10-K

UNITED STATES 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, 2014, 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 000-09341

SECURITY NATIONAL FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

UTAH	87-0345941
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5300 South 360 West, Suite 250 Salt Lake City, Utah	84123
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code:	(801) 264-1060

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: None

Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:

Title of each class	Name of each exchange on which registered
Class A common stock, $2.00 Par Value	Nasdaq National Market
Class C common stock, $2.00 Par Value	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [  ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer [  ]	Accelerated filer [ ]	Nonaccelerated filer [  ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

As of June 30, 2014, the aggregate market value of the registrant’s Class A common stock held by non-affiliates of the registrant was $18,028,000 based on the $4.07 closing sale price of the Class A common stock as reported on The Nasdaq National Market.

As of March 25, 2015, there were outstanding 12,460,013 shares of Class A common stock, $2.00 par value per share, and 1,393,538 shares of Class C common stock, $2.00 par value per share.

Documents Incorporated by Reference

None.

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Security National Financial Corporation

Form 10-K

For the Fiscal Year Ended December 31, 2014

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	3
Item 2.	Properties	11
Item 3.	Legal Proceedings	14
Item 4.	Mine Safety Disclosures	17
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 8.	Financial Statements and Supplementary Data	36
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	108
Item 9A.	Controls and Procedures	108
Item 9B.	Other Information	108
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	110
Item 11.	Executive Compensation	115
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	125
Item 13.	Certain Relationships and Related Transactions and Director Independence	127
Item 14.	Principal Accounting Fees and Services	127
Part IV
Item 15.	Exhibits and Financial Statement Schedules	128

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Item 1.  Business

Security National Financial Corporation (the “Company”) operates in three main business segments: life insurance, cemetery and mortuary, and mortgage loans. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products, and accident and health insurance. These products are marketed in 38 states through a commissioned sales force of independent licensed insurance agents who may also sell insurance products of other companies. The cemetery and mortuary segment of the Company consists of seven mortuaries and five cemeteries in the state of Utah and one cemetery in the state of California. The Company also engages in pre-need selling of funeral, cemetery, mortuary and cremation services through its Utah and California operations. Many of the insurance agents also sell pre-need funeral, cemetery and cremation services. The mortgage loan segment originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes and real estate projects. The mortgage loan segment operates through 123 wholesale and retail offices in 23 states, and is an approved mortgage lender in several other states.

The Company’s design and structure are that each business segment is related to the other business segments and contributes to the profitability of the other segments. Because of the Company’s cemetery and mortuary operations in Utah and California, the Company enjoys a level of public awareness that assists in the sales and marketing of insurance and pre-need cemetery and funeral products. The Company’s insurance subsidiaries invest their assets (including, in part, pre-paid funeral products and services) in investments authorized by the respective insurance departments of their states of domicile. The Company also pursues growth through acquisitions. The Company’s acquisition business strategy is based on reducing the overhead cost of the acquired company by utilizing the Company’s existing personnel, management, and technology while still providing quality service to customers and policyholders.

The Company was organized as a holding company in 1979, when Security National Life Insurance Company (“Security National Life”) became a wholly owned subsidiary of the Company and the former stockholders of Security National Life became stockholders of the Company. Security National Life was formed in 1965 and has acquired or purchased significant blocks of business which include Capital Investors Life Insurance Company (1994), Civil Service Employees Life Insurance Company (1995), Southern Security Life Insurance Company of Florida (1998), Menlo Life Insurance Company (1999), Acadian Life Insurance Company (2002), Paramount Security Life Insurance Company (2004), Memorial Insurance Company of America (2005), Capital Reserve Life Insurance Company (2007), Southern Security Life Insurance Company of Mississippi (2008), North America Life Insurance Company (2011), Trans-Western Life Insurance Company (2012), Mothe Life Insurance Company (2012) and DLE Life Insurance Company (2012).

The cemetery and mortuary operations have also grown through the acquisition of other cemetery and mortuary companies. The cemetery and mortuary companies that the Company has acquired and still owns Holladay Memorial Park, Inc. (1991), Cottonwood Mortuary, Inc. (1991) and Deseret Memorial, Inc. (1991).

In 1993, the Company formed SecurityNational Mortgage Company (“SecurityNational Mortgage”) to originate and refinance residential mortgage loans. In 2012, the Company formed Green Street Mortgage Services, Inc. (“Green Street Mortgage”) to originate and refinance residential mortgage loans.

See Note 14 of the Notes to Consolidated Financial Statements for additional information regarding business segments of the Company.

Life Insurance

Products

The Company, through Security National Life, issues and distributes selected lines of life insurance and annuities. The Company’s life insurance business includes funeral plans and interest-sensitive life insurance, as well as other traditional life, accident and health insurance products. The Company places specific marketing emphasis on funeral plans through pre-need planning. The Company’s other insurance subsidiaries, Memorial Insurance Company of America (“Memorial Insurance Company”), Southern Security Life Insurance Company of Mississippi (“Southern Security”) and Trans-Western Life Insurance Company (“Trans-Western”), service and maintain policies that were purchased prior to their acquisition by Security National Life.

A funeral plan is a small face value life insurance policy that generally has face coverage of up to $25,000. The Company believes that funeral plans represent a marketing niche that has lower competition because most insurance companies do not offer similar coverage. The purpose of the funeral plan policy is to pay the costs and expenses incurred at the time of a person’s death. On a per thousand dollar cost of insurance basis, these policies can be more expensive to the policyholder than many types of non-burial insurance due to their low face amount, requiring the fixed cost of the policy administration to be distributed over a smaller policy size, and the simplified underwriting practices that result in higher mortality costs.

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Markets and Distribution

The Company is licensed to sell insurance in 38 states. The Company, in marketing its life insurance products, seeks to locate, develop and service specific niche markets. The Company’s funeral plan policies are sold primarily to persons who range in age from 45 to 85and have low to moderate income.

A majority of the Company’s funeral plan premiums come from the states of Arkansas, California, Georgia, Louisiana, Mississippi, Missouri, Texas and Utah.

The Company sells its life insurance products through direct agents, brokers and independent licensed agents who may also sell insurance products of other companies. The commissions on life insurance products range from approximately 50% to 120% of first year premiums. In those cases where the Company utilizes its direct agents in selling such policies, those agents customarily receive advances against future commissions.

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

In marketing 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 since 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, 2014:

	2014		2013		2012				2011				2010
Life Insurance		497,933		498,228		502,978				414,411				398,774
Policy/Cert Count as of December 31							(2	)			(1	)
Insurance in force as of December 31 (omitted 000)	$	2,763,496	$	2,828,470	$	2,913,419	(2	)	$	2,969,648	(1	)	$	3,003,622
Premiums Collected (omitted 000)	$	52,418	$	50,009	$	48,168			$	47,982	(1	)	$	38,579

(1)	Includes the assumption reinsurance of North America Life Insurance Company.
(2)	Includes coinsurance with Mothe Life Insurance Company and DLE Life Insurance Company.

  Underwriting

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

Age Nearest	Non-Medical
Birthday	Limits
0-50	$100,000
51-up	Medical information required (APS or exam)

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

The Company’s funeral plan insurance is written on a simplified medical application with underwriting requirements being a completed application, a phone inspection on the applicant, and a Medical Information Bureau inquiry. There are several underwriting classes in which an applicant can be placed.

Annuities

Products

The Company’s annuity business includes single premium deferred annuities, flexible premium deferred annuities and immediate annuities. A single premium deferred annuity is a contract where the individual remits a sum of money to the Company, which is retained on deposit until such time as the individual may wish to annuitize or surrender the contract for cash. A flexible premium deferred annuity gives the contract holder the right to make premium payments of varying amounts or to make no further premium payments after his initial payment. These single and flexible premium deferred annuities can have initial surrender charges. The surrender charges act as a deterrent to individuals who may wish to prematurely surrender their annuity contracts. An immediate annuity is a contract in which the individual remits a sum of money to the Company 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.

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Annuities have guaranteed interest rates that range from 1% to 6.5% per annum. Rates above the guaranteed interest rate credited are periodically modified by the Board of Directors at their discretion. 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. Commissions, issuance expenses and general and administrative expenses are deducted from this interest rate spread.

Markets and Distribution

The general market for the Company’s annuities is middle to older age individuals who wish to save or invest their money in a tax-deferred environment. The major source of annuity considerations comes from direct agents. Annuities are also sold in conjunction with other insurance sales. If an individual does not qualify for a funeral plan due to health considerations, the agent will often sell that individual an annuity to fund those final expenses.

The following table summarizes the annuity business for the five years ended December 31, 2014:

	2014		2013		2012		2011				2010
Annuities Policy/Cert Count as of December 31		12,701		12,703		12,320		11,313	(1	)		12,344
Deposits Collected (omitted 000)	$	8,010	$	7,281	$	6,777	$	5,757	(1	)	$	6,166

(1) Includes the assumption reinsurance of North America Life Insurance Company.

Accident and Health

  Products

With the acquisition of Capital Investors in 1994, the Company acquired a block of accident and health policies that pay limited benefits to policyholders. The Company currently offers low-cost comprehensive diver’s accident policies that provide worldwide coverage for medical expense reimbursement in the event of diving accidents.

  Markets and Distribution

The Company markets its diver’s accident policies through the internet.

The following table summarizes the accident and health insurance business for the five years ended December 31, 2014:

	2014		2013		2012		2011		2010
Accident and Health Policy/Cert Count as of December 31		5,838		6,451		7,291		8,268		9,269
Premiums Collected (omitted 000)	$	133	$	144	$	158	$	175	$	203

Reinsurance

The primary purpose of reinsurance is to enable an insurance company to write issue an insurance policy in an amount larger than the risk the Company is willing to assume for itself. The Company remains obligated for the amounts reinsured (ceded) in the event the reinsurers do not meet their obligations.

The Company currently cedes and assumes certain risks with various authorized unaffiliated reinsurers pursuant to reinsurance treaties, which are generally renewed 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.

The Company’s policy is to retain no more than $100,000 of ordinary insurance per insured life, with the excess risk being reinsured. The total amount of life insurance reinsured by other companies as of December 31, 2014 was $67,761,000, which represents approximately 2.5% of the Company’s life insurance in force on that date.

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 reinsurance.

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Investments

The investments that support the Company’s life insurance and annuity obligations are determined by the investment committees of the Company’s subsidiaries and ratified by the full Board of Directors of the respective subsidiaries. A significant portion of the Company’s investments must meet statutory requirements governing the nature and quality of permitted investments by its insurance subsidiaries. The Company maintains a diversified portfolio consisting of common stocks, preferred stocks, municipal bonds, investment and non-investment grade bonds, mortgage loans, real estate, short-term investments and other securities and investments.

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

Cemetery and Mortuary

  Products

The Company currently operates six cemeteries and seven mortuaries. 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: plots, interment vaults, mausoleum crypts, markers, caskets, flowers and other death care related products. These 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 mortuary at each of its cemeteries, other than Holladay Memorial Park and Singing Hills Memorial Park, and has three separate stand-alone mortuary facilities.

   Markets and Distribution

The Company’s pre-need cemetery and mortuary sales are marketed to persons of all ages but are generally purchased by persons 45 years of age and older. The Company 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.

Potential customers are located via telephone sales prospecting, responses to letters mailed by the pre planning consultants, newspaper inserts, referrals, and door-to-door canvassing. The Company trains its sales representatives and helps generate leads for them. 

Mortgage Loans

   Products

The Company, through its wholly owned subsidiaries, SecurityNational Mortgage Company and Green Street Mortgage Services, Inc., is active in the residential real estate market. Both mortgage subsidiaries are approved and regulated by the U.S. Department of Housing and Urban Development (HUD), the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and other secondary market investors, to originate a variety of residential mortgage loan products, which are subsequently sold to investors. The Company uses internal and external funding sources to fund mortgage loans.

Security National Life originates commercial real estate loans, residential construction loans and land development loans for internal investment.

   Markets and Distribution

The Company’s residential mortgage lending services are marketed primarily to real estate brokers and mortgage originators. The Company has a strong retail origination presence in the Utah, Florida, Nevada, and Texas markets in addition to three wholesale branch offices located in Florida, Texas and Utah, with sales representatives in these and other states. 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 mortgage loans.

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Recent Acquisitions and Other Business Activities

Reinsurance Agreement with American Republic Insurance Company

On February 11, 2015, the Company signed a coinsurance agreement to reinsure certain life insurance policies from American Republic Insurance Company (“American Republic”).  The policies were previously reinsured by North America Life under a coinsurance agreement between World Insurance Company (“World Insurance”) and North America Life entered into on July 22, 2009, which was commuted.  World Insurance was subsequently purchased by and merged into American Republic.  The current coinsurance agreement is between the Company and American Republic and became effective on January 1, 2015.  As part of the coinsurance agreement, American Republic transferred all contractual obligations and risks to the Company, and the Company took control of $15,004,771 of assets in a trust account held by Texas Capital Bank as the trustee.

   Reinsurance Agreement with LJA Insurance Company

On December 19, 2014, the Company entered into a Coinsurance Funds Withheld Reinsurance Agreement with LJA Insurance Company (“LJA Insurance”), a Republic of the Marshall Islands domiciled insurance company. This agreement was effective November 1, 2014. Under the terms of the funds withheld agreement, the Company ceded to LJA Insurance 100% of three blocks of deferred annuities in the amount of $4,337,000 and retained the assets and recorded a funds held under coinsurance liability for the same amount. LJA Insurance agreed to pay the Company an initial ceding commission of $60,000 and an asset management fee of $16,000 per quarter to administer the policies. The Company will also receive a 90% experience refund for any profits from the business. The Company has the right to recapture the business by giving LJA Insurance 90 days written notice, or it may be terminated by mutual consent of both parties.

   Sale of Paradise Chapel Funeral Home, Inc.

On December 8, 2014, the Company and its subsidiaries, Paradise Sunset Chapel Funeral Home, Inc. (“Paradise Sunset Chapel”), and Security National Life completed an asset sales transaction with 40th Street Developers, LLC (“40th Street”), to sell certain real estate.   Under the terms of the asset purchase agreement among Paradise Sunset Chapel, Security National Life and 40th Street, 40th Street paid $1,505,000 at closing to Paradise Sunset Chapel and Security National Life.

   Acquisition of American Funeral Financial

On June 4, 2014, the Company, through its wholly owned subsidiary, SNFC Subsidiary, LLC, completed a purchase transaction with American Funeral Financial, LLC, a South Carolina limited liability company, and Hypershop, LLC, a North Carolina limited liability company and sole owner of all the limited liability company interests of American Funeral Financial, to purchase all of the outstanding limited liability company interests, or membership units, of American Funeral Financial.  American Funeral Financial is engaged in the operation of a factoring business with the principal purpose to provide funding for funeral homes and mortuaries.  For the year ended December 31, 2013, American Funeral Financial had revenues of $5,026,000 with a net income of $164,000.  As of December 31, 2013, the total assets of American Funeral Financial were $19,153,000 and total equity was $1,680,000.

Under the terms of the transaction, as set forth in the Purchase Agreement dated June 4, 2014, among the Company, SNFC Subsidiary, American Funeral Financial and Hypershop, the Company paid Hypershop purchase consideration equal to (i) $3,000,000 in cash, of which $175,000 was deposited into an interest bearing escrow account to be held for a period of twelve months from the closing date to pay off the indebtedness and other liabilities of American Funeral Financial, plus (ii) $12,011,183, representing the amount of the good standing receivables of American Funeral Financial, plus (iii)  earn-out payments equal to .0042 of the aggregate amount of life insurance assignments funded by American Funeral Financial during the three year period following the closing date of the transaction. This earn-out liability was estimated to be $1,368,000. The purchase consideration was to be used to pay off the indebtedness that American Funeral Financial owed to Security Finance Corporation of Spartanburg, as well as to pay off all other indebtedness and liabilities of American Funeral Financial.

The good standing receivables of American Funeral Financial are defined as its assignment receivables outstanding for less than 120 days from the closing date.  Within 15 business days after the expiration of the 120-day period following the closing date, the Company agrees to provide Hypershop with reasonable supporting detail of the amount of any assignment receivables included in the good standing receivables that were not collected in full by the Company during such 120-day period, and which of the uncollected good standing receivables that the Company elects to receive payment from Hypershop.  Thus, under the Purchase Agreement, the Company is entitled to payment from Hypershop for any uncollected good standing receivables in which the Company elects to receive payment.

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The uncollected good standing receivables payment is to be paid to the Company within 15 days from Hypershop’s receipt of the uncollected receivable notice from the Company through reduction of funds in the escrow account until the escrow amount has been reduced to zero or fully disbursed, and if the escrow amount is insufficient, then payment is to be made by offsetting or crediting the amounts owed to the Company from the earn-out payments owed to Hypershop until the Company  has received full payment of the amount equal to the uncollected receivables payment.  The Company, SNFC Subsidiary, Hypershop and American Funeral agree that if the escrow amount and the offsets against earn-out payments are insufficient to pay the amount of the uncollected good standing receivables and the outstanding indebtedness and other liabilities of American Funeral Financial as of the closing date, then the Company has no further recourse against Hypershop, and Hypershop has no further obligation or liability to the Company.

During the period between the closing date and 270 days after the closing date, the Company is required to use commercially reasonable efforts to collect all outstanding receivables, including assignment receivables outstanding for over 120 days from the closing date.  In the event that the Company collects any assignment receivables that are outstanding for more than 120 days, the Company agrees to pay Hypershop the amount of such receivables within 15 business days after the receipt of such receivables.  If the Company is unable to collect all the outstanding receivables that are more than 120 days from the closing date, the Company agrees to transfer to Hypershop all right, title and interest to such receivables.

With regard to earn-out payments, the Company  agrees to provide earn-out payments to Hypershop on a monthly basis over a three year period in the amount equal to the life insurance assignments that American Funeral Financial has funded during the applicable monthly calculation period multiplied by the earn-out multiple of .0042.  In the event any customer of American Funeral Financial has also been a customer of C & J Financial, LLC, a wholly owned subsidiary of the Company, during the twelve month period prior to the closing date, the earn-out multiple would be proportionately reduced by the funding amount provided by American Funeral Financial for such customer during the twelve month period prior to the closing date as compared to the funding amount provided by C & J Financial for such customer during the same twelve month period.

With regard to the Escrow Account, the Company and Hypershop entered into an agreement on January 21, 2015 to memorialize how the funds in the Escrow Account were to be distributed under the terms of the Purchase Agreement. The Company and Hypershop each agreed that the $175,000 in funds which were deposited into the Escrow Account at the closing of the purchase transaction pursuant to the terms of the Purchase Agreement were allocated between said parties as follows: The Company - $66,221 and Hypershop - $108,779. The Company and Hypershop also agreed to distribute the accrued interest on the funds that were deposited into the Escrow Account to Hypershop. The Escrow Agent distributed the funds from the Escrow Account per this agreement.

 Reinsurance Terminated with North America Life Insurance Company

On December 1, 2013, in accordance with the terms of the Coinsurance Agreement, Security National Life, through TransWestern Life Insurance Company (“Trans-Western Life”), recaptured additional policies of Trans-Western Life from North American Life Insurance Company (“North American Life”).  On December 10, 2013, pursuant to the Coinsurance Agreement, North America Life paid $2,500,000, less a ceding commission of $34,000 to Security National Life. On February 13, 2014, in accordance with the terms of the Coinsurance Agreement, Security National Life, through Trans Western Life, recaptured the remaining policies of Trans-Western Life from North American Life. Pursuant to the Coinsurance Agreement, North America Life paid $4,684,000 less a ceding commission of $57,000 to Security National Life, and the Reinsurance Agreement between Trans Western Life and North America Life was terminated.

   Reorganization of Security National Financial Corporation and Certain Subsidiaries

On May 8, 2013, the Company completed a reorganization transaction involving several of its wholly owned subsidiaries.  Under the terms of the Agreement and Plan of Reorganization, the Company contributed all its shares of common stock of Select Appraisal Management, Inc. (“Select Appraisal Management”), which had been a wholly owned subsidiary of the Company, to Green Street Mortgage, a wholly owned subsidiary of the Company.  The purpose of the transaction was to develop the appraisal business of Select Appraisal Management through Green Street Mortgage, which would be responsible for the development, management and oversight of the appraisal business of Select Appraisal Management. SecurityNational Mortgage agreed, as part of the reorganization, to transfer to Green Street Mortgage, in the form of a dividend, the appraisal management contracts and related operations that it owned.

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Moreover, as part of the reorganization, SecurityNational Mortgage agreed to assign to the Company, in the form of a dividend beginning January 1, 2013, the net servicing income from the mortgage servicing rights that it retains from the mortgage loans that it originates and sells on a servicing retained basis to third party investors in connection with its mortgage loan operations. Pursuant to the reorganization, SecurityNational Mortgage also agreed to pay the Company on a monthly basis the net income from its mortgage servicing operations, provided such payments do not violate the financial covenants that SecurityNational Mortgage is required to maintain with its warehouse mortgage lenders.

