SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 1999, or

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

                          Commission File Number 0-9341

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

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

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

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

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

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

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

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

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

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

                                                     Yes [X]  No___

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

The  aggregate  market value of the voting stock held by non-  affiliates of the
registrant as of March 31, 2000 was approximately $11,206,000.

As of March 31, 2000,  registrant had issued and outstanding 3,897,592 shares of
Class A Common Stock and 5,493,372 shares of Class C Stock.

                         DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  definitive  Proxy  Statement for the  registrant's  2000 Annual
Meeting of Stockholders are incorporated by reference into Part III hereof.


<PAGE>

                                     PART I

Item 1.  Business

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

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

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

                                        1

<PAGE>

Life Insurance

         Products

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

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

         Markets and Distribution

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

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

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

                                        2

<PAGE>
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, 1999:

                         1999        1998          1997        1996       1995
                         ----        ----          ----        ----       ----
Life
 Insurance

Policy/Cert.
    Count as of
    December 31        75,808(1)   69,895(1)        43,213    42,034    42,711
Insurance
    in force
    as of December 31
    (omitted 000)   2,113,893(1)   2,123,734(1)    648,906   546,213   530,688
Premiums
    Collected (omitted
     000)            15,261(1)        5,718          5,732     5,765     5,819

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

    Underwriting

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

                 Age Nearest                     Non-Medical
                   Birthday                         Limits
                 ------------                    -----------
                     0-50                          $75,000
                    51-up                       Exam Required

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

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

                                        3


<PAGE>

Annuities

       Products

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

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

     Markets and Distribution

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

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

                                        4

<PAGE>



The following  table  summarizes  the annuity  business for the five years ended
December 31, 1999:

                      1999         1998        1997         1996         1995
                      ----         ----        ----         ----         ----
Annuities
Policy/Cert.
    Count as of
    December 31     8,369(1)      7,890(1)      7,434       7,049       6,893
Deposits
    Collected
(omitted 000)       3,906(1)      2,770         2,521       2,859       2,375

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

Accident and Health

    Products

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

    Markets and Distribution

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

The following  table  summarizes  the accident and health  business for the five
years ended December 31, 1999:

                      1999       1998        1997        1996         1995
                      ----       ----        ----        ----         ----
Accident
  and Health

Policy/Cert.
    Count as of
    December 31    24,078(1)     27,201(1)   30,250     33,639       37,302
Premiums
    Collected
(omitted 000)         549(1)        375         430        493          569

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

Reinsurance

The Company  reinsures  with other  companies  portions of the  individual  life
insurance  and accident  and health  policies it has  underwritten.  The primary
purpose of reinsurance is to enable an insurance company to write a policy in an
amount  larger  than the risk it is  willing  to  assume  for  itself.  No other
liabilities  or  guarantees  by the  Company  exist on  business  ceded  through
reinsurance treaties, however, the Company remains obligated for

                                        5

<PAGE>



amounts ceded in the event the reinsurers do not meet their  obligations.  There
is no assurance that the reinsurer will be able to meet the obligations  assumed
by it under the reinsurance agreement.

The Company's policy is to retain no more than $50,000 of ordinary insurance per
insured life.  Excess risk is reinsured.  The total amount of life  insurance in
force  at  December  31,  1999,   reinsured   by  other   companies   aggregated
$296,936,000,  representing approximately 14% of the Company's life insurance in
force on that date.

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

Investments

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

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

Cemetery and Mortuary

    Products

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

                                        6


<PAGE>



Mortuary,  Inc. and Deseret Memorial, Inc. in September 1991, the acquisition of
Sunset  Funeral Home,  Inc. in January 1994,  the  acquisition  of  Greer-Wilson
Funeral Home,  Inc. in April 1995,  and the  acquisition of Crystal Rose Funeral
Home in February 1997.

    Markets and Distribution

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

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

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

Mortgage Loans

    Products

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

    Markets and Distribution

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

                                        7


<PAGE>



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

Recent Acquisitions and Other Business Activities

    California Memorial Estates

In February  1995,  California  Memorial  Estates,  Inc., a duly  organized Utah
corporation and wholly-owned subsidiary of the Company,  entered into a Purchase
and Sale Agreement and Escrow  Instructions with the Carter Family Trust and the
Leonard  M.  Smith  Family  Trust to  purchase  approximately  100 acres of real
property located in San Diego County,  California (the "Property").  The Company
has developed the property by designating  approximately 35 acres for a cemetery
known as Singing Hills Memorial Park. The Company has obtained approval from the
federal  government and the  California  Cemetery Board to operate a cemetery on
the  Property.  The  Company  has  completed  development  on six  acres  and is
currently selling cemetery lots on a pre-need and at-need basis on the developed
acreage.

    Greer-Wilson Funeral Home

In  March  1995,  the  Company  purchased  97,800  shares  of  common  stock  of
Greer-Wilson  Funeral Home,  Inc.  ("Greer-Wilson"),  representing  97.8% of the
total issued and outstanding  shares of common stock of  Greer-Wilson  after the
issuance of such shares. The Company continues to operate Greer-Wilson, which is
located in Phoenix, Arizona, as a funeral home and mortuary.

    Evergreen Memorial Park

In November 1995, the Company  entered into a purchase sale agreement with Myers
Mortuary  for the sale of the  Company's  65%  interest  in  Evergreen  Memorial
Partnership and the Company's 50% interest in Evergreen Management  Corporation.
As consideration for the sale of these entities, Myers Mortuary paid $746,123 in
satisfaction of the indebtedness that Evergreen Memorial Partnership owed to the
Company.  Myers  Mortuary has also agreed to pay $200,000 to the Company in four
equal annual  installments  of $50,000,  beginning  as of October 31,  1996.  In
addition, Myers Mortuary will pay a $10.00 royalty to the Company for each adult
space sold in Evergreen Memorial Park over ten years, beginning as of January 1,
1996.

    Security National Life Insurance Company

In December 1995,  Security National Life Insurance Company ("Security  National
Life") was merged  into  Capital  Investors  Life  Insurance  Company  ("Capital
Investors Life") with Capital Investors Life as the surviving corporation.  As a
result of the merger,  Capital  Investors Life has licenses to transact business
in 29 states.  In March  1996,  the Company  changed  the name of the  surviving
corporation from Capital Investors Life to Security National Life.

                                        8


<PAGE>



    Civil Service Employees Life Insurance Company

In December  1995, the Company,  through its  wholly-owned  subsidiary,  Capital
Investors  Life,  completed  the  purchase of all of the  outstanding  shares of
Common Stock of Civil Service  Employees Life Insurance  Company ("CSE Life"), a
California  corporation,  from Civil Service Employees  Insurance  Company,  and
prior to the closing of the  transaction,  the sole  stockholder of CSE Life. At
the  time of the  transaction,  CSE Life was a  California  domiciled  insurance
company with total assets of  approximately  $16.7  million.  At the time of the
acquisition,  CSE  Life was  licensed  to  transact  business  in seven  states,
including the state of California.

Following  the  completion of the purchase of CSE Life,  the Company  merged CSE
Life into Capital  Investors  Life.  The Company  continues  to operate  Capital
Investors  Life as the surviving  insurance  company,  which changed its name to
Security National Life in March 1996.

    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.

    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  Insurandyne
Corp.,  a Florida  Corporation  ("Insuradyne").  As of December 31, 1999,  SSLIC
Holding owns  approximately  61.3% 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, 1999, of approximately  $77.2 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,  1999,  which was filed  with the  Securities
Exchange Commission on March 30, 2000, Commission File No. 2-35669.

    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

                                        9


<PAGE>



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.

Regulation

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

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

The  Company's  cemetery  and mortuary  subsidiaries  are subject to the Federal
Trade Commission's comprehensive funeral industry rules and are subject to state
regulations  in the various  states where such  operations  are  domiciled.  The
morticians must be licensed by the respective  state in which they provide their
services.  Similarly,  the  mortuaries  are governed by state  statutes and city
ordinances in both Utah and Arizona.  Reports are required to be kept on file on
a yearly basis which  include  financial  information  concerning  the number of
spaces sold and,  where  applicable,  funds provided to the Endowment Care Trust
Fund. Licenses are issued annually on the basis of such reports.  The cemeteries
maintain city or county licenses where they conduct business.

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

                                       10


<PAGE>



Income Taxes

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

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

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

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

Competition

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

                                       11


<PAGE>



addition,  some of the cemeteries  with which the Company must compete for sales
are owned by  municipalities  and, as a result,  can offer lower prices than can
the Company.  The Company bears the cost of a pre-need sales program that is not
incurred  by those  competitors  that do not have a pre-need  sales  force.  The
Company  believes  that its products and prices are generally  competitive  with
those in the industry.

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

Employees

As of December 31, 1999,  the Company  employed 206  full-time  and 34 part-time
employees.

Item 2.  Properties

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

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

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

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

  (1)   The Company  leases an  additional  6,400 square feet of the facility to
        unrelated third parties for approximately $98,000 per year, under leases
        which expire at various dates after 1999.

  (2)   The Company  leases an  additional  2,766 square feet of the facility to
        unrelated third parties for approximately $15,000 per year, under leases
        which expire at various dates after 1999.

  (3)   The Company  leases an  additional  5,747 square feet of the facility to
        unrelated  third  parties for  approximately  $109,000  per year,  under
        leases which expire at various dates after 1999.

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

                                       12


<PAGE>



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

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

  Lakeview
     Cemetery(3)     1700 E. Lakeview Dr.
                     Bountiful, UT            1973       6              40            7            33

  Mountain View
     Cemetery(3)     3115 E. 7800 So.
                     Salt Lake City, UT       1973      26              54           16            38

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

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

  Lakehills
    Cemetery(4)      10055 So. State
                     Sandy, UT                1991      12              44            6            38
  Singing Hills
     Memorial
     Park(6)         2798 Dehesa Rd.
                     El Cajon, CA             1995       6              35            1            34

                                       13
</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, 1999,  there were mortgages of  approximately  $71,600
          collateralized  by the property  and  facilities  at Memorial  Estates
          Lakeview, Mountain View and Redwood Cemeteries.

     (4)  As of  December  31,  1999,  there  were  mortgages  of  approximately
          $1,925,000  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,  1999,  there  was a  mortgage  of  approximately
          $727,800 collateralized by the property.

                                       14


<PAGE>

<TABLE>
<CAPTION>



The following  table  summarizes the location,  square footage and the number of
viewing rooms and chapels of the fourteen 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
  Funeral Home        3934 East Indian
                      School Road
                      Phoenix, AZ                   1989       2          1         9,800

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

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

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

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

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

                                       15

</TABLE>

<PAGE>



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

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

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

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

                                       16


<PAGE>



     (1)  As of December 31, 1999 there were mortgages of approximately $370,700
          collateralized  by the property  and  facilities  of Camelback  Sunset
          Funeral Home.

     (2)  As of  December  31,  1999,  there  were  mortgages  of  approximately
          $1,925,000  collateralized  by the property and  facilities at Deseret
          Mortuary,  Cottonwood  Mortuary,  Holladay  Memorial  Park,  Lakehills
          Cemetery and Colonial Mortuary.

     (3)  As of  December  31,  1999,  there  was a  mortgage  of  approximately
          $206,400,  collateralized  by the property and  facilities  of Crystal
          Rose Funeral Home.

Item 3.  Legal Proceedings

Security   National  Mortgage  Company   ("Security   National   Mortgage"),   a
wholly-owned subsidiary of the Company, has been notified that it may be subject
to an  administrative  action  by the  U.S.  Department  of  Housing  and  Urban
Development  ("HUD").  By way of letter from HUD to Security  National  Mortgage
dated  February 15, 2000 and received on February  25, 2000,  Security  National
Mortgage was advised "that the Mortgage  Review Board" of HUD "is considering an
administrative action against Security National Mortgage .... pursuant to 24 CFR
Part 25 ... and a civil money penalty  pursuant to 24 CFR part 30 ....".  In the
letter, HUD set forth alleged violations of HUD/Federal  Housing  Administration
("FHA") requirements which included among such violations: (1) failure to comply
with Security National  Mortgage's own policy and procedures  outlined in a July
17, 1997 letter to HUD; (2)  acceptance  of loans  originated  by personnel  not
employed  by or not  exclusively  employed by Security  National  Mortgage;  (3)
acceptance of loans originated by non-HUD approved entities; (4) payment of fees
and compensation to unauthorized  entities or individuals in connection with FHA
insured mortgages; and (5) certification of inaccurate HUD's.

Concerning the  administrative  action by HUD relating to the above allegations,
dependent upon the facts and circumstances, HUD asserts it has alternatives such
as taking no action,  issuing a letter of reprimand,  placing Security  National
Mortgage on  probation  or even  suspending  or  withdrawing  Security  National
Mortgage's  approval  function as a HUD/FHA  lender.  With  respect to any civil
money penalty, which could be in addition to the foregoing,  the letter from HUD
states that the "amount of the civil  penalty  shall not exceed  $5,500 for each
such  listed  or  described  violation"  and that a  "continuing  violation  may
constitute a separate violation for each day that violation continues".

Security  National Mortgage is allowed to respond in writing to what is asserted
by HUD and the procedure permits at a future time, if necessary,  an evidentiary
hearing.  At this stage a complete  evaluation  of the matter has not been made.
Management, however, recognizes the serious alternative sanctions claimed by HUD
to be available  to it  including  the sanction of the loss of the ability to do
FHA lending work. Thus,  management recognizes the great importance and need for
an appropriate  written response to the letter to be filed with HUD and the need
to do what is necessary to see that Security National  Mortgage's  understanding
of the matter is fairly and properly presented to HUD.

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,
adversely determined, would have a material adverse effect on the Company or its
business.

                                       17


<PAGE>



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

None

                                     PART II

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

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

Period (Calendar Year)                                        Price Range
                                                            High         Low
                                                           ------       ------
         1998

              First Quarter................................3.97          3.57
              Second Quarter...............................4.29          3.57
              Third Quarter................................3.99          3.10
              Fourth Quarter...............................3.27          2.92

         1999

              First Quarter................................3.57          2.62
              Second Quarter...............................3.25          2.75
              Third Quarter................................3.63          2.94
              Fourth Quarter...............................3.63          3.00

         2000

              First Quarter................................4.50          2.88

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

                                       18


<PAGE>



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

The  Company  has never  paid a cash  dividend  on its Class A or Class C Common
Stock.  The  Company  currently  anticipates  that all of its  earnings  will be
retained  for use in the  operation  and  expansion of its business and does not
intend to pay any cash  dividends  on its Class A or Class C Common Stock in the
foreseeable  future.  Any future  determination as to cash dividends will depend
upon the earnings and  financial  position of the Company and such other factors
as the Board of Directors may deem  appropriate.  A 5% stock dividend on Class A
and Class C Common Stock was paid in the years 1989 through 1999.

