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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2024

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

433 West Ascension Way, Salt Lake City, Utah		84123
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:		(801) 264-1060

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

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act.

☐ Yes ☒ No

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 and posted 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 ☐		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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

☐

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 June 30, 2024, the aggregate market value of the registrant’s Class A Common Stock held by non-affiliates of the registrant was approximately $68,000,000, based on the $7.61 closing sale price of the Class A Common Stock as reported on The Nasdaq Global Select Market.

As of March 27, 2025, there were outstanding 21,321,739 shares of Class A Common Stock, $2.00 par value per share, and 3,367,334 shares of Class C Common Stock, $2.00 par value per share.

Documents Incorporated by Reference

Portions of the following document are incorporated by reference in Part III of this Report: the registrant’s definitive proxy statement relating to its 2025 Annual Meeting of Shareholders.

Security National Financial Corporation

Form 10-K

For the Fiscal Year Ended December 31, 2024

TABLE OF CONTENTS

		Page
	Part I

Item 1.	Business	3
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	10
Item 1C.	Cybersecurity	10
Item 2.	Properties	12
Item 3.	Legal Proceedings	16
Item 4.	Mine Safety Disclosures	16

	Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6.	[Reserved]	18
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 8.	Financial Statements and Supplementary Data	28
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	118
Item 9A.	Controls and Procedures	118
Item 9B.	Other Information	118
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	119

	Part III

Item 10.	Directors, Executive Officers, and Corporate Governance	119
Item 11.	Executive Compensation	119
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	119
Item 13.	Certain Relationships and Related Transactions, and Director Independence	119
Item 14.	Principal Accounting Fees and Services	119

	Part IV

Item 15.	Exhibits, Financial Statement Schedules	119
Item 16.	Form 10-K Summary	119
Signatures		120

PART I

Item 1. Business

Security National Financial Corporation (the “Company”) operates in three reportable business segments: life insurance, cemetery and mortuary, and mortgages. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products, and accident and health insurance. These products are marketed in 42 states through a commissioned sales force of independent licensed insurance agents who may also sell insurance products of other companies. The cemetery and mortuary segment consists of eleven mortuaries and five cemeteries in the state of Utah, one cemetery in the state of California, and one cemetery and four mortuaries in the state of New Mexico. The Company also engages in pre-need selling of funeral, cemetery, mortuary, and cremation services through its cemetery and mortuary locations. The mortgage segment originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes, and other real estate projects. The mortgage segment operates through 97 retail offices in 26 states and is an approved mortgage lender in several other states.

The Company’s design and structure are that each business segment is related to the other business segments and contributes to the profitability of the other segments. The Company’s cemetery and mortuary segment provides a level of public awareness that assists in the sales and marketing of insurance and pre-need cemetery and funeral products. The Company’s insurance segment invests its assets (including, in part, pre-need funeral products and services) in investments authorized by the respective insurance departments of their states of domicile. The Company also pursues growth through acquisitions. The Company’s mortgage segment provides mortgage loans and other real estate investment opportunities.

The Company was organized as a holding company in 1979 when Security National Life Insurance Company (“Security National Life”) became a wholly owned subsidiary of the Company, and the former stockholders of Security National Life became stockholders of the Company. Security National Life was formed in 1965 and has acquired or purchased significant blocks of business which include Capital Investors Life Insurance Company (1994), Civil Service Employees Life Insurance Company (1995), Southern Security Life Insurance Company (1998), Menlo Life Insurance Company (1999), Acadian Life Insurance Company (2002), Paramount Security Life Insurance Company (2004), Memorial Insurance Company of America (2005 and subsequently sold in 2021 to FOXO Life Insurance Company), Capital Reserve Life Insurance Company (2007), Southern Security Life Insurance Company, Inc. (2008), North America Life Insurance Company (2011, 2015), Trans-Western Life Insurance Company (2012), Mothe Life Insurance Company (2012), DLE Life Insurance Company (2012), American Republic Insurance Company (2015), First Guaranty Insurance Company (2016), Kilpatrick Life Insurance Company (2019), and merger with FOXO Life Insurance Company (2023).

The cemetery and mortuary operations have also grown through the acquisition of other cemetery and mortuary companies. The cemetery and mortuary companies that the Company has acquired are Holladay Memorial Park, Inc. (1991), Cottonwood Mortuary, Inc. (1991), Deseret Memorial, Inc. (1991), Probst Family Funerals and Cremations L.L.C. (2019), Heber Valley Funeral Home, Inc. (2019), Rivera Funerals, Cremations and Memorial Gardens (2021), and Holbrook Mortuary (2021).

In 1993, the Company formed SecurityNational Mortgage Company (“SecurityNational Mortgage”) to originate and refinance residential mortgage loans.

See Note 15 of the Notes to Consolidated Financial Statements for additional information regarding the business segments of the Company.

Life Insurance

Products

The Company, through Security National Life, First Guaranty Insurance Company (“First Guaranty”), and Kilpatrick Life Insurance Company (“Kilpatrick”), issues and administers selected lines of life insurance and annuities. The Company’s life insurance business includes funeral plans and interest-sensitive life insurance, as well as other traditional life, accident, and limited health insurance products. The Company places specific marketing emphasis on funeral plans through pre-need planning. The Company’s insurance subsidiaries, Kilpatrick, Southern Security Life Insurance Company, Inc. (“Southern Security”) and Trans-Western Life Insurance Company (“Trans-Western”), do not actively write policies, but service and maintain policies that were issued prior to their acquisition by Security National Life.

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 has less competition 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.

Markets and Distribution

The Company is licensed to sell insurance in 42 states. In marketing its life insurance products, the Company seeks to locate, develop and service specific niche markets. The Company’s funeral plan policies are sold primarily to people who range in age from 45 to 85 and have low to moderate income. Most of the Company’s funeral plan premiums come from the states of Arkansas, California, Florida, Georgia, Louisiana, Mississippi, Texas, and Utah.

The Company sells its life insurance products through direct agents, brokers, and independent licensed agents who may also sell insurance products of other companies. The commissions on life insurance products range from approximately 50% to 150% of first year premiums. In those cases where the Company utilizes its direct agents in selling such policies, those agents customarily receive advances against future commissions.

In some instances, funeral plan insurance is marketed in conjunction with the Company’s cemetery and mortuary sales force. When it is marketed by that group, the beneficiary is usually the Company’s cemeteries and mortuaries. Thus, death benefits that become payable under the policy are paid to the Company’s cemetery and mortuary subsidiaries to the extent of services performed and products purchased.

In marketing funeral plan insurance, the Company also seeks and obtains third-party endorsements from other cemeteries and mortuaries within its marketing areas. Typically, these cemeteries and mortuaries will provide letters of endorsement and may share in mailing and other lead-generating costs since these businesses are usually made the beneficiary of the policy. The following table summarizes the life insurance business for the five years ended December 31, 2024:

	2024		2023		2022			2021			2020
Life Insurance
Policy/Certificate Count as of December 31		635,791		640,970		646,296			653,450			659,237
Insurance in force as of December 31 (in thousands)	$	3,947,671	$	3,552,554	$	3,446,836	(1)	$	3,415,368	(1)	$	3,379,921	(1)
Premiums Collected (in thousands)	$	118,151	$	113,584	$	103,304		$	99,006		$	92,058

(1) Prior years have been adjusted to include accidental death benefit insurance in force that was inadvertently excluded.

Underwriting

The factors considered in evaluating an application for ordinary life insurance coverage can include the applicant’s age, occupation, general health condition, and medical history. Upon receipt of a satisfactory (non-funeral plan insurance) application, which contains pertinent medical questions, the Company issues insurance based upon its medical limits and requirements subject to the following general non-medical limits:

Non-Medical		Age Nearest
Limits		Birthday
0-50		$100,000
51-up		Medical information
		required (APS or exam)

When underwriting life insurance, the Company will sometimes issue policies with higher premium rates for substandard risks.

The Company’s funeral plan insurance is written on a simplified medical application with underwriting requirements being a completed application, a phone interview of the applicant, and an intelliscript prescription history inquiry. There are several underwriting classes in which an applicant can be placed.

Annuities

Products

The Company’s annuity business includes single premium deferred annuities, flexible premium deferred annuities, and immediate annuities. A single premium deferred annuity is a contract where the individual remits a sum of money to the Company, which is retained on deposit until such time as the individual may wish to annuitize or surrender the contract for cash. A flexible premium deferred annuity gives the contract holder the right to make premium payments of varying amounts or to make no further premium payments after his initial payment. These single and flexible premium deferred annuities can have initial surrender charges. The surrender charges act as a deterrent to individuals who may wish to prematurely surrender their annuity contracts. An immediate annuity is a contract in which the individual remits a sum of money to the Company in return for the Company’s obligation to pay a series of payments on a periodic basis over a designated period, such as an individual’s life, or for such other period as may be designated.

Annuities have guaranteed interest rates that range from 1% to 6.5% per annum. Rates above the guaranteed interest rate credited are periodically modified by the Company’s Board of Directors at its discretion. For the Company to make a profit on an annuity product, the Company must maintain an interest rate spread between its investment income and the interest rates credited to the annuities. Commissions, issuance expenses, and general and administrative expenses are deducted from this interest rate spread.

Markets and Distribution

The general market for the Company’s annuities is middle to older age individuals. A major source of annuity sales comes from direct agents and are sold in conjunction with other insurance sales. If an individual does not qualify for a funeral plan, the agent will often sell that individual an annuity to fund final expenses.

The following table summarizes the annuity business for the five years ended December 31, 2024:

	2024		2023		2022		2021		2020
Annuities Policy/Certificate Count as of December 31		24,296		24,924		24,225		24,901		25,476
Deposits Collected (in thousands)	$	11,740	$	10,946	$	9,972	$	9,719	$	9,637

Accident and Health

Products

Through its various acquisitions, the Company occasionally acquires small blocks of accident and health insurance policies, which it continues to service. The Company offered a low-cost comprehensive diver’s accident insurance policy that provided worldwide coverage for medical expense reimbursement in the event of a diving accident. This product was discontinued in March 2024.

Markets and Distribution

The Company marketed its diver’s accident insurance policies through the internet.

The following table summarizes the accident and health insurance business for the five years ended December 31, 2024:

	2024		2023		2022		2021		2020
Accident and Health Policy/Certificate Count as of December 31		7,592		9,379		11,132		12,494		13,735
Premiums Collected (in thousands)	$	188	$	216	$	543	$	353	$	296

Reinsurance

The primary purpose of reinsurance is to enable an insurance company to issue an insurance policy in an amount larger than the risk the insurance company is willing to assume for itself. The insurance company remains obligated for the amounts reinsured (ceded) in the event the reinsurers do not meet their obligations.

The Company currently cedes and assumes certain risks with various authorized unaffiliated reinsurers pursuant to reinsurance treaties, which are generally renewed annually. The premiums paid by the Company are based on a number of factors, primarily including the age of the insured and the risk ceded to the reinsurer.

It is the Company’s policy to retain no more than $100,000 of ordinary insurance per life insured, with the excess risk being reinsured. The total policy amount of life insurance reinsured by other companies as of December 31, 2024 and 2023, was $325,189,000 and $333,211,000, which represented approximately 9.4% and 9.3% of the Company’s total life insurance policy amount in force on that date, respectively.

See “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Notes to Consolidated Financial Statements” for additional disclosure and discussion regarding reinsurance.

Investments

The investments that support the Company’s life insurance and annuity obligations are determined by the investment committees of the Company’s subsidiaries and ratified by the full boards of directors of the respective subsidiaries. A significant portion of the Company’s investments must meet statutory requirements governing the nature and quality of permitted investments by its insurance subsidiaries. The Company maintains a diversified investment portfolio consisting of common stocks, preferred stocks, municipal bonds, corporate bonds, mortgage loans, real estate, and other securities and investments.

Cemetery and Mortuary

Products

Through its cemetery and mortuary segment, the Company markets a variety of products and services both on a pre-need basis (prior to death) and an at-need basis (at the time of death). The products include plots, interment vaults, mausoleum crypts, markers, caskets, urns, and other death care related products. These services include professional services of funeral directors, opening and closing of graves, use of chapels and viewing rooms, and use of automobiles and clothing. The Company has a mortuary at each of its cemeteries, other than Holladay Memorial Park and Singing Hills Memorial Park, and has ten separate stand-alone mortuary facilities.

Markets and Distribution

The Company’s pre-need cemetery and mortuary sales are marketed to persons of all ages but are generally purchased by persons 45 years of age and older. The Company is limited in its geographic distribution of these products to areas lying within an approximate 20-mile radius of its mortuaries and cemeteries. The Company’s at-need sales are similarly limited in the geographic area.

The Company actively seeks to sell its cemetery and funeral products to customers on a pre-need basis. The Company employs cemetery sales representatives on a commission basis to sell these products. Many of these pre-need cemetery and mortuary sales representatives are also licensed insurance salesmen and sell funeral plan insurance. In some instances, the Company’s cemetery and mortuary facilities are the named beneficiaries of the funeral plan policies.

Potential customers are located via telephone sales prospecting, responses to letters mailed by the pre-planning consultants, billboards and other outside advertising, referrals, and door-to-door canvassing. The Company trains its sales representatives and helps generate leads for them.

Mortgage Loans

Products

The Company, through SecurityNational Mortgage, is active in the residential real estate market. SecurityNational Mortgage is approved by the U.S. Department of Housing and Urban Development (HUD), the Federal National Mortgage Association (Fannie Mae), and other secondary market investors, to originate a variety of residential mortgage loan products, which are subsequently sold to investors. The Company uses internal and external funding sources to fund mortgage loans.

Security National Life originates and funds commercial real estate loans, residential construction loans, and land development loans for internal investment.

Markets and Distribution

The Company’s residential mortgage lending services are marketed primarily to real estate brokers, builders and directly to consumers. The Company has a strong retail origination presence in the Utah, Florida, Texas, Nevada and Arizona markets and many other states across the country. See “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Notes to Consolidated Financial Statements” for additional disclosure and discussion regarding mortgage loans.

Recent Acquisitions and Other Business Activities

Real Estate Development

The Company is capitalizing on the opportunity to develop commercial and residential assets on its existing and recently acquired properties. The cost to acquire existing for-sale assets currently exceeds the replacement costs, thus creating the opportunity for development and redevelopment of the land that the Company currently owns. The Company has developed, or is in the process of developing, assets that have an initial development cost exceeding $100,000,000, primarily relating to the Center53 Development and multiple single family residential development projects. The Company plans to continue its development endeavors based upon its assessment of the market demand.

Center53 Development

Center53 Development is an office development project comprising nearly 20 acres of land that is currently owned by the Company in the central valley of Salt Lake City. At final completion, the multi-year phased development is expected to create a campus atmosphere and include nearly one million square-feet of office space in five buildings, ranging from four to eleven stories, and will be serviced by three parking structures with approximately 4,000 stalls. In 2015, the Company broke ground and commenced development on the first phase which included a six-story building of nearly 200,000 square feet and a parking garage with 748 parking stalls. The first phase of the project was completed in July 2017 and is currently 88% leased. The second phase of the project began in March 2020 and includes a second six-story building of nearly 221,000 square feet and a parking garage with approximately 870 stalls. The Company began its occupancy of a portion of the building in October 2021 and the remainder of the building is currently 100% leased. The Company plans to initiate future phases of the Center53 Development for additional Class A office space in the central valley of Salt Lake City.

Regulation

The Company’s insurance subsidiaries are subject to comprehensive regulations in the jurisdictions in which they do business under statutes and regulations administered by state insurance commissioners. Such regulation relates to, among other things, prior approval of the acquisition of a controlling interest in an insurance company; standards of solvency which must be met and maintained; licensing of insurers and their agents; nature of and limitations on investments; deposits of securities for the benefit of policyholders; approval of policy forms and premium rates; periodic examinations of the affairs of insurance companies; annual and other reports required to be filed on the financial condition of insurers or for other purposes; and requirements regarding aggregate reserves for life policies and annuity contracts, policy claims, unearned premiums, and other matters. The Company’s insurance subsidiaries are subject to this type of regulation in any state in which they conduct relevant business. Such regulations may cause unforeseen costs and operational restrictions, and delay implementation of the Company’s business plans.

The Company’s life insurance subsidiaries are currently subject to regulations in Utah, Louisiana, Mississippi and Texas under insurance holding company legislation, and other states where applicable. Generally, intercompany transfers of assets and dividend payments from insurance subsidiaries are subject to prior notice of approval from the relevant state insurance department when they are deemed “extraordinary” under relevant state law. The insurance subsidiaries are required, under state insurance laws, to file detailed annual reports with the supervisory agencies in each of the states in which they do business. Their business and accounts are also subject to examination by these agencies every three to five years. The Company’s life insurance subsidiaries completed their last examinations in 2021 and 2022 for the period ending December 31, 2020 and the resulting final examination reports were approved by the insurance departments and are public records. Security National Life, First Guaranty, Kilpatrick, and Southern Security have received notice of a regularly scheduled multi-year examination for the years 2021-2024 that will commence in the second quarter of 2025.

The Texas Department of Banking also audits pre-need insurance policies that are issued in the state of Texas. Pre-need policies include the life and annuity products sold as the funding mechanism for funeral plans through funeral homes by Security National agents. The Company is required to send the Texas Department of Banking an annual report that summarizes the number of policies in force and the face amount or death benefit for each policy. This annual report is also required to indicate the number of new policies issued for that year, all death claims paid that year, and all premiums received.

The Company’s cemetery and mortuary subsidiaries are subject to the Federal Trade Commission’s comprehensive funeral industry rules and to state regulations in the various states where such operations are domiciled. The morticians must be licensed by the respective state in which they provide their services. Similarly, the mortuaries and cemeteries are governed and licensed by state statutes and city ordinances in Utah, California, and New Mexico. The subsidiaries are required to keep annual reports on file including financial information concerning the number of spaces sold and, where applicable, funds provided to the Endowment Care Trust Fund. Licenses are issued annually based on such reports. The cemeteries maintain city or county licenses where they conduct business.

The Company’s mortgage subsidiaries are subject to the rules and regulations of the U.S. Department of Housing and Urban Development (HUD), and to various state licensing acts and regulations and the Consumer Financial Protection Bureau (CFPB). These regulations, among other things, specify minimum capital requirements; procedures for loan origination and underwriting, licensing of brokers and loan officers and quality review audits and specify the fees that can be charged to borrowers. Each year, the Company is required to have an audit completed for its mortgage subsidiary by an independent registered public accounting firm to verify compliance with the relevant regulations. In addition to the government regulations, the Company must meet loan requirements, and underwriting guidelines of various investors who purchase the loans.

Income Taxes

The Company’s insurance subsidiaries, Security National Life, First Guaranty and Kilpatrick are taxed under the Life Insurance Company Tax Act of 1984. Under the act, life insurance companies are taxed at standard corporate rates on life insurance company taxable income. Life insurance company taxable income is gross income less general business deductions and reserves for future policyholder benefits (with modifications). Under The Tax Cuts and Jobs Act (the “Tax Act”), December 31, 2017 policyholder surplus account balances result in taxable income over a period of eight years.

Security National Life, First Guaranty and Kilpatrick calculate their life insurance taxable income after establishing a provision representing a portion of the costs of acquisition of such life insurance business. The effect of the provision is that a certain percentage of the Company’s premium income is characterized as deferred expenses and recognized over a five or ten-year period. The Tax Act changed this recognition period for amounts deferred after December 31, 2017 to a five or fifteen-year period.

The Company’s non-life insurance company subsidiaries are taxed in general under the regular corporate tax provisions. The Company’s subsidiaries Southern Security and Trans-Western are regulated as life insurance companies but do not meet the Internal Revenue Code definition of a life insurance company, so they are taxed as insurance companies other than life insurance companies.

Competition

The life insurance industry is highly competitive. There are approximately 700 legal reserve life insurance companies in business in the United States. These insurance companies differentiate themselves through marketing techniques, product features, pricing, and customer service. The Company’s insurance subsidiaries compete with many insurance companies, many of which have greater financial resources, longer business histories, and more diversified lines of insurance products than the Company. In addition, such companies generally have larger sales forces. Further, the Company competes with mutual insurance companies which may have a competitive advantage because all profits accrue to policyholders. Because the Company is smaller by industry standards and lacks broad diversification of risk, it may be more vulnerable to losses than larger, better-established companies. The Company believes that its policies and rates for the markets it serves are generally competitive.

The cemetery and mortuary industry are highly competitive. In the Utah, California, and New Mexico markets where the Company competes, there are several cemeteries and mortuaries which have longer business histories, more established positions in the community, and stronger financial positions than the Company. In addition, some of the cemeteries with which the Company must compete for sales are owned by municipalities and, as a result, can offer lower prices than can the Company. The Company bears the cost of a pre-need sales program that is not incurred by those competitors which do not have a pre-need sales force. The Company believes that its products and prices are generally competitive with those in the industry.

The mortgage industry is highly competitive with many mortgage companies and banks in the same geographic area in which the Company is operating. The mortgage industry in general is sensitive to changes in interest rates and the refinancing market is particularly vulnerable to changes in interest rates.

Seasonality

The Company’s business is generally not subject to seasonal fluctuations.

Human Capital Management

As of December 31, 2024, the Company employed 1,186 full-time and 235 part-time employees. Of the full-time employees, 678 were employed by the mortgage segment, 388 by the life insurance segment, and 120 by the cemetery and mortuary segment. The Company requires monthly acknowledgement of its anti-discrimination and anti-harassment policies and communicates to its employees how to report concerns that relate to their employment experience.

Employee Benefits

All eligible employees may elect coverage under the Company’s group health (including health savings and flexible spending), retirement, supplemental life and voluntary benefit programs. As of December 31, 2024, 757 employees had elected to participate in the Company’s group health insurance plans.

The Company sponsors a 401(k) retirement plan for each business segment. These retirement plans qualify under section 401(k) of the Internal Revenue Code and, if approved by the Company’s Board of Directors, the Company makes a matching contribution in Company stock based on the employee’s contribution amount.

The Company provides other time off benefits such as paid sick time and paid vacation time. The Company provides discounts on certain services provided by the Company to its employees. Additionally, the Company offers an employee assistance program that provides 24/7 counseling services for employees who may be facing challenges outside of the workplace.

Available Information

The Company’s internet address is www.securitynational.com. The Company’s investor relations website is www.investor.securitynational.com and the Company promptly makes available on this website, free of charge, the reports that it files or furnishes with the Securities and Exchange Commission.

Item 1A. Risk Factors

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

Item 1B. Unresolved Staff Comments

None. As a smaller reporting company, the Company is not required to provide information typically disclosed under this item.

Item 1C. Cybersecurity

The Company maintains a strong information security program and systems (“Cybersecurity System”) to guard against unauthorized access, malicious software, corruption of data, disruption of its networks and systems and unauthorized release of confidential information. The Company’s Cybersecurity System is comprised of multiple layers of controls to reduce the risk of cybersecurity incidents.

Risk Management and Strategy

The Company’s Cybersecurity System includes administrative, technical, and physical safeguards and is designed to provide an appropriate level of protection to maintain the confidentiality, integrity and availability of the Company’s and its customers’ information. This includes protecting against known and evolving threats to the security of the Company’s systems and information, and against unauthorized access, compromise, or loss of data. The Cybersecurity System is managed centrally, so the same security controls, policies and procedures are implemented across the organization. The Company maintains cybersecurity policies including an Acceptable Use Policy that all system users sign to acknowledge that they understand their security responsibilities. All system users receive security awareness training which includes phishing attack simulation testing.

A key element of the Company’s Cybersecurity System is to mature the program to align with the Center for Internet Security (CIS) Critical Security Controls security framework. CIS controls are designed based on real-world data about cyber-attacks, to ensure that the measures are effective against current threats. The framework provides a prioritized set of actions, which enables the Company to focus its efforts on the most effective defensive measures first. This prioritization helps in optimizing the use of resources for maximum impact on security. This strategy provides a structured and effective approach to cybersecurity, helping the Company to protect its assets, comply with regulations, manage risks, and improve its overall security posture.

The Company maintains cyber insurance coverage that may, subject to policy terms, conditions, and limitations, cover certain aspects of cybersecurity risks; however, such insurance coverage may be unavailable or insufficient to cover all losses or all types of claims that may arise in the continually evolving area of cyber risk.

Governance

The Company has established controls and procedures to escalate enterprise-level issues, including cybersecurity matters, to the appropriate management levels within its organization and to its Board of Directors, or members or committees thereof, as appropriate. The Company’s Board of Directors has oversight for enterprise risk management, including its approach to managing cybersecurity risk, and has delegated oversight responsibility of information security risks to its Audit Committee. Matters determined to present potential material impacts to the Company’s financial results, operations, and/or reputation are reported by management to the Company’s Board of Directors or its Audit Committee, as appropriate, in accordance with its escalation framework.

In addition, the Company has established procedures to ensure that management personnel are informed in a timely manner of known cybersecurity risks and incidents that may materially impact the Company’s operations and that timely public disclosure is made as appropriate. The Company’s Cybersecurity System is led by the Chief Information Officer (“CIO”) in collaboration with a third-party virtual Chief Information Security Officer (“vCISO”) and other third-party cybersecurity service providers which in turn assist in monitoring the Company’s exposure from significant information technology suppliers, significant software as service providers and major vendors with access to the Company’s information technology systems. The Company’s CIO has 10+ years of cybersecurity industry experience. Further, team members who support the Company’s cybersecurity program have relevant educational and industry experience through various roles involving information technology, security, auditing, compliance, systems, and programming, as well as cybersecurity certifications such as a Certified Information Systems Security Professional (CISSP) and Certified Information Security Manager (CISM). During the last three years, the Company has not experienced a material security breach and, as a result, the Company has not incurred any material expenses from such a breach. Furthermore, during such time, the Company has not been penalized or paid any amount under any information security breach settlement.

Item 2. Properties

The tables below set forth the location of the Company’s office facilities and certain other information relating to these properties.

Street

City

State

Function

Owned / Leased

Approximate Square Footage

Lease
Amount

Expiration

433 W. Ascension Way, Floors 4, 5 and 6

Salt Lake City

Corporate Headquarters, Insurance Operations, Cemetery and Mortuary Operations, Mortgage Operations and Sales

Owned

221,000

N/A

1818 Marshall St.

Shreveport

Insurance Operations

Owned

12,274

N/A

812 Sheppard St.

Minden

Insurance Sales

Owned

1,560

N/A

4901 S. Memory Lane

Holladay

Funeral Service Sales

Owned

1,200

N/A

1080 River Oaks Drive Suite #B204

Flowood

Insurance Sales

Leased

2,685

3,916

8/31/2028

1 Sanctuary Blvd #302

Manderville

Insurance Sales

Leased

1,335

2,146

6/30/2025

79 E. Main Street

Midway

Funeral Service Sales

Leased

4,476

6,233

10/31/2025

4387 S. 500 W.

Salt Lake City

Funeral Service Sales

Leased

2,168

1,895

7/31/2025

1627A Central Ave.

Los Alamos

Funeral Service Sales

Leased

1,400

1,600

month to month

200 Market Way

Rainbow City

Fast Funding Operations

Leased

12,850

10,910

1/31/2027

500 W Main St. #106

Russellville

Fast Funding Operations

Leased

198

1,000

month to month

5100 N. 99th Ave., Suite 101/103

Phoenix

Mortgage Sales

Sub-Leased

3,940

3,586

month to month

1490 S. Price Road, Suite 318

Chandler

Mortgage Sales

Leased

1,600

3,840

6/30/2025

1951 West Camelback Rd, Ste 200

Phoenix

Mortgage Sales

Leased

2,446

4,077

1/31/2026

2220 S. Country Club Drive Suite 101

Mesa

Mortgage Sales

Leased

3,274

5,500

2/14/2028

6751 N Sunset Blvd. #E260

Glendale

Mortgage Sales

Leased

1,496

5,319

04/30/25

7014 E Camelback Rd. #B100A

Scottsdale

Mortgage Sales

Leased

100

1,538

month to month

1360 N Bullard Ave. #I-207 & #J-208

Goodyear

Mortgage Sales

Leased

280

3,610

8/31/2025

40977 Oak Dr.

Forest Falls

Mortgage Sales

Leased

250

month to month

2934 E. Garvey Ave. South, Suite 250

West Covina

Mortgage Sales

Leased

500

1,100

month to month

7398 Fox Trail Unit B

Yucca Valley

Mortgage Sales

Leased

900

550

month to month

155 S. Highway 101 Suite 7

Solana Beach

Mortgage Sales

Leased

2,000

7,649

7/31/2026

2455 Bennett Valley Rd. #C107

Santa Rosa

Mortgage Sales

Leased

849

1,729

7/31/2025

78-065 Main St. #205C

La Quinta

Mortgage Sales

Leased

125

550

month to month

27 Main St., Suite C-104B

Edwards

Mortgage Sales

Leased

680

1,950

month to month

4501 Mohawk Dr.

Larkspur

Mortgage Sales

Leased

250

month to month

7800 E. Union Ave., Suite 550

Denver

Mortgage Sales

Sub-Leased

4,656

11,834

2/28/2026

5982 s Zeno Ct

Aurora

Mortgage Sales

Leased

month to month

5475 Tech Center Drive #201-A

Colorado Springs

Mortgage Sales

Leased

790

1,185

12/31/2027

447 Naubuc Ave. #110

Glasonbury

Mortgage Sales

Leased

1420

2367

3/31/2027

84 Broad St. 2nd Fl #6

Milford

Mortgage Sales

Leased

200

600

5/31/2025

8191 College Parkway, Suite 201

Ft Myers

Mortgage Sales

Leased

4,676

4,871

8/21/2025

2350 Fruitville Rd Ste, Ste 101

Sarasota

Mortgage Sales

Leased

2,455

5,424

3/14/2026

970 Island Grove Drive

Deland

Mortgage Sales

Leased

100

month to month

10293 61st Ct N

Pinellas Park

Mortgage Sales

Leased

100

month to month

250 International Pkwy #118

Lake Mary

Mortgage Sales

Leased

3,068

3,630

3/31/2027

5666 Seminole Blvd. #128

Seminole

Mortgage Sales

Leased

136

785.00

6/30/2025

900 Cricle 75 Parkway, Ste 175

Atlanta

Mortgage Sales

Leased

3,020

6,531

6/30/2026

6600 Peachtree Dunwoody Rd, Ste 135

Atlanta

Mortgage Sales

Leased

2,129

5,138

3/31/2026

2570 Stonevalley Ln Cumming

Atlanta

Mortgage Sales

Leased

100

month to month

3330 Cumberland Blvd. Suite 500 #62

Atlanta

Mortgage Sales

Leased

100

1,190

month to month

3330 Cumberland Blvd. Suite 500 #63

Atlanta

Mortgage Sales

Leased

860

month to month

3330 Cumberland Blvd. Suite 500 #65

Atlanta

Mortgage Sales

Leased

100

1,190

month to month

4370 Kukui Grove St., Suite 201

Lihue

Mortgage Sales

Leased

864

1,589

2/28/2025

1001 Kamokila Blvd.

Kapolei

Mortgage Sales

Leased

737

1,865

12/31/2025

677 Ala Moana Blvd. Suite 609

Honolulu

Mortgage Sales

Leased

716

2,270

1/31/2025

802 West Bartlett Road

Bartlett

Mortgage Sales

Leased

2,300

6,000

12/31/2025

81 Boulder Drive

Elizabethtown

Mortgage Sales

Leased

100

month to month

8684 Veterans Hwy, Ste 101

Millersville

Mortgage Sales

Leased

4,018

7,135

7/31/2026

860 Blue Gentian Road Suite 205

Eagan

Mortgage Sales

Leased

100

383

month to month

4987 Fall Creek Rd. Suite 1

Branson

Mortgage Sales

Leased

700

1,400

month to month

960 S 24th St. West Suite I

Billings

Mortgage Sales

Leased

200

750

month to month

739 11th Avenue Blvd. SE

Hickory

Mortgage Sales

Leased

1,000

900

5/31/2025

1980 Festival Plaza Dr., Suite 850

Las Vegas

Mortgage Sales

Leased

12,866

47,862

3/31/2027

840 Pinnacle Ct., Suite 3

Mesquite

Mortgage Sales

Leased

900

720

month to month

2635 St. Rose Pkwy, Suites D 100, 110, 120

Hendeson

Mortgage Sales

Leased

5,788

13,029

9/30/2025

2546 Findlater

Henderson

Mortgage Sales

Leased

120

month to month

1180 N Town Center Dr. #265

Las Vegas

Mortgage Sales

Leased

2,638

7,650

9/30/2027

Item 2. Properties (Continued)

Street

City

State

Function

Owned / Leased

Approximate Square Footage

Lease
Amount

Expiration

630 S 4th St. #100C

Las Vegas

Mortgage Sales

Leased

1,100

2,195

month to month

401 S Frontage Rd. #1

Pahrump

Mortgage Sales

Leased

2,200

3,000

8/31/2025

670 Meridian Way, Suite 146

Westerville

Mortgage Sales

Leased

100

644

month to month

1000 W Wilshire Blvd. #220

Oklahoma City

Mortgage Sales

Leased

200

550

month to month

11592 SW Roundup Place

Terrebonne

Mortgage Sales

Leased

100

month to month

709 Pacific Ave

Tillamook

Mortgage Sales

Leased

120

month to month

323 NW 13th Ave. #403

Portland

Mortgage Sales

Leased

580

1,160

9/30/2027

3970 Post Rd. #2PH

Warwick

Mortgage Sales

Leased

391

850

3/31/2025

144 Alf Taylor Rd.

Johnson City

Mortgage Sales

Sub-Leased

1,521

1,000

1/31/2025

1607 Solitude Ct.

Spring Hill

Mortgage Sales

Leased

100

month to month

3292 Winbrook Dr.

Memphis

Mortgage Sales

Leased

169

200

month to month

1213 East Alton Gloor Blvd., Suite H

Brownsville

Mortgage Sales

Leased

2,000

2,400

2/28/2025

722 Kiowa Dr. West

Lake Kiowa

Mortgage Sales

Leased

150

month to month

23227 Red River Drive

Katy

Mortgage Sales

Leased

144

750

month to month

4500 1-40 West, Suite B

Amarillo

Mortgage Sales

Leased

1,238

1,700

12/31/2025

30417 Fifth Street Suite B

Fulshear

Mortgage Sales

Leased

1,000

1,311

month to month

4908 North Midkiff Road

Midland

Mortgage Sales

Leased

1,550

2,500

month to month

462 Mid Cities Boulevard

Hurst

Mortgage Sales

Leased

1,640

2,500

month to month

2600 South Shore Boulevard, Suite 300

League City

Mortgage Sales

Leased

823

4/30/2025

1600 Lee Travino, Suite A-1

El Paso

Mortgage Sales

Leased

1,535

2,110

month to month

1777 NE Loop 410, Suite 600

San Antonio

Mortgage Sales

Leased

100

1,140

month to month

299 South Columbia,

Stephenville

Mortgage Sales

Leased

3,417

6,500

month to month

10000 Central Expressway Ste 428

Dallas

Mortgage Sales

Leased

200

1,400

12/31/2025

5757 Flewellen Oaks Ln #104

Fulshear

Mortgage Sales

Leased

100

800

month to month

2100 Kramer Ln. #900

Austin

Mortgage Sales

Leased

5,634

10,329

7/31/2029

10024 County Rd. 1016

Burleson

Mortgage Sales

Leased

100

month to month

2001 Timberloch Pl. #500-31

The Woodlands

Mortgage Sales

Leased

100

1,000

7/1/2025

1526 Katy Gap Rd. #802

Katy

Mortgage Sales

Leased

1,237

3,500

month to month

14090 SW Freeway Suite 300 #374

Sugar Land

Mortgage Sales

Leased

140

1,077

month to month

800 Town & Country Blvd., Suite 500 #369

Austin

Mortgage Sales

Leased

100

793

month to month

800 Town & Country Blvd., Suite 500 #370

Austin

Mortgage Sales

Leased

100

793

month to month

801 Town & Country Blvd., Suite 500 #371

Austin

Mortgage Sales

Leased

100

793

month to month

126 W. Sego Lily Dr., Suite 126

Sandy

Mortgage Sales

Leased

2,794

7,090

1/31/2027

497 S. Main

Ephraim

Mortgage Sales

Leased

1,884

1,600

4/30/2025

11240 S. River Heights Dr.

South Jordan

Mortgage Sales

Leased

3,403

8,468

11/30/2026

1350 E. 300 S. 3rd Floor

Lehi

Mortgage Sales

Leased

15,446

39,542

12/22/2026

2455 E. Parleys Way, Suites 120 & 150

Salt Lake City

Mortgage Sales

Leased

5,256

9,186

7/31/2030

859 W South Jordan Pkwy, Suite 101,

South Jordan

Mortgage Sales

Leased

3,376

6,360

5/30/2025

768 S. 1600 W., Suite B

Mapleton

Mortgage Sales

Leased

1,500

4,240

month to month

998 N 1200 W, Suite 104 Orem

Orem

Mortgage Sales

Leased

2,162

5,648

month to month

162 N 400 E #C205

St. George

Mortgage Sales

Leased

1,177

2,297

4/30/2026

500 E Village Blvd. #108

Stansbury Park

Mortgage Sales

Leased

200

600

4/30/2025

15650 NE Fourth Blvd Ste 101

Vancouver

Mortgage Sales

Leased

200

485

month to month

1508 24th Ave., Suite 23

Kenosha

Mortgage Sales

Leased

250

150

month to month

27903 99th St.

Trevor

Mortgage Sales

Leased

300

150

month to month

645 3rd St. #7

Beloit

Mortgage Sales

Leased

110

567

month to month

2527 S Business Dr.

Sheboygan

Mortgage Sales

Leased

980

1,200

month to month

14775 W National Ave.

New Berlin

Mortgage Sales

Leased

2,390

2,000

9/1/2026

255 E 2nd St. #1

Powell

Mortgage Sales

Leased

200

300

month to month

288 Scrub Oak Dr.

Star Valley Ranch

Mortgage Sales

Leased

100

month to month

The Company believes the office facilities it occupies are in good operating condition and adequate for current operations. The Company will generally enter into additional leases, modify existing leases or extend current leases based on its assessments of current market demand for its services. Those leases are expected to be month to month where possible.

Item 2. Properties (Continued)

The following table summarizes the location and acreage of the seven Company owned cemeteries, each of which includes one or more mausoleums. The acreage represents estimates of acres that are based upon survey reports, title reports, appraisal reports, or the Company’s inspection of the cemeteries. The Company estimates that there are approximately 1,200 spaces per developed acre.

						Net Saleable Acreage
Name of Cemetery	Location	Date Acquired		Developed Acreage		Total Acreage		Acres Sold as Cemetery Spaces (1)		Total Available Acreage
Memorial Estates, Inc. Lakeview Cemetery	1640 East Lakeview Drive Bountiful, Utah		1973		9		39		8		31

Memorial Estates, Inc. Mountain View Cemetery	3115 East 7800 South Salt Lake City, Utah		1973		26		54		20		34

Memorial Estates, Inc. Redwood Cemetery	6500 South Redwood Road West Jordan, Utah		1973		40		74		35		39

Deseret Memorial Inc. Lake Hills Cemetery	10055 South State Street Sandy, Utah		1991		9		28		6		22

Holladay Memorial Park, Inc. Holladay Memorial Park	4900 South Memory Lane Holladay, Utah		1991		12		16		8		8

California Memorial Estates, Inc. Singing Hills Memorial Park	2800 Dehesa Road El Cajon, California		1995		8		97		6		91 (2)

SNR-SF Cemetery LLC Santa Fe Memorial Gardens	417 Rodeo Rd Santa Fe, New Mexico		2021		5 (3)		5		4		1

	(1)	Includes both reserved and occupied spaces.
	(2)	Includes an open easement with a total acreage of approximately 62 acres.
	(3)	Includes five main columbariums that can hold approximately 6,000 inurnments.

Item 2. Properties (Continued)

The following table summarizes the location, square footage and the number of viewing rooms and chapels of the twelve Company owned mortuaries:

		Date		Viewing				Square
Name of Mortuary	Location	Acquired		Room(s)		Chapel(s)		Footage
Memorial Mortuary, Inc. Memorial Mortuary	5850 South 900 East, Murray, Utah		1973		3		1		20,000

Affordable Funerals and Cremations, St. George	157 East Riverside Dr., No. 3A, St. George, Utah		2016		1		1		2,360

Memorial Estates, Inc. Redwood Mortuary (1)	6500 South Redwood Rd., West Jordan, Utah		1973		2		1		10,000

Memorial Estates, Inc. Mountain View Mortuary (1)	3115 East 7800 South, Salt Lake City, Utah		1973		2		1		16,000

Memorial Estates, Inc. Lakeview Mortuary (1)	1640 East Lakeview Dr., Bountiful, Utah		1973		0		1		5,500

Deseret Memorial Inc. Lakehills Mortuary (1)	10055 South State St., Sandy, Utah		1991		2		1		18,000

Cottonwood Mortuary, Inc. Cottonwood Mortuary	4670 South Highland Dr., Holladay, Utah		1991		2		1		14,500

SN Probst LLC Heber Valley Funeral Home	288 North Main St., Heber City, Utah		2019		1		1		5,900

SN Holbrook LLC Milcreek Funeral Home	3251 S 2300 E, Millcreek, Utah		2021		2		1		6,300

SNR-SF Mortuary LLC Rivera Family Funeral Home Santa Fe (1)	417 Rodeo RD, Santa Fe, New Mexico		2021		2		1		7,700

SNR-Espanola LLC Rivera Family Funeral Home Española	305 Calle Salazar, Española, New Mexico		2021		1		2		10,400

SNR-Taos LLC Rivera Family Funeral Home Taos	818 Paseo Del Pueblo Sur, Taos, New Mexico		2021		0		1		9,600

(1)

These funeral homes also provide burial niches at their respective locations.

Item 3. 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 operation.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for the Registrant’s Common Stock, Related Stockholder Matters, and Issuer Purchases of Equity Securities

The Company’s Class A Common Stock trades on The Nasdaq Global Select Market under the symbol “SNFCA.” As of March 27, 2025, the closing stock price of the Class A Common Stock was $12.61 per share. As of March 27, 2025, there were 1,605 registered stockholders of record of the Company’s Class A Common Stock and 45 registered stockholders of record of the Company’s Class C Common Stock. Because many of the Company’s shares of Class A Common Stock are held by brokers and other institutions on behalf of the stockholders, the Company is unable to estimate the total number of stockholders represented by these record holders.

The following were the high and low market closing stock prices for the Class A Common Stock by quarter as reported by NASDAQ since January 1, 2023:

	Price Range (1)
	High		Low
Period (Calendar Year)
2023
First Quarter	$	6.85	$	5.44
Second Quarter	$	8.05	$	5.74
Third Quarter	$	8.41	$	7.22
Fourth Quarter	$	9.14	$	6.56

2024
First Quarter	$	9.04	$	7.26
Second Quarter	$	8.00	$	6.19
Third Quarter	$	9.20	$	7.45
Fourth Quarter	$	13.42	$	9.12

2025
First Quarter (through March 27, 2025)	$	13.46	$	11.31

(1)	Stock prices have been adjusted retroactively for the effect of annual stock dividends.

The Class C Common Stock is not registered or traded on a national exchange. See Note 12 of the Notes to Consolidated Financial Statements.

The Company has never paid a cash dividend on its Class A or Class C Common Stock. The Company currently anticipates that all its earnings will be retained for use in the operation and expansion of its business and does not intend to pay any cash dividends on its Class A or Class C Common Stock in the foreseeable future. Any future determination as to cash dividends will depend upon the earnings and financial position of the Company and such other factors as its Board of Directors may deem appropriate. The Company paid a 5% stock dividend on Class A and Class C Common Stock each year from 1990 through 2019, a 7.5% stock dividend for the year 2020, and a 5.0% stock dividend for the years 2021 through 2024.

On April 15, 2024, 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 May 15, 2024. The agreement is subject to the daily time, price and volume conditions of Rule 10b-18. The agreement expired on December 31, 2024.

The following table shows the Company’s repurchase activity of its common stock during the three-month period ended December 31, 2024, 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 of Class A Shares that May Yet Be Purchased Under the Plan or Program (2)
10/1/2024-10/31/2024		-	$	-		-		194,612
11/1/2024-11/30/2024		-		-		-		194,612
12/1/2024-12/31/2024		-		-		-		194,612

Total		-	$	-		-		194,612

(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.

The graph below compares the cumulative total stockholder return of the Company’s Class A Common Stock with the cumulative total return on the Standard & Poor’s 500 Stock Index and the Standard & Poor’s Insurance Index for the period from December 31, 2020 through December 31, 2024. The graph assumes that the value of the investment in the Company’s Class A Common Stock and in each of the indexes was $100 as of December 31, 2020 and that all dividends were reinvested.

The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of the Company’s Class A Common Stock.

	12/31/20		12/31/21		12/31/22		12/31/23		12/31/24
SNFC		100		116		96		125		175
S & P 500		100		128		103		128		158
S & P Insurance		100		125		135		145		181

The stock performance graph set forth above is required by the Securities and Exchange Commission and shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed soliciting material or filed under such acts.

Item 6. [Reserved]

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

Item 7. 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 cemetery and mortuary business; and (iii) capitalizing on the housing market by originating mortgage loans.

Insurance Operations

The following table shows the condensed financial results for the Company’s insurance operations for 2024 and 2023. See Note 15 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2024		2023		2024 vs 2023 % Increase (Decrease)
Revenues from external customers:
Insurance premiums	$	119,656	$	114,658		4	%
Net investment income		68,255		67,812		1	%
Mortgage fee income		0		77		(100	%)
Gains on investments and other assets		2,055		963		113	%
Other revenues		1,564		1,666		(6	%)
Intersegment revenues		7,272		8,203		(11	%)
Total segment revenues	$	198,802	$	193,379		3	%

Segment net earnings	$	24,851	$	21,617		15	%

Profitability for 2024 increased due to (a) a $4,998,000 increase in insurance premiums and other considerations, (b) a $3,301,000 decrease in death, surrenders and other policy benefits, (c) a $2,323,000 decrease in amortization of deferred policy acquisition costs, (d) a $1,092,000 increase in gains on investments and other assets, (e) a $443,000 increase in net investment income, and (f) a $354,000 decrease in interest expense, which were partially offset by (i) a $2,949,000 increase in income tax expense, (ii) a $2,929,000 increase in selling, general and administrative expenses, (iii) a $2,245,000 increase in future policy benefits, (iv) a $931,000 decrease in intersegment revenue, (v) a $102,000 decrease in other revenues, (vi) a $77,000 decrease in mortgage fee income, and (vii) a $42,000 increase in intersegment interest expense and other expenses.

Cemetery and Mortuary Operations

The following table shows the condensed financial results for the Company’s cemetery and mortuary operations for 2024 and 2023. See Note 15 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2024		2023		2024 vs 2023 % Increase (Decrease)
Revenues from external customers:
Cemetery revenues	$	16,101	$	15,189		6	%
Mortuary revenues		12,936		12,676		2	%
Net investment income		2,569		2,952		(13	%)
Gains on investments and other assets		873		717		22	%
Other revenues		543		404		34	%
Intersegment revenues		341		340		0	%
Total segment revenues	$	33,363	$	32,278		3	%
Segment net earnings	$	6,634	$	6,313		5	%

Profitability in 2024 increased due to (a) a $1,140,000 increase in cemetery pre-need sales, (b) a $260,000 increase in mortuary at-need sales, (c) a $156,000 increase in gains on investments and other assets, (d) a $139,000 increase in other revenues, and (e) a $26,000 decrease in intersegment interest expense and other expenses, which were partially offset by (i) a $458,000 increase in selling, general and administrative expenses, (ii) a $383,000 decrease in net investment income, (iii) a $239,000 increase in amortization of deferred policy acquisition costs, (iv) a $228,000 decrease in cemetery at-need sales, and (v) a $96,000 increase in income tax expense.

Mortgage Operations

The Company’s wholly owned subsidiary, 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 the Company, 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 MSRs on approximately 0.44% of its loan origination volume. These mortgage loans are serviced by either SecurityNational Mortgage or an approved third-party sub-servicer.

US Treasury rates continue to remain elevated despite the downward trend in inflation data and the Federal Reserve’s action to reduce rates. This has resulted in higher-than-expected mortgage rates, which in turn has further decreased the demand for loan originations classified as refinance. The higher-than-expected mortgage rates have also continued to have a negative effect on loan originations classified as purchases.

For 2024 and 2023, SecurityNational Mortgage originated 7,269 loans ($2,295,830,000 total volume) and 7,185 loans ($2,173,081,000 total volume), respectively.

The following table shows the condensed financial results for the Company’s mortgage operations for 2024 and 2023. See Note 15 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2024			2023			2024 vs 2023 % Increase (Decrease)
Revenues from external customers:
Secondary gains from investors	$	70,355		$	68,428			3	%
Income from loan originations		33,604			31,245			8	%
Change in fair value of loans held for sale		2,870			(478	)		700	%
Change in fair value of loan commitments		730			(1,124	)		165	%
Net investment income		902			1,580			(43	%)
Gains on investments and other assets		(986	)		157			(728	%)
Other revenues		2,497			1,576			58	%
Intersegment revenues		573			531			8	%
Total segment revenues	$	110,545		$	101,915			8	%
Segment net loss	$	(4,949	)	$	(13,435	)		63	%

Losses in 2024 compared to 2023 decreased due to (a) a $4,251,000 decrease in other expenses, (b) a $3,348,000 increase in the fair value of loans held for sale, (c) a $2,359,000 increase in income from loan originations, (d) a $2,177,000 decrease in personnel expenses, (e) a $1,927,000 increase in secondary gains from investors, (f) a $1,854,000 increase in the fair value of loan commitments, (g) a $1,729,000 decrease in rent and rent related expenses, (h) a $921,000 increase in other revenues, (i) a $904,000 decrease in intersegment interest expense and other expenses, (j) a $330,000 decrease in advertising expenses, (k) a $306,000 decrease in costs related to funding mortgage loans, (l) a $257,000 decrease in interest expense, (m) a $42,000 increase in intersegment revenues, and (n) a $29,000 decrease in depreciation on property and equipment, which were partially offset by (i) a $7,410,000 increase in commissions, (ii) a $2,717,000 increase in income tax expense, (iii) a $1,143,000 decrease in gains on investments and other assets, and (iv) a $678,000 decrease in net investment income.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are fundamental to understanding its results of operations and financial condition as they require that the Company use estimates and assumptions that may affect the value of its assets or liabilities and financial results. See Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for further information.

Five of these policies, discussed below, relate to critical estimates because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Actual results could differ from those estimates.

The Company’s Management and the Audit Committee of the Board of Directors have reviewed and approved the accounting policies associated with these critical estimates.

Future Policy Benefits

Reserves for future policy benefits for traditional life insurance products requires the use of many assumptions, including the duration of the policies, mortality experience, expenses, investment yield, lapse rates, surrender rates, and dividend crediting rates.

These assumptions are made based upon historical experience, industry standards and a best estimate of future results and, for traditional life products, include a provision for adverse deviation. For traditional life insurance, once established for a particular series of products, these assumptions are generally held constant.

Deferred Acquisition Costs and Value of Business Acquired

Amortization of deferred policy acquisition costs (“DAC”) for interest sensitive products is dependent upon estimates of current and future gross profits or margins on this business. Key assumptions used include the following: yield on investments supporting the liabilities, amount of interest or dividends credited to the policies, amount of policy fees and charges, amount of expenses necessary to maintain the policies, amount of death and surrender benefits, and the length of time the policies will stay in force.

For nonparticipating traditional life products, these costs are amortized over the premium paying period of the related policies in proportion to the ratio of annual premium revenues to total anticipated premium revenues. Such anticipated premium revenues are estimated using the same assumption used for computing liabilities for future policy benefits and are generally “locked in” at the date the policies are issued.

Value of business acquired (“VOBA”) is the present value of estimated future profits of the acquired business and is amortized like deferred acquisition costs. The critical issues explained for deferred acquisition costs would also apply for value of business acquired.

Premium Deficiency and Loss Recognition Testing

At least annually, the Company tests the adequacy of the net benefit reserves (liability for future policy benefits, net of DAC and VOBA) recorded for life insurance and annuity products. The Company tests for recoverability by using the Company’s current best-estimate assumptions as to policyholder mortality, persistency, maintenance expenses and invested asset returns. These tests evaluate whether the present value of future contract-related cash flows will support the capitalized DAC and VOBA assets. These cash flows consist primarily of premium income, less benefits, and expenses. If the current contract liabilities plus the present value of future premiums is greater than the sum of the present values of future policy benefits, commissions, and expenses plus the current DAC and VOBA less unearned premium reserve balances, then the capitalized assets are deemed recoverable. The present values are calculated using the best estimate of the after-tax net investment earned rate.

Loan Loss Reserve

The Company provides for losses on its mortgage loans held for sale through the mortgage loan loss reserve (a liability account).

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on mortgage loans sold to third-party investors. The Company may be required to reimburse third-party investors for costs associated with early payoff of loans within six months of origination of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale relating to any guarantee or recourse provisions in the event of defects in the representations and warranties made at loan sale. The Company accrues a monthly allowance for indemnification losses to investors based on total production. This estimate is based on the Company’s historical experience and is included as a component of mortgage fee income. Subsequent updates to the recorded liability from changes in assumptions are recorded in selling, general and administrative expenses. The estimated liability for indemnification losses is included in other liabilities and accrued expenses.

Loan Commitments

The Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage-backed security (“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 mortgage 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.

Results of Consolidated Operations

2024 Compared to 2023

Total revenues increased by $16,025,000, or 5.0%, to $334,522,000 for 2024 from $318,497,000 for 2023. Contributing to this increase in total revenues was primarily a $9,411,000 increase in mortgage fee income, a $4,997,000 increase in insurance premiums and other considerations, a $1,172,000 increase in net cemetery and mortuary sales, a $958,000 increase in other revenues, and a $105,000 increase in gains on investments and other assets. This increase in total revenues was offset by a $618,000 decrease in net investment income.

Mortgage fee income increased by $9,411,000, or 9.6%, to $107,559,000 for 2024, from $98,148,000 for 2023. This increase was primarily due to a $5,202,000 increase in the fair value of loans held for sale and loan commitments, a $3,264,000 increase in loan fees and interest income, a $1,850,000 increase in secondary gains from mortgage loans sold to third-party investors into the secondary market. This increase in mortgage fee income was partially offset by a $905,000 increase in the provision for loan loss reserve.

Insurance premiums and other considerations increased by $4,997,000, or 4.4%, to $119,656,000 for 2024, from $114,659,000 for 2023. This increase was due to an increase of $2,555,000 in first year premiums because of increased preneed insurance sales and an increase of $2,442,000 in renewal premiums due to the growth of the Company in recent years, particularly in whole life products, which resulted in more premium paying policies in force.

Net investment income decreased by $618,000, or 0.9%, to $71,725,000 for 2024, from $72,343,000 for 2023. This decrease was primarily attributable to a $3,416,000 decrease in rental income from real estate held for investment and a $3,290,000 decrease in mortgage loan interest. This decrease was partially offset by a $2,427,000 increase in interest on cash and cash equivalents, a $1,853,000 increase in insurance assignment income, a $941,000 decrease in investment expenses, a $461,000 increase in fixed maturity securities income, a $189,000 increase in income in other investments, a $137,000 increase in policy loan income, and an $82,000 increase in equity securities income.

Net mortuary and cemetery sales increased by $1,172,000, or 4.2%, to $29,037,000 for 2024, from $27,865,000 for 2023. This increase was primarily due to a $1,140,000 increase in cemetery pre-need sales and a $260,000 increase in mortuary at-need sales. This increase was partially offset by a $228,000 decrease in cemetery at-need sales.

Gains on investments and other assets increased by $105,000, or 5.7%, to $1,942,000 for 2024, from $1,837,000 for 2023. This increase in gains on investments and other assets was primarily due to a $614,000 increase in gains on real estate held for investment, a $234,000 increase in gains on other assets, a $210,000 increase in gains on equity securities mostly attributable to increases in the fair value of these equity securities, and a $208,000 increase in gains on fixed maturity securities. This increase was partially offset by a $1,161,000 decrease in gains on mortgage loans held for investment.

Other revenues increased by $958,000, or 26.3%, to $4,604,000 for 2024 from $3,646,000 for 2023. This increase was primarily attributable to a $1,350,000 legal settlement, which was partially offset by a decrease of $392,000 in other miscellaneous revenues.

Total benefits and expenses were $300,419,000, or 89.8% of total revenues for 2024, as compared to $302,197,000, or 94.9% of total revenues for 2023.

Death benefits, surrenders and other policy benefits, and future policy benefits decreased by an aggregate of $1,056,000, or 1.1%, to $98,956,000 for 2024, from $100,012,000 for 2023. This decrease was primarily the result of a $3,274,000 decrease in death benefits and a $27,000 decrease in surrender and other policy benefits. This decrease was partially offset by a $2,245,000 increase in future policy benefits.

Amortization of deferred policy and pre-need acquisition costs and value of business acquired decreased by $2,084,000, or 11.6%, to $15,940,000 for 2024, from $18,024,000 for 2023. This decrease was primarily due to increased payment consistency from premium-paying products along with a decrease in new business.

Selling, general and administrative expenses increased by an aggregate of $1,975,000, or 1.1%, to $176,465,000 for 2024, from $174,490,000 for 2023. This increase was primarily the result of a $7,043,000 increase in commissions, a $1,943,000 increase in personnel expenses, and a $32,000 increase in depreciation on property and equipment. This increase was partially offset by a $4,432,000 decrease in other expenses, a $1,710,000 decrease in rent and rent related expenses, a $595,000 decrease in advertising expenses, and a $306,000 decrease in costs related to funding mortgage loans.

Interest expense decreased by $611,000, or 12.6%, to $4,254,000 for 2024, from $4,865,000 for 2023. This decrease was primarily due to a decrease of $354,000 in interest expense on bank loans and a decrease of $257,000 in interest expense on mortgage warehouse lines of credit for loans held for sale.

Income tax expense increased by $5,763,000, or 319.2%, to $7,568,000 for 2024, from $1,805,000 for 2023. This increase was primarily due to an increase in earnings before income taxes for 2024 compared to 2023. The Company’s overall effective tax rate increased from 11.1% for 2023 to 22.2% in 2024, a 11.1% increase in the effective tax rate or a 100.6% change. This increase was partially due to the prior period reducing the valuation allowance to zero and no valuation allowance adjustment in the current period.

Risks

The following is a description of the material risks facing the Company and how it mitigates those risks:

Legal and Regulatory Risks. Changes in the legal or regulatory environment in which the Company operates may create additional expenses and risks not anticipated by the Company in developing and pricing its products. Regulatory initiatives designed to reduce insurer profits, new legal theories or insurance company insolvencies through guaranty fund assessments may create costs for the insurer beyond those recorded in the consolidated financial statements. In addition, changes in tax law with respect to mortgage interest deductions or other public policy or legislative changes may affect the Company’s mortgage sales. Also, the Company may be subject to further regulations in the cemetery and mortuary business. The Company aims to mitigate these risks by offering a wide range of products and by diversifying its operations, thus reducing its exposure to any single product or jurisdiction, and by employing underwriting practices that identify and minimize the adverse impact of such risks.

Mortgage Industry Risks. Developments in the mortgage industry and credit markets can adversely affect the Company’s ability to sell its mortgage loans to investors, which can impact the Company’s financial results by requiring it to assume the risk of holding and servicing any unsold loans.

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company could realize in the future on mortgage loans sold to third-party investors. The Company’s mortgage subsidiary may be required to reimburse third-party investors for costs associated with early payoff of loans within the first six months of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

During 2024 and 2023 the Company increased its loan loss reserve by $150,000 and decreased its loan loss reserve by $1,178,000, respectively, for loan originations, and the charges have been included in mortgage fee income. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2024 and 2023, the balances were $697,000 and $547,000, respectively. The Company believes the loan loss reserve represents probable loan losses incurred as of December 31, 2024. There is a risk, however, that future loan losses may exceed the loan loss reserve.

As of December 31, 2024, the Company’s mortgage loans held for investment portfolio consisted of mortgage loans in an aggregate principal amount of $11,400,000 with delinquencies exceeding 90 days. Of this amount, loans with an aggregate principal amount of $4,134,000 were in foreclosure proceedings. The Company has not received or recognized any interest income on the $11,400,000 in mortgage loans with delinquencies exceeding 90 days. During 2024 and 2023, the Company decreased its allowance for credit losses by $1,934,000 and increased it by $1,184,000, respectively, which was charged to bad debt expense and included in selling, general and administrative expenses for the period. The main reasons for the decrease in 2024 when compared to 2023 were due to a decrease in the commercial loan held for investment portfolio, further refinement of the Company’s quantitative loss analysis and general market improvements related to the residential mortgage loan held for investment single family portfolio. The allowances for credit losses on the Company’s mortgage loans held for investment portfolio as of December 31, 2024 and 2023 were $1,885,000 and $3,819,000, respectively.

Interest Rate Risk. Fluctuations in interest rates may cause a decrease in the value of the Company’s investments or impair the ability of the Company to market its mortgage and cemetery and mortuary products. This change in rates may cause certain interest-sensitive products to become uncompetitive or may cause disintermediation. The Company aims to mitigate this risk by charging fees for non-conformance with certain policy provisions, by offering products that transfer this risk to the purchaser, and by attempting to match the maturity schedule of its assets with the expected payouts of its liabilities. To the extent that liabilities come due more quickly than assets mature, the Company might have to borrow funds or sell assets prior to maturity and potentially recognize a loss on the sale.

Mortality and Morbidity Risks. The Company’s actuarial assumptions differing from actual mortality and morbidity experienced may mean that the Company’s relevant products sold were underpriced, may require the Company to liquidate insurance or make other claims earlier than planned, and have other potentially adverse consequences to the business. The Company aims to minimize this risk through sound underwriting practices, asset and liability duration matching, and sound actuarial practices.

Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. 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.

Liquidity and Capital Resources

The Company’s life insurance subsidiaries and cemetery and mortuary subsidiaries realize cash flow from premiums, contract payments and sales on personal services rendered for cemetery and mortuary 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 on 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 cemetery and mortuary 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.

As of December 31, 2024, the Company’s subsidiary SecurityNational Mortgage was not in compliance with the net income covenants under its warehouse lines of credit and its operating cash flow covenant for its standby letter of credit with its primary bank. SecurityNational Mortgage has received or is in the process of receiving waivers from the warehouse banks. In the unlikely event SecurityNational Mortgage is required to repay the outstanding advances of approximately $10,587,449 on the warehouse line of credit that has not provided a covenant waiver, SecurityNational Mortgage has sufficient cash and borrowing capacity on the warehouse lines of credit that have provided covenant waivers to fund its origination activities. The Company has done an internal analysis of the funding capacities of both internal and external sources and has determined that there are sufficient funds to continue its business model. The Company continues to negotiate other warehouse lines of credit with other lenders.

During 2024 and 2023, the Company’s operations provided cash of $57,320,000 and of $53,875,000, respectively. The increase in cash provided by operations was due primarily to the 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 cemetery and mortuary 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 cemetery and mortuary 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 held for sale. 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 $348,774,000 (at estimated fair value) and $362,663,000 (at estimated fair value) as of December 31, 2024 and 2023, respectively. This represented 38.0% and 38.7% of the total investments of the Company as of December 31, 2024, and 2023, 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 rating bonds. As of December 31, 2024, 2.4% (or $8,431,000) and as of December 31, 2023, 1.8% (or $6,954,000) of the insurance subsidiaries’ total bond investments were invested in bonds in rating categories three through six, which are considered non-investment grade.

See Note 2 of the Notes to Consolidated Financial Statements for the schedule of the maturity of fixed maturity securities available for sale and for the schedule of principal payments for mortgage loans held for investment.

See Note 7 of the Notes to Consolidated Financial Statements for a description of the Company’s sources of liquidity.

If market conditions were to cause interest rates to change, the fair value of the Company’s fixed income portfolio (of approximately $668,293,000), which includes bonds, preferred stocks and mortgage loans held for investment, could change by the following amounts based on the respective basis point swing (the change in the fair values were calculated using a modeling technique):

	-200 bps		-100 bps		+100 bps			+200 bps
Change in Fair Value	$	46,923	$	21,650	$	(22,661	)	$	(45,101	)
(in thousands)

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 December 31, 2024 and 2023, the life insurance subsidiaries were in compliance with the regulatory criteria.

The Company’s total capitalization of stockholders’ equity, and bank loans and other loans payable was $445,758,000 as of December 31, 2024, as compared to $418,450,000 as of December 31, 2023. This increase was primarily due to a $26,122,000 increase in stockholders’ equity and an increase of $1,185,000 in bank loans and other loans payable. Stockholders’ equity as a percentage of total capitalization was 76.1% and 74.8% as of December 31, 2024 and 2023, respectively.

Lapse rates measure the amount of insurance terminated during a particular period. The Company’s lapse rate for life insurance was 7.0% for 2024 as compared to a rate of 4.4% for 2023.

The combined statutory capital and surplus of the Company’s life insurance subsidiaries was $120,216,000 and $107,385,000 as of December 31, 2024 and 2023, respectively. The life insurance subsidiaries cannot pay dividends to their parent company without the approval of state insurance regulatory authorities.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about their businesses without fear of litigation so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in such statements. The Company desires to take advantage of the “safe harbor” provisions of the act.

This Annual Report on Form 10-K contains forward-looking statements, together with related data and projections, about the Company’s projected financial results and its plans and strategies. However, the actual results and needs of the Company may vary materially from forward-looking statements and projections made from time to time by the Company based on management’s then-current expectations. The business in which the Company is engaged involves changing and competitive markets, which may involve a high degree of risk, and there can be no assurance that forward-looking statements and projections will prove accurate.

Factors that may cause the Company’s actual results to differ materially from those contemplated or projected, forecast, estimated or budgeted in such forward looking statements include among others, the following possibilities: (i) heightened competition, including the intensification of price competition, the entry of new competitors, and the introduction of new products by new and existing competitors; (ii) adverse state and federal legislation or regulation, including decreases in rates, limitations on premium levels, increases in minimum capital and reserve requirements, benefit mandates and tax treatment of insurance products; (iii) fluctuations in interest rates causing a reduction of investment income or increase in interest expense and in the market value of interest rate sensitive investment; (iv) failure to obtain new customers, retain existing customers or reductions in policies in force by existing customers; (v) higher service, administrative, or general expenses due to the need for additional advertising, marketing, administrative or management information systems expenditures; (vi) loss or retirement of key executives or employees; (vii) increases in medical costs; (viii) changes in the Company’s liquidity due to changes in asset and liability matching; (ix) restrictions on insurance underwriting based on genetic testing and other criteria; (x) adverse changes in the ratings obtained by independent rating agencies; (xi) failure to maintain adequate reinsurance; (xii) possible claims relating to sales practices for insurance products and claim denials; (xiii) adverse trends in mortality and morbidity; (xiv) deterioration of real estate markets; and (xv) lawsuits in the ordinary course of business.

Off-Balance Sheet Agreements

The Company has commitments to fund existing construction and land development loans pursuant to the various loan agreements. As of December 31, 2024, the Company’s commitments were approximately $216,368,000 for these loans, of which $152,361,000 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 80% of appraised value. The Company receives fees and interest for these loans and the interest rate is generally fixed at 5.25% to 8.50% per annum. Maturities range between six and eighteen months.

Contractual Obligations

In the ordinary course of the Company’s operations, the Company enters certain contractual obligations. Such obligations include operating leases for office space, agreements with respect to borrowed funds and future policy benefits. See Notes 7, 22, 24 of the Notes to Consolidated Financial Statements for more information about these obligations.

Captive Insurance Participation

The Company has a limited equity interest in a captive insurance entity (the “Captive’) that provides workers compensation, general liability and automobile insurance . This program permits the Company to pool insurance risks and resources with like-minded companies in order to obtain more competitive pricing for claims administration, stop loss insurance premiums and to limit its risk of loss in any particular year. The Captive also provides access to a wide array of safety-related services and regular safety training to help the Company control claims. The maximum exposure to a loss related to the Company’s involvement in the Captive is limited to approximately $443,758, which is collateralized under a standby letter of credit issued on the insurance entity’s behalf. See Note 10, “Reinsurance, Commitments and Contingencies,” for additional discussion of commitments associated with the insurance program. The Company has been a member of the Captive since 2006 and does not expect any material losses to result from the issuance of the standby letter of credit given the Company’s past performance.

Item 7A. 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 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
	Page No.
Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)	28
Consolidated Balance Sheets, December 31, 2024 and 2023	29
Consolidated Statements of Earnings for the Years Ended December 31, 2024 and 2023	31
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024 and 2023	32
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023	33
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023	34
Notes to Consolidated Financial Statements	36

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Security National Financial Corporation:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Security National Financial Corporation and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Future Policy Benefits for Life Insurance Contracts and Amortization of Deferred Policy Acquisition Costs for Insurance Contracts and Value of Business Acquired - Refer to Notes 1 and 21 to the financial statements

Critical Audit Matter Description

The Company’s management sets assumptions in (1) estimating a liability for life insurance policy benefit payments that will be made in the future (future policy benefits for life insurance contracts), (2) determining amortization of deferred policy acquisition costs for insurance contracts and value of business acquired and (3) performing premium deficiency tests. The most significant assumptions include mortality, lapse, and projected investment yield. Assumptions are determined based upon analysis of company specific experience, industry standards, adjusted for changes in exposure and other relevant factors. Given the inherent uncertainty of these significant assumptions, auditing the development of such assumptions involved especially subjective judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s judgments regarding the mortality, lapse and projected investment yield assumptions used in the development of future policy benefits for life insurance contracts and the amortization of deferred policy acquisition costs for insurance contracts and value of business acquired, included the following, among others:

●	With the assistance of our actuarial specialists, we:

	●	evaluated these actuarial assumptions, including testing the accuracy and completeness of the supporting experience studies,
	●	evaluated management’s judgments regarding these assumptions used in the development of future policy benefits for life insurance contracts and the amortization of deferred policy acquisition costs and value of business acquired,
	●	evaluated the results of the Company’s annual premium deficiency tests.

/s/ Deloitte & Touche LLP

Salt Lake City, UT

March 31, 2025

We have served as the Company’s auditor since 2017.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	2024		2023
	December 31,
	2024		2023
Assets
Investments:
Fixed maturity securities, available for sale, at estimated fair value (amortized cost of $376,012,071 and $390,884,441 for 2024 and 2023, respectively; net of allowance for credit losses of $420,993 and $314,549 for 2024 and 2023, respectively)	$	366,546,129	$	381,535,986
Equity securities at estimated fair value (cost of $11,386,454 and $10,571,505 for 2024 and 2023, respectively)		15,771,681		13,636,071
Mortgage loans held for investment (net of allowance for credit losses of $1,885,390 and $3,818,653 for 2024 and 2023, respectively)		301,747,358		275,616,837
Real estate held for investment (net of accumulated depreciation of $31,419,539 and $29,307,791 for 2024 and 2023, respectively)		197,693,338		183,419,292
Real estate held for sale		1,278,033		3,028,973
Other investments and policy loans (net of allowances for credit losses of $1,536,926 and $1,553,836 for 2024 and 2023, respectively)		74,855,041		69,404,617
Accrued investment income		8,499,168		10,170,790
Total investments		966,390,748		936,812,566
Cash and cash equivalents		140,546,421		126,941,658
Loans held for sale at estimated fair value		131,181,148		126,549,190
Receivables (net of allowance for credit losses of $1,678,531 and $1,897,887 for 2024 and 2023, respectively)		15,858,743		15,335,315
Restricted assets (including $12,323,535 and $9,239,063 for 2024 and 2023, respectively, at estimated fair value)		23,806,836		20,028,976
Cemetery perpetual care trust investments (including $5,689,706 and $4,969,005 for 2024 and 2023, respectively, at estimated fair value)		8,836,503		8,082,917
Receivable from reinsurers		13,831,093		14,857,059
Cemetery land and improvements		10,594,632		9,163,691
Deferred policy and pre-need contract acquisition costs		122,661,298		116,351,067
Mortgage servicing rights, net		2,939,878		3,461,146
Property and equipment, net		19,047,688		19,175,099
Value of business acquired		7,491,600		8,467,613
Goodwill		5,253,783		5,253,783
Other		21,366,843		20,072,195
Total Assets	$	1,489,807,214	$	1,430,552,275

See accompanying notes to consolidated financial statements.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

	December 31,
	2024			2023
Liabilities and Stockholders’ Equity
Liabilities
Future policy benefits and unpaid claims	$	944,811,843		$	916,038,616
Unearned premium reserve		2,011,679			2,543,822
Bank and other loans payable		106,740,104			105,555,137
Deferred pre-need cemetery and mortuary contract revenues		20,168,405			18,237,246
Cemetery perpetual care obligation		5,642,693			5,326,196
Accounts payable		2,937,293			2,936,968
Other liabilities and accrued expenses		55,633,661			53,266,090
Income taxes		13,079,257			13,752,981
Total liabilities		1,151,024,935			1,117,657,056
Stockholders’ Equity
Preferred Stock:
Preferred stock - non-voting-$1.00 par value; 5,000,000 shares authorized; none issued or outstanding		-			-
Common Stock:
Class A: common stock - $2.00 par value; 40,000,000 shares authorized; 21,255,006 shares issued and outstanding as of December 31, 2024 and 21,052,883 (1) shares issued and outstanding as of December 31, 2023		42,510,012			40,096,004
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; 3,321,833 shares issued and outstanding as of December 31, 2024 and 3,120,432 (1) shares issued and outstanding as of December 31, 2023		6,643,666			5,943,708
Common stock value		6,643,666			5,943,708
Additional paid-in capital		79,698,367			72,424,429
Accumulated other comprehensive loss, net of taxes		(6,951,266	)		(6,885,558	)
Retained earnings		225,359,186			206,978,373
Treasury stock, at cost - 1,025,784 Class A shares and 99,623 Class C shares as of December 31, 2024; and 852,338 (1) Class A shares and 35,503 (1) Class C shares as of December 31, 2023		(8,477,686	)		(5,661,737	)
Total stockholders’ equity		338,782,279			312,895,219
Total Liabilities and Stockholders’ Equity	$	1,489,807,214		$	1,430,552,275

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

See accompanying notes to consolidated financial statements.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Earnings

	2024			2023
	Years Ended December 31,
	2024			2023
Revenues:
Insurance premiums and other considerations	$	119,655,745		$	114,658,436
Mortgage fee income		107,558,640			98,147,972
Net investment income		71,725,249			72,343,047
Net mortuary and cemetery sales		29,037,173			27,864,811
Gains on investments and other assets		1,941,898			1,837,342
Other		4,603,963			3,645,882
Total revenues		334,522,668			318,497,490

Benefits and expenses:
Death benefits		58,116,837			61,390,517
Surrenders and other policy benefits		4,584,763			4,612,346
Increase in future policy benefits		36,253,859			34,008,997
Amortization of deferred policy and pre-need acquisition costs and value of business acquired		15,940,371			18,024,338
Selling, general and administrative expenses:
Commissions		46,972,909			39,929,556
Personnel		85,084,802			83,141,759
Advertising		3,115,120			3,710,445
Rent and rent related		5,147,069			6,857,137
Depreciation on property and equipment		2,383,621			2,351,661
Costs related to funding mortgage loans		6,134,709			6,440,439
Other		27,627,210			32,058,856
Interest expense		4,254,100			4,865,327
Cost of goods and services sold – cemeteries and mortuaries		4,803,528			4,805,700
Total benefits and expenses		300,418,898			302,197,078

Earnings before income taxes		34,103,770			16,300,412
Income tax expense		(7,568,002	)		(1,805,354	)
Net earnings	$	26,535,768		$	14,495,058

Net earnings per Class A equivalent common share (1)	$	1.14		$	0.63

Net earnings per Class A equivalent common share - assuming dilution (1)	$	1.11		$	0.61

Weighted average Class A equivalent common shares outstanding (1)		23,314,643			23,189,418

Weighted average Class A equivalent common shares outstanding-assuming dilution (1)		23,975,508			23,813,324

(1)

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

See accompanying notes to consolidated financial statements.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Consolidated Statements of comprehensive income

	2024			2023
	Years Ended December 31,
	2024			2023
Net earnings	$	26,535,768		$	14,495,058
Other comprehensive income:
Unrealized gains (losses) on fixed maturity securities available for sale		(79,228	)		7,814,324
Unrealized gains on restricted assets		841			11,175
Unrealized gains (losses) on cemetery perpetual care trust investments		(1,403	)		2,917
Other comprehensive income (loss), before income tax		(79,790	)		7,828,416
Income tax benefit (expense)		14,082			(1,643,697	)
Other comprehensive income (loss), net of income tax		(65,708	)		6,184,719
Comprehensive income	$	26,470,060		$	20,679,777

See accompanying notes to consolidated financial statements.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

	Class A Common Stock		Class C Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock			Total
Balance at December 31, 2022	$	37,516,062	$	5,779,718		$	64,767,769		$	(13,070,277	)	$	202,160,306		$	(4,366,651	)	$	292,786,927

Adoption of ASU 2016-13		-		-			-			-			(671,506	)		-			(671,506	)
Net earnings		-		-			-			-			14,495,058			-			14,495,058
Other comprehensive income		-		-			-			6,184,719			-			-			6,184,719
Stock based compensation expense		-		-			601,362			-			-			-			601,362
Exercise of stock options		558,354		-			(423,967	)		-			-			-			134,387
Vesting of restricted stock units		2,430		-			(2,430	)		-			-			-			-
Sale of treasury stock		-		-			76,202			-			-			2,134,517			2,210,719
Purchase of treasury stock		-		-			583,156			-			-			(3,429,603	)		(2,846,447	)
Stock dividends		1,899,960		283,188			6,822,337			-			(9,005,485	)		-			-
Conversion Class C to Class A		119,198		(119,198	)		-			-			-			-			-
Balance at December 31, 2023		40,096,004		5,943,708			72,424,429			(6,885,558	)		206,978,373			(5,661,737	)		312,895,219
Balance		40,096,004		5,943,708			72,424,429			(6,885,558	)		206,978,373			(5,661,737	)		312,895,219

Net earnings		-		-			-			-			26,535,768			-			26,535,768
Other comprehensive income		-		-			-			(65,708	)		-			-			(65,708	)
Stock based compensation expense		-		-			800,820			-			-			-			800,820
Exercise of stock options		400,144		403,334			413,835			-			-			(768,191	)		449,122
Vesting of restricted stock units		3,570		-			(3,570	)		-			-			-			-
Sale of treasury stock		-		-			214,816			-			-			1,005,748			1,220,564
Purchase of treasury stock		-		-			-			-			-			(3,053,506	)		(3,053,506	)
Stock dividends		2,009,762		297,156			5,848,037			-			(8,154,955	)		-			-
Conversion Class C to Class A		532		(532	)		-			-			-			-			-
Balance at December 31, 2024	$	42,510,012	$	6,643,666		$	79,698,367		$	(6,951,266	)	$	225,359,186		$	(8,477,686	)	$	338,782,279
Balance	$	42,510,012	$	6,643,666		$	79,698,367		$	(6,951,266	)	$	225,359,186		$	(8,477,686	)	$	338,782,279

See accompanying notes to consolidated financial statements.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

	2024			2023
	Years Ended December 31,
	2024			2023
Cash flows from operating activities:
Net earnings	$	26,535,768		$	14,495,058
Adjustments to reconcile net earnings to net cash used in operating activities:
Gains on investments and other assets		(1,941,898	)		(1,837,342	)
Depreciation		8,172,446			8,641,080
Provision for credit losses		55,750			1,959,707
Net amortization of deferred fees and costs, premiums and discounts		(1,992,153	)		(2,140,548	)
Provision for deferred income taxes		311,971			(2,495,489	)
Policy and pre-need acquisition costs deferred		(21,343,031	)		(24,432,809	)
Policy and pre-need acquisition costs amortized		15,032,413			16,724,336
Value of business acquired amortized		907,958			1,300,002
Mortgage servicing rights, additions		(90,370	)		(1,009,312	)
Amortization of mortgage servicing rights		611,638			587,931
Stock based compensation expense		800,820			601,362
Benefit plans funded with treasury stock		1,220,564			2,210,719
Net change in fair value of loans held for sale		(2,869,729	)		478,460
Originations of loans held for sale		(2,295,830,408	)		(2,173,080,584	)
Proceeds from sales of loans held for sale		2,338,209,587			2,224,454,040
Net gains on sales of loans held for sale		(45,383,321	)		(40,239,112	)
Change in assets and liabilities:
Land and improvements held for sale		(1,430,941	)		(62,217	)
Future policy benefits and unpaid claims		31,595,619			29,745,349
Other operating assets and liabilities		4,747,167			(2,025,510	)
Net cash provided by operating activities		57,319,850			53,875,121
Cash flows from investing activities:
Purchases of fixed maturity securities		(85,235,694	)		(70,315,501	)
Sales, calls and maturities of fixed maturity securities		101,038,735			42,966,901
Purchase of equity securities		(3,098,448	)		(6,993,289	)
Sales of equity securities		2,321,623			6,346,625
Purchases of restricted assets		(6,039,118	)		(3,065,758	)
Sales, calls and maturities of restricted assets		1,579,178			840,080
Purchases of cemetery perpetual care trust investments		(4,615,717	)		(1,083,550	)
Sales, calls and maturities of cemetery perpetual care trust investments		2,607,608			458,046
Mortgage loans held for investment, other investments and policy loans made		(740,739,575	)		(645,581,141	)
Payments received for mortgage loans held for investment, other investments and policy loans		707,194,046			682,267,677
Purchases of property and equipment		(2,470,032	)		(1,109,937	)
Sales of property and equipment		365,697			-
Purchases of real estate		(52,348,798	)		(22,894,604	)
Sales of real estate		36,306,431			32,772,520
Net cash provided by (used in) investing activities		(43,134,064	)		14,608,069

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

	Years Ended December 31,
	2024			2023
Cash flows from financing activities:
Investment contract receipts		13,302,949			12,572,508
Investment contract withdrawals		(15,631,260	)		(15,654,593	)
Proceeds from stock options exercised		449,122			134,387
Purchase of treasury stock		(3,053,506	)		(2,846,447	)
Repayment of bank loans		(1,929,346	)		(69,602,737	)
Proceeds from bank loans		-			68,500,000
Net change in warehouse line borrowings for loans held for sale		2,855,476			(55,146,726	)
Net cash used in financing activities		(4,006,565	)		(62,043,608	)
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents		10,179,221			6,439,582
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year		139,923,399			133,483,817
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year	$	150,102,620		$	139,923,399

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest	$	4,196,139		$	5,136,747
Income taxes		8,227,642			20,406,598

Non Cash Investing and Financing Activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	1,770,873		$	160,348
Loans held for sale foreclosed into real estate held for sale		858,977			-
Mortgage loans held for investment foreclosed into real estate held for sale		671,480			-
Loans held for sale foreclosed into receivables		382,936			-
Right-of-use assets obtained in exchange for finance lease liabilities		176,040			12,332
Transfer of loans held for sale to mortgage loans held for investment		-			3,017,626
Transfer from mortgage loans held for investment to restricted assets		-			1,625,961
Transfer from mortgage loans held for investment to cemetery perpetual care trust investments		-			1,611,550

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents as shown in the consolidated statements of cash flows is presented in the table below:

	Years Ended December 31,
	2024		2023
Cash and cash equivalents	$	140,546,421	$	126,941,658
Restricted assets		8,553,803		10,114,694
Cemetery perpetual care trust investments		1,002,396		2,867,047
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	150,102,620	$	139,923,399
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year	$	150,102,620	$	139,923,399

See accompanying notes to consolidated financial statements.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies

General Overview of Business

Security National Financial Corporation and its wholly owned subsidiaries (the “Company”) operate in three reportable business segments: life insurance, cemetery and mortuary, and mortgages. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products and accident and health insurance marketed primarily in the states located in western, mid-western and southern regions of the United States. The cemetery and mortuary segment of the Company consists of eight mortuaries and five cemeteries in Utah, one cemetery in California, and four mortuaries and one cemetery in New Mexico. The mortgage segment is an approved government and conventional lender that originates and underwrites residential and commercial loans for new construction, existing homes, and real estate projects primarily in Florida, Nevada, Texas, and Utah.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Principles of Consolidation

These consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

Management of the Company has made several estimates and assumptions related to the reported amounts of assets and liabilities, reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with GAAP. Actual results could differ from those estimates.

Investments

The Company’s management determines the appropriate classifications of investments in fixed maturity securities and equity securities at the acquisition date and re-evaluates the classifications at each balance sheet date.

Fixed maturity securities available for sale are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded in accumulated other comprehensive income (loss).

Equity securities are carried at estimated fair value. Changes in fair values are reported as unrealized gains or losses and are recorded through net earnings as a component of gains (losses) on investments and other assets.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

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 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 term of the loans. Origination fees are included in net investment income on the 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.

Real estate held for investment is carried at cost, less accumulated depreciation provided on a straight-line basis over the estimated useful lives of the properties or is adjusted to a new basis for impairment in value, if any. Included, if any, are foreclosed properties. These properties are recorded at the lower of cost or fair value upon foreclosure. Also, included is residential subdivision land development which is carried at cost.

Real estate held for sale is carried at lower of cost or fair value, less estimated costs to sell. Depreciation is not recognized on real estate classified as held for sale.

Other investments and policy loans are carried at the aggregate unpaid balances, less allowances for credit losses.

Accrued investment income refers to the income earned from investments that has not yet been received by the Company.

Gains (losses) on investments (except for equity securities carried at fair value through net earnings) arise when investments are sold and are recorded on the trade date and the cost of the securities sold is determined using the specific identification method. The provision (release) for credit losses for fixed maturity securities held for sale are also included in gains (losses) on investments. See Note 2 for more information regarding the Company’s evaluation of credit losses.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Loans Held for Sale

Accounting Standards Codification (“ASC”) No. 825, “Financial Instruments”, allows for the option to report certain financial assets and liabilities at fair value initially and at subsequent measurement dates with changes in fair value included in earnings. The option may be applied instrument by instrument, but it is irrevocable. The Company elected the fair value option for loans held for sale. The Company believes the fair value option most closely aligns the timing of the recognition of gains and costs. These loans are intended for sale and the Company believes that fair value is the best indicator of the resolution of these loans. Electing fair value also reduces certain timing differences and better matches changes in the fair value of these assets with changes in the fair value of the related derivatives used for these assets. See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

The Company, through its mortgage subsidiaries, sells mortgage loans to third-party investors without recourse unless defects are identified in the representations and warranties made at loan sale. It may be required, however, to repurchase a loan or pay a fee instead of repurchasing under certain events, which include the following:

	●	Failure to deliver original documents specified by the investor,
	●	The existence of misrepresentation or fraud in the origination of the loan,
	●	The loan becomes delinquent due to nonpayment during the first several months after it is sold,
	●	Early pay-off of a loan, as defined by the agreements,
	●	Excessive time to settle a loan,
	●	Investor declines purchase, and
	●	Discontinued product and expired commitment.

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company.

It is the Company’s policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

	●	Research reasons for rejection,
	●	Provide additional documents,
	●	Request investor exceptions,
	●	Appeal rejection decision to purchase committee, and
	●	Commit to secondary investors.

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six-month period, the loans are repurchased and transferred to mortgage loans held for investment at the lower of cost or fair value and previously recorded mortgage fee income that was to be received from a third-party investor is written off against the loan loss reserve. Any loan that later becomes delinquent is evaluated by the Company at that time and any impairment is adjusted accordingly.

Determining Fair Value

The cost for loans held for sale is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Fair value is often difficult to determine and may contain significant unobservable inputs, but is based on the following guidelines:

	●	For loans that are committed, the Company uses the commitment price.
	●	For loans that are non-committed that have an active market, the Company uses the market price.
	●	For loans that are non-committed where there is no market but there is a similar product, the Company uses the fair value for the similar product.
	●	For loans that are non-committed where no active market exists, the Company determines that the unpaid principal balance best approximates the fair value, after considering the fair value of the underlying real estate collateral, estimated future cash flows, and the loan interest rate.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

The appraised value of the real estate underlying the original mortgage loan adds support to the Company’s determination of fair value because if the loan becomes delinquent the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan, thus minimizing credit losses. Most loans originated are sold to third-party investors. The amounts expected to be sold to investors are shown on the consolidated balance sheets as loans held for sale.

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. All revenues and costs are recognized when the mortgage loan is funded and any changes in fair value are shown as a component of mortgage fee income. See Note 3 and Note 17 to Consolidated Financial Statements for additional disclosures regarding loans held for sale and mortgage fee income.

Loan Loss Reserve

The loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on loans sold to third-party investors classified as loans held for sale on the consolidated balance sheets. The Company may be required to reimburse third-party investors for costs associated with early payoff of loans within six months of origination of such loans and to repurchase loans where there is a default, in any, of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale relating to any guarantee or recourse provisions in the event of defects in the representation and warranties made at loan sale. The Company accrues a monthly allowance for indemnification losses to investors based on total production. This estimate is based on the Company’s historical experience and is included as a component of mortgage fee income. Subsequent updates to the recorded liability from changes in assumptions are recorded in selling, general and administrative expenses as a component of provision for loan loss reserve. The estimated liability for indemnification losses is included in other liabilities and accrued expenses.

The loan loss reserve analysis involves mortgage loans that have been sold to third-party investors, which were believed to have met investor underwriting guidelines at the time of sale, where the Company has received a demand from the investor. There are generally three types of demands: make whole, repurchase, or indemnification. These types of demands are further described as follows:

Make whole demand — A make whole demand occurs when an investor forecloses on a property and then sells the property. The make whole amount is calculated as the difference between the original unpaid principal balance, payments received, accrued interest and fees, less the sale proceeds.

Repurchase demand — A repurchase demand usually occurs when there is a significant payment default, error in underwriting or detected loan fraud.

Indemnification demand — On certain loans the Company has negotiated a set fee that is to be paid in lieu of repurchase. The fee varies by investor and by loan product type.

The Company believes the loan loss reserve represents probable loan losses incurred as of the balance sheet date.

Additional information related to the Loan Loss Reserve is included in Note 3.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

Restricted Assets

Restricted assets are assets held in a trust account for future mortuary services and merchandise. Restricted assets also include 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 funded its medical benefit safe-harbor limit based on the qualified direct costs and has included this amount as a component of restricted cash. Additional information related to restricted assets is included in Notes 2 and 8 to Consolidated Financial Statements.

Cemetery Perpetual Care Trust Investments

Cemetery endowment care trusts have been set up for five of the seven cemeteries owned by the Company. Under endowment care arrangements a portion of the price for each lot sold is withheld and invested in a portfolio of investments like those described in the prior paragraph. The earnings stream from the investments is designed to fund future maintenance and upkeep of the cemetery. Additional information related to cemetery perpetual care trust investments is included in Notes 2 and 8 to Consolidated Financial Statements.

Cemetery Land and Improvements

The development of a cemetery involves not only the initial acquisition of raw land but also the installation of roads, water lines, landscaping, and other costs to establish a marketable cemetery lot. The costs of developing the cemetery are shown as an asset on the balance sheet. The amount on the balance sheet is reduced by the total cost assigned to the development of a particular lot when the criterion for recognizing a sale of that lot is met.

Deferred Policy Acquisition Costs

Commissions and other costs, net of commission and expense allowances for reinsurance ceded, that vary with and are primarily related to the production of new insurance business have been deferred. Deferred policy acquisition costs (“DAC”) for traditional life insurance are amortized over the premium paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For interest-sensitive insurance products, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges, investment, mortality, and expense margins. This amortization is adjusted when estimates of current or future gross profits to be realized from a group of products are reevaluated. Deferred acquisition costs are written off when policies lapse or are surrendered.

When accounting for DAC, the Company considers internal replacements of insurance and investment contracts. An internal replacement is a modification in product benefits, features, rights, or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to contract, or by the election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract are accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced contract are written off. Modifications that result in a contract that is substantially unchanged from the replaced contract are accounted for as a continuation of the replaced contract.

Value of Business Acquired

Value of business acquired (“VOBA”) is the present value of estimated future profits of the acquired business and is amortized like deferred policy acquisition costs. The critical issues explained for deferred acquisition costs would also apply for the value of business acquired.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

Premium Deficiency and Loss Recognition Testing

Mortgage Servicing Rights

Mortgage Servicing Rights (“MSR”) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company retains and provides loan servicing functions on loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of real estate owned and property dispositions.

The total residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans. The value of MSRs is derived from the net cash flows associated with the servicing contracts. The Company receives a servicing fee of generally about 0.25% annually on the remaining outstanding principal balances of the loans. Based on the result of the cash flow analysis, an asset or liability is recorded for mortgage servicing rights. The servicing fees are collected from the monthly payments made by the mortgagors. The Company generally receives other remuneration including rights to various mortgagor-contracted fees such as late charges, and collateral reconveyance charges and the Company is generally entitled to retain the interest earned on funds held pending remittance of mortgagor principal, interest, tax, and insurance payments. Contractual servicing fees and late fees are included in other revenues on the consolidated statements of earnings.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with an initial term of 30 years and MSRs backed by mortgage loans with an initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in the market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. Amortization expense is included in other expenses on the 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.

Interest rate risk, prepayment risk, and default risk are inherent risks in MSR valuation. Interest rate changes largely drive prepayment rates. Refinance activity generally increases as rates decline. A significant decrease in rates beyond expectation could cause a decline in the value of the MSR. On the contrary, if rates increase borrowers are less likely to refinance or prepay their mortgage, which extends the duration of the loan and MSR values are likely to rise. Because of these risks, discount rates and prepayment speeds are used to estimate the fair value.

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

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

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. When management 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.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is calculated principally on the straight-line method over the estimated useful lives of the assets which range from three to forty years. Leasehold improvements paid for by the Company as a lessee are amortized over the lesser of the useful life or remaining lease terms.

Long-lived Assets

Long-lived assets to be held and used, including property and equipment and real estate held for investment, are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset, and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

Derivative Instruments

Mortgage Banking Derivatives

Loan Commitments

The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the time a loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of loan commitments that will be exercised (i.e., the number of loans that will be funded) fluctuates. The probability that a loan will not be funded, or the loan application is denied or withdrawn within the terms of the commitment is driven by several factors, particularly the change, if any, in mortgage rates following the issuance of the loan commitment.

In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker, or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance), product type and the application approval status. The Company has developed fallout estimates using historical data that consider all the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most current data.

The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage-backed securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment net of estimated commission expense. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of related expenses. Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of mortgage loans that will fund within the terms of the commitments.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

Forward Sale Commitments

The Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments. Management expects these types of commitments will experience changes in fair value 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 consolidated balance sheets.

Call and Put Option Derivatives

The Company discontinued its use of selling “out of the money” call options on its equity securities and the use of selling put options as a source of revenue in the first quarter of 2023. The net changes in the fair value of call and put options are shown in current earnings as a component of realized gains (losses) on investments and other assets. Call and put options were shown in other liabilities and accrued expenses on the consolidated balance sheets.

Allowances for Credit Losses

The Company records allowances for current expected credit losses from fixed maturity securities available for sale, mortgage loans held for investment, other investments, and receivables in accordance with GAAP. The allowances for credit losses are valuation accounts that are reported as a reduction of the financial asset’s cost basis and are measured on a pool basis when similar risk characteristics exist. The Company estimates allowances for credit losses using relevant available information from both internal and external sources. The Company considers its historical loss experience, analyzes current market conditions and forecasts and uses third-party assistance to arrive at current expected credit losses. Amounts are written off against the allowance for credit losses when determined to be uncollectible. See below under Recent Accounting Pronouncements regarding the adoption of ASU 2016-13. See Notes 2 and 4 to Consolidated Financial Statements regarding the Company’s evaluation of allowances for credit losses.

Future Policy Benefits and Unpaid Claims

Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, lapse rates, surrender rates, dividend crediting rates, mortality, morbidity, and other assumptions based on the life insurance subsidiaries’ historical experience, industry standards, and best estimate of future results, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are, for some plans, graded to equal statutory values or cash values at or prior to maturity, which are deemed a reasonable equivalent for GAAP. The range of assumed interest rates for all traditional life insurance policy reserves was 4% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit claims are charged to expense in the period the claims are incurred. Increases in future policy benefits are charged to expense.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period more than related policy account balances. Interest credit rates for interest-sensitive insurance products ranged from 3% to 6.5%.

The Company records an unpaid claims liability for claims in the course of settlement equal to the death benefit amount less any reinsurance recoverable amount for claims reported. There is also an unpaid claims liability for claims incurred but not reported. This liability is based on the historical experience of the net amount of claims that were reported in reporting periods subsequent to the reporting period when claims were incurred.

Unearned Premium Reserve

The universal life products the Company services have significant policy initiation fees (front-end load) that are deferred and amortized into revenues over the estimated expected gross profits from surrender charges and investment, mortality, and expense margins. The same issues that impact deferred acquisition costs apply to unearned revenue.

Participating Insurance

Participating business constituted 2% of insurance in force for the years ended 2024 and 2023. The provision for policyholders’ dividends included in policyholder obligations is based on dividend scales anticipated by management. The amounts to be paid are determined by the Company’s Board of Directors. The expense recognized for policyholder dividends is included in surrenders and other policy benefits on the consolidated statements of earnings.

Recognition of Insurance Premiums and Other Considerations

Premiums and other considerations for traditional life insurance products (which include those products with fixed and guaranteed premiums and benefits and consist principally of whole life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies) are recognized as revenues when due from policyholders. Premiums and other consideration for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies, deferred annuities, and annuities without life contingencies) are reflected as increases in liabilities for policyholder account balances and not as revenues. Revenues reported for these products consist of policy charges for the cost of insurance, administration charges, amortization of policy initiation fees and surrender charges assessed against policyholder account balances. Surrender benefits paid relating to these products are reflected as decreases in liabilities for policyholder account balances and not as expenses. The Company receives investment income earned from the funds deposited into account balances, a portion of which is passed through to the policyholders in the form of interest credited. Interest credited to policyholder account balances and benefit claims more than policyholder account balances are reported as expenses, included in death benefits, in the consolidated financial statements.

Reinsurance

The Company follows the procedure of reinsuring risks of more than $100,000 to provide for greater diversification of business to allow management to control exposure to potential losses arising from large risks and provide additional capacity for growth. The Company remains liable for amounts ceded in the event the reinsurers are unable to meet their obligations.

The Company entered into coinsurance agreements with unaffiliated insurance companies under which the Company assumed 100% of the risk for certain life insurance policies and certain other policy-related liabilities of the insurance company.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Expense allowances received in connection with reinsurance ceded are accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly.

Pre-need Sales and Costs

Pre-need contract sales of funeral services and caskets - revenue and costs associated with the sales of pre-need funeral services and caskets are deferred until the performance obligations are fulfilled (services are performed or the caskets are delivered).

Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are deferred until 10% of the sales price has been collected.

Pre-need contract sales of cemetery merchandise (primarily markers and vaults) - revenue and costs associated with the sale of pre-need cemetery merchandise is deferred until the merchandise is delivered to the Company.

Pre-need contract sales of cemetery services (primarily merchandise delivery, installation fees and burial opening and closing fees) - revenue and costs associated with the sales of pre-need cemetery services are deferred until the services are performed.

Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral services, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred until the merchandise is delivered or services are performed.

Revenues and costs for at-need sales are recorded when a valid contract exists, the services are performed, collection is reasonably assured and there are no significant performance obligations remaining.

The Company, through its cemetery and mortuary operations, provides guaranteed funeral arrangements wherein a prospective customer can receive future goods and services at guaranteed prices. To accomplish this, the Company, through its life insurance operations, sells to the customer an increasing benefit life insurance policy that is assigned to the mortuaries. If, at the time of need, the policyholder/potential mortuary customer utilizes one of the Company’s facilities, the guaranteed funeral arrangement contract that has been assigned will provide the funeral goods and services at the contracted price. The increasing life insurance policy will cover the difference between the original contract prices and current prices. Risks may arise if the difference cannot be fully met by the life insurance policy. However, management believes that given current inflation rates and related price increases of goods and services, the risk of exposure is minimal.

Goodwill

Previous acquisitions have been accounted for as purchases under which assets acquired, and liabilities assumed were recorded at their fair values with the excess purchase price recognized as goodwill. The Company evaluates annually or when changes in circumstances warrant the recoverability of goodwill and if there is a decrease in value, the related impairment is recognized as a charge against income.

Other Intangibles

Other intangibles are recognized apart from goodwill whenever an acquired intangible asset arises from contractual or other legal rights, or whenever it is capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged, either individually or in combination with a related contract, asset, or liability. The Company engages a third-party valuation firm to analyze the value of the intangible assets that result from significant acquisitions. The value of the intangible assets that result from these acquisitions are included in Other Assets and are determined using the income approach, relying on a relief from the royalty method.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

Income Taxes

Income taxes include taxes currently payable plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences in the financial reporting basis and tax basis of assets and liabilities and operating loss carry-forwards. Deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Deferred tax assets and liabilities require various estimates and judgments and may be affected favorably or unfavorably by various internal and external factors. Factors affecting the deferred tax assets and liabilities include, but are not limited to, changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws or regulations, and changes to overall levels of pre-tax earnings. Changes in these estimates, judgments or factors may result in an increase or decrease to the Company’s deferred tax assets and liabilities with a related increase or decrease in the Company’s provision for income taxes. Estimated interest and penalties related to uncertain tax penalties are included as a component of income tax expense.

Earnings Per Common Share

The Company computes earnings per share, which requires a presentation of basic and diluted earnings per share. Basic earnings per equivalent Class A common share are computed by dividing net earnings by the weighted-average number of Class A common shares outstanding during each year presented, after the effect of the assumed conversion of Class C Common Stock to Class A Common Stock. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the year used to compute basic earnings per share plus dilutive potential incremental shares by application of the treasury stock method. Basic and diluted earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

Stock Based Compensation

The cost of employee services received in exchange for an award of equity instruments is recognized in the financial statements and is measured based on the fair value on the grant date of the award. The fair value of stock options is calculated using the Black Scholes Option Pricing Model. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award and is included in personnel expenses on the consolidated statements of earnings.

Concentration of Credit Risk

For a description of the concentration risk regarding available for sale debt securities, mortgage loans held for investment and real estate held for investment, refer to Note 2, and for receivables from reinsurers, refer to Note 10 of the Notes to Consolidated Financial Statements.

Advertising

The Company expenses advertising costs as incurred.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

Recent Accounting Pronouncements

Accounting Standards Adopted in 2024

ASU No. 2023-07: “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” — Issued in November 2023, ASU 2023-07 requires enhanced disclosures about significant segment expenses. The key amendments include: (i) disclosures on significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss on an annual and interim basis; (ii) disclosures on an amount for other segment items by reportable segment and a description of its composition on an annual and interim basis. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss; (iii) providing all annual disclosures on a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting in interim periods; and (iv) specifying the title and position of the CODM. The Company adopted ASU 2023-07 retrospectively for the annual period beginning January 1, 2024, and for the interim periods beginning January 1, 2025. The adoption of ASU 2023-07 did not affect the Company’s financial position or results of operations. Refer to Note 15 for the disclosures regarding the Company’s business segments.

Accounting Standards Adopted in 2023

ASU No. 2016-13: “Financial Instruments – Credit Losses (Topic 326)” — Issued in September 2016, ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis (such as mortgage loans held for investment and held to maturity debt securities) and available for sale debt securities. For assets held at an amortized cost basis, Topic 326 eliminates the probable initial recognition threshold and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities Topic 326 requires that credit losses be presented as an allowance rather than as a write-down. The Company adopted this standard on January 1, 2023, and after a review of the affected assets, decreased the opening balance of retained earnings in stockholders’ equity by $671,506 on January 1, 2023. The allowances for credit losses increased (decreased) by the following amounts.

	Amount
Mortgage loans held for investment:
Residential	$	(192,607	)
Residential construction		301,830
Commercial		555,807
Total		665,030

Restricted assets - mortgage loans held for investment:
Residential construction		3,463

Cemetery perpetual care trust investments - mortgage loans held for investment:
Residential construction		3,013

Grand Total		671,506

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

1) Significant Accounting Policies (Continued)

Accounting Standards Issued But Not Yet Adopted

ASU No. 2018-12: “Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts” — Issued in August 2018, ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future policy benefits on traditional long-duration contracts by requiring that assumptions be updated after contract inception and by modifying the rate used to discount future cash flows. The standard is aimed at improving the accounting for certain market-based options or guarantees associated with deposit or account balance contracts, simplifying amortization of deferred acquisition costs while improving and expanding required disclosures. In November 2020, ASU No. 2020-11: “Financial Services – Insurance (Topic 944): Effective Date and Early Application,” was issued. This ASU was issued to provide additional time for the implementation of ASU No. 2018-12 by deferring the effective date by one year. For smaller reporting companies, this update is effective for annual reporting periods beginning after December 15, 2024, and interim reporting periods beginning after December 15, 2025. The Company will adopt the standard commencing with its annual reporting period ending December 31, 2025. The Company is nearing completion of its analysis and implementation of the new standard, including the identification of cohorts, system updates, and design. The Company has engaged its team of actuaries, accountants, and systems specialists and consulted external system providers as part of the implementation. The adoption of this guidance is expected to have an impact on its financial position, results of operations, and disclosures, as well as systems, processes and controls. The Company continues to evaluate the impact of the new guidance on its consolidated financial statements.

ASU No. 2023-09: “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” — Issued in December 2023, ASU 2023-09 requires that public business entities, on an annual basis: (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments in this update require that all entities disclose on an annual basis the following information about income taxes paid: (i) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and (ii) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). ASU 2023-09 is effective for the Company for the annual reporting periods beginning January 1, 2025. The Company will adopt the standard commencing with its annual reporting period ending December 31, 2025. The Company does not anticipate that the adoption of ASU 2023-09 will have a material impact on the consolidated financial statements.

ASU No. 2024-03: “Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” — Issued in November 2024, ASU 2024-03 requires public business entities to disclose, in the notes to the consolidated financial statements, specified information about certain expenses at each interim and annual reporting period. ASU 2024-03 requires disclosures about specific types of expenses (i.e., (a) purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization) included in the expense captions presented on the face of the statement of earnings as well as disclosures about selling expenses. ASU 2024-03 does not change the requirements for the presentation of expenses on the statement of earnings. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Accordingly, the Company will adopt the standard commencing with its annual reporting period ending December 31, 2027. The Company is in the process of estimating the potential impact of the new guidance on the consolidated financial statements.

The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

2) Investments

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

Schedule of Investments

	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 Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

2) Investments (Continued)

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

	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses (1)			Allowance for Credit Losses			Estimated Fair Value
December 31, 2023:
Fixed maturity securities, available for sale, at estimated fair value:
U.S. Treasury securities and obligations of U.S. Government agencies	$	111,450,753		$	344,425	$	(1,416,448	)	$	-		$	110,378,730

Obligations of states and political subdivisions		6,524,083			500		(319,260	)		-			6,205,323

Corporate securities including public utilities		232,299,727			3,688,642		(7,145,507	)		(308,500	)		228,534,362

Mortgage-backed securities		40,359,878			506,647		(4,702,905	)		(6,049	)		36,157,571

Redeemable preferred stock		250,000			10,000		-			-			260,000

Total fixed maturity securities available for sale	$	390,884,441		$	4,550,214	$	(13,584,120	)	$	(314,549	)	$	381,535,986

Equity securities at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$	10,571,505		$	3,504,141	$	(439,575	)				$	13,636,071

Total equity securities at estimated fair value	$	10,571,505		$	3,504,141	$	(439,575	)				$	13,636,071

Mortgage loans held for investment at amortized cost:
Residential	$	103,153,587
Residential construction		104,052,748
Commercial		74,176,538
Less: Unamortized deferred loan fees, net		(1,623,226	)
Less: Allowance for credit losses		(3,818,653	)
Less: Net discounts		(324,157	)

Total mortgage loans held for investment	$	275,616,837

Real estate held for investment - net of accumulated depreciation:
Residential	$	40,924,865
Commercial		142,494,427

Total real estate held for investment	$	183,419,292

Real estate held for sale:
Residential	$	-
Commercial		3,028,973

Total real estate held for sale	$	3,028,973

Other investments and policy loans at amortized cost:
Policy loans	$	13,264,183
Insurance assignments		45,605,322
Federal Home Loan Bank stock (2)		2,279,800
Other investments		9,809,148
Less: Allowance for credit losses for insurance assignments		(1,553,836	)

Total policy loans and other investments	$	69,404,617

Accrued investment income	$	10,170,790

Total investments	$	936,812,566

(1)

Gross unrealized losses are net of allowance for credit losses

(2)

Includes $530,900 of Membership stock and $1,748,900 of Activity stock due to short-term advances and letters of credit.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

SECURITY NATIONAL FINANCIAL CORP 10-K