1



                             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, 2002, 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                                      87-034594
--------------------------------          --------------------------------
(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(d) of the Act:

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

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

Class A Common Stock, $2.00 Par Value    Class C Common Stock, $0.20 Par Value
-------------------------------------    -------------------------------------
     (Title of Class)                                 (Title of Class)

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

                               Yes [X]  No___

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of March 31, 2003, was approximately $30,734,548.

As of March 31, 2003,  registrant had issued and outstanding 4,642,681 shares of
Class A Common Stock and 6,110,920 shares of Class C Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  definitive  Proxy  Statement for the  registrant's  2003 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 35 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 five in the state of
Arizona.  The Company also engages in pre-need selling of funeral,  cemetery and
cremation  services  through its Utah  operations.  Many of the insurance agents
also sell pre-need funeral,  cemetery and cremation services.  The mortgage loan
segment is an approved  governmental and conventional lender that originates and
underwrites  residential and commercial  loans for new construction and existing
homes and real estate  projects.  The mortgage loan segment operates through ten
offices in six states.

The design and  structure  of the Company is that each segment is related to the
others and contributes to the  profitability  of the other segments.  Because of
the  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.  Security
National  Life  Insurance  Company,  a Utah  domiciled  life  insurance  company
("Security National Life") invests its assets (representing in part the pre-paid
funerals) in investments  authorized by the Insurance  Departments of the States
of Florida and Utah. One such investment authorized by the Insurance Departments
is high quality mortgage loans. Thus, while each segment is a profit center on a
stand-alone  basis,  this  horizontal  integration of each segment 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 became a wholly owned subsidiary of the Company and the former stockholders
of Security National Life became stockholders of the Company.  Security National
Life was formed in 1965 and has grown through the direct sale of life  insurance
and  annuities  and  through  the  acquisition  of  other  insurance  companies,
including  the  acquisitions  of Capital  Investors  Life  Insurance  Company in
December 1994, Civil Service  Employees Life Insurance Company in December 1995,
Southern  Security Life  Insurance  Company in December  1998.  Most recently on
December 23, 2002,  the Company  completed an asset  purchase  transaction  with
Acadian Life Insurance  Company,  a Louisiana  domiciled life insurance  company
("Acadian"),  from which it acquired  $75,000,000  in assets and  $75,000,000 in
insurance  reserves.  On January 1, 2003, the Company entered into an assumption
reinsurance agreement in which Acadian agreed to transfer and assign to Security
National Life all of its right,  title and interest in the  reinsured  policies.
The cemetery and mortuary  operations have also grown through the acquisition of
other cemetery and mortuary  companies,  including the  acquisitions of Paradise
Chapel Funeral Home,  Inc. in 1989,  Holladay  Memorial Park,  Inc.,  Cottonwood
Mortuary,  Inc.  and Deseret  Memorial,  Inc. in 1991,  Sunset  Funeral  Home in
January 1994,  Greer-Wilson  Funeral  Home,  Inc. in April 1995 and Crystal Rose
Funeral  Home in  February  1997.  In July 1993,  the  Company  formed  Security
National  Mortgage  Company  ("Security  National  Mortgage")  to originate  and
refinance  mortgage loans.  Since 1993 Security  National  Mortgage  Company has
opened  ten  branches  in  six  states.  See  Notes  to  Consolidated  Financial
Statements for additional  disclosure and discussion  regarding  segments of the
business.

Life Insurance

         Products

The Company,  through its  insurance  subsidiaries,  Security  National Life and
Southern Security Life Insurance Company,  issues and distributes selected lines
of life insurance and annuities.  The Company's life insurance business includes
funeral  plans,  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.


<PAGE>


A funeral plan is a small face value life insurance  policy that generally has a
face coverage of up to $5,000. The Company believes that funeral plans represent
a marketing niche that has lower competition  since most insurance  companies do
not offer  similar  coverages.  The purpose of the funeral plan policy is to pay
the  costs and  expenses  incurred  at the time of a  person's  death.  On a per
thousand dollar cost of insurance basis, these policies 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 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 the funding of a child's education.  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 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
fund the cost of their children's  higher  education.  The product is offered to
parents who have children generally under the age of 16.

         Markets and Distribution

The  Company is  licensed  to sell  insurance  in 35  states.  The  Company,  in
marketing  its life  insurance  products,  seeks to locate,  develop and service
specific "niche" markets. A "niche" market is an identifiable  market, which the
Company believes is not emphasized by most insurers. The Company generally sells
its  life  insurance  products  to  people  of  middle  age who  have a need for
insurance  to protect the income of the wage  earner of the  family,  to pay off
debts at the time of death and for other estate planning purposes.

Funeral plan policies are sold  primarily to persons who range in age from 45 to
75. Even though people of all ages and income levels purchase funeral plans, the
Company  believes  that the highest  percentage of funeral plan  purchasers  are
individuals who are older than 45 and have low to moderate income.

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
("HEA")  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 claims 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.

A  majority  of the  Company's  funeral  plan  premiums  come from the states of
Arizona,  Colorado,  Idaho,  Mississippi,  Nevada,  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.


<PAGE>


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

In  marketing  the funeral  plan  insurance,  the Company also seeks and obtains
third-party  endorsements  from  other  cemeteries  and  mortuaries  within  its
marketing areas. Typically, these cemeteries and mortuaries will provide letters
of endorsement  and may share in mailing and other  lead-generating  costs.  The
incentive for such  businesses to share the costs is that these  businesses  are
usually made the beneficiary of the policy.  The following table  summarizes the
life insurance business for the five years ended December 31, 2002:
<TABLE>
<CAPTION>

                                    2002              2001        2000          1999            1998
                                    ----              ----        ----          ----            ----
Life Insurance
Policy/Cert
<S>                                 <C>              <C>          <C>          <C>             <C>
    Count as of December 31         341,909(2)       74,335       71,178       75,808          69,895(1)
Insurance
    in force as of December 31
    (omitted 000)                $2,635,436(2)   $2,425,557   $2,049,789   $2,113,893      $2,123,734(1)
Premiums Collected
    (omitted 000)                   $14,699         $14,860      $14,959      $15,261(1)       $5,718
</TABLE>

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

(2)  Includes asset purchase  transaction with Acadian Life Insurance Company on
     December 23, 2002.

    Underwriting

Factors  considered  in  evaluating an  application  for insurance  coverage can
include the applicant's  age,  occupation,  general health and medical  history.
Upon receipt of a satisfactory  application,  which contains  pertinent  medical
questions,  the  Company  writes  insurance  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                      Exam Required

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 $10,000.  It is written on a  simplified
medical   application   with   underwriting   requirements   being  a  completed
application,  a phone  inspection on each  applicant  and a Medical  Information
Bureau inquiry. There are several underwriting classes in which an applicant can
be placed.  If the  Company  receives  conflicting  or  incomplete  underwriting
information, an attending physician's statement can be ordered.

Annuities

       Products

The Company's  annuity  business  includes  single premium  deferred  annuities,
flexible premium deferred  annuities and immediate  annuities.  A single premium
deferred annuity is a contract where the individual remits a sum of money to the
Company which is retained on deposit until such time as the  individual may wish
to purchase an immediate  annuity or surrender the contract for cash. A flexible
premium  deferred  annuity  gives the contract  holder the right to make premium
payments of varying  amounts or to make no further  premium  payments  after his
initial

<PAGE>


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  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 piece 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, 2002:


                       2002     2001    2000     1999        1998
                       ----     ----    ----     ----        ----
Annuities
Policy/Cert
    Count as of
    December 31       7,711    8,021    8,443    8,369       7,890(1)
Deposits Collected
(omitted 000)        $3,215   $2,550   $3,039   $3,906(1)   $2,770

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

Accident and Health

    Products

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


<PAGE>


    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, 2002:

                          2002      2001      2000     1999         1998
                          ----      ----      ----     ----         ----
Accident
  and Health
Policy/Cert. Count
    as of December 31    18,921    19,343    21,454    24,078       27,201(1)
Premiums Collected
(omitted 000)              $365      $413      $464      $549(1)      $375

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

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,  2002,   reinsured   by  other   companies   aggregated
$220,749,000, representing approximately 9.1% of the Company's life insurance in
force on that date.

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

Investments

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

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


<PAGE>


Cemetery and Mortuary

    Products

The Company has six wholly-owned cemeteries and 13 wholly-owned mortuaries.  The
cemeteries are non-denominational. Through its cemetery and mortuary operations,
the Company  markets a variety of products and services both on a pre-need basis
(prior to death)  and an  at-need  basis (at the time of  death).  The  products
include grave spaces,  interment vaults,  mausoleum crypts and niches,  markers,
caskets,  flowers and other related products.  The services include professional
services of funeral directors, opening and closing of graves, use of chapels and
viewing rooms,  and use of automobiles  and clothing.  The Company has a funeral
chapel at each of its cemeteries,  other than Holladay Memorial Park and Singing
Hills Memorial Park, and has ten separate stand-alone mortuary facilities.

    Markets and Distribution

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

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

The sales  representatives of the Company's cemetery and mortuary operations are
commissioned and receive no salary.  The sales commissions range from 10% to 22%
for cemetery  products  and services and 10% to 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

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

    Markets and Distribution

The Company's  mortgage  lending  services are marketed  primarily to individual
homeowners and has branch offices in Salt Lake City and Orem, Utah; Valencia and
Sacramento,  California;  Orlando, Florida; Colorado Springs, Colorado; Phoenix,
Arizona and  Houston,  Texas.  The average  loan size for  residential  loans is
$150,000.  The  Company's  mortgage  loan  originations  are  through  full time
mortgage  loan officers and  wholesale  brokers who are paid a sales  commission
ranging  between  .7% to 3.0% of the  loan  amount.  Prospective  customers  are
located  through  contacts with builders,  real estate agents and regional sales
representatives..

Recent Acquisitions and Other Business Activities

    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 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 ("GNLIC") on June
6, 2001, which, at that time consisted of all of GNLIC's  insurance  policies 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,  subsequent  to Acadian's  recapture of the
insurance in force from its  reinsurer  Scottish Re (U.S.) Inc. on September 30,
2002.

Under the terms of the Coinsurance  Agreement,  Security National Life agreed to
assume all of the risks (including deaths,  surrenders,  disability,  accidental
deaths and  dismemberment) on the reinsurance  policies as of the effective date
of the Agreement.  Acadian  represented and warranted that each of the reinsured
policies was in force as of the effective date (including  policies which may be
lapsed  subject  to the  right of  reinstatement,  policies  not  lapsed  but in
arrears,  and  policies  in force  and in effect  as paid up and  extended  term
policies)  with  premiums  paid  and its face  amount,  insured,  and all  other
characteristics accurately reflected.  Security National Life accepted liability
for all the  risks  under  the  reinsured  policies  on  eligible  lives for all
benefits  occurring  on or  after  the  effective  date  of the  agreement.  The
liability of Security  National  Life under the  coinsurance  treaty began as of
September 30, 2002.

The Coinsurance  Agreement  further provided Security National Life the right to
assume all right, title and interest to the reinsured policies, as well as other
similar  policies  written by Acadian under similar terms and  conditions in the
state of  Mississippi  from  September  30,  2002,  through  termination  of the
Coinsurance Agreement, with an Assumption Reinsurance Agreement, at any time but
in any event not later than nine months subsequent to December 16, 2002, subject
to all  regulatory  approvals  as required by law. In the event  Acadian were to
come under any  supervision by a state regulator or in the event Acadian were to
apply for or consent in the  appointment  of, or the taking of possession  by, a
receiver,  custodian,  regulator, trustee or liquidator of itself or of all or a
substantial part of its assets, make a general assignment for the benefit of its
creditors,  commence a voluntary case under the Federal  Bankruptcy Code, file a
petition  seeking to take  advantage  of any other law  relating to  bankruptcy,
insolvency,  reorganization  or winding up,  Security  National Life and Acadian
were to be deemed to have converted the  Coinsurance  Agreement to an Assumption
Reinsurance  Agreement  one day prior to such  insolvency  or other  actions and
Security National Life was to be deemed to have assumed the reinsurance policies
as of one day prior to the date thereof.

The  Coinsurance  Agreement  further  provided  that Acadian was 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.


<PAGE>


Subsequent to the coinsurance agreement,  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.

The  Assumption  Agreement  also  requires  Security  National  Life to  issue a
certificate  of  assumption  for each policy in force  included in the Reinsured
Business, reinsuring such policies according to the terms thereof, provided that
Security  National  Life may be subrogated  to and  substituted  for all rights,
privileges and interests accruing under such policies, and provided further that
all obligations and  liabilities  assumed by Security  National Life are assumed
subject to the terms,  limitations  and  conditions  of the  insurance  policies
included in the Reinsured Business and all defenses,  counterclaims and off-sets
that are or might thereafter become available to Security National Life.

Under the  Assumption  Agreement  Security  National  Life agreed to assume only
those insurance risks in contractual  obligations  included within the Reinsured
Business of Acadian.  Security  National  Life did not agree to assume any extra
contractual or other liability or obligations of Acadian. In addition,  Security
National  Life did not agree to assume  any policy  issued to an  insured  whose
death  occurred  prior to January 1, 2003,  and for which a death claim had been
received by Acadian  prior to that date.  However,  Security  National  Life did
agree to assume any valid  claim of an insured  whose  death  occurred  prior to
January 1, 2003,  and for which a death claim was not received by Acadian  prior
to that date.

The Assumption  Agreement  further provided that as of January 1, 2003,  Acadian
was to transfer and assign to Security National Life all of its right, title and
interest  in the  reinsured  policies,  including  policies  which may be lapsed
subject to the right of  reinstatement,  and  policies in force and in effect as
paid up and  extended  term  policies.  Acadian  further  agreed to turn over to
Security  National  Life,  as of  January 1, 2003,  all  policy  owner  service,
underwriting  and other  files on hand that may be needed by  Security  National
Life in the continuation of the Reinsured  Business,  and Acadian further agreed
to turn over all such records and record books as may be necessary  for carrying
on the  Reinsured  Business,  including  all such  permanent  records of Acadian
necessary  for  Security  National  Life to  continue  in  force in  effect  the
reinsured policies.

On December 23, 2002, Security National Life also entered into an Asset Purchase
Agreement  with  Acadian,  in which  Acadian  agreed to  transfer  and convey to
Security National Life all of Acadian's right,  title and interest in and to the
certain  assets of Acadian.  The assets  included  the  following:  (i) computer
hardware;  (ii) licensed software from  International  Business  Machines,  Inc.
("'IBM") for certain software  utilized in the maintenance of Acadian's  general
ledger  accounting  records,  for use on Acadian's AS400  computer;  (iii) owned
software  developed by employees or contractors of Acadian or Gulf National Life
Insurance  Company and utilized by Acadian in accounting for premiums  received,
reserve  computations,  and for  other  purposes;  (iv)  certain  furniture  and
equipment;  (v) the use of the name "Gulf National Life Insurance Company" alone
or as part of any other tradename,  as well as the logo "GNL"; (vi) the sublease
of  certain  real  property  located  in  Jackson,  Mississippi;  and  (vii) the
assignment and assumption of certain agreements and arrangements.  Following the
closing of the asset purchase  transaction with Acadian,  Security National Life
intends to  continue to operate the  business  it acquired  from  Acadian in the
state of Mississippi.


<PAGE>


    Menlo Life Insurance Company

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

    SSLIC Holding Company

On December 17, 1998,  the Company  completed the  acquisition  of SSLIC Holding
Company, (formerly Consolidare Enterprises, Inc.), a Florida corporation ("SSLIC
Holding")  pursuant to the terms of the Acquisition  Agreement which the Company
entered into on April 17, 1998 with SSLIC  Holding and certain  shareholders  of
SSLIC Holding for the purchase of all of the outstanding  shares of common stock
of SSLIC Holding and all of the outstanding shares of stock of Insuradyne Corp.,
a Florida  Corporation  ("Insuradyne").  As of December 31, 2002,  SSLIC Holding
owns  approximately  75% of the  outstanding  shares of common stock of Southern
Security Life Insurance Company, a Florida  corporation  ("Southern  Security").
Southern Security is a Florida domiciled  insurance company with total assets as
of December 31, 2002,  of  approximately  $77.3  million.  Southern  Security is
currently licensed to transact business in 14 states.  Southern Security is also
a reporting  company  under Section 13 of the  Securities  Exchange Act of 1934.
Reference is made to Southern Security's annual report on Form 10-K for the year
ended December 31, 2002, which was filed with the Securities Exchange Commission
on March 31, 2003, Commission File No. 2-35669.

    Crystal Rose Funeral Home

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

Regulation

The  Company's  insurance  subsidiaries,  Security  National  Life and  Southern
Security, are subject to comprehensive  regulation in the jurisdictions in which
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 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 and  Florida  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.


<PAGE>


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

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

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

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

Competition

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

<PAGE>


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, 2002,  the Company  employed 328  full-time  and 45 part-time
employees.

Item 2.  Properties

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

                                                                Approximate
                                                     Owned/      Square
    Location                    Function             Leased      Footage
    --------                    --------             ------      -------
5300 So. 360 West          Corporate Headquarters   Owned (1)    33,000
Salt Lake City, UT

1603 Thirteenth St         Insurance Sales          Owned (2)    10,000
Lubbock, TX

755 Rinehart Rd            Insurance Operations/    Owned (3)    27,000
Lake Mary, FL              Mortgage Sales

6522 Dogwood View Pkwy     Insurance Operations     Leased (4)    5,300
Jackson, MS

1236 No. Spencer, Ste. 2
Mesa, AZ                   Mortgage Sales           Leased (5)    3,700

27201 Tourney Rd., Ste. 121
Valencia, CA               Mortgage Sales           Leased (6)    1,600

12150 Tributary Pnt. Dr.,
 Ste. 160
Gold River, CA             Mortgage Sales           Leased (7)    2,000

1901 No. Union, Ste. 104
Colorado Springs, CO       Mortgage Sales           Leased (8)    2,200


<PAGE>



Item 2.  Properties (Continued)
--------------------
                                                                Approximate
                                                     Owned/        Square
    Location                 Function               Leased        Footage
    --------                 --------               ------        -------
10850 Richmond Ave.,  Ste 270
Houston, TX                Mortgage Sales           Leased (9)    1,600

595 West 800 North
Orem, UT                   Mortgage Sales           Leased (10)   2,000

970 East Holladay Rd.
Murray, UT                 Mortgage Sales           Leased (11)   6,600


(1)  The Company  leases an  additional  7,484  square  feet of the  facility to
     unrelated third parties for  approximately  $70,300 per year,  under leases
     expiring at various dates after 2002.

(2)  The Company  leases an  additional  7,265  square  feet of the  facility to
     unrelated third parties for  approximately  $33,000 per year,  under leases
     expiring at various dates after 2002.

(3)  The Company  leases an  additional  13,301  square feet of the  facility to
     unrelated third parties for  approximately  $232,600 per year, under leases
     expiring at various dates after 2002.

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

(5)  The Company leases this facility for $47,400 per year. The lease expires in
     August 2004.

(6)  The Company leases this facility for $39,600 per year. The lease expires in
     November 2005.

(7)  The Company leases this facility for $43,800 per year. The lease expires in
     July 2004.

(8)  The Company leases this facility for $28,200 per year. The lease expires in
     July 2003.