As of March 31, 2000,  there were 4,720  record  holders of Class A Common Stock
and 141 record holders of Class C Common Stock.

                                       19


<PAGE>



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

The following  selected  financial data for each of the five years in the period
ended  December 31, 1999,  are derived from the audited  consolidated  financial
statements.  The data as of December 31, 1999 and 1998,  and for the three years
ended  December 31, 1999,  should be read in conjunction  with the  consolidated
financial  statements,  related notes and other financial  information  included
herein.

Consolidated Statement of Earnings Data:
<TABLE>
<CAPTION>

                                                                   Year Ended December 31,
                                                    --------------------------------------------------

                                    1999(4)                1998               1997(2)          1996             1995(1)
                                    ----                   ----               ----             ----            -------
<S>                               <C>                <C>                 <C>                <C>               <C>
Revenue
Premiums                          $13,176,000        $ 5,916,000         $ 6,141,000        $ 5,666,000       $ 5,796,000
Net investment income              10,631,000          7,459,000           7,140,000          7,517,000         6,680,000
Net mortuary and
  cemetery income                  10,178,000          9,226,000           9,231,000          8,138,000         8,238,000
Realized gains on
  investments                         313,000             74,000             253,000            290,000           333,000
Mortgage fee income                14,503,000         10,082,000           5,662,000          8,237,000         4,943,000
Other                                 856,000             63,000              48,000             75,000            71,000
                                 ------------        -----------         -----------        -----------       -----------
Total revenue                      49,657,000         32,820,000          28,475,000         29,923,000        26,061,000
                                 ------------        -----------         -----------        -----------       -----------

Expenses

Policyholder benefits              11,976,000          6,932,000           6,669,000        $ 6,341,000       $ 6,111,000
Amortization of deferred
  policy acquisition costs          4,858,000          1,274,000           1,132,000          1,240,000         1,150,000
General and admini-
  strative expenses                26,959,000         19,649,000          15,361,000         17,292,000        13,019,000
Interest expense                    1,119,000            999,000             948,000          1,318,000         1,208,000
Cost of goods & services
  of the mortuaries
  & cemeteries                      3,295,000          2,940,000           2,696,000          2,355,000         2,314,000
                                  -----------        -----------         -----------        -----------       -----------
Total benefits & expenses          48,207,000         31,794,000          26,806,000         28,546,000        23,802,000
                                  -----------        -----------         -----------        -----------       -----------
Income before
  income tax expense                1,450,000          1,026,000           1,669,000          1,377,000         2,259,000
Income tax expense                   (230,000)          (255,000)           (360,000)          (139,000)         (728,000)
Minority interest in
  (income) loss of
   subsidiary                        (244,000)             --                  --                --                20,000
                                  -----------        -----------          ----------       ------------       -----------
Net earnings                      $   976,000        $   771,000          $1,309,000       $  1,238,000       $ 1,551,000
                                  ===========        ===========          ==========       ============       ===========

Net earnings per
   common share(3)                      $0.22              $0.18               $0.33              $0.33             $0.44
                                        =====              =====               =====              =====             =====
Weighted average out-
  standing common shares           4,397,000          4,273,000            3,988,000          3,750,000         3,508,000
Net earnings per common
   share-assuming dilution(3)           $0.22              $0.18               $0.32              $0.32             $0.43
                                        =====              =====               =====              =====             =====
Weighted average out-
   standing common shares-
   assuming dilution                4,397,000          4,273,000           4,093,000          3,856,000         3,576,000

                                       20

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


Balance Sheet Data:

                                                                  Year Ended December 31,
                                                  -----------------------------------------------------
                                   1999              1998(4)               1997(2)           1996              1995(1)
                                   ----              ----                  ------            ----               ----
<S>                           <C>                <C>                  <C>               <C>                 <C>

Assets
--------
Investments and
  restricted assets           $ 113,208,000      $126,332,000         $ 81,039,000       $ 78,638,000       $ 80,815,000
Cash                             12,423,000         6,671,000            3,408,000          3,301,000          7,710,000
Receivables                      38,074,000        28,309,000           15,224,000         17,070,000         24,177,000
Other assets                     50,593,000        51,953,000           25,781,000         25,701,000         25,511,000
                               ------------      ------------         ------------       ------------       ------------
Total assets                   $214,298,000      $213,265,000         $125,452,000       $124,710,000       $138,213,000
                               ============      ============         ============       ============       ============

Liabilities
-----------
Policyholder
  benefits                     $140,368,000       137,466,000         $ 77,890,000       $ 76,962,000       $ 76,868,000
Notes & contracts
  payable                        23,341,000        22,887,000            9,981,000         12,490,000         27,129,000
Cemetery & mortuary
  liabilities                     6,638,000         6,917,000            6,116,000          5,946,000          6,078,000
Other liabilities                11,415,000        12,536,000            6,070,000          5,844,000          6,219,000
                               ------------      ------------         ------------       ------------       ------------
Total liabilities               181,762,000       179,806,000          100,057,000        101,242,000        116,294,000
                               ------------      ------------         ------------       ------------       ------------

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

Stockholders' equity             26,490,000        26,680,000           25,395,000         23,468,000         21,919,000
                               ------------      ------------         ------------       ------------       ------------
Total liabilities and
  stockholders' equity         $214,298,000      $213,265,000         $125,452,000       $124,710,000       $138,213,000
                               ============      ============         ============       ============       ============

</TABLE>

     (1)  Only includes  Evergreen  Memorial Park for the first eleven months of
          1995 and the assets and  liabilities  of Civil Service  Employees Life
          Insurance Company as of December 31, 1995.

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

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

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

                                       21


<PAGE>



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

Overview

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

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, 1999, SSLIC Holding owns approximately 61.3%
of the  outstanding  shares of common stock of Southern  Security Life Insurance
Company ("Southern Security").

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

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

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

                                       22

</TABLE>

<PAGE>

<TABLE>
<CAPTION>



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

Overview

                                                                                          Without
                                                                                           SSLIC              Variance
                                                                       SSLIC Holding      Holding              without
                                                                        Southern          Southern           SSLIC Holding
                                                                        Security          Security         Southern Security
                                                                       Insuradyne        Insuradyne            Insuradyne
REVENUES:                                 1999             1998           1999             1999          Amount          Percent
----------                                ----             ----       ------------     ------------      ------          -------
<S>                                    <C>              <C>             <C>             <C>               <C>              <C>
Interest expense                       1,119,402        999,123         116,977         1,002,425         3,302            0.3
Cost of mortuaries and cemeteries
   goods and services sold             3,294,983      2,940,220          --             3,294,983       354,763           12.1
                                     -----------      ---------    ------------       -----------   -----------          -----
      Total benefits and expenses     48,206,597     31,793,559      10,141,421        38,065,176     6,271,617           19.7
                                     -----------   ------------    ------------       -----------   -----------          -----

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

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

                                       23

</TABLE>
<PAGE>



Results of Operations

1999 Compared to 1998

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

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

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

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

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

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

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

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

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

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

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

                                       24


<PAGE>



1998 Compared to 1997

Total revenues  increased by $4,345,000,  or 15.3%,  from $28,475,000 for fiscal
year 1997 to $32,820,000 for fiscal year 1998. Net investment  income  increased
$319,000 and mortgage fee income  increased  $4,420,000.  These  increases  were
offset by decreases in insurance premiums and other  considerations of $225,000,
net mortuary and cemetery sales of $5,000 and realized gains on investments  and
other assets of $179,000.

Insurance  premiums  and  other  considerations   decreased  by  $225,000,  from
$6,141,000 in 1997 to $5,916,000 in 1998. This decrease was primarily attributed
to a reduction in renewal premiums.

Net  investment  income  increased  by  $319,000,  from  $7,140,000  in  1997 to
$7,459,000 in 1998.  This increase was primarily the result of the  reinvestment
of the Company's bond portfolio in 1998 into higher  long-term rates in mortgage
loans.

Net mortuary and cemetery sales decreased by $5,000,  from $9,231,000 in 1997 to
$9,226,000  in  1998.  The  increase  in  cemetery  sales   (primarily   trusted
merchandise sales) was offset by a decrease in mortuary revenues.

Mortgage  fee  income  increased  by  $4,420,000,  from  $5,662,000  in  1997 to
$10,082,000 in 1998. This increase was primarily due to the increased  number of
loan  originations in the Company's primary market,  the  intermountain  region,
compared to 1997.

Total benefits and expenses were $31,794,000 for 1998, which  constituted 97% of
the  Company's  total  revenues,  as  compared  to  $26,806,000,  or  94% of the
Company's total revenues for 1997.

During 1998,  there was a net increase of $263,000 in death benefits,  surrender
and other  policy  benefits,  and an increase  in future  policy  benefits  from
$6,669,000  in 1997 to  $6,932,000  in 1998.  This increase was primarily due to
additional  interest  credited on annuities and reserve increases on traditional
products.  This  increase  was  reasonable  based  on the  underlying  actuarial
assumptions.

Amortization of deferred policy acquisition costs and cost of insurance acquired
increased by $141,000,  from  $1,132,000  in 1997 to  $1,274,000  in 1998.  This
increase was reasonable based on the underlying actuarial assumptions.

General and administrative expenses increased by $4,288,000, from $15,361,000 in
1997 to $19,649,000 in 1998.  Commission expenses increased by $2,735,000,  from
$4,883,000  in 1997 to  $7,618,000  in 1998.  Salaries  increased  $553,000 from
$4,806,000 in 1997 to $5,359,000 in 1998.  Other  expenses  increased  $999,000,
from  $5,672,000 in 1997 to $6,671,000 in 1998.  These  increases were primarily
the  result  of the  increased  number  of loan  originations  by the  Company's
mortgage subsidiary.

Interest  expense  increased  by $51,000,  from  $948,000 in 1997 to $999,000 in
1998.  This  increase  was  primarily  due to more  loan  originations  from the
Company's mortgage subsidiary that were funded by third parties.

Cost of the mortuary and cemetery  goods and services sold increased by $244,000
from  $2,696,000 in 1997 to $2,940,000 in 1998.  This increase was primarily due
to the increase in trusted merchandise sales.

                                       25


<PAGE>



Liquidity and Capital Resources

The Company's life insurance subsidiaries and cemetery and mortuary subsidiaries
realize  cash flow  from  premiums,  contract  payments  and  sales on  personal
services  rendered  for  cemetery  and  mortuary  business,  from  interest  and
dividends  on  invested  assets,  and from the  proceeds  from the  maturity  of
held-to-maturity   investments  or  sale  of  other  investments.  The  mortgage
subsidiary realizes cash flow from fees generated by originating and refinancing
mortgage loans and interest  earned on mortgages sold to investors.  The Company
considers these sources of cash flow to be adequate to fund future  policyholder
and  cemetery and mortuary  liabilities,  which  generally  are  long-term,  and
adequate to pay current policyholder claims,  annuity payments,  expenses on the
issuance of new policies,  the maintenance of existing  policies,  debt service,
and to meet operating expenses.

The  Company  attempts  to  match  the  duration  of  invested  assets  with its
policyholder  and  cemetery  and  mortuary  liabilities.  The  Company  may sell
investments other than those  held-to-maturity  in the portfolio to help in this
timing;  however,  to date, that has not been necessary.  The Company  purchases
short-term  investments  on a  temporary  basis  to  meet  the  expectations  of
short-term  requirements  of the Company's  products.  The Company's  investment
philosophy is intended to provide a rate of return which will persist during the
expected  duration  of  policyholder  and  cemetery  and  mortuary   liabilities
regardless of future interest rate movements.

The Company's  investment  policy is to invest  predominately  in fixed maturity
securities,  mortgage loans, and 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  $64,518,000 at amortized cost as of December 31, 1999
compared  to  $72,715,000  at  amortized  cost as of  December  31,  1998.  This
represents 42% of the total insurance related investments in 1999 as compared to
48 % in 1998. 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,
1999,  1.54%  ($994,000)  and at  December  31,  1998,  .64%  ($469,000)  of the
Company's  total  invested  assets 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  $82,499,000)  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)  $11,361   $5,389    $(5,122)   $(9,783)

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.

                                       26


<PAGE>



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, 1999
and 1998, the life subsidiaries exceeded the regulatory criteria.

The Company's total  capitalization  of  stockholders'  equity and bank debt and
notes payable was  $41,144,000 and $41,989,000 as of December 31, 1999 and 1998,
respectively.  Stockholders' equity as a percent of total capitalization was 64%
as of December 31, 1999 and 1998.

Lapse  rates  measure the amount of  insurance  terminated  during a  particular
period. The Company's lapse rate for life insurance in 1999 was 10%, as compared
to a rate of 15% in 1998.

In February 1995, the Company purchased approximately 100 acres of real property
(the  "Property")  located in San Diego,  California,  approximately 35 acres of
which is being used for a  cemetery.  The  purchase  price of the  property  was
$1,062,000,  $100,000  of which was paid in cash and the  balance  of  $962,000,
together with interest  thereon at the rate of 9% percent per annum,  to be paid
in 12 monthly  payments  of $5,000,  thereafter  in equal  monthly  payments  of
$10,000.  However,  interest did not accrue on any part of the principal balance
until  February 3, 1996.  A principal  payment of $100,000  was made in December
1995.  The Company has obtained  approval  from the federal  government  and the
California Cemetery Board to operate a cemetery on the property. The Company has
completed  development on six acres and is currently  selling cemetery lots on a
pre-need and at-need basis on the developed acreage.

In  March  1995,  the  Company  purchased  97,800  shares  of  common  stock  of
Greer-Wilson  Funeral  Home,  Inc.,  representing  97.8% of the total issued and
outstanding shares of common stock of Greer-Wilson for a total  consideration of
$1,218,000,  which  included  a note  to the  former  owners  in the  amount  of
$588,000.

In November 1995, the Company  entered into a purchase sale agreement with Myers
Mortuary  for the sale of the  Company's  65%  interest  in  Evergreen  Memorial
Partnership and the Company's 50% interest in Evergreen Management  Corporation.
As consideration for the sale of these entities, Myers Mortuary paid $746,123 in
satisfaction of the indebtedness that Evergreen Memorial Partnership owed to the
Company. Myers Mortuary also agreed to pay $200,000 to the Company in four equal
annual  installments of $50,000,  beginning as of October 31, 1996. In addition,
Myers  Mortuary  will pay a $10.00  royalty to the  Company for each adult space
sold in Evergreen Memorial Park over the next ten years, beginning as of January
1, 1996.

