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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ________

Commission File Number: 000-09341

Security National Financial Corporation

(Exact name of registrant as specified in its charter)

UTAH UT		87-0345941
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

433 Ascension Way, 6^th Floor, Salt Lake City, Utah		84123
(Address of principal executive offices)		(Zip Code)

(801) 264-1060

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of each exchange on which registered
Class A Common Stock		SNFCA		The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐ (Do not check if a smaller reporting company)		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of July 30, 2026, the registrant had 23,588,157 shares of Class A Common Stock, $2.00 par value, outstanding and 3,789,132 shares of Class C Common Stock, $2.00 par value, outstanding.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

FORM 10-Q

QUARTER ENDED JUNE 30, 2026

Table of Contents

		Page No.

	Part I - Financial Information
Item 1.	Financial Statements (Unaudited) (at June 30, 2026 and December 31, 2025 and for the Three and Six Months Ended June 30, 2026 and 2025)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Earnings	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements:	10
	Note 1 - Basis of Presentation and Recent Accounting Pronouncements	10
	Note 2 - Investments	14
	Note 3 - Loans Held for Sale	35
	Note 4 - Receivables	37
	Note 5 - Restricted Assets	40
	Note 6 - Cemetery Perpetual Care Trust Investments and Obligation	43
	Note 7 - Mortgage Servicing Rights	46
	Note 8 - Deferred Policy and Pre-need Contract Acquisition Costs, Value of Business Acquired and Unearned Premium Reserve	48
	Note 9 - Derivative Instruments	49
	Note 10 - Future Policy Benefits and Unpaid Claims	51
	Note 11 - Policyholder Account Balances	55
	Note 12 - Reinsurance	57
	Note 13 - Income Taxes	57
	Note 14 - Equity	58
	Note 15 - Earnings Per Share	60
	Note 16 - Business Segment Information	61
	Note 17 - Fair Value of Financial Instruments	66
	Note 18 - Stock Compensation Plans	75
	Note 19 - Commitments and Contingencies	79
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	81
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	88
Item 4.	Controls and Procedures	88
	Part II - Other Information
Item 1.	Legal Proceedings	89
Item 1A.	Risk Factors	89
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	89
Item 3.	Defaults Upon Senior Securities	90
Item 4.	Mine Safety Disclosures	90
Item 5.	Other Information	90
Item 6.	Exhibits	90
	Signatures	91

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Part I - Financial Information

Item 1.

Financial Statements.

	June 30, 2026		December 31, 2025
Assets
Investments:
Fixed maturity securities, available for sale, at estimated fair value (amortized cost of $385,103,571 and $382,401,293 for 2026 and 2025, respectively; net of allowance for credit losses of $840,660 and $579,450 for 2026 and 2025, respectively)	$	380,428,850	$	382,777,918
Equity securities at estimated fair value (cost of $12,540,527 and $12,206,559 for 2026 and 2025, respectively)		20,782,573		18,050,062
Mortgage loans held for investment (net of allowance for credit losses of $2,255,193 and $2,588,918 for 2026 and 2025, respectively)		290,685,188		322,435,385
Real estate held for investment (net of accumulated depreciation of $40,031,834 and $37,159,212 for 2026 and 2025, respectively)		235,071,387		214,897,130
Real estate held for sale		9,581,314		6,424,027
Other investments and policy loans (net of allowance for credit losses of $1,476,295 and $1,676,468 for 2026 and 2025, respectively)		80,052,870		85,223,293
Accrued investment income		9,393,407		9,054,645
Total investments		1,025,995,589		1,038,862,460
Cash and cash equivalents		163,441,869		102,256,828
Loans held for sale at estimated fair value		146,871,985		155,968,266
Receivables (net of allowance for credit losses of $1,546,298 and $1,428,672 for 2026 and 2025, respectively)		17,030,422		15,611,074
Restricted assets (including $18,729,073 and $16,106,168 for 2026 and 2025 respectively, at estimated fair value)		33,264,026		28,805,946
Cemetery perpetual care trust investments (including $7,141,438 and $6,575,744 for 2026 and 2025, respectively, at estimated fair value)		10,470,650		9,871,947
Receivable from reinsurers		12,827,092		13,655,373
Cemetery land and improvements		11,288,853		11,299,283
Mortgage servicing rights, net		2,447,105		2,528,459
Property and equipment, net		17,597,125		18,211,717
Deferred policy and pre-need contract acquisition costs		139,967,487		135,978,803
Value of business acquired		6,875,524		7,109,186
Goodwill		5,253,783		5,253,783
Other		15,983,458		16,431,479

Total Assets	$	1,609,314,968	$	1,561,844,604

See accompanying notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Unaudited)

	June 30, 2026			December 31, 2025
Liabilities and Stockholders’ Equity
Liabilities
Future policy benefits and unpaid claims	$	799,072,640		$	799,706,946
Policyholder account balances		138,026,432			140,605,750
Unearned premium reserve		1,738,407			1,824,796
Bank and other loans payable		122,230,135			98,387,919
Deferred pre-need funeral home and cemetery contract revenues		24,611,358			22,991,603
Cemetery perpetual care obligation		6,086,723			5,918,776
Accounts payable		3,887,774			4,150,119
Other liabilities and accrued expenses		52,877,010			51,969,405
Income taxes		27,748,571			25,920,562
Total liabilities		1,176,279,050			1,151,475,876

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; 23,583,948 shares issued and outstanding as of June 30, 2026 and 23,551,670 (1) shares issued and outstanding as of December 31, 2025		47,167,896			44,857,250
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; 3,789,130 shares issued and outstanding as of June 30, 2026 and 3,767,672 (1) shares issued and outstanding as of December 31, 2025		7,578,260			7,174,474
Common stock value		7,578,260			7,174,474
Additional paid-in capital		101,194,577			89,867,763
Accumulated other comprehensive gain, net of taxes		35,174,704			28,762,123
Retained earnings		251,835,042			248,795,475
Treasury stock at cost - 1,221,516 Class A shares and 117,184 Class C shares as of June 30, 2026; and 1,154,131 (1) Class A shares and 110,184 (1) Class C shares as of December 31, 2025		(9,914,561	)		(9,088,357	)

Total stockholders’ equity		433,035,918			410,368,728

Total Liabilities and Stockholders’ Equity	$	1,609,314,968		$	1,561,844,604

(1)	Issued and outstanding shares have been adjusted retroactively for the effect of annual stock dividends.

See accompanying notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	2026			2025			2026			2025
	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Revenues:
Insurance premiums and other considerations	$	28,704,662		$	30,185,854		$	57,559,916		$	59,965,379
Mortgage fee income		25,797,533			29,485,104			49,287,192			54,294,345
Net investment income		16,428,901			20,580,988			34,930,249			39,783,612
Net funeral home and cemetery sales		7,599,588			7,257,717			15,333,411			14,557,938
Gains on investments and other assets		4,580,323			1,142,707			4,931,071			1,728,728
Other		815,041			888,779			1,612,989			1,950,870
Total revenues		83,926,048			89,541,149			163,654,828			172,280,872

Benefits and expenses:
Policyholder benefits and claims (including the impact of assumption updates to the liability for future policy benefits of nil and nil for the three and six months ended June 30, 2026 and 2025, respectively)		24,317,248			25,515,540			48,856,645			50,970,714
Amortization of deferred policy and pre-need acquisition costs and value of business acquired		2,937,896			2,873,507			5,917,214			5,670,506
Selling, general and administrative expenses:
Commissions		10,316,926			13,465,338			19,110,786			23,903,719
Personnel		20,505,977			22,171,345			41,107,613			44,353,753
Advertising		730,345			940,448			1,467,408			1,764,393
Rent and rent related		786,406			937,139			1,608,683			1,925,750
Depreciation on property and equipment		587,485			599,018			1,167,575			1,214,153
Costs related to funding mortgage loans		1,610,111			1,891,789			3,284,088			3,307,041
Other		8,192,720			7,955,635			15,911,916			15,356,322
Interest expense		1,104,549			1,293,438			2,100,748			2,412,966
Cost of goods and services sold-funeral home and cemetery		1,177,676			1,159,283			2,411,125			2,412,553
Total benefits and expenses		72,267,339			78,802,480			142,943,801			153,291,870
Earnings before income taxes		11,658,709			10,738,669			20,711,027			18,989,002
Income tax expense		(2,677,012	)		(2,367,914	)		(4,727,904	)		(4,204,512	)

Net earnings	$	8,981,697		$	8,370,755		$	15,983,123		$	14,784,490

Net earnings per Class A Equivalent common share (1)	$	0.34		$	0.32		$	0.61		$	0.57

Net earnings per Class A Equivalent common share-assuming dilution (1)	$	0.33		$	0.31		$	0.60		$	0.55

Weighted-average Class A equivalent common shares outstanding (1)		26,040,005			26,007,334			26,049,116			25,973,466

Weighted-average Class A equivalent common shares outstanding-assuming dilution (1)		26,892,689			26,806,867			26,838,648			26,907,436

(1)

Net earnings per share have been adjusted retroactively for the effect of annual stock dividends. The weighted-average shares outstanding includes the weighted-average Class A common shares and the weighted-average Class C common shares determined on an equivalent Class A common stock basis. Net earnings per common share represent net earnings per equivalent Class A common share.

See accompanying notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	2026			2025			2026			2025
	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Net earnings	$	8,981,697		$	8,370,755		$	15,983,123		$	14,784,490
Other comprehensive income (loss):
Unrealized gains (losses) on fixed maturity securities available for sale	$	(473,827	)		2,772,234		$	(4,790,137	)		6,633,491
Unrealized gains (losses) on restricted assets (1)		896			(4,819	)		(2,361	)		(532	)
Unrealized gains (losses) on cemetery perpetual care trust investments (1)		85			(1,150	)		366			1,665
Interest rate remeasurement of future policy benefits		(1,632,362	)		(2,038,836	)		12,903,719			(10,161,681	)
Other comprehensive income (loss), before income tax		(2,105,208	)		727,429			8,111,587			(3,527,057	)
Income tax benefit (expense)		443,850			(152,197	)		(1,699,006	)		740,152
Other comprehensive income (loss), net of income tax		(1,661,358	)		575,232			6,412,581			(2,786,905	)
Comprehensive income	$	7,320,339		$	8,945,987		$	22,395,704		$	11,997,585

(1)	Fixed maturity securities available for sale

See accompanying notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	Six Months Ended June 30, 2026
	Class A Common Stock		Class C Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock			Total

December 31, 2025	$	44,857,250	$	7,174,474		$	89,867,763		$	28,762,123		$	248,795,475		$	(9,088,357	)	$	410,368,728
Net earnings		-		-			-			-			7,001,426			-			7,001,426
Other comprehensive income		-		-			-			8,073,939			-			-			8,073,939
Stock-based compensation expense		-		-			469,131			-			-			-			469,131
Exercise of stock options		2,102					4,540			-			-						6,642
Vesting of restricted stock units		6,174		-			(6,174	)		-			-			-			-
Sale of treasury stock		-		-			60,205			-			-			320,960			381,165
Purchase of treasury stock		-		-			-			-			-			(785,521	)		(785,521	)
March 31, 2026	$	44,865,526	$	7,174,474		$	90,395,465		$	36,836,062		$	255,796,901		$	(9,552,918	)	$	425,515,510

Net earnings		-		-			-			-			8,981,697			-			8,981,697
Other comprehensive loss		-		-			-			(1,661,358	)		-			-			(1,661,358	)
Stock-based compensation expense		-		-			457,371			-			-			-			457,371
Exercise of stock options		48,766		43,192			(44,807	)		-			-			-			47,151
Vesting of restricted stock units		7,238		-			(7,238	)		-			-			-			-
Sale of treasury stock		-		-			57,190			-			-			189,362			246,552
Purchase of treasury stock		-		-			-			-			-			(551,005	)		(551,005	)
Conversion Class C to Class A		276		(276	)		-			-			-			-			-
Stock dividends		2,246,090		360,870			10,336,596			-			(12,943,556	)		-			-
June 30, 2026	$	47,167,896	$	7,578,260		$	101,194,577		$	35,174,704		$	251,835,042		$	(9,914,561	)	$	433,035,918

	Six Months Ended June 30, 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		$	33,719,629		$	227,804,439		$	(8,477,686	)	$	381,898,427
Net earnings		-		-			-			-			6,413,735			-			6,413,735
Other comprehensive loss		-		-			-			(3,362,137	)		-			-			(3,362,137	)
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		$	30,357,492		$	234,218,174		$	(8,732,593	)	$	385,325,528

Net earnings		-		-			-			-			8,370,755			-			8,370,755
Other comprehensive income		-		-			-			575,232			-			-			575,232
Stock-based compensation expense		-		-			320,379			-			-			-			320,379
Vesting of restricted stock units		6,174		-			(6,174	)		-			-			-			-
Sale of treasury stock		-		-			63,807			-			-			208,399			272,206
Purchase of treasury stock		-		-			-			-			-			(961,419	)		(961,419	)
Conversion Class C to Class A		790		(790	)		-			-			-			-			-
Stock dividends		2,132,832		341,678			8,685,530			-			(11,160,040	)		-			-
June 30, 2025	$	44,783,274	$	7,175,228		$	89,068,179		$	30,932,724		$	231,428,889		$	(9,485,613	)	$	393,902,681

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	2026			2025
	Six Months Ended June 30,
	2026			2025
Cash flows from operating activities:
Net cash provided by operating activities	$	36,933,720		$	1,904,880

Cash flows from investing activities:
Purchases of fixed maturity securities		(39,027,131	)		(54,885,176	)
Sales, calls and maturities of fixed maturity securities		36,581,679			36,743,084
Purchases of equity securities		(2,510,554	)		(1,602,500	)
Sales of equity securities		2,177,647			1,529,484
Purchases of restricted assets		(3,971,938	)		(2,397,575	)
Sales, calls and maturities of restricted assets		2,450,148			1,330,555
Purchases of cemetery perpetual care trust investments		(706,125	)		(144,567	)
Sales, calls and maturities of perpetual care trust investments		644,345			955,014
Mortgage loans held for investment, other investments and policy loans made		(361,275,839	)		(446,677,580	)
Payments received for mortgage loans held for investment, other investments and policy loans		393,762,043			412,639,393
Purchases of property and equipment		(496,501	)		(884,076	)
Sales of property and equipment		23,000			1,200
Purchases of real estate		(45,636,547	)		(38,492,419	)
Sales of real estate		24,136,880			19,442,304
Net cash provided by (used in) investing activities		6,151,107			(72,442,859	)

Cash flows from financing activities:
Policyholder account balances - deposits		5,174,044			6,230,904
Policyholder account balances - withdrawals		(8,323,094	)		(8,421,749	)
Proceeds from stock options exercised		53,793			81,246
Purchases of treasury stock		(1,336,526	)		(1,203,684	)
Repayment of bank loans		(1,058,580	)		(18,012,268	)
Proceeds from bank loans		-			32,000,000
Net change in warehouse line borrowings for loans held for sale		24,782,098			2,164,373
Net cash provided by financing activities		19,291,735			12,838,822

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents		62,376,562			(57,699,157	)

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period		114,112,108			150,102,620

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	176,488,670		$	92,403,463

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest	$	2,076,707		$	2,422,711
Federal income taxes		4,475,089			2,117,229
State income taxes		124,010			110,870

Non Cash Operating, Investing and Financing Activities:
Mortgage loans held for investment foreclosed into real estate held for sale	$	3,322,938		$	-
Benefit plans funded with treasury stock		627,717			499,468
Right-of-use assets obtained in exchange for operating lease liabilities		305,661			1,069,880
Right-of-use assets obtained in exchange for finance lease liabilities		78,968			-
Transfer from fixed maturity securities available for sale to other investments		-			1,185,603
Loans held for sale foreclosed into real estate held for sale		-			380,000
Transfer of loans held for sale to mortgage loans held for investment		-			828,063

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:

	June 30, 2026		June 30, 2025
Cash and cash equivalents	$	163,441,869	$	79,317,770
Restricted assets		12,065,713		12,680,488
Cemetery perpetual care trust investments		981,088		405,205
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	176,488,670	$	92,403,463
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year	$	176,488,670	$	92,403,463

See accompanying notes to condensed consolidated financial statements (unaudited).

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

1) Basis of Presentation and Recent Accounting Pronouncements

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, 2025, included in the Company’s Annual Report on Form 10-K (File Number 000-09341). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

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.

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

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

Recent Accounting Pronouncements

Accounting Standards Adopted in 2025

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. On December 31, 2025, the Company adopted ASU No. 2018-12, using the modified retrospective approach, for changes to the liability for future policy benefits and deferred policy acquisition costs. The Company applied the guidance as of a transition date of January 1, 2024, and retrospectively adjusted prior period amounts to reflect the new guidance. The Company’s condensed consolidated financial statements are presented under the new guidance for reporting periods beginning January 1, 2024.

After adoption, cash flow assumptions, such as mortality, lapse, and expense, will be reviewed at least annually and, if necessary, they will be updated to reflect actual experience and current expectations in the calculation of the Company’s future policy benefits. Historically, cash flow assumptions were locked in at policy issuance and remained in place for the life of the business—even when material variances emerged between assumptions and actual experience—except in the case of a premium deficiency. Under the new guidance, net premiums are capped at 100 percent of gross premiums at the cohort level. Adoption of this standard also requires changes in the future treatment of the Company’s Deferred Acquisition Cost (“DAC”) asset.

Historically, the interest rate used to calculate the Company’s future policy benefits was set at policy issuance and remained in effect for the life of the policy. The Company used an expected investment portfolio rate of return based on a conservative experience assumption. The new guidance seeks to improve reporting on the financial impact associated with interest rate sensitivity. To accomplish this, future policy benefits are calculated using a discount rate based on an upper-medium-grade (A-rated) fixed income instrument.

The initial future policy benefit for each cohort is calculated using the original discount rate and then remeasured using the current discount rate curve. The original rate is used to determine interest accretion on the liability—which is included in net earnings—as well as to calculate the net premiums in both scenarios. The impact of remeasurement, from the original locked-in discount rate to the current rate, is reported as a component of the Company’s AOCI. This original discount rate is locked in at the cohort’s inception or at the Transition Date and will continue to be used in determining the impact on future net earnings associated with that contract.

DAC is used by insurance companies to defer costs related to acquiring insurance policies. Under the new guidance, amortization methods are simplified, and DAC for all insurance contracts will be subject to constant-level basis amortization over the lifetime of the policy. Historically, traditional life contracts were amortized in proportion to premiums over the expected premium-paying period. Additionally, shadow DAC is no longer reported.

