SECURITY NATIONAL FINANCIAL CORP 10-Q

Item 1. Financial Statements. March 31, 2025 December 31, 2024 Assets Investments: 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; net of allowance for credit losses of $ 507,300 and $ 420,993 for 2025 and 2024, respectively) $ 371,212,032 $ 366,546,129 Equity securities at estimated fair value (cost of $ 11,548,300 and $ 11,386,454 for 2025 and 2024, respectively) 15,973,782 15,771,681 Mortgage loans held for investment (net of allowance for credit losses of $ 2,008,592 and $ 1,885,390 for 2025 and 2024, respectively) 319,445,281 301,747,358 Real estate held for investment (net of accumulated depreciation of $ 32,853,123 and $ 31,419,539 for 2025 and 2024, respectively) 202,629,726 197,693,338 Real estate held for sale 2,713,040 1,278,033 Other investments and policy loans (net of allowance for credit losses of $ 1,517,783 and $ 1,536,926 for 2025 and 2024, respectively) 76,545,918 74,855,041 Accrued investment income 9,574,599 8,499,168 Total investments 998,094,378 966,390,748 Cash and cash equivalents 132,946,068 140,546,421 Loans held for sale at estimated fair value 139,834,226 131,181,148 Receivables (net of allowance for credit losses of $ 1,632,099 and $ 1,678,531 for 2025 and 2024, respectively) 15,943,962 15,858,743 Restricted assets (including $ 12,910,825 and $ 12,323,535 for 2025 and 2024 respectively, at estimated fair value) 27,722,898 23,806,836 Cemetery perpetual care trust investments (including $ 5,841,653 and $ 5,689,706 for 2025 and 2024, respectively, at estimated fair value) 9,038,179 8,836,503 Receivable from reinsurers 13,791,025 13,831,093 Cemetery land and improvements 10,545,468 10,594,632 Deferred policy and pre-need contract acquisition costs 123,527,455 122,661,298 Mortgage servicing rights, net 2,839,548 2,939,878 Property and equipment, net 18,811,490 19,047,688 Value of business acquired 7,380,231 7,491,600 Goodwill 5,253,783 5,253,783 Other 18,521,619 21,366,843 Total Assets $ 1,524,250,330 $ 1,489,807,214 See accompanying notes to condensed consolidated financial statements (unaudited). 3 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited) March 31, 2025 December 31, 2024 Liabilities and Stockholders’ Equity Liabilities Future policy benefits and unpaid claims $ 953,000,823 $ 944,811,843 Unearned premium reserve 1,966,308 2,011,679 Bank and other loans payable 122,823,346 106,740,104 Deferred pre-need cemetery and mortuary contract revenues 20,910,047 20,168,405 Cemetery perpetual care obligation 5,704,613 5,642,693 Accounts payable 4,982,820 2,937,293 Other liabilities and accrued expenses 53,258,611 55,633,661 Income taxes 15,110,076 13,079,257 Total liabilities 1,177,756,644 1,151,024,935 Stockholders’ Equity Preferred Stock - non-voting - $ 1.00 par value; 5,000,000 shares authorized; none issued or outstanding - - Class A: common stock - $ 2.00 par value; 40,000,000 shares authorized; 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 42,643,478 42,510,012 Class B: non-voting common stock - $ 1.00 par value; 5,000,000 shares authorized; none issued or outstanding - - Class C: convertible common stock - $ 2.00 par value; 6,000,000 shares authorized; 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 6,834,340 6,643,666 Common stock value 6,834,340 6,643,666 Additional paid-in capital 80,004,637 79,698,367 Accumulated other comprehensive loss, net of taxes ( 3,953,654 ) ( 6,951,266 ) Retained earnings 229,697,478 225,359,186 Treasury stock at cost - 1,037,568 Class A shares and 99,623 Class C shares as of March 31, 2025; and 1,025,784 Class A shares and 99,623 Class C shares as of December 31, 2024 ( 8,732,593 ) ( 8,477,686 ) Total stockholders’ equity 346,493,686 338,782,279 Total Liabilities and Stockholders’ Equity $ 1,524,250,330 $ 1,489,807,214 See accompanying notes to condensed consolidated financial statements (unaudited). 4 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Three Months Ended March 31, 2025 2024 Revenues: Mortgage fee income $ 24,809,241 $ 21,831,670 Insurance premiums and other considerations 29,779,525 29,852,093 Net investment income 19,202,624 19,946,568 Net mortuary and cemetery sales 7,300,221 6,948,491 Gains on investments and other assets 586,021 1,669,426 Other 1,062,091 939,950 Total revenues 82,739,723 81,188,198 Benefits and expenses: Death benefits 16,045,465 15,713,753 Surrenders and other policy benefits 1,201,555 1,215,793 Increase in future policy benefits 8,988,057 9,345,887 Amortization of deferred policy and pre-need acquisition costs and value of business acquired 4,696,535 4,743,913 Selling, general and administrative expenses: Commissions 10,438,381 7,981,217 Personnel 22,182,408 19,855,135 Advertising 823,945 687,655 Rent and rent related 988,611 1,401,477 Depreciation on property and equipment 615,135 587,449 Costs related to funding mortgage loans 1,415,252 1,449,095 Other 7,400,687 6,285,910 Interest expense 1,119,528 1,027,474 Cost of goods and services sold-mortuaries and cemeteries 1,253,270 1,274,129 Total benefits and expenses 77,168,829 71,568,887 Earnings before income taxes 5,570,894 9,619,311 Income tax expense ( 1,232,602 ) ( 2,144,789 ) Net earnings $ 4,338,292 $ 7,474,522 Net earnings per Class A Equivalent common share (1) $ 0.18 $ 0.32 Net earnings per Class A Equivalent common share-assuming dilution (1) $ 0.18 $ 0.31 Weighted-average Class A equivalent common shares outstanding (1) 23,521,451 23,325,136 Weighted-average Class A equivalent common shares outstanding-assuming dilution (1) 24,466,443 24,087,806 (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). 5 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, 2025 2024 Net earnings $ 4,338,292 $ 7,474,522 Other comprehensive income: Unrealized gains (losses) on fixed maturity securities available for sale $ 3,788,729 ( 1,131,650 ) Unrealized gains (losses) on restricted assets (1) 4,288 ( 1,890 ) Unrealized gains (losses) on cemetery perpetual care trust investments (1) 2,815 ( 774 ) Other comprehensive income (loss), before income tax 3,795,832 ( 1,134,314 ) Income tax (expense) benefit ( 798,220 ) 239,216 Other comprehensive income (loss), net of income tax 2,997,612 ( 895,098 ) Comprehensive income $ 7,335,904 $ 6,579,424 (1) Fixed maturity securities available for sale See accompanying notes to condensed consolidated financial statements (unaudited). 6 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Three Months Ended March 31, 2025 Class A Common Stock Class C Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Treasury Stock Total December 31, 2024 $ 42,510,012 $ 6,643,666 $ 79,698,367 $ ( 6,951,266 ) $ 225,359,186 $ ( 8,477,686 ) $ 338,782,279 Net earnings - - - - 4,338,292 - 4,338,292 Other comprehensive income - - - 2,997,612 - - 2,997,612 Stock-based compensation expense - - 309,260 - - - 309,260 Exercise of stock options 132,546 190,674 ( 92,965 ) - - ( 149,009 ) 81,246 Vesting of restricted stock units 920 - ( 920 ) - - - - Sale of treasury stock - - 90,895 - - 136,367 227,262 Purchase of treasury stock - - - - - ( 242,265 ) ( 242,265 ) March 31, 2025 $ 42,643,478 $ 6,834,340 $ 80,004,637 $ ( 3,953,654 ) $ 229,697,478 $ ( 8,732,593 ) $ 346,493,686 Three Months Ended March 31, 2024 Class A Common Stock Class C Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Treasury Stock Total December 31, 2023 $ 40,096,004 $ 5,943,708 $ 72,424,429 $ ( 6,885,558 ) $ 206,978,373 $ ( 5,661,737 ) $ 312,895,219 Balance $ 40,096,004 $ 5,943,708 $ 72,424,429 $ ( 6,885,558 ) $ 206,978,373 $ ( 5,661,737 ) $ 312,895,219 Net earnings - - - - 7,474,522 - 7,474,522 Other comprehensive loss - - - ( 895,098 ) - - ( 895,098 ) Stock-based compensation expense - - 199,887 - - - 199,887 Vesting of restricted stock units 810 - ( 810 ) - - - - Sale of treasury stock - - 103,788 - - 366,733 470,521 Purchase of treasury stock - - - - - ( 41,077 ) ( 41,077 ) Conversion Class C to Class A 348 ( 348 ) - - - - - March 31, 2024 $ 40,097,162 $ 5,943,360 $ 72,727,294 $ ( 7,780,656 ) $ 214,452,895 $ ( 5,336,081 ) $ 320,103,974 Balance $ 40,097,162 $ 5,943,360 $ 72,727,294 $ ( 7,780,656 ) $ 214,452,895 $ ( 5,336,081 ) $ 320,103,974 7 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net cash provided by operating activities $ 9,585,902 $ 25,077,244 Cash flows from investing activities: Purchases of fixed maturity securities ( 28,292,634 ) ( 6,670,277 ) Sales, calls and maturities of fixed maturity securities 26,374,371 11,440,209 Purchases of equity securities ( 1,114,187 ) ( 2,038,459 ) Sales of equity securities 1,085,712 1,412,118 Purchases of restricted assets ( 933,673 ) ( 643,531 ) Sales, calls and maturities of restricted assets 96,874 178,350 Purchases of cemetery perpetual care trust investments ( 26,565 ) ( 46,725 ) Sales, calls and maturities of perpetual care trust investments 859,715 54,601 Mortgage loans held for investment, other investments and policy loans made ( 217,905,832 ) ( 166,160,908 ) Payments received for mortgage loans held for investment, other investments and policy loans 198,431,585 175,017,132 Purchases of property and equipment ( 441,530 ) ( 256,155 ) Sales of property and equipment 1,200 71,469 Purchases of real estate ( 16,643,207 ) ( 17,740,755 ) Sales of real estate 9,241,645 7,082,265 Net cash provided by (used in) investing activities ( 29,266,526 ) 1,699,334 Cash flows from financing activities: Investment contract receipts 3,065,288 3,237,207 Investment contract withdrawals ( 4,097,396 ) ( 4,105,463 ) Proceeds from stock options exercised 81,246 - Purchases of treasury stock ( 242,265 ) ( 41,077 ) Repayment of bank loans ( 504,009 ) ( 470,652 ) Net change in warehouse line borrowings for loans held for sale 16,567,385 ( 769,236 ) Net cash provided by (used in) financing activities 14,870,249 ( 2,149,221 ) Net change in cash, cash equivalents, restricted cash and restricted cash equivalents ( 4,810,375 ) 24,627,357 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 150,102,620 139,923,399 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ 145,292,245 $ 164,550,756 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Interest $ 1,098,086 $ 1,022,460 Income taxes (net of refunds) - - Non Cash Operating, Investing and Financing Activities: Transfer from fixed maturity securities available for sale to other investments $ 1,185,603 $ - Right-of-use assets obtained in exchange for operating lease liabilities 436,109 479,462 Benefit plans funded with treasury stock 227,262 470,521 Loans held for sale foreclosed into real estate held for sale - 858,977 Transfer of loans held for sale to mortgage loans held for investment - 1,867,552 8 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited) 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: March 31, 2025 March 31, 2024 Cash and cash equivalents $ 132,946,068 $ 150,930,786 Restricted assets 11,455,091 10,598,384 Cemetery perpetual care trust investments 891,086 3,021,586 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 year $ 145,292,245 $ 164,550,756 See accompanying notes to condensed consolidated financial statements (unaudited). 9 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 1) Basis of Presentation 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 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, 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 uncertain. 