What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-15 compared with 2024-11-14 · 1176 added, 1274 removed, 1390 unchanged (64% of the section changed)

Financial Statements.

September 30,

Fixed maturity securities, available for sale, at estimated fair value (amortized cost of $ 376,903,025 and $ 376,012,071 for 2025 and 2024, respectively;

22 unchanged sentences

$ 1,489,807,214

accompanying notes to condensed consolidated financial statements (unaudited).

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS (Continued)

September 30,

See accompanying notes to condensed

consolidated financial statements (unaudited).

SECURITY NATIONAL

FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

BALANCE SHEETS (Continued)

Liabilities and Stockholders’ Equity

14 unchanged sentences

5,000,000 shares authorized;

none issued or outstanding

none issued or

common stock - $ 2.00 par value;

40,000,000 shares authorized;

21,117,986 shares issued and outstanding as of September 30, 2024 and 21,052,883 (1) shares issued and outstanding as of December 31, 2023

21,321,739 shares issued and outstanding as of March 31,

2025 and 21,255,006 shares issued and outstanding as of December 31, 2024

non-voting common stock - $ 1.00 par value;

5,000,000 shares authorized;

none issued or outstanding

none issued or

convertible common stock - $ 2.00 par value;

6,000,000 shares authorized;

3,120,166 shares issued and outstanding as of September 30, 2024 and 3,120,432 (1) shares issued and outstanding as of December 31, 2023

3,417,170 shares issued and outstanding as of

March 31, 2025 and 3,321,833 shares issued and outstanding as of December 31, 2024

Common stock value

2 unchanged sentences

( 3,953,654 )

( 6,951,266 )

Retained earnings

Treasury stock at cost - 938,919 Class A shares and 37,503 Class C shares as of September 30, 2024;

and 852,338 (1) Class A shares and 37,503 (1) Class C shares as of December 31, 2023

Treasury stock at cost - 1,037,568 Class A shares and 99,623 Class C shares as of March 31, 2025;

1,025,784 Class A shares and 99,623 Class C shares as of December 31, 2024

( 8,732,593 )

4 unchanged sentences

$ 1,489,807,214

(1) Issued and outstanding

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

accompanying notes to condensed consolidated financial statements (unaudited).

See accompanying notes to condensed

consolidated financial statements (unaudited).

SECURITY NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended

September 30,

Nine Months Ended

September 30,

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

STATEMENTS OF EARNINGS

Three Months Ended March 31,

Mortgage fee income

2 unchanged sentences

Net mortuary and cemetery sales

Gains (losses) on investments and other assets

Gains on investments and other assets

Total revenues

3 unchanged sentences

Increase in future policy benefits

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

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

Selling, general and administrative expenses:

9 unchanged sentences

( 2,144,789 )

( 7,646,071 )

( 3,258,740 )

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

Net earnings per

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

The weighted-average shares outstanding includes

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

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

accompanying notes to condensed consolidated financial statements (unaudited).

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

September 30,

Nine Months Ended

September 30,

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 amounts have been adjusted retroactively for the effect of annual

stock dividends.

The weighted-average shares outstanding includes the weighted-average Class A common shares and the weighted-average

Class C common shares determined on an equivalent Class A common stock basis.

Net earnings per common share represent net earnings per

equivalent Class A common share.

See accompanying

notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL

FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

Other comprehensive income:

1 unchanged sentence

( 1,131,650 )

( 6,580,750 )

Unrealized gains (losses) on restricted assets (1)

Unrealized gains (losses) on cemetery perpetual care trust

investments (1)

Unrealized gains (losses) on restricted

Unrealized gains

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

Other comprehensive income (loss), before income tax

( 1,134,314 )

( 6,598,389 )

Income tax (expense) benefit

( 2,201,866 )

( 1,826,546 )

Other comprehensive income (loss), net of income tax

( 5,387,527 )

( 5,212,021 )

Comprehensive income (loss)

$ ( 1,346,234 )

Comprehensive income

(1) Fixed maturity

securities available for sale

accompanying notes to condensed consolidated financial statements (unaudited).

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2024

See accompanying

notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL

FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2025

Class A Common Stock

4 unchanged sentences

Treasury Stock

January 1, 2024

$ ( 6,885,558 )

$ 206,978,373

$ ( 5,661,737 )

$ 312,895,219

Other comprehensive loss

Stock-based compensation expense

Vesting of restricted stock units

Sale of treasury stock

Purchase of treasury stock

Conversion Class C to Class A

March 31, 2024

$ ( 7,780,656 )

$ 214,452,895

$ ( 5,336,081 )

$ 320,103,974

Other comprehensive loss

Stock-based compensation expense

Exercise of stock options

Vesting of restricted stock units

Sale of treasury stock

Purchase of treasury stock

( 1,588,058 )

Conversion Class C to Class A

Stock dividends

( 8,153,824 )

June 30, 2024

December 31, 2024

$ ( 6,951,266 )

8 unchanged sentences

Purchase of treasury stock

Stock dividends

September 30, 2024

March 31, 2025

$ ( 3,953,654 )

1 unchanged sentence

$ ( 8,732,593 )

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

Nine Months Ended September 30, 2023

$ 346,493,686

Three Months Ended March 31, 2024

Class A Common Stock

4 unchanged sentences

Treasury Stock

January 1, 2023

$ ( 13,070,277 )

$ 202,160,306

$ ( 4,366,651 )

$ 292,786,927

Adoption of ASU 2016-13

Other comprehensive income

Stock-based compensation expense

Exercise of stock options

Sale of treasury stock

Purchase of treasury stock

( 1,204,357 )

Conversion Class C to Class A

March 31, 2023

$ ( 8,942,719 )

$ 202,728,972

$ ( 4,950,357 )

$ 297,033,642

Other comprehensive loss

( 3,952,052 )

Stock-based compensation expense

Exercise of stock options

Vesting of restricted stock units

Sale of treasury stock

Purchase of treasury stock

( 1,514,049 )

( 1,387,059 )

Conversion Class C to Class A

Stock dividends

( 9,002,969 )

June 30, 2023

December 31, 2023

$ ( 6,885,558 )

7 unchanged sentences

Other comprehensive loss

( 5,387,527 )

Other comprehensive income (loss)

( 5,387,527 )

Stock-based compensation expense

Exercise of stock options

Vesting of restricted stock units

2 unchanged sentences

Conversion Class C to Class A

Stock dividends

September 30, 2023

March 31, 2024

$ ( 7,780,656 )

6 unchanged sentences

$ 320,103,974

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

SECURITY NATIONAL

FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Cash flows from operating activities:

10 unchanged sentences

Purchases of restricted assets

( 2,536,814 )

( 1,836,290 )

Sales, calls and maturities of restricted assets

Purchases of cemetery perpetual care trust investments

( 2,487,924 )

Sales, calls and maturities of perpetual care trust investments

9 unchanged sentences

Sales of real estate

Net cash provided by investing activities

Net cash provided by (used in) investing activities

( 29,266,526 )

Cash flows from financing activities:

5 unchanged sentences

Purchases of treasury stock

( 1,672,232 )

( 2,843,365 )

Repayment of bank loans

( 1,423,826 )

( 69,133,305 )

Proceeds from bank loans

Net change in warehouse line borrowings for loans held for sale

( 52,720,401 )

Net cash used in financing activities

( 1,683,966 )

Net cash provided by (used in) financing activities

( 2,149,221 )

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

( 4,810,375 )

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

6 unchanged sentences

Non Cash Operating, Investing and Financing Activities:

Transfer from fixed maturity securities available for sale to other investments

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

1 unchanged sentence

Loans held for sale foreclosed into real estate held for sale

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

Transfer of loans held for sale to mortgage loans held for investment

Transfer from mortgage loans held for investment to restricted assets

Transfer from mortgage loans held for investment to cemetery perpetual care trust investments

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Reconciliation

of cash, cash equivalents, restricted cash and restricted cash equivalents as shown in the condensed consolidated statements of cash

flows are presented in the table below:

Nine Months Ended September 30,

SECURITY NATIONAL

FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS (Continued)

Reconciliation of cash, cash equivalents, restricted

cash and restricted cash equivalents as shown in the condensed consolidated statements of cash flows are presented in the table below:

Cash and cash equivalents

3 unchanged sentences

Cemetery perpetual care trust investments

Total cash, cash equivalents, restricted cash and restricted cash

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

$ 145,292,245

$ 164,550,756

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

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

$ 145,292,245

$ 164,550,756

accompanying notes to condensed consolidated financial statements (unaudited).

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

1) Basis of Presentation

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

accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Articles 8 and

10 of Regulation S-X.

Accordingly, they do not include all the information and disclosures required by accounting principles generally

accepted in the United States of America for complete financial statements.

These financial statements should be read in conjunction

with the consolidated financial statements of the Company and notes thereto for the year ended December 31, 2023, included in the Company’s

Annual Report on Form 10-K (File Number 000-09341).

In the opinion of management, all adjustments (consisting of normal recurring accruals)

considered necessary for a fair presentation have been included.

Operating results for the three and nine month periods ended September

30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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

management to adopt policies and make estimates and assumptions that affect the amounts reported in the financial statements and accompanying

In applying these policies and estimates, the Company makes judgments that frequently require assumptions about matters that are

inherently uncertain.

Accordingly, significant estimates used in the preparation of the Company’s financial statements may be subject

to significant adjustments in future periods.

See accompanying

notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

The accompanying

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

the United States of America for interim financial information and with the instructions to Form 10-Q and Articles 8 and 10 of Regulation

Accordingly, they do not include all the information and disclosures required by accounting principles generally accepted in the

United States of America for complete financial statements.

These financial statements should be read in conjunction with the consolidated

financial statements of the Company and notes thereto for the year ended December 31, 2024, included in the Company’s Annual Report

on Form 10-K (File Number 000-09341).

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered

necessary for a fair presentation have been included.

Operating results for the three month period ended March 31, 2025 are not necessarily

indicative of the results that may be expected for the year ending December 31, 2025.

The preparation

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

to adopt policies and make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

In applying these policies and estimates, the Company makes judgments that frequently require assumptions about matters that are inherently

Accordingly, significant estimates used in the preparation of the Company’s financial statements may be subject to significant

adjustments in future periods.

Actual results could differ from those estimates.

estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative

assets and liabilities;

Material estimates

that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative assets

and liabilities;

those used in determining deferred acquisition costs and the value of business acquired;

those used in determining

the value of mortgage loans foreclosed to real estate held for investment or sale;

those used in determining the liability for future

policy benefits and unearned revenue;

those used in determining the estimated future costs for pre-need sales;

those used in determining

the value of mortgage servicing rights;

those used in determining the

liability for future policy benefits;

those used in determining the value of loans held for sale;

those used in determining allowances

for credit losses;

those used in determining loan loss reserve;

and those used in determining deferred tax assets and liabilities.

some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

and those used in determining loan loss

Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

2) Recent Accounting Pronouncements

Standards Adopted in 2023

“Financial Instruments – Credit Losses (Topic 326)” — Issued in September 2016, ASU 2016-13

amends guidance on reporting credit losses for assets held at amortized cost basis (such as mortgage loans held for investment and held

to maturity debt securities) and available for sale debt securities.

For assets held at an amortized cost basis, Topic 326 eliminates

the probable initial recognition threshold and, instead, requires an entity to reflect its current estimate of all expected credit losses.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present

the net amount expected to be collected.

For available for sale debt securities Topic 326 requires that credit losses be presented as

an allowance rather than as a write-down.

The Company adopted this standard on January 1, 2023, and after a review of the affected assets,

decreased the opening balance of retained earnings in stockholders’ equity by $ 671,506 on January 1, 2023.

