SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-K/A

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 2000, or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the Transition Period from to

                          Commission File Number 0-9341

                     Security National Financial Corporation
             (Exact name of registrant as specified in its Charter)

           UTAH                                       87-0345941
(State or other jurisdiction           (I.R.S. Employer Identification Number)
 of incorporation or organization)


         5300 South 360 West, Suite 250                  84123
            Salt Lake City, Utah                      (Zip Code)
(Address of principal executive offices)

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

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

                                                     Name of each exchange
Title of each Class                                   on which registered
-------------------                                  ---------------------
      None                                                   None

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

                      Class A Common Stock, $2.00 Par Value
                                (Title of Class)

                      Class C Common Stock, $0.20 Par Value
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                       Yes [X]  No___

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of March 30, 2001 was approximately $10,014,000.

As of March 30, 2001,  registrant had issued and outstanding 3,874,567 shares of
Class A Common Stock and 5,762,729 shares of Class C Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  definitive  Proxy  Statement for the  registrant's  2001 Annual
Meeting of Stockholders are incorporated by reference into Part III hereof.




<PAGE>



                                     PART I

Item 1.  Business

Security National Financial  Corporation (the "Company")  operates in three main
business segments:  life insurance,  cemetery and mortuary,  and mortgage loans.
The life  insurance  segment is engaged in the business of selling and servicing
selected  lines of life  insurance,  annuity  products  and  accident and health
insurance. These products are marketed in 34 states through a commissioned sales
force of  independent  licensed  insurance  agents  who may also sell  insurance
products of other  companies.  The cemetery and mortuary  segment of the Company
consists  of five  cemeteries  in the  state  of Utah  and one in the  state  of
California  and  eight  mortuaries  in the state of Utah and six in the state of
Arizona.  The Company also engages in pre-need selling of funeral,  cemetery and
cremation  services  through its Utah  operations.  Many of the insurance agents
also sell pre-need funeral,  cemetery and cremation services.  The mortgage loan
segment is an approved  governmental and conventional lender that originates and
underwrites  residential and commercial  loans for new construction and existing
homes and real estate projects.

The design and  structure  of the Company is that each segment is related to the
others  and  contributes  to the  profitability  of the  other  segments  of the
Company.  Because of the increasing cemetery and mortuary operations in Utah and
Arizona,  the Company  enjoys a level of public  awareness  that  assists in the
sales and  marketing of insurance  and pre-need  cemetery and funeral  products.
Security National Life Insurance Company ("Security  National Life") invests its
assets (representing in part the pre-paid funerals) in investments authorized by
the Insurance Departments of the States of Florida and Utah. One such investment
authorized by the Insurance  Departments is high quality  mortgage loans.  Thus,
while each segment is a profit center on a stand-alone  basis,  this  horizontal
integration of each segment will lead to improved  profitability of the Company.
The Company is also pursuing growth through  acquisitions of both life insurance
companies and cemeteries and mortuaries. The Company's acquisition business plan
is based on reducing overhead cost of the acquired company by utilizing existing
personnel,  management,  and technology while still providing quality service to
the customers and policyholders.

The Company was organized as a holding  company in 1979 when  Security  National
Life became a wholly owned subsidiary of the Company and the former stockholders
of Security National Life became stockholders of the Company.  Security National
Life was formed in 1965 and has grown through the direct sale of life  insurance
and  annuities  and  through  the  acquisition  of  other  insurance  companies,
including  the  acquisitions  of Capital  Investors  Life  Insurance  Company in
December 1994, Civil Service  Employees Life Insurance  Company in December 1995
and Southern Security Life Insurance Company in December 1998. Memorial Estates,
Inc. and Memorial Mortuary became direct subsidiaries of the Company in the 1979
reorganization  when the Company was formed.  These  companies  were acquired by
Security  National Life in 1973. The cemetery and mortuary  operations have also
grown  through  the  acquisition  of  other  cemetery  and  mortuary  companies,
including  the  acquisitions  of Paradise  Chapel  Funeral  Home,  Inc. in 1989,
Holladay Memorial Park, Inc.,  Cottonwood  Mortuary,  Inc. and Deseret Memorial,
Inc. in 1991,  Sunset Funeral Home in January 1994,  Greer-Wilson  Funeral Home,
Inc. in April 1995 and Crystal Rose Funeral Home in February 1997. In July 1993,
the Company  formed  Security  National  Mortgage  Company  ("Security  National
Mortgage") to originate and refinance  mortgage loans. See Notes to Consolidated
Financial Statements for additional disclosure and discussion regarding segments
of the business.

Life Insurance

   Products

The Company,  through its  insurance  subsidiaries,  Security  National Life and
Southern Security Life Insurance Company,  issues and distributes selected lines
of life insurance and annuities.  The Company's life insurance business includes
funeral  plans and  interest-sensitive  whole life  insurance,  as well as other
traditional life and accident and health insurance  products but places specific
marketing emphasis on funeral plans.

                                        1

<PAGE>



A funeral plan is a small face value life insurance  policy that generally has a
face coverage of up to $5,000. The Company believes that funeral plans represent
a marketing niche that has lower competition  since most insurance  companies do
not offer  similar  coverages.  The purpose of the funeral plan policy is to pay
the  costs and  expenses  incurred  at the time of a  person's  death.  On a per
thousand  dollar cost of insurance  basis,  these policies are more expensive to
the policyholder  than many types of non-burial  insurance due to their low face
amount,  requiring the fixed cost of the policy to be distributed over a smaller
policy  size,  and due to the  simplified  underwriting  practices  resulting in
higher mortality costs.

 Markets and Distribution

The  Company is  licensed  to sell  insurance  in 34  states.  The  Company,  in
marketing  its life  insurance  products,  seeks to locate,  develop and service
specific "niche" markets.  A "niche" market is an identifiable  market which the
Company believes is not emphasized by most insurers. The Company generally sells
its  life  insurance  products  to  people  of  middle  age who  have a need for
insurance  to protect the income of the wage  earner of the  family,  to pay off
debts at the time of death and for other estate planning purposes.  Funeral plan
policies  are sold  primarily  to persons  who range in age from 45 to 75.  Even
though people of all ages and income levels purchase  funeral plans, the Company
believes that the highest  percentage of funeral plan purchasers are individuals
who are  older  than 45 and have  low to  moderate  income.  A  majority  of the
Company's  funeral  plan  premiums  come from the states of  Arizona,  Colorado,
Idaho,  Nevada,  Oklahoma,  Texas  and Utah,  and a  majority  of the  Company's
non-funeral  plan  life  insurance  premiums  come from the  states of  Alabama,
California, Florida, Georgia, Louisiana, New Mexico, South Carolina and Utah.

The Company sells its life insurance  products through direct agents and brokers
and independent  licensed  agents who may also sell insurance  products of other
companies.  The commissions on life insurance  products range from approximately
10% to 90% of first year premiums. In those cases where the Company utilizes its
direct  agents in  selling  such  policies,  those  agents  customarily  receive
advances against future commissions.

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

In  marketing  the funeral  plan  insurance,  the Company also seeks and obtains
third-party  endorsements  from  other  cemeteries  and  mortuaries  within  its
marketing areas. Typically, these cemeteries and mortuaries will provide letters
of endorsement  and may share in mailing and other  lead-generating  costs.  The
incentive for such  businesses to share the costs is that these  businesses  are
usually made the beneficiary of the policy.  The following table  summarizes the
life insurance business for the five years ended December 31, 2000:

<TABLE>
<CAPTION>

                                        2000           1999          1998         1997       1996
                                        ----           ----          ----         ----       ----
Life Insurance
<S>                               <C>            <C>            <C>             <C>        <C>
Policy/Cert
    Count as of
    December 31                      71,178(1)      75,808(1)      69,895(1)      43,213      42,034
Insurance
    in force
    as of December 31
    (omitted 000)                 2,049,789(1)   2,113,893(1)   2,123,734(1)     648,906     546,213
Premiums
    Collected
    (omitted 000)                    14,959(1)      15,261(1)       5,718          5,732       5,765

    (1)  Includes acquisition of Southern Security Life Insurance Company on
December 17, 1998.

</TABLE>
                                                         2

<PAGE>



    Underwriting

Factors  considered in evaluating an application for insurance  coverage include
the  applicant's  age,  occupation,  general  health and medical  history.  Upon
receipt  of  a  satisfactory  application,   which  contains  pertinent  medical
questions,  the Company writes insurance that is based on its medical limits and
requirements on a basis satisfactory to the reinsuring company (or companies, if
submitted facultatively), subject to the following general non-medical limits:

                 Age Nearest                     Non-Medical
                   Birthday                         Limits

                 0-50                                $75,000
                51-up                          Exam Required

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

In addition to the Company's  ordinary life product line, the Company also sells
final expense insurance.  This insurance is a small face amount,  with a maximum
issue of  $10,000.  It is  written  on a  simplified  medical  application  with
underwriting  requirements being a completed application,  a phone inspection on
each  applicant  and a Medical  Information  Bureau  inquiry.  There are several
underwriting  classes  in which  an  applicant  can be  placed.  If the  Company
receives  conflicting  or  incomplete  underwriting  information,  an  attending
physician's  statement  can be ordered to insure the  applicant is placed in the
correct underwriting class.

Annuities

       Products

The Company's  annuity  business  includes  single premium  deferred  annuities,
flexible premium deferred  annuities and immediate  annuities.  A single premium
deferred annuity is a contract where the individual remits a sum of money to the
Company, which is retained on deposit until such time as the individual may wish
to purchase an immediate  annuity or surrender the contract for cash. A flexible
premium  deferred  annuity  gives the contract  holder the right to make premium
payments of varying  amounts or to make no further  premium  payments  after his
initial payment.  These single and flexible premium deferred  annuities can have
initial  surrender  charges.  The  surrender  charges  act  as  a  deterrent  to
individuals  who may wish to surrender their annuity  contracts.  These types of
annuities have guaranteed  interest rates of 4% to 4 1/2% per annum. Above that,
the interest rate credited is periodically  determined by the Board of Directors
at their discretion.  An immediate annuity is a contract in which the individual
remits to the Company a sum of money in return for the  Company's  obligation to
pay a series of payments on a periodic  basis over a designated  period of time,
such as an individual's life, or for such other period as may be designated.

Holders of  annuities  enjoy a  significant  benefit  under the current  federal
income tax law in that interest accretions that are credited to the annuities do
not  incur  current  income  tax  expense  on the part of the  contract  holder.
Instead,  the interest  income is tax deferred until such time as it is paid out
to the  contract  holder.  In order for the  Company  to  realize a profit on an
annuity  product,  the Company must maintain an interest rate spread between its
investment  income and the interest  rate credited to the  annuities.  From that
spread  must  be  deducted  commissions,   issuance  expenses  and  general  and
administrative   expenses.  The  Company's  annuities  currently  have  credited
interest rates ranging from 4% to 6 1/2%.

                                        3

<PAGE>



     Markets and Distribution

The general  market for all of the  Company's  annuities  is middle to older age
individuals  who  wish  to  save  or  invest  their  money  in  a  tax  deferred
environment,  having  relatively high yields.  The Company currently markets its
annuities primarily in the states of Arizona,  New Mexico,  Oklahoma,  Texas and
Utah.

The major source of annuity  considerations comes from direct agents.  Annuities
can be sold as a by-product of other insurance sales.  This is particularly true
in the funeral  planning  area. If an individual  does not qualify for a funeral
plan due to health considerations,  the agent will often sell that individual an
annuity to take care of those final expenses.  The commission rates on annuities
range from 2% to 10%.

The following  table  summarizes  the annuity  business for the five years ended
December 31, 2000:

                          2000          1999       1998      1997      1996
                          ----          ----       ----      ----      ----
Annuities
Policy/Cert
    Count as of
    December 31          8,443(1)    8,369(1)    7,890(1)    7,434    7,049
Deposits Collected
(omitted 000)            3,039(1)    3,906(1)    2,770       2,521    2,859

    (1)  Includes acquisition of Southern Security Life Insurance Company on
December 17, 1998.

Accident and Health

    Products

Prior to the acquisition of Capital Investors Life in December 1994, the Company
did not actively  market accident and health  products.  With the acquisition of
Capital  Investors  Life,  the Company  acquired a block of accident  and health
policies which pay limited benefits to  policyholders.  The Company is currently
offering a low-cost  comprehensive  diver's accident policy and a limited cancer
benefit  policy.  The diver's policy  provides  world-wide  coverage for medical
expense  reimbursement and life insurance in the event of diving or water sports
accidents.  The cancer policy  provides a lump sum payment for the occurrence of
cancer.

    Markets and Distribution

The Company  currently  markets its diver's policy through water sports magazine
advertising  and dive  shops  throughout  the world.  The  Company  pays  direct
commissions ranging from 15% to 30% for new business generated.

The following  table  summarizes  the accident and health  business for the five
years ended December 31, 2000:

                             2000       1999        1998      1997    1996
                             ----       ----        ----      ----    ----
Accident
  and Health
Policy/Cert. Count as of
    December 31            21,454(1)  24,078(1)   27,201(1)  30,250   33,639
Premiums Collected
omitted 000)                 464(1)     549(1)       375        430      493

(1)  Includes  acquisition  of  Southern  Security  Life  Insurance  Company  on
     December 17, 1998.

                                        4

<PAGE>



Reinsurance

The Company  reinsures  with other  companies  portions of the  individual  life
insurance  and accident  and health  policies it has  underwritten.  The primary
purpose of reinsurance is to enable an insurance company to write a policy in an
amount  larger  than the risk it is  willing  to  assume  for  itself.  No other
liabilities  or  guarantees  by the  Company  exist on  business  ceded  through
reinsurance  treaties;  however, the Company remains obligated for amounts ceded
in the event the reinsurers do not meet their obligations. There is no assurance
that the reinsurer will be able to meet the obligations  assumed by it under the
reinsurance agreement.

The Company's policy is to retain no more than $50,000 of ordinary insurance per
insured life.  Excess risk is reinsured.  The total amount of life  insurance in
force  at  December  31,  2000,   reinsured   by  other   companies   aggregated
$253,698,000,  representing  approximately 12.4% of the Company's life insurance
in force on that date.

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

Investments

The   investments   that  support  the  Company's  life  insurance  and  annuity
obligations are determined by the Investment Committee of the Board of Directors
of the various  subsidiaries  and ratified by the full Board of Directors of the
respective  subsidiaries.  A significant  portion of the  investments  must meet
statutory requirements governing the nature and quality of permitted investments
by  insurance  companies.   The  Company's   interest-sensitive  type  products,
primarily  annuities  and  interest-sensitive  whole  life,  compete  with other
financial  products such as bank  certificates of deposit,  brokerage  sponsored
money market funds as well as competing life insurance company  products.  While
it is not the Company's  policy to offer the highest  yield in this climate,  in
order  to  offer  what the  Company  considers  to be a  competitive  yield,  it
maintains a diversified portfolio consisting of common stocks, preferred stocks,
municipal bonds,  investment and non-investment grade bonds including high-yield
issues,  mortgage  loans,  real  estate,  short-term  and other  securities  and
investments.

See "Management's Discussion and Analysis of Results of Operations and Financial
Condition"  and "Notes to  Consolidated  Financial  Statements"  for  additional
disclosure and discussion regarding investments.

Cemetery and Mortuary

    Products

The  Company  has  six   wholly-owned   cemeteries  and  fourteen   wholly-owned
mortuaries.  The  cemeteries  are  non-denominational.  Through its cemetery and
mortuary operations, the Company markets a variety of products and services both
on a  pre-need  basis  (prior to  death)  and an  at-need  basis (at the time of
death).  The products include grave spaces,  interment vaults,  mausoleum crypts
and niches, markers,  caskets,  flowers and other related products. The services
include  professional  services  of funeral  directors,  opening  and closing of
graves,  use of chapels and viewing rooms,  and use of automobiles and clothing.
The Company has a funeral chapel at each of its  cemeteries  other than Holladay
Memorial Park and Singing Hills  Memorial Park and has ten separate  stand-alone
mortuary facilities. The Company's cemetery and mortuary business increased with
the acquisition of Holladay Memorial Park, Inc.,  Cottonwood Mortuary,  Inc. and
Deseret  Memorial,  Inc. in September  1991,  the  acquisition of Sunset Funeral
Home, Inc. in January 1994, the  acquisition of Greer-Wilson  Funeral Home, Inc.
in April 1995,  and the  acquisition  of Crystal  Rose  Funeral Home in February
1997.

                                        5

<PAGE>



    Markets and Distribution

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

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

The sales  representatives of the Company's cemetery and mortuary operations are
commissioned and receive no salary.  The sales commissions range from 10% to 22%
for cemetery  products  and  services and 10% to 90% of first year  premiums for
funeral plan  insurance.  Potential  customers are located via  telephone  sales
prospecting, responses to letters mailed by the sales representatives, newspaper
inserts,  referrals,  contacts  made  at  funeral  services,  and  door  to door
canvassing. The Company trains its sales representatives and generates leads for
them.  If a  customer  comes to one of the  Company's  cemeteries  on an at-need
basis, the sales representatives are compensated on a commission basis.

Mortgage Loans

    Products

The  Company,  through  its  mortgage  subsidiary,  Security  National  Mortgage
Company,  originates and underwrites  residential  and commercial  loans for new
construction  and  existing  homes and real estate  projects.  The Company is an
approved government  guaranteed and conventional lender and processes government
guaranteed  and  conventional  loans.  Most of the  loans are sold  directly  to
investors.  The Company has available  warehouse lines of credit with affiliated
companies and an unaffiliated financial institution to fund mortgage loans prior
to the purchase by investors.

    Markets and Distribution

The Company's  mortgage  lending  services are marketed  primarily to individual
homeowners  and  businesses  who are  located in the area known as the  "Wasatch
Front,"  covering  approximately  100 miles  between  Provo,  Salt Lake City and
Ogden, Utah, with the greatest  concentration of sales being in the greater Salt
Lake City area and in Valencia and Sacramento,  California, Orlando, Florida and
Colorado Springs,  Colorado.  The typical loan size for residential loans ranges
from $40,000 to $150,000, and for commercial loans from $200,000 to $750,000.

The  Company's  mortgage loan  originations  are through full time mortgage loan
officers and wholesale  brokers who are paid a sales commission  ranging between
 .40% to 3.0% of the loan  amount.  Prospective  customers  are  located  through
contacts with builders, real estate agents, and door-to-door canvassing.

Recent Acquisitions and Other Business Activities

    Menlo Life Insurance Company

On June 30, 1999 the Company entered into a Coinsurance and Assumption Agreement
(the "Agreement") with Menlo Life Insurance Company ("Menlo Life"),  wherein the
Company has assumed 100% of the policies in force of Menlo Life.  The  Agreement
was not in effect  until it was  approved  by Menlo  Life's  domiciled  state of
Arizona and the state of California.  These approvals were obtained on September
9, 1999 for the Arizona  Insurance  Department,  and on December 9, 1999 for the
California Insurance Department.

                                        6

<PAGE>



    SSLIC Holding Company

On December 17, 1998,  the Company  completed the  acquisition  of SSLIC Holding
Company, (formerly Consolidare Enterprises, Inc.), a Florida corporation ("SSLIC
Holding")  pursuant to the terms of the Acquisition  Agreement which the Company
entered into on April 17, 1998 with SSLIC  Holding and certain  shareholders  of
SSLIC Holding for the purchase of all of the outstanding  shares of common stock
of SSLIC Holding and all of the outstanding shares of stock of Insuradyne Corp.,
a Florida  Corporation  ("Insuradyne").  As of December 31, 2000,  SSLIC Holding
owns  approximately  71.5% of the outstanding shares of common stock of Southern
Security Life Insurance Company, a Florida  corporation  ("Southern  Security").
Southern Security is a Florida domiciled  insurance company with total assets as
of December 31, 2000,  of  approximately  $77.1  million.  Southern  Security is
currently licensed to transact business in 14 states.  Southern Security is also
a reporting  company  under Section 13 of the  Securities  Exchange Act of 1934.
Reference is made to Southern Security's annual report on Form 10-K for the year
ended December 31, 2000, which was filed with the Securities Exchange Commission
on April 12, 2001, Commission File No. 2-35669.

    Crystal Rose Funeral Home

In February 1997, the Company purchased all of the outstanding  shares of common
stock  of  Crystal  Rose  Funeral  Home,  Inc.   ("Crystal  Rose"),  an  Arizona
corporation.  In  connection  with this  transaction,  the Company also acquired
certain  real estate and other  assets  related to the  business of Crystal Rose
from the sole  stockholder  of Crystal  Rose.  The Company  continues to operate
Crystal  Rose,  which is located in  Tolleson,  Arizona,  as a funeral  home and
mortuary.

Regulation

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

The Company is currently  subject to regulation in Utah under insurance  holding
company legislation, and other states where applicable. Intercorporate transfers
of assets and dividend  payments from its insurance  subsidiaries are subject to
prior notice of approval from the State Insurance Department, if they are deemed
"extraordinary" under these statutes.  The insurance  subsidiaries are required,
under state insurance laws, to file detailed annual reports with the supervisory
agencies in each of the states in which it does  business.  Their  business  and
accounts are also subject to examination by these agencies.

The  Company's  cemetery  and mortuary  subsidiaries  are subject to the Federal
Trade Commission's comprehensive funeral industry rules and are subject to state
regulations  in the various  states where such  operations  are  domiciled.  The
morticians must be licensed by the respective  state in which they provide their
services. Similarly, the mortuaries are governed by state statutes and city

                                        7

<PAGE>



ordinances in both Utah and Arizona.  Reports are required to be kept on file on
a yearly basis which  include  financial  information  concerning  the number of
spaces sold and,  where  applicable,  funds provided to the Endowment Care Trust
Fund. Licenses are issued annually on the basis of such reports.  The cemeteries
maintain city or county licenses where they conduct business.

The Company's mortgage loan subsidiary,  Security National Mortgage,  is subject
to the  rules  and  regulations  of the U.S.  Department  of  Housing  and Urban
Development. These regulations among other things specify the procedures for the
origination,  the  underwriting,  the  licensing of wholesale  brokers,  quality
review  audits and the amounts that can be charged to borrowers  for all FHA and
VA loans. Each year the Company must have an audit by an independent CPA firm to
verify  compliance  under  these  regulations.  In  addition  to the  government
regulations,  the Company must meet loan  requirements of various  investors who
purchase the loans before the loans can be sold to the investors.

Income Taxes

The  Company's  insurance  subsidiaries,  Security  National  Life and  Southern
Security,  are taxed under the Life Insurance Company Tax Act of 1984.  Pursuant
thereto,  life insurance companies are taxed at standard corporate rates on life
insurance company taxable income. Life insurance company taxable income is gross
income  less  general  business  deductions,  reserves  for future  policyholder
benefits (with modifications),  and a small life insurance company deduction (up
to 60% of life insurance company taxable income).  The Company may be subject to
the corporate  Alternative Minimum Tax (AMT). The exposure to AMT is primarily a
result of the small life insurance company deduction. Also, under the Tax Reform
Act of 1986,  distributions  in  excess  of  stockholder's  surplus  account  or
significant decrease in life reserves will result in taxable income.

Security National Life and Southern Security may continue to receive the benefit
of the small life insurance company deduction. In order to qualify for the small
company  deduction,  the  combined  assets  of the  Company  must be  less  than
$500,000,000 and the taxable income of the life insurance companies must be less
than $3,000,000.  To the extent that the net income limitation is exceeded, then
the  small  life  insurance  company  deduction  is  phased  out  over  the next
$12,000,000 of life insurance company taxable income.

Since 1990,  Security  National Life and Southern  Security have computed  their
life  insurance  taxable income after  establishing  a provision  representing a
portion of the costs of acquisition of such life insurance business.  The effect
of the provision is that a certain percentage of the Company's premium income is
characterized  as  deferred  expenses  and  recognized  over a five to ten  year
period.

The Company's non-life insurance company subsidiaries are taxed in general under
the regular  corporate tax provisions.  For taxable years  beginning  January 1,
1987,  the Company may be subject to the Corporate  Alternative  Minimum Tax and
the proportionate  disallowance rules for installment sales under the Tax Reform
Act of 1986.

Competition

The life insurance industry is highly competitive. There are approximately 2,000
legal reserve life insurance  companies in business in the United States.  These
insurance  companies  differentiate  themselves  through  marketing  techniques,
product  features,   price  and  customer  service.   The  Company's   insurance
subsidiaries compete with a large number of insurance  companies,  many of which
have  greater  financial  resources,  a  longer  business  history,  and a  more
diversified  line of  insurance  coverage  than the Company.  In addition,  such
companies  generally have a larger sales force.  Further,  many of the companies
with  which  the  Company  competes  are  mutual  companies  which  may  have  a
competitive  advantage because all profits accrue to policyholders.  Because the
Company is

                                        8

<PAGE>



small by industry  standards and lacks broad  diversification of risk, it may be
more vulnerable to losses than larger, better established companies. The Company
believes  that its  policies  and rates for the markets it serves are  generally
competitive.

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

The mortgage loan industry is highly competitive with several mortgage companies
and banks in the same  geographic  area in which the Company is operating  which
have longer business histories and more established  positions in the community.
The refinancing market is particularly vulnerable to changes in interest rates.

