Security National Financial Corporation (SNFCA) Income Statement

The negative NII reading in 2026Q2, following a positive $734.5 thousand in 2026Q1, suggests funding costs may now exceed asset yields on what appears to be a very small spread book, though the underlying balance-sheet detail is not disclosed here. The 165.6% NII growth logged in 2026Q1 should not be extrapolated, since it reflects movement off an extremely small base rather than a durable volume or rate-driven trend. Given that non-interest income is roughly 100% of revenue, NII appears to function as a residual line rather than a managed earnings lever for Security National.

A NIM pinned at zero or slightly negative through multiple rate regimes implies asset yields and funding costs have moved in lockstep, leaving pre-provision net revenue dependent on fee generation rather than spread. This makes the institution's profitability largely insensitive to rate cuts in either direction, which may be a source of stability but also means there is no margin buffer to absorb deposit repricing. Investors should note that NIM-based peer benchmarking is not meaningful here, since the margin is too small for basis-point comparisons to carry analytical weight.

Provisions of roughly $23 million per quarter now consume close to 28% of the $83-84 million quarterly revenue base, which appears to be the single largest wedge between gross earnings and the $9-17 million operating income line. The fact that operating income still printed $11.7 million in 2026Q2 despite this charge suggests pre-provision earnings are meaningfully larger than headline net income implies, but the durability of that cushion is untested if provisioning stays at this level. The absence of any provision in the 2024 quarters means the current run-rate is not comparable to the prior period, so trend extrapolation from those quarters would be misleading.

A fee share above 100% means the non-interest line is not merely supplementing interest income but is offsetting negative NII, which concentrates the entire earnings profile in the quality and pricing of insurance and service revenues. Because no fee composition breakdown is provided, investors cannot yet distinguish recurring premium or servicing streams from transactional or volatile items, and that ambiguity warrants further investigation. Net income growth of 32.0% year-over-year in 2026Q2 therefore appears tied to fee retention and cost absorption rather than any recovery in spread banking.

The current 57.9-58.6% range over the last two quarters looks respectable in isolation and sits near the 50.1% mark from 2025Q4, but the negative efficiency ratios printed in several 2024 and 2025 quarters indicate expense and revenue were not being recognized in the same periods. That inconsistency means any conclusion about genuine cost discipline should be treated as provisional until the reporting basis is confirmed across the full series. Operating income of $11.7 million on $83.9 million of revenue does suggest meaningful expense coverage, though the $23.2 million provision line remains the dominant driver of the final margin.