In December 1995, the Company purchased all of the outstanding  shares of common
stock of Civil Service  Employees Life Insurance Company ("CSE Life") from Civil
Service  Employees  Insurance  Company  for a total  cost of  $5,200,000,  which
included  a  promissory  note  in the  amount  of  $1,063,000.  Interest  on the
promissory  note accrues at 7% per annum.  Principal  payments are to be made in
seven equal annual  installments  of  $151,857,  beginning on December 29, 1996.
Accrued interest is payable annually beginning on December 29, 1996.

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

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

                                       27


<PAGE>



outstanding   shares  of  common   stock  of   Consolidare.   Consolidare   owns
approximately  61.3% of the  outstanding  shares  of  common  stock of  Southern
Security Life Insurance Company, a Florida corporation ("SSLIC"), and all of the
outstanding  shares  of  stock  of  Insuradyne  Corp.,  a  Florida   corporation
("Insuradyne").

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

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

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

On June 30, 1999 the Company entered into a Coinsurance and Assumption Agreement
(the "Agreement") with Menlo Life Insurance Company ("Menlo Life"),  wherein the
Company has assumed 100% of the policies in force of Menlo Life.  The  Agreement
was not in effect  until it was  approved  by Menlo  Life's  domiciled  state of
Arizona and the state of California.  These approvals were obtained on September
9, 1999 for the Arizona  Insurance  Department,  and on December 9, 1999 for the
California  Insurance  Department.  Menlo  Life  will pay  consideration  to the
Company  in the form of  statutory  admitted  assets  to equal  the  liabilities
assumed.  The  liabilities  assumed  at  December  31,  1999  was  approximately
$3,120,000. The consideration will be paid in the second quarter of 2000.

At December 31, 1999,  $21,066,134 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 1998,  the  Financial  Accounting  Standards  Board (the "FASB")  issued
Statement No. 133, Accounting for Derivative  Instruments and Hedging Activities
("SFAS 133"),  which the Company is required to adopt January 1, 2000.  SFAS 133
will require the Company to include

                                       28


<PAGE>



all derivatives in the statement of financial position at fair value. Changes in
derivative  fair values will either be  recognized in earnings as offsets to the
changes in fair value of related hedged assets, liabilities and firm commitments
or, for forecasted transactions,  deferred and recorded as a component of equity
until  the  hedged  transactions  occur  and are  recognized  in  earnings.  The
ineffective  portion  of a hedging  derivative's  change in fair  value  will be
immediately  recognized  in  earnings.  The impact of SFAS 133 on the  Company's
financial  statements  will  depend on a variety of  factors,  including  future
interpretive  guidance from the FASB,  the future level of forecasted and actual
foreign currency  transactions,  the extent of the Company's hedging activities,
the types of hedging instruments used and the effectiveness of such instruments.
However,  the Company  does not believe the effect of adopting  SFAS 133 will be
material to its financial position.

                                       29


<PAGE>



Item 8.  Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULES

                                                                        Page No.

Financial Statements:

    Report of Independent Auditors...........................................31

    Consolidated Balance Sheets, December 31,
    1999 and 1998............................................................33

    Consolidated Statements of Earnings,
    Years Ended December 31, 1999, 1998,
    and 1997.................................................................35

    Consolidated Statements of Stockholders'
    Equity, Years Ended December 31, 1999, 1998
    and 1997. ...............................................................36

    Consolidated Statements of Cash Flow,
    Years Ended December 31, 1999, 1998 and
    1997    .................................................................37

    Notes to Consolidated Financial
    Statements...............................................................39



Financial Statement Schedules:

  I.  Summary of Investments -- Other than
      Investments in Related Parties.........................................73

 II.  Condensed Financial Information of
      Registrant.............................................................74

 IV.  Reinsurance............................................................80

  V.  Valuation and Qualifying Accounts......................................81


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.

                                       30


<PAGE>



                         REPORT OF INDEPENDENT AUDITORS

To The Board of Directors of
Security National Financial Corporation

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

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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, 1999,
and the  consolidated  results of their  operations and their cash flows for the
year ended December 31, 1999, in conformity with generally  accepted  accounting
principles.   Also,  in  our  opinion,  the  related  1999  financial  statement
schedules,  when considered in relation to the basic financial  statements taken
as a whole, present fairly, in all material respects,  the information set forth
therein.

TANNER + CO.

Salt Lake City, Utah
March 30, 2000

                                       31


<PAGE>



                         REPORT OF INDEPENDENT AUDITORS

Board of Directors

Security National Financial Corporation

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

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

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

ERNST & YOUNG LLP

Salt Lake City, Utah
March 22, 1999

                                       32


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets

                                                              December 31,
Assets:                                                   1999          1998
-------                                                   ----          ----
Insurance-related investments:
Fixed maturity securities
  held to maturity, at amortized cost (market
  $39,453,452 and $46,897,819 for 1999 and 1998)      $39,629,851   $44,984,882
Fixed maturity securities available
  for sale, at market (cost $24,957,347 in 1999
  and 28,675,440 in 1998)                              24,119,190    28,675,440
Equity securities available for sale,
  at market (cost $4,350,139 and $4,035,251
  for 1999 and 1998)                                    5,745,213     5,146,059
Mortgage loans on real estate                          18,926,628    12,523,395
Real estate, net of accumulated
  depreciation of $2,722,024 and $2,380,874
  for 1999 and 1998                                     7,629,952     7,866,151
Policy, student and other loans                        11,607,993    11,493,637
Short-term investments                                  1,290,310    11,543,540
                                                     ------------ -------------
     Total insurance-related investments              108,949,137   122,233,104
Restricted assets of cemeteries and mortuaries          4,258,987     4,098,877
Cash                                                   12,422,864     6,670,996
Receivables:
  Trade contracts                                       4,232,030     4,011,722
Mortgage loans sold to investors                      29,071,913     21,181,028
  Receivable from agents                                2,272,624     1,944,449
  Receivable from officers                                118,400       145,600
  Other                                                 3,847,079     2,603,243
                                                     ------------  ------------
     Total receivables                                 39,542,046    29,886,042
  Allowance for doubtful accounts                      (1,467,954)   (1,576,668)
                                                     ------------  ------------
  Net receivables                                      38,074,092    28,309,374
Policyholder accounts on deposit
  with reinsurer                                        7,806,866     8,518,571
Land and improvements held for sale                     8,522,687     8,405,725
Accrued investment income                               1,493,013     1,440,860
Deferred policy acquisition costs                      10,630,086    10,501,281
Property, plant and equipment, net                     10,566,508    10,682,085
Cost of insurance acquired                              9,597,306    10,462,446
Excess of cost over net assets
  of acquired subsidiaries                              1,305,333     1,414,910
Other                                                     671,558       526,918
                                                     ------------  ------------
     Total assets                                    $214,298,437  $213,265,147
                                                     ============  ============

See accompanying notes to consolidated financial statements.

                                       33


<PAGE>



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

                                                       December 31,
                                                       ------------
                                                   1999           1998
                                                   ----           ----
Liabilities:
------------
Future life, annuity, and other
  policy benefits                              $ 138,501,316    $ 134,899,870
Unearned premium reserve                           1,866,523        2,565,968
Line of credit for financing
  of mortgage loans                                8,687,023        7,577,248
Bank loans payable                                10,768,098       11,909,980
Notes and contracts payable                        3,885,684        3,399,272
Estimated future costs of pre-need sales           6,817,685        6,376,651
Accounts payable                                     804,133        1,321,559
Funds held under reinsurance treaties              1,475,512        1,419,357
Other liabilities and accrued expenses             3,219,166        4,327,889
Income taxes                                       5,736,860        6,008,537
                                                 -----------      -----------
     Total liabilities                           181,762,000      179,806,331

Commitments and contingencies                                          --

Minority interest                                  6,046,744        6,778,557

Stockholders' Equity:
-----------------
Common stock:
     Class A: $2 par value, authorized
         10,000,000 shares, issued 4,863,731
         shares in 1999 and 4,617,330 shares
         in 1998                                   9,727,462        9,234,660
     Class C: $0.20 par value, authorized
         7,500,000 shares, issued 5,555,350
         shares in 1999 and 5,446,595 shares
         in 1998                                   1,111,070        1,089,319
                                                  ----------      -----------
Total common stock                                10,838,532       10,323,979
Additional paid-in capital                        10,015,942        9,596,444
Accumulated other comprehensive income,
  net of deferred taxes (benefit)
  of $(71,899) and $222,967 for 1999
  and 1998                                           665,691        1,081,113
Retained earnings                                  7,516,640        7,474,783
Treasury stock at cost (966,139 Class
     A shares  and 61,979 Class C shares
     in 1999; 692,993 Class A shares and
     59,028 Class C shares in 1998, held
     by affiliated companies)                     (2,547,112)      (1,796,060)
                                                ------------   --------------
Total stockholders' equity                        26,489,693       26,680,259
                                                ------------   --------------
  Total liabilities and stockholders' equity    $214,298,437    $ 213,265,147
                                                ============   ==============

See accompanying notes to consolidated financial statements.

                                       34


<PAGE>

<TABLE>
<CAPTION>

                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                       Consolidated Statements of Earnings


                                                                                        Year Ended December 31,

                                                                         1999                    1998                   1997
                                                                         ----                    ----                   ----
Revenues:
--------
<S>                                                                   <C>                   <C>                   <C>
Insurance premiums and
  other considerations                                                $ 13,175,825          $ 5,915,659           $ 6,140,783
Net investment income                                                   10,631,302            7,458,743             7,139,580
Net mortuary and cemetery sales                                         10,178,246            9,225,801             9,230,864
Realized gains on investments
  and other assets                                                         313,013               74,121               252,635
Mortgage fee income                                                     14,503,388           10,082,330             5,661,867
Other                                                                      855,604               62,949                48,893
                                                                      ------------         ------------           -----------
  Total revenue                                                         49,657,378           32,819,603            28,474,622

Benefits and expenses:
---------------------
Death benefits                                                           4,780,063            2,432,822             2,407,931
Surrenders and other policy benefits                                     1,494,863            1,145,812             1,286,511
Increase in future policy benefits                                       5,700,784            3,353,287             2,974,915
Amortization of deferred policy
  acquisition costs and cost of
  insurance acquired                                                     4,857,662            1,273,394             1,132,298
General and administrative expenses:
  Commissions                                                           11,850,763            7,618,335             4,882,880
  Salaries                                                               7,409,298            5,358,743             4,805,571
  Other                                                                  7,698,779            6,671,823             5,671,664
Interest expense                                                         1,119,402              999,123               947,629
Cost of goods and services sold
  of the mortuaries and cemeteries                                       3,294,983            2,940,220             2,696,174
                                                                      ------------          -----------           -----------
  Total benefits and expenses                                           48,206,597           31,793,559            26,805,573
                                                                      ------------          -----------           -----------

Earnings before income taxes                                             1,450,781            1,026,044             1,669,049
Income tax expense                                                        (230,516)            (254,815)             (360,108)
Minority income                                                           (244,370)               --                    --
                                                                      ------------          -----------           --------
  Net earnings                                                        $    975,895          $   771,229           $ 1,308,941
                                                                      ============          ===========           ===========

Net earnings per common share                                                $0.22                $0.18                 $0.33
                                                                             =====                =====                 =====

  Weighted average outstanding
    common shares                                                        4,397,141            4,272,516             3,988,034

Net earnings per common share-
  assuming dilution                                                          $0.22                $0.18                 $0.32
                                                                             =====                =====                 =====

  Weighted average outstanding
    common shares assuming-dilution                                      4,397,141            4,272,516             4,092,691

See accompanying notes to consolidated financial statements.

                                       35

</TABLE>

<PAGE>

<TABLE>
<CAPTION>



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

                                                                                 Accumulated
                                                                  Additional        Other
                                      Class           Class        Paid-in      Comprehensive   Retained     Treasury
                                        A               C          Capital         Income       Earnings       Stock       Total
                                    --------         -------      ---------        ------       --------       -----       -----
<S>                                 <C>              <C>           <C>              <C>         <C>          <C>          <C>
Balance at
  December 31, 1996                 8,221,418        993,413       8,675,386        259,915     7,118,528    (1,800,632) 23,468,028

Comprehensive income:
  Net earnings                                                                                  1,308,941                 1,308,941
  Unrealized gain on securities                                                     571,024                                 571,024
                                                                                                                        -----------
Total comprehensive income                                                                                                1,879,965
                                                                                                                        -----------
Stock dividends                       412,712         49,531         431,967                    (894,210)                     --
Conversion Class C
  to Class A                            2,718         (2,718)                                                                 --
Stock issued                           16,328            (64)         26,101                                    43,520      85,885
Purchase of treasury stock                                                                                     (38,948)    (38,948)
                                  -----------    -----------    ------------    -----------    ----------   ----------- ----------
Balance at
  December 31, 1997                 8,653,176      1,040,162       9,133,454        830,939     7,533,259   (1,796,060)  25,394,930

Comprehensive income:
  Net earnings                                                                                    771,229                   771,229
  Unrealized gain on securities                                                     250,174                                 250,174
                                                                                                                        -----------
Total comprehensive income                                                                                                1,021,403
                                                                                                                        -----------
Stock dividends                       439,784         51,875         338,046                     (829,705)                    --
Conversion Class C
  to Class A                            2,672         (2,672)                                                                 --
Stock issued                          139,028            (46)        124,944                                                263,926
                                  -----------    -----------    ------------    -----------    ----------  -----------  -----------
Balance at
  December 31, 1998               $ 9,234,660    $ 1,089,319    $  9,596,444    $ 1,081,113    $7,474,783  $(1,796,060) $26,680,259

Comprehensive income:
  Net earnings                                                                                    975,895                   975,895
  Unrealized gain on securities                                                   (415,422)                                (415,422)
                                                                                                                        -----------
Total comprehensive income                                                                                                  560,473
                                                                                                                        -----------
Stock dividends                       463,344         52,910         419,456                    (935,710)                    --
Conversion Class C
  to Class A                           31,160        (31,159)             (1)                                                --
Stock issued (cancelled)               (1,702)                            43                       1,672                         13
Purchase of treasury stock                                                                                     (751,052)  (751,052)
                                  -----------    -----------    ------------    -----------    ----------   ----------- ----------
Balance at
  December 31, 1999               $ 9,727,462    $ 1,111,070    $ 10,015,942    $   665,691    $7,516,640   $(2,547,112)$26,489,693
                                  ===========    ===========    ============    ===========    ==========   =========== ===========

</TABLE>

See accompanying notes to consolidated financial statements.

