SECURITIES & EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 2004, 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 Salt Lake City, Utah            84123
---------------------------------------------------          --------
(Address of principal executive offices)                    (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:  None

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

     Title of each Class             Name of each exchange on which registered
  ----------------------------       -----------------------------------------
Class A Common Stock, $2.00 Par Value          Nasdaq National Market

Class C Common Stock, $0.20 Par Value                None

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. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of the last business day of Registrant's  most recently  completed
second fiscal quarter was $19,539,000, based upon the closing price on that date
on the Nasdaq  National  Market.  There were 5,441,685  shares of Class A Common
Stock and 6,380,197 shares of Class C Stock outstanding at March 31, 2005.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  definitive  Proxy  Statement for the  registrant's  2005 Annual
Meeting of Stockholders are incorporated by reference into Part III hereof.

  ============================================================================


<PAGE>



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 38 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 four in the state of
Arizona.  The Company also engages in pre-need selling of funeral,  cemetery and
cremation services through its Utah, Arizona and California 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 mortgage  loan
segment operates through 17 offices in seven states, and is an approved mortgage
lender in 20 states.

The design and structure of the Company is that each business segment is related
to the other business segments and contributes to the profitability of the other
segments.  Because of the  Company's  cemetery and mortuary  operations in Utah,
California  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.  The  Company's  insurance  subsidiaries  invest their assets
(representing  in part the pre-paid  funerals) in investments  authorized by the
respective  insurance  departments  of  their  states  of  domicile.   One  such
investment  authorized by the  insurance  departments  is high quality  mortgage
loans.  Thus,  while each  business  segment is a profit center on a stand-alone
basis,  this  horizontal  integration  of each  segment  is  planned  to lead to
improved  profitability of the Company.  The Company also pursues growth through
acquisitions of both life insurance companies and cemeteries and mortuaries. The
Company's  acquisition  business strategy is based on reducing the overhead cost
of the  acquired  company  by  utilizing  existing  personnel,  management,  and
technology while still providing quality service to customers and policyholders.

The Company was organized as a holding company in 1979,  when Security  National
Life  Insurance  Company  ("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 1994,  Civil Service  Employees
Life  Insurance  Company  in 1995,  Southern  Security  Life  Insurance  Company
"Southern Security Life" in 1998 and an asset purchase  transaction with Acadian
Life Insurance Company ("Acadian") in December 2002. Effective January 26, 2004,
the Company purchased all of the outstanding  common stock of Paramount Security
Life  Insurance  Company  ("Paramount")  now Security  National  Life  Insurance
Company of  Louisiana  ("Security  National  Life of  Louisiana"),  a  Louisiana
domiciled life  insurance  company,  for the purchase  price of  $4,398,000.  In
addition, effective January 1, 2005, Security National Life and its wholly-owned
subsidiary,  SSLIC Holding Company, completed a merger transaction with Southern
Security Life Insurance  Company in which SSLIC Holding  Company was merged with
Southern  Security Life Insurance  Company,  that resulted in Southern  Security
Life Insurance  Company becoming a wholly-owned  subsidiary of Security National
Life and the  unaffiliated  stockholders  of Southern  Security  Life  Insurance
Company  becoming  entitled  to receive an  aggregate  of  $1,884,733  for their
shares.

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 1994,
Greer-Wilson  Funeral Home,  Inc. in 1995 and Crystal Rose Funeral Home in 1997.
In 1993, the Company formed SecurityNational Mortgage Company ("SecurityNational
Mortgage")   to   originate   and   refinance   mortgage   loans.   Since   1993
SecurityNational  Mortgage has opened 17 branches in seven states.  See Notes to
Consolidated  Financial  Statements  for  additional  disclosure  and discussion
regarding segments of the business.


<PAGE>


Life Insurance

  Products

The  Company,  through  its  insurance  subsidiaries,  Security  National  Life,
Southern  Security  Life  Insurance  Company,  and  Security  National  Life  of
Louisiana,   issues  and  distributes  selected  lines  of  life  insurance  and
annuities.  The  Company's  life  insurance  business  includes  funeral  plans,
interest-sensitive  whole life insurance,  as well as other traditional life and
accident and health insurance  products.  The Company places specific  marketing
emphasis  on  funeral  plans  and  traditional   whole  life  products  sold  in
association with the funding of higher education costs.

A funeral plan is a small face value life  insurance  policy that  generally has
face  coverage  of up to  $15,000.  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  can be 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 administration to
be  distributed  over a smaller  policy size,  and the  simplified  underwriting
practices that result in higher mortality costs.

Through the Company's higher  education  funding  division,  the Company markets
strategies for savings for college and repayment of loans a child may have after
college.  Pursuant to those strategies the Company conducts scholarship searches
and originates and funds  government  guaranteed  student loans. The traditional
whole life product  marketed in  conjunction  with  funding of higher  education
costs is a 10-Pay  Whole Life  Policy  with an annuity  rider.  Both the paid-up
aspect of the whole life policy and the savings  aspect of the annuity rider are
marketed  as a tool for parents to help save for,  fund or repay loans  incurred
during  college.  The product is offered to parents who have children  generally
under the age of 25.

  Markets and Distribution

The  Company is  licensed  to sell  insurance  in 38  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.

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.

Higher  education  funding is for  families  that  desire to  prepare  for their
children's  higher  education  needs.  Such preparation can include searches for
scholarships, grant applications,  guaranteed student loan applications, and the
purchase of life  insurance and  annuities.  In 1965,  the Higher  Education Act
created the  guaranteed  student loan programs  participated  in by the Company.
Federal  Family  Education  Loan (FFEL)  Program,  which now  comprises  Federal
Stafford Loans  (formerly  Guaranteed  Student Loans),  Federal PLUS Loans,  and
Federal  Consolidation  Loans.  The FFEL  Program  makes these  long-term  loans
available to students  attending  institutions  of higher  education,  vocation,
technical, business and trade schools and some foreign schools. State or private
nonprofit guaranty agencies insure FFEL's and the Federal Government  reimburses
these agencies for all or part of the insurance  loans they pay to lenders.  The
federal guaranty on a FFEL replaces the security  (collateral)  usually required
for a long-term consumer loan. These government programs have numerous rules for
qualification  and have limits on how much you can borrow.  The Company's  whole
life  product has an annuity  rider that can provide a way for  families to save
additional funds for their children's education.  The Company has a student loan
resource  department,  which is available to  policyholders  to help parents and
students apply for various scholarships, grants and loans.


<PAGE>


A  majority  of the  Company's  funeral  plan  premiums  come from the states of
Arizona,  Arkansas,  Colorado, Idaho, Kansas,  Mississippi,  Oklahoma, Texas and
Utah. 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 100% 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's cemeteries and mortuaries.  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, 2004:
<TABLE>
<CAPTION>

                                         2004              2003                2002           2001         2000
                                         ----              ----                ----           ----         ----
Life Insurance
<S>                              <C>                   <C>               <C>              <C>          <C>

Policy/Cert
    Count as of December 31         357,767(1)(2)(3)      353,017(1)(2)      341,909(1)       74,335       71,178
Insurance
    in force as of December 31
    (omitted 000)                $2,914,135(1)(2)(3)   $2,914,438(1)(2)   $2,635,436(1)   $2,425,557    $2,049,789
Premiums Collected
    (omitted 000)                $   30,560(1)(2)(3)   $   28,598(1)(2)   $   14,699      $   14,860    $   14,959
</TABLE>

(1)  Includes asset purchase  transaction with Acadian Life Insurance Company on
     December 23, 2002.
(2)  Includes  reinsurance  assumed under  agreement  with Guaranty  Income Life
     Insurance Company on October 1, 2003.
(3)  Includes stock purchase  transaction with Paramount Security Life Insurance
     Company,   now  known  as  Security  National  Life  Insurance  Company  of
     Louisiana, on March 16, 2004.

    Underwriting

Factors  considered  in evaluating an  application  for ordinary life  insurance
coverage can include the applicant's age, occupation, general health and medical
history.   Upon  receipt  of  a  satisfactory   (non-funeral   plan   insurance)
application,  which contains  pertinent  medical  questions,  the Company writes
insurance  based  upon  its  medical  limits  and  requirements  subject  to the
following general non-medical limits:

                 Age Nearest                      Non-Medical
                   Birthday                         Limits

                     0-50                            $75,000
                    51-up                      Medical information
                                             required (APS or exam)



<PAGE>



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

The Company also sells funeral plan  insurance.  This  insurance is a small face
amount,  with a maximum  policy size of $15,000.  It is written on a  simplified
medical   application   with   underwriting   requirements   being  a  completed
application,  a phone inspection on selected applicant and a Medical Information
Bureau inquiry. There are several underwriting classes in which an applicant can
be placed.

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  annuitize 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.  Annuities have guaranteed  interest rates of
3% 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  generally  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 3% to 5%.

       Markets and Distribution

The  general  market  for  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  major  source  of  annuity
considerations comes from direct agents.  Annuities are also sold in conjunction
with other insurance sales. This is true in both the funeral planning and higher
education  planning  areas. If an individual does not qualify for a funeral plan
due to health  considerations,  the agent  will often  sell that  individual  an
annuity to fund those final  expenses.  In the higher  education  planning area,
most life insurance  sales have as part of the  transaction  an annuity  portion
that is used to accumulate  funds.  The commission  rates on annuities are up to
10%.

The following  table  summarizes  the annuity  business for the five years ended
December 31, 2004:

                            2004      2003      2002      2001      2000
                            ----      ----      ----      ----      ----
Annuities
Policy/Cert
    Count as of
    December 31            7,365     7,206     7,711     8,021     8,443
Deposits Collected
    (omitted 000)         $1,972    $2,026    $3,215    $2,550    $3,039


<PAGE>



Accident and Health

    Products

Prior to the acquisition of Capital  Investors Life in 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.  The diver's policy provides
worldwide  coverage for medical expense  reimbursement in the event of diving or
water sports accidents.

    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, 2004:

                            2004     2003      2002      2001      2000
                            ---      ----      ----      ----      ----
Accident and Health
Policy/Cert. Count
  as of December 31       15,778    17,391    18,921    19,343    21,454
Premiums Collected
(omitted 000)               $308      $352      $365      $413      $464

Reinsurance

When a  given  policy  exceeds  the  Company's  retention  limits,  the  Company
reinsures with other companies that portion 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.  The  Company  remains
obligated  for  amounts  ceded in the event  the  reinsurers  do not meet  their
obligations.

The Company's policy is to retain no more than $75,000 of ordinary insurance per
insured life.  Excess risk is reinsured.  The total amount of life  insurance in
force  at  December  31,  2004,   reinsured   by  other   companies   aggregated
$188,542,000, representing approximately 5.8% 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

<PAGE>



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 investments 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 12 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,  internment 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 eight separate stand-alone mortuary facilities.

    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 4% to 21%
for cemetery  products  and services and 10% to 100% 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

Beginning  in  1993,  the  Company,  through  its  subsidiary,  SecurityNational
Mortgage  Company has been active in both the  residential as well as commercial
real estate markets.  The Company has current approvals through HUD, Fannie Mae,
Freddie Mac and other substantial secondary market investors, which enable it to
originate a wide

<PAGE>



variety of  residential  mortgage loan products  that are  subsequently  sold to
these  investors.   The  Company  uses  internal  funding  sources  as  well  as
maintaining  external  warehouse  lines of credit  with  unaffiliated  financial
institutions. The Company also originates residential construction loans.

Security National Capital,  a subsidiary of  SecurityNational  Mortgage Company,
originates  commercial real estate loans both for internal investment as well as
for sale to unaffiliated investors.

    Markets and Distribution

The Company's  residential  mortgage lending services are marketed  primarily to
individual  homeowners.  SecurityNational  Mortgage  Company  maintains a retail
origination  presence in the Salt Lake City  market in addition to 17  wholesale
branch offices located in Arizona,  California,  Colorado, Florida, Nevada, Utah
and Texas, with sales representatives in other states.

Recent Acquisitions and Other Business Activities

    Southern Security Life Insurance Company

Effective  as of January  1,  2005,  Security  National  Life and SSLIC  Holding
Company, a wholly owned subsidiary of Security National Life, completed a merger
transaction with Southern  Security Life Insurance  Company.  Under the terms of
the merger and  pursuant  to the  Agreement  and Plan of  Reorganization,  dated
August 25, 2004,  including the amendment thereto dated December 27, 2004, SSLIC
Holding  Company  was merged  with and into  Southern  Security  Life  Insurance
Company, which resulted in (i) Southern Security Life Insurance Company becoming
a wholly-owned  subsidiary of Security National Life Insurance Company, and (ii)
the  unaffiliated  stockholders  of Southern  Security Life  Insurance  Company,
holding an aggregate of 490,816  shares of common  stock,  becoming  entitled to
receive  $3.84 in cash for each  issued and  outstanding  share of their  common
stock  of  Southern  Security  Life  Insurance  Company,   or  an  aggregate  of
$1,884,733.

As a result of the merger,  the  separate  existence  of SSLIC  Holding  Company
ceased  as  Southern  Security  Life  Insurance  Company  became  the  surviving
corporation of the merger. Southern Security Life Insurance Company continues to
be  governed  by the laws of the State of Florida,  and its  separate  corporate
existence  continues  unaffected by the merger. In addition,  as a result of the
merger,  Security  National Life owns all of the issued and  outstanding  common
shares of Southern Security Life Insurance Company.  Security National Financial
Corporation,  through its affiliates,  Security  National Life Insurance Company
and SSLIC  Holding  Company,  owned 76.7% of the  Company's  outstanding  common
shares prior to the merger.

The purpose of the merger is to terminate the  registration  of the common stock
of Southern Security Life Insurance Company under the Securities Exchange Act of
1934 (by  reducing  the number of its  stockholders  of record to fewer than 300
stockholders)  and the  Nasdaq  listing  of the common  stock,  reduce  expenses
associated with such  registration and listing,  and provide the stockholders an
opportunity to sell their shares in an illiquid trading market without incurring
brokerage commissions. As a result of becoming a non-reporting company, Southern
Security Life Insurance  Company is no longer required to file periodic  reports
with the SEC,  including  among other  things,  annual  reports on Form 10-K and
quarterly  reports on Form  10-Q,  and is no longer  subject to the SEC's  proxy
rules.  In addition,  its common stock is no longer  eligible for trading on the
Nasdaq SmallCap Market.

    Security National Life Insurance Company of Louisiana,  formerly  Paramount
    Security Life Insurance Company

On March 16, 2004,  Security  National  Life  purchased  all of the  outstanding
common stock of Paramount Security Life Insurance Company, now known as Security
National Life of Louisiana, a Louisiana domiciled insurance

<PAGE>



company  located in  Shreveport,  Louisiana.  As of December 31, 2003,  Security
National Life of Louisiana had 9,383 policies in force and 29 agents. There were
no  material  changes to the number of policies in force or the number of agents
between  December 31, 2003 and March 16, 2004.  The purchase  consideration  was
$4,398,000  and was  effective  January  26,  2004.  Security  National  Life of
Louisiana  is licensed in the State of  Louisiana  and is  permitted  to appoint
agents who do not have a full life insurance  license.  These agents are limited
to selling  small life  insurance  policies  in the final  expense  market.  The
Company believes that with this license it will be able to expand its operations
in  Louisiana.  The Company is  servicing  Security  National  Life of Louisiana
policyholders  out of  its  Jackson,  Mississippi  office  and  has  closed  the
Shreveport office.

    Acadian Life Insurance Company

On December  23,  2002,  the Company  completed  an asset  purchase  transaction
through its wholly owned  subsidiary,  Security  National Life with Acadian Life
Insurance Company  ("Acadian") from which it acquired  $75,000,000 in assets and
$75,000,000 in insurance  reserves.  The acquired  assets  consist  primarily of
approximately  275,000  funeral  insurance  policies  in force  in the  state of
Mississippi.  The assets were originally  acquired by Acadian from Gulf National
Life Insurance  Company on June 6, 2001,  which, at that time,  consisted of all
the insurance  policies of Gulf National Life Insurance  Company in force and in
effect on June 1, 2001 (the "Reinsured Business").

As a part of the transaction,  Security National Life entered into a coinsurance
agreement with Acadian,  in which Security  National Life agreed to reinsure all
the liabilities related to policies held by Mississippi policyholders. The terms
included  the  payment  of  all  legal  liabilities,   obligations,  claims  and
commissions  of the acquired  policies.  The effective  date of the  coinsurance
agreement was September 30, 2002, following Acadian's recapture of the insurance
in force from its reinsurer Scottish Re (U.S.) Inc. on September 30, 2002.

The coinsurance agreement also provides that Acadian is required to pay Security
National  Life an initial  coinsurance  premium in cash or assets  acceptable to
Security National Life in an amount equal to the full coinsurance reserves,  not
including the incurred but not reported (IBNR) reserve as of the effective date.
The ceding  commission  to be paid by Security  National Life to Acadian for the
reinsured  policies  is to be the  recapture  amount  to be paid by  Acadian  to
Scottish Re (U.S.), Inc., which was approximately $10,000,000. After the initial
coinsurance  premium,  the coinsurance  premiums  payable by Acadian to Security
National Life are to be equal to all of the premiums collected by Acadian on the
reinsurance policies subsequent to December 31, 2002.

On January 1, 2003, Security National Life entered into an assumption  agreement
with Acadian,  in which  Security  National Life agreed to assume certain of the
liabilities  related  to  the  reinsurance  policies.  Under  the  terms  of the
assumption  agreement,  Acadian  agreed to cede to Security  National  Life, and
Security  National  Life  agreed  to  assume  the  stated  insurance  risks  and
contractual obligations of Acadian relating to the Reinsured Business.  Security
National Life agreed to pay all legal  liabilities  and  obligations,  including
claims and  commissions,  of Acadian  with  respect  to the  Reinsured  Business
arising on or after January 1, 2003, in accordance with the terms and conditions
of the reinsured policies.

Regulation

The Company's insurance subsidiaries, Security National Life, Southern Security,
and Security National Life of Louisiana are subject to comprehensive  regulation
in the  jurisdictions  in which they do 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

<PAGE>



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,  Florida and Louisiana
under insurance holding company legislation,  and other states where applicable.
Generally,  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  they do  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 and cemeteries are governed and licensed by
state statutes and city ordinances in Utah, Arizona and California.  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, SecurityNational Mortgage, is subject to
the  rules  and  regulations  of  the  U.S.  Department  of  Housing  and  Urban
Development  and  to  various  state  licensing  acts  and  regulations.   These
regulations,  among other things,  specify  minimum  capital  requirements,  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.

Income Taxes

The Company's insurance subsidiaries,  Security National Life, Southern Security
and  Security  National  Life of  Louisiana  are taxed under the Life  Insurance
Company Tax Act of 1984.  Under the act, 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 a  significant  decrease  in life
reserves will result in taxable income.

Security  National  Life,  Southern  Security  and  Security  National  Life  of
Louisiana  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.


<PAGE>



Since 1990, Security National Life, Southern Security and Security National Life
of  Louisiana  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  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 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 a number of mortgage
companies  and  banks  in the  same  geographic  area in which  the  Company  is
operating that are better capitalized,  have longer business histories, and more
established  positions  in the  community.  The  mortgage  market in  general is
sensitive  to  changes  in  interest  rates  and  the   refinancing   market  is
particularly vulnerable to changes in interest rates.

Employees

As of December 31, 2004,  the Company  employed 366  full-time  and 34 part-time
employees.


<PAGE>



Item 2.  Properties

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

<TABLE>
<CAPTION>
                                                                    Approximate
                                                        Owned        Square
 Location                       Function                Leased       Footage
 --------                       --------                ------       -------
<S>                            <C>                     <C>           <C>
 5300 So. 360 West             Corporate Headquarters  Owned (1)      33,000
 Salt Lake City, Utah

 755 Rinehart Road             Insurance Operations/   Owned (2)      27,000
 Lake Mary, Florida            Mortgage Sales

 6522 Dogwood View Parkway     Insurance Operations    Leased (3)      5,300
 Jackson, Mississippi

 7916 Wrenwood Blvd.,
 Suite C                       Insurance Operations    Leased (4)        300
 Baton Rouge, Louisiana

 2800 Youree Drive Bld. 1,
 Suite 207                     Insurance Operations    Leased (5)      2,500
 Shreveport, Louisiana

 410 North 44th Street,
 Suite 190                     Mortgage Sales          Leased (6)      3,700
 Phoenix, Arizona

 12150 Tributary Point Dr.,
 Suite160                      Mortgage Sales          Leased (7)      1,800
 Gold River, California

 7676 Hazard Center Drive,
 Suite 625                     Mortgage Sales          Leased (8)      1,300
 San Diego, California

 27201 Tourney Road,
 Suite 125                     Mortgage Sales          Leased (9)      1,600
 Valencia, California

 6208 Lehman Drive, Suite 201  Mortgage Sales          Leased (10)     2,200
 Colorado Springs, Colorado

 14001 East Lliff Ave.,
 Suite 120                     Mortgage Sales          Leased (11)     1,800
 Aurora, Colorado

 7785 Baymeadows Way,
 Suite 101                     Mortgage Sales          Leased (12)     1,800
 Jacksonville, Florida

 1617 Santa Barbara Blvd       Mortgage Sales          Leased (13)       700
 Cape Coral, Florida
</TABLE>



<PAGE>

<TABLE>
<CAPTION>


Item 2.  Properties (Continued)
--------------------
                                                                    Approximate
                                                      Owned           Square
     Location                       Function          Leased          Footage
     --------                       --------          ------         -------
<S>                              <C>                <C>               <C>
 5620 Tara Blvd., Suite 103       Mortgage Sales    Leased (14)        1,200
 Bradenton, Florida

 6655 W. Sahara, Suite A-214      Mortgage Sales    Leased (15)        2,300
 Las Vegas, Nevada

 12750 Merit Drive, Suite 1212    Mortgage Sales    Leased (16)        2,100
 Dallas, Texas

 10850 Richmond Ave., Suite 270   Mortgage Sales    Leased (17)        2,400
 Houston, Texas

 5251 Green Street, Suite 350     Mortgage Sales    Owned (18)         5,000
 Salt Lake City, Utah

 5258 Pinemont Dr., Suite B280    Mortgage Sales    Owned (19)         2,900
 Murray, Utah

 970 East Murray-Holladay Rd.,    Mortgage Sales    Leased (20)        6,400
 Ste. 4A
 Salt Lake City, Utah

 474 West 800 North, Suite 102    Mortgage Sales    Leased (21)        2,000
 Orem, Utah
</TABLE>

(1)  The Company  leases an  additional  5,576  square  feet of the  facility to
     unrelated third parties for  approximately  $96,500 per year,  under leases
     expiring at various dates after 2004.

(2)  The Company  leases an  additional  9,903  square  feet of the  facility to
     unrelated third parties for  approximately  $182,200 per year, under leases
     expiring at various dates after 2004.

(3)  The Company leases this facility for $84,000 per year. The lease expires in
     July 2005

(4)  The Company leases this facility for $5,900 per year. The lease expires May
     2005.

(5)  The Company leases this facility for $1,900 per year, with a month-to-month
     lease.

(6)  The Company leases this facility for $35,300 per year. The lease expires in
     October 2006.

(7)  The Company leases this facility for $48,100 per year. The lease expires in
     August 2009.

(8)  The Company leases this facility for $42,800 per year. The lease expires in
     June 2008.

(9)  The Company leases this facility for $39,200 per year. The lease expires in
     November 2005.


<PAGE>


Item 2.  Properties (Continued)
-------------------

(10) The Company leases this facility for $27,300 per year. The lease expires in
     June 2006.

(11) The Company leases this facility for $27,500 per year. The lease expires in
     June 2006.

(12) The Company leases this facility for $27,200 per year. The lease expires in
     September 2006.

(13) The Company leases this facility for $8,400 per year, with a month-to-month
     lease.

(14) The Company leases this facility for $23,800 per year. The lease expires in
     July 2006.

(15) The Company leases this facility for $49,100 per year. The lease expires in
     October 2006.

(16) The Company leases this facility for $25,600 per year. The lease expires in
     January 2006.

(17) The Company leases this facility for $37,400 per year. The lease expires in
     June 2008.

(18) The Company  leases an  additional  25,000  square feet of the  facility to
     unrelated third parties for  approximately  $442,500 per year, under leases
     expiring at various dates after 2004.

(19) The Company  leases an  additional  135,700  square feet of the facility to
     unrelated third parties for  approximately  $838,800 per year, under leases
     expiring at various dates after 2004.

(20) The Company leases this facility for $75,000 per year. The lease expires in
     January 2006.

(21) The Company leases this facility for $34,800 per year. The lease expires in
     February 2007.

The Company  believes the office  facilities  it occupies are in good  operating
condition,  are  adequate  for current  operations  and has no plans to build or
acquire additional office facilities. The Company believes its office facilities
are adequate for handling  its  business in the  foreseeable  future.  As leases
expire  the  Company  will  either  renew or find  comparable  leases or acquire
additional office space.


<PAGE>
<TABLE>
<CAPTION>



The following table summarizes the location and acreage of the six Company owned
cemeteries, which each include one or more mausoleums:

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

  Lakeview
     Cemetery(3)         1640 East Lakeview Dr.
                         Bountiful, Utah                1973           7             40               5            35
  Mountain View
     Cemetery(3)         3115 East 7800 South
                         Salt Lake City, Utah           1973          15             54              13            41

  Redwood
     Cemetery(3)(5)      6500 South Redwood Rd.
                         West Jordan, Utah              1973          27             78              26            52

  Holladay Memorial
     Park(4)(5) 4900 So. Memory Lane
                         Holladay, Utah                 1991           5             14               3            11

  Lakehills Cemetery(4)
                         10055 So. State Street
                         Sandy, Utah                    1991           9             41               3            38

  Singing Hills Memorial
     Park(6)             2800 Dehesa Road
                         El Cajon, California           1995           8             35               3            32
</TABLE>

(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, 2004,  there were  mortgages  of  approximately  $26,000
     collateralized by the property and facilities at Memorial Estates Lakeview,
     Mountain View and Redwood Cemeteries.

(4)  As of December 31, 2004, there were mortgages of  approximately  $1,545,000
     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,  2004,  there was a mortgage of  approximately  $397,000
     collateralized by the property.

<PAGE>

<TABLE>
<CAPTION>


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


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
                                     Murray, Utah                  1973            3               1        20,000

Memorial Estates, Inc.:
  Redwood Mortuary(3)                6500 South Redwood Rd.
                                     West Jordan, Utah             1973            2               1        10,000

  Mountain View Mortuary(3)          3115 East 7800 South
                                     Salt Lake City, Utah          1973            2               1        16,000

  Lakeview Mortuary(3)               1640 East Lakeview Dr.
                                     Bountiful, Utah               1973            0               1         5,500

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

Deseret Memorial, Inc.:
  Colonial Mortuary(1)               2128 South State St.
                                     Salt Lake City, Utah          1991            1               1        14,500

  Deseret Mortuary(1)                36 East 700 South
                                     Salt Lake City, Utah          1991            2               2        36,300

  Lakehills Mortuary(3)              10055 South State St.
                                     Sandy, Utah                   1991            2               1        18,000

  Cottonwood Mortuary(1)(3)          4670 South Highland Dr.
                                     Holladay, Utah                1991            2               1        14,500

Greer-Wilson
  Funeral Home                       5921 West Thomas Road
                                     Phoenix, Arizona              1995            2               2        25,000

Adobe Funeral Home                   218 North Central
                                     Avondale, Arizona             1995            1               1         1,850

Crystal Rose Funeral Home(2)         9155 W. VanBuren
                                     Tolleson, Arizona             1997            0               1         9,000
</TABLE>

<PAGE>

(1)  As of December 31, 2004, there were mortgages of  approximately  $1,545,000
     collateralized   by  the  property  and  facilities  at  Deseret  Mortuary,
     Cottonwood  Mortuary,   Holladay  Memorial  Park,  Lakehills  Cemetery  and
     Colonial Mortuary.

