of states and political subdivisions

securities including public utilities

fixed maturity securities available for sale

securities at estimated fair value:

miscellaneous and all other

$ ( 410,089 )

Total equity securities at estimated fair value

equity securities at estimated fair value

$ ( 410,089 )

Mortgage loans held for investment at amortized cost:

Residential construction

loans held for investment at amortized cost:

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.

mortgage loans held for investment

and cash equivalents (1)

investment income

restricted assets

Including cash and cash equivalents of $ 10,215,805 for the

life insurance and mortgage segments.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

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

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

Estimated Fair

December 31, 2025:

19 unchanged sentences

Total restricted assets

(1) Including cash

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

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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

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.

of June 30, 2026, and December 31, 2025.

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

1 unchanged sentence

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

At June 30, 2026

Obligations of states and political subdivisions

5 unchanged sentences

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

holdings were comprised of three securities with fair values aggregating 98.8 % of the aggregate amortized cost as of June 30, 2026.

holdings were comprised of two securities with fair values aggregating 99.4 % of the aggregate amortized cost as of December 31, 2025.

No credit losses have been recognized for the three and six month periods ended June 30, 2026, and 2025, since the unrealized losses

are primarily the result of increases in interest rates.

1 unchanged sentence

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,

table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of June 30, 2026,

by contractual maturity.

19 unchanged sentences

Care Obligation in the accompanying consolidated balance sheets .

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

components of cemetery perpetual care investments and obligation as of June 30, 2026, are as follows:

of Investments and Obligation

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

March 31, 2026:

Estimated Fair

June 30, 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

22 unchanged sentences

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

Estimated Fair

December 31, 2025:

24 unchanged sentences

30, 2026 (Unaudited)

Cemetery Perpetual Care Trust Investments and Obligation (Continued)

6) Cemetery Perpetual Care Trust Investments and Obligation

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.

of June 30, 2026, and December 31, 2025.

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

1 unchanged sentence

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

June 30, 2026

Obligations of states and political subdivisions

1 unchanged sentence

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 98.8 % of the aggregate amortized cost as of June 30, 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,

credit losses have been recognized for the three and six month periods ended June 30, 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 June 30, 2026,

by contractual maturity.

28 unchanged sentences

of Mortgage Servicing Rights

March 31, 2026

December 31, 2025

3 unchanged sentences

Amortization (2)

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

Application of valuation allowance to write down MSRswith other than temporary impairment

Balance before valuation allowance at end of period

1 unchanged sentence

Balance at beginning of year

Application of valuation allowance to write down MSRs with other than

temporary impairment

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

Balance at end of period

1 unchanged sentence

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

Included in mortgage fee income on the condensed consolidated

statements of earnings

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

This projection

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

was developed using the Company’s assumptions in its June 30, 2026, valuation of MSRs.

The assumptions used in the following table

2 unchanged sentences

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

Estimated MSR Amortization

Estimated MSR

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

1 unchanged sentence

of Other Revenues

Three Months Ended

Ended June 30,

Contractual service fees

1 unchanged sentence

of Unpaid Principal Balances of the Servicing Portfolio

March 31, 2026

December 31, 2025

Servicing UPB

3 unchanged sentences

of Assumptions Used in Determining MSR Value

March 31, 2026

June 30, 2026

December 31, 2025

18 unchanged sentences

( 5,683,552 )

Balance at March 31, 2026

Balance at June 30, 2026

$ 131,677,165

13 unchanged sentences

( 5,418,228 )

Balance at March 31, 2025

Balance at June 30, 2025

$ 124,154,907

10 unchanged sentences

Universal Life

Accident and Health

Balance at December 31, 2025

Balance at March 31, 2026

Balance at June 30, 2026

Traditional Life

1 unchanged sentence

Universal Life

Accident and Health

Balance at December 31, 2024

Balance, beginning of period

Balance at March 31, 2025

Balance at June 30, 2025

Balance, end of period

2 unchanged sentences

of Balance and the Changes in Unearned Premium Reserve

Three Months Ended March 31,

Six Months Ended June 30,

Universal Life

3 unchanged sentences

Unearned premium reserve, end of period

(1) Included in premiums

and other considerations on the condensed consolidated statements of earnings.

