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Investments

3 Months Ended

Mar. 31, 2025

Investments, Debt and Equity Securities [Abstract]

3) Investments

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

Schedule of Investments

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses (1)			Allowance for Credit Losses			Estimated Fair Value
March 31, 2025:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	67,730,345		$	168,247	$	(369,412	)	$	-		$	67,529,180

Obligations of states and political subdivisions		3,554,218			12,021		(216,520	)		-			3,349,719

Corporate securities including public utilities		278,660,923			4,042,114		(5,058,561	)		(495,251	)		277,149,225

Mortgage-backed securities		26,707,539			99,349		(3,860,931	)		(12,049	)		22,933,908

Redeemable preferred stock		250,000			-		-			-			250,000

Total fixed maturity securities available for sale	$	376,903,025		$	4,321,731	$	(9,505,424	)	$	(507,300	)	$	371,212,032

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$	11,548,300		$	4,887,671	$	(462,189	)				$	15,973,782

Total equity securities at estimated fair value	$	11,548,300		$	4,887,671	$	(462,189	)				$	15,973,782

Mortgage loans held for investment at amortized cost:
Residential	$	93,910,555
Residential construction		169,877,471
Commercial		60,191,978
Less: Unamortized deferred loan fees, net		(2,251,280	)
Less: Allowance for credit losses		(2,008,592	)
Less: Net discounts		(274,851	)

Total mortgage loans held for investment	$	319,445,281

Real estate held for investment - net of accumulated depreciation:
Residential	$	77,755,199
Commercial		124,874,527

Total real estate held for investment	$	202,629,726

Real estate held for sale:
Residential	$	2,561,487
Commercial		151,553

Total real estate held for sale	$	2,713,040

Other investments and policy loans at amortized cost:
Policy loans	$	14,183,492
Insurance assignments		50,727,040
Federal Home Loan Bank stock (2)		630,200
Other investments		12,522,969
Less: Allowance for credit losses for insurance assignments		(1,517,783	)

Total other investments and policy loans	$	76,545,918

Accrued investment income	$	9,574,599

Total investments	$	998,094,378

(1)

Gross unrealized losses are net of allowance for credit losses

(2)

Includes $580,700 of Membership stock and $49,500 of Activity stock attributable to short-term borrowings and letters of credit.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

The Company’s investments as of December 31, 2024 are summarized as follows:

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses (1)			Allowance for Credit Losses			Estimated Fair Value
December 31, 2024:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	74,680,606		$	327,618	$	(486,976	)	$	-		$	74,521,248

Obligations of states and political subdivisions		6,416,751			1,762		(290,448	)		-			6,128,065

Corporate securities including public utilities		262,954,278			2,444,842		(6,922,871	)		(408,944	)		258,067,305

Mortgage-backed securities		31,710,436			125,764		(4,244,640	)		(12,049	)		27,579,511

Redeemable preferred stock		250,000			-		-			-			250,000

Total fixed maturity securities available for sale	$	376,012,071		$	2,899,986	$	(11,944,935	)	$	(420,993	)	$	366,546,129

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$	11,386,454		$	4,976,567	$	(591,340	)				$	15,771,681

Total equity securities at estimated fair value	$	11,386,454		$	4,976,567	$	(591,340	)				$	15,771,681

Mortgage loans held for investment at amortized cost:
Residential	$	92,061,787
Residential construction		151,172,733
Commercial		62,753,085
Less: Unamortized deferred loan fees, net		(2,082,241	)
Less: Allowance for credit losses		(1,885,390	)
Less: Net discounts		(272,616	)

Total mortgage loans held for investment	$	301,747,358

Real estate held for investment - net of accumulated depreciation:
Residential	$	71,618,410
Commercial		126,074,928

Total real estate held for investment	$	197,693,338

Real estate held for sale:
Residential	$	1,126,480
Commercial		151,553

Total real estate held for sale	$	1,278,033

Other investments and policy loans at amortized cost:
Policy loans	$	14,019,248
Insurance assignments		48,493,858
Federal Home Loan Bank stock (2)		2,404,900
Other investments		11,473,961
Less: Allowance for credit losses for insurance assignments		(1,536,926	)

Total policy loans and other investments	$	74,855,041

Accrued investment income	$	8,499,168

Total investments	$	966,390,748

(1)

Gross unrealized losses are net of allowance for credit losses

(2)

Includes $553,900 of Membership stock and $1,851,000 of Activity stock due to short-term advances and letters of credit.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

There were no investments in fixed maturity securities or equity securities, aggregated by issuer, of more than 10% of shareholders’ equity (before net unrealized gains and losses on equity securities and fixed maturity securities) as of March 31, 2025, other than investments issued or guaranteed by the United States Government.