(2)  As of December 31, 2004,  there was a mortgage of  approximately  $112,000,
     collateralized by the property and facilities of Crystal Rose Funeral Home.

(3)  These  funeral  homes  also  provide  burial  niches  at  their  respective
     locations.

Item 3.  Legal Proceedings

An action was brought  against the Company in May 2001 by Glenna  Brown  Thomas,
individually and as personal  representative  of the Estate of Lynn W. Brown, in
the Third  Judicial  Court,  Salt Lake  County,  Utah.  The action  asserts that
Memorial  Estates,  Inc.  delivered  to Lynn W.  Brown  six  stock  certificates
totaling  2,000 shares of its common  stock in 1970 and 1971.  Mr. Brown died in
1972.  It is also  asserted  that at the time the 2,000  shares  were issued and
outstanding,  the shares  represented a 2% ownership of Memorial Estates.  It is
further alleged that Mr. Brown was entitled to preemptive  rights and, after the
issuance  of the stock to Mr.  Brown,  there  were  further  issuances  of stock
without  providing  written  notice to Mr.  Brown or his  estate of his right to
purchase more stock.

It is further  asserted  that  Thomas has the right to the  transfer  of Brown's
shares  on the  books of  Security  National  Financial  Corporation  as well as
Memorial  Estates,  and  to the  restoration  of  Brown's  proportion  of  share
ownership in Memorial  Estates at the time of his death by issuance and delivery
to Thomas of sufficient shares of the Company's publicly traded and unrestricted
stock in exchange  for the 2,000  shares of Memorial  Estates  stock,  including
payment of all dividends from the date of Thomas's demand.  The formal discovery
cutoff was January 15, 2004. The Company has been verbally  informed that Thomas
will dismiss the case but such dismissal has not been  communicated  in writing.
Until the case is actually  dismissed,  the Company intends to vigorously defend
the matter,  including the assertion  that the statute of  limitations  bars the
claims in their entirety.

The Company  received a letter dated November 9, 2004 on behalf of Charles Hood,
who worked at Singing Hills Memorial Park in El Cajon, California.  He was hired
in April 2003 as a  groundskeeper  with his work concluding on October 30, 2003.
Mr. Hood claims that he wrote a letter to the  Company  outlining  his  concerns
regarding  the  operation  of  the  cemetery,  and  that  the  next  day  he was
terminated.  Even  though  he  recognizes  his  relationship  was as an  at-will
employee.  Mr.  Hood's  claims  against the Company  also  include,  but are not
limited to, violation of labor laws, whistleblower retaliation and infliction of
emotional distress. The letter proposes a settlement in the amount of $275,000.

No lawsuit  has been filed in the  matter.  The  Company  has been  engaged in a
review of the claims made in the letter. Based on its investigation, the Company
believes that Mr. Hood voluntarily quit and was not terminated.  Counsel for the
Company and counsel for Mr. Hood have been in discussion  concerning the matter.
At this stage of the  investigation,  the Company does not believe  there is any
justification  for the claims being made.  If a resolution of the dispute is not
achieved and litigation ensues, the Company is prepared to vigorously defend the
action.

The Company also  received a letter  dated  November 29, 2004 on behalf of Roger
Gornichec,  who the Company recognizes as having been an independent contractor.
The attorney who wrote the letter on behalf of Mr. Hood also wrote the letter on
behalf of Mr.  Gornichec.  Mr.  Gornichec  concluded  his  services  as an agent
selling  insurance in the spring of 2003 and his license to sell cemetery  plots
was not  renewed in the summer of 2004.  Mr.  Gornichec  asserts  that he was an
employee contrary to the Company's position.


<PAGE>

The claims  made on behalf of Mr.  Gornichec  include,  but are not  limited to,
wrongful  termination  in violation  of public  policy,  misrepresentation,  age
discrimination,   whistle-blower   retaliation,   interference   with   economic
advantage,  breach of  contract,  breach of the  covenant of good faith and fair
dealing, and infliction of emotional distress. Mr. Gornichec also claims that he
is  owed a  certain  amount  from a  retirement  plan.  The  letter  proposes  a
settlement in the amount of $420,000.  Based on its  investigation,  the Company
believes that Mr. Gornichec was an independent contractor,  not an employee, and
that the claims and the  settlement  amount  sought  are not  justified.  If the
matter is not  resolved  and  litigation  ensues,  the  Company is  prepared  to
vigorously defend the action.

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. Based on management's assessment and legal counsel's representations
concerning the likelihood of unfavorable  outcomes, no amounts have been accrued
for the above claims in the consolidated financial statements.

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

No matters were  submitted to a vote of the  Company's  shareholders  during the
quarter ended December 31, 2004.

                                     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.  As of March 31,  2005,  the  closing
sales price of the Class A Common Stock was $3.51 per share.  The  following are
the high and low market  closing  sales  prices for the Class A Common  Stock by
quarter as reported by Nasdaq since January 1, 2003:

Period (Calendar Year)                 Price Range
                                   High          Low
   2003
    First Quarter                 $6.59         $4.31
    Second Quarter                 6.01          5.02
    Third Quarter                  5.98          4.98
    Fourth Quarter                 7.10          5.47

  2004
    First Quarter                  8.47          6.36
    Second Quarter                 6.51          3.71
    Third Quarter                  3.89          3.08
    Fourth Quarter                 3.81          2.90

  2005
    First Quarter                  4.29          2.99

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.)


<PAGE>


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 1990 through 2004.

As of December 31, 2004, there were 4,437 record holders of Class A Common Stock
and 126 record holders of Class C Common Stock.

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, 2004,  are derived from the audited  consolidated  financial
statements.  The data as of December 31, 2004 and 2003,  and for the three years
ended  December 31, 2004,  should be read in conjunction  with the  consolidated
financial  statements,  related notes and other financial  information  included
herein.


<PAGE>

<TABLE>
<CAPTION>

Consolidated Statement of Earnings Data:
                                                                   Year Ended December 31,

                                           2004              2003(1)            2002             2001              2000
                                           ----              -------            ----             ----              ----
Revenue
<S>                                        <C>              <C>              <C>              <C>              <C>
Premiums                                  $ 25,979,000     $ 23,295,000      $14,077,000      $13,151,000      $12,876,000
Net investment income                       15,939,000       17,303,000       12,540,000       12,947,000       12,136,000
Net mortuary and cemetery sales             11,661,000       10,944,000       10,638,000        9,881,000        8,741,000
Realized (losses) gains on investments          74,000           (2,000)       1,021,000           10,000          424,000
Mortgage fee income                         62,690,000       92,955,000       57,008,000       40,086,000       22,922,000
Other                                          855,000          550,000          479,000          152,000          305,000
                                          ------------     ------------      -----------      -----------      -----------
Total revenue                              117,198,000      145,045,000       95,763,000       76,227,000       57,404,000
                                          ------------     ------------      -----------      -----------      -----------

Expenses
Policyholder benefits                       23,362,000       21,755,000       13,756,000       11,775,000       12,931,000
Amortization of deferred
  policy acquisition costs                   4,602,000        4,929,000        3,994,000        3,870,000        3,189,000
General and administrative expenses         82,097,000      102,926,000       68,459,000       52,247,000       35,959,000
Interest expense                             2,174,000        3,642,000        1,970,000        2,791,000        2,126,000
Cost of goods and services of
  the mortuaries and cemeteries              2,304,000        2,328,000        2,045,000        1,772,000        1,952,000
                                          ------------     ------------      -----------      -----------      -----------
Total benefits and expenses                114,539,000      135,580,000       90,224,000       72,455,000       56,157,000
                                          ------------     ------------      -----------      -----------      -----------
Income before income tax expense             2,659,000        9,465,000        5,539,000        3,772,000        1,247,000
Income tax expense                            (652,000)      (2,891,000)      (1,565,000)        (913,000)        (305,000)
Minority interest in (income)
   loss of subsidiary                          115,000           22,000           18,000          (18,000)         (46,000)
                                          ------------     ------------      -----------      ----------      -----------
Net earnings                              $  2,122,000     $  6,596,000      $ 3,992,000      $ 2,841,000      $   896,000
                                          ============     ============      ===========      ===========      ===========

Net earnings per common share(3)                  $.35            $1.13             $.72             $.52             $.16
                                                  ====            =====             ====             ====             ====
Weighted average outstanding
   common shares (3)                         6,002,000        5,852,000        5,573,000        5,485,000        5,511,000
Net earnings per common
   share-assuming dilution(3)                     $.34            $1.10             $.69             $.52             $.16
                                                  ====            =====             ====             ====             ====
Weighted average outstanding
   common shares-assuming dilution (3)        6,218,000       6,003,000        5,744,000        5,486,000        5,528,000
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

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

Balance Sheet Data:
                                                                          December 31,

                                       2004(2)         2003           2002(1)        2001           2000
                                      -------         -------         ----           ----           ----
Assets
<S>                                 <C>            <C>            <C>             <C>           <C>
Investments and restricted assets   $183,876,000   $112,006,000   $106,161,000   $ 94,514,000   $108,810,000
Cash                                  15,334,000     19,704,000     38,199,000      8,757,000     11,275,000
Receivables                           53,737,000    120,698,000    102,590,000     59,210,000     36,413,000
Other assets                          63,527,000     61,075,000     61,112,000     51,088,000     52,249,000
                                    ------------   ------------   ------------   ------------   ------------
Total assets                        $316,474,000   $313,483,000   $308,062,000   $213,569,000   $208,747,000
                                    ============   ============   ============   ============   ============

Liabilities
Policyholder benefits               $226,785,000   $220,739,000   $217,895,000   $142,291,000   $141,755,000
Notes & contracts payable             13,331,000     17,863,000     19,273,000     12,098,000     14,046,000
Cemetery & mortuary liabilities       10,789,000     10,562,000     10,076,000      9,344,000      8,659,000
Other liabilities                     20,091,000     21,187,000     22,007,000     15,630,000     12,921,000
                                    ------------   ------------   ------------   ------------   ------------
Total liabilities                    270,996,000    270,351,000    269,251,000    179,363,000    177,381,000
                                    ------------   ------------   ------------   ------------   ------------

Minority interest                      3,813,000      3,957,000      4,298,000      4,237,000      4,625,000

Stockholders' equity                  41,665,000     39,175,000     34,513,000     29,969,000     26,741,000
                                    ------------   ------------   ------------   ------------   ------------
Total liabilities and
  stockholders' equity              $316,474,000   $313,483,000   $308,062,000   $213,569,000   $208,747,000
                                    ============   ============   ============   ============   ============
</TABLE>


(1)  Reflects the asset purchase transaction with Acadian Life Insurance Company
     on December 23, 2002.

(2)  Includes the purchase of Paramount  Life  Insurance  Company,  now Security
     National Life Insurance Company of Louisiana, on March 16, 2004.

(3)  Earnings  per share  amounts  have been  adjusted  for the effect of annual
     stock dividends.

<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
traditional  whole  life  products;  (ii)  emphasis  on  cemetery  and  mortuary
business;  and (iii)  capitalizing  on lower interest  rates by originating  and
refinancing mortgage loans and other "niche" mortgage products.

SecurityNational  Mortgage  Company  ("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,
including  the  Company's  insurance  subsidiaries.  SNMC receives fees from the
borrowers and other  secondary fees from third party investors who purchased the
loans from SNMC. SNMC pays the brokers and correspondents a commission for loans
that are brokered through SNMC.

As of December 31, 2004,  SNMC had 17 branches in seven  states.  In 2001,  SNMC
opened wholesale branches in Phoenix,  Arizona and Houston, Texas. In 2003, SNMC
opened offices in Tampa and Jacksonville,  Florida; Las Vegas,  Nevada;  Denver,
Colorado;  Bountiful, Utah; and Dallas, Texas. SNMC opened one office in 2004 at
Cape Coral,  Florida. SNMC originated and sold 11,567 loans ($1,781,000,000 loan
amount),   17,494  loans   ($2,560,000,000   loan  amount),   and  11,737  loans
($1,721,000,000 loan amount) in 2004, 2003 and 2002,  respectively.  SNMC's loan
volume decreased in 2004 due to an increase in interest rates resulting in fewer
borrowers refinancing their loans.

On December 17, 1998,  the Company  purchased all of the  outstanding  shares of
common stock of SSLIC Holding Company,  formerly Consolidare Enterprises,  Inc.,
and Insuradyne  Corporation for a total cost of $12,248,194.  As of December 31,
2004,  Security  National Life and its  wholly-owned  subsidiary,  SSLIC Holding
Company,  held  approximately  77% of the outstanding  shares of common stock of
Southern Security Life Insurance Company.

In  addition,  effective  on  January 1, 2005,  Security  National  Life and its
wholly-owned subsidiary,  SSLIC Holding Company,  completed a merger transaction
with Southern Security Life Insurance Company in which SSLIC Holding Company was
merged with Southern Security Life Insurance Company, which resulted in Southern
Security Life Insurance  Company becoming a wholly-owned  subsidiary of Security
National  Life and the  unaffiliated  stockholders  of  Southern  Security  Life
Insurance  Company  becoming  entitled to receive an aggregate of $1,884,733 for
their shares.

On December 23, 2002, the Company  completed an asset purchase  transaction with
Acadian Life Insurance Company, a Louisiana domiciled life insurance company, in
which it  acquired  from  Acadian  $75,000,000  in  assets  and  $75,000,000  in
insurance  reserves through its wholly owned subsidiary,  Security National Life
Insurance Company, a Utah domiciled life insurance company.  The acquired assets
consist primarily of approximately  275,000 funeral insurance  policies in force
in the state of Mississippi. The assets were originally acquired by Acadian from
Gulf National Life Insurance  Company on June 6, 2001,  consisting of all of the
insurance  policies of Gulf National Life  Insurance  Company that were in force
and in effect on June 1, 2001.

On March 16, 2004,  Security  National  Life  purchased  all of the  outstanding
common stock of Paramount Security Life Insurance Company, now known as Security
National Life of Louisiana,  a Louisiana  domiciled insurance company located in
Shreveport,  Louisiana.  As of December  31,  2003,  Security  National  Life of
Louisiana had

<PAGE>



9,383  policies in force and 29 agents.  There were no  material  changes in the
number of policies in force or the number of agents  between  December  31, 2003
and March 16, 2004. The purchase  consideration was $4,398,000 and was effective
January 26, 2004.  Security  National Life of Louisiana is licensed in the State
of Louisiana where it is permitted to appoint agents who do not have a full life
insurance license.

These agents are limited to selling small life  insurance  policies in the final
expense market.  The Company  believes that with this license it will be able to
expand its operations in Louisiana.  The Company is servicing  Security National
Life of Louisiana  policyholders out of its Jackson,  Mississippi office and has
closed its Shreveport office.

Significant Accounting Policies

The following is a brief summary of our  significant  accounting  policies and a
review of our most critical accounting estimates. Please also refer to Note 1 of
our consolidated financial statements.

Insurance Operations

In accordance with accounting principles generally accepted in the United States
of America (GAAP),  premiums and considerations  received for interest sensitive
products such as universal life  insurance and ordinary  annuities are reflected
as  increases  in  liabilities  for  policyholder  account  balances  and not as
revenues. Revenues reported for these products consist of policy charges for the
cost of insurance,  administration  charges,  amortization of policy  initiation
fees and surrender  charges  assessed  against  policyholder  account  balances.
Surrender benefits paid relating to these products are reflected as decreases in
liabilities for policyholder  account balances and not as expenses.  The Company
receives  investment  income  earned  from  the  funds  deposited  into  account
balances,  a portion of which is passed through to the policyholders in the form
of interest  credited.  Interest  credited to policyholder  account balances and
benefit  claims in excess of  policyholder  account  balances  are  reported  as
expenses in the consolidated financial statements.

Premium revenues reported for traditional life insurance products are recognized
as revenues when due. Future policy benefits are recognized as expenses over the
life of the policy by means of the provision for future policy benefits.

The costs related to acquiring new business,  including certain costs of issuing
policies and other variable selling expenses (principally commissions),  defined
as deferred  policy  acquisition  costs,  are  capitalized  and  amortized  into
expense.  For  nonparticipating  traditional  life  products,  these  costs  are
amortized over the premium paying period of the related policies,  in proportion
to the ratio of annual premium revenues to total  anticipated  premium revenues.
Such  anticipated  premium revenues are estimated using the same assumption used
for computing  liabilities for future policy benefits and are generally  "locked
in" at the date the policies are issued. For interest sensitive products,  these
costs are  amortized  generally in  proportion  to expected  gross  profits from
surrender   charges  and  investment,   mortality  and  expense  margins.   This
amortization  is adjusted  when the Company  revises the  estimate of current or
future gross profits or margins. For example,  deferred policy acquisition costs
are amortized  earlier than originally  estimated when policy  terminations  are
higher  than  originally  estimated  or when  investments  backing  the  related
policyholder liabilities are sold at a gain prior to their anticipated maturity.

Death and other  policyholder  benefits  reflect  exposure to mortality risk and
fluctuate  from  year to year on the level of claims  incurred  under  insurance
retention  limits.  The  profitability  of the Company is primarily  affected by
fluctuations in mortality, other policyholder benefits, expense levels, interest
spreads  (i.e.,  the  difference  between  interest  earned on  investments  and
interest credited to policyholders) and persistency. The Company has the ability
to mitigate  adverse  experience  through  sound  underwriting,  asset/liability
duration matching,  sound actuarial practices,  adjustments to credited interest
rates, policyholder dividends or cost of insurance charges.

<PAGE>

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 or the caskets are delivered.

Pre-need  sales of  cemetery  internment  rights  (cemetery  burial  property) -
revenue  and costs  associated  with the sales of pre-need  cemetery  internment
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" (SFAS No. 66). Under SFAS 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 SFAS 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 until the merchandise is delivered or
services are performed.

Revenues and costs for at-need sales are recorded when a valid contract  exists,
the services are  performed,  collection is reasonably  assured and there are no
significant obligations remaining.

Mortgage Operations

Mortgage fee income is generated  through the  origination  and  refinancing  of
mortgage loans and is realized in accordance with SFAS No. 140.

The majority of loans originated are sold to third party investors.  The amounts
sold to investors are shown on the balance sheet as due from sale of loans,  and
are shown on the basis of the amount of fees due from the investors.

Use of Significant Accounting Estimates

The  preparation  of  financial  statements  in  conformity  with GAAP  requires
management to make estimates and assumptions  that affect  reported  amounts and
disclosures.  It is reasonably possible that actual experience could differ from
the estimates and assumptions utilized which could have a material impact on the
financial statements.  The following is a summary of our significant  accounting
estimates, and critical issues that impact them:

Fixed Maturities Available for Sale

Securities available-for-sale are carried at fair value, with unrealized holding
gains and losses  reported in accumulated  other  comprehensive  income which is
included in stockholders'  equity after adjustment for deferred income taxes and
deferred acquisition costs related to universal life products.


<PAGE>


The Company is required to exercise  judgment to determine when a decline in the
value of a  security  is other  than  temporary.  When the  value of a  security
declines and the decline is determined to be other than temporary,  the carrying
value of the  investment  is reduced  to its fair  value and a realized  loss is
recorded to the extent of the decline.

Deferred Acquisition Costs

Amortization  of  deferred  policy  acquisition  costs  for  interest  sensitive
products is dependent  upon  estimates  of current and future  gross  profits or
margins on this business.  Key assumptions used include the following:  yield on
investments supporting the liabilities, amount of interest or dividends credited
to the policies, amount of policy fees and charges, amount of expenses necessary
to maintain the  policies,  and amount of death and  surrender  benefits and the
length of time the policies will stay in force.

For nonparticipating  traditional life products,  these costs are amortized over
the premium paying period of the related policies, in proportion to the ratio of
annual premium revenues to total anticipated premium revenues.  Such anticipated
premium  revenues are  estimated  using the same  assumption  used for computing
liabilities for future policy benefits and are generally "locked in" at the date
the policies are issued.

Cost of Insurance Acquired

Cost of insurance  acquired is the present value of estimated  future profits of
the acquired  business and is amortized similar to deferred  acquisition  costs.
The critical issues  explained for deferred  acquisition  costs would also apply
for cost of insurance acquired.

Allowance for Doubtful Accounts

The Company  accrues an  estimate  of  potential  losses for the  collection  of
receivables.  The  significant  receivables are the result of receivables due on
mortgage  loans sold to investors,  cemetery and mortuary  operations,  mortgage
loan operations and other receivables. The allowance is based upon the Company's
experience.  The critical  issues that would impact recovery of the cemetery and
mortuary  receivables  is the overall  economy.  The critical  issues that would
impact recovery of mortgage loan operations would be interest rate risk and loan
underwriting.

Future Policy Benefits

Reserves for future policy  benefits for  traditional  life  insurance  products
requires the use of many  assumptions,  including  the duration of the policies,
mortality experience,  expenses, investment yield, lapse rates, surrender rates,
and dividend crediting rates.

These assumptions are made based upon historical experience,  industry standards
and a best  estimate of future  results  and,  for  traditional  life  products,
include a provision for adverse deviation. For traditional life insurance,  once
established for a particular series of products, these assumptions are generally
held constant.

Unearned Revenue

The  universal  life  products  the  Company  sells  have a  significant  policy
initiation fees (front-end load), which are deferred and amortized into revenues
over the estimated expected gross profits from surrender charges and investment,
mortality and expense margins.  The same issues that impact deferred acquisition
costs would apply to unearned revenue.


<PAGE>

Deferred Pre-need  Cemetery and Funeral Contracts  Revenues and Estimated Future
Cost of Pre-need Sales

The revenue and cost associated with the sales of pre-need cemetery  merchandise
and funeral  services are  deferred  until the  merchandise  is delivered or the
service is 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.

Mortgage Loan Loss Reserve

The Company accrues an estimate of future losses on mortgage loans sold to third
party investors.  The Company may be required to reimburse third party investors
for costs  associated  with  early  payoff  of loans  within  the first  year of
duration and to repurchase loans in default within the first year. The estimates
are based upon historical experience and best estimate of future liabilities.

Deferred Compensation

The Company has deferred compensation agreements with several of its current and
past executive officers. The deferred compensation is payable upon retirement or
death of these individuals either in annual  installments (10 years) or lump sum
settlement,  if approved by the Board of Directors.  The Company has accrued the
present value of these  benefits  based upon their future  retirement  dates and
other factors, on its consolidated financial statements.

Depreciation

Depreciation  is calculated  principally  on the  straight-line-method  over the
estimated  useful lives of the assets which range from 3 to 40 years.  Leasehold
improvements are amortized over the lesser of the useful life or remaining lease
terms.

Results of Operations

2004 Compared to 2003

Total revenues decreased by $27,847,000,  or 19.2%, from $145,045,000 for fiscal
year 2003 to $117,198,000 for fiscal year 2004. Contributing to this decrease in
total  revenues  was  a  $30,265,000  decrease  in  mortgage  fee  income  and a
$1,364,000 decrease in net investment income. This decrease was partially offset
by an  increase in  mortuary  and  cemetery  sales of  $717,000,  an increase in
insurance  premium  and other  considerations  of  $2,684,000,  an  increase  in
realized  gains on  investments  of $76,000 and an increase in other  revenue of
$305,000.

Insurance  premiums  and other  considerations  increased  by  $2,684,000,  from
$23,295,000 in 2003 to  $25,979,000 in 2004.  This increase was primarily due to
the additional  insurance premiums that were realized on new insurance sales and
included premiums from policies acquired from Paramount  Security Life Insurance
Company in 2004.


<PAGE>


Net  investment  income  decreased by  $1,364,000,  from  $17,303,000 in 2003 to
$15,939,000  in 2004.  This  decrease  was  primarily  attributable  to  reduced
interest income on fewer mortgage loans originated by SecurityNational  Mortgage
Company during 2004.

Net mortuary and cemetery sales increased by $717,000,  from $10,944,000 in 2003
to  $11,661,000  in 2004.  This increase was primarily due to pre-need  cemetery
sales.

Realized gains on investments and other assets increased by $76,000, from a loss
of $2,000 in 2003 to a gain of $74,000 in 2004.

Other  revenue  increased by $305,000 from $550,000 in 2003 to $855,000 in 2004.
Other  revenue  increased  in part from the  recovery  of funds from a member of
management who was found to have  fraudulently  obtained expense  reimbursements
over a period of several  years.  The total amount of payments that the employee
fraudulently obtained was $111,000.  The employee was terminated and the Company
demanded  and  received  full  restitution.  The employee  made  restitution  by
transferring  to the  Company  shares of the  Company's  common  stock  that the
employee owned at the time he was terminated.

Mortgage  fee income  decreased  by  $30,265,000,  from  $92,955,000  in 2003 to
$62,690,000 in 2004.  This decrease was primarily  attributable to a decrease in
the number of loan originations during 2004 due to an increase in interest rates
resulting in fewer borrowers refinancing mortgage loans.

Total benefits and expenses were  $114,539,000 for 2004, which constituted 97.7%
of the Company's total revenues,  as compared to  $135,580,000,  or 93.5% of the
Company's total revenues for 2003.

During  2004,  there  was  a net  increase  of  $1,607,000  in  death  benefits,
surrenders  and other  policy  benefits,  and in  future  policy  benefits  from
$21,755,000 in 2003 to $23,362,000 in 2004.  This net increase was the result of
an increase in reserves for policyholders offset by decreases in death benefits,
and surrenders and other policy benefits.

Amortization  of  deferred  policy and  pre-need  acquisition  costs and cost of
insurance acquired decreased by $327,000,  from $4,929,000 in 2003 to $4,602,000
in 2004.  This decrease was primarily  due to reduced  amortization  of deferred
policy acquisition costs and cost of insurance  acquired,  which is in line with
actuarial assumptions.

General and administrative expenses decreased by $20,829,000,  from $102,926,000
in 2003 to $82,097,000 in 2004. Contributing to this decrease was an $18,846,000
decrease in commission expenses, from $67,537,000 in 2003 to $48,691,000 in 2004
due to  fewer  mortgage  loan  originations  made by  SecurityNational  Mortgage
Company during 2004.  Salaries increased  $312,000,  from $14,080,000 in 2003 to
$14,392,000 in 2004 primarily due to merit increases.  Other expenses  decreased
$2,295,000,  from  $21,310,000 in 2003 to $19,015,000 in 2004.  These  decreases
were  primarily  the  result of  reduced  expenses  due to fewer  mortgage  loan
originations made by SecurityNational Mortgage Company during 2004.