The requirements of the new guidance did not impact capital and surplus or net income under statutory accounting practices, cash flows on the Company’s policies, or the underlying economics of the Company’s business.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

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

The following tables present amounts as previously reported in 2025, the effect upon those amounts from the adoption of the new guidance under ASU No. 2018-12, and the resulting adjusted amounts that are reflected in the condensed consolidated financial statements included herein. The following tables only include those line items impacted by the adoption of the new guidance.

	As Previously Reported			Effect of Change			As Currently Reported			As Previously Reported			Effect of Change			As Currently Reported
Condensed Consolidated Statements of Earnings:	Three Months Ended June 30, 2025									Six Months Ended June 30, 2025
	As Previously Reported			Effect of Change			As Currently Reported			As Previously Reported			Effect of Change			As Currently Reported
Benefits and expenses:
Policyholder benefits and claims	$	25,053,422		$	462,118		$	25,515,540		$	51,288,499		$	(317,785	)	$	50,970,714
Amortization of deferred policy and pre-need acquisition costs and value of business acquired		5,737,675			(2,864,168	)		2,873,507			10,434,210			(4,763,704	)		5,670,506
Total benefits and expenses		81,204,530			(2,402,050	)		78,802,480			158,373,359			(5,081,489	)		153,291,870

Earnings before income taxes		8,336,619			2,402,050			10,738,669			13,907,513			5,081,489			18,989,002
Income tax expense		(1,830,264	)		(537,650	)		(2,367,914	)		(3,062,866	)		(1,141,646	)		(4,204,512	)
Net earnings	$	6,506,355		$	1,864,400		$	8,370,755		$	10,844,647		$	3,939,843		$	14,784,490

Net earnings per Class A equivalent common share (1)	$	0.25		$	0.07		$	0.32		$	0.42		$	0.15		$	0.57

Net earnings per Class A equivalent common share - assuming dilution (1)	$	0.24		$	0.07		$	0.31		$	0.40		$	0.15		$	0.55

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

	As Previously Reported			Effect of Change			As Currently Reported			As Previously Reported			Effect of Change			As Currently Reported
Condensed Consolidated Statements of Comprehensive Income:	Three Months Ended June 30, 2025									Six Months Ended June 30, 2025
	As Previously Reported			Effect of Change			As Currently Reported			As Previously Reported			Effect of Change			As Currently Reported
Net earnings	$	6,506,355		$	1,864,400		$	8,370,755		$	10,844,647		$	3,939,843		$	14,784,490
Other comprehensive income:
Unrealized gains on fixed maturity securities available for sale		2,693,245			78,989			2,772,234			6,481,974			151,517			6,633,491
Interest rate remeasurement of future policy benefits		-			(2,038,836	)		(2,038,836	)		-			(10,161,681	)		(10,161,681	)
Other comprehensive income (loss), before income tax		2,687,276			(1,959,847	)		727,429			6,483,107			(10,010,164	)		(3,527,057	)
Income tax benefit (expense)		(563,765	)		411,568			(152,197	)		(1,361,984	)		2,102,136			740,152
Other comprehensive income (loss), net of income tax		2,123,511			(1,548,279	)		575,232			5,121,123			(7,908,028	)		(2,786,905	)
Comprehensive income (loss)	$	8,629,866		$	316,121		$	8,945,987		$	15,965,770		$	(3,968,185	)	$	11,997,585

	As Previously Reported			Effect of Change		As Currently Reported
Condensed Consolidated Statements of Stockholders’ Equity:	Six Months Ended June 30, 2025
	As Previously Reported			Effect of Change		As Currently Reported
Accumulated other comprehensive income (loss)	$	(1,830,143	)	$	32,762,867	$	30,932,724
Retained earnings		225,043,793			6,385,096		231,428,889
Total stockholders’ equity	$	354,754,718		$	39,147,963	$	393,902,681

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

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

Accounting Standards Issued But Not Yet Adopted

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 this new standard on the consolidated financial statements.

ASU No. 2025-11: “Interim Reporting (Topic 270): Narrow-Scope Improvements” — Issued in December 2025, ASU 2025-11 clarifies the form, content, and disclosure requirements for interim financial statements and the application of Topic 270. The update differentiates requirements by entity type: SEC registrants must continue to follow SEC rules for condensed financial statements; non-SEC registrants may present either full or condensed statements, using either the ASU’s guidance or SEC-style condensed guidance; and not-for-profit entities follow the non-SEC model with additional presentation considerations specific to NFP reporting. The ASU also compiles a comprehensive list of required interim disclosures for condensed statements from across the Codification, supported by conforming edits, to improve usability (while not replacing underlying guidance). In addition, the ASU reinforces a disclosure principle requiring entities to provide interim disclosures for significant events or transactions that have had a material effect since the most recent year-end, such as changes in accounting principles, key estimates, financing arrangements, long-term contracts, or the reporting entity. The amendments are effective for public business entities for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The guidance may be applied prospectively or retrospectively. The Company is in the process of estimating the potential impact of this new standard on the consolidated financial statements.

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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments

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

Schedule of Investments

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses (1)			Allowance for Credit Losses			Estimated Fair Value
June 30, 2026:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	75,537,690		$	212,461	$	(337,267	)	$	-		$	75,412,884
Obligations of states and political subdivisions		3,090,544			262		(185,443	)		-			2,905,363
Corporate securities including public utilities		284,497,104			4,003,915		(4,153,173	)		(636,611	)		283,711,235
Mortgage-backed securities		21,228,233			37,490		(3,384,006	)		(204,049	)		17,677,668
Redeemable preferred stock		750,000			9,200		(37,500	)		-			721,700
Total fixed maturity securities available for sale	$	385,103,571		$	4,263,328	$	(8,097,389	)	$	(840,660	)	$	380,428,850

Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	12,540,527		$	8,479,971	$	(237,925	)				$	20,782,573
Total equity securities at estimated fair value	$	12,540,527		$	8,479,971	$	(237,925	)				$	20,782,573

Mortgage loans held for investment at amortized cost:
Residential	$	85,963,856
Residential construction		140,692,240
Commercial		68,081,034
Less: Unamortized deferred loan fees, net		(1,552,440	)
Less: Allowance for credit losses		(2,255,193	)
Less: Net discounts		(244,309	)

Total mortgage loans held for investment	$	290,685,188

Real estate held for investment - net of accumulated depreciation:
Residential	$	116,634,085
Commercial		118,437,302

Total real estate held for investment	$	235,071,387

Real estate held for sale:
Residential	$	6,345,029
Commercial		3,236,285

Total real estate held for sale	$	9,581,314

Other investments and policy loans at amortized cost:
Policy loans	$	14,616,118
Insurance assignments		44,009,510
Federal Home Loan Bank stock (2)		680,200
Other investments		22,223,337
Less: Allowance for credit losses for insurance assignments		(1,476,295	)

Total other investments and policy loans	$	80,052,870
Accrued investment income	$	9,393,407
Total investments	$	1,025,995,589

(1)	Gross unrealized losses are net of allowance for credit losses
(2)	Includes $612,800 of Membership stock and $67,400 of Activity stock attributable to short-term borrowings and letters of credit.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

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

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses (1)			Allowance for Credit Losses			Estimated Fair Value
December 31, 2025:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	75,713,307		$	982,769	$	(89,550	)	$	-		$	76,606,526
Obligations of states and political subdivisions		3,396,999			11,662		(172,184	)		-			3,236,477
Corporate securities including public utilities		277,708,638			7,029,453		(3,387,651	)		(425,401	)		280,925,039
Mortgage-backed securities		24,832,349			161,348		(3,553,214	)		(154,049	)		21,286,434
Redeemable preferred stock		750,000			10,942		(37,500	)		-			723,442
Total fixed maturity securities available for sale	$	382,401,293		$	8,196,174	$	(7,240,099	)	$	(579,450	)	$	382,777,918

Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	12,206,559		$	6,176,440	$	(332,937	)				$	18,050,062
Total equity securities at estimated fair value	$	12,206,559		$	6,176,440	$	(332,937	)				$	18,050,062

Mortgage loans held for investment at amortized cost:
Residential	$	90,644,590
Residential construction		157,398,705
Commercial		79,231,786
Less: Unamortized deferred loan fees, net		(1,995,795	)
Less: Allowance for credit losses		(2,588,918	)
Less: Net discounts		(254,983	)

Total mortgage loans held for investment	$	322,435,385

Real estate held for investment - net of accumulated depreciation:
Residential	$	93,638,938
Commercial		121,258,192

Total real estate held for investment	$	214,897,130

Real estate held for sale:
Residential	$	6,272,474
Commercial		151,553

Total real estate held for sale	$	6,424,027

Other investments and policy loans at amortized cost:
Policy loans	$	14,467,357
Insurance assignments		46,183,999
Federal Home Loan Bank stock (2)		646,500
Other investments		25,601,905
Less: Allowance for credit losses for insurance assignments		(1,676,468	)

Total policy loans and other investments	$	85,223,293
Accrued investment income	$	9,054,645
Total investments	$	1,038,862,460

(1)	Gross unrealized losses are net of allowance for credit losses
(2)	Includes $581,600 of Membership stock and $64,900 of Activity stock due to short-term advances and letters of credit.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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 June 30, 2026, 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 June 30, 2026, and December 31, 2025. The fair values of fixed maturity securities that are actively traded are based on quoted market prices. For fixed maturity securities that are 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.

	Unrealized Losses for Less than Twelve Months		Fair Value		Unrealized Losses for More than Twelve Months		Fair Value		Total Unrealized Loss		Combined Fair Value
June 30, 2026
U.S. Treasury securities and obligations of U.S. Government agencies	$	273,354	$	32,972,686	$	63,913	$	1,566,865	$	337,267	$	34,539,551
Obligations of states and political subdivisions		3,662		196,338		181,781		2,073,479		185,443		2,269,817
Corporate securities including public utilities		1,190,106		86,172,801		2,963,067		37,121,227		4,153,173		123,294,028
Mortgage-backed securities		14,268		993,191		3,369,738		14,700,113		3,384,006		15,693,304
Redeemable preferred stock		37,500		212,500		-		-		37,500		212,500
Totals	$	1,518,890	$	120,547,516	$	6,578,499	$	55,461,684	$	8,097,389	$	176,009,200

December 31, 2025
U.S. Treasury securities and obligations of U.S. Government agencies	$	2,591	$	2,047,280	$	86,959	$	11,033,603	$	89,550	$	13,080,883
Obligations of states and political subdivisions		4,884		195,116		167,300		2,095,220		172,184		2,290,336
Corporate securities including public utilities		638,436		30,085,561		2,749,214		42,688,720		3,387,650		72,774,281
Mortgage-backed securities		4,353		192,242		3,548,862		17,504,265		3,553,215		17,696,507
Redeemable preferred stock		37,500		212,500		-		-		37,500		212,500
Totals	$	687,764	$	32,732,699	$	6,552,335	$	73,321,808	$	7,240,099	$	106,054,507

Relevant holdings were comprised of 549 securities with fair values aggregating 95.6% of the aggregate amortized cost as of June 30, 2026, compared to 338 securities with fair values aggregating 93.6% of the aggregate amortized cost as of December 31, 2025. A credit loss provision of $164,663 and of $20,313 have been recognized for the three-month periods ended June 30, 2026, and 2025, respectively. A credit loss provision of $261,210 and of $65,993 have been recognized for the six-month periods ended June 30, 2026, and 2025, respectively. Credit losses are included in gains (losses) on investments and other assets on the condensed consolidated statements of earnings. Other unrealized losses for which no credit loss was recognized are primarily the result of increases in interest rates.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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 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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

Credit Quality Indicators

Based on the NAIC securities designations, the Company had 98.4% and 98.5% of its fixed maturity securities rated investment grade as of June 30, 2026, and December 31, 2025, respectively. The following table summarizes the credit quality, by NAIC designation, of the Company’s fixed maturity securities available for sale, excluding redeemable preferred stock.

	June 30, 2026				December 31, 2025
NAIC Designation	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
1	$	202,837,866	$	199,876,553	$	198,055,737	$	197,788,945
2		174,316,179		173,864,555		177,242,472		178,441,019
3		5,798,920		5,093,932		6,145,460		5,616,342
4		899,491		822,110		155,717		160,830
5		-		-		-		-
6		501,115		50,000		51,907		47,340
Total	$	384,353,571	$	379,707,150	$	381,651,293	$	382,054,476

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 June 30, 2026, and 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
	Three Months Ended June 30, 2026
	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 - March 31, 2026	$	-	$	-	$	521,948	$	154,049	$	675,997

Additions for credit losses not previously recorded		-		-		-		50,000		50,000
Change in allowance on securities with previous allowance		-		-		114,663		-		114,663
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 - June 30, 2026	$	-	$	-	$	636,611	$	204,049	$	840,660

	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
	Three Months Ended June 30, 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 - March 31, 2025	$	-	$	-	$	495,251		$	12,049	$	507,300

Additions for credit losses not previously recorded		-		-		-			-		-
Change in allowance on securities with previous allowance		-		-		(20,444	)		-		(20,444	)
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 - June 30, 2025	$	-	$	-	$	474,937		$	12,049	$	486,986

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

The following tables present a roll forward of the Company’s allowance for credit losses on fixed maturity securities available for sale for the six-month periods ended June 30, 2026, and 2025:

	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
	Six Months Ended June 30, 2026
	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, 2025	$	-	$	-	$	425,401	$	154,049	$	579,450

Additions for credit losses not previously recorded		-		-		17,498		50,000		67,498
Change in allowance on securities with previous allowance		-		-		193,712		-		193,712
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 - June 30, 2026	$	-	$	-	$	636,611	$	204,049	$	840,660

	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
	Six Months Ended June 30, 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
Balance	$	-	$	-	$	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		-		-		(6,007	)		-		(6,007	)
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 - June 30, 2025	$	-	$	-	$	474,937		$	12,049	$	486,986
Balance	$	-	$	-	$	474,937		$	12,049	$	486,986

The table below presents the amortized cost and the estimated fair value of fixed maturity securities available for sale as of June 30, 2026, by contractual maturity. Actual or expected maturities may differ from contractual maturities because certain securities afford the issuer the right to call or prepay their obligations.

	Amortized Cost		Estimated Fair Value
Due in 1 year	$	11,711,839	$	11,709,904
Due in 2-5 years		129,271,705		129,040,087
Due in 5-10 years		140,558,359		141,414,746
Due in more than 10 years		81,583,435		79,864,745
Mortgage-backed securities		21,228,233		17,677,668
Redeemable preferred stock		750,000		721,700
Total	$	385,103,571	$	380,428,850

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

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

	2026		2025			2026			2025
	Three Months Ended June 30,					Six Months Ended June 30,
	2026		2025			2026			2025
Proceeds from sales	$	-	$	15,172		$	1,179,677		$	2,764,641
Gross realized gains		-		-			247			526
Gross realized losses		-		(711	)		(65,035	)		(542	)

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:

	As of June 30, 2026		As of December 31, 2025
Fixed maturity securities available for sale at estimated fair value	$	7,098,607	$	7,744,141
Other investments		424,702		-
Cash and cash equivalents		1,457,017		1,543,842
Total assets on deposit	$	8,980,326	$	9,287,983

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

	As of June 30, 2026		As of December 31, 2025
Fixed maturity securities available for sale at estimated fair value	$	21,114,524	$	23,915,884
Other investments		1,175,185		-
Cash and cash equivalents		2,155,747		2,136,642
Total assets on deposit	$	24,445,456	$	26,052,526

The Company, through two of its life insurance subsidiaries, is a member of the Federal Home Loan Banks of Des Moines and Dallas (“FHLBs”). Assets pledged as collateral with the FHLBs are presented below. These pledged securities are used as collateral for any FHLB cash advances. As of June 30, 2026, the Company owed nil to the FHLBs for advances. Amounts owed, if any, are included in Bank and other loans payable on the condensed consolidated balance sheets. The Company did not receive or repay any advances during the six months ended June 30, 2026.

	As of June 30, 2026		As of December 31, 2025
Fixed maturity securities available for sale at estimated fair value	$	60,674,140	$	64,066,256
Total assets pledged as collateral	$	60,674,140	$	64,066,256

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

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.

The Company employs full-time employees to manage 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 those that are in regions that are expected to have high growth in employment and population and that provide operational efficiencies.

The Company currently owns and operates commercial properties in Utah, California, Mississippi and Louisiana. These properties include office buildings, flex office space, and the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, 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 $112,006,917 and $114,683,175 as of June 30, 2026, and December 31, 2025, respectively. The associated bank loan carrying values totaled $93,152,192 and $94,120,446 as of June 30, 2026, and December 31, 2025, respectively.

During the three and six month periods ended June 30, 2026, and 2025, the Company did not record any impairment losses on commercial real estate held for investment or held for sale. Impairment losses, if any, are included in gains (losses) on investment and other assets on the condensed consolidated statements of earnings.

During the three-month periods ended June 30, 2026, and 2025, the Company recorded depreciation expense on commercial real estate held for investment of $1,433,680 and $1,432,921, respectively, and of $2,867,187 and $2,854,937 during the six-month periods ended June 30, 2026 and 2025, respectively. Commercial real estate held for investment is stated at cost and is depreciated over the estimated useful life, primarily using the straight-line method. Depreciation is included in net investment income on the condensed consolidated statements of earnings.

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

	Net Book Value				Total Square Footage
	June 30, 2026		December 31, 2025		June 30, 2026		December 31, 2025
Utah (1)	$	118,419,709	$	121,240,268		546,941		546,941
Louisiana		17,593		17,924		1,622		1,622

	$	118,437,302	$	121,258,192		548,563		548,563

(1)

Includes Center53

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

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

	Net Book Value
	June 30, 2026		December 31, 2025
California	$	2,800,000	$	-
Louisiana		284,732		-
Mississippi (1)		151,553		151,553

	$	3,236,285	$	151,553

(1)	Consists of approximately 93 acres of undeveloped land

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 June 30, 2026, real estate owned and occupied by the Company is summarized as follows:

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, Funeral Home/Cemetery Operations, and Mortgage Operations and Sales		216,865		50	%
1818 Marshall Street, Shreveport, LA (2) (3)	Life Insurance Operations		12,274		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 June 30, 2026, and 2025 the Company recorded impairment losses on residential real estate held for sale nil and nil, respectively, and of $35,651 and nil during the six months ended June 30, 2026 and 2025, respectively. Impairment losses are included in gains (losses) on investment and other assets on the condensed consolidated statements of earnings.