Fixed Maturity Securities

The table below summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value as of March 31, 2025 and December 31, 2024. The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments. The table below sets forth unrealized losses by duration with the fair value of the related fixed maturity securities.

	Unrealized Losses for Less than Twelve Months		Fair Value		Unrealized Losses for More than Twelve Months		Fair Value		Total Unrealized Loss		Combined Fair Value
March 31, 2025
U.S. Treasury securities and obligations of U.S. Government agencies	$	17,078	$	4,202,295	$	352,334	$	12,890,048	$	369,412	$	17,092,343
Obligations of states and political subdivisions		7,192		192,808		209,328		2,211,591		216,520		2,404,399
Corporate securities		810,597		63,857,548		4,247,964		79,610,636		5,058,561		143,468,184
Mortgage-backed securities		4,946		220,459		3,855,985		18,098,828		3,860,931		18,319,287
Totals	$	839,813	$	68,473,110	$	8,665,611	$	112,811,103	$	9,505,424	$	181,284,213

December 31, 2024
U.S. Treasury securities and obligations of U.S. Government agencies	$	8,737	$	986,365	$	478,239	$	22,110,495	$	486,976	$	23,096,860
Obligations of states and political subdivisions		15,003		2,167,918		275,445		3,008,385		290,448		5,176,303
Corporate securities including public utilities		1,888,022		93,562,219		5,034,849		77,975,776		6,922,871		171,537,995
Mortgage-backed securities		32,150		2,915,192		4,212,490		19,041,442		4,244,640		21,956,634
Totals	$	1,943,912	$	99,631,694	$	10,001,023	$	122,136,098	$	11,944,935	$	221,767,792

Relevant holdings were comprised of 585 securities with fair values aggregating 95.0% of the aggregate amortized cost as of March 31, 2025, compared to 706 securities with fair values aggregating 94.9% of the aggregate amortized cost as of December 31, 2024. A credit loss provision of $86,307 and of $96,000 have been recognized for the three month periods ended March 31, 2025 and 2024, respectively. Credit losses are included in gains (losses) on investments and other assets on the condensed consolidated statements of earnings. Other unrealized losses for which no credit loss was recognized are primarily the result of increases in interest rates.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Evaluation of Allowance for Credit Losses

The Company evaluates its fixed maturity securities classified as available for sale on a quarterly basis to identify any potential credit losses. This evaluation includes a review of current ratings by the National Association of Insurance Commissions (“NAIC”) and other industry rating agencies. Securities with NAIC rating of 1 or 2 are considered investment grade and are only reviewed for credit loss if current market data or recent company news could lead to a credit downgrade. Securities with NAIC ratings of 3 to 5 are considered non-investment grade and are evaluated for credit loss. The evaluation involves assessing all facts and circumstances surrounding each security including, but not limited to, historical values, interest payment history, projected earnings, and revenue growth rates as well as a review of the reason for a downgrade in the NAIC rating. Based on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely make interest and principal payments in accordance with the terms of the financial instrument. Securities with a rating of 6 are automatically determined to be impaired and a credit loss is recognized in earnings.

Where the decline in fair value of fixed maturity securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and the Company anticipates recovery of all contractual or expected cash flows, the Company does not consider these securities to have credit loss because the Company does not intend to sell these securities and it is not more likely than not the Company will be required to sell these securities before a recovery of amortized cost, which may be at maturity.

If the Company intends to sell a fixed maturity security or if it is more likely than not that the Company will be required to sell a security before recovery of its amortized cost basis, a credit loss has occurred and the difference between the amortized cost and the fair value that relates to the expected credit loss is recognized as a loss in earnings, included in gains (losses) on investments and other assets on the condensed consolidated statements of earnings.

If the Company does not intend to sell a fixed maturity security and it is less likely than not that the Company will be required to sell the security but the Company also does not expect to recover the entire amortized cost basis of the security, a credit loss is recognized in earnings for the amount of the expected credit loss with a corresponding allowance for credit losses as a contra-asset account. The credit loss is included in gains (losses) on investments and other assets on the condensed consolidated statements of earnings. The recognized credit loss is limited to the total unrealized loss on the security due to a change in credit.

Amounts due on available for sale fixed maturities that are deemed to be uncollectible are written off and removed from the allowance for credit loss. A write-off may also occur if the Company intends to sell a security or when it is more likely than not that the Company will be required to sell the security before the recovery of its amortized cost.

The Company does not calculate a credit loss allowance on accrued interest income, included in accrued investment income on the condensed consolidated balance sheets, as the Company writes off any accrued interest income to net investment income if the accrued but unpaid amount exceeds 90 days.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Credit Quality Indicators

Based on the NAIC securities designations, the Company had 98.2% and 97.7% of its fixed maturity securities rated investment grade as of March 31, 2025 and December 31, 2024, respectively. The following table summarizes the credit quality, by NAIC designation, of the Company’s fixed maturity securities available for sale, excluding redeemable preferred stock.