Interest expense decreased by $1,468,000,  from $3,642,000 in 2003 to $2,174,000
in 2004.  This decrease was primarily due to reduced  warehouse  lines of credit
required for fewer  mortgage  loan  originations  by  SecurityNational  Mortgage
Company during 2004.

2003 Compared to 2002

Total revenues  increased by $49,282,000,  or 50.5%, from $95,763,000 for fiscal
year 2002 to $145,045,000 for fiscal year 2003. Contributing to this increase in
total revenues was a $35,947,000  increase in mortgage fee income,  a $4,763,000
increase in net  investment  income,  and a  $9,218,000  increase  in  insurance
premiums and other considerations.


<PAGE>

Insurance  premiums  and other  considerations  increased  by  $9,218,000,  from
$14,077,000 in 2002 to  $23,295,000 in 2003.  This increase was primarily due to
the additional premiums from policies acquired in the asset purchase transaction
with Acadian Life.

Net  investment  income  increased by  $4,763,000,  from  $12,540,000 in 2002 to
$17,303,000 in 2003. This increase was primarily  attributable to the additional
investment  income from the assets  acquired in the asset  purchase  transaction
with Acadian Life.

Net mortuary and cemetery sales increased by $306,000,  from $10,638,000 in 2002
to  $10,944,000 in 2003.  This increase was primarily due to additional  at-need
cemetery and mortuary sales.

Realized gains on investments and other assets  decreased by $1,023,000,  from a
gain of  $1,021,000 in 2002 to a loss of $2,000 in 2003.  The realized  gains on
investment  and other assets in 2002 was primarily  from the sale of property at
Lake Hills Cemetery.

Mortgage  fee income  increased  by  $35,947,000,  from  $57,008,000  in 2002 to
$92,955,000  in 2003.  This  increase was  primarily  attributable  to a greater
number of loan originations during 2003 due to the opening of new offices and to
lower  interest  rates  resulting  in  additional  borrowers  refinancing  their
mortgage loans.

Total benefits and expenses were  $135,580,000 for 2003, which constituted 93.5%
of the Company's  total revenues,  as compared to  $90,224,000,  or 94.2% of the
Company's total revenues for 2002.

During  2003,  there  was  a net  increase  of  $7,999,000  in  death  benefits,
surrenders  and other  policy  benefits,  and in  future  policy  benefits  from
$13,756,000 in 2002 to $21,755,000 in 2003.  This net increase was primarily due
to the additional death benefits,  surrenders and other policy benefits acquired
from the additional  policies  acquired in the asset purchase  transaction  with
Acadian Life.

Amortization  of  deferred  policy and  pre-need  acquisition  costs and cost of
insurance acquired increased by $935,000,  from $3,994,000 in 2002 to $4,929,000
in 2003.  This  increase was  primarily due to the  additional  amortization  of
deferred  policy  acquisition  costs  and cost of  insurance  acquired  from the
additional  policies  acquired in the asset  purchase  transaction  with Acadian
Life.

General and administrative  expenses increased by $34,467,000,  from $68,459,000
in 2002 to $102,926,000 in 2003. Contributing to this increase was a $25,422,000
increase in commission  expenses,  from  $42,114,000  in 2002 to  $67,537,000 in
2003. Salaries increased $3,666,000,  from $10,414,000 in 2002 to $14,080,000 in
2003.  Other  expenses  increased  $5,379,000,   from  $15,931,000  in  2002  to
$21,310,000  in 2003.  These  increases  were primarily the result of additional
expenses due to increased  numbers of loan  originations  made by the  Company's
mortgage subsidiary in 2003 and to additional expenses associated with the asset
purchase transaction with Acadian Life.

Interest expense increased by $1,672,000,  from $1,970,000 in 2002 to $3,642,000
in 2003. This increase was primarily due to additional warehouse lines of credit
required  from  the  additional  mortgage  loan  originations  by the  Company's
mortgage subsidiary,  SecurityNational Mortgage Company, and bank borrowings for
the asset purchase transaction with Acadian Life.

Cost of the mortuary and cemetery goods and services sold increased by $282,000,
from  $2,045,000 in 2002 to $2,327,000 in 2003.  This increase was primarily due
to increased at-need cemetery and mortuary sales.


<PAGE>


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  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  the  warehousing  of  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  $81,051,000  as of December  31, 2004
compared to  $51,564,000  as of December 31, 2003.  This  represents  62% of the
total  insurance  related  investments  in  2004  as  compared  to 48% in  2003.
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, 2004, 2%
($1,659,000)  and at December 31, 2003, 3%  ($1,739,000)  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  $149,469,000)  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)            $18,169        $10,620     $(12,346)     $(26,842)

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, 2004
and 2003, the life subsidiaries exceeded the regulatory criteria.


<PAGE>


The Company's total  capitalization  of  stockholders'  equity and bank debt and
notes payable was  $54,995,000 and $57,039,000 as of December 31, 2004 and 2003,
respectively.  Stockholders' equity as a percent of total capitalization was 76%
and 69% as of December 31, 2004 and 2003, respectively.

Lapse  rates  measure the amount of  insurance  terminated  during a  particular
period.  The  Company's  lapse  rate for life  insurance  in 2004 was  9.0%,  as
compared to a rate of 8.6% in 2003.

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 77% of the outstanding shares of common stock of Southern Security
Life  Insurance  Company,  a Florida  corporation  ("SSLIC").  The Company  also
acquired 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.

The Company entered into an Administrative Services Agreement dated December 17,
1998 with SSLIC. Under the terms of the agreement, the Company 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  will pay the  Company  an  administrative
services fee of $250,000 per month, or $3,000,000 on an annual basis,  which 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. However, such fee is to
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
Company has not made any increases in the amount of the Administrative  Services
Fee to reflect increases in the Consumer Price Index.

The Administrative Services Agreement is to remain in effect for an initial term
expiring on December  16,  2003.  The term of the  agreement  was  automatically
extended for an  additional  one-year  term  expiring  December  16,  2004.  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. Neither the Company nor SSLIC provided written notice prior to
September 30, 2004, stating a desire not to extend the term of the agreement. As
a result, the agreement will be extended for an additional  one-year term ending
December 31, 2005.

Effective  as of January  1,  2005,  Security  National  Life and SSLIC  Holding
Company, a wholly owned subsidiary of Security National Life, completed a merger
transaction with Southern  Security Life Insurance  Company.  Under the terms of
the merger and  pursuant  to the  Agreement  and Plan of  Reorganization,  dated
August 25, 2004,  including the amendment thereto dated December 27, 2004, SSLIC
Holding  Company  was merged  with and into  Southern  Security  Life  Insurance
Company, which resulted in (i) Southern Security Life Insurance Company

<PAGE>

becoming a wholly-owned  subsidiary of Security National Life Insurance Company,
and (ii) the  unaffiliated  stockholders  of Southern  Security  Life  Insurance
Company,  holding an  aggregate  of  490,816  shares of common  stock,  becoming
entitled to receive $3.84 in cash for each issued and outstanding share of their
common stock of Southern  Security Life  Insurance  Company,  or an aggregate of
$1,884,733.

As a result of the merger,  the  separate  existence  of SSLIC  Holding  Company
ceased  as  Southern  Security  Life  Insurance  Company  became  the  surviving
corporation of the merger. Southern Security Life Insurance Company continues to
be  governed  by the laws of the State of Florida,  and its  separate  corporate
existence  continues  unaffected by the merger. In addition,  as a result of the
merger,  Security  National Life owns all of the issued and  outstanding  common
shares of Southern Security Life Insurance Company.  Security National Financial
Corporation,  through its affiliates,  Security  National Life Insurance Company
and SSLIC  Holding  Company,  owned 76.7% of the  Company's  outstanding  common
shares prior to the merger.

The purpose of the merger is to terminate the  registration  of the common stock
of Southern Security Life Insurance Company under the Securities Exchange Act of
1934 (by  reducing  the number of its  stockholders  of record to fewer than 300
stockholders)  and the  Nasdaq  listing  of the common  stock,  reduce  expenses
associated with such  registration and listing,  and provide the stockholders an
opportunity to sell their shares in an illiquid trading market without incurring
brokerage commissions. As a result of becoming a non-reporting company, Southern
Security Life Insurance  Company is no longer required to file periodic  reports
with the SEC,  including  among other  things,  annual  reports on Form 10-K and
quarterly  reports on Form  10-Q,  and is no longer  subject to the SEC's  proxy
rules.  In addition,  its common stock is no longer  eligible for trading on the
Nasdaq SmallCap Market.

On December  23,  2002,  the Company  completed  an asset  purchase  transaction
through its wholly owned  subsidiary,  Security  National Life with Acadian from
which it acquired  $75,000,000 in assets and $75,000,000 in insurance  reserves.
The acquired assets consist primarily of approximately 275,000 funeral insurance
policies  in force in the  state of  Mississippi.  The  assets  were  originally
acquired by Acadian from Gulf National Life  Insurance  Company on June 6, 2001,
which, at that time, consisted of all of the insurance policies of Gulf National
Life  Insurance  Company in force and in effect on June 1, 2001 (the  "Reinsured
Business").

As a part of the transaction,  Security National Life entered into a coinsurance
agreement with Acadian,  in which Security  National Life agreed to reinsure all
the liabilities related to policies held by Mississippi policyholders. The terms
included  the  payment  of  all  legal  liabilities,   obligations,  claims  and
commissions  of the acquired  policies.  The effective  date of the  coinsurance
agreement was September 30, 2002, following Acadian's recapture of the insurance
in force from its reinsurer Scottish Re (U.S.) Inc. on September 30, 2002.

The  coinsurance  agreement  further  provides  that  Acadian is required to pay
Security  National  Life an  initial  coinsurance  premium  in  cash  or  assets
acceptable to Security  National Life in an amount equal to the full coinsurance
reserves,  not including the incurred but not reported  (IBNR) reserve as of the
effective  date. The ceding  commission to be paid by Security  National Life to
Acadian for the reinsured  policies is to be the recapture  amount to be paid by
Acadian to Scottish Re (U.S.), Inc., which was approximately $10,000,000.  After
the initial coinsurance  premium, the coinsurance premiums payable by Acadian to
Security  National  Life  are to be equal to all of the  premiums  collected  by
Acadian on the reinsurance policies subsequent to December 31, 2002.

On January 1, 2003, Security National Life entered into an assumption  agreement
effective January 1, 2003, with Acadian,  in which Security National Life agreed
to assume certain of the liabilities related to the reinsurance policies.  Under
the  terms of the  assumption  agreement,  Acadian  agreed  to cede to  Security
National Life, and Security  National Life agreed to assume the stated insurance
risks and contractual obligations of Acadian relating to the Reinsured Business.
Security  National  Life agreed to pay all legal  liabilities  and  obligations,
including  claims and  commissions,  of Acadian  with  respect to the  Reinsured
Business  arising on or after January 1, 2003, in accordance  with the terms and
conditions of the reinsured policies.

On March 16, 2004,  Security  National  Life  purchased  all of the  outstanding
common stock of Paramount Security Life Insurance Company, now known as Security
National Life of Louisiana,  a Louisiana  domiciled insurance company located in
Shreveport,  Louisiana.  As of December  31,  2003,  Security  National  Life of
Louisiana  had 9,383  policies  in force and 29 agents.  There were no  material
changes  in the  number of  policies  in force or the  number of agents  between
December 31, 2003 and March 16, 2004. The purchase  consideration was $4,398,000
and was  effective  January 26,  2004.  Security  National  Life of Louisiana is
licensed in the State of Louisiana  where it is permitted to appoint  agents who
do not have a full life insurance license.

These agents are limited to selling small life  insurance  policies in the final
expense market.  The Company  believes that with this license it will be able to
expand its operations in Louisiana.  The Company is servicing  Security National
Life of Louisiana  policyholders out of its Jackson,  Mississippi office and has
closed its Shreveport office.

<PAGE>

At December 31, 2004,  $27,208,316 of the Company's  consolidated  stockholders'
equity represents the statutory  stockholders' equity of the Company's insurance
subsidiaries.  The life insurance  subsidiaries  need to comply with  applicable
state regulations before a dividend can be paid to their parent company.

The Private Securities  Litigation Reform Act of 1995 provides a safe harbor for
forward-looking   statements  to  encourage  companies  to  provide  prospective
information  about their businesses  without fear of litigation so long as those
statements are identified as  forward-looking  and are accompanied by meaningful
cautionary  statements  identifying  important  factors  that could cause actual
results  to differ  materially  from those  projected  in such  statements.  The
Company desires to take advantage of the "safe harbor" provisions of the act.

Forward-Looking Statements

This Annual Report of Form 10-K contains  forward-looking  statements,  together
with related  data and  projections,  about the  Company's  projected  financial
results and its future plans and strategies.  However,  actual results and needs
of  the  Company  may  vary  materially  from  forward-looking   statements  and
projections  made from time to time by the Company on the basis of  management's
then-current expectations. The business in which the Company is engaged involves
changing and competitive  markets,  which may involve a high degree of risk, and
there can be no assurance that  forward-looking  statements and projections will
prove accurate.

Factors that may cause the Company's  actual results to differ  materially  from
those contemplated or projected, forecast, estimated or budgeted in such forward
looking  statements  include among  others,  the  following  possibilities:  (i)
heightened competition,  including the intensification of price competition, the
entry  of new  competitors,  and the  introduction  of new  products  by new and
existing competitors;  (ii) adverse state and federal legislation or regulation,
including  decreases  in rates,  limitations  on premium  levels,  increases  in
minimum capital and reserve requirements,  benefit mandates and tax treatment of
insurance products;  (iii) fluctuations in interest rates causing a reduction of
investment  income or increase in  interest  expense and in the market  value of
interest rate sensitive investment;  (iv) failure to obtain new customer, retain
existing customers or reductions in policies in force by existing customers; (v)
higher  service,  administrative,  or  general  expense  due  to  the  need  for
additional  advertising,  marketing,  administrative  or management  information
systems  expenditures;  (vi) loss or retirement of key  executives or employees;
(vii) increases in medical costs;  (viii) changes in the Company's liquidity due
to changes in asset and  liability  matching;  (ix)  restrictions  on  insurance
underwriting based on genetic testing and other criteria; (x) adverse changes in
the ratings obtained by independent  rating  agencies;  (xi) failure to maintain
adequate  reinsurance;  (xii) possible  claims  relating to sales  practices for
insurance  products and claim denials and (xiii) adverse trends in mortality and
morbidity.

Off-Balance Sheet Agreements

The Company's  off-balance  sheet  arrangements  consist of operating leases for
rental of office space and equipment.

The Company  leases  office space and  equipment  under  various  non-cancelable
agreements,  with remaining terms up to five years. Minimum lease payments under
these non-cancelable operating leases as of December 31, 2004, are approximately
as follows:

                           Years Ending December 31:
                           -------------------------
                          2005             $  588,000
                          2006                381,000
                          2007                 97,000
                          2008                 90,000
                          2009                 49,000
                                           ----------
                             Total         $1,205,000



<PAGE>

Total rent  expense  related to these  non-cancelable  operating  leases for the
years  ended  December  31,  2004,  2003 and 2002  was  approximately  $734,000,
$396,000 and $200,000, respectively.

Recent Accounting Pronouncements

In April  2003,  the FASB issued SFAS No. 149,  Amendment  of  Statement  133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts  (collectively referred to as
derivatives)  and for  hedging  activities  under SFAS No. 133,  Accounting  for
Derivative  Instruments and Hedging Activities.  This Statement is effective for
contracts entered into or modified after June 30, 2003, with certain exceptions,
and for hedging relationships  designated after September 30, 2003. The adoption
of SFAS No.  149 did not have a  material  effect on the  Company's  results  of
operations or financial position.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
requires that certain financial  instruments,  which under previous guidance may
have been accounted for as equity,  must now be accounted for as liabilities (or
an asset in some  circumstances).  The financial  instruments  affected  include
mandatory  redeemable stock,  certain financial  instruments that require or may
require the issuer to buy back some of its shares in exchange  for cash or other
assets and certain  obligations  that can be settled with shares of stock.  This
Statement  is  effective  for all such  financial  instruments  entered  into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim period  beginning after June 15, 2003. The Company entered into an
agreement  with a  stockholder  in August 2003,  in which it  purchased  124,000
shares of Class A Common Stock from this  stockholder  for $6.00 per share.  The
purchase of these shares is reflected in treasury stock.  Also,  under the terms
of this  agreement,  the  stockholder  has agreed not to  purchase  or  control,
directly or indirectly, any additional shares of Class A or Class C Common Stock
through August 2007, and on August 27, 2004, 2005, and 2006, the stockholder may
request,  but is not obligated to request, the Company to purchase an additional
100,000  shares of Class A Common Stock held by this  stockholder  for $6.00 per
share. On October 26, 2004, the Company completed the stock purchase  agreement,
when the Company purchased the remaining amount of 51,929 shares, thus under the
agreement the Company will not be required to purchase any additional shares.

Effective  December 31,  2003,  the Company  adopted  EITF Issue No.  03-1,  The
Meaning  of  Other-Than-Temporary  Impairment  and Its  Application  to  Certain
Investments  ("EITF  03-1").  EITF  03-1  provides  guidance  on the  disclosure
requirements for other-than-temporary  Impairments of debt and marketable equity
investments  that are  accounted  for under  Statement of  Financial  Accounting
Standards  ("SFAS")  No. 115,  Accounting  for Certain  Investments  in Debt and
Equity  Securities.  The  adoption of EITF 03-1  requires the Company to include
certain quantitative and qualitative  disclosures for debt and marketable equity
securities classified as  available-for-sale or held-to-maturity  under SFAS 115
that   are   impaired   at  the   balance   sheet   date   but  for   which   an
other-than-temporary  impairment has not been  recognized.  The adoption of EITF
03-1 did not have a  material  impact on the  Company's  financial  position  or
results of operations.

In April 2003,  the FASB cleared  Statement  133  Implementation  Issue No. B36,
Embedded  Derivatives:  Modified  Coinsurance  Arrangements and Debt Instruments
That  Incorporate  Credit Risk  Exposures  That Are Unrelated or Only  Partially
Related to the  Creditworthiness  of the Obligor under Those Instruments ("Issue
B36").  Issue B36 concluded that (i) a company's  funds withheld  payable and/or
receivable under certain  reinsurance  arrangements,  and (ii) a debt instrument
that  incorporates  credit risk  exposures  that are unrelated or only partially
related to the  creditworthiness  of the obligor include an embedded  derivative
feature that is not clearly and closely related to the host contract. Therefore,
the  embedded  derivative  feature must be measured at fair value on the balance
sheet and changes in fair value reported in income.  Issue B36 became  effective
on October 1, 2003. The adoption of Issue No. B36 did not have a material impact
on the Company's financial position or results of operations.


<PAGE>


In  January  2003,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  No.  46,   "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of ARB No.  51",  and  subsequently  issued a  revision  to this
Interpretation in December 2003. This Interpretation addresses the consolidation
by  business  enterprises  of  variable  interest  entities  as  defined  in the
Interpretation.  The Interpretation  applies to those variable interest entities
considered to be  special-purpose  entities no later than December 31, 2003. The
Interpretation  must also be applied to all other variable  interest entities no
later March 31, 2004.  Interpretation  No. 46 did not have a material  impact on
the Company's financial position or results of operations.

In December 2004, FASB revised SFAS 123 to Share-Based  Payment ("SFAS 123(R)").
SFAS  123(R)  provides   additional  guidance  on  determining  whether  certain
financial   instruments   awarded  in  share-based   payment   transactions  are
liabilities.  SFAS  123(R)  also  requires  that  the  cost  of all  share-based
transactions be recorded in the financial statements.  The revised pronouncement
must be adopted by the  Company by July 1, 2005.  Implementation  of SFAS 123(R)
will not have a  significant  impact  on the  Company's  consolidated  financial
statements in the period of  implementation.  However,  any future stock options
granted could have a significant impact on the Company's  consolidated financial
statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company has no activities in derivative  financial or commodity  instruments
other than those recorded and disclosed in the financial statements. See note 17
of the consolidated  financial  statements  included elsewhere in this Form 10K.
The  Company's  exposure to market  risks  (i.e.,  interest  rate risk,  foreign
currency  exchange  rate risk and equity  price risk)  through  other  financial
instruments,  including  cash  equivalents,  accounts  receivable  and  lines of
credit, is not material.


<PAGE>

<TABLE>
<CAPTION>


Item 8.  Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES

                                                                    Page No.

Financial Statements:

<S>                                                                   <C>
    Report of Independent Registered Public Accounting Firm............36

    Consolidated Balance Sheet, December 31,
    2004 and 2003......................................................37

    Consolidated Statement of Earnings,
    Years Ended December 31, 2004, 2003, and 2002......................39

    Consolidated Statement of Stockholders'
    Equity, Years Ended December 31, 2004, 2003
    and 2002. .........................................................40

    Consolidated Statement of Cash Flows,
    Years Ended December 31, 2004, 2003 and 2002.......................41

    Notes to Consolidated Financial Statements.........................43


Financial Statement Schedules:

 I. Summary of Investments -- Other than
      Investments in Related Parties...................................83

II.   Condensed Financial Information of Registrant....................85

IV.   Reinsurance......................................................91

 V.   Valuation and Qualifying Accounts................................92
</TABLE>


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.


<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM















To the Board of Directors and Stockholders
of Security National Financial Corporation

We have audited the accompanying consolidated balance sheet of Security National
Financial Corporation and subsidiaries as of December 31, 2004 and 2003, and the
related  consolidated  statements of earnings,  stockholders'  equity,  and cash
flows for the three years in the period ended  December 31, 2004.  In connection
with our audits of the consolidated  financial statements,  we have also audited
the amounts included in the consolidated financial statement schedules as listed
in the accompanying index under Item 8. These consolidated  financial statements
and  schedules  are  the  responsibility  of  the  Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and schedules based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits 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  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  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 as of December 31, 2004
and 2003, and the consolidated  results of their operations and their cash flows
for the three years in the period ended  December 31, 2004, in  conformity  with
accounting principles generally accepted in the United States of America.  Also,
in our opinion,  the related consolidated  financial statement  schedules,  when
considered in relation to the basic consolidated financial statements taken as a
whole,  present  fairly,  in all material  respects,  the  information set forth
therein.





/s/   TANNER  LC

Salt Lake City, Utah
March 31, 2005


<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                           Consolidated Balance Sheet

                                                                 December 31,
Assets:                                                      2004           2003
-------                                                      ----           ----
<S>                                                      <C>               <C>
Insurance-related investments:
Fixed maturity securities
  held to maturity, at amortized cost (market
  $72,330,878 and $38,624,978 for 2004 and 2003)         $ 69,984,761     $ 37,293,989
Fixed maturity securities available
  for sale, at market (cost $10,486,309 in 2004
  and $13,214,057 in 2003)                                 11,066,025       14,270,037
Equity securities available for sale,
  at market (cost $2,037,249 and $1,981,461
  for 2004 and 2003)                                        4,166,769        3,453,444
Mortgage loans on real estate and construction loans,
  net of allowances for losses of $254,893
  and $14,893 for 2004 and 2003                            65,831,586       29,914,745
Real estate, net of accumulated
  depreciation and allowances for
  losses of $4,408,030 and $4,059,934
  for 2004 and 2003                                         9,709,129        8,519,680
Policy, student and other loans                            13,312,471       11,753,617
Short-term investments                                      4,628,999        2,054,248
                                                         ------------     ------------
     Total insurance-related investments                  178,699,740      107,259,760
                                                         ------------     ------------
Restricted assets of cemeteries and mortuaries              5,176,463        4,745,709
                                                         ------------     ------------
Cash                                                       15,333,668       19,704,358
                                                         ------------     ------------
Receivables:
  Trade contracts                                           5,333,891        5,173,964
  Mortgage loans sold to investors                         47,167,150      114,788,185
  Receivable from agents                                    1,416,211        1,318,958
  Receivable from officers                                      1,540           37,540
  Other                                                     1,120,157        1,086,523
                                                         ------------     ------------
     Total receivables                                     55,038,949      122,405,170
  Allowance for doubtful accounts                          (1,302,368)      (1,706,678)
                                                         ------------     ------------
  Net receivables                                          53,736,581      120,698,492
                                                         ------------     ------------
Policyholder accounts on deposit
  with reinsurer                                            6,689,422        6,795,983
Cemetery land and improvements held for sale                8,547,764        8,387,061
Accrued investment income                                   1,743,721        1,142,690
Deferred policy and pre-need
  contract acquisition costs                               20,181,818       17,202,489
Property and equipment, net                                10,520,665       11,009,416
Cost of insurance acquired                                 14,053,497       14,980,763
Excess of cost over net assets
  of acquired subsidiaries                                    683,191          683,191
Other                                                       1,107,230          873,424
                                                         ------------     ------------
     Total assets                                        $316,473,760     $313,483,336
                                                         ============     ============

</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>


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

                                                          December 31,
                                                      2004             2003
                                                      ----             ----
Liabilities:
------------
Future life, annuity, and other
  policy benefits                                $224,529,539     $218,793,693
Unearned premium reserve                            2,254,991        1,945,203
Bank loans payable                                 10,442,106       14,422,670
Notes and contracts payable                         2,888,539        3,440,694
Deferred pre-need cemetery and funeral
  contract revenues                                10,762,357       10,520,280
Accounts payable                                    1,064,269        1,274,183
Funds held under reinsurance treaties               1,184,463        1,294,589
Other liabilities and accrued expenses              6,371,343        7,745,120
Income taxes                                       11,497,967       10,914,845
                                                 ------------     ------------
     Total liabilities                            270,995,574      270,351,277
                                                 ------------     ------------

Commitments and contingencies                         --               --
                                                 ------------     ------------

Minority interest                                   3,813,346        3,956,628
                                                 ------------     ------------

Stockholders' Equity:
Common stock:
  Class A: $2 par value, authorized
    10,000,000 shares, issued 6,755,870
    shares in 2004 and 6,275,104 shares in 2003    13,511,740       12,550,208
  Class C:  convertible, $0.20 par value,
    authorized 7,500,000 shares, issued
    6,468,199 shares in 2004 and 6,469,638
    shares in 2003                                  1,293,641        1,293,927
                                                 ------------     ------------
     Total common stock                            14,805,381       13,844,135
Additional paid-in capital                         14,922,851       13,569,582
Accumulated other comprehensive (loss)
  and other items, net of deferred
  taxes of $445,761 and $274,091 for
  2004 and 2003, respectively                         (11,352)        (437,973)
Retained earnings                                  15,365,259       15,414,681
Treasury stock at cost (1,315,075
   Class A shares and 79,103 Class C
   shares in 2004; 1,276,518 Class A
   shares and 75,336 Class C shares
   in 2003, held by affiliated companies)          (3,417,299)      (3,214,994)
                                                 ------------     ------------
     Total stockholders' equity                    41,664,840       39,175,431
                                                 ------------     ------------
         Total liabilities and
          stockholders' equity                   $316,473,760     $313,483,336
                                                 ============     ============

See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                       Consolidated Statement of Earnings


                                                          Years Ended December 31,
                                                          ------------------------
                                                   2004             2003             2002
                                                   ----             ----             ----
Revenues:
<S>                                             <C>              <C>              <C>
Insurance premiums and other considerations    $ 25,979,341     $ 23,294,373      $14,076,652
Net investment income                            15,939,176       17,302,597       12,539,430
Net mortuary and cemetery sales                  11,661,053       10,944,365       10,638,754
Realized gains (losses) on investments
  and other assets                                   74,431           (2,155)       1,020,820
Mortgage fee income                              62,689,391       92,955,165       57,008,283
Other                                               854,425          550,064          479,424
                                               ------------     ------------      -----------
  Total revenue                                 117,197,817      145,044,409       95,763,363
                                               ------------     ------------      -----------

Benefits and expenses:
Death benefits                                   13,248,960       13,315,266        5,637,217
Surrenders and other policy benefits              1,291,621        1,726,275        2,086,829
Increase in future policy benefits                8,821,497        6,712,961        6,031,685
Amortization of deferred
  policy and pre-need acquisition
  costs and cost of insurance acquired            4,602,072        4,929,006        3,993,393
General and administrative expenses:
  Commissions                                    48,690,807       67,536,703       42,114,240
  Salaries                                       14,391,958       14,079,908       10,414,392
  Other                                          19,014,776       21,309,897       15,930,804
Interest expense                                  2,173,778        3,642,046        1,970,342
Cost of goods and services sold of the
  mortuaries and cemeteries                       2,303,821        2,327,475        2,045,476
                                               ------------     ------------      -----------

  Total benefits and expenses                   114,539,290      135,579,537       90,224,378
                                               ------------     ------------      -----------

Earnings before income taxes                      2,658,527        9,464,872        5,538,985
Income tax expense                                 (651,536)      (2,890,669)      (1,565,393)
Minority interest                                   115,281           22,294           17,688
                                               ------------     ------------      -----------
  Net earnings                                 $  2,122,272     $  6,596,497      $ 3,991,280
                                               ============     ============      ===========

Net earnings per common share (1)                      $.35            $1.13             $.72
                                                       ====            =====             ====

  Weighted average
    outstanding common shares (1)                 6,001,861        5,851,814        5,572,783

Net earnings per common share
  assuming dilution (1)                                $.34            $1.10             $.69
                                                       ====            =====             ====

  Weighted average outstanding common
    shares assuming dilution (1)                  6,217,951        6,003,773        5,744,154
</TABLE>


See  accompanying notes to consolidated  financial statements.