Finally, the Company agreed as part of the reorganization to contribute all of its shares of stock of Dry Creek Property Development, Inc. (“Dry Creek Development”), which had been a wholly owned subsidiary of the Company, to Security National Life Insurance Company (“Security National Life”). The purpose of this transaction was to help facilitate the future funding and development of approximately 13 acres of land that the Company owns in Sandy, Utah.

Regulation

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

The Company’s life insurance subsidiaries are currently subject to regulation in Utah, Arkansas, Mississippi and Texas under insurance holding company legislation, and other states where applicable. Generally, intercompany transfers of assets and dividend payments from insurance subsidiaries are subject to prior notice of approval from the state insurance department, if they are deemed “extraordinary” under these statutes. The insurance subsidiaries are required, under state insurance laws, to file detailed annual reports with the supervisory agencies in each of the states in which they do business. Their business and accounts are also subject to examination by these agencies. The Texas Department of Banking also audits Pre-Need Insurance policies that are issued in the state of Texas.  Pre-need policies are life and annuity products sold as the funding mechanism for funeral plans through funeral homes by security National agents.  The Company is required to send the Texas Department of Banking an annual report that summarizes the number of policies in force and  the face amount or death benefit for each policy.  This annual report also indicates  the number of new policies issued for that year, all death claims paid that year, and all premiums received.

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

The Company’s mortgage subsidiaries are subject to the rules and regulations of the U.S. Department of Housing and Urban Development (HUD), and to various state licensing acts and regulations and the Consumer Finance Protection Bureau (CFPB). These regulations, among other things, specify minimum capital requirements, procedures for loan origination and underwriting, licensing of brokers and loan officers, quality review audits and the fees that can be charged to borrowers. Each year, the Company is required to have an audit by an independent registered public accounting firm to verify compliance under some of these regulations. In addition to the government regulations, the Company must meet loan requirements, and underwriting guidelines of various investors who purchase the loans.

9

Income Taxes

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

Security National Life last received the benefit of the small life insurance company deduction in 2011. In order to qualify for the small company deduction, the combined tax 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 on a tax accounting basis. To the extent that the net income limitation is exceeded, the small life insurance company deduction is phased out over the next $12,000,000 of life insurance company taxable income. The combined tax assets of the Company exceeded $500,000,000 as of December 31, 2014.

Since 1990 Security National Life has computed its 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. The following subsidiaries are regulated as life insurance companies but do not meet the Internal Revenue Code definition of a life insurance company so are taxed as insurance companies other than life insurance companies: Memorial Insurance Company, Southern Security and Trans-Western.  For taxable years beginning January 1, 1987, the Company may be subject to the Corporate Alternative Minimum Tax under the Tax Reform Act of 1986.

Competition

The life insurance industry is highly competitive. There are approximately 2,000 legal reserve life insurance companies in business in the United States. These insurance companies differentiate themselves through marketing techniques, product features, price and customer service. The Company’s insurance subsidiaries compete with a large number of insurance companies, many of which have greater financial resources, a longer business history, and more diversified line of insurance products than the Company. In addition, such companies generally have a larger sales force. Further, the Company competes with mutual insurance companies which may have a competitive advantage because all profits accrue to policyholders. Because the Company is smaller 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 and San Diego areas where the Company competes, there are a number of cemeteries and mortuaries which have longer business histories, more established positions in the community, and stronger financial positions than the Company. In addition, some of the cemeteries with which the Company must compete for sales are owned by municipalities and, as a result, can offer lower prices than can the Company. The Company bears the cost of a pre-need sales program that is not incurred by those competitors which 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 industry is highly competitive with a large number of mortgage companies and banks in the same geographic area in which the Company is operating. The mortgage industry in general is sensitive to changes in interest rates and the refinancing market is particularly vulnerable to changes in interest rates.

Employees

As of December 31, 2014, the Company had 1,090 full-time and 390 part-time employees.

10

Item 2.  Properties

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

Street	City	State	Function	Owned Leased	Approximate Square Footage		Lease Amount				Expiration
5300 South 360 West	Salt Lake City	UT	Corporate Headquarters	Owned		30,317	$	485,071	/	yr	month to month
5201 Green Street	Salt Lake City	UT	Mortgage Operations	Owned		10,990	$	13,252	/	mo	month to month
3935 I-55 South, Frontage Road	Jackson	MS	Insurance Operations	Owned		12,000	$	84,000	/	yr	month to month
5239 Greenpine Drive	Murray	UT	Funeral Service Operations	Leased		1,642	$	1,020	/	mo	month to month
497-A Sutton Bridge Road	Rainbow City	AL	Fast Funding Operations	Leased		5,500	$	33,600	/	yr	6/30/2018
2567 Mall Road	Florence	AL	Mortgage Sales	Sub-Leased		1,600	$	750	/	mo	month to month
5701 Talavi Blvd. #155	Glendale	AZ	Mortgage Sales	Leased		2,214	$	4,358	/	mo	5/6/2015
2345 E. Thomas Road, Suite 400	Phoenix	AZ	Mortgage Sales	Leased		3,762	$	4,232	/	mo	month to month
1701 N. Scottsdale Rd. Suite 125	Scottsdale	AZ	Mortgage Sales	Leased		3,140	$	6,542	/	mo	month to month
900 East Hamilton Ave	Campbell	CA	Mortgage Sales	Leased		182	$	1,409	/	mo	month to month
1900 Powell St #600-6011	Emeryville	CA	Mortgage Sales	Leased		100	$	1,300	/	mo	10/31/2015
8505 Madison Avenue, #140	Fair Oaks	CA	Mortgage Sales	Leased		1,200	$	2,160	/	mo	11/30/2016
3643 East 4th Street, Suite A	Long Beach	CA	Mortgage Sales	Leased		1,250	$	2,060	/	mo	month to month
765 The City Drive #360	Orange	CA	Mortgage Sales	Leased		3,886	$	7,772	/	mo	8/31/2017
3005 Douglas Boulevard #100	Roseville	CA	Mortgage Sales	Leased		3,722	$	6,997	/	mo	4/14/2018
421 S. Cataract	San Dimas	CA	Mortgage Sales	Leased		6,200	$	6,510	/	yr	month to month
817 N Broadway Ste E	Santa Ana	CA	Mortgage Sales	Leased		550	$	1,000	/	mo	4/15/2015
7100 East Bellview Avenue #301	Greenwood Village	CO	Mortgage Sales	Leased		2,549	$	3,717	/	mo	10/31/2016
7777 Glades Road, Suite #401A	Boca Raton	FL	Mortgage Sales	Leased		2,762	$	7,875	/	mo	month to month
8191 College Parkway Suite 201	Ft Myers	FL	Mortgage Sales	Leased		1,704	$	1,502	/	mo	10/31/2015
4575 Via Royal, #100	Ft Myers	FL	Mortgage Sales	Sub-Leased		2,631	$	500	/	mo	month to month
1145 TownPark Avenue # 2215	Lake Mary	FL	Mortgage Sales	Leased		7,425	$	13,922	/	mo	3/1/2020
7575 Dr. Phillips Blvd, Suite 270	Orlando	FL	Mortgage Sales	Leased		1,317	$	2,571	/	mo	3/31/2018
11256 Boyette Rd	Riverview	FL	Mortgage Sales	Leased		120	$	500	/	mo	month to month
200 9th Avenue N, Ste 200	Safety Harbor,	FL	Mortgage Sales	Leased		3,591	$	85,266	/	yr	5/31/2015
15351 Amberly Drive	Tampa	FL	Mortgage Sales	Leased		153	$	500	/	mo	month to month
14502 N Dale Mabry Highway	Tampa	FL	Mortgage Sales	Leased		250	$	550		mo	3/31/2015
2445 Moon Rd#3	Grayson	GA	Mortgage Sales	Leased		1,800	$	2,365	/	mo	month to month
841 Bishop Street #924	Honolulu	HI	Mortgage Sales	Leased		740	$	2,263	/	mo	3/31/2015
733 Bishop Street #1880	Honolulu	HI	Mortgage Sales	Leased		2,812	$	8,267	/	mo	month to month
28-2856 Onomea Place	Pepeekeo	HI	Mortgage Sales	Leased		120	$	100	/	mo	month to month
3438 South 15 East, #100	Idaho Falls	ID	Mortgage Sales	Leased		1,401	$	1,285	/	mo	1/31/2015
3999 E Overland Road	Meridian	ID	Mortgage Sales	Leased		1,266	$	24,054	/	yr	11/30/2015
7227 W. Madison Avenue	Forest Park	IL	Mortgage Sales	Leased		1,800	$	24,000	/	yr	month to month
6900 Houston Rd. #21 & 22	Florence	KY	Mortgage Sales	Leased		1,700	$	1,900	/	mo	month to month
12910 Shelbyville RD	Louisville	KY	Mortgage Sales	Leased		100	$	350	/	mo	month to month
910 Pierremont #410	Shreveport	LA	Mortgage Sales	Leased		174	$	790	/	mo	month to month
1 Exchange Place	Worcester	MA	Mortgage Sales	Leased		475	$	700	/	mo	8/31/2016
636 Trade Center Blvd	Chesterfield	MO	Mortgage Sales	Leased		1,800	$	2,403	/	mo	2/28/2017
7802 Menaul Blvd NE	Albuquerque	NM	Mortgage Sales	Leased		3,780	$	3,958	/	mo	month to month
2370 Corporate Circle, Suite 200	Henderson	NV	Mortgage Sales	Leased		7,741	$	169,063	/	yr	12/1/2017
9330 W. Sahara Ave #270	Las Vegas	NV	Mortgage Sales	Leased		2,681	$	3,887	/	mo	7/1/2015
6130 Elton Avenue, #223	Las Vegas	NV	Mortgage Sales	Leased		125	$	400	/	mo	3/31/2015
3275 N Fort Apache Rd, Ste #150	Las Vegas	NV	Mortgage Sales	Leased		2,448	$	2,448	/	mo	7/15/2015
3285 North Fort Apache Road	Las Vegas	NV	Mortgage Sales	Leased		1,000	$	11,500	/	mo	month to month
6540 South Pecos Road, Building A, Suite 104	Las Vegas	NV	Mortgage Sales	Leased		2,802	$	2,662	/	mo	month to month
4000 S. Eastern Avenue, Suite 310	Las Vegas	NV	Mortgage Sales	Leased		2,750	$	52,800	/	yr	12/31/2019
3500 Lakeside Court #207	Reno	NV	Mortgage Sales	Leased		552	$	550	/	mo	month to month
3743 Dixie Hwy,Suite B	Franklin	OH	Mortgage Sales	Leased		500	$	400	/	mo	11/30/2015
2468 W New Orleans	Brokern Arrow	OK	Mortgage Sales	Leased		1,683	$	1,896	/	mo	12/31/2019
3050 SE Division Street, Suite 245 (D Street Village)	Portland	OR	Mortgage Sales	Leased		1,078	$	2,156	/	mo	10/31/2016
3311 NE MLK Jr Blvd # 203	Portland	OR	Mortgage Sales	Leased		1,400	$	675	/	mo	month to month
10610 SE Washington	Portland	OR	Mortgage Sales	Leased		506	$	1,000	/	mo	month to month
108 Central Avenue Ste 1	Goose Creek	SC	Mortgage Sales	Leased		1,071	$	650	/	mo	month to month
11002 Kingston Pike # 204	Knoxville	TN	Mortgage Sales	Leased		1,093	$	1,300	/	mo	5/31/2017
9737 Great Hills Trail, Suite 150	Austin	TX	Mortgage Sales	Leased		8,174	$	53,536	/	mo	2/28/2017
12515-7 Research Blvd.	Austin	TX	Mortgage Sales	Leased		2,799	$	4,082	/	mo	12/31/2018
13413 Galleria Circie, #120	Austin	TX	Mortgage Sales	Sub-Leased		400	$	1,200	/	mo	6/30/2015
13413 Galleria Circie, #Q-180	Austin	TX	Mortgage Sales	Leased		1,851	$	3,085	/	mo	12/31/2018
8700 Manchaca Road #603	Austin	TX	Mortgage Sales	Sub-Leased		1,000	$	1,400	/	mo	month to month
1213 East Alton Gloor Blvd Suite H	Brownsville	TX	Mortgage Sales	Leased		1,000	$	1,100	/	mo	9/30/2015
12201 Merit Drive, Suite 400	Dallas	TX	Mortgage Sales	Leased		3,047	$	54,846	/	yr	7/31/2016

11

Item 2.  Properties (Continued)

Street	City	State	Function	Owned Leased	Approximate  Square Footage		Lease Amount				Expiration
310 E. Rio Grande Street	Eagle Pass	TX	Mortgage Sales	Leased		150	$	250	/	mo	month to month
11601 Pellicano Suite A-14&15	El Paso	TX	Mortgage Sales	Sub-Leased		2,160	$	32,400	/	yr	month to month
5780 North Mesa Street	El Paso	TX	Mortgage Sales	Leased		1,532	$	2,048	/	mo	6/30/2015
4936 Collinwood Sutie 110	Fort Worth	TX	Mortgage Sales	Leased		1,900	$	34,200	/	yr	12/31/2016
30417 5th Street #B	Fulshear	TX	Mortgage Sales	Sub-Leased		1,000	$	550	/	mo	month to month
116 West 8th Street, Unit 103	Georgetown	TX	Mortgage Sales	Leased		135	$	325	/	mo	2/28/2015
2825 Wilcrest Drive, Ste 220	Houston	TX	Mortgage Sales	Leased		120	$	400	/	mo	month to month
17000 El Camino Real #103D	Houston	TX	Mortgage Sales	Leased		750	$	750	/	mo	month to month
17000 El Camino Real #103C	Houston	TX	Mortgage Sales	Leased		460	$	588	/	mo	10/31/2015
17347 Village Green Drive-102A	Houston	TX	Mortgage Sales	Sub-Leased		3,000	$	6,445	/	mo	month to month
10613 West Sam Houston Parkway North, STE 175	Houston	TX	Mortgage Sales	Leased		4,572	$	11,049	/	mo	12/31/2018
7322 Southwest Freeway 1818	Houston	TX	Mortgage Sales	Sub-Leased		1,250	$	1,875	/	mo	month to month
1848 Norwood Plaza #205	Hurst	TX	Mortgage Sales	Sub-Leased		455	$	361	/	mo	month to month
24668 Kingsland Blvd	Katy	TX	Mortgage Sales	Leased		150	$	400	/	mo	month to month
2877 Commercial Center Blvd	Katy	TX	Mortgage Sales	Leased		250	$	2,000	/	mo	month to month
1202 Lakeway Drive, Suite 12	Lakeway	TX	Mortgage Sales	Leased		1,192	$	2,000	/	mo	1/3/2017
7913 McPherson, #B	Laredo	TX	Mortgage Sales	Leased		1,200	$	1,400	/	mo	5/31/2016
3027 Marina Bay Dr #110	League City	TX	Mortgage Sales	Leased		180	$	740	/	mo	month to month
125 North Main Street	Mansfield	TX	Mortgage Sales	Sub-Leased		300	$	200	/	mo	month to month
802 E. Expressway 83, #A	Pharr	TX	Mortgage Sales	Sub-Leased		1,000	$	1,100	/	mo	month to month
811 S Central Expressway #550	Richardson	TX	Mortgage Sales	Sub-Leased		1,080	$	1,053	/	mo	month to month
1 Chisholm Trail Road, Suite 210	Round Rock	TX	Mortgage Sales	Leased		3,402	$	3,331	/	mo	10/31/2017
2526 North Loop 1604 West, Suite 210	San Antonio	TX	Mortgage Sales	Leased		4,959	$	10,775	/	mo	8/31/2016
9901 I-H10 West #800	San Antonio	TX	Mortgage Sales	Leased		100	$	2,620	/	mo	6/30/2015
19901 Southwest Freeway #108	Sugarland	TX	Mortgage Sales	Sub-Leased		500	$	500	/	mo	month to month
52 Sugar Creek Center Blvd., #150	Sugarland	TX	Mortgage Sales	Leased		1,788	$	3,497	/	mo	12/31/2019
602 S Main St #300	Weatherford	TX	Mortgage Sales	Sub-Leased		1,000	$	1,200	/	mo	month to month
8505 Technology Forest Place, #304	Woodlands	TX	Mortgage Sales	Leased		100	$	2,600	/	mo	5/30/2018
13997 Minuteman Drive Suite 250	Draper	UT	Mortgage Sales	Leased		3,206	$	5,811	/	mo	9/30/2017
13997 Minuteman Drive Suite 100	Draper	UT	Mortgage Sales	Leased		5,492	$	9,666	/	mo	9/30/2017
497 South Main	Ephraim	UT	Mortgage Sales	Leased		500	$	765	/	mo	9/30/2015
288 SR 248, Suite 2A	Kamas	UT	Mortgage Sales	Leased		1,480	$	2,350	/	mo	month to month
1558 N Woodland Park Drive #400	Layton	UT	Mortgage Sales	Leased		1,000	$	2,500	/	mo	month to month
6965 South Union Park, Suites #100, #260, #300, #460, #470, & #480	Midvale	UT	Mortgage Sales	Leased		37,226	$	74,098	/	mo	2/28/2018
6975 Union Park Avenue STE 420	Midvale	UT	Mortgage Sales	Leased		6,672	$	12,500	/	mo	6/30/2019
5201 South Green street	Murray	UT	Mortgage Sales	Leased		10,990	$	12,684	/	mo	6/30/2016
1443 West 800 North, Suite 201	Orem	UT	Mortgage Sales	Leased		3,129	$	3,781	/	mo	7/31/2015
1245 Deer Valley Drive #3A	Park City	UT	Mortgage Sales	Leased		2,183	$	4,548	/	mo	12/31/2017
465 North Main	Richfield	UT	Mortgage Sales	Leased		2,848	$	1,600	/	mo	month to month
1864 West 12600 South	Riverton	UT	Mortgage Sales	Leased		277	$	6,911	/	yr	month to month
1224 South River Road, Buiding E, Suites E3 & E4	Saint George	UT	Mortgage Sales	Leased		1,900	$	1,710	/	mo	4/30/2016
307 West 200 South, Ste 5001	Salt Lake City	UT	Mortgage Sales	Leased		500	$	500	/	mo	month to month
5993 S. Redwood Road	Salt Lake City	UT	Mortgage Sales	Leased		2,800	$	2,624	/	mo	5/31/2015
9980 S 300 West #201	Sandy	UT	Mortgage Sales	Leased		100	$	1,819	/	mo	month to month
9815 South Monroe Street, suite 206	Sandy	UT	Mortgage Sales	Leased		2,819	$	5,286	/	mo	5/31/2018
1099 West South Jordan Parkway	South Jordan	UT	Mortgage Sales	Leased		3,329	$	46,318	/	yr	month to month
10437 South 1300 West	South Jordan	UT	Mortgage Sales	Leased		4,000	$	7,500	/	mo	9/30/2019
6575 So. Redwood Road	Taylorsville	UT	Mortgage Sales	Leased		3,323	$	4,638	/	mo	8/31/2019
118 East Vine Street	Tooele	UT	Mortgage Sales	Leased		1,000	$	800	/	mo	7/31/2017
108 South 500 West	Vernal	UT	Mortgage Sales	Leased		100	$	1,350	/	mo	month to month
10655 NE 4th St # 800	Bellevue	WA	Mortgage Sales	Leased		2,263	$	6,883	/	mo	8/31/2017
2100 124th Avenue NE Suite 100	Bellevue	WA	Mortgage Sales	Leased		2,406	$	5,013	/	mo	10/31/2015
160 Cascade Place #221	Burlington	WA	Mortgage Sales	Leased		140	$	330	/	mo	month to month
1604 Hewitt Ave, Suite 703	Everett	WA	Mortgage Sales	Leased		2,038	$	4,650	/	mo	month to month
11232 120th Ave NE # 206	Kirkland	WA	Mortgage Sales	Leased		500	$	350	/	mo	month to month
10524 Bridgeport Way SW	Lakewood	WA	Mortgage Sales	Leased		100	$	750	/	mo	2/28/2015
19410 8th Avenue, Suite 103	Poulsbo	WA	Mortgage Sales	Sub-Leased		2,385	$	3,578	/	mo	month to month
318 39th ST Ave SW, STE A	Puyallup	WA	Mortgage Sales	Leased		3,431	$	5,289	/	mo	11/30/2017
535 Dock Street #103	Tacoma	WA	Mortgage Sales	Leased		1,950	$	2,925	/	mo	6/30/2015
15640 NE Fourth Plain Blvd #220	Vancouver	WA	Mortgage Sales	Leased		120	$	395	/	mo	7/31/2015

The Company believes the office facilities it occupies are in good operating condition and adequate for current operations.The company will enter into additional leases or modify existing leases to meet market demand.  Those leases will be month to month where possible.  As leases expire the Company will either renew or find comparable leases or acquire additional office space.