The allowances for credit

losses increased (decreased) by the following amounts.

of Increased (Decrease) in Allowances for Credit Losses Upon ASU

Mortgage loans held for investment:

$ ( 192,607 )

Residential construction

Restriced assets - mortgage loans held for investment:

Residential construction

Cemetery perpetual care trust investments - mortgage loans held for investment:

Residential construction

Standards Issued But Not Yet Adopted

1 unchanged sentence

Targeted Improvements to the Accounting for Long-Duration Contracts” —

— Issued in August 2018, ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future

policy benefits on traditional long-duration contracts by requiring that assumptions be updated after contract inception and by modifying

the rate used to discount future cash flows.

The standard is aimed at improving the accounting for certain market-based options or guarantees

associated with deposit or account balance contracts, simplifying amortization of deferred acquisition costs while improving and expanding

required disclosures.

2018-12 is effective for annual reporting periods beginning after December 15, 2024 and interim reporting

periods beginning after December 15, 2025.

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

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

system updates, and design.

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

system providers as part of the implementation.

The Company is in the process of estimating the impact of the new guidance on the consolidated

financial statements.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

2) Recent Accounting Pronouncements (Continued)

Issued in August 2018, ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future policy benefits

on traditional long-duration contracts by requiring that assumptions be updated after contract inception and by modifying the rate used

to discount future cash flows.

The standard is aimed at improving the accounting for certain market-based options or guarantees associated

with deposit or account balance contracts, simplifying amortization of deferred acquisition costs while improving and expanding required

In November 2020, ASU No.

“Financial Services – Insurance (Topic 944):

Effective Date and Early Application,”

This ASU was issued to provide additional time for the implementation of ASU No.

2018-12 by deferring the effective date by

For smaller reporting companies, this update is effective for annual reporting periods beginning after December 15, 2024, and

interim reporting periods beginning after December 15, 2025.

The Company will adopt the standard commencing with its annual reporting

period ending December 31, 2025.

The Company is nearing completion of its analysis and implementation of the new standard, including the

identification of cohorts, system updates, and design.

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

and consulted external system providers as part of the implementation.

The adoption of this guidance is expected to have an impact on

its financial position, results of operations, and disclosures, as well as systems, processes and controls.

The Company continues to evaluate

the impact of the new guidance on its consolidated financial statements.

“Income Taxes (Topic 740):

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

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

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

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

In addition, the amendments in this update require

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

(i) the amount of income taxes paid

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

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

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

ASU 2023-09 is effective for the Company beginning on January 1,

The Company is in the process of estimating the impact of the new guidance on the consolidated financial statements.

“Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” — Issued in November

2023, ASU 2023-07 requires enhanced disclosures about significant segment expenses.

The key amendments include:

(i) disclosures on significant

segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of

segment profit or loss on an annual and interim basis;

(ii) disclosures on an amount for other segment items by reportable segment and

a description of its composition on an annual and interim basis.

The other segment items category is the difference between segment revenue

less the significant expenses disclosed and each reported measure of segment profit or loss;

(iii) providing all annual disclosures on

a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting in interim periods;

and (iv) specifying the title and position of the CODM.

ASU 2023-07 is effective for the Company for annual periods beginning January

1, 2024 and interim periods beginning January 1, 2025.

The Company is in the process of estimating the impact of the new guidance on

the consolidated financial statements.

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

results of operations or financial position.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Improvements to Income Tax Disclosures” — Issued in December 2023, ASU 2023-09 requires

that public business entities, on an annual basis:

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

information for reconciling items that meet a quantitative threshold.

In addition, the amendments in this update require that all entities

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

(i) the amount of income taxes paid (net of refunds received)

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

by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income

taxes paid (net of refunds received).

ASU 2023-09 is effective for the Company for the annual reporting periods beginning January 1, 2025.

The Company will adopt the standard commencing with its annual reporting period ending December 31, 2025.

The Company does not anticipate

that the adoption of ASU 2023-09 will have a material impact on the consolidated financial statements.

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

Disaggregation of Income

Statement Expenses” — Issued in November 2024, ASU 2024-03 requires public business entities to disclose, in the notes

to the consolidated financial statements, specified information about certain expenses at each interim and annual reporting period.

2024-03 requires disclosures about specific types of expenses (i.e., (a) purchases of inventory, (b) employee compensation, (c) depreciation

and (d) intangible asset amortization) included in the expense captions presented on the face of the statement of earnings as well as

disclosures about selling expenses.

ASU 2024-03 does not change the requirements for the presentation of expenses on the statement of

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning

after December 15, 2027.

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

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

The Company has

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

of operations or financial position.

NATIONAL FINANCIAL CORPO RATION

AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

1 unchanged sentence

3) Investments

Company’s investments as of September 30, 2024 are summarized as follows:

The Company’s investments as of March 31, 2025

are summarized as follows:

of Investments

4 unchanged sentences

Estimated Fair Value

September 30, 2024:

March 31, 2025:

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

51 unchanged sentences

Investments (Continued)

Company’s investments as of December 31, 2023 are summarized as follows:

The Company’s investments as of December 31,

2024 are summarized as follows:

Amortized Cost

8 unchanged sentences

$ ( 486,976 )

$ ( 1,416,448 )

$ 110,378,730

Obligations of states and political subdivisions

16 unchanged sentences

Mortgage loans held for investment at amortized cost:

$ 103,153,587

Residential construction

25 unchanged sentences

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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Investments (Continued)

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

equity securities and fixed maturity securities) as of September 30, 2024, other than investments issued or guaranteed by the United

States Government.

Maturity Securities

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

of September 30, 2024 and December 31, 2023.

The fair values of fixed maturity securities are based on quoted market prices, when available.

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

or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable

to the coupon rate, credit and maturity of the investments.

The table below sets forth unrealized losses by duration with the fair value

of the related fixed maturity securities.

of Fair Value of Fixed Maturity Securities

There 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, 2025, other than investments issued

or guaranteed by the United States Government.

Fixed Maturity Securities

The table below summarizes unrealized losses on fixed

maturity securities available for sale that were carried at estimated fair value as of March 31, 2025 and December 31, 2024.

fair values of fixed maturity securities are based on quoted market prices, when available.

For fixed maturity securities not actively

traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated

by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments.

The table below sets forth unrealized losses by duration with the fair value of the related fixed maturity securities.

Schedule of Fair Value of Fixed Maturity Securities

Unrealized Losses for Less than Twelve Months

2 unchanged sentences

Combined Fair Value

September 30, 2024

March 31, 2025

Treasury securities and obligations of U.S.

9 unchanged sentences

Obligations of states and political subdivisions

Corporate securities

Corporate securities including public utilities

Mortgage-backed securities

1 unchanged sentence

$ 221,767,792

holdings were comprised of 433 securities with fair values aggregating 94.9 % of the aggregate amortized cost as of September 30, 2024.

Relevant holdings were comprised of 606 securities with fair values aggregating 94.9 % of the aggregate amortized cost as of December

Credit loss provision of $ 20,342 and credit loss release of $ 1,741 have been recognized for the three month periods ended September

30, 2024 and 2023, respectively.

Credit loss provision of $ 100,053 and $ 222,264 have been recognized for the nine month periods ended

September 30, 2024 and 2023, respectively.

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

consolidated statements of earnings.

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

in interest rates.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

Relevant holdings were comprised of 585 securities

with fair values aggregating 95.0 % of the aggregate amortized cost as of March 31, 2025, compared to 706 securities with fair values aggregating

94.9 % of the aggregate amortized cost as of December 31, 2024.

A credit loss provision of $ 86,307 and of $ 96,000 have been recognized

for the three month periods ended March 31, 2025 and 2024, respectively.

Credit losses are included in gains (losses) on investments and

other assets on the condensed consolidated statements of earnings.

Other unrealized losses for which no credit loss was recognized are

primarily the result of increases in interest rates.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Investments (Continued)

of Allowance for Credit Losses

Note 2 regarding the adoption of ASU 2016-13.

a quarterly basis, the Company evaluates its fixed maturity securities classified as available for sale to identify any potential credit

This evaluation includes a review of current ratings by the National Association of Insurance Commissions (“NAIC”)

and other industry rating agencies.

Securities with a rating of 1 or 2 are considered investment grade and are not reviewed for credit

loss unless current market data or recent company news could lead to a credit downgrade.

Securities with ratings of 3 to 5 are evaluated

for credit loss.

The evaluation involves assessing all facts and circumstances surrounding each security including, but not limited to,

historical values, interest payment history, projected earnings, and revenue growth rates as well as a review of the reason for a downgrade

in the NAIC rating.

Based on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely

make interest and principal payments in accordance with the terms of the financial instrument.

Securities with a rating of 6 are automatically

determined to be impaired and a credit loss is recognized in earnings.

the decline in fair value of fixed maturity securities is attributable to changes in market interest rates or to factors such as market

volatility, liquidity and spread widening, and the Company anticipates recovery of all contractual or expected cash flows, the Company

does not consider these securities to have credit loss because the Company does not intend to sell these securities and it is not more

likely than not the Company will be required to sell these securities before a recovery of amortized cost, which may be at maturity.

the Company intends to sell a fixed maturity security or if it is more likely than not that the Company will be required to sell a security

before recovery of its amortized cost basis, a credit loss has occurred and the difference between the amortized cost and the fair value

that relates to the expected credit loss is recognized as a loss in earnings, included in gains (losses) on investments and other assets

on the condensed consolidated statements of earnings.

the Company does not intend to sell a debt security and it is less likely than not that the Company will be required to sell the debt

security but the Company also does not expect to recover the entire amortized cost basis of the security, a credit loss is recognized

in earnings for the amount of the expected credit loss with a corresponding allowance for credit losses as a contra-asset account.

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

The recognized

credit loss is limited to the total unrealized loss on the security due to a change in credit.

on available for sale fixed maturities that are deemed to be uncollectible are written off and removed from the allowance for credit

A write-off may also occur if the Company intends to sell a security or when it is more likely than not that the Company will be

required to sell the security before the recovery of its amortized cost.

Company does not measure a credit loss allowance on accrued interest receivable, included in accrued investment income on the condensed

consolidated balance sheets, as the Company writes off any accrued interest receivable balance to net investment income in a timely manner

(after 90 days) when the Company has concerns regarding collectability.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

The Company evaluates

its fixed maturity securities classified as available for sale on a quarterly basis to identify any potential credit losses.

This evaluation

includes a review of current ratings by the National Association of Insurance Commissions (“NAIC”) and other industry rating

Securities with NAIC rating of 1 or 2 are considered investment grade and are only reviewed for credit loss if current market

data or recent company news could lead to a credit downgrade.

Securities with NAIC ratings of 3 to 5 are considered non-investment grade

and are evaluated for credit loss.

The evaluation involves assessing all facts and circumstances surrounding each security including,

but not limited to, historical values, interest payment history, projected earnings, and revenue growth rates as well as a review of the

reason for a downgrade in the NAIC rating.

Based on the analysis of a security that is rated 3 to 5, a determination is made whether the

security will likely make interest and principal payments in accordance with the terms of the financial instrument.

Securities with a

rating of 6 are automatically determined to be impaired and a credit loss is recognized in earnings.

Where the decline

in fair value of fixed maturity securities is attributable to changes in market interest rates or to factors such as market volatility,

liquidity and spread widening, and the Company anticipates recovery of all contractual or expected cash flows, the Company does not consider

these securities to have credit loss because the Company does not intend to sell these securities and it is not more likely than not the

Company will be required to sell these securities before a recovery of amortized cost, which may be at maturity.

If the Company

intends to sell a fixed maturity security or if it is more likely than not that the Company will be required to sell a security before

recovery of its amortized cost basis, a credit loss has occurred and the difference between the amortized cost and the fair value that

relates to the expected credit loss is recognized as a loss in earnings, included in gains (losses) on investments and other assets on

the condensed consolidated statements of earnings.

If the Company

does not intend to sell a fixed maturity security and it is less likely than not that the Company will be required to sell the security

but the Company also does not expect to recover the entire amortized cost basis of the security, a credit loss is recognized in earnings

for the amount of the expected credit loss with a corresponding allowance for credit losses as a contra-asset account.

