SECURITY NATIONAL FINANCIAL CORP
For the period ended Dec 31, 2025. Filed Mar 16, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 16, 2026
SNFCA$9.48+1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001641172-25-001508
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-16.
0001493152-26-010228
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 75 current paragraphs.
39 unchanged; 31 reworded; 5 added; 14 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Profitability for 2025 increased due to (a) a $8,124,000 increase in net investment income, (b) a $1,174,000 increase in gains on investments and other assets, (c) a $340,000 increase in other revenues, (d) a $219,000 decrease in intersegment expenses, and (e) a $101,000 increase in insurance premiums and other considerations, which were partially offset by (i) a $6,134,000 increase in selling, general and administrative expenses, (ii) a $711,000 increase in amortization of deferred policy acquisition costs, (iii) a $621,000 increase in income tax expense, (iv) a $276,000 decrease in intersegment revenue, (v) a $205,000 increase in policyholder benefits and claims, and (vi) a $7,000 increase in interest expense.
Current report
Mortgage rates have followed the US Treasury yields in response to inflation and slowing new home sales. As expected, the lack of mortgage rate reductions has resulted in a decrease in loan originations classified as ‘refinance.’ Higher than anticipated mortgage rates have also had a negative effect on loan originations classified as ‘purchases’ although not as significant as those in the refinance classification.
Current report
A liability for future policy benefits is accrued as premium revenue is recognized, which is the present value of expected future policy benefits to be paid to or on behalf of policyholders less the present value of expected future net premiums to be collected from policyholders. This liability is calculated using a discount rate assumption that is an upper-medium grade fixed-income instrument yield as provided by Bloomberg’s Evaluated Pricing (“BVAL”) methodology. This discount rate for a particular cohort is locked-in when that cohort is closed to new contracts and is used for purposes of interest accretion for the future policy benefits liability and is reflected in policyholder benefits and claims on the consolidated statements of earnings. The current rate as of each reporting date is used to calculate an adjusted future policy benefit liability and is recognized through accumulated other comprehensive income (“AOCI”). Other assumptions include best-estimate mortality and lapse rates that are based on the company’s historical experience, industry data, and other factors; also estimates of expected non-level costs, such as termination or settlement costs. Routine policy maintenance costs are not included. These assumptions are reviewed at least annually. Any changes to these assumptions will be reflected in policyholder benefits and claims on the consolidated statements of earnings. The DPL equals accumulated deferrals (prior to and including the valuation date) minus accumulated amortization, where “deferrals” equals the difference between gross and net premium, and “amortization” equals the product of the measure of in force policies (units in force) and an amortization ratio which is updated at the same time as the net premium ratio.
Current report
Commissions and other acquisition costs, net of commission and expense allowances for reinsurance ceded, that vary with and are primarily related to the production of new insurance business that have been incurred are deferred. For traditional long-duration life insurance products, deferred policy acquisition costs (“DAC”) are amortized on a constant-level basis established on a cohort-grouped contract basis over the expected term of the related contracts, with the amortization basis being units in force using assumptions consistent with those used in computing the liability for future policy benefits. For policyholder account balance insurance products, DAC is amortized using the policy counts for annuities and units in-force for interest sensitive life products. Deferred acquisition costs are written off when policies terminate.
Current report
Amortization of deferred policy and pre-need acquisition costs and value of business acquired increased by $648,000, or 5.9%, to $11,661,000 for 2025, from $11,013,000 for 2024. This increase is due to a $689,000 increase in the amortization of deferred policy and pre-need acquisition costs due to an increase in the average outstanding balance. This increase was partially offset by a $41,000 decrease in the amortization of value of business acquired due to no new deferrals and a decreasing average outstanding balance.
Removed paragraphs (14)
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Premium Deficiency and Loss Recognition Testing
Previous report
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.
Previous report
Loan Loss Reserve
Previous report
The Company provides for losses on its mortgage loans held for sale through the mortgage loan loss reserve (a liability account).
Previous report
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.
Previous report
Loan Commitments
Previous report
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.
Previous report
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.
Reworded paragraphs (31)
Previous wording
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.
Current wording
The following table shows the condensed financial results for the Company’s insurance operations for 2025, and 2024. See Note 20 of the Notes to Consolidated Financial Statements. See Note 1 of the Notes to Consolidated Financial Statements regarding the adoption of ASU 2018-12.
Previous wording
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.
Current wording
Profitability in 2025 decreased due to (a) a $888,000 decrease in cemetery pre-need sales, (b) a $570,000 increase in selling, general and administrative expenses, (c) a $223,000 decrease in net investment income, (d) an $8,000 increase in income tax expense, and (e) a $2,000 increase in interest expense, which were partially offset by (i) a $526,000 increase in mortuary at-need sales, (ii) a $474,000 increase in gains on investments and other assets, (iii) a $377,000 increase in other revenues, (iv) a $143,000 decrease in costs of goods and services sold, (v) a $63,000 decrease in amortization of deferred policy acquisition costs, (vi) a $29,000 increase in cemetery at-need sales, and (vii) a $29,000 decrease in intersegment expenses.
Previous wording
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.
Current wording
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 0.85% of its loan origination volume. These mortgage loans are serviced by either SecurityNational Mortgage or an approved third-party sub-servicer.
Previous wording
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.
Current wording
For 2025, and 2024, SecurityNational Mortgage originated 6,844 loans ($2,296,055,000 total volume) and 7,269 loans ($2,295,830,000 total volume), respectively.
Previous wording
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.
Current wording
Losses in 2025 compared to 2024 decreased due to (a) a $5,462,000 increase in secondary gains from investors, (b) a $3,076,000 decrease in personnel expenses, (c) a $1,302,000 decrease in rent and rent related expenses, (d) a $1,046,000 increase in gains on investments and other assets, (e) a $248,000 decrease in intersegment expenses, and (f) a $13,000 decrease in depreciation on property and equipment, which were partially offset by (i) a $2,254,000 decrease in the fair value of loans held for sale, (ii) a $1,563,000 decrease in the fair value of loan commitments, (iii) a $1,379,000 decrease in other revenues, (iv) a $994,000 decrease in income from loan originations, (v) an $845,000 increase in commissions, (vi) an $833,000 increase in other expenses, (vii) a $488,000 increase in costs related to funding mortgage loans, (viii) a $390,000 increase in advertising expenses, (iv) a $374,000 increase in income tax expense, (x) a $287,000 decrease in net investment income, (xi) a $255,000 increase in interest expense, (xii) a $220,000 decrease in intersegment revenues, and (xiii) a $187,000 increase in data processing and IT related expenses.
Previous wording
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.
Current wording
Two 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.
Previous wording
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.
Current wording
Value of business acquired (“VOBA”) is the present value of estimated future profits of the acquired business and is amortized the same way as DAC.
Previous wording
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.
Current wording
Total revenues increased by $10,065,000, or 3.0%, to $344,588,000 for 2025 from $334,523,000 for 2024. Contributing to this increase in total revenues was primarily a $7,613,000 increase in net investment income, a $2,695,000 increase in gains on investments and other assets, a $651,000 increase in mortgage fee income, and a $101,000 increase in insurance premiums and other considerations. This increase in total revenues was offset by a $662,000 decrease in other revenues and a $333,000 decrease in net cemetery and mortuary sales.
Previous wording
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.
Current wording
Mortgage fee income increased by $651,000, or 0.6%, to $108,209,000 for 2025, from $107,558,000 for 2024. This increase was primarily due to a $5,462,000 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 $3,817,000 decrease in the fair value of loans held for sale and loan commitments and a $994,000 decrease in loan fees and interest income net of the provision for loan loss reserve.
Previous wording
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.
Current wording
Insurance premiums and other considerations increased by $101,000, or 0.1%, to $119,757,000 for 2025, from $119,656,000 for 2024. This increase was primarily due to an increase of $2,564,000 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. This increase was partially offset by a decrease of $2,463,000 in first year premiums because of decreased preneed insurance sales.
Previous wording
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.
Current wording
Net investment income increased by $7,613,000, or 10.6%, to $79,338,000 for 2025, from $71,725,000 for 2024. This increase was primarily attributable to a $9,875,000 increase in mortgage loan interest, a $1,603,000 increase in fixed maturity securities income, a $928,000 increase in insurance assignment income, $258,000 increase in rental income from real estate held for investment, a $189,000 increase in income in other investments, a $156,000 increase in equity securities income, and a $12,000 increase in policy loan income. This increase was partially offset by a $2,773,000 increase in investment expenses and a $2,635,000 decrease in interest on cash and cash equivalents.
Previous wording
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.
Current wording
Net mortuary and cemetery sales decreased by $333,000, or 1.1%, to $28,704,000 for 2025, from $29,037,000 for 2024. This decrease was primarily due to an $888,000 decrease in cemetery pre-need sales. This decrease was partially offset by a $526,000 increase in mortuary at-need sales and a $29,000 increase in cemetery at-need sales.
Previous wording
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.
Current wording
Gains on investments and other assets increased by $2,695,000, or 138.8%, to $4,636,000 for 2025, from $1,942,000 for 2024. This increase in gains on investments and other assets was primarily due to a $1,167,000 increase in gains on mortgage loans held for investment, an $864,000 increase in gains on real estate held for investment and sale, and an $856,000 increase in gains on equity securities mostly attributable to increases in the fair value of these equity securities. This increase was partially offset by a $101,000 decrease in gains on fixed maturity securities and a $91,000 decrease in gains on other investments and assets.
Previous wording
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.
Current wording
Other revenues decreased by $662,000, or 14.4%, to $3,942,000 for 2025 from $4,604,000 for 2024. This decrease was primarily attributable to a $1,350,000 legal settlement that was received in 2024, which was partially offset by an increase in other miscellaneous revenues in 2025.
Previous wording
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.
Current wording
Total benefits and expenses were $303,178,000, or 88.0% of total revenues for 2025, as compared to $297,149,000, or 88.8% of total revenues for 2024.
Previous wording
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.
Current wording
Policyholder benefits and claims increased by an aggregate of $205,000, or 0.2%, to $100,818,000 for 2025, from $100,613,000 for 2024. This increase was primarily the result of a $2,306,000 increase in death benefits and a $485,000 increase in surrender and other policy benefits. This increase was partially offset by a $2,586,000 decrease in future policy benefits.
Previous wording
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.
Current wording
Selling, general and administrative expenses increased by an aggregate of $5,055,000, or 2.9%, to $181,520,000 for 2025, from $176,465,000 for 2024. This increase was primarily the result of a $3,370,000 increase in other expenses, a $2,067,000 increase in personnel expenses, a $488,000 increase in costs related to funding mortgage loans, a $400,000 increase in advertising expenses, a $76,000 increase in commissions, and a $42,000 increase in depreciation on property and equipment. This increase was partially offset by a $1,386,000 decrease in rent and rent related expenses.
Previous wording
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.
Current wording
Interest expense increased by $265,000, or 6.2%, to $4,519,000 for 2025, from $4,254,000 for 2024. This increase was primarily due to an increase of $256,000 in interest expense on mortgage warehouse lines of credit for loans held for sale and an increase of $9,000 in interest expense on bank loans.
Previous wording
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.
Current wording
Income tax expense increased by $1,002,000, or 12.1%, to $9,257,000 for 2025, from $8,255,000 for 2024. This increase was primarily due to an increase in earnings before income taxes for 2025 compared to 2024. The Company’s overall effective tax rate increased from 22.1% for 2024 to 22.4% in 2025, a 0.3% increase in the effective tax rate or a 1.4% change. This increase was partially due to an increase in non-deductible items.
Previous wording
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.
Current wording
During 2025 and 2024 the Company decreased its loan loss reserve by $312,000 and increased its loan loss reserve by $150,000, 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, 2025 and 2024, the balances were $384,000 and $697,000, respectively. The Company believes the loan loss reserve represents probable loan losses incurred as of December 31, 2025. There is a risk, however, that future loan losses may exceed the loan loss reserve.
Previous wording
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.