During the three-month periods ended June 30, 2026, and 2025, the Company recorded depreciation expense on residential real estate held for investment of $2,718 and $2,732, respectively, and of $5,436 and $5,408 during the six- month periods ended June 30, 2026 and 2025, respectively. Residential real estate held for investment is stated at cost and is depreciated over the estimated useful life, primarily using the straight-line method. Depreciation is included in net investment income on the condensed consolidated statements of earnings.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

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

	Net Book Value
	June 30, 2026		December 31, 2025
Utah (1)	$	116,634,085	$	93,638,938
	$	116,634,085	$	93,638,938

(1)	Includes multiple residential subdivision development projects, refer to the following table

The Company also invests in residential subdivision developments. The following table presents additional information regarding the Company’s residential subdivision development projects in Utah:

	June 30, 2026		December 31, 2025
Lots developed		406		492
Lots to be developed		990		761
Book Value	$	116,475,338	$	93,474,755

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

	Net Book Value
	June 30, 2026		December 31, 2025
Utah	$	5,456,806	$	5,456,806
Colorado		121,000		140,000
Florida		-		146,651
Georgia		380,000		380,000
Hawaii		238,206		-
Nevada		149,017		149,017
	$	6,345,029	$	6,272,474

The net book value of foreclosed residential real estate included in residential real estate held for sale was $1,343,223 and $1,270,669 as of June 30, 2026, and December 31, 2025, respectively.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

Mortgage Loans Held for Investment

Mortgage loans held for investment consist of first and second mortgages and are generally classified into three distinct groups: 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 several 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.

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

	Commercial			Residential			Residential Construction			Total
As of June 30, 2026:
Utah		29	%		15	%		97	%		57	%
Florida		-			25	%		-			7	%
California		12	%		5	%		-			4	%
Texas		13	%		16	%		-			8	%
Arizona		10	%		13	%		-			6	%
Other states		36	%		26	%		3	%		18	%
Total		100	%		100	%		100	%		100	%

As of December 31, 2025:
Utah		26	%		16	%		96	%		57	%
Florida		1	%		25	%		-			7	%
California		24	%		5	%		-			7	%
Texas		12	%		14	%		-			7	%
Arizona		9	%		15	%		-			6	%
Other states		28	%		25	%		4	%		16	%
Total		100	%		100	%		100	%		100	%

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. Loans that exceed 80% of the fair market value of the respective loan collateral require additional collateral or mortgage insurance by an approved third-party insurer.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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 and the fair value is reassessed. Accrual of interest resumes if a mortgage loan is brought current. Given this policy, the Company does not measure a credit loss allowance on accrued interest receivable, which is included in accrued investment income on the condensed consolidated balance sheets. Payments received for mortgage loans on a non-accrual status are recognized when received. The interest income recognized from payments received for mortgage loans on a non-accrual status was immaterial. Interest income not accrued on these loans totaled approximately $603,912 and $1,042,325 as of June 30, 2026, and December 31, 2025, 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. 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 into the following loan types: commercial, residential, and residential construction. The inherent risks within each loan type vary 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 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 life events and the general economic condition of the region. Where LTV exceeds 80%, the loan is generally guaranteed by private mortgage insurance, the FHA, or VA.

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, LTV, payment status, age, and current property values. Analyzing the information from various sources allows the Company to arrive at an allowance for credit losses.

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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

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 has commitments to fund existing construction and land development loans pursuant to the various loan agreements. As of June 30, 2026, the Company’s commitments were approximately $191,479,678 for these loans, of which $144,527,863 had been funded. 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 the 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.

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 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 - March 31, 2026	$	1,322,084		$	932,072	$	299,204		$	2,553,360
Change in provision for credit losses (1)		(393,653	)		285,703		(17,819	)		(125,769	)
Charge-offs		(172,398	)		-		-			(172,398	)
Ending balance - June 30, 2026	$	756,033		$	1,217,775	$	281,385		$	2,255,193

Beginning balance - March 31, 2025	$	1,021,730		$	647,107	$	339,755		$	2,008,592
Change in provision for credit losses (1)		157,537			482,785		(8,170	)		632,152
Charge-offs		-			-		-			-
Ending balance - June 30, 2025	$	1,179,267		$	1,129,892	$	331,585		$	2,640,744

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

	Six Months Ended
	Commercial			Residential		Residential Construction			Total
Beginning balance - December 31, 2025	$	1,368,121		$	904,738	$	316,059		$	2,588,918
Change in provision for credit losses (1)		(439,690	)		313,037		(34,674	)		(161,327	)
Charge-offs		(172,398	)		-		-			(172,398	)
Ending balance - June 30, 2026	$	756,033		$	1,217,775	$	281,385		$	2,255,193

Beginning balance - December 31, 2024	$	732,494		$	850,550	$	302,346		$	1,885,390
Change in provision for credit losses (1)		446,773			279,342		29,239			755,354
Charge-offs		-			-		-			-
Ending balance - June 30, 2025	$	1,179,267		$	1,129,892	$	331,585		$	2,640,744

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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
June 30, 2026
30-59 days past due	$	-		$	6,593,310		$	-		$	6,593,310
60-89 days past due		77,518			1,340,600			-			1,418,118
Over 90 days past due (1)		7,522,308			7,238,352			-			14,760,660
In process of foreclosure (1)		-			1,053,434			-			1,053,434
Total past due		7,599,826			16,225,696			-			23,825,522
Current		60,481,208			69,738,160			140,692,240			270,911,608
Total mortgage loans		68,081,034			85,963,856			140,692,240			294,737,130
Allowance for credit losses		(756,033	)		(1,217,775	)		(281,385	)		(2,255,193	)
Unamortized deferred loan fees, net		(156,865	)		(1,162,227	)		(233,348	)		(1,552,440	)
Unamortized discounts, net		(138,563	)		(105,746	)		-			(244,309	)
Net mortgage loans held for investment	$	67,029,573		$	83,478,108		$	140,177,507		$	290,685,188

December 31, 2025
30-59 days past due	$	86,117		$	7,302,658		$	-		$	7,388,775
60-89 days past due		-			2,485,313			-			2,485,313
Over 90 days past due (1)		2,832,372			2,479,479			-			5,311,851
In process of foreclosure (1)		588,013			616,430			-			1,204,443
Total past due		3,506,502			12,883,880			-			16,390,382
Current		75,725,284			77,760,710			157,398,705			310,884,699
Total mortgage loans		79,231,786			90,644,590			157,398,705			327,275,081
Allowance for credit losses		(1,368,121	)		(904,738	)		(316,059	)		(2,588,918	)
Unamortized deferred loan fees, net		(374,372	)		(1,283,049	)		(338,374	)		(1,995,795	)
Unamortized discounts, net		(146,534	)		(108,449	)		-			(254,983	)
Net mortgage loans held for investment	$	77,342,759		$	88,348,354		$	156,744,272		$	322,435,385

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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 June 30, 2026:

Credit Quality Indicator	2026		2025		2024		2023		2022		Prior		Total		% of Total
LTV:
Less than 65%	$	3,874,000	$	18,643,045	$	3,888,514	$	12,800,000	$	171,493	$	8,689,865	$	48,066,917		70.60	%
65% to 80%		4,769,919		1,212,262		10,424,266		1,000,506		293,872		-		17,700,825		26.00	%
Greater than 80%		-		2,313,292		-		-		-		-		2,313,292		3.40	%

Total	$	8,643,919	$	22,168,599	$	14,312,780	$	13,800,506	$	465,365	$	8,689,865	$	68,081,034		100.00	%

DSCR
>1.20x	$	-	$	295,500	$	9,991,610	$	7,500,000	$	-	$	5,227,181	$	23,014,291		33.80	%
1.00x - 1.20x		8,643,919		17,498,099		4,321,170		6,300,506		465,365		343,289		37,572,348		55.19	%
<1.00x		-		4,375,000		-		-		-		3,119,395		7,494,395		11.01	%

Total	$	8,643,919	$	22,168,599	$	14,312,780	$	13,800,506	$	465,365	$	8,689,865	$	68,081,034		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, 2025:

Credit Quality Indicator	2025		2024		2023		2022		2021		Prior		Total		% of Total
LTV:
Less than 65%	$	34,518,653	$	3,890,144	$	15,600,000	$	462,761	$	810,696	$	8,299,883	$	63,582,137		80.25	%
65% to 80%		3,525,554		10,432,942		1,000,776		293,872		-		-		15,253,144		19.25	%
Greater than 80%		-		-		-		-		396,505		-		396,505		0.50	%

Total	$	38,044,207	$	14,323,086	$	16,600,776	$	756,633	$	1,207,201	$	8,299,883	$	79,231,786		100.00	%

DSCR
>1.20x	$	7,519,000	$	10,000,000	$	7,500,000	$	-	$	-	$	5,292,385	$	30,311,385		38.26	%
1.00x - 1.20x		28,300,207		4,323,086		9,100,776		756,633		1,207,201		3,007,498		46,695,401		58.94	%
<1.00x		2,225,000		-		-		-		-		-		2,225,000		2.81	%

Total	$	38,044,207	$	14,323,086	$	16,600,776	$	756,633	$	1,207,201	$	8,299,883	$	79,231,786		100.00	%

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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 June 30, 2026:

Credit Quality Indicator	2026		2025		2024		2023		2022		Prior		Total		% of Total
Performance Indicators:
Performing	$	5,772,823	$	7,880,037	$	10,015,937	$	7,383,847	$	33,701,203	$	12,918,223	$	77,672,070		90.35	%
Non-performing (1)		352,867		1,468,575		1,670,630		2,088,256		992,234		1,719,224		8,291,786		9.65	%

Total	$	6,125,690	$	9,348,612	$	11,686,567	$	9,472,103	$	34,693,437	$	14,637,447	$	85,963,856		100.00	%

(1)	Includes residential mortgage loans in the process of foreclosure of $1,053,434

LTV:
Less than 65%	$	1,797,451	$	2,082,485	$	6,020,086	$	3,119,207	$	5,241,712	$	8,483,048	$	26,743,989	31.11	%
65% to 80%		2,693,202		6,065,619		5,511,619		6,059,879		27,438,602		5,619,593		53,388,514	62.11	%
Greater than 80%		1,635,037		1,200,508		154,862		293,017		2,013,123		534,806		5,831,353	6.78	%

Total	$	6,125,690	$	9,348,612	$	11,686,567	$	9,472,103	$	34,693,437	$	14,637,447	$	85,963,856	100.00	%

The aggregate unpaid principal balance of residential mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2025:

Credit Quality Indicator	2025		2024		2023		2022		2021		Prior		Total		% of Total
Performance Indicators:
Performing	$	10,946,252	$	11,711,336	$	10,177,427	$	39,714,697	$	2,264,902	$	12,734,067	$	87,548,681		96.58	%
Non-performing (1)		546,602		927,255		616,430		255,544		-		750,078		3,095,909		3.42	%

Total	$	11,492,854	$	12,638,591	$	10,793,857	$	39,970,241	$	2,264,902	$	13,484,145	$	90,644,590		100.00	%

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

LTV:	Year 1		Year 2		Year 3		Year 4		Year 5
Less than 65%	$	4,382,324	$	6,054,903	$	4,118,599	$	5,710,475	$	968,377	$	7,259,011	$	28,493,689	31.43	%
65% to 80%		6,673,602		6,428,826		6,380,363		32,514,676		1,296,525		5,688,715		58,982,707	65.07	%
Greater than 80%		436,928		154,862		294,895		1,745,090		-		536,419		3,168,194	3.50	%

Total	$	11,492,854	$	12,638,591	$	10,793,857	$	39,970,241	$	2,264,902	$	13,484,145	$	90,644,590	100.00	%

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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 June 30, 2026:

Credit Quality Indicator	2026		2025		2024		2023		2022		Total		% of Total
Performance Indicators:
Performing	$	54,166,000	$	55,395,707	$	24,335,368	$	3,769,201	$	3,025,964	$	140,692,240		100.00	%
Non-performing		-		-		-		-		-		-		0.00	%

Total	$	54,166,000	$	55,395,707	$	24,335,368	$	3,769,201	$	3,025,964	$	140,692,240		100.00	%

LTV:
Less than 65%	$	11,605,814	$	24,371,764	$	22,989,281	$	3,769,201	$	3,025,964	$	65,762,024		46.74	%
65% to 80%		42,560,186		31,023,943		1,346,087		-		-		74,930,216		53.26	%
Greater than 80%		-		-		-		-		-		-		0.00	%

Total	$	54,166,000	$	55,395,707	$	24,335,368	$	3,769,201	$	3,025,964	$	140,692,240		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, 2025:

Credit Quality Indicator	2025		2024		2023		2022		2021		Total		% of Total
Performance Indicators:
Performing	$	105,516,880	$	42,129,717	$	5,820,344	$	-	$	3,931,764	$	157,398,705		100.00	%
Non-performing		-		-		-		-		-		-		0.00	%

Total	$	105,516,880	$	42,129,717	$	5,820,344	$	-	$	3,931,764	$	157,398,705		100.00	%

LTV:
Less than 65%	$	24,286,540	$	20,684,760	$	5,820,344	$	-	$	3,931,764	$	54,723,408		34.77	%
65% to 80%		78,223,502		21,444,957		-		-		-		99,668,459		63.32	%
Greater than 80%		3,006,838		-		-		-		-		3,006,838		1.91	%

Total	$	105,516,880	$	42,129,717	$	5,820,344	$	-	$	3,931,764	$	157,398,705		100.00	%

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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:

	As of June 30, 2026			As of December 31, 2025
30-59 days past due	$	8,365,826		$	8,444,866
60-89 days past due		3,947,278			3,344,793
Over 90 days past due		5,148,954			4,976,211
Total past due		17,462,058			16,765,870
Current		26,547,452			29,418,129
Total insurance assignments		44,009,510			46,183,999
Allowance for credit losses		(1,476,295	)		(1,676,468	)
Net insurance assignments	$	42,533,215		$	44,507,531

The Company records an allowance for credit losses when the insurance assignment is funded. Once an insurance assignment is 90 days past due or is in 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:

	Three Months Ended
Beginning balance - March 31, 2026	$	1,518,047
Change in provision for credit losses (1)		237,329
Charge-offs		(279,081	)
Ending balance - June 30, 2026	$	1,476,295

Beginning balance - March 3, 2025	$	1,517,783
Change in provision for credit losses (1)		257,253
Charge-offs		(294,004	)
Ending balance - June 30, 2025	$	1,481,032

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

	Six Months Ended
Beginning balance - December 31, 2025	$	1,676,468
Change in provision for credit losses (1)		522,156
Charge-offs		(722,329	)
Ending balance - June 30, 2026	$	1,476,295

Beginning balance - December 31, 2024	$	1,536,926
Change in provision for credit losses (1)		551,051
Charge-offs		(606,945	)
Ending balance - June 30, 2025	$	1,481,032

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

Variable Interest Entities (“VIE”)

The Company has 50% ownership interests in three VIEs: HHH Real Estate LLC (“HHH”), SN Oquirrh LLC (“Oquirrh”), and SN Towns LLC (“Towns”). These entities hold and develop single family lots for residential construction. In accordance with the operating agreements for these entities, net profits and losses are allocated to the members in accordance with their ownership interests. The investments in all three VIEs are accounted for under the equity method of accounting. The Company classifies distributions received using the cumulative earnings approach.

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

	As of June 30, 2026		As of December 31, 2025
HHH (1)	$	7,733,769	$	10,530,515
Oquirrh (1)		652,559		887,532
Towns (2)		2,407,618		2,656,616
Total	$	10,793,946	$	14,074,663

(1)	Included in other investments and policy loans on the condensed consolidated balance sheets
(2)	Out of these totals, $1,174,675 and $1,467,058 of which at June 30, 2026, and December 31, 2025, respectively, were included in restricted assets and $1,232,942 and $1,189,558 of which at June 30, 2026, and December 31, 2025, respectively, were included in cemetery perpetual care trust investments on the condensed consolidated balance sheets

The Company has determined that HHH, Oquirrh and Towns are VIEs for which the Company is not the primary beneficiary for the following reasons: (1) the at-risk equity holders, as a group, lack the characteristics of a controlling financial interest, (2) the Company does not direct the activities and legal operations that most significantly affect the entity’s economic performance and (3) the Company does not have majority voting rights and no power to unilaterally direct the activities of the entity, and therefore, is not the primary beneficiary. The Company’s exposure to loss because of its involvement with the equity method investees is limited to the carrying value of the Company’s investments.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) 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

	2026			2025			2026			2025
	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Fixed maturity securities:
Gross realized gains	$	15,132		$	453		$	40,926		$	1,521
Gross realized losses		(9,495	)		30,029			(87,368	)		(12,257	)
Net credit loss provision		(164,663	)		20,313			(261,210	)		(65,993	)

Equity securities:
Gains (losses) on securities sold		(157,861	)		15,981			(142,139	)		130,108
Unrealized gains on securities held at the end of the period		4,032,384			793,404			3,977,871			1,066,880

Real estate held for investment and sale:
Gross realized gains		845,360			202,389			1,432,332			596,915
Gross realized losses		(15,119	)		-			(50,771	)		-

Other assets:
Gross realized gains		54,701			81,867			55,370			88,392
Gross realized losses		(20,116	)		(1,729	)		(33,940	)		(76,838	)
Total	$	4,580,323		$	1,142,707		$	4,931,071		$	1,728,728

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 include gains and losses from cemetery perpetual care trust investments and the restricted assets of cemeteries and mortuaries and totaled $1,510,457 in net gains and $271,176 in net gains for the three-month periods ended June 30, 2026 and 2025, respectively, and of $1,436,129 in net gains and $485,155 in net gains for the six-month periods ended June 30, 2026 and 2025, respectively.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

2) Investments (Continued)

Major categories of net investment income were as follows:

	2026			2025			2026			2025
	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Fixed maturity securities available for sale	$	4,690,866		$	4,749,965		$	9,403,510		$	9,414,798
Equity securities		233,674			247,633			441,506			440,263
Mortgage loans held for investment		6,341,825			12,457,357			14,615,885			20,421,897
Real estate held for investment and sale		2,914,081			2,872,566			5,852,000			5,832,278
Policy loans		210,231			235,758			451,739			480,363
Insurance assignments		4,878,392			5,138,214			10,322,623			10,870,365
Other investments		196,965			82,349			512,603			243,835
Cash and cash equivalents		1,195,981			953,618			2,243,217			2,356,252
Gross investment income		20,662,015			26,737,460			43,843,083			50,060,051
Investment expenses		(4,233,114	)		(6,156,472	)		(8,912,834	)		(10,276,439	)
Net investment income	$	16,428,901		$	20,580,988		$	34,930,249		$	39,783,612

Net investment income includes income earned from cemetery perpetual care trust investments and the restricted assets of cemeteries and mortuaries of $231,327 and $220,634 for the three-month periods ended June 30, 2026, and 2025, respectively, and of $438,459 and $367,472 for the six-month periods ended June 30, 2026, and 2025, respectively.