(9)  The Company leases this facility for $37,200 per year. The lease expires in
     November 2004.

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

(11) The Company  leases this facility for $103,800 per year.  The lease expires
     in December 2003.

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


<PAGE>





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

                                                                                                          Net Saleable Acreage

                                                                                                          Acres
                                                                                                         Sold as          Total
Name of                                                      Date       Developed         Total         Cemetery        Available
 Cemetery                        Location                  Acquired    Acreage(1)      Acreage(1)       Spaces(2)      Acreage(1)
------------                     --------                  --------    ----------      ----------       ---------      ----------
Memorial Estates, Inc.:

<S>                          <C>                           <C>            <C>             <C>             <C>             <C>
Lakeview
   Cemetery(3)               1700 E. Lakeview Dr.
                             Bountiful, UT                  1973           7               40               7              33
Mountain View
   Cemetery(3)               3115 E. 7800 So.
                             Salt Lake City, UT             1973          26               54              17              37

Redwood
   Cemetery(3)(5)            6500 So. Redwood Rd.
                             West Jordan, UT                1973          40               78              35              43

Holladay Memorial
   Park(4)(5)                4800 So. Memory Lane
                             Holladay, UT                   1991           6               14               6               8

Lakehills
   Cemetery(4)               10055 So. State
                             Sandy, UT                      1991          12               41               6              35

Singing Hills
   Memorial
   Park(6)                   2798 Dehesa Rd.
                             El Cajon, CA                   1995          6                35               3              32
</TABLE>

<PAGE>


     (1)  The acreage  represents  estimates of acres that are based upon survey
          reports, title reports,  appraisal reports or the Company's inspection
          of the cemeteries.
     (2)  Includes spaces sold for cash and installment contract sales.
     (3)  As of December 31, 2002, there were mortgages of approximately $45,000
          collateralized  by the property  and  facilities  at Memorial  Estates
          Lakeview, Mountain View and Redwood Cemeteries.
     (4)  As of  December  31,  2002,  there  were  mortgages  of  approximately
          $1,600,000  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,  2002,  there  was a  mortgage  of  approximately
          $534,000 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 thirteen 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
                           Salt Lake City, UT            1973         3            1            20,000

Memorial Estates, Inc.:

  Redwood Mortuary         6500 South Redwood Rd.
                           West Jordan, UT               1973         2            1            10,000

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

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

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

  Deseret
     Mortuary(2)           36 East 700 South
                           Salt Lake City, UT            1991         2            2            36,300
  Lakehills
     Mortuary              10055 South State St.
                           Sandy, UT                     1991         2            1            18,000

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

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

<PAGE>
<TABLE>
<CAPTION>

 Name of                                                 Date       Viewing                       Square
 Mortuary                   Location                   Acquired     Room(s)     Chapel(s)        Footage
 --------                   --------                   --------     ------      ---------        -------
Greer-Wilson:

<S>                        <C>                          <C>            <C>        <C>           <C>
  Greer-Wilson
  Funeral Home             5921 West Thomas Road
                           Phoenix, AZ                   1995          2           2            25,000

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

<PAGE>



     (1)  As of December 31, 2002 there were mortgages of approximately $150,000
          collateralized  by the property  and  facilities  of Camelback  Sunset
          Funeral Home.
     (2)  As of  December  31,  2002,  there  were  mortgages  of  approximately
          $1,600,000  collateralized  by the property and  facilities at Deseret
          Mortuary,  Cottonwood  Mortuary,  Holladay  Memorial  Park,  Lakehills
          Cemetery and Colonial Mortuary.
     (3)  As of  December  31,  2002,  there  was a  mortgage  of  approximately
          $200,000,  collateralized  by the property and  facilities  of Crystal
          Rose Funeral Home.

Item 3.  Legal Proceedings

An action was brought against Southern  Security Life Insurance  Company in July
1999 by Dorothy Ruth Campbell in the Circuit Court of Escambia County,  Alabama.
The action arose out of a denial of coverage under a $10,000  insurance  policy.
The   claims   were  for   breach  of   contract,   bad  faith  and   fraudulent
misrepresentation.  In the action,  Campbell  sought  compensatory  and punitive
damages plus  interest.  The case was dismissed by order of summary  judgment on
January 21, 2003. The appeal time, if appeal is taken, is 42 days.

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 delivered to Lynn W. Brown six stock certificates  representing
2,000 shares in 1970 and 1971.  Mr. Brown died in 1972.  It is asserted  that at
the time the 2,000 shares were issued and  outstanding,  such  represented  a 2%
ownership  of  Memorial  Estates.  It is  alleged  Mr.  Brown  was  entitled  to
preemptive  rights and that 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 with respect to an opportunity to purchase more stock. It is asserted
among other  things that the  plaintiff  "has the right to a transfer of Brown's
shares to Thomas on defendants'  (which  includes  Security  National  Financial
Corporation  as well as  Memorial  Estates,  Inc.) books and to  restoration  of
Brown's  proportion  of share  ownership in Memorial at the time of his death by
issuance and delivery to Thomas of  sufficient  shares of  defendant's  publicly
traded and unrestricted stock in exchange for the 2,000 shares of Memorial stock
and payment of all dividends  from the date of Thomas's  demand,  as required by
Article XV of the Articles of Incorporation." Based on present information,  the
Company intends to vigorously defend the matter, including an assertion that the
statute of limitations bars the claims.

An action was  brought  against  Southern  Security  Life  Insurance  Company by
National Group Underwriters,  Inc. ("NGU") in state court in the State of Texas.
The case was removed by the Company to the United States  District Court for the
Northern District of Texas, Fort Worth Division,  with Civil No.  4:01-CV-403-E.
An Amended  Complaint was filed on or about July 18, 2001. The Amended Complaint
asserts  that NGU had a  contract  with the  Company  wherein  NGU would  submit
applications for certain  policies of insurance to be issued by the Company.  It
is alleged that disputes have arisen  between NGU and the Company with regard to
the calculation and payment of certain  advanced  commissions as well as certain
production bonuses.

NGU  alleged  that it has been  damaged  far in  excess of the  $75,000  minimum
jurisdictional limits of this Court. NGU also seeks attorney's fees and costs as
well as prejudgment and postjudgment  interest. A second amended complaint and a
third amended  complaint  which  included a fraud claim were filed. A motion was
filed by the Company to dismiss the third amended complaint, including the fraud
claim. The court denied the motion.  The Company has  counterclaimed for what it
claims to be a debit  balance owing to it pursuant to the  relationship  between
the parties with said  counterclaim  seeking a substantial  amount from NGU (the
amount  subject to  reduction  as premiums  are  received).  The Company is also
seeking to recover  attorney's  fees and costs,  as well as punitive  damages on
three of its causes of action.  The change of venue  motion of the  Company  was
denied.  Certain  discovery has taken place.  The federal case was dismissed per
stipulation.  The matter was refiled in Texas state court,  Tarrant County, Case
No. 348 195490 02. The claims of the respective parties are essentially the

<PAGE>


same as set forth above which claims include fraudulent  inducement  relative to
entering  into a contract,  fraud,  breach of  contract,  breach of duty of good
faith and fair dealing, attorneys' fees and exemplary damages. Further discovery
involving the parties is anticipated.  The Company intends to vigorously  defend
the matter as well as prosecute its counterclaim.

An action  was  brought  by  Bernice  Johnson  against  Southern  Security  Life
Insurance  Company  in May,  2002 in the  Circuit  Court  of  Jefferson  County,
Alabama,  Civil  Action No. CV02 2963.  The face  amount of  coverage  under the
policy  is  $15,000.  The  insured  died in  July  2001.  Claims  are  made  for
non-payment   of  the   policy   amount.   The   claims   for   relief   include
misrepresentation, mental anguish and emotional distress, fraud, intentional and
bad faith non  payment  of the  benefit,  intentional  and bad faith  failure to
investigate  the claim for  benefits,  reckless and  negligent and wanton action
relative to  misrepresentation  and/or concealment of facts,  negligence and the
wanton  hiring,  training and  supervision of agent.  Compensatory  and punitive
damages are sought along with  interest  and costs.  An answer has been filed by
the Company and discovery is in process.

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

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
  None
                                     PART II

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

The Company's  Class A Common Stock trades on the Nasdaq  National  Market under
the symbol "SNFCA." Prior to August 13, 1987,  there was no active public market
for the Class A and Class C Common  Stock.  As of March 31,  2003,  the  closing
sales price of the Class A Common Stock was $6.62 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, 2001:

Period (Calendar Year)                              Price Range
----------------------                            -----------------
                                           High                         Low
                                          ------                        ----
         2001
              First Quarter               $2.32                         $1.81
              Second Quarter               2.27                          1.82
              Third Quarter                2.63                          2.00
              Fourth Quarter               2.63                          2.09
         2002
              First Quarter                2.81                          2.20
              Second Quarter               6.48                          2.38
              Third Quarter                6.10                          2.74
              Fourth Quarter               6.43                          2.48
         2003
              First Quarter                7.26                          4.75

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 1989 through 2002.

As of December 31, 2002, there were 4,583 record holders of Class A Common Stock
and 143 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, 2002,  are derived from the audited  consolidated  financial
statements.  The data as of December 31, 2002 and 2001,  and for the three years
ended  December 31, 2002,  should be read in conjunction  with the  consolidated
financial  statements,  related notes and other financial  information  included
herein.
<TABLE>
<CAPTION>

Consolidated Statement of Earnings Data:

                                                                         Year Ended December 31,

                                           2002           2001            2000            1999(1)            1998
                                           ----           ----            ----            -------            ----
Revenue
<S>                                    <C>             <C>             <C>             <C>              <C>
Premiums                               $14,077,000     $13,151,000     $12,876,000     $13,176,000      $5,916,000
Net investment income                   12,540,000      12,947,000      12,136,000      10,631,000       7,459,000
Net mortuary and cemetery income        11,256,000      10,603,000       9,417,000      10,178,000       9,226,000
Realized gains on investments            1,021,000          10,000         424,000         313,000          74,000
Mortgage fee income                     57,008,000      40,086,000      22,922,000      14,503,000      10,082,000
Other                                      479,000         152,000         305,000         856,000          63,000
                                      ------------    ------------    ------------    ------------    ------------
Total revenue                           96,381,000      76,949,000      58,080,000      49,657,000      32,820,000
                                      ------------    ------------    ------------    ------------    ------------

Expenses
Policyholder benefits                   13,756,000      11,775,000      12,931,000      11,976,000       6,932,000
Amortization of deferred
  policy acquisition costs               3,994,000       3,870,000       3,189,000       4,858,000       1,274,000
General and administrative expenses     68,459,000      52,247,000      35,959,000      26,959,000      19,649,000
Interest expense                         1,970,000       2,791,000       2,126,000       1,119,000         999,000
Cost of goods & services of
  the mortuaries & cemeteries            2,663,000       2,494,000       2,628,000       3,295,000       2,940,000
                                      ------------    ------------    ------------    ------------    ------------
Total benefits & expenses               90,842,000      73,177,000      56,833,000      48,207,000      31,794,000
                                      ------------    ------------    ------------    ------------    ------------
Income before
  income tax expense                     5,539,000       3,772,000       1,247,000       1,450,000       1,026,000
Income tax expense                      (1,565,000)       (913,000)       (305,000)       (230,000)       (255,000)
Minority interest in (income)
   loss of subsidiary                       18,000         (18,000)        (46,000)       (244,000)             --
                                      ------------    ------------    ------------    ------------    ------------
Net earnings                            $3,992,000      $2,841,000        $896,000        $976,000        $771,000
                                      ============    ============    ============    ============    ============

Net earnings per common share(3)              $.83            $.63            $.21            $.22            $.18
                                      ============    ============    ============    ============    ============
Weighted average outstanding
   common shares                         4,824,000       4,506,000       4,318,000       4,397,000       4,273,000
Net earnings per common
   share-assuming dilution(3)                 $.80            $.63            $.21            $.22            $.18
                                      ============    ============    ============    ============    ============
Weighted average outstanding
   common shares-assuming dilution       4,995,000       4,507,000       4,335,000       4,397,000       4,273,000

</TABLE>

<PAGE>



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

Balance Sheet Data:

<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                                        2002(2)         2001           2000          1999          1998(1)
                                       -------          ----           ----          ----          -------
Assets
<S>                                 <C>             <C>           <C>            <C>            <C>
Investments and restricted assets   $106,162,000    $94,514,000   $108,810,000   $113,208,000   $126,332,000
Cash                                  38,199,000      8,757,000     11,275,000     12,423,000      6,671,000
Receivables                          101,684,000     58,701,000     36,413,000     38,074,000     28,309,000
Other assets                          61,112,000     51,088,000     52,249,000     50,593,000     51,953,000
                                    ------------   ------------   ------------   ------------   ------------
Total assets                        $307,157,000   $213,060,000   $208,747,000   $214,298,000   $213,265,000
                                    ============   ============   ============   ============   ============

Liabilities
Policyholder benefits               $217,895,000   $142,291,000   $141,755,000   $140,368,000   $137,466,000
Notes & contracts payable             19,273,000     12,098,000     14,046,000     23,341,000     22,887,000
Cemetery & mortuary liabilities       10,076,000      9,344,000      8,659,000      6,638,000      6,917,000
Other liabilities                     21,102,000     15,121,000     12,921,000     11,415,000     12,536,000
                                    ------------   ------------   ------------   ------------   ------------
Total liabilities                    268,346,000    178,854,000    177,381,000    181,762,000    179,806,000
                                    ------------   ------------   ------------   ------------   ------------

Minority interest                      4,298,000      4,237,000      4,625,000      6,046,000      6,779,000

Stockholders' equity                  34,513,000     29,969,000     26,741,000     26,490,000     26,680,000
                                    ------------   ------------   ------------   ------------   ------------
Total liabilities and
  stockholders' equity              $307,157,000   $213,060,000   $208,747,000   $214,298,000   $213,265,000
                                    ============   ============   ============   ============   ============

</TABLE>

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

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


<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.

During the years ending December 31, 2002 and 2001,  Security  National Mortgage
Company (SNMC) experienced increases in revenue and expenses due to the increase
in loan volume of its operations.  SNMC is a mortgage lender  incorporated under
the laws of the State of Utah.  SNMC is approved  and  regulated  by the Federal
Housing Administration (FHA), a department of the U.S. Department of Housing and
Urban Development (HUD), to originate mortgage loans that qualify for government
insurance in the event of default by the borrower.  SNMC obtains loans primarily
from independent brokers and correspondents.  SNMC funds the loans from internal
cash flows and lines of credit from financial  institutions.  SNMC receives fees
from the  borrowers  and other  secondary  fees from third party  investors  who
purchase  the loans  from  SNMC.  SNMC  sells  all of its  loans to third  party
investors  and does not retain  servicing to these loans.  SNMC pays the brokers
and  correspondents  a commission  for loans that are brokered  through SNMC. In
1999, SNMC opened new wholesale branches in Sacramento, California and Valencia,
California.  In 2000,  SNMC opened new wholesale  branches in Orlando,  Florida;
Colorado  Springs,  Colorado and Provo,  Utah.  In 2001,  SNMC opened  wholesale
branches in Phoenix, Arizona and Houston, Texas. SNMC originated and sold 11,737
($1,721,000,000  loan amount),  8,738  ($1,268,000,000  loan amount),  and 4,845
($652,000,000 loan amount) loans in 2002, 2001 and 2000, respectively.

On December 17, 1998,  the Company  purchased all of the  outstanding  shares of
common stock of SSLIC Holding Company ("SSLIC Holding")  (formerly  "Consolidare
Enterprises,  Inc.") and Insuradyne Corporation  ("Insuradyne") for a total cost
of $12,248,194. As of December 31, 2002, SSLIC Holding held approximately 75% of
the  outstanding  shares of common  stock of Southern  Security  Life  Insurance
Company ("Southern Security").

On December 23, 2002, the Company  completed an asset purchase  transaction with
Acadian Life Insurance  Company,  a Louisiana  domiciled life insurance  company
("Acadian"),  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 ("GNLIC") on June
6, 2001,  consisting of all of GNLIC's insurance policies in force and in effect
on June 1, 2001.

Significant Accounting Policies and Estimates

The following is a brief summary of our  significant  accounting  policies and a
review of our most critical accounting estimates.  For a complete description of
our significant accounting policies, see Note 1 to our 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



<PAGE>


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
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.  We have the ability to
mitigate  adverse  experience  through  adjustments to credited  interest rates,
policyholder dividends or cost of insurance charges.

Cemetery and Mortuary Operations

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

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

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

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

Prearranged  funeral and  pre-need  cemetery  customer  obtaining  costs - costs
incurred  related to obtaining  new pre-need  cemetery and  prearranged  funeral
business are accounted for under the guidance of the provisions of Statement


<PAGE>


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.

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

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

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

Mortgage Operations

Mortgage fee income is generated  through the  origination  and  refinancing  of
mortgage  loans and is deferred  until such loans are  determined  to be sold in
accordance with FAS No. 140.

All loans are sold to third  party  investors  and the  Company  does not retain
servicing  rights.  The amounts sold to investors are shown on the balance sheet
as 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 the reported amounts of
assets,  liabilities,  revenues and expenses and the  disclosure  of  contingent
assets and liabilities.  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.

The Company uses fair market values based on National  Association  of Insurance
Commissioners  (NAIC) values,  versus values  associated  with normal  marketing
pricing services. The Company considers the difference to be immaterial.

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

<PAGE>


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.

These estimates, which are revised periodically, are based on historical results
and our best estimate of future expenses.

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 the  Company's
cemetery and mortuary operations and mortgage loan operations.  The allowance is
based upon the Company's  experience.  The critical issues that would impact the
cemetery and mortuary operations is the overall economy. The critical issues for
the 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.

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.  Also,
trust  investment  earnings  from any pre-need  sales placed into trust are also
deferred until the merchandise is delivered.

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.


<PAGE>


Results of Operations

2002 Compared to 2001

Total revenues  increased by $19,432,000,  or 25.3%, from $76,949,000 for fiscal
year 2001 to $96,381,000 for fiscal year 2002.  Contributing to this increase in
total  revenues was a  $16,922,000  increase in mortgage fee income,  a $653,000
increase in net mortuary and cemetery sales and a $926,000 increase in insurance
premiums and other considerations.

Insurance  premiums  and  other  considerations   increased  by  $926,000,  from
$13,151,000 in 2001 to  $14,077,000 in 2002.  This increase was primarily due to
the additional  premiums from increased sales of the Company's  traditional life
products.

Net  investment  income  decreased  by  $407,000,  from  $12,947,000  in 2001 to
$12,540,000  in 2002.  This  decrease  was  primarily  attributable  to  reduced
interest earned as a result of lower interest rates during 2002.

Net mortuary and cemetery sales increased by $653,000,  from $10,603,000 in 2001
to  $11,256,000 in 2002.  This increase was primarily due to additional  at-need
cemetery and mortuary sales.

Mortgage  fee income  increased  by  $16,922,000,  from  $40,086,000  in 2001 to
$57,008,000  in 2002.  This  increase was  primarily  attributable  to a greater
number of loan originations during 2002 due to lower interest rates.

Total benefits and expenses were $90,842,000 for 2002, which  constituted  94.3%
of the Company's  total revenues,  as compared to  $73,177,000,  or 95.1% of the
Company's total revenues for 2001.