The credit loss

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

The recognized credit

loss is limited to the total unrealized loss on the security due to a change in credit.

Amounts due on

available for sale fixed maturities that are deemed to be uncollectible are written off and removed from the allowance for credit loss.

A write-off may also occur if the Company intends to sell a security or when it is more likely than not that the Company will be required

to sell the security before the recovery of its amortized cost.

The Company does

not calculate a credit loss allowance on accrued interest income, included in accrued investment income on the condensed consolidated

balance sheets, as the Company writes off any accrued interest income to net investment income if the accrued but unpaid amount exceeds

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Investments (Continued)

Quality Indicators

NAIC assigns designations to fixed maturity securities.

These designations range from Class 1 (highest quality) to Class 6 (lowest quality).

The NAIC designations are utilized by insurers in preparing their annual statutory statements.

NAIC Class 1 and 2 are considered investment

grade while the NAIC Class 3 through 6 designations are considered non-investment grade.

Based on the NAIC designations, the Company

had 97.9 % and 98.2 % of its fixed maturity securities rated investment grade as of September 30, 2024 and December 31, 2023, respectively.

Credit Quality Indicators

Based on the NAIC securities designations, the Company

had 98.2 % and 97.7 % of its fixed maturity securities rated investment grade as of March 31, 2025 and December 31, 2024, respectively.

The following table summarizes the credit quality, by NAIC designation, of the Company’s fixed maturity securities available for

sale, excluding redeemable preferred stock.

of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation

September 30, 2024

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

March 31, 2025

December 31, 2024

NAIC Designation

Estimated Fair

8 unchanged sentences

$ 366,296,129

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

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

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

Three Months Ended September 30, 2024

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 - June 30, 2024

Additions for credit losses not previously recorded

Change in allowance on securities with previous allowance

Reductions for securities sold during the period

Reductions for securities with credit losses due to intent to sell

Write-offs charged against the allowance

Recoveries of amounts previously written off

Ending Balance - September 30, 2024

Three Months Ended September 30, 2023

The 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, 2025 and 2024:

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

Three Months Ended March 31, 2025

Treasury securities and obligations of U.S.

3 unchanged sentences

Mortgage-backed securities

Beginning balance - June 30, 2023

Beginning balance - December 31, 2024

Additions for credit losses not previously recorded

4 unchanged sentences

Recoveries of amounts previously written off

Ending Balance - September 30, 2023

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

Ending Balance - March 31, 2025

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Investments (Continued)

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

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

Nine Months Ended September 30, 2024

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 - January 1, 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 - September 30, 2024

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Treasury securities and obligations of U.S.

3 unchanged sentences

Mortgage-backed securities

Beginning balance - January 1, 2023

Beginning balance - December 31, 2023

Additions for credit losses not previously recorded

4 unchanged sentences

Recoveries of amounts previously written off

Ending Balance - September 30, 2023

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

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

30, 2024, by contractual maturity.

Actual or expected maturities may differ from contractual maturities because certain borrowers may

have the right to call or prepay obligations with or without call or prepayment penalties.

of Investments Classified by Contractual Maturity Date

Ending Balance - March 31, 2024

The table below

presents the amortized cost and the estimated fair value of fixed maturity securities available for sale as of March 31, 2025, by contractual

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

to call or prepay its obligations.

Schedule of Investments Classified by Contractual Maturity Date

Estimated Fair

7 unchanged sentences

$ 371,212,032

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

of Major Categories of Net Investment Income

Three Months Ended September 30,

Nine Months Ended September 30,

Information regarding

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

Schedule of Major Categories of Net Investment Income

Three Months Ended March 31,

Proceeds from sales

1 unchanged sentence

Gross realized losses

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Investments (Continued)

on Deposit, Held in Trust, and Pledged as Collateral

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

of Assets on Deposit With Life Insurance

September 30,

Deposit, Held in Trust, and Pledged as Collateral

Assets on deposit

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

Schedule of Assets on Deposit With Life Insurance

Fixed maturity securities available for sale at estimated fair value

2 unchanged sentences

Total assets on deposit

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

September 30,

Assets held in trust related to third-party reinsurance agreements were

Fixed maturity securities available for sale at estimated fair value

1 unchanged sentence

Total assets on deposit

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

Assets pledged as collateral with the

FHLB are presented below.

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

September 30,

The Company is a member of the Federal Home Loan Bank

of Des Moines and Dallas (“FHLB”).

Assets pledged as collateral with the FHLB are presented below.

These pledged securities

are used as collateral for any FHLB cash advances.

Fixed maturity securities available for sale at estimated fair value

Total assets pledged as collateral

Estate Held for Investment and Held for Sale

Company strategically deploys resources into real estate assets to match the income and yield durations of its primary obligations.

sources for these real estate assets come through its various business units in the form of acquisition, development, and mortgage foreclosures.

Held for Investment and Held for Sale

The Company strategically

deploys resources into real estate assets to match the income and yield durations of its primary obligations.

The sources for these real

estate assets come through its various business units in the form of acquisition, development, and mortgage foreclosures.

Real Estate Held for Investment and Held for Sale

Company owns and manages commercial real estate assets as a means of both generating investment income and providing workspace for its

These assets are acquired in accordance with the Company’s goals and objectives for risk-adjusted returns.

Due diligence

is conducted on each asset using internal and third-party resources.

The geographic locations and asset classes of investments are determined

by senior management under the direction of the Board of Directors.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

The Company owns,

invests in and manages commercial real estate as a means of both generating investment income and providing workspace for its employees.

This asset class is acquired in accordance with the Company’s goals and objectives for risk-adjusted returns.

Due diligence is conducted

on each asset using internal and third-party resources.

The geographic locations and asset sub-classes of investments are determined by

senior management under the direction of the Board of Directors.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Investments (Continued)

Company employs full-time employees to attend to the day-to-day operations of those assets within the greater Salt Lake area and close

surrounding markets.

The Company utilizes third party property managers where the geographic location does not warrant full-time staff

or through strategic lease-up periods.

The Company will generally acquire assets as a result of company acquisitions or that are in regions

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.

aggregated net book value of commercial real estate serving as collateral for bank loans was $ 120,756,194 and $ 124,381,467 as of September

30, 2024 and December 31, 2023, respectively.

The associated bank loan carrying values totaled $ 96,470,650 and $ 97,807,614 as of September

30, 2024 and December 31, 2023, respectively.

the three and nine month periods ended September 30, 2024 and 2023, the Company did not record any impairment losses on commercial real

estate held for investment or held for sale.

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

on the condensed consolidated statements of earnings.

the three month periods ended September 30, 2024 and 2023, the Company recorded depreciation expense on commercial real estate held for

investment of $ 1,420,367 and $ 1,572,494 , respectively, and of $ 4,366,462 and $ 4,715,322 during the nine month periods ended September

The Company employs

full-time employees to attend to the day-to-day operations of its commercial real estate within the greater Salt Lake area and close surrounding

The Company utilizes third party property managers where the geographic location does not warrant full-time staff or through

strategic lease-up periods.

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

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

The 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.

The aggregate

net book value of commercial real estate serving as collateral for bank loans was $ 118,658,948 and $ 119,889,846 as of March 31, 2025 and

December 31, 2024, respectively.

The associated bank loan carrying values totaled $ 95,542,882 and $ 96,007,488 as of March 31, 2025 and

December 31, 2024, respectively.

During the three

month periods ended March 31, 2025 and 2024, the Company did not record any impairment losses on commercial real estate held for investment

or held for sale.

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

statements of earnings.

During the three

month periods ended March 31, 2025 and 2024, the Company recorded depreciation expense on commercial real estate held for investment of

$ 1,422,016 and $ 1,527,793 , 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 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

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 consolidated statements

The Company’s

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

Schedule of Commercial Real Estate Investment

Net Book Value

Total Square Footage

September 30,

December 31, 2024

$ 124,856,106

3 unchanged sentences

(1) Includes Center53

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

Net Book Value

Total Square Footage

September 30,

Consists of approximately 93 acres of undeveloped land

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

Real Estate Held for Investment and Held for Sale

Company occasionally acquires residential homes through the mortgage loan foreclosure process.

The Company has the option to sell these

properties or to continue to hold them for expected cash flow and price appreciation.

Company established Security National Real Estate Services (“SNRE”) to manage its residential property portfolio.

SNRE cultivates

and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the Company’s entire

residential property portfolio.

the three and nine month periods ended September 30, 2024 and 2023 the Company did no t record any impairment losses on residential real

estate held for sale or held for investment.

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

on the condensed consolidated statements of earnings.

the three month periods ended September 30, 2024 and 2023, the Company recorded depreciation expense on residential real estate held

for investment of $ 2,653 and $ 2,648 , respectively, and $ 7,958 and $ 7,944 during the nine month periods ended September 30, 2024 and 2023,

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 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

September 30,

Includes multiple residential subdivision development projects

Company also invests in residential subdivision developments.

The following table presents additional information regarding the Company’s

residential subdivision development projects in Utah:

September 30,

Lots developed

Lots to be developed

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

The Company’s

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

Net Book Value

September 30,

net book value of foreclosed residential real estate included in residential real estate held for sale was $ 849,900 and nil as of September

30, 2024 and December 31, 2023, respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

March 31, 2025

December 31, 2024

Mississippi (1)

(1) Consists of approximately

93 acres of undeveloped land

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Investments (Continued)

Estate Owned and Occupied by the Company

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

As of September 30, 2024, real estate

owned and occupied by the Company is summarized as follows:

Commercial Real Estate Owned and

Occupied by the Company

The primary business

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

As of March 31, 2025, real estate owned and occupied by

the Company is summarized as follows:

of Real Estate Owned and Occupied by the Company

Business Segment

Square Footage

Approximate Square Footage

Square Footage Occupied by the Company

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

4 unchanged sentences

Life Insurance Sales

Included in real estate held for investment on the condensed

consolidated balance sheets

Included in property and equipment on the condensed consolidated

balance sheets

(1) Included in real

estate held for investment on the condensed consolidated balance sheets

(2) Included in property

and equipment on the condensed consolidated balance sheets

(3) Listed for sale

Loans Held for Investment

loans held for investment consist of first and second mortgages.

The mortgage loans bear interest at rates ranging from 2.0 % to 10.5 %,

maturity dates range from nine months to 30 years and the loans are secured by real estate.

Concentrations

of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet

contractual obligations to be similarly affected by changes in economic conditions.

Although the Company has a diversified mortgage loan

portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real

estate exposures, a substantial portion of the relevant debtors’ ability to honor obligations is dependent upon the economic stability

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

As of September 30, 2024, the Company had 53 %, 9 %, 7 %, 7 %

and 5 %, of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, Arizona, and California, respectively.

of December 31, 2023, the Company had 44 %, 11 %, 10 %, 7 % and 6 % of its mortgage loans from borrowers located in the states of Utah, Florida,

California, Texas, and Arizona respectively.

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

Residential Real Estate Held for

Investment and Held for Sale

The Company occasionally

acquires residential homes through the mortgage loan foreclosure process.

The Company has the option to sell these properties or to continue

to hold them for expected cash flow and price appreciation.

The Company also looks for opportunities to acquire land that can be developed

into single family lots.

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

During the three

month periods ended March 31, 2025 and 2024 the Company did not record any impairment losses on residential real estate held for sale

or held for investment.

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

statements of earnings.

During the three

month periods ended March 31, 2025 and 2024, the Company recorded depreciation expense on residential real estate held for investment

of $ 2,676 and $ 2,653 , 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 consolidated statements

The Company’s

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

Schedule of Residential Real Estate Investment

Net Book Value

(1) Includes multiple

residential subdivision development projects, refer to the following table.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Investments (Continued)

The Company also

invests in residential subdivision developments.