	March 31, 2025				December 31, 2024
NAIC Designation	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
1	$	187,879,097	$	184,522,723	$	188,386,980	$	183,460,027
2		181,586,910		179,966,189		178,060,265		174,405,442
3		5,831,758		5,343,171		7,961,422		7,342,220
4		648,713		630,362		649,592		600,459
5		705,397		499,587		702,643		487,981
6		1,150		-		1,169		-
Total	$	376,653,025	$	370,962,032	$	375,762,071	$	366,296,129

The following tables present a roll forward of the Company’s allowance for credit losses on fixed maturity securities available for sale for the three month periods ended March 31, 2025 and 2024:


	Three Months Ended March 31, 2025
	U.S. Treasury securities and obligations of U.S. Government agencies		Obligations of states and political subdivisions		Corporate securities including public utilities			Mortgage-backed securities		Total

Beginning balance - December 31, 2024	$	-	$	-	$	408,944		$	12,049	$	420,993

Additions for credit losses not previously recorded		-		-		72,000			-		72,000
Change in allowance on securities with previous allowance		-		-		14,437			-		14,437
Reductions for securities sold during the period		-		-		-			-		-
Reductions for securities with credit losses due to intent to sell		-		-		-			-		-
Write-offs charged against the allowance		-		-		-			-		-
Recoveries of amounts previously written off		-		-		(130	)		-		(130	)

Ending Balance - March 31, 2025	$	-	$	-	$	495,251		$	12,049	$	507,300

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)


	Three Months Ended March 31, 2024
	U.S. Treasury securities and obligations of U.S. Government agencies		Obligations of states and political subdivisions		Corporate securities including public utilities		Mortgage-backed securities		Total

Beginning balance - December 31, 2023	$	-	$	-	$	308,500	$	6,049	$	314,549
Balance	$	-	$	-	$	308,500	$	6,049	$	314,549

Additions for credit losses not previously recorded		-		-		30,000		-		30,000
Change in allowance on securities with previous allowance		-		-		60,000		6,000		66,000
Reductions for securities sold during the period		-		-		-		-		-
Reductions for securities with credit losses due to intent to sell		-		-		-		-		-
Write-offs charged against the allowance		-		-		-		-		-
Recoveries of amounts previously written off		-		-		-		-		-

Ending Balance - March 31, 2024	$	-	$	-	$	398,500	$	12,049	$	410,549
Balance	$	-	$	-	$	398,500	$	12,049	$	410,549

The table below presents the amortized cost and the estimated fair value of fixed maturity securities available for sale as of March 31, 2025, by contractual maturity. Actual or expected maturities may differ from contractual maturities because certain securities afford the issuer the right to call or prepay its obligations.

	Amortized Cost		Estimated Fair Value
Due in 1 year	$	22,159,707	$	22,003,935
Due in 2-5 years		71,242,437		70,452,145
Due in 5-10 years		135,956,272		135,838,014
Due in more than 10 years		120,587,070		119,734,030
Mortgage-backed securities		26,707,539		22,933,908
Redeemable preferred stock		250,000		250,000
Total	$	376,903,025	$	371,212,032

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

	2025			2024
	Three Months Ended March 31,
	2025			2024
Proceeds from sales	$	3,224,848		$	179,989
Gross realized gains		526			303
Gross realized losses		(40,504	)		(854	)

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Assets on Deposit, Held in Trust, and Pledged as Collateral

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

	As of March 31, 2025		As of December 31, 2024
Fixed maturity securities available for sale at estimated fair value	$	6,183,996	$	6,126,589
Other investments		424,543		400,000
Cash and cash equivalents		1,456,924		1,444,654
Total assets on deposit	$	8,065,463	$	7,971,243

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

	As of March 31, 2025		As of December 31, 2024
Fixed maturity securities available for sale at estimated fair value	$	25,814,271	$	25,309,270
Cash and cash equivalents		4,766,926		4,417,683
Total assets on deposit	$	30,581,197	$	29,726,953

The Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”). Assets pledged as collateral with the FHLB are presented below. These pledged securities are used as collateral for any FHLB cash advances.

As of
March 31,
2025

As of

December 31,

2024

Fixed maturity securities available for sale at estimated fair value

52,791,611

63,800,454

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.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

The Company employs full-time employees to attend to the day-to-day operations of its commercial real estate within the greater Salt Lake area and close surrounding markets. The Company utilizes third party property managers where the geographic location does not warrant full-time staff or through strategic lease-up periods. The Company generally acquires commercial real estate in connection with company acquisitions or that are in regions expected to have high growth in employment and population and that provide operational efficiencies.