During 2002, there was a net increase of $902,000 in death benefits,  surrenders
and other  policy  benefits,  and an increase  of  $1,079,000  in future  policy
benefits from  $11,775,000 in 2001 to $13,756,000 in 2002. This net increase was
primarily the result of an increase in traditional life reserves.

Amortization  of  deferred  policy and  pre-need  acquisition  costs and cost of
insurance acquired increased by $124,000,  from $3,870,000 in 2001 to $3,994,000
in 2002.  This  increase  was  reasonable  based  on the  underlying  nature  of
assumptions.

General and administrative  expenses increased by $16,212,000,  from $52,247,000
in 2001 to $68,459,000 in 2002.  Contributing to this increase was a $12,255,000
increase in commission  expenses,  from  $29,859,000  in 2001 to  $42,114,000 in
2002. Salaries increased  $1,386,000,  from $9,028,000 in 2001 to $10,414,000 in
2002.  Other  expenses  increased  $2,571,000,   from  $13,360,000  in  2001  to
$15,931,000  in 2002.  These  increases  were primarily the result of additional
expenses due to increased  numbers of loan  originations  made by the  Company's
mortgage subsidiary in 2002.

Interest expense decreased by $821,000, from $2,791,000 in 2001 to $1,970,000 in
2002.  This  decrease  was due to more  loan  originations  from  the  Company's
mortgage  subsidiary  being  funded  from  internal  sources  of funds and lower
interest rates from borrowings from third parties.

Cost of the mortuary and cemetery goods and services sold increased by $169,000,
from  $2,494,000 in 2001 to $2,663,000 in 2002.  This increase was primarily due
to greater at-need cemetery and mortuary sales.


<PAGE>


2001 Compared to 2000

Total revenues  increased by $18,870,000,  or 32.5%, from $58,079,000 for fiscal
year 2000 to $76,949,000, for fiscal year 2001. Contributing to this increase in
total  revenues was a $17,165,000  increase in mortgage fee income,  an $810,000
increase in net  investment  income,  a $1,187,000  increase in net mortuary and
cemetery  sales  and  a  $275,000  increase  in  insurance  premiums  and  other
considerations.

Insurance  premiums  and  other  considerations   increased  by  $275,000,  from
$12,876,000 in 2000 to  $13,151,000 in 2001.  This increase was primarily due to
the additional  premiums from increased sales of the Company's  traditional life
products.

Net  investment  income  increased  by  $810,000,  from  $12,136,000  in 2000 to
$12,946,000  in 2001.  This  increase was primarily  attributable  to additional
interest  earned  as a result of a greater  number of loan  originations  during
2001.

Net mortuary and cemetery sales increased by $1,187,000, from $9,417,000 in 2000
to  $10,603,000 in 2001.  This increase was primarily due to additional  at-need
cemetery and mortuary sales.

Mortgage  fee income  increased  by  $17,165,000,  from  $22,921,000  in 2000 to
$40,086,000  in 2001.  This  increase was  primarily  attributable  to a greater
number of loan originations  during 2001 due to lower interest rates,  resulting
in more borrowers refinancing their mortgage loans.

Total benefits and expenses were $73,177,000 for 2001, which  constituted  95.1%
of the Company's  total revenues,  as compared to  $56,832,000,  or 97.9% of the
Company's total revenues for 2000.

During  2001,  there  was  a net  increase  of  $1,160,000  in  death  benefits,
surrenders  and other policy  benefits,  and a decrease of  $2,316,000 in future
policy  benefits  from  $12,931,000  in 2000 to  $11,775,000  in 2001.  This net
decrease was primarily the result of a decrease in traditional life reserves.

Amortization  of  deferred  policy and  pre-need  acquisition  costs and cost of
insurance acquired increased by $681,000,  from $3,189,000 in 2000 to $3,870,000
in  2001.  This  increase  was  reasonable  based  on the  underlying  actuarial
assumptions.

General and administrative  expenses increased by $16,288,000,  from $35,959,000
in 2000 to $52,247,000 in 2001. Contributing to this increase was an $11,458,000
increase in commission  expenses,  from  $18,401,000  in 2000 to  $29,859,000 in
2001.  Salaries increased  $1,360,000,  from $7,667,000 in 2000 to $9,028,000 in
2001.  Other  expenses  increased   $3,470,000,   from  $9,890,000  in  2000  to
$13,360,000  in 2001.  These  increases  were primarily the result of additional
expenses due to increased  numbers of loan  originations  made by the  Company's
mortgage subsidiary in 2001.

Interest expense increased by $665,000, from $2,126,000 in 2000 to $2,791,000 in
2001.  This  increase  was  primarily  due to more  loan  originations  from the
Company's mortgage subsidiary being funded by third parties in 2001.

Cost of the mortuary and cemetery goods and services sold decreased by $134,000,
from  $2,628,000 in 2000 to $2,494,000 in 2001.  This decrease was primarily due
to additional  sales of cemetery burial  properties in 2001,  which have a lower
cost of goods sold than other funeral products.

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

<PAGE>


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

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

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

The Company's  investment  policy is to invest  predominately  in fixed maturity
securities,  mortgage loans, and warehouse  mortgage loans on a short-term basis
before selling the loans to investors in accordance  with the  requirements  and
laws  governing the life  insurance  subsidiaries.  Bonds owned by the insurance
subsidiaries  amounted  to  $51,530,000  as of  December  31,  2002  compared to
$49,271,000 as of December 31, 2001.  This represents 51% of the total insurance
related  investments  in 2002 as compared to 55% in 2001.  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, 2002, 4% ($1,903,000)  and at
December 31, 2001, 5% ($2,534,000) 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  $73,458,000)  could  change by the
following  amounts based on the respective  basis point swing (the change in the
market values were calculated using a modeling technique):

                      -200 bps     -100 bps      +100 bps      +200 bps
                      --------     --------      --------      --------
Change in
   Market Value
   (in thousands)      $4,960       $3,275       $(4,335)     $(10,258)

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, 2002
and 2001, the life subsidiaries exceeded the regulatory criteria.

The Company's total  capitalization  of  stockholders'  equity and bank debt and
notes payable was  $53,787,000 and $42,067,000 as of December 31, 2002 and 2001,
respectively.  Stockholders' equity as a percent of total capitalization was 64%
and 71% as of December 31, 2002 and 2001, respectively.

Lapse  rates  measure the amount of  insurance  terminated  during a  particular
period.  The  Company's  lapse rate for life  insurance  in 2002 was  10.7%,  as
compared to a rate of 13.2% in 2001.


<PAGE>


On December 17, 1998,  the Company  completed  the  acquisition  of  Consolidare
Enterprises,  Inc., a Florida corporation  ("Consolidare") pursuant to the terms
of the  Acquisition  Agreement  which the Company entered into on April 17, 1998
with Consolidare and certain shareholders of Consolidare for the purchase of all
of the  outstanding  shares of common  stock of  Consolidare.  Consolidare  owns
approximately 75% of the outstanding shares of common stock of Southern Security
Life  Insurance  Company,  a  Florida  corporation  ("SSLIC"),  and  all  of the
outstanding  shares  of  stock  of  Insuradyne  Corp.,  a  Florida   corporation
("Insuradyne").

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

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

The administrative services fee may be increased,  beginning on January 1, 2002,
to reflect  increases in the Consumer  Price Index,  over the index amount as of
January 1, 2001. The  Administrative  Services  Agreement shall remain in effect
for an initial term expiring on December 16, 2003. The term of the agreement may
be  automatically  extended for  additional  one-year  terms  unless  either the
Company or SSLIC shall deliver a written notice on or before September 30 of any
year  stating to the other its  desire not to extend the term of the  agreement.
However, in no event can the agreement be terminated prior to December 16, 2003.

On June  30,  1999,  the  Company  entered  into a  Coinsurance  and  Assumption
Agreement (the  "Agreement")  with Menlo Life Insurance  Company ("Menlo Life"),
wherein the Company has assumed 100% of the policies in force of Menlo Life. The
Agreement  was not in effect  until it was  approved by Menlo  Life's  domiciled
state of Arizona and the state of California.  These  approvals were obtained on
September 9, 1999 for the Arizona Insurance Department,  and on December 9, 1999
for the California  Insurance  Department.  Menlo Life paid consideration to the
Company  in the form of  statutory  admitted  assets  to equal  the  liabilities
assumed.  On  September  25,  2001,  Menlo Life paid to the Company  $308,978 in
policy loans and $2,269,403 in cash.

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 ("GNLIC") on June
6, 2001, which, at that time consisted of all of GNLIC's  insurance  policies 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,  subsequent  to Acadian's  recapture of the
insurance in force from its  reinsurer  Scottish Re (U.S.) Inc. on September 30,
2002.


<PAGE>


Under the terms of the Coinsurance  Agreement,  Security National Life agreed to
assume all of the risks (including deaths,  surrenders,  disability,  accidental
deaths and  dismemberment) on the reinsurance  policies as of the effective date
of the Agreement.  Acadian  represented and warranted that each of the reinsured
policies was in force as of the effective date (including  policies which may be
lapsed  subject  to the  right of  reinstatement,  policies  not  lapsed  but in
arrears,  and  policies  in force  and in effect  as paid up and  extended  term
policies)  with  premiums  paid  and its face  amount,  insured,  and all  other
characteristics accurately reflected.  Security National Life accepted liability
for all the  risks  under  the  reinsured  policies  on  eligible  lives for all
benefits  occurring  on or  after  the  effective  date  of the  agreement.  The
liability of Security  National  Life under the  coinsurance  treaty began as of
September 30, 2002.

The Coinsurance  Agreement  further provided Security National Life the right to
assume all right, title and interest to the reinsured policies, as well as other
similar  policies  written by Acadian under similar terms and  conditions in the
state of  Mississippi  from  September  30,  2002,  through  termination  of the
Coinsurance Agreement, with an Assumption Reinsurance Agreement, at any time but
in any event not later than nine months subsequent to December 16, 2002, subject
to all  regulatory  approvals  as required by law. In the event  Acadian were to
come under any  supervision by a state regulator or in the event Acadian were to
apply for or consent in the  appointment  of, or the taking of possession  by, a
receiver,  custodian,  regulator, trustee or liquidator of itself or of all or a
substantial part of its assets, make a general assignment for the benefit of its
creditors,  commence a voluntary case under the Federal  Bankruptcy Code, file a
petition  seeking to take  advantage  of any other law  relating to  bankruptcy,
insolvency,  reorganization  or winding up,  Security  National Life and Acadian
were to be deemed to have converted the  Coinsurance  Agreement to an Assumption
Reinsurance  Agreement  one day prior to such  insolvency  or other  actions and
Security National Life was to be deemed to have assumed the reinsurance policies
as of one day prior to the date thereof.

The  Coinsurance  Agreement  further  provided  that Acadian was 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.

Subsequent to the coinsurance agreement,  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.

The  Assumption  Agreement  also  requires  Security  National  Life to  issue a
certificate  of  assumption  for each policy in force  included in the Reinsured
Business, reinsuring such policies according to the terms thereof, provided that
Security  National  Life may be subrogated  to and  substituted  for all rights,
privileges and interests accruing under such policies, and provided further that
all obligations and  liabilities  assumed by Security  National Life are assumed
subject to the terms,  limitations  and  conditions  of the  insurance  policies
included in the Reinsured Business and all defenses,  counterclaims and off-sets
that are or might thereafter become available to Security National Life.

Under the  Assumption  Agreement  Security  National  Life agreed to assume only
those insurance risks in contractual  obligations  included within the Reinsured
Business of Acadian.  Security  National  Life did not agree to assume any extra
contractual or other liability or obligations of Acadian. In addition,  Security
National  Life did not agree to assume  any policy  issued to an  insured  whose
death  occurred  prior to January 1, 2003,  and for which a death claim had been
received by Acadian  prior to that date.  However,  Security  National  Life did
agree to assume any valid  claim of an insured  whose  death  occurred  prior to
January 1, 2003,  and for which a death claim was not received by Acadian  prior
to that date.


<PAGE>


The Assumption  Agreement  further provided that as of January 1, 2003,  Acadian
was to transfer and assign to Security National Life all of its right, title and
interest  in the  reinsured  policies,  including  policies  which may be lapsed
subject to the right of  reinstatement,  and  policies in force and in effect as
paid up and  extended  term  policies.  Acadian  further  agreed to turn over to
Security  National  Life,  as of  January 1, 2003,  all  policy  owner  service,
underwriting  and other  files on hand that may be needed by  Security  National
Life in the continuation of the Reinsured  Business,  and Acadian further agreed
to turn over all such records and record books as may be necessary  for carrying
on the  Reinsured  Business,  including  all such  permanent  records of Acadian
necessary  for  Security  National  Life to  continue  in  force in  effect  the
reinsured policies.

At December 31, 2002,  $22,964,225 of the Company's  consolidated  stockholders'
equity represents the statutory  stockholders' equity of the Company's insurance
subsidiaries.  The life  insurance  subsidiaries  cannot pay a  dividend  to its
parent company without the approval of insurance regulatory authorities.

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  142,  "Goodwill  and  Other
Intangible Assets".  Under SFAS No. 142,  amortization of goodwill is precluded,
however,  its  recoverability  must be periodically (at least annually) reviewed
and tested for  impairment.  Goodwill must be tested at the reporting unit level
for  impairment  in the year of adoption,  including  an initial test  performed
within six  months of  adoption.  If the  initial  test  indicates  a  potential
impairment,  then a more detailed analysis to determine the extent of impairment
must be completed  within twelve months of adoption.  SFAS No. 142 also requires
that  useful  lives for  intangibles  other  than  goodwill  be  reassessed  and
remaining amortization periods be adjusted accordingly. The adoption of SFAS No.
142 did not have a  material  impact on the  Company's  financial  condition  or
results of operations.

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 establishes an accounting model for
long-lived  assets to be  disposed  of by sale that  applies  to all  long-lived
assets,  including  discontinued  operations.  SFAS No. 144 requires  that those
long-lived assets be measured at the lower of carrying amount or fair value less
cost to sell,  whether  reported in  continuing  operations  or in  discontinued
operations.  The  provisions  of  SFAS  No.  144  are  effective  for  financial
statements  issued for fiscal years beginning after December 15, 2001.  Adoption
of SFAS No.  144 did not  have a  material  impact  on the  Company's  financial
condition  or results of  operations.  In April 2002,  FASB issued SFAS No. 145,
"Rescission of FASB  Statements  No. 4, 44, and 64,  Amendment of FASB Statement
No. 13, and Technical  Corrections".  Under historical  guidance,  all gains and
losses resulting from the  extinguishment of debt were required to be aggregated
and, if material, classified as an extraordinary item, net of related income tax
effect.  SFAS No. 145 rescinds  that guidance and requires that gains and losses
from  extinguishments of debt be classified as extraordinary  items only if they
are both unusual and infrequent in occurrence. SFAS No. 145 also amends SFAS No.
13,  "Accounting  for Leases" for the required  accounting  treatment of certain
lease  modifications  that  have  economic  effects  similar  to  sale-leaseback
transactions.  SFAS No. 145 requires that those lease modifications be accounted
for in the same manner as  sale-leaseback  transactions.  The provisions of SFAS
No. 145 related to SFAS No. 13 are effective for  transactions  occurring  after
May 15, 2002.  Adoption of the provisions of SFAS No. 145 related to SFAS No. 13
did not have a material impact on the Company's  financial  condition or results
of operations. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated  with  Exit  or  Disposal  Activities",   which  addresses  financial
accounting and reporting for costs  associated with exit or disposal  activities
and nullifies EITF Issue No. 94-3,  "Liability  Recognition for Certain Employee
Termination  Benefits and Other Costs to Exit an Action (including Certain Costs
Incurred in a Restructuring)"  ("Issue 94-3"). The principal  difference between
SFAS No. 146 and Issue 94-3 is that SFAS No. 146 requires that a liability for a
cost  associated  with an exit or  disposal  activity  be  recognized  when  the
liability is incurred,  rather than at the date of an entity's  commitment to an
exit plan.  SFAS No. 146 is  effective  for exit or  disposal  activities  after
December 31, 2002.  Based upon a  preliminary  review,  adoption of SFAS No. 146
would not have a material impact on the Company's financial condition or results
of operations.


<PAGE>


In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness  of Others" ("FIN 45").  FIN 45 requires  certain  guarantees to be
recorded at fair value and also  requires a guarantor  to make new  disclosures,
even when the likelihood of making  payments  under the guarantee is remote.  In
general, the Interpretation  applies to contracts or indemnification  agreements
that contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying that is related to an asset,  liability, or an
equity security of the guaranteed  party.  The recognition  provisions of FIN 45
are effective on a prospective  basis for  guarantees  issued or modified  after
December 31, 2002.  The  disclosure  requirements  are  effective  for financial
statements of interim and annual periods  ending after December 15, 2002.  Based
upon a preliminary  review,  adoption of FIN 45 would not have a material impact
on the Company's financial condition or results of operations.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation -- Transition and Disclosure and Amendment to FASB No. 123",  which
provides  three  optional   transition  methods  for  entities  that  decide  to
voluntarily  adopt  the fair  value  recognition  principles  of SFAS  No.  123,
"Accounting  for  Stock  Issued  to  Employees",  and  modifies  the  disclosure
requirements  of that  Statement.  Under  the  prospective  method,  stock-based
compensation expense is recognized for awards granted after the beginning of the
fiscal  year in which  the  change  is made.  The  modified  prospective  method
recognizes  stock-based  compensation expense related to new and unvested awards
in the year of change  equal to that which would have been  recognized  had SFAS
No. 123 been adopted as of its  effective  date,  fiscal years  beginning  after
December  15,  1994.  The  retrospective  restatement  method  recognizes  stock
compensation costs for the year of change and restates financial  statements for
all prior periods presented as though the fair value  recognition  provisions of
SFAS No. 123 had been adopted as of its effective  date.  Since the Company does
not  intend to  voluntarily  adopt  the fair  value  presentation  for FASB 123,
adoption of SFAS 148 would not have a material effect on the financial condition
or results of operations of the Company. However, pro forma disclosures required
by  SFAS  148  will  be  included  in the  Company's  future  interim  financial
statements when necessary.

In January 2003, the FASB issued  Interpretation 46,  "Consolidation of Variable
Interest  Entities"  ("FIN  46"),  which  requires  an  enterprise  to assess if
consolidation  of an entity is  appropriate  based  upon its  variable  economic
interests in a variable  interest  entity (VIE).  The initial  determination  of
whether  an  entity  is a VIE  shall be made on the date at which an  enterprise
becomes  involved  with the  entity.  A VIE is an  entity  in which  the  equity
investors do not have the characteristics of a controlling financial interest or
do not have  sufficient  equity at risk for the entity to finance its activities
without  additional  subordinated  financial  support  from  other  parties.  An
enterprise  shall  consolidate  a VIE if it has a  variable  interest  that will
absorb a majority of the VIE's expected losses if they occur, receive a majority
of the  entity's  expected  residual  returns if they occur or both. A direct or
indirect ability to make decisions that significantly  affect the results of the
activities of a VIE is a strong indication that an enterprise has one or both of
the characteristics that would require consolidation of the VIE.