Current wording
As of December 31, 2025, the Company’s mortgage loans held for investment portfolio consisted of mortgage loans in an aggregate principal amount of $6,516,000 with delinquencies exceeding 90 days. Of this amount, loans with an aggregate principal amount of $1,204,000 were in foreclosure proceedings. The Company has not received or recognized any interest income on the $6,516,000 in mortgage loans with delinquencies exceeding 90 days. During 2025 and 2024, the Company increased its allowance for credit losses by $704,000 and decreased it by $1,934,000, respectively, which was charged to bad debt expense and included in selling, general and administrative expenses for the period. The main reasons for the increase in 2025 when compared to 2024 were due to an increase in the commercial loan held for investment portfolio and in the residential construction loan held for investment portfolio. The allowances for credit losses on the Company’s mortgage loans held for investment portfolio as of December 31, 2025 and 2024 were $2,589,000 and $1,885,000, respectively.
Previous wording
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.
Current wording
As of December 31, 2025, SecurityNational Mortgage was not in compliance with the net income covenant of the US Bank, Western Alliance Bank and JP Morgan Chase Bank warehouse lines of credit. SecurityNational Mortgage has since received waivers from each of these lenders with respect to this covenant. In the unlikely event the Company is required to repay the outstanding advances of approximately $4,173,449 on the warehouse lines of credit, the Company has sufficient cash to do so. The Company has also performed an analysis of its funding capacities from both internal and external sources and has determined that there are sufficient funds to continue its current business model. The Company continues to negotiate other warehouse lines of credit with other lenders.
Previous wording
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.
Current wording
During 2025 and 2024, the Company’s operations provided cash of $45,540,000 and of $57,320,000, respectively. The decrease in cash provided by operations was due primarily to a decrease in proceeds from loans held for sale.
Previous wording
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.
Current wording
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 $365,986,000 (at estimated fair value) and $348,774,000 (at estimated fair value) as of December 31, 2025, and 2024, respectively. This represented 35.2% and 38.0% of the total investments of the Company as of December 31, 2025, and 2024, respectively. Generally, all bonds owned by the life insurance subsidiaries are rated by the National Association of Insurance Commissioners. Under this rating system, there are six categories used for the rating of bonds. As of December 31, 2025, 1.6% (or $5,825,000) and as of December 31, 2024, 2.4% (or $8,431,000) of the insurance subsidiaries’ total bond investments were invested in bonds in rating categories three through six, which are considered non-investment grade.
Previous wording
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):
Current wording
If market conditions were to cause interest rates to change, the fair value of the Company’s fixed income portfolio (of approximately $705,213,000), 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):
Previous wording
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.
Current wording
The Company’s total capitalization of stockholders’ equity, and bank loans and other loans payable were $508,757,000 and $488,639,000 as of December 31, 2025 and 2024, respectively. This increase was primarily due to a $28,470,000 increase in stockholders’ equity, which was partially offset by a decrease of $8,352,000 in bank loans and other loans payable. Stockholders’ equity as a percentage of total capitalization was 80.7% and 78.2% as of December 31, 2025 and 2024, respectively.
Previous wording
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.
Current wording
Lapse rates measure the amount of insurance terminated during a particular period. The Company’s lapse rate for life insurance was 7.2% for 2025 as compared to a rate of 7.0% for 2024.
Previous wording
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.
Current wording
The combined statutory capital and surplus of the Company’s life insurance subsidiaries was $139,068,000 and $120,216,000 as of December 31, 2025 and 2024, respectively. The life insurance subsidiaries cannot pay dividends to their parent company without the approval of state insurance regulatory authorities.
Previous wording
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.
Current wording
The Company has commitments to fund existing construction and land development loans pursuant to the various loan agreements. As of December 31, 2025, the Company’s commitments were approximately $201,220,000 for these loans, of which $158,908,000 had been drawn. 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.
Previous wording
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.
Current wording
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 15, 16, and 24 of the Notes to Consolidated Financial Statements for more information about these obligations.
Previous wording
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.
Current wording
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 24 of the Notes to Consolidated Financial Statements 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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.