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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

14 unchanged sentences

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.

not be funded within the terms of the mortgage loan commitment also is influenced by 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

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

21 unchanged sentences

Schedule of Derivative Assets at Fair Value

March 31, 2026

June 30, 2026

December 31, 2025

17 unchanged sentences

Schedule of Gains and Losses on Derivatives

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Classification

1 unchanged sentence

Mortgage fee income

$ ( 365,260 )

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

10 unchanged sentences

Schedule of Liability for Future Policy Benefits, by Product Segment

March 31, 2026

June 30, 2026

December 31, 2025

25 unchanged sentences

30, 2026 (Unaudited)

Future Policy Benefits and Unpaid Claims (Continued)

10) Future Policy Benefits and Unpaid

Claims (Continued)

and Limited-Payment Life

1 unchanged sentence

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

Three Months Ended March 31,

Six Months Ended June 30,

Present Value of Expected Net Premiums:

49 unchanged sentences

$ 557,539,460

(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.

(1) For the three and

six months ended June 30, 2026, and 2025, the net effect of actual variances from expected experience was primarily due to lapses.

mortality and surrenders were close to expected.

(2) Net premiums collected

3 unchanged sentences

30, 2026 (Unaudited)

Future Policy Benefits and Unpaid Claims (Continued)

10) 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

1 unchanged sentence

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

Three Months Ended March 31,

Six Months Ended June 30,

Undiscounted expected future benefit payments

11 unchanged sentences

of Gross Premiums and Interest Accretion

Three Months Ended

Six Months Ended June 30,

Gross premiums

2 unchanged sentences

of Weighted-average Interest Rates

As of March 31,

As of June 30,

Interest accretion rate

2 unchanged sentences

of Weighted Average Duration of the Liability

As of March 31,

As of June 30,

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.

the three and six months ended June 30, 2026 and 2025, respectively, there were no material 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

5 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

Balance, beginning of year

15 unchanged sentences

$ 197,855,816

(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.

(1) For the three and six months ended June 30, 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

2 unchanged sentences

Accident and Health

Balance at 12/31/2025

Balance at December 31, 2025

30,576,460 (1)

3 unchanged sentences

( 37,960,857 )

Balance at 3/31/2026

Balance at June 30, 2026

Accident and Health

Balance at 12/31/2024

Balance at December 31, 2024

31,067,103 (1)

3 unchanged sentences

( 37,441,377 )

Balance at 3/31/2025

Balance at June 30, 2025

(1) Included in policyholder

14 unchanged sentences

Balance Sheets

March 31, 2026

June 30, 2026

December 31, 2025

15 unchanged sentences

of Balances and Changes in Policyholder Account Balances

Three Months Ended

March 31, 2026

Three Months Ended

March 31, 2025

Universal Life

2 unchanged sentences

Fixed Annuities

Six Months Ended June 30, 2026

Six Months Ended June 30, 2025

Universal Life

Fixed Annuities

Universal Life

Fixed Annuities

Balance, beginning of year

3 unchanged sentences

Policy charges (1)

( 1,181,073 )

( 1,140,891 )

Surrenders, withdrawals and benefit payments

1 unchanged sentence

( 7,732,762 )

( 1,095,280 )

( 7,326,469 )

Balance, end of period

5 unchanged sentences

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

(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

(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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

Balance, beginning of year

11 unchanged sentences

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

March 31, 2026

Range of Guaranteed Minimum Crediting Rate

3 unchanged sentences

Greater than 150 bps above guaranteed minimum

June 30, 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

2 unchanged sentences

2.00% - 2.99%

3:00% - 4.00%

Greater than 4.00%

3 unchanged sentences

2.00% - 2.99%

3:00% - 4.00%

Greater than 4.00%

$ 102,529,346

March 31, 2025

Range of Guaranteed Minimum Crediting Rate

3 unchanged sentences

Greater than 150 bps above guaranteed minimum

June 30, 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

2 unchanged sentences

2.00% - 2.99%

3:00% - 4.00%

Greater than 4.00%

3 unchanged sentences

2.00% - 2.99%

3:00% - 4.00%

Greater than 4.00%

17 unchanged sentences

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

estimated effective tax rate for 2025 and is not anticipated to have a material impact on the effective tax rate for 2026.

Company’s overall effective tax rate for the three-month periods ended June 30, 2026 and 2025 was 23.0 % and 22.1 %, respectively,

which resulted in a provision for income taxes of $ 2,677,012 and $ 2,367,914 , respectively, and for the six-month periods ended June 30,

2026 and 2025 was 22.8 % and 22.1 %, respectively, which resulted in a provision for income taxes of $ 4,727,904 and $ 4,204,512 , 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 prior year.