Employees

As of December 31, 2000,  the Company  employed 240  full-time  and 28 part-time
employees.

Item 2.  Properties

The following table sets forth the location of the Company's  office  facilities
and certain other information relating to these properties.

                                                           Approximate
                                                Owned         Square
   Location                Function             Leased       Footage
   --------                --------             ------        -------

 5300 So. 360 West        Corporate
 Salt Lake City, UT       Headquarters         Owned(1)       33,000

 1603 Thirteenth St.      District
 Lubbock, TX              Sales Office         Owned(2)        5,000

 755 Rinehart Rd.         Subsidiary
 Lake Mary, FL            Headquarters         Owned(3)       27,000

     (1)  The Company leases an additional  8,800 square feet of the facility to
          unrelated  third parties for  approximately  $136,000 per year,  under
          leases which expire at various dates after 2000.

     (2)  The Company leases an additional  2,766 square feet of the facility to
          unrelated  third  parties for  approximately  $15,000 per year,  under
          leases which expire at various dates after 2000.

     (3)  The Company leases an additional  5,747 square feet of the facility to
          unrelated  third parties for  approximately  $109,000 per year,  under
          leases which expire at various dates after 2000.

The Company  believes the office  facilities  it occupies are in good  operating
condition,  are  adequate  for  current  operations  and has no plan to build or
acquire additional office facilities. The Company believes its office facilities
are adequate for handling business in the foreseeable future.

                                        9

<PAGE>



The following table summarizes the location and acreage of the six Company owned
cemeteries:
<TABLE>
<CAPTION>

                                                                       Net Saleable Acreage
                                                                             Acres
                                                                            Sold as      Total
Name of                                             Date      Developed        Total     Cemetery       Available
 Cemetery                         Location        Acquired    Acreage(1)    Acreage(1)   Spaces(2)      Acreage(1)
------------                     --------         ---------   ----------    ----------   ---------      ----------

<S>                         <C>                      <C>        <C>            <C>            <C>             <C>
Memorial Estates, Inc.:

  Lakeview
     Cemetery(3)            1700 E. Lakeview Dr.
                            Bountiful, UT             1973        6            40              7               33
  Mountain View
     Cemetery(3)            3115 E. 7800 So.
                            Salt Lake City, UT        1973       26            54             16               38

  Redwood
     Cemetery(3)(5)         6500 So. Redwood Rd.
                            West Jordan, UT           1973       40            78             34               44

  Holladay Memorial
     Park(4)(5)             4800 So. Memory Lane
                            Holladay, UT              1991        6            14              5                9

  Lakehills
     Cemetery(4)            10055 So. State
                            Sandy, UT                 1991       12            44              6               38

  Singing Hills
     Memorial
     Park(6)                2798 Dehesa Rd.
                            El Cajon, CA              1995        6            35              2               33

                                       10
</TABLE>

<PAGE>



     (1)  The acreage  represents  estimates of acres that are based upon survey
          reports, title reports,  appraisal reports or the Company's inspection
          of the cemeteries.

     (2)  Includes spaces sold for cash and installment contract sales.

     (3)  As of December 31, 2000, there were mortgages of approximately $62,100
          collateralized  by the property  and  facilities  at Memorial  Estates
          Lakeview, Mountain View and Redwood Cemeteries.

     (4)  As of  December  31,  2000,  there  were  mortgages  of  approximately
          $1,862,000  collateralized  by the property and  facilities at Deseret
          Mortuary,  Cottonwood  Mortuary,  Holladay  Memorial  Park,  Lakehills
          Cemetery and Colonial Mortuary.

     (5)  These cemeteries include two granite mausoleums.

     (6)  As of  December  31,  2000,  there  was a  mortgage  of  approximately
          $665,300 collateralized by the property.

                                       11

<PAGE>



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

<TABLE>
<CAPTION>

 Name of                                               Date      Viewing              Square
 Mortuary             Location                       Acquired    Room(s)   Chapel(s)  Footage
-----------           ---------                      --------    --------  -------   ---------
<S>                   <C>                             <C>          <C>      <C>       <C>
Memorial Mortuary     5850 South 900 East
                      Salt Lake City, UT               1973         3         1        20,000

Memorial Estates, Inc.:
  Redwood Mortuary    6500 South Redwood Rd.
                      West Jordan, UT                  1973         2         1        10,000

  Mountain View
     Mortuary         3115 East 7800 South
                      Salt Lake City, UT               1973         2         1        16,000
  Lakeview
     Mortuary         1700 East Lakeview Dr.
                      Bountiful, UT                    1973         0         1         5,500

Paradise Chapel
  Funeral Home        3934 East Indian School Road
                      Phoenix, AZ                      1989         2         1         9,800

Deseret Memorial, Inc.:

  Colonial
     Mortuary(2)      2128 South State St.
                      Salt Lake City, UT               1991         1         1        14,500

  Deseret
     Mortuary(2)      36 East 700 South
                      Salt Lake City, UT               1991         2         2        36,300

  Lakehills
     Mortuary         10055 South State St.
                      Sandy, UT                        1991         2         1        18,000

Cottonwood
  Mortuary(2)         4670 South Highland Dr.
                      Salt Lake City, UT               1991         2         1        14,500

Camelback Sunset
  Funeral Home(1)     301 West Camelback Rd.
                      Phoenix, AZ                      1994         2         1        11,000

                                       12
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


  Name of                                      Date     Viewing               Square
 Mortuary             Location               Acquired   Room(s)    Chapel(s)   Footage
----------           ----------              --------  ---------   ---------  --------
Greer-Wilson:
------------
<S>                  <C>                      <C>         <C>         <C>      <C>
  Greer-Wilson
  Funeral Home       5921 West Thomas Road
                     Phoenix, AZ               1995        2          2        25,000

  Tolleson Funeral
    Home             9386 West VanBuren
                     Tolleson, AZ              1995        0          1         3,460

  Avondale Funeral
    Home             218 North Central
                     Avondale, AZ              1995        1          1         1,850
Crystal Rose
  Funeral Home(3)    9155 W. VanBuren
                     Tolleson, AZ              1997        0          1         9,000

                                       13
</TABLE>

<PAGE>



     (1)  As of December 31, 2000 there were mortgages of approximately $301,500
          collateralized  by the property  and  facilities  of Camelback  Sunset
          Funeral Home.

     (2)  As of  December  31,  2000,  there  were  mortgages  of  approximately
          $1,862,000  collateralized  by the property and  facilities at Deseret
          Mortuary,  Cottonwood  Mortuary,  Holladay  Memorial  Park,  Lakehills
          Cemetery and Colonial Mortuary.

     (3)  As of  December  31,  2000,  there  was a  mortgage  of  approximately
          $214,600,  collateralized  by the property and  facilities  of Crystal
          Rose Funeral Home.

Item 3.  Legal Proceedings

The Company is not a party to any legal proceedings  outside the ordinary course
of the  Company's  business  or to any legal  proceedings  which,  if  adversely
determined, would have a material adverse effect on the Company or its business.

                                       14

<PAGE>



Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

None

                                     PART II

Item 5. Market for the  Registrant's  Common Stock and Related  Security  Holder
Matters

     The  Company's  Class A Common Stock trades on the Nasdaq  National  Market
     under the symbol  "SNFCA."  Prior to August 13,  1987,  there was no active
     public market for the Class A and Class C Common Stock. During recent years
     there has been  occasional  trading of Class A and Class C Common  Stock by
     brokerage firms in the over-the-counter  market. The following are the high
     and low sales prices for Class A Common Stock as reported by Nasdaq:

Period (Calendar Year)                                        Price Range
----------------------                                     -----------------
                                                         High          Low
                                                        ------        -----
         1999
              First Quarter................................3.24        2.38
              Second Quarter...............................2.95        2.49
              Third Quarter................................3.29        2.66
              Fourth Quarter...............................3.52        2.72

         2000
              First Quarter................................4.29        2.74
              Second Quarter...............................3.33        2.56
              Third Quarter................................3.10        2.41
              Fourth Quarter...............................2.86        2.02

         2001
              First Quarter................................2.56        2.00

The  above  sales  prices  have been  adjusted  for the  effect of annual  stock
dividends.

The Class C Common Stock is not actively  traded,  although there are occasional
transactions in such stock by brokerage firms.  (See Note 11 to the Consolidated
Financial Statements.)

The  Company  has never  paid a cash  dividend  on its Class A or Class C Common
Stock.  The  Company  currently  anticipates  that all of its  earnings  will be
retained  for use in the  operation  and  expansion of its business and does not
intend to pay any cash  dividends  on its Class A or Class C Common Stock in the
foreseeable  future.  Any future  determination as to cash dividends will depend
upon the earnings and  financial  position of the Company and such other factors
as the Board of Directors may deem  appropriate.  A 5% stock dividend on Class A
and Class C Common Stock has been paid each year from 1989 through 2000.

As of December 31, 2000, there were 4,658 record holders of Class A Common Stock
and 141 record holders of Class C Common Stock.

                                       15

<PAGE>


Item 6.  Selected Financial Data - The Company and Subsidiaries (Consolidated)
------------------------------------------------------------------------------

The following  selected  financial data for each of the five years in the period
ended  December 31, 2000,  are derived from the audited  consolidated  financial
statements.  The data as of December 31, 2000 and 1999,  and for the three years
ended  December 31, 2000,  should be read in conjunction  with the  consolidated
financial  statements,  related notes and other financial  information  included
herein.

Consolidated Statement of Earnings Data:

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                            ----------------------------------------------------------------------

                                           2000           1999(3)           1998          1997(1)         1996
                                           ----            ----             ----          ------          ----
Revenue
<S>                                   <C>             <C>             <C>             <C>             <C>
Premiums                              $ 12,876,000    $ 13,176,000    $  5,916,000    $  6,141,000    $  5,666,000
Net investment income                   12,136,000      10,631,000       7,459,000       7,140,000       7,517,000
Net mortuary and cemetery income         9,417,000      10,178,000       9,226,000       9,231,000       8,138,000
Realized gains on investments              424,000         313,000          74,000         253,000         290,000
Mortgage fee income                     22,922,000      14,503,000      10,082,000       5,662,000       8,237,000
Other                                      305,000         856,000          63,000          48,000          75,000
                                      ------------    ------------    ------------    ------------    ------------
Total revenue                           58,080,000      49,657,000      32,820,000      28,475,000      29,923,000
                                      ------------    ------------    ------------    ------------    ------------

Expenses
Policyholder benefits                   12,931,000      11,976,000       6,932,000       6,669,000       6,341,000
Amortization of deferred
  policy acquisition costs               3,189,000       4,858,000       1,274,000       1,132,000       1,240,000
General and administrative expenses     35,959,000      26,959,000      19,649,000      15,361,000      17,292,000
Interest expense                         2,126,000       1,119,000         999,000         948,000       1,318,000
Cost of goods & services of
  the mortuaries & cemeteries            2,628,000       3,295,000       2,940,000       2,696,000       2,355,000
                                      ------------    ------------    ------------    ------------    ------------
Total benefits & expenses               56,833,000      48,207,000      31,794,000      26,806,000      28,546,000
                                      ------------    ------------    ------------    ------------    ------------
Income before
  income tax expense                     1,247,000       1,450,000       1,026,000       1,669,000       1,377,000
Income tax expense                        (305,000)       (230,000)       (255,000)       (360,000)       (139,000)
Minority interest in (income)
   loss of subsidiary                      (46,000)       (244,000)             --              --              --
                                      ------------    ------------    ------------    ------------    ------------
Net earnings                          $    896,000    $    976,000    $    771,000    $  1,309,000    $  1,238,000
                                      ============    ============    ============    ============    ============

Net earnings per common share(3)      $       0.21    $       0.22    $       0.18    $       0.33    $       0.33
                                      ============    ============    ============    ============    ============
Weighted average outstanding
   common shares                         4,317,779       4,397,000       4,273,000       3,988,000       3,750,000
Net earnings per common
   share-assuming dilution(3)         $       0.21    $       0.22    $       0.18    $       0.32    $       0.32
                                      ============    ============    ============    ============    ============
Weighted average outstanding
   common shares-assuming dilution       4,335,044       4,397,000       4,273,000       4,093,000       3,856,000
</TABLE>

                                       16

<PAGE>



Item 6.  Selected Financial Data - The Company and Subsidiaries (Consolidated)
------------------------------------------------------------------------------

Balance Sheet Data:

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                       --------------------------------------------------------------------------
                                        2000           1999          1998(3)         1997(1)         1996
                                        ----           ----           ----           ------          ----

Assets
<S>                                 <C>            <C>            <C>            <C>            <C>
Investments and restricted assets   $108,810,000   $113,208,000   $126,332,000   $ 81,039,000   $ 78,638,000
Cash                                  11,275,000     12,423,000      6,671,000      3,408,000      3,301,000
Receivables                           36,413,000     38,074,000     28,309,000     15,224,000     17,070,000
Other assets                          52,249,000     50,593,000     51,953,000     25,781,000     25,701,000
                                    ------------   ------------   ------------   ------------   ------------
Total assets                        $208,747,000   $214,298,000   $213,265,000   $125,452,000   $124,710,000
                                    ============   ============   ============   ============   ============

Liabilities
Policyholder benefits               $141,755,000   $140,368,000    137,466,000   $ 77,890,000   $ 76,962,000
Notes & contracts payable             14,046,000     23,341,000     22,887,000      9,981,000     12,490,000
Cemetery & mortuary liabilities        8,659,000      6,638,000      6,917,000      6,116,000      5,946,000
Other liabilities                     12,921,000     11,415,000     12,536,000      6,070,000      5,844,000
                                    ------------   ------------   ------------   ------------   ------------
Total liabilities                    177,381,000    181,762,000    179,806,000    100,057,000    101,242,000
                                    ------------   ------------   ------------   ------------   ------------

Minority interest                      4,625,000      6,046,000      6,779,000             --             --

Stockholders' equity                  26,741,000     26,490,000     26,680,000     25,395,000     23,468,000
                                    ------------   ------------   ------------   ------------   ------------
Total liabilities and
  stockholders' equity              $208,747,000   $214,298,000   $213,265,000   $125,452,000   $124,710,000
                                    ============   ============   ============   ============   ============
</TABLE>


     (1)  Reflects the  acquisition  of Crystal Rose Funeral Home as of February
          1997.

     (2)  The earnings  per share  amounts  prior to 1997 have been  restated as
          required to comply with  Statement of Financial  Accounting  Standards
          No. 128,  Earnings Per Share.  For further  discussion of earnings per
          share  and the  impact  of  Statement  No.  128,  see the notes to the
          audited consolidated financial statements.

     (3)  Reflects the acquisition of SSLIC Holding Company and  subsidiaries as
          of December 17, 1998.

                                       17

<PAGE>



Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations
-------------------------------------------------------------------------------

Overview

The Company's  operations  over the last several years  generally  reflect three
trends or events which the Company expects to continue:  (i) increased attention
to "niche" insurance  products,  such as the Company's funeral plan policies and
interest  sensitive  products;  (ii) emphasis on cemetery and mortuary business;
and (iii)  capitalizing  on lower interest rates by originating  and refinancing
mortgage loans.

During the years ending December 31, 2000 and 1999,  Security  National Mortgage
Company (SNMC) experienced increases in revenue and expenses due to the increase
in loan volume of its operations.  SNMC is a mortgage lender  incorporated under
the laws of the State of Utah.  SNMC is approved  and  regulated  by the Federal
Housing Administration (FHA), a department of the U.S. Department of Housing and
Urban Development (HUD), to originate mortgage loans that qualify for government
insurance in the event of default by the borrower.  SNMC obtains loans primarily
from independent brokers and correspondents.  SNMC funds the loans from internal
cash flows and lines of credit from financial  institutions.  SNMC receives fees
from  origination  points paid by the borrowers and service and release premiums
received from third party investors who purchase the loans from SNMC. SNMC sales
all of its loans to third party investors and does not retain servicing to these
loans. SNMC pays the brokers and  correspondents a commission for loans that are
brokered through SNMC. In 1999 SNMC opened new wholesale branches in Sacramento,
California and Valencia,  California. In 2000 SNMC opened new wholesale branches
in Orlando, Florida, Colorado Springs, Colorado and Provo, Utah. SNMC originated
and sold 4,845 ($652,000,000) and 3,526 ($453,000,000)loans respectively in 2000
and 1999.

On December 17, 1998,  the Company  purchased all of the  outstanding  shares of
common stock of SSLIC Holding Company ("SSLIC Holding")  (formerly  "Consolidare
Enterprises,  Inc.") and Insuradyne Corporation  ("Insuradyne") for a total cost
of $12,248,194.  As of December 31, 2000, SSLIC Holding owns approximately 71.5%
of the  outstanding  shares of common stock of Southern  Security Life Insurance
Company ("Southern Security").

                                       18

<PAGE>



Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations
-------------------------------------------------------------------------------

The purchase of SSLIC Holding, including Insuradyne, was accounted for using the
purchase method of accounting. Thus the results of operations of the Company for
the twelve  months  ended  December 31, 1998 do not include the results of SSLIC
Holding and  Insuradyne.  In the  Management's  Discussion  and  Analysis of the
Results of  Operations,  the  results of SSLIC  Holding and  Insuradyne  for the
twelve  months  ended  December  31,  1999 have  been  excluded.  The  following
Consolidated Statements of Earnings shows the effect of excluding the results of
SSLIC Holding and Insuradyne for the twelve months ended December 31, 1999.

<TABLE>
<CAPTION>

                                                                                        Without
                                                                                         SSLIC                Variance
                                                                         SSLIC Holding   Holding               without
                                                                           Southern     Southern             SSLIC Holding
                                                                           Security     Security           Southern Security
                                                                          Insuradyne   Insuradyne              Insuradyne
REVENUES:                                   1999            1998             1999          1999           Amount       Percent
                                            ----            ----            -----       ------------      ------       -------
<S>                                    <C>            <C>             <C>             <C>             <C>               <C>
Insurance premiums
  and other considerations             $ 13,175,825    $  5,915,659    $  6,901,546    $  6,274,279    $    358,620        6.1%
Net investment income                    10,631,302       7,458,743       2,938,745       7,692,557         233,814        3.1
Net mortuary and cemetery income         10,178,246       9,225,801              --      10,178,246         952,445       10.3
Realized gains on investments
   and other assets                         313,013          74,121              --         313,013         238,892      322.3
Mortgage fee income                      14,503,388      10,082,330              --      14,503,388       4,421,058       43.8
Other                                       855,604          62,949         715,128         140,476          77,527      123.2
                                       ------------    ------------    ------------    ------------    ------------    -------
   Total Revenues                        49,657,378      32,819,603      10,555,419      39,101,959       6,282,356       19.1
                                       ------------    ------------    ------------    ------------    ------------    -------

BENEFITS AND EXPENSES:
Death benefits                            4,780,063       2,432,822       1,917,134       2,862,929         430,107       17.7
Surrenders and other policy benefits      1,494,863       1,145,812          88,208       1,406,655         260,843       22.8
Increase in future policy benefits        5,700,784       3,353,287       2,448,222       3,252,562        (100,725)      (3.0)
Amortization of deferred policy
   acquisition costs and cost of
   insurance acquired                     4,857,662       1,273,394       3,592,217       1,265,445          (7,949)      (0.6)
General and administrative
   expenses:
      Commissions                        11,850,763       7,618,335         364,848      11,485,915       3,867,580       50.8
      Salaries                            7,409,298       5,358,743       1,063,533       6,345,765         987,022       18.4
      Other                               7,698,779       6,671,823         550,282       7,148,497         476,674        7.1

BENEFITS AND EXPENSES:
Interest expense                          1,119,402         999,123         116,977       1,002,425           3,302        0.3
Cost of mortuaries and cemeteries
   goods and services sold                3,294,983       2,940,220              --       3,294,983         354,763       12.1
                                       ------------    ------------    ------------    ------------    ------------    -------
      Total benefits and expenses        48,206,597      31,793,559      10,141,421      38,065,176       6,271,617       19.7
                                       ------------    ------------    ------------    ------------    ------------    -------

Earnings before income taxes              1,450,781       1,026,044         413,998       1,036,783          10,739        1.0

Income tax expense                         (230,516)       (254,815)        (25,803)       (204,713)         50,102       19.7
Minority interest in income
   of subsidiary                           (244,370)             --        (244,370)             --              --       --
                                       ------------    ------------    ------------    ------------    ------------    -------
      Net earnings                     $    975,895    $    771,229    $    143,825    $    832,070    $     60,841        7.9%
                                       ============    ============    ============    ============    ============    =======
</TABLE>

                                       19

<PAGE>



Results of Operations

2000 Compared to 1999

Total revenues  increased by $8,422,000,  or 17.0%,  from $49,657,000 for fiscal
year 1999 to $58,079,000 for fiscal year 2000.  Contributing to this increase in
total revenues was a $1,505,000 increase in net investment income, an $8,418,000
increase in mortgage fee income,  and a $111,000  increase in realized  gains on
investments and other assets.

Insurance  premiums  and  other  considerations   decreased  by  $300,000,  from
$13,176,000  in 1999 to  $12,876,000  in 2000.  This reduction was primarily the
result  of a change  in the sales  mix of the  Company's  insurance  subsidiary,
Southern  Security.  Since March  1998,  Southern  Security  has sold more final
expense policies,  which have lower face amounts,  than universal life products,
which have larger face amounts.  Consequently, the insurance revenues from final
expense products were less than those from universal life products.

Net  investment  income  increased by  $1,505,000  from  $10,631,000  in 1999 to
$12,136,000  in 2000.  This  increase was  primarily  attributable  to more loan
originations  made by the  Company's  mortgage  subsidiary  in  2000  due to the
expansion of business activities in new geographic markets.

Net mortuary and cemetery sales  decreased by $761,000 from  $10,178,000 in 1999
to  $9,417,000  in 2000.  This  decrease  was  primarily  due to the  change  in
accounting  principles for pre-need funeral and cemetery contract revenues.  See
Note 1 "Recent Accounting Pronouncements".

Mortgage  fee  income  increased  by  $8,418,000,  from  $14,504,000  in 1999 to
$22,922,000  in 2000.  This  increase was  primarily  the result of an increased
number of loan originations made by the Company's mortgage subsidiary in 2000.

Other  revenue  decreased by $551,000 from $856,000 in 1999 to $305,000 in 2000.
This reduction was primarily the result of having received proceeds in 1999 from
insurance  claims filed for the recovery of the costs to litigate a case against
a former officer of the Company's insurance subsidiary, Southern Security.

Total benefits and expenses were $56,833,000 for 2000, which  constituted  97.9%
of the Company's  total  revenues,  as compared to  $48,207,000,  or 97.1 of the
Company's total revenues for 1999.

During 2000,  there was a net increase of $955,000 in death benefits,  surrender
and other  policy  benefits,  and an increase  in future  policy  benefits  from
$11,976,000 in 1999 to  $12,931,000 in 2000.  This increase was primarily due to
additional  interest  credited on annuities and reserve increases on traditional
products.  This  increase  was  reasonable  based  on the  underlying  actuarial
assumptions.

Amortization of deferred policy acquisition costs and cost of insurance acquired
decreased by $1,669,000  from  $4,858,000  in 1999 to  $3,189,000 in 2000.  This
decrease  was  primarily  due to  adjusting  the  amortization  rate to  current
assumptions at the Company's insurance subsidiary, Southern Security.

General and administrative expenses increased by $9,000,000, from $26,959,000 in
1999 to  $35,959,000  in 2000.  Contributing  to this  increase was a $6,550,000
increase in commission expenses from $11,851,000 in 1999 to $18,401,000 in 2000.
Salaries increased $258,000 from $7,409,000 in 1999 to $7,667,000 in 2000. Other
expenses  increased  $2,191,000,  from $7,699,000 in 1999 to $9,890,000 in 2000.
These  increases  were  primarily  the  result  of an  increased  number of loan
originations made by the Company's mortgage subsidiary in 2000.

Interest expense increased by $1,007,000,  from $1,119,000 in 1999 to $2,126,000
in 2000.  This  increase was primarily  due to more loan  originations  from the
Company's mortgage subsidiary being funded by third parties in 2000.

Cost of the mortuary and cemetery goods and services sold decreased by $667,000,
from  $3,295,000 in 1999 to $2,628,000 in 2000.  This decrease was primarily due
to the  change in  accounting  principles  for  pre-need  funeral  and  cemetery
contract revenues. See Note 1, "Recent Accounting Pronouncements".

                                       20

<PAGE>



1999 Compared to 1998

(See Overview for an  explanation  of this  comparison.  SSLIC Holding  Company,
Southern  Security and  Insuradyne  results from  operations  for 1999 have been
excluded)

Total revenues  increased by $6,282,000,  or 19.1%,  from $32,820,000 for fiscal
year 1998 to $39,102,000 for fiscal year 1999.  Contributing to this increase in
total  revenues  was  a  $359,000  increase  in  insurance  premiums  and  other
considerations,  a  $234,000  increase  in net  investment  income,  a  $952,000
increase in net mortuary and cemetery  sales, a $4,421,000  increase in mortgage
fee income,  and a $239,000  increase in realized gains on investments and other
assets.