(1)  Earnings  per share  amounts  have been  adjusted  for the effect of annual
     stock dividends.

<PAGE>
<TABLE>
<CAPTION>


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

                                                                            Accumulated
                                                                               Other
                                                             Additional    Comprehensive
                                    Class           Class      Paid-in      Income (loss),   Retained     Treasury
                                      A               C        Capital    and Other Items    Earnings       Stock        Total
                                  --------         -------    ---------   ---------------    --------       -----        -----
<S>                             <C>              <C>           <C>           <C>           <C>          <C>          <C>
Balance  as of  January 1, 2002  $10,727,182     $1,222,686    $10,168,523   $1,223,930   $ 9,989,230    $(3,362,233)  $29,969,318
Comprehensive income:
  Net earnings                        --             --              --           --        3,991,280         --         3,991,280
  Unrealized losses                   --             --              --         (32,067)          --          --           (32,067)
                                                                                                                       ----------
Total comprehensive income            --             --              --           --              --          --         3,959,213
                                                                                                                       ----------
Stock dividends                      552,024         58,883        690,316        --       (1,301,223)        --            --
Conversion Class C to Class A         45,036        (45,036)         --           --              --          --            --
Exercise of stock options            264,742          --           422,003        --         (686,745)        --            --
Sale of treasury stock                 --             --             --           --              --         584,880       584,880
                                 -----------     ----------     -----------  -----------  ------------   -----------   -----------
Balance at December 31, 2002     $11,588,984     $1,236,533     $11,280,842  $1,191,863   $11,992,542    $(2,777,353)  $34,513,411
                                 -----------     ----------     -----------  ----------   -----------    -----------   -----------

Comprehensive income:
  Net earnings                   $     --         $   --        $    --      $   --       $ 6,596,497    $    --       $  6,596,497
  Unrealized gains                     --             --             --         352,784          --           --            352,784
                                                                                                                       -----------
Total comprehensive income             --             --             --          --              --           --          6,949,281
                                                                                                                       -----------
Acquisition of Company Stock
  held in escrow (see note 17)         --             --             --      (1,982,620)         --           --         (1,982,620)
Stock dividends                      603,549         61,617       1,529,240      --        (2,194,406)        --            --
Conversion Class C to Class A          4,225         (4,223)             (2)     --              --           --            --
Exercise of stock options            353,450          --            759,502      --          (979,952)        --            133,000
Purchase of treasury stock             --             --              --         --              --         (437,641)     (437,641)
                                 -----------    -----------     -----------  ----------   -----------    -----------   -----------
Balance at December 31, 2003     $12,550,208     $1,293,927     $13,569,582  $ (437,973)  $15,414,681    $(3,214,994   $39,175,431
                                 -----------    -----------     -----------  ----------   -----------    -----------   -----------

Comprehensive income:
  Net earnings                   $     --        $    --       $      --     $   --       $ 2,122,272    $    --       $  2,122,272
  Unrealized gain                      --             --              --        426,621         --            --            426,621
                                                                                                                       -----------
Total comprehensive income             --             --              --         --             --            --          2,548,893
                                                                                                                       -----------
Exercise of stock options            255,776          --            775,801      --        (1,031,577)        --             --
Purchase of Treasury stock             --             --              --         --             --          (422,946)      (422,946)
Sale of Treasury stock                 --             --            142,500      --             --            220,641       363,141
Stock dividends                      643,864         61,602         433,862      --        (1,139,328)        --             --
Conversion Class C to Class A         61,892        (61,888)          1,106      --              (789)        --               321
                                 -----------     ----------     -----------  ----------   -----------    -----------   -----------
Balance at December 31, 2004     $13,511,740     $1,293,641     $14,922,851  $  (11,352)  $15,365,259    $(3,417,299)  $41,664,840)
                                 ===========     ==========     ===========  ==========   ===========    ===========   ===========
</TABLE>

See accompanying notes to consolidated financial statements


<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statement of Cash Flows

                                                                            Years Ended December 31,
                                                                            ------------------------
                                                                              2004             2003            2002
                                                                              ----             ----            ----
Cash flows from operating activities:
<S>                                                                         <C>             <C>             <C>
     Net earnings                                                          $ 2,122,272     $ 6,596,497     $ 3,991,280
     Adjustments to reconcile net earnings
       to net cash provided by (used in) operating
      activities:
          Realized (gains) losses on investments
               and other assets                                                (74,431)          2,155      (1,020,820)
          Depreciation                                                       2,013,113       1,866,924       1,553,399
          Provision for losses on real estate
              accounts and loans receivable                                   (165,781)        225,072        (300,412)
          Amortization of premiums and discounts                                (2,489)         44,092         121,329
          Provision for deferred income taxes                                  636,430       2,862,343         970,139
          Policy and pre-need acquisition costs deferred                    (6,051,793)     (4,527,546)     (4,462,624)
          Policy and pre-need acquisition costs amortized                    3,370,763       3,611,674       3,214,710
          Cost of insurance acquired amortized                               1,231,308       1,317,332         778,683
     Change in assets and liabilities net of effects
       from purchases and disposals of subsidiaries:
          Land and improvements held for sale                                 (160,703)         42,154         626,688
          Future life and other benefits                                     9,000,715       7,426,761       5,349,152
          Receivables for mortgage loans sold                               67,621,035     (25,333,080)    (38,760,032)
          Other operating assets and liabilities                            (2,624,510)      3,402,371         975,682
                                                                           -----------     -----------     -----------
              Net cash provided by (used in)
              operating activities                                          76,915,929      (2,463,251)    (26,962,826)
                                                                           -----------     -----------     -----------
Cash flows from investing activities:
     Securities held to maturity:
          Purchase - fixed maturity securities                             (37,371,166)    (15,396,993)     (4,147,878)
          Calls and maturities - fixed maturity securities                   6,293,614      11,147,744       8,025,610
     Securities available for sale:
          Purchases - equity securities                                        (21,993)        (51,921)       (327,726)
          Sales - equity securities                                          2,675,301       3,860,000       3,303,095
     Purchases of short-term investments                                   (29,893,323)    (19,065,874)    (13,819,476)
     Sales of short-term investments                                        26,731,711      22,347,104       9,937,642
     Purchases of restricted assets                                           (262,195)        610,155         (56,899)
     Mortgage, policy, and other loans made                                (78,437,965)    (30,192,467)    (10,129,993)
     Payments received for mortgage, policy, and
          other loans                                                       41,116,662      20,479,056       4,939,374
     Purchases of property and equipment                                    (1,241,898)     (1,623,310)     (1,348,752)
     Cash received on sale of property and equipment                           149,040          --               --
     Purchases of real estate                                               (1,856,931)     (1,807,658)     (3,153,299)
     Cash paid for purchase of subsidiary                                     (304,042)         --               --
     Sale of real estate                                                       352,054       2,287,831       2,825,666
     Cash received in assumed reinsurance transaction                           --              --          55,827,793
                                                                           -----------     -----------     -----------
         Net cash (used in) provided by investing activities               (72,071,131)     (7,406,333)     51,875,157
                                                                           -----------     -----------     -----------

</TABLE>




See accompanying notes to the consolidated financial statements.




<PAGE>
<TABLE>
<CAPTION>


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


                                                                                     Years Ended December 31,
                                                                                     ------------------------
                                                                                2004            2003            2002
                                                                                ----            ----            ----
Cash flows from financing activities:
<S>                                                                        <C>             <C>             <C>
     Annuity and pre-need contract receipts                                  5,387,393       5,785,310       7,635,422
     Annuity and pre-need contract withdrawals                             (10,276,576)    (10,410,247)    (10,866,398)
     Repayment of bank loans and notes and
        contracts payable                                                   (4,401,500)     (3,695,521)     (1,824,440)
     Proceeds from borrowing on notes and contracts                            135,000          --               --
     Proceeds from borrowings on bank loans and notes
        and contracts payable                                                    --              --          9,000,000
     Stock options exercised                                                     --            133,000           --
     Purchase of Treasury stock                                               (422,946)       (437,641)          --
     Sale of treasury stock                                                    363,141           --            584,880
                                                                           -----------    ------------    ------------
     Net cash (used in) provided by financing activities                    (9,215,488)     (8,625,099)      4,529,464
                                                                           -----------    ------------    ------------
Net change in cash                                                          (4,370,690)    (18,494,683)     29,441,795
                                                                           -----------    ------------    ------------
Cash at beginning of year                                                   19,704,358      38,199,041       8,757,246
                                                                           -----------    ------------    ------------
Cash at end of year                                                        $15,333,668     $19,704,358     $38,199,041
                                                                           ===========    ============    ============
</TABLE>


Supplemental Schedule of Cash Flow Information:

The  following  information  shows the  non-cash  items in  connection  with the
assumption of reinsurance  from Acadian Life  Insurance  Company on December 23,
2002:

     Liabilities assumed:
          Future life, annuity and other policy benefits      $74,199,194
     Less non-cash items:
          Cost of insurance acquired                           (9,106,309)
          Bonds received                                       (9,032,818)
          Policy loans received                                   (82,126)
          Premiums due and unpaid                                (150,148)
                                                              -----------
     Cash received                                            $55,827,793
                                                              ===========

The  following  information  shows the  non-cash  items in  connection  with the
purchase of Security  National Life Insurance  Company of Louisiana on March 16,
2004:

     Liabilities assumed:
          Future life, annuity and other policy benefits      $ 1,865,038
     Less non-cash items
          Cost of insurance acquired                             (304,042)
          Bonds received                                       (1,537,801)
          Common stock received                                  (326,325)
          Mortgage loans received                                (471,593)
          Real estate received                                    (32,668)
          Policy loans received                                   (28,180)
          Short-term investments                                  586,601
          Receivables                                             (13,589)
          Accrued investment income                               (24,983)
          Property, plant and equipment                           (16,500)
                                                              -----------
          Cash paid                                           $  (304,042)
                                                              ===========

See accompanying notes to the consolidated financial statements.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002



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,  Mississippi,  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 four 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
Arizona, California, Colorado, Florida, Nevada, Texas and Utah.

Basis of Presentation

The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance with U.S.  generally  accepted  accounting  principles which, for the
life  insurance  subsidiaries,   differ  from  statutory  accounting  principles
prescribed  or permitted by  regulatory  authorities.  Certain  amounts in prior
years have been reclassified to conform with the 2004 presentation.

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,
mortgagors of mortgage loans on real estate and obligors on construction  loans,
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.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

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.

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 U.S.
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts  reported in the consolidated  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,  construction loans and
other receivables,  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, 2004, are
as follows:

Security National Life Insurance Company
SecurityNational Mortgage Company
Memorial Estates, Inc.
Memorial Mortuary
Paradise Chapel Funeral Home
California Memorial Estates
Cottonwood Mortuary, Inc.
Deseret Memorial, Inc.
Holladay Cottonwood Memorial Foundation
Holladay Memorial Park, Inc.
Sunset Funeral Home, Inc.
Greer-Wilson Funeral Home


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

Crystal Rose Funeral Home
Hawaiian Land Holdings
SSLIC Holding Company
Insuradyne Corporation
Southern Security Life Insurance Company (77%)
Security National Life Insurance Company of Louisiana
   (formerly Paramount Security Life Insurance Company)
Security National Capital, Inc.
Security National Funding

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.,
and Insuradyne  Corporation for a total cost of $12,248,194.  As of December 31,
2004,  Security  National Life and its wholly owned  subsidiary,  SSLIC Holding,
owned  approximately  77% of the outstanding  shares of common stock of Southern
Security Life Insurance  Company.  The  acquisition  was accounted for using the
purchase method.

Effective  as of January  1,  2005,  Security  National  Life and SSLIC  Holding
Company, a wholly owned subsidiary of Security National Life, completed a merger
transaction with Southern  Security Life Insurance  Company.  Under the terms of
the merger and  pursuant  to the  Agreement  and Plan of  Reorganization,  dated
August 25,  2004,  among  Security  National  Life,  SSLIC  Holding  Company and
Southern Security Life Insurance Company,  including the amendment thereto dated
December  27,  2004,  SSLIC  Holding  Company was merged with and into  Southern
Security Life Insurance  Company,  which resulted in (i) Southern  Security Life
Insurance  Company becoming a wholly-owned  subsidiary of Security National Life
Insurance Company,  and (ii) the unaffiliated  stockholders of Southern Security
Life Insurance Company,  holding an aggregate of 490,816 shares of common stock,
becoming entitled to receive $3.84 in cash for each issued and outstanding share
of their  common  stock of  Southern  Security  Life  Insurance  Company,  or an
aggregate of $1,884,733.

As a result of the merger,  the  separate  existence  of SSLIC  Holding  Company
ceased  as  Southern  Security  Life  Insurance  Company  became  the  surviving
corporation of the merger. Southern Security Life Insurance Company continues to
be  governed  by the laws of the State of Florida,  and its  separate  corporate
existence  continues  unaffected by the merger. In addition,  as a result of the
merger,  Security  National Life owns all of the issued and  outstanding  common
shares of Southern Security Life Insurance Company.  Security National Financial
Corporation,  through its affiliates,  Security  National Life Insurance Company
and SSLIC  Holding  Company,  owned 76.7% of the  Company's  outstanding  common
shares prior to the merger.

The purpose of the merger is to terminate the  registration  of the common stock
of Southern Security Life Insurance Company under the Securities Exchange Act of
1934 (by  reducing  the number of its  stockholders  of record to fewer than 300
stockholders)  and the  Nasdaq  listing  of the common  stock,  reduce  expenses
associated with such  registration and listing,  and provide the stockholders an
opportunity to sell their shares in an illiquid trading market without incurring
brokerage commissions. As a result of becoming a non-reporting company, Southern
Security Life Insurance  Company is no longer required to file periodic  reports
with the SEC,  including  among other  things,  annual  reports on Form 10-K and
quarterly  reports on Form  10-Q,  and is no longer  subject to the SEC's  proxy
rules.  In addition,  its common stock is no longer  eligible for trading on the
Nasdaq SmallCap Market.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

On December 23, 2002, the Company,  through its wholly-owned subsidiary Security
National Life Insurance  Company  completed the asset purchase  transaction with
Acadian Life Insurance  Company  ("Acadian") from which it acquired from Acadian
$75,000,000 in assets and $75,000,000 in statutory insurance reserves.  Security
National  Life paid a ceding  commission  of  $10,254,803.  On  January 1, 2003,
Security  National  Life entered into an  assumption  agreement in which Acadian
transferred and assigned to Security  National Life all of its right,  title and
interest in the  reinsured  policies  and Security  National  Life took over the
operations of this block of business.  The assets and liabilities  acquired have
been  included in the  Company's  consolidated  balance sheet as of December 31,
2002.  Since the Company did not take over the  operations  from  Acadian  until
January 1, 2003, nothing was included in the consolidated  statement of earnings
during 2002.

On March 16, 2004,  Security  National  Life  purchased  all of the  outstanding
common stock of Paramount Security Life Insurance Company, now known as Security
National Life of Louisiana,  a Louisiana  domiciled insurance company located in
Shreveport,  Louisiana.  As of December  31,  2003,  Security  National  Life of
Louisiana  had 9,383  policies  in force and 29 agents.  There were no  material
changes  to the  number of  policies  in force or the  number of agents  between
December 31, 2003 and March 16, 2004. The purchase  consideration was $4,398,000
and was  effective  January 26,  2004.  Security  National  Life of Louisiana is
licensed in the State of Louisiana  where it is permitted to appoint  agents who
do not have a full life insurance  license.  These agents are limited to selling
small life insurance  policies in the final expense market. The Company believes
that with this license it will be able to expand its  operations  in  Louisiana.
The Company is servicing  Security National Life of Louisiana  policyholders out
of its Jackson, Mississippi office and has closed its Shreveport office.

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,  less
allowances for possible losses.

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


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002

1) Significant Accounting Principles (Continued)

Restricted assets of cemeteries and mortuaries - consist of assets held in Trust
Account  for future  mortuary  services  and  merchandise  and  consist 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  statement 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 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 forty  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.

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.

Allowance for Doubtful Accounts

The Company  accrues an  estimate  of  potential  losses for the  collection  of
receivables.  The  significant  receivables are the result of receivables due on
mortgage  loans sold to investors,  cemetery and mortuary  operations,  mortgage
loan operations and other receivables. The allowance is based upon the Company's
experience.  The critical  issues that would impact recovery of the cemetery and
mortuary  receivables  is the overall  economy.  The critical  issues that would
impact recovery of mortgage loan operations would be interest rate risk and loan
underwriting.

<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

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%. 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%.

Participating Insurance

Participating  business  constitutes  2%, 2%, and 2% of  insurance  in force for
2004, 2003 and 2002,  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 $75,000 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.

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 or the caskets are delivered.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

Pre-need  sales of  cemetery  internment  rights  (cemetery  burial  property) -
revenue  and costs  associated  with the sales of pre-need  cemetery  internment
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 until the merchandise is delivered or
services are performed.

Revenues and costs for at-need sales are recorded when a valid contract  exists,
the  services  are  performed,  collection  reasonably  assured and there are no
significant obligations remaining.

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  consists of origination  fees,  processing fees and certain
other income related to the sale of mortgages.  For mortgages sold, mortgage fee
income and related  expenses are recognized at the time the loan meets the sales
criteria for financial  assets which are: (1) the  transferred  assets have been
isolated from the Company and its creditors, (2) the transferee has the right to
pledge or exchange the mortgage, and (3) the Company does not maintain effective
control over the transferred mortgage.




<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

The majority of loans originated are sold to third party investors.  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 investors, which
includes fees. Any impairment to sold loans or possible loan losses are included
in a separate provision for loan losses. The estimates are based upon historical
experience  and best  estimate of future  liabilities.  At December 31, 2004 and
2003 the provision for loan losses was $1,432,000 and $1,919,000, respectively.

The Company accrues an estimate of future losses on mortgage loans sold to third
party investors.  The Company may be required to reimburse third party investors
for costs  associated  with  early  payoff  of loans  within  the first  year of
duration and to repurchase loans in default within the first year. The estimates
are based upon historical experience and best estimate of future liabilities.

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 the fair values.  The Company
evaluates  annually or when changes in circumstances  warrant the recoverability
of the amounts  recorded and if there is a decrease in value they are recognized
in income.  In accordance with FAS 142 the Company no longer amortizes excess of
cost over net assets of acquired  business  ("goodwill").  Pro forma information
related to the  amortization  of goodwill has not been presented since it is not
material.

Long-lived Assets

Long-lived  assets  to be held and used are  reviewed  for  impairment  whenever
events or changes in circumstances indicate that the related carrying amount may
not be recoverable.  When required,  impairment  losses on assets to be held and
used are recognized based on the fair value of the asset, and long-lived  assets
to be  disposed of are  reported  at the lower of carrying  amount or fair value
less costs to sell.

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 basic and diluted earnings per share.  Basic
earnings per share are computed by dividing net earnings by the weighted average
number of common


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

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

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.

The Company has three fixed option  plans (the "1993 Plan" the "2000 Plan",  and
the "2003 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  $1,090,458,  $490,145 and $533,520 in 2004, 2003
and 2002, respectively.  As a result, basic and diluted earnings per share would
have been reduced by $.18 and $.08 in 2004 and 2003, respectively,  and basic of
$.10 and diluted of $.09 for the year 2002.

The weighted  average fair value of options  granted in 2004 under the 2000 Plan
and the 2003 Plan is  estimated  at $1.71 as of the grant  date  using the Black
Scholes Option Pricing Model with the following  assumptions:  dividend yield of
5%, volatility of 74%,  risk-free interest rate of 3.4%, and an expected life of
five to ten years.

The weighted  average  fair value of each option  granted in 2003 under the 1993
Plan,  and the 2000 Plan is  estimated  at $2.63 as of the grant  date using the
Black  Scholes  option-pricing  model with the following  assumptions:  dividend
yield of 5%, volatility of 73%,  risk-free  interest rate of 4%, and an expected
life of two years.

The weighted  average fair value of options granted in 2002 under the 1993 Plan,
and the 2000 Plan,  is  estimated  at $2.88 as of the grant date using the Black
Scholes Option Pricing Model with the following  assumptions:  dividend yield of
5%, volatility of 74%,  risk-free interest rate of 3.8%, and an expected life of
five to 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.

Concentration of Credit Risk

The Company maintains its cash in bank deposit  accounts,  which at times exceed
federally  insured  limits.  The Company has not  experienced any losses in such
accounts and believes it is not exposed to any  significant  credit risk on cash
and cash equivalents.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

Recent Accounting Pronouncements

In April  2003,  the FASB issued SFAS No. 149,  Amendment  of  Statement  133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts  (collectively referred to as
derivatives)  and for  hedging  activities  under SFAS No. 133,  Accounting  for
Derivative  Instruments and Hedging Activities.  This Statement is effective for
contracts entered into or modified after June 30, 2003, with certain exceptions,
and for hedging relationships  designated after September 30, 2003. The adoption
of SFAS No.  149 did not have a  material  effect on the  Company's  results  of
consolidated operations or financial position.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
requires that certain financial  instruments,  which under previous guidance may
have been accounted for as equity,  must now be accounted for as liabilities (or
an asset in some  circumstances).  The financial  instruments  affected  include
mandatory  redeemable stock,  certain financial  instruments that require or may
require the issuer to buy back some of its shares in exchange  for cash or other
assets and certain  obligations  that can be settled with shares of stock.  This
Statement  is  effective  for all such  financial  instruments  entered  into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim period  beginning after June 15, 2003. The Company entered into an
agreement with a stockholder in August 2003, wherein it purchased 124,000 shares
of Class A Common Stock from this  stockholder for $6.00 per share. The purchase
of these shares is reflected in treasury  stock.  Also,  under the terms of this
agreement,  the stockholder  has agreed not to purchase or control,  directly or
indirectly,  any  additional  shares of Class A or Class C Common Stock  through
August  2007,  and on August 27,  2004,  2005,  and 2006,  the  stockholder  may
request,  but is not obligated to request, the Company to purchase an additional
100,000  shares of Class A Common Stock held by this  stockholder  for $6.00 per
share. On October 26, 2004, the Company  completed the stock purchase  agreement
when the Company purchased the remaining amount of 51,959 shares, thus under the
agreement the Company will not be required to purchase any additional shares.

Effective  December 31,  2003,  the Company  adopted  EITF Issue No.  03-1,  The
Meaning  of  Other-Than-Temporary  Impairment  and Its  Application  to  Certain
Investments  ("EITF  03-1").  EITF  03-1  provides  guidance  on the  disclosure
requirements for other-than-temporary  Impairments of debt and marketable equity
investments  that are  accounted  for under  Statement of  Financial  Accounting
Standards  ("SFAS")  No. 115,  Accounting  for Certain  Investments  in Debt and
Equity  Securities.  The  adoption of EITF 03-1  requires the Company to include
certain quantitative and qualitative  disclosures for debt and marketable equity
securities classified as  available-for-sale or held-to-maturity  under SFAS 115
that   are   impaired   at  the   balance   sheet   date   but  for   which   an
other-than-temporary  impairment has not been  recognized.  The adoption of EITF
03-1 did not have a  material  impact on the  Company's  consolidated  financial
position or results of operations.

In April 2003,  the FASB cleared  Statement  133  Implementation  Issue No. B36,
Embedded  Derivatives:  Modified  Coinsurance  Arrangements and Debt Instruments
That  Incorporate  Credit Risk  Exposures  That Are Unrelated or Only  Partially
Related to the  Creditworthiness  of the Obligor under Those Instruments ("Issue
B36").  Issue B36 concluded that (i) a company's  funds withheld  payable and/or
receivable under certain  reinsurance  arrangements,  and (ii) a debt instrument
that  incorporates  credit risk  exposures  that are unrelated or only partially
related to the


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


1) Significant Accounting Principles (Continued)

credit worthiness of the obligor include an embedded  derivative feature that is
not clearly and closely  related to the host contract.  Therefore,  the embedded
derivative  feature  must be  measured  at fair value on the  balance  sheet and
changes in fair value reported in income.  Issue B36 became effective on October
1, 2003.  The  adoption  of Issue No. B36 did not have a material  impact on the
Company's consolidated financial position or results of operations.

In  January  2003,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  No.  46,   "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of ARB No.  51",  and  subsequently  issued a  revision  to this
Interpretation in December 2003. This Interpretation addresses the consolidation
by  business  enterprises  of  variable  interest  entities  as  defined  in the
Interpretation.  The Interpretation  applies to those variable interest entities
considered to be  special-purpose  entities no later than December 31, 2003. The
Interpretation  must also be applied to all other variable  interest entities no
later March 31, 2004.  Interpretation  No. 46 did not have a material  impact on
the Company's consolidated financial position or results of operations.