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

12 unchanged sentences

Conversion of Class C to Class A

Outstanding shares at March 31, 2026

Outstanding shares at June 30, 2026 (1)

Outstanding shares at December 31, 2024 ( 1 )

2 unchanged sentences

Vesting of restricted stock units

Outstanding shares at March 31, 2025

Conversion of Class C to Class A

Outstanding shares at June 30, 2025 ( 1 )

Outstanding shares, ending

(1) Adjusted retroactively

for the effect of annual stock dividends

(1) Adjusted retroactively for the effect of annual stock dividends

Company’s Board of Directors declared a 5% stock dividend on June 27, 2026, to shareholders of record as of July 10, 2026, which

was issued on July 17, 2026.

All share and per-share amounts presented herein have been retroactively adjusted to reflect the stock dividend.

Other Comprehensive Income (Loss)

2 unchanged sentences

of Changes in Accumulated Other Comprehensive Income (Loss)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

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

$ ( 314,801 )

$ ( 4,482,485 )

Amounts reclassified into net earnings

3 unchanged sentences

( 1,393,520 )

( 3,779,860 )

Unrealized gains (losses) on restricted assets ( 1 )

Tax (expense) benefit

Unrealized gains on cemetery perpetual care trust investments (1)

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

Unrealized gains (losses)

Tax (expense)

Tax (expense) benefit

Interest rate remeasurement of future policy benefits

( 1,632,362 )

( 2,038,836 )

( 10,161,681 )

Tax (expense) benefit

1 unchanged sentence

( 1,289,565 )

( 1,610,681 )

( 8,027,726 )

Other comprehensive income (loss) changes

$ ( 1,661,358 )

(1) Fixed maturity

securities available for sale

$ ( 2,786,905 )

(1) Fixed maturity securities available for sale

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Equity (Continued)

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

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

5 unchanged sentences

Other comprehensive income

(1) Fixed maturity

securities available for sale

(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

6 unchanged sentences

$ ( 4,957,506 )

(1) Fixed maturity

securities available for sale

(1) Fixed maturity securities available for sale

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

6 unchanged sentences

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,

weighted-average shares outstanding

of dilutive securities:

stock options

restricted stock units

weighted-average shares outstanding

net earnings per share

the six-month periods ended June 30, 2026, and 2025, there were 423,146 and 416,539 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.

1 unchanged sentence

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Business Segment Information

41 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Business Segment Information (Continued)

Schedule of Revenues and Expenses by Reportable Segment

the Three Months Ended March 31, 2026

From external sources:

Revenue from external

Net investment income

Gains (losses) on investments

and other assets

Other revenues

the Three Months Ended June 30, 2026

external sources:

from external customers

investment income

(losses) on investments and other assets

segment revenues

2 unchanged sentences

consolidated revenues

Policyholder benefits and

Amortization of deferred policy

and pre-need acquisition costs and value of business acquired

Selling, general and administrative

benefits and claims

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

general and administrative expenses:

and rent related

on property and equipment

to funding mortgage loans

Data processing

and IT related (1)

related to funding mortgage loans

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

of goods and services sold-mortuaries and cemeteries

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:

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

assets, and certain overhead expenses.

Home/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.

each reportable segment, intersegment expenses includes:

Insurance - mortgage servicing fees and interest expense.

Home/Cemetery - 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, 2026 (Unaudited)

Business Segment Information (Continued)

the Three Months Ended June 30, 2025

external sources:

from external customers

investment income

(losses) on investments and other assets

segment revenues

of intersegment revenues

( 1,987,667 )

consolidated revenues

benefits and claims

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

general and administrative expenses:

and rent related

on property and equipment

related to funding mortgage loans

processing and IT related (1)

taxes on insurance premiums and other considerations (1)

segment items (1)(2)

of goods and services sold-mortuaries and cemeteries

tax expense (benefit)

Segment net earnings (loss)

net earnings (loss)

( 1,260,869 )

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:

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

assets, and certain overhead expenses.

Home/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.

each reportable segment, intersegment expenses includes:

Insurance - mortgage servicing fees and interest expense.