Insurance  premiums  and  other  considerations   increased  by  $359,000,  from
$5,915,000 in 1998 to $6,274,000 in 1999. This increase was primarily attributed
to additional new business.

Net  investment  income  increased  by  $234,000,  from  $7,459,000  in  1998 to
$7,693,000 in 1999.  This increase was primarily the result of the  reinvestment
of the Company's  bonds which matured or were called in 1999 into mortgage loans
having higher long-term rates.

Net mortuary and cemetery sales  increased by $952,000,  from $9,226,000 in 1998
to $10,178,000 in 1999. This increase was primarily from additional pre-need and
at-need sales.

Mortgage  fee  income  increased  by  $4,421,000,  from  $10,082,000  in 1998 to
$14,503,000  in 1999.  This  increase was  primarily  attributable  to more loan
originations  made by the  Company's  mortgage  subsidiary  in  1999  due to the
expansion of business activities in new geographic markets.

Total benefits and expenses were $38,065,000 for 1999, which  constituted 97% of
the  Company's  total  revenues,  as  compared  to  $31,794,000,  or  97% of the
Company's total revenues for 1998.

During 1999,  there was a net increase of $590,000 in death benefits,  surrender
and other  policy  benefits,  and an increase  in future  policy  benefits  from
$6,932,000  in 1998 to  $7,522,000  in 1999.  This increase was primarily due to
additional  interest  credited on annuities and reserve increases on traditional
products and additional  death claims.  These increases were reasonable based on
the underlying actuarial assumptions.

Amortization of deferred policy acquisition costs and cost of insurance acquired
decreased  by  $8,000,  from  $1,273,000  in 1998 to  $1,265,000  in 1999.  This
decrease was reasonable based on the underlying actuarial assumptions.

General and administrative expenses increased by $5,331,000, from $19,649,000 in
1998 to $24,980,000 in 1999.  Commission expenses increased by $3,868,000,  from
$7,618,000 in 1998 to  $11,486,000  in 1999.  Salaries  increased  $987,000 from
$5,359,000 in 1998 to $6,346,000 in 1999.  Other  expenses  increased  $477,000,
from  $6,671,000 in 1998 to $7,148,000 in 1999.  These  increases were primarily
the result of an increased  number of loan  originations  made by the  Company's
mortgage subsidiary in 1999.

Interest  expense  increased by $3,000,  from  $999,000 in 1998 to $1,002,000 in
1999.  This  increase  was  primarily  due to more  loan  originations  from the
Company's mortgage subsidiary being funded by third parties in 1999.

Cost of the mortuary and cemetery goods and services sold increased by $355,000,
from  $2,940,000 in 1998 to $3,295,000 in 1999.  This increase was primarily due
to the increase in pre-need and at-need sales.

Liquidity and Capital Resources

The Company's life insurance subsidiaries and cemetery and mortuary subsidiaries
realize  cash flow  from  premiums,  contract  payments  and  sales on  personal
services  rendered  for  cemetery  and  mortuary  business,  from  interest  and
dividends  on  invested  assets,  and from the  proceeds  from the  maturity  of
held-to-maturity investments or sale

                                       21

<PAGE>



of other  investments.  The  mortgage  subsidiary  realizes  cash flow from fees
generated by originating and  refinancing  mortgage loans and interest earned on
mortgages sold to investors. The Company considers these sources of cash flow to
be adequate to fund future  policyholder and cemetery and mortuary  liabilities,
which generally are long-term,  and adequate to pay current policyholder claims,
annuity payments,  expenses on the issuance of new policies,  the maintenance of
existing policies, debt service, and to meet operating expenses.

The  Company  attempts  to  match  the  duration  of  invested  assets  with its
policyholder  and  cemetery  and  mortuary  liabilities.  The  Company  may sell
investments other than those  held-to-maturity  in the portfolio to help in this
timing;  however,  to date, that has not been necessary.  The Company  purchases
short-term  investments  on a  temporary  basis  to  meet  the  expectations  of
short-term requirements of the Company's products.

The  Company's  investment  philosophy  is  intended to provide a rate of return
which will persist during the expected duration of policyholder and cemetery and
mortuary liabilities regardless of future interest rate movements.

The Company's  investment  policy is to invest  predominately  in fixed maturity
securities,  mortgage loans, and warehouse  mortgage loans on a short-term basis
before selling the loans to investors in accordance  with the  requirements  and
laws  governing the life  insurance  subsidiaries.  Bonds owned by the insurance
subsidiaries  amounted  to  $62,889,000  as of  December  31,  2000  compared to
$63,749,000 as of December 31, 1999.  This represents 60% of the total insurance
related  investments  in 2000 as compared to 59% in 1999.  Generally,  all bonds
owned by the life insurance  subsidiaries are rated by the National  Association
of  Insurance  Commissioners  (NAIC).  Under this rating  system,  there are six
categories  used for rating bonds.  At December 31, 2000, .68% ($429,000) and at
December 31, 1999, 1.56% ($994,000) of the Company's total bond investments were
invested in bonds in rating  categories  three through six which are  considered
non-investment grade.

If market conditions were to cause interest rates to change, the market value of
the fixed  income  portfolio  (approximately  $80,263,000)  could  change by the
following  amounts based on the respective  basis point swing (the change in the
market values were calculated using a modeling technique):

                 -200 bps   -100 bps   +100 bps   +200 bps
Change in
   Market Value
   (in thousands)  $4,441   $2,932    $(3,881)   $(9,184)

The Company has  classified  certain of its fixed income  securities,  including
high-yield  securities,  in its  portfolio  as  available  for  sale,  with  the
remainder  classified as held to maturity.  However,  in accordance with Company
policy,  any such securities  purchased in the future will be classified as held
to maturity.  Business conditions,  however, may develop in the future which may
indicate a need for a higher level of liquidity in the investment portfolio.  In
that event the  Company  believes  it could  sell  short-term  investment  grade
securities before liquidating higher-yielding longer term securities.

The Company is subject to risk based capital guidelines established by statutory
regulators  requiring  minimum  capital  levels based on the  perceived  risk of
assets, liabilities,  disintermediation, and business risk. At December 31, 2000
and 1999, the life subsidiaries exceeded the regulatory criteria.

The Company's total  capitalization  of  stockholders'  equity and bank debt and
notes payable was  $40,787,000 and $41,143,000 as of December 31, 2000 and 1999,
respectively.  Stockholders' equity as a percent of total capitalization was 66%
and 64% as of December 31, 2000 and 1999, respectively.

Lapse  rates  measure the amount of  insurance  terminated  during a  particular
period. The Company's lapse rate for life insurance in 2000 was 15%, as compared
to a rate of 10% in 1999.

In February 1997, the Company purchased all of the outstanding  shares of common
stock of Crystal Rose Funeral Home, Inc. for a total  consideration of $382,000,
which included a note to the former owner in the amount of $297,000.

                                       22

<PAGE>



On December 17, 1998,  the Company  completed  the  acquisition  of  Consolidare
Enterprises,  Inc., a Florida corporation  ("Consolidare") pursuant to the terms
of the  Acquisition  Agreement  which the Company entered into on April 17, 1998
with Consolidare and certain shareholders of Consolidare for the purchase of all
of the  outstanding  shares of common  stock of  Consolidare.  Consolidare  owns
approximately  71.5% of the  outstanding  shares  of  common  stock of  Southern
Security Life Insurance Company, a Florida corporation ("SSLIC"), and all of the
outstanding  shares  of  stock  of  Insuradyne  Corp.,  a  Florida   corporation
("Insuradyne").

As consideration for the purchase of the shares of Consolidare, the Company paid
to the  stockholders of Consolidare at closing an aggregate of  $12,248,194.  In
order to pay the purchase  consideration,  the Company obtained  $6,250,000 from
bank  financing,  with the  balance  of  $5,998,194  obtained  from  funds  then
currently held by the Company.  In addition to the purchase  consideration,  the
Company caused SSLIC to pay, on the closing date,  $1,050,000 to George Pihakis,
the President and Chief Executive  Officer of SSLIC prior to closing,  as a lump
sum  settlement of the executive  compensation  agreement  between SSLIC and Mr.
Pihakis.

In connection with the  acquisition of Consolidare,  the Company entered into an
Administrative  Services Agreement dated December 17, 1998 with SSLIC. Under the
terms of the  agreement,  the Company has agreed to provide  SSLIC with  certain
defined  administrative and financial services,  including  accounting services,
financial   reports   and   statements,    actuarial,   policyholder   services,
underwriting,  data processing,  legal, building management,  marketing advisory
services  and  investment  services.  In  consideration  for the  services to be
provided by the Company, SSLIC shall pay the Company an administrative  services
fee of $250,000 per month, provided,  however, that such fee shall be reduced to
zero for so long as the  capital  and  surplus of SSLIC is less than or equal to
$6,000,000,  unless  SSLIC and the Company  otherwise  agree in writing and such
agreement is approved by the Florida Department of Insurance.

The administrative services fee may be increased,  beginning on January 1, 2001,
to reflect  increases in the Consumer  Price Index,  over the index amount as of
January 1, 2000. The  Administrative  Services  Agreement shall remain in effect
for an initial term expiring on December 16, 2003. The term of the agreement may
be  automatically  extended for  additional  one-year  terms  unless  either the
Company or SSLIC shall deliver a written notice on or before September 30 of any
year  stating to the other its  desire not to extend the term of the  agreement.
However, in no event can the agreement be terminated prior to December 16, 2003.

On June 30, 1999 the Company entered into a Coinsurance and Assumption Agreement
(the "Agreement") with Menlo Life Insurance Company ("Menlo Life"),  wherein the
Company has assumed 100% of the policies in force of Menlo Life.  The  Agreement
was not in effect  until it was  approved  by Menlo  Life's  domiciled  state of
Arizona and the state of California.  These approvals were obtained on September
9, 1999 for the Arizona  Insurance  Department,  and on December 9, 1999 for the
California  Insurance  Department.  Menlo  Life  will pay  consideration  to the
Company  in the form of  statutory  admitted  assets  to equal  the  liabilities
assumed.  The  consideration  will be paid when the  policies in force have been
converted  onto  the  Company's  computer  system.  It is  anticipated  that the
conversion  will take  place  during the third  quarter of 2001.  Until then the
policies  will be  administered  by Menlo  Life.  The net  amount  to be paid at
December 31, 2000, is $2,711,329.

At December 31, 2000,  $22,715,000 of the Company's  consolidated  stockholders'
equity represents the statutory  stockholders' equity of the Company's insurance
subsidiaries.  The life  insurance  subsidiaries  cannot pay a  dividend  to its
parent company without the approval of insurance regulatory authorities.

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,  was
issued in June 1998 and  amended  by SFAS No.  138,  issued  in June  2000.  The
requirements  of SFAS No. 133, as amended,  will be effective for the Company in
the first  quarter of the fiscal year  beginning  January 1, 2001.  The standard
establishes  accounting  and  reporting  standards  for  derivative  instruments
embedded in other  contracts  and for hedging  activities.  Under the  standard,
certain contracts that were not formerly considered derivatives may now meet the
definition  of a  derivative.  The  Company has  determined  SFAS 133 to have no
impact on the Company's financial position and results of operations because the
Company has no derivative activity.

                                       23

<PAGE>



SFAS No. 140,  Accounting  for Transfers  and Servicing of Financial  Assets and
Extinguishments of Liabilities,  was issued in September 2000. SFAS No. 140 is a
replacement of SFAS No. 125, Accounting for Transfers and Servicing of Financial
Assets and  Extinguishments  of Liabilities.  Most of the provisions of SFAS No.
125  were  carried  forward  to SFAS  No.  140  without  reconsideration  by the
Financial Accounting Standards Board (FASB), and some were changed only in minor
ways. In issuing SFAS No. 140, the FASB included  issues and decisions  that had
been  addressed and determined  since the original  publication of SFAS No. 125.
SFAS No. 140 is effective for transfers  after March 31, 2001.  Management  does
not expect the  adoption  of SFAS No.  140 to have a  significant  impact on the
financial position or results of operations of the Company.

                                       24

<PAGE>



Item 8.  Financial Statements and Supplementary Data

     INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES

                                                                Page No.

Financial Statements:

    Report of Independent Auditors.................................26

    Consolidated Balance Sheet, December 31,
    2000 and 1999..................................................28

    Consolidated Statement of Earnings,
    Years Ended December 31, 2000, 1999,
    and 1998.......................................................30

    Consolidated Statement of Stockholders'
    Equity, Years Ended December 31, 2000, 1999
    and 1998. .....................................................31

    Consolidated Statement of Cash Flow,
    Years Ended December 31, 2000, 1999 and
    1998    .......................................................32

    Notes to Consolidated Financial
    Statements.....................................................34



Financial Statement Schedules:

  I.  Summary of Investments -- Other than
      Investments in Related Parties...............................63

 II.  Condensed Financial Information of
      Registrant...................................................64

 IV.  Reinsurance..................................................70

  V.  Valuation and Qualifying Accounts............................71


All other schedules to the consolidated financial statements required by Article
7 of  Regulation  S-X are not  required  under the related  instructions  or are
inapplicable and therefore have been omitted.

                                       25

<PAGE>



                         REPORT OF INDEPENDENT AUDITORS















To The Board of Directors and Shareholders
of Security National Financial Corporation

We have audited the accompanying consolidated balance sheet of Security National
Financial Corporation and subsidiaries as of December 31, 2000 and 1999, and the
related  consolidated  statements of earnings,  stockholders'  equity,  and cash
flows for the years then ended.  In  connection  with our audit of the financial
statements, we have also audited the amounts included in the financial statement
schedules  as listed in the  accompanying  index  under Item 8. These  financial
statements and schedules are the responsibility of the Company's management. Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedules based on our audits.

We conducted  our audits in accordance  with U.S.  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Security  National  Financial  Corporation and subsidiaries at December 31, 2000
and 1999, and the consolidated  results of their operations and their cash flows
for the  years  ended  December  31,  2000 and  1999,  in  conformity  with U.S.
generally accepted accounting principles. Also, in our opinion, the related 2000
and 1999 financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.





TANNER + CO.

Salt Lake City, Utah
March 23, 2001

                                       26

<PAGE>



                         REPORT OF INDEPENDENT AUDITORS















Board of Directors
Security National Financial Corporation

We have  audited  the  accompanying  consolidated  balance  sheets  of  Security
National  Financial  Corporation  and  subsidiaries  as of December 31, 1998 and
1997, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the three  years in the  period  ended  December  31,
1998. Our audits also include the financial  statement  schedules  listed in the
Index at Item 8. These financial statements and schedules are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these financial statements and schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Security  National  Financial  Corporation and subsidiaries at December 31, 1998
and 1997, and the consolidated  results of their operations and their cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles. Also, in our opinion, the related
financial  statement  schedules,  when  considered  in  relation  to  the  basic
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.





ERNST & YOUNG LLP

Salt Lake City, Utah
March 22, 1999

                                       27

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                           Consolidated Balance Sheet

                                                             December 31,
Assets:                                                  2000          1999
-------                                                  ----          ----
Insurance-related investments:
Fixed maturity securities
  held to maturity, at amortized cost (market
  $39,283,266 and $39,453,452 for 2000 and 1999)   $  39,384,168 $  39,629,851
Fixed maturity securities available
  for sale, at market (cost $23,556,864 in 2000
  and 24,957,347 in 1999)                             23,504,989    24,119,190
Equity securities available for sale,
  at market (cost $1,617,363 and $4,350,139
  for 2000 and 1999)                                   2,774,077     5,745,213
Mortgage loans on real estate                         17,435,178    18,926,628
Real estate, net of accumulated
  depreciation of $3,088,761 and $2,722,024
  for 2000 and 1999                                    8,564,395     7,629,952
Policy, student and other loans                       11,277,742    11,607,993
Short-term investments                                 1,027,927     1,290,310
                                                   ------------- -------------
     Total insurance-related investments             103,968,476   108,949,137
Restricted assets of cemeteries and mortuaries         4,841,819     4,258,987
Cash                                                  11,275,030    12,422,864
Receivables:
  Trade contracts                                      5,342,380     4,232,030
 Mortgage loans sold to investors                     26,886,162    29,071,913
  Receivable from agents                               2,225,784     2,272,624
  Receivable from officers                               111,500       118,400
  Other                                                3,503,320     3,847,079
                                                   ------------- -------------
     Total receivables                                38,069,146    39,542,046
  Allowance for doubtful accounts                     (1,656,223)   (1,467,954)
                                                   ------------- -------------
  Net receivables                                     36,412,923    38,074,092
Policyholder accounts on deposit
  with reinsurer                                       7,434,750     7,806,866
Land and improvements held for sale                    8,485,523     8,522,687
Accrued investment income                              1,302,552     1,493,013
Deferred policy acquisition costs
  and pre-need deferred charges                       13,603,182    10,630,086
Property, plant and equipment, net                    10,824,700    10,566,508
Cost of insurance acquired                             8,729,264     9,597,306
Excess of cost over net assets
  of acquired subsidiaries                             1,172,599     1,305,333
Other                                                    695,683       671,558
                                                   ------------- -------------
     Total assets                                  $ 208,746,501 $ 214,298,437
                                                   ============= =============



See accompanying notes to consolidated financial statements.

                                       28

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                     Consolidated Balance Sheet (Continued)

                                                            December 31,
                                                            ------------
                                                       2000            1999
                                                       ----            ----

Liabilities:
------------
Future life, annuity, and other
  policy benefits                               $ 140,000,344    $ 138,501,316
Unearned premium reserve                            1,754,980        1,866,523
Line of credit for financing
   of mortgage loans                                  --             8,687,023
Bank loans payable                                  9,805,118       10,768,098
Notes and contracts payable                         4,240,830        3,885,684
Deferred pre-need cemetery and funeral
  contracts revenues and estimated
  future cost of pre-need sales                     8,679,199        6,817,685
Accounts payable                                    1,242,407          804,133
Funds held under reinsurance treaties               1,417,216        1,475,512
Other liabilities and accrued expenses              4,115,920        3,219,166
Income taxes                                        6,124,512        5,736,860
                                                -------------    -------------
     Total liabilities                            177,380,526      181,762,000

Commitments and contingencies                         --               --

Minority interest                                   4,624,614        6,046,744

Stockholders' Equity:
--------------------
Common stock:
     Class A: $2 par value, authorized
         10,000,000 shares, issued 5,107,631
         shares in 2000 and 4,863,731 shares
         in 1999                                   10,215,262        9,727,462
     Class C: $0.20 par value, authorized
         7,500,000 shares, issued 5,827,805
         shares in 2000 and 5,555,350 shares
         in 1999                                    1,165,561        1,111,070
                                                -------------    -------------
Total common stock                                 11,380,823       10,838,532
Additional paid-in capital                         10,054,714       10,015,942
Accumulated other comprehensive income, net of
  deferred taxes (benefit)  of $66,043 and
  and $(71,899) for 2000 and 1999                     836,751          665,691
Retained earnings                                   7,831,306        7,516,640
Treasury stock at cost (1,233,064 Class
     A shares and 65,078 Class C shares in 2000;
     966,139 Class A shares and
     61,979 Class C shares in 1999, held
     by affiliated companies)                       (3,362,233)      (2,547,112)
                                                 -------------    -------------
Total stockholders' equity                          26,741,361       26,489,693
                                                 -------------    -------------
  Total liabilities and stockholders' equity     $ 208,746,501    $ 214,298,437
                                                 =============    =============

See accompanying notes to consolidated financial statements.

                                       29

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                       Consolidated Statement of Earnings

<TABLE>
<CAPTION>

                                                                 Year Ended December 31,
                                                        2000             1999           1998
                                                        ----             ----           ----
Revenues:
--------
<S>                                                 <C>             <C>             <C>
Insurance premiums and other considerations         $ 12,875,585    $ 13,175,825    $  5,915,659
Net investment income                                 12,136,072      10,631,302       7,458,743
Net mortuary and cemetery sales                        9,416,927      10,178,246       9,225,801
Realized gains on investments and other assets           423,805         313,013          74,121
Mortgage fee income                                   22,921,585      14,503,388      10,082,330
Other                                                    304,886         855,604          62,949
                                                    ------------    ------------    ------------
  Total revenue                                       58,078,860      49,657,378      32,819,603

Benefits and expenses:
------------
Death benefits                                         3,959,811       4,780,063       2,432,822
Surrenders and other policy benefits                   1,702,251       1,494,863       1,145,812
Increase in future policy benefits                     7,268,720       5,700,784       3,353,287
Amortization of deferred policy acquisition costs
  and cost of insurance acquired                       3,188,752       4,857,662       1,273,394
General and administrative expenses:
  Commissions                                         18,401,314      11,850,763       7,618,335
  Salaries                                             7,667,263       7,409,298       5,358,743
  Other                                                9,890,197       7,698,779       6,671,823
Interest expense                                       2,126,169       1,119,402         999,123
Cost of goods and services sold
  of the mortuaries and cemeteries                     2,628,260       3,294,983       2,940,220
                                                    ------------    ------------    ------------

  Total benefits and expenses                         56,832,737      48,206,597      31,793,559
                                                    ------------    ------------    ------------

Earnings before income taxes                           1,246,123       1,450,781       1,026,044
Income tax expense                                      (304,640)       (230,516)       (254,815)
Minority income                                          (45,754)       (244,370)             --
                                                    ------------    ------------    ------------
  Net earnings                                      $    895,729    $    975,895    $    771,229
                                                    ============    ============    ============

Net earnings per common share                       $       0.21    $       0.22    $       0.18
                                                    ============    ============    ============

  Weighted average outstanding common shares           4,317,779       4,397,141       4,272,516

Net earnings per common share-
  assuming dilution                                 $       0.21    $       0.22    $       0.18
                                                    ============    ============    ============

  Weighted average outstanding
    common shares assuming-dilution                    4,335,044       4,397,141       4,272,516
</TABLE>

See accompanying notes to consolidated financial statements.

                                       30

<PAGE>

<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                 Consolidated Statement of Stockholders' Equity

                                                                           Accumulated
                                                             Additional       Other
                                     Class          Class      Paid-in     Comprehensive   Retained     Treasury
                                      A              C         Capital        Income       Earnings       Stock           Total
                                  --------        -------     ---------       ------       --------       -----           -----
<S>                              <C>           <C>          <C>            <C>           <C>            <C>           <C>
Balance at
  December 31, 1997              $8,653,176    $1,040,162   $ 9,133,454    $  830,939     $7,533,259     $(1,796,060)  $25,394,930

Comprehensive income:
  Net earnings                                                                               771,229                       771,229
Unrealized gain on securities                                                 250,174                                      250,174
                                                                                                                        ----------
Total comprehensive income                                                                                               1,021,403
                                                                                                                        ----------
Stock dividends                      439,784        51,875      338,046                     (829,705)                        --
Conversion Class C
  to Class A                           2,672        (2,672)                                                                  --
Stock issued                         139,028           (46)     124,944                                                    263,926
                                  ----------    ----------  -----------    ----------    -----------     ------------  -----------

Balance at
  December 31, 1998                9,234,660     1,089,319    9,596,444     1,081,113      7,474,783      (1,796,060)   26,680,259

Comprehensive income:
  Net earnings                                                                               975,895                       975,895
  Unrealized gain on securities                                              (415,422)                                    (415,422)
                                                                                                                       -----------
Total comprehensive income                                                                                                 560,473
                                                                                                                       -----------
Stock dividends                       463,344        52,910     419,456                     (935,710)                       --
Conversion Class C
  to Class A                           31,160       (31,159)         (1)                                                    --
Stock issued (canceled)                (1,702)                       43                        1,672                            13
Purchase of treasury stock                                                                                 (751,052)      (751,052)
                                  -----------   -----------  -----------  ----------    ------------    -----------    -----------

Balance at
  December 31, 1999                 9,727,462     1,111,070   10,015,942     665,691       7,516,640    (2,547,112)     26,489,693

Comprehensive income:
  Net earnings                                                                               895,729                       895,729
  Unrealized gain on securities                                              171,060                                       171,060
                                                                                                                       -----------
Total comprehensive income                                                                                               1,066,789
                                                                                                                       -----------
Stock dividends                        486,786        55,503                  38,774        (581,063)                        --
Conversion Class C
  to Class A                             1,014        (1,012)                     (2)                                        --
Purchase of treasury stock                                                                                 (815,121)      (815,121)
                                    ----------    ----------   ----------  ---------      ----------     ----------    -----------

Balance at
  December 31, 2000                $10,215,262    $1,165,561  $10,054,714   $836,751      $7,831,306    $(3,362,233)   $26,741,361
                                   ===========    ==========  ===========   ========      ==========    ===========    ===========
</TABLE>



See accompanying notes to consolidated financial statements.