In December 2004, FASB revised SFAS 123 to Share-Based  Payment ("SFAS 123(R)").
SFAS  123(R)  provides   additional  guidance  on  determining  whether  certain
financial   instruments   awarded  in  share-based   payment   transactions  are
liabilities.  SFAS  123(R)  also  requires  that  the  cost  of all  share-based
transactions be recorded in the financial statements.  The revised pronouncement
must be adopted by the  Company by July 1, 2005.  Implementation  of SFAS 123(R)
will not have a  significant  impact  on the  Company's  consolidated  financial
statements in the period of  implementation.  However,  any future stock options
granted could have a significant impact on the Company's  consolidated financial
statements.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


2)  Investments

The Company's  investments  in fixed  maturity  securities  held to maturity and
equity  securities  available for sale as of December 31, 2004 are summarized as
follows:
<TABLE>
<CAPTION>


                                                                        Gross         Gross        Estimated
                                                          Amortized  Unrealized    Unrealized         Fair
                                                            Cost        Gains        Losses          Value
                                                          --------    ---------    ----------      ---------
December 31, 2004:
Fixed maturity securities held to maturity:
   Bonds:
<S>                                                     <C>              <C>            <C>        <C>
     U.S. Treasury securities
           and obligations of U.S.
           Government agencies                           $15,033,673    $   194,811    $ (43,407)   $15,185,077

     Obligations of states and
           political subdivisions                            492,290        30,274        (2,765)       519,799

     Corporate securities including
           public utilities                               50,572,235     2,261,608       (33,151)    52,800,692

     Mortgage-backed securities                            3,865,680        34,075      (115,578)     3,784,177

   Redeemable preferred stock                                 20,883        20,250         --            41,133
                                                         -----------    ----------     ---------    -----------
     Total fixed maturity
     securities held to maturity                         $69,984,761    $2,541,018     $(194,901)   $72,330,878
                                                         ===========    ==========     =========    ===========

Securities available for sale:
   Bonds
     U.S.  Treasury securities and
           obligations of U.S.
           Government agencies                           $  596,898       $59,626      $  --        $   656,524

     Corporate securities including
           public utilities                                9,889,411       520,090         --        10,409,501

   Non-redeemable preferred stock                             56,031        49,063        (3,431)       101,663

   Common stock                                            1,981,218     2,564,992      (481,104)     4,065,106
                                                         -----------    ----------     ---------    -----------
         Total securities available for sale             $12,523,558    $ 3,193,771    $ (484,535)  $15,232,794
                                                         ===========    ==========     =========    ===========
</TABLE>

<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


2)  Investments (Continued)

The Company's  investments  in fixed  maturity  securities  held to maturity and
equity securities  available for sale as of December 31, 2003, are summarized as
follows:
<TABLE>
<CAPTION>


                                                                              Gross             Gross          Estimated
                                                          Amortized        Unrealized        Unrealized          Fair
                                                            Cost              Gains            Losses           Value
                                                          --------          ---------        ----------       ---------
December 31, 2003:
Fixed maturity securities held to maturity:
   Bonds:
<S>                                                    <C>                <C>             <C>                 <C>
     U.S. Treasury securities
           and obligations of U.S
   .       Government agencies                          $ 3,080,471        $  180,125       $   --             $ 3,260,596

     Obligations of states and
           political subdivisions                           261,360            25,091            (693)             285,758

     Corporate securities including
           public utilities                              30,289,401         1,176,618        (110,514)          31,355,505

     Mortgage-backed securities                           3,634,752            78,663         (28,654)           3,684,761

   Redeemable preferred stock                                28,005            17,400          (7,047)              38,358
                                                        -----------        ----------       ---------          -----------
     Total fixed maturity
     securities held to maturity                        $37,293,989        $1,477,897       $(146,908)         $38,624,978
                                                        ===========        ==========       =========          ===========

Securities available for sale:
   Bonds
     U.S.  Treasury securities and obligations of U.S.
           Government agencies                          $   595,177        $   81,604       $   --             $   676,781

     Corporate securities including
           public utilities                              12,618,880           974,376           --              13,593,256

   Non-redeemable preferred stock                            56,030            42,688          (4,006)              94,712

   Common stock                                           1,925,431         1,958,319        (525,018)           3,358,732
                                                        -----------        ----------       ---------          -----------
       Total securities available for sale              $15,195,518        $3,056,987       $(529,024)         $17,723,481
                                                        ===========        ==========       ==========         ===========
</TABLE>


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


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, 2004, by contractual maturity, are shown below. Expected maturities
may differ from contractual  maturities  because certain  borrowers may have the
right  to  call  or  prepay  obligations  with or  without  call  or  prepayment
penalties.


                                                   Amortized      Estimated Fair
Held to Maturity:                                    Cost             Value
                                                   ----------     -------------
Due in 2005                                       $ 1,687,683      $ 1,709,558
Due in 2006 through 2009                            5,209,521        5,600,338
Due in 2010 through 2014                           11,252,266       11,767,372
Due after 2014                                     43,538,491       44,989,369
Mortgage-backed securities                          8,275,917        8,223,108
Redeemable preferred stock                             20,883           41,133
                                                  -----------      -----------
     Total held to maturity                       $69,984,761      $72,330,878
                                                  ===========      ===========

                                                    Amortized     Estimated Fair
Available for Sale:                                   Cost            Value
                                                   ----------     --------------
Due in 2005                                       $ 4,014,336      $ 4,091,321
Due in 2006 through 2009                            5,212,933        5,557,089
Due in 2010 through 2014                            1,161,101        1,300,541
Due after 2014                                         97,939          117,074
Non-redeemable preferred stock                         56,031          101,663
Common stock                                        1,981,218        4,065,106
                                                  -----------      -----------
     Total available for sale                     $12,523,558      $15,232,794
                                                  ===========      ===========


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


2)  Investments (Continued)

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

                                          2004           2003             2002
                                          ----           ----             ----
Fixed maturity securities
  held to maturity:
    Gross realized gains                 $36,933        $ 3,549     $   37,172
    Gross realized losses                (26,355)        (5,665)          (557)

Securities available for sale:
    Gross realized gains                   3,310              1            354
    Gross realized losses                 (6,364)           (40)        (1,424)
    Other assets                          66,907           --          985,275
                                         -------        -------     ----------
        Total                            $74,431        $(2,155)    $1,020,820
                                         =======        =======     ==========

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

Mortgage  loans consist of first and second  mortgages.  The mortgage loans bear
interest at rates  ranging from 3.625% to 21%,  maturity  dates range from three
months to 30 years and are secured by real estate. Concentrations of credit risk
arise  when  a  number  of  mortgage   loan  debtors   have   similar   economic
characteristics  that would cause their ability to meet contractual  obligations
to be similarly affected by changes in economic conditions. Although the Company
has a diversified mortgage loan portfolio  consisting of residential  mortgages,
commercial loans and residential  construction loans and requires  collateral on
all real estate  exposures,  a  substantial  portion of its debtors'  ability to
honor obligations is reliant on the economic  stability of the geographic region
in which the debtors do business.  The Company has 76% of its mortgage  loans in
the  state  of  Utah.  The  mortgage  loans  on  real  estate  balances  on  the
consolidated  balance  sheet  are  reflected  net of an  allowance  for bad debt
$254,893 and $14,893 at December 31, 2004 and 2003, respectively.

There  were  no  investments,   aggregated  by  issuer,  in  excess  of  10%  of
shareholders'  equity (before net  unrealized  gains and losses on available for
sale  securities)  at  December  31,  2004,  other  than  investments  issued or
guaranteed by the United States Government.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


2)  Investments (Continued)

Major categories of net investment income are as follows:

                                        2004            2003           2002
                                        ----            ----           ----
Fixed maturity  securities          $ 4,438,808     $ 3,407,177     $ 3,228,042
Equity securities                        67,120          54,481          53,889
Mortgage loans on real estate         3,403,110       1,931,358       1,350,882
Real estate                           1,322,796       1,509,932       1,501,534
Policy loans                            673,404         676,201         663,554
Short-term investments and other      7,276,009      10,918,563       6,691,657
                                    -----------     -----------     -----------
  Gross investment income            17,181,247      18,497,712      13,489,558
Investment expenses                  (1,242,071)     (1,195,115)       (950,128)
                                    -----------     -----------     -----------
Net investment income               $15,939,176     $17,302,597     $12,539,430
                                    ===========     ===========     ===========


Net investment  income  includes net investment  income earned by the restricted
assets of the cemeteries and mortuaries of approximately $781,000,  $848,000 and
$924,000 for 2004, 2003, and 2002, 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
$9,710,534 at December 31, 2004 and $8,850,755 at December 31, 2003.

3)  Cost of Insurance Acquired

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

                                      2004            2003              2002
                                      ----            ----              ----
Balance at
  beginning of year               $14,980,763      $16,408,849      $ 8,081,223
                                  -----------      -----------      -----------
Cost of insurance
  acquired                            304,042         (110,754)       9,106,309
                                  -----------      -----------      -----------

Imputed interest at 7%              1,016,199        1,098,636          857,153
Amortization                       (2,247,507)      (2,415,968)      (1,635,836)
                                  -----------      -----------      -----------
Net amortization
  charged to income                (1,231,308)      (1,317,332)        (778,683)
                                  -----------      -----------      -----------
Balance at end
  of year                         $14,053,497      $14,980,763      $16,408,849
                                 ============      ===========      ===========

Presuming no  additional  acquisitions,  net  amortization  charged to income is
expected to approximate $1,130,151, $1,031,605, $962,386, $899,312, and $860,501
for the years 2005 through 2009.  Actual  amortization may vary based on changes
in assumptions or experience.



<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


4) Property and Equipment

The cost of property and equipment is summarized below:

                                                          December 31,
                                                   2004                 2003
                                                   ----                 ----
Land and buildings                              $11,310,114         $11,140,690
Furniture and equipment                          11,066,917          10,288,299
                                                -----------         -----------
                                                 22,377,031          21,428,989
Less accumulated depreciation                   (11,856,366)        (10,419,573)
                                                -----------         -----------
     Total                                      $10,520,665         $11,009,416
                                                ===========         ===========

5)   Bank Loans Payable

Bank loans payable are summarized as follows:
                                                           December 31,
                                                    2004                2003
                                                    ----                ----
6.59% note payable in monthly installments
    of $34,680 including principal and
    interest, collateralized by 15,000
    shares of Security National Life stock,
    due December 2004.                          $    --             $   391,363

6% note payable in monthly installments
    of $5,693 including principal and
    interest, collateralized by real
    property, with a book value of
    approximately $850,000, due
    September 2010.                                 633,596             662,944

6.93% note payable in monthly installments
    of $14,175 including principal and
    interest, collateralized by real
    property with a book
    value of approximately $860,000,
    due November 2007.                            1,476,813           1,519,198

$1,153,572 in 2004 and $2,230,016 in
    2003 revolving line of credit at 6.15%,
    interest payable monthly and a reduction
    in principal due in semi-annual
    installments, collateralized by 15,000
    shares of Security National Life
    Insurance Company stock, due December 2005.     445,811           2,178,075

Bank prime rate plus 1/2% (5.75% at
    December 31, 2004) note payable in
    monthly installments of $7,235
    including principal and interest,
    collateralized by real property,
    with a book value of approximately
    $678,000, due August 2004.                        --                 60,683


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


5) Bank Loans Payable (Continued)
                                                            December 31,
                                                      2004              2003
                                                      ----              ----
Bank prime rate less 1.35% (3.90% at December 31,
    2004) 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.                             $     68,562             98,880

7.35% note payable in monthly installments of
    $14,975 including principal and interest,
    collateralized by 15,000 shares of Security
    National Life Insurance Company stock,
    due December 2006.                              333,145            482,394

5.87% note payable, interest only to July 1, 2003,
  thereafter, interest and monthly principal
  payments of $134,000, collateralized by 15,000
  shares of Security National Life
  Insurance Company Stock, due January 2010.      7,206,641          8,413,993

Mark to market adjustment (see note 17)              36,810            303,029

Other collateralized bank loans payable             240,728            312,111
                                                 ----------          ---------
  Total bank loans                               10,442,106         14,422,670

Less current installments                         2,136,957          3,688,647
                                               ------------        -----------
Bank loans, excluding current installments     $  8,305,149        $10,734,023
                                               ============        ===========

In  addition  to the lines of credit  described  above,  the Company has line of
credit agreements with a bank for $2,500,000,  of which none were outstanding at
December  31,  2004 or 2003.  The  lines of  credit  are for  general  operating
purposes and bear  interest at the bank's prime rate and must be repaid every 30
days.

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,
                                                       2004          2003
                                                       ----          ----
Unsecured note payable 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.    $520,477      $545,921


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


6) Notes and Contracts Payable (Continued)
                                                             December 31,
                                                        2004            2003
                                                        ----            ----
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.                  20,655            98,319

9% note payable in monthly installments of
  $10,000 including principal and interest,
  collateralized by real property, with a
  book value of approximately
  $2,908,000, due July 2008.                          397,133           459,138

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, with a book value of approximately
  $780,000, due March 2030.                           932,924           954,475

Unsecured note payable due to former shareholder
  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.                                         158,840           317,680

Due to shareholder of Security National Financial
  Corporation, 6.0% note payable in annual
  installments of $100,000 including principal
  and interest, due July 2005, secured
  by Company stock held in escrow.                    100,000           200,000

Due to shareholder of Security National Financial
  Corporation, 4.0% note payable in annual
  installments of $160,873 including principal
  and interest, due January 2006,
  secured by Company stock held in escrow             321,747           482,620

Other notes payable                                   436,763           382,541
                                                   ----------        ----------
Total notes and contracts payable                   2,888,539         3,440,694
Less current installments                             700,321           732,715
                                                   ----------        ----------

Notes and contracts, excluding
current installments                               $2,188,218        $2,707,979
                                                   ==========        ==========


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


6) Notes and Contracts Payable (Continued)

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

                  2005                  $  2,837,278
                  2006                     2,197,709
                  2007                     1,825,997
                  2008                     1,895,911
                  2009                     1,874,575
                  Thereafter               2,699,175
                                         -----------
                  Total                  $13,330,645
                                         ===========

Interest paid approximated interest expense in 2004, 2003 and 2002.

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.  As of
December  31, 2003 the Company  owed the fund  $41,335 in excess of the required
contribution to the fund, and as of December 31, 2004, the Company owed the fund
$26,587, which is recorded in other liabilities.

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

Assets in the restricted asset account are summarized as follows:

                                                              December 31,
                                                         2004            2003
                                                         ----            ----
Cash and cash equivalents                            $  776,997      $  617,142
Mutual funds                                            273,258         188,732
Fixed maturity securities                                 --            108,554
Equity securities                                        86,555          77,778
Participation in mortgage loans
 with Security National Life                          4,005,957       3,719,807
Time certificate of deposit                              33,696          33,696
                                                     ----------      ----------
   Total                                             $5,176,463      $4,745,709
                                                     ==========      ==========


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


8)  Income Taxes

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

                                                         December 31,
                                                  2004                  2003
                                                  ----                  ----
Current                                       $    18,585           $    18,585
Deferred                                       11,479,382            10,896,260
                                              -----------           -----------
Total                                         $11,497,967           $10,914,845
                                              ===========           ===========


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

                                                            December 31,
                                                     2004               2003
                                                     ----               ----
Assets
Future policy benefits                           $(1,917,789)      $(1,676,881)
Unearned premium                                  (1,524,191)       (1,635,912)
Difference between book
   and tax basis of bonds                            (73,964)          (27,951)
Other                                               (337,038)         (605,932)
                                                 -----------       -----------
Total deferred tax assets                         (3,852,982)       (3,946,676)
                                                 -----------       -----------

Liabilities
Deferred policy acquisition costs                  5,056,822         4,889,696
Cost of insurance acquired                         2,317,477         2,486,035
Installment sales                                  2,940,268         2,367,510
Depreciation                                         824,718           891,725
Trusts                                             1,155,566         1,054,323
Tax on unrealized appreciation                       689,478           568,944
Reinsurance                                        2,084,117         1,974,996
Other                                                263,918           609,707
                                                 -----------       -----------
Total deferred tax liabilities                    15,332,364        14,842,936
                                                 -----------       -----------
Net deferred tax liability                       $11,479,382       $10,896,260
                                                 ===========       ===========


The Company paid $126,894, $55,442 and $462,983 in income taxes for 2004, 2003
and 2002, respectively. The Company's income tax expense (benefit) is summarized
as follows:

                            2004                2003             2002
                            ----                ----             ----
Current                   $ 15,106          $   28,326         $  595,254
Deferred                   636,430           2,862,343            970,139
                          --------          ----------         ----------
Total                     $651,536          $2,890,669         $1,565,393
                          ========          ==========         ==========

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


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


8) Income Taxes (Continued)
                                            2004          2003          2002
                                            ----          ----          ----
Computed expense at statutory rate       $903,899     $3,218,056     $1,883,255
Special deductions allowed
   small life insurance companies        (243,873)      (285,991)      (315,923)
Dividends received deduction               (5,619)        (5,611)          (737)
Minority interest taxes                    47,376         13,469          7,429
Other, net                                (50,247)       (49,254)        (8,631)
                                         --------     ----------     ----------
   Tax expense                           $651,536     $2,890,669     $1,565,393
                                         ========     ==========     ==========

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, 2004,  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 Company has a net operating loss carry forward of approximately  $3,024,000,
as of December 31, 2004. These carry forward amounts begin expiring in ten years
and range up to 20 years.

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 during the years 2004 and 2003. 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 $815,445,000 at December
31, 2004 and $940,050,000 at December 31, 2003.

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 reimbursement.

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

On December 26, 2003,  the Company  entered into a partially  Coinsurance  and a
partially  Modified  Coinsurance  Agreement  (CoModco  Agreement)  with Guaranty
Income Life  Insurance  Company  (Guaranty)  effective  September 30, 2003.  The
Company has reinsured  100% of certain  blocks of Guaranty's  traditional  life,
universal life and annuity businesses. The total liabilities reinsured for these
blocks of  businesses  on October 1, 2003 were  $60,527,887.  The Company paid a
ceding  commission  to Guaranty of  $3,400,000  and will receive from Guaranty a
risk charge of 1% of the outstanding Coinsurance per calendar quarter.  Guaranty
put into a bank  trust  investment  grade  bonds,  which  equal the  outstanding
liabilities assumed by the Company. The Company is named as a beneficiary of the
trust and the terms of the trust are such that Guaranty will maintain investment
grade  bonds in the trust to equal the  outstanding  liabilities  assumed by the
Company.  Under the  CoModco  Agreement  the  Coinsurance  and the  increase  in
reserves are equal. Under U. S. GAAP the Coinsurance and the reserve increases


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


9)       Reinsurance, Commitments and Contingencies (Continued)

are netted since these are non-cash items,  and the Company expects to recapture
the Coinsurance from future profits of the reinsured business.  Guaranty has the
right to recapture the business at any time after December 31, 2004 upon 90 days
advance notice.  As of December 31, 2004 and 2003, the  outstanding  Coinsurance
amount was  $2,545,763 and  $3,345,765,  respectively.  The Company  recorded as
income the risk  charge  for the years  ended  December  31,  2004 and 2003,  of
$121,831 and $34,000,  respectively.  In the event that the Company  believes it
will not  recover  the  Coinsurance  it will have to record as an expense  and a
future liability for the amount of such impairment.  Effective  January 1, 2005,
Guaranty  recaptured the reinsurance  under this agreement and the agreement was
cancelled  between the Company and  Guaranty.  The  recapture  did not result in
recognition of a gain or loss in the consolidated financial statements.

The Company  leases  office space and  equipment  under  various  non-cancelable
agreements,  with remaining terms up to five years. Minimum lease payments under
these non-cancelable operating leases as of December 31, 2004, are approximately
as follows:

                            Years Ending December 31:
                         2005                $  588,000
                         2006                   381,000
                         2007                    97,000
                         2008                    90,000
                         2009                    49,000
                                             ----------
                         Total               $1,205,000
                                             ==========

Total rent  expense  related to these  non-cancelable  operating  leases for the
years  ended  December  31,  2004,  2003 and 2002  was  approximately  $734,000,
$396,000, and $200,000, respectively.


An action was brought  against the Company in May 2001 by Glenna  Brown  Thomas,
individually and as personal  representative  of the Estate of Lynn W. Brown, in
the Third  Judicial  Court,  Salt Lake  County,  Utah.  The action  asserts that
Memorial  Estates,  Inc.  delivered  to Lynn W.  Brown  six  stock  certificates
totaling  2,000 shares of its common  stock in 1970 and 1971.  Mr. Brown died in
1972.  It is also  asserted  that at the time the 2,000  shares  were issued and
outstanding,  the shares  represented a 2% ownership of Memorial Estates.  It is
further alleged that Mr. Brown was entitled to preemptive  rights and, after the
issuance  of the stock to Mr.  Brown,  there  were  further  issuances  of stock
without  providing  written  notice to Mr.  Brown or his  estate of his right to
purchase more stock.

It is further  asserted  that  Thomas has the right to the  transfer  of Brown's
shares  on the  books of  Security  National  Financial  Corporation  as well as
Memorial  Estates,  and  to the  restoration  of  Brown's  proportion  of  share
ownership in Memorial  Estates at the time of his death by issuance and delivery
to Thomas of sufficient shares of the Company's publicly traded and unrestricted
stock in exchange  for the 2,000  shares of Memorial  Estates  stock,  including
payment of all dividends from the date of Thomas's demand.  The formal discovery
cutoff was January 15, 2004. The Company has been verbally  informed that Thomas
will dismiss the case but such dismissal has not been  communicated  in writing.
Until the case is actually  dismissed,  the Company intends to vigorously defend
the matter,  including the assertion  that the statute of  limitations  bars the
claims in their entirety.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


9)       Reinsurance, Commitments and Contingencies (Continued)

The Company  received a letter dated November 9, 2004 on behalf of Charles Hood,
who worked at Singing Hills Memorial Park in El Cajon, California.  He was hired
in April 2003 as a  groundskeeper  with his work concluding on October 30, 2003.
Mr. Hood claims that he wrote a letter to the  Company  outlining  his  concerns
regarding  the  operation  of  the  cemetery,  and  that  the  next  day  he was
terminated.  Even  though  he  recognizes  his  relationship  was as an  at-will
employee.  Mr.  Hood's  claims  against the Company  also  include,  but are not
limited to, violation of labor laws, whistleblower retaliation and inflection of
emotional distress. The letter proposes a settlement in the amount of $275,000.

No lawsuit  has been filed in the  matter.  The  Company  has been  engaged in a
review of the claims made in the letter. Based on its investigation, the Company
believes that Mr. Hood voluntarily quit and was not terminated.  Counsel for the
Company and counsel for Mr. Hood have been in discussion  concerning the matter.
At this stage of the  investigation,  the Company does not believe  there is any
justification  for the claims being made.  If a resolution of the dispute is not
achieved and litigation ensues, the Company is prepared to vigorously defend the
action.

The Company also  received a letter  dated  November 29, 2004 on behalf of Roger
Gornichec,  who the Company recognizes as having been an independent contractor.
The attorney who wrote the letter on behalf of Mr. Hood also wrote the letter on
behalf of Mr.  Gornichec.  Mr.  Gornichec  concluded  his  services  as an agent
selling  insurance in the spring of 2003 and his license to sell cemetery  plots
was not  renewed in the summer of 2004.  Mr.  Gornichec  asserts  that he was an
employee contrary to the Company's position.

The claims  made on behalf of Mr.  Gornichec  include,  but are not  limited to,
wrongful  termination  in violation  of public  policy,  misrepresentation,  age
discrimination,   whistle-blower   retaliation,   interference   with   economic
advantage,  breach of  contract,  breach of the  covenant of good faith and fair
dealing, and infliction of emotional distress. Mr. Gornichec also claims that he
is  owed a  certain  amount  from a  retirement  plan.  The  letter  proposes  a
settlement in the amount of $420,000.  Based on its  investigation,  the Company
believes that Mr. Gornichec was an independent contractor,  not an employee, and
that the claims and the  settlement  amount  sought  are not  justified.  If the
matter is not  resolved  and  litigation  ensues,  the  Company is  prepared  to
vigorously defend the action.

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. Based on management's assessment and legal counsel's representations
concerning the likelihood of unfavorable  outcomes, no amounts have been accrued
for the above claims in the consolidated financial statements.

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


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


10) Retirement Plans (Continued)

employee's  compensation to total compensation for all eligible employees during
each year. ESOP contribution expense totaled $105,196,  $98,588, and $99,612 for
2004, 2003, and 2002,  respectively.  At December 31, 2004 the ESOP held 577,183
shares of Class A and  1,553,041  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 1% 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  2004,  2003,  and 2002  were  $5,746,  $4,493,  and  $7,975,
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 contributions for 2004, 2003 and
2002  were  $128,949,   $110,081,  and  $142,218,   respectively.   All  amounts
contributed  to the plan are  deposited  into a trust  fund  administered  by an
independent trustee.

In 2001, the Company's Board of Directors adopted a Deferred  Compensation Plan.
Under the terms of the Plan, the Company will provide deferred  compensation for
a select group of management or highly compensated employees, within the meaning
of Sections 201(2),  301(a)(3) and 401(a)(1) of the Employee  Retirement  Income
Security  Act of 1974,  as amended.  The Board has  appointed a Committee of the
Company to be the Plan  Administrator  and to determine  the  employees  who are
eligible to participate in the plan. The employees who  participate may elect to
defer a portion of their  compensation into the plan. The Company may contribute
into  the plan at the  discretion  of the  Company's  Board  of  Directors.  The
Company's  contributions  for 2004,  2003 and 2002 were $123,249,  $95,485,  and
$100,577, respectively.

The  Company  has  Deferred  Compensation  Agreements  with its Chief  Executive
Officer and its past Senior Vice President. The Deferred Compensation is payable
on the retirement or death of these  individuals  either in annual  installments
(10 years) or in a lump sum  settlement,  if approved by the Board of Directors.
The  amount  payable is $65,839  per year with cost of living  adjustments  each
anniversary.  The  Compensation  Agreements  also  provides  that any  remaining
balance will be payable to their heirs in the event of their death.  In addition
the Agreement  provides that the Company will pay the Group Health coverages for
these individuals and/or their spouses.  In 2004 and 2003, the Company increased
its liability for these future obligations by $10,000 and $2,000,  respectively.
The current balance as of December 31, 2004 is $714,000.



<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


10)   Retirement Plans (Continued)

On July 16, 2004, the Company entered into an employment agreement with Scott M.
Quist, its President and Chief Operating Officer.  The agreement is effective as
of  December  4, 2003 and has a  five-year  term,  but the Company has agreed to
renew the agreement on December 4, 2008 and 2013 for additional five-year terms,
provided  Mr.  Quist  performs  his  duties  with usual and  customary  care and
diligence.  Under the terms of the  agreement,  Mr.  Quist is to devote his full
time  to the  Company  serving  as its  President,  General  Counsel  and  Chief
Operating Officer at not less than his current salary and benefits.  The Company
also  agrees to  maintain  a group term life  insurance  policy of not less than
$1,000,000 on Mr. Quist's life and a whole life  insurance  policy in the amount
of $500,000 on Mr. Quist's life. In the event of disability,  Mr. Quist's salary
would be continued for up to five years at 75% of its current level.