                                                                              36


<PAGE>

<TABLE>
<CAPTION>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flow

                                                                                                Year Ended December 31,
                                                                                                -----------------------
                                                                                      1999              1998                1997
                                                                                      ----              ----                ----
<S>                                                                               <C>              <C>                <C>
Cash flows from operating activities:

     Net earnings                                                                 $   975,895       $   771,229        $1,308,941
     Adjustments to reconcile net earnings
       to net cash provided by
            operating activities:
          Realized gains on investments
            and other assets                                                         (313,013)          (74,121)         (252,635)
          Depreciation                                                              1,187,426           917,166           815,977
          Provision for losses on accounts
            and loans receivable                                                      150,981           175,750           129,502
          Amortization of goodwill, premiums,
            and discounts                                                             263,572            90,622           106,783
          Provision for deferred income taxes                                         228,464           339,763           159,935
          Policy acquisition costs deferred                                        (3,886,279)       (1,310,170)         (909,943)
          Policy acquisition costs amortized                                        3,992,522           976,482           753,662
          Cost of insurance acquired amortized                                        865,140           296,912           378,636
     Change in assets and liabilities net of
       effects from purchases and disposals of
          subsidiaries:
          Land and improvements held for sale                                        (116,962)           61,161           (10,584)
          Future life and other benefits                                            5,012,923         3,349,196         2,879,911
          Receivables for mortgage loans sold                                      (7,890,885)       (5,841,576)        2,056,691
          Other operating assets and liabilities                                     (959,832)          836,210          (333,984)
                                                                                 ------------       -----------      ------------
              Net cash provided by (used in)
                operating activities                                                 (490,048)          588,624         7,082,892

Cash flows from investing activities: Securities held to maturity:

          Purchase - fixed maturity securities                                     (1,207,177)         (524,562)       (9,254,030)
          Calls and maturities - fixed
            maturity securities                                                     6,658,968        10,482,673         7,561,598
     Securities available for sale:
          Purchases - equity securities                                              (507,404)          (22,183)         (309,547)
          Sales - equity securities                                                 2,906,278           114,608           465,935
     Purchases of short-term investments                                           (9,131,204)      (11,453,095)       (5,008,706)
     Sales of short-term investments                                               19,384,434        11,102,460         3,568,048
     Purchases of restricted assets                                                  (119,479)          (15,820)         (329,379)
     Mortgage, policy, and other loans made                                       (10,891,562)       (6,974,351)       (1,337,456)
     Payments received for mortgage,
       policy, and other loans                                                      4,770,423         2,811,841         3,066,889
     Purchases of property, plant, and equipment                                     (767,383)       (2,040,023)         (351,091)
     Disposal of property and equipment                                               190,000              --                --
     Purchases of real estate                                                        (421,230)         (755,581)          (97,013)
     Sale of real estate                                                              334,500              --                --
     Purchases of subsidiaries
       net of cash acquired                                                             --          (11,764,823)          (60,602)
                                                                                 ------------      ------------       -----------
              Net cash (used in) provided by
                investing activities                                               11,199,164        (9,038,856)       (2,085,354)

                                       37

</TABLE>

<PAGE>

<TABLE>
<CAPTION>



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



                                                                                      Year Ended December 31,
                                                                                      -----------------------
                                                                         1999                  1998                 1997
                                                                         ----                  ----                 ----

Cash flows from financing activities:
<S>                                                                  <C>                      <C>                <C>

     Annuity receipts                                                10,522,726               2,770,045            2,521,025
     Annuity withdrawals                                            (15,183,240)             (3,962,579)          (4,472,918)
     Repayment of bank loans and
          notes and contracts payable                                (1,545,957)               (918,065)          (1,965,706)
     Proceeds from borrowings on bank
          loans and notes and contracts
             payable                                                    890,500               6,246,400              233,000
     Sale of treasury stock                                               --                      --                  44,994
     Purchase of treasury stock                                        (751,052)                  --                 (38,948)
     Net change in line of credit
          for financing of mortgage loans                             1,109,775               7,577,248           (1,211,890)
                                                                   ------------            ------------          -----------
     Net cash (used in) provided by
          financing activities                                       (4,957,248)             11,713,049           (4,890,443)
                                                                   ------------            ------------          -----------
Net change in cash                                                    5,751,868               3,262,817              107,095

Cash at beginning of year                                             6,670,996               3,408,179            3,301,084
                                                                   ------------             -----------          -----------

Cash at end of year                                                $ 12,422,864             $ 6,670,996          $ 3,408,179
                                                                   ============             ===========          ===========


See accompanying notes to the financial statements.

                                       38

</TABLE>

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997



1)       Significant Accounting Principles

General Overview of Business

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

Basis of Presentation

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

Risks

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

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

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

                                       39


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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 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, 1999, 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

                                       40


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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 (61.3%)

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 61.3% of the outstanding shares of
common stock of Southern Security Life Insurance  Company  (Southern  Security).
The  acquisition  was  accounted for using the purchase  method.  The assets and
liabilities of SSLIC Holding and Insuradyne  have been included in the Company's
balance  sheet at December 31, 1998.  The results of operations of SSLIC Holding
and Insuradyne were not material to the financial statements of the Company from
the date of acquisition  through December 31, 1998 and,  consequently,  have not
been  included in the  Consolidated  Statements  of  Earnings  for the year then
ended.

Investments

Investments are shown on the following basis:

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

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

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

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

                                       41


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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

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

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

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

Cash and Cash Equivalents

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

Property, Plant and Equipment

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

Recognition of Insurance Premiums and Other Considerations

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

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

                                       42


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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

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

Future Life, Annuity and Other Policy Benefits

Future policy benefit reserves for traditional life insurance are computed using
a net level method,  including  assumptions as to investment yields,  mortality,
morbidity,  withdrawals,  and  other  assumptions  based on the  life  insurance
subsidiaries  experience,  modified as necessary  to give effect to  anticipated
trends and to include  provisions  for  possible  unfavorable  deviations.  Such
liabilities are, for some plans, graded to equal statutory values or cash values
at or prior to maturity. The range of assumed interest rates for all traditional
life  insurance  policy  reserves  was 4.5% to 10.0% in 1999,  1998,  and  1997.
Benefit reserves for traditional limited-payment life insurance policies include
the deferred portion of the premiums received during the premium-paying  period.
Deferred premiums are recognized as income over the life of the policies. Policy
benefit claims are charged to expense in the period the claims are incurred.

Future policy benefit  reserves for  interest-sensitive  insurance  products are
computed  under a  retrospective  deposit  method and represent  policy  account
balances before applicable  surrender  charges.  Policy benefits and claims that
are charged to expense  include  benefit claims incurred in the period in excess
of   related   policy   account   balances.   Interest   crediting   rates   for
interest-sensitive  insurance  products ranged from 4% to 6.5% in 1999, 1998 and
1997.

Participating Insurance

Participating  business  constitutes  2%, 1%, and 8% of  insurance  in force for
1999, 1998 and 1997,  respectively.  The provision for policyholders'  dividends
included in policyholder  obligations is based on dividend scales anticipated by
management. Amounts to be paid are determined by the Board of Directors.

Reinsurance

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

                                       43


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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

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

Cemetery and Mortuary Operations

Land and improvements used in cemetery operations are stated at cost and charged
to  operations  when sold  based on the  number of  spaces  available  for sale.
Mausoleum  costs are  charged  to  operations  when sold  based on the number of
niches  available  for sale.  Perpetual  care is  maintained  on sold  spaces as
discussed in Note 7.

Certain cemetery  products are sold on a pre-need basis.  Revenues from pre-need
cemetery  sales are  recognized at the time of sale.  Related costs  required to
establish the liability  for estimated  future costs of pre-need  sales are also
recorded at the time of sale. This liability relates to promised merchandise and
funeral  services and is increased  or  decreased  each period as current  costs
change.  A  corresponding  charge is made to operations to reflect the change in
costs. Certain mortuary products and services are also sold on a pre-need basis.
Pre-need  mortuary sales are fully reserved at the time of the sale.  Revenue on
pre-need  mortuary  services is recognized at the time the service is performed.
All pre-need sales contracts bear interest at 8%.

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  to the  mortuaries.  If,  at the  time of  need,  the
policyholder/potential mortuary customer utilizes one

                                       44


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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

Mortgage Operations

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

Excess of Cost Over Net Assets of Acquired Businesses

Previous  acquisitions  have been accounted for as purchases  under which assets
acquired and liabilities  assumed were recorded at their fair values. The excess
of cost over net assets of acquired  businesses is being  amortized over a range
of  fifteen  to  twenty  years  using  the  straight-line  method.  The  Company
periodically  evaluates  the  recoverability  of amounts  recorded.  Accumulated
amortization  was  $1,029,528  and  $919,951  at  December  31,  1999 and  1998,
respectively.

Income Taxes

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

Earnings Per Common Share

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

                                       45


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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 one fixed option plan (the "1993 Plan").  In accordance with APB
Opinion No. 25, no compensation  cost has been recognized for the 1993 plan. Had
compensation cost for the 1993 plan 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  $9,000,
$110,000, and $10,000 in 1999, 1998, and 1997, respectively.  As a result, basic
and diluted  earnings per share would have been reduced by $0, $0.03,  and $0 in
1999, 1998, and 1997, respectively.

The weighted  average fair value of options  granted in 1999 under the 1993 Plan
is  estimated  at $0.04 as of the grant  date  using the  Black  Scholes  Option
Pricing Model with the following  assumptions:  dividend yield of 5%, volatility
of 28.83%, risk-free interest rate of 8.25%, and an expected life of ten years.

The weighted  average  fair value of each option  granted in 1998 under the 1993
Plan is  estimated  at  $0.81 as of the  grant  date  using  the  Black  Scholes
option-pricing  model  with the  following  assumptions:  dividend  yield of 5%,
volatility of 29.3%,  risk-free  interest rate of 5.7%,  and an expected life of
five 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 the 1987 Plan is estimated and recognized  over the period of
the award based on changes in the current  market price of the  Company's  stock
over the vesting period. Options granted under the 1987 Plan are exercisable for
a period of ten years from the date of grant.

Pending Accounting Change

In June 1998,  the  Financial  Accounting  Standards  Board (the "FASB")  issued
Statement No. 133, Accounting for Derivative  Instruments and Hedging Activities
("SFAS 133"),  which the Company is required to adopt January 1, 2000.  SFAS 133
will  require  the  Company to  include  all  derivatives  in the  statement  of
financial position at fair value.  Changes in derivative fair values will either
be  recognized  in  earnings  as offsets to the changes in fair value of related
hedged assets, liabilities and firm commitments or, for forecasted transactions,
deferred and recorded as a

                                       46


<PAGE>
                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997



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

component of equity until the hedged  transactions  occur and are  recognized in
earnings. The ineffective portion of a hedging derivative's change in fair value
will be  immediately  recognized  in  earnings.  The  impact  of SFAS 133 on the
Company's  financial  statements will depend on a variety of factors,  including
future  interpretive  guidance from the FASB, the future level of forecasted and
actual  foreign  currency  transactions,  the  extent of the  Company's  hedging
activities,  the types of hedging instruments used and the effectiveness of such
instruments.  However,  the Company does not believe the effect of adopting SFAS
133 will be material to its financial position.

Reclassifications

Certain  amounts in prior years have been  reclassified to conform with the 1999
presentation.

                                       47


<PAGE>

<TABLE>
<CAPTION>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997

2)  Investments

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

                                                                            Gross                Gross         Estimated
                                                      Amortized          Unrealized           Unrealized         Fair
                                                        Cost                Gains               Losses           Value
                                                      --------            ---------           ----------        -------
December 31, 1999:
   Fixed maturity securities held to maturity:

   <S>                                              <C>                <C>                 <C>                  <C>
   Bonds:
     U.S. Treasury securities
     and obligations of U.S.
     Government agencies                            $12,822,025         $   90,415          $  (225,797)        $12,686,643

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

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

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

   Redeemable preferred stock                            28,011             19,011               (7,000)             40,022
                                                    -----------        -----------           ----------         -----------
        Total fixed maturity securities
        held to maturity                            $39,629,851        $   724,169           $ (900,568)        $39,453,452
                                                    ===========        ===========           ==========         ===========

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

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

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

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

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

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

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

                                         48

</TABLE>

<PAGE>

<TABLE>
<CAPTION>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997

                                                                            Gross                Gross              Estimated
                                                      Amortized          Unrealized           Unrealized              Fair
                                                        Cost                Gains               Losses               Value
                                                      --------            ---------           ----------           -------
December 31, 1998:
   Fixed maturity securities held to maturity:

   Bonds

 <S>                                                <C>                 <C>                 <C>                <C>
     U.S. Treasury securities
     and obligations of U.S.
     Government agencies                            $14,548,493         $  483,831            $    (117)        $15,032,207

     Obligations of states and
     political subdivisions                             169,941             15,047               (5,938)            179,050

     Corporate securities
     including public utilities                      22,764,172          1,410,810              (34,627)         24,140,355

     Mortgage-backed securities                       7,439,713               --                   --             7,439,713
   Redeemable preferred stock                            62,563             51,874               (7,943)            106,494
                                                    -----------         ----------            ---------         -----------

        Total                                       $44,984,882         $1,961,562            $ (48,625)        $46,897,819
                                                    ===========         ==========            =========         ===========

Securities available for sale
   Bonds

     U.S. Treasury securities
     and obligations of U.S.
     Government agencies (1)                        $ 5,309,323        $    --               $     --           $ 5,309,323

     Corporate securities
        including public
        utilities(1)                                 23,366,117             --                     --            23,366,117

   Nonredeemable preferred
     stock                                               76,431             75,675               (3,231)            148,875
   Common stock                                       3,958,820          1,581,457             (543,093)          4,997,184
                                                    -----------         ----------           ----------         -----------

        Total                                       $32,710,691         $1,657,132           $ (546,324)        $33,821,499
                                                    ===========         ==========           ==========         ===========

   Restricted equity
     securities (note 7)                            $   172,391         $  203,619           $  (10,348)        $   365,662
                                                    ===========         ==========           ==========         ===========


(1) Fixed  maturity  securities  available for sale were acquired as part of the
SSLIC acquisition. As such, cost equaled fair value as of December 31, 1998.

                                         49

</TABLE>

<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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, 1999, by contractual maturity, are shown below. Expected maturities
may differ from contractual  maturities  because certain  borrowers may have the
right  to  call  or  prepay  obligations  with or  without  call  or  prepayment
penalties.