The Company currently owns and operates six commercial properties in two states. These properties include office buildings, flex office space, and the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah. The Company uses bank debt in strategic cases, primarily where it is anticipated to improve yields, or facilitate the acquisition of higher quality assets or asset class diversification.

The aggregate net book value of commercial real estate serving as collateral for bank loans was $118,658,948 and $119,889,846 as of March 31, 2025 and December 31, 2024, respectively. The associated bank loan carrying values totaled $95,542,882 and $96,007,488 as of March 31, 2025 and December 31, 2024, respectively.

During the three month periods ended March 31, 2025 and 2024, the Company did not record any impairment losses on commercial real estate held for investment or held for sale. Impairment losses, if any, are included in gains (losses) on investment and other assets on the condensed consolidated statements of earnings.

During the three month periods ended March 31, 2025 and 2024, the Company recorded depreciation expense on commercial real estate held for investment of $1,422,016 and $1,527,793, respectively. Commercial real estate held for investment is stated at cost and is depreciated over the estimated useful life, primarily using the straight-line method. Depreciation is included in net investment income on the consolidated statements of earnings.

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

	Net Book Value				Total Square Footage
	March 31, 2025		December 31, 2024		March 31, 2025		December 31, 2024
Utah (1)	$	124,856,106	$	126,056,342		546,941		546,941
Louisiana		18,421		18,586		1,622		1,622

	$	124,874,527	$	126,074,928		548,563		548,563

(1)

Includes Center53

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

	Net Book Value
	March 31, 2025		December 31, 2024
Mississippi (1)	$	151,553	$	151,553

	$	151,553	$	151,553

(1)

Consists of approximately 93 acres of undeveloped land

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Commercial Real Estate Owned and Occupied by the Company

The primary business units of the Company occupy a portion of the real estate owned by the Company. As of March 31, 2025, real estate owned and occupied by the Company is summarized as follows:

Location	Business Segment	Approximate Square Footage		Square Footage Occupied by the Company
433 Ascension Way, Floors 4, 5 and 6, Salt Lake City, UT - Center53 Building 2 (1)	Corporate Offices, Life Insurance, Cemetery/Mortuary Operations, and Mortgage Operations and Sales		216,865		50	%
1818 Marshall Street, Shreveport, LA (2)	Life Insurance Operations		12,274		100	%
812 Sheppard Street, Minden, LA (2) (3)	Life Insurance Sales		1,560		100	%

(1)

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

(2)

Included in property and equipment on the condensed consolidated balance sheets

(3)

Listed for sale

Residential Real Estate Held for Investment and Held for Sale

The Company occasionally acquires residential homes through the mortgage loan foreclosure process. The Company has the option to sell these properties or to continue to hold them for expected cash flow and price appreciation. The Company also looks for opportunities to acquire land that can be developed into single family lots. Once developed, finished lots are sold to builder partners and others.

During the three month periods ended March 31, 2025 and 2024 the Company did not record any impairment losses on residential real estate held for sale or held for investment. Impairment losses, if any, are included in gains (losses) on investment and other assets on the condensed consolidated statements of earnings.

During the three month periods ended March 31, 2025 and 2024, the Company recorded depreciation expense on residential real estate held for investment of $2,676 and $2,653, respectively. Residential real estate held for investment is stated at cost and is depreciated over the estimated useful life, primarily using the straight-line method. Depreciation is included in net investment income on the consolidated statements of earnings.

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

	Net Book Value
	March 31, 2025		December 31, 2024
Utah (1)	$	77,755,198	$	71,618,410
	$	77,755,198	$	71,618,410

(1)

Includes multiple residential subdivision development projects, refer to the following table.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

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

	March 31, 2025		December 31, 2024
Lots developed		245		231
Lots to be developed		1,034		1,046
Book Value	$	79,689,307	$	71,443,356

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

	Net Book Value
	March 31, 2025			December 31, 2024
Utah	$	2,561,487	(1)	$	849,900
Florida		-			276,580
	$	2,561,487		$	1,126,480

(1)

Includes a residential subdivision development project for $2,106,487

The net book value of foreclosed residential real estate included in residential real estate held for sale was $455,000 and $1,126,480 as of March 31, 2025 and December 31, 2024, respectively.

Mortgage Loans Held for Investment

Mortgage loans held for investment consist of first and second mortgages and are generally classified in three distinct group: Commercial, Residential and Residential Construction. These mortgage loans bear interest at rates ranging from 2.0% to 10.5%, maturity dates range from nine months to 30 years and have amortization periods of 0 to 30 years.

Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of the relevant debtors’ ability to honor obligations is dependent upon the economic stability of the geographic region in which the debtors do business or are employed. As of March 31, 2025, the Company had 59%, 8%, 7%, 4% and 4%, of its mortgage loans from borrowers located in the states of Utah, Florida, Arizona, Texas, and California, respectively. As of December 31, 2024, the Company had 56%, 8%, 9% and 6% of its mortgage loans from borrowers located in the states of Utah, Florida, Arizona, and Texas, respectively.