In the event of a sale or merger of the Company and Mr. Quist is 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.
The  agreement  further  provides  that Mr. Quist is entitled to receive  annual
retirement  benefits beginning (i) one month from the date of his retirement (to
commence no sooner than age 65), (ii) five years following complete  disability,
or (iii) upon  termination of his employment  without  cause.  These  retirement
benefits are to be paid for a period of ten years in annual  installments in the
amount equal to 75% of his then current rate of  compensation.  However,  in the
event that Mr. Quist dies prior to receiving all retirement benefits thereunder,
the remaining benefits are to be paid to his heirs. The Company expensed $31,500
and $328,000 in fiscal 2004 and 2003,  respectively,  to cover the present value
of anticipated retirement benefits under the employment agreement. The liability
accrued is $359,500 and $328,000 as of December 31, 2004 and 2003, respectively.

On December  4, 2003,  the  Company,  through  its  subsidiary  SecurityNational
Mortgage Company,  entered into an employment  agreement with J. Lynn Beckstead,
Jr., Vice  President of Mortgage  Operations  and President of  SecurityNational
Mortgage Company. The agreement has a five-year term, but the Company has agreed
to renew the  agreement  on December 4, 2008 and 2013 for  additional  five-year
terms,  provided Mr. Beckstead performs his duties with usual and customary care
and diligence.  Under the terms of the agreement, Mr. Beckstead is to devote his
full time to the  Company  serving as  President  of  SecurityNational  Mortgage
Company  at not less  than his  current  salary  and  benefits,  and to  include
$350,000  of  life  insurance  protection.  In  the  event  of  disability,  Mr.
Beckstead's salary would be continued for up to five years at 50% of its current
level.

In the event of a sale or  merger of the  Company,  and Mr.  Beckstead  were not
retained in his current position, the Company would be obligated to continue Mr.
Beckstead's  current  compensation  and  benefits for five years  following  the
merger or sale. The agreement further provides that Mr. Beckstead is entitled to
receive annual retirement  benefits beginning (i) one month from the date of his
retirement  (to  commence no sooner  than age 62 1/2) (ii) five years  following
complete disability,  or (iii) upon termination of his employment without cause.
These  retirement  benefits  are to be paid for a period  of ten years in annual
installments  in the amount equal to one-half of his then current annual salary.
However,  in the event that Mr. Beckstead dies prior to receiving all retirement
benefits  thereunder,  the remaining  benefits are to be paid to his heirs.  The
Company  expensed  in  2004  and  2003   approximately   $18,500  and  $172,000,
respectively,  to cover  the  present  value of the  retirement  benefit  of the
agreement.  The liability  accrued is $190,500 and $172,000,  as of December 31,
2004 and 2003, respectively.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


11)  Capital Stock

The following  table  summarizes the activity in shares of capital stock for the
three-year period ended December 31, 2004:

                                                       Class A          Class C
Balance at January 1, 2002                            5,363,591       6,113,430

      Exercise of stock options                         132,371           --
      Stock Dividends                                   276,012        294,419
      Conversion of Class C to Class A                   22,518       (225,180)
                                                     ----------     ----------
Balance at December 31, 2002                          5,794,492      6,182,669
                                                     ----------     ----------

      Exercise of stock options                         176,725          --
      Stock Dividends                                   301,774        308,086
      Conversion of Class C to Class A                    2,113        (21,117)
                                                     ----------     ----------
Balance at December 31, 2003                          6,275,104      6,469,638
                                                     ----------     ----------

      Exercise of stock options                         127,888          --
      Stock Dividends                                   321,932        308,007
      Conversion of Class C to Class A                   30,946       (309,446)
                                                     ----------     ----------
Balance at December 31, 2004                          6,755,870      6,468,199
                                                     ==========     ==========

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.

Stockholders of both classes of common stock have received 5% stock dividends in
the years 1990 through 2004, 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.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


11)  Capital Stock (Continued)

Earnings  per share  amounts  have been  adjusted for the effect of annual stock
dividends.

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

                                               2004        2003          2002
                                               ----        ----          ----
Numerator:
   Net income                               $2,122,272   $6,596,497  $3,991,280
                                            ==========   ==========  ==========

Denominator:
   Denominator for basic earnings
    per share-weighted-average shares        6,001,861    5,851,814   5,572,783
                                            ----------   ----------  ----------

   Effect of dilutive securities:
     Employee stock options                    214,462      149,952     169,543
     Stock appreciation rights                   1,628        2,007       1,828
                                            ----------   ----------  ----------
Dilutive potential common shares               216,090      151,959     171,371
                                            ----------   ----------  ----------

   Denominator for diluted earnings per
     share-adjusted weighted-average
     shares and assumed conversions          6,217,951    6,003,773   5,744,154
                                            ==========   ==========  ==========

Basic earnings per share                          $.35        $1.13        $.72
                                                  ====        =====        ====
Diluted earnings per share                        $.34        $1.10        $.69
                                                  ====        =====        ====

12)    Stock 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.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


12) Stock Compensation Plans (Continued)

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 of
                                        Class A Shares      Option Price
                                        --------------     --------------
Outstanding at January 1, 2002             188,890         $3.53 - $3.88

   Dividend                                    576
   Exercised                              (119,974)
   Expired                                 (58,773)
                                         ---------

Outstanding at December 31, 2002            10,719                 $3.36
                                         ---------

   Dividend                                    201
   Exercised                                (6,700)
                                          --------

Outstanding at December 31, 2003             4,220                 $3.20
                                          --------

   Dividend                                    158
   Exercised                                (1,055)
                                          --------

Outstanding at December 31, 2004             3,323                 $3.05
                                          ========

Exercisable at end of year                   3,323                 $3.05
                                          ========

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

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 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,

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002

12) Stock Compensation Plans (Continued)

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.

On November 7, 1996,  the Company  amended the Plan 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. The Plan had a term of ten years and
was terminated in 2003 and options granted thereunder are non-transferable.

Activity of the 1993 Plan is summarized as follows:

                                           Number of Class
                                              A Shares        Option Price
                                           ---------------   --------------
Outstanding at January 1, 2002                772,063        $2.02 - $3.59
   Dividend                                    21,077
   Granted                                    185,250
   Cancelled                                 (190,018)
   Exercised                                 (283,703)
                                            ---------

Outstanding at December 31, 2002              504,669        $2.02 - $4.46
   Dividend                                    30,609
   Granted                                    371,000
   Exercised                                 (263,496)
                                            ---------


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


12) Stock Compensation Plans (Continued)

                                            Number of
                                         Class A Shares          Option Price

Outstanding at December 31, 2003              642,782           $2.07 - $6.18

   Dividend                                    16,176
   Granted                                       --
   Exercised                                 (310,341)
   Cancelled                                   (8,925)
                                            ---------

Outstanding at December 31, 2004              339,692           $1.97 - $5.35
                                            =========

Exercisable at end of year                    339,692           $1.97 - $5.35
                                            =========

Available options for future grant
   1993 Stock Incentive Plan                    --
                                            =========

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.

The term of the 2000 Plan is five years.

Activity of the 2000 Plan is summarized as follows:

                                                Number of
                                             Class A Shares      Option Price
                                             --------------
Outstanding at January 1, 2002                    8,610         $2.04 - $2.43
   Dividend                                         631
   Granted                                        4,000
                                                -------

Outstanding at December 31, 2002                 13,241         $1.94 - $2.86
   Dividend                                         697
   Granted                                        4,000
   Exercised                                     (3,311)
                                                -------
<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002

12) Stock Compensation Plans (Continued)

                                                 Number of
                                               Class A Shares    Option Price
                                               --------------    ------------
Outstanding at December 31, 2003                  14,627         $1.85 - $5.72

   Dividend                                          931
   Granted                                         4,000
   Exercised                                        --
                                                --------

Outstanding at December 31, 2004                  19,558         $1.76 - $5.45
                                                ========

Exercisable at end of year                        15,358         $1.76 - $5.45
                                                ========

Available options for future
    grant 2000 Director Plan                      40,606
                                                ========

On  July  11,  2003,  the  Company  adopted  the  Security  National   Financial
Corporation  2003 Stock Option Plan (the "2003 Plan"),  which  reserved  500,000
shares of Class A Common Stock and 1,000,000  shares of Class C Common Stock for
issuance thereunder. The 2003 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 2003 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 under the 2003 Plan.

The 2003 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
affected  under the 2003 Plan are to be  determined by the Board of Directors or
its  committee.  No options may be  exercised  for a term of more than ten years
from the date of the 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 2003 Plan provides
that the exercise price for non-qualified options will not be 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 2003  Plan has a term of ten  years.  The  Board of  Directors  may amend or
terminate the 2003 Plan at any time,  from time to time,  subject to approval of
certain modifications to the 2003 Plan by the shareholders of the Company as may
be required by law or the 2003 Plan.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


12) Stock Compensation Plans (Continued)

Activity of the 2003 Plan is summarized as follows:

                                     Number of        Number of       Option
                                  Class A Shares   Class C Shares(1)  Price(1)
Outstanding at December 31, 2003        -0-               -0-
                                        --               --

Outstanding at January 1, 2004          -0-               -0-

   Dividend                            7,675           50,000
   Granted                           153,500        1,000,000
   Exercised                            -0-               -0-
                                    --------       ----------

Outstanding at December 31, 2004     161,175        1,050,000     $3.77 - $3.08
                                    ========       ==========

Exercisable at end of year           161,175        1,050,000     $3.77 - $3.08
                                    ========       ==========

Available options for future grant
   2003 Stock Incentive Plan         390,075          52,500
                                    ========       =========

(1) Class "C" shares are  converted to Class "A" shares on a 10 to 1 ratio.  The
Option Price is based on Class A Common shares.

13)  Statutory-Basis Financial Information

The Company's life  insurance  subsidiaries  are domiciled in Utah,  Florida and
Louisiana and prepare their  statutory-basis  financial statements in accordance
with  accounting  practices  prescribed  or permitted  by the Utah,  Florida and
Louisiana   Insurance   Departments.   "Prescribed"  or  "Permitted"   statutory
accounting  practices  are  interspersed  throughout  state  insurance  laws and
regulations.  The  National  Association  of  Insurance  Commissioners  ("NAIC")
Accounting  Practices and Procedures  Manual version  effective January 1, 2001,
has been  adopted as  permitted  practices  by the States of Utah,  Florida  and
Louisiana.

Statutory net income and statutory stockholder's equity for the life
subsidiaries as reported to state regulatory authorities, are presented below:

                                           Statutory Net Income (Loss)
                                         for the year ended December 31,

                                           2004          2003           2002
                                           ----          ----           ----
Security National Life                    $65,724    $(5,404,687)    $1,547,253
Southern Security Life                   (525,237)     2,431,499       (427,439)
Security National Life of Louisiana        50,341          N/A            N/A

                                            Statutory Stockholders' Equity
                                                      December 31,
                                           2004          2003           2002
                                           ----          ----           ----
Security National Life                $15,183,712     $15,069,057   $14,381,257
Southern Security Life                 10,877,112      11,443,488     8,582,968
Security National Life of Louisiana     1,147,492         N/A            N/A
<Page>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002

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, Florida and Louisiana 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 combined weighted Ratio that is greater than 432%
of the first level of regulatory action.

14)  Business Segment Information

Description of Products and Services by Segment

The Company has three reportable business 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 at-need cemetery and mortuary merchandise and services
at its  mortuaries  and  cemeteries,  pre-need  sales of cemetery  spaces  after
collection of 10% or more of the purchase  price 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.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


14)      Business Segment Information (Continued)

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.

<TABLE>
<CAPTION>

                                                                     2004
                                      Life             Cemetery/                            Reconciling
                                    Insurance           Mortuary          Mortgage             Items           Consolidated
                                  ------------       ------------        ---------          -----------        ------------
Revenues:
From external sources:
<S>                               <C>                <C>                <C>             <C>                  <C>
   Revenue from customers        $ 25,979,341        $11,661,053        $62,689,391     $    --              $100,329,785
   Net investment income            9,062,991            812,659          6,063,526          --                15,939,176
   Realized gains on
      Investments and
      other assets                      7,523             66,908            --               --                    74,431
   Other revenues                     311,316            184,712            358,397          --                   854,425

Intersegment revenues:
   Net investment income            7,478,350             85,337            265,470       (7,829,157)              --
                                  -----------        -----------        -----------      -----------         ------------
                                   42,839,521         12,810,669         69,376,784       (7,829,157)         117,197,817
                                  -----------        -----------        -----------      -----------         ------------
Expenses:
Death and other policy benefits    14,540,581             --                 --               --                14,540,581
Increase in future policy benefits  8,821,497             --                 --               --                 8,821,497
Amortization of deferred policy
    and pre-need acquisition
    costs and cost of insurance
    acquired                        4,349,371            252,701            --               --                 4,602,072
Depreciation                          426,432            768,882            469,703          --                 1,665,017
General, administration and
      other costs:
   Intersegment                       --                  36,672            284,982         (321,654)             --
   Other                           11,771,056          9,963,065         61,002,224          --                82,736,345
Interest expense:
   Intersegment                       348,797            163,297           6,995,409      (7,507,503)             --
   Other                              647,823            339,182           1,186,773         --                 2,173,778
                                  -----------        -----------        ------------    ------------         ------------
                                   40,905,557         11,523,799          69,939,091      (7,829,157)         114,539,290
                                  -----------        -----------        ------------    ------------         ------------
Earnings (losses)
   before income taxes           $  1,933,964        $ 1,286,870        $  (562,307)    $   --               $  2,658,527
                                 ============        ===========        ===========     ============         ============

Identifiable assets              $305,970,161        $47,358,587        $14,236,837     $(51,091,825)        $316,473,760
                                 ============        ===========        ===========     ============         ============

Expenditures for
   long-lived assets             $    283,655        $   487,118        $   471,125     $     --             $  1,241,898
                                 ============        ===========        ===========     ============         ============
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


14) Business Segment Information (Continued)

                                                                        2003
                                        Life             Cemetery/                          Reconciling
                                      Insurance          Mortuary            Mortgage          Items        Consolidated
                                     -----------       ------------         ---------        -----------   -------------
Revenues:
<S>                                   <C>              <C>                <C>              <C>             <C>
From external sources:
   Revenue from customers            $ 23,294,373      $10,944,365       $ 92,955,165      $    --         $127,193,903
   Net investment income                6,571,404          936,118          9,795,075           --           17,302,597
   Realized gains (losses)
      on investments and other
      assets                               (2,155)         --                 --                --               (2,155)
   Other revenues                         254,974           94,907            200,183           --              550,064

Intersegment revenues:
   Net investment income               10,028,748           47,651             --           (10,076,399)         --
                                     ------------      -----------       ------------      ------------    ------------
                                       40,147,344       12,023,041        102,950,423       (10,076,399)    145,044,409
                                     ------------      -----------       ------------      -------------   ------------
Expenses:
Death and other policy
   benefits                            15,041,541          --                  --                --          15,041,541
Increase in future policy
   benefits                             6,712,961          --                  --                --           6,712,961
Amortization of deferred policy
   acquisition costs and
   cost of insurance acquired           4,683,556          245,450             --                --           4,929,006
Depreciation                              464,844          760,091            310,595            --           1,535,530
General, administrative
      and other costs:
   Intersegment                           --                84,323            208,362          (292,685)        --
   Other                               10,398,872        9,807,357         83,512,224           --          103,718,453
Interest expense:
   Intersegment                            90,001          179,803          9,513,910        (9,783,714)        --
   Other                                  743,884          436,828          2,461,334             --          3,642,046
                                     ------------      -----------        ------------     -------------   -------------
                                       38,135,659       11,513,852         96,006,425       (10,076,399)    135,579,537
                                     ------------      -----------        -----------      ------------    ------------
Earnings (losses)
   before income taxes               $  2,011,685      $   509,189       $  6,943,998      $      --       $  9,464,872
                                     ============      ===========       ============      ============    ============

Identifiable assets                  $302,319,614      $44,018,131       $ 16,938,151      $(49,792,560)   $313,483,336
                                     ============      ===========       ============      ============    ============

Expenditures for
   long-lived assets                 $    235,631      $   559,435       $    828,244      $     --        $  1,623,310
                                     ============      ===========       ============      =============   ============
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


14) Business Segment Information (Continued)
                                                                     2002

                                      Life              Cemetery/                            Reconciling
                                    Insurance           Mortuary          Mortgage              Items        Consolidated
                                 ------------       --------------       ----------        -------------    --------------
Revenues:
<S>                             <C>                 <C>                 <C>                <C>               <C>
From external sources:
   Revenue from
      customers                 $ 14,076,652         $10,638,754         $57,008,283       $   --            $ 81,723,689
   Net investment income           6,065,652           1,011,786           5,461,992           --              12,539,430
   Realized gains on
      investments and other
      assets                         311,365             709,455              --               --               1,020,820
   Other revenues                     69,741              85,146             324,537           --                 479,424

Intersegment revenues:
   Net investment income           4,741,338             --                  --              (4,741,338)           --
                                ------------         -----------         -----------       ------------      ------------
                                  25,264,748          12,445,141          62,794,812         (4,741,338)       95,763,363
                                ------------         -----------         -----------       ------------      ------------
Expenses:
Death and other policy
   benefits                        7,724,046              --                 --                --               7,724,046
Increase in future
   policy benefits                 6,031,685              --                 --                --               6,031,685
Amortization of deferred
    Policy acquisition costs
    and cost of insurance
    acquired                       3,718,627             274,766             --                 --              3,993,393
Depreciation                         383,139             678,851             167,513            --              1,229,503
General, administrative
    and other costs:
   Intersegment                     (900,000)            486,672             623,872            (210,544)         --
   Other                           6,570,217           9,537,374          53,167,818            --             69,275,409
Interest expense:
   Intersegment                       90,000             201,118           4,239,676          (4,530,794)         --
   Other                             321,896             428,498           1,219,948             --             1,970,342
                                ------------         -----------         -----------       --------------    ------------
                                  23,939,610          11,607,279          59,418,827          (4,741,338)      90,224,378
                                ------------         -----------         -----------       -------------     ------------
Earnings (losses)
   before income taxes          $  1,325,138         $   837,862         $ 3,375,985       $    --           $  5,538,985
                                ============         ===========         ===========       ==============    =============

Identifiable assets             $295,177,565         $42,255,381         $14,960,638       $ (44,331,241)    $308,062,343
                                ============         ===========         ===========       =============     ============

Expenditures for long-
   lived assets                 $    189,156         $   677,561         $   482,035       $    --           $  1,348,752
                                ============         ===========         ===========       =============     ============
</TABLE>

<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


15)      Related Party Transactions

On December 19, 2001, the Company entered into an option agreement with Monument
Title,  LLC, a Utah limited liability  company  ("Monument  Title") in which the
Company  made  available  a  $100,000  line of  credit to  Monument  Title at an
interest  rate of 8% per  annum.  The line of credit is secured by the assets of
Monument  Title.  From December 28, 2001 to June 14, 2002, the Company  advanced
Monument Title a total of $77,953 under the line of credit.  The amount advanced
under the line of credit plus accrued  interest  are payable  upon demand.  This
receivable  was fully  allowed  for in 2003.  The owners of  Monument  Title are
brothers-in-law of the President and Chief Operating Officer of the Company. The
Company has the right under the option agreement for a period of five years from
the date thereof to acquire 100% of the  outstanding  common  shares of Monument
Title for the sum of $10. The purpose of the transaction,  which was approved by
the Company's  board of  directors,  is to insure that the title and escrow work
performed for SecurityNational  Mortgage Company in connection with its mortgage
loans are  completed as  accurately  as possible by Monument  Title to avoid any
economic losses to the Company.

On November 1, 2004, the Company entered into an Agreement to Repay Indebtedness
and to Convey Option with  Monument  Title and its  principal  owner.  Under the
terms of the  agreement,  Monument  Title  agreed to pay the  Company a total of
$94,177, representing the total of $77,953 that the Company advanced to Monument
Title under the line of credit,  plus interest  thereon,  within seven days from
the date of the  agreement.  Monument  Title  paid the  $94,177  to the  Company
pursuant  to the  agreement.  In  addition,  the  Company  agreed to release its
interest  in the option  agreement  to acquire  100% of the  outstanding  common
shares of Monument  Title,  in  consideration  for the payment of an  additional
$94,177.  Monument  Title is to pay the  additional  $94,177  to the  Company in
minimum  payments of $500 per month for the first twelve  months  following  the
date of the  agreement,  with  additional  payments  of $1,000 per month for the
second twelve months  following the date of the agreement.  After the 24th month
following the date of the agreement, the outstanding balance is to bear interest
at the three year  treasury rate plus one percent.  The minimum  payment for the
third year is $1,500 per  month,  the  minimum  payment  for the fourth  year is
$2,000 per month and the minimum payment for the fifth year is $2,500 per month.
Any remaining unpaid balance,  including  interest,  shall be due and payable at
the conclusion of the 60th month from the date of the agreement.

The Company has a non-interest  bearing note receivable from the Chairman of the
Board and Chief Executive  Officer.  No installment  payments are required under
the terms of the  note,  but the note  must be paid in full as of  December  31,
2007. The outstanding  balance of the note was approximately  $1,500 and $38,000
at December 31, 2004 and 2003, respectively.

16)  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
consolidated  balance sheet for these financial  instruments  approximate  their
fair values.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


16)   Disclosure about Fair Value of Financial Instruments

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
consolidated  balance sheet 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, 2004 and
December 31, 2003, were approximately $82,592,000 and $86,389,000, 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.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2004, 2003, and 2002


17)    Accumulated Other Comprehensive Income (Loss), and Other Items

The following summarizes accumulated other comprehensive income:

                                                     December 31,
                                              2004        2003         2002
                                              ----        ----         ----
Unrealized gains
     on available for-sale securities        $226,464    $   638,540   $ 84,263
Reclassification
     adjustment for net realized
     gains (losses) in net income               7,524        (2,155)    (35,544)
                                             --------    ----------    --------
Net unrealized gains (losses)                 233,988       636,385      48,719
Potential unrealized gains (losses) for
     derivative bank loans
     (interest rate swaps)                    266,219      (303,029)      --
Tax (expense) benefit on net unrealized
     gain (losses)                            (73,586)       19,428     (80,786)
                                             --------    ----------    --------
Other comprehensive income (loss)            $426,621    $  352,784    $(32,067)
                                             ========    =========     ========

Other items:
     Acquisition of Company Stock
         held in escrow                      $  --       (1,982,620)   $   --
                                             ========    ==========    ========

The  "Acquisition  of Company  Stock held in Escrow" above is held in escrow and
voted by trustee  until the  balances  shown  under Note 6 "Notes and  Contracts
Payable" in the amounts of $100,000  and  $321,747,  as of December 31, 2004 and
2003, respectively, are paid per terms of the agreement and promissory note.

The Company considers its interest rate swap instruments  (swaps) effective cash
flow hedges against the variable interest rates of certain bank loans. The swaps
expire on the maturity  dates of the bank loans they hedge.  In the event a swap
is  terminated,  any  resulting  gain or loss would be deferred and amortized to
interest  expense  over the  remaining  life of the bank loan it hedged.  In the
event of early  extinguishment of a hedged bank loan, any realized or unrealized
gain or loss from the hedging swap would be recognized in income coincident with
the extinguishment.

Information regarding the swaps is as follows as of December 31, 2004:

     Weighted average variable interest rate of
         the hedged bank loans (prime less .5%)                   4.75%
     Weighted average fixed interest rate of the swaps             6.1%
     Market value of the swaps- potential unrealized
         loss position                                        $(36,810)

The respective market values of the swaps are derived from proprietary models of
the  financial  institution  with whom the Company  purchased the swaps and from
whom the Company obtained the hedged bank loans.




<PAGE>
<TABLE>
<CAPTION>



                                                                  Schedule I

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



As of December 31, 2004
                                                                                                              Amount at
                                                                                                             Which Shown
                                                                                         Estimated             in the
Type of Investment                                               Amortized Cost         Fair Value           Balance Sheet
Fixed maturity securities held to maturity:
Bonds:
<S>                                                              <C>                   <C>                 <C>
   U.S. Treasury securities and obligations
     of U.S. Government agencies                                 $ 15,033,673           $15,185,077        $ 15,033,673
   Obligations of states and political subdivisions                   492,290               519,799             492,290
   Corporate securities
     including public utilities                                    50,572,235            52,800,693          50,572,236
   Mortgage backed securities                                       3,865,680             3,784,176           3,865,679
Redeemable preferred stocks                                            20,883                41,133              20,883
                                                                 ------------           -----------        ------------

   Total fixed securities held to maturity                         69,984,761            72,330,878          69,984,761
                                                                 ------------           -----------        ------------

Securities available for sale:
Bonds:
   U.S. Treasury securities and obligations
     of U.S. Government agencies                                      596,898               656,524             656,524
   Corporate securities
     including public utilities                                     9,889,411            10,409,501          10,409,501
Nonredeemable preferred stock                                          56,031               101,663             101,663
Common stock:
   Public utilities                                                   323,719               547,608             547,608
   Banks, trusts and insurance companies                              520,683             1,200,586           1,200,586
   Industrial, miscellaneous and all other                          1,136,816             2,316,912           2,316,912
                                                                 ------------           -----------        ------------

     Total securities available for sale                           12,523,558            15,232,794          15,232,794
                                                                 ------------           -----------        ------------

Mortgage loans on real estate:
  Residential                                                      24,203,576                                24,203,576
  Commercial                                                       21,872,148                                21,872,148
  Residential construction                                         19,755,862                                19,755,862
Real estate                                                         9,709,129                                 9,709,129
Policy, student and other loans                                    13,312,471                                13,312,471
Other short-term investments                                        4,628,999                                 4,628,999
                                                                 ------------                              ------------

     Total investments                                           $175,990,504                              $178,699,740
                                                                 ============                              ============
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                                                        Schedule I (Continued)

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



As of December 31, 2003:
                                                                                                              Amount at
                                                                                                             Which Shown
                                                                                         Estimated             in the
Type of Investment                                               Amortized Cost         Fair Value           Balance Sheet
Fixed maturity securities held to maturity:
Bonds:
<S>                                                             <C>                    <C>                <C>
   U.S. Treasury securities and obligations
     of U.S. Government agencies                                 $  3,080,471           $ 3,260,596        $  3,080,471
   Obligations of states and political subdivisions                   261,360               285,758             261,360
   Corporate securities
     including public utilities                                    30,289,401            31,355,505          30,289,401
   Mortgage backed securities                                       3,634,752             3,684,761           3,634,752
Redeemable preferred stocks                                            28,005                38,358              28,005
                                                                 ------------           -----------        ------------

   Total fixed securities held to maturity                         37,293,989            38,624,978          37,293,989
                                                                 ------------           -----------        ------------

Securities available for sale:
Bonds:
   U.S. Treasury securities and
   obligations of U.S. Government agencies                            595,177               676,781             676,781
   Corporate securities
     including public utilities                                    12,618,880            13,593,256          13,593,256
Non-redeemable preferred stock                                         56,031                94,712              94,712
Common stock:
   Public utilities                                                   314,014               447,172             447,172
   Banks, trusts and insurance companies                              520,683               989,305             989,305
   Industrial, miscellaneous and all other                          1,090,733             1,922,255           1,922,255
                                                                 ------------           -----------        ------------

     Total securities available for sale                           15,195,518            17,723,481          17,723,481
                                                                 ------------           -----------        ------------

Mortgage loans on real estate:
  Residential                                                       6,119,912                                 6,119,912
  Commercial                                                       12,894,894                                12,894,894
  Residential construction                                         10,899,939                                10,899,939
Real estate                                                         8,519,680                                 8,519,680
Policy, student and other loans                                    11,753,617                                11,753,617
Short-term investments                                              2,054,248                                 2,054,248
                                                                 ------------                              ------------

Total investments                                                $104,731,797                              $107,259,760
                                                                 ============                              ============
</TABLE>


<PAGE>


                                                                 Schedule II

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                             Condensed Balance Sheet


                                                           December 31,
                                                      2004              2003
                                                      ----              ----
Assets
Cash                                              $  (635,394)      $  (791,521)

Investment in subsidiaries
    (equity method)                                57,988,720        56,188,527

Receivables:
    Receivable from
        Affiliates                                  9,147,416        10,734,307
    Allowance for doubtful accounts                   (16,528)         (161,528)
                                                  -----------       -----------
       Total receivables                            9,130,888        10,572,779
                                                  -----------       -----------

Property and equipment, at cost,
    net of accumulated depreciation
    of $896,060 for 2004 and $730,230
    for 2003                                          142,170           300,744

Other assets                                           66,828            79,504
                                                  -----------       -----------
    Total assets                                  $66,693,212       $66,350,033
                                                  ===========       ===========




















See accompanying notes to parent company only financial statements.


