The Company’s investments in fixed maturity securities held to maturity and equity securities available for sale as of March 31, 2014 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
March 31, 2014:

Equity securities available for sale at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$ 6,249,495	$ 301,155	$ (531,554)	$ 6,019,096

Total equity securities available for sale at estimated fair value	$ 6,249,495	$ 301,155	$ (531,554)	$ 6,019,096

Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$ 55,147,389
Residential construction	13,978,754
Commercial	48,640,505
Less: Allowance for loan losses	(1,689,154)
Total mortgage loans on real estate and construction loans held for investment	$ 116,077,494

Real estate held for investment - net of depreciation	$ 100,179,474

Policy and other loans at amortized cost:
Policy loans	$ 7,408,878
Other loans	15,314,651
Less: Allowance for doubtful accounts	(322,985)

Total policy and other loans at amortized cost	$ 22,400,544

Short-term investments at amortized cost	$ 16,818,276

The Company’s investments in fixed maturity securities held to maturity and equity securities available for sale as of December 31, 2013 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2013:
Fixed maturity securities held to maturity carried at amortized cost:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies	$ 2,284,261	$ 298,901	$ -	$ 2,583,162
Obligations of states and political subdivisions	1,790,661	197,340	(9,404)	1,978,597
Corporate securities including public utilities	134,257,468	10,513,448	(1,394,918)	143,375,997
Mortgage-backed securities	4,522,081	206,617	(11,351)	4,717,347
Redeemable preferred stock	612,023	12,994	(5,900)	619,117
Total fixed maturity securities held to maturity	$ 143,466,494	$ 11,229,300	$ (1,421,573)	$ 153,274,220

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2013:

Equity securities available for sale at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$ 4,783,936	$ 240,206	$ (525,385)	$ 4,498,756

Total securities available for sale carried at estimated fair value	$ 4,783,936	$ 240,206	$ (525,385)	$ 4,498,756

Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$ 49,868,486
Residential construction	12,912,473
Commercial	41,653,009
Less: Allowance for loan losses	(1,652,090)

Total mortgage loans on real estate and construction loans held for investment	$ 102,781,878

Real estate held for investment - net of depreciation	$ 99,760,475

Policy and other loans at amortized cost:
Policy loans	$ 7,520,376
Other loans	12,472,805
Less: Allowance for doubtful accounts	(269,175)

Total policy and other loans at amortized cost	$ 19,724,006

Short-term investments at amortized cost	$ 12,135,719

Fixed Maturity Securities

The following tables summarize unrealized losses on fixed maturity securities, which are carried at amortized cost, at March 31, 2014 and December 31, 2013. The unrealized losses were primarily related to interest rate fluctuations. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related fixed maturity securities:

	Unrealized Losses for Less than Twelve Months	No. of Investment Positions	Unrealized Losses for More than Twelve Months	No. of Investment Positions	Total Unrealized Loss
At March 31, 2014
Obligations of states and political subdivisions	$ -	0	$ 8,326	2	$ 8,326
Corporate securities including public utilities	379,189	33	270,111	13	649,300
Mortgage-backed securities	2,779	1	8,238	1	11,017
Redeemable preferred stock	-	0	-	0	-
Total unrealized losses	$ 381,968	34	$ 286,675	16	$ 668,643
Fair Value	$ 9,539,730		$ 3,665,392		$ 13,205,122

At December 31, 2013
Obligations of states and political subdivisions	$ 7,131	1	$ 2,273	1	$ 9,404
Corporate securities including public utilities	1,134,414	72	260,504	10	1,394,918
Mortgage-backed securities	3,109	1	8,242	1	11,351
Redeemable preferred stock	5,900	1	-	0	5,900
Total unrealized losses	$ 1,150,554	75	$ 271,019	12	$ 1,421,573
Fair Value	$ 22,002,277		$ 2,308,464		$ 24,310,741

As of March 31, 2014, the average market value of the related fixed maturities was 95.2% of amortized cost and the average market value was 94.5% of amortized cost as of December 31, 2013. During the three months ended March 31, 2014 and 2013 an other than temporary decline in fair value resulted in the recognition of credit losses on fixed maturity securities of $30,000 and $30,000, respectively.

On a quarterly basis, the Company reviews its fixed maturity investment securities related to corporate securities and other public utilities, consisting of bonds and preferred stocks that are in a loss position. The review involves an analysis of the securities in relation to historical values, and projected earnings and revenue growth rates. Based on the analysis, a determination is made whether a security will likely recover from the loss position within a reasonable period of time. If it is unlikely that the investment will recover from the loss position, the loss is considered to be other than temporary, the security is written down to the impaired value and an impairment loss is recognized.