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

Due in 2000                  $ 5,456,257   $ 5,408,398
Due in 2001 through 2004      19,474,680    19,763,420
Due in 2005 through 2009       8,223,804     7,974,416
Due after 2009                   438,089       467,382
Mortgage-backed securities     6,009,010     5,799,815
Redeemable preferred stock        28,011        40,021
                             -----------   -----------
                             $39,629,851   $39,453,452

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

Due in 2000                  $ 1,199,855   $ 1,203,063
Due in 2001 through 2004      12,967,929    12,676,305
Due in 2005 through 2009       9,331,611     8,840,145
Due after 2009                 1,367,611     1,309,565
Mortgage-backed securities        90,341        90,112
                             -----------   -----------
                             $24,957,347   $24,119,190

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

                             1999       1998         1997
                             ----       ----         ----
Fixed maturity
  securities held to
  maturity:

Gross realized gains    $  87,859    $ 43,154    $  37,995
Gross realized losses      (1,895)    (26,470)     (12,457)

Securities available
    for sale:
Gross realized gains       14,138      66,589      242,714
Gross realized losses         (12)     (3,887)     (15,617)

Other assets              212,923      (5,265)        --
                        ---------    --------    ---------
        Total           $ 313,013    $ 74,121    $ 252,635
                        =========    ========    =========



                                         50


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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

Concentrations  of credit risk arise when a number of mortgage loan debtors have
similar  economic  characteristics  that  would  cause  their  ability  to  meet
contractual  obligations  to  be  similarly  affected  by  changes  in  economic
conditions.  Although  the Company has a  diversified  mortgage  loan  portfolio
consisting of residential  and commercial  loans and requires  collateral on all
real estate  exposures,  a substantial  portion of its debtors' ability to honor
obligations  is reliant on the economic  stability of the  geographic  region in
which the debtors do business.  The Company has 83% of its mortgage loans in the
state of Utah.

Investments,  aggregated  by issuer,  in excess of 10% of  shareholders'  equity
(before net  unrealized  gains and losses on available for sale  securities)  at
December 31, 1999,  other than  investments  issued or  guaranteed by the United
States Government, are as follows:

                                                          Carrying Amount

        Dean Witter Discover                                 $4,065,311
        Philip Morris, Inc.                                   5,459,717

Major categories of net investment income are as follows:

                            1999           1998            1997
                            ----           ----            ----

Fixed maturity
  securities          $  4,720,838    $ 3,293,949    $ 3,519,270
Equity securities          226,857        219,785        238,097
Mortgage loans
  on real estate         1,451,214      1,036,132        774,478
Real estate              1,711,771      1,384,311      1,375,996
Policy loans               725,383        170,752        170,726
Short-term
  investments              650,035        405,848        529,979
Other                    2,142,527      1,899,643      1,310,246
                      ------------    -----------    -----------
  Gross investment
    income              11,628,625      8,410,420      7,918,792
Investment expenses       (997,323)      (951,677)      (779,212)
                      ------------    -----------    -----------
Net investment
  income              $ 10,631,302    $ 7,458,743    $ 7,139,580
                      ============    ===========    ===========

Net investment  income  includes net investment  income earned by the restricted
assets of the cemeteries and mortuaries of approximately $733,000,  $683,000 and
$609,000 for 1999, 1998, and 1997, respectively.

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

Securities on deposit for regulatory  authorities as required by law amounted to
$9,632,937 at December 31, 1999 and $9,924,315 at December 31, 1998.

                                       51


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


3)  Cost of Insurance Acquired

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

                              1999             1998            1997
                              ----             ----            ----
Balance at
  beginning of year      $ 10,462,446    $  3,370,018    $ 3,748,654
Cost of insurance
  acquired                       --         7,389,340           --

Imputed interest at 7%        732,371         235,901        262,406
Amortization               (1,597,511)       (532,813)      (641,042)
                         ------------    ------------    -----------
Net amortization
  charged to income          (865,140)       (296,912)      (378,636)
                         ------------    ------------    -----------
Balance at end
  of year                $  9,597,306    $ 10,462,446    $ 3,370,018
                         ============    ============    ===========

Presuming no  additional  acquisitions,  net  amortization  charged to income is
expected to approximate $860,000, $824,000, $759,000, $702,000, and $649,000 for
the years 2000 through 2004.  Actual  amortization  may vary based on changes in
assumptions or experience.

4) Property, Plant and Equipment

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

                                   December 31,
                                   ------------
                              1999             1998
                              ----             ----

Land and Buildings        $ 10,171,943    $  9,983,828
Furniture and equipment      6,384,208       6,011,048
                          ------------    ------------
                            16,556,151      15,994,876
Less accumulated
     depreciation           (5,989,643)     (5,312,791)
                          ------------    ------------
     Total                $ 10,566,508    $ 10,682,085
                          ============    ============


5)   Bank Loans Payable and Lines of Credit

Bank loans payable are summarized as follows:

                                                        December 31,
                                                        ------------
                                                   1999             1998
                                                   ----             ----
Bank prime rate plus 1/2% (9.0% at
   December  31,  1999) note  payable in
   monthly installments of $36,420
   including  principal and interest,
   collateralized by 15,000 shares of
   Security National Life stock, due
    December 2004.                             $1,697,397         $1,974,898

10% note  payable in monthly  installments
   of $8,444  including  principal and
   interest, collateralized by real property,
   which book value is approximately
   $1,079,000, due January 2013.                  740,202            766,186

                                       52


<PAGE>



                       SECURITY NATIONAL FINANCIAL CORPORATION
                                  AND SUBSIDIARIES
                     Notes to Consolidated Financial Statements
                    Years Ended December 31, 1999, 1998, and 1997


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

                                                           December 31,
                                                           ------------
                                                   1999                    1998
                                                   ----                    ----
One year treasury constant
  maturity plus 2.75% (8.59% at
  December 31, 1999) note payable in
  monthly installments of $6,000,
  including principal and interest,
  collateralized by real property,
  which book value is approximately
  $414,000, due October 2002.                    182,089                239,134

Bank prime rate less 1.35%
  (7.15% at December 31, 1999)
  note payable in monthly
  installments of $20,836,
  including principal and interest,
  collateralized by real property,
  which book value in approximately
  $1,077,000, due November 2007.               1,703,915              1,755,736

$5,863,000  revolving  line of  credit
  at bank  prime rate less 1%, (7.5% at
  December 31, 1999)  interest  only to
  December  1999  thereafter  interest
  and principal, collateralized by 15,000
  shares of Security National Life Insurance
  Company stock, due December 2005.            5,610,111              6,246,400

Bank prime rate plus 1/2% (9.0% at December
  31,  1999) note  payable in monthly
  installments of $7,235  including
  principal and interest, collateralized
  by real property, which book value is
  approximately $893,128, due August 2004        370,748                412,116

Bank prime rate less 1.35%
  (7.15% at December 31, 1999) 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.    199,461                216,117

                                       53


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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


                                                    December 31,
                                                    ------------
                                            1999                 1998
                                           ----                  ----

Other collateralized
  bank loans payable                      264,175                 299,393
                                      -----------              ----------
  Total bank loans                     10,768,098              11,909,980

Less current installments               1,143,823               3,181,330
                                      -----------              ----------
  Bank loans, excluding
  current installments                $ 9,624,275              $8,728,650
                                      ===========              ==========

$15 million  revolving line of credit
 at LIBOR plus 1.50% (7.32% at
 December 31, 1999), payable within
 30 days collateralized by receivable
 rom mortgage loans sold to
 investors                           .$ 8,687,023              $7,577,248
                                      ===========              ==========

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, 1999 or 1998.  The lines of credit are for general
operating  purposes.  The $2,000,000 line of credit bears interest at the bank's
prime rate and must be repaid every 30 days. The $5,000,000 line of credit bears
interest at a variable rate with interest payable monthly and is  collateralized
by student loans equaling 115% of the unpaid principal balance.

See Note 6 for summary of maturities in subsequent years.

6)  Notes and Contracts Payable

Notes and contracts payable are summarized as follows:

                                                     December 31,
                                                    ------------
                                            1999                   1998
                                            ----                   ----
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.                  $   646,294             $   667,829

                                       54


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

                                                       December 31,
                                                       ------------
                                               1999                    1998
                                               ----                    ----

Due to former stockholders of Greer
  Wilson resulting from the acquisition
  of such entity.  Amountrepresents the
  present value discounted at 10% of
  monthly annuity payments of
  $7,000, due March 2005.                     344,860                392,458

Due to former  stockholders
  of Civil Service Employees Life
  Insurance Company resulting from
  the acquisition of such entity.
  7% note payable in seven annual
  installments with principal payments
  of $151,857, due December 2003.              455,571                607,429

Due to former  stockholders  of Crystal
  Rose Funeral Home resulting from the
  acquisition of such entity.  Amount
  represents the present value discounted
  at 9% of monthly annuity payments of
  $5,350 due February 2007.                    177,246                221,587

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      727,847                780,604

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

Other notes payable                            643,366                729,365
                                            ----------             ----------
Total notes and
  contracts payable                          3,885,684              3,399,272
Less current
  installments                                 414,421                416,679
                                            ----------             ----------

Notes and contracts,
excluding current
installments                                $3,471,263             $2,982,593
                                            ==========             ==========

                                       55


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

       2000                              $10,245,267
       2001                                1,920,260
       2002                                2,008,230
       2003                                1,898,830
       2004                                2,030,122
    Thereafter                             5,238,096
                                         -----------
       Total                             $23,340,805
                                         ===========

Interest paid approximated interest expense in 1999, 1998 and 1997.

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, 1999 the Company had transferred  $179,939 in
excess of the required  contribution  to the fund. As of December 31, 1998,  the
Company had recorded a liability to the fund of $540,504.

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

Assets in the restricted asset account are summarized as follows:

                                               December 31,
                                              ------------
                                       1999                  1998
                                       ----                  ----

Cash and cash equivalents          $ 2,361,597           $ 2,243,808
Mutual funds                           132,945               132,945
Fixed maturity securities              295,771               294,210
Equity securities                       77,778                71,054
Participation in mortgage
   loans with Security

   National Life                     1,357,200             1,323,164
Time certificate of deposit             33,696                33,696
                                   -----------           -----------
   Total                           $ 4,258,987           $ 4,098,877
                                   ===========           ===========

                                       56


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


8)  Income Taxes

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

                                                   December 31,
                                                   ------------
                                       1999                  1998
                                       ----                  ----
Current                           $  142,002             $  141,352
Deferred                           5,594,858              5,867,185
                                  ----------             ----------
Total                             $5,736,860             $6,008,537
                                  ==========             ==========

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

                                 1999            1998
                                 ----            ----
Assets
------
Future policy benefits       $(1,740,203)   $(2,138,384)
Unearned premium              (1,950,587)      (965,574)
Difference between book
   and tax basis of bonds        (56,489)       (46,885)
AMT credits                         --          (11,658)
Net operating loss
   carryforwards expiring
   in the years
   2001 through 2010            (219,249)      (213,409)
Other                           (329,361)      (126,125)
                             -----------    -----------
Total deferred
   tax assets                $(4,295,889)   $(3,502,035)

Liabilities
                                            -----------
Deferred policy
   acquisition costs         $ 4,485,047    $ 2,186,241
Cost of insurance acquired     1,884,547      3,198,551
Installment sales              1,323,994        351,080
Depreciation                     660,369        758,149
Trusts                           821,165        899,415
Tax on unrealized
   appreciation                   (9,299)       541,901
Other                            724,924      1,433,883
                             -----------    -----------
Total deferred
   tax liabilities             9,890,747      9,369,220
                             -----------    -----------
Net deferred tax liability   $ 5,594,858    $ 5,867,185
                             ===========    ===========

The Company paid no income taxes in 1999,  1998 and 1997.  The Company's  income
tax expense (benefit) is summarized as follows:

              1999        1998        1997
              ----        ----        ----

Current    $  2,052   $ (84,948)   $200,173
Deferred    228,464     339,763     159,935
           --------   ---------    --------
Total      $230,516   $ 254,815    $360,108
           ========   =========    ========

                                       57


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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

                            1999         1998        1997
                            ----         ----        ----
Computed expense at
   statutory rate       $ 493,266    $ 348,855    $ 562,772
Special deductions
   allowed small life
   insurance
   companies             (122,204)     (88,658)    (152,215)
Dividends received
   deduction              (24,401)     (26,691)     (32,343)
Minority interest
   taxes                 (102,828)        --           --
Other, net                (13,317)      21,309      (18,106)
                        ---------    ---------    ---------
   Tax expense          $ 230,516    $ 254,815    $ 360,108
                        =========    =========    =========

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, 1999,  the
policyholders'  surplus accounts  approximated  $4,500,000.  Management does not
intend to take actions nor does management expect any events to occur that would
cause federal  income taxes to become payable on that amount.  However,  if such
taxes  were  accrued,  the  amount  of  taxes  payable  would  be  approximately
$1,500,000.

The insurance  companies  have remaining loss carry forwards for tax purposes of
approximately  $1,600,000,  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, 1999 and 1998.  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 $581,297,000 at December
31, 1999 and $569,448,000 at December 31, 1998.

As part of the acquisition of Southern Security,  the Company has a co-insurance
agreement with The Mega Life and Health Insurance Company ("MEGA").  On December
31, 1992 Southern  Security  ceded to MEGA 18% of all universal life policies in
force at that date.  MEGA is  entitled  to 18% of all future  premiums,  claims,
policyholder loans and surrenders  relating to the ceded policies.  In addition,
Southern Security receives certain  commission and expense  reimbursements.  The
funds held related to  reinsurance  treaties of  $1,475,512  and  policyholders'
account balances on deposit with reinsurer of $7,806,866 represent the 18% share
of policy loans and  policyholder  account balances ceded to MEGA as of December
31, 1999.

                                       58


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


9)  Reinsurance, Commitments and Contingencies (Continued)
    ------------------------------------------

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

Security   National  Mortgage  Company   ("Security   National   Mortgage"),   a
wholly-owned subsidiary of the Company, has been notified that it may be subject
to an  administrative  action  by the  U.S.  Department  of  Housing  and  Urban
Development  ("HUD").  By way of letter from HUD to Security  National  Mortgage
dated  February 15, 2000 and received on February  25, 2000,  Security  National
Mortgage was advised "that the Mortgage  Review Board" of HUD "is considering an
administrative action against Security National Mortgage .... pursuant to 24 CFR
Part 25 ... and a civil money penalty  pursuant to 24 CFR part 30 ....".  In the
letter, HUD set forth alleged violations of HUD/Federal  Housing  Administration
("FHA") requirements which included among such violations: (1) failure to comply
with Security National  Mortgage's own policy and procedures  outlined in a July
17, 1997 letter to HUD; (2)  acceptance  of loans  originated  by personnel  not
employed  by or not  exclusively  employed by Security  National  Mortgage;  (3)
acceptance of loans originated by non-HUD approved entities; (4) payment of fees
and compensation to unauthorized  entities or individuals in connection with FHA
insured mortgages; and (5) certification of inaccurate HUD's.