<PAGE>


                                                        Schedule II (Continued)


                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                      Condensed Balance Sheet (Continued)


                                                           December 31,
                                                      2004              2003
                                                      ----              ----
Liabilities:
-----------
Bank loans payable:
  Current installments                           $ 1,886,570        $ 2,995,831
  Long-term                                        6,059,926          8,641,418

Notes and contracts payable:
  Current installments                               261,834            261,835
  Long-term                                          160,873            421,746

Advances from affiliated companies                10,227,106          8,868,497

Other liabilities and accrued expenses               955,832          1,060,083

Income taxes                                       5,476,231          4,925,192
                                                 -----------        -----------
    Total liabilities                             25,028,372         27,174,602
                                                 -----------        -----------
Stockholders' equity:
Common Stock:
  Class A:  $2 par value, authorized
    10,000,000 shares, issued 6,755,870
    shares in 2004 and 6,275,104 shares
    in 2003                                       13,511,740         12,550,208
  Class C:  convertible, $0.20 par value,
    authorized 7,500,000 shares, issued
    6,468,199 shares in 2004 and 6,469,638
    shares in 2003                                 1,293,641          1,293,927
                                                ------------        -----------
Total common stock                                14,805,381         13,844,135

Additional paid-in capital                        14,922,851         13,569,582
Accumulated other comprehensive
  income (loss), and other items                     (11,352)          (437,973)
Retained earnings                                 15,365,259         15,414,681
Treasury stock at cost
    (1,315,075 Class A shares and 79,103
    Class C shares in 2004; 1,276,518
    Class A shares and 75,336 Class C shares
    in 2003, held by affiliated companies)        (3,417,299)        (3,214,994)
                                                 -----------        -----------
Total stockholders' equity                        41,664,840         39,175,431
                                                 -----------        -----------
  Total liabilities and
    stockholders' equity                         $66,693,212        $66,350,033
                                                 ===========        ===========

See accompanying notes to parent company only financial statements.


<PAGE>



                                                        Schedule II (Continued)


                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                        Condensed Statements of Earnings




                                                 Year Ended December 31,
                                                 -----------------------
                                           2004          2003            2002
                                           ----          ----            ----

Revenue:
    Net investment income              $       35     $       52     $   34,053
    Fees from affiliates                4,249,430      4,200,683      3,772,293
                                       ----------     ----------     ----------
        Total revenue                   4,249,465      4,200,735      3,806,346
                                       ----------     ----------     ----------

Expenses:
    General and administrative
        Expenses                        2,277,933      2,326,526      3,174,550
    Interest expense                      634,783        719,894        278,013
    Expenses to affiliates                180,446        156,327        186,719
                                       ----------    -----------     ----------
        Total expenses                  3,093,162      3,202,747      3,639,282
                                       ----------    -----------     ----------

    Earnings before income
        taxes, and earnings of
        subsidiaries                    1,156,303        997,988        167,064

    Income tax expense                   (606,355)    (2,841,738)    (1,045,791)

    Equity in earnings
        (loss) of subsidiaries          1,572,324      8,440,247      4,870,007
                                       ----------     ----------     ----------
    Net earnings                       $2,122,272     $6,596,497     $3,991,280
                                       ==========     ==========     ==========










See accompanying notes to parent company only financial statements.


<PAGE>


                                                      Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                        Condensed Statements of Cash Flow


                                                    Year Ended December 31,
                                               2004        2003        2002
                                               ----        ----        ----
Cash flows from operating activities:
    Net earnings                            $2,122,272  $6,596,497  $3,991,280
Adjustments to reconcile net earnings
      to net cash provided by operating
      activities:
      Depreciation and amortization            165,830     154,506     118,386
      Undistributed (earnings) losses
         of affiliates                      (1,572,324) (8,440,247) (4,870,007)
      Provision for income taxes               606,355   2,841,738   1,045,791
    Change in assets and liabilities:
      Accounts receivable                       36,000    (128,778)     31,909
      Other assets                              12,676     (12,589)    (45,549)
      Other liabilities                       (230,824)     94,529     (30,673)
                                            ----------  ----------  ----------
Net cash provided by operating activities    1,139,985   1,105,656     241,137
                                            ----------  ----------  ----------

Cash flows from investing activities:
    Dividends received from subsidiaries         --      1,150,000   2,381,687
    Purchase of equipment                       (7,256)    (40,106)   (106,185)
    Investment in subsidiaries                   --           --      (900,000)
                                            ----------  ----------  ----------
Net cash (used in) provided by
    investing activities                        (7,256)  1,109,894   1,375,502
                                            ----------  ----------  ----------

Cash flows from financing activities:
    Advances from (to) affiliates            2,764,500  (1,019,660) (9,396,773)
    Payments of notes and contracts payable (3,741,102) (2,116,541) (1,224,801)
    Stock options exercised                      --        133,000       --
    Proceeds from borrowings on notes and
      contracts payable                          --          --      9,000,000
                                            ----------  ----------  ----------
Net cash used in financing activities         (976,602) (3,003,201) (1,621,574)
                                            ---------- -----------  ----------
Net change in cash                             156,127    (787,651)     (4,935)
Cash at beginning of year                     (791,521)     (3,870)      1,065
                                            ----------  ----------  ----------
Cash at end of year                         $ (635,394) $ (791,521) $   (3,870)
                                            ==========  ==========  ==========






See accompanying notes to parent company only financial statements.


<PAGE>


                                                     Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
           Notes to Parent Company Only Condensed Financial Statements


1) Bank Loans Payable

   Bank loans payable are summarized as follows:
                                                            December 31,
                                                          2004      2003
$1,153,572 in 2004 and $2,230,016 in 2003
    revolving line of credit at 6.15%,
    interest payable monthly and a reduction
    in principal due in semi-annual installments,
    collateralized by 15,000 shares of Security
    National Life Insurance Company stock,
    due December 2005.                                $  445,811    $2,178,075

6.59% note payable in monthly installments of
    $34,680 including principal and interest,
    collateralized by 15,000 shares of Security
    National Life stock, due December 2004.                 --         391,363

7.35% note payable in monthly installments of
    $14,975 including principal and interest,
    collateralized by 15,000 shares of Security
    National Life Insurance Company stock,
    due December 2006.                                   333,145       482,394

5.87% note payable interest only to July 1, 2003,
    thereafter, interest plus monthly principal
    payment of $134,000, collateralized by 15,000
    shares of Security National Life
    Insurance Company stock, due January 2010.         7,206,641     8,413,993

Mark-to-market adjustment                                (39,101)      171,424
                                                      ----------    ----------

        Total bank loans                               7,946,496    11,637,249

      Less current installments                        1,886,570     2,995,831
                                                      ----------    ----------
      Bank loans, excluding current
      Installments                                    $6,059,926    $8,641,418
                                                      ==========    ==========

2)  Notes and Contracts Payable

    Notes and contracts are summarized as follows:
                                                             December 31,
                                                         2004        2003
    Due to shareholders of Security National
      Financial Corporation, 6.0% note
      payable in annual installments of
      $100,000 including principal and
      interest, due July 2005, secured
      by Company stock held in escrow                 $  100,000    $   200,000

    Due to shareholders of Security National
      Financial Corporation, 4.0% note
      payable in annual installments of $160,873
      including principal and interest, due
      January 2006, secured by Company stock
      held in escrow                                    321,747         482,620


<PAGE>

                                                   Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
           Notes to Parent Company Only Condensed Financial Statements


2)  Notes and Contracts Payable (Continued)
                                                                  December 31,
                                                               2004       2003
                                                               ----       ----

 Other                                                           960        961
                                                            --------   --------

Total notes and contracts                                    422,707    683,581
Less current installments                                    261,834    261,835
                                                            --------   --------
Notes and contracts, excluding current installments         $160,873   $421,746
                                                            ========   ========

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

              2005                     $2,148,404
              2006                      1,651,684
              2007                      1,439,220
              2008                      1,526,011
              2009                      1,603,884
              Thereafter                 --
                                       ----------
              Total                    $8,369,203
                                       ==========

3)  Advances from Affiliated Companies


                                                                December 31,
                                                             2004         2003
         Non-interest bearing advances from affiliates:
         Cemetery and Mortuary
              subsidiary                                 $ 1,459,841 $1,366,930
         Life Insurance subsidiary                         8,723,282  7,491,567
         Mortgage subsidiary                                  43,983     10,000
                                                        ------------ ----------
                                                         $10,227,106 $8,868,497

4)  Dividends

In 2004, 2003 and 2002, Security National Life Insurance Company, a wholly owned
subsidiary of the  Registrant,  paid to the  registrant  cash dividends of $-0-,
$1,150,000, and $2,381,687, respectively.


<PAGE>
<TABLE>
<CAPTION>

                                                                  Schedule IV

                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                                   Reinsurance


                                                                                   Percentage
                                           Ceded to      Assumed                    of Amount
                             Direct          Other      from other     Net           Assumed
                             Amount        Companies    Companies     Amount          to Net
2004
<S>                       <C>           <C>           <C>           <C>              <C>
Life Insurance
    in force ($000)        $2,098,690      $188,542      $815,445    $2,725,593       29.9%
                          ===========      ========   ===========   ===========       ====

Premiums:
Life Insurance            $25,554,908      $916,511    $1,031,961   $25,670,358        4.0%
Accident and
    Health Insurance          308,049            12           946       308,983         .3%
                          -----------      --------    ----------   -----------       ----
         Total premiums   $25,862,957      $916,523    $1,032,907   $25,979,341        4.0%
                          ===========      ========    ==========   ===========       ====

2003
Life Insurance
    in force ($000)        $1,974,388      $213,515    $  940,050   $ 2,700,923       34.8%
                          ===========      ========    ==========   ===========       ====

Premiums:
Life Insurance            $22,944,221      $973,632      $972,174   $22,942,763        4.2%
Accident and
    Health Insurance          350,371            --         1,239       351,610         .4%
                          -----------      --------    ----------   -----------       ----
         Total premiums   $23,294,592      $973,632    $  973,413   $23,294,373        4.2%
                          ===========      ========    ==========   ===========       ====

2002
Life Insurance
    in force ($000)        $1,460,832      $220,749    $1,174,604   $ 2,414,687       48.6%
                          ===========      ========   ===========   ===========       ====

Premiums:
Life Insurance            $13,678,397      $889,401    $  922,158   $13,711,154        6.7%
Accident and
    Health Insurance          364,275           380         1,603       365,498         .4%
                          -----------      --------    ----------   -----------       ----
         Total premiums   $14,042,672      $889,781    $  923,761   $14,076,652        6.6%
                          ===========      ========    ==========   ===========       ====
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                                                 Schedule V

                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                        Valuation and Qualifying Accounts


                                             Balance at  Additions Charged     Deductions       Balance
                                             Beginning       to Costs         Disposals and    at End of
                                              of Year      and Expenses        Write-offs        Year
                                             ---------     ------------        ----------      --------

<S>                                         <C>            <C>               <C>              <C>
For the Year Ended December 31, 2004
Accumulated depreciation
   on real estate                          $ 4,059,934     $ 348,096         $    --         $ 4,408,030

Allowance for losses on mortgage loans
   on real estate and construction loans        14,893       240,000              --             254,893

Accumulated depreciation
   on property and equipment                10,419,573     1,665,018          (228,225)       11,856,366

Allowance for doubtful accounts              1,706,678        24,000          (428,310)        1,302,368

For the Year Ended December 31, 2003
Accumulated depreciation
   on real estate                           $3,728,539      $331,395         $    --         $ 4,059,934

Allowance for losses on mortgage loans
   on real estate and construction loans        14,893        --                  --              14,893

Accumulated depreciation
   on property and equipment                 8,903,197     1,535,529           (19,153)       10,419,573

Allowance for doubtful accounts              1,479,728       472,897          (245,947)        1,706,678

For the Year Ended December 31, 2002
Accumulated depreciation
    on real estate                         $ 3,404,644      $323,895         $    --         $ 3,728,539

Allowance for losses on mortgage loans
   on real estate and construction loans        14,893        --                  --              14,893

Accumulated depreciation
    on property and equipment                7,685,613     1,229,504           (11,920)        8,903,197

Allowance for doubtful accounts              1,778,592        90,357          (389,221)        1,479,728

Allowance for real estate losses               119,269        --              (119,269)          --
</TABLE>




<PAGE>



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


None

Item 9A.  Controls and Procedures

     (a)  Evaluation  of  disclosure  controls and  procedures  - The  Company's
principal  executive  officer and principal  financial officer have reviewed and
evaluated the effectiveness of the Company's  disclosure controls and procedures
(as defined in Rule 13a-15(e) or 15d-15(e) under the Securities  Exchange Act of
1934 (the  "Exchange  Act") as of the end of the period  covered by this  annual
report.  Based on that  evaluation,  the  principal  executive  officer  and the
principal  financial  officer  have  concluded  that  the  Company's  disclosure
controls and procedures are effective,  providing them with material information
relating to the Company as required to be  disclosed  in the reports the Company
files or submits under the Exchange Act on a timely basis.

     (b) Changes in internal controls - There were no significant changes in the
Company's  internal  controls over financial  reporting or in other factors that
could  significantly  affect the  Company's  internal  controls  and  procedures
subsequent  to the date of their  most  recent  evaluation,  nor were  there any
significant  deficiencies  or  material  weaknesses  in the  Company's  internal
controls. As a result, no corrective actions were required or undertaken.

                                    PART III

Item 10. Directors and Executive Officers

The Company's Board of Directors consists of seven persons, four of whom are not
employees of the Company. There are no family relationships between or among any
of the  directors  and  executive  officers,  except  that Scott M. Quist and G.
Robert  Quist are the sons of George R. Quist and  Christie Q.  Overbaugh is the
daughter of George R. Quist. The following table sets forth certain  information
with respect to the directors and executive officers of the Company.

    Name                       Age        Position with the Company
----------------             ------
George R. Quist                84     Chairman of the Board and Chief Executive
                                      Officer

Scott M. Quist                 51     President, Chief Operating Officer and
                                      Director

Stephen M. Sill                59     Vice President, Treasurer and Chief
                                      Financial Officer

G. Robert Quist                53     First Vice President and Secretary

J. Lynn Beckstead, Jr.         51     Vice President Mortgage Operations and
                                      Director

Christie Q. Overbaugh          56     Senior Vice President of Internal
                                      Operations of Southern Security Life
                                      Insurance Company

Charles L. Crittenden          84     Director

Robert G. Hunter               45     Director

H. Craig Moody                 53     Director

Norman G. Wilbur               66     Director

Committees of the Board of Directors  include an executive  committee,  on which
Messrs. George Quist, Scott Quist, 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.


<PAGE>



The audit  committee  is  composed of  directors  who are, in the opinion of the
Board of Directors,  free from any  relationship  which would interfere with the
exercise of independent  judgment and who possess an  understanding of financial
statements and generally accepted accounting principles. Thus, each member is an
"independent"  director  as  that  term is  defined  by the  regulations  of the
Securities  Exchange Act of 1934.  The Board of Directors  has  determined  that
Norman G. Wilbur,  who currently  serves as a director and a member of the audit
committee, is an independent financial expert of the audit committee.

Directors

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

George R. Quist has been  Chairman of the Board and Chief  Executive  Officer of
the Company  since  October  1979.  Mr. Quist served as President of the Company
from 1979 until July  2002.  From 1960 to 1964,  Mr.  Quist 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.

Scott M. Quist has been  President  of the  Company  since July 2002,  its Chief
Operating  Officer since October 2001,  and a director since May 1986. Mr. Quist
served as First Vice  President of the Company from May 1986 to July 2002.  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 a 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.  He has also served as a regional  director of Key Bank of Utah since
November  1993.  Mr.  Quist is  currently a director  and past  president of the
National  Alliance  of Life  Companies,  a trade  association  of over  200 life
companies.

J. Lynn  Beckstead  Jr. has been Vice  President  of Mortgage  Operations  and a
director  of the Company  since  March  2002.  In  addition,  Mr.  Beckstead  is
President of  SecurityNational  Mortgage  Company,  an affiliate of the Company,
having served in this position since July 1993. From 1980 to 1993, Mr. Beckstead
was Vice President and a director of Republic Mortgage Corporation. From 1983 to
1990,  Mr.  Beckstead  was Vice  President  and a director of Richards  Woodbury
Mortgage Corporation. From 1980 to 1983, he was a principal broker for Boardwalk
Properties.  From 1978 to 1980, Mr. Beckstead was a residential loan officer for
Medallion Mortgage Company. From 1977 to 1978, he was a residential construction
loan manager of Citizens Bank.

Charles L. Crittenden has been a director of the Company since October 1979. 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.

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

H. Craig Moody has been a director  of the Company  since  September  1995.  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.


<PAGE>


Norman G. Wilbur has been a director  of the Company  since  October  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.  Penney'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.

Executive Officers

Stephen M. Sill has been Vice President,  Treasurer and Chief Financial  Officer
of the  Company  since March  2002.  From 1997 to March 2002,  Mr. Sill was Vice
President and  Controller of the Company.  From 1994 to 1997,  Mr. Sill was Vice
President and Controller of Security National Life Insurance Company.  From 1989
to 1993, he was  Controller  of Flying J. Inc.  From 1978 to 1989,  Mr. Sill was
Senior Vice President and Controller of Surety Life Insurance Company. From 1975
to 1978, he was Vice President and Controller of Sambo's  Restaurant,  Inc. From
1974 to  1975,  Mr.  Sill was  Director  of  Reporting  for  Northwest  Pipeline
Corporation. From 1970 to 1974, he was an auditor with Arthur Andersen & Co. Mr.
Sill is the Immediate Past President and a director of the Insurance  Accounting
and Systems Association  (IASA), a national  association of over 1,300 insurance
companies and associate members.

G. Robert Quist has been First Vice President and Secretary of the Company since
March 2002.  Mr. Quist has also served as First Vice  President of Singing Hills
Memorial  Park since 1996.  Mr.  Quist has served as Vice  President of Memorial
Estates since 1982; he began  working for Memorial  Estates in 1978.  Also since
1987,  Mr.  Quist has served as  President  and a director  of Big Willow  Water
Company  and  as  Secretary-Treasurer  and  a  director  of  the  Utah  Cemetery
Association.  From 1987 to 1988,  he was a director  of  Investors  Equity  Life
Insurance Company of Hawaii.

Christie Q. Overbaugh has been Senior Vice President of Internal  Operations for
Southern  Security Life Insurance Company since June 2002, and Vice President of
Underwriting of Security National Life Insurance Company since October 1998. Ms.
Overbaugh has also served as Vice  President of the Company from October 1999 to
June 2002,  and as Vice  President of  Underwriting  for Southern  Security Life
Insurance  Company from October  1998 to June 2002.  From 1985 to 1990,  she was
Chief  Underwriter  for Investors  Equity Life  Insurance  Company of Hawaii and
Security National Life Insurance  Company.  From 1990 to 1991, Ms. Overbaugh was
President of the Utah Home Office  Underwriters  Association.  Ms.  Overbaugh is
currently  a member  of the Utah Home  Office  Underwriters  Association  and an
Associate Member of LOMA (Life Office Management Association).

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 that is in conflict or may be in
conflict with the interests of the Company.

No  director,  officer or 5%  stockholder  of the Company or any  subsidiary  or
affiliate  thereof has had any transactions with the Company or its subsidiaries
during 2004 or 2003.

All  directors  of the  Company  hold office  until the next  Annual  Meeting of
Stockholders and until their successors have been elected and qualified.


<PAGE>


Pursuant to Item 406 of  Regulation  S-K under the  Securities  Exchange  Act of
1934,  the  Company  has not yet  adopted a code of ethics  that  applies to its
principal executive officer, principal financial officer,  controller or persons
performing  similar  functions.  The Company is still in the process of studying
this issue and may adopt a code of ethics in the near future.

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  Chairman of the Board
and Chief Executive Officer, and all other executive officers (collectively, the
"Named Executive  Officers") at December 31, 2004 whose salary and bonus for all
services in all  capacities  exceed  $100,000 for the fiscal year ended December
31, 2004.
<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)       2004   $165,600   $ 50,000     $2,400          $0          100,000          $0         $26,002
  Chairman of the         2003    165,600     50,000      2,400           0          100,000           0          23,273
  Board and Chief         2002    165,600     25,000      2,400           0           80,000           0          31,186
  Executive Officer

Scott M. Quist (1)        2004   $215,900   $ 75,000     $7,200          $0        1,000,000(4)       $0         $34,773
  President, Chief        2003    205,400     60,000      7,200           0           70,000           0          29,531
  Operating Officer       2002    179,400     35,000      7,200           0           40,000           0          24,066
  and Director

J. Lynn Beckstead, Jr.    2004   $195,796   $ 85,000         $0          $0            5,000          $0         $25,750
  Vice President of       2003    158,500    255,675          0           0           15,000           0          16,104
  Mortgage Operations     2002    150,000    120,401          0           0           10,000           0          15,101
  and Director

G. Robert Quist (1)       2004   $104,814$          0    $2,400          $0           10,000          $0         $10,711
  First Vice President
  and Secretary           2003     87,175     16,599      2,400           0           35,000           0           9,748

Stephen M. Sill           2004   $102,855    $ 6,000     $3,600          $0            5,000          $0         $11,684
  Vice President,
  Treasurer and Chief
  Financial Officer
</TABLE>

     (1)  George R. Quist is the father of Scott M. Quist and G. Robert 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,  Scott
          M. Quist, J. Lynn Beckstead Jr., and G. Robert 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  Security  National  Financial
          Corporation Deferred  Compensation Plan (for the years 2004, 2003, and
          2002, such amounts were George R. Quist, $21,341, $18,590 and $16,207,
          respectively;  and  Scott M.  Quist,  $23,001,  $23,000  and  $19,219,
          respectively;  J.  Lynn  Beckstead,  Jr.,  $21,000,  $12,750  and  $0,
          respectively; G. Robert Quist, $10,161 and $9,394 for 2004 and 2003,


<PAGE>


          respectively;  Stephen  M.  Sill  $11,134  for  2004);  (b)  insurance
          premiums  paid by the Company with  respect to a group life  insurance
          plan for the benefit of the Named  Executive  Officers  (for the years
          2004,  2003 and 2002,  such  amounts were for George R. Quist $17, $39
          and $125,  respectively;  for Scott M. Quist, G. Robert Quist, Stephen
          M.  Sill and J.  Lynn  Beckstead,  Jr.,  $550,  $354,  and $642  each,
          respectively); (c) life insurance premiums paid by the Company for the
          benefit of the family of George R. Quist ($4,644 for each of the years
          2004,  2003 and  2002);  Scott M.  Quist  ($11,222  for the year 2004,
          $6,177 for the year 2003,  $4,205 for 2002);  J. Lynn  Beckstead,  Jr.
          ($4,200 for 2004); (d) compensation  paid for the cashless exercise of
          50,000 shares of Company stock  exercised by George R. Quist ($10,210)
          for the year 2002; (e) amounts contributed by the Company into a trust
          for the benefit of the Named  Executive  Officers  under the  Security
          National Financial  Corporation's Employer Stock Ownership Plan (ESOP)
          (for the years 2003 and 2002, such amounts were J. Lynn Beckstead Jr.,
          $3,000 and $2,754,  respectively;  and (f) amounts  contributed by the
          Company into a trust for the benefit of the Named  Executive  Officers
          under  the  Security  National   Financial   Corporation   Tax-Favored
          Retirement  Savings Plan  (401-k)  Plan) (for the years 2003 and 2002,
          such   amounts   were  J.  Lynn   Beckstead   Jr.,  $0  and   $11,705,
          respectively).  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  granted to him.  The loan has been fully paid as of March 31,
          2005.

     (4)  Options to  purchase  1,000,000  shares of Class C common  stock.  The
          Class C common shares are  convertible to Class A common shares on the
          basis of ten  shares  of Class C common  stock to one share of Class A
          common stock.

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, 2004, as well as the aggregate  number
and  value of  unexercised  options  held by the  Named  Executive  Officers  on
December 31, 2004.

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
                      Shares                                     at                                   Options/SARs at
                    Acquired on                             December 31,                               December 31,
                     Exercise         Value                    2004(#)                                      2004
Name                   (#)          Realized       Exercisable          Unexercisable          Exercisable       Unexercisable
----                 --------       --------       -----------          -------------          -----------       -------------
<S>                   <C>          <C>            <C>                     <C>               <C>                       <C>
George R.  Quist      68,298       $560,040          153,620               -0-              $    27,233               $-0-
Scott M. Quist          -0-            -0-         1,082,175(1)            -0-                       -0-               -0-
J. Lynn Beckstead, Jr. 8,355         62,243           21,788               -0-                       -0-               -0-
G. Robert Quist        6,862         51,455           49,088               -0-                       -0-               -0-
Stephen M. Sill        3,718         32,350            5,250               -0-                    1,228                -0-
</TABLE>

(1)  Includes options to purchase  1,000,000 shares of Class C common stock. The
     Class C common shares are convertible to Class A common shares on the basis
     of ten shares of Class C common stock to one share of Class A common stock.