FIN 46 is effective for new VIE's established subsequent to January 31, 2003 and
for existing  VIE's as of July 1, 2003.  Based upon a  preliminary  review,  the
adoption of FIN 46 would not have a material  impact on the Company's  financial
condition or results of  operations as there were no material  VIE's  identified
which would require  consolidation.  FIN 46 further  requires the  disclosure of
certain  information  related to VIE's in which the Company  holds a significant
variable interest.  The Company does not believe that it owns any such interests
that require disclosure at this time.




<PAGE>


Item 8.  Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES

                                                                      Page No.

Financial Statements:

    Report of Independent Auditors......................................34

    Consolidated Balance Sheet, December 31,
    2002 and 2001.......................................................35

    Consolidated Statement of Earnings,
    Years Ended December 31, 2002, 2001,
    and 2000............................................................37

    Consolidated Statement of Stockholders'
    Equity, Years Ended December 31, 2002, 2001
    and 2000. ..........................................................38

    Consolidated Statement of Cash Flows,
    Years Ended December 31, 2002, 2001 and
    2000    ............................................................39

    Notes to Consolidated Financial
    Statements..........................................................41


Financial Statement Schedules:

 I.   Summary of Investments -- Other than
      Investments in Related Parties....................................75

II.   Condensed Financial Information of
      Registrant........................................................77

IV.   Reinsurance.......................................................83

 V.   Valuation and Qualifying Accounts.................................84


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 AUDITORS'















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, 2002 and 2001, and the
related  consolidated  statements of earnings,  stockholders'  equity,  and cash
flows for the three years in the period ended  December 31, 2002.  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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence supporting the amounts and disclosures in the 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 at December 31, 2002
and 2001, and the consolidated  results of their operations and their cash flows
for the three years in the period ended  December 31, 2002, 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 + CO

Salt Lake City, Utah
March 28, 2003


<PAGE>
                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                           Consolidated Balance Sheet

                                                             December 31,
Assets:                                                 2002             2001
-------                                                 ----             ----
Insurance-related investments:
Fixed maturity securities
  held to maturity, at amortized cost (market
  $33,927,051 and $28,697,986 for 2002 and 2001)     $33,015,097   $27,799,909
Fixed maturity securities available
  for sale, at market (cost $17,153,223 in 2002
  and $20,565,833 in 2001)                            18,514,943    21,470,729
Equity securities available for sale,
  at market (cost $1,929,540 and $1,605,980
  for 2002 and 2001)                                   2,642,093     2,641,549
Mortgage loans on real estate                         21,016,008    15,479,305
Real estate, net of accumulated
  depreciation and allowances for
  losses of $3,728,539 and $3,523,912
  for 2002 and 2001                                    9,331,248     9,051,691
Policy, student and other loans                       10,974,165    11,277,975
Short-term investments                                 5,335,478     1,453,644
                                                   -------------  ------------
     Total insurance-related investments             100,829,032    89,174,802
Restricted assets of cemeteries and mortuaries         5,332,736     5,339,436
Cash                                                  38,199,041     8,757,246
Receivables:
  Trade contracts                                     11,358,027     6,945,274
  Mortgage loans sold to investors                    89,455,105    50,695,073
  Receivable from agents                               2,054,071     2,061,541
  Receivable from officers                                70,290       102,200
  Other                                                1,131,977     1,183,927
                                                   -------------  ------------
     Total receivables                               104,069,470    60,988,015
  Allowance for doubtful accounts                     (2,385,309)   (2,287,241)
                                                   -------------  ------------
  Net receivables                                    101,684,161    58,700,774
Policyholder accounts on deposit
  with reinsurer                                       6,955,691     7,148,068
Land and improvements held for sale                    8,429,215     8,346,448
Accrued investment income                                928,287     1,059,789
Deferred policy and pre-need
  acquisition costs                                   15,917,257    14,453,023
Property, plant and equipment, net                    10,921,635    10,802,387
Cost of insurance acquired                            15,984,340     7,615,348
Excess of cost over net assets
  of acquired subsidiaries                             1,029,562     1,065,045
Other                                                    945,805       597,209
                                                   -------------  ------------
     Total assets                                   $307,156,762  $213,059,575
                                                   =============  ============



See accompanying notes to consolidated financial statements.


<PAGE>


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

                                                            December 31,
                                                            ------------
                                                       2002             2001
                                                       ----             ----
Liabilities:
------------
Future life, annuity, and other
  policy benefits                                 $215,980,207     $140,504,866
Unearned premium reserve                             1,914,700        1,785,977
Bank loans payable                                  16,113,227        8,461,900
Notes and contracts payable                          3,160,009        3,635,776
Deferred pre-need cemetery and funeral
  contracts revenues and estimated
  future cost of pre-need sales                     10,002,396        9,338,353
Accounts payable                                     1,553,777        1,319,319
Funds held under reinsurance treaties                1,334,964        1,379,640
Other liabilities and accrued expenses              10,182,382        5,552,799
Income taxes                                         8,103,882        6,874,597
                                                 -------------    -------------
     Total liabilities                             268,345,544      178,853,227

Commitments and contingencies                          --               --

Minority interest                                    4,297,807        4,237,030

Stockholders' Equity:
--------------------
Common stock:
     Class A: $2 par value, authorized
         10,000,000 shares, issued 5,794,492
         shares in 2002 and 5,363,591 shares
         in 2001                                    11,588,984       10,727,182
     Class C: $0.20 par value, authorized
         7,500,000 shares, issued 6,182,669
         shares in 2002 and 6,113,430 shares
         in 2001                                     1,236,533        1,222,686
                                                 -------------    -------------
Total common stock                                  12,825,517       11,949,868
Additional paid-in capital                          11,280,842       10,168,523
Accumulated other comprehensive income, net of
  deferred taxes of $293,519 and
  $212,734 for 2002 and 2001                         1,191,863        1,223,930
Retained earnings                                   11,992,542        9,989,230
Treasury stock at cost (1,151,811 Class
     A shares and 71,749 Class C shares
     in 2002; 1,294,716 Class A shares and
     68,332 Class C shares in 2001, held
     by affiliated companies)                       (2,777,353)      (3,362,233)
                                                 -------------    -------------
Total stockholders' equity                          34,513,411       29,969,318
                                                 -------------    -------------
  Total liabilities and stockholders' equity      $307,156,762     $213,059,575
                                                 =============    =============

See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                       Consolidated Statement of Earnings


                                                               Year Ended December 31,
                                                               -----------------------
                                                      2002           2001             2000
                                                      ----           ----             ----
Revenues:
--------
<S>                                               <C>             <C>             <C>
Insurance premiums and other considerations       $14,076,652     $13,150,875     $12,875,585
Net investment income                              12,539,430      12,946,499      12,136,072
Net mortuary and cemetery sales                    11,256,069      10,603,451       9,416,927
Realized gains on investments and other assets      1,020,820          10,428         423,805
Mortgage fee income                                57,008,283      40,086,097      22,921,585
Other                                                 479,424         151,945         304,886
                                                 ------------    ------------    ------------
  Total revenue                                    96,380,678      76,949,295      58,078,860

Benefits and expenses:
---------------------
Death benefits                                      5,637,217       5,354,522       3,959,811
Surrenders and other  policy benefits               2,086,829       1,467,323       1,702,251
Increase in future policy benefits                  6,031,685       4,953,008       7,268,720
Amortization of deferred
  policy and pre-need acquisition
  costs and cost of insurance acquired              3,993,393       3,870,158       3,188,752
General and administrative expenses:
  Commissions                                      42,114,240      29,859,295      18,401,314
  Salaries                                         10,414,392       9,027,523       7,667,263
  Other                                            15,930,804      13,360,362       9,890,197
Interest expense                                    1,970,342       2,790,627       2,126,169
Cost of goods and services sold of the
  mortuaries and cemeteries                         2,662,791       2,494,367       2,628,260
                                                 ------------    ------------    ------------

  Total benefits and expenses                      90,841,693      73,177,185      56,832,737
                                                 ------------    ------------    ------------

Earnings before income taxes                        5,538,985       3,772,110       1,246,123
Income tax expense                                 (1,565,393)       (913,539)       (304,640)
Minority interest                                      17,688         (17,791)        (45,754)
                                                 ------------    ------------    ------------
  Net earnings                                     $3,991,280      $2,840,780        $895,729
                                                 ============    ============    ============

Net earnings per common share                            $.83            $.63            $.21
                                                 ============    ============    ============

  Weighted average
    outstanding common shares                       4,823,914       4,506,476       4,317,779

Net earnings per common share-
  assuming dilution                                      $.80            $.63            $.21
                                                 ============    ============    ============

  Weighted average outstanding common
    shares assuming-dilution                        4,995,285       4,506,858       4,335,044

</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>




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

                                                                            Accumulated
                                                              Additional       Other
                                   Class          Class        Paid-in     Comprehensive     Retained     Treasury
                                     A              C          Capital         Income        Earnings       Stock             Total
                                 --------        -------      ---------     -------------    --------       -----             -----
<S>                              <C>           <C>           <C>           <C>              <C>           <C>            <C>
Balance at January 1, 2000       $9,727,462    $1,111,070    $10,015,942       $665,691     $7,516,640    $(2,547,112)  $26,489,693
                               ------------    ----------    -----------   ------------    ------------    ------------ -----------

Comprehensive income:
  Net earnings                         --          --              --              --          895,729           --         895,729
  Unrealized gain on securities        --          --              --           171,060          --              --         171,060

Total comprehensive income             --          --              --              --            --              --       1,066,789
                                                                                                                       ------------
Stock dividends                     486,786        55,503         38,774           --         (581,063)          --           --
Conversion Class C to Class A         1,014        (1,012)            (2)          --            --              --           --
Purchase of treasury stock             --            --            --              --            --          (815,121)     (815,121)
                               ------------    ----------     -----------   ------------   ------------    ------------  ----------

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

Comprehensive income:
  Net earnings                 $      --       $     --       $    --        $    --        $2,840,780    $      --      $2,840,780

  Unrealized gain on securities       --             --            --          387,179           --              --         387,179

Total comprehensive income            --             --            --             --             --              --       3,227,959
                                                                                                                       ------------
Stock dividends                     510,826        58,221        113,809          --          (682,856)          --           --
Conversion Class C to Class A         1,094        (1,096)         --             --             --              --              (2)
                               ------------    ----------    -----------   ------------    ------------    ------------ -----------

Balance at December 31, 2001    $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 gain on securities       --             --           --           (32,067)         --              --         (32,067)
                                                                                                                      ------------
Total comprehensive income            --             --           --             --             --              --       3,959,213
                                                                                                                      ------------
Stock dividends                     552,024        58,883         --             --           (610,907)         --              --
Conversion Class C to Class A        45,036       (45,036)        --             --              --             --              --
Exercise of stock options           264,742          --        1,112,319         --         (1,377,061)         --              --
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
                               ============    ===========   ============   ==========     ===========     ===========  ===========
</TABLE>

See accompanying notes to consolidated financial statements


<PAGE>
<TABLE>
<CAPTION>





                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statement of Cash Flows

                                                                                      Year Ended December 31,
                                                                                      -----------------------
                                                                               2002             2001            2000
                                                                               ----             ----            ----
Cash flows from operating activities:
<S>                                                                         <C>             <C>               <C>
     Net earnings                                                           $3,991,280      $2,840,780        $895,729
     Adjustments to reconcile net earnings
       to net cash provided by (used in) operating activities:
          Realized gains on investments and other assets                    (1,020,820)        (10,428)       (423,805)
          Depreciation                                                       1,553,399       1,350,372       1,202,158
          Provision for losses on real estate
            accounts and loans receivable                                       96,520         793,194         219,269
          Amortization of goodwill, premiums, and discounts                    121,329         197,793         214,355
          Provision for deferred income taxes                                  970,139         522,047         259,952
          Policy and pre-need acquisition costs deferred                    (4,462,624)     (3,834,432)     (5,365,417)
          Policy and pre-need acquisition costs amortized                    3,256,076       3,045,996       2,320,710
          Cost of insurance acquired amortized                                 737,317         824,162         868,042
     Change in assets and liabilities net of effects from purchases and
       disposals of subsidiaries:
          Land and improvements held for sale                                  626,688         139,075          37,164
          Future life and other benefits                                     5,349,152       5,734,205       7,023,493
          Receivables for mortgage loans sold                              (38,760,032)    (24,786,179)      2,185,751
          Other operating assets and liabilities                               578,750       2,400,265       1,028,892
                                                                          ------------    ------------    ------------
              Net cash provided by (used in) operating activities          (26,962,826)    (10,783,150)     10,466,293
                                                                          ------------    ------------    ------------
Cash flows from investing activities:
     Securities held to maturity:
          Purchase - fixed maturity securities                              (4,147,878)       (402,995)     (4,801,309)
          Calls and maturities - fixed maturity securities                   8,025,610      12,086,818       5,137,323
     Securities available for sale:
          Purchases - equity securities                                       (327,726)             --        (418,365)
          Sales - equity securities                                          3,303,095       2,826,094       4,797,396
     Purchases of short-term investments                                   (13,819,476)    (14,301,717)     (7,523,432)
     Sales of short-term investments                                         9,937,642      13,876,000       7,785,815
     Purchases of restricted assets                                            (56,899)       (497,617)       (604,345)
     Mortgage, policy, and other loans made                                (10,129,993)     (3,114,060)     (3,016,125)
     Payments received for mortgage, policy, and other loans                 4,939,374       5,626,747       4,782,778
     Purchases of property, plant, and equipment                            (1,348,752)     (1,006,824)     (1,719,120)
     Disposal of property and equipment                                             --              --         625,507
     Purchases of real estate                                               (3,153,299)       (784,677)     (1,329,347)
     Sale of real estate                                                     2,825,666         195,562              --
     Cash received in assumed reinsurance                                   55,827,793              --              --
                                                                          ------------    ------------    ------------
          Net cash provided by investing activities                         51,875,157      14,503,331       3,716,776
                                                                          ------------    ------------    ------------
</TABLE>








See accompanying notes to the consolidated financial statements.




<PAGE>
<TABLE>
<CAPTION>


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


                                                                             Year Ended December 31,
                                                                             -----------------------
                                                                       2002              2001               2000
                                                                       ----              ----               ----
Cash flows from financing activities:
<S>                                                                    <C>             <C>             <C>
     Annuity and pre-need contract receipts                            7,635,422       9,707,844       8,714,642
     Annuity and pre-need contract withdrawals                       (10,866,398)    (13,997,537)    (13,935,567)
     Repayment of bank loans and notes and contracts payable          (1,824,440)     (2,698,272)     (1,652,036)
     Proceeds from borrowings on bank loans and notes and
          contracts payable                                            9,000,000         750,000       1,044,202
     Sale (purchase) of treasury stock                                   584,880              --        (815,121)
     Net change in line of credit for financing of mortgage loans             --              --      (8,687,023)
                                                                    ------------    ------------    ------------
     Net cash provided by (used in) financing activities               4,529,464      (6,237,965)    (15,330,903)
                                                                    ------------    ------------    ------------
Net change in cash                                                    29,441,795      (2,517,784)     (1,147,834)
Cash at beginning of year                                              8,757,246      11,275,030      12,422,864
                                                                    ------------    ------------    ------------
Cash at end of year                                                  $38,199,041      $8,757,246     $11,275,030
                                                                    ============    ============    ============
</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                        $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
                                                ===========



















See accompanying notes to the consolidated financial statements.


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000



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 five mortuaries
in  Arizona.  The  mortgage  loan  segment  is  an  approved   governmental  and
conventional  lender that originates and underwrites  residential and commercial
loans for new construction, existing homes and real estate projects primarily in
California, Colorado, Florida, Utah, Arizona and Texas.

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.

Risks

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

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

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


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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 financial  statements  and
accompanying notes. Actual results could differ from those estimates.

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

Principles of Consolidation

The  accompanying  consolidated  financial  statements  include the accounts and
operations of the Company. The Company's  subsidiaries at December 31, 2002, are
as follows:

Security National Life Insurance Company
Security National Mortgage Company
Memorial Estates, Inc.
Memorial Mortuary
Paradise Chapel Funeral Home
Singing Hills Memorial Park
Cottonwood Mortuary, Inc.
Deseret Memorial, Inc.
Holladay Cottonwood Memorial Foundation
Holladay Memorial Park
Camelback Sunset Funeral Home, Inc.
Greer-Wilson Funeral Home
Crystal Rose Funeral Home
Hawaiian Land Holdings
SSLIC Holding Company
Insuradyne Corporation
Southern Security Life Insurance Company (75%)


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

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

On December 17, 1998,  the Company  purchased all of the  outstanding  shares of
common stock of SSLIC Holding Company (formerly Consolidare Enterprises,  Inc.),
(SSLIC  Holding) and  Insuradyne  Corporation  (Insuradyne)  for a total cost of
$12,248,194.  SSLIC Holding owns  approximately 75% of the outstanding shares of
common stock of Southern Security Life Insurance  Company  (Southern  Security).
The acquisition was accounted for using the purchase method.

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  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.

The unaudited consolidated pro forma results of operations assuming consummation
of the purchase as of January 1, 2001 are summarized as follows:

                                                 Pro Forma
                                       2002                    2001
                                       ----                    ----
                                  (In thousands except earnings per share)

Total revenues                       $109,678                $90,518
Net earnings                            5,397                  3,543
Earnings per share                       1.12                    .77

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.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

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.

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

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

Cash and Cash Equivalents

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

Property, Plant and Equipment

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

Recognition of Insurance Premiums and Other Considerations

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

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

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

gross profits from surrender charges, investment, mortality and expense margins.
This  amortization is adjusted when estimates of current or future gross profits
to be realized from a group of products are  reevaluated.  Deferred  acquisition
costs are written off when policies lapse or are surrendered.

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

Future Life, Annuity and Other Policy Benefits

Future policy benefit reserves for traditional life insurance are computed using
a net level method,  including  assumptions as to investment yields,  mortality,
morbidity,  withdrawals,  and  other  assumptions  based on the  life  insurance
subsidiaries  experience,  modified as necessary  to give effect to  anticipated
trends and to include  provisions  for  possible  unfavorable  deviations.  Such
liabilities are, for some plans, graded to equal statutory values or cash values
at or prior to maturity. The range of assumed interest rates for all traditional
life insurance policy reserves was 4.5% to 10%. 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
2002, 2001 and 2000,  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.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

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

Cemetery and Mortuary Operations

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

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

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

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

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

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

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

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

The Company, through its mortuary and cemetery operations, provides a guaranteed
funeral arrangement wherein a prospective  customer can receive future goods and
services at guaranteed prices. To accomplish this, the Company, through its life
insurance operations, sells to the customer an increasing benefit life insurance
policy that is assigned


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

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

Mortgage Operations

Mortgage fee income is generated  through the  origination  and  refinancing  of
mortgage  loans and is deferred  until such loans are  determined  to be sold in
accordance with FAS No. 140.

Substantially  all loans are sold to third party  investors and the Company does
not retain  servicing  rights.  The amounts sold to  investors  are shown on the
balance  sheet as due from  sale of  loans,  and are  shown on the  basis of the
amount of fees due from the investors.  Any impairment to sold loans or possible
loan losses are included in a separate  provision  for loan losses.  At December
31, 2002 and 2001 the  provision  for loan  losses was  $906,000  and  $509,000,
respectively.