                                       31

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                       Consolidated Statement of Cash Flow

<TABLE>
<CAPTION>

                                                               Years Ended December 31,
                                                          2000           1999           1998
                                                          ----           ----           ----
<S>                                                <C>             <C>             <C>
Cash flows from operating activities:
     Net earnings                                  $    895,729    $    975,895    $    771,229
     Adjustments to reconcile net earnings
       to net cash provided by
            operating activities:
          Realized gains on investments
            and other assets                           (423,805)       (313,013)        (74,121)
          Depreciation                                1,202,158       1,187,426         917,166
          Provision for losses on accounts
            and loans receivable                        219,269         150,981         175,750
          Amortization of goodwill, premiums,
            and discounts                               214,355         263,572          90,622
          Provision for deferred income taxes          (182,291)        228,464         339,763
          Policy and pre-need acquisition
            costs deferred                           (5,365,417)     (3,886,279)     (1,310,170)
          Policy acquisition costs amortized          2,320,710       3,992,522         976,482
          Cost of insurance acquired amortized          868,042         865,140         296,912
     Change in assets and liabilities net of
       effects from purchases and disposals of
          subsidiaries:
          Land and improvements held for sale            37,164        (116,962)         61,161
          Future life and other benefits              7,023,493       5,012,923       3,349,196
          Receivables for mortgage loans sold         2,185,751      (7,890,885)     (5,841,576)
          Other operating assets and liabilities      1,471,135        (959,832)        836,210
                                                   ------------    ------------    ------------
              Net cash provided by (used in)
                operating activities                 10,466,293        (490,048)        588,624
Cash flows from investing activities:
     Securities held to maturity:
          Purchase - fixed maturity securities       (4,801,309)     (1,207,177)       (524,562)
          Calls and maturities - fixed
            maturity securities                       5,137,323       6,658,968      10,482,673
     Securities available for sale:
          Purchases - equity securities                (418,365)       (507,404)        (22,183)
          Sales - equity securities                   4,797,396       2,906,278         114,608
     Purchases of short-term investments             (7,523,432)     (9,131,204)    (11,453,095)
     Sales of short-term investments                  7,785,815      19,384,434      11,102,460
     Purchases of restricted assets                    (604,345)       (119,479)        (15,820)
     Mortgage, policy, and other loans made          (3,016,125)    (10,891,562)     (6,974,351)
     Payments received for mortgage,
       policy, and other loans                        4,782,778       4,770,423       2,811,841
     Purchases of property, plant, and equipment     (1,719,120)       (767,383)     (2,040,023)
     Disposal of property and equipment                 625,507         190,000              --
     Purchases of real estate                        (1,329,347)       (421,230)       (755,581)
     Sale of real estate                                     --         334,500              --
     Purchases of subsidiaries
       net of cash acquired                                  --              --     (11,764,823)
                                                   ------------    ------------    ------------
              Net cash (used in) provided by
                investing activities                  3,716,776      11,199,164      (9,038,856)
</TABLE>

                                       32

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                 Consolidated Statement of Cash Flow (Continued)

<TABLE>
<CAPTION>

                                                         Year Ended December 31,
                                                  2000           1999            1998
                                                  ----           ----            ----

<S>                                          <C>             <C>              <C>
Cash flows from financing activities:
     Annuity receipts                          8,714,642      10,522,726       2,770,045
     Annuity withdrawals                     (13,935,567)    (15,183,240)     (3,962,579)
     Repayment of bank loans and
          notes and contracts payable         (1,652,036)     (1,545,957)       (918,065)
     Proceeds from borrowings on bank
          loans and notes and contracts
             payable                           1,044,202         890,500       6,246,400
     Purchase of treasury stock                 (815,121)       (751,052)             --
     Net change in line of credit
          for financing of mortgage loans     (8,687,023)      1,109,775       7,577,248
                                            ------------    ------------    ------------
     Net cash (used in) provided by
          financing activities               (15,330,903)     (4,957,248)     11,713,049
                                            ------------    ------------    ------------
Net change in cash                            (1,147,834)      5,751,868       3,262,817

Cash at beginning of year                     12,422,864       6,670,996       3,408,179
                                            ------------    ------------    ------------

Cash at end of year                         $ 11,275,030    $ 12,422,864    $  6,670,996
                                            ============    ============    ============

</TABLE>


See accompanying notes to the financial statements.

                                       33

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998



1)       Significant Accounting Principles

General Overview of Business

Security National Financial  Corporation and its wholly-owned  subsidiaries (the
"Company")  operates in three main business segments;  life insurance,  cemetery
and mortuary,  and mortgage loans. The life insurance  segment is engaged in the
business of selling and  servicing  selected  lines of life  insurance,  annuity
products  and  accident  and  health   insurance   marketed   primarily  in  the
intermountain west, California,  Florida,  Oklahoma, and Texas. The cemetery and
mortuary  segment  of the  Company  consists  of five  cemeteries  in Utah,  one
cemetery in California,  eight mortuaries in Utah and six mortuaries in Arizona.
The mortgage loan segment is an approved  governmental and  conventional  lender
that  originates  and  underwrites  residential  and  commercial  loans  for new
construction,  existing homes and real estate projects  primarily in California,
Colorado, Florida and Utah.

Basis of Presentation

The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance with generally  accepted  accounting  principles  which, for the life
insurance  subsidiaries,  differ from statutory accounting principles prescribed
or permitted by regulatory authorities.

Risks

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

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

Credit  Risk - the risk that  issuers  of  securities  owned by the  Company  or
mortgagors of mortgage loans on real estate owned by the Company will default or
that other  parties,  including  reinsurers  and holders of  cemetery/  mortuary
contracts which owe the Company money,  will not pay. The Company minimizes this
risk by adhering to a conservative  investment  strategy,  by maintaining  sound
reinsurance and credit and collection  policies and by providing for any amounts
deemed uncollectible.

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

                                       34

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


1)  Significant Accounting Principles (Continued)
    --------------------------------------------

Mortality/Morbidity Risk - the risk that the Company's actuarial assumptions may
differ  from  actual  mortality/morbidity  experience  may cause  the  Company's
products to be  underpriced,  may cause the Company to  liquidate  insurance  or
other claims earlier than anticipated and other potentially adverse consequences
to the business.  The Company  minimizes  this risk through  sound  underwriting
practices, asset/liability duration matching, and sound actuarial practices.

Estimates The  preparation of financial  statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

The estimates  susceptible to  significant  change are those used in determining
the liability for future policy  benefits and claims,  those used in determining
valuation  allowances  for  mortgage  loans on real  estate,  and those  used in
determining  the  estimated  future  costs for  pre-need  sales.  Although  some
variability  is inherent in these  estimates,  management  believes  the amounts
provided are adequate.

Principles of Consolidation

The  accompanying  consolidated  financial  statements  include the accounts and
operations of the Company. The Company's  subsidiaries at December 31, 2000, are
as follows:

Security National Life Insurance Company
Security National Mortgage Company
Memorial Estates, Inc.
Memorial Mortuary
Paradise Chapel Funeral Home
Singing Hills Memorial Park
Cottonwood Mortuary, Inc.
Deseret Memorial, Inc.
Holladay Cottonwood Memorial Foundation
Holladay Memorial Park
Camelback Sunset Funeral Home, Inc.
Greer-Wilson Funeral Home
Crystal Rose Funeral Home
Hawaiian Land Holdings
SSLIC Holding Company
Insuradyne Corporation
Southern Security Life Insurance Company (71.5%)

All significant  intercompany  transactions and accounts have been eliminated in
consolidation.

On December 17, 1998,  the Company  purchased all of the  outstanding  shares of
common stock of SSLIC Holding Company (formerly Consolidare Enterprises,  Inc.),
(SSLIC  Holding) and  Insuradyne  Corporation  (Insuradyne)  for a total cost of
$12,248,194. SSLIC Holding owns approximately 71.5% of the outstanding shares of
common stock of Southern Security Life Insurance  Company  (Southern  Security).
The  acquisition  was  accounted for using the purchase  method.  The assets and
liabilities of SSLIC Holding and Insuradyne  have been included in the Company's
balance  sheet at December 31, 1998.  The results of operations of SSLIC Holding
and Insuradyne were not material to the financial statements of the Company from
the date of acquisition  through December 31, 1998 and,  consequently,  have not
been  included in the  Consolidated  Statements  of  Earnings  for the year then
ended.

                                       35

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


1)       Significant Accounting Principles (Continued)
         ---------------------------------

Investments

Investments are shown on the following basis:

Fixed maturity  securities held to maturity - at cost, adjusted for amortization
of premium or accretion  of  discount.  Although the Company has the ability and
intent to hold these investments to maturity,  infrequent and unusual conditions
could  occur  under  which it would  sell  certain  of these  securities.  Those
conditions include unforeseen changes in asset quality,  significant  changes in
tax  laws,  and  changes  in  regulatory  capital  requirements  or  permissible
investments.

Fixed maturity and equity securities  available for sale - at fair value,  which
is based upon quoted trading prices.  Changes in fair values net of income taxes
are  reported as  unrealized  appreciation  or  depreciation  and recorded as an
adjustment directly to stockholders' equity and, accordingly,  have no effect on
net income.

Mortgage  loans on real  estate - at unpaid  principal  balances,  adjusted  for
amortization  of premium or accretion of discount,  less  allowance for possible
losses.

Real estate - at cost, less accumulated depreciation provided on a straight-line
basis over the estimated  useful lives of the  properties,  and net of allowance
for impairment in value, if any.

Policy, student, and other loans - at the aggregate unpaid balances.

Short-term  investments  - consists of  certificates  of deposit and  commercial
paper with maturities of up to one year.

Restricted   assets  of   cemeteries   and   mortuaries   -  consists  of  cash,
participations in mortgage loans with Security National Life Insurance  Company,
and mutual funds  carried at cost;  fixed  maturity  securities  carried at cost
adjusted  for  amortization  of premium or  accretion  of  discount;  and equity
securities carried at fair market value.

Realized  gains and  losses  on  investments  -  realized  gains  and  losses on
investments  and declines in value  considered to be other than  temporary,  are
recognized in operations on the specific identification basis.

Cash and Cash Equivalents

For purposes of the statements of cash flows,  the Company  considers all highly
liquid debt instruments  purchased with an original  maturity of three months or
less to be cash equivalents.

Property, Plant and Equipment

Property,  plant and equipment is recorded at cost.  Depreciation  is calculated
principally on the  straight-line  method over the estimated useful lives of the
assets  which  range  from three to thirty  years.  Leasehold  improvements  are
amortized over the lesser of the useful life or remaining lease terms.

Recognition of Insurance Premiums and Other Considerations

Premiums for traditional  life insurance  products (which include those products
with fixed and guaranteed premiums and benefits and consist principally of whole
life insurance policies,  limited-payment  life insurance policies,  and certain
annuities  with life  contingencies)  are  recognized  as revenues when due from
policyholders. Revenues for interest-sensitive insurance policies (which include
universal life policies,  interest-sensitive life policies,  deferred annuities,
and annuities without life contingencies) consist of policy charges for the cost
of insurance,  policy  administration  charges,  and surrender  charges assessed
against policyholder account balances during the period.

                                       36

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


1)    Significant Accounting Principles (Continued)
      ---------------------------------

Deferred Policy Acquisition Costs and Cost of Insurance Acquired

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

Cost of insurance  acquired is the present value of estimated  future profits of
the acquired  business and is amortized  similar to deferred policy  acquisition
costs.

Future Life, Annuity and Other Policy Benefits

Future policy benefit reserves for traditional life insurance are computed using
a net level method,  including  assumptions as to investment yields,  mortality,
morbidity,  withdrawals,  and  other  assumptions  based on the  life  insurance
subsidiaries  experience,  modified as necessary  to give effect to  anticipated
trends and to include  provisions  for  possible  unfavorable  deviations.  Such
liabilities are, for some plans, graded to equal statutory values or cash values
at or prior to maturity. The range of assumed interest rates for all traditional
life  insurance  policy  reserves  was 4.5% to 10.0% in 2000,  1999,  and  1998.
Benefit reserves for traditional limited-payment life insurance policies include
the deferred portion of the premiums received during the premium-paying  period.
Deferred premiums are recognized as income over the life of the policies. Policy
benefit claims are charged to expense in the period the claims are incurred.

Future policy benefit  reserves for  interest-sensitive  insurance  products are
computed  under a  retrospective  deposit  method and represent  policy  account
balances before applicable  surrender  charges.  Policy benefits and claims that
are charged to expense  include  benefit claims incurred in the period in excess
of   related   policy   account   balances.   Interest   crediting   rates   for
interest-sensitive  insurance  products ranged from 4% to 6.5% in 2000, 1999 and
1998.

Participating Insurance

Participating  business  constitutes  6%, 5%, and 4% of  insurance  in force for
2000, 1999 and 1998,  respectively.  The provision for policyholders'  dividends
included in policyholder  obligations is based on dividend scales anticipated by
management. Amounts to be paid are determined by the Board of Directors.

Reinsurance

The Company  follows the procedure of  reinsuring  risks in excess of $50,000 to
provide for greater  diversification  of business,  allow  management to control
exposure to potential  losses arising from large risks,  and provide  additional
capacity for growth.  The Company  remains liable for amounts ceded in the event
the reinsurers are unable to meet their obligations.

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

                                       37

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


1)  Significant Accounting Principles (Continued)
    ---------------------------------

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

Cemetery and Mortuary Operations

Pre-need  sales of funeral  services and caskets - revenue and costs  associated
with the sales of pre-need  funeral  services and caskets are deferred until the
services are performed.

Pre-need sales of cemetery interment rights (cemetery burial property) - revenue
and costs  associated with the sales of pre-need  cemetery  interment rights are
recognized in accordance  with the retail land sales  provisions of Statement of
Financial Accounting Standards No. 66, "Accounting for the Sales of Real Estate"
(FAS No. 66). Under FAS 66,  recognition  of revenue and  associated  costs from
constructed cemetery property must be deferred until a minimum percentage of the
sales  price  has been  collected.  Revenues  related  to the  pre-need  sale of
unconstructed  cemetery  property  will  be  deferred  until  such  property  is
constructed and meets the criteria of FAS No. 66 described above.

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

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

Prearranged  funeral and  pre-need  cemetery  customer  obtaining  costs - costs
incurred  related to obtaining  new pre-need  cemetery and  prearranged  funeral
business are accounted for under the guidance of the  provisions of Statement of
Financial  Accounting  Standards No. 60  "Accounting  and Reporting by Insurance
Enterprises" (FAS No. 60).  Obtaining costs,  which include only costs that vary
with and are primarily  related to the acquisition of new pre- need cemetery and
prearranged funeral business, are deferred.

Cemetery  merchandise  and  services  trust  investment  earnings  -  investment
earnings  generated by assets  included in merchandise  and services  trusts are
deferred until the associated merchandise is delivered or services performed.

The  Company is  required  to place  specified  amounts  into  restricted  asset
accounts for products  sold on a pre-need  basis.  Income from assets  placed in
these  restricted  asset accounts are used to offset  required  increases to the
estimated future liability.

                                       38

<PAGE>



Revenues  and costs  for  at-need  sales  are  recorded  when the  services  are
performed.

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

Mortgage Operations

Mortgage fee income is generated  through the  origination  and  refinancing  of
mortgage loans and is deferred until such loans are sold.

All loans are sold to third  party  investors  and the  Company  does not retain
servicing  rights.  The amounts sold to investors are shown on the balance sheet
as Mortgage loans sold to investors and are shown on the basis of the amount due
from the each investor. Any impairment to sold loans or possible loan losses are
included in the provision for doubtful  accounts.  At December 31, 2000 and 1999
there was not any provision for doubtful loan losses needed.

Excess of Cost Over Net Assets of Acquired Businesses

Previous  acquisitions  have been accounted for as purchases  under which assets
acquired and liabilities  assumed were recorded at their fair values. The excess
of cost over net assets of acquired  businesses is being  amortized over a range
of  fifteen  to  twenty  years  using  the  straight-line  method.  The  Company
periodically  evaluates  the  recoverability  of amounts  recorded.  Accumulated
amortization  was  $1,162,262  and  $1,029,528  at  December  31, 2000 and 1999,
respectively.

Income Taxes

Income taxes include taxes currently  payable plus deferred taxes related to the
tax effect of temporary  differences  in the financial  reporting  basis and tax
basis  of  assets  and  liabilities.  Such  temporary  differences  are  related
principally  to the deferral of policy  acquisition  costs and the provision for
future policy  benefits in the insurance  operations,  and  unrealized  gains on
fixed maturity and equity securities available for sale.

Earnings Per Common Share

The  Company  computes  earnings  per  share in  accordance  with  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings Per Share".  This
Standard  requires  presentation of two new amounts,  basic and diluted earnings
per share. Basic earnings per share are computed by dividing net earnings by the
weighted average number of common shares outstanding during each year presented,
after the effect of the assumed  conversion  of Class C Common  Stock to Class A
Common Stock, the acquisition of treasury stock,  and the retroactive  effect of
stock dividends declared. Diluted earnings per share is computed by dividing net
earnings by the weighted average number of common shares  outstanding during the
year plus the incremental  shares that would have been outstanding under certain
deferred compensation plans.

Stock Compensation

The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation".
In  accordance  with the  provisions  of SFAS 123,  the  Company  has elected to
continue to apply Accounting  Principles  Board Opinion No. 25,  "Accounting for
Stock Issued to Employees"  ("APB Opinion No. 25"), and related  interpretations
in accounting for its stock option plans.

                                       39

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


1)  Significant Accounting Principles (Continued)
    ---------------------------------

The Company has two fixed option plans (the "1993 Plan" and the "2000 Plan"). In
accordance with APB Opinion No. 25, no compensation cost has been recognized for
these plans.  Had  compensation  cost for these plans been determined based upon
the fair  value at the grant date  consistent  with the  methodology  prescribed
under  SFAS No.  123,  the  Company's  net  income  would  have been  reduced by
approximately $0, $203,000, and $110,000 in 2000, 1999, and 1998,  respectively.
As a result, basic and diluted earnings per share would have been reduced by $0,
$0.05, and $0.03 in 2000, 1999, and 1998, respectively.

The weighted  average fair value of options  granted in 2000 under the 1993 Plan
and the 2000 Plan is  estimated  at $1.50 as of the grant  date  using the Black
Scholes Option Pricing Model with the following  assumptions:  dividend yield of
0%, volatility of 30.8%,  risk-free  interest rate of 6.6%, and an expected life
of five to ten years.

The weighted  average  fair value of each option  granted in 1999 under the 1993
Plan is  estimated  at  $1.61 as of the  grant  date  using  the  Black  Scholes
option-pricing  model  with the  following  assumptions:  dividend  yield of 0%,
volatility of 28.83%,  risk-free  interest rate of 6.0%, and an expected life of
ten years.

The Company also has one variable  option plan (the "1987 Plan").  In accordance
with APB  Opinion  No. 25,  compensation  cost  related to options  granted  and
outstanding under these plans is estimated and recognized over the period of the
award based on changes in the current  market price of the Company's  stock over
the vesting  period.  Options  granted under the 1987 Plan are exercisable for a
period of ten years from the date of grant.

Pending Accounting Change

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,  was
issued in June 1998 and  amended  by SFAS No.  138,  issued  in June  2000.  The
requirements  of SFAS No. 133, as amended,  will be effective for the Company in
the first  quarter of the fiscal year  beginning  January 1, 2001.  The standard
establishes  accounting  and  reporting  standards  for  derivative  instruments
embedded in other  contracts  and for hedging  activities.  Under the  standard,
certain contracts that were not formerly considered derivatives may now meet the
definition  of a  derivative.  The  Company has  determined  SFAS 133 to have no
impact on the Company's financial position and results of operations because the
Company has no derivative activity.

SFAS No. 140,  Accounting  for Transfers  and Servicing of Financial  Assets and
Extinguishments of Liabilities,  was issued in September 2000. SFAS No. 140 is a
replacement of SFAS No. 125, Accounting for Transfers and Servicing of Financial
Assets and  Extinguishments  of Liabilities.  Most of the provisions of SFAS No.
125  were  carried  forward  to SFAS  No.  140  without  reconsideration  by the
Financial Accounting Standards Board (FASB), and some were changed only in minor
ways. In issuing SFAS No. 140, the FASB included  issues and decisions  that had
been  addressed and determined  since the original  publication of SFAS No. 125.
SFAS No. 140 is effective for transfers  after March 31, 2001.  Management  does
not expect the  adoption  of SFAS No.  140 to have a  significant  impact on the
financial position or results of operations of the Company.

Recent Accounting Pronouncement

Interpretation No. 44

In March 2000, the Financial  Accounting  Standards Board issued  Interpretation
No.  44  ("FIN  44"),  "Accounting  for  Certain  Transactions  Involving  Stock
Compensation,  an  Interpretation  of APB Opinion No. 25". FIN 44 clarifies  the
application of Opinion No. 25 for (a) the definition of employee for purposes of
applying  Opinion  No.  25,  (b) the  criteria  for  determining  whether a plan
qualifies as a noncompensatory  plan, (c) the accounting  consequence of various
modifications  to the terms of a previously  fixed stock option or award and (d)
the  accounting  for an  exchange  of stock  compensation  awards in a  business
combination. FIN 44 became effective July 1, 2000, but certain conclusions cover
specific  events that occur after either December 15, 1998, or January 12, 2000.
FIN 44  had no  effect  on  the  Company's  financial  position  or  results  of
operations.

                                       40

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


1)  Significant Accounting Principles (Continued)
    ---------------------------------

SAB 101

The Company has adopted Staff Accounting  Bulletin No. 101 "Revenue  Recognition
in  Financial  Statements"  (SAB 101) which  changes  the  Company's  accounting
policies  regarding  the  manner in which the  Company  records  pre-need  sales
activities.  The implementation of SAB No. 101 did not have a material effect on
the consolidated financial condition, results of operations or cash flows of the
Company.

The change in the Company's accounting policies resulting from implementation of
SAB No. 101 has been treated as a change in accounting principle effective as of
January 1, 2000. The cumulative effect of the accounting change through December
31,  1999 was  negligible.  The  following  table shows the  unaudited  proforma
effects of retroactive  application using the newly adopted accounting  policies
compared to historical  results for the years ended  December 31, 1999 and 1998.
There were no changes in net earnings or net earnings per common share for those
periods since the Company's previous  accounting  practice did not recognize any
significant  profits  on  pre-need  sales.  The  Company's  previous  accounting
practice recorded  pre-need sales as revenue but also recorded  approximately an
equal  amount  for the sum of the  future  merchandise  cost and sales  expense.
Implementing  SAB 101 changed this  practice to defer these  pre-need  sales and
costs to when the merchandise is delivered or the services are performed.

                            1999                            1998
                   Proforma       Historical       Proforma       Historical

  Revenues        $48,631,818     $49,657,378    $31,938,532      $32,819,603

Total benefits
  and expenses     47,181,037      48,206,597     30,912,488       31,793,559


Reclassifications

Certain  amounts in prior years have been  reclassified to conform with the 2000
presentation.

                                       41

<PAGE>
<TABLE>
<CAPTION>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998

2)  Investments

The Company's  investments  in fixed  maturity  securities  held to maturity and
equity securities available for sale are summarized as follows:

                                                               Gross       Gross       Estimated
                                            Amortized      Unrealized   Unrealized       Fair
                                                Cost          Gains       Losses         Value
                                              --------      ---------    ----------    ---------
December 31, 2000: Fixed maturity securities
   held to maturity:
  <S>                                      <C>           <C>           <C>           <C>
   Bonds:
     U.S. Treasury securities
     and obligations of U.S.
     Government agencies                   $12,900,371   $   182,637   $    (4,809)   $13,078,199

     Obligations of states and
     political subdivisions                    183,399        12,829        (7,903)       188,325

     Corporate securities
     including public utilities             20,951,532       322,660      (584,886)    20,689,306

     Mortgage-backed securities              5,320,861        30,737       (55,620)     5,295,978

   Redeemable preferred stock                   28,005        10,500        (7,047)        31,458
                                           -----------   -----------   -----------    -----------

           Total fixed maturity
           securities held to maturity     $39,384,168   $   559,363   $  (660,265)   $39,283,266
                                           ===========   ===========   ===========    ===========

Securities available for sale:
   Bonds
     U.S. Treasury securities
     and obligations of U.S.
     Government agencies                   $ 3,367,096   $    45,003   $      (648)   $ 3,411,451

     Corporate securities
           including public utilities       20,124,932        91,913      (188,214)    20,028,631

     Mortgage-backed securities                 64,836            71            --         64,907

   Nonredeemable preferred stock                56,031        29,750        (9,044)        76,737

   Common stock                              1,561,332     1,596,254      (460,246)     2,697,340
                                           -----------   -----------   -----------    -----------

           Total securities
           available for sale              $25,174,227   $ 1,762,991   $  (658,152)   $26,279,066
                                           ===========   ===========   ===========    ===========

   Restricted equity securities (note 7)   $   172,391   $   215,410   $    (3,019)   $   384,782
                                           ===========   ===========   ===========    ===========
</TABLE>

                                       42

<PAGE>
<TABLE>
<CAPTION>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998

                                                      Gross           Gross      Estimated
                                      Amortized     Unrealized      Unrealized      Fair
                                        Cost           Gains          Losses       Value
                                      --------       ---------      ----------    ---------
<S>                                 <C>            <C>           <C>            <C>
December 31, 1999: Fixed
   maturity securities
   held to maturity:
   Bonds:
     U.S. Treasury securities
     and obligations of U.S.
     Government agencies             $12,822,025   $    90,415   $  (225,797)   $12,686,643

     Obligations of states and
     political subdivisions              176,499         6,345       (15,728)       167,116

     Corporate securities
     including public utilities       20,594,306       594,303      (428,752)    20,759,857

     Mortgage-backed securities        6,009,010        14,095      (223,291)     5,799,814

   Redeemable preferred stock             28,011        19,011        (7,000)        40,022
                                     -----------   -----------   -----------    -----------

        Total fixed maturity
        securities held to
        maturity                     $39,629,851   $   724,169   $  (900,568)   $39,453,452
                                     ===========   ===========   ===========    ===========

Securities available
for sale:
   Bonds
     U.S. Treasury securities
     and obligations of U.S.
     Government agencies             $ 4,596,294   $     4,599   $   (21,561)   $ 4,579,332

     Corporate securities
        including public utilities    20,270,712            --      (820,966)    19,449,746

     Mortgage-backed securities           90,341            --          (229)        90,112

   Nonredeemable preferred stock          70,431        43,163        (7,144)       106,450

   Common stock                        4,279,708     2,248,436      (889,381)     5,638,763
                                     -----------   -----------   -----------    -----------

        Total securities
        available for sale           $29,307,486   $ 2,296,198   $(1,739,281)   $29,864,403
                                     ===========   ===========   ===========    ===========

   Restricted equity
     securities (note 7)             $   172,391   $   234,872   $      (968)   $   406,295
                                     ===========   ===========   ===========    ===========
</TABLE>

                                       43

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


2)  Investments (Continued)
    -----------

The fair values for 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
December 31, 2000, 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.