Equity Securities

The following tables summarize unrealized losses on equity securities that were carried at estimated fair value based on quoted trading prices at March 31, 2014 and December 31, 2013. The unrealized losses were primarily the result of decreases in fair value due to overall equity market declines. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related equity securities available-for-sale in a loss position:

	Unrealized Losses for Less than Twelve Months	No. of Investment Positions	Unrealized Losses for More than Twelve Months	No. of Investment Positions	Total Unrealized Losses
At March 31, 2014
Industrial, miscellaneous and all other	$ 140,329	34	$ 391,225	26	$ 531,554
Total unrealized losses	$ 140,329	34	$ 391,225	26	$ 531,554
Fair Value	$ 1,430,615		$ 701,249		$ 2,131,864

At December 31, 2013
Industrial, miscellaneous and all other	$ 119,449	28	$ 405,936	28	$ 525,385
Total unrealized losses	$ 119,449	28	$ 405,936	28	$ 525,385
Fair Value	$ 993,612		$ 772,345		$ 1,765,957

As of March 31, 2014, the average market value of the equity securities available for sale was 80.0% of the original investment and the average market value was 77.1% of the original investment as of December 31, 2013. The intent of the Company is to retain equity securities for a period of time sufficient to allow for the recovery in fair value. However, the Company may sell equity securities during a period in which the fair value has declined below the amount of the original investment. In certain situations new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. During the three months ended March 31, 2014 and 2013, there was no other than temporary decline in fair value.

On a quarterly basis, the Company reviews its investment in industrial, miscellaneous and all other equity securities that are in a loss position. The review involves an analysis of the securities in relation to historical values, price earnings ratios, projected earnings and revenue growth rates. Based on the analysis a determination is made whether a security will likely recover from the loss position within a reasonable period of time. If it is unlikely that the investment will recover from the loss position, the loss is considered to be other than temporary, the security is written down to the impaired value and an impairment loss is recognized.

The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments. The fair values for equity securities are based on quoted market prices.

The amortized cost and estimated fair value of fixed maturity securities at March 31, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost	Estimated Fair Value
Held to Maturity:
Due in 2014	$ 3,046,870	$ 3,098,094
Due in 2015 through 2018	28,040,904	31,225,456
Due in 2019 through 2023	38,821,994	42,832,188
Due after 2023	67,247,028	73,447,397
Mortgage-backed securities	4,122,589	4,392,440
Redeemable preferred stock	612,023	622,554
Total held to maturity	$ 141,891,408	$ 155,618,129

The amortized cost and estimated fair value of available for sale securities at March 31, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Equities are valued using the specific identification method.

	Amortized Cost	Estimated Fair Value
Available for Sale:
Due in 2014	$ -	$ -
Due in 2015 through 2018	-	-
Due in 2019 through 2023	-	-
Due after 2023	-	-
Non-redeemable preferred stock	-	-
Common stock	6,249,495	6,019,096
Total available for sale	$ 6,249,495	$ 6,019,096

The Company’s realized gains and losses, other than temporary impairments from investments and other assets, are summarized as follows:

	Three Months Ended March 31
	2014	2013
Fixed maturity securities held to maturity:
Gross realized gains	$ -	$ 12,892
Gross realized losses	-	(5,475)
Other than temporary impairments	(30,000)	(30,000)

Securities available for sale:
Gross realized gains	53,253	133,956
Gross realized losses	-	(737)
Other than temporary impairments	-	-

Other assets:
Gross realized gains	145,740	710,787
Gross realized losses	-	(8,845)
Other than temporary impairments	-	-
Total	$ 168,993	$ 812,578

The net carrying amount of held to maturity securities sold was $-0- and $1,455,835 for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively. The net realized gain related to these sales was $1,524 and $12,533 for the three months ended March 31, 2014 and 2013, respectively. Certain circumstances lead to these decisions to sell.

There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses on available for sale securities) at March 31, 2014, other than investments issued or guaranteed by the United States Government.

Major categories of net investment income are as follows:

	Three Months Ended March 31
	2014	2013
Fixed maturity securities	$ 2,109,121	$ 1,953,040
Equity securities	39,247	65,760
Mortgage loans on real estate	1,552,110	1,039,774
Real estate	1,689,595	1,079,129
Policy and other loans	197,568	203,135
Short-term investments, principally gains on sale of mortgage loans and other	1,899,113	2,207,594
Gross investment income	7,486,754	6,548,432
Investment expenses	(1,844,254)	(1,547,415)
Net investment income	$ 5,642,500	$ 5,001,017

Net investment income includes income earned by the restricted assets of the cemeteries and mortuaries of $94,745 and $91,470 for the three months ended March 31, 2014 and 2013 respectively.