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
periodically  evaluates the  recoverability of amounts  recorded.  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.

Income Taxes

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

Earnings Per Common Share

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


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

Stock Compensation

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

The Company has two fixed option plans (the "1993 Plan" and the "2000 Plan"). In
accordance with APB Opinion No. 25, no compensation cost has been recognized for
these plans.  Had  compensation  cost for these plans been determined based upon
the fair  value at the grant date  consistent  with the  methodology  prescribed
under  SFAS No.  123,  the  Company's  net  income  would  have been  reduced by
approximately $533,520, $3,143, and $0 in 2002, 2001, and 2000, respectively. As
a result,  basic and diluted earnings per share would have been reduced by $.07,
$0, and $0 in 2002, 2001 and 2000, respectively.

The weighted  average  fair value of each option  granted in 2002 under the 1993
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 weighted  average fair value of options  granted in 2001 under the 1993 Plan
and the 2000 Plan is  estimated  at $1.25 as of the grant  date  using the Black
Scholes Option Pricing Model with the following  assumptions:  dividend yield of
5%, volatility of 31.8%,  risk-free interest rate of 5.14%, and an expected life
of five to ten years.

The weighted  average fair value of options  granted in 2000 under the 1993 Plan
and the 2000 Plan is  estimated  at $1.50 as of the grant  date  using the Black
Scholes Option Pricing Model with the following  assumptions:  dividend yield of
5%, volatility of 30.8%,  risk-free  interest rate of 6.6%, 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 may
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.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  142,  "Goodwill  and  Other
Intangible Assets".  Under SFAS No. 142,  amortization of goodwill is precluded,
however,  its  recoverability  must be periodically (at least annually) reviewed
and tested for

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

impairment.  Goodwill must be tested at the reporting  unit level for impairment
in the year of adoption,  including an initial test performed  within six months
of adoption. If the initial test indicates a potential  impairment,  then a more
detailed analysis to determine the extent of impairment must be completed within
twelve  months of  adoption.  SFAS No. 142 also  requires  that useful lives for
intangibles other than goodwill be reassessed and remaining amortization periods
be adjusted  accordingly.  The  adoption of SFAS No. 142 did not have a material
impact on the Company's financial condition or results of operations.  In August
2001, the FASB issued SFAS No. 144,  "Accounting  for the Impairment or Disposal
of  Long-Lived  Assets".  SFAS No.  144  establishes  an  accounting  model  for
long-lived  assets to be  disposed  of by sale that  applies  to all  long-lived
assets,  including  discontinued  operations.  SFAS No. 144 requires  that those
long-lived assets be measured at the lower of carrying amount or fair value less
cost to sell,  whether  reported in  continuing  operations  or in  discontinued
operations.  The  provisions  of  SFAS  No.  144  are  effective  for  financial
statements  issued for fiscal years beginning after December 15, 2001.  Adoption
of SFAS No.  144 did not  have a  material  impact  on the  Company's  financial
condition  or results of  operations.  In April 2002,  FASB issued SFAS No. 145,
"Rescission of FASB  Statements  No. 4, 44, and 64,  Amendment of FASB Statement
No. 13, and Technical  Corrections".  Under historical  guidance,  all gains and
losses resulting from the  extinguishment of debt were required to be aggregated
and, if material, classified as an extraordinary item, net of related income tax
effect.  SFAS No. 145 rescinds  that guidance and requires that gains and losses
from  extinguishments of debt be classified as extraordinary  items only if they
are both unusual and infrequent in occurrence. SFAS No. 145 also amends SFAS No.
13,  "Accounting  for Leases" for the required  accounting  treatment of certain
lease  modifications  that  have  economic  effects  similar  to  sale-leaseback
transactions.  SFAS No. 145 requires that those lease modifications be accounted
for in the same manner as  sale-leaseback  transactions.  The provisions of SFAS
No. 145 related to SFAS No. 13 are effective for  transactions  occurring  after
May 15, 2002.  Adoption of the provisions of SFAS No. 145 related to SFAS No. 13
did not have a material impact on the Company's  financial  condition or results
of operations. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated  with  Exit  or  Disposal  Activities",   which  addresses  financial
accounting and reporting for costs  associated with exit or disposal  activities
and nullifies EITF Issue No. 94-3,  "Liability  Recognition for Certain Employee
Termination  Benefits and Other Costs to Exit an Action (including Certain Costs
Incurred in a Restructuring)"  ("Issue 94-3"). The principal  difference between
SFAS No. 146 and Issue 94-3 is that SFAS No. 146 requires that a liability for a
cost  associated  with an exit or  disposal  activity  be  recognized  when  the
liability is incurred,  rather than at the date of an entity's  commitment to an
exit plan.  SFAS No. 146 is  effective  for exit or  disposal  activities  after
December 31, 2002.  Based upon a  preliminary  review,  adoption of SFAS No. 146
would not have a material impact on the Company's financial condition or results
of operations.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness  of Others" ("FIN 45").  FIN 45 requires  certain  guarantees to be
recorded at fair value and also  requires a guarantor  to make new  disclosures,
even when the likelihood of making  payments  under the guarantee is remote.  In
general, the Interpretation  applies to contracts or indemnification  agreements
that contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying that is related to an asset,  liability, or an
equity security of the guaranteed  party.  The recognition  provisions of FIN 45
are effective on a prospective  basis for  guarantees  issued or modified  after
December 31, 2002.  The  disclosure  requirements  are  effective  for financial
statements of interim and annual periods  ending after December 15, 2002.  Based
upon a preliminary  review,  adoption of FIN 45 would not have a material impact
on the Company's financial condition or results of operations.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation -- Transition and Disclosure and Amendment to FASB No. 123",  which
provides  three  optional   transition  methods  for  entities  that  decide  to
voluntarily  adopt  the fair  value  recognition  principles  of SFAS  No.  123,
"Accounting  for  Stock  Issued  to  Employees",  and  modifies  the  disclosure
requirements  of  that  Statement.  Under  the  prospective  method  stock-based
compensation expense is recognized for awards granted after the beginning of the
fiscal  year in which  the  change  is made.  The  modified  prospective  method
recognizes  stock-based  compensation expense related to new and unvested awards
in the year of change  equal to that which would have been  recognized  had SFAS
No. 123 been adopted as of its  effective  date,  fiscal years  beginning  after
December  15,  1994.  The  retrospective  restatement  method  recognizes  stock
compensation costs for the year of change and restates financial  statements for
all prior periods presented as though the fair value  recognition  provisions of
SFAS No. 123 had been adopted as of its effective  date.  Since the Company does
not  intend to  voluntarily  adopt  the fair  value  presentation  for FASB 123,
adoption of SFAS 148 would not have a material effect on the financial condition
or results of operations of the Company.  However, pro forma disclosures by SFAS
148 will be included in the Company's future interim  financial  statements when
necessary.

In January 2003, the FASB issued  Interpretation 46,  "Consolidation of Variable
Interest  Entities"  ("FIN  46"),  which  requires  an  enterprise  to assess if
consolidation  of an entity is  appropriate  based  upon its  variable  economic
interests in a variable  interest  entity (VIE).  The initial  determination  of
whether  an  entity  is a VIE  shall be made on the date at which an  enterprise
becomes  involved  with the  entity.  A VIE is an  entity  in which  the  equity
investors do not have the characteristics of a controlling financial interest or
do not have  sufficient  equity at risk for the entity to finance its activities
without  additional  subordinated  financial  support  from  other  parties.  An
enterprise  shall  consolidate  a VIE if it has a  variable  interest  that will
absorb a majority of the VIE's expected losses if they occur, receive a majority
of the  entity's  expected  residual  returns if they occur or both. A direct or
indirect ability to make decisions that significantly  affect the results of the
activities of a VIE is a strong indication that an enterprise has one or both of
the characteristics that would require consolidation of the VIE.

FIN 46 is effective for new VIE's established subsequent to January 31, 2003 and
for existing  VIE's as of July 1, 2003.  Based upon a  preliminary  review,  the
adoption of FIN 46 would not have a material  impact on the Company's  financial
condition or results of  operations as there were no material  VIE's  identified
which would require  consolidation.  FIN 46 further  requires the  disclosure of
certain  information  related to VIE's in which the Company  holds a significant
variable interest.  The Company does not believe that it owns any such interests
that require disclosure at this time.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


2)  Investments
    ------------

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

                                                                 Gross           Gross       Estimated
                                                  Amortized   Unrealized      Unrealized       Fair
                                                    Cost          Gains          Losses        Value
                                                  --------     ---------      ----------     ---------

December  31,  2002:
-------------------

Fixed maturity  securities  held to maturity:
  Bonds:
<S>                                            <C>               <C>            <C>          <C>
    U.S.  Treasury  securities
     and obligations  of U.S
     Government  agencies                       $  2,835,420     $ 214,146      $ (1,964)    $3,047,602

     Obligations of states and
           political subdivisions                    188,303        21,805          (725)       209,383

     Corporate securities including
           public utilities                       21,106,651       806,023      (254,369)    21,658,305

     Mortgage-backed securities                    8,856,718       125,310            --      8,982,028

   Redeemable preferred stock                         28,005         8,775        (7,047)        29,733
                                                 -----------   -----------    -----------   -----------

     Total fixed maturity
     securities held to maturity                 $33,015,097    $1,176,059     $(264,105)   $33,927,051
                                                 ===========   ===========    ===========   ===========

Securities available for sale:
   Bonds
     U.S. Treasury securities
           and  obligations of U.S.
           Government agencies                      $594,439 $     103,697     $   --         $698,136

     Corporate securities including
           public utilities                       16,558,784     1,258,023         --        17,816,807

   Non-redeemable preferred stock                     56,031        33,810        (7,256)        82,585

   Common stock                                    1,873,509     1,281,528      (595,529)     2,559,508
                                                 -----------   -----------    -----------   -----------
           Total securities available for sale   $19,082,763    $2,677,058     $(602,785)   $21,157,036
                                                 ===========   ===========    ===========   ===========

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

                                                                          Gross            Gross    Estimated
                                                          Amortized    Unrealized       Unrealized    Fair
                                                            Cost          Gains           Losses      Value
                                                          --------      ---------       ----------   ---------
December 31, 2001:
-----------------
Fixed maturity securities held to maturity:
   Bonds:
<S>                                                     <C>              <C>           <C>          <C>
     U.S. Treasury securities and obligations
           of U.S. Government agencies                   $4,212,280      $227,446       $    --     $4,439,726

     Obligations of states and political subdivisions       180,660        12,507        (7,684)       185,484

     Corporate securities including public utilities     19,206,038       736,038      (168,158)    19,773,918

     Mortgage-backed securities                           4,172,926        98,203          (578)     4,270,550

   Redeemable preferred stock                                28,005         7,350        (7,047)        28,308
                                                        -----------   -----------   -----------    -----------

           Total fixed maturity securities
            held to maturity                            $27,799,909    $1,081,544     $(183,467)   $28,697,986
                                                        ===========   ===========   ===========    ===========

Securities available for sale:
   Bonds
     U.S. Treasury securities and obligations
           of U.S. Government agencies                     $594,568       $58,415      $     --       $652,983

     Corporate securities including public utilities     19,971,265       846,481            --     20,817,746

   Non-redeemable preferred stock                            56,031        32,150        (6,931)        81,250

   Common stock                                           1,549,949     1,523,382      (513,032)     2,560,299
                                                        -----------   -----------   -----------    -----------
           Total securities available for sale          $22,171,813    $2,460,428     $(519,963)   $24,112,278
                                                        ===========   ===========   ===========    ===========
</TABLE>




<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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, 2002, 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 2003                   $8,026,827    $8,166,873
Due in 2004 through 2007       8,077,359     8,578,724
Due in 2008 through 2012 `     7,048,229     7,150,450
Due after 2012                   977,959     1,019,243
Mortgage-backed securities     8,856,718     8,982,028
Redeemable preferred stock        28,005        29,733
                             -----------   -----------
                             $33,015,097   $33,927,051
                             ===========   ===========

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

Due in 2003                   $3,852,677    $3,969,924
Due in 2004 through 2007       9,973,676    10,829,215
Due in 2008 through 2012       3,229,099     3,598,364
Due after 2012                    97,771       117,440
Mortgage-backed securities            --            --
                             -----------   -----------
                             $17,153,223   $18,514,943
                             ===========   ===========


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

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

                                               2002         2001        2000
                                               ----         ----        ----
Fixed maturity securities held to maturity:
Gross realized gains                          $37,172      $20,228     $3,125
Gross realized losses                            (557)        (565)       (53)

Securities available for sale:
Gross realized gains                              354            6    884,199
Gross realized losses                          (1,424)        (111)  (463,466)
Other assets                                  985,275       (9,130)     --
                                          -----------     --------   --------
        Total                              $1,020,820      $10,428   $423,805
                                          ===========     ========   ========

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 7% to 15%,  maturity  dates range from one to 29
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  and  commercial  loans and requires
collateral on all real estate exposures,  a substantial  portion of its debtors'
ability  to honor  obligations  is  reliant  on the  economic  stability  of the
geographic  region in which the debtors do business.  The Company has 68% of its
mortgage loans in the state of Utah.

Investments,  aggregated  by issuer,  in excess of 10% of  shareholders'  equity
(before net  unrealized  gains and losses on available for sale  securities)  at
December 31, 2002,  other than  investments  issued or  guaranteed by the United
States Government, are as follows:

                                 Carrying Amount
        Dean Witter Discover                                   $4,457,852
        Philip Morris, Inc.                                    $5,834,031


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


Major categories of net investment income are as follows:

                                     2002            2001            2000
                                     ----            ----            ----
Fixed maturity  securities        $3,228,042      $3,776,132      $4,629,916
Equity securities                     53,889          49,281         235,491
Mortgage loans on real estate      1,350,882       1,570,478       1,735,590
Real estate                        1,501,534       1,548,507       1,507,239
Policy loans                         663,554         630,352         641,272
Short-term investments               189,894         379,562         402,350
Other                              6,501,763       5,973,092       3,962,362
                                ------------    ------------    ------------
  Gross investment income         13,489,558      13,927,404      13,114,220
Investment expenses                 (950,128)       (980,905)       (978,148)
                                ------------    ------------    ------------
Net investment income            $12,539,430     $12,946,499     $12,136,072
                                ============    ============    ============


Net investment  income  includes net investment  income earned by the restricted
assets of the cemeteries and mortuaries of approximately $924,000,  $872,000 and
$717,000 for 2002, 2001, and 2000, 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
$7,819,262 at December 31, 2002 and $8,829,559 at December 31, 2001.

3)  Cost of Insurance Acquired

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

                               2002           2001            2000
                               ----           ----            ----
Balance at
  beginning of year        $7,615,348      $8,729,264      $9,597,306
Cost of insurance
  acquired                  9,106,309        (289,754)             --

Imputed interest at 7%        507,268         572,061         641,325
Amortization               (1,244,585)     (1,396,223)     (1,509,367)
                         ------------    ------------    ------------
Net amortization
  charged to income          (737,317)       (824,162)       (868,042)
                         ------------    ------------    ------------
Balance at end
  of year                 $15,984,340      $7,615,348      $8,729,264
                         ============    ============    ============

Presuming no  additional  acquisitions,  net  amortization  charged to income is
expected  to  approximate  $1,281,286,  $1,177,041,  $1,081,769,  $983,719,  and
$915,240 for the years 2003 through 2007. 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, 2002, 2001, and 2000


4) Property, Plant and Equipment

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

                                        December 31,
                                        ------------
                                     2002            2001
                                     ----            ----
Land and Buildings               $11,098,907     $10,930,790
Furniture and equipment            8,725,925       7,557,210
                                ------------    ------------
                                  19,824,832      18,488,000
Less accumulated depreciation     (8,903,197)     (7,685,613)
                                ------------    ------------
     Total                       $10,921,635     $10,802,387
                                ============    ============

5)   Bank Loans Payable and Lines of Credit
<TABLE>
<CAPTION>

Bank loans payable are summarized as follows:
                                                                                       December 31,
                                                                                       ------------
                                                                                  2002              2001
                                                                                  ----              ----
<S>                                                                             <C>               <C>
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.                 $727,524          $1,101,543

10% note payable in monthly installments of $8,444 including
    principal and interest, collateralized by real property,
    which book value is approximately $982,000, due January 2013.                645,124             680,020

One-year treasury constant maturity plus 2.75% (8.03%
    at December 31, 2001) note payable in monthly installments
    of $6,000, including principal and interest, collateralized by
    real property, which book value is approximately
    $332,000, paid in full October 2002.                                           --                 48,971

6.93% note payable in monthly installments of $20,836, including
    principal and interest, collateralized by real property, which
    book value is approximately $952,537, due November 2007.                    1,472,560           1,590,487

$4,171,803 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.                   3,144,673           3,703,767

Bank prime rate plus 1/2% (4.75% at December 31, 2002) note
    payable in monthly installments of $7,235 including principal
    and interest, collateralized by real property, which book
    value is approximately $771,061, due August 2004.                             150,564             235,450

</TABLE>
<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000

<TABLE>
<CAPTION>

5)   Bank Loans Payable and Lines of Credit (Continued)
     ---------------------------------------
                                                                                     December 31,
                                                                                     ------------
                                                                               2002                2001
                                                                               ----                ----
<S>                                                                          <C>                   <C>
Bank prime rate less 1.35% (3.40% at December 31, 2002) 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.                                                                128,738            156,549

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.                                                            610,170            750,000

Bank prime rate less .28% (4.22% at December 31, 2002) Note
    payable interest only to July 1, 2003, thereafter interest
    plus monthly principal payments of $116,883, collateralized
    by 15,000 shares of Security National Life
    Insurance Company Stock, due January 2010.                                  9,000,000                --

Other collateralized bank loans payable                                           233,874            195,113
                                                                          ---------------          ---------
  Total bank loans                                                             16,113,227          8,461,900

Less current installments                                                       2,282,575          1,677,683
                                                                           --------------         ----------
  Bank loans, excluding
  current installments                                                       $ 13,830,652        $ 6,784,217
                                                                             ============        ===========
</TABLE>

In  addition  to the lines of credit  described  above,  the Company has line of
credit  agreements with banks for $2,000,000 and $5,000,000,  of which none were
outstanding  at December  31, 2002 or 2001.  The lines of credit are for general
operating  purposes.  The $2,000,000 line of credit bears interest at the bank's
prime rate and must be repaid every 30 days. The $5,000,000 line of credit bears
interest at a variable rate with interest payable monthly and is  collateralized
by student loans equaling 115% of the unpaid principal balance.

See Note 6 for summary of maturities in subsequent years.