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. 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 liability for future policy benefits; those used in determining the value of loans held for sale; and those used in determining loan loss reserve. Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects. 10 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 2) Recent Accounting Pronouncements Accounting Standards Issued But Not Yet Adopted ASU No. 2018-12: “Financial Services – Insurance (Topic 944): 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. In November 2020, ASU No. 2020-11: “Financial Services – Insurance (Topic 944): Effective Date and Early Application,” was issued. This ASU was issued to provide additional time for the implementation of ASU No. 2018-12 by deferring the effective date by one year. 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. ASU No. 2023-09: “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” — Issued in December 2023, ASU 2023-09 requires that public business entities, on an annual basis: (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments in this update require that all entities disclose on an annual basis the following information about income taxes paid: (i) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and (ii) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). ASU 2023-09 is effective for the Company for the annual reporting periods beginning January 1, 2025. The Company will adopt the standard commencing with its annual reporting period ending December 31, 2025. The Company does not anticipate that the adoption of ASU 2023-09 will have a material impact on the consolidated financial statements. ASU No. 2024-03: “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. ASU 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 earnings. 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 31, 2027. 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. 11 SECURITY NATIONAL FINANCIAL CORPO RATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments The Company’s investments as of March 31, 2025 are summarized as follows: Schedule of Investments Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (1) Allowance for Credit Losses Estimated Fair Value March 31, 2025: Fixed maturity securities, available for sale, at estimated fair value: U.S. Treasury securities and obligations of U.S. Government agencies $ 67,730,345 $ 168,247 $ ( 369,412 ) $ - $ 67,529,180 Obligations of states and political subdivisions 3,554,218 12,021 ( 216,520 ) - 3,349,719 Corporate securities including public utilities 278,660,923 4,042,114 ( 5,058,561 ) ( 495,251 ) 277,149,225 Mortgage-backed securities 26,707,539 99,349 ( 3,860,931 ) ( 12,049 ) 22,933,908 Redeemable preferred stock 250,000 - - - 250,000 Total fixed maturity securities available for sale $ 376,903,025 $ 4,321,731 $ ( 9,505,424 ) $ ( 507,300 ) $ 371,212,032 Equity securities at estimated fair value: Common stock: Industrial, miscellaneous and all other $ 11,548,300 $ 4,887,671 $ ( 462,189 ) $ 15,973,782 Total equity securities at estimated fair value $ 11,548,300 $ 4,887,671 $ ( 462,189 ) $ 15,973,782 Mortgage loans held for investment at amortized cost: Residential $ 93,910,555 Residential construction 169,877,471 Commercial 60,191,978 Less: Unamortized deferred loan fees, net ( 2,251,280 ) Less: Allowance for credit losses ( 2,008,592 ) Less: Net discounts ( 274,851 ) Total mortgage loans held for investment $ 319,445,281 Real estate held for investment - net of accumulated depreciation: Residential $ 77,755,199 Commercial 124,874,527 Total real estate held for investment $ 202,629,726 Real estate held for sale: Residential $ 2,561,487 Commercial 151,553 Total real estate held for sale $ 2,713,040 Other investments and policy loans at amortized cost: Policy loans $ 14,183,492 Insurance assignments 50,727,040 Federal Home Loan Bank stock (2) 630,200 Other investments 12,522,969 Less: Allowance for credit losses for insurance assignments ( 1,517,783 ) Total other investments and policy loans $ 76,545,918 Accrued investment income $ 9,574,599 Total investments $ 998,094,378 (1) Gross unrealized losses are net of allowance for credit losses (2) Includes $ 580,700 of Membership stock and $ 49,500 of Activity stock attributable to short-term borrowings and letters of credit. 12 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) The Company’s investments as of December 31, 2024 are summarized as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (1) Allowance for Credit Losses Estimated Fair Value December 31, 2024: Fixed maturity securities, available for sale, at estimated fair value: U.S. Treasury securities and obligations of U.S. Government agencies $ 74,680,606 $ 327,618 $ ( 486,976 ) $ - $ 74,521,248 Obligations of states and political subdivisions 6,416,751 1,762 ( 290,448 ) - 6,128,065 Corporate securities including public utilities 262,954,278 2,444,842 ( 6,922,871 ) ( 408,944 ) 258,067,305 Mortgage-backed securities 31,710,436 125,764 ( 4,244,640 ) ( 12,049 ) 27,579,511 Redeemable preferred stock 250,000 - - - 250,000 Total fixed maturity securities available for sale $ 376,012,071 $ 2,899,986 $ ( 11,944,935 ) $ ( 420,993 ) $ 366,546,129 Equity securities at estimated fair value: Common stock: Industrial, miscellaneous and all other $ 11,386,454 $ 4,976,567 $ ( 591,340 ) $ 15,771,681 Total equity securities at estimated fair value $ 11,386,454 $ 4,976,567 $ ( 591,340 ) $ 15,771,681 Mortgage loans held for investment at amortized cost: Residential $ 92,061,787 Residential construction 151,172,733 Commercial 62,753,085 Less: Unamortized deferred loan fees, net ( 2,082,241 ) Less: Allowance for credit losses ( 1,885,390 ) Less: Net discounts ( 272,616 ) Total mortgage loans held for investment $ 301,747,358 Real estate held for investment - net of accumulated depreciation: Residential $ 71,618,410 Commercial 126,074,928 Total real estate held for investment $ 197,693,338 Real estate held for sale: Residential $ 1,126,480 Commercial 151,553 Total real estate held for sale $ 1,278,033 Other investments and policy loans at amortized cost: Policy loans $ 14,019,248 Insurance assignments 48,493,858 Federal Home Loan Bank stock (2) 2,404,900 Other investments 11,473,961 Less: Allowance for credit losses for insurance assignments ( 1,536,926 ) Total policy loans and other investments $ 74,855,041 Accrued investment income $ 8,499,168 Total investments $ 966,390,748 (1) Gross unrealized losses are net of allowance for credit losses (2) Includes $ 553,900 of Membership stock and $ 1,851,000 of Activity stock due to short-term advances and letters of credit. 13 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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. 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. Schedule of Fair Value of Fixed Maturity Securities Unrealized Losses for Less than Twelve Months Fair Value Unrealized Losses for More than Twelve Months Fair Value Total Unrealized Loss Combined Fair Value March 31, 2025 U.S. Treasury securities and obligations of U.S. Government agencies $ 17,078 $ 4,202,295 $ 352,334 $ 12,890,048 $ 369,412 $ 17,092,343 Obligations of states and political subdivisions 7,192 192,808 209,328 2,211,591 216,520 2,404,399 Corporate securities 810,597 63,857,548 4,247,964 79,610,636 5,058,561 143,468,184 Mortgage-backed securities 4,946 220,459 3,855,985 18,098,828 3,860,931 18,319,287 Totals $ 839,813 $ 68,473,110 $ 8,665,611 $ 112,811,103 $ 9,505,424 $ 181,284,213 December 31, 2024 U.S. Treasury securities and obligations of U.S. Government agencies $ 8,737 $ 986,365 $ 478,239 $ 22,110,495 $ 486,976 $ 23,096,860 Obligations of states and political subdivisions 15,003 2,167,918 275,445 3,008,385 290,448 5,176,303 Corporate securities including public utilities 1,888,022 93,562,219 5,034,849 77,975,776 6,922,871 171,537,995 Mortgage-backed securities 32,150 2,915,192 4,212,490 19,041,442 4,244,640 21,956,634 Totals $ 1,943,912 $ 99,631,694 $ 10,001,023 $ 122,136,098 $ 11,944,935 $ 221,767,792 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. 14 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) Evaluation of Allowance for Credit Losses 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 agencies. 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 90 days. 15 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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. Schedule of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation March 31, 2025 December 31, 2024 NAIC Designation Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value 1 $ 187,879,097 $ 184,522,723 $ 188,386,980 $ 183,460,027 2 181,586,910 179,966,189 178,060,265 174,405,442 3 5,831,758 5,343,171 7,961,422 7,342,220 4 648,713 630,362 649,592 600,459 5 705,397 499,587 702,643 487,981 6 1,150 - 1,169 - Total $ 376,653,025 $ 370,962,032 $ 375,762,071 $ 366,296,129 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 U.S. Treasury securities and obligations of U.S. Government agencies Obligations of states and political subdivisions Corporate securities including public utilities Mortgage-backed securities Total Beginning balance - December 31, 2024 $ - $ - $ 408,944 $ 12,049 $ 420,993 Additions for credit losses not previously recorded - - 72,000 - 72,000 Change in allowance on securities with previous allowance - - 14,437 - 14,437 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 - - ( 130 ) - ( 130 ) Ending Balance - March 31, 2025 $ - $ - $ 495,251 $ 12,049 $ 507,300 16 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) Three Months Ended March 31, 2024 U.S. Treasury securities and obligations of U.S. Government agencies Obligations of states and political subdivisions Corporate securities including public utilities Mortgage-backed securities Total Beginning balance - December 31, 2023 $ - $ - $ 308,500 $ 6,049 $ 314,549 Balance $ - $ - $ 308,500 $ 6,049 $ 314,549 Additions for credit losses not previously recorded - - 30,000 - 30,000 Change in allowance on securities with previous allowance - - 60,000 6,000 66,000 Reductions for securities sold during the period - - - - - Reductions for securities with credit losses due to intent to sell - - - - - Write-offs charged against the allowance - - - - - Recoveries of amounts previously written off - - - - - Ending Balance - March 31, 2024 $ - $ - $ 398,500 $ 12,049 $ 410,549 Balance $ - $ - $ 398,500 $ 12,049 $ 410,549 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 maturity. Actual or expected maturities may differ from contractual maturities because certain securities afford the issuer the right to call or prepay its obligations. Schedule of Investments Classified by Contractual Maturity Date Amortized Cost Estimated Fair Value Due in 1 year $ 22,159,707 $ 22,003,935 Due in 2-5 years 71,242,437 70,452,145 Due in 5-10 years 135,956,272 135,838,014 Due in more than 10 years 120,587,070 119,734,030 Mortgage-backed securities 26,707,539 22,933,908 Redeemable preferred stock 250,000 250,000 Total $ 376,903,025 $ 371,212,032 Information regarding sales of fixed maturity securities available for sale is presented as follows. Schedule of Major Categories of Net Investment Income 2025 2024 Three Months Ended March 31, 2025 2024 Proceeds from sales $ 3,224,848 $ 179,989 Gross realized gains 526 303 Gross realized losses ( 40,504 ) ( 854 ) 17 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) Assets on 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 As of March 31, 2025 As of December 31, 2024 Fixed maturity securities available for sale at estimated fair value $ 6,183,996 $ 6,126,589 Other investments 424,543 400,000 Cash and cash equivalents 1,456,924 1,444,654 Total assets on deposit $ 8,065,463 $ 7,971,243 Assets held in trust related to third-party reinsurance agreements were as follows: As of March 31, 2025 As of December 31, 2024 Fixed maturity securities available for sale at estimated fair value $ 25,814,271 $ 25,309,270 Cash and cash equivalents 4,766,926 4,417,683 Total assets on deposit $ 30,581,197 $ 29,726,953 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. As of March 31, 2025 As of December 31, 2024 Fixed maturity securities available for sale at estimated fair value $ 52,791,611 $ 63,800,454 Total assets pledged as collateral $ 52,791,611 $ 63,800,454 Real Estate 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. Commercial Real Estate Held for Investment and Held for Sale 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. 