Net investment income on real estate consists primarily of rental revenue received under short-term leases.

Investment expenses consist primarily of depreciation, property taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities.

Securities on deposit for regulatory authorities as required by law amounted to $9,212,874 at March 31, 2014 and $9,215,222 at December 31, 2013. The restricted securities are included in various assets under investments on the accompanying condensed consolidated balance sheets.

Mortgage Loans

Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0% to 10.5%, maturity dates range from three months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At March 31, 2014, the Company had 34%, 20%, 10%, 9%, and 6% of its mortgage loans from borrowers located in the states of Utah, California, Florida, Texas, and Oklahoma, respectively. The mortgage loans on real estate balances on the consolidated balance sheet are reflected net of an allowance for loan losses of $1,689,154 and $1,652,090 at March 31, 2014 and December 31, 2013, respectively.

The Company establishes a valuation allowance for credit losses in its portfolio.

The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:

Allowance for Credit Losses and Recorded Investment in Mortgage Loans

	Commercial	Residential	Residential Construction	Total
March 31, 2014
Allowance for credit losses:
Beginning balance - January 1, 2014	$ 187,129	$ 1,364,847	$ 100,114	$ 1,652,090
Charge-offs	-	-	-	-
Provision	-	37,064	-	37,064
Ending balance -March 31, 2014	$ 187,129	$ 1,401,911	$ 100,114	$ 1,689,154

Ending balance: individually evaluated for impairment	$ -	$ 174,180	$ -	$ 174,180

Ending balance: collectively evaluated for impairment	$ 187,129	$ 1,227,731	$ 100,114	$ 1,514,974

Ending balance: loans acquired with deteriorated credit quality	$ -	$ -	$ -	$ -

Mortgage loans:
Ending balance	$ 48,640,505	$ 55,147,389	$ 13,978,754	$ 117,766,648

Ending balance: individually evaluated for impairment	$ -	$ 1,517,892	$ -	$ 1,517,892

Ending balance: collectively evaluated for impairment	$ 48,640,505	$ 53,629,497	$ 13,978,754	$ 116,248,756

Ending balance: loans acquired with deteriorated credit quality	$ -	$ -	$ -	$ -

December 31, 2013
Allowance for credit losses:
Beginning balance - January 1, 2013	$ -	$ 4,193,674	$ 46,187	$ 4,239,861
Charge-offs	-	(2,670,794)	(137,629)	(2,808,423)
Provision	187,129	(158,033)	191,556	220,652
Ending balance - December 31, 2013	$ 187,129	$ 1,364,847	$ 100,114	$ 1,652,090

Ending balance: individually evaluated for impairment	$ -	$ 152,745	$ -	$ 152,745

Ending balance: collectively evaluated for impairment	$ 187,129	$ 1,212,102	$ 100,114	$ 1,499,345

Ending balance: loans acquired with deteriorated credit quality	$ -	$ -	$ -	$ -

Mortgage loans:
Ending balance	$ 41,653,009	$ 49,868,486	$ 12,912,473	$ 104,433,968

Ending balance: individually evaluated for impairment	$ -	$ 1,518,327	$ -	$ 1,518,327

Ending balance: collectively evaluated for impairment	$ 41,653,009	$ 48,350,159	$ 12,912,473	$ 102,915,641

Ending balance: loans acquired with deteriorated credit quality	$ -	$ -	$ -	$ -

The following is a summary of the aging of mortgage loans for the periods presented:

Age Analysis of Past Due Mortgage Loans

	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days (1)	In Foreclosure (1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Net Mortgage Loans
March 31, 2014
Commercial	$ -	$ -	$ -	$ 4,973,745	$ 4,973,745	$ 43,666,760	$ 48,640,505	$ (187,129)	$ 48,453,376
Residential	2,641,721	925,882	6,599,822	1,517,892	11,685,317	43,462,072	55,147,389	(1,401,911)	53,745,478
Residential Construction	-	-	64,895	-	64,895	13,913,859	13,978,754	(100,114)	13,878,640

Total	$ 2,641,721	$ 925,882	$ 6,664,717	$ 6,491,637	$ 16,723,957	$ 101,042,691	$ 117,766,648	$ (1,689,154)	$ 116,077,494

December 31, 2013
Commercial	$ -	$ -	$ -	$ 4,973,745	$ 4,973,745	$ 36,679,264	$ 41,653,009	$ (187,129)	$ 41,465,880
Residential	1,646,953	1,604,847	5,867,501	1,518,327	10,637,628	39,230,858	49,868,486	(1,364,847)	48,503,639
Residential Construction	-	-	64,895	-	64,895	12,847,578	12,912,473	(100,114)	12,812,359

Total	$ 1,646,953	$ 1,604,847	$ 5,932,396	$ 6,492,072	$ 15,676,268	$ 88,757,700	$ 104,433,968	$ (1,652,090)	$ 102,781,878

(1) Interest income is not recognized on loans past due greater than 90 days or in foreclosure.