6)  Notes and Contracts Payable
<TABLE>
<CAPTION>

Notes and contracts payable are summarized as follows:
                                                                                       December 31,
                                                                                       ------------
                                                                                   2002        2001
                                                                                   ----        ----
<S>                                                                             <C>           <C>
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.                                                $574,526     $604,265
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000

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

                                                                                         December 31,
                                                                                         ------------
                                                                                   2002           2001
                                                                                   ----           ----
<S>                                                                              <C>             <C>
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.                                             168,621        232,259

Due to former stockholders of Civil Service Employees Life
  Insurance Company resulting from the acquisition of such
  entity. 7% note payable in seven annualinstallments with
  principal payments of $151,857, paid in full December 2002.                            --      151,857

Due to former stockholders of Crystal Rose Funeral Home
  resulting from the acquisition of such entity. Amount
  represents the present value discounted at 9% of monthly annuity
  payments of $2,675 due February 2007.                                             5,296         35,420

9% note payable in monthly installments of $10,000 including
  principal and interest collateralized by real property,
  which book value is approximately $2,908,000, due July 2008.                    534,111         602,653

Due to Memorial Estates Endowment Care Trust Fund for the
  remodel of the Cottonwood Funeral Home. 6% note payable
  in monthly installments of $5,339 including principal and
  interest collateralized by the Funeral Home, which book value
  is approximately $881,631 due March 2030.                                       951,807         861,748

Due to former shareholders of Southern Security Life Insurance
  Company resulting from the acquisition of such entity.
  6.5% note payable in five annual installments with principal
  payments of $158,840 due April 2005                                            476,520          635,361

</TABLE>

<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000

6)  Notes and Contracts Payable (Continued)
    ----------------------------
<TABLE>
<CAPTION>

                                                                                         December 31,
                                                                                         ------------
                                                                                   2002              2001
                                                                                   ----              ----

<S>                                                                             <C>              <C>
Other notes payable                                                                449,128          512,213
                                                                                 ---------       ----------
Total notes and contracts payable                                                3,160,009        3,635,776
Less current installments                                                          447,569          600,894
                                                                                 ---------       ----------

Notes and contracts, excluding
current installments                                                            $2,712,440       $3,034,882
                                                                                ==========       ==========
</TABLE>

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

            2003                    $2,730,144
            2004                     3,801,840
            2005                     3,325,101
            2006                     2,145,441
            2007                     1,929,913
      Thereafter                     5,340,797
                                  ------------
           Total                  $19,273,236
                                  ===========

Interest paid approximated interest expense in 2002, 2001 and 2000.

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

-The Company owns and operates several  endowment care cemeteries,  for which it
has  established  and maintains an endowment  care fund.  The Company  records a
liability  to the fund for each  space  sold at  current  statutory  rates.  The
Company  is not  required  to  transfer  assets to the fund until the spaces are
fully paid for. As of December  31, 2001 the Company had  transferred  $5,586 in
excess of the required  contribution  to the fund,  and as of December 31, 2002,
the Company owed the fund $73,151.

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

Assets in the restricted asset account are summarized as follows:

                                          December 31,
                                          ------------
                                      2002         2001
                                      ----         ----
Cash and cash equivalents           $378,388     $475,712
Mutual funds                         188,732      188,732
Fixed maturity securities            301,928      348,737
Equity securities                     77,778       77,778
Participation in mortgage loans
 with Security National Life       4,352,214    4,214,781
Time certificate of deposit           33,696       33,696
                                  ----------   ----------
   Total                          $5,332,736   $5,339,436
                                  ==========   ==========


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


8)  Income Taxes

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

                   December 31,
                   ------------
                2002          2001
                ----          ----
Current        $45,702      $(86,569)
Deferred     8,058,180     6,961,166
           -----------   -----------
Total       $8,103,882    $6,874,597
           ===========   ===========


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

                                                2002            2001
                                                ----            ----
Assets
Future policy benefits                      $(1,849,395)    $(1,727,742)
Unearned premium                             (1,717,492)     (1,829,505)
Difference between book
   and tax basis of bonds                       (34,178)        (43,176)
Net operating loss carryforwards
 expiring in the years 2003 through 2011     (1,132,874)        (84,350)
Other                                          (575,788)       (631,375)
                                           ------------    ------------
Total deferred tax assets                    (5,309,727)     (4,316,148)
                                           ------------    ------------

Liabilities
Deferred policy acquisition costs             5,235,909       5,140,228
Cost of insurance acquired                    2,643,596       1,553,301
Installment sales                             1,997,256       1,838,465
Depreciation                                    883,667         643,243
Trusts                                        1,184,382       1,162,077
Tax on unrealized appreciation                  644,148         583,213
Other                                           778,949         356,789
                                           ------------    ------------
Total deferred tax liabilities               13,367,907      11,277,316
                                           ------------    ------------
Net deferred tax liability                   $8,058,180      $6,961,166
                                           ============    ============


The Company paid $462,983,  $564,327 and $94,365 in income taxes for 2002,  2001
and 2000, respectively. The Company's income tax expense (benefit) is summarized
as follows:

               2002         2001          2000
               ----         ----          ----
Current      $595,254     $391,492      $44,688
Deferred      970,139      522,047      259,952
           ----------   ----------   ----------
Total      $1,565,393     $913,539     $304,640
           ==========   ==========   ==========

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, 2002, 2001, and 2000


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

                                          2002          2001            2000
                                          ----          ----            ----
Computed expense at statutory rate    $1,883,255     $1,282,517       $423,682
Special deductions allowed
   small life insurance companies       (315,923)      (356,734)       (68,769)
Dividends received deduction                (737)        (6,405)       (24,418)
Minority interest taxes                    7,429         (7,466)       (19,222)
Other, net                                (8,631)         1,627         (6,633)
                                     -----------    -----------    -----------
   Tax expense                        $1,565,393       $913,539       $304,640
                                     ===========    ===========    ===========

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, 2002,  the
policyholders'  surplus accounts  approximated  $4,500,000.  Management does not
intend to take actions nor does management expect any events to occur that would
cause federal  income taxes to become payable on that amount.  However,  if such
taxes  were  accrued,  the  amount  of  taxes  payable  would  be  approximately
$1,500,000.

The insurance  companies have  remaining  loss carry  forwards of  approximately
$8,300,000,  approximately  $286,000 of which is subject to an annual limitation
of approximately $300,000.

9)       Reinsurance, Commitments and Contingencies

The Company  follows the procedure of reinsuring  risks in excess of a specified
limit,  which ranged from $30,000 to $75,000 at December 31, 2002 and 2001.  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  $1,174,604,000  at
December 31, 2002 and $838,421,000 at December 31, 2001.

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

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


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


10)   Retirement Plans

The Company and its subsidiaries have a noncontributory Employee Stock Ownership
Plan (ESOP) for all eligible  employees.  Eligible employees are primarily those
with more than one year of service,  who work in excess of 1,040 hours per year.
Contributions,  which  may be in cash or stock of the  Company,  are  determined
annually by the Board of Directors. The Company's contributions are allocated to
eligible employees based on the ratio of each eligible  employee's  compensation
to  total  compensation  for all  eligible  employees  during  each  year.  ESOP
contribution expense totaled $99,612, $191,557, and $0 for 2002, 2001, and 2000,
respectively.  At December 31, 2002 the ESOP held 507,490  shares of Class A and
1,408,653 shares of Class C common stock of the Company.  All shares held by the
ESOP have been allocated to the  participating  employees and all shares held by
the ESOP are  considered  outstanding  for  purposes of  computing  earnings per
share.

The Company has a 401(k)  savings  plan  covering  all  eligible  employees,  as
defined above,  which includes  employer  participation  in accordance  with the
provisions  of Section  401(k) of the  Internal  Revenue  Code.  The plan allows
participants  to make  pretax  contributions  up to the  lesser  of 15% of total
annual  compensation or the statutory limits. The Company may match up to 50% of
each employee's  investment in Company stock, up to 1/2% of the employee's total
annual compensation. The Company's match will be Company stock and the amount of
the match will be at the  discretion  of the Company's  Board of Directors.  The
Company's  matching 401(k)  contributions  for 2002, 2001, and 2000 were $7,975,
$18,458, and $0 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 2002, 2001 and
2000 were $142,218,  $260,350, and $0, 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   contribution   for  2002  and  2001  was  $100,577   and   $220,038,
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 monthly  installments
(120 months) or in a lump sum settlement, if approved by the Board of Directors.
The amount payable


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


10)   Retirement Plans (Continued)
      -----------------

is  $60,000  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 2002 the Company  increased  its  liability for these
future  obligations by $31,000.  The current  balance as of December 31, 2002 is
$702,000.

11)  Capital Stock

The following  table  summarizes the activity in shares of capital stock for the
three-year period ended December 31, 2002:

                                      Class A     Class C
                                   ----------   ----------
Balance at January 1, 2000          4,863,731    5,555,350

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

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

Stock Dividends                       255,413      291,104
Conversion of Class C to Class A          547       (5,479)
                                   ----------   ----------

Balance at December 31, 2001        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
                                   ==========   ==========

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 1989 through 2002, 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, 2002, 2001, and 2000



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

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

                                             2002         2001          2000
                                             ----         ----          ----
Numerator:
   Net income                             $3,991,280   $2,840,780     $895,729
                                          ==========   ==========   ==========

Denominator:
   Denominator for basic earnings
    per share-weighted-average
     shares                                4,823,914    4,506,476    4,317,779

   Effect of dilutive securities:
     Employee stock options                  169,543          382       17,265
     Stock appreciation rights                 1,828           --           --
                                          ----------   ----------   ----------

   Dilutive potential common shares          171,371          382       17,265
                                          ----------   ----------   ----------

   Denominator for diluted earnings per
     share-adjusted weighted-average
     shares and assumed conversions        4,995,285    4,506,858    4,335,044
                                          ==========   ==========   ==========
   Basic earnings per share                     $.83         $.63         $.21
                                          ==========   ==========   ==========
   Diluted earnings per share                   $.80         $.63         $.21
                                          ==========   ==========   ==========

12)  Deferred Compensation Plans

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

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

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



<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


12)  Deferred 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        Option
                                      of Shares       Price
Outstanding at January 1, 2000        171,329    $3.89 - $4.28

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

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

   Dividend                             8,995
   Exercised                               --
                                     -------

Outstanding at December 31, 2001      188,890    $3.53 - $3.88
                                     --------

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

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

Exercisable at end of year             10,719             $3.36
                                    =========

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,  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.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


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

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

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

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

On November 7, 1996,  the Company  amended the 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.

Activity of the 1993 Plan is summarized as follows:

                                      Number of
                                       Shares     Option Price
                                     ----------  -------------
Outstanding at January 1, 2000        519,998    $2.22 - $3.96
   Dividend                            27,313
   Granted                             26,000
                                     --------

Outstanding at December 31, 2000      573,311    $2.12 - $3.77
   Dividend                            36,765
   Granted                            172,500
   Expired                            (10,513)
                                    ---------

Outstanding at December 31, 2001      772,063    $2.02 - $3.59
   Dividend                            21,077
   Granted                            185,250
   Expired                           (190,018)
   Exercised                         (283,703)
                                     --------

Outstanding at December 31, 2002      504,669    $2.02 - $4.46
                                    =========

Exercisable at end of year            358,588    $2.02 - $4.46
                                    =========
Available options for future grant
   1993 Stock Incentive Plan          388,361
                                    =========


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000

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

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 will be five years.

Activity of the 2000 Plan is summarized as follows:

                                            Number                  Option
                                           of Shares                 Price
Outstanding at
December 31, 1999                              0
   Dividend                                  200
   Granted                                 4,000
                                         -------

Outstanding at
December 31, 2000                          4,200                $2.14
   Dividend                                  410
   Granted                                 4,000
                                         -------

Outstanding at
December 31, 2001                          8,610                $2.04 - $2.43
                                         -------

   Dividend                                  631
   Granted                                 4,000
                                         -------

Outstanding at
December 31, 2002                         13,241                $1.94 - $2.86
                                          ======

Exercisable at end of year                 9,041                $1.94 - $2.31
                                         =======

Available options for future
    grant 2000 Director Plan              44,641
                                          ======


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


13)  Statutory-Basis Financial Information

The Company's life insurance  subsidiaries are domiciled in Utah and Florida and
prepare their statutory-basis financial statements in accordance with accounting
practices prescribed or permitted by the Utah and Florida Insurance Departments.
"Prescribed"  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 a prescribed or permitted
practices by the States of Utah and Florida.

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

                                  Statutory Net Income (Loss)
                                          December 31,
                              2002           2001           2000
                              ----           ----           ----

Security National Life    $1,547,253     $1,732,018       $796,047
Southern Security Life      (427,439)      (429,143)        80,477

                                Statutory Stockholders' Equity
                                         December 31,
                              2002         2001          2000
                              ----         ----          ----

Security National Life   $14,381,257   $16,316,605   $14,309,515
Southern Security Life     8,582,968     8,459,700     8,405,211

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

The Utah and Florida Insurance  Departments  impose minimum  risk-based  capital
requirements  that were  developed  by the NAIC on  insurance  enterprises.  The
formulas for determining the risk-based  capital ("RBC") specify various factors
that are applied to financial  balances or various  levels of activity  based on
the  perceived  degree of risk.  Regulatory  compliance is determined by a ratio
(the "Ratio") of the enterprise's  regulatory total adjusted capital, as defined
by the  NAIC,  to  its  authorized  control  level,  as  defined  by  the  NAIC.
Enterprises  below  specific  trigger  points or ratios  are  classified  within
certain levels,  each of which requires  specified  corrective  action. The life
insurance subsidiaries have a Ratio that is greater than 569% of the first level
of regulatory action.




<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


14)  Business Segment Information

Description of Products and Services by Segment

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

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.


<PAGE>
<TABLE>
<CAPTION>




                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000


14)  Business Segment Information (Continued)
     -----------------------------
                                                                                  2002

                                           Life          Cemetery/                   Reconciling
                                         Insurance       Mortuary        Mortgage       Items           Consolidated
                                         ---------       --------        --------       -----           ------------
Revenues:
From external sources:
<S>                                    <C>             <C>             <C>         <C>                  <C>
   Revenue from customers              $14,076,652     $11,256,069     $57,008,283 $       --           $82,341,004
   Net investment income                 6,065,652       1,011,786       5,461,992         --            12,539,430
   Realized gains on investments           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      13,062,456       62,794,812       (4,741,338)    96,380,678
                                     -------------   -------------    -------------    -------------    -------------
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                              --          36,672         173,872             (210,544)        --
   Other                                 5,670,217      10,604,689      53,617,818             --        69,892,724
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      12,224,594       59,418,827       (4,741,338)    90,841,693
                                     -------------   -------------    -------------    -------------   -------------
Earnings (losses)
   before income taxes                  $1,325,138        $837,862     $ 3,375,985      $     --         $5,538,985
                                     =============    ============    ============      ===========     ===========

Identifiable assets                   $295,177,565     $42,255,381     $14,055,057      $(44,331,241)  $307,156,762
                                     =============   =============    =============    =============   ============

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

<PAGE>
<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000

14)  Business Segment Information (Continued)
     ----------------------------
                                                                                                        2001

                                         Life          Cemetery/                     Reconciling
Revenues:                              Insurance       Mortuary       Mortgage          Items      Consolidated
                                       ---------       --------       --------          -----      ------------
From external sources:
<S>                                   <C>            <C>            <C>                <C>          <C>
   Revenue from customers             $13,150,875    $10,603,451    $40,086,097        $     --     $63,840,423
   Net investment income                7,018,047        959,655      4,968,797              --      12,946,499
   Realized gains on investments           10,428             --             --              --          10,428
   Other revenues                          53,053         42,356         56,536              --         151,945

Intersegment revenues:
   Net investment income                3,679,133             --             --      (3,679,133)             --
                                     ------------   ------------   ------------    ------------    ------------
                                       23,911,536     11,605,462     45,111,430      (3,679,133)     76,949,295
                                     ------------   ------------   ------------    ------------    ------------
Expenses:
Death and other policy benefits         6,821,845             --             --              --       6,821,845
Increase in future policy benefits      4,953,008             --             --              --       4,953,008
Amortization of deferred policy
   and pre-need acquisition costs
   and cost of insurance acquired       3,561,895        308,263             --              --       3,870,158
Depreciation                              330,892        595,082        103,162              --       1,029,136
General, administrative
      and other costs:
   Intersegment                                --         36,672        136,867        (173,539)             --
   Other                                7,035,455      9,396,691     37,280,266              --      53,712,412
Interest expense:
   Intersegment                            98,095        243,732      3,163,767      (3,505,594)             --
Other                                     317,988        418,488      2,054,150              --       2,790,626
                                     ------------   ------------   ------------    ------------    ------------
                                       23,119,178     10,998,928     42,738,212      (3,679,133)     73,177,185
                                     ------------   ------------   ------------    ------------    ------------
Earnings (losses)
   before income taxes                   $792,358       $606,534     $2,373,218 $            --       3,772,110
                                     ============   ============   ============    ============    ============

Identifiable assets                  $201,193,249    $38,915,291     $6,411,222    $(33,460,187)   $213,059,575
                                     ============   ============   ============    ============    ============

Expenditures for
   long-lived assets                     $219,762       $505,045       $323,014 $            --      $1,047,821
                                     ============   ============   ============    ============    ============
</TABLE>

<PAGE>
<TABLE>
<CAPTION>





                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000

14)  Business Segment Information (Continued)
     ----------------------------

                                                                                2000

                                          Life         Cemetery/                      Reconciling
                                        Insurance      Mortuary         Mortgage         Items       Consolidated
                                        ---------      --------         --------         -----       ------------
Revenues:
From external sources:
<S>                                   <C>             <C>            <C>         <C>                 <C>
   Revenue from customers             $12,875,585     $9,416,927     $22,921,585 $            --     $45,214,097
   Net investment income                8,222,688        716,813       3,196,571              --      12,136,072
   Realized gains on investments          423,805             --              --              --         423,805
   Other revenues                          85,927         23,479         195,480              --         304,886

Intersegment revenues:
   Net investment income                2,551,644             --              --      (2,551,644)             --
                                     ------------   ------------    ------------    ------------    ------------

                                       24,159,649     10,157,219      26,313,636      (2,551,644)     58,078,860
                                     ------------   ------------    ------------    ------------    ------------
Expenses:
Death and other policy benefits         5,662,062             --              --              --       5,662,062
Increase in future policy benefits      7,268,720             --              --              --       7,268,720
Amortization of deferred policy
   acquisition costs and cost of
   insurance acquired                   3,188,752             --              --              --       3,188,752
Depreciation                              322,418        451,259          61,744              --         835,421
General, administrative
      and other costs:
   Intersegment                                --         36,672         101,288        (137,960)             --
   Other                                5,585,178      9,369,839      22,796,596              --      37,751,613
Interest expense:
   Intersegment                                --        210,984       2,202,700      (2,413,684)             --
   Other                                  394,868        518,845       1,212,456              --       2,126,169
                                     ------------   ------------    ------------    ------------    ------------
                                       22,421,998     10,587,599      26,374,784      (2,551,644)     56,832,737
                                     ------------   ------------    ------------    ------------    ------------
Earnings (losses)
   before income taxes                 $1,737,651      $(430,380)       $(61,148$             --      $1,246,123
                                     ============   ============    ============    ============    ============

Identifiable assets                  $199,694,971    $36,704,436      $3,495,907    $(31,148,813)   $208,746,501
                                     ============   ============    ============    ============    ============

Expenditures for
   long-lived assets                     $260,836       $680,626        $220,856$             --      $1,162,318
                                     ============   ============    ============    ============    ============
</TABLE>


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 2002, 2001, and 2000

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.  The
owners  of  Monument  Title  are  brother-in-laws  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 Company
believes that it is currently  prohibited  from directly  owning shares of stock
representing control of a title company.  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.

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 $70,000 and $102,000
at December 31, 2002 and 2001, 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
balance sheets for these financial instruments approximate their fair values.