18 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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 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 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. 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 March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024 Utah (1) $ 124,856,106 $ 126,056,342 546,941 546,941 Louisiana 18,421 18,586 1,622 1,622 $ 124,874,527 $ 126,074,928 548,563 548,563 (1) Includes Center53 The Company’s commercial real estate held for sale is summarized as follows as of the respective dates indicated: Net Book Value March 31, 2025 December 31, 2024 Mississippi (1) $ 151,553 $ 151,553 $ 151,553 $ 151,553 (1) Consists of approximately 93 acres of undeveloped land 19 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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: Schedule of Real Estate Owned and Occupied by the Company Location Business Segment Approximate Square Footage Square Footage Occupied by the Company 433 Ascension Way, Floors 4, 5 and 6, Salt Lake City, UT - Center53 Building 2 (1) Corporate Offices, Life Insurance, Cemetery/Mortuary Operations, and Mortgage Operations and Sales 216,865 50 % 1818 Marshall Street, Shreveport, LA (2) Life Insurance Operations 12,274 100 % 812 Sheppard Street, Minden, LA (2) (3) Life Insurance Sales 1,560 100 % (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 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 of earnings. 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 March 31, 2025 December 31, 2024 Utah (1) $ 77,755,198 $ 71,618,410 $ 77,755,198 $ 71,618,410 (1) Includes multiple residential subdivision development projects, refer to the following table. 20 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) 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: March 31, 2025 December 31, 2024 Lots developed 245 231 Lots to be developed 1,034 1,046 Book Value $ 79,689,307 $ 71,443,356 The Company’s residential real estate held for sale is summarized as follows as of the respective dates indicated: Net Book Value March 31, 2025 December 31, 2024 Utah $ 2,561,487 (1) $ 849,900 Florida - 276,580 $ 2,561,487 $ 1,126,480 (1) Includes a residential subdivision development project for $ 2,106,487 The net book 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. These 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. Interest income is included in net investment income on the condensed consolidated statements of earnings and is recognized when earned. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the terms of the loans. Origination fees are included in net investment income on the condensed consolidated statements of earnings. 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. 21 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) Evaluation of Allowance for Credit Losses 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. Accrual of interest resumes if a mortgage loan is brought current. 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. 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. 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 delinquent. The Company uses these metrics to pool similar loans. The allowance for credit losses is based on estimates, historical experience, probability of loss, value of the underlying collateral, and other factors that affect the collectability of the loan. The Company applies a future loss factor to the outstanding balance of each group to arrive at the allowance for credit losses. 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. 22 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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 Commercial Residential Residential Construction Total Beginning balance - December 31, 2024 $ 732,494 $ 850,550 $ 302,346 $ 1,885,390 Change in provision for credit losses (1) 289,236 ( 203,443 ) 37,409 123,202 Charge-offs - - - - Ending balance - March 31, 2025 $ 1,021,730 $ 647,107 $ 339,755 $ 2,008,592 Beginning balance - December 31, 2023 $ 1,219,653 $ 2,390,894 $ 208,106 $ 3,818,653 Change in provision for credit losses (1) ( 360,031 ) ( 528,399 ) ( 8,609 ) ( 897,039 ) Charge-offs - - - - Ending balance - March 31, 2024 $ 859,622 $ 1,862,495 $ 199,497 $ 2,921,614 (1) Included in other expenses on the condensed consolidated statements of earnings 23 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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 Commercial Residential Residential Construction Total March 31, 2025 30-59 days past due $ - $ 3,745,815 $ - $ 3,745,815 60-89 days past due - 1,142,421 - 1,142,421 Over 90 days past due (1) 3,196,505 1,481,040 - 4,677,545 In process of foreclosure (1) 191,508 2,818,740 - 3,010,248 Total past due 3,388,013 9,188,016 - 12,576,029 Current 56,803,965 84,722,539 169,877,471 311,403,975 Total mortgage loans 60,191,978 93,910,555 169,877,471 323,980,004 Allowance for credit losses ( 1,021,730 ) ( 647,107 ) ( 339,755 ) ( 2,008,592 ) Unamortized deferred loan fees, net ( 195,628 ) ( 1,344,145 ) ( 711,507 ) ( 2,251,280 ) Unamortized discounts, net ( 152,972 ) ( 121,879 ) - ( 274,851 ) Net mortgage loans held for investment $ 58,821,648 $ 91,797,424 $ 168,826,209 $ 319,445,281 December 31, 2024 30-59 days past due $ 2,100,000 $ 5,818,334 $ - $ 7,918,334 60-89 days past due - 845,980 - 845,980 Over 90 days past due (1) 4,205,000 3,061,450 - 7,266,450 In process of foreclosure (1) 191,508 3,942,392 - 4,133,900 Total past due 6,496,508 13,668,156 - 20,164,664 Current 56,256,577 78,393,631 151,172,733 285,822,941 Total mortgage loans 62,753,085 92,061,787 151,172,733 305,987,605 Allowance for credit losses ( 732,494 ) ( 850,550 ) ( 302,346 ) ( 1,885,390 ) Unamortized deferred loan fees, net ( 115,555 ) ( 1,307,539 ) ( 659,147 ) ( 2,082,241 ) Unamortized discounts, net ( 149,268 ) ( 123,348 ) - ( 272,616 ) Net mortgage loans held for investment $ 61,755,768 $ 89,780,350 $ 150,211,240 $ 301,747,358 (1) Interest income is not recognized on loans which are more than 90 days past due or in foreclosure. 24 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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 2025 2024 2023 2022 2021 Prior Total % of Total LTV: Less than 65% $ 4,135,000 $ 3,893,127 $ 20,100,000 $ 1,352,150 $ 851,019 $ 8,692,062 $ 39,023,358 64.83 % 65% to 80% 7,675,000 10,432,942 1,840,776 823,397 - - 20,772,115 34.51 % Greater than 80% - - - 396,505 - 396,505 0.66 % Total $ 11,810,000 $ 14,326,069 $ 21,940,776 $ 2,175,547 $ 1,247,524 $ 8,692,062 $ 60,191,978 100.00 % DSCR >1.20x $ 1,500,000 $ 13,893,127 $ 16,490,000 $ - $ - $ 5,382,415 $ 37,265,542 61.91 % 1.00x - 1.20x 10,310,000 432,942 5,450,776 2,175,547 1,247,524 3,309,647 22,926,436 38.09 % <1.00x - - - - - - 0.00 % Total $ 11,810,000 $ 14,326,069 $ 21,940,776 $ 2,175,547 $ 1,247,524 $ 8,692,062 $ 60,191,978 100.00 % 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 2024 2023 2022 2021 2020 Prior Total % of Total LTV: Less than 65% $ 7,653,600 $ 24,600,000 $ 2,352,150 $ 864,128 $ - $ 8,867,779 $ 44,337,657 70.65 % 65% to 80% 10,432,942 1,840,776 823,397 - 4,913,313 - 18,010,428 28.70 % Greater than 80% - - - 405,000 - - 405,000 0.65 % Total $ 18,086,542 $ 26,440,776 $ 3,175,547 $ 1,269,128 $ 4,913,313 $ 8,867,779 $ 62,753,085 100.00 % DSCR >1.20x $ 16,300,000 $ 20,990,000 $ 1,000,000 $ - $ 4,913,313 $ 5,414,274 $ 48,617,587 77.47 % 1.00x - 1.20x 432,942 5,450,776 2,175,547 1,269,128 - 3,453,505 12,781,898 20.37 % <1.00x 1,353,600 - - - - - 1,353,600 2.16 % Total $ 18,086,542 $ 26,440,776 $ 3,175,547 $ 1,269,128 $ 4,913,313 $ 8,867,779 $ 62,753,085 100.00 % 25 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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 2025 2024 2023 2022 2021 Prior Total % of Total Performance Indicators: Performing $ 4,704,914 $ 13,891,863 $ 10,790,191 $ 42,397,698 $ 3,353,866 $ 14,472,243 $ 89,610,775 95.42 % Non-performing (1) - - 2,501,101 794,108 - 1,004,571 4,299,780 4.58 % Total $ 4,704,914 $ 13,891,863 $ 13,291,292 $ 43,191,806 $ 3,353,866 $ 15,476,814 $ 93,910,555 100.00 % (1) Includes residential mortgage loans in the process of foreclosure of $ 2,818,740 LTV: Less than 65% $ 256,928 $ 5,654,269 $ 4,874,062 $ 5,567,007 $ 1,783,406 $ 7,251,737 $ 25,387,409 27.03 % 65% to 80% 4,007,350 7,423,674 7,537,730 35,601,976 1,570,460 7,479,051 63,620,241 67.75 % Greater than 80% 440,636 813,920 879,500 2,022,823 - 746,026 4,902,905 5.22 % Total $ 4,704,914 $ 13,891,863 $ 13,291,292 $ 43,191,806 $ 3,353,866 $ 15,476,814 $ 93,910,555 100.00 % 26 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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 2024 2023 2022 2021 2020 Prior Total % of Total Performance Indicators: Performing $ 14,861,098 $ 10,030,848 $ 42,634,670 $ 3,076,901 $ 5,513,462 $ 8,940,966 $ 85,057,945 92.39 % Non-performing (1) - 3,442,992 1,451,039 291,359 311,116 1,507,336 7,003,842 7.61 % Total $ 14,861,098 $ 13,473,840 $ 44,085,709 $ 3,368,260 $ 5,824,578 $ 10,448,302 $ 92,061,787 100.00 % (1) Includes residential mortgage loans in the process of foreclosure of $ 3,942,392 LTV: Less than 65% $ 6,241,730 $ 4,931,376 $ 5,488,954 $ 1,790,036 $ 2,440,002 $ 5,273,672 $ 26,165,770 28.42 % 65% to 80% 7,802,984 7,662,200 37,509,634 1,578,224 2,701,008 5,107,289 62,361,339 67.74 % Greater than 80% 816,384 880,264 1,087,121 - 683,568 67,341 3,534,678 3.84 % Total $ 14,861,098 $ 13,473,840 $ 44,085,709 $ 3,368,260 $ 5,824,578 $ 10,448,302 $ 92,061,787 100.00 % 27 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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. Monitoring 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 Credit Quality Indicator 2025 2024 2023 2022 2021 Total % of Total Performance Indicators: Performing $ 35,926,520 $ 109,676,549 $ 13,869,615 $ 209,290 $ 10,195,497 $ 169,877,471 100.00 % Non-performing - - - - - - 0.00 % Total $ 35,926,520 $ 109,676,549 $ 13,869,615 $ 209,290 $ 10,195,497 $ 169,877,471 100.00 % LTV: Less than 65% $ 8,882,430 $ 44,804,033 $ 13,869,615 $ 209,290 $ 10,195,497 $ 77,960,865 45.89 % 65% to 80% 26,680,356 64,872,516 - - - 91,552,872 53.89 % Greater than 80% 363,734 - - - - 363,734 0.21 % Total $ 35,926,520 $ 109,676,549 $ 13,869,615 $ 209,290 $ 10,195,497 $ 169,877,471 100.00 % 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 2024 2023 2022 2021 Total % of Total Performance Indicators: Performing $ 118,863,944 $ 21,375,552 $ 972,468 $ 9,960,769 $ 151,172,733 100.00 % Non-performing - - - - - 0.00 % Total $ 118,863,944 $ 21,375,552 $ 972,468 $ 9,960,769 $ 151,172,733 100.00 % LTV: Less than 65% $ 48,065,177 $ 21,375,552 $ 518,590 $ 9,960,769 $ 79,920,088 52.87 % 65% to 80% 70,798,767 - 453,878 - 71,252,645 47.13 % Greater than 80% - - - - 0.00 % Total $ 118,863,944 $ 21,375,552 $ 972,468 $ 9,960,769 $ 151,172,733 100.00 % 28 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) Insurance Assignments 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 As of March 31, 2025 As of December 31, 2024 30-59 days past due $ 11,138,384 $ 8,785,184 60-89 days past due 4,436,355 4,046,731 Over 90 days past due 5,375,708 5,320,216 Total past due 20,950,447 18,152,131 Current 29,776,593 30,341,727 Total insurance assignments 50,727,040 48,493,858 Allowance for credit losses ( 1,517,783 ) ( 1,536,926 ) Net insurance assignments $ 49,209,257 $ 46,956,932 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 $ 1,536,926 Change in provision for credit losses (1) 293,798 Charge-offs ( 312,941 ) Ending balance - March 31, 2025 $ 1,517,783 Beginning balance - December 31, 2023 $ 1,553,836 Change in provision for credit losses (1) 250,567 Charge-offs ( 216,878 ) Ending balance - March 31, 2024 $ 1,587,525 29 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) 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 2025 2024 Three Months Ended March 31, 2025 2024 Fixed maturity securities: Gross realized gains $ 1,068 $ 303 Gross realized losses ( 42,286 ) ( 854 ) Net credit loss provision ( 86,307 ) ( 96,000 ) Equity securities: Gains (losses) on securities sold 114,127 ( 61,103 ) Unrealized gains on securities held at the end of the period 273,477 1,542,863 Real estate held for investment and sale: Gross realized gains 394,525 249,960 Gross realized losses - - Other assets: Gross realized gains 6,525 35,486 Gross realized losses ( 75,108 ) ( 1,229 ) Total $ 586,021 $ 1,669,426 The 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. Net realized 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 . 30 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 3) Investments (Continued) Major categories of net investment income were as follows: 2025 2024 Three Months Ended March 31, 2025 2024 Fixed maturity securities available for sale $ 4,664,833 $ 4,403,558 Equity securities 192,631 168,148 Mortgage loans held for investment 7,964,539 8,814,036 Real estate held for investment and sale 2,959,711 3,515,061 Policy loans 244,605 301,267 Insurance assignments 5,732,150 5,076,549 Other investments 161,486 198,959 Cash and cash equivalents 1,402,636 1,690,957 Gross investment income 23,322,591 24,168,535 Investment expenses ( 4,119,967 ) ( 4,221,967 ) Net investment income $ 19,202,624 $ 19,946,568 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, 2025 As of December 31, 2024 Fixed maturity securities available for sale $ 4,368,511 $ 3,795,581 Equity securities 13,258 11,049 Mortgage loans held for investment 956,485 1,049,489 Real estate held for investment 4,146,465 3,559,463 Other investments 4,667 - Cash and cash equivalents 85,213 83,586 Total accrued investment income $ 9,574,599 $ 8,499,168 31 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 4) 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: Schedule of Aggregate Fair Value Loans Held for Sale As of March 31, 2025 As of December 31, 2024 Aggregate fair value $ 139,834,226 $ 131,181,148 Unpaid principal balance 136,957,745 128,948,072 Unrealized gain 2,876,481 2,233,076 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: Schedule of Mortgage Fee Income for Loans Held for Sale 2025 2024 Three Months Ended March 31, 2025 2024 Loan fees $ 5,254,090 $ 5,520,465 Interest income 1,667,434 1,482,819 Secondary gains 16,954,943 14,730,974 Change in fair value of loan commitments 474,540 561,778 Change in fair value of loans held for sale 641,268 ( 300,890 ) Provision for loan loss reserve ( 183,034 ) ( 163,476 ) Mortgage fee income $ 24,809,241 $ 21,831,670 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. 32 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 As of March 31, 2025 As of December 31, 2024 Balance, beginning of period $ 696,626 $ 547,233 Provision on current loan originations (1) 183,034 932,154 Charge-offs, net of recaptured amounts ( 177,769 ) ( 782,761 ) Balance, end of period $ 701,891 $ 696,626 (1) Included in mortgage fee income 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. 33 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 5) Stock Compensation Plans 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. As of March 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. The activity of the stock option plans during the three month period ended March 31, 2025, is summarized as follows: Schedule of Activity Restricted Stock Units Number of Class A Shares Weighted Average Exercise Price (2) Number of Class C Shares Weighted Average Exercise Price (2) Outstanding at December 31, 2024 646,594 $ 5.93 1,724,400 $ 7.23 Granted 24,000 - Exercised ( 112,735 ) ( 113,023 ) Cancelled - - Outstanding at March 31, 2025 557,859 $ 6.24 1,611,377 $ 7.50 As of March 31, 2025: Options exercisable 501,834 $ 5.51 1,363,881 $ 6.47 As of March 31, 2025: Available options for future grant 53,718 146,238 Weighted average contractual term of options outstanding at March 31, 2025 5.38 years 6.64 years Weighted average contractual term of options exercisable at March 31, 2025 5.02 years 6.16 years Aggregated intrinsic value of options outstanding at March 31, 2025 (1) $ 3,269,071 $ 7,406,757 Aggregated intrinsic value of options exercisable at March 31, 2025 (1) $ 3,305,118 $ 7,676,614 (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. 34 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 5) Stock Compensation Plans (Continued) The activity of the stock option plans during the three month period ended March 31, 2024, is summarized as follows: Number of Class A Shares Weighted Average Exercise Price (2) Number of Class C Shares Weighted Average Exercise Price Outstanding at December 31, 2023 833,570 $ 5.22 1,520,062 $ 5.86 Granted 16,500 - Exercised - - Cancelled - - Outstanding at March 31, 2024 850,070 $ 5.29 1,520,062 $ 5.86 As of March 31, 2024: Options exercisable 765,695 $ 4.97 1,291,312 $ 5.47 As of March 31, 2024: Available options for future grant 76,320 529,750 Weighted average contractual term of options outstanding at March 31, 2024 5.00 years 6.25 years Weighted average contractual term of options exercisable at March 31, 2024 4.57 years 5.83 years Aggregated intrinsic value of options outstanding at March 31, 2024 (1) $ 2,230,953 $ 3,108,691 Aggregated intrinsic value of options exercisable at March 31, 2024 (1) $ 2,246,543 $ 3,146,491 (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. 35 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 5) Stock Compensation Plans (Continued) Restricted Stock Units (“RSUs”) 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 Number of Class A Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2024 12,813 $ 12.90 Granted - Vested ( 460 ) Non-vested at March 31, 2025 12,353 $ 13.08 Available RSUs for future grant 4,187 Activity of the RSUs during the three month period ended March 31, 2024, is summarized as follows: Number of Class A Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2023 2,245 $ 7.72 Granted - Vested ( 405 ) Non-vested at March 31, 2024 1,840 $ 7.99 Available RSUs for future grant 16,540 36 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 6) Earnings Per Share Earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. In accordance with GAAP, the basic and diluted earnings per share amounts were calculated as follows: Schedule of Earnings Per Share, Basic and Diluted 2025 2024 Three Months Ended March 31, 2025 2024 Numerator: Net earnings $ 4,338,292 $ 7,474,522 Denominator: Basic weighted-average shares outstanding 23,521,451 23,325,136 Effect of dilutive securities: Employee stock options 944,992 762,670 Diluted weighted-average shares outstanding 24,466,443 24,087,806 Basic net earnings per share $ 0.18 $ 0.32 Diluted net earnings per share $ 0.18 $ 0.31 For 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. Basic and diluted earnings per share amounts are the same for each class of common stock. The following table summarizes the activity in shares of capital stock. Summary of Activities in Shares of Capital Stock Class A Class C Outstanding shares at December 31, 2024 21,255,006 3,321,833 Exercise of stock options 66,273 95,337 Vesting of restricted stock units 460 - Outstanding shares at March 31, 2025 21,321,739 3,417,170 Outstanding shares at December 31, 2023 (1) 21,052,883 3,120,432 Outstanding shares 21,052,883 3,120,432 Vesting of restricted stock units 405 - Conversion of Class C to Class A 174 ( 174 ) Outstanding shares at March 31, 2024 (1) 21,053,462 3,120,258 Outstanding shares 21,053,462 3,120,258 (1) Adjusted retroactively for the effect of annual stock dividends 37 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 7) Business Segment Information Description of Products and Services by Segment The Company has three operating and reportable business segments: life insurance, cemetery and mortuary, and mortgage. 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. Services and Cost Sharing Policies The 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. Intersegment 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. Factors Management Used to Identify the Company’s Operating and Reportable Segments The 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. Chief Operating Decision Maker (“CODM”) The 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. 