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 June 30, 2026		As of December 31, 2025
Fixed maturity securities available for sale	$	4,201,037	$	4,089,819
Equity securities		18,326		13,169
Mortgage loans held for investment		1,215,560		1,032,964
Real estate held for investment		3,864,979		3,850,958
Other investments		30,917		30,916
Cash and cash equivalents		62,588		36,819
Total accrued investment income	$	9,393,407	$	9,054,645

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

3) 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:

	As of June 30, 2026		As of December 31, 2025

Aggregate fair value	$	146,871,985	$	155,968,266
Unpaid principal balance		144,581,000		154,484,198
Unrealized gain		2,290,985		1,484,068

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:

	2026			2025			2026			2025
	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Loan fees	$	6,387,240		$	6,709,062		$	12,121,753		$	11,963,152
Interest income		2,027,840			2,366,245			3,758,505			4,033,679
Secondary gains		16,895,087			20,185,222			33,309,825			37,140,165
Change in fair value of loan commitments		(365,260	)		132,404			1,019,467			606,944
Change in fair value of loans held for sale		1,045,923			308,074			(558,065	)		949,342
Provision for loan loss reserve		(193,297	)		(215,903	)		(364,293	)		(398,937	)
Mortgage fee income	$	25,797,533		$	29,485,104		$	49,287,192		$	54,294,345

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

3) Loans Held for Sale (Continued)

Loan Loss Reserve

Repurchase demands (“demand(s)”) from third party investors for 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 demand. In many instances, the Company can resolve the issues relating to the demand by the third-party investor without having to make any payments to the investor.

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

	As of June 30, 2026			As of December 31, 2025
Balance, beginning of period	$	384,184		$	696,626
Provision on current loan originations (1)		364,293			805,518
Additional provision (2)		-			40,000
Charge-offs, net of recaptured amounts		(337,460	)		(1,157,960	)
Balance, end of period	$	411,017		$	384,184

(1)	Included in mortgage fee income
(2)	Included in other expenses

The Company maintains reserves for estimated losses on current production volumes. For the six-month period ended June 30, 2026, $364,293 in reserves were added at a rate of 3.5 basis points per loan, the equivalent of $350 per $1,000,000 in loans originated. For the six-month period ended June 30, 2025, $398,937 in reserves were added at a rate of 3.5 basis points per loan, the equivalent of $350 per $1,000,000 in loans originated. The Company monitors market data and trends, and economic conditions (including forecasts) and uses its own experience to determine adequate loss reserves on current production.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

4) Receivables

Receivables consist of the following:

Schedule of Receivable

	As of June 30, 2026			As of December 31, 2025
Contracts with customers	$	7,581,046		$	6,981,676
Receivables from sales agents		4,706,484			4,193,842
Insurance premiums due		1,431,040			1,275,664
Other		4,858,150			4,588,564
Total receivables		18,576,720			17,039,746
Allowance for credit losses		(1,546,298	)		(1,428,672	)
Net receivables	$	17,030,422		$	15,611,074

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 for Credit Losses

	Three Months Ended
Beginning balance - March 31, 2026	$	1,523,072
Change in provision for credit losses (1)		72,786
Charge-offs		(49,560	)
Ending balance - June 30, 2026	$	1,546,298

Beginning balance - March 31, 2025	$	1,632,099
Change in provision for credit losses (1)		(104,209	)
Charge-offs		(36,847	)
Ending balance - June 30, 2025	$	1,491,043

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

	Six Months Ended
Beginning balance - December 31, 2025	$	1,428,672
Change in provision for credit losses (1)		220,341
Charge-offs		(102,715	)
Ending balance - June 30, 2026	$	1,546,298

Beginning balance - December 31, 2024	$	1,678,531
Change in provision for credit losses (1)		(88,067	)
Charge-offs		(99,421	)
Ending balance - June 30, 2025	$	1,491,043

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

4) Receivables (Continued)

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 funeral home and cemetery segment sells a variety of goods and services to customers in both at-need and pre-need situations. Due to the timing of the fulfillment of the obligation, revenue is deferred until that obligation is fulfilled.

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

Pre-need Merchandise and Service Revenue: All pre-need merchandise and service revenue are deferred, and the funds are placed in trust until the need arises; the merchandise is received, or the service is performed. The trust is then relieved, and the revenue and commissions are recognized. Pre-need contracts are required to be paid in full prior to a customer using a good or service from a pre-need contract. Goods and services from pre-need contracts can be transferred when paid in full from one owner to another. In such cases, the Company will act as an agent in transferring the requested goods and services. The transfer of goods and services does not fulfill the contract and revenue remains deferred.

At-need Specialty Merchandise Revenue: At-need specialty merchandise revenue consists of customizable merchandise ordered from manufacturers such as markers and bases. When specialty merchandise is ordered, it can take time to manufacture and deliver the product. Revenue is deferred until the at-need merchandise is received.

Complete payment does not constitute fulfillment of the contract. Goods or services are deferred until such a time the service is performed, or merchandise is received.

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

	Contract Balances
	Receivables (1)		Contract Asset		Contract Liability
Opening (December 31, 2025)	$	6,981,676	$	-	$	22,991,603
Closing (June 30, 2026)		7,581,046		-		24,611,358
Increase/(decrease)		599,370		-		1,619,755

	Contract Balances
	Receivables (1)			Contract Asset		Contract Liability
Opening (December 31, 2024)	$	7,095,589		$	-	$	20,168,405
Closing (December 31, 2025)		6,981,676			-		22,991,603
Increase/(decrease)		(113,913	)		-		2,823,198

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

4) Receivables (Continued)

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 funeral home and cemetery contracts:

	2026		2025		2026		2025
	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Major goods/service lines
At-need	$	5,321,687	$	5,083,789	$	11,167,549	$	10,800,066
Pre-need		2,277,901		2,173,928		4,165,862		3,757,872
Net mortuary and cemetery sales	$	7,599,588	$	7,257,717	$	15,333,411	$	14,557,938

Timing of Revenue Recognition
Goods transferred at a point in time	$	5,043,304	$	4,843,082	$	9,902,648	$	8,997,629
Services transferred at a point in time		2,556,284		2,414,635		5,430,763		5,560,309
Net mortuary and cemetery sales	$	7,599,588	$	7,257,717	$	15,333,411	$	14,557,938

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

5) 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 funeral home and cemetery segment.

Additionally, restricted cash represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company elected to maintain its medical benefit fund without change from the prior year and has included this amount as a component of restricted cash. These restricted cash items are for the Company’s life insurance and mortgage segments.

Restricted assets as of June 30, 2026, are summarized as follows:

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2026:
Fixed maturity securities, available for sale, at estimated fair value:
Obligations of states and political subdivisions	$	228,584		$	104	$	(1,630	)	$	227,058
Corporate securities including public utilities		51,207			-		(257	)		50,950
Total fixed maturity securities available for sale	$	279,791		$	104	$	(1,887	)	$	278,008

Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	15,013,259		$	3,847,895	$	(410,089	)	$	18,451,065
Total equity securities at estimated fair value	$	15,013,259		$	3,847,895	$	(410,089	)	$	18,451,065

Mortgage loans held for investment at amortized cost:
Residential construction	$	777,490
Less: Allowance for credit losses		(1,498	)
Total mortgage loans held for investment	$	775,992

Other investments	$	1,674,516

Cash and cash equivalents (1)	$	12,065,713

Accrued investment income	$	18,732

Total restricted assets	$	33,264,026

(1)	Including cash and cash equivalents of $10,215,805 for the life insurance and mortgage segments.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

5) Restricted Assets (Continued)

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

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2025:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	895,817		$	1,735	$	-		$	897,552
Obligations of states and political subdivisions		228,512			124		(8	)		228,628
Corporate securities including public utilities		52,030			-		(959	)		51,071
Total fixed maturity securities available for sale	$	1,176,359		$	1,859	$	(967	)	$	1,177,251

Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	12,582,890		$	2,690,346	$	(344,319	)	$	14,928,917
Total equity securities at estimated fair value	$	12,582,890		$	2,690,346	$	(344,319	)	$	14,928,917

Mortgage loans held for investment at amortized cost:
Residential construction	$	812,427
Less: Allowance for credit losses		(1,625	)
Total mortgage loans held for investment	$	810,802

Other investments	$	1,957,888

Cash and cash equivalents (1)	$	9,919,800

Accrued investment income	$	11,288

Total restricted assets	$	28,805,946

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

5) Restricted Assets (Continued)

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 June 30, 2026
Obligations of states and political subdivisions	$	-	$	-	$	1,630	$	101,954	$	1,630	$	101,954
Corporate securities including public utilities		-		-		257		50,951		257		50,951
Total unrealized losses	$	-	$	-	$	1,887	$	152,905	$	1,887	$	152,905

At December 31, 2025
Obligations of states and political subdivisions	$	-	$	-	$	8	$	103,504	$	8	$	103,504
Corporate securities including public utilities		-		-		959		51,071		959		51,071
Total unrealized losses	$	-	$	-	$	967	$	154,575	$	967	$	154,575

Relevant holdings were comprised of three securities with fair values aggregating 98.8% of the aggregate amortized cost as of June 30, 2026. Relevant holdings were comprised of two securities with fair values aggregating 99.4% of the aggregate amortized cost as of December 31, 2025. No credit losses have been recognized for the three and six month periods ended June 30, 2026, and 2025, since the unrealized losses are primarily the result of increases in interest rates. See Note 2 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 June 30, 2026, by contractual maturity. Actual or expected maturities may differ from contractual maturities because certain securities afford the issuer the right to call or prepay their obligations.

	Amortized		Estimated Fair
	Cost		Value
Due in 1 year	$	125,000	$	125,104
Due in 2-5 years		-		-
Due in 5-10 years		-		-
Due in more than 10 years		154,791		152,904
Total	$	279,791	$	278,008

See Notes 2 and 17 for additional information regarding restricted assets.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

6) 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 June 30, 2026, are as follows:

Schedule of Investments and Obligation

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2026:
Fixed maturity securities, available for sale, at estimated fair value:
Obligations of states and political subdivisions	$	118,671		$	-	$	(1,468	)	$	117,203
Total fixed maturity securities available for sale	$	118,671		$	-	$	(1,468	)	$	117,203

Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	5,220,548		$	1,940,328	$	(136,641	)	$	7,024,235
Total equity securities at estimated fair value	$	5,220,548		$	1,940,328	$	(136,641	)	$	7,024,235

Mortgage loans held for investment at amortized cost:
Residential construction	$	1,008,730
Less: Allowance for credit losses		(2,017	)
Total mortgage loans held for investment	$	1,006,713

Other investments	$	1,333,656

Cash and cash equivalents	$	981,088

Accrued investment income	$	7,755

Total cemetery perpetual care trust investments	$	10,470,650

Cemetery perpetual care obligation	$	(6,086,723	)

Trust investments in excess of trust obligations	$	4,383,927

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

6) Cemetery Perpetual Care Trust Investments and Obligation (Continued)

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

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2025:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	152,738		$	842	$	-		$	153,580
Obligations of states and political subdivisions		121,423			-		(2,991	)		118,432
Total fixed maturity securities available for sale	$	274,161		$	842	$	(2,991	)	$	272,012

Equity securities at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	4,835,663		$	1,637,554	$	(169,485	)	$	6,303,732
Total equity securities at estimated fair value	$	4,835,663		$	1,637,554	$	(169,485	)	$	6,303,732

Mortgage loans held for investment at amortized cost:
Residential construction	$	66,342
Less: Allowance for credit losses		(133	)
Total mortgage loans held for investment	$	66,209

Cash and cash equivalents	$	1,935,480

Other investments	$	1,290,271

Accrued investment income	$	4,243

Total cemetery perpetual care trust investments	$	9,871,947

Cemetery perpetual care obligation	$	(5,918,776	)

Trust investments in excess of trust obligations	$	3,953,171

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

6) Cemetery Perpetual Care Trust Investments and Obligation (Continued)

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
June 30, 2026
Obligations of states and political subdivisions	$	-	$	-	$	1,468	$	117,203	$	1,468	$	117,203
Totals	$	-	$	-	$	1,468	$	117,203	$	1,468	$	117,203

December 31, 2025
Obligations of states and political subdivisions	$	-	$	-	$	2,991	$	118,432	$	2,991	$	118,432
Totals	$	-	$	-	$	2,991	$	118,432	$	2,991	$	118,432

Relevant holdings were comprised of two securities with fair values aggregating 98.8% of the aggregate amortized cost as of June 30, 2026. Relevant holdings were comprised of two securities with fair values aggregating 97.5% of aggregate amortized cost as of December 31, 2025. No credit losses have been recognized for the three and six month periods ended June 30, 2026, and 2025, since the unrealized losses are primarily the result of increases in interest rates. See Note 2 for additional information regarding the Company’s evaluation of the allowance for credit losses for fixed maturity securities available for sale.

	Amortized		Estimated Fair
	Cost		Value
Due in 1 year	$	-	$	-
Due in 2-5 years		68,233		66,839
Due in 5-10 years		50,438		50,364
Due in more than 10 years		-		-
Total	$	118,671	$	117,203

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

7) Mortgage Servicing Rights

The Company initially records its MSRs at fair value. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. Amortization expenses are included in other expenses on the condensed consolidated statements of earnings. MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

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 June 30, 2026			As of December 31, 2025
Amortized cost:
Balance before valuation allowance at beginning of year	$	2,528,459		$	2,939,878
MSR additions resulting from loan sales (1)		152,234			151,056
Amortization (2)		(233,588	)		(562,475	)
Sale of MSRs		-			-
Application of valuation allowance to write down MSRswith other than temporary impairment		-			-
Balance before valuation allowance at end of period	$	2,447,105		$	2,528,459

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	$	2,447,105		$	2,528,459

Estimated fair value of MSRs at end of period	$	4,146,075		$	4,035,635

(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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

7) 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 June 30, 2026, valuation of MSRs. The assumptions used in the following table are likely to change as market conditions, portfolio composition and borrower behavior change, causing both actual and projected amortization levels to change over time.

	Estimated MSR Amortization
2026		232,241
2027		223,082
2028		207,530
2029		187,850
2030		170,162
Thereafter		1,426,240
Total	$	2,447,105

The Company collected the following contractual service fee income and late fee income as reported in other revenues on the condensed consolidated statement of earnings.

Schedule of Other Revenues

	2026		2025		2026		2025
	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Contractual service fees	$	223,749	$	222,900	$	445,816	$	455,001
Late fees		17,375		12,231		34,681		31,848
Total	$	241,124	$	235,131	$	480,497	$	486,849

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

		As of June 30, 2026				As of December 31, 2025
Servicing UPB		$	357,613,906			$	361,632,543

The following key assumptions were used in determining MSR value:

	Prepayment Speeds		Average Life (Years)		Discount Rate
June 30, 2026		11.75		7.88		11.68
December 31, 2025		12.27		7.44		11.92

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

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

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

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

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

	Traditional Life			Fixed Annuities			Universal Life			Accident and Health		Pre-need Contracts			Total
Balance at December 31, 2025	$	127,639,286		$	571,370		$	3,430,518		$	-	$	4,337,629		$	135,978,803
Deferrals		9,001,384			62,910			-			-		607,942			9,672,236
Amortization		(4,963,505	)		(59,996	)		(148,274	)		-		(511,777	)		(5,683,552	)
Balance at June 30, 2026	$	131,677,165		$	574,284		$	3,282,244		$	-	$	4,433,794		$	139,967,487

	Traditional Life			Fixed Annuities			Universal Life			Accident and Health			Pre-need Contracts			Total
Balance at December 31, 2024	$	118,803,677		$	535,836		$	3,754,867		$	466		$	4,125,061		$	127,219,907
Balance, beginning of period	$	118,803,677		$	535,836		$	3,754,867		$	466		$	4,125,061		$	127,219,907
Deferrals		10,207,141			91,482			-			-			254,754			10,553,377
Amortization		(4,855,911	)		(66,913	)		(167,561	)		(466	)		(327,377	)		(5,418,228	)
Balance at June 30, 2025	$	124,154,907		$	560,405		$	3,587,306		$	-		$	4,052,438		$	132,355,056
Balance, end of period	$	124,154,907		$	560,405		$	3,587,306		$	-		$	4,052,438		$	132,355,056

Value of Business Acquired (“VOBA”)

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

	Traditional Life			Fixed Annuities		Universal Life			Accident and Health			Total
Balance at December 31, 2025	$	6,968,331		$	-	$	124,932		$	15,923		$	7,109,186
Deferrals		-			-		-			-			-
Amortization		(203,735	)		-		(28,884	)		(1,043	)		(233,662	)
Balance at June 30, 2026	$	6,764,596		$	-	$	96,048		$	14,880		$	6,875,524

	Traditional Life			Fixed Annuities		Universal Life			Accident and Health			Total
Balance at December 31, 2024	$	7,397,519		$	-	$	186,632		$	18,370		$	7,602,521
Balance, beginning of period	$	7,397,519		$	-	$	186,632		$	18,370		$	7,602,521
Deferrals		-			-		-			-			-
Amortization		(219,165	)		-		(31,862	)		(1,251	)		(252,278	)
Balance at June 30, 2025	$	7,178,354		$	-	$	154,770		$	17,119		$	7,350,243
Balance, end of period	$	7,178,354		$	-	$	154,770		$	17,119		$	7,350,243

Unearned Premium Reserve

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

	2026			2025
	Six Months Ended June 30,
	2026			2025
		Universal Life			Universal Life
Balance, beginning of period	$	1,824,796		$	2,013,245
Deferrals		-			-
Amortization (1)		(86,389	)		(97,037	)
Unearned premium reserve, end of period	$	1,738,407		$	1,916,208

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

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 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.