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

Investment  Contracts:  The fair  values  for the  Company's  liabilities  under
investment-type  insurance  contracts are estimated based on the contracts' cash
surrender values. The carrying amount and fair value as of December 31, 2002 and
December 31, 2001, were approximately $87,351,000 and $86,544,000, 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, 2002, 2001, and 2000


17)  Other Comprehensive Income

The following summarizes other comprehensive income:

                                            2002        2001         2000
                                            ----        ----         ----
Unrealized gains (losses)
     on available for-sale securities     $84,263     $769,684     $736,803
Less:  reclassification
     adjustment for net realized
     gains in net income                  (35,544)     (10,428)    (420,739)
                                        ---------    ---------    ---------
Net unrealized gains (losses)              48,719      759,256      316,064
Tax expense on net unrealized
     gain (losses)                        (80,786)    (372,077)    (145,004)
                                        ---------    ---------    ---------
Other comprehensive income (loss)        $(32,067)    $387,179     $171,060
                                        =========    =========    =========


<PAGE>
<TABLE>
<CAPTION>

                                                                    Schedule I

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



As of December 31, 2002:
                                                                                        Amount at
                                                                                         Which
                                                                                         Shown
                                                                       Estimated        in the
Type of Investment                                     Amortized          Fair           Balance
------------------                                        Cost            Value           Sheet
                                                       --------         ---------       ---------
Fixed maturity securities held to maturity:
Bonds:
<S>                                                    <C>             <C>            <C>
   U.S. Treasury securities and obligations
     of U.S. Government agencies                        $2,835,420     $3,047,602     $2,835,420
   Obligations of states and political subdivisions        188,303        209,383        188,303
   Corporate securities
     including public utilities                         21,106,651     21,658,305     21,106,651
   Mortgage backed securities                            8,856,718      8,982,028      8,856,718
Redeemable preferred stocks                                 28,005         29,733         28,005
                                                      ------------   ------------   ------------

   Total Fixed Securities held to maturity              33,015,097     33,927,051     33,015,097
                                                      ------------   ------------   ------------

Securities available for sale:
Bonds:
   U.S. Treasury securities and obligations
     of U.S. Government agencies                           594,439        698,136        698,136
   Corporate securities
     including public utilities                         16,558,784     17,816,807     17,816,807
   Mortgage-backed securities                                   --             --             --
Nonredeemable preferred stock                               56,031         82,585         82,585
Common stock:
   Public utilities                                        314,014        375,570        375,570
   Banks, trusts and insurance companies                   520,683        818,146        818,146
   Industrial, miscellaneous and all other               1,038,812      1,365,792      1,365,792
                                                      ------------   ------------   ------------

     Total Securities available for sale                19,082,763     21,157,036     21,157,036
                                                      ------------   ------------   ------------

Mortgage loans on real estate                           21,016,008                    21,016,008
Real estate                                              9,331,248                     9,331,248
Policy loans                                            10,974,165                    10,974,165
Other investments                                        5,335,478                     5,335,478
                                                      ------------                  ------------

   Total investments                                   $98,754,759                  $100,829,032
                                                      ============                  ============
</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, 2001:
                                                                                   Amount at
                                                                                    Which
                                                                                    Shown
                                                                     Estimated      in the
Type of Investment                                      Amortized      Fair         Balance
------------------                                        Cost         Value        Sheet
                                                        --------     ---------    ---------
Fixed maturity securities held to maturity:
Bonds:
<S>                                                    <C>           <C>           <C>
   U.S. Treasury securities and obligations
     of U.S. Government agencies                       $4,212,280    $4,439,726    $4,212,280
   Obligations of states and political subdivisions       180,660       185,484       180,660
   Corporate securities
     including public utilities                        19,206,038    19,773,918    19,206,038
   Mortgage backed securities                           4,172,926     4,270,550     4,172,926
Redeemable preferred stocks                                28,005        28,308        28,005
                                                      -----------   -----------   -----------

   Total Fixed Securities held to maturity             27,799,909    28,697,986    27,799,909
                                                      -----------   -----------   -----------

Securities available for sale:
Bonds:
   U.S. Treasury  securities and
   obligations of U.S. Government agencies                594,568       652,983       652,983
   Corporate securities
     including public utilities                        19,971,265    20,817,746    20,817,746
   Mortgage-backed securities                                  --            --            --
Nonredeemable preferred stock                              56,031        81,250        81,250
Common stock:
   Public utilities                                       315,068       504,243       504,243
   Banks, trusts and insurance companies                  195,983       389,210       389,210
   Industrial, miscellaneous and all other              1,038,898     1,666,846     1,666,846
                                                      -----------   -----------   -----------

     Total Securities available for sale               22,171,813    24,112,278    24,112,278
                                                      -----------   -----------   -----------

Mortgage loans on real estate                          15,479,305                  15,479,305
Real estate                                             9,051,691                   9,051,691
Policy loans                                           11,277,975                  11,277,975
Other investments                                       1,453,644                   1,453,644
                                                      -----------                 -----------

   Total investments                                  $87,234,337                 $89,174,802
                                                      ===========                 ===========
</TABLE>

<PAGE>


                                                                    Schedule II

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                                 Balance Sheets


                                            December 31,
                                            ------------
                                      2002            2001
                                      ----           -----
Assets
Cash                                $(3,870)         $1,065

Investment in subsidiaries
    (equity method)              50,069,998      46,128,864

Receivables:
    Receivable from
        affiliates               10,662,465       1,664,955
    Other                           (74,653)        (42,743)
                               ------------    ------------
       Total receivables         10,587,812       1,622,212
                               ------------    ------------

Property, plant and
    equipment, at cost,
    net of accumulated
    depreciation of $575,724
    for 2002 and $457,338
    for 2001                        415,144         427,345

Other assets                         66,915          21,366
                               ------------    ------------
    Total assets                $61,135,999     $48,200,852
                               ============    ============




















See accompanying notes to parent company only financial statements.


<PAGE>

                                                        Schedule II (Continued)


                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                           Balance Sheets (Continued)

                                                            December 31,
                                                       2002            2001

Liabilities:
Bank loans payable:
    Current installments                            $2,082,175      $1,386,857
    Long-term                                       11,400,191       4,168,453

Notes and contracts payable:
    Current installments                                   961         152,818
    Long-term                                          --                --

Advances from affiliated companies                  10,031,968      10,431,231

Other liabilities and accrued expenses                 965,555         996,228

Income taxes                                         2,141,738       1,095,947
                                                  ------------    ------------
    Total liabilities                               26,622,588      18,231,534
                                                  ------------    ------------

Stockholders' equity:
Common Stock:
    Class A:  $2 par value, authorized
        10,000,000 shares, issued 5,794,492
        shares in 2002 and 5,363,591 shares
        in 2001                                     11,588,984      10,727,182
    Class C:  $0.20 par value,
        authorized 7,500,000 shares, issued
        6,182,669 shares in 2002 and 6,113,430
         shares in 2001                              1,236,533       1,222,686
                                                  ------------     -----------
Total common stock                                  12,825,517      11,949,868

Additional paid-in capital                          11,280,842      10,168,523
Accumulated other comprehensive income               1,191,863       1,223,930
Retained earnings                                   11,992,542       9,989,230
Treasury stock at cost
    (1,151,811 Class A shares and 71,749
    Class C shares in 2002; 1,294,716 Class
    A shares and 68,332 Class C shares in 2001,
    held by affiliated companies)                   (2,777,353)     (3,362,233)
                                                  ------------    ------------
Total stockholders' equity                          34,513,411      29,969,318
                                                  ------------    ------------
    Total liabilities and
        stockholders' equity                       $61,135,999     $48,200,852
                                                  ============    ============


See accompanying notes to parent company only financial statements.


<PAGE>



Schedule II (Continued)


                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                             Statements of Earnings




                                            Year Ended December 31,
                                            -----------------------
                                        2002           2001          2000
                                        ----           ----          ----

Revenue:
    Net investment income              $34,053           $188            $96
    Fees from affiliates             3,772,293      3,824,259      3,878,458
                                   -----------    -----------    -----------
        Total revenue               $3,806,346      3,824,447      3,878,554
                                   -----------    -----------    -----------

Expenses:
    General and administrative
        Expenses                     3,287,683      4,082,438      1,873,323
    Interest expense                   351,599        373,815        593,228
                                   -----------    -----------    -----------
        Total expenses               3,639,282      4,456,253      2,466,551
                                   -----------    -----------    -----------

    Earnings (loss)before income
        taxes, and earnings of
        subsidiaries                   167,064       (631,806)     1,412,003

    Income tax expense              (1,045,791)      (531,270)      (373,075)

    Equity in earnings
        (loss) of subsidiaries       4,870,007      4,003,856       (143,199)
                                   -----------    -----------    -----------
    Net earnings                    $3,991,280     $2,840,780       $895,729
                                   ===========    ===========    ===========










See accompanying notes to parent company only financial statements.


<PAGE>
<TABLE>
<CAPTION>


                                                        Schedule II (Continued)

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


                                                          Year Ended December 31,
                                                          -----------------------
                                                  2002           2001           2000
Cash flows from operating activities:
<S>                                            <C>            <C>              <C>
    Net earnings                               $3,991,280     $2,840,780       $895,729
Adjustments to reconcile net earnings
      to net cash provided by
      operating activities:
      Depreciation and amortization               118,386        113,042         29,904
      Undistributed (earnings) losses
         of affiliates                         (4,870,007)    (4,003,856)       143,199
      Provision for income taxes                1,045,791        531,271        373,075
    Change in assets and liabilities:
      Accounts receivable                          31,909         60,751            558
      Other assets                                (45,549)        25,638         25,637
      Other liabilities                           (30,673)       282,349          1,836
                                              -----------    -----------    -----------
Net cash provided by operating activities         241,137       (150,025)     1,469,938
                                              -----------    -----------    -----------

Cash flows from investing activities:
    Dividends received from subsidiaries        2,381,687             --             --
    Purchase of equipment                        (106,185)        (2,954)      (556,802)
    Investment in subsidiaries                   (900,000)            --             --
                                              -----------    -----------    -----------
Net cash used in investing activities           1,375,502         (2,954)      (556,802)
                                              -----------    -----------    -----------

Cash flows from financing activities:
    Proceeds from advances from affiliates     (9,396,773)     1,922,758        303,299
    Payments of advances to affiliates                 --        (28,998)      (101,514)
    Payments of notes and contracts payable    (1,224,801)    (1,676,940)    (1,128,972)
    Purchase of treasury stock                         --       (783,086)            --
    Proceeds from borrowings on notes and
      contracts payable                         9,000,000        750,000             --
                                              -----------    -----------    -----------
Net cash provided (used) by
      financing activities                     (1,621,574)       183,734       (927,187)
                                              -----------    -----------    -----------
Net change in cash                                 (4,935)        30,755        (14,051)
Cash at beginning of year                           1,065        (29,690)       (15,639)
                                              -----------    -----------    -----------
Cash at end of year                               $(3,870)        $1,065       $(29,690)
                                              ===========    ===========    ===========
</TABLE>










See accompanying notes to parent company only financial statements.


<PAGE>
<TABLE>
<CAPTION>


                                                        Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                Notes to Parent Company Only Financial Statements


1) Bank Loans Payable

   Bank loans payable are summarized as follows:
                                                                                            December 31,
                                                                                      2002             2001
<S>                                                                              <C>              <C>
$4,171,803 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.                                                       $ 3,144,672    $ 3,703,767

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.                                     727,524      1,101,543

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.                   610,170        750,000

Bank prime rate less .28% (4.22% at December 31, 2002) Note
    payable interest only to July 2, 2003, thereafter interest
    plus monthly principal payment of $116,883, collateralized
    by 15,000 shares of Security National Life Insurance Company
    stock, due January 2010.                                                           9,000,000           --
                                                                                  --------------   ------------

        Total bank loans                                                              13,482,366      5,555,310

      Less current installments                                                        2,082,175      1,386,857
                                                                                   -------------    -----------
      Bank loans, excluding current
      installments                                                                   $11,400,191     $4,168,453
                                                                                     ===========     ==========
</TABLE>

<TABLE>
<CAPTION>

2)  Notes and Contracts Payable

    Notes and contracts are summarized as follows:
                                                                                          December 31,
                                                                                    2002              2001

<S>                                                                              <C>                 <C>
   Due to former stockholders of Civil Service Employees
      Life Insurance Company resulting from the acquisition
      of such entity. 7% note payable in seven annual principal
      payments of $151,857 paid in full December 2002                            $       --         $   151,857

    Other                                                                               961                 961


    Total notes and contracts                                                           961             152,818
                                                                                ---------------     -----------
    Less current installments                                                           961             152,818
                                                                               ----------------    ------------
    Notes and contracts, excluding current installments                      $           --       $        --
                                                                             ==================   =============

</TABLE>

<PAGE>


                                                        Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                Notes to Parent Company Only Financial Statements


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

              2003                    $ 2,083,136
              2004                      3,019,075
              2005                      2,715,818
              2006                      1,574,384
              2007                      1,402,596
              Thereafter                2,688,318
                                    -------------
              Total                   $13,483,327
                                      ===========

3)  Advances from Affiliated Companies


                                                               December 31,
                                                        2002            2001

         Non-interest bearing advances from affiliates:
         Cemetery and Mortuary
              subsidiary                           $ 1,366,930     $  1,366,930
         Life Insurance subsidiary                   8,655,038        9,054,301
         Mortgage subsidiary                            10,000           10,000
                                                   -----------     ------------
                                                   $10,031,968      $10,431,231
                                                   ===========      ===========

4)  Dividends

In 2002 Security National Life Insurance  Company,  a wholly owned subsidiary of
the Registrant, paid to the registrant cash dividends of $2,381,687.  There were
no dividends paid for years 2001 and 2000 by any subsidiaries.


<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
2002
----
<S>                        <C>           <C>          <C>           <C>           <C>
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%
                          ===========   ===========   ===========   ===========     =======

2001
----
Life Insurance
    in force ($000)        $1,587,136      $216,369      $838,421    $2,209,188        37.9%
                          ===========   ===========   ===========   ===========     =======

Premiums:
Life Insurance            $12,930,418    $1,035,984      $845,736   $12,740,170         6.6%
Accident and
    Health Insurance          406,393           285         4,597       410,705         1.1%
                          -----------   -----------   -----------   -----------     -------
         Total premiums   $13,336,811    $1,036,269      $850,333   $13,150,875         6.5%
                          ===========   ===========   ===========   ===========     =======

2000
----
Life Insurance
    in force ($000)        $1,469,502      $253,698      $580,287    $1,796,091        32.3%
                          ===========   ===========   ===========   ===========     =======

Premiums:
Life Insurance            $12,934,701    $1,151,262      $634,899   $12,418,338        5.11%
Accident and
    Health Insurance          454,656           427         3,018       457,247         .66%
                          -----------   -----------   -----------   -----------     -------
         Total premiums   $13,389,357    $1,151,689      $637,917   $12,875,585        4.95%
                          ===========   ===========   ===========   ===========     =======
</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
                                      ---------     ------------       ----------          --------

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

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

Allowance for doubtful accounts         2,287,241      517,299     (419,231)         2,385,309

Allowance for real  estate losses         119,269           --     (119,269)            --

For the Year Ended December 31, 2001
Accumulated depreciation
   on real estate                      $3,088,761     $321,234      $(5,352)        $3,404,643

Accumulated depreciation
   on property, plant
   and equipment                        6,699,141    1,029,137      (42,665)         7,685,613

Allowance for doubtful accounts         1,656,223      832,798     (201,780)         2,287,241

Allowance for real estate losses               --      119,269           --            119,269

For the Year Ended December 31, 2000
Accumulated depreciation
   on real estate                      $2,722,024     $366,737  $        --         $3,088,761

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

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

</TABLE>

<PAGE>


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

None
                                    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 is no family relationship  between or among any
of the directors, except that Scott M. Quist and G. Robert Quist are the sons 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           82         Chairman of the Board and Chief
                                     Executive Officer

Scott M. Quist            49         President, General Counsel, Chief
                                     Operating Officer and Director

Stephen M. Sill           57         Vice President, Treasurer and Chief
                                     Financial Officer

G. Robert Quist           51         First Vice President and Secretary

J. Lynn Beckstead, Jr.    49         Vice President and Director

Charles L. Crittenden     82         Director

Robert G. Hunter          43         Director

H. Craig Moody            51         Director

Norman G. Wilbur          64         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.

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.  In  addition,  he served as President of the
Company from October 1979 until July 2002. Mr. Quist has also served as Chairman
of the Board and Chief  Executive  Officer of Southern  Security Life  Insurance
Company since  December  1998,  and as its President  from December 1998 to July
2002.  From 1960 to 1964,  he was  Executive  Vice  President  and  Treasurer of
Pacific  Guardian Life  Insurance  Company.  From 1946 to 1960, he was an agent,
District Manager and Associate  General Agent for various  insurance  companies.
Mr.  Quist  also  served  from  1981 to 1982 as the  President  of The  National
Association  of  Life  Companies,  a trade  association  of 642  life  insurance
companies, and from 1982 to 1983 as its Chairman of the Board.


<PAGE>


Scott M. Quist has been  President  of the  Company  since July 2002,  its Chief
Operating  Officer  since  October  2001 and its General  Counsel and a director
since May 1986. Mr. Quist served as First Vice President of the Company from May
1986 to July 2002.  Mr. Quist has also served as President of Southern  Security
Life  Insurance  Company  since July 2002,  its Chief  Operating  Officer  since
October 2001,  and its General  Counsel and a director  since December 1998. Mr.
Quist also served as First Vice  President of Southern  Security Life  Insurance
Company from December 1998 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 a treasurer  and  director  of The  National  Association  of Life
Companies,  a trade association of 642 insurance companies until its merger with
the American Council of Life Companies. Mr. Quist has been a member of the Board
of Governors of the Forum 500 Section  (representing small insurance  companies)
of the American Council of Life Insurance. Mr. Quist has also served as 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 a Vice  President and a director of the Company
since March 2002.  Mr.  Beckstead has also served as Vice President and director
of Southern Security Life Insurance Company since March 2002. In addition, he is
President of Security National  Mortgage  Company,  an affiliate of the Company,
and has  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 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 is also a director of Southern  Security Life  Insurance  Company and
has served in this position since  December  1998. Mr.  Crittenden has been sole
stockholder of Crittenden  Paint & Glass Company since 1958. He is also an owner
of Crittenden  Enterprises,  a real estate development  company, and Chairman of
the Board of Linco, Inc.

Robert G. Hunter,  M.D. has been a director of the Company  since  October 1998.
Dr. Hunter is also a director of Southern  Security Life  Insurance  Company and
has served in this  position  since  December  1998.  Dr.  Hunter is currently a
practicing  physician in private  practice.  Dr.  Hunter  created the State Wide
E.N.T. Organization (Rocky Mountain E.N.T., Inc.) where he is currently a member
of the Executive Committee.  He is Chairman of Surgery at Cottonwood Hospital, a
delegate to the Utah Medical  Association and a delegate  representing 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 also a director of Southern  Security  Life  Insurance  Company and has
served in this  position  since  December  1998.  Mr.  Moody is owner of Moody &
Associates,  a  political  consulting  and real estate  company.  He is a former
Speaker and House Majority Leader of the House of  Representatives  of the State
of Utah.