38 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 7) Business Segment Information (Continued) Schedule of Revenues and Expenses by Reportable Segment Insurance Mortuary Mortgage Total For the Three Months Ended March 31, 2025 Life Cemetery/ Insurance Mortuary Mortgage Total Revenues: From external sources: Revenue from external customers $ 29,779,525 $ 7,300,221 $ 24,809,241 $ 61,888,987 Net investment income 18,630,945 421,253 150,426 19,202,624 Gains on investments and other assets 290,534 209,970 85,517 586,021 Other revenues 585,598 187,850 288,643 1,062,091 Intersegment revenues 1,319,923 83,836 121,868 1,525,627 Total segment revenues 50,606,525 8,203,130 25,455,695 84,265,350 Elimination of intersegment revenues ( 1,525,627 ) Total consolidated revenues 82,739,723 Less: Death benefits 16,045,465 - - Surrenders and other policy benefits 1,201,555 - - Increase in future policy benefits 8,988,057 - - Amortization of deferred policy and pre-need acquisition costs and value of business acquired 4,522,570 173,965 - Selling, general and administrative expenses: Commissions 862,343 208,420 9,367,618 Personnel 8,526,188 2,538,026 11,118,194 Advertising 99,976 151,609 572,360 Rent and rent related 99,790 38,038 850,783 Depreciation on property and equipment 242,812 212,361 159,962 Cost related to funding mortgage loans - - 1,415,252 Data processing and IT related (1) 235,788 70,526 878,110 Premium taxes on insurance premiums and other considerations (1) 718,071 - - Other segment items (1)(2) 2,624,538 1,231,210 1,642,444 Intersegment expenses (3) 205,558 87,441 1,232,628 Interest expense 906,447 163 212,918 Costs of goods and services sold-mortuaries and cemeteries - 1,253,270 - Income tax expense (benefit) 1,181,211 534,844 ( 483,453 ) Segment net earnings (loss) 4,146,156 1,703,257 ( 1,511,121 ) 4,338,292 Net earnings $ 4,338,292 Segment assets $ 1,406,921,748 $ 108,399,058 $ 100,755,930 $ 1,616,076,736 Elimination of intersegment assets ( 91,826,406 ) Total consolidated assets $ 1,524,250,330 Expenditures for long-lived assets $ 16,717,670 $ 257,933 $ 109,134 $ 17,084,737 (1) 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. (2) 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. (3) 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. 39 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 7) Business Segment Information (Continued) Insurance Mortuary Mortgage Total For the Three Months Ended March 31, 2024 Life Cemetery/ Insurance Mortuary Mortgage Total Revenues: From external sources: Revenue from external customers $ 29,852,093 $ 6,948,491 $ 21,831,670 $ 58,632,254 Net investment income 18,612,363 1,084,192 250,013 19,946,568 Gains (losses) on investments and other assets 1,088,493 582,162 ( 1,229 ) 1,669,426 Other revenues 417,686 172,733 349,531 939,950 Intersegment revenues 1,379,575 84,768 146,606 1,610,949 Total segment revenues 51,350,210 8,872,346 22,576,591 82,799,147 Elimination of intersegment revenues ( 1,610,949 ) Total consolidated revenues 81,188,198 Less: Death benefits 15,713,753 - - Surrenders and other policy benefits 1,215,793 - - Increase in future policy benefits 9,345,887 - - Amortization of deferred policy and pre-need acquisition costs and value of business acquired 4,509,432 234,481 - Selling, general and administrative expenses: Commissions 406,498 231,785 7,342,934 Personnel 7,231,308 2,309,726 10,314,101 Advertising 107,496 127,677 452,482 Rent and rent related 106,560 40,281 1,254,636 Depreciation on property and equipment 224,077 206,605 156,767 Cost related to funding mortgage loans - - 1,449,095 Data processing and IT related (1) 206,299 66,800 952,222 Premium taxes on insurance premiums and other considerations (1) 760,959 - - Other segment items (1)(2) 1,830,106 1,233,177 1,236,347 Intersegment expenses (3) 231,374 94,024 1,285,551 Interest expense 931,159 240 96,075 Costs of goods and services sold-mortuaries and cemeteries - 1,274,129 - Income tax expense (benefit) 1,817,069 786,854 ( 459,134 ) Segment net earnings (loss) 6,712,440 2,266,567 ( 1,504,485 ) 7,474,522 Net earnings $ 7,474,522 Segment assets $ 1,341,500,414 $ 99,346,510 $ 94,563,032 $ 1,535,409,956 Elimination of intersegment assets ( 94,161,443 ) Total consolidated assets $ 1,441,248,513 Expenditures for long-lived assets $ 17,835,137 $ 140,367 $ 21,406 $ 17,996,910 (1) 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. (2) 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. (3) 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. 40 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. GAAP also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value measurements are classified under the following hierarchy: Level 1: Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Financial assets and financial liabilities whose values are based on the following: a) Quoted prices for similar assets or liabilities in active markets. b) Quoted prices for identical or similar assets or liabilities in non-active markets; or c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: 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. The Company utilizes a combination of third-party valuation service providers, brokers, and internal valuation models to determine fair value. The following methods and assumptions were used by the Company in estimating the fair value disclosures related to significant financial instruments. The items shown under Level 1 and Level 2 are valued as follows: Fixed Maturity Securities Available for Sale : 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 (considered Level 3 financial assets), are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments. Equity Securities : The fair values for equity securities are based on quoted market prices. Restricted Assets : A portion of these assets include equity securities and fixed maturity securities that have quoted market prices that are used to determine fair value. Also included are cash and cash equivalents and participations in mortgage loans. The carrying amounts reported in the accompanying condensed consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature. Cemetery Perpetual Care Trust Investments : A portion of these assets include equity securities and fixed maturity securities that have quoted market prices that are used to determine fair value. Also included are cash and cash equivalents. The carrying amounts reported in the accompanying condensed consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature. Additionally, there were no transfers between Level 1 and Level 2 in the fair value hierarchy. 41 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments (Continued) The items shown under Level 3 are valued as follows: Loans Held for Sale : The Company elected the fair value option for loans held for sale. The fair value is based on quoted market prices, when available. When a quoted market price is not readily available, the Company uses the market price from its last sale of similar assets. Fair value is often difficult to determine in volatile markets and may contain significant unobservable inputs. Loan Commitments and Forward Sale Commitments : The Company’s mortgage segment enters loan commitments with potential borrowers and forward sale commitments to sell loans with third-party investors. The Company also uses a hedging strategy for these transactions. A loan commitment binds the Company to lend funds to a qualified borrower at a specified interest rate and within a specified period, generally up to 30 days after issuance of the loan commitment. Loan commitments are defined to be derivatives under GAAP and are recognized at fair value on the consolidated balance sheets with changes in their fair values recorded in current earnings. The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted MBS prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of mortgage loans that will be funded within the terms of the commitments. Impaired Mortgage Loans Held for Investment : The Company believes that the fair value of these nonperforming loans will approximate the unpaid principal balance expected to be recovered based on the fair value of the underlying collateral. For residential and commercial properties, the collateral value is estimated by obtaining an independent appraisal. The appraisal typically considers comparable sales in the area, property condition, and potential rental income that could be generated (particularly for commercial properties). For residential construction loans, the collateral is typically incomplete, so the fair value is estimated as the replacement cost using data from a provider of building cost information to the real estate construction. Impaired Real Estate Held for Investment : 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. It should be noted that for replacement cost, when determining the fair value of real estate held for investment, the Company uses a provider of building cost information to the real estate construction industry. For the investment analysis, the Company uses market data based upon its real estate operation experience and projected the present value of the net rental income over seven years. The Company also considers area comparable properties and property condition when determining fair value. In addition to this analysis performed by the Company, the Company depreciates Real Estate Held for Investment. This depreciation reduces the book value of these properties and lessens the exposure to the Company from further deterioration in real estate values. Mortgage Servicing Rights : The Company initially recognizes Mortgage Servicing Rights (“MSRs”) at their estimated fair values derived from the net cash flows associated with the servicing contracts, where the Company assumes the obligation to service the loan in the sale transaction. 42 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments (Continued) The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the condensed consolidated balance sheet as of March 31, 2025: Schedule of Fair Value Assets and Liabilities Measured on a Recurring Basis Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets accounted for at fair value on a recurring basis Fixed maturity securities available for sale $ 371,212,032 $ - $ 370,061,728 $ 1,150,304 Equity securities 15,973,782 15,973,782 - - Loans held for sale 139,834,226 - - 139,834,226 Restricted assets (1) 2,352,472 - 2,352,472 - Restricted assets (2) 10,558,353 10,558,353 - - Cemetery perpetual care trust investments (1) 769,914 769,914 - Cemetery perpetual care trust investments (2) 5,071,739 5,071,739 - - Derivatives - loan commitments (3) 3,016,606 - - 3,016,606 Total assets accounted for at fair value on a recurring basis $ 548,789,124 $ 31,603,874 $ 373,184,114 $ 144,001,136 Liabilities accounted for at fair value on a recurring basis Derivatives - loan commitments (4) ( 228,856 ) - - ( 228,856 ) Total liabilities accounted for at fair value on a recurring basis $ ( 228,856 ) $ - $ - $ ( 228,856 ) (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 43 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments (Continued) The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the condensed consolidated balance sheet as of December 31, 2024: Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets accounted for at fair value on a recurring basis Fixed maturity securities available for sale $ 366,546,129 $ - $ 365,396,203 $ 1,149,926 Equity securities 15,771,681 15,771,681 - - Loans held for sale 131,181,148 - - 131,181,148 Restricted assets (1) 2,351,369 - 2,351,369 - Restricted assets (2) 9,972,166 9,972,166 - - Cemetery perpetual care trust investments (1) 769,662 - 769,662 - Cemetery perpetual care trust investments (2) 4,920,044 4,920,044 - - Derivatives - loan commitments (3) 5,348,089 - - 5,348,089 Total assets accounted for at fair value on a recurring basis $ 536,860,288 $ 30,663,891 $ 368,517,234 $ 137,679,163 Liabilities accounted for at fair value on a recurring basis