The following table presents additional information regarding the Company’s residential

subdivision development projects in Utah:

Lots developed

Lots to be developed

The Company’s

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

Net Book Value

December 31, 2024

2,561,487 (1)

(1) Includes a residential

subdivision development project for $ 2,106,487

value of foreclosed residential real estate included in residential real estate held for sale was $ 455,000 and $ 1,126,480 as of March

31, 2025 and December 31, 2024, respectively.

Mortgage Loans

Held for Investment

Mortgage loans held for investment consist of first

and second mortgages and are generally classified in three distinct group:

Commercial, Residential and Residential Construction.

mortgage loans bear interest at rates ranging from 2.0 % to 10.5 %, maturity dates range from nine months to 30 years and have amortization

periods of 0 to 30 years.

Concentrations of credit risk arise when a number

of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly

affected by changes in economic conditions.

Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages,

commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of the

relevant debtors’ ability to honor obligations is dependent upon the economic stability of the geographic region in which the debtors

do business or are employed.

As of March 31, 2025, the Company had 59 %, 8 %, 7 %, 4 % and 4 %, of its mortgage loans from borrowers located

in the states of Utah, Florida, Arizona, Texas, and California, respectively.

As of December 31, 2024, the Company had 56 %, 8 %, 9 % and

6 % of its mortgage loans from borrowers located in the states of Utah, Florida, Arizona, and Texas, respectively.

Mortgage loans

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

and the related allowance for credit losses.

5 unchanged sentences

consolidated statements of earnings.

loans are secured by the underlying property and require an appraisal at the time of underwriting and funding.

Generally, the Company

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

For loans of more than 80% of the fair

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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

Mortgage loans

are secured by the underlying property and require an appraisal at the time of underwriting and funding.

Generally, the Company requires

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

For loans of more than 80% of the fair market value

of the respective loan collateral, additional collateral or mortgage insurance by an approved third-party insurer is required.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

of Allowance for Credit Losses

Note 2 regarding the adoption of ASU 2016-13.

allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the Company’s mortgage loans

held for investment to present the net amount expected to be collected.

The Company reports in net earnings, as a credit loss expense,

the amount necessary to adjust the allowance for credit losses for the Company’s current estimate of expected credit losses on

mortgage loans held for investment.

This credit loss expense is included in other expenses on the condensed consolidated statements of

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

interest income that had been accrued.

The allowance

for credit losses is a valuation account that is deducted from the amortized cost basis of the Company’s mortgage loans held for

investment to present the net amount expected to be collected.

The Company reports in net earnings, as a credit loss expense, the amount

necessary to adjust the allowance for credit losses for the Company’s current estimate of expected credit losses on mortgage loans

held for investment.

This credit loss expense is included in other expenses on the condensed consolidated statements of earnings.

Once a mortgage

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

that had been accrued.

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

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

Payments received

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

The interest income recognized from payments received for mortgage

loans on a non-accrual status was immaterial.

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

Payments received for mortgage

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

The interest income recognized from payments received for mortgage loans on

a non-accrual status was immaterial.

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

Interest not accrued

on these loans totaled approximately $ 297,000 and $ 237,000 as of September 30, 2024 and December 31, 2023, respectively.

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

When a mortgage loan becomes delinquent, the Company proceeds to foreclose and all expenses for foreclosure are expensed as incurred.

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

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

The Company’s

loan types are commercial, residential, and residential construction.

The inherent risks within the portfolio vary depending upon the

loan type as follows:

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

Commercial loans are made primarily based on the underlying collateral supporting the loan.

Accordingly, the repayment of

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

guarantor’s) ability to repay.

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

ratio (“DSCR”), loan to value (“LTV”), local market conditions, borrower quality, and underlying collateral.

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

value is assessed if the loan becomes 90 days delinquent.

Interest not accrued on these

loans totaled approximately $ 259,000 and $ 244,000 as of March 31, 2025 and December 31, 2024, respectively.

The Company measures

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

a mortgage loan becomes delinquent, the Company proceeds to foreclose and all expenses for foreclosure are expensed as incurred.

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

To determine the allowance for credit losses, the

Company has segmented its mortgage loans held for investment by loan type.

The Company’s loan types are commercial, residential,

and residential construction.

The inherent risks within the portfolio vary depending upon the loan type as follows:

Commercial - Underwritten in accordance with

the Company’s policies to determine the borrower’s ability to repay the obligation as agreed.

Commercial loans are made primarily

based on the underlying collateral supporting the loan.

Accordingly, the repayment of a commercial loan depends primarily on the collateral

and its ability to generate income and secondarily on the borrower’s (or guarantor’s) ability to repay.

Commercial loans are evaluated for credit loss by

analyzing common metrics that are predictors for future credit losses such as debt service coverage ratio (“DSCR”), loan to

value (“LTV”), local market conditions, borrower quality, and underlying collateral.

The fair value of the underlying collateral

is based on a third-party appraisal of the property at origination of the loan.

The fair value is assessed if the loan becomes 90 days

The Company uses these metrics to pool similar loans.

The allowance for credit

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

affect the collectability of the loan.

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

the allowance for credit losses.

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

The borrower’s ability to repay is

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

Where loan to value exceeds 80%, the loan is generally

guaranteed by private mortgage insurance, the FHA, or VA.

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

Among other things,

the Company uses its historical delinquency information and considers current and forecasted economic conditions.

External sources include

a monthly analysis of its residential portfolio by a third party.

The third party uses the Company’s current loan data and runs

it through various models to project cash flows and provide a projected life of loan loss.

The models consider loan features such as

loan type, loan to value, payment status, age, and current property values.

Analyzing the information from the various sources allows

the Company to arrive at the allowance for credit losses.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

construction (including land acquisition and development) – These loans are underwritten in accordance with the Company’s

underwriting policies, which include a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent

appraisal valuations, and factor in estimates of the value of construction projects upon completion.

Construction loans generally involve

the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed

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

Additionally,

land acquisition and development loans are underwritten in accordance with the Company’s underwriting policies, which include independent

appraisal valuations as well as the estimated value associated with the land upon completion of development into finished lots.

loans are of a higher risk than other mortgage loans due to their ultimate repayment being sensitive to general economic conditions,

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

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

at a per loan basis point allowance that is recognized at loan origination and for subsequent draws.

The per loan basis point is reviewed

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

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

of Allowance for Loan Losses

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

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

The Company applies

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

Residential — These loans are secured

by first and second mortgages on single-family dwellings.

The borrower’s ability to repay is sensitive to the life events and the

general economic condition of the region.

Where loan to value exceeds 80%, the loan is generally guaranteed by private mortgage insurance,

the FHA, or VA.

Residential loans are evaluated for credit loss by

using relevant available information from both internal and external sources.

Among other things, the Company uses its historical delinquency

information and considers current and forecasted economic conditions.

External sources include a monthly analysis of its residential portfolio

by a third party.

The third party uses the Company’s current loan data and runs it through various models to project cash flows

and provide a projected life of loan loss.

The models consider loan features such as loan type, loan to value, payment status, age, and

current property values.

Analyzing the information from the various sources allows the Company to arrive at the allowance for credit losses.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

Residential construction (including land acquisition

and development loans) – These loans are underwritten in accordance with the Company’s underwriting policies, which include

a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent appraisal valuations, and factor

in estimates of the value of construction projects upon completion.

Construction loans generally involve the disbursement of substantial

funds over a short period of time with repayment substantially dependent upon the success of the completed project and the ability of

the borrower to secure long-term financing.

Additionally, land acquisition and development loans

are underwritten in accordance with the Company’s underwriting policies, which include independent appraisal valuations as well

as the estimated value associated with the land upon completion of development into finished lots.

These loans are of a higher risk than

other mortgage loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term or construction

financing, and interest rate sensitivity.

The Company advances funds in accordance with the

loan agreements once the work has been completed and an independent inspection is made.

The maximum loan commitment ranges between 50 %

and 85 % of appraised value.

The Company receives fees and interest for these loans and the interest rate is generally fixed at 5.25 % to

8.50 % per annum.

Maturities range between six and eighteen months.

The Company has commitments to

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

As of March 31, 2025, the Company’s

commitments were approximately $ 239,187,000 for these loans, of which $ 172,110,015 had been drawn.

Residential construction mortgage loans are evaluated

for credit loss by considering historical activity and current housing market trends to arrive at a per loan basis point allowance that

is recognized at loan origination and for subsequent draws.

The per loan basis point is reviewed at least annually or as loan losses or

market trends require.

The following table presents a roll forward of the

allowance for credit losses as of the dates indicated:

Schedule of Allowance for Loan Losses

Three Months Ended

Beginning balance - June 30, 2024

Adoption of ASU 2016-13 (1)

Change in provision for credit losses (2)

( 1,095,485 )

Ending balance - September 30, 2024

Beginning balance - June 30, 2023

Change in provision for credit losses (2)

Ending balance - September 30, 2023

Nine Months Ended

Beginning balance - January 1, 2024

Residential Construction

Beginning balance - December 31, 2024

Change in provision for credit losses (1)

( 1,143,422 )

( 1,095,485 )

Ending balance - September 30, 2024

Beginning balance - January 1, 2023

Adoption of ASU 2016-13 (1)

Ending balance - March 31, 2025

Beginning balance - December 31, 2023

Change in provision for credit losses (1)

Ending balance - September 30, 2023

See Note 2 of the notes to the condensed consolidated financial

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

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

of Aging of Mortgage Loans

September 30, 2024

Ending balance - March 31, 2024

(1) Included in other

expenses on the condensed consolidated statements of earnings

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

The following table presents the aging of mortgage loans held for investment

by loan type as of the dates indicated:

Schedule of Aging of Mortgage Loans

March 31, 2025

30-59 days past due

6 unchanged sentences

( 1,021,730 )

( 2,008,592 )

Unamortized deferred loan fees, net

14 unchanged sentences

( 1,885,390 )

( 2,390,894 )

( 3,818,653 )

Unamortized deferred loan fees, net

5 unchanged sentences

$ 301,747,358

Interest income is not recognized on loans which are more than

90 days past due or in foreclosure.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

Quality Indicators

Company evaluates and monitors the credit quality of its commercial loans by analyzing loan to value (“LTV”) and debt service

coverage ratios (“DSCR”).

Monitoring a commercial mortgage loan increases when the loan is delinquent or earlier if there

is an indication of impairment.

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

September 30, 2024:

of Commercial Mortgage Loans By Credit Quality Indicator

(1) Interest income

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

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

Credit Quality Indicators

The Company evaluates and monitors the credit quality

of its commercial loans by analyzing LTV and DSCR.

Monitoring a commercial mortgage loan increases when the loan is delinquent or earlier

if there is an indication of impairment.

The aggregate unpaid principal balance of commercial

mortgage loans by credit quality indicator and origination year was as follows as of March 31, 2025:

Schedule of Commercial Mortgage Loans By Credit Quality Indicator

Credit Quality Indicator

2 unchanged sentences

1.00x - 1.20x

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

December 31, 2023:

The aggregate unpaid principal balance of commercial

mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2024:

Credit Quality Indicator

2 unchanged sentences

1.00x - 1.20x

9,174,841 (1) (1)

Commercial construction loan

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

Company evaluates and monitors the credit quality of its residential mortgage loans by analyzing LTV and loan performance.

defines non-performing mortgage loans as loans more than 90 days past due and on a non-accrual status.

Monitoring a residential mortgage

loan increases when the loan is delinquent or earlier if there is an indication of impairment.

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

September 30, 2024:

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

The Company evaluates and monitors the credit quality

of its residential mortgage loans by analyzing LTV and loan performance.

The Company defines non-performing mortgage loans as loans more

than 90 days past due and on a non-accrual status.

Monitoring a residential mortgage loan increases when the loan is delinquent or earlier

if there is an indication of impairment.