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 the exercise of the loan commitments. Management expects these types of commitments will experience changes in fair value in contrast to changes in fair value of the loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

9) Derivative Instruments (Continued)

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

		June 30, 2026						December 31, 2025
	Balance Sheet Location	Notional Amount		Asset Fair Value		Liability Fair Value		Notional Amount		Asset Fair Value		Liability Fair Value
Derivatives not designated as hedging instruments:
Loan commitments	Other assets and Other liabilities	$	152,197,366	$	2,588,911	$	89,307	$	132,887,592	$	1,700,742	$	220,605
Total		$	152,197,366	$	2,588,911	$	89,307	$	132,887,592	$	1,700,742	$	220,605

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.

		Three Months Ended June 30,					Six Months Ended June 30,
Derivative	Classification	2026			2025		2026		2025
Loan commitments	Mortgage fee income	$	(365,260	)	$	132,404	$	1,019,467	$	606,944

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

10) Future Policy Benefits and Unpaid Claims

The Company establishes liabilities for amounts payable under insurance policies. These liabilities are comprised of traditional and limited-payment contracts and associated deferred profit liabilities, unpaid claims, and additional insurance liabilities. Also, refer to Note 1 regarding the adoption of ASU 2018-12.

The following table provides a reconciliation of future policy benefits and unpaid claims and the related receivable from reinsurers to the condensed consolidated balance sheets.

	June 30, 2026		December 31, 2025
Traditional and limited-payment life	$	576,213,332	$	581,389,399
Deferred profit liability - traditional and limited-payment life		211,420,629		205,802,774
Payout annuities		91,209		95,436
Accident and health		495,742		505,208
Other policyholder funds		4,463,995		4,514,783
Reported but unpaid claims		2,306,231		3,299,899
Incurred but not reported claims		4,081,502		4,099,447

Gross future policy benefits and unpaid claims	$	799,072,640	$	799,706,946

Receivable from reinsurers

Traditional and limited-payment life		8,997,782		9,186,983
Deferred profit liability - traditional and limited-payment life		963,513		985,258
Accident and health		70,173		70,173
Reported but unpaid claims		63,751		131,712
Incurred but not reported claims		6,000		6,000

Total receivable from reinsurers		10,101,219		10,380,126

Net future policy benefits and unpaid claims	$	788,971,421	$	789,326,820

Net unpaid claims	$	6,317,982	$	7,261,634

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

10) Future Policy Benefits and Unpaid Claims (Continued)

Traditional and Limited-Payment Life

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

	2026			2025
	Six Months Ended June 30,
	2026			2025
Present Value of Expected Net Premiums:
Balance, beginning of year	$	250,450,302		$	252,828,339
Beginning balance at original discount rate		250,331,770			258,790,212
Effect of changes in cash flow assumptions		-			-
Effect of actual variances from expected experience (1)		(9,125,505	)		(8,850,587	)
Adjusted beginning of year balance		241,206,265			249,939,625
Issuances		24,679,101			26,216,812
Interest accrual		5,864,428			6,164,310
Net premiums collected (2)		(25,194,587	)		(25,990,691	)
Ending balance at original discount rate		246,555,207			256,330,056
Effect of changes in discount rate assumptions		(4,092,345	)		(1,782,680	)
Balance, end of period	$	242,462,862		$	254,547,376

Present Value of Expected Future Policy Benefits:
Balance, beginning of year	$	831,839,700		$	800,812,826
Beginning balance at original discount rate		867,177,517			858,516,933
Effect of changes in cash flow assumptions		-			-
Effect of actual variances from expected experience (1)		(6,967,515	)		(6,646,425	)
Adjusted beginning of year balance		860,210,002			851,870,508
Issuances		24,609,755			26,382,636
Interest accrual		20,776,434			20,629,718
Benefit payments		(34,467,584	)		(34,214,879	)
Ending balance at original discount rate		871,128,607			864,667,983
Effect of changes in discount rate assumptions		(52,452,413	)		(43,363,232	)
Balance, end of period	$	818,676,194		$	821,304,751

Net liability for future policy benefits, pre-flooring	$	576,205,399		$	566,700,902
Flooring impact, end of period		7,933			56,473
Net liability for future policy benefits, post-flooring		576,213,332			566,757,375
Less: Receivable from reinsurers		8,997,782			9,217,915
Net liability for future policy benefits, after reinsurance	$	567,215,550		$	557,539,460

(1)	For the three and six months ended June 30, 2026, and 2025, the net effect of actual variances from expected experience was primarily due to lapses. Actual mortality and surrenders were close to expected.

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

10) Future Policy Benefits and Unpaid Claims (Continued)

The following table summarizes the amount of undiscounted and discounted expected gross premiums and expected future benefit payments for traditional and limited-payment life:

	2026		2025
	Six Months Ended June 30,
	2026		2025
Undiscounted expected future benefit payments	$	1,930,940,323	$	1,933,878,976
Discounted expected future benefit payments (at original discount rate)		871,128,607		864,667,984
Discounted expected future benefit payments (at current discount rate)		818,676,194		821,304,751

Undiscounted expected future gross premiums	$	806,178,110	$	832,796,284
Discounted expected future gross premiums (at original discount rate)		540,083,057		556,610,277
Discounted expected future gross premiums (at current discount rate)		531,118,711		552,739,259

The following table summarizes the amount of gross premiums and interest accretion recognized in insurance premiums and other considerations and policyholder benefits and claims, respectively, in the condensed consolidated statements of earnings for traditional and limited-payment life:

	2026		2025
	Six Months Ended June 30,
	2026		2025
Gross premiums	$	57,326,570	$	59,480,517
Interest accretion	$	14,912,006	$	14,465,409

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

	2026			2025
	As of June 30,
	2026			2025
Interest accretion rate		4.90	%		4.90	%
Current discount rate		5.60	%		5.50	%

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

	As of June 30,
	2026		2025
Duration of the liability in years (at original discount rate)		15		15
Duration of the liability in years (at current discount rate)		13		14

Adverse Development

For the three and six months ended June 30, 2026 and 2025, respectively, there were no material impacts to net earnings for traditional and limited-payment life, where net premiums exceeded gross premiums for certain issue-year cohorts.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

10) Future Policy Benefits and Unpaid Claims (Continued)

Deferred Profit Liability

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

	2026			2025
	Six Months Ended June 30,
	2026			2025
Balance, beginning of year	$	205,802,774		$	192,278,993
Effect of actual variances from expected experience (1)		(1,663,002	)		(2,328,599	)
Adjusted balance, beginning of period		204,139,772			189,950,394
Profits deferred		32,131,982			33,489,827
Interest accrual		5,143,805			4,829,075
Amortization		(29,994,930	)		(29,412,087	)
Other adjustments		-			-
Balance, end of period		211,420,629			198,857,209
Less: Receivable from reinsurers		963,513			1,001,393
Deferred profit liability, net of reinsurance	$	210,457,116		$	197,855,816

(1)	For the three and six months ended June 30, 2026, and 2025, the net effect of actual variances from expected experience was primarily due to lapses. Actual mortality and surrenders were close to expected.

Unpaid Claims

The following table provides a roll forward of the Company’s liability for reported but unpaid claims and incurred but not reported claims, net of the related receivable from reinsurers.

	Life				Annuities			Accident and Health				Total
Balance at December 31, 2025	$	6,941,791			$	302,843		$	17,000			$	7,261,634
Incurred		30,576,460		(1)		6,369,120	(2)		71,625		(3)		37,017,205
Settled		(31,556,777	)			(6,332,455	)		(71,625	)			(37,960,857	)
Balance at June 30, 2026	$	5,961,474			$	339,508		$	17,000			$	6,317,982

		Life				Annuities			Accident and Health				Total
Balance at December 31, 2024	$	6,363,243			$	255,480		$	17,000			$	6,635,723
Incurred		31,067,103		(1)		6,696,820	(2)		661		(3)		37,764,584
Settled		(30,729,487	)			(6,711,229	)		(661	)			(37,441,377	)
Balance at June 30, 2025	$	6,700,859			$	241,071		$	17,000			$	6,958,930

(1)	Included in policyholder benefits and claims on the condensed consolidated statements of earnings

(2)	Released from policyholder account balances

(3)	Included in policyholder benefits and claims on the condensed consolidated statements of earnings

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

11) Policyholder Account Balances

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

The following table provides a reconciliation of policyholder account balances and the related receivable from reinsurers to the condensed consolidated balance sheets.

	June 30, 2026		December 31, 2025
Policyholder account balances - fixed annuities	$	102,529,346	$	104,233,454
Deferred profit liability - fixed annuities		506,582		546,802
Policyholder account balances - universal life		34,990,504		35,825,494

Gross policyholder account balances	$	138,026,432	$	140,605,750

Receivable from reinsurers

Policyholder account balances - fixed annuities		2,725,873		3,275,247

Total receivable from reinsurers		2,725,873		3,275,247

Net policyholder account balances	$	135,300,559	$	137,330,503

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

		Universal Life			Fixed Annuities			Universal Life			Fixed Annuities
	Six Months Ended June 30, 2026						Six Months Ended June 30, 2025
		Universal Life			Fixed Annuities			Universal Life			Fixed Annuities
Balance, beginning of year	$	35,825,494		$	104,233,454		$	37,091,230		$	105,088,621
Deposits		656,762			4,517,967			684,549			5,546,355
Interest credited		891,634			1,518,387			836,413			1,531,110
Policy charges (1)		(1,181,073	)		(7,700	)		(1,140,891	)		(3,868	)
Surrenders, withdrawals and benefit payments		(1,202,313	)		(7,732,762	)		(1,095,280	)		(7,326,469	)
Balance, end of period		34,990,504			102,529,346			36,376,021			104,835,749
Less: Receivable from reinsurers		-			2,725,873			-			3,473,439
Policyholder account balances, net of reinsurance	$	34,990,504		$	99,803,473		$	36,376,021		$	101,362,310

Weighted-average crediting rate		4.16	%		3.03	%		4.16	%		3.03	%
Net amount at risk (2)		128,734,920			N/A			135,397,796			N/A
Cash surrender value		34,990,504			102,046,772			36,376,021			104,473,330

(1)	Contracts included in the policyholder account balances are generally charged a premium and/or monthly assessments on the basis of the account balance. Included in premiums and other considerations on the consolidated statements of earnings.

(2)	For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

11) Policyholder Account Balances (Continued)

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

	2026			2025
	Six Months Ended June 30,
	2026			2025
Balance, beginning of year	$	546,802		$	627,465
Effect of actual variances from expected experience		-			-
Adjusted balance, beginning of period		546,802			627,465
Profits deferred		-			-
Interest accrual		-			-
Amortization		(40,220	)		(41,149	)
Other adjustments		-			-
Balance, end of period		506,582			586,316
Less: Receivable from reinsurers		-			-
Deferred profit liability, net of reinsurance	$	506,582		$	586,316

The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums for the lines of business indicated are as follows:

Range of Guaranteed Minimum Crediting Rate	At guaranteed minimum		1-50 bps above guaranteed minimum		51-150 bps above guaranteed minimum		Greater than 150 bps above guaranteed minimum		Total
	June 30, 2026
Range of Guaranteed Minimum Crediting Rate	At guaranteed minimum		1-50 bps above guaranteed minimum		51-150 bps above guaranteed minimum		Greater than 150 bps above guaranteed minimum		Total
Universal Life
Less than 1.00%	$	-	$	-	$	-	$	-	$	-
1.00% - 1.99%		-		-		-		-		-
2.00% - 2.99%		-		-		-		-		-
3:00% - 4.00%		24,733,263		-		1,541,406		-		26,274,669
Greater than 4.00%		4,249,139		4,466,696		-		-		8,715,835
Total	$	28,982,402	$	4,466,696	$	1,541,406	$	-	$	34,990,504

Fixed Annuities
Less than 1.00%	$	-	$	-	$	-	$	-	$	-
1.00% - 1.99%		10,546,598		9,548,635		-		-		20,095,233
2.00% - 2.99%		6,737,506		-		334,302		4,818,977		11,890,785
3:00% - 4.00%		46,550,291		10,291,146		90,975		425,284		57,357,696
Greater than 4.00%		12,832,101		-		353,531		-		13,185,632
Total	$	76,666,496	$	19,839,781	$	778,808	$	5,244,261	$	102,529,346

Range of Guaranteed Minimum Crediting Rate	At guaranteed minimum		1-50 bps above guaranteed minimum		51-150 bps above guaranteed minimum		Greater than 150 bps above guaranteed minimum		Total
	June 30, 2025
Range of Guaranteed Minimum Crediting Rate	At guaranteed minimum		1-50 bps above guaranteed minimum		51-150 bps above guaranteed minimum		Greater than 150 bps above guaranteed minimum		Total
Universal Life
Less than 1.00%	$	-	$	-	$	-	$	-	$	-
1.00% - 1.99%		-		-		-		-		-
2.00% - 2.99%		-		-		-		-		-
3:00% - 4.00%		25,686,478		-		1,526,169		-		27,212,647
Greater than 4.00%		4,481,400		4,681,974		-		-		9,163,374
Total	$	30,167,878	$	4,681,974	$	1,526,169	$	-	$	36,376,021

Fixed Annuities
Less than 1.00%	$	-	$	-	$	-	$	-	$	-
1.00% - 1.99%		11,531,923		10,835,181		-		-		22,367,104
2.00% - 2.99%		4,783,024		-		333,277		4,984,265		10,100,566
3:00% - 4.00%		48,154,943		10,560,036		37,929		454,076		59,206,984
Greater than 4.00%		12,807,491		-		353,604		-		13,161,095
Total	$	77,277,381	$	21,395,217	$	724,810	$	5,438,341	$	104,835,749

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

12) 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.

13) Income Taxes

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes provisions that allow for the immediate expensing of domestic research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. OBBBA did not have a material impact on the Company’s estimated effective tax rate for 2025 and is not anticipated to have a material impact on the effective tax rate for 2026.

The Company’s overall effective tax rate for the three-month periods ended June 30, 2026 and 2025 was 23.0% and 22.1%, respectively, which resulted in a provision for income taxes of $2,677,012 and $2,367,914, respectively, and for the six-month periods ended June 30, 2026 and 2025 was 22.8% and 22.1%, respectively, which resulted in a provision for income taxes of $4,727,904 and $4,204,512, respectively. The Company’s effective tax rate is higher than the U.S. federal statutory rate of 21% due to, among other factors, state taxes as offset by certain state income tax benefits, along with certain permanent tax adjustments such as meals and entertainment and stock-based compensation. The increase in the effective tax rate when compared to the prior year was primarily due to certain permanent tax adjustments that are higher when compared to the prior year.

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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

14) Equity

Capital Stock

The following table summarizes the activity in shares of capital stock.

	Class A		Class C
Outstanding shares at December 31, 2025 (1)		23,551,670		3,767,672

Exercise of stock options		25,434		21,596
Vesting of restricted stock units		6,706		-
Conversion of Class C to Class A		138		(138	)

Outstanding shares at June 30, 2026 (1)		23,583,948		3,789,130

Outstanding shares at December 31, 2024 (1)		23,444,604		3,673,109
Outstanding shares, beginning		23,444,604		3,673,109

Exercise of stock options		66,273		95,337
Vesting of restricted stock units		3,547		-
Conversion of Class C to Class A		395		(395	)

Outstanding shares at June 30, 2025 (1)		23,514,819		3,768,051
Outstanding shares, ending		23,514,819		3,768,051

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

The Company’s Board of Directors declared a 5% stock dividend on June 27, 2026, to shareholders of record as of July 10, 2026, which was issued on July 17, 2026. All share and per-share amounts presented herein have been retroactively adjusted to reflect the stock dividend.

Accumulated Other Comprehensive Income (Loss)

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

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

	2026			2025			2026			2025
	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025

Unrealized gains (losses) on fixed maturity securities available for sale	$	(314,801	)	$	2,721,438		$	(4,482,485	)	$	6,710,220
Amounts reclassified into net earnings		(159,026	)		50,796			(307,652	)		(76,729	)
Net unrealized gains (losses) before taxes		(473,827	)		2,772,234			(4,790,137	)		6,633,491
Tax (expense) benefit		101,297			(581,839	)		1,010,277			(1,393,520	)
Net		(372,530	)		2,190,395			(3,779,860	)		5,239,971
Unrealized gains (losses) on restricted assets (1)		896			(4,819	)		(2,361	)		(532	)
Tax (expense) benefit		(223	)		1,200			588			132
Net		673			(3,619	)		(1,773	)		(400	)
Unrealized gains (losses) on cemetery perpetual care trust investments (1)		85			(1,150	)		366			1,665
Unrealized gains (losses)		85			(1,150	)		366			1,665
Tax (expense) benefit		(21	)		287			(91	)		(415	)
Net		64			(863	)		275			1,250
Interest rate remeasurement of future policy benefits		(1,632,362	)		(2,038,836	)		12,903,719			(10,161,681	)
Tax (expense) benefit		342,797			428,155			(2,709,780	)		2,133,955
Net		(1,289,565	)		(1,610,681	)		10,193,939			(8,027,726	)
Other comprehensive income (loss) changes	$	(1,661,358	)	$	575,232		$	6,412,581		$	(2,786,905	)

(1)	Fixed maturity securities available for sale

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

14) Equity (Continued)

The following table presents the accumulated balances of other comprehensive income (loss) as of June 30, 2026:

	Beginning Balance December 31, 2025			Change for the period			Ending Balance June 30, 2026
Unrealized gains (losses) on fixed maturity securities available for sale	$	752,551		$	(3,779,860	)	$	(3,027,309	)
Unrealized gains (losses) on restricted assets (1)		669			(1,773	)		(1,104	)
Unrealized gains (losses) on cemetery perpetual care trust investments (1)		(1,613	)		275			(1,338	)
Interest rate remeasurement of future policy benefits		28,010,516			10,193,939			38,204,455
Other comprehensive income	$	28,762,123		$	6,412,581		$	35,174,704

(1)	Fixed maturity securities available for sale

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

	Beginning Balance December 31, 2024			Change for the period			Ending Balance December 31, 2025
Unrealized gains (losses) on fixed maturity securities available for sale	$	(7,147,384	)	$	7,899,935		$	752,551
Unrealized gains (losses) on restricted assets (1)		(4,126	)		4,795			669
Unrealized gains (losses) on cemetery perpetual care trust investments (1)		(5,225	)		3,612			(1,613	)
Interest rate remeasurement of future policy benefits		40,876,364		$	(12,865,848	)		28,010,516
Other comprehensive income (loss)	$	33,719,629		$	(4,957,506	)	$	28,762,123

(1)	Fixed maturity securities available for sale

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

15) Earnings Per Share

Earnings per share have been retroactively adjusted for the effect of annual stock dividends. In accordance with GAAP, the basic and diluted earnings per share were calculated as follows:

	2026		2025		2026		2025
	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Numerator:
Net earnings	$	8,981,697	$	8,370,755	$	15,983,123	$	14,784,490
Denominator:
Basic weighted-average shares outstanding		26,040,005		26,007,334		26,049,116		25,973,466
Effect of dilutive securities:
Employee stock options		851,949		799,533		789,127		933,970
Unvested restricted stock units		735		-		405		-
Diluted weighted-average shares outstanding		26,892,689		26,806,867		26,838,648		26,907,436
Basic net earnings per share	$	0.34	$	0.32	$	0.61	$	0.57
Diluted net earnings per share	$	0.33	$	0.31	$	0.60	$	0.55

For the six-month periods ended June 30, 2026, and 2025, there were 423,146 and 416,539 anti-dilutive stock option shares, respectively, that were not included in the computation of diluted net earnings per common share as their effect would be anti-dilutive. Basic and diluted earnings per share are the same for each class of common stock.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

16) Business Segment Information

Description of Products and Services by Segment

The Company has identified three operating and reportable business segments: life insurance, funeral home and cemetery, and mortgage. The Company’s life insurance segment revenue consists of life insurance premiums; fees earned on factored life insurance policies and net investment income derived from investing policyholder and surplus funds. Its expenses include operating expenses to collect insurance premiums and insurance policy receivables, and administer claims, and commissions payable related to the sale of insurance products sold by the Company’s independent agency force. The Company’s funeral home and cemetery segment revenue consists of fees from the sale of at-need cemetery and funeral home merchandise, services at its funeral homes and cemeteries, pre-need sales of cemetery spaces and the net investment income from investing surplus cash. Its expenses include operating expenses to maintain funeral home and cemetery operations and commissions related to the sale of insurance products sold by the Company’s agents. The Company’s mortgage segment revenue consists of residential mortgage origination fee income and mortgage interest income. Its expenses include normal operating expenses related to the origination and sale of residential mortgage loans, loan servicing, and warehouse interest and fee expenses.