12

Item 2.  Properties (Continued)

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

					Net Saleable Acreage
Name of Cemetery	Location	Date Acquired	Developed Acreage (1)		Total Acreage (1)		Acres Sold as Cemetery Spaces (2)		Total Available Acreage (1)
Memorial Estates, Inc.
Lakeview Cemetery	1640 East Lakeview Drive Bountiful, Utah	1973		7		40		6		34
Mountain View Cemetery (5)	3115 East 7800 South Salt Lake City, Utah	1973		17		54		16		38
Redwood Cemetery (4) (5)	6500 South Redwood Road West Jordan, Utah	1973		34		78		30		48
Deseret Memorial Inc. Lake Hills Cemetery (3)(6)
Lake Hills Cemetery (3)(6)	10055 South State Street Sandy, Utah	1991		9		28		4		24
Holladay Memorial Park, Inc.
Holladay Memorial Park (3)(4)	4900 South Memory Lane Holladay, Utah	1991		5		14		4		10
California Memorial Estate, Inc.
Singing Hills Memorial Park	2800 Dehesa Road El Cajon, California	1995		8		35		4		31

(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, 2014, there were mortgages of approximately $467,000 collateralized by the property and facilities at Deseret Mortuary, Cottonwood Mortuary, Holladay Memorial Park, and Lake Hills Cemetery.
(4)	These cemeteries include two granite mausoleums.
(5)	The Company developed additional acreage at both Mountain View Cemetery and Redwood Cemetery in 2013 and plans to continue such development as needed.
(6)	In mid-October 2013, Deseret Mortuary sold to Dry Creek Development 13 Acres of unimproved land.

13

Item 2. Properties (Continued)

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

		Date	Viewing				Square
Name of Mortuary	Location	Acquired	Room(s)		Chapel(s)		Footage
Memorial Mortuary, Inc.
Memorial Mortuary	5850 South 900 East
	Murray, Utah	1973		3		1		20,000
Memorial Estates, Inc.
Redwood Mortuary(2)	6500 South Redwood Rd.
	West Jordan, Utah	1973		2		1		10,000
Mountain View Mortuary(2)	3115 East 7800 South
	Salt Lake City, Utah	1973		2		1		16,000
Lakeview Mortuary(2)	1640 East Lakeview Dr.
	Bountiful, Utah	1973		0		1		5,500
Deseret Memorial, Inc.
Deseret Mortuary(1)	36 East 700 South
	Salt Lake City, Utah	1991		2		2		36,300
Lakehills Mortuary(2)	10055 South State St.
	Sandy, Utah	1991		2		1		18,000
Cottonwood Mortuary, Inc.
Cottonwood Mortuary(1)(2)	4670 South Highland Dr.
	Holladay, Utah	1991		2		1		14,500

(1)	As of December 31, 2014, there were mortgages of approximately $467,000 collateralized by the property and facilities at Deseret Mortuary, Cottonwood Mortuary, Holladay Memorial Park and Lake Hills Cemetery.
(2)	These funeral homes also provide burial niches at their respective locations.

Item 3.  Legal Proceedings

Lehman Brothers - Aurora Loan Services Litigation

On April 15, 2005, SecurityNational Mortgage entered into a loan purchase agreement with Lehman Brothers Bank, FSB (“Lehman Bank”). Under the terms of the loan purchase agreement, Lehman Bank agreed to purchase mortgage loans from time to time from SecurityNational Mortgage. During 2007, Lehman Bank and its wholly owned subsidiary, Aurora Loan Services LLC (“Aurora Loan Services”), purchased a total of 1,490 mortgage loans in the aggregate amount of $352,774,000 from SecurityNational Mortgage. Lehman Bank asserted that certain of the mortgage loans that it purchased from SecurityNational Mortgage during 2007 contained alleged misrepresentations and early payment defaults. As a result of these alleged issues with the mortgage loans, Lehman Bank contended it had the right to require SecurityNational Mortgage to repurchase certain loans or be liable for losses related to such loans under the loan purchase agreement. SecurityNational Mortgage disagrees with these claims.

On December 17, 2007, SecurityNational Mortgage entered into an Indemnification Agreement with Lehman Bank and Aurora Loan Services. Under the terms of the Indemnification Agreement, SecurityNational Mortgage agreed to indemnify Lehman Bank and Aurora Loan Services for 75% of all losses that Lehman Bank and Aurora Loan Services may incur relative to breaches by mortgagors pertaining to 55 mortgage loans that were purchased from SecurityNational Mortgage. SecurityNational Mortgage was released from any obligation to pay the remaining 25% of such losses. The Indemnification Agreement also required SecurityNational Mortgage to indemnify Lehman Bank and Aurora Loan Services for 100% of any future losses incurred on mortgage loans with breaches that were not among the 55 mortgage loans.

14

Pursuant to the Indemnification Agreement, SecurityNational Mortgage paid $395,000 to Aurora Loan Services as a deposit into a reserve account, to secure any obligations of SecurityNational Mortgage under the Indemnification Agreement. This deposit was in addition to a $250,000 deposit that SecurityNational Mortgage previously made into the reserve account for a total of $645,000. Losses from mortgage loans with alleged breaches were payable from the reserve account. Lehman Bank and Aurora Loan Services were not to apply any funds from the reserve account to a particular mortgage loan, however, until an actual loss had occurred. Under the Indemnification Agreement SecurityNational Mortgage was to pay to Aurora Loan Services each calendar month the difference between the reserve account balance and $645,000, but in no event would SecurityNational Mortgage be required to make payments into the reserve account in excess of $125,000 for any calendar month.

Since the time the reserve account was established, SecurityNational Mortgage paid a total of $4,281,000 from the reserve account to indemnify Lehman Brothers Bank and Aurora Loan Services for alleged losses from 31 mortgage loans that were among 55 mortgage loans with alleged breaches that were covered by the Indemnification Agreement and ten other mortgage loans with alleged breaches. In the last monthly billing statement dated April 24, 2011 to SecurityNational Mortgage, Lehman Brothers Holdings Inc. (“Lehman Holdings”) claimed that SecurityNational Mortgage owed approximately $3,745,000 for mortgage loan losses under the Indemnification Agreement.

During 2010 and 2011, the Company recognized alleged losses of $1,289,000 and $-0-, respectively. Management cannot fully determine the total losses, however, because there could be potential claims for losses that have not yet been determined.  As of December 31, 2014, the Company had not accrued for any losses under the Indemnification Agreement. SecurityNational Mortgage was involved in discussions with Lehman Bank and Lehman Holdings concerning issues under the Indemnification Agreement. During the discussion period, monthly payments for December 2010 and January, February, March and April of 2011 totaling $625,000 were abated or deferred.

On May 11, 2011, SecurityNational Mortgage filed a complaint against Aurora Bank FSB, formerly known as Lehman Bank, and Aurora Loan Services in the United States District Court for the District of Utah because it had been unable to resolve certain issues under the Indemnification Agreement with Lehman Bank and Aurora Loan Services. The complaint alleges, among other claims, material breach of the Indemnification Agreement, including a claim that neither Lehman Bank nor Aurora Loan Services owned the mortgage loans that SecurityNational Mortgage sold so as to justify the amount of payments demanded from, and made by, SecurityNational Mortgage. As a result, SecurityNational Mortgage claims it is entitled to judgment of approximately $4,000,000 against Lehman Bank, as well as Aurora Loan Services to the extent of its involvement and complicity with Lehman Bank. The complaint also alleges a second claim for material breach of a section of the Indemnification Agreement that contains an alleged “sunset” provision and that the amount of the requested payments made was not justified under the “sunset” provision.

On June 8, 2011, Lehman Holdings, which had filed for bankruptcy in September 2008, filed a complaint against SecurityNational Mortgage in the United States District Court for the District of Utah. A subsidiary of Lehman Holdings owns Lehman Bank. The complaint alleges that SecurityNational Mortgage sold loans to Lehman Bank, which were then sold to Lehman Holdings. The complaint additionally alleges that Lehman Bank and Aurora Loan Services assigned their rights and remedies under the loan purchase agreement, as well as the Indemnification Agreement, to Lehman Holdings, which latter assignment purportedly took place on March 28, 2011. Lehman Holdings declared in a letter dated June 2, 2011 that the Indemnification Agreement was null and void except as to losses previously released and discharged, which is disputed by SecurityNational Mortgage.

Lehman Holdings’ alleged claims are for damages for breach of contract and breach of warranty pursuant to a loan purchase agreement and Seller’s Guide. Based on claiming that the Indemnification Agreement is null and void pursuant to its lawsuit, Lehman Holdings has initially claimed damages in excess of $5,000,000. Prior to declaring the Indemnification Agreement null and void, Lehman Holdings claimed in a then recent billing statement under the terms of the Indemnification Agreement, that SecurityNational Mortgage owed approximately $3,745,000 for mortgage loan losses under the Indemnification Agreement. SecurityNational Mortgage strongly disagrees with the position of Lehman Holdings and, as set forth in its May 11, 2011 complaint, seeks affirmative relief of approximately $4,000,000 from Lehman Bank and Aurora Loan Services. Lehman Bank is a subsidiary of a company owned by Lehman Holdings, and Aurora Loan Services is a subsidiary of Lehman Bank.

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On September 4, 2012, SecurityNational Mortgage filed a motion for summary judgment in its action against Lehman Bank and Aurora Loan Services on certain material issues, as well as against Lehman Holdings regarding its claims against SecurityNational Mortgage. Lehman Bank and Aurora Loan Services filed a cross motion for summary judgment as to the issues in SecurityNational Mortgage’s motion and, in the Lehman Holdings case, Lehman Holdings has requested that the Court allow a cross motion on the issues which are the subject of SecurityNational Mortgage’s September 4, 2012 motion. The cases are before two different federal judges.

On February 27, 2013, SecurityNational Mortgage’s motion for summary judgment against Lehman Bank and Aurora Loan Services and the related cross motion were heard by Judge David Nuffer of the United States District Court for the District of Utah. After an extensive hearing, Judge Nuffer requested that the parties prepare findings of fact in accordance with the Court’s earlier promulgated findings as modified at the hearing, and that each party submit proposed conclusions of law related to the motions. The motion and cross motion were taken under advisement. SecurityNational Mortgage’s motion in the Lehman Holdings case was heard on April 22, 2014 before Judge Ted Stewart of the United States District Court for the District of Utah, and is under advisement.

On May 6, 2014, Judge Nuffer issued his summary of facts, conclusions of law and order granting SecurityNational Mortgage’s motion for summary judgment and denying the cross motion of Lehman Bank and Aurora Loan Services. On May 27, 2014, Lehman Bank and Aurora Loan Services filed a motion to reconsider Judge Nuffer’s summary judgment ruling. On June 2, 2014, a hearing was held before Judge Nuffer to determine the amount owing to SecurityNational Mortgage pursuant to the summary judgment ruling. On December 23, 2014, Judge Nuffer issued an order denying Lehman Bank’s and Aurora Loan Services’ motion for reconsideration of his summary judgment ruling in favor of SecurityNational Mortgage.

On December 24, 2014, Judge Nuffer issued an amended order granting SecurityNational Mortgage’s motion for summary judgment. The amended order provided that the amount of monies previously paid by SecurityNational Mortgage that were wrongfully applied by Lehman Bank to losses on loans actually owed by Lehman Holdings, as established at the June 2, 2014 hearing, was $3,892,974. The amended order also provided for prejudgment interest at 9% per annum to SecurityNational Mortgage. The total amount of prejudgment interest awarded is $1,674,240 through May 31, 2014, with a per diem of $960 for each day after May 31, 2014 until judgment. The court also commented that further replenishment of the indemnification fund under the Indemnification Agreement appears to be barred by language in the assignment effecting a waiver, but that this issue had not been briefed before the June 2, 2014 hearing. In addition, the court stated that the offset that Lehman Bank and Aurora Loan Services pled as an affirmative defense had not yet been adjudicated by the court. Finally, the court ordered the parties to meet and confer by January 16, 2015, and to file a motion to schedule the disposition of the remaining issues in the case. The motion is to clarify whether any issues other than the offset remain to be resolved.

On May 7, 2014, Judge Stewart issued an order for the parties to submit supplemental briefs as to the effect of Judge Nuffer’s summary judgment order on SecurityNational Mortgage’s motion for summary judgment in the Lehman Holdings case. The supplemental briefing was continued until January 16, 2015. Judge Stewart also granted leave for SecurityNational Mortgage to file an additional motion for summary judgment in the Lehman Holdings case on the basis that the claims of Lehman Holdings are barred by the statute of limitations.  The motion was also to be filed by January 16, 2015.  The August 11, 2014 trial setting before Judge Stewart in the Lehman Holdings case was stricken without providing a new trial date.

On January 16, 2015, SecurityNational Mortgage and Lehman Holdings filed briefs with Judge Stewart concerning the effect of the rulings in Judge Nuffer’s case on the case before Judge Stewart, and on the same date SecurityNational Mortgage filed a motion for summary judgment in the Lehman Holdings case based on the statute of limitations. A hearing concerning SecurityNational Mortgage’s summary judgment motion based on the statute of limitations is scheduled before Judge Stewart on April 14, 2015. On February 28, 2015, Lehman Bank and Aurora Loan Services filed a partial summary judgment motion before Judge Nuffer asserting that the Indemnification Agreement security fund should be replenished, and for a right to offset alleged losses of approximately $8.6 million, based on more than 100 loans retained by Lehman Bank, against the amount owing to SecurityNational per Judge Nuffer’s summary judgment order. Lehman Bank and Aurora Loan Services asserts that another 124 loans are not analyzed yet for potential breaches.

SecurityNational Mortgage had until March 30, 2015 to respond to the motion of Lehman Bank and Aurora Loan Services, and to file a motion if so determined by SecurityNational Mortgage. SecurityNational Mortgage asserts that Lehman Bank and Aurora Loan Services have no rights to a replenishment of the Indemnification Agreement reserve account, or for any offset against the liability of Lehman Bank and Aurora Loan Services to SecurityNational Mortgage, including the assertion that Lehman Bank and Aurora Loan Services executed an assignment to Lehman Holdings containing a waiver and release of rights and remedies which affect the foregoing asserted replenishment and offset matters.  On March 30, 2015, SecurityNational Mortgage filed a response in opposition to the partial summary judgement motion of Lehman Bank and Aurora Loan Services and also filed its own partial summary judgment motion on the same issue against Lehman Bank and Aurora Loan Services.

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

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Item 4.  Mine Safety Disclosures

Not applicable.

PART II

Item 5.  Market for the Registrant’s Common Stock, Related Security Holder Matters, and Issuer Purchases of Equity Securities

The Company’s Class A common stock trades on The Nasdaq National Market under the symbol “SNFCA.” Prior to August 13, 1987, there was no active public market for the Class A and Class C common stock. As of March 25, 2015, the closing sales price of the Class A common stock was $5.41 per share. The following were the high and low market closing sales prices for the Class A common stock by quarter as reported by Nasdaq since January 1, 2013:

	Price Range (1)
	High		Low
Period (Calendar Year)
2013
First Quarter	$	13.09	$	6.14
Second Quarter	$	8.32	$	5.37
Third Quarter	$	6.03	$	4.96
Fourth Quarter	$	5.46	$	4.16
2014
First Quarter	$	4.56	$	3.67
Second Quarter	$	4.27	$	3.53
Third Quarter	$	4.73	$	3.86
Fourth Quarter	$	5.66	$	4.45
2015
First Quarter (through March 25, 2015)	$	6.24	$	5.39

 (1) Sales prices have been adjusted retroactively for the effect of annual stock dividends.

The Class C common stock is not registered or traded on a national exchange. See Note 11 of the Notes to Consolidated Financial Statements.

The Company has never paid a cash dividend on its Class A or Class C common stock. The Company currently anticipates that all of its earnings will be retained for use in the operation and expansion of its business and does not intend to pay any cash dividends on its Class A or Class C common stock in the foreseeable future. Any future determination as to cash dividends will depend upon the earnings and financial position of the Company and such other factors as the Board of Directors may deem appropriate. A 5% stock dividend on Class A and Class C common stock has been paid each year from 1990 through 2014.

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The graph below compares the cumulative total stockholder return of the Company’s Class A common stock with the cumulative total return on the Standard & Poor’s 500 Stock Index and the Standard & Poor’s Insurance Index for the period from December 31, 2010 through December 31, 2014. The graph assumes that the value of the investment in the Company’s Class A common stock and in each of the indexes was $100 at December 31, 2010 and that all dividends were reinvested.

The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of the Company’s Class A common stock.

	12/31/10		12/31/11		12/31/12		12/31/13		12/31/14
SNFC		100		85		483		278		332
S & P 500		100		100		113		147		164
S & P Insurance		100		90		115		154		163

The graph set forth above is required by the Securities and Exchange Commission and shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed soliciting material or filed under such acts.

As of December 31, 2014, there were 3,606 record holders of Class A common stock and 85 record holders of Class C common stock.

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

The following selected financial data is for each of the five years ended December 31, 2014, and is derived from the audited consolidated financial statements. The data as of December 31, 2014 and 2013, and for the three years ended December 31, 2014, should be read in conjunction with the consolidated financial statements, related notes and other financial information.

Consolidated Statement of Earnings Data:

	Year Ended December 31
	2014			2013			2012(2)			2011(1)			2010
Revenue
Insurance premiums and other considerations	$	53,009,000		$	50,472,000		$	48,216,000		$	48,457,000		$	38,509,000
Net investment income		28,304,000			20,354,000			21,916,000			18,570,000			18,262,000
Net mortuary and cemetery sales		11,426,000			12,000,000			10,865,000			10,761,000			11,520,000
Realized gains on investments		1,918,000			1,418,000			1,425,000			2,464,000			1,615,000
Other than temporary impairments		(164,000	)		(336,000	)		(1,208,000	)		(841,000	)		(674,000	)
Mortgage fee income		128,697,000			128,801,000			151,887,000			79,046,000			97,697,000
Other		3,747,000			2,606,000			1,159,000			1,110,000			1,582,000
Total revenues		226,937,000			215,315,000			234,260,000			159,567,000			168,511,000
Expenses
Policyholder benefits		47,850,000			48,130,000			45,681,000			46,204,000			37,947,000
Amortization of deferred policy acquisition costs		6,893,000			5,182,000			5,450,000			5,769,000			4,431,000
Selling, general and administrative expenses		154,866,000			147,406,000			156,310,000			102,513,000			122,217,000
Interest expense		2,994,000			2,854,000			3,744,000			1,961,000			2,779,000
Cost of goods and services of the mortuaries and cemeteries		1,853,000			1,919,000			1,724,000			1,883,000			2,226,000
Total benefits and expenses		214,456,000			205,491,000			212,909,000			158,330,000			169,600,000
Earnings (loss) before income taxes		12,481,000			9,824,000			21,351,000			1,237,000			(1,089,000	)
Income tax benefit (expense)		(4,726,000	)		(2,238,000	)		(4,639,000	)		62,000			658,000
Net earnings (loss)	$	7,755,000		$	7,586,000		$	16,712,000		$	1,299,000		$	(431,000	)
Net earnings (loss) per common share (3)	$	0.62		$	0.61		$	1.46		$	0.12		$	(0.04	)
Weighted average outstanding common shares (3)		12,519,000			12,366,000			11,428,000			11,187,000			10,981,000
Net earnings (loss) per common share-assuming dilution (3)	$	0.60		$	0.58		$	1.39		$	0.11		$	(0.04	)
Weighted average outstanding common shares-assuming dilution (3)		12,928,000			12,982,000			12,027,000			11,306,000			10,981,000

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Balance Sheet Data:

	December 31
	2014		2013		2012(2)		2011(1)		2010
Assets
Investments and restricted assets	$	446,249,000	$	391,523,000	$	356,446,000	$	337,625,000	$	281,262,000
Cash		30,855,000		38,203,000		33,494,000		15,583,000		37,244,000
Receivables		82,079,000		88,832,000		111,157,000		87,252,000		71,035,000
Other assets		111,887,000		100,199,000		96,120,000		82,591,000		77,471,000
Total assets	$	671,070,000	$	618,757,000	$	597,217,000	$	523,051,000	$	467,012,000
Liabilities
Policyholder benefits	$	481,689,000	$	457,304,000	$	443,388,000	$	388,538,000	$	351,563,000
Bank & other loans payable		29,020,000		18,289,000		11,910,000		25,019,000		7,066,000
Cemetery & mortuary liabilities		13,242,000		13,176,000		13,412,000		13,140,000		13,192,000
Cemetery perpetual care obligation		3,407,000		3,266,000		3,153,000		2,983,000		2,854,000
Other liabilities		46,621,000		38,971,000		45,542,000		32,140,000		32,408,000
Total liabilities		573,979,000		531,006,000		517,405,000		461,820,000		407,083,000
Stockholders’ equity		97,091,000		87,751,000		79,812,000		61,231,000		59,929,000
Total liabilities and stockholders’ equity	$	671,070,000	$	618,757,000	$	597,217,000	$	523,051,000	$	467,012,000

(1)     Includes the assumption reinsurance of North America Life Insurance Company.