Retirement Plans

On December 8, 1988, the Company entered into a deferred  compensation plan with
George R. Quist,  the Chairman and Chief Executive  officer of the Company.  The
plan was later amended on three  occasions  with the third  amendment  effective
February 1, 2001. Under the terms of the plan as amended, upon the retirement of
Mr.  Quist,  the Company is required to pay him ten annual  installments  in the
amount of  $60,000.  Retirement  is  defined  in the plan as the age of 70, or a
later retirement age, as specified by the Board of Directors. The $60,000 annual
payments are to be adjusted for inflation in  accordance  with the United States
Consumer  Price  Index for each year  after  January  1,  2002.  If Mr.  Quist's
employment  is  terminated  by reason of  disability  or death before he reaches
retirement  age, the Company is to make the ten annual payments to Mr. Quist, in
the  event of  disability,  or to his  designated  beneficiary,  in the event of
death.


<PAGE>


The plan also provides that the Board of Directors may, in its  discretion,  pay
the amounts due under the plan in a single,  lump-sum payment. In the event that
Mr. Quist dies before the ten annual  payments are made, the unpaid balance will
continue to be paid to his designated beneficiary. The plan further requires the
Company to furnish an automobile  for Mr.  Quist's use and to pay all reasonable
expenses  incurred  in  connection  with its use for a ten year  period,  and to
provide Mr. Quist with a  hospitalization  policy with similar benefits to those
provided to him the day before his  retirement or  disability.  However,  in the
event Mr. Quist's employment with the Company is terminated for any reason other
than   retirement,   death,  or  disability,   the  entire  amount  of  deferred
compensation payments under the plan shall be forfeited by him.

Employment Agreements

On July 16, 2004, the Company entered into an employment agreement with Scott M.
Quist, its President and Chief Operating Officer.  The agreement is effective as
of  December  4, 2003 and has a  five-year  term,  but the Company has agreed to
renew the agreement on December 4, 2008 and 2013 for additional five-year terms,
provided  Mr.  Quist  performs  his  duties  with usual and  customary  care and
diligence.  Under the terms of the  agreement,  Mr.  Quist is to devote his full
time  to the  Company  serving  as its  President,  General  Counsel  and  Chief
Operating Officer at not less than his current salary and benefits.  The Company
also  agrees to  maintain  a group term life  insurance  policy of not less than
$1,000,000 on Mr. Quist's life and a whole life  insurance  policy in the amount
of $500,000 on Mr. Quist's life. In the event of disability,  Mr. Quist's salary
would be continued for up to five years at 75% of its current level.

In the event of a sale or merger of the Company and Mr. Quist is 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.
The  agreement  further  provides  that Mr. Quist is entitled to receive  annual
retirement  benefits beginning (i) one month from the date of his retirement (to
commence no sooner than age 65), (ii) five years following complete  disability,
or (iii) upon  termination of his employment  without  cause.  These  retirement
benefits are to be paid for a period of ten years in annual  installments in the
amount equal to 75% of his then current rate of  compensation.  However,  in the
event that Mr. Quist dies prior to receiving all retirement benefits thereunder,
the remaining  benefits are to be paid to his heirs. The Company accrued $31,500
and $328,000 in fiscal 2004 and 2003,  respectively,  to cover the present value
of anticipated retirement benefits under the employment agreement.

On December  4, 2003,  the  Company,  through  its  subsidiary  SecurityNational
Mortgage Company,  entered into an employment  agreement with J. Lynn Beckstead,
Jr., Vice  President of Mortgage  Operations  and President of  SecurityNational
Mortgage Company. The agreement has a five-year term, but the Company has agreed
to renew the  agreement  on December 4, 2008 and 2013 for  additional  five-year
terms,  provided Mr. Beckstead performs his duties with usual and customary care
and diligence.  Under the terms of the agreement, Mr. Beckstead is to devote his
full time to the  Company  serving as  President  of  SecurityNational  Mortgage
Company  at not less  than his  current  salary  and  benefits,  and to  include
$350,000  of  life  insurance  protection.  In  the  event  of  disability,  Mr.
Beckstead's salary would be continued for up to five years at 50% of its current
level.

In the event of a sale or  merger of the  Company,  and Mr.  Beckstead  were not
retained in his current position, the Company would be obligated to continue Mr.
Beckstead's  current  compensation  and  benefits for five years  following  the
merger or sale. The agreement further provides that Mr. Beckstead is entitled to
receive annual retirement  benefits beginning (i) one month from the date of his
retirement  (to  commence no sooner  than age 62 1/2) (ii) five years  following
complete disability,  or (iii) upon termination of his employment without cause.
These  retirement  benefits  are to be paid for a period  of ten years in annual
installments  in the amount equal to one-half of his then current annual salary.
However,  in the event that Mr. Beckstead dies prior to receiving all retirement
benefits  thereunder,  the remaining  benefits are to be paid to his heirs.  The
Company   accrued  in  2004  and  2003   approximately   $18,500  and  $172,000,
respectively,  to cover  the  present  value of the  retirement  benefit  of the
agreement.


<PAGE>

Director Compensation

Directors of the Company (but not  including  directors who are  employees)  are
paid a director's  fee of $12,000 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  2004,  2003 and 2002  were
approximately  $5,746,  $4,493 and $7,975,  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 2004, 2003 and
2002, were $128,949, $110,081 and $142,218, 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.

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  234  participants  and had $105,196
contributions  payable to the Plan in 2004.  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 George R. Quist,  Scott M. Quist and Robert G.  Hunter,  who
each serve as a director of the Company.


<PAGE>

Deferred Compensation Plan

In 2001, the Company's Board of Directors adopted a Deferred  Compensation Plan.
Under the terms of the  Deferred  Compensation  Plan,  the Company  will provide
deferred  compensation  for a select group of management  or highly  compensated
employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee  Retirement  Income  Security  Act of 1974,  as amended.  The board has
appointed  a  committee  of the  Company  to be the  plan  administrator  and to
determine  the  employees  who are  eligible  to  participate  in the plan.  The
employees  who  participate  may elect to defer a portion of their  compensation
into the plan. The Company may contribute into the plan at the discretion of the
Company's Board of Directors. The Company's contribution for 2004, 2003 and 2002
was $123,249, $95,485 and $100,577, respectively.

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.

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
1993 Plan as  follows:  (i) to  increase  the number of shares of Class A Common
Stock  reserved for issuance  under the 1993 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.  The Plan  terminated  in 2003 and  options  granted
thereunder are non-transferable.


<PAGE>

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.

2003 Stock Option Plan

On  July  11,  2003,  the  Company  adopted  the  Security  National   Financial
Corporation 2003 Stock Incentive Plan (the "2003 Plan"),  which reserved 500,000
shares of Class A common stock and 1,000,000  shares of Class C common stock for
issuance thereunder. The 2003 Plan was approved by the Board of Directors on May
9, 2003, and by the stockholders at the annual meeting of the stockholders  held
on July 11,  2003.  The 2003 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 2003 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 under the 2003 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
2003  Plan are 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 2003 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
affected  under the 2003 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 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.



<PAGE>

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 then fair market value of the option
shares on the date of grant.  The 2003 Plan provides that the exercise price for
non-qualified  options  will not be 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 2003  Plan has a term of ten  years.  The  Board of  Directors  may amend or
terminate   the  2003  Plan  at  any  time,   subject  to  approval  of  certain
modifications  to the 2003 Plan by the  shareholders  of the  Company  as may be
required by law or the 2003 Plan.

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 31,  2005,  (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 and
                                            Class A                          Class C                        Class C
                                         Common Stock                     Common Stock                   Common Stock
                                         ------------                     ------------                   ------------
                                   Amount                           Amount                           Amount
                                Beneficially       Percent       Beneficially        Percent      Beneficially      Percent
Name and Address (1)                Owned         of Class           Owned          of Class          Owned          of Class
-----------------                  -------        --------           -----          --------          -----          --------
<S>                              <C>               <C>           <C>                 <C>          <C>              <C>
George R. and Shirley C. Quist
  Family Partnership, Ltd. (2)     426,375          7.0%          3,358,687            52.6%       3,785,062        28.1%
Employee Stock
  Ownership Plan (3)               577,183          9.5%          1,553,041            24.3%       2,130,224        15.8%
George R. Quist (4)(5)(7)(8)       449,945          7.4%            470,581             7.4%         920,526         6.8%
Scott M. Quist (4)(7)(9)           347,885          5.7%          1,307,079            20.5%       1,654,964        12.3%
Associated Investors (10)           92,798          1.5%            655,610            10.3%         748,408         5.5%
G. Robert Quist (6)(11)            112,300          1.9%            244,052             3.8%         356,352         2.6%
J. Lynn Beckstead, Jr., (6)(12)    104,193          1.7%            --                  *            104,193          *
Stephen M. Sill (6)(13)             58,087          1.0%            --                  *             58,087          *
Christie Q. Overbaugh (14)          56,979          *               105,501             1.7%         162,480         1.2%
Robert G. Hunter, M.D., (4)(15)      7,296          *               --                  *              7,296          *
Norman G. Wilbur (16)                5,962          *               --                  *              5,962          *
Charles L. Crittenden (17)           5,921          *               --                  *              5,921          *
H. Craig Moody (18)                  5,678          *               --                  *              5,678          *
All directors and executive
  officers (10 persons)
  (4)(5)(6)(7)                   1,580,621         26.1%          5,485,500            86.0%       7,066,521        52.4%
</TABLE>


*   Less than 1%

(1) Unless otherwise  indicated,  the address of each listed  stockholder is c/o
Security National  Financial  Corporation,  5300 South 360 West, Suite 250, Salt
Lake City, Utah 84123.

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

(3) The  trustees  of the  Employee  Stock  Ownership  Plan (ESOP) are George R.
Quist,  Scott M. Quist,  and Robert G.  Hunter who  exercise  shared  voting and
investment powers.


<PAGE>



Item 12 -  Security  Ownership  of  Certain  Beneficial  Owners  and  Management
(Continued)


(4) Does not include 577,183 shares of Class A common stock and 1,553,041 shares
of Class C common stock owned by the Company's  Employee  Stock  Ownership  Plan
(ESOP),  of which  George R Quist,  Scott M. Quist and Robert G.  Hunter are the
trustees and  accordingly,  exercise  shared voting and  investment  powers with
respect to such shares.

(5) Does not include 92,798 shares of Class A common stock and 655,611 shares of
Class C common stock owned by Associated Investors,  a Utah general partnership,
of which George R. Quist is the managing  partner  and,  accordingly,  exercises
sole voting and investment powers with respect to such shares.

(6) Does not  include  252,757  shares  of  Class A  common  stock  owned by the
Company's  401(k)  Retirement  Savings Plan,  of which G. Robert Quist,  J. Lynn
Beckstead,  and Stephen M. Sill are  members of the  Investment  Committee  and,
accordingly,  exercise shared voting and investment  powers with respect to such
shares.

(7) Does not  include  140,573  shares  of  Class A  common  stock  owned by the
Company's  Deferred  Compensation  Plan,  of which  George R. Quist and Scott M.
Quist are members of the Investment Committee and, accordingly,  exercise shared
voting and investment powers with respect to such shares.

(8) Includes  options to purchase 153,620 shares of Class A common stock granted
to George R. Quist that are  currently  exercisable  or will become  exercisable
within 60 days of March 31, 2005.

(9)  Includes  options to  purchase  77,175  shares of Class A common  stock and
1,050,000  shares of Class C Common  Stock  granted  to Scott M.  Quist that are
currently  exercisable  or will become  exercisable  within 60 days of March 31,
2005.

(10) The  managing  partner of  Associated  Investors  is George R.  Quist,  who
exercises sole voting and investment powers.

(11) Includes  options to purchase 49,088 shares of Class A common stock granted
to G. Robert Quist that are  currently  exercisable  or will become  exercisable
within 60 days of March 31, 2005.

(12) Includes  options to purchase 21,788 shares of Class A common stock granted
to Mr.  Beckstead  that are  currently  exercisable  or will become  exercisable
within 60 days of March 31, 2005.

(13) Includes  options to purchase  5,250 shares of Class A common stock granted
to Mr. Sill that are currently  exercisable or will become exercisable within 60
days of March 31, 2005.

(14) Includes  options to purchase  7,875 shares of Class A common stock granted
to Ms.  Overbaugh  that are  currently  exercisable  or will become  exercisable
within 60 days of March 31, 2005.

(15) Includes  options to purchase  4,753 shares of Class A common stock granted
to Mr. Hunter that are currently  exercisable or will become  exercisable within
60 days of March 31, 2005.

(16) Includes  options to purchase  4,753 shares of Class A common stock granted
to Mr. Wilbur that are currently  exercisable or will become  exercisable within
60 days of March 31, 2005.

(17) Includes  options to purchase  1,103 shares of Class A common stock granted
to Mr.  Crittenden  that are currently  exercisable  or will become  exercisable
within 60 days of March 31, 2005.


<PAGE>


Item 12 -  Security  Ownership  of  Certain  Beneficial  Owners  and  Management
(Continued)


(18) Includes  options to purchase  4,753 shares of Class A common stock granted
to Mr. Moody that are currently exercisable or will become exercisable within 60
days of March 31, 2005.

The Company's  executive  officers and directors,  as a group,  own beneficially
approximately 52.4% of the outstanding shares of the Company's Class A and Class
C common stock.

Item 13.  Certain Relationships and Related Transactions

On December 19, 2001, the Company entered into an option agreement with Monument
Title, LLC, a Utah limited liability company in which the Company made available
a $100,000 line of credit to Monument Title at an interest rate of 8% per annum.
The line of credit is secured by the assets of Monument Title. From December 28,
2001 to June 14, 2002,  the Company  advanced  Monument Title a total of $77,953
under the line of credit.  The  amount  advanced  under the line of credit  plus
accrued interest are payable upon demand. Ron Motzkus and Troy Lashley,  who own
90% and 10% of the  outstanding  shares of  Monument  Title,  respectively,  are
brother-in-laws of Scott M. Quist,  President and Chief Operating Officer of the
Company.  The Company has the right under the option  agreement  for a period of
five years  from the date  thereof to  acquire  100% of the  outstanding  common
shares of Monument  Title for the sum of $10.  The  purpose of the  transaction,
which was approved by the Company's  Board of  Directors,  is to insure that the
title and escrow  work  performed  for  Security  National  Mortgage  Company in
connection  with its mortgage  loans are  completed as accurately as possible by
Monument Title to avoid any economic losses to the Company.

On November 1, 2004, the Company entered into an Agreement to Repay Indebtedness
and to Convey Option with Monument Title and Mr. Motzkus. Under the terms of the
agreement,  Monument  Title  agreed  to pay  the  Company  a total  of  $94,177,
representing  the total of $77,953 that the Company  advanced to Monument  Title
under the line of credit, plus interest thereon, within seven days from the date
of the agreement. Monument Title paid the $94,177 to the Company pursuant to the
agreement. In addition, the Company agreed to release its interest in the option
agreement to acquire 100% of the outstanding common shares of Monument Title, in
consideration for the payment of an additional $94,177. Monument Title is to pay
the additional  $94,177 to the Company in minimum payments of $500 per month for
the first twelve months  following the date of the  agreement,  with  additional
payments of $1,000 per month for the second twelve months  following the date of
the agreement.  After the 24th month  following the date of the  agreement,  the
outstanding balance is to bear interest at the three year treasury rate plus one
percent. The minimum payment for the third year is $1,500 per month, the minimum
payment for the fourth year is $2,000 per month and the minimum  payment for the
fifth  year is  $2,500  per  month.  Any  remaining  unpaid  balance,  including
interest,  shall be due and payable at the conclusion of the 60th month from the
date of the agreement.

On  December  26,  2003,  Security  National  Life  entered  into a  coinsurance
agreement  and a modified  coinsurance  agreement  with  Southern  Security Life
Insurance  Company,  effective  September  30,  2003.  Under  the terms of these
agreements, Southern Security Life Insurance Company ceded 50% of certain blocks
of its universal life business to Security  National Life. The total liabilities
reinsured  for this  business  on  October  1, 2003 were  $22,195,259.  Southern
Security  Life  Insurance  Company  received a ceding  commission  from Security
National Life of $3,200,000 and will pay a risk charge to Security National Life
of 1% of the outstanding  coinsurance per calendar  quarter.  Southern  Security
Life Insurance  Company placed investment grade bonds in a bank trust, the value
of which equal the  outstanding  liabilities  ceded to Security  National  Life.
Security  National Life is named as a beneficiary of the trust, and the terms of
the trust are such that Southern  Security Life Insurance  Company will maintain
investment grade bonds in the trust to equal the outstanding  liabilities  ceded
to Security National Life.

Under the  coinsurance  agreement and the modified  coinsurance  agreement,  the
coinsurance  and the decrease in reserves are equal in amount.  Under U. S. GAAP
the  coinsurance  and the reserve  decreases are netted since these are non-cash
items,  and Southern  Security Life Insurance  Company  expects to recapture the
coinsurance  from future profits of the reinsured  business.  Southern  Security
Life Insurance Company has the right to recapture the business at any time after
September 30, 2004,  upon 90 days advance  notice.  As of December 31, 2004, the
outstanding coinsurance amount was $2,426,107.  Southern Security Life Insurance
Company  recorded  as an  expense  the risk  charge of  $112,315  for 2004.  The
coinsurance  agreements  have  remained in effect  following  completion  of the
merger of SSLIC Holding Company into Southern  Security Life Insurance  Company.
As a result,  the  coinsurance  agreements have not been impacted or affected by
the completion of such merger.

On  December  28,  2004,  Security  National  Life  entered  into a  coinsurance
agreement  and a modified  coinsurance  agreement  with  Southern  Security Life
Insurance  Company,  effective  October  1,  2004.  Under  the  terms  of  these
agreements, Southern Security Life Insurance Company ceded 25% of certain blocks
of its universal life business to Security  National Life. The total liabilities
reinsured  for this  business  on  October  1, 2004 were  $11,010,599.  Southern
Security  Life  Insurance  Company  received a ceding  commission  from Security
National Life of $1,200,000 and will pay a risk charge to Security National Life
of 1% of the outstanding  coinsurance per calendar  quarter.  Southern  Security
Life Insurance  Company placed investment grade bonds in a bank trust, the value
of which equal the  outstanding  liabilities  ceded to Security  National  Life.
Security  National Life is named as a beneficiary of the trust, and the terms of
the trust are such that Southern  Security Life Insurance  Company will maintain
investment grade bonds in the trust to equal the outstanding  liabilities  ceded
to Security National Life.

Under the  coinsurance  agreement and the modified  coinsurance  agreement,  the
coinsurance  and the decrease in reserves are equal in amount.  Under U. S. GAAP
the  coinsurance  and the reserve  decreases are netted since these are non-cash
items,  and Southern  Security Life Insurance  Company  expects to recapture the
coinsurance  from future profits of the reinsured  business.  Southern  Security
Life Insurance Company has the right to recapture the business at any time after
September 30, 2005,  upon 120 days advance  notice.  As of December 31, 2004 the
outstanding coinsurance amount was $1,157,886.  Southern Security Life Insurance
Company  recorded  as an  expense  the risk  charge of  $12,000  for  2004.  The
coinsurance  agreements  have  remained in effect  following  completion  of the
merger of SSLIC Holding Company into Southern  Security Life Insurance  Company.
As a result,  the  coinsurance  agreements have not been impacted or affected by
the completion of such merger.

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.

Item 14. Principle Accounting Fees and Services

Fees  incurred in 2004 for annual audit  services  pertaining  to the  financial
statements  and  employee  benefit  plans and  related  quarterly  reviews  were
approximately $262,000. There were $19,000 in other fees during 2004.


<PAGE>



PART IV

Item 15.  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.

    (3)  Exhibits

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

    3.1   Articles of Restatement of Articles of Incorporation (7)
    3.2   Amended Bylaws (10)
    4.1   Specimen Class A Stock Certificate (1)
    4.2   Specimen Class C Stock Certificate (1)
    4.3   Specimen Preferred Stock Certificate and Certificate of Designation
          of Preferred Stock (1)
   10.1   Restated and Amended Employee Stock Ownership Plan and  Trust
          Agreement (1)
   10.2   1993 Stock Option Plan (3)
   10.3   2000 Director Stock Option Plan (4)
   10.4   2003 Stock Option Plan (9)
   10.5   Deferred Compensation Agreement with George R. Quist (2)
   10.6   Promissory Note with George R. Quist (5)
   10.7   Deferred Compensation Plan (6)
   10.8   Coinsurance Agreement between Security National Life and Acadian (7)
   10.9   Assumption Agreement among Acadian, Acadian Financial Group, Inc.,
          Security National Life and the Company (7)
   10.10  Asset Purchase Agreement between Acadian, Acadian Financial Group,
          Inc., Security National Life and the Company (7)
   10.11  Promissory Note with Key Bank of Utah (8)
   10.12  Loan and Security Agreement with Key Bank of Utah (8)
   10.13  Stock Purchase and Sale Agreement with Ault Glazer & Co. Investment
          Management LLC (10)
   10.14  Stock Purchase Agreement with Paramount Security Life Insurance
          Company (11)
   10.15  Reinsurance Agreement between Security National Life Insurance
          Company and Guaranty Income Life Insurance Company(12)
   10.16  Employment agreement with J. Lynn Beckstead, Jr.(12)
   10.17  Employment agreement with Scott M. Quist (13)
   10.18  Agreement and Plan of  Reorganization  among Security  National Life
          Insurance  Company,  SSLIC Holding Company,  and Southern Security
          Life Insurance Company (14)
   10.19  Agreement and Plan of Merger,  among Security National Life Insurance
          Company,  SSLIC Holding Company,  and Southern Security Life
          Insurance Company
   10.20  Agreement to repay indebtedness and to convey option with Monument
          Title, LLC.
   10.21  Subsidiaries of the Registrant
   31.1   Certification pursuant to 18 U.S.C. Section 1350, as enacted by
          Section 302 of the Sarbanes-Oxley Act of 2002
   31.2   Certification pursuant to 18 U.S.C. Section 1350, as enacted by
          Section 302 of the Sarbanes-Oxley Act of 2002
   32.1   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002
   32.2   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002


<PAGE>



(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 Schedule 14A Definitive  Proxy  Statement,
     filed  August  29,  2000,  relating  to the  Company's  Annual  Meeting  of
     Shareholders
(5)  Incorporated  by  reference  from Annual  Report on Form 10-K,  as filed on
     April 16, 2001
(6)  Incorporated  by  reference  from Annual  Report on Form 10-K,  as filed on
     April 3, 2002
(7)  Incorporated  by reference from Report on Form 8-K/A as filed on January 8,
     2003
(8)  Incorporated  by  reference  from Annual  Report on Form 10-K,  as filed on
     April 15, 2003
(9)  Incorporated  by reference  from Schedule 14A Definitive  Proxy  Statement,
     Filed  on June  5,  2003,  relating  to the  Company's  Annual  Meeting  of
     Shareholders
(10) Incorporated  by reference  from Report on Form 10-Q,  as filed on November
     14, 2003
(11) Incorporated by reference from Report on Form 8-K, as filed March 30, 2004
(12) Incorporated  by reference  from Report on Form 10-K, as filed on March 30,
     2004
(13) Incorporated  by reference from Report on Form 10-Q, as filed on August 13,
     2004
(14) Incorporated  by  reference  from Report on Form 8-K as filed on August 30,
     2004

     (b)  Reports on Form 8-K:

     No reports on Form 8-K were filed by the Company  during the quarter  ended
     December 31, 2004.


<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:  April 15, 2005 By: George R. Quist
                           ---------------
                           Chairman of the Board 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                       April 15, 2005
                          Board and Chief Executive
                          Officer (Principal
                          Executive Officer)

Scott M. Quist            President, Chief Operating            April 15, 2005
                          Officer and Director

Stephen M. Sill           Vice President,
                          Treasurer and Chief
                          Financial Officer (Principal
                          Financial and Accounting
                          Officer)                              April 15, 2005

J. Lynn Beckstead, Jr.    Vice President and Director           April 15, 2005

Charles L. Crittenden     Director                              April 15, 2005

H. Craig Moody            Director March 30, 2005

Norman G. Wilbur          Director                              April 15, 2005

Robert G. Hunter          Director                              April 15, 2005


<PAGE>

                                  Exhibit 31.1

                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                                  AS ENACTED BY
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, George R. Quist, certify that:

1.   I have  reviewed  this  annual  report  on Form 10-K of  Security  National
     Financial Corporation.

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant to have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others  within those  entities,  particularly  during the period
          covered in which this report is being prepared;

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (c)  Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's  auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.

Date: April 15, 2005

                                   By:      George R. Quist
                                            Chairman of the Board and
                                            Chief Executive Officer


<PAGE>



                                  Exhibit 31.2

                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                                  AS ENACTED BY
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Stephen M. Sill, certify that:

1.   I have  reviewed  this  annual  report  on Form 10-K of  Security  National
     Financial Corporation.

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant to have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others  within those  entities,  particularly  during the period
          covered in which this report is being prepared;

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (c)  Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our  most  recent  evaluation  of  internal  financial  reporting,  to  the
     registrant's  auditors  and the audit  committee of  registrant's  board of
     directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.


Date:  April 15, 2005

                               By:      Stephen M. Sill
                                        Vice President, Treasurer and
                                        Chief Financial Officer


<PAGE>


                                  EXHIBIT 32.1
                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Security National Financial  Corporation
(the  "Company") on Form 10-K for the period ending  December 31, 2004, as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, George R. Quist,  Chairman  of the Board and Chief  Executive  Officer of the
Company,  certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section
906 of the  Sarbanes-Oxley  Act of 2002,  that,  to the best of my knowledge and
belief:

(1)  the Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(2)  the information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and result of operations of the Company.

By:      George R. Quist
         Chairman of the Board and
         Chief Executive Officer
         April 15, 2005

                                  EXHIBIT 32.2
                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Security National Financial  Corporation
(the  "Company") on Form 10-K for the period ending  December 31, 2004, as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, Stephen M. Sill, Vice President, Treasurer and Chief Financial Officer of the
Company,  certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section
906 of the  Sarbanes-Oxley  Act of 2002,  that,  to the best of my knowledge and
belief:

(1)  the Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(2)  the information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and result of operations of the Company.

By:      Stephen M. Sill
         Vice President, Treasurer
         and Chief Financial Officer
         April 15, 2005


<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
                          Year Ended December 31, 2004

                     SECURITY NATIONAL FINANCIAL CORPORATION
                           Commission File No. 0-9341

                                 E X H I B I T S


<PAGE>


                                  Exhibit Index



Exhibit No.                  Document Name

10.19   Agreement Plan of Merger,  among Security National Life Insurance
        Company, SSLIC Holding Company and Southern Security Life Insurance
        Company

10.20   Agreement  to repay  indebtedness and to convey option with Monument
        Title, LLC.

10.21   Subsidiaries of the Registrant

31.1    Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section
        302 of the Sarbanes-Oxley Act of 2002

31.2    Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section
        302 of the Sarbanes-Oxley Act of 2002

32.1    Certification  pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002

32.2    Certification  pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002



<PAGE>


                                  EXHIBIT 10.21

                        Subsidiaries of Security National
                              Financial Corporation
                              as of March 31, 2005


     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.

     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

     Security National Funding Company

     Security National Life Insurance Company of Louisiana  (Formerly  Paramount
     Security Life Insurance Company)

     Security National Capital, Inc.

     Security National Funding