Mortgage loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, charge-offs, premiums, discounts, and the related allowance for credit losses. Interest income is included in net investment income on the condensed consolidated statements of earnings and is recognized when earned. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the terms of the loans. Origination fees are included in net investment income on the condensed consolidated statements of earnings.

Mortgage loans are secured by the underlying property and require an appraisal at the time of underwriting and funding. Generally, the Company requires that loans not exceed 80% of the fair market value of the respective loan collateral. For loans of more than 80% of the fair market value of the respective loan collateral, additional collateral or mortgage insurance by an approved third-party insurer is required.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Evaluation of Allowance for Credit Losses

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the Company’s mortgage loans held for investment to present the net amount expected to be collected. The Company reports in net earnings, as a credit loss expense, the amount necessary to adjust the allowance for credit losses for the Company’s current estimate of expected credit losses on mortgage loans held for investment. This credit loss expense is included in other expenses on the condensed consolidated statements of earnings.

Once a mortgage loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and reverse any interest income that had been accrued. Given this policy, the Company does not measure a credit loss allowance on accrued interest receivable. Accrued interest receivable is included in accrued investment income on the condensed consolidated balance sheets. Payments received for mortgage loans on a non-accrual status are recognized when received. The interest income recognized from payments received for mortgage loans on a non-accrual status was immaterial. Accrual of interest resumes if a mortgage loan is brought current. Interest not accrued on these loans totaled approximately $259,000 and $244,000 as of March 31, 2025 and December 31, 2024, respectively.

The Company measures expected credit losses based on the fair value of the collateral when the Company determines that foreclosure is probable. When a mortgage loan becomes delinquent, the Company proceeds to foreclose and all expenses for foreclosure are expensed as incurred. Once foreclosed, the property is classified as real estate held for investment or held for sale.

To determine the allowance for credit losses, the Company has segmented its mortgage loans held for investment by loan type. The Company’s loan types are commercial, residential, and residential construction. The inherent risks within the portfolio vary depending upon the loan type as follows:

Commercial - Underwritten in accordance with the Company’s policies to determine the borrower’s ability to repay the obligation as agreed. Commercial loans are made primarily based on the underlying collateral supporting the loan. Accordingly, the repayment of a commercial loan depends primarily on the collateral and its ability to generate income and secondarily on the borrower’s (or guarantor’s) ability to repay.

Commercial loans are evaluated for credit loss by analyzing common metrics that are predictors for future credit losses such as debt service coverage ratio (“DSCR”), loan to value (“LTV”), local market conditions, borrower quality, and underlying collateral. The fair value of the underlying collateral is based on a third-party appraisal of the property at origination of the loan. The fair value is assessed if the loan becomes 90 days delinquent. The Company uses these metrics to pool similar loans. The allowance for credit losses is based on estimates, historical experience, probability of loss, value of the underlying collateral, and other factors that affect the collectability of the loan. The Company applies a future loss factor to the outstanding balance of each group to arrive at the allowance for credit losses.

Residential — These loans are secured by first and second mortgages on single-family dwellings. The borrower’s ability to repay is sensitive to the life events and the general economic condition of the region. Where loan to value exceeds 80%, the loan is generally guaranteed by private mortgage insurance, the FHA, or VA.

Residential loans are evaluated for credit loss by using relevant available information from both internal and external sources. Among other things, the Company uses its historical delinquency information and considers current and forecasted economic conditions. External sources include a monthly analysis of its residential portfolio by a third party. The third party uses the Company’s current loan data and runs it through various models to project cash flows and provide a projected life of loan loss. The models consider loan features such as loan type, loan to value, payment status, age, and current property values. Analyzing the information from the various sources allows the Company to arrive at the allowance for credit losses.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Residential construction (including land acquisition and development loans) – These loans are underwritten in accordance with the Company’s underwriting policies, which include a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent appraisal valuations, and factor in estimates of the value of construction projects upon completion. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project and the ability of the borrower to secure long-term financing.

Additionally, land acquisition and development loans are underwritten in accordance with the Company’s underwriting policies, which include independent appraisal valuations as well as the estimated value associated with the land upon completion of development into finished lots. These loans are of a higher risk than other mortgage loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term or construction financing, and interest rate sensitivity.

The Company advances funds in accordance with the loan agreements once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 85% of appraised value. The Company receives fees and interest for these loans and the interest rate is generally fixed at 5.25% to 8.50% per annum. Maturities range between six and eighteen months. The Company has commitments to fund existing construction and land development loans pursuant to the various loan agreements. As of March 31, 2025, the Company’s commitments were approximately $239,187,000 for these loans, of which $172,110,015 had been drawn.