(2)     Includes the coinsurance with Mothe Life Insurance Company and DLE Life Insurance Company.

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

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

Overview

The Company’s operations over the last several years generally reflect three trends or events which the Company expects to continue: (i) increased attention to “niche” insurance products, such as the Company’s funeral plan policies and traditional whole life products; (ii) emphasis on cemetery and mortuary business; and (iii) capitalizing on relatively low interest rates by originating mortgage loans.

Insurance Operations

The following table shows the financial results for the Company’s insurance operations for the years ended December 31, 2014, 2013 and 2012.  See Note 14 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2014		2013		2014 vs 2013 % Increase (Decrease)			2012		2013 vs 2012 % Increase (Decrease)
Revenues from external customers
Insurance premiums	$	53,009	$	50,472		5	%	$	48,216		5	%
Net investment income		23,008		15,878		45	%		16,617		(4	%)
Revenues from loan originations		4,029		851		373	%		1,334		(36	%)
Other		1,727		1,604		8	%		690		132	%
Total	$	81,773	$	68,805		19	%	$	66,857		3	%
Intersegment revenue	$	6,128	$	7,220		(15	%)	$	7,571		(5	%)
Earnings before income taxes	$	8,472	$	2,868		195	%	$	4,591		(38	%)

Intersegment revenues for the Company’s insurance operations are primarily interest income from the warehouse line provided to SecurityNational Mortgage Company. Profitability in 2014 has increased due to increases in net investment income, increases in insurance premiums and increases in loan origination revenue.

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Cemetery and Mortuary Operations

The following table shows the condensed financial results for the Company’s cemetery and mortuary operations for the years ended December 31, 2014, 2013 and 2012.  See Note 14 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2014		2013		2014 vs 2013 % Increase (Decrease)			2012		2013 vs 2012 % Increase (Decrease)
Revenues from external customers
Mortuary revenues	$	4,801	$	5,081		(6	%)	$	4,567		11	%
Cemetery revenues		6,625		6,919		(4	%)		6,297		10	%
Realized gains on investments and other assets		586		16		3563	%		9		78	%
Other		445		364		22	%		470		(23	%)
Total	$	12,457	$	12,380		1	%	$	11,343		9	%
Earnings before income taxes	$	663	$	223		197	%	$	219		2	%

The majority of the realized gain in the Company’s cemetery and mortuary operations in 2014 was due to the sale of certain real estate of Paradise Sunset Chapel. Included in other revenue was rental income from residential and commercial properties purchased from Security National Life. Memorial Estates used financing provided by Security National Life to purchase these properties. The rental income was offset by property insurance, taxes, maintenance expenses and interest payments made to Security National Life. Memorial Estates recorded depreciation on these properties of $945,000, $1,029,000 and $1,025,000 for the twelve months ended December 31, 2014, 2013 and 2012, respectively.

Mortgage Operations

Approximately 58% of the Company’s revenues for the fiscal year 2014 were through its wholly owned subsidiaries, SecurityNational Mortgage Company and Green Street Mortgage Services, Inc. Both mortgage subsidiaries are mortgage lenders incorporated under the laws of the State of Utah, and are approved and regulated by the Federal Housing Administration (FHA), a department of the U.S. Department of Housing and Urban Development (HUD), to originate mortgage loans that qualify for government insurance in the event of default by the borrower. SecurityNational Mortgage and Green Street Mortgage obtain loans from their retail offices and independent brokers and pay a commission to brokers for loans that are funded by them. Mortgage loans originated by the Company’s mortgage subsidiaries are funded from internal cash flows, including loan purchase agreements from Security National Life Insurance Company, its wholly owned subsidiary, and unaffiliated financial institutions.

SecurityNational Mortgage and Green Street Mortgage receive fees from the borrowers and secondary fees from third party investors that purchase their loans. Loans originated by SecurityNational Mortgage and Green Street Mortgage are generally sold with mortgage servicing rights released to third party investors. Since the second quarter of 2012, however, SecurityNational Mortgage has sold, but retained mortgage servicing rights on approximately 30% of its origination volume. These loans are serviced by an approved third party servicer. For the twelve months ended December 31, 2014, 2013 and 2012, SecurityNational Mortgage originated and sold 10,794 loans ($2,037,337,000 total volume), 11,484 loans ($2,147,040,000 total volume), and 13,392 loans ($2,451,843,000 total volume), respectively. For the twelve months ended December 31, 2014 and 2013, Green Street Mortgage originated and sold 33 loans ($7,298,000 total volume), and seven loans ($1,731,000 total volume), respectively. Green Street Mortgage did not originate and sell any mortgage loans prior to January 1, 2013.

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The following table shows the condensed financial results for the Company’s mortgage operations for the years ended 2014, 2013 and 2012.  See Note 14 of the Notes to Consolidated Financial Statements.

	Years ended December 31 (in thousands of dollars)
	2014		2013		2014 vs 2013 % Increase (Decrease)			2012		2013 vs 2012 % Increase (Decrease)
Revenues from external customers:
Revenues from loan originations	$	102,806	$	104,111		(1	%)	$	120,749		(14	%)
Secondary gains from investors		21,862		23,839		(8	%)		29,804		(20	%)
Total	$	124,668	$	127,950		(3	%)	$	150,553		(15	%)
Earnings before income taxes	$	3,346	$	6,732		(50	%)	$	16,542		(59	%)

The decrease in earnings for the Company’s mortgage operations for the twelve months ended December 31, 2014 as compared to December 31, 2013 was due to lower secondary gains on mortgage loans sold to investors and the decline in refinance activity as a result of the increase in mortgage loan interest rates in 2014.

Mortgage Loan Loss Settlements

The mortgage industry has seen potential loan losses decrease. Future loan losses are extremely difficult to estimate, especially in the current market.  However, management believes that the Company’s reserve methodology and its current practice of property preservation allow it to estimate its losses on loans sold. The amounts accrued for loan losses in years ended December 31, 2014 and 2013 were $3,053,000 and $1,846,000, respectively. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2014 and 2013, the balances were $1,718,000 and $5,507,000, respectively.

Final Settlement with Wells Fargo

On April 7, 2011, SecurityNational Mortgage entered into the Settlement Agreement and Release (the "Settlement Agreement") with Wells Fargo Funding, Inc. On December 4, 2014, SecurityNational Mortgage and Wells Fargo Bank (which was assigned Wells Fargo Funding's interest in the Settlement Agreement) entered into a Second Addendum (the "Addendum") to the Settlement Agreement, in which SecurityNational Mortgage agreed to make a final payment to Wells Fargo Bank by December 30, 2014, to satisfy and terminate its remaining payment obligations under the Settlement Agreement. On December 29, 2014, SecurityNational Mortgage made the final payment to Wells Fargo Bank pursuant to the terms of the Addendum from its loan loss reserve, thereby satisfying in full its payment obligations under the Settlement Agreement.

Settlement with Bank of America, N.A. and Countrywide Home Loans, Inc.

On December 23, 2014, SecurityNational Mortgage entered into a Settlement Agreement (the “Settlement Agreement”) with Countrywide Home Loans, Inc. (“Countrywide Home Loans”), Bank of America, N.A. (“Bank of America”), successor-in-interest by the April 27, 2009 de jure merger to Countrywide Bank, FSB.  Under the terms of the Settlement Agreement, SecurityNational Mortgage is required to pay a settlement amount to Bank of America and Countrywide Home Loans, jointly as settlement purchasers.  On December 23, 2014, SecurityNational Mortgage made the full and final settlement payment from its mortgage loan loss reserve to Bank of America and Countrywide Home Loans by wire transfer.

The payment of the settlement amount is in full and final settlement of the claims and disputes between Bank of America and Countrywide Home Loans, and SecurityNational Mortgage under certain loan purchase agreements.  Bank of America, Countrywide Home Loans and SecurityNational Mortgage are parties to the Loan Purchase Agreement, originally entered into between Countrywide Funding Corporation and SecurityNational Mortgage, dated September 27, 1994; and Countrywide Home Loans and SecurityNational Mortgage are parties to the Home Equity Loan Purchase Agreement, dated January 15, 1997, including any amendments or modifications to such agreements (collectively, the “Loan Purchase Agreements”).

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Under the terms of the Settlement Agreement, SecurityNational Mortgage, Bank of America and Countrywide Home Loans agreed to full, complete and general mutual releases with respect to the alleged claims and disputes.  In particular, Bank of America and Countrywide Home Loans, as settlement purchasers, and SecurityNational Mortgage Company, as settlement seller, and their respective parent and subsidiary entities, predecessors, successors and affiliates agree to fully, finally and completely release and forever discharge each other and their respective parent and subsidiary entities, predecessors, successors, affiliates, assigns and their respective current and past directors, officers, employees, representatives and agents from any and all claims and disputes under the Loan Purchase Agreements.  The settlement agreement is subject to an exception for pervasive or system-wide fraud.

Mortgage Loan Loss Demands

Third Party Investors

There have been assertions in third party investor correspondence that SecurityNational Mortgage sold mortgage loans that allegedly contained borrower misrepresentations or experienced early payment defaults, or that were otherwise allegedly defective or not in compliance with agreements between SecurityNational Mortgage and the third party investors consisting principally of financial institutions.  As a result of these claims, third party investors have made demands that SecurityNational Mortgage repurchase certain alleged defective mortgage loans that were sold to such investors or indemnify them against any losses related to such loans.

The total amount of potential claims by third party investors is difficult to determine.  The Company has reserved and accrued $1,702,000 as of December 31, 2014 to settle all such investor related claims.  The Company believes that the reserve for mortgage loan loss, which includes provisions for probable losses and indemnification on mortgage loans sold to investors, is reasonable based on available information.  Moreover, the Company has successfully negotiated acceptable settlement terms with other third party investors that asserted claims for mortgage loan losses against SecurityNational Mortgage.

SecurityNational Mortgage disagrees with the repurchase demands and notices of potential claims from third party investors. Furthermore, SecurityNational Mortgage believes there is potential to resolve the alleged claims by the third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.

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JP Morgan Chase Indemnification Demand

The Company and its wholly owned subsidiary, SecurityNational Mortgage, received a notice of claim for indemnification dated December 21, 2011, from JP Morgan Chase & Co. (“JP Morgan Chase”) on behalf of EMC Mortgage, LLC (“EMC Mortgage”), relating to 21 mortgage loans that EMC Mortgage allegedly purchased as a third party investor from SecurityNational Mortgage.  The notice also referenced a guaranty agreement, dated February 23, 2006, by the Company for the benefit of EMC Mortgage.  The indemnification notice additionally stated that EMC Mortgage had been named in a lawsuit by the Bear Stearns Mortgage Funding Trust 2007-AR2 (the “Trust”), which was filed on September 13, 2011 in the Delaware Court of Chancery.

The lawsuit the Trust brought against EMC Mortgage contends that more than 800 residential mortgage loans that EMC Mortgage sold to the Trust (including the 21 loans allegedly originated by SecurityNational Mortgage) contained breaches of representations and warranties with respect to the mortgage loans, as well as defaults and foreclosures in many of such loans.  As a result of the alleged breaches of representations and warranties by EMC Mortgage, the complaint requests that EMC Mortgage be ordered to repurchase from the Trust any loans for which it breached its representations and warranties, in the amount of the mortgage loans’ outstanding principal balance and all accrued but unpaid interest.

The indemnification notice from JP Morgan Chase further alleged that the Company and SecurityNational Mortgage are required to indemnify EMC Mortgage for any of its losses arising from the lawsuit that the Trust brought against EMC based upon allegedly untrue statements of material fact related to information that was provided by SecurityNational Mortgage. To the extent the claims in the complaint relate to the 21 mortgage loans that SecurityNational Mortgage allegedly sold to EMC Mortgage, the Company believes it has significant defenses to such claims. The Company intends to vigorously defend itself and SecurityNational Mortgage in the event that JP Morgan Chase were to bring any legal action to require the Company or SecurityNational Mortgage to indemnify it for any loss, liability or expense in connection with the lawsuit that the Trust brought against EMC Mortgage.

Mortgage Loan Loss Litigation

For a description of the litigation involving SecurityNational Mortgage and Lehman Brothers and Aurora Loan Services, reference is to Part I, Item 3. Legal Proceedings.

Significant Accounting Policies

The following is a brief summary of our significant accounting policies and a review of our most critical accounting estimates. See Note 1 of the Notes to Consolidated Financial Statements.

Insurance Operations

In accordance with generally accepted accounting principles in the United States of America (GAAP), premiums and other considerations received for interest sensitive products are reflected as increases in liabilities for policyholder account balances and not as revenues. Revenues reported for these products consist of policy charges for the cost of insurance, administration charges, amortization of policy initiation fees and surrender charges assessed against policyholder account balances. Surrender benefits paid relating to these products are reflected as decreases in liabilities for policyholder account balances and not as expenses.

The Company receives investment income earned from the funds deposited into account balances, a portion of which is passed through to the policyholders in the form of interest credited. Interest credited to policyholder account balances and benefit claims in excess of policyholder account balances are reported as expenses in the consolidated financial statements.

Premiums and other considerations received for traditional life insurance products are recognized as revenues when due. Future policy benefits are recognized as expenses over the life of the policy by means of the provision for future policy benefits.

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

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

Cemetery and Mortuary Operations

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

Pre-need sales of cemetery interment rights (cemetery burial property), including revenue and costs associated with the sales of pre-need cemetery interment rights, are recognized in accordance with the retail land sales provisions of generally accepted accounting principles in the United States (GAAP). Under GAAP, recognition of revenue and associated costs from constructed cemetery property must be deferred until a minimum percentage of the sales price has been collected. Revenues related to the pre-need sale of unconstructed cemetery property will be deferred until such property is constructed and meets the criteria of GAAP, described above.

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

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

Prearranged funeral and pre-need cemetery customer obtaining costs, including costs incurred related to obtaining new pre-need cemetery and prearranged funeral business are accounted for under the guidance of the provisions of GAAP related to Financial Services - Insurance. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral business, are deferred until the merchandise is delivered or services are performed.

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

Mortgage Operations

Mortgage fee income consists of origination fees, processing fees and certain other income related to the origination and sale of mortgage loans. For mortgage loans sold to third party investors, mortgage fee income and related expenses are recognized pursuant to generally accepted accounting principles at the time the sales of the mortgage loans comply with the sales criteria for the transfer of financial assets. The sales criteria is as follows: (i) the transferred assets have been isolated from the Company and its creditors, (ii) the transferee has the right to pledge or exchange the mortgage, and (iii) the Company does not maintain effective control over the transferred mortgage.

The Company must determine that all three sales criteria are met at the time a mortgage loan is funded. All rights and title to the mortgage loans are assigned to unrelated financial institution investors, including investor commitments for the loans made prior to warehouse banks purchasing the loans under the purchase commitments.

The Company sells all mortgage loans to third party investors without recourse. It may be required, however, to repurchase a loan or pay a fee instead of repurchase under certain events, which include the following:

· Failure to deliver original documents specified by the investor,

· The existence of misrepresentation or fraud in the origination of the loan,

· The loan becomes delinquent due to nonpayment during the first several months after it is sold,

· Early pay-off of a loan, as defined by the agreements,

· Excessive time to settle a loan,

· Investor declines purchase, and

· Discontinued product and expired commitment.

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company. Generally, a ten day extension will cost .125% (12.5 basis points) of the loan amount. The Company’s historical data shows that 99% of all loans originated are generally settled by the investors as agreed within 16 days after delivery. There are situations, however, when the Company determines that it is unable to enforce the settlement of loans rejected by the third-party investors and that it is in its best interest to repurchase those loans from the warehouse banks.

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It is the Company’s policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month time period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

· Research reasons for rejection,

· Provide additional documents,

· Request investor exceptions,

· Appeal rejection decision to purchase committee, and

· Commit to secondary investors.

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six month time period, the loans are repurchased and transferred to the long term investment portfolio at the lower of cost or fair value and the previously recorded sales revenue is reversed. Any loan that later becomes delinquent is evaluated by the Company at that time and any impairment is adjusted accordingly.

Determining lower of cost or market. Cost is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Market value, while often difficult to determine, is based on the following guidelines:

· For loans that have an active market, the Company uses the market price on the repurchase date.

· For loans where there is no market but there is a similar product, the Company uses the market value for the similar product on the repurchase date.

· For loans where no active market exists on the repurchase date, the Company determines that the unpaid principal balance best approximates the market value on the repurchase date, after considering the fair value of the underlying real estate collateral and estimated future cash flows.

The appraised value of the real estate underlying the original mortgage loan adds significance to the Company’s determination of fair value because, if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan. In determining the market value on the date of repurchase, the Company considers the total value of all of the loans because any sale of loans would be made as a pool.

Loans that are foreclosed on are reclassified as other real estate held for investment. The Company carries the foreclosed properties in Security National Life, Memorial Estates, and SecurityNational Mortgage, its life, cemeteries and mortuaries, and mortgage subsidiary, and rents the properties until it is deemed economically desirable to sell them.

Mortgage fee income is generated through the origination and refinancing of mortgage loans and is realized in accordance with GAAP related to sales of financial assets.

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

Use of Significant Accounting Estimates

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

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Fixed Maturities and Equity Securities Available for Sale

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

When the value of a security declines and the decline is determined to be other than temporary, the carrying value of the investment is reduced to its fair value and a realized loss is recorded to the extent of the decline.

Deferred Acquisition Costs

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

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

Value of Business Acquired

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

Allowance for Doubtful Accounts

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

Future Policy Benefits

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

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

Unearned Revenue

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

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

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

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

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Mortgage Servicing Rights

Mortgage Service Rights (MSR) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company is obligated to retain and provide loan servicing functions on the loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of REO and property dispositions. The Company initially accounts for MSRs at fair value and subsequently accounts for them using the amortization method. MSR amortization is determined by amortizing the balance straight-line over an estimated nine year life. The Company periodically assesses MSRs accounted for using the amortization method for impairment.

Mortgage Allowance for Loan Loss and Loan Loss Reserve

The Company provides allowances for losses on its mortgage loans through an allowance for loan losses (a contra-asset account) and through the mortgage loan loss reserve (a liability account). The allowance for loan losses is an allowance for losses on the Company’s mortgage loans held for investment. The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral.

When a mortgage loan is past due more than 90 days, the Company, where appropriate, sets up an allowance to approximate the excess of the carrying value of the mortgage loan over the estimated fair value of the underlying real estate collateral. When foreclosure is commenced on a delinquent loan, all expenses for foreclosure are expensed as incurred. Once foreclosed the carrying value should approximate its fair value and the amount will be classified as real estate owned. The Company is currently able to rent properties at a 2% to 8% gross return.

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on mortgage loans sold to third party investors. The Company may be required to reimburse third party investors for costs associated with early payoff of loans within the first six months of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale relating to any guarantee or recourse provisions. The Company accrues a monthly allowance for indemnification losses to investors based on total production. This estimate is based on the Company’s historical experience. The amount accrued for and the charge to expense is included in selling, general and administrative expenses. The estimated liability for indemnification losses is included in other liabilities and accrued expenses. The Company believes the allowance for loan losses and the loan loss reserve represent probable loan losses incurred as of the balance sheet date.

Deferred Compensation

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

Depreciation

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

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Captive Insurance

This Company belongs to a captive insurance group for certain casualty, workers compensation and general liability insurance. Insurance reserves are maintained relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive insurance management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided independent third-party actuaries. If actual claims or adverse development of loss reserves occurs and exceed these estimates, additional reserves may be required. The estimation process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date.

Results of Consolidated Operations

2014 Compared to 2013

Total revenues increased by $11,622,000, or 5.4%, to $226,937,000 for fiscal year 2014 from $215,315,000 for the fiscal year 2013. Contributing to this increase in total revenues was a $7,950,000 increase in net investment income, a $2,537,000 increase in insurance premiums and other considerations, a $1,141,000 increase in other revenues, a $500,000 increase in realized gains on investments and other assets, and an $172,000 decrease in other than temporary impairments. This increase in total revenues was partially offset by a $574,000 decrease in net cemetery and mortuary sales, and a $104,000 decrease in mortgage fee income.

Insurance premiums and other considerations increased by $2,537,000, or 5.0%, to $53,009,000 for 2014, from $50,472,000 for the comparable period in 2013. This increase was due to an increase in renewal premiums and an increase in first year premiums as a result of increased insurance sales in 2014.

Net investment income increased by $7,950,000, or 39.1%, to $28,304,000 for 2014, from $20,354,000 for the comparable period in 2013. This increase was primarily attributable to a $3,445,000 increase in income from short-term investments, a $2,883,000 increase in interest from mortgage loans, and a $1,776,000 increase in income from real estate. This increase was partially offset by a $61,000 increase in investment expenses, a $58,000 decrease in policy loans income, and a $37,000 decrease in fixed maturity securities income.