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, 2025. 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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

16) Business Segment Information (Continued)


	For the Three Months Ended June 30, 2026
	Life		Funeral Home/
	Insurance		Cemetery		Mortgage			Total
Revenues:
From external sources:
Revenue from external customers	$	28,704,662	$	7,599,588	$	25,797,533		$	62,101,783
Net investment income		15,692,590		540,965		195,346			16,428,901
Gains (losses) on investments and other assets		3,047,602		1,533,457		(736	)		4,580,323
Other revenues		392,765		154,243		268,033			815,041
Intersegment revenues		1,679,529		84,767		66,745			1,831,041
Total segment revenues		49,517,148		9,913,020		26,326,921			85,757,089

Elimination of intersegment revenues									(1,831,041	)
Total consolidated revenues									83,926,048

Less:
Policyholder benefits and claims		24,317,248		-		-
Amortization of deferred policy and pre-need acquisition costs and value of business acquired		2,716,063		221,833		-
Selling, general and administrative expenses:
Commissions		324,242		478,614		9,514,070
Personnel		8,666,571		2,939,810		8,899,596
Advertising		143,580		140,932		445,833
Rent and rent related		99,164		36,052		651,190
Depreciation on property and equipment		209,664		250,390		127,431
Cost related to funding mortgage loans		-		-		1,610,111
Data processing and IT related (1)		366,891		99,532		1,036,588
Premium taxes on insurance premiums and other considerations (1)		692,730		-		-
Other segment items (1)(2)		2,388,214		1,448,790		2,159,975
Intersegment expenses (3)		151,513		77,266		1,602,262
Interest expense		894,049		1,751		208,749
Costs of goods and services sold-mortuaries and cemeteries		-		1,177,676		-
Income tax expense		1,900,118		752,166		24,728
Segment net earnings		6,647,101		2,288,208		46,388			8,981,697

Net earnings								$	8,981,697

(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.
		Funeral Home/Cemetery - 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.
		Funeral Home/Cemetery - rent expense, data processing and IT related expenses, and interest expense.
		Mortgage - rent expense and interest expense.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

16) Business Segment Information (Continued)


	For the Three Months Ended June 30, 2025
	Life		Funeral Home/
	Insurance		Cemetery		Mortgage			Total
Revenues:
From external sources:
Revenue from external customers	$	30,185,854	$	7,257,717	$	29,485,104		$	66,928,675
Net investment income		19,999,873		465,425		115,690			20,580,988
Gains (losses) on investments and other assets		873,261		271,176		(1,730	)		1,142,707
Other revenues		465,668		146,243		276,868			888,779
Intersegment revenues		1,828,343		84,767		74,557			1,987,667
Total segment revenues		53,352,999		8,225,328		29,950,489			91,528,816

Elimination of intersegment revenues									(1,987,667	)
Total consolidated revenues									89,541,149

Less:
Policyholder benefits and claims		25,515,540		-		-
Amortization of deferred policy and pre-need acquisition costs and value of business acquired		2,720,095		153,412		-
Selling, general and administrative expenses:
Commissions		1,076,858		580,026		11,808,454
Personnel		8,397,298		2,673,778		11,100,269
Advertising		126,294		142,609		671,545
Rent and rent related		78,960		35,956		822,223
Depreciation on property and equipment		219,873		223,184		155,961
Cost related to funding mortgage loans		-		-		1,891,789
Data processing and IT related (1)		312,143		74,406		899,009
Premium taxes on insurance premiums and other considerations (1)		734,203		-		-
Other segment items (1)(2)		2,402,646		1,303,824		2,229,404
Intersegment expenses (3)		159,256		84,485		1,743,926
Interest expense		993,830		147		299,461
Costs of goods and services sold-mortuaries and cemeteries		-		1,159,283		-
Income tax expense (benefit)		2,348,731		429,866		(410,683	)
Segment net earnings (loss)		8,267,272		1,364,352		(1,260,869	)		8,370,755

Net earnings								$	8,370,755

(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.
		Funeral Home/Cemetery - 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.
		Funeral Home/Cemetery - rent expense, data processing and IT related expenses, and interest expense.
		Mortgage - rent expense and interest expense.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

16) Business Segment Information (Continued)


	For the Six Months Ended June 30, 2026
	Life		Funeral Home
	Insurance		and Cemetery		Mortgage			Total
Revenues:
From external sources:
Revenue from external customers	$	57,559,916	$	15,333,411	$	49,287,192		$	122,180,519
Net investment income		33,409,867		1,193,496		326,886			34,930,249
Gains on investments and other assets		3,430,116		1,459,129		41,826			4,931,071
Other revenues		767,817		314,885		530,287			1,612,989
Intersegment revenues		3,202,675		168,603		139,051			3,510,329
Total segment revenues		98,370,391		18,469,524		50,325,242			167,165,157

Elimination of intersegment revenues									(3,510,329	)
Total consolidated revenues									163,654,828

Less:
Policyholder benefits and claims		48,856,645		-		-
Amortization of deferred policy and pre-need acquisition costs and value of business acquired		5,405,437		511,777		-
Selling, general and administrative expenses:
Commissions		797,068		716,823		17,596,895
Personnel		17,405,428		5,672,880		18,029,305
Advertising		234,484		242,869		990,055
Rent and rent related		193,539		73,955		1,341,189
Depreciation on property and equipment		423,223		491,616		252,736
Cost related to funding mortgage loans		-		-		3,284,088
Data processing and IT related (1)		721,710		188,199		2,067,857
Premium taxes on insurance premiums and other considerations (1)		1,352,345		-		-
Other segment items (1)(2)		4,737,527		2,810,840		4,033,438
Intersegment expenses (3)		307,654		157,355		3,045,320
Interest expense		1,786,826		2,459		311,463
Costs of goods and services sold-mortuaries and cemeteries		-		2,411,125		-
Income tax expense (benefit)		3,563,406		1,270,863		(106,365	)
Segment net earnings (loss)		12,585,099		3,918,763		(520,739	)		15,983,123

Net earnings								$	15,983,123

Segment assets	$	1,423,062,141	$	110,989,273	$	96,186,799		$	1,630,238,213

Elimination of intersegment assets									(20,923,245	)
Total consolidated assets								$	1,609,314,968

Expenditures for long-lived assets	$	45,649,313	$	435,969	$	47,766		$	46,133,048

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

16) Business Segment Information (Continued)


	For the Six Months Ended June 30, 2025
	Life		Funeral Home
	Insurance		and Cemetery		Mortgage			Total
Revenues:
From external sources:
Revenue from external customers	$	59,965,379	$	14,557,938	$	54,294,345		$	128,817,662
Net investment income		38,630,818		886,678		266,116			39,783,612
Gains on investments and other assets		1,163,795		481,146		83,787			1,728,728
Other revenues		1,051,266		334,093		565,511			1,950,870
Intersegment revenues		3,148,266		168,603		196,425			3,513,294
Total segment revenues		103,959,524		16,428,458		55,406,184			175,794,166

Elimination of intersegment revenues									(3,513,294	)
Total consolidated revenues									172,280,872

Less:
Policyholder benefits and claims		50,970,714		-		-
Amortization of deferred policy and pre-need acquisition costs and value of business acquired		5,343,129		327,377		-
Selling, general and administrative expenses:
Commissions		1,939,201		788,446		21,176,072
Personnel		16,923,486		5,211,804		22,218,463
Advertising		226,270		294,218		1,243,905
Rent and rent related		178,750		73,994		1,673,006
Depreciation on property and equipment		462,685		435,545		315,923
Cost related to funding mortgage loans		-		-		3,307,041
Data processing and IT related (1)		547,931		144,932		1,777,119
Premium taxes on insurance premiums and other considerations (1)		1,452,274		-		-
Other segment items (1)(2)		5,027,184		2,535,034		3,871,848
Intersegment expenses (3)		364,814		171,926		2,976,554
Interest expense		1,900,277		310		512,379
Costs of goods and services sold-mortuaries and cemeteries		-		2,412,553		-
Income tax expense (benefit)		4,133,938		964,710		(894,136	)
Segment net earnings (loss)		14,488,871		3,067,609		(2,771,990	)		14,784,490

Net earnings								$	14,784,490

Segment assets	$	1,392,400,255	$	101,407,961	$	86,674,977		$	1,580,483,193

Elimination of intersegment assets									(26,857,765	)
Total consolidated assets								$	1,553,625,428

Expenditures for long-lived assets	$	38,588,008	$	535,256	$	253,231		$	39,376,495

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) 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 presented in its 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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (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 conditions. 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 property with the funds required for estimated future policy benefits. Accordingly, in addition to an appraisal, the determination of fair value 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 net rental income over seven years. The Company also considers comparable properties in the area and property conditions 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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (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 June 30, 2026:

	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	$	380,428,850		$	-	$	379,854,776	$	574,074
Equity securities		20,782,573			20,782,573		-		-
Loans held for sale		146,871,985			-		-		146,871,985
Restricted assets (1)		278,008			-		278,008		-
Restricted assets (2)		18,451,065			18,451,065		-		-
Cemetery perpetual care trust investments (1)		117,203			-		117,203		-
Cemetery perpetual care trust investments (2)		7,024,235			7,024,235		-		-
Derivatives - loan commitments (3)		2,588,911			-		-		2,588,911
Total assets accounted for at fair value on a recurring basis	$	576,542,830		$	46,257,873	$	380,249,987	$	150,034,970

Liabilities accounted for at fair value on a recurring basis
Derivatives - loan commitments (4)		(89,307	)		-		-		(89,307	)
Total liabilities accounted for at fair value on a recurring basis	$	(89,307	)	$	-	$	-	$	(89,307	)

(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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (Continued)

	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	$	382,777,918		$	-	$	382,203,275	$	574,643
Equity securities		18,050,062			18,050,062		-		-
Loans held for sale		155,968,266			-		-		155,968,266
Restricted assets (1)		1,177,251			-		1,177,251		-
Restricted assets (2)		14,928,917			14,928,917		-		-
Cemetery perpetual care trust investments (1)		272,012			-		272,012		-
Cemetery perpetual care trust investments (2)		6,303,732			6,303,732		-		-
Derivatives - loan commitments (3)		1,700,742			-		-		1,700,742
Total assets accounted for at fair value on a recurring basis	$	581,178,900		$	39,282,711	$	383,652,538	$	158,243,651

Liabilities accounted for at fair value on a recurring basis
Derivatives - loan commitments (4)	$	(220,605	)	$	-	$	-	$	(220,605	)
Total liabilities accounted for at fair value on a recurring basis	$	(220,605	)	$	-	$	-	$	(220,605	)

(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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (Continued)

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

				Significant	Range of Inputs
	Fair Value at		Valuation	Unobservable	Minimum			Maximum			Weighted
	June 30, 2026		Technique	Input(s)	Value			Value			Average
Loans held for sale	$	146,871,985	Market approach	Investor contract pricing as a percentage of unpaid principal balance		87.0	%		109.0	%		102.0	%
Derivatives - loan commitments (net)		2,499,604	Market approach	Pull-through rate		64.0	%		100.0	%		92.0	%
				Initial-Value		N/A			N/A			N/A
				Servicing		0 bps			226 bps			43 bps
Fixed maturity securities available for sale		574,074	Broker quotes	Pricing quotes	$	100.00		$	100.00		$	100.00

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2025, the significant unobservable inputs used in the fair value measurements were as follows:

				Significant	Range of Inputs
	Fair Value at		Valuation	Unobservable	Minimum			Maximum			Weighted
	December 31, 2025		Technique	Input(s)	Value			Value			Average
Loans held for sale	$	155,968,266	Market approach	Investor contract pricing as a percentage of unpaid principal balance		86.0	%		107.0	%		102.0	%
Derivatives - loan commitments (net)		1,480,137	Market approach	Pull-through rate		60.0	%		100.0	%		89.0	%
				Initial-Value		N/A			N/A			N/A
				Servicing		0 bps			251 bps			52 bps
Fixed maturity securities available for sale		574,643	Broker quotes	Pricing quotes	$	100.00		$	100.77		$	100.10

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (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 June 30, 2026:

	Net Loan Commitments			Loans Held for Sale			Fixed Maturity Securities Available for Sale
Balance - March 31, 2026	$	2,864,864		$	137,607,689		$	574,643
Originations and purchases		-			547,528,180			-
Sales, maturities and paydowns		-			(550,161,814	)
Total gains (losses):
Included in earnings		(365,260	)(1)		11,897,930	(1)		-	(2)
Included in other comprehensive income		-			-			(569	)
Balance - June 30, 2026	$	2,499,604		$	146,871,985		$	574,074

(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 June 30, 2025:

	Net Loan Commitments			Loans Held for Sale			Fixed Maturity Securities Available for Sale
Balance - March 31, 2025	$	2,787,750		$	139,834,226		$	1,150,304
Originations and purchases		-			616,896,709			-
Sales, maturities and paydowns		-			(603,595,597	)		-
Transfer to mortgagte loans held for investment					(828,063	)
Loans held for sale foreclosed into real estate held for sale					(380,000	)
Total gains (losses):
Included in earnings		132,404	(1)		13,948,844	(1)		-	(2)
Included in other comprehensive income		-			-			(566	)
Balance - June 30, 2025	$	2,920,154		$	165,876,119		$	1,149,738

(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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (Continued)

The following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the six-month period ended June 30, 2026:

	Net Loan Commitments			Loans Held for Sale			Fixed Maturity Securities Available for Sale
Balance - December 31, 2025	$	1,480,137		$	155,968,266		$	574,643
Originations and purchases		-			1,036,088,480			-
Sales, maturities and paydowns		-			(1,066,874,319	)		-
Total gains (losses):
Included in earnings		1,019,467	(1)		21,689,558	(1)		-	(2)
Included in other comprehensive income		-			-			(569	)
Balance - June 30, 2026	$	2,499,604		$	146,871,985		$	574,074

(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 six-month period ended June 30, 2025:

	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		-			1,134,783,086			-
Sales, maturities and paydowns		-			(1,124,978,173	)		-
Transfer to mortgage loans held for investment					(828,063	)
Loans held for sale foreclosed into real estate held for sale					(380,000	)
Total gains (losses):
Included in earnings		606,944	(1)		26,098,121	(1)		-	(2)
Included in other comprehensive income		-			-			(188	)
Balance - June 30, 2025	$	2,920,154		$	165,876,119		$	1,149,738

(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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (Continued)

The Company did not have any financial assets and financial liabilities measured at fair value on a nonrecurring basis as of June 30, 2026, or as of June 30, 2025.

Fair Value of Financial Instruments Carried at Other Than Fair 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 June 30, 2026, and December 31, 2025.

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 June 30, 2026:

	Carrying Value			Level 1		Level 2		Level 3			Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential	$	83,478,108		$	-	$	-	$	85,079,523		$	85,079,523
Residential construction		140,177,507			-		-		140,177,507			140,177,507
Commercial		67,029,573			-		-		68,386,002			68,386,002
Mortgage loans held for investment, net	$	290,685,188		$	-	$	-	$	293,643,032		$	293,643,032
Policy loans (1)		14,616,118			-		-		14,616,118			14,616,118
Insurance assignments, net (1)		42,533,215			-		-		42,533,215			42,533,215
Restricted assets (2)		775,992			-		-		775,992			775,992
Cemetery perpetual care trust investments (2)		1,006,713			-		-		1,006,713			1,006,713
Mortgage servicing rights, net		2,447,105			-		-		4,146,075			4,146,075

Liabilities
Bank and other loans payable	$	(122,230,135	)	$	-	$	-	$	(110,534,559	)	$	(110,534,559	)
Policyholder account balances - universal life		(34,990,504	)		-		-		(35,015,185	)		(35,015,185	)
Policyholder account balances - fixed annuities		(103,035,928	)		-		-		(137,195,977	)		(137,195,977	)

(1)	Included in other investments and policy loans on the condensed consolidated balance sheets
(2)	Mortgage loans held for investment

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (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, 2025:

	Carrying Value			Level 1		Level 2		Level 3			Total Estimated Fair Value
Assets
Mortgage loans held for investment
Residential	$	88,348,354		$	-	$	-	$	89,318,434		$	89,318,434
Residential construction		156,744,272			-		-		156,744,272			156,744,272
Commercial		77,342,759			-		-		78,683,341			78,683,341
Mortgage loans held for investment, net	$	322,435,385		$	-	$	-	$	324,746,047		$	324,746,047
Policy loans (1)		14,467,357			-		-		14,467,357			14,467,357
Insurance assignments, net (1)		44,507,531			-		-		44,507,531			44,507,531
Restricted assets (2)		810,802			-		-		810,802			810,802
Cemetery perpetual care trust investments (2)		66,209			-		-		66,209			66,209
Mortgage servicing rights, net		2,528,459			-		-		4,035,635			4,035,635

Liabilities
Bank and other loans payable	$	(98,387,919	)	$	-	$	-	$	(87,490,315	)	$	(87,490,315	)
Policyholder account balances - universal life		(35,825,494	)		-		-		(35,986,392	)		(35,986,392	)
Policyholder account balances - fixed annuities		(104,780,256	)		-		-		(103,880,576	)		(103,880,576	)

(1)	Included in other investments and policy loans on the consolidated balance sheets
(2)	Mortgage loans held for investment

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: These loans are fully collateralized by the cash surrender value of the underlying policy. Accordingly, the carrying amounts reported in the accompanying condensed consolidated balance sheet approximates their fair values.