The aggregate unpaid principal balance of residential

mortgage loans by credit quality indicator and origination year was as follows as of March 31, 2025:

Credit Quality Indicator

1 unchanged sentence

Non-performing (1)

Includes residential mortgage loans in the process of foreclosure

of $ 3,516,610

(1) Includes residential

mortgage loans in the process of foreclosure of $ 2,818,740

Less than 65%

Greater than 80%

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

December 31, 2023:

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

The aggregate unpaid principal balance of residential

mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2024:

Credit Quality Indicator

1 unchanged sentence

Non-performing (1)

$ 103,153,587

Includes residential mortgage loans in the process of foreclosure

of $ 1,021,790

(1) Includes residential

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

Less than 65%

Greater than 80%

$ 103,153,587

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

Investments (Continued)

Company evaluates and monitors the credit quality of its residential construction loans (including land acquisition and development loans)

by analyzing LTV and loan performance.

Monitoring a residential construction mortgage loan increases when the loan is delinquent or earlier

if there is an indication of impairment.

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

follows as of September 30, 2024:

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

The Company evaluates and monitors the credit quality

of its residential construction loans (including land acquisition and development loans) by analyzing LTV and loan performance.

a residential construction mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment.

The aggregate unpaid principal balance of residential

construction mortgage loans by credit quality indicator and origination year was as follows as of March 31, 2025:

Schedule of Residential Construction Mortgage Loans

2 unchanged sentences

$ 109,676,549

$ 169,877,471

Non-performing

$ 109,676,549

$ 169,877,471

Less than 65%

1 unchanged sentence

$ 109,676,549

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

follows as of December 31, 2023:

$ 169,877,471

The aggregate unpaid principal balance of residential

construction mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2024:

Credit Quality Indicator

1 unchanged sentence

$ 118,863,944

$ 151,172,733

Non-performing

$ 118,863,944

$ 151,172,733

Less than 65%

1 unchanged sentence

$ 118,863,944

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

following table presents the aging of insurance assignments, included in other investments and policy loans on the condensed consolidated

balance sheets:

of Aging of Insurance Assignments

September 30,

$ 151,172,733

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

The following table presents the aging of insurance assignments, included

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

Schedule of Aging of Insurance Assignments

30-59 days past due

7 unchanged sentences

Net insurance assignments

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

Once an insurance assignment moves to 90 days

or legal proceedings, it is monitored for write-off and collectability, and any adjustments to the allowance are recorded at that time.

See Note 2 regarding the adoption of ASU 2016-13.

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

of Allowance for Credit Losses

Beginning balance - June 30, 2024

Change in provision for credit losses (1)

Ending balance - September 30, 2024

Beginning balance - June 30, 2023

Change in provision for credit losses (1)

Ending balance - September 30, 2023

Beginning balance - January 1, 2024

The Company records an allowance for credit losses

when the insurance assignment is funded.

Once an insurance assignment moves to 90 days past due or legal proceedings, it is monitored

for write-off and collectability, and any adjustments to the allowance are recorded at that time.

The following table presents a roll forward of the

allowance for credit losses for insurance assignments as of the dates indicated:

Schedule of Allowance for Credit Losses

Three Months Ended

Beginning balance - December 31, 2024

Change in provision for credit losses (1)

Ending balance - September 30, 2024

Beginning balance - January 1, 2023

Ending balance - March 31, 2025

Beginning balance - December 31, 2023

Change in provision for credit losses (1)

Ending balance - September 30, 2023

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

Related Earnings

following table presents the realized gains and losses from sales, calls, and maturities, and unrealized gains and losses on equity securities

from investments and other assets:

of Gain (Loss) on Investments

Three Months Ended

September 30,

Nine Months Ended

September 30,

Ending balance - March 31, 2024

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

Investment Related Earnings

The following table presents the realized

gains and losses from sales, calls, and maturities, and unrealized gains and losses on equity securities from investments and other assets:

Schedule of Gain (Loss) on Investments

Three Months Ended March 31,

Fixed maturity securities:

1 unchanged sentence

Gross realized losses

Net credit loss release (provision)

Net credit loss provision

Equity securities:

Gains (losses) on securities sold

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

( 1,321,511 )

Mortgage loans held for investment:

Gross realized gains

Gross realized losses

( 1,161,364 )

Unrealized gains on securities held at the end of the period

Real estate held for investment and sale:

4 unchanged sentences

Gross realized losses

$ ( 932,414 )

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

using the specific identification method.

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

the cemeteries and mortuaries of $ 1,140,136 and $ 452,115 in net gains for the three month periods ended September 30, 2024 and 2023,

respectively, and of $ 1,519,487 and $ 200,605 in net gains for the nine month periods ended September 30, 2024 and 2023, respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

3) Investments (Continued)

categories of net investment income were as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

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

specific identification method.

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

mortuaries and totaled $ 213,979 and $ 582,172 in net gains for the three month periods ended March 31, 2025 and 2024, respectively .

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

3) Investments

Major categories

of net investment income were as follows:

Three Months Ended March 31,

Fixed maturity securities available for sale

9 unchanged sentences

( 4,221,967 )

( 12,005,256 )

( 12,380,505 )

Net investment income

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

and mortuaries of $ 393,811 and $ 372,277 for the three month periods ended September 30, 2024 and 2023, respectively, and of $ 1,798,170

and $ 2,224,629 for the nine month periods ended September 30, 2024 and 2023, respectively.

investment income on real estate consists primarily of rental revenue.

Investment expenses consist primarily of depreciation, property

taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities.

Investment Income

investment income consists of the following:

of Accrued Investment Income

September 30,

Net investment

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

totaled $ 146,838 and $ 933,551 for the three month periods ended March 31, 2025 and 2024, respectively.

Net investment

income on real estate consists primarily of rental revenue.

Investment expenses consist primarily of depreciation, property taxes, operating

expenses of real estate and an estimated portion of administrative expenses relating to investment activities.

Accrued Investment Income

Accrued investment income consists

of the following:

Schedule of Accrued Investment Income

As of March 31,

As of December 31, 2024

Fixed maturity securities available for sale

2 unchanged sentences

Real estate held for investment

Other investments

Cash and cash equivalents

Total accrued investment income

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

4) Loans Held for Sale

Company’s loans held for sale portfolio is valued using the fair value option.

Changes in the fair value of the loans are included

in mortgage fee income.

Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s

policy on recognition of mortgage loan interest income and is included in mortgage fee income on the condensed consolidated statement

Included in loans held for sale are loans in the process of foreclosure with an aggregate unpaid principal balance of $ 332,848

and $ 1,636,090 as of September 30, 2024 and December 31, 2023, respectively.

See Note 8 to the condensed consolidated financial statements

for additional disclosures regarding loans held for sale.

following table presents the aggregate fair value and the aggregate unpaid principal balance of loans held for sale:

The Company’s loans held for sale portfolio

is valued using the fair value option.

Changes in the fair value of the loans are included in mortgage fee income.

Interest income is

recorded based on the contractual terms of the loan and in accordance with the Company’s policy on recognition of mortgage loan

interest income and is included in mortgage fee income on the condensed consolidated statement of earnings.

See Note 8 to the condensed

consolidated financial statements for additional disclosures regarding loans held for sale.

The following table presents the aggregate fair value

and the aggregate unpaid principal balance of loans held for sale:

of Aggregate Fair Value Loans Held for Sale

September 30,

As of December 31, 2024

Aggregate fair value

2 unchanged sentences

Unpaid principal balance

Unrealized gain (loss)

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

loans held for sale.

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

Unrealized gain

Mortgage Fee Income

Mortgage fee income consists of origination fees,

processing fees, interest income and other income related to the origination and sale of mortgage loans held for sale.

Major categories of mortgage fee income for loans

held for sale are summarized as follows:

of Mortgage Fee Income for Loans Held for Sale

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Interest income

1 unchanged sentence

Change in fair value of loan commitments

( 1,504,286 )

Change in fair value of loans held for sale

1 unchanged sentence

Mortgage fee income

demands from third party investors that correspond to mortgage loans previously held for sale and sold are reviewed and relevant data

is captured so that an estimated future loss can be calculated.

The key factors that are used in the estimated future loss calculation

are as follows:

(i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi)

validity of the demand.

Other data is captured and is useful for management purposes;

the actual estimated loss is generally based on

these key factors.

The Company conducts its own review upon the receipt of a repurchase demand.

In many instances, the Company can resolve

the issues relating to the repurchase demand by the third-party investor without having to make any payments to the investor.

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

of Loan Loss Reserve Included in Other Liabilities and Accrued Expenses

September 30,

Loan Loss Reserve

Repurchase demands from third party investors that

correspond to mortgage loans previously held for sale and sold are reviewed and relevant data is captured so that an estimated future

loss can be calculated.

The key factors that are used in the estimated future loss calculation are as follows:

(i) lien position, (ii)

payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand.

Other data is captured

and is useful for management purposes;

the actual estimated loss is generally based on these key factors.

The Company conducts its own

review upon the receipt of a repurchase demand.

In many instances, the Company can resolve the issues relating to the repurchase demand

by the third-party investor without having to make any payments to the investor.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

4) Loans Held for

Sale (Continued)

The loan loss reserve, which is included in other

liabilities and accrued expenses, is summarized as follows:

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

Balance, beginning of period

1 unchanged sentence

Charge-offs, net of recaptured amounts

( 1,205,598 )

Balance, end of period

Included in mortgage fee income

Company maintains reserves for estimated losses on current production volumes.

For the nine month period ended September 30, 2024, $ 729,734

in reserves were added at a rate of 4.2 basis points per loan, the equivalent of $ 420 per $ 1,000,000 in loans originated.

This is a decrease

over the nine month period ended September 30, 2023, when reserves of $ 770,220 were added at a rate of 4.5 basis points per loan originated,

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

The Company monitors market data and trends, economic conditions (including

forecasts), and its own experience to maintain adequate loss reserves on current production.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

5) Stock Compensation Plans

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

based compensation expense for stock options issued of $ 195,431 and $ 145,973 has been recognized for these plans for the three month

periods ended September 30, 2024 and 2023, respectively, and $ 577,613 and $ 430,856 has been recognized for these plans for the nine month

periods ended September 30, 2024 and 2023, respectively, and is included in personnel expenses on the condensed consolidated statements

As of September 30, 2024, the total unrecognized compensation expense related to the options issued was $ 134,239 , which

is expected to be recognized over the remaining vesting period.

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

The Company estimates

the expected life of the options using the simplified method.

Future volatility is estimated based upon the weighted historical volatility

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

The risk-free interest rate for

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

of the stock option plans during the nine month period ended September 30, 2024, is summarized as follows:

Schedule of Activity of Stock Option Plans

Outstanding at January 1, 2024

Adjustment for the effect of stock dividends

Outstanding at September 30, 2024

As of September 30, 2024:

(1) Included in mortgage

The Company maintains

reserves for estimated losses on current production volumes.

For the three month periods ended March 31, 2025 and 2024, $ 183,034 and $ 163,476

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

The Company monitors market data and trends and, economic conditions (including forecasts), and uses its own experience to determine adequate

loss reserves on current production.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

5) Stock Compensation

The Company has

equity incentive plans (the “2013 Plan”, the “2014 Director Plan” and the “2022 Plan”).

Stock Options

Stock based compensation

expense for stock options issued of $ 299,272 and $ 198,998 has been recognized for these plans for the three month periods ended March

31, 2025 and 2024, respectively, and is included in personnel expenses on the condensed consolidated statements of earnings.

31, 2025, the total unrecognized compensation expense related to the options issued was $ 873,138 which is expected to be recognized over

the remaining vesting period.

The fair value

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

The Company estimates the expected

life of the options using the simplified method.

Future volatility is estimated based upon the weighted historical volatility of the Company’s

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

The risk-free interest rate for the expected life of the

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

of the stock option plans during the three month period ended March 31, 2025, is summarized as follows:

Schedule of Activity Restricted Stock Units

Class A Shares

Weighted Average Exercise Price (2)

Class C Shares

Weighted Average Exercise Price (2)

Outstanding at December 31, 2024

Outstanding at March 31, 2025

As of March 31, 2025:

Options exercisable

As of September 30, 2024:

As of March 31, 2025:

Available options for future grant

Weighted average contractual term of options outstanding at September 30, 2024

Weighted average contractual term of options exercisable at September 30, 2024

Aggregated intrinsic value of options outstanding at September 30, 2024 (1)

Aggregated intrinsic value of options exercisable at September 30, 2024 (1)

The Company used a stock price of $ 9.20 as of September 30,

2024 to derive intrinsic value.