Concerning the  administrative  action by HUD relating to the above allegations,
dependent upon the facts and circumstances, HUD asserts it has alternatives such
as taking no action,  issuing a letter of reprimand,  placing Security  National
Mortgage on  probation  or even  suspending  or  withdrawing  Security  National
Mortgage's  approval  function as a HUD/FHA  lender.  With  respect to any civil
money penalty, which could be in addition to the foregoing,  the letter from HUD
states that the "amount of the civil  penalty  shall not exceed  $5,500 for each
such  listed  or  described  violation"  and that a  "continuing  violation  may
constitute a separate violation for each day that violation continues".

Security  National Mortgage is allowed to respond in writing to what is asserted
by HUD and the procedure permits at a future time, if necessary,  an evidentiary
hearing.  At this stage a complete  evaluation  of the matter has not been made.
Management, however, recognizes the serious alternative sanctions claimed by HUD
to be available  to it  including  the sanction of the loss of the ability to do
FHA lending work. Thus,  management recognizes the great importance and need for
an appropriate  written response to the letter to be filed with HUD and the need
to do what is necessary to see that Security National  Mortgage's  understanding
of the matter is fairly and properly presented to HUD.

The Company is also 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.

                                       59


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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 $56,277,  $59,613, and $45,616 for 1999, 1998, and
1997, respectively. At December 31, 1999 the ESOP held 619,273 shares of Class A
and 1,216,848 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  1999,  1998,  and  1997  were
approximately  $3,858,  $7,000,  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.  In
1999 the Company  contributed  $130,958 to the Plan. There were no contributions
made in 1998 or 1997.  All amounts  contributed to the plan are deposited into a
trust fund administered by an independent trustee.

                                       60


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


11)  Capital Stock

The following  table  summarizes the activity in shares of capital stock for the
three year period ended December 31, 1999:

                             Class A         Class C
                           ----------    -----------
Balance at December
   31, 1996                 4,110,709     4,967,072

Stock Dividends               206,344       247,329
Conversion of Class C
   to Class A                   1,359       (13,590)
Stock Issued                    8,176          --
                           ----------    ----------

Balance at December
   31, 1997                 4,326,588     5,200,811

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

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

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

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

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

Stockholders of both classes of common stock have received 5% stock dividends in
the years 1989 through 1999, 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.

                                       61


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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


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

                                 1999             1998         1997
                                 ----             ----         ----

Numerator:
   Net income                   $ 975,895   $    771,229   $1,308,941
                                =========   ============   ==========

Denominator:
   Denominator for basic
     earnings per share-
     weighted-average
     shares                     4,397,141      4,272,516    3,988,034

   Effect of
     dilutive securities:
     Employee stock
       options                       --             --         19,606
     Stock appreciation
       rights                        --             --         85,051
                                ---------   ------------   ----------

   Dilutive potential
     common shares                   --             --        104,657

   Denominator
     for diluted earnings per
     share-adjusted
     weighted-average
     shares and assumed
     conversions                4,397,141      4,272,516    4,092,691
                                =========   ============   ==========
   Basic earnings
     per share                  $    0.22   $       0.18   $     0.33
                                =========   ============   ==========
   Diluted earnings
     per share                  $    0.22   $       0.18   $     0.32
                                =========   ============   ==========

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

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

                                       62


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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

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

                                       63


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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



Activity of the 1987 Plan is summarized as follows:

                                      Number                        Option
                                     of Shares                       Price

Outstanding at
December 31, 1996                      22,309                  $2.20 - $2.47

   Granted                            148,000
   Dividend                             7,400
   Exercised                          (22,309)
                                   ----------

Outstanding at
December 31, 1997                     155,400                  $4.29 - $4.71

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

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

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

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

   Exercisable
   at end of year                     171,329
                                   ==========

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

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

                                       64


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

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

                                       65


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

Activity of the 1993 Plan is summarized as follows:

                                      Number                        Option
                                     of Shares                       Price
                                    -----------                    ---------
Outstanding at
December 31, 1996                     287,816                  $2.70 - $4.52
   Cancelled                           (9,450)
   Dividend                            13,918
                                    ---------

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

Outstanding at
December 31, 1998                     407,339                  $2.34 - $4.16
   Dividend                            24,762
   Granted                            190,000
   Expired                           (102,103)
                                   ----------

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

Exercisable
at end of year                        519,998
                                    =========

Available options
   for future grant
   1993 Stock
   Incentive Plan                     404,221
                                     ========

13)  Statutory-Basis Financial Information

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

In  1998,   the  NAIC   adopted   codified   statutory   accounting   principles
("Codification").  Codification will likely change,  to some extent,  prescribed
statutory  accounting  practices  and may result in  changes  to the  accounting
practices  that the  Company  uses to prepare  its  statutory-  basis  financial
statements.  Codification  will require adoption by the various states before it
becomes the

                                       66


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


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

prescribed  statutory basis of accounting for insurance  companies  domesticated
within those states. Accordingly,  before Codification becomes effective for the
Company,  the  states  of  Florida  and  Utah  must  adopt  Codification  as the
prescribed  basis of  accounting  on which  domestic  insurers must report their
statutory-basis results to the Insurance Departments. At this time it is unclear
when the states of Florida and Utah will adopt Codification.  Management has not
yet  determined  the impact of  Codification  to the  Company's  statutory-basis
financial  statements.  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,
                             1999       1998       1997
                             --------------------------

Security National Life      $628,538    346,659  712,219
Southern Security Life       533,233   (486,825)  45,398


                             Statutory Stockholders' Equity
                                        December 31,
                            1999        1998        1997
                            ----------------------------

Security National Life   $12,089,618 12,083,747  11,789,615
Southern Security Life     8,976,516  8,627,252   9,316,923

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

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

                                       67


<PAGE>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997


14)  Business Segment Information

Description of Products and Services by Segment

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

Measurement of Segment Profit or Loss and Segment Assets

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

Factors Management Used to Identify the Enterprise's
Reportable Segments

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

                                       68


<PAGE>

<TABLE>
<CAPTION>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997

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

                                                                            1999

                                  Life        Cemetery/                                  Reconciling
                               Insurance     Mortuary       Mortgage       Corporate        Items       Consolidated
                               ---------     --------       --------       ---------        -----       ------------
<S>                         <C>           <C>             <C>           <C>            <C>             <C>

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

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

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

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

                                       69

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997

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

                                                                            1998

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

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

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

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

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

                                                                             70

</TABLE>

<PAGE>

<TABLE>
<CAPTION>



                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997

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

                                                                            1997

                                  Life        Cemetery/                                Reconciling
                               Insurance      Mortuary     Mortgage      Corporate       Items       Consolidated
                               ---------      --------    --------       ---------       -----       ------------
<S>                         <C>           <C>            <C>          <C>           <C>             <C>
Revenues:
From external sources:
   Revenue from customers   $  6,140,783   $ 9,230,864   $5,661,867   $      --      $       --      $ 21,033,514
   Net investment income       5,856,221       609,194      664,331         9,834            --         7,139,580
   Realized gains
      on investments             252,635          --        252,635
   Other revenues                 13,778        27,621          450         7,044            --            48,893

Intersegment revenues:
   Net investment income         978,930          --           --         188,767      (1,167,697)           --
   Other revenues                115,622          --           --         568,800        (684,422)           --
                            ------------   -----------   ----------   -----------    ------------    ------------
                            $ 13,357,969   $ 9,867,679   $6,326,648   $   774,445    $ (1,852,119)   $ 28,474,622
Expenses:
Death and other
  policy benefits           $  3,694,442   $      --     $     --     $      --      $       --      $  3,694,442
Increase in future
   policy benefits             2,974,915          --           --            --              --         2,974,915
Amortization of
   deferred policy
   acquisition costs
   and cost of
   insurance acquired          1,132,298          --           --            --              --         1,132,298
Depreciation                      55,338       420,787       29,150        10,644            --           515,919
General, administrative
      and other costs:
   Intersegment                  536,400        75,408       72,614          --          (684,422)           --
   Other                       3,722,336     8,312,812    5,377,440       127,782            --        17,540,370
Interest expense:
   Intersegment                  188,767       192,835      783,257         2,838      (1,167,697)           --
   Other                          41,723       628,616       19,836       257,454            --           947,629
                            ------------   -----------   ----------   -----------    ------------    ------------
                            $ 12,346,219   $ 9,630,458   $6,282,297   $   398,718    $ (1,852,119)   $ 26,805,573
                            ------------   -----------   ----------   -----------    ------------    ------------
Earnings (losses)
   before income taxes      $  1,011,750   $   237,221   $   44,351   $   375,727    $       --      $  1,669,049
                            ============   ===========   ==========   ===========    ============    ============
Identifiable
   assets                   $103,604,675   $31,297,233   $1,176,039   $ 1,881,997    $(12,508,065)   $125,451,879
                            ============   ===========   ==========   ===========    ============    ============
Expenditures for
   long-lived assets        $     40,882   $   283,622   $   26,587   $      --      $       --      $    351,091
                            ============   ===========   ==========   ===========    ============    ============

                                                                              71

</TABLE>

<PAGE>




                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                  Years Ended December 31, 1999, 1998, and 1997



15)  Disclosure about Fair Value of Financial Instruments
     ----------------------------------------------------

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

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

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

Investment  Contracts:  The fair  values  for the  Company's  liabilities  under
investment-type  insurance  contracts are estimated based on the contracts' cash
surrender  values.  The  carrying  amount and fair value as of December 31, 1999
were approximately $90,251,000 and $84,923,000, respectively.

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

16)  Other Comprehensive Income

The following summarizes other comprehensive income:

                                    1999         1998        1997
                                    ----         ----        ----
Unrealized gains (losses)
     on available
     for-sale securities        $(696,162)   $ 405,047    $ 928,917
Less:  reclassification
     adjustment for net
     realized gains in
     net income                   (14,126)     (62,702)    (227,097)
                                ---------    ---------    ---------
Net unrealized gains (losses)    (710,288)     342,345      701,820
Tax expense on net unrealized
     gain (losses)                294,866      (92,171)    (130,796)
                                ---------    ---------    ---------
Other comprehensive
     income (loss)              $(415,422)   $ 250,174    $ 571,024
                                =========    =========    =========

                                       72


<PAGE>



                                                                   Schedule I

                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                             Summary of Investments
                    Other than Investments in Related Parties



As of December 31, 1999:

                                                             Amount at
                                                              Which
                                                              Shown
                                               Estimated      in the
Type of Investment              Amortized        Fair        Balance
------------------                 Cost          Value        Sheet
                                 --------      ---------     -------
Fixed maturity securities
  held to maturity:

Bonds:
   U.S. Treasury securities
     and obligations
     of U.S. Government
     agencies                 $ 12,822,025   $ 12,686,643   $12,822,025
   Obligations of states
     and political
     subdivisions                  176,499        167,116       176,499
   Corporate securities
     including public
     utilities                  20,594,306     20,759,857    20,594,306
   Mortgage backed
     securities                  6,009,010      5,799,814     6,009,010
Redeemable preferred
     stocks                         28,011         40,022        28,011
                              ------------   ------------   -----------

   Total Fixed
     Securities held
     to maturity                39,629,851     39,453,452    39,629,851
                              ------------   ------------   -----------

Securities
   available for sale:
Bonds:
   U.S. Treasury
   securities and
   obligations of U.S.
     Government agencies         4,596,294      4,579,332     4,579,332
   Corporate securities
     including public
     utilities                  20,270,712     19,449,746    19,449,746
   Mortgage-backed
     securities                     90,341         90,112        90,112
Nonredeemable
   preferred stock                  70,431        106,450       106,450
Common stock:
   Public utilities                285,723        396,487       396,487
   Banks, trusts and
     insurance companies           251,083        603,764       603,764
   Industrial,
     miscellaneous and
     all other                   3,742,902      4,638,512     4,638,512
                              ------------   ------------   -----------

     Total Securities
        available for
        sale                    29,307,486     29,864,403    29,864,403
                              ------------   ------------   -----------

Mortgage loans on
   real estate                  18,926,628                  18,926,628
Real estate                      7,629,952                   7,629,952
Policy loans                    11,607,993                  11,607,993
Other investments                1,290,310                   1,290,310
                              ------------                 -----------

   Total investments          $108,392,220                $108,949,137
                              ============                 ===========

                                       73


<PAGE>



                                                                   Schedule II

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                                 Balance Sheets

                                             December 31,

                                     1999        1998
                                     ----        ----
Assets

Short-term investments         $      --     $   294,927

Cash(15,639)                       118,731

Investment in subsidiaries
    (equity method)             41,742,002    36,107,674

Receivables:
    Receivable from
        affiliates               1,629,966     1,579,965
    Other                           18,566        76,368
                               -----------   -----------
       Total receivables         1,648,532     1,656,333

Property, plant and
    equipment, at cost,
    net of accumulated
    depreciation of $314,392
    for 1999 and $313,859
    for 1998                        10,535            66

Other assets                        72,641           396
                               -----------   -----------
    Total assets               $43,458,071   $38,178,127
                               ===========   ===========





See accompanying notes to parent company only financial statements.

                                       74


<PAGE>



                                                        Schedule II Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                           Balance Sheets (Continued)



                                                 December 31,

                                          1999            1998
                                          ----            ----
Liabilities:
------------
Bank loans payable:
    Current installments            $    841,767    $  2,358,684
    Long-term                          6,465,741       5,862,614

Notes and contracts payable:
    Current installments                 152,818         181,319
    Long-term                            303,713         455,572

Advances from affiliated
    companies                          8,290,697       1,781,118

Other liabilities and
    accrued expenses                     512,041         494,367

Income taxes                             401,601         364,194
                                    ------------    ------------
    Total liabilities                 16,968,378      11,497,868
                                    ------------    ------------

Stockholders' equity:
---------------------
Common Stock:
   Class A:  $2 par value,
       authorized 10,000,000
       shares, issued
       4,863,731 shares in
       1999 and 4,617,330
       shares in 1998                  9,727,462       9,234,660
   Class C:  $0.20 par
       value, authorized
       7,500,000 shares,
       issued 5,555,350
       shares in 1999
       and 5,446,595
       shares in 1998                  1,111,070       1,089,319
                                    ------------    ------------
Total common stock                    10,838,532      10,323,979

Additional paid-in capital            10,015,942       9,596,444
Accumulated other
   comprehensive income                  665,691       1,081,113
Retained earnings                      7,516,640       7,474,783
Treasury stock at cost
  (966,139 Class A shares and
   61,979 Class C shares in 1999;
   692,993 Class A shares and
   59,028 Class C shares in 1998,
   held by affiliated companies)      (2,547,112)     (1,796,060)
                                    ------------    ------------
Total stockholders'
   equity                             26,489,693      26,680,259
                                    ------------    ------------
   Total liabilities
       and stockholders'
       equity                       $ 43,458,071    $ 38,178,127
                                    ============    ============


See accompanying notes to parent company only financial statements.