Home/Cemetery - 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, 2026 (Unaudited)

Business Segment Information (Continued)

the Six Months Ended June 30, 2026

external sources:

from external customers

$ 122,180,519

investment income

on investments and other assets

segment revenues

of intersegment revenues

( 3,510,329 )

consolidated revenues

benefits and claims

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

general and administrative expenses:

and rent related

on property and equipment

related to funding mortgage loans

processing and IT related (1)

taxes on insurance premiums and other considerations (1)

segment items (1)(2)

of goods and services sold-mortuaries and cemeteries

tax expense (benefit)

net earnings (loss)

$ 1,423,062,141

$ 110,989,273

$ 1,630,238,213

of intersegment assets

3 unchanged sentences

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:

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:

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.

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:

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

- rent expense and interest expense.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Business Segment Information (Continued)

the Three Months Ended March 31, 2025

From external sources:

Revenue from external

Net investment income

Gains on investments and other

Other revenues

the Six Months Ended June 30, 2025

external sources:

from external customers

$ 128,817,662

investment income

on investments and other assets

segment revenues

2 unchanged sentences

consolidated revenues

Policyholder benefits and

Amortization of deferred policy

and pre-need acquisition costs and value of business acquired

Selling, general and administrative

benefits and claims

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

general and administrative expenses:

and rent related

on property and equipment

to funding mortgage loans

Data processing

and IT related (1)

related to funding mortgage loans

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

of goods and services sold-mortuaries and cemeteries

tax expense (benefit)

Segment net earnings (loss)

( 1,511,121 )

net earnings (loss)

( 2,771,990 )

7 unchanged sentences

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:

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:

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.

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:

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

- rent expense and interest expense.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instruments

43 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instrument (Continued)

items shown under Level 3 are valued as follows:

56 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instrument (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 March 31, 2026:

their classification in the condensed consolidated balance sheet as of June 30, 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

Fixed maturity securities available for sale

Prices in Active Markets for Identical Assets

Observable Inputs

Unobservable Inputs

accounted for at fair value on a recurring basis

maturity securities available for sale

$ 380,428,850

$ 379,854,776

Equity securities

Loans held for sale

Restricted assets (1)

Restricted assets (2)

Cemetery perpetual care trust investments (1)

Cemetery perpetual care trust investments (2)

Derivatives - loan commitments (3)

Total assets accounted for at fair value on a recurring basis

held for sale

perpetual care trust investments (1)

perpetual care trust investments (2)

- loan commitments (3)

assets accounted for at fair value on a recurring basis

$ 576,542,830

1 unchanged sentence

$ 150,034,970

accounted for at fair value on a recurring basis

- loan commitments (4)

liabilities accounted for at fair value on a recurring basis

Derivatives - loan commitments (4)

Total liabilities accounted for at fair value on a recurring basis

maturity securities available for sale

2 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instrument (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 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

Fixed maturity securities available for sale

Prices in Active Markets for Identical Assets

Observable Inputs

Unobservable Inputs

accounted for at fair value on a recurring basis

maturity securities available for sale

$ 382,777,918

$ 382,203,275

Equity securities

Loans held for sale

Restricted assets (1)

Restricted assets (2)

Cemetery perpetual care trust investments (1)

Cemetery perpetual care trust investments (2)

Derivatives - loan commitments (3)

Total assets accounted for at fair value on a recurring basis

held for sale

perpetual care trust investments (1)

perpetual care trust investments (2)

- loan commitments (3)

assets accounted for at fair value on a recurring basis

$ 581,178,900

1 unchanged sentence

$ 158,243,651

Liabilities accounted for at fair value on a recurring basis

Derivatives - loan commitments (4)

accounted for at fair value on a recurring basis

- loan commitments (4)

$ ( 220,605 )

Total liabilities accounted for at fair value on a recurring basis

liabilities accounted for at fair value on a recurring basis

$ ( 220,605 )

4 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

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 March 31, 2026, the significant unobservable inputs

used in the fair value measurements were as follows:

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instrument (Continued)

Level 3 assets and liabilities measured at fair value on a recurring basis as of June 30, 2026, the significant unobservable inputs used

in the fair value measurements were as follows:

Schedule of Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis

Range of Inputs

Fair Value at

March 31, 2026

Loans held for sale

held for sale

$ 146,871,985

Market approach

Investor contract pricing as a percentage of unpaid principal balance

Derivatives - loan commitments (net)

Market approach

Pull-through rate

contract pricing as a percentage of unpaid principal balance

- loan commitments (net)

Initial-Value

Fixed maturity securities available for sale

Broker quotes

Pricing quotes

maturity securities available for sale

Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2025, the significant unobservable inputs

used in the fair value measurements were as follows:

Range of Inputs

Fair Value at

December 31, 2025

Loans held for sale

held for sale

$ 155,968,266

Market approach

Investor contract pricing as a percentage of unpaid principal balance

Derivatives - loan commitments (net)

Market approach

Pull-through rate

contract pricing as a percentage of unpaid principal balance

- loan commitments (net)

Initial-Value

Fixed maturity securities available for sale

Broker quotes

Pricing quotes

maturity securities available for sale

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instrument (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 March 31, 2026:

three-month period ended June 30, 2026:

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

Loan Commitments

Held for Sale

Maturity Securities Available for Sale

- March 31, 2026

$ 137,607,689

and purchases

maturities and paydowns

( 550,161,814 )

gains (losses):

( 365,260 )(1)

11,897,930 (1)

in other comprehensive income

- June 30, 2026

$ 146,871,985

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 June 30, 2025:

Loan Commitments

Held for Sale

Maturity Securities Available for Sale

- March 31, 2025

$ 139,834,226

and purchases

maturities and paydowns

( 603,595,597 )

to mortgagte loans held for investment

held for sale foreclosed into real estate held for sale

gains (losses):

13,948,844 (1)

in other comprehensive income

- June 30, 2025

$ 165,876,119

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, 2026 (Unaudited)

Fair Value of Financial Instrument (Continued)

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

six-month period ended June 30, 2026:

Net Loan Commitments

4 unchanged sentences

Originations and purchases

1,036,088,480

Sales, maturities and paydowns

5 unchanged sentences

Included in other comprehensive income

Balance - March 31, 2026

Balance - June 30, 2026

$ 146,871,985

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

three-month period ended March 31, 2025:

six-month period ended June 30, 2025:

Loan Commitments

1 unchanged sentence

Maturity Securities Available for Sale

Balance - December

- December 31, 2024

$ 131,181,148

Originations and purchases

Sales, maturities and paydowns

and purchases

1,134,783,086

Total gains (losses):

Included in earnings

maturities and paydowns

( 1,124,978,173 )

Included in other comprehensive

- March 31, 2025

to mortgage loans held for investment

held for sale foreclosed into real estate held for sale

gains (losses):

26,098,121 (1)

in other comprehensive income

- June 30, 2025

$ 165,876,119

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

1 unchanged sentence

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

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 March 31, 2026,

or as of March 31, 2025.

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instrument (Continued)

Company did not have any financial assets and financial liabilities measured at fair value on a nonrecurring basis as of June 30, 2026,

or as of June 30, 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 March 31, 2026, and December

are not necessarily indicative of the amounts the Company could have realized in a sales transaction as of June 30, 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 March 31, 2026:

are summarized as follows as of June 30, 2026:

Schedule of Financial Instruments Carried at Other Than Fair Value

Carrying Value

Total Estimated Fair Value

Mortgage loans held for investment

Residential construction

Mortgage loans held for investment, net

Estimated Fair Value

loans held for investment

loans held for investment, net

$ 290,685,188

1 unchanged sentence

$ 293,643,032

Policy loans (1)

Insurance assignments, net (1)

Restricted assets (2)

Cemetery perpetual care trust investments (2)

Mortgage servicing rights, net

Bank and other loans payable

assignments, net (1)

perpetual care trust investments (2)

servicing rights, net

and other loans payable

$ ( 122,230,135 )

1 unchanged sentence

$ ( 110,534,559 )

Policyholder account balances - universal life

account balances - universal life

( 34,990,504 )

1 unchanged sentence

( 35,015,185 )

Policyholder account balances - fixed annuities

account balances - fixed annuities

( 103,035,928 )

4 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instrument (Continued)

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 December 31, 2025:

Carrying Value

Total Estimated Fair Value

Mortgage loans held for investment

Residential construction

Mortgage loans held for investment, net

Estimated Fair Value

loans held for investment

loans held for investment, net

$ 322,435,385

1 unchanged sentence

$ 324,746,047

Policy loans (1)

Insurance assignments, net (1)

Restricted assets (2)

Cemetery perpetual care trust investments (2)

Mortgage servicing rights, net

Bank and other loans payable

assignments, net ( 1 )

perpetual care trust investments ( 2 )

servicing rights, net

and other loans payable

$ ( 98,387,919 )

1 unchanged sentence

$ ( 87,490,315 )

Policyholder account balances - universal life

account balances - universal life

( 35,825,494 )

1 unchanged sentence

( 35,986,392 )

Policyholder account balances - fixed annuities

account balances - fixed annuities

( 104,780,256 )

28 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

Fair Value of Financial Instruments (Continued)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Fair Value of Financial Instrument (Continued)

and Other Loans Payable :

22 unchanged sentences

based compensation expense for stock options issued of $ 450,299 and $ 310,430 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.

periods ended June 30, 2026, and 2025, respectively, and $ 913,999 and $ 609,703 has been recognized for these Plans for the six-month

periods ended June 30, 2026, and 2025, respectively, and is included in personnel expenses on the condensed consolidated statements of

As of June 30, 2026, the total unrecognized compensation expense related to the options issued was $ 783,164 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.