Adjusted for the effect of annual stock dividends.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

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)

(1) The Company used

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

(2) Adjusted for the

effect of annual stock dividends.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

Stock Compensation Plans (Continued)

of the stock option plans during the nine month period ended September 30, 2023, is summarized as follows:

of the stock option plans during the three month period ended March 31, 2024, is summarized as follows:

Class A Shares

2 unchanged sentences

Weighted Average Exercise Price

Outstanding at January 1, 2023

Adjustment for the effect of stock dividends

Outstanding at September 30, 2023

As of September 30, 2023:

Outstanding at December 31, 2023

Outstanding at March 31, 2024

As of March 31, 2024:

Options exercisable

As of September 30, 2023:

As of March 31, 2024:

Available options for future grant

Weighted average contractual term of options outstanding at September 30, 2023

Weighted average contractual term of options exercisable at September 30, 2023

Aggregated intrinsic value of options outstanding at September 30, 2023 (1)

Aggregated intrinsic value of options exercisable at September 30, 2023 (1)

The Company used a stock price of $ 7.84 as of September 30,

2023 to derive intrinsic value.

Adjusted for the effect of annual stock dividends.

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

the exercise date) of stock options exercised during the nine month periods ended September 30, 2024 and 2023 was $ 290,159 and $ 454,923 ,

respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

Weighted average contractual term of options outstanding at March 31, 2024

Weighted average contractual term of options exercisable at March 31, 2024

Aggregated intrinsic value of options outstanding at March 31, 2024 (1)

Aggregated intrinsic value of options exercisable at March 31, 2024 (1)

(1) The Company used

a stock price of $ 7.91 as of March 31, 2024 to derive intrinsic value.

(2) Adjusted for the

effect of annual stock dividends.

The 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, 2025 and 2024 was $ 1,357,776 and nil , respectively.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

March 31, 2025 (Unaudited)

Stock Compensation Plans (Continued)

Stock Units (“RSUs”)

based compensation expense for RSUs issued of $ 895 and nil has been recognized under these plans for the three month periods ended September

30, 2024 and 2023, respectively, and of $ 2,666 and $ 742 has been recognized under these plans for the nine month periods ended September

30, 2024 and 2023, 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 September 30, 2024, the total

unrecognized compensation expense related to the RSUs issued was $ 598 , which is expected to be recognized over the remaining vesting

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

Stock based compensation

expense for RSUs issued of $ 9,988 and $ 889 has been recognized under these plans for the three month periods ended March 31, 2025 and

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

The fair value of each

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

As of March 31, 2025, the total unrecognized compensation

expense related to the RSUs issued was $ 27,311 , which is expected to be recognized over the remaining vesting period.

Activity of the

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

Schedule of Activity Restricted Stock Units

Class A Shares

Average Grant

Date Fair Value

Non-vested at January 1, 2024

Non-vested at September 30, 2024

Weighted Average Grant Date Fair Value

Non-vested at December 31, 2024

Non-vested at March 31, 2025

Available RSUs for future grant

of the RSUs during the nine month period ended September 30, 2023 is summarized as follows:

Activity of the

RSUs during the three month period ended March 31, 2024, is summarized as follows:

Class A Shares

Weighted Average Grant Date Fair Value

Non-vested at January 1, 2023

Non-vested at September 30, 2023

Non-vested at December 31, 2023

Non-vested at March 31, 2024

Available RSUs for future grant

8 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Basic weighted-average shares outstanding

4 unchanged sentences

Diluted net earnings per share

the nine month periods ended September 30, 2024 and 2023, there were nil and 55,125 anti-dilutive stock option shares, respectively,

the three month periods ended March 31, 2025 and 2024, there were 382,700 and 467,125 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.

5 unchanged sentences

Vesting of restricted stock units

Conversion of Class C to Class A

Outstanding shares at September 30, 2023

Outstanding shares at March 31, 2025

Outstanding shares at December 31, 2023 (1)

Exercise of stock options

Outstanding shares

Vesting of restricted stock units

Conversion of Class C to Class A

Outstanding shares at September 30, 2024

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

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

Outstanding shares at March 31, 2024 (1)

Outstanding shares

(1) Adjusted retroactively

for the effect of annual stock dividends

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

Business Segment Information

of Products and Services by Segment

Company has three reportable business segments:

Company has three operating and reportable business segments:

life insurance, cemetery and mortuary, and mortgage.

The Company’s life insurance

segment consists of life insurance premiums and operating expenses from the sale of insurance products sold by the Company’s independent

agency force and net investment income derived from investing policyholders and segment surplus funds.

The Company’s cemetery and

mortuary segment consists of revenues and operating expenses from the sale of at-need cemetery and mortuary merchandise and services

at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10% or more of the purchase price and the net

investment income from investing segment surplus funds.

The Company’s mortgage segment consists of fee income and expenses from

the origination of residential mortgage loans and interest earned and interest expenses from warehousing loans held for sale.

of Segment Profit or Loss and Segment Assets

accounting policies of the reportable segments are the same as those described in the Significant Accounting Principles of the Form 10-K

for the year ended December 31, 2023.

Intersegment revenues are recorded at cost plus an agreed upon intercompany profit, and are eliminated

upon consolidation.

Management Used to Identify the Enterprise’s Reportable Segments

Company’s reportable segments are business units that are managed separately due to the different products provided and the need

to report separately to the various regulatory jurisdictions.

The Company regularly reviews the quantitative thresholds and other criteria

to determine when other business segments may need to be reported.

The Company’s

life insurance segment’s revenue consists of life insurance premiums, fees earned on factored life insurance policies and net investment

income derived from investing policyholder and surplus funds.

Its expenses include operating expenses to collect insurance premiums and

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

independent agency force.

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

cemetery and mortuary merchandise, services at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10%

or more of the purchase price and the net investment income from investing surplus cash.

Its expenses include operating expenses to maintain

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

The Company’s

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

Its expenses include

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

fee expenses.

and Cost Sharing Policies

accounting policies of the Company’s operating and reportable segments are the same as those described in Part II, Item 8, Note

1 - Significant Accounting Policies of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

revenues are recorded at cost plus an agreed upon intercompany profit and are eliminated upon consolidation.

In addition to revenues,

the reportable segments share in business services and costs including personnel expenses, rent, information technology, software, interest

expense, and other similar operating costs.

These shared services and costs are allocated between the segments using prevailing market

rates and other agreed upon allocation methods.

Management Used to Identify the Company’s Operating and Reportable Segments

Company’s operating and reportable segments are business units that are managed separately due to the different products provided

and the need to report separately to the various regulatory jurisdictions.

Operating Decision Maker (“CODM”)

Company’s CODM is the Chief Executive Officer.

The following table summarizes significant segment expenses.

The significant expenses

are based on the information that the CODM is regularly provided to assess segment performance.

The CODM reviews the regularly provided

information for each segment monthly and gives added emphasis on month over month and year over year comparative results.

The CODM considers

these comparative results when making decisions about the allocation of the Company’s resources to each segment.

The measure of

segment profit or loss for the Company’s three operating and reportable business segments is net earnings.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

Schedule of Revenues and Expenses by Reportable Segment

Life Insurance

For the Three Months Ended

September 30, 2024

Revenues from external customers

Intersegment revenues

( 2,289,697 )

Segment profit (loss) before income taxes

For the Nine Months Ended

September 30, 2024

Revenues from external customers

$ 146,061,306

$ 255,253,221

For the Three Months Ended March 31, 2025

From external sources:

Revenue from external customers

Net investment income

Gains on investments and other assets

Other revenues

Intersegment revenues

( 6,036,375 )

Segment profit (loss) before income taxes

( 1,813,111 )

Identifiable Assets

$ 1,379,914,778

$ 103,403,799

$ ( 93,411,674 )

$ 1,489,570,412

Total segment revenues

Elimination of intersegment revenues

( 1,525,627 )

Total consolidated revenues

Death benefits

Surrenders and other policy benefits

Increase in future policy benefits

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

Selling, general and administrative expenses:

Rent and rent related

Depreciation on property and equipment

Cost related to funding mortgage loans

Data processing and IT related (1)

Premium taxes on insurance premiums and other considerations (1)

Other segment items (1)(2)

Intersegment expenses (3)

Interest expense

Costs of goods and services sold-mortuaries and cemeteries

Income tax expense (benefit)

Segment net earnings (loss)

( 1,511,121 )

Segment assets

$ 1,406,921,748

$ 108,399,058

For the Three Months Ended

September 30, 2023

Revenues from external customers

Intersegment revenues

$ 100,755,930

Segment profit (loss) before income taxes

$ 1,616,076,736

For the Nine Months Ended

September 30, 2023

Revenues from external customers

Elimination of intersegment assets

( 91,826,406 )

Total consolidated assets

$ 1,524,250,330

Expenditures for long-lived assets

in other expenses on the condensed consolidated statements of earnings.

Data processing and IT related expenses includes various

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

each reportable segment, other segment items includes:

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

amortization of intangible assets, and certain overhead expenses.

Cemetery/Mortuary

- bad debt, insurance expenses, professional service expenses, maintenance and utility expenses,

property taxes, amortization of intangible assets, and certain overhead expenses.

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

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

each reportable segment, intersegment expenses includes:

Insurance - mortgage servicing fees and interest expense.

Cemetery/Mortuary

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

- rent expense and interest expense.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2025 (Unaudited)

Business Segment Information (Continued)

For the Three Months Ended March 31, 2024

From external sources:

Revenue from external customers

Net investment income

Gains (losses) on investments and other assets

Other revenues

Intersegment revenues

( 7,005,257 )

Segment profit (loss) before income taxes

( 11,206,534 )

Identifiable Assets

$ 1,299,027,212

$ 107,800,781

Total segment revenues

Elimination of intersegment revenues

( 1,610,949 )

Total consolidated revenues

Death benefits

Surrenders and other policy benefits

Increase in future policy benefits

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

Selling, general and administrative expenses:

Rent and rent related

Depreciation on property and equipment

Cost related to funding mortgage loans

Data processing and IT related (1)

Premium taxes on insurance premiums and other considerations (1)

Other segment items (1)(2)

Intersegment expenses (3)

Interest expense

Costs of goods and services sold-mortuaries and cemeteries

Income tax expense (benefit)

Segment net earnings (loss)

( 1,504,485 )

Segment assets

$ 1,341,500,414

$ 1,535,409,956

Elimination of intersegment assets

( 94,161,443 )

Total consolidated assets

$ 1,441,248,513

Expenditures 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:

Life Insurance - bad debt, insurance expenses, professional service

expenses, state insurance department fees,

amortization of intangible assets, and certain overhead expenses.

Cemetery/Mortuary - bad debt, insurance expenses, professional

service expenses, maintenance and utility expenses,

property taxes, amortization of intangible assets, and certain overhead expenses.

Mortgage - bad debt, insurance expenses, professional service

expenses, business license and registration fees,

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

For each reportable segment, intersegment expenses includes:

Life Insurance - mortgage servicing fees and interest expense.

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

expenses, and interest expense.

Mortgage - rent expense and interest expense.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

12 unchanged sentences

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

Quoted prices for similar assets or liabilities in active markets.

Quoted prices for identical or similar assets or liabilities

in non-active markets;

models whose inputs are observable, directly or indirectly, for substantially the full term

of the asset or liability.

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

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

These inputs may reflect the Company’s estimates of

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

prices for similar assets or liabilities in active markets.

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

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

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

both unobservable and significant to the overall fair value measurement.