Net cemetery and mortuary sales decreased by $574,000, or 4.8%, to $11,426,000 for 2014, from $12,000,000 for the comparable period in 2013. This decrease was primarily due to a $294,000 decrease in cemetery pre-need and at-need sales, and a $280,000 decrease in mortuary at-need sales.

Realized gains on investments and other assets increased by $500,000, or 0.5%, to $1,918,000 in realized gains for 2014, from $1,418,000 in realized gains for the comparable period in 2013. This increase in realized gains and losses on investments and other assets was primarily due to a $482,000 increase in gains and losses on other assets, and a $262,000 increase in gains and losses on fixed maturity securities held to maturity. This increase was partially offset by a $244,000 decrease in gains and losses on marketable securities.

Other than temporary impairments on investments decreased by $172,000, or 51.2%, to $164,000 for 2014 from $336,000 for the comparable period in 2013. This decrease was due to a $116,000 decrease in impairments on real estate held for investment and mortgage loans, and a $56,000 decrease in impairments on marketable securities.

Mortgage fee income decreased by $104,000, or 0.1%, to $128,697,000 for 2014, from $128,801,000 for the comparable period in 2013. This decrease was primarily attributable to lower secondary gains from mortgage loans sold to investors and the decline in refinance activity as a result of the increase in mortgage loan rates in 2014.

Other revenues increased by $1,141,000, or 43.8%, to $3,747,000 for 2014 from $2,606,000 for the comparable period in 2013. This increase was due to an increase in mortgage servicing revenues.

Total benefits and expenses were $214,456,000, or 94.5% of total revenues, for 2014, as compared to $205,491,000, or 95.3% of total revenues, for the comparable period in 2013.

Death benefits, surrenders and other policy benefits, and future policy benefits decreased by an aggregate of $280,000, or 0.6%, to $47,850,000 for 2014, from $48,130,000 for the comparable period in 2013. This decrease was primarily the result of a $1,535,000 decrease in future policy benefits, which was partially offset by increases of $1,052,000 in death benefits, and $203,000 in surrender and other policy benefits.

Amortization of deferred policy and pre-need acquisition costs and value of business acquired increased by $1,711,000, or 33.0%, to $6,893,000 for 2014, from $5,182,000 for the comparable period in 2013. This increase was primarily due to increased amortization of the value of business acquired for new acquisitions and increased amortization for deferred policy costs due to an increased amount of insurance business terminating.

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Selling, general and administrative expenses increased by $7,458,000, or 5.1%, to $154,865,000 for 2014, from $147,407,000 for the comparable period in 2013. This increase was primarily due to a $6,564,000 increase in personnel expenses, a $4,472,000 increase in other expenses, a $1,302,000 increase in the provision for loan losses, a $678,000 increase in rent and rent related expenses, a $556,000 increase in depreciation expense on property and equipment, and a $242,000 increase in costs related to funding mortgage loans. This increase was partially offset by a $6,103,000 decrease in commission expenses and a $253,000 decrease in advertising expenses.

Interest expense increased by $140,000, or 4.9%, to $2,994,000 for 2014, from $2,854,000 for the comparable period in 2013. This increase was primarily due to a new bank loan entered into by Security National Life for real estate offset by a reduction in outstanding balances on warehouse lines of credit used to fund mortgage loans.

Cost of goods and services sold of the cemeteries and mortuaries decreased by $66,000, or 3.4%, to $1,853,000 for 2014, from $1,919,000 for the comparable period in 2013. This decrease was primarily due to a decrease in mortuary at-need sales and a decrease in cemetery pre-need and at-need sales.

Other comprehensive income for the years ended December 31, 2014 and December 31, 2013 amounted to a gain of $220,000 and a loss of $716,000, respectively. This increase of $936,000 in 2014 was primarily the result of a gain of $1,307,000 in derivatives related to mortgage loans offset by a $371,000 unrealized loss in marketable securities.

2013 Compared to 2012

Total revenues decreased by $18,945,000, or 8.1%, to $215,315,000 for fiscal year 2013 from $234,260,000 for the fiscal year 2012. Contributing to this decrease in total revenues was a $23,087,000 decrease in mortgage fee income and a $1,562,000 decrease in net investment income. This decrease in total revenues was partially offset by a $2,256,000 increase in insurance premiums and other considerations, a $1,447,000 increase in other revenues, a $1,136,000 increase in net cemetery and mortuary sales, and an $871,000 decrease in other than temporary impairments.

Insurance premiums and other considerations increased by $2,256,000, or 4.7%, to $50,472,000 for 2013, from $48,216,000 for the comparable period in 2012. This increase was due to an increase in first year premiums as a result of increased insurance sales in 2013.

Net investment income decreased by $1,562,000, or 7.1%, to $20,354,000 for 2013, from $21,916,000 for the comparable period in 2012. This decrease was primarily attributable to a $3,103,000 increase in investment expenses, an $877,000 decrease in interest from mortgage loans, a $53,000 decrease in equity securities income, and a $31,000 decrease in policy loans income. This decrease was partially offset by a $1,731,000 increase in income from real estate, a $535,000 increase in fixed maturity securities income, and a $236,000 increase in income from short-term investments.

Net cemetery and mortuary sales increased by $1,136,000, or 10.5%, to $12,000,000 for 2013, from $10,864,000 for the comparable period in 2012. This increase was primarily due to a $622,000 increase in cemetery pre-need and at-need sales, and a $514,000 increase in mortuary at-need sales.

Realized gains on investments and other assets decreased by $6,000, or 0.5%, to $1,418,000 in realized gains for 2013, from $1,424,000 in realized gains for the comparable period in 2012. This decrease in realized gains and losses on investments and other assets was primarily due to a $410,000 decrease in gains and losses on fixed maturity securities held to maturity. This decrease was partially offset by a $252,000 increase in gains and losses on other assets, and a $152,000 increase in gains and losses on marketable securities.

Other than temporary impairments on investments decreased by $871,000, or 72.2%, to $336,000 for 2013 from $1,207,000 for the comparable period in 2012. This decrease was due to a $679,000 decrease in impairments on real estate held for investment and mortgage loans, a $147,000 decrease in impairments on marketable securities, and a $45,000 decrease in impairments on fixed maturity securities held to maturity.

Mortgage fee income decreased by $23,087,000, or 15.2%, to $128,801,000 for 2013, from $151,888,000 for the comparable period in 2012. This decrease was primarily attributable to lower secondary gains from mortgage loans sold to investors and the decline in refinance activity as a result of the increase in mortgage loan rates in 2013.

Other revenues increased by $1,447,000, or 124.9%, to $2,606,000 for 2013 from $1,159,000 for the comparable period in 2012. This increase was due to an increase in mortgage servicing revenues.

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Total benefits and expenses were $205,491,000, or 95.3% of total revenues, for 2013, as compared to $212,909,000, or 90.9% of total revenues, for the comparable period in 2012.

Death benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $2,449,000, or 5.4%, to $48,130,000 for 2013, from $45,681,000 for the comparable period in 2012. This increase was primarily the result of a $3,771,000 increase in death benefits, a $518,000 increase in surrender and other policy benefits, which were partially offset by a $1,840,000 decrease in future policy benefits.

Amortization of deferred policy and pre-need acquisition costs and value of business acquired decreased by $267,000, or 4.9%, to $5,182,000 for 2013, from $5,449,000 for the comparable period in 2012. This decrease was primarily due to improved persistency in the traditional life and universal life lines of business.

Selling, general and administrative expenses decreased by $8,903,000, or 5.7%, to $147,407,000 for 2013, from $156,310,000 for the comparable period in 2012. This decrease was primarily the result of a decrease in mortgage loan originations by SecurityNational Mortgage, which was attributed to the decline in refinance activity as a result of the increase in mortgage loan rates in 2013. Commission expenses decreased by $17,861,000, from $83,840,000 in 2012 to $65,979,000 in 2013 as a result of the decline in refinance activity in 2013. Costs related to funding mortgage loans decreased by $296,000, from $6,931,000 in 2012 to $6,635,000 in 2013 as a result of the decline in refinance activity in 2013. Provision for loan losses decreased by $2,488,000, from $4,239,000 in 2012 to $1,751,000 in 2013.

The decreases in selling, general and administrative expenses were partially offset by an increase in salaries of $5,921,000, from $27,099,000 in 2012 to $33,020,000 in 2013, primarily due to an increase in the number of employees. Other expenses increased by $5,821,000, from $34,200,000 in 2012 to $40,021,000 in 2013 primarily due to an increase in mortgage servicing fees.

Interest expense decreased by $890,000, or 23.8%, to $2,854,000 for 2013, from $3,744,000 for the comparable period in 2012. This decrease was primarily due to reduction in outstanding balances on warehouse lines of credit used to fund mortgage loans.

Cost of goods and services sold of the cemeteries and mortuaries increased by $195,000, or 11.3%, to $1,919,000 for 2013, from $1,724,000 for the comparable period in 2012. This increase was primarily due to an increase in mortuary at-need sales and an increase in cemetery pre-need and at-need sales.

Other comprehensive income for the years ended December 31, 2013 and December 31, 2012 amounted to a loss of $716,000 and a gain of $1,280,000, respectively. This decrease of $1,996,000 in 2013 was primarily the result of a loss of $1,873,000 in derivatives related to mortgage loans and a $123,000 unrealized loss in marketable securities.

Risks

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

Legal and Regulatory Risks. The risk that changes in the legal or regulatory environment in which the Company operates will create additional expenses and risks not anticipated by the Company in developing and pricing its products. 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 and mortuary business. The Company mitigates these risks 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 that identify and minimize the adverse impact of such risks.

Mortgage Industry Risks. Developments in the mortgage industry and credit markets can adversely affect the Company’s ability to sell its mortgage loans to investors, which can impact the Company’s financial results by requiring it to assume the risk of holding and servicing any unsold loans.

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on mortgage loans sold to third party investors. The Company’s mortgage subsidiaries may be required to reimburse third party investors for costs associated with early payoff of loans within the first six months of such loans and to repurchase loans where there is a default in any of the first four monthly payments to the investors or, in lieu of repurchase, to pay a negotiated fee to the investors. The Company’s estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

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Upon completion of a transfer that satisfies the conditions to be accounted for as a sale, the Company initially measures at fair value liabilities incurred in a sale relating to any guarantee or recourse provisions. The Company accrues a monthly allowance for indemnification losses to investors based on its historical experience. The amounts accrued for loan losses in years ended December 31, 2014, 2013 and 2012 were $3,053,000, $1,846,000 and $4,053,000, respectively, and the charge to expense has been included in selling, general and administrative expenses. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2014 and 2013, the balances were $1,718,000 and $5,507,000, respectively. The Company believes the allowance for loan losses and the loan loss reserve represent probable loan losses incurred as of December 31, 2014. There is a risk, however, that future loan losses may exceed the loan loss reserves and allowances.

As of December 31, 2014, the Company’s long term mortgage loan portfolio consisted of $7,500,000 in mortgage loans with delinquencies more than 90 days. Of this amount, $1,971,000 of the loans were in foreclosure proceedings. The Company has not received or recognized any interest income on the $7,500,000 in mortgage loans with delinquencies more than 90 days. During the twelve months ended December 31, 2014 and 2013, the Company increased its allowance for mortgage losses by $389,000 and $221,000, respectively, which was charged to bad debt expense and included in selling, general and administrative expenses for the period. The allowances for mortgage loan losses as of December 31, 2014 and 2013 were $2,003,000 and $1,652,000, respectively.

There have been assertions in third party investor correspondence that SecurityNational Mortgage sold mortgage loans that allegedly contained borrower misrepresentations or experienced early payment defaults, or that were otherwise allegedly defective or not in compliance with agreements between SecurityNational Mortgage and the third party investors consisting principally of financial institutions.  As a result of these claims, third party investors have made demands that SecurityNational Mortgage repurchase certain alleged defective mortgage loans that were sold to such investors or indemnify them against any losses related to such loans.

The total amount of potential claims by third party investors is difficult to determine.  The Company has reserved and accrued $1,702,000 as of December 31, 2014 to settle all such investor related claims.  The Company believes that the reserve for mortgage loan loss, which includes provisions for probable losses and indemnification on mortgage loans sold to investors, is reasonable based on available information.  Moreover, the Company has successfully negotiated acceptable settlement terms with other third party investors that asserted claims for mortgage loan losses against SecurityNational Mortgage.

SecurityNational Mortgage disagrees with the repurchase demands and notices of potential claims from third party investors. Furthermore, SecurityNational Mortgage believes there is potential to resolve the alleged claims by the third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.

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 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 loss on the sale.

Mortality and Morbidity Risks. The risk that the Company’s actuarial assumptions may differ from actual mortality and morbidity experiences 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 and liability duration matching, and sound actuarial practices.

Estimates.  The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

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

32

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 subsidiaries realize 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 current operating expenses.

During the twelve months ended December 31, 2014 and 2013, the Company's operations provided cash of $31,016,000 and $36,652,000, respectively. This was due primarily to a $7,362,000 increase in 2014 and a $15,668,000 increase in 2013 in the balance of mortgage loans sold to investors.

The Company’s liability for future life, annuity and other benefits is expected to be paid out over the long-term due to the Company’s market niche of selling funeral plans. Funeral plans are small face value life insurance that will pay the costs and expenses incurred at the time of a person’s death. A person generally will keep these policies in force and will not surrender them prior to a person’s death. Because of the long-term nature of these liabilities, the Company is able to hold to maturity its bonds, real estate and mortgage loans thus reducing the risk of liquidating these long-term investments as a result of any sudden changes in market values.

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. 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 also to invest predominantly in fixed maturity securities, real estate, mortgage loans, and warehousing of mortgage loans on a short-term basis before selling the loans to investors in accordance with the requirements and laws governing the life insurance subsidiaries. Bonds owned by the insurance subsidiaries amounted to $134,406,000 as of December 31, 2014 compared to $142,854,000 as of December 31, 2013. This represents 30.9% and 37.1% of the total investments as of December 31, 2014, and 2013, respectively. Generally, all bonds owned by the life insurance subsidiaries are rated by the National Association of Insurance Commissioners. Under this rating system, there are six categories used for rating bonds. At December 31, 2014, 6.8% (or $9,192,000) and at December 31, 2013, 4.6% (or $6,621,000) of the Company’s total bond investments were invested in bonds in rating categories three through six, which are considered non-investment grade.

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. In accordance with Company policy, however, any such securities purchased in the future will be classified as held to maturity. Notwithstanding, business conditions 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.

See Note 2 of the Notes to Consolidated Financial Statements for the schedule of the maturity of fixed maturity securities and for the schedule of principal payments for mortgage loans on real estate and construction loans held for investment.

If market conditions were to cause interest rates to change, the market value of the Company’s fixed income portfolio, which includes bonds, preferred stock, and mortgage loans, 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	$	22,870	$	11,111	$	(13,270	)	$	(23,869	)
(in thousands)

33

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, 2014 and December 31, 2013, the life insurance subsidiaries exceeded the regulatory criteria.

The Company’s total capitalization of stockholders’ equity, and bank debt and notes payable were $126,111,000 as of December 31, 2014, as compared to $106,040,000 as of December 31, 2013. Stockholders’ equity as a percent of total capitalization was 77.0% and 82.8% as of December 31, 2014 and December 31, 2013, respectively. Bank debt and notes payable increased by $10,731,000 for the twelve months ended December 31, 2014 as compared to December 31, 2013, thus decreasing the stockholders equity percentage.

Lapse rates measure the amount of insurance terminated during a particular period. The Company’s lapse rate for life insurance was 7.0% in 2014 as compared to a rate of 5.7% for 2013.

At December 31, 2014, $37,528,000 of the Company’s consolidated stockholders’ equity represents the statutory stockholders’ equity of the Company’s life insurance subsidiaries. The life insurance subsidiaries cannot pay a dividend to its parent company without the approval of state insurance regulatory authorities.

Forward-Looking Statements

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

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

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

Off-Balance Sheet Agreements

At December 31, 2014, the Company was contingently liable under a standby letter of credit aggregating $699,671, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company's captive insurance program. The Company does not expect any material losses to result from the issuance of the standby letter of credit because claims are not expected to exceed premiums paid. Accordingly, the estimated fair value of these instruments is zero.

At December 31, 2014, the Company was contingently liable under a standby letter of credit aggregating $1,250,000, to be used as collateral to cover any contingency related to claims filed in states where the Company is licensed. The Company does not expect any material losses to result from the issuance of the standby letter of credit. Accordingly, the estimated fair value of these instruments is zero.

34

At December 31, 2014 the Company was contingently liable under two standby letters of credit aggregating $139,220, issued as security deposits to guarantee payment of final bills for electric and gas utility services for a commercial real estate property owned by the Company in Wichita, Kansas.

SecurityNational Mortgage has entered into loan purchase agreements to originate and sell mortgage loans to two unaffiliated warehouse banks.  On March 19, 2012, SecurityNational Mortgage and Wells Fargo Bank, N.A. (“Wells Fargo”) entered into a loan purchase agreement in which Wells Fargo agreed to provide a warehouse line of up to $55,000,000 to fund certain approved mortgage loans originated by SecurityNational Mortgage. On August 6, 2012, SecurityNational Mortgage and Wells Fargo agreed to an amendment to the March 19, 2012 loan purchase agreement to increase the amount of the warehouse line available to fund mortgage loans originated by SecurityNational Mortgage from $55,000,000 to $75,000,000.

On July 16, 2012, SecurityNational Mortgage and UBS Real Estate Securities Inc. (“UBS”) entered into a loan purchase agreement in which UBS agreed to provide a warehouse line of up to $30,000,000 to fund mortgage loans originated by SecurityNational Mortgage. On October 26, 2012, SecurityNational Mortgage and UBS agreed to an amendment to the July 16, 2012 loan purchase agreement to increase the amount of the warehouse line available to fund mortgage loans originated by SecurityNational Mortgage from $30,000,000 to $40,000,000.

Generally, when mortgage loans are sold to the warehouse banks, the Company is no longer obligated to pay the amounts outstanding on the mortgage loans, but is required to pay a fee in the form of interest on a portion of the mortgage loans between the date the loans are sold to warehouse banks and the settlement date with the third party investors. The terms of the loan purchase agreements are typically for one year, with interest accruing on a portion of the mortgage loans at annual rates ranging from 2.5% to 2.75% over the 30-day LIBOR rate.

As of December 31, 2014, there was $149,098,000 in mortgage loans in which settlements with third party investors were still pending.

The total of the Company unfunded residential construction loan commitments as of December 31, 2014 was $16,236,000.

The Company has entered into a Construction and Term Loan Agreement (“Agreement”) between Zions First National Bank, a national banking association, and Dry Creek Property Development, Inc., the Company’s wholly owned subsidiary. Under the terms of this Agreement the Company agrees to pay Zions First National Bank the principal sum of $27,500,000 plus interest. These funds are being used for the construction of a 282-unit multifamily development in Sandy City Utah. As of December 31, 2014, the Company has used $13,085,000 of these funds.

Contractual Obligations

The Company’s contractual obligations as of December 31, 2014 and the payments due by period are shown in the following table:

	Less than 1 year		1-3 years		4-5 years		over 5 years		Total
Non-cancelable operating leases	$	4,299,185	$	7,635,126	$	616,791	$	20,536	$	12,571,638
Notes and contracts payable		5,248,043		16,228,894		246,336		7,297,105		29,020,378
	$	9,547,228	$	23,864,020	$	863,127	$	7,317,641	$	41,592,016

Variable Interest Entities

In conjunction with the Company’s casualty insurance program, limited equity interests are held in a captive insurance entity. This program permits the Company to self-insure a portion of losses, to gain access to a wide array of safety-related services, to pool insurance risks and resources in order to obtain more competitive pricing for administration and reinsurance and to limit its risk of loss in any particular year. This entity meets the definition of a variable interest entity (VIE); however, under generally accepted accounting principles, “there is not a requirement to include this entity in the consolidated financial statements.” The maximum exposure to loss related to the Company’s involvement with this entity is limited to approximately $699,671, which is collateralized under a standby letter of credit issued on the insurance entity’s behalf. See Note 9, “Reinsurance, Commitments and Contingencies,” for additional discussion of commitments associated with the insurance program and Note 1, “Significant Accounting Policies”, for further information on a standby letter of credit. As of December 31, 2014, there are no other entities that met the definition of a variable interest entity.

35

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

The Company has no activities in derivative financial or commodity instruments other than those recorded and disclosed in the financial statements. See Note 18 of the consolidated financial statements included elsewhere in this Form 10-K. The Company’s exposure to market risks (i.e., interest rate risk, foreign currency exchange rate risk and equity price risk) through other financial instruments, including cash equivalents, accounts receivable and lines of credit, is not material.