                                                             Estimated
                                            Amortized           Fair
Held to Maturity:                             Cost              Value
                                           ----------         ---------

Due in 2001                               $ 8,276,712        $ 8,298,094
Due in 2002 through 2005                   17,348,014         17,496,854
Due in 2006 through 2010                    6,050,499          5,691,138
Due after 2010                              2,360,077          2,469,744
Mortgage-backed securities                  5,320,861          5,295,978
Redeemable preferred stock                     28,005             31,458
                                          -----------        -----------
                                          $39,384,168        $39,283,266



                                                              Estimated
                                           Amortized            Fair
Available for Sale:                          Cost               Value
                                          ----------          ---------

    Due in 2001                           $ 2,773,071        $ 2,774,159
    Due in 2002 through 2005               14,149,826         14,088,461
    Due in 2006 through 2010                6,471,463          6,469,372
    Due after 2010                             97,669            108,090
    Mortgage-backed securities                 64,835             64,907
                                          -----------        -----------
                                          $23,556,864        $23,504,989

The  Company's  realized  gains and  losses in  investments  are  summarized  as
follows:

                                      2000              1999           1998
                                      ----              ----           ----
Fixed maturity securities
  held to maturity:
Gross realized gains              $   3,125       $  87,859       $  43,154
Gross realized losses                   (53)         (1,895)        (26,470)

Securities available
    for sale:
Gross realized gains                884,199          14,138          66,589
Gross realized losses              (463,466)            (12)         (3,887)

Other assets                             --         212,923          (5,265)
                                  ---------       ---------       ---------
        Total                     $ 423,805       $ 313,013       $  74,121
                                  =========       =========       =========

                                       44

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


2)  Investments (Continued)
    -----------

Generally  gains and losses  from held to  maturity  securities  are a result of
early calls and related amortization of premiums or discounts.

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  and commercial  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.  The Company has 83% of its mortgage loans in the
state of Utah.

Investments,  aggregated  by issuer,  in excess of 10% of  shareholders'  equity
(before net  unrealized  gains and losses on available for sale  securities)  at
December 31, 2000,  other than  investments  issued or  guaranteed by the United
States Government, are as follows:

                                                            Carrying Amount
        Dean Witter Discover                                 $4,274,338
        Philip Morris, Inc.                                   5,653,514

Major categories of net investment income are as follows:

                                   2000              1999              1998
                                   ----              ----              ----

Fixed maturity
  securities                   $  4,629,916      $  4,720,838      $  3,293,949
Equity securities                   235,491           226,857           219,785
Mortgage loans
  on real estate                  1,735,590         1,451,214         1,036,132
Real estate                       1,507,239         1,711,771         1,384,311
Policy loans                        641,272           725,383           170,752
Short-term
  investments                       402,350           650,035           405,848
Other                             3,962,362         2,142,527         1,899,643
                               ------------      ------------      ------------
  Gross investment
    income                       13,114,220        11,628,625         8,410,420
Investment expenses                (978,148)         (997,323)         (951,677)
                               ------------      ------------      ------------
Net investment
  income                       $ 12,136,072      $ 10,631,302      $  7,458,743
                               ============      ============      ============

Net investment  income  includes net investment  income earned by the restricted
assets of the cemeteries and mortuaries of approximately $717,000,  $733,000 and
$683,000 for 2000, 1999, and 1998, respectively.

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

Securities on deposit for regulatory  authorities as required by law amounted to
$8,815,733 at December 31, 2000 and $9,632,937 at December 31, 1999.

                                       45

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


3)  Cost of Insurance Acquired

Information with regard to cost of insurance acquired is as follows:

                                     2000             1999              1998
                                     ----             ----              ----
Balance at
  beginning of year              $  9,597,306     $ 10,462,446     $  3,370,018
Cost of insurance
  acquired                                 --               --        7,389,340

Imputed interest at 7%                641,325          732,371          235,901
Amortization                       (1,509,367)      (1,597,511)        (532,813)
                                 ------------     ------------     ------------
Net amortization
  charged to income                  (868,042)        (865,140)        (296,912)
                                 ------------     ------------     ------------
Balance at end
  of year                        $  8,729,264     $  9,597,306     $ 10,462,446
                                 ============     ============     ============

Presuming no  additional  acquisitions,  net  amortization  charged to income is
expected to approximate $824,000, $759,000, $702,000, $649,000, and $587,000 for
the years 2001 through 2005.  Actual  amortization  may vary based on changes in
assumptions or experience.

4) Property, Plant and Equipment

The cost of property, plant and equipment is summarized below:

                                                          December 31,
                                                          ------------
                                                 2000                    1999
                                                 ----                    ----

Land and Buildings                            $ 10,828,916         $ 10,171,943
Furniture and equipment                          6,694,925            6,384,208
                                              ------------         ------------
                                                17,523,841           16,556,151
Less accumulated
     depreciation                               (6,699,141)          (5,989,643)
                                              ------------         ------------
     Total                                    $ 10,824,700         $ 10,566,508
                                              ============         ============


5)   Bank Loans Payable and Lines of Credit

Bank loans payable are summarized as follows:

                                                              December 31,
                                                              ------------
                                                        2000             1999
                                                        ----             ----
Bank prime rate plus 1/2% (10.0% at December
  31, 2000) note payable in monthly
 installments of $36,420 including principal
  and interest, collateralized by 15,000
  shares of Security National Life stock,
  due December 2004                                    $1,425,967     $1,697,397

10% note payable in monthly installments
  of $8,444 including principal and
  interest, collateralized by real property,
 which book value is approximately
  $1,045,000, due January 2013                            711,608        740,202

                                       46

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


5)  Bank Loans Payable and Lines of Credit (Continued)
    --------------------------------------

                                                             December 31,
                                                             ------------
                                                         2000           1999
                                                         ----           ----
One year treasury constant maturity
  plus 2.75% 8.03% at December 31, 2000)
  note payable in monthly installments of
  $6,000, including principal and interest,
  collateralized by real property, which
  book value is approximately $359,000,
  due October 2002                                      120,824       182,089

Bank prime rate less 1.35% (8.15% at December
  31, 2000) note payable in monthly installments
  of $20,836, including principal and interest,
  collateralized by real property, which book
  value is approximately $1,033,000, due November
  2007                                                1,662,768     1,703,915

$5,046,448 revolving line of credit
  at bank prime rate less 1%, (8.5% at
  December 31, 2000) interest only to
  December 1999 thereafter interest and principal,
  collateralized by 15,000 shares of
  Security National Life Insurance
  Company stock, due December 2005                    4,904,426     5,610,111

Bank prime rate plus 1/2% (10.0% at
  December 31, 2000) note payable in
  monthly installments of $7,235 including
  principal and interest, collateralized by
  real property, which book value is approximately
  $852,000, due August 2004                             301,516       370,748

Bank prime rate less 1.35% (8.15% at
  December 31, 2000) note payable in monthly
  installments of $2,736 including principal
  and interest, collateralized by 15,000 shares
  of Security National Life Insurance Company
  stock, due December 2005                              180,893       199,461

Other collateralized bank loans payable                 497,116       264,175
                                                    -----------   -----------
  Total bank loans                                    9,805,118    10,768,098

Less current installments                             1,596,600     1,143,823
                                                    -----------   -----------
  Bank loans, excluding
  current installments                              $ 8,208,518   $ 9,624,275
                                                    ===========   ===========

$15 million revolving line of credit
  at LIBOR plus 1.50% (7.32% at December 31,
  1999), payable within 30 days
  collateralized by receivable from mortgage
  loans sold to investors                           $    --      $ 8,687,023
                                                   ===========   ===========

                                       47

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


5)  Bank Loans Payable and Lines of Credit (Continued)
    --------------------------------------

In  addition  to the lines of credit  described  above,  the Company has line of
credit  agreements with banks for $2,000,000 and $5,000,000,  of which none were
outstanding  at December  31, 2000 or 1999.  The lines of credit are for general
operating  purposes.  The $2,000,000 line of credit bears interest at the bank's
prime rate and must be repaid every 30 days. The $5,000,000 line of credit bears
interest at a variable rate with interest payable monthly and is  collateralized
by student loans equaling 115% of the unpaid principal balance.

See Note 6 for summary of maturities in subsequent years.

6)  Notes and Contracts Payable

Notes and contracts payable are summarized as follows:

                                                           December 31,
                                                           ------------
                                                      2000               1999
                                                      ----               ----
Due to former stockholders of
  Deseret Memorial, Inc. resulting from
  the acquisition of such entity. Amount
  represents the present value discounted at
  8% of monthly annuity payments ranging from
  $4,600 to $5,000 plus an index adjustment
  in the 7th through the 12th years, due
  September 2011.                                $  628,802        $   646,294

Due to former stockholders of Greer
  Wilson resulting from the acquisition of
  such entity. Amount represents the present
  value discounted at 10% of monthly annuity
  payments of $7,000, due March 2005.               289,865            344,860

Due to former stockholders of Civil
  Service Employees Life Insurance Company
  resulting from the acquisition of such entity.
  7% note payable in seven annual installments
  with principal payments of $151,857,
  due December 2003.                                303,714            455,571

Due to former stockholders of Crystal
  Rose Funeral Home resulting from the
  acquisition of such entity. Amount
  represents the present value discounted at
  9% of monthly annuity payments of $5,350
  due February 2007.                                 62,892            177,246

9% note payable in monthly installments
  of $10,000 including principal and
  interest collateralized by real property,
  which book value is approximately
  $2,908,000, due July 2008                         665,318            727,847

Due to Memorial Estates Endowment Care
  Trust Fund for the remodel of the
  Cottonwood Funeral Home. 6% note payable
  in monthly installments of $5,339 including
  principal and interest collateralized by
  the Funeral Home, which book value is
  approximately $1,348,000 due March 2030           899,500            890,500

                                       48

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


6)  Notes and Contracts Payable (Continued)
    ---------------------------

                                                              December 31,
                                                             ------------
                                                          2000          1999
                                                          ----          ----

Due to former shareholders of Southern
  Security Life Insurance Company resulting
  from the acquisition of such entity. 6.5%
  note payable in five annual installments
  with principal payments of $158,840 due
  April 2005                                            794,202           --

Other notes payable                                     596,537        643,366
                                                     ----------     ----------
Total notes and contracts payable                     4,240,830      3,885,684
Less current installments                               615,291        414,421
                                                     ----------     ----------

Notes and contracts, excluding
current installments                                $3,625,539      $3,471,263
                                                    ==========      ==========

The following  tabulation  shows the combined  maturities of bank loans payable,
lines of credit and notes and contracts payable:

       2001                              $ 2,211,891
       2002                                2,198,823
       2003                                2,118,151
       2004                                2,270,124
       2005                                1,813,758
    Thereafter                             3,433,201
                                         -----------
       Total                             $14,045,948
                                         ===========

Interest paid approximated interest expense in 2000, 1999 and 1998.

7)  Cemetery and Mortuary Endowment Care and Pre-need Merchandise Funds
    -------------------------------------------------------------------

The Company owns and operates several  endowment care  cemeteries,  for which it
has  established  and maintains an endowment  care fund.  The Company  records a
liability  to the fund for each  space  sold at  current  statutory  rates.  The
Company  is not  required  to  transfer  assets to the fund until the spaces are
fully paid for.  As of December  31,  2000 and 1999 the Company had  transferred
$20,373 and $179,939, respectively in excess of the required contribution to the
fund.

The Company has established and maintains  certain  restricted asset accounts to
provide  for future  merchandise  obligations  incurred in  connection  with its
pre-need sales. Such amounts are reported as restricted assets of cemeteries and
mortuaries in the accompanying balance sheet.

Assets in the restricted asset account are summarized as follows:

                                                 December 31,
                                                 ------------
                                               2000        1999
                                               ----        ----

             Cash and cash equivalents     $  385,659   $2,361,597
             Mutual funds                     169,865      132,945
             Fixed maturity securities        297,331      295,771
             Equity securities                 77,778       77,778
             Participation in mortgage
                loans with Security
                National Life               3,877,490    1,357,200
             Time certificate of deposit       33,696       33,696
                                           ----------   ----------
                Total                      $4,841,819   $4,258,987
                                           ==========   ==========

                                       49

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


8)  Income Taxes

The Company's income tax liability at December 31 is summarized as follows:

                                                          December 31,
                                                          ------------
                                                    2000                 1999
                                                    ----                 ----
Current                                        $  499,714             $  142,002
Deferred                                        5,624,798              5,594,858
                                               ----------             ----------
Total                                          $6,124,512             $5,736,860
                                               ==========             ==========

Significant  components of the Company's  deferred tax assets and liabilities at
December 31 are approximately as follows:


                                                    2000                1999
                                                    ----                ----
Assets
Future policy benefits                         $ (2,021,798)       $ (1,740,203)
Unearned premium                                 (1,939,023)         (1,950,587)
Difference between book
   and tax basis of bonds                           (49,498)            (56,489)
Net operating loss
   carryforwards expiring
   in the years
   2001 through 2010                               (210,848)           (219,249)
Other                                              (633,007)           (329,361)
                                               ------------        ------------
Total deferred
   tax assets                                    (4,854,174)         (4,295,889)

Liabilities
Deferred policy
   acquisition costs                           $  5,213,517        $  4,485,047
Cost of insurance acquired                        1,714,724           1,884,547
Installment sales                                 1,215,773           1,323,994
Depreciation                                        653,192             660,369
Trusts                                            1,051,602             821,165
Tax on unrealized
   appreciation                                     214,337              (9,299)
Other                                               415,827             724,924
                                               ------------        ------------
Total deferred
   tax liabilities                               10,478,972           9,890,747
                                               ------------        ------------
Net deferred tax liability                     $  5,624,798        $  5,594,858
                                               ============        ============

The  Company  paid  $94,365 in income  taxes for 2000 and did not pay any income
taxes  for  1999 and  1998.  The  Company's  income  tax  expense  (benefit)  is
summarized as follows:

                                   2000               1999              1998
                                   ----               ----              ----
Current                          $ 486,931          $   2,052         $ (84,948)
Deferred                          (182,291)           228,464           339,763
                                 ---------          ---------         ---------
Total                            $ 304,640          $ 230,516         $ 254,815
                                 =========          =========         =========

                                       50

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


8)  Income Taxes (Continued)
    ------------

The  reconciliation of income tax expense at the U.S. federal statutory rates is
as follows:

                                              2000         1999          1998
                                              ----         ----          ----
Computed expense at
   statutory rate                         $ 423,682     $ 493,266     $ 348,855
Special deductions allowed
   small life insurance companies           (68,769)     (122,204)      (88,658)
Dividends received deduction                (24,418)      (24,401)      (26,691)
Minority interest taxes                     (19,222)     (102,828)           --
Other, net                                   (6,633)      (13,317)       21,309
                                          ---------     ---------     ---------
   Tax expense                            $ 304,640     $ 230,516     $ 254,815
                                          =========     =========     =========

A portion of the life  insurance  income earned prior to 1984 was not subject to
current  taxation but was  accumulated  for tax purposes,  in a  "policyholders'
surplus   account."  Under   provisions  of  the  Internal   Revenue  Code,  the
policyholders'  surplus  account was frozen at its December 31, 1983 balance and
will be taxed  generally  only when  distributed.  As of December 31, 2000,  the
policyholders'  surplus accounts  approximated  $4,500,000.  Management does not
intend to take actions nor does management expect any events to occur that would
cause federal  income taxes to become payable on that amount.  However,  if such
taxes  were  accrued,  the  amount  of  taxes  payable  would  be  approximately
$1,500,000.

The insurance  companies  have remaining loss carry forwards for tax purposes of
approximately  $1,679,000,  approximately  $286,000  of which is  subject  to an
annual limitation of approximately $300,000.

9) Reinsurance, Commitments and Contingencies

The Company  follows the procedure of reinsuring  risks in excess of a specified
limit,  which ranged from $30,000 to $75,000 at December 31, 2000 and 1999.  The
Company is liable for these amounts in the event such  reinsurers  are unable to
pay their  portion of the claims.  The Company has also assumed  insurance  from
other companies  having insurance in force amounting to $580,287,000 at December
31, 2000 and $581,296,000 at December 31, 1999.

As part of the acquisition of Southern Security,  the Company has a co-insurance
agreement with The Mega Life and Health Insurance Company ("MEGA").  On December
31, 1992 Southern  Security  ceded to MEGA 18% of all universal life policies in
force at that date.  MEGA is  entitled  to 18% of all future  premiums,  claims,
policyholder loans and surrenders  relating to the ceded policies.  In addition,
Southern Security receives certain  commission and expense  reimbursements.  The
funds held related to  reinsurance  treaties of  $1,417,216  and  policyholders'
account balances on deposit with reinsurer of $7,434,750 represent the 18% share
of policy loans and  policyholder  account balances ceded to MEGA as of December
31, 2000.

Mortgage loans originated and sold to unaffiliated investors are sold subject to
certain recourse provisions.

The  Company is a defendant  in various  other legal  actions  arising  from the
normal  conduct of business.  Management  believes that none of the actions will
have a  material  effect on the  Company's  financial  position  or  results  of
operations.

                                       51

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


10)      Retirement Plans

The Company and its subsidiaries have a noncontributory Employee Stock Ownership
Plan (ESOP) for all eligible  employees.  Eligible employees are primarily those
with more than one year of service,  who work in excess of 1,040 hours per year.
Contributions,  which  may be in cash or stock of the  Company,  are  determined
annually by the Board of Directors. The Company's contributions are allocated to
eligible employees based on the ratio of each eligible  employee's  compensation
to  total  compensation  for all  eligible  employees  during  each  year.  ESOP
contribution  expense totaled $0, $56,277, and $59,613 for 2000, 1999, and 1998,
respectively.  At December 31, 2000 the ESOP held 553,322  shares of Class A and
1,277,690 shares of Class C common stock of the Company.  All shares held by the
ESOP have been allocated to the  participating  employees and all shares held by
the ESOP are  considered  outstanding  for  purposes of  computing  earnings per
share.

The Company has a 401(k)  savings  plan  covering  all  eligible  employees,  as
defined above,  which includes  employer  participation  in accordance  with the
provisions  of Section  401(k) of the  Internal  Revenue  Code.  The plan allows
participants  to make  pretax  contributions  up to the  lesser  of 15% of total
annual  compensation or the statutory limits. The Company may match up to 50% of
each employee's  investment in Company stock, up to 1/2% of the employee's total
annual compensation. The Company's match will be Company stock and the amount of
the match will be at the  discretion  of the Company's  Board of Directors.  The
Company's   matching  401(k)   contributions  for  2000,  1999,  and  1998  were
approximately  $0,  $3,858,  and $7,000  respectively.  Also,  the  Company  may
contribute at the  discretion  of the  Company's  Board of Directors an Employer
Profit  Sharing  Contribution  to the 401-K  savings plan.  The Employer  Profit
Sharing   Contribution  shall  be  divided  among  three  different  classes  of
participants in the plan based upon the participant's title in the Company.  The
Company  contribution  for  2000,  1999 and  1998  were  $0,  $130,958,  and $0,
respectively.  All amounts  contributed  to the plan are deposited  into a trust
fund administered by an independent trustee.

11)  Capital Stock

The following  table  summarizes the activity in shares of capital stock for the
three year period ended December 31, 2000:

                                                     Class A           Class C
                                                     -------           -------
Balance at December 31, 1997                        4,326,588         5,200,811

Stock Dividends                                       219,892           259,374
Conversion of Class C to Class A                        1,336           (13,352)
Stock Issued (canceled)                                69,514              (238)
                                                   ----------        ----------

Balance at December 31, 1998                        4,617,330         5,446,595

Stock Dividends                                       231,672           264,550
Conversion of Class C to Class A                       15,580          (155,795)
Stock Issued (canceled)                                  (851)               --
                                                   ----------        ----------

Balance at December 31, 1999                        4,863,731         5,555,350

Stock Dividends                                       243,393           277,515
Conversion of Class C to Class A                          507            (5,060)
                                                   ----------        ----------

Balance at December 31, 2000                        5,107,631         5,827,805
                                                   ==========        ==========

                                       52

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


11)  Capital Stock (Continued)
     -------------

The Company has two classes of common stock with shares outstanding, Class A and
Class C.  Class C shares  vote  share for  share  with the Class A shares on all
matters except  election of one-third of the directors who are elected solely by
the Class A shares, but generally are entitled to a lower dividend participation
rate. Class C shares are convertible into Class A shares at any time on a ten to
one ratio.  Also Class A shares can be  converted  into Class C shares,  but the
conversion rights have numerous restrictions.

Stockholders of both classes of common stock have received 5% stock dividends in
the years 1989 through 2000, as authorized by the Company's Board of Directors.

The  Company  has Class B Common  Stock of $1.00  par  value,  5,000,000  shares
authorized, of which none are issued. Class B shares are non-voting stock except
to any proposed  amendment to the Articles of  Incorporation  which would affect
Class B Common Stock.

In  accordance  with SFAS 128, the basic and diluted  earnings per share amounts
were calculated as follows:

                                           2000            1999          1998
                                           ----            ----          ----

Numerator:
   Net income                            $  895,729    $   975,895   $  771,229
                                         ==========    ===========   ==========

Denominator:
   Denominator for basic
     earnings per share-
     weighted-average
     shares                               4,317,779      4,397,141    4,272,516

   Effect of
     dilutive securities:
     Employee stock
       options                               17,265             --           --
     Stock appreciation
       rights                                    --             --           --
                                         ----------    -----------   ----------

   Dilutive potential
     common shares                           17,265             --           --

   Denominator
     for diluted earnings per
     share-adjusted
     weighted-average
     shares and assumed
     conversions                          4,335,044      4,397,141    4,272,516
                                         ==========    ===========   ==========
   Basic earnings per share              $     0.21    $      0.22   $     0.18
                                         ==========    ===========   ==========
   Diluted earnings per share            $     0.21    $      0.22   $     0.18
                                         ==========    ===========   ==========

There are no dilutive effects on net income for purpose of this calculation.

                                       53

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


12)  Deferred Compensation Plans

In 1987,  the Company  adopted the 1987  Incentive  Stock  Option Plan (the 1987
Plan).  The 1987 Plan  provides  that shares of the Class A Common  Stock of the
Company may be optioned to certain  officers  and key  employees of the Company.
The 1987 Plan  establishes  a Stock  Option  Plan  Committee  which  selects the
employees  to whom the options will be granted and  determines  the price of the
stock.  The 1987 Plan  establishes the minimum purchase price of the stock at an
amount  which is not less than 100% of the fair market  value of the stock (110%
for  employees  owning more than 10% of the total  combined  voting power of all
classes of stock).

The 1987 Plan  provides  that if  additional  shares of Class A Common Stock are
issued  pursuant to a stock split or a stock  dividend,  the number of shares of
Class A Common Stock then covered by each outstanding  option granted  hereunder
shall be increased  proportionately with no increase in the total purchase price
of the shares  then  covered,  and the number of shares of Class A Common  Stock
reserved  for the  purpose  of the  1987  Plan  shall be  increased  by the same
proportion.

In the event that the shares of Class A Common Stock of the Company from time to
time issued and outstanding  are reduced by a combination of shares,  the number
of  shares of Class A Common  Stock  then  covered  by each  outstanding  option
granted  hereunder  shall be reduced  proportionately  with no  reduction in the
total price of the shares  then so covered,  and the number of shares of Class A
Common Stock  reserved for the purposes of the 1987 Plan shall be reduced by the
same proportion.

The 1987 Plan  terminated  in 1997 and  options  granted  are  non-transferable.
Options granted and outstanding  under the 1987 Plan include Stock  Appreciation
Rights which permit the holder of the option to elect to receive cash, amounting
to the  difference  between the option  price and the fair  market  value of the
stock at the time of the exercise,  or a lesser amount of stock without payment,
upon exercise of the option.