Norman G. Wilbur has been a director  of the Company  since  October  1998.  Mr.
Wilbur is also a director of Southern  Security Life  Insurance  Company and has
served in this position since December 1998. Mr. Wilbur worked for J.C.  Penny's
regional  offices in budget and  analysis.  His final  position  was  Manager of
Planning  and  Reporting  for J.C.  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

The following is a description of the Company's executive officers,  who are not
also directors of the Company.


<PAGE>



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.  He has also served as Vice  President,
Treasurer  and Chief  Financial  Officer of  Southern  Security  Life  Insurance
Company since March 2002.  From 1998 to March 2002, Mr. Sill also served as Vice
President and Controller of Southern Security Life Insurance 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 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 also served as a director  of  Southern  Security  Life
Insurance  Company  since April 1999 and has been Vice  President  and Secretary
since March 2002.  Mr. Quist has also served as First Vice  President of Singing
Hills  Memorial Park since 1996.  Mr. Quist has also served as Vice President of
Memorial  Estates since 1982; he began working for Memorial Estates in 1978. Mr.
Quist has also served as President  and a director of Big Willow  Water  Company
since 1987 and was a director  of  Investors  Equity Life  Insurance  Company of
Hawaii in 1987. He has also served as a director and  Secretary-Treasurer of the
Utah Cemetery  Association  since 1987.  From 1976 to 1978 he worked for Wyoming
Minerals and from 1974 to 1976 for Rocky Mountain Geochemical Corp.

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

No director,  officer or 5% stockholder of the Company or its  subsidiaries,  or
any  affiliate  thereof  has  had  any  transactions  with  the  Company  or its
subsidiaries during 2002 or 2001.

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

Item 11.  Executive Officer Compensation

The following  table sets forth,  for each of the last three fiscal  years,  the
compensation  received by George R. Quist,  the  Company's  President  and Chief
Executive Officer,  and all other executive officers  (collectively,  the "Named
Executive  Officers")  at  December  31,  2002  whose  salary  and bonus for all
services in all  capacities  exceed  $100,000 for the fiscal year ended December
31, 2002.
<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)       2002     $165,600     $25,000           $2,400            0            0           0         $31,186
  Chairman of the         2001      148,737      20,200            2,400            0       50,000           0          37,358
  Board and Chief         2000      147,204      20,200            2,400            0       50,000           0           5,281
  Executive Officer

Scott M. Quist (1)        2002     $179,400     $35,000           $7,200            0            0           0         $24,066
  President, Chief        2001      152,525      20,000            7,200            0       35,000           0          34,739
  Operating Officer
  and Director            2000      140,400      18,770            7,200            0       35,000           0             637
</TABLE>


<PAGE>


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

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

     (3)  The amounts  indicated under "All Other  Compensation"  consist of (a)
          amounts contributed by the Company into a trust for the benefit of the
          Named  Executive   Officers  under  the  Security  National  Financial
          Corporation Deferred  Compensation Plan (for the years 2002, 2001, and
          2000 such  amounts  were George R.  Quist,  $16,207,  $32,077,  and $0
          respectively;   and  Scott  M.  Quist,   $19,219,   $34,102,   and  $0
          respectively); (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 2002,  2001 and 2000,  such  amounts were for
          George R. Quist $125, $637, and $637 respectively;  for Scott M. Quist
          $642, $637, and $637  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  2002,  2001 and 2000);  Scott M. Quist
          ($4,205  for  the  year  2002,  $0 for  2001  and $0  for  2000);  (d)
          compensation  paid for the  cashless  exercise  of  50,000  shares  of
          Company stock exercised by George R. Quist ($10,210) The amounts under
          "All Other  Compensation"  do not include the no interest  loan in the
          amount of $172,000  that the Company  made to George R. Quist on April
          29,  1998,   to  exercise   stock   options.   See  "Item  13  Certain
          Relationships and Related Transactions".

The following table sets forth information concerning the exercise of options to
acquire  shares of the Company's  Common Stock by the Named  Executive  Officers
during the fiscal year ended December 31, 2002, as well as the aggregate  number
and  value of  unexercised  options  held by the  Named  Executive  Officers  on
December 31, 2002.

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                     2002(#)                                      2002
                                                               -------                                    ------
Name                (#)           Realized         Exercisable          Unexercisable          Exercisable       Unexercisable
----              --------        --------         -----------          -------------          -----------       -------------
<S>                <C>          <C>                  <C>                    <C>               <C>                 <C>
George R.
  Quist            44,946       $233,719              84,000                 44,100            $192,120           $192,075
Scott M.
  Quist            56,341       $292,975              42,000                 44,100            $113,100           $201,675
</TABLE>

Retirement Plans

George R.  Quist,  who has been  Chairman  and Chief  Executive  Officer  of the
Company  since  1979,  and  President  from 1979 to July  2002,  has a  Deferred
Compensation   Agreement,   dated  December  8,  1988,  with  the  Company  (the
"Compensation  Agreement").  This  Compensation  Agreement was amended effective
January 2, 2001, to reflect the following  benefits.  The employment  agreements
between the Company  and George R. Quist be amended to adjust for  inflation  in
accordance with the United States Consumer Index commencing January 2, 2002, and
for each year thereafter of the term of the agreement and that for the year 2001
the  adjustment  for his  retirement  is $60,000 per year instead of $50,000 per
year. The agreements  shall also be amended to provide his spouse,  in the event
of his  pre-mature  death,  with health  insurance  coverage  equivalent to that
carried on executive  personnel  with the coverage for the entire  period of the
agreement.  In the event of death of George R. Quist and his spouse prior to the
expiration of the terms of the  agreement,  payments shall be paid to his estate
or as otherwise directed by him in writing.


<PAGE>


The  Compensation  Agreement  further  provides  that the Board of Directors may
elect to pay the entire amount of deferred  compensation in the form of a single
lump-sum  payment  or other  installment  payments,  so long as the term of such
payments do not exceed 10 years.  However,  in the event Mr. Quist's  employment
with the Company is terminated  for any reason other than  retirement,  death or
disability,  the entire  deferred  compensation  shall be  forfeited by him. The
Company has accrued a liability for the  Compensation  Agreement at December 31,
2002 of $294,000.

Employment Agreement

The  Company  maintains  an  employment  agreement  with  Scott  M.  Quist.  The
agreement,  which has a five-year term, was entered into in 1996, and renewed in
1997 and 2002. 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,  and to
include $500,000 of life insurance protection.  In the event of disability,  Mr.
Quist'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. Quist were not
retained in his current position, the Company would be obligated to continue Mr.
Quist's current  compensation  and benefits for seven years following the merger
or sale.

Director Compensation

Directors of the Company (but not  including  directors who are  employees)  are
paid a director's  fee of $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 2002,  2001,  and 2000 were
approximately  $7,975,  $18,458,  and 0,  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 2002, 2001 and
2000, were $142,218, $260,350, and 0, respectively.

Employee Stock Ownership Plan

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


<PAGE>


Under  the  Ownership  Plan,  the  Company  has  discretionary   power  to  make
contributions on behalf of all eligible employees into a trust created under the
Ownership Plan.  Employees  become eligible to participate in the Ownership Plan
when they have attained the age of 19 and have  completed one year of service (a
twelve-month  period in which the  Employee  completes  at least  1,040 hours of
service). The Company's  contributions under the Ownership Plan are allocated to
eligible employees on the same ratio that each eligible employee's  compensation
bears to total  compensation  for all eligible  employees  during each year.  To
date,  the Ownership Plan has  approximately  170  participants  and had $99,612
contributions  payable to the Plan in 2002.  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.

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 2002 and 2001 was
$100,577 and $220,038, respectively.

1987 Incentive Stock Option Plan

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

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

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


<PAGE>


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.

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.


<PAGE>


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.



<PAGE>





Item 12 - Security Ownership of Certain Beneficial Owners and Management

The following table sets forth security  ownership  information of the Company's
Class A and Class C Common Stock as of March 31,  2003,  (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,  (iii) each of the  Company's  named
executive  officers,  and (iv) 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
Name and Address of                       Beneficially      Percent         Beneficially       Percent     Beneficially    Percent
Beneficial Owner                              Owned        of Class             Owned         of Class        Owned        of Class
-----------------                            -------       --------             -----         --------        -----        --------
<S>                                        <C>              <C>                <C>             <C>           <C>           <C>
George R. Quist (1)(2)(3)(4)(5)
4491 Wander Lane
Salt Lake City, UT 84124                     288,728        5.8%               428,207          7.0%           716,935      6.4%

George R. and Shirley C
Quist Family
  Partnership, Ltd.(6)
4491 Wander Lane
Salt Lake City, UT 84124                     383,899         7.6%            3,045,052         49.8%         3,428,951     30.8%

Employee Stock
  Ownership Plan (7)
5300 S. 360 W., Suite 250
Salt Lake City, UT 84123                     507,490        10.1%            1,408,653          23.1%       1,916,143      17.2%

Scott M. Quist (1)(3)(4)(8)
7 Wanderwood Way
Sandy, UT 84092                              229,106         4.6%              233,178           3.8%         462,284      4.2%

Associated Investors (9)
5300 S. 360 W. Suite 250
Salt Lake City, UT 84123                      84,170         1.7%              594,658           9.7%         678,828      6.1%

</TABLE>


<PAGE>
<TABLE>
<CAPTION>


Item 12 - Security Ownership of Certain Beneficial Owners and Management  (Continued)
-------------------------------------------------------------------------
                                                                                                                      Class A and
                                                         Class A                           Class C                      Class C
                                                      Common Stock                      Common Stock                  Common Stock
                                                      ------------                      ------------                  ------------
                                             Amount                             Amount                        Amount
Name and Address of                       Beneficially      Percent         Beneficially       Percent     Beneficially    Percent
Beneficial Owner                              Owned        of Class             Owned         of Class        Owned        of Class
-----------------                            -------       --------             -----         --------        -----        --------
<S>                                          <C>             <C>               <C>              <C>         <C>            <C>

G. Robert Quist (10)
2678 Cave Hollow Way
Bountiful, UT 84010                           68,794          1.4%             221,363           3.6%        290,157          2.6%

Stephen M. Sill (11)
1595 North Fort Lane
Layton, UT 84041                              35,261            *                                             35,261           *

J. Lynn Beckstead, Jr. (12)
190 Matterhorn Drive
Alpine, UT 84004                              74,449           1.5%                                           74,449           *

Charles L. Crittenden(13)
2334 Fillmore Avenue
Ogden, UT 84401                                3,321             *                                             3,321           *

H. Craig Moody(14)
1782 East Faunsdale Dr.
Sandy, Utah 84092                              3,100             *                                             3,100           *

Norman G. Wilbur (15)
2520 Horseman Drive
Plano, TX 75025                                3,357             *                                             3,357           *

Robert G. Hunter, M.D (1)(3)(16)
2 Ravenwood Lane
Sandy, UT 84092                                4,563             *                                             4,563           *

All directors and executive officers
  (9 persons)(1)(2)(3)(4)                  1,094,578          21.8%           3,927,800         64.3%      5,022,378        45.1%

 *   Less than one percent
</TABLE>


<PAGE>


     (1) Does not include  507,490  shares of Class A Common Stock and 1,408,653
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.

     (2) Does not  include  84,170  shares of Class A Common  Stock and  594,658
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 voting and investment powers with respect to such shares.

     (3) Does not include  171,222  shares of Class A Common  Stock owned by the
Company's  401(k)  Retirement  Savings Plan, of which George R. Quist,  Scott M.
Quist,  and  Robert G.  Hunter  are  members of the  Investment  Committee  and,
accordingly,  exercise shared voting and investment  powers with respect to such
shares.

     (4) Does not  include  76,997  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.

     (5)  Includes  options to purchase  84,000  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, 2003.

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

     (7) 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.

     (8)  Includes  options to purchase  42,000  shares of Class A common  stock
granted  to Scott  M.  Quist,  that are  currently  exercisable  or will  become
exercisable within 60 days of March 31, 2003.

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

     (10)  Includes  options to purchase  5,250  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, 2003.

     (11)  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, 2003.

     (12)  Includes  options to purchase  43,076  shares of Class A common stock
granted  to Mr.  Beckstead,  that  are  currently  exercisable  or  will  become
exercisable within 60 days of March 31, 2003.

     (13)  Includes  options to purchase  2,261  shares of Class A common  stock
granted  to Mr.  Crittenden,  that  are  currently  exercisable  or will  become
exercisable within 60 days of March 31, 2003.

     (14)  Includes  options to purchase  2,261  shares of Class A common  stock
granted to Mr. Moody, that are currently  exercisable or will become exercisable
within 60 days of March 31, 2003.

     (15)  Includes  options to purchase  2,261  shares of Class A common  stock
granted to Mr. Wilbur, that are currently exercisable or will become exercisable
within 60 days of March 31, 2003.

     (16)  Includes  options to purchase  2,261  shares of Class A common  stock
granted to Mr. Hunter, that are currently exercisable or will become exercisable
within 60 days of March 31, 2003.



<PAGE>



The Company's officers and directors, as a group, own beneficially approximately
45.1% of the  outstanding  shares  of the  Company's  Class A and Class C Common
Stock.

Item 13.  Certain Relationships and Related Transactions

The Company  has made a loan in the amount of  $172,000 to George R. Quist,  the
Company's  Chief  Executive  Officer,  without  requiring  the  payment  of  any
interest.  The loan was made under a  Promissory  Note dated  April 29,  1998 in
order for Mr. Quist to exercise  stock  options  which were granted to him under
the 1993 Stock Option Plan. No installment payments are required under the terms
of the note,  but the note must be paid in full as of  December  31,  2007.  Mr.
Quist has the right to make prepayments on the note at any time. As of March 31,
2003, the outstanding balance of the note was $62,790.  The loan was approved by
the  Company's  directors on March 12, 1999,  with Mr.  Quist  abstaining,  at a
special meeting of the Board of Directors.

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.  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
Company believes that it is currently  prohibited from directly owning shares of
stock representing  control of a title company.  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.

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.  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 Rules  240.13a-14(c)  and  15d-14(c)  under the  Securities  and
Exchange Act of 1934 (the "Exchange Act") as of a date within ninety days before
the filing date of 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  controls  or in other  factors  that could  significantly  affect the
Company's  disclosure  controls and  procedures  subsequent to the date of their
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.


<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.

(a)(3)  Exhibits

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

Exhibit

    Table No  Document

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

      B. Bylaws (1)

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

      B. Specimen Class C Stock Certificate (1)

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

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

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

     C.   1993 Stock Option Plan (3)

     D.   2000 Director Stock Option Plan (12)

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

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

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

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

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

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

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

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


<PAGE>



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

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

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

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

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

     R.   Promissory Note with George R. Quist (13)

     S.   Deferred Compensation Plan (14)

     T.   Coinsurance Agreement between Security National Life and Acadian (15)

     U.   Assumption  Agreement among Acadian,  Acadian  Financial Group,  Inc.,
          Security National Life and the Company (15)

     V.   Asset Purchase  Agreement  between Acadian,  Acadian  Financial Group,
          Inc., Security National Life and the Company (15)

     W.   Promissory Note with Key Bank of Utah

     X.   Loan and Security Agreement with Key Bank of Utah

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

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

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

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

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

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

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

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

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

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

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

     (12) Incorporated   by  reference  from  Schedule  14A   Definitive   Proxy
          Statement,  filed August 29, 2000,  relating to the  Company's  Annual
          Meeting of Shareholders.


<PAGE>



     (13) Incorporated  by reference from Report on Form 10-K, as filed on April
          16, 2001.

     (14) Incorporated  by reference from Report on Form 10-K, as filed on April
          3, 2002.

     (15) Incorporated  by  reference  from  Report  on Form  8-K-A  as filed on
          January 8, 2003.


     21.  Subsidiaries of the Registrant

     (b)  Reports on Form 8-K:

     Asset purchase  transaction with Acadian Life Insurance Company on December
23, 2002:

          Form 8-K filed on January 7, 2003
          Form 8-K/A  filed on January 8, 2003
          Form 8-K /A-2 filed on March 10, 2003


<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, 2003                        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, 2003
                              Board and Chief Executive
                              Officer (Principal
                              Executive Officer)

Scott M. Quist                President, General               April 15, 2003
                              Counsel, Chief
                              Operating Officer
                              and Director                     April 15, 2003

Stephen M. Sill               Vice President,
                              Treasurer and Chief
                              Financial Officer (Principal
                              Financial and Accounting
                              Officer)                         April 15, 2003

G. Robert Quist               First Vice President and
                              Secretary                        April 15, 2003

J. Lynn Beckstead, Jr.        Vice President and Director      April 15, 2003

Charles L. Crittenden         Director                         April 15, 2003

H. Craig Moody                Director                         April 15, 2003

Norman G. Wilbur              Director                         April 15, 2003

Robert G. Hunter              Director                         April 15, 2003


<PAGE>

                                 CERTIFICATIONS


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-14 and 15d-14) for the registrant and have:

     (a)  Designed  such  disclosure  controls  and  procedures  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 in which this annual report
          is being prepared;

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     (c)  Presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  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  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: April 15, 2003

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


<PAGE>



                                 CERTIFICATIONS

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-14 and 15d-14) for the registrant and have:

     (a)  Designed  such  disclosure  controls  and  procedures  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 in which this annual report
          is being prepared;

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     (c)  Presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  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  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  April 15, 2003

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


<PAGE>


                                  EXHIBIT 99.1
                            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 10K for the period  ending  December 31, 2002, as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, George R. Quist, 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.

George R. Quist
Chief Executive Officer
April 15, 2003

                                  EXHIBIT 99.2
                            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 10K for the period  ending  December 31, 2002, as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, Stephen M. Sill, 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.

Stephen M. Sill
Chief Financial Officer
April 15, 2003


<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
                          Year Ended December 31, 2003

                     SECURITY NATIONAL FINANCIAL CORPORATION
                           Commission File No. 0-9341

                                 E X H I B I T S


<PAGE>


                                  Exhibit Index



Exhibit No.                  Document Name

21                Subsidiaries of the Registrant

10                Promissory Note

10                Loan Agreement


<PAGE>


                                   EXHIBIT 21

                        Subsidiaries of Security National
                              Financial Corporation
                              as of March 31, 2003


<PAGE>


                                   Exhibit 21


Subsidiaries of Security National Financial Corporation (as of March 31, 2003)

         Security National Life Insurance Company

         Security National Mortgage Company

         Memorial Estates, Inc.

         Memorial Mortuary

         Paradise Chapel Funeral Home, Inc.

         California Memorial Estates, Inc.

         Cottonwood Mortuary, Inc.

         Deseret Memorial, Inc.

         Holladay Cottonwood Memorial Foundation

         Holladay Memorial Park, Inc.

         Camelback Sunset Funeral Home, Inc.

         Greer-Wilson Funeral Home, Inc.

         Crystal Rose Funeral Home, Inc.

         Hawaiian Land Holdings

         SSLIC Holding Company

         Insuradyne Corporation

         Southern Security Life Insurance Company


<PAGE>


                                    Exhibit W
                                 Promissory Note


<PAGE>


                                    Exhibit W


<PAGE>


                                    Exhibit X
          Loan and Security Agreement with KeyBank National Association


<PAGE>


                                    Exhibit X