Item 8.  Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page No.
Financial Statements:
	Report of Independent Registered Public Accounting Firm	37
	Consolidated Balance Sheets, December 31, 2014 and 2013	39
	Consolidated Statements of Earnings for the Years Ended December 31, 2014, 2013 and 2012	41
	Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012	42
	Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012	43
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012	44
	Notes to Consolidated Financial Statements	46

36

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and the Shareholders

Security National Financial Corporation

We have audited the accompanying consolidated balance sheets of Security National Financial Corporation and Subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the years then ended. Our audits also included the financial statement Schedule II, Schedule IV and Schedule V. The Company’s management is responsible for these consolidated financial statements and schedules. Our responsibility is to express an opinion on these consolidated financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 as of December 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Salt Lake City, Utah

March 31, 2015

www.eidebailly.com

5 Triad Center, Ste. 750  |  Salt Lake City, UT 84180-1128  |  T 801.532.2200  |  F 801.532.7944  |  EOE

37

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and the Shareholders

Security National Financial Corporation

We have audited the accompanying consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the year ended December 31, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 results of their operations and their cash flows for the year ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. Supplemental Schedule II, IV and V is presented for purpose of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ HANSEN, BARNETT & MAXWELL, P.C.

Salt Lake City, Utah

March 30, 2013

38

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31
Assets	2014		2013
Investments:
Fixed maturity securities, held to maturity, at amortized cost	$	135,018,347	$	143,466,494
Equity securities, available for sale, at estimated fair value		6,752,750		4,498,756
Mortgage loans on real estate and construction loans held for investment, net of allowances for loan losses of $2,003,055 and $1,652,090 for 2014 and 2013		120,050,072		102,781,878
Real estate held for investment, net of accumulated depreciation of $10,875,419 and $9,658,599 for 2014 and 2013		111,411,351		99,760,475
Policy and other loans, net of allowance for doubtful accounts of $693,413 and $269,175 for 2014 and 2013		34,125,428		19,724,006
Short-term investments		27,059,495		12,135,719
Accrued investment income		2,483,253		2,485,054
Total investments		436,900,696		384,852,382
Cash and cash equivalents		30,855,320		38,203,164
Mortgage loans sold to investors		67,534,400		77,179,652
Receivables, net		14,544,093		11,652,572
Restricted assets		9,347,797		6,670,980
Cemetery perpetual care trust investments		2,645,423		2,414,883
Receivable from reinsurers		12,036,263		12,033,877
Cemetery land and improvements		10,848,085		10,631,573
Deferred policy and pre-need contract acquisition costs		50,307,503		45,737,940
Mortgage servicing rights		7,834,747		4,844,101
Property and equipment, net		11,307,714		11,523,160
Value of business acquired		8,547,627		8,680,845
Goodwill		2,765,570		677,039
Other		5,594,324		3,655,286
Total Assets	$	671,069,562	$	618,757,454

See accompanying notes to consolidated financial statements.

39

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

	December 31
Liabilities and Stockholders' Equity	2014			2013
Liabilities
Future life, annuity, and other benefits	$	476,727,465		$	452,130,649
Unearned premium reserve		4,961,937			5,173,785
Bank and other loans payable		29,020,378			18,289,438
Deferred pre-need cemetery and mortuary contract revenues		13,242,143			13,176,476
Cemetery perpetual care obligation		3,406,718			3,266,131
Accounts payable		1,789,387			2,850,575
Other liabilities and accrued expenses		24,408,666			20,167,363
Income taxes		20,421,767			15,951,848
Total liabilities		573,978,461			531,006,265
Commitments and Contingencies		-			-
Stockholders’ Equity
Common Stock:
Class A: common stock - $2.00 par value; 20,000,000 shares authorized; issued 12,459,240 shares in 2014 and 11,807,287 shares in 2013		24,918,480			23,614,574
Class B: non-voting common stock - $1.00 par value; 5,000,000 shares authorized; none issued or outstanding		-			-
Class C: convertible common stock - $2.00 par value; 2,000,000 shares authorized; issued 1,394,069 shares in 2014 and 1,330,191 shares in 2013		2,788,138			2,660,382
Additional paid-in capital		25,931,119			23,215,875
Accumulated other comprehensive income, net of taxes		1,438,566			1,218,396
Retained earnings		44,101,252			39,666,587
Treasury stock, at cost - 986,264 Class A shares and -0- Class C shares in 2014; 1,141,021 Class A shares and -0- Class C shares in 2013		(2,086,454	)		(2,624,625	)
Total stockholders’ equity		97,091,101			87,751,189
Total Liabilities and Stockholders’ Equity	$	671,069,562		$	618,757,454

See accompanying notes to consolidated financial statements.

40

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

	Years Ended December 31
	2014			2013			2012
Revenues:
Insurance premiums and other considerations	$	53,008,679		$	50,471,658		$	48,216,327
Net investment income		28,303,740			20,354,002			21,915,577
Net mortuary and cemetery sales		11,426,308			12,000,375			10,864,497
Realized gains on investments and other assets		1,918,176			1,418,051			1,424,510
Other than temporary impairments		(164,240	)		(336,226	)		(1,207,632	)
Mortgage fee income		128,696,998			128,800,930			151,887,838
Other		3,747,013			2,606,230			1,159,052
Total revenues		226,936,674			215,315,020			234,260,169
Benefits and expenses:
Death benefits		27,100,278			26,048,325			22,277,037
Surrenders and other policy benefits		2,689,686			2,486,611			1,969,051
Increase in future policy benefits		18,060,151			19,594,890			21,435,191
Amortization of deferred policy and pre-need acquisition
costs and value of business acquired		6,892,978			5,181,837			5,449,429
Selling, general and administrative expenses:
Commissions		59,876,675			65,979,564			83,840,427
Personnel		49,360,406			42,795,925			35,469,486
Advertising		4,584,436			4,837,714			4,050,187
Rent and rent related		6,135,876			5,457,988			4,503,285
Depreciation on property and equipment		2,177,165			1,621,069			1,258,097
Provision for loan losses and loss reserve		3,053,403			1,751,472			4,239,418
Costs related to funding mortgage loans		6,877,069			6,635,290			6,931,045
Other		22,800,066			18,328,005			16,017,975
Interest expense		2,994,429			2,853,701			3,744,293
Cost of goods and services sold – mortuaries and cemeteries		1,853,103			1,918,902			1,723,955
Total benefits and expenses		214,455,721			205,491,293			212,908,876
Earnings before income taxes		12,480,953			9,823,727			21,351,293
Income tax expense		(4,726,305	)		(2,237,806	)		(4,638,775	)
Net earnings	$	7,754,648		$	7,585,921		$	16,712,518
Net earnings per Class A equivalent common share (1)	$	0.62		$	0.61		$	1.46
Net earnings per Class A equivalent common share - assuming dilution(1)	$	0.60		$	0.58		$	1.39
Weighted average Class A equivalent common shares outstanding (1)		12,518,743			12,366,029			11,427,568
Weighted average Class A equivalent common shares outstanding-assuming dilution (1)		12,928,009			12,981,576			12,026,849

(1) Earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends. The weighted-average shares outstanding includes the weighted-average Class A common shares and the weighted-average Class C common shares determined on an equivalent Class A common stock basis. Class C common shares have been adjusted retroactively for the effect of the 1-for-10 reverse stock split that was approved by the stockholders in 2014. Net earnings per common share represent net earnings per equivalent Class A common share. Net earnings per Class C common share is $5.82, $5.69 and $13.90 per share for 2014, 2013 and 2012, respectively, and $4.81, $5.54 and $13.67 per share-assuming dilution for 2014, 2013 and 2012, respectively.

See accompanying notes to consolidated financial statements.

41

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Years Ended December 31
	2014			2013			2012
Net earnings	$	7,754,648		$	7,585,921		$	16,712,518
Other comprehensive income:
Changes in:
Net unrealized gains (losses) on derivative instruments		286,018			(1,020,754	)		852,168
Net unrealized gains (losses) on available for sale securities		(65,848	)		304,791			427,748
Other comprehensive gain (loss)		220,170			(715,963	)		1,279,916
Comprehensive income	$	7,974,818		$	6,869,958		$	17,992,434

See accompanying notes to consolidated financial statements.

42

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2014, 2013 and 2012

	Class A Common Stock		Class C Common Stock			Additional  Paid-in Capital			Accumulated Other  Comprehensive  Income (Loss)			Retained  Earnings			Treasury Stock			Total
Balance at January 1, 2012	$	19,277,596	$	2,027,195		$	19,487,565		$	654,443		$	22,546,623		$	(2,762,835	)	$	61,230,587
				.
Net earnings		-		-			-			-			16,712,518			-			16,712,518
Other comprehensive income		-		-			-			1,279,916			-			-			1,279,916
Stock based compensation		-		-			251,031			-			-			-			251,031
Exercise of stock options		1,371,506		63,782			(1,416,982	)		-			-			-			18,306
Sale of treasury stock		-		-			(62,650	)		-			-			382,401			319,751
Stock dividends		1,037,404		104,488			3,003,177			-			(4,145,069	)		-			-
Conversion Class C to Class A		646		(645	)		(1	)		-			-			-			-
Balance at December 31, 2012		21,687,152		2,194,820			21,262,140			1,934,359			35,114,072			(2,380,434	)		79,812,109
Net earnings		-		-			-			-			7,585,921			-			7,585,921
Other comprehensive loss		-		-			-			(715,963	)		-			-			(715,963	)
Stock based compensation		-		-			88,369			-			-			-			88,369
Exercise of stock options		719,572		422,422			(345,845	)		-			-			(543,334	)		252,815
Sale of treasury stock		-		-			428,794			-			-			299,143			727,937
Stock dividends		1,124,304		126,685			1,782,418			-			(3,033,406	)		-			1
Conversion Class C to Class A		83,546		(83,545	)		(1	)		-			-			-			-
Balance at December 31, 2013		23,614,574		2,660,382			23,215,875			1,218,396			39,666,587			(2,624,625	)		87,751,189
Net earnings		-		-			-			-			7,754,648			-			7,754,648
Other comprehensive income		-		-			-			220,170			-			-			220,170
Stock based compensation		-		-			391,220			-			-						391,220
Reverse stock split true up		-		30			-			-			(30	)		-			-
Exercise of stock options		108,824		-			(34,800	)		-			-			-			74,024
Sale of treasury stock		-		-			361,679			-			-			538,171			899,850
Stock dividends		1,190,040		132,767			1,997,147			-			(3,319,954	)		-			-
Conversion Class C to Class A		5,042		(5,041	)		(2	)		-			1			-			-
Balance at December 31, 2014	$	24,918,480	$	2,788,138		$	25,931,119		$	1,438,566		$	44,101,252		$	(2,086,454	)	$	97,091,101

See accompanying notes to consolidated financial statements.

43

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31
	2014			2013			2012
Cash flows from operating activities:
Net earnings	$	7,754,648		$	7,585,921		$	16,712,518
Adjustments to reconcile net earnings to net cash provided by operating activities:
Realized gains on investments and other assets		(1,918,176	)		(1,418,051	)		(1,424,510	)
Other than temporary impairments		164,240			336,226			1,207,632
Depreciation and amortization		4,389,472			4,160,760			2,877,743
Provision for losses on real estate accounts and loans receivable		743,386			(584,873	)		(963,169	)
Amortization of premiums and discounts		238,687			103,032			(762,301	)
Provision for deferred and other income taxes		3,072,642			416,269			953,394
Policy and pre-need acquisition costs deferred		(10,159,895	)		(9,666,040	)		(7,885,882	)
Policy and pre-need acquisition costs amortized		5,590,332			3,841,565			4,234,271
Value of business acquired amortized		1,302,646			1,340,272			1,215,158
Servicing asset at amortized cost, additions		(3,741,381	)		(2,494,254	)		(2,797,470	)
Amortization of mortgage servicing rights		750,735			447,623			-
Stock based compensation expense		391,220			88,369			251,031
Benefit plans funded with treasury stock		899,850			727,937			319,751
Change in assets and liabilities:
Land and improvements held for sale		(216,512	)		(36,345	)		26,054
Future life and other benefits		14,084,894			19,182,046			20,508,725
Receivables for mortgage loans sold		7,362,353			15,668,188			(18,807,956	)
Other operating assets and liabilities		306,668			(3,046,791	)		6,751,217
Net cash provided by operating activities		31,015,809			36,651,854			22,416,206
Cash flows from investing activities:
Securities held to maturity:
Purchase - fixed maturity securities		(3,449,187	)		(22,849,622	)		(11,365,269	)
Calls and maturities - fixed maturity securities		11,850,864			8,518,848			9,601,320
Securities available for sale:
Purchase - equity securities		(5,996,993	)		(2,807,367	)		(1,685,983	)
Sales - equity securities		3,851,664			4,528,862			3,028,509
Purchases of short-term investments		(18,587,022	)		(19,827,619	)		(51,823,941	)
Sales of short-term investments		3,663,246			48,617,290			17,830,574
Sales (purchases) of restricted assets		(2,628,764	)		2,777,715			(4,436,547	)
Change in assets for perpetual care trusts		(230,921	)		(255,204	)		(265,435	)
Amount received for perpetual care trusts		140,587			113,130			169,924
Mortgage, policy, and other loans made		(286,974,069	)		(160,737,841	)		(117,135,836	)
Payments received for mortgage, policy, and other loans		267,763,998			133,260,148			131,565,100
Purchases of property and equipment		(1,520,443	)		(3,570,334	)		(3,022,393	)
Disposal of property and equipment		894,805			33,900			30,524
Purchases of real estate held for investment		(19,317,567	)		(26,749,586	)		(143,278	)
Sale of real estate held for investment		7,269,475			3,352,446			6,886,821
Cash received from reinsurance		13,553,864			2,466,175			34,485,224
Cash paid for purchase of subsidiaries, net of cash acquired		(15,011,193	)		-			(180,591	)
Net cash provided by (used in) investing activities		(44,727,656	)		(33,129,059	)		13,538,723

See accompanying notes to consolidated financial statements

44

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

	Years Ended December 31
	2014			2013			2012
Cash flows from financing activities:
Annuity contract receipts	$	10,051,662		$	9,385,168		$	8,939,017
Annuity contract withdrawals		(14,519,563	)		(14,866,251	)		(13,915,777	)
Proceeds from stock options exercised		74,024			252,815			18,306
Repayment of bank loans and notes and contracts payable		(2,357,468	)		(2,292,037	)		(1,534,612	)
Proceeds from bank borrowings		13,115,348			13,314,594			241,875
Change in line of credit borrowings		-			(4,608,204	)		(11,791,796	)
Net cash provided by (used in) financing activities		6,364,003			1,186,085			(18,042,987	)
Net change in cash and cash equivalents		(7,347,844	)		4,708,880			17,911,942
Cash and cash equivalents at beginning of year		38,203,164			33,494,284			15,582,342
Cash and cash equivalents at end of year	$	30,855,320		$	38,203,164		$	33,494,284
Non Cash Investing and Financing Activities
Mortgage loans foreclosed into real estate	$	981,820		$	3,930,297		$	17,019,870

See accompanying notes to consolidated financial statements.

45

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies

General Overview of Business

Security National Financial Corporation and its wholly owned subsidiaries (the “Company”) operate 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 and eleven southern states. The cemetery and mortuary segment of the Company consists of seven mortuaries and five cemeteries in Utah and one cemetery in California. The mortgage loan segment is an approved government and conventional lender that originates and underwrites residential and commercial loans for new construction, existing homes and real estate projects primarily in California, Florida, Nevada, Texas, and Utah.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The presentation of certain amounts in prior years has been reclassified to conform to the 2014 presentation.

Principles of Consolidation

These consolidated financial statements include the financial statements of the Company and its majority owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Investments

The Company’s management determines the appropriate classifications of investments in fixed maturity securities and equity securities at the acquisition date and re-evaluates the classifications at each balance sheet date.

Fixed maturity securities held to maturity are carried 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 are carried at estimated fair value. 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, and construction loans are carried at their unpaid principal balances adjusted for charge-offs, the related allowance for loan losses, and net deferred fees or costs on originated loans. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans.

Mortgage loans are collateral dependent and require an appraisal at the time of underwriting and funding.  Generally the Company will fund a loan not to exceed 80% of the loan’s collateral fair market value.  Amounts over 80% will require mortgage insurance by an approved third party insurer.  Once a loan is deemed to be impaired the Company will review the market value of the collateral and provide an allowance for any impairment.

Mortgage loans sold to investors are carried at the amount due from third party investors, which is the estimated fair value at the balance sheet date since these amounts are generally collected within a short period of time.

Real estate held for investment is carried at cost, less accumulated depreciation provided on a straight-line basis over the estimated useful lives of the properties, or is adjusted to a new basis for impairment in value, if any. Included are foreclosed properties which the Company intends to hold for investment purposes.  These properties are recorded at the lower of cost or market value upon foreclosure.

46

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

Policy and other loans are carried at the aggregate unpaid balances, less allowances for possible losses.

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

Restricted assets are assets held in a trust account for future mortuary services and merchandise and consist of cash; participations in mortgage loans with Security National Life; mutual funds carried at cost; equity securities carried at fair market value; a surplus note with Security National Life. Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for the construction of a 282-unit multifamily development in Sandy City, Utah.

Cemetery and mortuary perpetual care trust business segment contains six wholly owned cemeteries. Of the six cemeteries owned by the Company, four cemeteries are endowment care properties. Under endowment care arrangements a portion of the price for each lot sold is withheld and invested in a portfolio of investments similar to those described in the prior paragraph. The earnings stream from the investments is designed to fund future maintenance and upkeep of the cemetery.

Realized gains and losses on investments arise when investments are sold (as determined on a specific identification basis) or are other-than-temporarily impaired. If in management’s judgment a decline in the value of an investment below cost is other-than-temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in judging whether an impairment is other-than-temporary include: the financial condition, business prospects and credit worthiness of the issuer, the length of time that fair value has been less than cost, the relative amount of the decline, and the Company’s ability and intent to hold the investment until the fair value recovers, which is not assured.

Cash and Cash Equivalents

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

Cemetery Land and Improvements

The development of a cemetery involves not only the initial acquisition of raw land but the installation of roads, water lines, landscaping and other costs to establish a marketable cemetery lot. The costs of developing the cemetery are shown as an asset on the balance sheet. The amount on the balance sheet is reduced by the total cost assigned to the development of a particular lot when the criterion for recognizing a sale of that lot is met.

Property and Equipment

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

Recognition of Insurance Premiums and Other Considerations

Premiums and  other consideration 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. Premiums and other consideration for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies, deferred annuities, and annuities without life contingencies) are recognized when earned and consist of amounts assessed against policyholder account balances during the period for policy administration charges and surrender charges.

47

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

Deferred Policy Acquisition Costs and Value of Business 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 (“DAC”) for traditional life insurance are amortized over the premium paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For interest-sensitive insurance products, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges, investment, mortality and expense margins. This amortization is adjusted when estimates of current or future gross profits to be realized from a group of products are reevaluated. Deferred acquisition costs are written off when policies lapse or are surrendered.

The Company follows accounting principles generally accepted in the United States of America when accounting for DAC on internal replacements of insurance and investment contracts. An internal replacement is a modification in product benefits, features, rights or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to contract, or by the election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract are accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced contract are written-off. Modifications that result in a contract that is substantially unchanged from the replaced contract are accounted for as a continuation of the replaced contract.

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

Mortgage Servicing Rights

Mortgage Service Rights (MSR) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company is obligated to retain and provide loan servicing functions on loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of REO and property dispositions.

The total residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans.  The value of MSRs is derived from the net cash flows associated with the servicing contracts. The Company receives a servicing fee of generally about 0.250% annually on the remaining outstanding principal balances of the loans. Based on the result of the cash flow analysis, an asset or liability is recorded for mortgage servicing rights. The servicing fees are collected from the monthly payments made by the mortgagors. The Company generally receives other remuneration including rights to various mortgagor-contracted fees such as late charges, and collateral reconveyance charges and the Company is generally entitled to retain the interest earned on funds held pending remittance of mortgagor principal, interest, tax and insurance payments.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. MSR amortization is determined by amortizing the balance straight-line over an estimated nine year life.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

48

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

Derivatives

The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of mortgage loan commitments from the time a derivative loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of derivative loan commitments that will be exercised (i.e., the number of loan commitments that will be funded) fluctuates. The probability that a loan will not be funded within the terms of the commitment is driven by a number of factors, particularly the change, if any, in mortgage rates following the inception of the interest rate lock. However, many borrowers continue to exercise derivative loan commitments even when interest rates have fallen.

In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance) product type and the application approval status. The Company has developed fallout estimates using historical data that take into account all of the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the mortgage loan commitments and are updated periodically to reflect the most current data.

The Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage loan and the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the mortgage loan commitment is issued. Therefore, at the time of issuance, the estimated fair value is zero. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates derived from the Company’s recent historical empirical data are used to estimate the quantity of mortgage loans that will fund within the terms of the commitments.