Insurance Assignments, Net: These investments primarily have short-term maturities. Accordingly, the carrying amounts reported in the accompanying condensed consolidated balance sheet approximates their fair values.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

17) Fair Value of Financial Instrument (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: Policyholder account balances for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period of more than related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 1.5% to 6.5%. The fair values for these investment-type insurance policies are estimated based on the present value of liability cash flows. The fair values for the Company’s insurance contracts other than investment-type contracts are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk, such that the Company’s exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance policies.

18) Stock Compensation Plans

The Company has three active equity incentive plans (the “2013 Plan”, the “2014 Director Plan” and the “2022 Plan” or “the Plans”).

Stock Options

Stock based compensation expense for stock options issued of $450,299 and $310,430 has been recognized for these Plans for the three-month periods ended June 30, 2026, and 2025, respectively, and $913,999 and $609,703 has been recognized for these Plans for the six-month periods ended June 30, 2026, and 2025, respectively, and is included in personnel expenses on the condensed consolidated statements of earnings. As of June 30, 2026, the total unrecognized compensation expense related to the options issued was $783,164 which is expected to be recognized over the remaining vesting period.

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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

18) Stock Compensation Plans (Continued)

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

	Number of Class A Shares			Weighted Average Exercise Price (2)		Number of Class C Shares			Weighted Average Exercise Price (2)

Outstanding at December 31, 2025		760,838		$	6.50		2,366,291		$	7.16
Adjustment for the effect of stock dividends		36,267					116,778
Granted		7,500					-
Exercised		(36,610	)				(30,750	)
Cancelled		(6,598	)				-
Outstanding at June 30, 2026		761,397		$	6.63		2,452,319		$	7.22

As of June 30, 2026:
Options exercisable		625,419		$	6.30		2,115,150		$	7.07

As of June 30, 2026:
Available options for future grant		1,466,152					529,417

Weighted average contractual term of options outstanding at June 30, 2026		6.49 years					6.53 years

Weighted average contractual term of options exercisable at June 30, 2026		5.89 years					6.10 years

Aggregated intrinsic value of options outstanding at June 30, 2026 (1)	$	2,109,231				$	5,909,686

Aggregated intrinsic value of options exercisable at June 30, 2026 (1)	$	1,961,826				$	5,537,788

(1)	The Company used a stock price of $9.23 as of June 30, 2026 to derive intrinsic value.
(2)	Adjusted for the effect of annual stock dividends.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

18) Stock Compensation Plans (Continued)

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

	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		$	5.63		1,724,400		$	6.87
Adjustment for the effect of stock dividends		27,898					80,571
Granted		24,000					-
Exercised		(112,735	)				(113,023	)
Cancelled		76					-
Outstanding at June 30, 2025		585,833		$	5.93		1,691,948		$	7.13

As of June 30, 2025:
Options exercisable		546,483		$	5.48		1,526,948		$	8.64

As of June 30, 2025:
Available options for future grant		2,156,404					678,550

Weighted average contractual term of options outstanding at June 30, 2025		5.30 years					6.39 years

Weighted average contractual term of options exercisable at June 30, 2025		4.99 years					6.11 years

Aggregated intrinsic value of options outstanding at June 30, 2025 (1)	$	1,811,956				$	3,200,152

Aggregated intrinsic value of options exercisable at June 30, 2025 (1)	$	1,933,277				$	3,780,038

(1)	The Company used a stock price of $9.02 as of June 30, 2025 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 six-month periods ended June 30, 2026, and 2025 were $269,074 and $1,357,776, respectively.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

18) Stock Compensation Plans (Continued)

Restricted Stock Units (“RSUs”)

Stock based compensation expense for RSUs issued of $7,071 and $9,949 has been recognized under these plans for the three-month periods ended June 30, 2026, and 2025, respectively, of $12,503 and $19,936 has been recognized under these plans for the six-month periods ended June 30, 2026, and 2025, respectively, and is included in personnel expenses on the condensed consolidated statements of earnings. The fair value of each RSU granted is determined by the Company’s stock price on the date of the grant. As of June 30, 2026, the total unrecognized compensation expense related to the RSUs issued was $14,123, which is expected to be recognized over the remaining vesting period.

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

	Number of Class A Shares			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2025		17,568		$	9.33
Granted		-
Vested		(6,706	)
Non-vested at June 30, 2026		10,862		$	8.53

Available RSUs for future grant		489,706

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

	Number of Class A Shares			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2024		12,813		$	12.90
Granted		-
Vested		(3,547	)
Non-vested at June 30, 2025		9,266		$	13.08

Available RSUs for future grant		504,187

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

19) Commitments and Contingencies

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 3 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 three lines of credit agreements for funding mortgage loans held for sale: one through U.S. Bank, a second through Western Alliance Bank, and a third through JPMorgan Chase Bank. The Company anticipates renewing all agreements in 2026.

The U.S. Bank warehouse line of credit agreement 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 October 29, 2026. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and a minimum net income of $1 for the quarter.

The Western Alliance Bank warehouse line of credit agreement 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 15, 2026. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and a minimum net income of $1 for the quarter.

The JPMorgan Chase Bank warehouse line of credit agreement allows SecurityNational Mortgage to borrow up to $35,000,000. The relevant agreement contemplates interest at the 1-Month SOFR rate plus 1.95% on drawn amounts and matures on August 15, 2026. The Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and a minimum pre-tax income of $1 for the year.

As of June 30, 2026, SecurityNational Mortgage was in compliance with all covenants under its warehouse lines of credit. The Company has also performed an analysis of its funding capacities of both internal and external sources and has determined that there are sufficient funds to continue its current business model. The Company continues to negotiate other warehouse lines of credit with other lenders.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

19) Commitments and Contingencies (Continued)

Debt Covenants for Revolving Lines of Credit and Bank Loans

The Company’s revolving line of credit agreement contains an annual “zero balance” covenant and quarterly segment financial statements. The Company is also subject to debt covenants under one of its real estate loans which require maintenance of a minimum consolidated operating cash flow ratio, minimum liquidity amounts, and minimum consolidated net worth value. In addition to these financial debt covenants, the Company is required to provide building specific financial statements and rent rolls for each of its real estate loans. As of June 30, 2026, the Company was in compliance with all debt covenants and required reporting.

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.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The Company’s operations over the last several years generally reflect three strategies which the Company expects to continue: (i) increased attention to “niche” insurance products, such as the Company’s funeral plan policies and traditional whole life products; (ii) increased emphasis on the funeral home and cemetery business; and (iii) capitalizing on the housing market by originating mortgage loans.

Insurance Operations

The Company’s life insurance business includes funeral plans and interest-sensitive life insurance, as well as other traditional life, accident and health insurance products. The Company places specific marketing emphasis on funeral plans through pre-need planning.

A funeral plan is a small face value life insurance policy that generally has face coverage of up to $30,000. The Company believes that funeral plans represent a marketing niche that is less competitive because most insurance companies do not offer similar coverage. The purpose of the funeral plan policy is to pay the costs and expenses incurred at the time of a person’s death. On a per thousand-dollar cost of insurance basis, these policies can be more expensive to the policyholder than many types of non-burial insurance due to their low face amount, requiring the fixed cost of the policy administration to be distributed over a smaller policy size, and the simplified underwriting practices that result in higher mortality costs.

The following table shows the condensed financial results of the insurance operations for the three and six month periods ended June 30, 2026, and 2025. See Note 16 to the condensed consolidated financial statements.

	Three months ended June 30, (in thousands of dollars)							Six months ended June 30, (in thousands of dollars)
	2026		2025		% Increase (Decrease)			2026		2025		% Increase (Decrease)
Revenues from external customers:
Insurance premiums	$	28,705	$	30,186		(5	)%	$	57,560	$	59,965		(4	)%
Net investment income		15,692		20,000		(22	)%		33,410		38,631		(14	)%
Gains on investments and other assets		3,048		873		249	%		3,430		1,164		195	%
Other revenues		393		466		(16	)%		768		1,051		(27	)%
Intersegment revenues		1,679		1,828		(8	)%		3,202		3,148		2	%
Total segment revenues	$	49,517	$	53,353		(7	)%	$	98,370	$	103,959		(5	)%
Segment net earnings	$	6,647	$	8,267		(20	)%	$	12,585	$	14,489		(13	)%

Profitability for the six-month period ended June 30, 2026 decreased due to (a) a $5,221,000 decrease in net investment income, (b) a $2,405,000 decrease in insurance premiums and other considerations, (c) a $283,000 decrease in other revenues, and (d) a $62,000 increase in amortization of deferred policy acquisition costs, which were partially offset by (i) a $2,266,000 increase in gains on investments and other assets, (ii) a $2,114,000 decrease in policyholder benefits and claims, (iii) a $892,000 decrease in selling, general and administrative expenses, (iv) a $571,000 decrease in income tax expense, (v) a $113,000 decrease in interest expense, (vi) a $57,000 decrease in intersegment expenses, and (vii) a $54,000 increase in intersegment revenue.

Funeral Home and Cemetery Operations

The Company sells funeral home services and products through its eleven funeral homes in Utah and four funeral homes in New Mexico. The Company also sells cemetery services, products and land (burial plots) through its five cemeteries in Utah, one cemetery in San Diego County, California, and one cemetery in Santa Fe, New Mexico. At-need funeral home and cemetery product sales and services are recognized as revenue when the services are performed or when the products are delivered. Pre-need funeral home and cemetery product sales and services are deferred until the merchandise is delivered, or services are performed. Revenue for pre-need cemetery land sales is recognized at the time of sale, and land is removed from inventory.

The following table shows the condensed financial results of the funeral home and cemetery operations for the three and six month periods ended June 30, 2026, and 2025. See Note 16 to the condensed consolidated financial statements.

	Three months ended June 30, (in thousands of dollars)							Six months ended June 30, (in thousands of dollars)
	2026		2025		% Increase (Decrease)			2026		2025		% Increase (Decrease)
Revenues from external customers:
Cemetery revenues	$	4,219	$	4,093		3	%	$	8,366	$	7,803		7	%
Funeral home revenues		3,381		3,165		7	%		6,967		6,755		3	%
Net investment income		541		465		16	%		1,193		887		34	%
Gains on investments and other assets		1,533		271		466	%		1,459		481		203	%
Other revenues		154		146		5	%		315		334		(6	)%
Interesegment revenues		85		85		0	%		169		169		0	%
Total segment revenues	$	9,913	$	8,225		21	%	$	18,469	$	16,429		12	%
Segment net earnings	$	2,288	$	1,364		68	%	$	3,919	$	3,068		28	%

Profitability in the six-month period ended June 30, 2026 increased due to (a) a $978,000 increase in gains on investments and other assets, (b) a $408,000 increase in cemetery pre-need sales, (c) a $306,000 increase in net investment income, (d) a $212,000 increase in funeral home at-need sales, (e) a $155,000 increase in cemetery at-need sales, (f) a $14,000 decrease in intersegment expenses, and (g) a $2,000 decrease in cost of goods and services sold, which were partially offset by (i) a $715,000 increase in selling, general and administrative expenses, primarily attributable to a $461,000 increase in personnel expenses, (ii) a $306,000 increase in income tax expense, (iii) a $184,000 increase in amortization of deferred policy acquisition costs, and (iv) a $19,000 decrease in other revenues.

Mortgage Operations

The Company’s wholly owned subsidiary, SecurityNational Mortgage Company (“SecurityNational Mortgage”), is a mortgage lender incorporated under the laws of the State of Utah and approved and regulated by the Federal Housing Administration (FHA), a department of the U.S. Department of Housing and Urban Development (HUD), which originates mortgage loans that qualify for government insurance in the event of default by the borrower, in addition to various conventional mortgage loan products. SecurityNational Mortgage originates and refinances mortgage loans on a retail basis. Mortgage loans originated or refinanced by SecurityNational Mortgage are funded through loan purchase agreements with Security National Life, Kilpatrick Life and unaffiliated financial institutions.

SecurityNational Mortgage receives fees from borrowers that are involved in mortgage loan originations and refinancings, and secondary fees earned from third party investors that purchase the mortgage loans. Mortgage loans are generally sold with mortgage servicing rights (“MSRs”) released to third-party investors or retained by SecurityNational Mortgage. SecurityNational Mortgage currently retains the mortgage servicing rights on approximately 1.59% of its loan origination volume. These mortgage loans are serviced by either SecurityNational Mortgage or an approved third-party sub-servicer.

Mortgage rates have followed the US Treasury yields in response to inflation and slowing new home sales. As expected, the lack of mortgage rate reductions has resulted in a decrease in loan originations classified as ‘refinance.’ Higher than anticipated mortgage rates have also had a negative effect on loan originations classified as ‘purchases’ although not as significant as those in the refinance classification.

For the three and six month periods ended June 30, 2026, and 2025, SecurityNational Mortgage originated 3,011 loans ($1,036,088,000 total loan volume principal amount) and 3,375 loans ($1,134,783,000 total loan volume principal amount), respectively.

The following table shows the condensed financial results of the mortgage operations for the three and six month periods ended June 30, 2026, and 2025. See Note 16 to the condensed consolidated financial statements.

	Three months ended June 30, (in thousands of dollars)									Six months ended June 30, (in thousands of dollars)
	2026			2025			% Increase (Decrease)			2026			2025			% Increase (Decrease)
Revenues from external customers
Secondary gains from investors	$	16,895		$	20,185			(16	)%	$	33,310		$	37,140			(10	)%
Income from loan originations		8,222			8,859			(7	)%		15,516			15,598			(1	)%
Change in fair value of loans held for sale		1,046			308			240	%		(558	)		949			(159	)%
Change in fair value of loan commitments		(365	)		132			(377	)%		1,019			607			68	%
Net investment income		195			116			68	%		327			266			23	%
Gains (losses) on investments and other assets		(1	)		(2	)		(50	)%		42			84			(50	)%
Other revenues		268			277			(3	)%		530			566			(6	)%
Intersegment revenues		67			75			(11	)%		139			196			(29	)%
Total segment revenues	$	26,327		$	29,950			(12	)%	$	50,325		$	55,406			(9	)%
Segment net earnings (loss)	$	46		$	(1,261	)		104	%	$	(521	)	$	(2,772	)		81	%

Losses for the six-month period ended June 30, 2026 decreased due to (a) a $4,189,000 decrease in personnel expenses, (b) a $3,579,000 decrease in commissions, (c) a $412,000 increase in the fair value of loan commitments, (d) a $332,000 decrease in rent and rent related expenses, (e) a $254,000 decrease in advertising expenses, (f) a $201,000 decrease in interest expense, (g) a $63,000 decrease in depreciation on property and equipment, (h) a $61,000 increase in net investment income, and (i) a $23,000 decrease in costs related to funding mortgage loans, which were partially offset by (i) a $3,830,000 decrease in secondary gains from investors, (ii) a $1,507,000 decrease in the fair value of loans held for sale, (iii) a $788,000 decrease in income tax benefit, (iv) a $291,000 increase in data processing and IT related expenses, (v) a $161,000 increase in other expenses, (vi) an $82,000 decrease in income from loan originations, (vii) a $69,000 increase in intersegment expenses, (viii) a $57,000 decrease in intersegment revenues, (ix) a $42,000 decrease in gains on investments and other assets, and (x) a $36,000 decrease in other revenues.

Consolidated Results of Operations

Three-month period ended June 30, 2026, Compared to Three-month period ended June 30, 2025

Total revenues decreased by $5,615,000, or 6.3%, to $83,926,000 for the three-month period ended June 30, 2026, from $89,541,000 for the comparable period in 2025. Contributing to this decrease in total revenues was a $4,152,000 decrease in net investment income, a $3,688,000 decrease in mortgage fee income, a $1,481,000 decrease in insurance premiums and other considerations, and a $74,000 decrease in other revenues, which were partially offset by a $3,438,000 increase in gains on investments and other assets and a $342,000 increase in net funeral home and cemetery sales.

Mortgage fee income decreased by $3,688,000, or 12.5%, to $25,797,000, for the three-month period ended June 30, 2026, from $29,485,000 for the comparable period in 2025. This decrease was primarily due to a $3,290,000 decrease in secondary gains from mortgage loans sold to third-party investors into the secondary market reflecting lower overall loan volume and less favorable pricing conditions, and a $638,000 decrease in income from loan originations, and a $498,000 decrease in the fair value of loan commitments, which were partially offset by a $738,000 increase in the fair value of loans held for sale.

Insurance premiums and other considerations decreased by $1,481,000, or 4.9%, to $28,705,000 for the three-month period ended June 30, 2026, from $30,186,000 for the comparable period in 2025. This decrease was primarily due to a decrease of $1,820,000 in first year premiums because of a decrease in sales, which was partially offset by an increase of $339,000 in renewal premiums.

Net investment income decreased by $4,152,000, or 20.2%, to $16,429,000 for the three-month period ended June 30, 2026, from $20,581,000 for the comparable period in 2025. This decrease was primarily attributable to a $6,116,000 decrease in mortgage loan interest resulting from a decline in the average balance of the mortgage loan portfolio held for investment, a $260,000 decrease in insurance assignment income, a $59,000 decrease in fixed maturity securities income, a $26,000 decrease in policy loan interest, and a $14,000 decrease in equity securities income, which were partially offset by a $1,923,000 decrease in investment expenses, a $242,000 increase in interest on cash and cash equivalents, a $115,000 increase in other investment income, and a $41,000 increase in real estate income.

Net funeral home and cemetery sales increased by $342,000, or 4.7%, to $7,600,000 for the three-month period ended June 30, 2026, from $7,258,000 for the comparable period in 2025. This increase was primarily due to a $216,000 increase in funeral home at-need sales, a $104,000 increase in cemetery pre-need sales, and a $22,000 increase in cemetery at-need sales.