These inputs may reflect the Company’s estimates of the

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

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

61 unchanged sentences

Real Estate Held for Investment :

The Company believes that in an orderly market, fair value will approximate the replacement

cost of a home and the rental income provides a cash flow stream for investment analysis.

The Company believes the highest and best use

of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties,

matching the income from the investment in rental properties with the funds required for future estimated policy claims.

Fair value is generally determined by obtaining an independent appraisal, which typically considers

area comparable properties and property condition.

The Company believes that in an orderly market, fair value approximates the replacement

cost of a home and will list for sale any foreclosed properties.

In a disorderly market, the Company believes the highest and best use

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

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

Accordingly, in addition to an appraisal, the fair

value determination will generally be weighed more heavily toward the rental analysis.

should be noted that for replacement cost, when determining the fair value of real estate held for investment, the Company uses a provider

3 unchanged sentences

The Company also

considers area comparable properties and property conditions when determining fair value.

considers area comparable properties and property condition when determining fair value.

addition to this analysis performed by the Company, the Company depreciates Real Estate Held for Investment.

10 unchanged sentences

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

their classification in the condensed consolidated balance sheet as of September 30, 2024:

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

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

2 unchanged sentences

Significant Unobservable Inputs

Assets accounted for at fair value on a

recurring basis

Assets accounted for at fair value on a recurring basis

Fixed maturity securities available for sale

8 unchanged sentences

Derivatives - loan commitments (3)

Total assets accounted for at fair value on a

recurring basis

Total assets accounted for at fair value on a recurring basis

$ 548,789,124

1 unchanged sentence

$ 144,001,136

Liabilities accounted for at fair value on a

recurring basis

Liabilities accounted for at fair value on a recurring basis

Derivatives - loan commitments (4)

( 3,168,855 )

Total liabilities accounted for at fair value

on a recurring basis

Total liabilities accounted for at fair value on a recurring basis

$ ( 228,856 )

maturity securities available for sale

in other assets on the consolidated balance sheets

in other liabilities and accrued expenses on the consolidated balance sheets

(1) Fixed maturity

securities available for sale

(2) Equity securities

(3) Included in other

assets on the condensed consolidated balance sheets

(4) Included in other

liabilities and accrued expenses on the condensed consolidated balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

7 unchanged sentences

Significant Unobservable Inputs

Assets accounted for at fair value on a

recurring basis

Assets accounted for at fair value on a recurring basis

Fixed maturity securities available for sale

8 unchanged sentences

Derivatives - loan commitments (3)

Total assets accounted for at fair value on a

recurring basis

Total assets accounted for at fair value on a recurring basis

$ 536,860,288

1 unchanged sentence

$ 137,679,163

Liabilities accounted for at fair value on a

recurring basis

Liabilities accounted for at fair value on a recurring basis

Derivatives - loan commitments (4)

1 unchanged sentence

$ ( 3,034,879 )

Total liabilities accounted for at fair value

on a recurring basis

Total liabilities accounted for at fair value on a recurring basis

$ ( 3,034,879 )

maturity securities available for sale

in other assets on the consolidated balance sheets

in other liabilities and accrued expenses on the consolidated balance sheets

(1) Fixed maturity

securities available for sale

(2) Equity securities

(3) Included in other

assets on the condensed consolidated balance sheets

(4) Included in other

liabilities and accrued expenses on the condensed consolidated balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Fair Value of Financial Instruments (Continued)

Level 3 assets and liabilities measured at fair value on a recurring basis as of September 30, 2024, the significant unobservable inputs

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

used in the fair value measurements were as follows:

33 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 September 30, 2024:

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

Net Loan Commitments

Loans Held for Sale

Fixed Maturity Securities Available for Sale

Balance - June 30, 2024

$ 150,196,416

Originations and purchases

Sales, maturities and paydowns

( 655,088,969 )

Total gains (losses):

Included in earnings

( 179,836 )(1)

14,576,935 (1)

Included in other comprehensive income

Balance - September 30, 2024

$ 142,897,741

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

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

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

three month period ended September 30, 2023:

Net Loan Commitments

Loans Held for Sale

Fixed Maturity Securities Available for Sale

Balance - June 30, 2023

$ 161,310,060

Originations and purchases

Sales, maturities and paydowns

( 585,545,472 )

Transfer to mortgage loans held for investment

( 1,867,552 )

Total gains (losses):

Included in earnings

( 1,504,286 )(1)

9,553,586 (1)

Included in other comprehensive income

Balance - September 30, 2023

$ 152,546,566

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, 2024 (Unaudited)

8) Fair Value of Financial Instruments (Continued)

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

nine month period ended September 30, 2024:

three month period ended March 31, 2025:

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

Net Loan Commitments

4 unchanged sentences

Originations and purchases

1,723,036,874

Sales, maturities and paydowns

( 521,382,576 )

Transfer to mortgage loans held for investment

Loans held for sale foreclosed into real estate held for sale

Total gains (losses):

2 unchanged sentences

Included in other comprehensive income

Balance - September 30, 2024

Balance - March 31, 2025

$ 139,834,226

As a component of Mortgage fee income on the condensed consolidated

statements of earnings

As a component of Net investment income on the condensed consolidated

statements of earnings

(1) As a component

of Mortgage fee income on the condensed consolidated statements of earnings

(2) As a component

of Net investment income on the condensed consolidated statements of earnings

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

nine month period ended September 30, 2023:

three month period ended March 31, 2024:

Net Loan Commitments

4 unchanged sentences

Originations and purchases

1,708,831,185

Sales, maturities and paydowns

2 unchanged sentences

( 1,867,552 )

Foreclosed into real estate held for sale

Total gains (losses):

1 unchanged sentence

9,302,121 (1)

31,576,482 (1)

Included in other comprehensive income

Balance - September 30, 2023

Balance - March 31, 2024

$ 112,678,958

As a component of Mortgage fee income on the condensed consolidated

statements of earnings

As a component of Net investment income on the condensed consolidated

statements of earnings

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

2024 and as of December 31, 2023.

(1) As a component

of Mortgage fee income on the condensed consolidated statements of earnings

(2) As a component

of Net investment income on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

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, 2025

or as of December 31, 2024.

Value of Financial Instruments Carried at Other Than Fair Value

5 unchanged sentences

Therefore, for substantially all financial instruments, the fair value estimates presented herein

are not necessarily indicative of the amounts the Company could have realized in a sales transaction as of September 30, 2024 and December

are not necessarily indicative of the amounts the Company could have realized in a sales transaction as of March 31, 2025 and December

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

are summarized as follows as of September 30, 2024:

are summarized as follows as of March 31, 2025:

Schedule of Financial Instruments Carried at Other Than Fair Value

23 unchanged sentences

( 104,853,294 )

Included in other investments and policy loans on the condensed

consolidated balance sheets

Mortgage loans held for investment

Included in future policy benefits and unpaid claims on the

condensed consolidated balance sheets

(1) Included in other

investments and policy loans on the condensed consolidated balance sheets

(2) Mortgage loans

held for investment

(3) Included in future

policy benefits and unpaid claims on the condensed consolidated balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

28 unchanged sentences

( 104,611,544 )

Included in other investments and policy loans on the consolidated

balance sheets

Mortgage loans held for investment

Included in future policy benefits and unpaid claims on the

consolidated balance sheets

(1) Included in other

investments and policy loans on the consolidated balance sheets

(2) Mortgage loans

held for investment

(3) Included in future

policy benefits and unpaid claims on the consolidated balance sheets

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

10 unchanged sentences

that were sold recently.

Construction – These loans are primarily short in maturity.

Accordingly, the estimated fair value is determined to be the carrying

Construction – These loans primarily have short term maturities.

Accordingly, the estimated fair value is determined to be the

carrying value.

– The estimated fair value is determined by estimating expected future cash flows of payments and discounting them using current

3 unchanged sentences

Assignments, Net :

These investments are primarily short in maturity, accordingly, the carrying amounts reported in the accompanying

These investments primarily have short term maturities, accordingly, the carrying amounts reported in the accompanying

condensed consolidated balance sheet for these financial instruments approximate their fair values.

66 unchanged sentences

Schedule of Derivative Assets at Fair Value

September 30, 2024

March 31, 2025

December 31, 2024

17 unchanged sentences

Schedule of Gains and Losses on Derivatives

Net Amount Gain (Loss)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net Amount Gain

Three Months Ended March 31,

Classification

1 unchanged sentence

Mortgage fee income

$ ( 179,836 )

$ ( 1,504,286 )

$ ( 977,716 )

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

18 unchanged sentences

Company, through its subsidiary SecurityNational Mortgage, has two lines of credit for the purpose of funding mortgage loans.

Company’s agreement with U.S.

of the lines of credit, with U.S.

Bank, allows SecurityNational Mortgage to borrow up to $ 15,000,000 .

The agreement charges interest

at 2.10% plus the greater of (i) 0%, and (ii) the one-month forward-looking term rate based on SOFR and matures on June 20, 2025 .

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

income (excluding any changes in the fair value of mortgage servicing rights) of at least $ 1.00 on a rolling twelve months.

Company’s agreement with Western Alliance Bank allows SecurityNational Mortgage to borrow up to $ 25,000,000 .

The agreement charges

interest at the 1-Month SOFR rate plus 2.0% and matures on August 27, 2025 .

The Company is required to comply with covenants for adjusted

tangible net worth, unrestricted cash balance, and minimum combined pre-tax income of at least $ 1.00 on a quarterly basis.

The relevant agreement contemplates

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 June 20, 2025 .

The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and a minimum pre-tax loss below $2.5 million for the quarter.

Company’s other line of credit, with Western Alliance Bank, allows SecurityNational Mortgage to borrow up to $ 25,000,000 .

The relevant agreement contemplates

interest at the 1-Month SOFR rate plus 2.0% on

drawn amounts and matures on August

The Company is required to comply with

covenants for adjusted tangible net worth, unrestricted cash balance, and a minimum pre-tax loss below $ 2.5

million for the quarter.

agreements for both warehouse lines of credit include cross default provisions where certain events of default under other of SecurityNational

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

As of September 30, 2024, the Company

was in compliance with the net income covenant of the warehouse lines of credit and its operating cash flow covenant for its standby

letter of credit with its primary bank.

The Company has performed an internal 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.

As of March 31, 2025, 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

The Company continues to negotiate other warehouse lines of credit with other lenders.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

Company also has debt covenants on its revolving lines of credit and is required to comply with minimum operating cash flow ratios and

minimum net worth for each of its business segments.

The Company also has debt covenants for one of its loans on real estate for a minimum

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

In addition to these financial debt covenants,

the Company is required to provide segment specific financial statements and building specific financial statements on all bank loans.

As of September 30, 2024, the Company was in compliance with all these debt covenants.

minimum net worth requirement for each of its business segments.

The Company also has debt covenants for one of its loans on real estate

requiring a minimum consolidated operating cash flow ratio, minimum liquidity, and consolidated net worth.

In addition to these financial

debt covenants, the Company is required to provide segment specific financial statements and building specific financial statements on

all bank loans.

As of March 31, 2025, the Company was in compliance with all these debt covenants.

Contingencies and Commitments

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

As of September

30, 2024, the Company’s commitments were approximately $ 193,870,000 for these loans, of which $ 131,896,896 had been funded.

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

The maximum loan commitment ranges between 50 % and 80 % of appraised value.

The Company receives fees and interest for these loans and

the interest rate is generally fixed at 5.25 % to 8.50 % per annum.

Maturities range between six and eighteen months.

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

7 unchanged sentences

If actual claims or adverse development of loss reserves occurs

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

The estimation process contains uncertainty

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

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

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

The Company believes that none of

the actions, if adversely determined, will have a material effect on the Company’s financial position or results of operations.

Based on the Company’s assessment and legal counsel’s analysis concerning the likelihood of unfavorable outcomes, no amounts

have been accrued for the above claims in the consolidated financial statements.

The Company is not a party to any other material legal

proceedings outside the ordinary course of business or to any other legal proceedings, which, if adversely determined, would have a material

adverse effect on its financial condition or results of operations.