Activity of the 1987 Plan is summarized as follows:

                                                      Number          Option
                                                    of Shares         Price
Outstanding at December 31, 1997                     155,400      $4.29 - $4.71

   Dividend                                            7,770
   Exercised                                              --
                                               -------------

Outstanding at December 31, 1998                     163,170      $4.08 - $4.49

   Dividend                                            8,159
   Exercised                                              --
                                               -------------

Outstanding at December 31, 1999                     171,329      $3.89 - $4.28

   Dividend                                            8,566
   Exercised                                              --
                                               -------------

Outstanding at December 31, 2000                     179,895      $3.70 - $4.07
                                               =============

   Exercisable at end of year                        179,895
                                               =============

Available options for future grant
   1987 Stock Incentive Plan                           -0-
                                               =============

On  June  21,  1993,  the  Company  adopted  the  Security  National   Financial
Corporation 1993 Stock Incentive Plan (the "1993 Plan"),  which reserved 300,000
shares of Class A Common

                                       54

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


12)  Deferred Compensation Plans (Continued)
     ---------------------------

Stock for issuance thereunder. The 1993 Plan allows the Company to grant options
and issue shares as a means of providing  equity  incentives  to key  personnel,
giving them a proprietary interest in the Company and its success and progress.

The 1993 Plan  provides  for the grant of options and the award or sale of stock
to officers,  directors,  and employees of the Company.  Both  "incentive  stock
options," as defined  under  Section  422A of the Internal  Revenue Code of 1986
(the "Code"),  and "non- qualified  options" may be granted pursuant to the 1993
Plan.  Options  intended  as  incentive  stock  options  may be  issued  only to
employees,  and must meet certain  conditions  imposed by the Code,  including a
requirement  that the  option  exercise  price be not less than the fair  market
value of the option shares on the date of grant. The 1993 Plan provides that the
exercise price for  non-qualified  options will be not less than at least 50% of
the fair  market  value of the stock  subject  to such  option as of the date of
grant of such options, as determined by the Company's Board of Directors.

The options were granted to reward  certain  officers and key employees who have
been  employed  by the  Company  for a number of years  and to help the  Company
retain  these  officers  by  providing  them  with an  additional  incentive  to
contribute to the success of the Company.

The 1993  Plan is  administered  by the  Board of  Directors  or by a  committee
designated  by the Board.  The 1993 Plan  provides  that if the shares of Common
Stock shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock  dividend on
its outstanding  Common Stock, the number of shares of Common Stock  deliverable
upon the exercise of options  shall be  increased or decreased  proportionately,
and  appropriate  adjustments  shall be made in the purchase  price per share to
reflect  such  subdivision,  combination  or stock  dividend.  No options may be
exercised for a term of more than ten years from the date of grant.

The 1993  Plan has a term of ten  years.  The  Board of  Directors  may amend or
terminate   the  1993  Plan  at  any  time,   subject  to  approval  of  certain
modifications  to the 1993 Plan by the  shareholders  of the  Company  as may be
required by law or the 1993 Plan.

On November  7, 1996 the  Company  amended  the  Articles  of  Incorporation  as
follows:  (i) to increase the number of shares of Class A Common Stock  reserved
for  issuance  under the plan from  300,000  Class A shares to  600,000  Class A
shares;  and (ii) to  provide  that the stock  subject  to  options,  awards and
purchases may include Class C common stock.

On October 14, 1999, the Company amended the 1993 Plan to increase the number of
shares of Class A Common Stock reserved for issuance under the plan from 746,126
Class A shares to 1,046,126 Class A shares.

                                       55

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


12)  Deferred Compensation Plans (Continued)
     ---------------------------

Activity of the 1993 Plan is summarized as follows:

                                                    Number            Option
                                                   of Shares           Price
Outstanding at December 31, 1997                    292,284       $2.58 - $4.31
   Dividend                                          30,869
   Granted                                          148,000
   Exercised                                        (63,814)
                                              -------------

Outstanding at December 31, 1998                    407,339       $2.34 - $4.16

   Dividend                                          24,762
   Granted                                          190,000
   Expired                                         (102,103)
                                              -------------

Outstanding at December 31, 1999                    519,998       $2.22 - $3.96

   Dividend                                          27,313
   Granted                                           26,000
                                              -------------

Outstanding at December 31, 2000                    573,311       $2.12 - $3.77
                                              =============

Exercisable at end of year                          573,311
                                              =============

Available options for future grant
   1993 Stock Incentive Plan                        509,701
                                              =============

On October  16,  2000,  the  Company  adopted the  Security  National  Financial
Corporation  2000 Director  Stock Option Plan (the "2000 Plan"),  which reserved
50,000  shares  of Class A  Common  Stock  for  issuance  thereunder.  Effective
November 1, 2000,  and on each  anniversary  date thereof during the term of the
2000 Plan,  each  outside  Director  who shall  first  join the Board  after the
effective date shall be granted an option to purchase 1,000 shares upon the date
which such person  first  becomes an outside  Director and an annual grant of an
option to purchase 1,000 shares on each anniversary date thereof during the term
of the 2000 Plan. The options  granted to outside  Directors shall vest in their
entirety on the first anniversary date of the grant.

The primary  purposes of the 2000 Plan are to enhance the  Company's  ability to
attract  and retain  well-qualified  persons  for  service as  directors  and to
provide  incentives to such  directors to continue  their  association  with the
Company.

The 2000 Plan provides that if the shares of Common Stock shall be subdivided or
combined  into a greater or  smaller  number of shares or if the  Company  shall
issue any shares of Common Stock as a stock dividend on its  outstanding  Common
Stock,  the number of shares of Common  Stock  deliverable  upon the exercise of
options  shall  be  increased  or  decreased  proportionately,  and  appropriate
adjustments  shall be made in the  purchase  price  per  share to  reflect  such
subdivisions, combination or stock dividend.

                                       56

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


12)  Deferred Compensation Plans (Continued)
     ---------------------------

The term of the 2000 Plan will be five years.

Activity of the 2000 Plan is summarized as follows:

                                      Number         Option
                                     of Shares       Price
                                     ---------      --------
Outstanding at
December 31, 199                          0
   Dividend                             200
   Granted                            4,000
                                      -----

Outstanding at
December 31, 2000                     4,200            $   2.14
                                      =====

Exercisable at
   end of year                            0
                                      =====

Available options for
   future grant 2000
   Director Plan                     48,300
                                     ======

13)  Statutory-Basis Financial Information

The Company's life insurance  subsidiaries are domiciled in Utah and Florida and
prepare their statutory-basis financial statements in accordance with accounting
practices prescribed or permitted by the Utah and Florida Insurance Departments.
"Prescribed"  statutory accounting  practices are interspersed  throughout state
insurance  laws  and   regulations,   the  National   Association  of  Insurance
Commissioners  ("NAIC") Accounting Practices and Procedures Manual and a variety
of other NAIC publications. "Permitted" statutory accounting practices encompass
all accounting practices that are not prescribed; such practices may differ from
state to state,  may differ  from  company to  company  within a state,  and may
change in the future.

The National Association of Insurance Commissioners has adopted the Codification
of  Statutory  Accounting  Principles  ("Codification").   Codification  changes
current statutory  accounting rules in several areas and is effective January 1,
2001.  Although the Company has not estimated the potential  effect, it does not
believe  Codificaiton  will have a material  effect on the  financial  position,
results of  operation,  or liquidity of the  Company.  Statutory  net income and
statutory  stockholder's  equity for the life  subsidiaries as reported to state
regulatory authorities, is presented below:

                                                Statutory Net Income (Loss)
                                                      December 31,
                                            2000          1999           1998
                                            ----          ----           ----

Security National Life                   $796,047       $628,538       346,659
Southern Security Life                     80,477        533,233      (486,825)

                                                Statutory Stockholders' Equity
                                                       December 31,
                                            2000          1999            1998
                                            ----          ----            ----

Security National Life                $14,309,515    $12,089,618     12,083,747
Southern Security Life                  8,405,211      8,976,516      8,627,252

                                       57

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998


13)  Statutory-Basis Financial Information (Continued)
     -------------------------------------

Generally,  the net  assets of the life  insurance  subsidiaries  available  for
transfer  to the Company  are  limited to the  amounts  that the life  insurance
subsidiaries net assets,  as determined in accordance with statutory  accounting
practices,  exceed minimum statutory capital requirements;  however, payments of
such amounts as dividends are subject to approval by regulatory authorities.

The Utah and Florida Insurance  Departments  impose minimum  risk-based  capital
requirements  that were  developed  by the NAIC on  insurance  enterprises.  The
formulas for determining the risk-based  capital ("RBC") specify various factors
that are applied to financial  balances or various  levels of activity  based on
the  perceived  degree of risk.  Regulatory  compliance is determined by a ratio
(the "Ratio") of the enterprise's  regulatory total adjusted capital, as defined
by the  NAIC,  to  its  authorized  control  level,  as  defined  by  the  NAIC.
Enterprises  below  specific  trigger  points or ratios  are  classified  within
certain levels,  each of which requires  specified  corrective  action. The life
insurance subsidiaries have a Ratio that is greater than 300% of the first level
of regulatory action.

14)  Business Segment Information

Description of Products and Services by Segment

The  Company  has  three  reportable  segments:  life  insurance,  cemetery  and
mortuary,  and mortgage loans. The Company's life insurance  segment consists of
life  insurance  premiums  and  operating  expenses  from the sale of  insurance
products  sold by the  Company's  independent  agency  force and net  investment
income  derived from  investing  policyholder  and segment  surplus  funds.  The
Company's  cemetery and  mortuary  segment  consists of revenues  and  operating
expenses from the sale of pre-need and at-need cemetery and mortuary merchandise
and services at its mortuaries and cemeteries and the net investment income from
investing segment surplus funds. The Company's mortgage loan segment consists of
loan  originations  fee income and expenses from the originations of residential
mortgage  loans and  interest  earned and  interest  expenses  from  warehousing
pre-sold  loans  before  the funds are  received  from  financial  institutional
investors.  In  addition,  the Company has a corporate  segment  which  provides
administrative  and  marketing  services to the  reportable  segments  described
above.

Measurement of Segment Profit or Loss and Segment Assets

The  accounting  policies  of the  reportable  segments  are the  same as  those
described in the Significant  Accounting  Principles.  Intersegment revenues are
recorded at cost plus an agreed upon intercompany profit.

Factors Management Used to Identify the Enterprise's Reportable Segments

The  Company's  reportable  segments  are  business  units that offer  different
products and are managed  separately due to the different  products and the need
to report to the various regulatory jurisdictions.

                                       58

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998

14)  Business Segment Information
<TABLE>
<CAPTION>

                                                                          2000


                                Life        Cemetery/                                       Reconciling
                              Insurance     Mortuary          Mortgage        Corporate        Items     Consolidated
                              ---------     --------          --------        ---------        -----     ------------

Revenues:
<S>                         <C>            <C>             <C>                 <C>              <C>        <C>
From external sources:
   Revenue from customers   $ 12,875,585   $  9,416,927    $ 22,921,585         $    --         $    --    $ 45,214,097
   Net investment income       8,222,658        716,813       3,196,571              30              --      12,136,072
   Realized gains
      on investments             423,805             --              --              --              --         423,805
   Other revenues                 85,861         23,479         195,480              66              --         304,886

Intersegment revenues:
   Net investment income       2,955,958             --              --         309,658      (3,265,616)             --
   Other revenues                180,941             --              --       3,568,800      (3,749,741)             --
                            ------------   ------------    ------------    ------------    ------------    ------------
                              24,744,808     10,157,219      26,313,636       3,878,554      (7,015,357)     58,078,860
                            ------------   ------------    ------------    ------------    ------------    ------------
Expenses:
Death and other
   policy benefits             5,662,062             --              --              --              --       5,662,062
Increase in future
   policy benefits             7,268,720             --              --              --              --       7,268,720
Amortization of
   deferred policy
   acquisition costs
   and cost of
   insurance acquired          3,188,752             --              --              --              --       3,188,752
Depreciation                     322,514        451,259          61,744          29,904              --         865,421
General, administrative
      and other costs:
   Intersegment                3,717,341         69,072         101,288         166,408      (4,054,109)             --
   Other                       3,878,167      9,369,839      22,796,596       1,677,011              --      37,725,613
Interest expense:
   Intersegment                  309,658        210,984       2,202,700         237,906      (2,961,248)             --
   Other                          39,546        518,845       1,212,456         355,322              --       2,126,169
                            ------------   ------------    ------------    ------------    ------------    ------------
                              24,386,760     10,619,999      26,374,784       2,466,551      (7,015,357)     56,832,737
                            ------------   ============    ------------    ------------    ------------    ------------
Earnings (losses)
   before income taxes      $    358,048   $   (462,780)   $    (61,148)   $  1,412,003       $      --    $  1,246,123
                            ============   ============    ============    ============    ============    ============

Identifiable
   assets                   $196,390,736   $ 37,344,781    $  3,495,907    $  3,304,235    $(31,148,813)   $209,386,846
                            ============   ============    ============    ============    ============    ============

Expenditures for
   long-lived assets        $    260,836   $    680,626    $    220,856    $    556,802       $      --    $  1,719,120
                            ============   ============    ============    ============    ============    ============
</TABLE>

                                       59

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998

14)  Business Segment Information (Continued)
     ----------------------------
<TABLE>
<CAPTION>

                                                                         1999


                                Life        Cemetery/                                     Reconciling
                             Insurance      Mortuary         Mortgage      Corporate         Items         Consolidated
                             ---------      --------         --------      ---------         -----         ------------

Revenues:
<S>                         <C>            <C>             <C>                 <C>           <C>         <C>
From external sources:
   Revenue from customers   $ 13,175,825   $ 10,178,246    $ 14,503,388        $    --       $      --    $ 37,857,459
   Net investment income       8,305,723        733,377       1,558,166         34,036              --      10,631,302
   Realized gains
      on investments             313,013             --              --             --              --         313,013
   Other revenues                812,973         22,856          14,117          5,658              --         855,604

Intersegment revenues:
   Net investment income       2,275,916             --              --        269,904      (2,545,820)             --
   Other revenues                175,409             --              --      3,568,800      (3,744,209)             --
                            ------------   ------------    ------------   ------------    ------------    ------------
                              25,058,859     10,934,479      16,075,671      3,878,398      (6,290,029)     49,657,378
                            ------------   ------------    ------------   ------------    ------------    ------------
Expenses:
Death and other
   policy benefits             6,274,926             --              --             --              --       6,274,926
Increase in future
   policy benefits             5,700,784             --              --             --              --       5,700,784
Amortization of
   deferred policy
   acquisition costs
   and cost of
   insurance acquired          4,857,662             --              --             --              --       4,857,662
Depreciation                     179,461        452,225          44,633            533              --         676,852
General, administrative
      and other costs:
   Intersegment                3,711,809         69,072          85,719        219,684      (4,086,284)             --
   Other                       3,307,063      9,886,187      14,207,923      2,175,798              --      29,576,971
Interest expense:
   Intersegment                  269,904        181,972       1,484,726        267,143      (2,203,745)             --
   Other                           3,236        540,051         201,976        374,139              --       1,119,402
                            ------------   ------------    ------------   ------------    ------------    ------------
                              24,304,845     11,129,507      16,024,977      3,037,297      (6,290,029)     48,206,597
                            ------------   ------------    ------------   ------------    ------------    ------------
Earnings (losses)
   before income taxes      $    754,014   $   (195,028)   $     50,694   $    841,101       $      --    $  1,450,781
                            ============   ============    ============   ============    ============    ============

Identifiable
   assets                   $196,056,087   $ 34,013,032    $ 11,020,380   $  2,716,069    $(29,507,131)   $214,298,437
                            ============   ============    ============   ============    ============    ============

Expenditures for
   long-lived assets        $        266   $    527,658    $     90,819   $     11,002       $      --    $    629,745
                            ============   ============    ============   ============    ============    ============
</TABLE>

                                       60

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998

14)  Business Segment Information (Continued)
     ----------------------------
<TABLE>
<CAPTION>

                                                                        1998


                                 Life         Cemetery/                                   Reconciling
                              Insurance       Mortuary       Mortgage       Corporate        Items       Consolidated
                             ---------       --------       --------       ---------        -----        ------------

Revenues:
<S>                         <C>            <C>             <C>               <C>           <C>            <C>
From external sources:
   Revenue from customers   $  5,915,659   $  9,225,801    $ 10,082,330      $      --      $       --    $ 25,223,790
   Net investment income       5,553,486        682,915       1,206,578         15,764              --       7,458,743
   Realized gains
      on investments              74,121             --              --             --              --          74,121
   Other revenues                 22,078         32,456           6,034          2,381              --          62,949

Intersegment revenues:
   Net investment income       1,360,877             --              --        187,151      (1,548,028)             --
   Other revenues                109,887             --              --        568,800        (678,687)             --
                            ------------   ------------    ------------   ------------    ------------    ------------
                              13,036,108      9,941,172      11,294,942        774,096      (2,226,715)     32,819,603
                            ------------   ------------    ------------   ------------    ------------    ------------
Expenses:
Death and other
   policy benefits             3,578,634             --              --             --              --       3,578,634
Increase in future
   policy benefits             3,353,287             --              --             --              --       3,353,287
Amortization of
   deferred policy
   acquisition costs
   and cost of
   insurance acquired          1,273,394             --              --             --              --       1,273,394
Depreciation                      85,557        455,418          39,125          4,655              --         584,755
General, administrative
      and other costs:
   Intersegment                  536,400         70,656          71,631             --        (678,687)             --
   Other                       3,497,140      8,775,932       9,540,801        190,493              --      22,004,366
Interest expense:
   Intersegment                  187,151        183,908       1,176,969             --      (1,548,028)             --
   Other                          11,587        554,283         176,091        257,162         999,123
                            ------------   ------------    ------------   ------------    ------------    ------------
                            $ 12,523,150   $ 10,040,197    $ 11,004,617   $    452,310    $ (2,226,715)   $ 31,793,559
                            ------------   ------------    ------------   ------------    ------------    ------------
Earnings (losses)
   before income taxes      $    512,958   $    (99,025)   $    290,325   $    321,786      $       --    $  1,026,044
                            ============   ============    ============   ============    ============    ============

Identifiable
   assets                   $183,340,180   $ 33,539,827    $  9,010,581   $  3,070,453    $(15,695,894)   $213,265,147
                            ============   ============    ============   ============    ============    ============

Expenditures for
   long-lived assets        $    761,246   $  1,202,056    $     76,721      $      --       $      --    $  2,040,023
                            ============   ============    ============   ============    ============    ============

                                                            61
</TABLE>

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2000, 1999, and 1998



15)  Disclosure about Fair Value of Financial Instruments

The fair values of  investments in fixed  maturity and equity  securities  along
with methods used to estimate such values are disclosed in Note 2. The following
methods and assumptions  were used by the Company in estimating the "fair value"
disclosures related to other significant financial instruments:

Cash,  Receivables,   Short-term  Investments,  and  Restricted  Assets  of  the
Cemeteries and Mortuaries:  The carrying  amounts  reported in the  accompanying
balance sheets for these financial instruments approximate their fair values.

Mortgage,  Policy,  Student, and Collateral Loans: The fair values are estimated
using interest rates currently being offered for similar loans to borrowers with
similar credit ratings.  Loans with similar  characteristics  are aggregated for
purposes of the calculations.  The carrying amounts reported in the accompanying
balance sheets for these financial instruments approximate their fair values.

Investment  Contracts:  The fair  values  for the  Company's  liabilities  under
investment- type insurance  contracts are estimated based on the contracts' cash
surrender  values.  The  carrying  amount and fair value as of December 31, 2000
were approximately $88,189,000 and $83,919,000, respectively.

The fair values for the Company's insurance contracts other than investment-type
contracts  are not  required  to be  disclosed.  However,  the  fair  values  of
liabilities  under all insurance  contracts are taken into  consideration in the
Company's  overall  management  of interest  rate risk,  such that the Company's
exposure  to  changing  interest  rates is  minimized  through  the  matching of
investment maturities with amounts due under insurance contracts.

16)  Other Comprehensive Income

The following summarizes other comprehensive income:

                                              2000         1999          1998
                                              ----         ----          ----
Unrealized gains (losses)
     on available for-sale
     securities                           $ 736,803     $(696,162)    $ 405,047
Less:  reclassification
     adjustment for net realized
     gains in net income                   (420,739)      (14,126)      (62,702)
                                          ---------     ---------     ---------
Net unrealized gains (losses)               316,064      (710,288)      342,345
Tax expense on net unrealized
     gain (losses)                         (145,004)      294,866       (92,171)
                                          ---------     ---------     ---------
Other comprehensive income (loss)         $ 171,060     $(415,422)    $ 250,174
                                          =========     =========     =========

                                       62

<PAGE>



                                                                   Schedule I

                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                             Summary of Investments
                    Other than Investments in Related Parties



As of December 31, 2000:
                                                              Amount at
                                                               Which
                                                               Shown
                                             Estimated         in the
Type of Investment             Amortized        Fair           Balance
------------------                Cost          Value          Sheet
                               --------       ---------       ---------
Fixed maturity securities
   held to maturity:
Bonds:
   U.S. Treasury securities
     and obligations
     of U.S. Government
     agencies                 $ 12,900,371   $ 13,078,200   $ 12,900,371
   Obligations of states
     and political
     subdivisions                  183,399        188,325        183,399
   Corporate securities
     including public
     utilities                  20,951,532     20,689,306     20,591,532
   Mortgage backed
     securities                  5,320,861      5,295,978      5,320,861
Redeemable preferred
     stocks                         28,005         31,458         28,005
                              ------------   ------------   ------------

   Total Fixed
     Securities held
     to maturity                39,384,168     39,283,267     39,384,168
                              ------------   ------------   ------------

Securities
   available for sale:
Bonds:
   U.S. Treasury
   securities and
   obligations of U.S.
     Government agencies         3,367,097      3,411,451      3,411,451
   Corporate securities
     including public
     utilities                  20,124,932     20,028,631     20,028,631
   Mortgage-backed
     securities                     64,836         64,907         64,907
Nonredeemable
   preferred stock                  56,031         76,738         76,738
Common stock:
   Public utilities                315,068        617,311        617,311
   Banks, trusts and
     insurance companies           195,983        489,282        489,282
   Industrial,
     miscellaneous and
     all other                   1,050,280      1,590,747      1,590,747
                              ------------   ------------   ------------

     Total Securities
        available for
        sale                    25,174,227     26,279,067     26,279,067
                              ------------   ------------   ------------

Mortgage loans on
   real estate                  17,435,178                    17,435,178
Real estate                      8,564,395                     8,564,395
Policy loans                    11,277,742                    11,277,742
Other investments                1,027,927                     1,027,927
                              ------------                  ------------

   Total investments          $102,863,636                  $103,968,476
                              ============                  ============

                                       63

<PAGE>



                                                                   Schedule II

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                                 Balance Sheets


                                                     December 31,
                                                     ------------
                                              2000                 1999
                                               ----                ----
Assets
Cash$                                        (29,690)       $    (15,639)

Investment in subsidiaries
    (equity method)                        40,954,743          41,742,002

Receivables:
    Receivable from
        affiliates                          1,731,480           1,629,966
    Other                                      18,008              18,566
                                         ------------        ------------
       Total receivables                    1,749,488           1,648,532

Property, plant and
    equipment, at cost,
    net of accumulated
    depreciation of $344,296
    for 2000 and $314,392
    for 1999                                  537,433              10,535

Other assets                                   47,004              72,641
                                         ------------        ------------
    Total assets                         $ 43,258,978        $ 43,458,071
                                         ============        ============





See accompanying notes to parent company only financial statements.

                                       64

<PAGE>



                                                         Schedule II Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                           Balance Sheets (Continued)



                                               December 31,
                                              ------------
                                         2000             1999
                                         ----             ----
Liabilities:
------------
Bank loans payable:
    Current installments             $  1,035,585    $    841,767
    Long-term                           5,294,808       6,465,741

Notes and contracts payable:
    Current installments                  152,818         152,818
    Long-term                             151,857         303,713

Advances from affiliated companies      8,603,996       8,290,697

Other liabilities and
   accrued expenses                       513,877         512,041

Income taxes                              764,676         401,601
                                     ------------    ------------
    Total liabilities                  16,517,617      16,968,378
                                     ------------    ------------

Stockholders' equity:
Common Stock:
    Class A:  $2 par value, authorized
        10,000,000 shares, issued
        5,107,631 shares in 2000 and
        4,863,731 shares in 1999       10,215,262       9,727,462
    Class C:  $0.20 par value,
        authorized 7,500,000 shares,
        issued 5,827,805 shares in 2000
        and 5,555,350 shares in 1999    1,165,561       1,111,070
                                     ------------    ------------
Total common stock                     11,380,823      10,838,532

Additional paid-in capital             10,054,714      10,015,942
Accumulated other
    comprehensive income                  836,751         665,691
Retained earnings                       7,831,306       7,516,640
Treasury stock at cost
    (1,233,064 Class A shares and
    65,078 Class C shares in 2000;
    966,139 Class A shares and 61,979
    Class C shares in 1999, held by
    affiliated companies)              (3,362,233)     (2,547,112)
                                     ------------    ------------
Total stockholders' equity             26,741,361      26,489,693
                                     ------------    ------------
    Total liabilities and
        stockholders' equity         $ 43,258,978    $ 43,458,071
                                     ============    ============


See accompanying notes to parent company only financial statements.