Derivatives - loan commitments (4) $ ( 3,034,879 ) $ - $ - $ ( 3,034,879 ) Total liabilities accounted for at fair value on a recurring basis $ ( 3,034,879 ) $ - $ - $ ( 3,034,879 ) (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 44 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments (Continued) For 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: Schedule of Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis Fair Value at Significant Range of Inputs March 31, Valuation Unobservable Minimum Maximum Weighted 2025 Technique Input(s) Value Value Average Loans held for sale $ 139,834,226 Market approach Investor contract pricing as a percentage of unpaid principal balance 84.0 % 110.0 % 102.0 % Derivatives - loan commitments (net) 2,787,750 Market approach Pull-through rate 65.0 % 95.0 % 82.0 % Initial-Value N/A N/A N/A Servicing 0 bps 241 bps 43 bps Fixed maturity securities available for sale 1,150,304 Broker quotes Pricing quotes $ 100.00 $ 101.46 $ 100.19 For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2024, the significant unobservable inputs used in the fair value measurements were as follows: Fair Value at Significant Range of Inputs December 31, Valuation Unobservable Minimum Maximum Weighted 2024 Technique Input(s) Value Value Average Loans held for sale $ 131,181,148 Market approach Investor contract pricing as a percentage of unpaid principal balance 84.0 % 109.0 % 102.0 % Derivatives - loan commitments (net) 2,313,210 Market approach Pull-through rate 63.0 % 100.0 % 83.0 % Initial-Value N/A N/A N/A Servicing 0 bps 242 bps 47 bps Fixed maturity securities available for sale 1,149,926 Broker quotes Pricing quotes $ 100.00 $ 101.20 $ 100.16 45 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments (Continued) The following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the three month period ended March 31, 2025: Schedule of Changes in the Consolidated Balance Sheet Line Items Measured Using Level 3 Inputs Net Loan Commitments Loans Held for Sale Fixed Maturity Securities Available for Sale Balance - December 31, 2024 $ 2,313,210 $ 131,181,148 $ 1,149,926 Originations and purchases - 517,886,377 - Sales, maturities and paydowns - ( 521,382,576 ) - Total gains (losses): Included in earnings 474,540 (1) 12,149,277 (1) - (2) Included in other comprehensive income - - 378 Balance - March 31, 2025 $ 2,787,750 $ 139,834,226 $ 1,150,304 (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 The following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the three month period ended March 31, 2024: Net Loan Commitments Loans Held for Sale Fixed Maturity Securities Available for Sale Balance - December 31, 2023 $ 1,583,262 $ 126,549,190 $ 1,238,656 Originations and purchases - 465,605,114 - Sales, maturities and paydowns - ( 486,050,938 ) - Transfer to mortgage loans held for investment - ( 1,867,552 ) - Foreclosed into real estate held for sale - ( 858,977 ) - Total gains (losses): Included in earnings 561,778 (1) 9,302,121 (1) - (2) Included in other comprehensive income - - ( 6,469 ) Balance - March 31, 2024 $ 2,145,040 $ 112,678,958 $ 1,232,187 (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 46 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments (Continued) The 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. Fair Value of Financial Instruments Carried at Other Than Fair Value ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The Company uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction as of March 31, 2025 and December 31, 2024. The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of March 31, 2025: Schedule of Financial Instruments Carried at Other Than Fair Value Carrying Value Level 1 Level 2 Level 3 Total Estimated Fair Value Assets Mortgage loans held for investment Residential $ 91,797,424 $ - $ - $ 92,626,433 $ 92,626,433 Residential construction 168,826,209 - - 168,826,209 168,826,209 Commercial 58,821,648 - - 58,679,031 58,679,031 Mortgage loans held for investment, net $ 319,445,281 $ - $ - $ 320,131,673 $ 320,131,673 Policy loans 14,183,492 - - 14,183,492 14,183,492 Insurance assignments, net (1) 49,209,257 - - 49,209,257 49,209,257 Restricted assets (2) 1,035,160 - - 1,035,160 1,035,160 Cemetery perpetual care trust investments (2) 1,194,905 - - 1,194,905 1,194,905 Mortgage servicing rights, net 2,839,548 - - 4,288,738 4,288,738 Liabilities Bank and other loans payable $ ( 122,823,346 ) $ - $ - $ ( 109,056,311 ) $ ( 109,056,311 ) Policyholder account balances (3) ( 36,925,691 ) - - ( 36,981,073 ) ( 36,981,073 ) Future policy benefits - annuities (3) ( 105,461,353 ) - - ( 104,853,294 ) ( 104,853,294 ) (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 47 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments (Continued) The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2024: Carrying Value Level 1 Level 2 Level 3 Total Estimated Fair Value Assets Mortgage loans held for investment Residential $ 89,780,350 $ - $ - $ 90,168,328 $ 90,168,328 Residential construction 150,211,240 - - 150,211,240 150,211,240 Commercial 61,755,768 - - 60,864,775 60,864,775 Mortgage loans held for investment, net $ 301,747,358 $ - $ - $ 301,244,343 $ 301,244,343 Policy loans 14,019,248 - - 14,019,248 14,019,248 Insurance assignments, net (1) 46,956,932 - - 46,956,932 46,956,932 Restricted assets (2) 983,834 - - 983,834 983,834 Cemetery perpetual care trust investments (2) 2,141,464 - - 2,141,464 2,141,464 Mortgage servicing rights, net 2,939,878 - - 4,552,316 4,552,316 Liabilities Bank and other loans payable $ ( 106,740,104 ) $ - $ - $ ( 90,455,678 ) $ ( 90,455,678 ) Policyholder account balances (3) ( 37,066,043 ) - - ( 37,626,593 ) ( 37,626,593 ) Future policy benefits - annuities (3) ( 105,716,087 ) - - ( 104,611,544 ) ( 104,611,544 ) (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 The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of these financial instruments are summarized as follows: Mortgage Loans Held for Investment : The estimated fair value of the Company’s mortgage loans held for investment is determined using various methods. The Company’s mortgage loans are grouped into three categories: Residential, Residential Construction and Commercial. When estimating the expected future cash flows, it is assumed that all loans will be held to maturity, and any loans that are non-performing are evaluated individually for impairment. Residential – The estimated fair value is determined through a combination of discounted cash flows (estimating expected future cash flows of payments and discounting them using current interest rates from single-family mortgages) and considering pricing of similar loans that were sold recently. Residential Construction – These loans primarily have short term maturities. Accordingly, the estimated fair value is determined to be the carrying value. Commercial – The estimated fair value is determined by estimating expected future cash flows of payments and discounting them using current interest rates for commercial mortgages. Policy Loans : The carrying amounts reported in the accompanying condensed consolidated balance sheet for these financial instruments approximate their fair values because they are fully collateralized by the cash surrender value of the underlying insurance policies. Insurance Assignments, Net : 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. 48 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 8) Fair Value of Financial Instruments (Continued) Bank and Other Loans Payable : The carrying amounts reported in the accompanying condensed consolidated balance sheet for warehouse lines of credit approximate their fair values due to their relatively short-term maturities and variable interest rates. The estimated fair value for bank loans collateralized by real estate is determined by estimating future cash flows of payments and discounting them using current market rates. Policyholder Account Balances and Future Policy Benefits-Annuities : Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period of more than related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 1.5 % to 6.5 %. The fair values for these investment-type insurance contracts are estimated based on the present value of liability cash flows. The fair values for the Company’s insurance contracts other than investment-type contracts are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk, such that the Company’s exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts. 9) Derivative Instruments Mortgage Banking Derivatives Loan Commitments The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the time a loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of loan commitments that will be exercised (i.e., the number of loans that will be funded) fluctuates. The probability that a loan will not be funded, or the loan application is denied or withdrawn within the terms of the commitment is driven by several factors, particularly the change, if any, in mortgage rates following the issuance of the loan commitment. In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance), product type and the application approval status. The Company has developed fallout estimates using historical data that consider all the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most current data. The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage-backed securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment net of estimated commission expense. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of related expenses. Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of mortgage loans that will be funded within the terms of the commitments. 