Gains on investments and other assets increased by $3,438,000 to $4,580,000 for the three-month period ended June 30, 2026, from $1,142,000 for the comparable period in 2025. This increase in gains on investments and other assets was primarily due to a $3,065,000 increase in gains on equity securities primarily attributable to increases in the fair value of these equity securities and a $628,000 increase in gains on real estate, which were partially offset by a $210,000 decrease in gains on fixed maturity securities and a $45,000 decrease in gains on other assets.

Other revenues decreased by $74,000, or 8.3%, to $815,000 for the three-month period ended June 30, 2026, from $889,000 for the comparable period in 2025. This decrease was primarily due to a decrease of $74,000 in other miscellaneous revenues.

Policyholder benefits and claims decreased by $1,198,000 or 4.7%, to $24,317,000 for the three-month period ended June 30, 2026, from $25,515,000 for the comparable period in 2025. This decrease was primarily the result of a $941,000 decrease in future policy benefits and a $335,000 decrease in death benefits, which were partially offset by a $78,000 increase in surrender and other policy benefits.

Amortization of deferred policy and pre-need acquisition costs and value of business acquired increased by $64,000, or 2.2%, to $2,938,000 for the three-month period ended June 30, 2026, from $2,874,000 for the comparable period in 2025. This increase is due to a $74,000 increase in the amortization of deferred policy and pre-need acquisition costs due to an increase in the average outstanding balance, which was partially offset by a $10,000 decrease in the amortization of value of business acquired due to no new deferrals and a decreasing average outstanding balance.

Selling, general and administrative expenses decreased by $5,231,000, or 10.9%, to $42,730,000 for the three-month period ended June 30, 2026, from $47,961,000 for the comparable period in 2025. This decrease was primarily the result of a $3,148,000 decrease in commissions, a $1,665,000 decrease in personnel expenses, a $282,000 decrease in costs related to funding mortgage loans, a $210,000 decrease in advertising expense, a $151,000 decrease in rent and rent related expenses, and a $12,000 decrease in depreciation on property and equipment, which were partially offset by a $237,000 increase in other expenses.

Interest expense decreased by $189,000, or 14.6%, to $1,105,000 for the three-month period ended June 30, 2026, from $1,293,000 for the comparable period in 2025. This decrease was primarily due to a decrease of $98,000 in interest expense on bank loans and $91,000 in interest expense on mortgage warehouse lines of credit for loans held for sale.

Funeral home and cemetery cost of goods and services sold increased by $18,000, or 1.6%, to $1,177,000 for the three-month period ended June 30, 2026, from $1,159,000 for the comparable period in 2025. This increase was primarily due to an increase of $22,000 in pre-need sales, which was partially offset by a decrease of $4,000 in at-need sales.

Income tax expense increased by $309,000, or 13.1%, to $2,677,000 for the three-month period ended June 30, 2026, from $2,368,000 for the comparable period in 2025. This increase was primarily due to an increase in earnings before income taxes for 2026 compared to 2025. The Company’s overall effective tax rate increased from 22.1% for 2025 to 23.0% in 2026, a 0.9% increase in the effective tax rate or a 4.1% change. This increase was primarily due to certain permanent tax adjustments that are higher when compared to the prior year.

Six-month period ended June 30, 2026, Compared to Six-month period ended June 30, 2025

Total revenues decreased by $8,626,000, or 5.0%, to $163,655,000 for the six-month period ended June 30, 2026, from $172,281,000 for the comparable period in 2025. Contributing to this decrease in total revenues was a $5,007,000 decrease in mortgage fee income, a $4,853,000 decrease in net investment income, a $2,405,000 decrease in insurance premiums and other considerations, and a $338,000 decrease in other revenues, which were partially offset by a $3,202,000 increase in gains on investments and other assets and a $775,000 increase in net funeral home and cemetery sales.

Mortgage fee income decreased by $5,007,000, or 9.2%, to $49,287,000, for the six-month period ended June 30, 2026, from $54,294,000 for the comparable period in 2025. This decrease was primarily due to a $3,830,000 decrease in secondary gains from mortgage loans sold to third-party investors into the secondary market reflecting lower overall loan volume and less favorable pricing conditions, a $1,507,000 decrease in the fair value of loans held for sale, and an $82,000 decrease in income from loan originations, which were partially offset by a $412,000 increase in the fair value of loan commitments.

Insurance premiums and other considerations decreased by $2,405,000, or 4.0%, to $57,560,000 for the six-month period ended June 30, 2026, from $59,965,000 for the comparable period in 2025. This decrease was primarily due to a decrease of $2,785,000 in first year premiums because of a decrease in sales, which was partially offset by an increase of $380,000 in renewal premiums.

Net investment income decreased by $4,853,000, or 12.2%, to $34,930,000 for the six-month period ended June 30, 2026, from $39,783,000 for the comparable period in 2025. This decrease was primarily attributable to a $5,806,000 decrease in mortgage loan interest resulting from a decline in the average balance of the mortgage loan portfolio held for investment, a $548,000 decrease in insurance assignment income, a $113,000 decrease in interest on cash and cash equivalents, a $29,000 decrease in policy loan interest, and an $11,000 decrease in fixed maturity securities income, which were partially offset by a $1,364,000 decrease in investment expenses, a $269,000 increase in other investment income, a $20,000 increase in real estate income, and a $1,000 increase in equity securities income.

Net funeral home and cemetery sales increased by $775,000, or 5.3%, to $15,333,000 for the six-month period ended June 30, 2026, from $14,558,000 for the comparable period in 2025. This increase was primarily due to a $408,000 increase in cemetery pre-need sales, a $212,000 increase in funeral home at-need sales, and a $155,000 increase in cemetery at-need sales.

Gains on investments and other assets increased by $3,202,000 to $4,931,000 for the six-month period ended June 30, 2026, from $1,729,000 for the comparable period in 2025. This increase in gains on investments and other assets was primarily due to a $2,639,000 increase in gains on equity securities primarily attributable to increases in the fair value of these equity securities, a $784,000 increase in gains on real estate, and a $10,000 increase in gains on other assets, which were partially offset by a $231,000 decrease in gains on fixed maturity securities.

Other revenues decreased by $338,000, or 17.3%, to $1,613,000 for the six-month period ended June 30, 2026, from $1,951,000 for the comparable period in 2025. This decrease was primarily due to a decrease of $338,000 in other miscellaneous revenues.

Policyholder benefits and claims decreased by $2,114,000 or 4.1%, to $48,857,000 for the six-month period ended June 30, 2026, from $50,971,000 for the comparable period in 2025. This decrease was primarily the result of a $1,619,000 decrease in future policy benefits, a $491,000 decrease in death benefits, and a $4,000 decrease in surrender and other policy benefits.

Amortization of deferred policy and pre-need acquisition costs and value of business acquired increased by $247,000, or 4.4%, to $5,917,000 for the six-month period ended June 30, 2026, from $5,670,000 for the comparable period in 2025. This increase is due to a $265,000 increase in the amortization of deferred policy and pre-need acquisition costs due to an increase in the average outstanding balance, which was partially offset by an $18,000 decrease in the amortization of value of business acquired due to no new deferrals and a decreasing average outstanding balance.

Selling, general and administrative expenses decreased by $8,167,000, or 8.9%, to $83,658,000 for the six-month period ended June 30, 2026, from $91,825,000 for the comparable period in 2025. This decrease was primarily the result of a $4,793,000 decrease in commissions, a $3,246,000 decrease in personnel expenses, a $317,000 decrease in rent and rent related expenses, a $297,000 decrease in advertising expense, a $47,000 decrease in depreciation on property and equipment, and a $23,000 decrease in costs related to funding mortgage loans, which were partially offset by a $556,000 increase in other expenses.

Interest expense decreased by $312,000, or 12.9%, to $2,101,000 for the six-month period ended June 30, 2026, from $2,413,000 for the comparable period in 2025. This decrease was primarily due to a decrease of $201,000 in interest expense on mortgage warehouse lines of credit for loans held for sale and a decrease of $111,000 in interest expense on bank loans.

Funeral home and cemetery cost of goods and services sold decreased by $1,000, or 0.1%, to $2,411,000 for the six-month period ended June 30, 2026, from $2,412,000 for the comparable period in 2025. This decrease was primarily due to a decrease of $22,000 in at-need sales, which was partially offset by an increase of $21,000 in pre-need sales.

Income tax expense increased by $523,000, or 12.4%, to $4,728,000 for the six-month period ended June 30, 2026, from $4,205,000 for the comparable period in 2025. This increase was primarily due to an increase in earnings before income taxes for 2026 compared to 2025. The Company’s overall effective tax rate increased from 22.1% for 2025 to 22.8% in 2026, a 0.7% increase in the effective tax rate or a 3.1% change. This increase was primarily due to certain permanent tax adjustments that are higher when compared to the prior year.

Liquidity and Capital Resources

The Company’s life insurance subsidiaries and funeral home and cemetery subsidiaries realize cash flow from premiums, contract payments and sales on personal services rendered for funeral home and cemetery business, from interest and dividends on invested assets, and from the proceeds from the sale or maturity of investments. The mortgage subsidiaries realize cash flow from fees generated by originating and refinancing mortgage loans and fees from mortgage loans held for sale that are sold to investors into the secondary market. It should be noted that current conditions in the financial markets and economy may affect the realization of these expected cash flows. The Company considers these sources of cash flow to be adequate to fund future policyholder and funeral home and cemetery liabilities, which generally are long-term, and adequate to pay current policyholder claims, annuity payments, expenses related to the issuance of new policies, the maintenance of existing policies, debt service, and to meet current operating expenses.

During the six-month periods ended June 30, 2026, and 2025, the Company’s operations provided cash of approximately $36,934,000 and of approximately $1,905,000, respectively. The increase in cash provided by operations was due primarily to a decrease in originations of loans held for sale and an increase in net earnings.

The Company expects to pay out liabilities under its funeral plans over the long term given the nature of those plans. Funeral plans are small face value life insurance policies that payout upon a person’s death to cover funeral burial costs; policyholders generally keep these policies in force until, and do not surrender prior to, death. Because of the long-term nature of these liabilities, the Company can hold to maturity or for the targeted investment period its corresponding bond, real estate, and mortgage loan investments, thus reducing the risk of liquidating these long-term investments because of any sudden changes in their fair values.

The Company attempts to match the duration of invested assets with its policyholder and funeral home and cemetery liabilities. The Company may sell investments other than those held to maturity in the portfolio to help in this timing matching. The Company purchases short-term investments on a temporary basis to meet the expected short-term requirements of the Company’s insurance products. The Company’s investment philosophy is intended to provide a rate of return for the expected duration of its funeral home and cemetery policies that will exceed the accruing of liabilities under those policies regardless of future interest rate movements.

The Company’s investment policy is also to invest predominantly in fixed maturity securities, real estate, mortgage loans, and warehousing of mortgage loans. The warehoused mortgage loans are typically held for sale on a short-term basis before selling the loans to investors in accordance with the requirements and laws governing the Company’s life insurance subsidiaries. Bonds owned by the insurance subsidiaries amounted to $363,471,000 (at estimated fair value) and $365,986,000 (at estimated fair value) as of June 30, 2026, and December 31, 2025, respectively. This represented 40.1% and 35.2% of the total investments of the Company as of June 30, 2026, and December 31, 2025, respectively. Generally, all bonds owned by the life insurance subsidiaries are rated by the National Association of Insurance Commissioners. Under this rating system, there are six categories used for the rating of bonds. As of June 30, 2026, 1.6% (or $5,966,000) and as of December 31, 2025, 1.6% (or $5,825,000) of the Company’s total bond investments were invested in bonds in rating categories three through six, which are considered non-investment grade.

The Company’s life insurance subsidiaries are subject to risk-based capital guidelines established by statutory regulators requiring minimum capital levels based on the perceived risk of assets, liabilities, disintermediation, and business risk. As of June 30, 2026, and December 31, 2025, the life insurance subsidiaries were in compliance with the regulatory criteria.

The Company’s total capitalization of stockholders’ equity, bank and other loans payable was $555,266,000 as of June 30, 2026, as compared to $508,757,000 as of December 31, 2025. This increase was primarily due to an increase of $22,667,000 in stockholders’ equity and an increase of $23,842,000 in bank and other loans payable. Stockholders’ equity as a percentage of total capitalization was 78.0% and 80.7% as of June 30, 2026, and December 31, 2025, respectively.

Two of the Company’s three mortgage warehouse lines of credit, through Western Alliance Bank and JPMorgan Chase Bank, are scheduled to mature on August 15, 2026. The Company is currently in the process of negotiating renewals of these facilities and anticipates that both will be renewed on substantially similar terms. However, there can be no assurance that such renewals will be completed. If these facilities are not renewed, the Company may need to secure alternative funding sources for its mortgage lending operations, which could result in less favorable terms and temporarily impact loan origination volumes. See Note 19 to the condensed consolidated financial statements for additional information regarding these warehouse lines.

Lapse rates measure the amount of insurance terminated during a particular period. The Company’s lapse rate for life insurance in 2025 was 7.2% as compared to a lapse rate of 7.0% for 2024. The 2026 lapse rate to date has been approximately the same as 2025.

The combined statutory capital and surplus of the Company’s life insurance subsidiaries was approximately $144,894,000 and $139,068,000 as of June 30, 2026, and December 31, 2025, respectively. The life insurance subsidiaries cannot pay a dividend to their parent company without the approval of state insurance regulatory authorities.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, the Company is not required to provide information typically disclosed under this item.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of June 30, 2026, the Company carried out an evaluation under the supervision and with the participation of its Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has designed these controls and procedures to ensure that information the Company is required to disclose in reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to Company management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

The executive officers have concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2026, because of the material weakness in the Company’s internal control over financial reporting described below. This material weakness was also identified during the fourth quarter of 2025 and is disclosed in the Company’s Annual Report on Form 10-K along with the report of the Company’s registered public accounting firm.

The Company identified a material weakness related to information technology general controls (“ITGCs”) because the Company did not design and maintain effective ITGCs for information systems that are relevant to the preparation of the financial statements. Specifically, deficiencies were identified related to user access controls and program change management controls for financial systems. These deficiencies resulted in related control deficiencies with respect to information generated from the impacted systems and used in the performance of controls relevant to the preparation of the financial statements. The material weakness related to the ITGCs did not result in adjustments to the financial statements for the quarter ended June 30, 2026.

Changes in Internal Control over Financial Reporting

The Company is taking actions to remediate the material weakness relating to its internal control over financial reporting. Other than the changes to the Company’s internal control over financial reporting described in “Remediation Plan and Status” below, there were no changes to the Company’s internal control over financial reporting as defined by Rule 13a-15(f) under the Exchange Act during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Remediation Plan and Status

The Company is committed to remediating its material weakness as promptly as possible. Management is in the process of implementing its remediation plan, which includes enhancing user access controls and strengthening program change management controls for the Company’s financial systems. Management will test the ongoing operating effectiveness of the new and existing controls in future periods. The material weakness cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Part II - Other Information

Item 1.

Legal Proceedings.

The Company is not a party to any material legal proceedings outside the ordinary course of business or to any other legal proceedings, which if adversely determined, would be expected to have a material adverse effect on its financial condition or results of operations.

Item 1A.

Risk Factors.

As a smaller reporting company, the Company is not required to provide information typically disclosed under this item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Securities and Use of Proceeds from Registered Securities

None.

Issuer Purchases of Equity Securities

On February 16, 2026, the Company executed a 10b5-1 agreement with a broker to repurchase shares of the Company’s Class A Common Stock. Under the terms of the agreement, the broker is permitted to repurchase up to $1,000,000 of the Company’s Class A Common Stock. Purchases commenced on March 16, 2026. The agreement is subject to the daily time, price, and volume conditions of Rule 10b-18. On June 16, 2026 the Company terminated the 10b5-1 share repurchase plan because the authorized repurchase limit of 1,000,000 shares had been reached.

The following table shows the Company’s repurchase activity during the three-month period ended June 30, 2026, under the 10b5-1 agreement.

Period	(a) Total Number of Class A Shares Purchased		(b) Average Price Paid per Class A Share (1)		(c) Total Number of Class A Shares Purchased as Part of Publicly Announced Plan or Program		(d) Maximum Number (or Approximate Dollar Value) of Class A Shares that May Yet Be Purchased Under the Plan or Program (2)
4/1/2026-4/30/2026		12,030	$	9.48		-		37,342
5/1/2026-5/31/2026		28,102		9.41		-		9,240
6/1/2026-6/30/2026		10,441		9.43		-		(1,201	)
Total		50,573	$	9.43		-		(1,201	)

	(1)	Includes fees and commissions paid on stock repurchases.
	(2)	In September 2018, the Board of Directors of the Company approved a Stock Repurchase Plan that authorized the repurchase of 300,000 shares of the Company’s Class A Common Stock in the open market. The Company amended the Stock Repurchase Plan on December 4, 2020. The amendment authorized the repurchase of a total of 1,000,000 shares of the Company’s Class A Common Stock in the open market. Any repurchased shares of Class A common stock are to be held as treasury shares to be used as the Company’s employer matching contribution to the Employee 401(k) Retirement Savings Plan and for shares held in the Deferred Compensation Plan.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

None.

Item 5.

Other Information.

None of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K, during the three-month period ended June 30, 2026.

Item 6.

Exhibits.

(a)(1)	Financial Statements

	See “Table of Contents – Part I – Financial Information” under page 2 above.

(a)(2)	Financial Statement Schedules

	None

	All other schedules to the consolidated financial statements required by Article 7 of Regulation S-X are not required under the related instructions or are inapplicable and therefore have been omitted.

(a)(3)	Exhibits

	The following Exhibits are filed herewith pursuant to Rule 601 of Regulation S-K or are incorporated by reference to previous filings.

	3.1	Amended and Restated Articles of Incorporation (1)
	3.2	Amended and Restated Bylaws (2)
	31.1	Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101.INS	Inline XBRL Instance Document
	101.SCH	Inline XBRL Taxonomy Extension Schema Document
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
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	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

	(1)	Incorporated by reference from Report on Form 10-K, as filed on March 31, 2017
	(2)	Incorporated by reference from Report on Form 10-Q, as filed on May 15, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

REGISTRANT

SECURITY NATIONAL FINANCIAL CORPORATION

Registrant

Dated: August 10, 2026	/s/ Scott M. Quist
	Scott M. Quist
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)

Dated: August 10, 2026	/s/ Garrett S. Sill
	Garrett S. Sill
	Chief Financial Officer and Treasurer
	(Principal Financial Officer and Principal Accounting Officer)