                                       65

<PAGE>



                                                       Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                             Statements of Earnings




                                              Year Ended December 31,
                                              -----------------------
                                       2000            1999              1998
                                       ----            ----              ----

Revenue:
    Net investment
        income                      $        96     $    39,694     $    18,145
    Fees from
        affiliates                    3,878,458       3,838,704         755,951
                                    -----------     -----------     -----------
        Total revenue                 3,878,554       3,878,398         774,096
                                    -----------     -----------     -----------

Expenses:
    General and
        administrative
        expenses                      1,873,323       2,396,015         195,148
    Interest expense                    593,228         641,282         257,162
                                    -----------     -----------     -----------
        Total expenses                2,466,551       3,037,297         452,310
                                    -----------     -----------     -----------

Earnings (loss)
    before income
    taxes, and
    earnings of
    subsidiaries                      1,412,003         841,101         321,786

Income tax expense                     (373,075)       (277,810)       (114,346)

Equity in earnings
    (loss) of subsidiaries             (143,199)        412,604         563,789
                                    -----------     -----------     -----------
Net earnings                        $   895,729     $   975,895     $   771,229
                                    ===========     ===========     ===========


























See accompanying notes to parent company only financial statements.

                                       66

<PAGE>

<TABLE>
<CAPTION>


                                                       Schedule II (Continued)
                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)
                             Statements of Cash Flow


                                                        Year Ended December 31,
                                                        -----------------------
                                                   2000           1999          1998
                                                   ----           ----          ----
<S>                                           <C>            <C>            <C>
Cash flows from operating activities:
    Net earnings                              $   895,729    $   975,895    $   771,229
Adjustments to reconcile net earnings
      to net cash provided by
      (used in) operating activities:
      Depreciation and amortization                29,904            533          4,655
      Undistributed (earnings) losses
         of affiliates                            143,199       (412,604)      (563,789)
      Provision for income taxes                  373,075        277,810        114,346
    Change in assets and liabilities:
      Accounts receivable                             558         57,802        (90,600)
      Other assets                                 25,637        (72,245)          (396)
      Accounts payable and accrued expenses            --             --          4,697
      Other liabilities                             1,836         17,687        263,926
                                              -----------    -----------    -----------
Net cash provided by operating activities       1,469,938        844,878        504,068

Cash flows from investing activities:
    Purchase of short-term investments                 --        (11,045)       (11,737)
    Proceeds from sale of short term
      investments                                      --        305,972             --
    Note receivable from affiliate                     --             --     (1,000,000)
    Purchase of equipment                        (556,802)       (11,002)            --
    Investment in subsidiaries                         --     (6,388,198)    (5,250,000)
                                              -----------    -----------    -----------
Net cash used in investing activities            (556,802)    (6,104,273)    (6,261,737)

Cash flows from financing activities:
    Proceeds from advances from affiliates        303,299      6,388,198        200,000
    Payments of advances to affiliates           (101,514)      (169,023)      (200,000)
    Payments of notes and contracts payable    (1,128,972)    (1,094,150)      (398,353)
    Purchase of treasury stock                         --             --             --
    Sale of treasury stock                             --             --             --
    Proceeds from borrowings on notes and
      contracts payable                                --             --      6,246,400
                                              -----------    -----------    -----------
Net cash provided (used) by
      financing activities                       (927,187)     5,125,025      5,848,047
                                              -----------    -----------    -----------
Net change in cash                                (14,051)      (134,370)        90,378
Cash at beginning of year                         (15,639)       118,731         28,353
                                              -----------    -----------    -----------
Cash at end of year                           $   (29,690)   $   (15,639)   $   118,731
                                              ===========    ===========    ===========
</TABLE>

See accompanying notes to parent company only financial statements.

                                       67

<PAGE>



                                                       Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                Notes to Parent Company Only Financial Statements


1) Bank Loans Payable

    Bank loans payable are summarized as follows:

                                                            December 31,
                                                            ------------
                                                      2000                1999
                                                      ----                ----
    $5,046,448 revolving line of credit at
    bank prime rate less 1%, (8.5% at December
    31, 2000) interest only to December 2000
    thereafter interest and principal,
    collateralized by 15,000 shares of
    Security National Life Insurance Company
    stock, due December 2005                       $ 4,904,426       $5,610,111

    Bank prime rate plus 1/2% (10.0% at
    December 31, 2000) note payable in
    monthly installments of $36,420
    including principal and interest,
    collateralized by 15,000 shares of
    Security National Life stock, due
    December 2004.                                   1,425,967       1,697,397
                                                    ----------      ----------

        Total bank loans                            6,330,393        7,307,508

      Less current installments                     1,035,585          841,767
                                                   ----------       ----------
      Bank loans, excluding current
      installments                                 $5,294,808       $6,465,741
                                                   ==========       ==========


2)  Notes and Contracts Payable

    Notes and contracts are summarized as follows:

                                                          December 31,
                                                          ------------
                                                     2000                1999
                                                     ----                ----
    10 year notes due April 16, 1999,
      1% over U.S. Treasury 6 month
      bill rate                                $    536              $     535

    Due to former stockholders of
     Civil Service Employees Life Insurance
     Company resulting from the acquisition
     of such entity. 7% note payable in seven
     annual principal payments of
     $151,857 due December 2003                 303,714                 455,571

    Other                                           425                     425
                                               --------               ---------

    Total notes and contracts                   304,675                 456,531
                                               --------               ---------
    Less current installments                   152,818                 152,818
                                               --------               ---------
    Notes and contracts, excluding current
      installments                             $151,857                $303,713
                                               ========                ========

                                       68

<PAGE>



                                                       Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                Notes to Parent Company Only Financial Statements


The following tabulation shows the combined maturities of bank loans payable and
notes and contracts payable:

         2001                      1,188,403
         2002                      1,420,553
         2003                      1,366,940
         2004                      1,505,600
         2005                      1,153,572
         Thereafter                   --
                                  ----------
         Total                    $6,635,068
                                  ==========

3)  Advances from Affiliated Companies
                                                           December 31,
                                                    2000               1999
         Non-interest bearing advances
           from affiliates:
         Cemetery and Mortuary
            subsidiary                          $1,366,930       $1,366,930
         Life Insurance subsidiary               7,227,066        6,923,767
         Mortgage subsidiary                        10,000            --
                                                ----------       ----------
                                                $8,603,996       $8,290,697
                                                ==========       ==========

4)  Dividends

No dividends  have been paid to the  registrant for each of the last three years
by any subsidiaries.

                                       69

<PAGE>



                                                                   Schedule IV

                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                                   Reinsurance
<TABLE>
<CAPTION>


                                                                          Percentage
                                   Ceded to       Assumed                  of Amount
                      Direct         Other       from Other       Net       Assumed
                      Amount       Companies      Companies     Amount      to Net
                      ------       ---------      ---------     ------      ------
2000
<S>                <C>            <C>           <C>           <C>           <C>
Life Insurance
 in force ($000)    $ 1,469,502   $   253,698   $   580,287   $ 1,796,091     32.3%
                    ===========   ===========   ===========   ===========   =======

Premiums:
Life Insurance      $12,742,016   $ 1,151,262   $   634,899   $12,225,653      5.19%
Accident and
 Health Insurance       454,656           427         3,018       457,247       .66%
                    -----------   -----------   -----------   -----------   -------
   Total premiums   $13,196,672   $ 1,151,689   $   637,917   $12,682,900      5.03%
                    ===========   ===========   ===========   ===========   =======

1999
Life Insurance
 in force ($000)    $ 1,532,597   $   296,936   $   581,296   $ 1,816,957     32.00%
                    ===========   ===========   ===========   ===========   =======

Premiums:
Life Insurance      $12,870,339   $ 1,063,696   $   722,080   $12,528,723      5.76%
Accident and
 Health Insurance       563,592        34,643         4,565       533,514       .85%
                    -----------   -----------   -----------   -----------   -------
   Total premiums   $13,433,931   $ 1,098,339   $   726,645   $13,062,237      5.56%
                    ===========   ===========   ===========   ===========   =======

1998
Life Insurance
 in force ($000)    $ 1,554,286   $   352,777   $   569,448   $ 1,770,957     32.15%
                    ===========   ===========   ===========   ===========   =======

Premiums:
Life Insurance      $ 5,544,015   $   251,271   $   161,562   $ 5,454,306      2.96%
Accident and
 Health Insurance       371,585        22,924         4,905       353,566      1.39%
                    -----------   -----------   -----------   -----------   -------
   Total premiums   $ 5,915,600   $   274,195   $   166,467   $ 5,807,872      2.87%
                    ===========   ===========   ===========   ===========   =======

</TABLE>


                                       70

<PAGE>

<TABLE>
<CAPTION>


                                                                   Schedule V

                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                        Valuation and Qualifying Accounts


                                         Balance      Additions     Deductions,    Balance
                                           at          Charged       Disposals       at
                                        Beginning     to Costs          and        End of
                                         of Year    and Expenses    Write-offs      Year
                                        ---------   ------------    ----------    --------
<S>                                    <C>          <C>            <C>         <C>
For the Year Ended December 31, 2000
Accumulated depreciation
   on real estate                      $2,722,024   $  366,737     $     --    $3,088,761

Accumulated depreciation on
   property, plant and equipment        5,989,643      835,421     (125,923)    6,699,141

Allowance for doubtful accounts         1,467,954      190,930       (2,661)    1,656,223

For the Year Ended December 31, 1999
Accumulated depreciation
   on real estate                      $2,380,874   $  369,557   $  (28,407)   $2,722,024

Accumulated depreciation on
   property, plant and equipment        5,312,791      817,869     (141,017)    5,989,643

Allowance for doubtful accounts         1,576,668      150,981     (259,695)    1,467,954

For the Year Ended December 31, 1998
Accumulated depreciation
   on real estate                      $2,049,346   $  332,411   $     (883)   $2,380,874
Accumulated depreciation on
   property, plant and equipment        4,728,036      584,755           --     5,312,791

Allowance for doubtful accounts         1,679,090      175,750     (278,172)    1,576,668

</TABLE>

                                       71

<PAGE>



Item  9.  Changes  In and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

Security National Financial Corporation (the "Company") retained Tanner + Co. as
its  independent  auditors and replaced Ernst & Young LLP effective  December 1,
1999. No report of Ernst & Young LLP on the financial  statements of the Company
for either of the past two years  contained an adverse  opinion or disclaimer of
opinion,  or was  qualified  or  modified as to  uncertainty,  audit  scope,  or
accounting  principles.  Since  the  engagement  of  Ernst &  Young  LLP for the
Company's  two most recent  fiscal  years and  through the date of  replacement,
there were no  disagreements  between  the  Company and Ernst & Young LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.  The change in independent accountants was approved
by the Company's Board of Directors and disclosed in a Form 8-K, which was filed
with the Securities and Exchange Commission on December 21, 1999.

                                    PART III

Item 10. Directors and Executive Officers
-----------------------------------------
The Company's Board of Directors consist of seven persons,  four of whom are not
employees of the Company. All the Directors of the Company are also directors of
its subsidiaries.  There is no family  relationship  between or among any of the
directors,  except  that  Scott M.  Quist is the son of  George  R.  Quist.  The
following table sets forth certain information with respect to the directors and
executive officers of the Company.

                                                 Position with the
   Name             Age      Director Since      Company
-----------------   -----    --------------      -----------------------------
George R. Quist(1)     80     October 1979      Chairman of the Board,
                                                President and Chief Executive
                                                Officer

William C. Sargent(2)  72     February 1980     Senior Vice President,
                                                Secretary and Director

Scott M. Quist(2)      47     May 1986          First Vice President,
                                                General Counsel, Treasurer
                                                and Director
Charles L.
  Crittenden(1)        81     October 1979      Director

H. Craig Moody(2)      47     September 1995    Director

Norman Wilbur(1)       62     October 1998      Director

Robert G.
  Hunter, M.D.(2)      41     October 1998      Director

(1)  These  directors were elected by the holders of Class A Common Stock voting
     as a class by themselves.

(2)  These  directors  were elected by the holders of Class A and Class C Common
     Stock voting together.

Committees of the Board of Directors  include an executive  committee,  on which
Messrs.  George Quist, Scott Quist, Sargent and Moody serve; an audit committee,
on which  Messrs.  Crittenden,  Moody,  and  Wilbur  serve;  and a  compensation
committee, on which Messrs. Crittenden, Wilbur, and George Quist serve.

                                       72

<PAGE>



The  following  is a  description  of the  business  experience  of  each of the
directors.

George R. Quist has been Chairman of the Board,  President  and Chief  Executive
Officer of the Company  since  October  1979.  Mr. Quist is also Chairman of the
Board, President and Chief Executive Officer of Southern Security Life Insurance
Company and has served in this position since December 1998.  From 1960 to 1964,
he was Executive Vice President and Treasurer of Pacific Guardian Life Insurance
Company.  From 1946 to 1960,  he was an agent,  District  Manager and  Associate
General Agent for various insurance  companies.  Mr. Quist also served from 1981
to 1982 as the President of The National Association of Life Companies,  a trade
association  of 642  life  insurance  companies,  and  from  1982 to 1983 as its
Chairman of the Board.

William C.  Sargent has been Senior Vice  President  of the Company  since 1980,
Secretary since October 1993, and a director since February 1980. Mr. Sargent is
also Senior Vice President,  Secretary and a director of Southern  Security Life
Insurance  Company and has served in this position since December 1998. Prior to
that time,  he was  employed  by  Security  National  as a  salesman  and agency
superintendent.

Scott M. Quist has been General  Counsel of the Company  since 1982,  First Vice
President  since  December  1990,  Treasurer  since October 1993, and a director
since May 1986.  Mr.  Quist is also First Vice  President,  General  Counsel and
Treasurer  and a director of Southern  Security Life  Insurance  Company and has
served in this position since December 1998.  From 1980 to 1982, Mr. Quist was a
tax specialist with Peat, Marwick,  Mitchell, & Co., in Dallas, Texas. From 1986
to 1991,  he was  treasurer  and  director of The National  Association  of Life
Companies,  a trade association of 642 insurance companies until its merger with
the American Council of Life Companies. Mr. Quist has been a member of the Board
of Governors of the Forum 500 Section  (representing small insurance  companies)
of the  American  Council  of Life  Insurance.  Mr.  Quist has also  served as a
regional  director  of Key  Bank of Utah  since  November  1993.  Mr.  Quist  is
currently a director and immediate  past  president of the National  Alliance of
Life Companies, a trade association of over 200 life companies.

Charles L. Crittenden has been a director of the Company since October 1979. Mr.
Crittenden is also a director of Southern  Security Life  Insurance  Company and
has served in this position since  December  1998. Mr.  Crittenden has been sole
stockholder of Crittenden  Paint & Glass Company since 1958. He is also an owner
of Crittenden Enterprises, a real estate development company and Chairman of the
Board of Linco, Inc.

H. Craig Moody has been a director  of the Company  since  September  1995.  Mr.
Moody is also a director of Southern  Security  Life  Insurance  Company and has
served in this  position  since  December  1998.  Mr.  Moody is owner of Moody &
Associates,  a  political  consulting  and real estate  company.  He is a former
Speaker and House Majority Leader of the House of  Representatives  of the State
of Utah.

Norman Wilbur has been a director of the Company since October 1998.  Mr. Wilbur
is also a director of Southern Security Life Insurance Company and has served in
this position since December 1998. Mr. Wilbur worked for J.C.  Penny's  regional
offices in budget and analysis.  His final  position was Manager of Planning and
Reporting for J.C.  Penny's stores.  After 36 years with J.C. Penny's he took an
option of an early  retirement  in 1997.  Mr. Wilbur is a past board member of a
homeless organization in Plano, Texas.

Robert G. Hunter,  M.D. has been a director of the Company  since  October 1998.
Dr. Hunter is also a director of Southern  Security Life  Insurance  Company and
has served in this  position  since  December  1998.  Dr.  Hunter is currently a
practicing  physician in private  practice.  Dr.  Hunter  created the State Wide
E.N.T. Organization (Rocky Mountain E.N.T., Inc.) where he is currently a member
of the Executive Committee.  He is Chairman of Surgery at Cottonwood Hospital, a
delegate to the Utah Medical Association and a delegate representing Utah to the
American Medical Association, and a member of several medical advisory boards.

                                       73

<PAGE>



Executive Officers

The following table sets forth certain information with respect to the executive
officers of the Company (the business biographies set forth above):

     Name              Age                                    Title
   --------            ---                                    -----
George R.
  Quist(1)             80                     Chairman of the Board, President
                                              and Chief Executive Officer
William C.
  Sargent              72                     Senior Vice President and
                                              Secretary
Scott M.
  Quist(1)             47                     First Vice President, General
                                              Counsel and Treasurer

(1)George R. Quist is the father of Scott M. Quist.

The Board of Directors  of the Company has a written  procedure  which  requires
disclosure to the board of any material  interest or any affiliation on the part
of any of its officers, directors or employees which is in conflict or may be in
conflict with the interests of the Company.

No director,  officer or 5% stockholder of the Company or its  subsidiaries,  or
any  affiliate  thereof  has  had  any  transactions  with  the  Company  or its
subsidiaries during 2000 or 1999.

Each of the  Directors of the Company are  directors of Southern  Security  Life
Insurance Company,  which has a class of equity securities  registered under the
Securities  Exchange Act of 1934.  In addition,  Scott M. Quist is a director of
Key Bank of Utah. All directors of the Company hold office until the next annual
meeting of  stockholders  and until their  successors have been duly elected and
qualified.

                                       74

<PAGE>



Item 11.  Executive Officer Compensation

The following  table sets forth,  for each of the last three fiscal  years,  the
compensation  received by George R. Quist,  the  Company's  President  and Chief
Executive Officer,  and all other executive officers  (collectively,  the "Named
Executive  Officers")  at  December  31,  2000  whose  salary  and bonus for all
services in all  capacities  exceed  $100,000 for the fiscal year ended December
31, 2000.


<TABLE>
<CAPTION>

                                                Summary Compensation Table

                                                                      Annual Compensation        Long-Term Compensation
                                                        Other
                                                        Annual       Restricted    Securities     Long-Term  All Other
Name and                                                Compen-        Stock       Underlying    Incentive    Compen-
Principal Position         Year   Salary($)  Bonus($)   sation($)(2)  Awards($)  Options/SARs(#) Payout($)  sation($)(3)
------------------         ----   ---------  --------   ------------  ---------  --------------  ---------  ------------
<S>                       <C>    <C>        <C>           <C>           <C>        <C>             <C>        <C>
George R. Quist (1)        2000   147,204    20,200        2,400         0         50,000            0          5,281
  Chairman of the Board,   1999   147,204    20,200        2,400         0         50,000            0         20,247
  President and Chief      1998   137,454    20,200        2,400         0         50,000            0         12,084
  Executive Officer

William C. Sargent         2000   147,798    17,325        4,500         0         45,000            0            637
  Senior Vice President,   1999   148,058    17,325        4,500         0         45,000            0         16,879
  Secretary and            1998   130,329    17,325        4,500         0         45,000            0          5,286
  Director

Scott M. Quist (1)         2000   140,400    18,770        7,200         0         35,000            0            637
 First Vice President,     1999   129,400    18,770        7,200         0         35,000            0         15,201
  General Counsel          1998   119,025    18,770        7,200         0         35,000            0          7,257
  Treasurer and Director
</TABLE>

                                       75

<PAGE>



  (1)      George R. Quist is the father of Scott M. Quist.

     (2) The amounts  indicated  under "Other  Annual  Compensation"  consist of
payments  related  to  the  operation  of  automobiles  by the  Named  Executive
Officers.  However, such payments do not include the furnishing of an automobile
by the Company to George R. Quist, William C. Sargent and Scott M. Quist nor the
payment of insurance and property taxes with respect to the automobiles operated
by the Named Executive Officers.

     (3) The amounts  indicated  under "All Other  Compensation"  consist of (a)
amounts  contributed  by the  Company  into a trust for the benefit of the Named
Executive  Officers  under the Employee  Stock  Ownership Plan (for fiscal 2000,
such  amounts were George R. Quist,  $0;  William C.  Sargent,  $0; and Scott M.
Quist,  $0);  (b)  matching  contributions  made by the Company  pursuant to the
401(k) Retirement Savings Plan in which all matching  contributions are invested
in the Company's Class A Common Stock (for fiscal 2000, such amounts were George
R. Quist, $-0-;  William C. Sargent,  $-0-; and Scott M. Quist, $-0-; (c) profit
sharing  contributions  made by the Company  pursuant  to the 401(k)  Retirement
Savings Plan (for fiscal 2000, such amounts were George R. Quist, $0; William C.
Sargent, $0; and Scott M. Quist, $0); (d) insurance premiums paid by the Company
with  respect  to a group  life  insurance  plan for the  benefit  of the  Named
Executive  Officers  (for fiscal 2000,  $1,911 was paid for all Named  Executive
Officers as a group,  or $637 each for George R. Quist,  William C.  Sargent and
Scott M. Quist);  and (e) life  insurance  premiums  paid by the Company for the
benefit of the family of George R. Quist ($4,644).  The amounts under "All Other
Compensation" do not include the no interest loan in the amount of $172,000 that
the  Company  made to  George R.  Quist on April 29,  1998,  to  exercise  stock
options. See "Item 13 Certain Relationships and Related Transactions".

The following table sets forth information concerning the exercise of options to
acquire  shares of the Company's  Common Stock by the Named  Executive  Officers
during the fiscal year ended December 31, 2000, as well as the aggregate  number
and  value of  unexercised  options  held by the  Named  Executive  Officers  on
December 31, 2000.

Aggregated  Option/SAR  Exercised  in  Last  Fiscal  Year  and  Fiscal  Year-End
Option/SAR Values:

<TABLE>
<CAPTION>

                                                          Number of
                                                         Securities
                                                         Underlying                              Value of
                                                         Unexercised                            Unexercised
                                                        Options/SARs                           In-the-Money
                                                             at                               Options/SARs at
                    Shares                              December 31,                           December 31,
                  Acquired on                              2000(#)                                 2000
                   Exercise        Value               --------------                        ------------------
Name                 (#)         Realized      Exercisable       Unexercisable       Exercisable             Unexercisable
----               --------      --------      -----------       -------------       -----------             -------------
<S>                   <C>          <C>          <C>                    <C>          <C>                          <C>
George R
  Quist                0           $0            173,781                0                $0                       $0
William C
  Sargent              0           $0            248,850                0            $11,494                      $0
Scott M
  Quist                0           $0            132,673                0                 $0                      $0

</TABLE>

Retirement Plans

George R. Quist, who has been Chairman, President and Chief Executive Officer of
the Company since 1979, has a Deferred Compensation Agreement, dated December 8,
1988,  with  the  Company  (the  "Compensation  Agreement").  This  Compensation
Agreement provides upon Mr. Quist's retirement the Company shall pay him $50,000
per year as an annual retirement  benefit for a period of 10 years from the date
of retirement;  and upon his death,  the remainder of such annual payments shall
be payable to his designated beneficiary.

The  Compensation  Agreement  further  provides  that the Board of Directors may
elect to pay the entire amount of deferred  compensation in the form of a single
lump-sum  payment  or other  installment  payments,  so long as the term of such
payments do not exceed 10 years.  However,  in the event Mr. Quist's  employment
with the Company is terminated  for any reason other than  retirement,  death or
disability, the entire deferred compensation shall be forfeited by him.

                                       76

<PAGE>



William C.  Sargent,  who has been Senior Vice  President  of the Company  since
1980,  has a Deferred  Compensation  Agreement  dated April 15,  1994,  with the
Company (the  "Compensation  Agreement").  This Compensation  Agreement provides
upon Mr.  Sargent's  retirement the Company shall pay him $50,000 per year as an
annual retirement  benefit for a period of 10 years from the date of retirement;
and upon his death,  the remainder of such annual  payments  shall be payable to
his designated beneficiary.

The  Compensation  Agreement  further  provides  that the Board of Directors may
elect to pay the entire amount of deferred  compensation in the form of a single
lump-sum  payment  or other  installment  payments,  so long as the term of such
payments do not exceed 10 years.  However, in the event Mr. Sargent's employment
with the Company is terminated  for any reason other than  retirement,  death or
disability, the entire deferred compensation shall be forfeited by him.

Employment Agreement

The  Company  maintains  an  employment  agreement  with  Scott  M.  Quist.  The
agreement,  which has a five year term, was entered into in 1996, and renewed in
1997. Under the terms of the agreement,  Mr. Quist is to devote his full time to
the Company serving as its Treasurer,  First Vice President, and General Counsel
at not less than his current  salary and  benefits,  and to include  $500,000 of
life insurance protection. In the event of disability,  Mr. Quist's salary would
be continued  for up to 5 years at 50% of its current  level.  In the event of a
sale or merger of the  Company,  and Mr.  Quist were not retained in his current
position,  the Company  would be  obligated  to  continue  Mr.  Quist's  current
compensation and benefits for seven years following the merger or sale.