                                       75


<PAGE>



                                                        Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                              (Parent Company Only)

                             Statements of Earnings

                                    Year Ended December 31,
                                   -----------------------
                             1999          1998           1997
                             ----          ----           ----

Revenue:
    Net investment
        income           $    39,694    $  18,145    $    16,878
    Fees from
        affiliates         3,838,704      755,951        757,567
                         -----------    ---------    -----------
        Total revenue      3,878,398      774,096        774,445
                         -----------    ---------    -----------
Expenses:
    General and
       administrative
        expenses           2,396,015      195,148        138,425
    Interest expense         641,282      257,162        260,293
                         -----------    ---------    -----------
        Total expenses     3,037,297      452,310        398,718
                         -----------    ---------    -----------
Earnings (loss)
    before income
    taxes, and
    earnings of
    subsidiaries             841,101      321,786        375,727

Income tax expense          (277,810)    (114,346)      (124,256)

Equity in earnings
    of subsidiaries          412,604      563,789      1,057,470
                         -----------    ---------    -----------
Net earnings             $   975,895    $ 771,229    $ 1,308,941
                         ===========    =========    ===========


























See accompanying notes to parent company only financial statements.

                                       76


<PAGE>



                                                        Schedule II (Continued)

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

                                         Year Ended December 31,
                                         -----------------------
                                   1999            1998          1997
                                   ----            ----          ----
Cash flows from operating activities:

    Net earnings               $   975,895    $   771,229    $ 1,308,941
Adjustments to
      reconcile net earnings
      to net cash provided
      by (used in)
      operating activities:
      Depreciation and
         amortization                  533          4,655         10,644
      Undistributed earnings
         of affiliates            (412,604)      (563,789)    (1,057,470)
      Provision for
         income taxes              277,810        114,346        124,254
    Change in assets and
      liabilities:
      Accounts receivable           57,802        (90,600)        86,403
      Other assets                 (72,245)          (396)           202
      Accounts payable and
         accrued expenses             --            4,697         31,046
      Other liabilities             17,687        263,926        (43,732)
                               -----------    -----------    -----------
Net cash provided by
    operating activities           844,878        504,068        460,288

Cash flows from investing
    activities:
    Purchase of short-term
      investments                  (11,045)       (11,737)       (96,039)
    Proceeds from sale of
      short term investments       305,972           --           91,750
    Note receivable from
      affiliate                       --       (1,000,000)          --
    Purchase of equipment          (11,002)          --             --
    Investment in
      subsidiaries              (6,388,198)    (5,250,000)       (75,000)
                               -----------    -----------    -----------
Net cash used in
    investing activities        (6,104,273)    (6,261,737)       (79,289)

Cash flows from financing
    activities:
    Proceeds from advances
      from affiliates            6,388,198        200,000           --
    Payments of advances
      to affiliates               (169,023)      (200,000)          --
    Payments of notes and
      contracts payable         (1,094,150)      (398,353)      (386,799)
    Purchase of treasury
      stock                           --             --             --
    Sale of treasury stock            --             --           44,994
    Proceeds from borrowings
      on notes and
      contracts payable               --        6,246,400           --
                               -----------    -----------    -----------
Net cash provided by
    financing activities         5,125,025      5,848,047       (341,805)
                               -----------    -----------    -----------
Net change in cash                (134,370)        90,378         39,194
Cash at beginning
    of year                        118,731         28,353        (10,841)
                               -----------    -----------    -----------
Cash at end of year            $   (15,639)   $   118,731    $    28,353
                               ===========    ===========    ===========

See accompanying notes to parent company only financial statements.

                                       77


<PAGE>



                                                       Schedule II (Continued)

                     SECURITY NATIONAL FINANCIAL CORPORATION
                Notes to Parent Company Only Financial Statements


1) Bank Loans Payable

    Bank loans payable are summarized as follows:

                                                           December 31,
                                                           ------------
                                                     1999               1998
                                                     ----               ----
    $5,863,000  revolving
    line of credit at bank prime
    rate less 1%,  (7.5% at December
    31, 1999)  interest only to
    December 1999  thereafter
    interest and principal, collateralized
    by 15,000 shares of Security
    National Life Insurance Company
    stock, due December 2005                       $5,610,111       $6,246,400

    Bank prime rate plus 1/2%
    (9.0% at December  31, 1999)
    note payable in monthly
    installments of $36,420 including
    principal and interest, collateralized
    by 15,000 shares of Security
    National Life stock, due December 2004.         1,697,397        1,974,898
                                                   ----------        ---------

        Total bank loans                            7,307,508        8,221,298

      Less current installments                       841,767        2,358,684
                                                   ----------       ----------
      Bank loans, excluding
        current installments                       $6,465,741       $5,862,614
                                                   ==========       ==========


2)  Notes and Contracts Payable

    Notes and contracts are summarized as follows:

                                                            December 31,
                                                            ------------
                                                       1999             1998
                                                       ----             ----
    10 year notes due April 16, 1999,
      1% over U.S. Treasury 6 month
      bill rate                                    $     535          $ 28,187

    Due to former stockholders of
    Civil Service Employees Life Insurance
    Company resulting from the acquisition
    of such entity. 7% note payable in seven
    annual principal payments of $151,857
    due December 2003                                 455,571          607,429

    Other                                                 425            1,275
                                                    ---------         --------

    Total notes and contracts                         456,531          636,891
    Less current installments                         152,818          181,319
                                                    ---------         --------
    Notes and contracts,
      excluding current
      installments                                   $303,713         $455,572
                                                     ========         ========

                                       78


<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:

         2000                     $  994,585
         2001                      1,329,464
         2002                      1,420,552
         2003                      1,366,940
         2000                      1,498,926
         Thereafter                1,153,572
                                  ----------
         Total                    $7,764,039
                                  ==========

3)  Advances from Affiliated Companies

                                    December 31,

                                1999        1998
                                ----        ----
Non-interest bearing
advances from affiliates:

Cemetery and Mortuary
   subsidiary               $1,366,930   $1,126,527
Mortgage subsidiary               --           --
Life Insurance subsidiary    6,923,767      654,591
                            ----------   ----------
                            $8,290,697   $1,781,118

4)  Dividends

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

                                       79


<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
                                       ------            ---------       ---------         ------           ------

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

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

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

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

1997
----
Life Insurance
 in force ($000)                     $   602,652        $   61,629        $ 46,254        $   587,277         7.88%
                                     ===========        ==========        ========        ===========        =====

Premiums:
Life Insurance                       $ 5,575,024        $  237,830        $276,086        $ 5,613,280         4.92%
Accident and
 Health Insurance                        426,529            25,367           6,953            408,115         1.70%
                                     -----------        ----------        --------        -----------        -----
   Total premiums                    $ 6,001,553        $  263,197        $283,039        $ 6,021,395         4.70%
                                     ===========        ==========        ========        ===========        =====

                                           80

</TABLE>
<PAGE>

<TABLE>
<CAPTION>



                                                                      Schedule V

                           SECURITY NATIONAL FINANCIAL CORPORATION
                                      AND SUBSIDIARIES
                              Valuation and Qualifying Accounts


                                          Balance     Additions            Deductions,           Balance
                                            at         Charged              Disposals              at
                                        Beginning      to Costs                 and               End of
                                         of Year    and Expenses           Write-offs             Year
                                        ---------    ------------           ----------           ------
For the Year Ended December 31, 1999
------------------------------------
<S>                                    <C>               <C>             <C>                    <C>
Accumulated depreciation
   on real estate                      $2,380,874        $369,557        $ (28,407)             $2,722,024

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

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

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

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


For the Year Ended December 31, 1997
------------------------------------
Accumulated depreciation
   on real estate                      $1,868,187        $300,058        $(118,899)             $2,049,346

Accumulated depreciation on
   property, plant and equipment        4,218,591         515,919           (6,474)              4,728,036

Allowance for doubtful accounts         1,862,599         129,502         (313,011)              1,679,090

                                       81

</TABLE>

<PAGE>



Item 9.  Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
-----------------------------------
Security National Financial Corporation (the "Company") retained Tanner + Co. as
its  independent  auditors and replaced Ernst & Young LLP effective  December 1,
1999. No report of Ernst & Young LLP on the financial  statements of the Company
for either of the past two years  contained an adverse  opinion or disclaimer of
opinion,  or was  qualified  or  modified as to  uncertainty,  audit  scope,  or
accounting  principles.  Since  the  engagement  of  Ernst &  Young  LLP for the
Company's  two most recent  fiscal  years and  through the date of  replacement,
there were no  disagreements  between  the  Company and Ernst & Young LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.  The change in independent accountants was approved
by the Company's Board of Directors and disclosed in a Form 8-K, which was filed
with the Securities and Exchange  Commission on December 21, 1999.  Reference is
made to current reports on Forms 8-K dated December 21, 1999.

                                    PART III

Item 10. Directors and Executive Officers

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

                                                                  Position(s)
     Name                Age        Director Since             with the Company
--------------           ---        --------------             ----------------
George R.
  Quist(2)                79          October 1979          Chairman of the
                                                            Board, President
                                                            and Chief
                                                            Executive Officer

William C.
  Sargent(2)              71          February 1980         Senior Vice
                                                            President,
                                                            Secretary and
                                                            Director

Scott M.
  Quist(1)                46          May 1986              First Vice
                                                            President,
                                                            General Counsel,
                                                            Treasurer and
                                                            Director
Charles L.
  Crittenden(2)           80          October 1979          Director

Sherman B.
  Lowe(2)                 85          October 1979          Director

R.A.F.
  McCormick(1)            86          October 1979          Director

H. Craig
  Moody(1)                46          September 1995        Director

Norman Wilbur(2)          61          October 1998          Director

Robert G.
   Hunter(2)              40          October 1998          Director

                                       82


<PAGE>




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

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

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

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

George R. Quist,  age 79, has been  Chairman of the Board,  President  and Chief
Executive  Officer of the Company since October 1979. Mr. Quist is also Chairman
of the Board,  President and Chief Executive  Officer of Southern  Security Life
Insurance Company and has served in this position since December 1998. From 1960
to 1964, he was Executive Vice President and Treasurer of Pacific  Guardian Life
Insurance  Company.  From 1946 to 1960,  he was an agent,  District  Manager and
Associate General Agent for various insurance  companies.  Mr. Quist also served
from  1981  to  1982  as the  President  of The  National  Association  of  Life
Companies, a trade association of 642 life insurance companies, and from 1982 to
1983 as its Chairman of the Board.

William C. Sargent,  age 71, has been Senior Vice President of the Company since
1980,  Secretary  since October 1993,  and a director  since  February 1980. Mr.
Sargent is also  Senior  Vice  President,  Secretary  and  Director  of Southern
Security Life  Insurance  Company and has served in this position since December
1998. Prior to that time, he was employed by Security National as a salesman and
agency superintendent.

Scott M. Quist,  age 46, has been  General  Counsel of the  Company  since 1982,
First Vice President  since December 1990,  Treasurer  since October 1993, and a
director since May 1986. Mr. Quist is also First Vice  President,  Treasurer and
General Counsel and Director of Southern Security Life Insurance Company and has
served in this position since December 1998.  From 1980 to 1982, Mr. Quist was a
tax specialist with Peat, Marwick,  Mitchell, & Co., in Dallas, Texas. From 1986
to 1991,  he was  treasurer  and  director of The National  Association  of Life
Companies,  a trade association of 642 insurance companies until its merger with
the American Council of Life Companies. Mr. Quist has been a member of the Board
of Governors of the Forum 500 Section  (representing small insurance  companies)
of the  American  Council  of Life  Insurance.  Mr.  Quist has also  served as a
regional  director  of Key  Bank of Utah  since  November  1993.  Mr.  Quist  is
currently  a  director  and vice  president  of the  National  Alliance  of Life
Companies, a trade association of over 200 life companies.

Charles L. Crittenden,  age 80, 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.

                                       83


<PAGE>



Sherman B. Lowe,  age 85, has been a director of the Company since October 1979.
Mr. Lowe is also a director of Southern  Security Life Insurance Company and has
served in this position since December 1998. Mr. Lowe was formerly President and
Manager of Lowe's Pharmacy for over 30 years. He is now retired.  He is an owner
of Burton-Lowe Ranches, a general partnership.

R.A.F. McCormick, age 86, has been a director of the Company since October 1979.
Mr. McCormick is also a director of Southern Security Life Insurance Company and
has served in this position  since December 1998. He is a past Vice President of
Sales for Cloverclub Foods. He is now retired.

H. Craig Moody, age 46, has been a director of the Company since September 1995.
Mr. Moody is also a director of Southern Security Life Insurance Company and has
served in this  position  since  December  1998.  Mr.  Moody is owner of Moody &
Associates,  a  political  consulting  and real estate  company.  He is a former
Speaker and House Majority Leader of the House of  Representatives  of the State
of Utah.

Norman  Wilbur,  age 61, has been a director of the Company  since October 1998.
Mr. Wilbur is also a director of Southern  Security Life  Insurance  Company and
has served in this  position  since  December  1998.  Mr. Wilbur worked for J.C.
Penny's regional offices in budget and analysis.  His final position was Manager
of Planning and  Reporting  for J.C.  Penny's  stores.  After 36 years with J.C.
Penny's he took an option of an early  retirement in 1997.  Mr. Wilbur is a past
board member of a homeless organization in Plano, Texas.

Robert G. Hunter, M.D., age 40, has been a director of the Company since October
1998. Dr. Hunter is also a director of Southern  Security Life Insurance Company
and has served in this position  since  December 1998. Dr. Hunter is currently a
practicing  physician in private  practice.  Dr.  Hunter  created the State Wide
E.N.T. Organization (Rocky Mountain E.N.T., Inc.) where he is currently a member
of the Executive Committee.  He is Chairman of Surgery at Cottonwood Hospital, a
delegate to the Utah Medical Association and a delegate representing Utah to the
American Medical Association, and a member of several medical advisory boards.