Impaired Mortgage Loans

Impaired mortgage loans include loans with a related specific valuation allowance or loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary. The recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting period and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:

Impaired Loans

	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
March 31, 2014
With no related allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	-	-	-	-	-
Residential construction	-	-	-	-	-

With an allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	1,517,892	1,517,892	174,180	1,517,892	-
Residential construction	-	-	-	-	-

Total:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	1,517,892	1,517,892	174,180	1,517,892	-
Residential construction	-	-	-	-	-

December 31, 2013
With no related allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	-	-	-	-	-
Residential construction	-	-	-	-	-

With an allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	1,518,327	1,518,327	152,745	1,518,327	-
Residential construction	-	-	-	-	-

Total:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	1,518,327	1,518,327	152,745	1,518,327	-
Residential construction	-	-	-	-	-

Credit Risk Profile Based on Performance Status

The Company’s mortgage loan portfolio is monitored based on performance of the loans. Monitoring a mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment. The Company defines non-performing mortgage loans as loans 90 days past due or on non-accrual status.

The Company’s performing and non-performing mortgage loans were as follows:

Mortgage Loan Credit Exposure
Credit Risk Profile Based on Payment Activity

	Commercial		Residential			Residential Construction		Total
	March 31, 2014	December 31, 2013		March 31, 2014	December 31, 2013	March 31, 2014	December 31, 2013	March 31, 2014	December 31, 2013

Performing	$ 43,666,760	$ 36,679,264		$ 47,029,675	$ 42,482,658	$ 13,913,859	$ 12,847,578	$ 104,610,294	$ 92,009,500
Nonperforming	4,973,745	4,973,745		8,117,714	7,385,828	64,895	64,895	13,156,354	12,424,468

Total	$ 48,640,505	$ 41,653,009		$ 55,147,389	$ 49,868,486	$ 13,978,754	$ 12,912,473	$ 117,766,648	$ 104,433,968

Non-Accrual Mortgage Loans

Once a loan is past due 90 days, it is the Company’s policy to end the accrual of interest income on the loan and write off any income that had been accrued. Interest not accrued on these loans totals $565,000 and $678,000 as of March 31, 2014 and December 31, 2013, respectively.

The following is a summary of mortgage loans on a nonaccrual status for the periods presented.

	Mortgage Loans on Nonaccrual Status

	As of March 31	As of December 31
	2014	2013
Commercial	$ 4,973,745	$ 4,973,745
Residential	8,117,714	7,385,828
Residential construction	64,895	64,895
Total	$ 13,156,354	$ 12,424,468

Loan Loss Reserve

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 loan loss reserve analysis involves mortgage loans that have been sold to third party investors where the Company has received a demand from the investor. There are generally three types of demands: make whole, repurchase, or indemnification. These types of demands are more particularly described as follows:

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

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

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

When a repurchase demand is received from a third party investor, the relevant data is reviewed and captured so that an estimated future loss can be calculated. The key factors that are used in the estimated loss calculation are as follows: (i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the Company is able to resolve the issues relating to the repurchase demand by the third party investor without having to make any payments to the investor.

The following is a summary of the loan loss reserve that is included in other liabilities and accrued expenses:

	As of March 31	As of December 31
	2014	2013
Balance, beginning of period	$ 5,506,532	$ 6,035,295
Provisions for losses	372,093	1,846,285
Charge-offs	(351,213)	(2,375,048)
Balance, end of period	$ 5,527,412	$ 5,506,532

The Company believes the loan loss reserve represents probable loan losses incurred as of the balance sheet date. The loan loss reserve may not be adequate, however, for claims asserted by third party investors. Actual loan loss experience could change, in the near-term, from the established reserve based upon claims asserted by third party investors. If SecurityNational Mortgage is unable to negotiate acceptable terms with the third party investors, legal action may ensue in an effort to obtain amounts that the third party investors claim are allegedly due. In the event of legal action, if SecurityNational Mortgage is not successful in its defenses against claims asserted by these third party investors to the extent that a substantial judgment is entered against SecurityNational Mortgage which is beyond its capacity to pay, SecurityNational Mortgage may be required to curtail or cease operations.