The Company utilizes forward loan sales commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward loan sales commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments by securing the ultimate sales price and delivery date of the loans. Management expects these derivatives will experience changes in fair value opposite to changes in fair value of the derivative loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

Allowance for Doubtful Accounts and Loan Losses and Impaired Loans

The Company records an allowance and recognizes an expense for potential losses from mortgage loans, other loans and receivables in accordance with generally accepted accounting principles.

Receivables are the result of cemetery and mortuary operations, mortgage loan operations and life insurance operations. The allowance is based upon the Company’s historical experience for collectively evaluated impairment. Other allowances are based upon receivables individually evaluated for impairment. Collectability of the cemetery and mortuary receivables is significantly influenced by current economic conditions. The critical issues that impact recovery of mortgage loan operations are interest rate risk, loan underwriting, new regulations and the overall economy.

49

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

The Company provides allowances for losses on its mortgage loans held for investment through an allowance for loan losses. The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. See the schedules in Note 2 for additional information. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as other real estate owned held for investment or sale. The Company will rent the properties until it is deemed desirable to sell them.

The allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the performance status of the loans, or the Company’s actual collection experience. The actual losses could change, in the near term, from the established allowance, based upon the occurrence or non-occurrence of these events.

Loan Loss Reserve

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on mortgage loans sold to third party investors.

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

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

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

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

Additional information related to the Loan Loss Reserve is included in Note 2.

Future Life, Annuity and Other Policy Benefits

Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, mortality, morbidity, withdrawals, and other assumptions based on the life insurance subsidiaries’ experience, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are, for some plans, graded to equal statutory values or cash values at or prior to maturity. The range of assumed interest rates for all traditional life insurance policy reserves was 4.5% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit claims are charged to expense in the period the claims are incurred. Increases in future policy benefits are charged to expense.

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 3% to 6.5%.

50

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

Participating Insurance

Participating business constituted 2%, 2%, and 2% of insurance in force for 2014, 2013 and 2012, 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 $100,000 to provide for greater diversification of business to allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. The Company remains liable for amounts ceded in the event the reinsurers are unable to meet their obligations.

The Company 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.

Pre-need Sales and Costs

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

Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are recognized in accordance with the retail land sales provisions based on accounting principles generally accepted in the United States of America. Under accounting principles generally accepted in the United States of America, recognition of revenue and associated costs from constructed cemetery property must be deferred until a minimum percentage of the sales price has been collected.

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

Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral services are accounted for under the guidance of the provisions based on accounting principles generally accepted in the United States of America. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred until the merchandise is delivered or services are performed.

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

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

51

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

Mortgage Fee Income

Mortgage fee income consists of origination fees, processing fees and certain other income related to the origination and sale of mortgage loans. For mortgage loans sold to third party investors, mortgage fee income and related expenses are recognized pursuant to generally accepted accounting principles at the time the sales of mortgage loans comply with the sales criteria for the transfer of financial assets, which are: (i) the transferred assets have been isolated from the Company and its creditors, (ii) the transferee has the right to pledge or exchange the mortgage, and (iii) the Company does not maintain effective control over the transferred mortgage. The Company must determine that all three criteria are met at the time a loan is funded. All rights and title to the mortgage loans are assigned to unrelated financial institution investors, including investor commitments for the loans, prior to warehouse banks purchasing the loans under the purchase commitments.

The Company, through its mortgage subsidiaries, sells all mortgage loans to third party investors without recourse. However, it may be required to repurchase a loan or pay a fee instead of repurchase under certain events, which include the following:

· Failure to deliver original documents specified by the investor,

· The existence of misrepresentation or fraud in the origination of the loan,

· The loan becomes delinquent due to nonpayment during the first several months after it is sold,

· Early pay-off of a loan, as defined by the agreements,

· Excessive time to settle a loan,

· Investor declines purchase, and

· Discontinued product and expired commitment.

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company. Generally, a ten day extension will cost .125% (12.5 basis points) of the loan amount. The Company’s historical data shows that 99% of all loans originated by its mortgage subsidiaries are generally settled by the investors as agreed within 16 days after delivery. There are situations, however, when the Company determines that it is unable to enforce the settlement of loans rejected by the third-party investors and that it is in its best interest to repurchase those loans from the warehouse banks.

It is the Company's policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month time period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

· Research reasons for rejection,

· Provide additional documents,

· Request investor exceptions,

· Appeal rejection decision to purchase committee, and

· Commit to secondary investors.

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six month time period, the loans are repurchased and transferred to the long term investment portfolio at the lower of cost or fair value and previously recorded sales revenue is reversed. Any loan that later becomes delinquent is evaluated by the Company at that time and any impairment is adjusted accordingly.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

Determining Lower of Cost or Market

Cost is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Market value is often difficult to determine, but is based on the following:

· For loans that have an active market the Company uses the market price on the repurchased date.

· For loans where there is no market but there is a similar product, the Company uses the market value for the similar product on the repurchased date.

· For loans where no active market exists on the repurchased date, the Company determines that the unpaid principal balance best approximates the market value on the repurchased date, after considering the fair value of the underlying real estate collateral and estimated future cash flows.

The appraised value of the real estate underlying the original mortgage loan adds support to the Company’s determination of fair value because if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan. In determining the market value on the date of repurchase, the Company considers the total value of all of the loans because any sale of loans would be made as a pool.

For mortgages originated and held for investment, mortgage fee income and related expenses are recognized when the loan is originated.

The Company provides an allowance for loan losses on its mortgage loans held for investment. The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired.

Commercial Loans

Each quarter, management reviews the current commercial loans and determines if an allowance is required based on the Company’s actual experience of losses on impaired commercial loans. To date, the Company has not incurred any significant losses. The carrying value of all commercial loans is supported by appraisals and cash flow analysis of revenue received. Also, the Company has not accrued any interest income or capitalized any of the foreclosure costs on the impaired commercial loans.

Residential and Construction Loans

The Company believes that in an orderly market fair value will approximate the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for future estimated policy claims. Accordingly, the fair value determination will be weighted more heavily toward the rental analysis.

It should be noted that for replacement cost, when determining the fair value of mortgage properties, the Company uses Marshall and Swift, a provider of building cost information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and projected the present value of the net rental income over seven years. The Company used 60% of the projected cash flow analysis and 40% of the replacement cost to approximate fair value of the collateral.

Each quarter the Company also analyzes its current loan portfolio and determines the level of allowance needed for loans that are listed as current in the portfolio. The basis of the analysis places a higher weight on loans with high loan to value ratios, those that lack mortgage insurance, and certain loan types that have a higher percentage of default based on the Company’s experience.

Each quarter the Company makes further analysis of the foreclosed properties to determine if any additional allowances are necessary by comparing national indexes of loan to value ratios by region to the Company’s loan to value ratios. Based upon the above procedures, the Company’s management believes that residential and residential construction loans are reflected in the Company’s financial statements at the lower of cost or market in accordance with GAAP requirements.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

Goodwill

Previous acquisitions have been accounted for as purchases under which assets acquired and liabilities assumed were recorded at their fair values with the excess purchase price recognized as goodwill. The Company evaluates annually or when changes in circumstances warrant the recoverability of goodwill and if there is a decrease in value, the related impairment is recognized as a charge against income. No impairment of goodwill has been recognized in the accompanying financial statements.

Long-lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset, and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. No impairment of long-lived assets has been recognized in the accompanying financial statements.

Income Taxes

Income taxes include taxes currently payable plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences in the financial reporting basis and tax basis of assets and liabilities and operating loss carry-forwards. Deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.

Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax penalties are included as a component of other expenses.

Earnings Per Common Share

The Company computes earnings per share in accordance with accounting principles generally accepted in the United States of America which requires presentation of basic and diluted earnings per share. Basic earnings per equivalent Class A common share are computed by dividing net earnings by the weighted-average number of Class A common shares outstanding during each year presented, after the effect of the assumed conversion of Class C common stock to Class A common stock. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the year used to compute basic earnings per share plus dilutive potential incremental shares. Basic and diluted earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

Stock Based Compensation

The cost of employee services received in exchange for an award of equity instruments is recognized in the financial statements and is measured based on the fair value on the grant date of the award. The fair value of stock options is calculated using the Black Scholes method. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

1)       Significant Accounting Policies (Continued)

Concentration of Credit Risk

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

Advertising

The Company expenses advertising costs as incurred.

Recent Accounting Pronouncements

Accounting Standards Update (“ASU”) No. 2014-17: “Business Combinations (Topic 805) – Pushdown Accounting” – Issued in November 2014, ASU 2014-17 provides guidance for determining whether and at what threshold an acquiree (acquired entity) that is a business or nonprofit activity can reflect the acquirer’s accounting and reporting basis (pushdown accounting) in its separate financial statements. The amendments in this Update provide that an acquired entity may elect to apply pushdown accounting in its separate financial statements upon a change-in-control event in which an acquirer obtains control of the acquired entity. The amendments in this Update are effective November 18, 2014. This new guidance did not have a significant impact on the Company’s results of operations or financial position.

Accounting Standards Update (“ASU”) No. 2014-11: "Transfers and Servicing - Repurchase to Maturity Transactions, Repurchase Financings, and Disclosures (Topic 860)" – Issued in June 2014, ASU 2014-11 aligns the accounting for repurchase to maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The new authoritative guidance is effective for the first interim or annual period beginning after December 15, 2014. In addition the disclosure of certain transactions accounted for as a sale is effective for the first interim or annual period beginning on or after December 15, 2014, and the disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. Early adoption is prohibited. This new guidance will not have a significant impact on the Company’s results of operations or financial position.

ASU No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” - Issued in May 2014, ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition”, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Insurance contracts are excluded from the scope of this new guidance. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2016. The Company is in the process of evaluating the potential impact of this standard, which is not expected to be material to the Company’s results of operations or financial position.

ASU No. 2014-14: “Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40)” - In January 2014, ASU No. 2014-14 amended ASC Topic 310, "Receivables" to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2014 and will not have a significant impact on the Company’s results of operations or financial position.

The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.

55

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments

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

	Amortized Cost		Gross  Unrealized  Gains		Gross  Unrealized  Losses			Estimated Fair Value
December 31, 2014:
Fixed maturity securities held to maturity carried at amortized cost:
U.S. Treasury securities and obligations of U.S. Government agencies	$	1,873,146	$	345,715	$	-		$	2,218,861
Obligations of states and political subdivisions		1,736,489		221,893		(5,278	)		1,953,104
Corporate securities including public utilities		126,533,483		15,841,536		(980,357	)		141,394,662
Mortgage-backed securities		4,263,206		305,381		(11,894	)		4,556,693
Redeemable preferred stock		612,023		22,032		-			634,055
Total fixed maturity securities held to maturity	$	135,018,347	$	16,736,557	$	(997,529	)	$	150,757,375

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)       Investments (Continued)

	Amortized  Cost			Gross  Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2014:
Equity securities available for sale at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	7,179,010		$	393,873	$	(820,133	)	$	6,752,750
Total securities available for sale carried at estimated fair value	$	7,179,010		$	393,873	$	(820,133	)	$	6,752,750
Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$	53,592,433
Residential construction		33,071,938
Commercial		35,388,756
Less: Allowance for loan losses		(2,003,055	)
Total mortgage loans on real estate and construction loans held for investment	$	120,050,072
Real estate held for investment - net of depreciation	$	111,411,351
Policy and other loans at amortized cost:
Policy loans	$	7,011,012
Other loans		27,807,829
Less: Allowance for doubtful accounts		(693,413	)
Total policy and other loans at amortized cost	$	34,125,428
Short-term investments at amortized cost	$	27,059,495

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

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

	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized  Losses			Estimated  Fair Value
December 31, 2013:
Fixed maturity securities held to maturity carried at amortized cost:
U.S. Treasury securities and obligations of U.S. Government agencies	$	2,284,261	$	298,901	$	-		$	2,583,162
Obligations of states and political subdivisions		1,790,661		197,340		(9,404	)		1,978,597
Corporate securities including public utilities		134,257,468		10,513,448		(1,394,919	)		143,375,997
Mortgage-backed securities		4,522,081		206,617		(11,351	)		4,717,347
Redeemable preferred stock		612,023		12,994		(5,900	)		619,117
Total fixed maturity securities held to maturity	$	143,466,494	$	11,229,300	$	(1,421,574	)	$	153,274,220

58

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

	Amortized  Cost			Gross Unrealized Gains		Gross  Unrealized  Losses			Estimated  Fair Value
December 31, 2013:
Equity securities available for sale at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$	4,783,936		$	240,206	$	(525,386	)	$	4,498,756
Total securities available for sale carried at estimated fair value	$	4,783,936		$	240,206	$	(525,386	)	$	4,498,756
Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$	49,868,486
Residential construction		12,912,473
Commercial		41,653,009
Less: Allowance for loan losses		(1,652,090	)
Total mortgage loans on real estate and construction loans held for investment	$	102,781,878
Real estate held for investment - net of depreciation	$	99,760,475
Policy and other loans at amortized cost:
Policy loans	$	7,520,376
Other loans		12,472,805
Less: Allowance for doubtful accounts		(269,175	)
Total policy and other loans at amortized cost	$	19,724,006
Short-term investments at amortized cost	$	12,135,719

59

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)       Investments (Continued)

Fixed Maturity Securities

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

	Unrealized Losses for  Less than Twelve Months		No. of Investment Positions		Unrealized Losses for More than  Twelve Months		No. of  Investment Positions		Total  Unrealized Loss
At December 31, 2014
Redeemable Preferred Stock	$	-		0	$	-		0	$	-
Obligations of States and
Political Subdivisions		-		0		5,278		1		5,278
Corporate Securities		548,310		21		432,047		11		980,357
Mortgage and other
asset-backed securities		3,966		1		7,928		0		11,894
Total unrealized losses	$	552,276		22	$	445,253		12	$	997,529
Fair Value	$	7,081,352			$	2,777,587			$	9,858,939
At December 31, 2013
Redeemable Preferred Stock	$	5,900		1	$	-		0	$	5,900
Obligations of States and
Political Subdivisions		7,131		1		2,273		1		9,404
Corporate Securities		1,134,415		72		260,504		10		1,394,919
Mortgage and other
asset-backed securities		3,109		1		8,242		1		11,351
Total unrealized losses	$	1,150,555		75	$	271,019		12	$	1,421,574
Fair Value	$	22,002,277			$	2,308,464			$	24,310,741

As of December 31, 2014, the average market value of the related fixed maturities was 90.8% of amortized cost and the average market value was 94.5% of amortized cost as of December 31, 2013. During 2014, 2013 and 2012, an other than temporary decline in market value resulted in the recognition of credit losses on fixed maturity securities of $120,000, $120,000 and $165,000, respectively.

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

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)       Investments (Continued)

Equity Securities

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

	Unrealized  Losses for  Less than Twelve  Months		No. of  Investment  Positions		Unrealized Losses for More than  Twelve Months		No. of  Investment Positions		Total  Unrealized  Losses
At December 31, 2014
Industrial, miscellaneous and all other	$	327,389		138	$	492,744		27	$	820,133
Total unrealized losses	$	327,389		138	$	492,744		27	$	820,133
Fair Value	$	2,162,425			$	676,706			$	2,839,131
At December 31, 2013
Industrial, miscellaneous and all other	$	119,449		28	$	405,936		28	$	525,385
Total unrealized losses	$	119,449		28	$	405,936		28	$	525,385
Fair Value	$	993,612			$	772,345			$	1,765,957

As of December 31, 2014, the average market value of the equity securities available for sale was 77.6% of the original investment and the average market value was 77.1% of the original investment as of December 31, 2013. The intent of the Company is to retain equity securities for a period of time sufficient to allow for the recovery in fair value. However, the Company may sell equity securities during a period in which the fair value has declined below the amount of the original investment. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. During 2014, 2013, and 2012, an other than temporary decline in the market value resulted in the recognition of an impairment loss on equity securities of $44,240, $100,304, and $247,317, respectively.

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

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

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)       Investments (Continued)

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

	Amortized		Estimated Fair
	Cost		Value
Held to Maturity:
Due in 2015	$	4,961,596	$	5,075,769
Due in 2016 through 2019		33,920,182		37,561,840
Due in 2020 through 2024		25,074,149		27,690,447
Due after 2024		66,187,191		75,238,571
Mortgage-backed securities		4,263,206		4,556,693
Redeemable preferred stock		612,023		634,055
Total held to maturity	$	135,018,347	$	150,757,375

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

			Estimated Fair
	Cost		Value
Available for Sale:
Common stock	$	7,179,010	$	6,752,750
Total available for sale	$	7,179,010	$	6,752,750

62

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

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

	2014			2013			2012
Fixed maturity securities held to maturity:
Gross realized gains	$	390,203		$	97,238		$	470,874
Gross realized losses		(71,800	)		(41,164	)		(3,875	)
Other than temporary impairments		(120,000	)		(120,000	)		(165,000	)
Securities available for sale:
Gross realized gains		349,207			540,990			392,033
Gross realized losses		(55,222	)		(2,678	)		(5,705	)
Other than temporary impairments		(44,240	)		(100,304	)		(247,317	)
Other assets:
Gross realized gains		1,445,596			824,203			794,346
Gross realized losses		(139,808	)		(538	)		(223,163	)
Other than temporary impairments		-			(115,922	)		(795,315	)
Total	$	1,753,936		$	1,081,825		$	216,878

The net carrying amount for sales of securities classified as held to maturity was $2,840,709, $1,455,835 and $2,174,300, for the years ended December 31, 2014, 2013 and 2012, respectively.  The net realized gain related to these sales was $20,722, $12,533 and $271,364, for the years ended December 31, 2014, 2013 and 2012, respectively. Certain circumstances lead to these decisions to sell.

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

Major categories of net investment income are as follows:

	2014			2013			2012
Fixed maturity securities	$	8,229,451		$	8,265,949		$	7,731,051
Equity securities		212,917			210,491			264,063
Mortgage loans on real estate		7,550,110			4,666,910			5,543,777
Real estate		8,433,895			6,658,185			4,927,128
Policy, student and other loans		741,220			799,703			830,683
Short-term investments, principally gains on sale of mortgage loans		12,397,382			8,952,584			8,716,257
Gross investment income		37,564,975			29,553,822			28,012,959
Investment expenses		(9,261,235	)		(9,199,820	)		(6,097,382	)
Net investment income	$	28,303,740		$	20,354,002		$	21,915,577

Net investment income includes net investment income earned by the restricted assets of the cemeteries and mortuaries of $356,369, $341,430 and $352,488 for 2014, 2013 and 2012, respectively.

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

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

63

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

Securities on deposit for regulatory authorities as required by law amounted to $8,886,001 at December 31, 2014 and $9,215,222 at December 31, 2013. The restricted securities are included in various assets under investments on the accompanying consolidated balance sheets.

Mortgage Loans

Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0 % to 10.5%, maturity dates range from three months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At December 31, 2014, the Company has 44%, 17%, 13% and 8% of its mortgage loans from borrowers located in the states of Utah, California, Texas and Florida, respectively. The mortgage loans on real estate balances on the consolidated balance sheet are reflected net of an allowance for loan losses of $2,003,055 and $1,652,090 at December 31, 2014 and 2013, respectively.