Executive Officers

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

     Name               Age               Title
--------------         ----        --------------------
George R.
  Quist(1)              79        Chairman of the Board, President
                                  and Chief Executive Officer
William C.
  Sargent               71        Senior Vice President and Secretary
Scott M.
  Quist(1)              46        First Vice President, General Counsel
                                  and Treasurer

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

                                       84


<PAGE>



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 1999 or 1998 other than employment arrangements as described
above,  and the loan made to George R.  Quist on April 29,  1998.  See "Item 13.
Certain Relationships and Related Transactions."

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

                                       85


<PAGE>

<TABLE>
<CAPTION>



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,  1999  whose  salary  and bonus for all
services in all  capacities  exceed  $100,000 for the fiscal year ended December
31, 1999.

                                                                                  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)        1999          $147,204   $20,200       $2,400         $0           50,000         $0           $20,247
  Chairman of the Board,   1998           137,454    20,200        2,400          0           50,000          0            12,084
  President and Chief      1997           118,508    16,833        2,400          0           50,000          0            11,094
  Executive Officer

William C. Sargent         1999           148,058    17,325        4,500          0           45,000          0            16,879
  Senior Vice President,   1998           130,329    17,325        4,500          0           45,000          0             5,286
  Secretary and            1997           108,685    16,500        4,500          0           45,000          0             5,224
  Director

Scott M. Quist (1)         1999           134,200    18,770        7,200          0           45,000          0            15,201
 First Vice President,     1998           119,025    18,770        7,200          0           35,000          0             7,257
  General Counsel          1997           103,215    17,875        7,200          0           35,000          0             6,490
  Treasurer and Director

                                       86

</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, William C. Sargent and Scott M. Quist nor the
payment of insurance and property taxes with respect to the automobiles operated
by the Named Executive Officers.

  (3) The  amounts  indicated  under  "All  Other  Compensation"  consist of (a)
amounts  contributed  by the  Company  into a trust for the benefit of the Named
Executive  Officers  under the Employee  Stock  Ownership Plan (for fiscal 1999,
such amounts were George R. Quist, $2,721; William C. Sargent, $2,953; and Scott
M. Quist,  $2,648);  (b) matching  contributions made by the Company pursuant to
the 401(k)  Retirement  Savings  Plan in which all  matching  contributions  are
invested in the  Company's  Class A Common Stock (for fiscal 1999,  such amounts
were George R. Quist, $-0-; William C. Sargent,  $-0-; and Scott M. Quist, $-0-;
(c) profit  sharing  contributions  made by the  Company  pursuant to the 401(k)
Retirement  Savings  Plan (for fiscal  1999,  such amounts were George R. Quist,
$12,245;  William  C.  Sargent,  $13,289;  and  Scott M.  Quist,  $11,916);  (d)
insurance  premiums  paid by the Company with respect to a group life  insurance
plan for the benefit of the Named  Executive  Officers (for fiscal 1999,  $1,911
was paid for all Named Executive Officers as a group, or $637 each for George R.
Quist,  William C. Sargent and Scott M. Quist);  and (e) life insurance premiums
paid by the Company  for the benefit of the family of George R. Quist  ($4,644).
The amounts under "All Other  Compensation"  do not include the no interest loan
in the amount of $172,000  that the Company made to George R. Quist on April 29,
1998, to exercise stock options. See "Item 13 Certain  Relationships and Related
Transactions".

The following table sets forth information concerning the exercise of options to
acquire  shares of the Company's  Common Stock by the Named  Executive  Officers
during the fiscal year ended December 31, 1999, as well as the aggregate  number
and  value of  unexercised  options  held by the  Named  Executive  Officers  on
December 31, 1999.

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

                                           Number of
                                          Securities
                                           Underlying           Value of
                                           Unexercised         Unexercised
                                          Options/SARs        In-the-Money
                Shares                        at             Options/SARs at
               Acquired                   December 31,        December 31,
                  on                        1999(#)               1999
               Exercise     Value     Exercis-    Unexer-   Exercis-  Unexer-
Name               (#)    Realized      able      cisable     able    cisable
----          ---------------------  ----------   -------  ---------- -------
George R
  Quist         -0-        $-0-        165,506       -0-   $ 25,313      $-0-
William C
  Sargent       -0-        $-0-        237,000       -0-   $136,682      $-0-
Scott M
  Quist         -0-        $-0-        126,355       -0-   $ 37,246      $-0-

                                       87


<PAGE>



Retirement Plans

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

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

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

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

Employment Agreement

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

Director Compensation

Directors of the Company (but not  including  directors who are  employees)  are
paid a director's  fee of $8,400 per year by the Company for their  services and
are reimbursed for their expenses in attending board and committee meetings.  No
additional fees are paid by the Company for committee  participation  or special
assignments.

                                       88


<PAGE>


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 1999,  1998,  and 1997 were
approximately  $3,858,  $7,000 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. In 1999 the Company
contributed  $130,958 to the Plan. There were no  contributions  made in 1998 or
1997.  All  amounts  contributed  to the plan are  deposited  into a trust  fund
administered by an independent trustee.

Employee Stock Ownership Plan

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

Under  the  Ownership  Plan,  the  Company  has  discretionary   power  to  make
contributions on behalf of all eligible employees into a trust created under the
Ownership Plan.  Employees  become eligible to participate in the Ownership Plan
when they have attained the age of 19 and have  completed one year of service (a
twelve-month  period in which the  Employee  completes  at least  1,040 hours of
service). The Company's  contributions under the Ownership Plan are allocated to
eligible employees on the same ratio that each eligible employee's  compensation
bears to total  compensation  for all eligible  employees  during each year.  To
date,  the  Ownership  Plan  has   approximately   107   participants   and  had
contributions  payable  to the  Plan in  1999 of  $56,277.  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

                                       89


<PAGE>



Ownership  Plan at any time.  The trustees of the trust fund under the Ownership
Plan are Messrs. R.A.F. McCormick,  George R. Quist, and William C. Sargent, all
directors of the Company.

1987 Incentive Stock Option Plan

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

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

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

1993 Stock Option Plan

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

The 1993 Plan  provides  for the grant of options and the award or sale of stock
to officers,  directors,  and employees of the Company.  Both  "incentive  stock
options," as defined  under  Section  422A of the Internal  Revenue Code of 1986
(the "Code"),  and  "non-qualified  options" may be granted pursuant to the 1993
Plan. The exercise  prices for the options  granted are equal to or greater than
the fair market value of the stock subject to such options as of the

                                       90


<PAGE>



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

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

                                       91


<PAGE>

<TABLE>
<CAPTION>



Item 12 - Security Ownership of Certain Beneficial Owners and Management

The following table sets forth security  ownership  information of the Company's
Class A and Class C Common Stock as of March 20,  2000,  (i) for persons who own
beneficially more than 5% of the Company's outstanding Class A or Class C Common
Stock, (ii) each director of the Company,  and (iii) for all executive  officers
and directors of the Company as a group.

                                                                                                               Class A
                                                Class A                    Class C                           and Class C
                                             Common Stock                Common Stock                       Common Stock
                                             ------------                ------------                        ------------
                                 Amount                            Amount                             Amount
Name and Address of           Beneficially        Percent       Beneficially    Percent           Beneficially           Percent
Beneficial Owner                 Owned           of Class          Owned        of Class              Owned             of Class
-----------------               -------          --------          -----        --------              -----             --------
<S>                             <C>                <C>           <C>             <C>                 <C>                 <C>
George R. Quist (1)(2)
4491 Wander Lane
Salt Lake City,
  Utah 84124                   142,581              3.7%          223,104         4.1%                  365,685            3.9%

George R. and Shirley C
Quist Family
  Partnership, Ltd.(6)
4491 Wander Lane
Salt Lake City,
  Utah 84124                   327,371               8.4%       2,629,242        47.9%                2,956,613           31.5%

Employee Stock
  Ownership Plan (4)
5300 S. 360 W., Suite 250
Salt Lake City,
  Utah 84123                   619,273              15.9%       1,216,848        22.2%                1,836,121           19.6%

William C. Sargent (1)(2)(3)
4974 Holladay Blvd
Salt Lake City,
  Utah 84117                    94,121               2.4%         300,075         5.5%                  394,196            4.2%

Scott M. Quist (3)
7 Wanderwood Way
Sandy, Utah 84092               98,916               2.5%          69,672         1.3%                 168,588            1.8%

Charles L. Crittenden
248 - 24th Street
Ogden, Utah 84404                1,643                *           187,752         3.4%                 189,395            2.0%

                                                                                   92

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                             Class A
                                                Class A                    Class C                          and Class C
                                             Common Stock               Common Stock                       Common Stock
                                             ------------               ------------                        ------------
                                 Amount                            Amount                             Amount
Name and Address of           Beneficially        Percent       Beneficially    Percent           Beneficially           Percent
Beneficial Owner                 Owned           of Class          Owned        of Class              Owned             of Class
-----------------               -------          --------          -----        --------              -----             --------
<S>                             <C>                <C>           <C>             <C>                 <C>                 <C>
Sherman B. Lowe (3)
2197 South 2100 East
Salt Lake City,
  Utah 84109                    22,318              *              205,187        3.7%               227,505               2.4%

R.A.F. McCormick (1)
400 East Crestwood Road
Kaysville, Utah 84037           10,703              *              107,051        1.9%               117,754               1.3%

H. Craig Moody
1782 East Faunsdale Dr.
Sandy, Utah 84092                  588              *                -0-            *                    588                 *

Norman G. Wilbur
2520 Horseman Drive

Plano, Texas 75025                 840              *                -0-            *                    840                 *

Robert G. Hunter
#2 Ravenwood Lane
Sandy, Utah 84092                  648              *                -0-            *                    648                 *

Associated Investors (5)
5300 S. 360 W. Suite 250
Salt Lake City,
  Utah 84123                    83,214            2.1%             513,688        9.4%               596,902               6.4%

All directors and
  executive officers
  (9 persons)                  782,943           20.1%           3,722,083        67.8%             4,421,812              47.1%

 *   Less than one percent

                                                                                 93

</TABLE>

<PAGE>



  (1) Does not  include  619,273  shares of Class A Common  Stock and  1,216,848
shares of Class C Common Stock owned by the Company's  Employee Stock  Ownership
Plan (ESOP), of which George R. Quist,  William C. Sargent and R.A.F.  McCormick
are the trustees and accordingly,  exercise shared voting and investment  powers
with respect to such shares.

  (2) Does not include  83,214 shares of Class A Common Stock and 513,688 shares
of  Class  C  Common  Stock  owned  by  Associated  Investors,  a  Utah  general
partnership,   of  which  these  individuals  are  the  managing  partners  and,
accordingly,  exercise shared voting and investment  powers with respect to such
shares.

  (3) Does not  include  85,491  shares  of  Class A Common  Stock  owned by the
Company's 401(k) Retirement Savings Plan, of which William C. Sargent,  Scott M.
Quist  and  Sherman  B.  Lowe  are  members  of  the  Investment  Committee  and
accordingly,  exercise shared voting and investment  powers with respect to such
shares.

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

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

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

The Company's officers and directors, as a group, own beneficially approximately
47.1% of the  outstanding  shares  of the  Company's  Class A and Class C Common
Stock.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------
The Company  has made a loan in the amount of  $172,000 to George R. Quist,  the
Company's  President and Chief Executive Officer,  without requiring the payment
of any interest.  The loan was made under a Promissory Note dated April 29, 1998
in order for Mr. Quist to exercise stock options which were granted to him under
the 1993 Plan. No installment payments are required under the terms of the note,
but the note must be paid in full as of May 1, 2000.  Mr. Quist has the right to
make  prepayments on the note at any time. As of March 31, 2000, the outstanding
balance  of the  note was  $116,600.  The loan  was  approved  by the  Company's
directors on March 12, 1999, with Mr. Quist abstaining,  at a Special Meeting of
the Board of Directors.

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

No director,  officer or 5% stockholder of the Company or its  subsidiaries,  or
any affiliate thereof, has engaged in any business transactions with the Company
or its subsidiaries during 1998 or 1999 other than as described herein.

                                       94


<PAGE>



                                     PART IV

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

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

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

(a)(3)  Exhibits

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

Exhibit

    Table No              Document

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

      B.     Bylaws (1)

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

      B.     Specimen Class C Stock Certificate (1)

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

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

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

      C.     1993 Stock Option Plan (3)

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

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

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

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

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

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

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

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

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

                                       95


<PAGE>



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

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

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

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

      Q.     Promissory Note with George R. Quist. (12)

            (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 Annual Report on Form 10-K, as
                   filed on April 14, 1999.

    21.  Subsidiaries of the Registrant

    27.  Financial Data Schedule

    (b)  Reports on Form 8-K:

            On December  1, 1999,  the Company  filed a Form 8-K  regarding  the
            engagement  of Tanner + Co. as its  independent  auditors to replace
            Ernst & Young LLP.

                                       96


<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 14, 2000                       By: George R. Quist,
                                                 ---------------
                                                Chairman of the Board,
                                                President and Chief
                                                Executive Officer

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

SIGNATURE                                  TITLE                         DATE

George R. Quist                  Chairman of the                 April 14, 2000
---------------                  Board, President
                                 and Chief Executive
                                 Officer (Principal
                                 Executive Officer)

Scott M. Quist                   First Vice                      April 14, 2000
--------------                   President, General
                                 Counsel and
                                 Treasurer and
                                 Director (Principal
                                 Financial and
                                 Accounting Officer)

William C. Sargent               Senior Vice                     April 14, 2000
------------------               President, Secretary
                                 and Director

Charles L. Crittenden            Director                        April 14, 2000
---------------------

Sherman B. Lowe                  Director                        April 14, 2000
---------------

R.A.F. McCormick                 Director                        April 14, 2000
----------------

H. Craig Moody                   Director                        April 14, 2000
--------------

Norman G. Wilbur                 Director                        April 14, 2000
----------------

Robert G. Hunter                 Director                        April 14, 2000
----------------

                                       97


<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                          Year Ended December 31, 1999

                     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

27.                  Financial Data Schedule


<PAGE>
                                   EXHIBIT 21

                        Subsidiaries of Security National
                              Financial Corporation
                              as of March 31, 2000


<PAGE>



                                   Exhibit 21


Subsidiaries of Security National Financial Corporation
(as of March 31, 2000)

         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>