49 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 9) Derivative Instruments (Continued) Forward Sale Commitments The Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments. Management expects these types of commitments will experience changes in fair value opposite to changes in fair value of the loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments. The net changes in fair value of loan commitments and forward sale commitments are shown in current earnings as a component of mortgage fee income on the consolidated statements of earnings. Mortgage banking derivatives are shown in other assets and other liabilities and accrued expenses on the condensed consolidated balance sheets. The following table shows the fair value and notional amounts of derivative instruments: Schedule of Derivative Assets at Fair Value March 31, 2025 December 31, 2024 Balance Sheet Location Notional Amount Asset Fair Value Liability Fair Value Notional Amount Asset Fair Value Liability Fair Value Derivatives not designated as hedging instruments: Loan commitments Other assets and Other liabilities $ 202,283,530 $ 3,016,606 $ 228,856 $ 210,597,657 $ 5,348,089 $ 3,034,879 Total $ 202,283,530 $ 3,016,606 $ 228,856 $ 210,597,657 $ 5,348,089 $ 3,034,879 The table below presents the gains (losses) on derivatives. There were no gains or losses reclassified from accumulated other comprehensive income into income or gains or losses recognized in income on derivatives ineffective portion, or any amounts excluded from effective testing. Schedule of Gains and Losses on Derivatives Net Amount Gain Three Months Ended March 31, Derivative Classification 2025 2024 Loan commitments Mortgage fee income $ 474,540 $ 561,778 50 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 10) Reinsurance, Commitments and Contingencies Reinsurance The Company follows the procedure of reinsuring risks of more than a specified limit, which ranges from $ 25,000 to $ 100,000 on newly issued policies. The Company has also assumed various reinsurance agreements through acquisition of life companies. The Company is ultimately liable for these reinsured amounts in the event such reinsurers are unable to pay their portion of the claims. The Company evaluates the financial condition of reinsurers and monitors the concentration of credit risk. The Company is also a reinsurer of insurance with other companies. Mortgage Loan Loss Settlements Future loan losses can be extremely difficult to estimate. However, the Company believes that the Company’s reserve methodology and its current practice of property preservation allow it to estimate its potential losses on loans sold. See Note 4 to the condensed consolidated financial statements for additional information about the Company’s loan loss reserve. Debt Covenants for Mortgage Warehouse Lines of Credit The Company, through its subsidiary SecurityNational Mortgage, has two lines of credit for the purpose of funding mortgage loans. One of the lines of credit, with U.S. Bank, allows SecurityNational Mortgage to borrow up to $ 15,000,000 . 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. The 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 27, 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. The 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 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 model. The Company continues to negotiate other warehouse lines of credit with other lenders. 51 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 10) Reinsurance, Commitments and Contingencies (Continued) Debt Covenants for Revolving Lines of Credit and Bank Loans The 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 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. Other Contingencies and Commitments The Company belongs to a captive insurance group (“the captive group”) for certain casualty insurance, worker compensation and general liability programs. The captive group maintains insurance reserves relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive group considers several factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. If actual claims or adverse development of loss reserves occurs and exceed these estimates, additional reserves may be required from the Company and its subsidiaries. The estimation process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date. The 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. 52 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 11) Mortgage Servicing Rights The Company initially records its MSRs at fair value as discussed in Note 8. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. Amortization expense is included in other expenses on the condensed consolidated statements of earnings. MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance. The Company periodically reviews the various loan strata to determine whether the value of the MSRs in each stratum is impaired and likely to recover. If the Company deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance. The following table presents the MSR activity: Schedule of Mortgage Servicing Rights As of March 31, 2025 As of December 31, 2024 Amortized cost: Balance before valuation allowance at beginning of year $ 2,939,878 $ 3,461,146 MSR additions resulting from loan sales (1) 35,852 90,370 Amortization (2) ( 136,182 ) ( 611,638 ) Sale of MSRs - - Application of valuation allowance to write down MSRs with other than temporary impairment - - Balance before valuation allowance at end of period $ 2,839,548 $ 2,939,878 Valuation allowance for impairment of MSRs: Balance at beginning of year $ - $ - Additions - - Application of valuation allowance to write down MSRs with other than temporary impairment - - Balance at end of period $ - $ - Mortgage servicing rights, net $ 2,839,548 $ 2,939,878 Estimated fair value of MSRs at end of period $ 4,288,738 $ 4,552,316 (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 53 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 11) Mortgage Servicing Rights (Continued) The table below summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the Company’s assumptions in its March 31, 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. Schedule of Finite-Lived Intangible Assets, Future Amortization Expense, Mortgage Servicing Rights Estimated MSR Amortization 2025 313,624 2026 276,708 2027 249,392 2028 221,913 2029 198,505 Thereafter 1,579,406 Total $ 2,839,548 The Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the condensed consolidated statement of earnings. Schedule of Other Revenues 2025 2024 Three Months Ended March 31, 2025 2024 Contractual servicing fees $ 232,101 $ 256,662 Late fees 19,617 23,208 Total $ 251,718 $ 279,870 The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio. Summary of Unpaid Principal Balances of the Servicing Portfolio As of March 31, 2025 As of December 31, 2024 Servicing UPB $ 381,495,494 $ 385,134,774 The following key assumptions were used in determining MSR value: Schedule of Assumptions Used in Determining MSR Value Prepayment Speeds Average Life (Years) Discount Rate March 31, 2025 10.00 7.83 11.98 December 31, 2024 8.79 8.28 12.14 54 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 12) Income Taxes The 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. Interim income taxes are based on an estimated annualized effective tax rate applied to the respective quarterly periods, adjusted for discrete tax items in the period in which they occur. Although the Company believes its tax estimates are reasonable, the Company can make no assurance that the final tax outcome of these matters will not be different from that which it has reflected in its historical income tax provisions and accruals. 13) Revenues from Contracts with Customers The Company reports revenues from contracts with customers pursuant to ASC No. 606, Revenue from Contracts with Customers . Information about Performance Obligations and Contract Balances The Company’s cemetery and mortuary segment sells a variety of goods and services to customers in both at-need and pre-need situations. Due to the timing of the fulfillment of the obligation, revenue is deferred until that obligation is fulfilled. The Company’s three types of future obligations are as follows: Pre-need Merchandise and Service Revenue : All pre-need merchandise and service revenue is deferred, and the funds are placed in trust until the need arises, the merchandise is received, or the service is performed. The trust is then relieved, and the revenue and commissions are recognized. At-need Specialty Merchandise Revenue : At-need specialty merchandise revenue consists of customizable merchandise ordered from a manufacturer such as markers and bases. When specialty merchandise is ordered, it can take time to manufacture and deliver the product. Revenue is deferred until the at-need merchandise is received. Deferred Pre-need Land Revenue : Deferred pre-need revenue and corresponding commissions are deferred until 10% of the funds are received from the customer through regular monthly payments. Deferred pre-need land revenue is not placed in trust. Complete payment of the contract does not constitute fulfillment of the performance obligation. Goods or services are deferred until such a time the service is performed or merchandise is received. Pre-need contracts are required to be paid in full prior to a customer using a good or service from a pre-need contract. Goods and services from pre-need contracts can be transferred when paid in full from one owner to another. In such cases, the Company will act as an agent in transferring the requested goods and services. The transfer of goods and services does not fulfill an obligation and revenue remains deferred. 55 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 13) Revenues from Contracts with Customers (Continued) The opening and closing balances of the Company’s receivables, contract assets and contract liabilities are as follows: Schedule of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities Contract Balances Receivables (1) Contract Asset Contract Liability Opening (December 31, 2024) $ 7,095,589 $ - $ 20,168,405 Closing (March 31, 2025) 7,103,871 - 20,910,047 Increase/(decrease) 8,282 - 741,642 Contract Balances Receivables (1) Contract Asset Contract Liability Opening (December 31, 2023) $ 6,321,573 $ - $ 18,237,246 Closing (December 31, 2024) 7,095,589 - 20,168,405 Increase/(decrease) 774,016 - 1,931,159 (1) Included in Receivables, net on the condensed consolidated balance sheets The 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. The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. Disaggregation of Revenue The following table disaggregates revenue for the Company’s cemetery and mortuary contracts: Schedule of Revenues of the Cemetery and Mortuary Contracts 2025 2024 Three Months Ended March 31, 2025 2024 Major goods/service lines At-need $ 5,716,277 $ 5,410,300 Pre-need 1,583,944 1,538,191 Net mortuary and cemetery sales $ 7,300,221 $ 6,948,491 Timing of Revenue Recognition Goods transferred at a point in time $ 4,154,547 $ 4,190,222 Services transferred at a point in time 3,145,674 2,758,269 Net mortuary and cemetery sales $ 7,300,221 $ 6,948,491 56 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 14) Receivables Receivables consist of the following: Schedule of Receivable As of March 31, 2025 As of December 31, 2024 Contracts with customers $ 7,103,871 $ 7,095,589 Receivables from sales agents 4,169,465 4,028,881 Other 6,302,725 6,412,804 Total receivables 17,576,061 17,537,274 Allowance for credit losses ( 1,632,099 ) ( 1,678,531 ) Net receivables $ 15,943,962 $ 15,858,743 The Company records an allowance for credit losses for its receivables in accordance with GAAP. The following table presents a roll forward of the allowance for credit losses as of the dates indicated: Schedule of Allowance Credit Losses Three Months Ended Beginning balance - December 31, 2024 $ 1,678,531 Change in provision for credit losses (1) 16,142 Charge-offs ( 62,574 ) Ending balance - March 31, 2025 $ 1,632,099 Beginning balance - December 31, 2023 $ 1,897,887 Change in provision for credit losses (1) ( 118,497 ) Charge-offs ( 23,837 ) Ending balance - March 31, 2024 $ 1,755,553 (1) Included in other expenses on the condensed consolidated statements of earnings 57 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 15) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets Cemetery Perpetual Care Trust Investments and Obligation State law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment rights for cemeteries that have established an endowment care trust. These endowment care trusts are defined as Variable Interest Entities pursuant to GAAP. The