Residential construction mortgage loans are evaluated for credit loss by considering historical activity and current housing market trends to arrive at a per loan basis point allowance that is recognized at loan origination and for subsequent draws. The per loan basis point is reviewed at least annually or as loan losses or market trends require.

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

Schedule of Allowance for Loan Losses

	Three Months Ended
	Commercial			Residential			Residential Construction			Total
Beginning balance - December 31, 2024	$	732,494		$	850,550		$	302,346		$	1,885,390
Change in provision for credit losses (1)		289,236			(203,443	)		37,409			123,202
Charge-offs		-			-			-			-
Ending balance - March 31, 2025	$	1,021,730		$	647,107		$	339,755		$	2,008,592

Beginning balance - December 31, 2023	$	1,219,653		$	2,390,894		$	208,106		$	3,818,653
Change in provision for credit losses (1)		(360,031	)		(528,399	)		(8,609	)		(897,039	)
Charge-offs		-			-			-			-
Ending balance - March 31, 2024	$	859,622		$	1,862,495		$	199,497		$	2,921,614

(1)

Included in other expenses on the condensed consolidated statements of earnings

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

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

Schedule of Aging of Mortgage Loans

	Commercial			Residential			Residential Construction			Total
March 31, 2025
30-59 days past due	$	-		$	3,745,815		$	-		$	3,745,815
60-89 days past due		-			1,142,421			-			1,142,421
Over 90 days past due (1)		3,196,505			1,481,040			-			4,677,545
In process of foreclosure (1)		191,508			2,818,740			-			3,010,248
Total past due		3,388,013			9,188,016			-			12,576,029
Current		56,803,965			84,722,539			169,877,471			311,403,975
Total mortgage loans		60,191,978			93,910,555			169,877,471			323,980,004
Allowance for credit losses		(1,021,730	)		(647,107	)		(339,755	)		(2,008,592	)
Unamortized deferred loan fees, net		(195,628	)		(1,344,145	)		(711,507	)		(2,251,280	)
Unamortized discounts, net		(152,972	)		(121,879	)		-			(274,851	)
Net mortgage loans held for investment	$	58,821,648		$	91,797,424		$	168,826,209		$	319,445,281

December 31, 2024
30-59 days past due	$	2,100,000		$	5,818,334		$	-		$	7,918,334
60-89 days past due		-			845,980			-			845,980
Over 90 days past due (1)		4,205,000			3,061,450			-			7,266,450
In process of foreclosure (1)		191,508			3,942,392			-			4,133,900
Total past due		6,496,508			13,668,156			-			20,164,664
Current		56,256,577			78,393,631			151,172,733			285,822,941
Total mortgage loans		62,753,085			92,061,787			151,172,733			305,987,605
Allowance for credit losses		(732,494	)		(850,550	)		(302,346	)		(1,885,390	)
Unamortized deferred loan fees, net		(115,555	)		(1,307,539	)		(659,147	)		(2,082,241	)
Unamortized discounts, net		(149,268	)		(123,348	)		-			(272,616	)
Net mortgage loans held for investment	$	61,755,768		$	89,780,350		$	150,211,240		$	301,747,358

(1)

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

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Credit Quality Indicators

The Company evaluates and monitors the credit quality of its commercial loans by analyzing LTV and DSCR. Monitoring a commercial mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment.

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

Credit Quality Indicator	2025		2024		2023		2022		2021		Prior		Total		% of Total
LTV:
Less than 65%	$	4,135,000	$	3,893,127	$	20,100,000	$	1,352,150	$	851,019	$	8,692,062	$	39,023,358		64.83	%
65% to 80%		7,675,000		10,432,942		1,840,776		823,397		-		-		20,772,115		34.51	%
Greater than 80%		-		-				-		396,505		-		396,505		0.66	%

Total	$	11,810,000	$	14,326,069	$	21,940,776	$	2,175,547	$	1,247,524	$	8,692,062	$	60,191,978		100.00	%

DSCR
>1.20x	$	1,500,000	$	13,893,127	$	16,490,000	$	-	$	-	$	5,382,415	$	37,265,542		61.91	%
1.00x - 1.20x		10,310,000		432,942		5,450,776		2,175,547		1,247,524		3,309,647		22,926,436		38.09	%
<1.00x		-		-				-		-		-		-		0.00	%

Total	$	11,810,000	$	14,326,069	$	21,940,776	$	2,175,547	$	1,247,524	$	8,692,062	$	60,191,978		100.00	%

The aggregate unpaid principal balance of commercial mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2024:

Credit Quality Indicator	2024		2023		2022		2021		2020		Prior		Total		% of Total
LTV:
Less than 65%	$	7,653,600	$	24,600,000	$	2,352,150	$	864,128	$	-	$	8,867,779	$	44,337,657		70.65	%
65% to 80%		10,432,942		1,840,776		823,397		-		4,913,313		-		18,010,428		28.70	%
Greater than 80%		-		-		-		405,000		-		-		405,000		0.65	%

Total	$	18,086,542	$	26,440,776	$	3,175,547	$	1,269,128	$	4,913,313	$	8,867,779	$	62,753,085		100.00	%

DSCR
>1.20x	$	16,300,000	$	20,990,000	$	1,000,000	$	-	$	4,913,313	$	5,414,274	$	48,617,587		77.47	%
1.00x - 1.20x		432,942		5,450,776		2,175,547		1,269,128		-		3,453,505		12,781,898		20.37	%
<1.00x		1,353,600		-		-		-		-		-		1,353,600		2.16	%

Total	$	18,086,542	$	26,440,776	$	3,175,547	$	1,269,128	$	4,913,313	$	8,867,779	$	62,753,085		100.00	%

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

The Company evaluates and monitors the credit quality of its residential mortgage loans by analyzing LTV and loan performance. The Company defines non-performing mortgage loans as loans more than 90 days past due and on a non-accrual status. Monitoring a residential mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment.

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

Credit Quality Indicator	2025		2024		2023		2022		2021		Prior		Total		% of Total
Performance Indicators:
Performing	$	4,704,914	$	13,891,863	$	10,790,191	$	42,397,698	$	3,353,866	$	14,472,243	$	89,610,775		95.42	%
Non-performing (1)		-		-		2,501,101		794,108		-		1,004,571		4,299,780		4.58	%

Total	$	4,704,914	$	13,891,863	$	13,291,292	$	43,191,806	$	3,353,866	$	15,476,814	$	93,910,555		100.00	%

(1)

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

LTV:
Less than 65%	$	256,928	$	5,654,269	$	4,874,062	$	5,567,007	$	1,783,406	$	7,251,737	$	25,387,409	27.03	%
65% to 80%		4,007,350		7,423,674		7,537,730		35,601,976		1,570,460		7,479,051		63,620,241	67.75	%
Greater than 80%		440,636		813,920		879,500		2,022,823		-		746,026		4,902,905	5.22	%

Total	$	4,704,914	$	13,891,863	$	13,291,292	$	43,191,806	$	3,353,866	$	15,476,814	$	93,910,555	100.00	%

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

The aggregate unpaid principal balance of residential mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2024:

Credit Quality Indicator	2024		2023		2022		2021		2020		Prior		Total		% of Total
Performance Indicators:
Performing	$	14,861,098	$	10,030,848	$	42,634,670	$	3,076,901	$	5,513,462	$	8,940,966	$	85,057,945		92.39	%
Non-performing (1)		-		3,442,992		1,451,039		291,359		311,116		1,507,336		7,003,842		7.61	%

Total	$	14,861,098	$	13,473,840	$	44,085,709	$	3,368,260	$	5,824,578	$	10,448,302	$	92,061,787		100.00	%

(1)

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

LTV:
Less than 65%	$	6,241,730	$	4,931,376	$	5,488,954	$	1,790,036	$	2,440,002	$	5,273,672	$	26,165,770	28.42	%
65% to 80%		7,802,984		7,662,200		37,509,634		1,578,224		2,701,008		5,107,289		62,361,339	67.74	%
Greater than 80%		816,384		880,264		1,087,121		-		683,568		67,341		3,534,678	3.84	%

Total	$	14,861,098	$	13,473,840	$	44,085,709	$	3,368,260	$	5,824,578	$	10,448,302	$	92,061,787	100.00	%

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

The Company evaluates and monitors the credit quality of its residential construction loans (including land acquisition and development loans) by analyzing LTV and loan performance. Monitoring a residential construction mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment.

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

Credit Quality Indicator	2025		2024		2023		2022		2021		Total		% of Total
Performance Indicators:
Performing	$	35,926,520	$	109,676,549	$	13,869,615	$	209,290	$	10,195,497	$	169,877,471		100.00	%
Non-performing		-		-		-		-		-		-		0.00	%

Total	$	35,926,520	$	109,676,549	$	13,869,615	$	209,290	$	10,195,497	$	169,877,471		100.00	%

LTV:
Less than 65%	$	8,882,430	$	44,804,033	$	13,869,615	$	209,290	$	10,195,497	$	77,960,865		45.89	%
65% to 80%		26,680,356		64,872,516		-		-		-		91,552,872		53.89	%
Greater than 80%		363,734		-		-		-		-		363,734		0.21	%

Total	$	35,926,520	$	109,676,549	$	13,869,615	$	209,290	$	10,195,497	$	169,877,471		100.00	%

The aggregate unpaid principal balance of residential construction mortgage loans by credit quality indicator and origination year was as follows as of December 31, 2024:

Credit Quality Indicator	2024		2023		2022		2021		Total		% of Total
Performance Indicators:
Performing	$	118,863,944	$	21,375,552	$	972,468	$	9,960,769	$	151,172,733		100.00	%
Non-performing		-		-		-		-		-		0.00	%

Total	$	118,863,944	$	21,375,552	$	972,468	$	9,960,769	$	151,172,733		100.00	%

LTV:
Less than 65%	$	48,065,177	$	21,375,552	$	518,590	$	9,960,769	$	79,920,088		52.87	%
65% to 80%		70,798,767		-		453,878		-		71,252,645		47.13	%
Greater than 80%				-		-		-		-		0.00	%

Total	$	118,863,944	$	21,375,552	$	972,468	$	9,960,769	$	151,172,733		100.00	%

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Insurance Assignments

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

	As of March 31, 2025			As of December 31, 2024
30-59 days past due	$	11,138,384		$	8,785,184
60-89 days past due		4,436,355			4,046,731
Over 90 days past due		5,375,708			5,320,216
Total past due		20,950,447			18,152,131
Current		29,776,593			30,341,727
Total insurance assignments		50,727,040			48,493,858
Allowance for credit losses		(1,517,783	)		(1,536,926	)
Net insurance assignments	$	49,209,257		$	46,956,932

The Company records an allowance for credit losses when the insurance assignment is funded. Once an insurance assignment moves to 90 days past due or legal proceedings, it is monitored for write-off and collectability, and any adjustments to the allowance are recorded at that time.

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

Schedule of Allowance for Credit Losses

	Three Months Ended
Beginning balance - December 31, 2024	$	1,536,926
Change in provision for credit losses (1)		293,798
Charge-offs		(312,941	)
Ending balance - March 31, 2025	$	1,517,783

Beginning balance - December 31, 2023	$	1,553,836
Change in provision for credit losses (1)		250,567
Charge-offs		(216,878	)
Ending balance - March 31, 2024	$	1,587,525

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Investment Related Earnings

The following table presents the realized gains and losses from sales, calls, and maturities, and unrealized gains and losses on equity securities from investments and other assets:

Schedule of Gain (Loss) on Investments

	2025			2024
	Three Months Ended March 31,
	2025			2024
Fixed maturity securities:
Gross realized gains	$	1,068		$	303
Gross realized losses		(42,286	)		(854	)
Net credit loss provision		(86,307	)		(96,000	)

Equity securities:
Gains (losses) on securities sold		114,127			(61,103	)
Unrealized gains on securities held at the end of the period		273,477			1,542,863

Real estate held for investment and sale:
Gross realized gains		394,525			249,960
Gross realized losses		-			-

Other assets:
Gross realized gains		6,525			35,486
Gross realized losses		(75,108	)		(1,229	)
Total	$	586,021		$	1,669,426

The realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined using the specific identification method.

Net realized gains and losses includes gains and losses from cemetery perpetual care trust investments and the restricted assets of cemeteries and mortuaries and totaled $213,979 and $582,172 in net gains for the three month periods ended March 31, 2025 and 2024, respectively.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

3) Investments (Continued)

Major categories of net investment income were as follows:

	2025			2024
	Three Months Ended March 31,
	2025			2024
Fixed maturity securities available for sale	$	4,664,833		$	4,403,558
Equity securities		192,631			168,148
Mortgage loans held for investment		7,964,539			8,814,036
Real estate held for investment and sale		2,959,711			3,515,061
Policy loans		244,605			301,267
Insurance assignments		5,732,150			5,076,549
Other investments		161,486			198,959
Cash and cash equivalents		1,402,636			1,690,957
Gross investment income		23,322,591			24,168,535
Investment expenses		(4,119,967	)		(4,221,967	)
Net investment income	$	19,202,624		$	19,946,568

Net investment income includes income earned from cemetery perpetual care trust investments and the restricted assets of cemeteries and mortuaries and totaled $146,838 and $933,551 for the three month periods ended March 31, 2025 and 2024, respectively.

Net investment income on real estate consists primarily of rental revenue. Investment expenses consist primarily of depreciation, property taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities.

Accrued Investment Income

Accrued investment income consists of the following:

Schedule of Accrued Investment Income

	As of March 31, 2025		As of December 31, 2024
Fixed maturity securities available for sale	$	4,368,511	$	3,795,581
Equity securities		13,258		11,049
Mortgage loans held for investment		956,485		1,049,489
Real estate held for investment		4,146,465		3,559,463
Other investments		4,667		-
Cash and cash equivalents		85,213		83,586
Total accrued investment income	$	9,574,599	$	8,499,168

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)