6 unchanged sentences

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Stock Compensation Plans (Continued)

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

activity of the Plans during the six-month period ended June 30, 2026, is summarized as follows:

Schedule of Activity of Stock Option Plans

Class A Shares

Weighted Average Exercise Price (2)

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.

Average Exercise Price (2)

at December 31, 2025

for the effect of stock dividends

at June 30, 2026

of June 30, 2026:

options for future grant

average contractual term of options outstanding at June 30, 2026

average contractual term of options exercisable at June 30, 2026

intrinsic value of options outstanding at June 30, 2026 (1)

intrinsic value of options exercisable at June 30, 2026 (1)

Company used a stock price of $ 9.23 as of June 30, 2026 to derive intrinsic value.

for the effect of annual stock dividends.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Stock Compensation Plans (Continued)

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

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

Class A Shares

Weighted Average Exercise Price (2)

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.

Average Exercise Price (2)

at December 31, 2024

for the effect of stock dividends

at June 30, 2025

of June 30, 2025:

options for future grant

average contractual term of options outstanding at June 30, 2025

average contractual term of options exercisable at June 30, 2025

intrinsic value of options outstanding at June 30, 2025 (1)

intrinsic value of options exercisable at June 30, 2025 (1)

Company used a stock price of $ 9.02 as of June 30, 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 ,

the exercise date) of stock options exercised during the six-month periods ended June 30, 2026, and 2025 were $ 269,074 and $ 1,357,776 ,

respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Stock Compensation Plans (Continued)

1 unchanged sentence

based compensation expense for RSUs issued of $ 7,071 and $ 9,949 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:

June 30, 2026, and 2025, respectively, of $ 12,503 and $ 19,936 has been recognized under these plans for the six-month periods ended June

30, 2026, and 2025, respectively, and is included in personnel expenses on the condensed consolidated statements of earnings.

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

As of June 30, 2026, the total unrecognized

compensation expense related to the RSUs issued was $ 14,123 , which is expected to be recognized over the remaining vesting period.

of the RSUs during the six-month period ended June 30, 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:

Average Grant Date Fair Value

at December 31, 2025

at June 30, 2026

RSUs for future grant

of the RSUs during the six-month period ended June 30, 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

Average Grant Date Fair Value

at December 31, 2024

at June 30, 2025

RSUs for future grant

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Commitments and Contingencies

14 unchanged sentences

interest at 2.10% plus the greater of (i) 0%, and (ii) the one-month forward-looking term rate based on SOFR on drawn amounts and matures

on July 17, 2026 .

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

minimum net loss of $ 2.5 million for the quarter.

on October 29, 2026 .

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.

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 loss of $ 2.5 million for the

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

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.

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.

of June 30, 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

to Condensed Consolidated Financial Statements

30, 2026 (Unaudited)

Commitments and Contingencies (Continued)

Covenants for Revolving Lines of Credit and Bank Loans

Company’s revolving line of credit agreements contain debt covenants requiring the Company to maintain minimum operating cash flow

ratios and minimum net worth requirements for each of its business segments.

The Company is also subject to debt covenants under one

of its real estate loans which require maintenance of a minimum consolidated operating cash flow ratio, minimum liquidity amounts, and

minimum consolidated net worth value.

In addition to these financial debt covenants, the Company is required to provide segment specific

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

As of March 31, 2026,

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

Company’s revolving line of credit agreement contains an annual “zero balance” covenant and quarterly segment financial

The Company is also subject to debt covenants under one of its real estate loans which require maintenance of a minimum consolidated

operating cash flow ratio, minimum liquidity amounts, and minimum consolidated net worth value.

In addition to these financial debt covenants,

the Company is required to provide building specific financial statements and rent rolls for each of its real estate loans.

30, 2026, the Company was in compliance with all debt covenants and required reporting.

Contingencies and Commitments

22 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements