SNFCA

We thank you for joining us today to review our financial and operational results for the period ended March 31st, 2026. Before we begin, I'd like to remind everyone that our remarks today will include forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially from those projected. Such risks include, but are not limited to, changes in economic conditions, interest rates, regulatory developments, competitive pressures, and other factors detailed in our filings with the Securities and Exchange Commission.

We caution you not to place undue reliance on these forward-looking statements, which speak only as of today's date. We undertake no obligation to publicly update or revise these statements to reflect future events or circumstances, except as required by law. With that, I'd like to turn the call over to our Chairman, President, and Chief Executive Officer, Scott Quist. Scott?

Thank you, Heather. To have an increase of over 9% on after-tax earnings despite a top line decrease is a testament to the operational efficiencies our teams have been implementing over the last several years. Of course, we are working diligently to increase our top lines. That is a very stated objective of all our units. Nevertheless, improved profitability is the ultimate goal. We did improve profitability. Our mortgage segment had an outstanding quarter despite the fact that we were still not profitable, improving over 65% from Q1 of 2025. We were cautiously optimistic that we would be profitable in Q1 of 2026. Our teams had worked diligently to improve revenue and to rationalize costs in arguably the weakest quarter of the year.

Our secondary investor pricing in March declined for what was indicated when we locked loans to what was realized when the loans were sold. That unexpected decline represented nearly 50 basis points of revenue, or profit in this case, or nearly $200 million in volume, so it was significant. Obviously, we're reevaluating our processes, but it's fair to say that we had followed our customary policies and procedures and were surprised at the ultimate investor pricing. Even with that unfortunate secondary result, I believe congratulations are due for an outstanding 65% quarter-over-quarter improvement. Our Cemetery and Mortuary Group did improve their top line by 4.4% in Q1 but had a decrease in net income. That decrease, I think, deserves some explanation.

On an ongoing operational basis, meaning before investment results, our operating income actually improved some 16% in Q1 2025 over Q-- excuse me, in Q1 2026 over Q1 2025. This was accomplished primarily by a 35% improvement in preneed cemetery sales. The hard work that has been put in over the last year is showing up in sales, which argues for an even brighter future. Congratulations to our sales team for a fabulous result, in my opinion. The culprit leading to our decrease in net income, again, as opposed to operational income, was our investment income with the largest factor there being an increase in unrealized losses in our common stock portfolio. Our cemetery and mortuary segment, because of consistently profitable operations, has a very considerable investment portfolio which we intend to use as conditions warrant in financing future growth to include acquisitions.

Our life Insurance segment from the table, excuse me, had a 4% decrease in its top line. As has been noted in several press releases, we have been and are continuing to reorganize and improve our sales forces, which has necessitated reorganizations, terminations, and turmoil. I believe I am seeing the turnaround in all our marketing channels, progress continues to be somewhat considered and deliberate. I will note that the majority of the top-line decrease is in our least profitable products. In fact, our underwriting profit, as measured using Statutory Accounting Principles, significantly increased due to our improved premium margins. That has been a very deliberate strategy over the last period of time. If I were to point to a single factor leading to our net income decrease, it would be a decline in our builder profit splits.

Phrased another way, similar to our Cemetery and Mortuary segment, a decrease in net investment income. That characterization is somewhat nuanced. We also increased our land holdings by some $37 million, which has the effect of decreasing, all of the things being equal, our investment income since profit on land holdings, at least in the current period, I should say, since profit on land holdings is only recognized either when the land is sold or when vertical construction begins.

I think it important to keep in mind our net portfolio yield for Q1, as near as I can tell, is still about 100 basis points above industry averages. It is important to maintain perspective in the face of decreased investment income. To summarize, our top line revenue did decrease some 4%, but our profitability did increase over 9%. I think all of our teams did a great job implementing efficiency. Make no mistake, top line growth continues to be a primary objective, but improved profitability is the primary objective, which objective we achieved. Thank you.

Thank you, Scott. Good afternoon, and thank you for joining us today. My name is Garrett Sill, and I am the Chief Financial Officer of Security National Financial Corporation. This was a good quarter for the company, and I want to highlight a few items regarding our consolidated financial statements. First, on our balance sheet, most of our assets remained relatively flat compared to our year-end reporting. However, we did see a combined $32 million decrease in our bond and mortgage loan portfolios. I would note that the decrease in the mortgage portfolios was across all products, in commercial, residential, and construction lending. This decrease was offset by a $20 million increase in real estate investments. Just by way of clarification, Scott referenced $37 million increase in real estate investments. That was a quarter-over-quarter number.

The $20 million is comparing year-end 2025 with Q1 and March 31st, 2026. Our cash balances also increased significantly in Q1, and we've been active in deploying that cash in Q2. Our total liabilities also remained relatively flat with a $9 million decrease in our future policy benefits, which was offset by increased bank debt of $10 million. This increase in bank debt was a result of increased borrowings on warehouse lines of credit, mortgage loan fundings. Our equity also increased $15 million or 3.7% when compared to year-end. I'll discuss in a few minutes, a few items related to our equity. Moving to our statement of earnings, revenues were down 3.6% as we saw decreases in insurance premiums, mortgage fee income and net investment income.

This decrease in revenues was offset by a 5.6% decrease in total expenses as we saw decreases in nearly every category. The net result, as has been discussed, was an increased net earnings quarter-over-quarter of nearly $600,000 or 9.2%. As mentioned in our last call, accelerated filing status and the implementation of ASU 2018-12, better known as Targeted Improvements to the Accounting for Long-Duration Contracts, or LDTI, brought with it some significant changes and challenges to the company. I want to acknowledge and thank our finance, actuary, and information and technology groups for their work on SOX 404(b) compliance and the implementation of LDTI. It has been a significant lift for them in addition to all their other duties and responsibilities.

Regarding the reporting of our adoption of LDTI, I would encourage you to review the Statement of Comprehensive Income on Page 6 of our 10-Q, as it provides the details behind our $15 million increase in equity when our net earnings were only $7 million. This additional $8 million in equity is a result of a $4 million decrease in the fair value of our bond portfolio, which was offset by a decrease in reserves of $14 million and a tax effect of $2 million. This movement in fair values is a result of a decrease in interest rates as compared to year-end. Going forward, our Statement of Comprehensive Income will be an important statement to review to better understand the movement in the company's equities.

I would also draw your attention to Page 12, which contains a reconciliation of our restated Q1 2025 earnings, comprehensive income, and equity. Throughout 2026, we will continue to restate our 2025 quarterly earnings for comparison purposes. For Q1 2025, earnings were restated nearly $2 million. This is primarily a result of our deferred acquisition costs, or DAC, being amortized over the life of the policy instead of the premium paying period. This result was lower DAC amortization, which resulted in an increase in earnings. In closing, Q1 2026 was a good quarter for the company as we saw growth in total assets, stockholders' equity, and net earnings. We still have significant amount of work to do as we continue to test, improve, and remediate our internal controls over the financial reporting. The future does look bright. Next, we'll hear from Andrew Quist. Thank you.

Thank you, Garrett, and good afternoon, fellow shareholders. I'm Andrew Quist, President and CEO of Security National Mortgage Company. In the first quarter of 2026, Security National Mortgage Company had a pre-tax net loss of $698,000 compared to a pre-tax net loss of $1,995,000 in the first quarter of 2025. This was a decrease to our loss of $1,297,000, or a 65% reduction.

The first quarter is historically the most difficult quarter in the mortgage industry. Nevertheless, I was disappointed we lost money in the quarter. At the same time, a 65% improvement in our net loss on the back of a 74% improvement in the fourth quarter is progress worth noting and something I do believe our employees should be congratulated on. As in the fourth quarter, this improvement in net income came on reduced origination volumes. In the first quarter of 2026, we originated $489 million of loan volume compared to $518 million in the first quarter of 2025, a 6% year-over-year decrease. On a sequential quarter basis, origination volumes were down 9%.

Based on the Mortgage Bankers Association reported total industry origination volumes for Q1, SNMC's market share held steady at 9 basis points, the same as in the fourth quarter. The sequential quarter reduction in origination volume was roughly in line with overall industry origination volumes. While the year-over-year decline continues to be impacted by the company separating from a large group of loan originators in the third quarter of last year. As primarily a purchase transaction-based lender, a key concern for Security National in the first quarter was declining home sales. According to the National Association of Realtors, January, February, and March each had lower existing home sales than the same month a year earlier. Affordability and uncertainty continue to weigh heavily on home buyers. We are working hard to counteract these market forces. Last earnings call, I referenced our refinance volumes.

In the most recent quarter, Security National increased to 24% refinance volume from 19% refinance volume in the fourth quarter. This marks another three-year high in that metric. The first quarter also showed noticeable increases in HELOC and reverse mortgage lending activity. Our team continues to focus and improve on assisting our past borrowers with their next financing needs, regardless of what that might be. This broadening of our loan product lending has had the intended result of blunting the impact of fewer home sales. The corollary of broadening our loan product lending is improved productivity. In the first quarter, our average loans per loan officer per month increased 23% over the first quarter in 2025. In a quarter with declining home sales, this is a result I'm particularly proud of.

Security National has helped our loan officers increase their transaction volume while at the same time more fully serving our borrowers' needs. In summary, in the first quarter of 2026, Security National reduced its pre-tax net loss by 65% despite lower origination volumes. This reduction was driven by improved productivity paired with expanded refinance and broadened loan product activity. I'd like to conclude by thanking our loan officers and our employees for their tireless work improving Security National in this challenging environment. The progress being made is tangible. Thank you. I'll now turn the time over to Adam Quist.

Thank you, Andrew. As Andrew said, my name is Adam Quist, and I'm President and CEO of the Security National Life Insurance Companies. My remarks will focus on the performance of our life companies in Q1 2026. Coming off the strongest operational year in our company's history, Q1 2026 showed a modest step back in GAAP revenue and earnings relative to Q1 2025. I want to explain what drove those results and why they are largely expected as a short-term result of long-term strategic decisions. At the outset, I also wanted to highlight that, as Scott mentioned, from a statutory accounting standpoint, our underwriting profit improved from Q1 2025.

Turning to and focusing on our GAAP results, our total life segment revenues were approximately $48.9 million, down about 3% from $50.6 million in Q1 2025. Segment net earnings were $5.9 million compared to $6.2 million a year ago, a decrease of roughly 5%. Two factors account for substantially all of that variance. First, a decline in insurance premiums, which is concentrated in our lowest margin products. Second, a decrease in net investment income driven primarily by our lower profit share distributions from our home builder partners. Insurance premiums were approximately $28.9 million, down about 3% from $29.8 million in Q1 2025.

Importantly, as mentioned, approximately 60% of that decrease is attributable to a decline in single premium business, which as mentioned, is one of our least profitable product lines. The remainder reflects the effects of the ongoing reorganization of our sales force leadership. Over the past two years, we have made significant changes to and investments in our sales leadership talent and sales distribution infrastructure. Building any high-performing sales organization does not happen without some turmoil, and that near-term disruption is visible in our top line. I want to emphasize that we have improved our premium margins, which is showing up in our results. Our renewal premiums remain stable, which reflects the durability of our policyholder base. Our goal is not to have stable premiums. Our goal is to grow premiums.

I am encouraged by what I see across our marketing channels, and I'm confident in the sales leadership and infrastructure investments we have made and are building the right foundation. Our net investment income was $17.7 million, down about 5% from $18.6 million in Q1 2025. There are several moving pieces, but the single largest driver was a decline in profit share distributions from our home builder partners. There is also a related dynamic worth noting. Our investment in land increased by approximately $37 million compared to Q1 2025. That is a meaningful capital commitment, and it carries a near-term opportunity cost because under GAAP, income from land held for investment is not recognized until the lot is sold or a construction loan is taken out.

We have more capital deployed in land than a year ago, and that capital has not yet or is not yet generating reportable net income. Land holdings may be considered a leading indicator. More land investment today may mean more builder profits ahead, but it is nevertheless a net drag currently, and of course, we are subject to macroeconomic housing trends. Even with these headwinds, we believe our net portfolio yield remains approximately 100 basis points above industry averages. We remain confident in our investment strategy over the long term. Despite adding significant talent and continuing to invest in our infrastructure, our overall life insurance segment expenses are up less than 3% year-over-year. That discipline reflects real operational efficiency gains across the organization. Our policyholder benefits and claims also declined by approximately $900,000 or 3.6% to $24.5 million.

In conclusion, Q1 2026 presented real headwinds, a modestly lower top-line premium revenue, which was driven primarily by lower margin premium single-premium business and our sales force transition. It was also driven by lower investment income driven by reduced builder profit share distributions and our growing land portfolio. These dynamics are understood and anticipated. Nevertheless, our goal and expectation is to grow both our top line and bottom line. Beneath those headline numbers, our premium margins improved, our total expenses grew less than 3% despite meaningful talent additions. Our claims declined. We believe our investment portfolio continues to yield well above industry benchmarks. I am confident in the direction of our life companies and in the talent of our team. I look forward to updating you on our progress throughout the year. I will now turn the time over to Steve Kiel, the COO of our Cemeteries and Mortuaries division.

Thank you, Adam. Good afternoon, everyone. I'm Steve Kiel, Chief Operating Officer of Security National Funeral Homes & Cemeteries. I'd like to briefly walk you through our first quarter performance and highlight the key factors that shaped the quarter. For the first quarter of 2026, earnings before tax decreased 4% to $2.149 million, compared with $2.238 million a year ago. Revenue increased 4.4% to $8.473 million from $8.119 million, led by strong Cemetery performance and steady results across the broader business. Importantly, operating earnings before tax, excluding investment results, increased 15.7% to $1.523 million from $1.317 million in the first quarter of 2025.

That improvement reflects solid execution in the business and gives us confidence in the underlying trajectory of the segment. Let me review with you our Funeral Home performance. First quarter earnings before tax decreased 9.5% to $555,000, compared to $613,000 a year ago. Revenue was essentially flat at $3.671 million, compared with $3.673 million in the first quarter of 2025. It's important to note that families served declined 6.7% year-over-year. However, the average funeral sales were able to increase 6.6%. We also saw a 22.5% increase in the percentage of our families choosing cremation with a memorial or funeral service.

Those results reflect stronger service mix, excellent sales discipline, and continued progress as we align our offerings with the changing customer preferences. Over the past year, we have invested heavily in training and operational development to improve our arrangement conference effectiveness, strengthen our sales education, and elevate our service quality across our funeral homes. That work is producing measurable improvement. We believe it positions the funeral home segment for stronger long-term performance. Now turning to our Cemeteries. First quarter earnings before tax increased 37.6% to $996,000 from $704,000 a year ago. Revenue increased 18.5% to $4.209 million from $3.553 million in the first quarter of 2025.

That growth, as noted, was driven primarily by strong net pre-need land sales, which increased 35.1% during the quarter. It's important to note that the number of pre-need land contracts written also increased 15.8%, reflecting effective execution by our sales team and continued momentum with our overall pre-need strategy. We continue to invest heavily in recruiting top-tier talent, deploying consistent training programs, and offering educational community seminars. At the same time, our cemetery placements during the first quarter 2026 declined 5.9% from prior year period, and this remains an area of focus for us. To address that, we are continuing to emphasize family education around permanent placement remembrance while improving the customer experience through stronger arrangement presentations, targeted outreach, enhanced cemetery tours, and ongoing developmental team training. Let me turn now to investment income.

First quarter investment income decreased 33.5% to $591,000 from $889,000 a year ago. The key point is that the change was driven by investment results rather than operating performance. As noted in the press release, unrealized losses on common stock positions were the largest factor affecting net investment income this quarter. We continue to manage capital with a long-term perspective and remain committed to investing in internal growth opportunities, including cemetery garden expansions, as well as external growth opportunities through acquisitions that we expect to support future returns. Before I close, I want to take a moment to thank our funeral home, cemetery grounds, and operational support teams. Their commitment, professionalism, and care make these results possible and continue to strengthen the experience we provide to those families that we have the privilege to serve.

Overall, we're encouraged by the quarter, confident in the direction of the business, and focused on discipline execution. Thank you for your time, your confidence, and your continued partnership. I now turn the time back over to Heather Street, our Human Resources Director.

Thank you, Steve. Before we conclude today's call, we'd like to open the floor for questions. As a reminder, to ask a question, please use the Zoom platform to raise your hand to unmute, or you may submit questions through the Zoom Q&A panel. Include your name and organization. We'll take as many as time permits. From Alex Cardenas, question in regards to the roughly 50 basis point shortfall between locked loan rates and actual investor pricing on about $200 billion in volume for March. What specific changes are you making in your hedging strategy or in your lock-sell timing process to prevent this from recurring? A following, if allowed, do you expect the conflict with Iran to impact volume going forward?

Thank you for the question, Alex. Yeah, that was a difficult one in March. The bottom line is, there's not a lot we can do when the investor simply reduces their pricing from the time of lock to the time of purchase. We're able to get our expected margins or our locked margins that are built into our pricing in that instance. Any additional pickup is hard to account for in a hedging strategy. One of the things that we are doing is simply looking at that change day over day and gathering information on the cumulative impact of that change so that we can make changes in our built-in margins. Because that's the only way that we're going to be able to capture that. It's simply something that we have to be more vigilant for.

As far as the conflict with Iran, it's difficult to tell how that's going to impact volume going forward. Obviously, it has introduced a element of increasing interest rates, which of course impacts volume. I think the bigger issue is the volatility that it's introduced. Anytime that there is volatility, potential home buyers typically don't like that. I think what we'll have to do to blunt that impact is simply be prepared for when those rate drops occur, 'cause there will be pockets of declining rates, to take advantage of those opportunities the market gives us. We have to be prepared for those events and not wait for those events to occur to prepare for them, if that makes sense.

Thank you, Andrew, and thank you, Alex. Do we have any further questions? Thank you again for your questions and participation. We value the engagement and thoughtful input of our shareholders and analysts. As we've come to the end of our time, we'll note the end of our Q&A. Before we officially close, I'd like to take this opportunity to remind everyone that our annual shareholder meeting will be held on June 26th, 2026 at 10:00 A.M. Mountain Daylight Time at 433 Ascension Way, first floor, Salt Lake City, Utah.

For those unable to attend in person, the meeting will also be available via Zoom. For more information about the meeting, our latest financial reports, or any other investor materials, we invite you to visit the investor relations section at our website at www.securitynational.com. We appreciate your continued support of Security National Financial Corporation. This concludes our first quarter 2026 earnings call. We look forward to speaking with you again soon. Thank you and have a great day.

2021. I have started excluding those years simply because of the extraordinary circumstances those years presented, both in terms of the interest rate environment, which as many will recall, actually for a very short period of time gave negative rates. Also the mortality increase which boosted our Cemetery and Mortuary earnings, which circumstances are unlikely to duplicate in the future. I choose to compare ourselves to more normal times. Again, absent the pandemic-related years of 2020 and 2021, this was our best net profit year ever, beating 2024 by nearly 11%, which is significant realizing that 2024 was our previous best year ever, again, absent 2020 and 2021. 2025 was a very good year for our company, and I believe the fourth quarter, in particular, delivered excellent results.

Regarding the Life segment, Mr. Sill will be addressing this more, following my remarks. I would urge your awareness that pursuant to the implementation of ASU 2018-12 Long-Duration Targeted Improvements, otherwise known as LDTI, our Life segment's 2024 full year results were restated upwards by approximately $2 million. Regarding my use of the phrase "very good" in describing our year-end results, I think any time a financial services company achieves a 2% return on total assets is very good. Our entire team, Mortgage, Life Insurance, and Cemetery and Mortuary, joined together to produce that result. Going to my use of the word "excellent" in describing quarterly results, I think any time we achieve a nearly 200% increase over the prior year's Q4 is excellent. Turning now to our specific business segment results.

2025 is our Insurance segment's best operational year ever. We did and are continuing to expend considerable strategic thought, effort, and expense to improve our sales systems, both from the agent and managerial views and our end customers' view in order to grow our top-line revenue. We have brought on and continue to bring on new capable talent and have continued to refine and improve our sales support and commission systems. Our Cemetery and Mortuary segment delivered a nearly 30% EBITDA margin for the year, which is very good, especially considering the increasing cremation rates. Here, we have also brought on new sales talent and continue to spend considerable resources refining our sales support systems to grow top-line revenue. We believe revenue will grow as we drive the implementation of our initiatives.

Our Mortgage segment had a fabulous Q4, delivering a 74% net income improvement on a 4.6% revenue decrease. A tremendous amount of thought, work, accountability, and effort has gone into streamlining and rationalizing our corporate, regional, and branch operations, as well as expanding our sales offerings, both in terms of capability and personnel. The improvement and momentum are significant. It is essential to understand the integrated nature of our company. A major reason for the Life segment's continued improvement is its investment income, much of which is related to our Mortgage segment's operations. While I agree with my father's saying that every tub sits on its own bottom, and thus we need to measure our three business segments' financial results in those terms. Nevertheless, we are designed such that each segment synergistically supports its siblings.

We, as a company, would not have had our best year ever without the significant push from each of our business segments. Finally, before turning the time over to Mr. Sill, I would note that I am the Chief Executive Officer and President of the holding company. I am not the Chief Executive Officer of our Life segment or our Mortgage segment or our Memorial segments. If I'm keeping those in line, our Life segment is Mr. Adam Quist. Memorial would be Mr. Adam Quist, and Mortgage would be Mr. Andrew Quist. With that, simple explanation, we'll go to Mr. Sill, our Chief Financial Officer. Mr. Sill.

Thank you, Scott. Good afternoon, and thank you for joining us today. As Scott mentioned, my name is Garrett Sill, and I am the Chief Financial Officer of Security National Financial Corporation. As mentioned in our last call, accelerated filer status brought with it some significant changes and challenges to the company. The most significant change was the adoption and formalization of the company's internal controls over financial reporting. The company's internal controls can generally fall into two categories: business process controls and Information Technology General Controls. The runway was short in 2025 to bring the company up to speed with our new control stance, but we got there. Fortunately, we have a much longer runway in 2026, and we'll use the framework developed last year to refine, enhance, and remediate our controls both from a 404(a) and a 404(b) perspective.

2025 also brought a significant change to our financial statements, as Scott mentioned, as we officially adopted ASU 2018-12, better known as Targeted Improvements to the Accounting for Long-Duration Contracts, or LDTI. With our filing on Monday, this project is completed, and I can officially erase it from my office's whiteboard. It has been a three-year effort, and I want to thank our actuary and finance teams as well as Deloitte for the efforts involved. Regarding our adoption of LDTI, I would encourage you to review pages 49 through 52 of our 10-K, as those pages add some clarity to the various effects to the company's financial statements as we restated our annual results for 2024 for comparison purposes. The simplest way for me to explain the effect of LDTI is to focus on two key items.

First, under old accounting standards, deferred acquisition costs, or DAC, was amortized based on the premium paying period of the policy. Under our new accounting standards, or LDTI, DAC is now amortized over the life of the policy. The result is a lower DAC amortization, which means accelerated earnings. Second, we use a standardized discount rate when calculating our future policy reserves or our reserves, and we apply the standardized rate to our in-force business every quarter. The result is that changes in interest rates will cause our reserves to increase as interest rates decrease and to decrease as interest rates increase. The change in reserves due to interest rate changes flows through our accumulated other comprehensive income, which is a component of our stockholders' equity. Now I just want to mention a few items regarding our consolidated financial statements.

First, on our balance sheet, invested assets increased nearly $72 million, or 7.5%, as we increased our investment in key areas. We also saw a favorable swing in our fixed income or our bond portfolio with the easing of interest rates in 2025. Our deferred acquisition costs, or DAC, balances increased almost $9 million or 6.9% because of LDTI, which I mentioned earlier. In all, our total assets increased $67 million or 4.5%. Most of our liabilities remained relatively flat, except for our future policy benefits or reserves, which increased nearly $48 million or 6.3%. This is largely due to the change in our discount rate at year-end. As a reminder, this increase in reserve flows directly to stockholders' equity and was partially offset by the appreciation in our bond portfolio.

These two items, along with our earnings, pushed our stockholders' equity to $410 million or an increase of 7.5%. Moving to our statement of earnings, the 3% increase in revenue that Scott mentioned was primarily a result of good investment returns, which is shown in the net investment income and gains on investment lines of that statement. The $10 million increase in revenues was muted by the increased costs that totaled approximately $6 million. The most significant areas of increase were personnel expenses, which was up about $2 million, and other expenses increased by about $3 million. The most noticeable increases in the subcategory of our other expenses were bad debt, professional fees, insurance premiums, and data processing. The net result was an increase in net earnings year-over-year of $3 million or 10%.

In closing, 2025 was a good financial year for the company as we saw growth in total assets, stockholders' equity, and net earnings year-over-year. We still have a significant amount of work as we continue to navigate our accelerated filer status, but I am confident that we can meet the rigorous standards. Next, we'll hear from Andrew Quist, President and Chief Executive Officer of SecurityNational Mortgage Company.

Thank you. Thank you, Garrett, and good afternoon, fellow shareholders. As Garrett mentioned, I'm Andrew Quist, President and CEO of SecurityNational Mortgage Company.

In the fourth quarter of 2025, SecurityNational Mortgage Company had a pre-tax net loss of $1,161,000 compared to a net loss of $4,400,000 in the fourth quarter of 2024, a decrease to our net loss of $3,239,000 or a 74% reduction. Though still a net loss, averaging more than $1 million a month improvement over the same quarter last year shows significant progress in our company and a trajectory I'm proud of. This improvement came on reduced origination volumes. In the fourth quarter of 2025, we originated $540 million of loan volume compared to $573 million in the fourth quarter of 2024, a 6% year-over-year decrease. On a sequential quarter basis, origination volumes were down 13%.

Based on the Mortgage Bankers Association's reported total industry origination volumes for Q4, SecurityNational Mortgage Company's market share decreased to 9 basis points from 11 basis points in the third quarter. This reduction in origination volume and market share was the result of the company separating from loan originators that could not originate loans profitably and continued underperformance in refinance volumes.

Turning to refinance volumes, SecurityNational improved from 14% refinance volume in the third quarter to 19% in Q4, with 23% refinance volume in December alone, which marks a three-year high in that metric. I believe this shows our focus on capturing more of the refinance market and improving our skill set in this area is working. We will always be a purchase transaction-based lender, but improving our capture of refinance loans is key to gaining market share and improving origination volumes in this environment. Reviewing full-year results, SecurityNational Mortgage had a net loss of $4,761,000 in 2025, compared to a net loss of $6,213,000 in 2024. This was a $1,452,000 reduction in our loss or a 23% improvement.

I believe GAAP results understate the year-over-year improvement at SNMC. On an operating basis, the year-over-year improvement was over $4 million in 2025. This was on flat origination volumes. SecurityNational Mortgage funded $2.3 billion in both 2025 and 2024. In summary, SecurityNational Mortgage showed significant improvement in the fourth quarter, beating last year's results by over $1 million on average. We also improved our full-year results in 2025 by 23%. I'm confident we will continue on this path of improvement, and I want to express a heartfelt thank you to our loan officers and our employees for their continued work to improve SNMC. It is bearing results. Thank you.

Thank you, Andrew. My name is Adam Quist, and I'm President and CEO of the Security National Life Insurance Company. My comments will focus specifically on the performance of our life companies, which as Scott mentioned, in 2025 delivered their strongest operational year ever. For the year 2025, the life segment's net earnings rose to $37.4 million on pre-tax net income, up nearly 8% year-over-year. We accomplished this by generating approximately $208 million in total revenue, an increase of about 5% over 2024. These results reflect our strong investment performance, the continued stability of our insurance operations, and the progress we are making in strengthening both our distribution and operations platforms. Let me further highlight a few of the key drivers behind those results.

First, investment income was the most meaningful contributor to our performance this year. Net investment income increased to approximately $76 million, representing about a 12% growth over the prior year. This was largely due to returns associated with our residential real estate investment strategies. Our life companies benefit from a diversified investment portfolio, and an important component of that portfolio are the assets generated in synergy with our mortgage segment. As Scott stated, the integrated structure of Security National continues to provide a unique advantage for our life companies, allowing us to deploy capital efficiently while generating what we view as strong risk-adjusted returns over the long term within the life segment. Second, our core premium revenue remained very stable, totaling roughly $120 million for this year. This reflects the durability of our policyholder base and the strength of our agent network.

Over the past two years, we have invested significant time and resources into improving our sales management, sales systems, agent support infrastructure, and the overall agent, partner, and customer experience. Those investments are helping us maintain a consistent production base while positioning us for future growth. To be clear, our goal is not to just have stable premium revenue. Our goal is to grow premium. While it is a process, I believe the investments we have made over the past two years are starting to show their fruits. Third, we continue to make targeted investments in personnel while maintaining disciplined expense management. We did see some increases in operating expenses as we expanded our sales support capabilities, invested in technology, and continued modernizing our internal infrastructure. These investments are intentional and strategic.

They are aimed at strengthening our distribution platform and ensuring that our life companies are positioned for long-term growth. Again, it is important to remember that, as Garrett mentioned, our results reflect the implementation of ASU 2018-12 or the LDTI accounting standards. While the accounting presentation has changed somewhat, as you can see in our results, the underlying economics and performance of the life companies remain strong. I want to echo Garrett and extend my gratitude to our finance and actuarial teams as the implementation of LDTI was a heavy lift and required significant effort from both teams. Beyond the financial results, our focus remains on three core priorities. First, expanding and strengthening our sales leadership and sales distributions. We continue to recruit new agents and develop new leadership within our sales organization.

Second, improving the systems that support our leaders, agents, and funeral home partners. Over the past two years, we have worked to refine our sales support tools, commission systems, and operational processes. Our goal is simple: to increase our value to agents and partners and make it easier for our agents and partners to do business with us as we help them grow their production. We are continuing to invest in technology, policy application and administration capabilities, and digital tools that improve both agent productivity and our operational efficiency. Our third priority is to continue to build infrastructure that supports sustainable, strong investment returns for our life companies over the long term. We have invested significant human and financial capital in strengthening this capability. Of course, we are not immune to the broader macroeconomic conditions which lie outside of our control.

As a meaningful portion of our portfolio is real estate-related investments. We can all read in the popular press of the broader economic trends affecting those markets, sometimes to a positive and sometimes not. Nevertheless, we believe the platform and strategy we are implementing through disciplined underwriting, strong partnerships, and thoughtful capital deployment will continue to generate attractive risk-adjusted returns over the long term. To summarize, 2025 was the strongest operational year in the history of our life companies. We saw stable premium production, meaningful growth in investment income, and improved profitability, all while continuing to invest in the systems and infrastructure that will support and enable future growth. Thank you for your continued support, and I look forward to sharing our progress with you on future calls.

I will now turn the time over to Steve Kehl to report on our funeral homes and cemeteries division.