Company is the primary beneficiary of these trusts, as it absorbs both the losses and any expenses associated with the trusts. The Company has consolidated cemetery endowment care trust investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets . The components of cemetery perpetual care investments and obligation as of March 31, 2025, are as follows: Schedule of Investments and Obligation Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value March 31, 2025: Fixed maturity securities, available for sale, at estimated fair value: U.S. Treasury securities and obligations of U.S. Government agencies $ 650,126 $ 1,323 $ ( 1,117 ) $ 650,332 Obligations of states and political subdivisions 123,933 - ( 4,351 ) 119,582 Total fixed maturity securities available for sale $ 774,059 $ 1,323 $ ( 5,468 ) $ 769,914 Equity securities at estimated fair value: Common stock: Industrial, miscellaneous and all other $ 3,917,228 $ 1,356,226 $ ( 201,715 ) $ 5,071,739 Total equity securities at estimated fair value $ 3,917,228 $ 1,356,226 $ ( 201,715 ) $ 5,071,739 Mortgage loans held for investment at amortized cost: Residential construction $ 1,195,310 Less: Allowance for credit losses ( 405 ) Total mortgage loans held for investment $ 1,194,905 Other investments $ 1,106,768 Cash and cash equivalents $ 891,086 Accrued investment income $ 3,767 Total cemetery perpetual care trust investments $ 9,038,179 Cemetery perpetual care obligation $ ( 5,704,613 ) Trust investments in excess of trust obligations $ 3,333,566 58 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued) The components of cemetery perpetual care investments and obligation as of December 31, 2024, are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value December 31, 2024: Fixed maturity securities, available for sale, at estimated fair value: U.S. Treasury securities and obligations of U.S. Government agencies $ 651,428 $ - $ ( 2,010 ) $ 649,418 Obligations of states and political subdivisions 125,194 - ( 4,950 ) 120,244 Total fixed maturity securities available for sale $ 776,622 $ - $ ( 6,960 ) $ 769,662 Equity securities at estimated fair value: Common stock: Industrial, miscellaneous and all other $ 3,874,522 $ 1,271,529 $ ( 226,007 ) $ 4,920,044 Total equity securities at estimated fair value $ 3,874,522 $ 1,271,529 $ ( 226,007 ) $ 4,920,044 Mortgage loans held for investment at amortized cost: Residential construction $ 202,600 Less: Allowance for credit losses ( 405 ) Commercial 1,939,269 Less: Allowance for credit losses - Total mortgage loans held for investment $ 2,141,464 Cash and cash equivalents $ 1,002,396 Accrued investment income $ 2,937 Total cemetery perpetual care trust investments $ 8,836,503 Cemetery perpetual care obligation $ ( 5,642,693 ) Trust investments in excess of trust obligations $ 3,193,810 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. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities: Schedule of Fair Value of Fixed Maturity Securities Unrealized Losses for Less than Twelve Months Fair Value Unrealized Losses for More than Twelve Months Fair Value Total Unrealized Loss Fair Value March 31, 2025 U.S. Treasury securities and obligations of U.S. Government agencies $ 1,117 $ 500,705 $ - $ - $ 1,117 $ 500,705 Obligations of states and political subdivisions - - 4,351 119,582 4,351 119,582 Totals $ 1,117 $ 500,705 $ 4,351 $ 119,582 $ 5,468 $ 620,287 December 31, 2024 U.S. Treasury securities and obligations of U.S. Government agencies $ 2,010 $ 649,419 $ - $ - $ 2,010 $ 649,419 Obligations of states and political subdivisions 4,950 120,243 - - 4,950 120,243 Totals $ 6,960 $ 769,662 $ - $ - $ 6,960 $ 769,662 59 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued) Relevant 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, 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 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. The 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 Amortized Estimated Fair Cost Value Due in 1 year $ 501,822 $ 500,705 Due in 2-5 years 219,761 217,837 Due in 5-10 years 52,476 51,372 Due in more than 10 years - - Total $ 774,059 $ 769,914 60 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued) Restricted Assets The Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection with its pre-need sales for its cemetery and mortuary segment. Additionally, restricted cash represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company elected to maintain its medical benefit fund without change from the prior year and has included this amount as a component of restricted cash. These restricted cash items are for the Company’s life insurance and mortgage segments. Restricted 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 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value March 31, 2025: Fixed maturity securities, available for sale, at estimated fair value: U.S. Treasury securities and obligations of U.S. Government agencies $ 1,740,244 $ 5,719 $ ( 675 ) $ 1,745,288 Obligations of states and political subdivisions 470,113 172 ( 4,768 ) 465,517 Corporate securities including public utilities 143,321 40 ( 1,694 ) 141,667 Total fixed maturity securities available for sale $ 2,353,678 $ 5,931 $ ( 7,137 ) $ 2,352,472 Equity securities at estimated fair value: Common stock: Industrial, miscellaneous and all other $ 9,009,982 $ 2,100,071 $ ( 551,700 ) $ 10,558,353 Total equity securities at estimated fair value $ 9,009,982 $ 2,100,071 $ ( 551,700 ) $ 10,558,353 Mortgage loans held for investment at amortized cost: Residential construction $ 1,037,234 Less: Allowance for credit losses ( 2,074 ) Total mortgage loans held for investment $ 1,035,160 Other investments $ 2,313,436 Cash and cash equivalents (1) $ 11,455,090 Accrued investment income $ 8,387 Total restricted assets $ 27,722,898 (1) Including cash and cash equivalents of $ 10,828,570 for the life insurance and mortgage segments. 61 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued) Restricted assets as of December 31, 2024, are summarized as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value December 31, 2024: Fixed maturity securities, available for sale, at estimated fair value: U.S. Treasury securities and obligations of U.S. Government agencies $ 1,741,029 $ 2,256 $ ( 1,511 ) $ 1,741,774 Obligations of states and political subdivisions 471,217 180 ( 4,223 ) 467,174 Corporate securities including public utilities 144,616 32 ( 2,227 ) 142,421 Total fixed maturity securities available for sale $ 2,356,862 $ 2,468 $ ( 7,961 ) $ 2,351,369 Equity securities at estimated fair value: Common stock: Industrial, miscellaneous and all other $ 8,547,709 $ 1,914,309 $ ( 489,852 ) $ 9,972,166 Total equity securities at estimated fair value $ 8,547,709 $ 1,914,309 $ ( 489,852 ) $ 9,972,166 Mortgage loans held for investment at amortized cost: Residential construction $ 985,806 Less: Allowance for credit losses ( 1,972 ) Total mortgage loans held for investment $ 983,834 Other investments $ 1,939,269 Cash and cash equivalents (1) $ 8,553,803 Accrued investment income $ 6,395 Total restricted assets $ 23,806,836 (1) Including cash and cash equivalents of $ 7,657,958 for the life insurance and mortgage segments. 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. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities. Schedule of Fair Value of Fixed Maturity Securities Unrealized Losses for Less than Twelve Months Fair Value Unrealized Losses for More than Twelve Months Fair Value Total Unrealized Loss Fair Value At March 31, 2025 U.S. Treasury securities and obligations of U.S. Government agencies $ 675 $ 300,423 $ - $ - $ 675 $ 300,423 Obligations of states and political subdivisions 240 25,366 4,528 289,979 4,768 315,345 Corporate securities including public utilities - - 1,694 406,606 1,694 406,606 Total unrealized losses $ 915 $ 325,789 $ 6,222 $ 696,585 $ 7,137 $ 1,022,374 At December 31, 2024 U.S. Treasury securities and obligations of U.S. Government agencies $ 1,511 $ 558,707 $ - $ - $ 1,511 $ 558,707 Obligations of states and political subdivisions 2,004 237,636 2,219 129,358 4,223 366,994 Corporate securities including public utilities 1,316 51,685 911 65,704 2,227 117,389 Total unrealized losses $ 4,831 $ 848,028 $ 3,130 $ 195,062 $ 7,961 $ 1,043,090 62 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued) Relevant holdings were comprised of nine securities with fair values aggregating 99.0 % of the aggregate amortized cost as of March 31, 2025. Relevant 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. The 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 Amortized Estimated Fair Cost Value Due in 1 year $ 1,614,956 $ 1,616,124 Due in 2-5 years 308,335 310,642 Due in 5-10 years 100,606 100,510 Due in more than 10 years 329,781 325,196 Total $ 2,353,678 $ 2,352,472 See Notes 3 and 8 for additional information regarding restricted assets and cemetery perpetual care trust investments. 63 SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) 16) Accumulated Other Comprehensive Income (loss) The following table summarizes the changes in accumulated other comprehensive income (loss): Schedule of Changes in Accumulated Other Comprehensive Income 2025 2024 Three Months Ended March 31, 2025 2024 Unrealized gains (losses) on fixed maturity securities available for sale $ 3,916,254 $ ( 1,035,099 ) Amounts reclassified into net earnings ( 127,525 ) ( 96,551 ) Net unrealized gains (losses) before taxes 3,788,729 ( 1,131,650 ) Tax (expense) benefit ( 796,451 ) 238,552 Net 2,992,278 ( 893,098 ) Unrealized gains (losses) on restricted assets (1) 4,288 ( 1,890 ) Tax (expense) benefit ( 1,068 ) 471 Net 3,220 ( 1,419 ) Unrealized gains (losses) on cemetery perpetual care trust investments (1) 2,815 ( 774 ) Tax (expense) benefit ( 701 ) 193 Net 2,114 ( 581 ) Other comprehensive income (loss) changes $ 2,997,612 $ ( 895,098 ) (1) Fixed maturity securities available for sale The following table presents the accumulated balances of other comprehensive income (loss) as of March 31, 2025: Schedule of Accumulated Balances of Other Comprehensive Income Beginning Balance December 31, 2024 Change for the period Ending Balance March 31, 2025 Unrealized gains (losses) on fixed maturity securities available for sale $ ( 6,941,915 ) $ 2,992,278 $ ( 3,949,637 ) Unrealized gains (losses) on restricted assets (1) ( 4,126 ) 3,220 ( 906 ) Unrealized gains (losses) on cemetery perpetual care trust investments (1) ( 5,225 ) 2,114 ( 3,111 ) Other comprehensive income (loss) $ ( 6,951,266 ) $ 2,997,612 $ ( 3,953,654 ) (1) Fixed maturity securities available for sale The following table presents the accumulated balances of other comprehensive income (loss) as of December 31, 2024: Beginning Balance December 31, 2023 Change for the period Ending Balance December 31, 2024 Unrealized losses on fixed maturity securities available for sale $ ( 6,876,629 ) $ ( 65,286 ) $ ( 6,941,915 ) Unrealized gains (losses) on restricted assets (1) ( 4,757 ) 631 ( 4,126 ) Unrealized losses on cemetery perpetual care trust investments (1) ( 4,172 ) ( 1,053 ) ( 5,225 ) Other comprehensive loss $ ( 6,885,558 ) $ ( 65,708 ) $ ( 6,951,266 ) (1) Fixed maturity securities available for sale 64