Director Compensation

Directors of the Company (but not  including  directors who are  employees)  are
paid a director's  fee of $8,400 per year by the Company for their  services and
are reimbursed for their expenses in attending board and committee meetings.  No
additional fees are paid by the Company for committee  participation  or special
assignments.  However,  each  director is provided with an annual grant of stock
options to purchase 1,000 shares of Class A Common Stock under the 2000 Director
Stock Option Plan.

Employee 401(k) Retirement Savings Plan

In 1995, the Company's Board of Directors  adopted a 401(k)  Retirement  Savings
Plan.  Under the terms of the 401(k) plan,  effective as of January 1, 1995, the
Company may make discretionary  employer matching contributions to its employees
who choose to  participate  in the plan.  The plan allows the board to determine
the  amount of the  contribution  at the end of each year.  The Board  adopted a
contribution  formula  specifying  that  such  discretionary  employer  matching
contributions  would equal 50% of the participating  employee's  contribution to
the plan to  purchase  Company  stock  up to a  maximum  discretionary  employee
contribution of 1/2% of a participating employee's  compensation,  as defined by
the plan.

All persons who have  completed at least one year's service with the Company and
satisfy other plan  requirements are eligible to participate in the 401(k) plan.
All Company matching  contributions are invested in the Company's Class A Common
Stock.  The  Company's  matching  contributions  for 2000,  1999,  and 1998 were
approximately  $0,  $3,858,  and $7,000  respectively.  Also,  the  Company  may
contribute at the  discretion  of the  Company's  Board of Directors an Employer
Profit  Sharing  Contribution  to the 401- K plan.  The Employer  Profit Sharing
Contribution  shall be divided among three different  classes of participants in
the  plan  based  upon  the  participant's  title in the  Company.  All  amounts
contributed  to the plan are  deposited  into a trust  fund  administered  by an
independent trustee. The Company's  contributions to the plan for 2000, 1999 and
1998, were $0, $130,958 and $0, respectively.

Employee Stock Ownership Plan

Effective  January 1, 1980, the Company adopted an employee stock ownership plan
(the  "Ownership  Plan") for the benefit of career  employees of the Company and
its  subsidiaries.  The following is a description of the Ownership Plan, and is
qualified  in its entirety by the  Ownership  Plan, a copy of which is available
for inspection at the Company's offices.

                                       77

<PAGE>



Under  the  Ownership  Plan,  the  Company  has  discretionary   power  to  make
contributions on behalf of all eligible employees into a trust created under the
Ownership Plan.  Employees  become eligible to participate in the Ownership Plan
when they have attained the age of 19 and have  completed one year of service (a
twelve-month  period in which the  Employee  completes  at least  1,040 hours of
service). The Company's  contributions under the Ownership Plan are allocated to
eligible employees on the same ratio that each eligible employee's  compensation
bears to total  compensation  for all eligible  employees  during each year.  To
date,  the  Ownership  Plan  has  approximately  107  participants  and  had  no
contributions  payable to the Plan in 2000.  Benefits  under the Ownership  Plan
vest as follows: 20% after the third year of eligible service by an employee, an
additional 20% in the fourth, fifth, sixth and seventh years of eligible service
by an employee.

Benefits  under  the  Ownership  Plan  will be paid  out in one  lump  sum or in
installments in the event the employee becomes disabled,  reaches the age of 65,
or is  terminated  by the  Company  and  demonstrates  financial  hardship.  The
Ownership Plan  Committee,  however,  retains  discretion to determine the final
method of payment. Finally, the Company reserves the right to amend or terminate
the  Ownership  Plan at any  time.  The  trustees  of the trust  fund  under the
Ownership  Plan are  Messrs.  George R.  Quist,  and  William  C.  Sargent,  all
directors of the Company.

1987 Incentive Stock Option Plan

In 1987,  the Company  adopted the 1987  Incentive  Stock  Option Plan (the 1987
Plan).  The 1987 Plan  provides  that shares of the Class A Common  Stock of the
Company may be optioned to certain  officers  and key  employees of the Company.
The Plan  establishes a Stock Option Plan Committee  which selects the employees
to whom the options will be granted and determines  the price of the stock.  The
Plan  establishes the minimum  purchase price of the stock at an amount which is
not less than 100% of the fair  market  value of the stock  (110% for  employees
owning  more than 10% of the  total  combined  voting  power of all  classes  of
stock).

The Plan provides  that if additional  shares of Class A Common Stock are issued
pursuant to a stock split or a stock  dividend,  the number of shares of Class A
Common Stock then covered by each outstanding  option granted hereunder shall be
increased  proportionately  with no increase in the total  purchase price of the
shares  then so  covered,  and the  number  of  shares  of Class A Common  Stock
reserved for the purpose of the Plan shall be increased by the same  proportion.
In the event that the shares of Class A Common Stock of the Company from time to
time issued and outstanding  are reduced by a combination of shares,  the number
of  shares of Class A Common  Stock  then  covered  by each  outstanding  option
granted  hereunder  shall be reduced  proportionately  with no  reduction in the
total price of the shares  then so covered,  and the number of shares of Class A
Common Stock  reserved for the purposes of the Plan shall be reduced by the same
proportion.

The Plan terminated in 1997 and options granted are  non-transferable.  The Plan
permits  the  holder of the option to elect to receive  cash,  amounting  to the
difference  between the option  price and the fair market  value of the stock at
the time of the  exercise,  or a lesser amount of stock  without  payment,  upon
exercise of the option.

1993 Stock Option Plan

On  June  21,  1993,  the  Company  adopted  the  Security  National   Financial
Corporation  1993 Stock Incentive Plan (the "1993 Plan"),  which reserves shares
of Class A Common Stock for issuance  thereunder.  The 1993 Plan was approved at
the annual  meeting of the  stockholders  held on June 21,  1993.  The 1993 Plan
allows the  Company to grant  options and issue  shares as a means of  providing
equity  incentives to key personnel,  giving them a proprietary  interest in the
Company and its success and progress.

The 1993 Plan  provides  for the grant of options and the award or sale of stock
to officers,  directors,  and employees of the Company.  Both  "incentive  stock
options," as defined  under  Section  422A of the Internal  Revenue Code of 1986
(the "Code"),  and  "non-qualified  options" may be granted pursuant to the 1993
Plan. The exercise  prices for the options  granted are equal to or greater than
the fair  market  value of the stock  subject to such  options as of the date of
grant,  as determined by the Company's  Board of Directors.  The options granted
under the 1993 Plan, were to reward certain  officers and key employees who have
been  employed  by the  Company  for a number of years  and to help the  Company
retain  these  officers  by  providing  them  with an  additional  incentive  to
contribute to the success of the Company.

                                       78

<PAGE>



The 1993 Plan is to be  administered by the Board of Directors or by a committee
designated by the Board.  The terms of options  granted or stock awards or sales
effected  under the 1993 Plan are to be  determined by the Board of Directors or
its  committee.  The Plan  provides  that if the shares of Common Stock shall be
subdivided  or  combined  into a greater or  smaller  number of shares or if the
Company  shall  issue  any  shares of Common  Stock as a stock  dividend  on its
outstanding  Common Stock, the number of shares of Common Stock deliverable upon
the exercise of Options  shall be increased  or decreased  proportionately,  and
appropriate adjustments shall be made in the purchase price per share to reflect
such  subdivision,  combination or stock  dividend.  In addition,  the number of
shares of Common  Stock  reserved  for purposes of the Plan shall be adjusted by
the same  proportion.  No options may be  exercised  for a term of more than ten
years from the date of grant.

Options intended as incentive stock options may be issued only to employees, and
must meet certain conditions  imposed by the code,  including a requirement that
the option  exercise  price be no less than the fair market  value of the option
shares on the date of grant.  The 1993 Plan provides that the exercise price for
non-qualified  options  will be not less  than at least  50% of the fair  market
value  of the  stock  subject  to such  option  as of the  date of grant of such
options, as determined by the Company's Board of Directors.

The 1993  Plan has a term of ten  years.  The  Board of  Directors  may amend or
terminate   the  1993  Plan  at  any  time,   subject  to  approval  of  certain
modifications  to the 1993 Plan by the  shareholders  of the  Company  as may be
required by law or the 1993 Plan.  On  November 7, 1996 the Company  amended the
Articles of  Incorporation  as follows:  (i) to increase the number of shares of
Class A Common Stock  reserved for issuance  under the Plan from 300,000 Class A
shares to 600,000 Class A shares;  and (ii) to provide that the stock subject to
options, awards and purchases may include Class C common stock.

On October 14, 1999, the Company amended the 1993 Plan to increase the number of
shares of Class A Common Stock reserved for issuance under the plan from 746,126
Class A shares to 1,046,126 Class A shares.

2000 Director Stock Option Plan

On October 16, 2000, the Company  adopted the 2000  Directors  Stock Option Plan
(the "Director Plan") effective November 1, 2000. The Director Plan provides for
the grant by the  Company of options to purchase  up to an  aggregate  of 50,000
shares of Class A Common  Stock  for  issuance  thereunder.  The  Director  Plan
provides  that each member of the  Company's  Board of  Directors  who is not an
employee or paid consultant of the Company  automatically is eligible to receive
options to purchase the Company's Class A Common Stock under the Director Plan.

Effective as of November 1, 2000,  and on each  anniversary  date thereof during
the term of the Director Plan, each outside director shall automatically receive
an option to purchase  1,000 shares of Class A Common Stock.  In addition,  each
new outside  director  who shall first join the Board after the  effective  date
shall be granted an option to  purchase  1,000  shares  upon the date which such
person  first  becomes an outside  director  and an annual grant of an option to
purchase  1,000 shares on each  anniversary  date thereof during the term of the
Director  Plan.  The options  granted to outside  directors  shall vest in their
entirety on the first anniversary date of the grant. The primary purposes of the
Director  Plan are to  enhance  the  Company's  ability  to  attract  and retain
well-qualified  persons for service as directors  and to provide  incentives  to
such directors to continue their association with the Company.

In the event of a merger  of the  Company  with or into  another  company,  or a
consolidation,  acquisition  of  stock or  assets  or other  change  in  control
transaction  involving the Company,  each option  becomes  exercisable  in full,
unless such  option is assumed by the  successor  corporation.  In the event the
transaction  is not  approved by a majority of the  "Continuing  Directors"  (as
defined in the Director Plan),  each option becomes fully vested and exercisable
in full immediately  prior to the consummation of such  transaction,  whether or
not assumed by the successor corporation.

                                       79

<PAGE>



Item 12 - Security Ownership of Certain Beneficial Owners and Management

The following table sets forth security  ownership  information of the Company's
Class A and Class C Common Stock as of March 20,  2001,  (i) for persons who own
beneficially more than 5% of the Company's outstanding Class A or Class C Common
Stock, (ii) each director of the Company,  and (iii) for all executive  officers
and directors of the Company as a group.
<TABLE>
<CAPTION>


                                                                                                             Class A
                                         Class A                           Class C                         and Class C
                                       Common Stock                       Common Stock                     Common Stock
                                       ------------                       ------------                     ------------
                                  Amount                        Amount                              Amount
Name and Address of            Beneficially  Percent        Beneficially            Percent      Beneficially        Percent
Beneficial Owner                  Owned     of Class            Owned              of Class          Owned          of Class
-----------------                -------    --------            -----              --------          -----          --------
<S>                             <C>          <C>            <C>                   <C>            <C>              <C>
George R. Quist (1)(2)
4491 Wander Lane
Salt Lake City,
  Utah 84124                     148,710      3.8%             229,560               4.0%           378,270             3.9%

George R. and Shirley C
Quist Family
  Partnership, Ltd.(6)
4491 Wander Lane
Salt Lake City,
  Utah 84124                     343,740      8.9%           2,760,704              47.9%          3,104,444           32.2%

Employee Stock
  Ownership Plan (4)
5300 S. 360 W., Suite 250
Salt Lake City,
  Utah 84123                     553,322     14.3%           1,277,690               22.2%        1,831,012            19.0%

William C. Sargent (1)(2)(3)
4974 Holladay Blvd
Salt Lake City,
  Utah 84117                     117,732      3.0%            168,934                 2.9%          286,666             3.0%

Scott M. Quist (3)
7 Wanderwood Way
Sandy, Utah 84092                106,594      2.8%             73,156                 1.3%          179,750             1.9%

Charles L. Crittenden
2334 Fillmore Avenue
Ogden, Utah 84401                  1,725       *              197,140                 3.4%          198,865             2.1%

</TABLE>

                                       80

<PAGE>



Item 12 - Security Ownership of Certain Beneficial Owners and Management
<TABLE>
<CAPTION>

                                                                                                             Class A
                                         Class A                           Class C                         and Class C
                                       Common Stock                       Common Stock                     Common Stock
                                       ------------                       ------------                     ------------
                                  Amount                        Amount                              Amount
Name and Address of            Beneficially  Percent        Beneficially            Percent      Beneficially        Percent
Beneficial Owner                  Owned     of Class            Owned              of Class          Owned          of Class
-----------------                -------    --------            -----              --------          -----          --------
<S>                         <C>               <C>             <C>                  <C>           <C>                <C>
H. Craig Moody
1782 East Faunsdale Dr.
Sandy, Utah 84092                680            *                -0-                   *               680             *

Norman G. Wilbur
2520 Horseman Drive
Plano, Texas 75025               994            *                -0-                   *               994             *

Robert G. Hunter, M.D
2 Ravenwood Lane
Sandy, Utah 84092              1,837            *                -0-                   *             1,837             *

Associated Investors (5)
5300 S. 360 W. Suite 250
Salt Lake City,
  Utah 84123                  87,375           2.3%            539,372                9.4%         626,747            6.5%

All directors and
  executive officers
  (7 persons)                722,012          18.6%          3,429,494               59.5%       4,151,506           43.1%

 *   Less than one percent
</TABLE>

                                       81

<PAGE>



     (1) Does not include  553,322  shares of Class A Common Stock and 1,277,690
shares of Class C Common Stock owned by the Company's  Employee Stock  Ownership
Plan (ESOP),  of which George R. Quist,  and William C. Sargent are the trustees
and  accordingly,  exercise shared voting and investment  powers with respect to
such shares.

     (2) Does not  include  87,375  shares of Class A Common  Stock and  539,372
shares of Class C Common  Stock owned by  Associated  Investors,  a Utah general
partnership,   of  which  these  individuals  are  the  managing  partners  and,
accordingly,  exercise shared voting and investment  powers with respect to such
shares.

     (3) Does not include  106,642  shares of Class A Common  Stock owned by the
Company's 401(k) Retirement Savings Plan, of which William C. Sargent, and Scott
M. Quist are  members of the  Investment  Committee  and  accordingly,  exercise
shared voting and investment powers with respect to such shares.

     (4) The trustees of the Employee Stock  Ownership Plan (ESOP) are George R.
Quist and William C. Sargent who exercise shared voting and investment powers.

     (5) The managing  partners of Associated  Investors are George R. Quist and
William C. Sargent, who exercise shared voting and investment powers.

     (6) This  stock is owned by the  George  R. and  Shirley  C.  Quist  Family
Partnership, Ltd., of which Mr. Quist is the general partner.

The Company's officers and directors, as a group, own beneficially approximately
43.1% of the  outstanding  shares  of the  Company's  Class A and Class C Common
Stock.

Item 13.  Certain Relationships and Related Transactions

The Company  has made a loan in the amount of  $172,000 to George R. Quist,  the
Company's  President and Chief Executive Officer,  without requiring the payment
of any interest.  The loan was made under a Promissory Note dated April 29, 1998
in order for Mr. Quist to exercise stock options which were granted to him under
the 1993 Plan. No installment payments are required under the terms of the note,
but the note must be paid in full as of December  31,  2001.  Mr.  Quist has the
right to make  prepayments  on the note at any time.  As of March 31, 2001,  the
outstanding  balance  of the note was  $109,700.  The loan was  approved  by the
Company's  directors on March 12, 1999, with Mr. Quist abstaining,  at a Special
Meeting of the Board of Directors.

The  Company's  Board  of  Directors  has a  written  procedure  which  requires
disclosure to the Board of any material  interest or any affiliation on the part
of any of its officers, directors or employees which is in conflict or may be in
conflict with the interests of the Company.

No director,  officer or 5% stockholder of the Company or its  subsidiaries,  or
any affiliate thereof, has engaged in any business transactions with the Company
or its subsidiaries during 2000 or 1999 other than as described herein.

                                       82

<PAGE>



                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
--------------------------------------------------------------------------

(a)(1)(2) Financial Statements and Schedules

     See "Index to Consolidated Financial Statements and Supplemental Schedules"
under Item 8 above.

(a)(3)  Exhibits

          The  following  Exhibits  are filed  herewith  pursuant to Rule 601 of
          Regulation S-K or are incorporated by reference to previous filings.

Exhibit

    Table No              Document

(a)(3)  Exhibits:
    3.A.     Articles of Restatement of Articles of Incorporation (8)

      B.   Bylaws (1)

    4.A.     Specimen Class A Stock Certificate (1)

      B.   Specimen Class C Stock Certificate (1)

      C.   Specimen   Preferred   Stock   Certificate   and  Certificate  of
           Designation of Preferred Stock (1)

     10.A.Restated and Amended Employee Stock Ownership Plan and Trust Agreement
          (1)

      B.   Deferred Compensation Agreement with George R. Quist (2)

      C.   1993 Stock Option Plan (3)

      D.   Promissory Note with Key Bank of Utah (4)

      E.   Loan and Security Agreement with Key Bank of Utah (4)

      F.   General Pledge Agreement with Key Bank of Utah (4)

      G.   Note Secured by Purchase  Price Deed of Trust and  Assignment of
           Rents with the Carter Family Trust and the Leonard M. Smith Family
           Trust (5)

      H.   Deed of Trust and Assignment of Rents with the Carter Family Trust
           and the Leonard M. Smith Family Trust (5)

      I.     Promissory Note with Page and Patricia Greer (6)

      J.     Pledge Agreement with Page and Patricia Greer (6)

      K.     Promissory Note with Civil Service Employees Insurance Company (7)

      L.     Deferred Compensation Agreement with William C. Sargent (8)

      M.     Employment Agreement with Scott M. Quist. (8)

      N.     Acquisition Agreement with Consolidare Enterprises, Inc., and
             certain shareholders of Consolidare. (9)

      O.     Agreement and Plan of Merger between Consolidare Enterprises, Inc
             and SSLIC Holding Company. (10)

                                       83

<PAGE>



     P.   Administrative   Services   Agreement  with  Southern   Security  Life
          Insurance Company. (11)

     Q.   Promissory Note with George R. Quist.

               (1)  Incorporated  by reference  from  Registration  Statement on
                    Form S-1, as filed on June 29, 1987.

               (2)  Incorporated  by reference  from Annual Report on Form 10-K,
                    as filed on March 31, 1989.

               (3)  Incorporated  by reference  from Annual Report on Form 10-K,
                    as filed on March 31, 1994.

               (4)  Incorporated  by reference from Report on Form 8-K, as filed
                    on February 24, 1995.

               (5)  Incorporated by reference from Annual Report on Form 10K, as
                    filed on March 31, 1995.

               (6)  Incorporated  by reference from Report on Form 8-K, as filed
                    on May 1, 1995.

               (7)  Incorporated  by reference from Report on Form 8-K, as filed
                    on January 16, 1996.

               (8)  Incorporated  by reference  from Annual Report on Form 10-K,
                    as filed on March 31, 1998.

               (9)  Incorporated  by reference from Report on Form 8-K, as filed
                    on May 11, 1998.

               (10) Incorporated  by reference from Report on Form 8-K, as filed
                    on January 4, 1999.

               (11) Incorporated  by reference from Report on Form 8-K, as filed
                    on March 4, 1999.

    21.  Subsidiaries of the Registrant

    (b)  Reports on Form 8-K:

            None

                                       84

<PAGE>



                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                     SECURITY NATIONAL FINANCIAL CORPORATION


Dated:  February 5, 2002                     By: George R. Quist,
                                                 ---------------
                                                Chairman of the Board,
                                                President and Chief
                                                Executive Officer

Pursuant to the requirements of the Securities  Exchange Act of 1934 as amended,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:

SIGNATURE                        TITLE                         DATE
----------                   ------------                    --------
George R. Quist            Chairman of the                 February 5, 2002
                           Board, President
                           and Chief Executive
                           Officer (Principal
                           Executive Officer)

Scott M. Quist             First Vice                      February 5, 2002
                           President, General
                           Counsel, Treasurer and
                           Secretary, Director (Principal
                           Financial and Accounting Officer)

Charles L. Crittenden      Director                        February 5, 2002

H. Craig Moody             Director                        February 5, 2002

Norman G. Wilbur           Director                        February 5, 2002

Robert G. Hunter           Director                        February 5, 2002


                                       85

<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
                          Year Ended December 31, 2000

                     SECURITY NATIONAL FINANCIAL CORPORATION
                           Commission File No. 0-9341

                                 E X H I B I T S


<PAGE>



                                  Exhibit Index


Exhibit No.                  Document Name

10.Q.    Promissory Note with George R. Quist

21.      Subsidiaries of the Registrant


<PAGE>



                                  Exhibit 10(Q)

                      Promissory Note with George R. Quist


<PAGE>



                                                           Note

$115,400.00        May 1, 2000

George R. Quist
4491 Wander Lane
Salt Lake City, Utah 84124


     1. Borrower's  Promise to Pay. In return for the loan that I have received,
I promise to pay the sum of One Hundred  Fifteen  Thousand Four Hundred  Dollars
($115,400.00)  (this  amount  is  called  the  "principal")  to the order of the
Lender. The Lender is Security National Financial Corporation. I understand that
the Lender may transfer  this Note.  The Lender or anyone who takes this Note by
transfer and who is entitled to receive  payments  under this Note is called the
"Note Holder".

     2. Interest. There will be no interest for this loan.

     3. Payments.  No monthly  payments will be required under this Note. If, on
December 31, 2001, I still owe amounts under this Note, I will pay those amounts
in full on that  date,  which is  called  the  "Maturity  Date".  I will make my
payments at 5300 South 360 West,  Suite 200, Salt Lake City, Utah 84123, or at a
different place if required by the Note Holder. Payments can be made through the
United States mails.

     4.  Borrower's  Right to  Repay.  I have  the  right  to make  payments  of
principal at any time before they are due. A payment of principal  only is known
as a  "prepayment".  When I make a  prepayment,  I will tell the Note  Holder in
writing that I am doing so. I may make a full prepayment or partial  prepayments
without  paying  any  prepayment  charge.  The  Note  Holder  will use all of my
prepayments  to reduce the amount of principal  that I owe under this Note. If I
make a partial  prepayment,  there will be no changes in the due date unless the
Note Holder agrees in writing to those changes.

     5. Loan  Charges.  If a law,  which  applies  to this  loan and which  sets
maximum loan charges,  is finally interpreted so that the interest or other loan
charges  collected or to be collected  in  connection  with this loan exceed the
permitted limits,  then: (i) any such loan charge shall be reduced by the amount
necessary to reduce the charge to the permitted limit; and (ii) any sums already
collected  from me which exceeded  permitted  limits will be refunded to me. The
Note Holder may choose to make this refund by reducing the principal I owe under
this Note or by making a direct  payment to me. If a refund  reduces  principal,
the reduction will be treated as a partial prepayment.

     6. Giving of Notices.  Unless  applicable law requires a different  method,
any notice that must be given to me under this Note will be given by  delivering
it or by mailing it by first class mail to me at the Property  Address  above or
at a  different  address  if I give the Note  Holder  a notice  of my  different
address.  Any notice that must be given to the Note Holder  under this Note will
be given by mailing it by first  class  mail to the Note  Holder at the  address
stated in  Section 3 above or at a  different  address if I am given a notice of
that different address.

     7.  Waivers.  I and any other  person who has  obligations  under this Note
waive the rights of presentment and notice of dishonor.  "Presentment" means the
right to require the Note Holder to demand  payment of amounts  due.  "Notice of
Dishonor"  means the right to require  the Note  Holder to give  notice to other
persons that amounts due have not been paid.

WITNESS THE HAND OF THE UNDERSIGNED.



/s/  George R. Quist
George R. Quist


<PAGE>



                                   EXHIBIT 21

                        Subsidiaries of Security National
                              Financial Corporation
                              as of March 31, 2001


<PAGE>


                                   Exhibit 21


Subsidiaries of Security National Financial Corporation
(as of March 31, 2001)

         Security National Life Insurance Company

         Security National Mortgage Company

         Memorial Estates, Inc.

         Memorial Mortuary

         Paradise Chapel Funeral Home, Inc.

         California Memorial Estates, Inc.

         Cottonwood Mortuary, Inc.

         Deseret Memorial, Inc.

         Holladay Cottonwood Memorial Foundation

         Holladay Memorial Park, Inc.

         Camelback Sunset Funeral Home, Inc.

         Greer-Wilson Funeral Home, Inc.

         Crystal Rose Funeral Home, Inc.

         Hawaiian Land Holdings

         SSLIC Holding Company

         Insuradyne Corporation

         Southern Security Life Insurance Company


<PAGE>