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

The estimation process contains

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

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

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

The Company believes that none of the actions,

if adversely determined, will have a material effect on the Company’s financial position or results of operations.

Based on management’s

assessment and legal counsel’s analysis concerning the likelihood of unfavorable outcomes, no amounts have been accrued for the

above claims in the consolidated financial statements.

The Company is not a party to any other material legal proceedings outside the

ordinary course of business or to any other legal proceedings, which, if adversely determined, would have a material adverse effect on

its financial condition or results of operations.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

5 unchanged sentences

Amortization expense

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

MSR amortization is determined by amortizing the MSR balance

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

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

MSR amortization is determined by amortizing the

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

Company periodically assesses MSRs for impairment.

7 unchanged sentences

following table presents the MSR activity:

Schedule of Mortgage Servicing Rights

As of September 30,

of Mortgage Servicing Rights

As of March 31,

As of December 31,

3 unchanged sentences

Amortization (2)

Application of valuation allowance to write down MSRs

with other than temporary impairment

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

Balance before valuation allowance at end of period

1 unchanged sentence

Balance at beginning of year

Application of valuation allowance to write down MSRs

with other than temporary impairment

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

Balance at end of period

1 unchanged sentence

Estimated fair value of MSRs at end of period

Included in mortgage fee income on the condensed consolidated

statements of earnings

Included in other expenses on the condensed consolidated statements

(1) Included in mortgage

fee income on the condensed consolidated statements of earnings

(2) Included in other

expenses on the condensed consolidated statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

This projection

was developed using the Company’s assumptions in its September 30, 2024 valuation of MSRs.

The assumptions used in the following

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

amortization levels to change over time.

was developed using the Company’s assumptions in its March 31, 2025 valuation of MSRs.

The assumptions used in the following table

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

levels to change over time.

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

3 unchanged sentences

of Other Revenues

Three Months Ended September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Contractual servicing fees

1 unchanged sentence

of Unpaid Principal Balances of the Servicing Portfolio

As of September 30,

As of March 31,

As of December 31, 2024

4 unchanged sentences

of Assumptions Used in Determining MSR Value

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

31, 2025 (Unaudited)

12) Income Taxes

Company’s overall effective tax rate for the three month periods ended September 30, 2024 and 2023 was 22.2 % and 21.7 %, respectively,

which resulted in a provision for income taxes of $ 3,383,238 and $ 1,117,397 , respectively, and for the nine month periods ended September

30, 2024 and 2023 was 22.3 % and 21.9 %, respectively, which resulted in a provision for income taxes of $ 7,646,071 and $ 3,258,740 , respectively.

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

federal statutory rate of 21 % due to, among other factors, state income

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 the Company’s

state income tax provision.

Company’s overall effective tax rate for the three month periods ended March 31, 2025 and 2024 was 22.1 % and 22.3 %, respectively,

which resulted in a provision for income taxes of $ 1,232,602 and $ 2,144,789 , 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 decrease in the effective

tax rate when compared to the prior year was primarily due to the Company’s decreased state income tax provision.

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

43 unchanged sentences

Contract Liability

Opening (January 1, 2024)

Closing (September 30, 2024)

Opening (December 31, 2024)

Closing (March 31, 2025)

Increase/(decrease)

3 unchanged sentences

Contract Liability

Opening (January 1, 2023)

Opening (December 31, 2023)

Closing (December 31, 2024)

Increase/(decrease)

Included in Receivables, net on the condensed consolidated

balance sheets

amount of revenue recognized and included in the opening contract liability balance for the three month periods ended September 30, 2024

and 2023 was $ 1,320,688 and $ 1,279,750 , respectively, and for the nine month periods ended September 30, 2024 and 2023 was $ 4,256,184

and $ 3,516,215 , respectively.

(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, 2025

and 2024 was $ 1,159,212 and $ 1,506,114 , respectively.

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

4 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Major goods/service lines

mortuary and cemetery sales

Net mortuary and cemetery

Timing of Revenue Recognition

1 unchanged sentence

Services transferred at a point in time

mortuary and cemetery sales

Net mortuary and cemetery

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2025 (Unaudited)

13) Revenues from Contracts with Customers (Continued)

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

Segment for the periods presented:

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net mortuary and cemetery sales

Gains (losses) on investments and other assets

Net investment income

Other revenues

Revenues from external customers

14) Receivables

consist of the following:

Schedule of Receivables

As of September 30, 2024

Schedule of Receivable

As of March 31, 2025

As of December 31, 2024

7 unchanged sentences

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

See Note 2 regarding the adoption of ASU

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

1 unchanged sentence

Three Months Ended

Beginning balance - June 30, 2024

Change in provision for credit losses (1)

Ending balance - September 30, 2024

Beginning balance - June 30, 2023

Change in provision for credit losses (1)

Ending balance - September 30, 2023

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2024 (Unaudited)

14) Receivables (Continued)

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

Nine Months Ended

Beginning balance - January 1, 2024

Beginning balance - December 31, 2024

Change in provision for credit losses (1)

Ending balance - September 30, 2024

Beginning balance - January 1, 2023

Ending balance - March 31, 2025

Beginning balance - December 31, 2023

Change in provision for credit losses (1)

Ending balance - September 30, 2023

Ending balance - March 31, 2024

(1) Included in other

12 unchanged sentences

Care Obligation in the accompanying consolidated balance sheets .

components of the cemetery perpetual care investments and obligation as of September 30, 2024, are as follows:

of Investments

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

of Investments and Obligation

Amortized Cost

1 unchanged sentence

Gross Unrealized Losses

Allowance for Credit Losses

Estimated Fair Value

September 30, 2024:

March 31, 2025:

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

13 unchanged sentences

Total mortgage loans held for investment

Accrued investment income

Other investments

Cash and cash equivalents

Accrued investment income

Total cemetery perpetual care trust investments

6 unchanged sentences

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

components of the cemetery perpetual care investments and obligation as of December 31, 2023, are as follows:

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

Amortized Cost

7 unchanged sentences

Obligations of states and political subdivisions

Corporate securities including public utilities

Total fixed maturity securities available for sale

8 unchanged sentences

Allowance for credit losses

Total mortgage loans held for investment

Cash and cash equivalents

Accrued investment income

Total cemetery perpetual care trust investments

4 unchanged sentences

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

of September 30, 2024 and December 31, 2023.

of March 31, 2025 and December 31, 2024.

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

4 unchanged sentences

Total Unrealized Loss

September 30, 2024

March 31, 2025

Treasury securities and obligations of U.S.

5 unchanged sentences

Obligations of states and political subdivisions

Corporate securities including public utilities

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

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

holdings were comprised of three securities with fair values aggregating 99.2 % of the aggregate amortized cost as of September 30, 2024.

holdings were comprised of three securities with fair values aggregating 99.1 % of the aggregate amortized cost as of March 31, 2025.

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

No credit losses have been recognized for the three and nine month periods ended September 30, 2024 and 2023, since the increase

in unrealized losses is primarily a result of increases in interest rates.

See Note 3 for additional information regarding the Company’s

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

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

No credit losses have been recognized for the three month periods ended March 31, 2025 and 2024, since the increase in unrealized

losses is primarily a result of increases in interest rates.

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

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

table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of March 31, 2024,

by contractual maturity.

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

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

Schedule of Investments Classified by Contractual

Maturity Date

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

or prepay obligations with or without call or prepayment penalties.

Schedule of Investments Classified by Contractual Maturity Date

Estimated Fair

16 unchanged sentences

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

assets as of September 30, 2024, are summarized as follows:

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

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

2 unchanged sentences

Gross Unrealized Losses

Allowance for Credit Losses

Estimated Fair Value

September 30, 2024:

March 31, 2025:

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

14 unchanged sentences

Total mortgage loans held for investment

Accrued investment income

Other investments

Cash and cash equivalents (1)

Accrued investment income

Total restricted assets

1 unchanged sentence

and cash equivalents of $ 10,828,570 for the life insurance and mortgage segments.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

September 30, 2024 (Unaudited)

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2025 (Unaudited)

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

21 unchanged sentences

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 $ 6,930,930 for the life insurance and mortgage segments.

and cash equivalents of $ 7,657,958

for the life insurance and mortgage segments.

Maturity Securities

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

of September 30, 2024 and December 31, 2023.

of March 31, 2025 and December 31, 2024.

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

maturity securities.

of Fair Value of Fixed Maturity Securities

Schedule of Fair Value of Fixed Maturity Securities

Unrealized Losses for Less than Twelve Months

1 unchanged sentence

Total Unrealized Loss

September 30, 2024

At March 31, 2025

Treasury securities and obligations of U.S.

2 unchanged sentences

Corporate securities including public utilities

December 31, 2023

Total unrealized losses

At December 31, 2024

Treasury securities and obligations of U.S.

2 unchanged sentences

Corporate securities including public utilities

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

September 30, 2024 (Unaudited)

Total unrealized losses

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2025 (Unaudited)

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

holdings were comprised of 12 securities with fair values aggregating 99.3 % of the aggregate amortized cost as of September 30, 2024.

Relevant holdings were comprised of 12 securities with fair values aggregating 99.1 % of the aggregate amortized cost as of December 31,

No credit losses have been recognized for the three and nine month periods ended September 30, 2024 and 2023, since the increase

in unrealized losses is primarily a result of increases in interest.

See Note 3 for additional information regarding the Company’s

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

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

holdings were comprised of nine securities with fair values aggregating 99.0 % of the aggregate amortized cost as of March 31, 2025.

holdings were comprised of 15 securities with fair values aggregating 99.2 % of the aggregate amortized cost as of December 31, 2024.

No credit losses have been recognized for the three month periods ended March 31, 2025 and 2024, since the increase in unrealized losses

is primarily a result of increases in interest.

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

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

table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of March 31, 2025,

by contractual maturity.

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

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

Schedule of Investments Classified by Contractual

Maturity Date

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

or prepay obligations with or without call or prepayment penalties.

Schedule of Investments Classified by Contractual Maturity Date

Estimated Fair

4 unchanged sentences

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

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

September 30, 2024 (Unaudited)

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2025 (Unaudited)

Accumulated Other Comprehensive Income (loss)

1 unchanged sentence

Schedule of Changes in Accumulated Other Comprehensive Income

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

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

$ ( 1,035,099 )

$ ( 6,310,923 )

Amounts reclassified into net earnings

1 unchanged sentence

( 1,131,650 )

( 6,580,750 )

Tax (expense) benefit

( 2,198,474 )

( 1,824,502 )

( 5,376,426 )

( 5,198,792 )

Unrealized gains (losses) on restricted assets (1)

Tax (expense) benefit

Unrealized gains (losses) on cemetery perpetual care

trust investments (1)

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

Tax (expense) benefit

1 unchanged sentence

$ ( 895,098 )

$ ( 5,212,021 )

(1) Fixed maturity

securities available for sale

following table presents the accumulated balances of other comprehensive income (loss) as of September 30, 2024:

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

Schedule of Accumulated Balances of Other Comprehensive Income

1 unchanged sentence

Change for the period

Ending Balance September 30,

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

Ending Balance March 31,

Unrealized gains (losses) on fixed maturity securities

available for sale

$ ( 6,941,915 )

$ ( 3,949,637 )

Unrealized gains (losses) on restricted assets (1)

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

Unrealized gains (losses) on cemetery perpetual

care trust investments (1)

Other comprehensive income (loss)

$ ( 6,951,266 )

$ ( 3,953,654 )

(1) Fixed maturity

4 unchanged sentences

Ending Balance December 31,

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

Unrealized losses on fixed maturity securities

available for sale

$ ( 6,876,629 )

1 unchanged sentence

Unrealized gains (losses) on restricted assets (1)

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

Other comprehensive income (loss)

Unrealized losses on cemetery perpetual

care trust investments (1)

Other comprehensive loss

$ ( 6,885,558 )

3 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