Thank you, Adam. Good afternoon, everyone. I am Steve Kehl, the Chief Operating Officer of Security National Funeral Homes and Cemeteries. In the fourth quarter of 2025, our earnings before tax increased to $1.74 million, compared to $877,000 in the prior year period. Total revenue rose 9.7% to $8.13 million, up from $7.41 million in the fourth quarter of 2024. For the full year, earnings before tax were $8.82 million, compared to $8.86 million in 2024, while total revenue increased 0.9% to $33.32 million, up from $33.02 million in the prior year. While full year earnings were modestly below the prior year, our performance reflects underlying stability and continued progress.

We are entering the new year with renewed conviction in our strategy and a clear path to sustained growth and long-term value creation. In the fourth quarter of 2025 for our funeral home operations, funeral home earnings before tax increased 55.5% to $182,000 compared to $117,000 in the prior year period. Revenue remained stable at $3.27 million, up modestly from $3.26 million in the fourth quarter of last year. Despite a 4.3% decline in families served, the team delivered a 0.2% increase in average funeral sales, reflecting disciplined execution and a continued focus on value. For the full year, funeral home revenue increased 4% to $13.85 million, compared to $13.32 million in 2024.

This growth was supported by a 3.5% increase in average funeral sales, along with an increase in the number of families served. Notably, we achieved a 9.3% increase in the number of families choosing to hold a service alongside cremation, reflecting continued success in aligning our offerings with evolving consumer preferences. We believe this performance underscores the effectiveness of our expanded service portfolio and the continued advancement of our funeral directors in guiding families toward more meaningful, personalized experiences. Over the past year, we have made targeted investments in professional development, strengthening capabilities within the arrangement conference, and elevating standards of execution across our funeral home teams, positioning us well for continued growth.

In the fourth quarter of 2025 for our cemetery division, our cemetery earnings before tax were $518,000, compared to $934,000 in the prior year period, and revenue decreased 11.3% to $3.86 million from $4.35 million. The decline in revenue was primarily driven by lower net pre-need land sales, including the absence of larger, high-value property transactions in the quarter. Importantly, the team increased the number of pre-need contracts written by 11.8% and achieved a 2.9% increase in cemetery placements, reflecting continued underlying activity and engagement. For the full year, cemetery revenue decreased 6.2% to $15.22 million, compared to $16.22 million in 2024.

Notably, we delivered growth in contract volume across both pre-need and at-need cemetery operations, underscoring sustained demand while also continuing to see an evolution in consumer disposition preferences within our cemeteries. As our cemetery teams remain focused on educating families on the value of establishing a permanent place of remembrance, we are confident these efforts will translate into future revenue growth and strengthen our long-term position. We continue to prioritize consistent high-quality arrangement presentations, targeted and education-based community events, and enhanced cemetery park tours and ongoing training initiatives to ensure our cemetery teams are effectively guiding families through all available options. Regarding our investment income, in the fourth quarter of 2025, our investment income increased to $1 million compared to a negative $202,000 in the prior year period.

For the full year, our investment income increased 21.9% to $4.25 million compared to $3.48 million in the prior year. We approach our investment strategy with a long-term perspective, expecting returns to compound steadily over time. Both quarterly and annual investment income have been strengthened by partnerships within both our mortgage and life insurance segments. We also saw favorable growth in unrealized gains on our common stock positions. We remain committed to disciplined capital allocation, including continued investment in our internal growth initiatives with our cemetery garden expansions. In closing, I'd like to express my sincere gratitude to our funeral home, cemetery grounds, and operational support teams. Your commitment to excellence and professionalism truly defines who we are and drives our success.

Because of you, we are not only maintaining our standards, we are strengthening them and continuing to serve families with the highest level of care, compassion, and respect. Thank you for your time and for your confidence. I now turn the time back over to our Human Resources Director, Ms. Heather Street.

Thank you, Steve. Before we conclude today's call, we would like to open the floor for questions. As a reminder, to ask a question, please use the Zoom platform to raise your hand to unmute, or you may submit questions through the Zoom Q&A panel. Include your name and organization, and we'll take as many as time permits. Are there any questions at all? I see no questions in the chat as well as through the participant channels. It looks like we've come to the end of our time. We'll note the end of our Q&A. As if we have no more questions, we'll note the end of our Q&A. Thank you again for your questions and participation, and we value the engagement and thoughtful input of our shareholders at panel events.

Our latest financial reports or any other investor materials, we invite you to visit the investor relations section of our website at www.securitynational.com. We appreciate your continued support for Security National Financial Corporation. This concludes our fourth quarter 2025 earnings call. We look forward to speaking with you again soon. Thank you and have a great day.