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

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

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

Allowance for Credit Losses and Recorded Investment in Mortgage Loans
For the Years Ended December 31, 2014, and 2013
	Commercial		Residential			Residential Construction			Total
2014
Allowance for credit losses:
Beginning balance	$	187,129	$	1,364,847		$	100,114		$	1,652,090
Charge-offs		-		(38,444	)		-			(38,444	)
Provision		-		389,409			-			389,409
Ending balance	$	187,129	$	1,715,812		$	100,114		$	2,003,055
Ending balance: individually evaluated for impairment	$	-	$	153,446		$	-		$	153,446
Ending balance: collectively evaluated for impairment	$	187,129	$	1,562,366		$	100,114		$	1,849,609
Ending balance: loans acquired with deteriorated credit quality	$	-	$	-		$	-		$	-
Mortgage loans:
Ending balance	$	35,388,756	$	53,592,433		$	33,071,938		$	122,053,127
Ending balance: individually evaluated for impairment	$	-	$	1,556,182		$	414,499		$	1,970,681
Ending balance: collectively evaluated for impairment	$	35,388,756	$	52,036,251		$	32,657,439		$	120,082,446
Ending balance: loans acquired with deteriorated credit quality	$	-	$	-		$	-		$	-
2013
Allowance for credit losses:
Beginning balance	$	-	$	4,193,674		$	46,187		$	4,239,861
Charge-offs		-		(2,670,794	)		(137,629	)		(2,808,423	)
Provision		187,129		(158,033	)		191,556			220,652
Ending balance	$	187,129	$	1,364,847		$	100,114		$	1,652,090
Ending balance: individually evaluated for impairment	$	-	$	152,745		$	-		$	152,745
Ending balance: collectively evaluated for impairment	$	187,129	$	1,212,102		$	100,114		$	1,499,345
Ending balance: loans acquired with deteriorated credit quality	$	-	$	-		$	-		$	-
Mortgage loans:
Ending balance	$	41,653,009	$	49,868,486		$	12,912,473		$	104,433,968
Ending balance: individually evaluated for impairment	$	-	$	1,518,327		$	-		$	1,518,327
Ending balance: collectively evaluated for impairment	$	41,653,009	$	48,350,159		$	12,912,473		$	102,915,641
Ending balance: loans acquired with deteriorated credit quality	$	-	$	-		$	-		$	-

65

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

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

Age Analysis of Past Due Mortgage Loans
Years Ended December 31, 2014 and 2013
	30-59 Days  Past Due		60-89 Days  Past Due		Greater Than  90 Days 1)		In  Foreclosure 1)		Total Past Due		Current		Total Mortgage  Loans		Allowance  for Loan  Losses			Net  Mortgage Loans
2014
Commercial	$	-	$	-	$	-	$	-	$	-	$	35,388,756	$	35,388,756	$	(187,129	)	$	35,201,627
Residential		1,631,142		1,174,516		5,464,901		1,556,182		9,826,741		43,765,692		53,592,433		(1,715,812	)		51,876,621
Residential   Construction		-		-		64,895		414,499		479,394		32,592,544		33,071,938		(100,114	)		32,971,824
Total	$	1,631,142	$	1,174,516	$	5,529,796	$	1,970,681	$	10,306,135	$	111,746,992	$	122,053,127	$	(2,003,055	)	$	120,050,072
2013
Commercial	$	-	$	-	$	-	$	4,973,745	$	4,973,745	$	36,679,264	$	41,653,009	$	(187,129	)	$	41,465,880
Residential		1,646,953		1,604,847		5,867,501		1,518,327		10,637,628		39,230,858		49,868,486		(1,364,847	)		48,503,639
Residential   Construction		-		-		64,895		-		64,895		12,847,578		12,912,473		(100,114	)		12,812,359
Total	$	1,646,953	$	1,604,847	$	5,932,396	$	6,492,072	$	15,676,268	$	88,757,700	$	104,433,968	$	(1,652,090	)	$	102,781,878

1)  There was not any interest income recognized on loans past due greater than 90 days or in foreclosure.

66

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

Impaired Mortgage Loans

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

Impaired Loans
For the Years Ended December 31, 2014, and 2013
	Recorded  Investment		Unpaid Principal  Balance		Related Allowance		Average Recorded  Investment		Interest Income  Recognized
2014
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		-		-		-		-		-
Residential construction		414,499		414,499		-		414,499		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		1,556,182		1,556,182		153,446		1,556,182		-
Residential construction		-		-		-		-		-
Total:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		1,556,182		1,556,182		153,446		1,556,182		-
Residential construction		414,499		414,499		-		414,499		-
2013
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		-		-		-		-		-
Residential construction		-		-		-		-		-
With an allowance recorded:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		1,518,327		1,518,327		152,745		1,518,327		-
Residential construction		-		-		-		-		-
Total:
Commercial	$	-	$	-	$	-	$	-	$	-
Residential		1,518,327		1,518,327		152,745		1,518,327		-
Residential construction		-		-		-		-		-

67

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

Credit Risk Profile Based on Performance Status

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

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

Mortgage Loan Credit Exposure
Credit Risk Profile Based on Payment Activity
As of December 31, 2014, and 2013
	Commercial				Residential				Residential Construction				Total
	2014		2013		2014		2013		2014		2013		2014		2013
Performing	$	35,388,756	$	36,679,264	$	46,571,350	$	42,482,658	$	32,592,544	$	12,847,578	$	114,552,650	$	92,009,500
Non-performing		-		4,973,745		7,021,083		7,385,828		479,394		64,895		7,500,477		12,424,468
Total	$	35,388,756	$	41,653,009	$	53,592,433	$	49,868,486	$	33,071,938	$	12,912,473	$	122,053,127	$	104,433,968

Non-Accrual Mortgage Loans

Once a loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and write off any income that had been accrued. Interest not accrued on these loans totals $535,000 and $678,000 as of December 31, 2014 and 2013, respectively.

The following is a summary of mortgage loans on a non-accrual status for the periods presented.

	Mortgage Loans on Non-accrual Status
	As of December 31, 2014, and 2013
	2014		2013
Commercial	$	-	$	4,973,745
Residential		7,021,083		7,385,828
Residential construction		479,394		64,895
Total	$	7,500,477	$	12,424,468

Principal Amounts Due

The amortized cost and contractual payments on mortgage loans on real estate and construction loans held for investment by category as of December 31, 2014 are shown below. Expected principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment penalties.

			Principal		Principal		Principal
			Amounts		Amounts		Amounts
			Due in		Due in		Due
	Total		2015			2016-2019	Thereafter
Residential	$	53,592,433	$	3,748,893	$	17,225,255	$	32,618,285
Residential Construction		33,071,938		32,648,470		423,468		-
Commercial		35,388,756		18,652,738		13,279,688		3,456,330
Total	$	122,053,127	$	55,050,101	$	30,928,411	$	36,074,615

68

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

2)        Investments (Continued)

Loan Loss Reserve

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

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

	Years Ended December 31
	2014			2013
Balance, beginning of period	$	5,506,532		$	6,035,295
Provisions for losses		3,053,403			1,846,285
Charge-offs and settlements		(6,841,785	)		(2,375,048	)
Balance, at December 31	$	1,718,150		$	5,506,532

The Company believes the loan loss reserve represents probable loan losses incurred as of the balance sheet date. Actual loan loss experience could change, in the near-term, from the established reserve based upon claims that could be asserted by third party investors. SecurityNational Mortgage believes there is potential to resolve any alleged claims by third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.

3)       Receivables

Receivables consist of the following:

	Years Ended December 31
	2014			2013
Trade contracts	$	12,166,838		$	9,993,755
Receivables from sales agents		1,951,677			994,056
Held in Escrow – Southern Security		278,331			312,167
Other		1,428,106			1,601,227
Total receivables		15,824,952			12,901,205
Allowance for doubtful accounts		(1,280,859	)		(1,248,633	)
Net receivables	$	14,544,093		$	11,652,572

69

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

4)       Value of Business Acquired

Information with regard to value of business acquired is as follows:

	December 31
	2014			2013			2012
Balance at beginning of year	$	8,680,845		$	9,829,082		$	10,996,050
Value of  business acquired		1,169,428			192,035			48,190
Imputed interest at 7%		591,412			647,848			728,880
Amortization		(1,894,058	)		(1,988,120	)		(1,944,038	)
Net amortization charged to income		(1,302,646	)		(1,340,272	)		(1,215,158	)
Balance at end of year	$	8,547,627		$	8,680,845		$	9,829,082

Presuming no additional acquisitions, net amortization charged to income is expected to approximate $1,113,000, $1,031,000, $958,000, $852,000, and $790,000 for the years 2015 through 2019. Actual amortization may vary based on changes in assumptions or experience. As of December 31, 2014, value of business acquired is being amortized over a weighted average life of 6.6 years.

5)       Property and Equipment

The cost of property and equipment is summarized below:

	December 31
	2014			2013
Land and buildings	$	11,904,100		$	12,482,082
Furniture and equipment		15,822,957			14,301,713
		27,727,057			26,783,795
Less accumulated depreciation		(16,419,343	)		(15,260,635	)
Total	$	11,307,714		$	11,523,160

Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $2,177,165, $1,621,069 and $1,258,097 respectively.

70

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

6)       Bank and Other Loans Payable

Bank loans payable are summarized as follows:

	December 31
	2014		2013
6.34% note payable in monthly installments of $13,556 including principal and interest, collateralized by real property with a book value of approximately $498,000, due November 2017.	$	466,937	$	612,068
5.75% note payable in monthly installments of $28,271 including principal and interest, collateralized by real property with a book value of approximately $5,890,000 due March 2015.		3,398,099		3,509,944
Mark to market of interest rate swaps (discussed below) adjustment		31,370		58,310
3.85% note payable in monthly installments of $79,468 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due June 2015.		461,889		1,377,925
3.85% note payable in monthly installments of $86,059 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due December 2017.		2,994,999		3,891,926
4.40% note payable in monthly installments of $46,825 including principal and interest, collateralized by real property with a book value of approximately $12,450,000 due January 2026.		8,333,550		8,500,000
2.75% above the 90-day LIBOR rate (3.0052% at December 31, 2014) constructon and term loan payable, collateralized by real property with a book vaue of approximately $22,855,000 due July 2017.		13,085,189		-
Other collateralized bank loans payable		247,384		338,304
Other notes payable		961		961
Total bank and other loans		29,020,378		18,289,438
Less current installments		5,248,043		5,849,926
Bank and other loans, excluding current installments	$	23,772,335	$	12,439,512

During 2001, the Company entered into an interest rate swap instrument that effectively fixed the interest rate on the note payable at 6.34% per annum. Management considers the interest rate swap instrument an effective cash flow hedge against the variable interest rate on the bank note since the interest rate swap mirrors the term of the note payable and expires on the maturity date of the bank loan it hedges. The interest rate swap is a derivative financial instrument carried at its fair value.

In the event the swap is terminated, any resulting gain or loss would be deferred and amortized to interest expense over the remaining life of the bank loan it hedged. In the event of early extinguishment of the hedged bank loan, any realized or unrealized gain or loss from the hedging swap would be recognized in income coincident with the extinguishment.

71

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

6)       Bank and Other Loans Payable

At December 31, 2014 and 2013, the fair value of the interest rate swap was an unrealized loss of $31,370 and $58,310, respectively, and was computed based on the underlying variable Libor rate plus 1.65%, or 2.65% per annum. The unrealized loss resulted in a derivative liability of $31,370 and $58,310 and has been reflected in accumulated other comprehensive income. The change in accumulated other comprehensive income from the interest rate swap in 2014 and 2013 was $26,940 and 32,262, respectively. The fair value of the interest rate swap was derived from a proprietary model of the bank from whom the interest rate swap was purchased and to whom the note is payable.

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75% (2.50% at December 31, 2014), secured by the capital stock of Security National Life and maturing June 30, 2015, renewable annually. At December 31, 2014, the Company was contingently liable under a standby letter of credit aggregating $699,671, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company's captive insurance program. The Company does not expect any material losses to result from the issuance of the standby letter of credit because claims are not expected to exceed premiums paid. As of December 31, 2014, there were no amounts outstanding under the revolving line-of-credit.

The Company has a $15,000,000 revolving line-of-credit with a bank with interest payable at the variable overnight Libor rate plus 2% (2.1146% at December 31, 2014), secured by bond investments of the Company and maturing June 30, 2015. At December 31, 2014, the Company was contingently liable under two standby letters of credit aggregating $139,220, issued as security deposits to guarantee payment of final bills for electric and gas utility services for a commercial real estate property owned by the Company in Wichita, Kansas. As of December 31, 2014, there were no amounts outstanding under the revolving line-of-credit.

The Company has a $2,150,000 revolving line-of-credit with a bank with interest payable at the prime rate plus 1.25% (4.50% at December 31, 2014), secured by the capital stock of Security National Life and maturing June 30, 2015. At December 31, 2014, SecurityNational Mortgage was contingently liable under a standby letter of credit aggregating $1,250,000, to be used as collateral to cover any contingency relating to claims filed in states where SecurityNational Mortgage is licensed. The Company does not expect any material losses to result from the issuance of the standby letter of credit. As of December 31, 2014, there were no amounts outstanding under the revolving line-of-credit.

The Company has entered into a Construction and Term Loan Agreement (“Agreement”) between Zions First National Bank, a national banking association, and Dry Creek Property Development, Inc., the Company’s wholly owned subsidiary. Under the terms of this Agreement the Company promises to pay Zions First National Bank the principal sum of $27,500,000 plus interest. These funds will be used for the construction of a 282-unit multifamily development in Sandy City, Utah. As of December 31, 2014, the amount outstanding under this agreement was $13,085,189.

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

2015	$	5,248,043
2016		1,395,942
2017		14,586,183
2018		246,769
2019		246,336
Thereafter		7,297,105
Total	$	29,020,378

Interest paid approximated interest expense in 2014, 2013 and 2012, which was $2,994,429, $2,853,701 and $3,744,293, respectively.

72

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

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

The Company is required by state law to pay into perpetual care trusts a portion of the proceeds from the sale of cemetery property interment rights. The related cemetery perpetual care trusts are defined as variable interest entities pursuant to generally accepted accounting principles. Also, management has determined that the Company is the primary beneficiary of these trusts, as it absorbs both a majority of the losses and returns associated with the trusts. The Company has consolidated cemetery perpetual care trust investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets.

The components of the cemetery perpetual care obligation are as follows:

	December 31
	2014			2013
Trust investments, at market value	$	2,645,423		$	2,414,883
Note receivables from Cottonwood Mortuary
Singing Hills Cemetery and Memorial Estates - Pinehill eliminated in consolidation		1,847,892			1,881,565
Total trust assets		4,493,315			4,296,448
Cemetery perpetual care obligation		(3,406,718	)		(3,266,131	)
Fair value of trust assets in excess of trust obligations	$	1,086,597		$	1,030,317

The Company has established and maintains certain restricted trust investments to provide for future merchandise and service obligations incurred in connection with its pre-need sales. Also included in cash and cash equivalents are escrows held for borrowers under servicing agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for the construction of a 282-unit multifamily development in Sandy City, Utah.

Assets in the restricted asset account are summarized as follows:

	December 31
	2014		2013
Cash and cash equivalents	$	7,274,685	$	4,746,417
Mutual funds		627,154		582,163
Fixed maturity securities		8,775		8,775
Equity securities		88,048		84,986
Participating in mortgage loans with Security National Life		1,349,135		1,248,639
Total	$	9,347,797	$	6,670,980

A surplus note receivable and interest, at December 31, 2014 and December 31, 2013 in the amount of $4,000,000 from Security National Life was eliminated in consolidation.
 

73

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

8)       Income Taxes

The Company’s income tax liability (benefit) at December 31 is summarized as follows:

	December 31			December 31
	2014			2013
Current	$	(333,350	)	$	(1,578,071	)
Deferred		20,755,117			17,529,919
Total	$	20,421,767		$	15,951,848

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

	December 31
	2014			2013
Assets
Future policy benefits	$	(6,856,001	)	$	(5,381,385	)
Loan loss reserve		(670,078	)		(2,147,547	)
Unearned premium		(1,687,059	)		(1,759,087	)
Available for sale securities		(125,797	)		(566,316	)
Net operating loss		(1,738,137	)		(873,412	)
Deferred compensation		(1,279,860	)		(1,057,551	)
Deposit obligations		(1,018,313	)		(1,043,964	)
Other		(1,398,152	)		(1,287,773	)
Less: Valuation allowance		5,276,431			5,593,063
Total deferred tax assets		(9,496,966	)		(8,523,972	)
Liabilities
Deferred policy acquisition costs		12,271,954			10,914,618
Basis difference in property and equipment		7,049,551			6,242,266
Value of business acquired		2,906,193			2,951,487
Deferred gains		5,472,003			3,545,692
Trusts		1,599,657			1,599,657
Tax on unrealized appreciation		952,725			800,171
Total deferred tax liabilities		30,252,083			26,053,891
Net deferred tax liability	$	20,755,117		$	17,529,919

The valuation allowance relates to differences between recorded deferred tax assets and liabilities and ultimate anticipated realization.

The valuation allowance decreased $316,632 during 2014 and $735,868 during 2013.

The Company paid $408,939, $4,009,598 and $1,900,000 in income taxes for 2014, 2013 and 2012, respectively.

The Company’s income tax expense (benefit) is summarized as follows for the years ended December 31:

74

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

8)        Income Taxes

	2014		2013		2012
Current	$	1,653,663	$	1,821,539	$	2,707,962
Deferred		3,072,642		416,267		1,930,813
Total	$	4,726,305	$	2,237,806	$	4,638,775

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

	2014		2013			2012
Computed expense at statutory rate	$	4,243,524	$	3,340,067		$	7,472,953
Tax audit settlements		-		20,371			-
Other, net		482,781		(1,122,632	)		(2,834,178	)
Tax expense (benefit)	$	4,726,305	$	2,237,806		$	4,638,775

At December 31, 2014, the Company had no significant unrecognized tax benefits. As of December 31, 2014, the Company does not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months. Federal and state income tax returns for 2011 through 2014 are subject to examination by taxing authorities. An examination of the Company’s 2012 federal income tax return is in process.

9)         Reinsurance, Commitments and Contingencies

Reinsurance

The Company follows the procedure of reinsuring risks in excess of a specified limit, which ranged from $25,000 to $100,000 during the years 2014 and 2013. 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 approximately $1,462,340,000 (unaudited) at December 31, 2014 and approximately $1,566,336,000 (unaudited) at December 31, 2013.

Reinsurance Agreement with American Republic Insurance Company

On February 11, 2015, the Company signed a coinsurance agreement to reinsure certain life insurance policies from American Republic Insurance Company (“American Republic”).  The policies were previously reinsured by North America Life under a coinsurance agreement between World Insurance Company (“World Insurance”) and North America Life entered into on July 22, 2009 which was commuted.  World Insurance was subsequently purchased by and merged into American Republic.  The current coinsurance agreement is between the Company and American Republic and became effective on January 1, 2015.  As part of the coinsurance agreement, American Republic transferred all contractual obligations and risks to the Company and the Company took control of $15,004,771 of assets in a trust account held by Texas Capital Bank as the trustee.

Reinsurance Agreement with LJA Insurance Company

On December 19, 2014, the Company entered into a Coinsurance Funds Withheld Reinsurance Agreement with LJA Insurance Company (“LJA Insurance”), a Republic of the Marshall Islands domiciled insurance company. This agreement was effective November 1, 2014. Under the terms of the funds withheld agreement, the Company ceded to LJA Insurance 100% of three blocks of deferred annuities in the amount of $4,337,000 and retained the assets and recorded a funds held under coinsurance liability for the same amount. LJA Insurance agreed to pay the Company an initial ceding commission of $60,000 and an asset management fee of $16,000 per quarter to administer the policies. The Company will also receive a 90% experience refund for any profits from the business. The Company has the right to recapture the business by giving LJA Insurance 90 days written notice, or it may be terminated by mutual consent of both parties.

75

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

9)        Reinsurance, Commitments and Contingencies

Reinsurance Terminated with North America Life Insurance Company

On December 1, 2013, in accordance with the terms of the Coinsurance Agreement, Security National Life, through Trans-western Life Insurance Company (“Trans-Western Life”), recaptured additional policies of Trans-Western Life from North American Life Insurance Company (“North American Life”).  On December 10, 2013, pursuant to the Coinsurance Agreement, North America Life paid $2,500,000, less a ceding commission of $34,000 to Security National Life. On February 13, 2014, in accordance with the terms of the Coinsurance Agreement, Security National Life, through Trans-Western Life, recaptured the remaining policies of Trans-Western Life from North American Life. Pursuant to the Coinsurance Agreement, North America Life paid $4,684,000 less a ceding commission of $57,000 to Security National Life, and the Reinsurance Agreement between Trans Western Life and North America Life was terminated.

Mortgage Loan Loss Settlements

The mortgage industry has seen potential loan losses increase. Future loan losses are extremely difficult to estimate, especially in the current market.  However, management believes that the Company’s reserve methodology and its current practice of property preservation allow it to estimate its losses on loans sold. The amounts accrued for loan losses in years ended December 31, 2014 and 2013 were $3,053,000 and $1,846,000, respectively. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2014 and 2013, the balances were $1,718,000 and $5,507,000, respectively.

Final Settlement with Wells Fargo

On April 7, 2011, SecurityNational Mortgage Company ("SecurityNational Mortgage"),  a wholly owned subsidiary of Security National Financial Corporation, entered into the Settlement Agreement and Release (the "Settlement Agreement") with Wells Fargo Funding, Inc. ("Wells Fargo Funding"). On December 4, 2014, SecurityNational Mortgage and Wells Fargo Bank (which was assigned Wells Fargo Funding's interest in the Settlement Agreement) entered into a Second Addendum (the "Addendum") to the Settlement Agreement, in which SecurityNational Mortgage agreed to make a final payment to Wells Fargo Bank by December 30, 2014, to satisfy and terminate its remaining payment obligations under the Settlement Agreement. On December 29, 2014, SecurityNational Mortgage made the final payment to Wells Fargo Bank pursuant to the terms of the Addendum from its loan loss reserve, thereby satisfying in full its payment obligations under the Settlement Agreement.

Settlement with Bank of America, N.A. and Countrywide Home Loans, Inc.

On December 23, 2014, SecurityNational Mortgage entered into a Settlement Agreement (the “Settlement Agreement”) with Countrywide Home Loans, Inc. (“Countrywide Home Loans”), Bank of America, N.A. (“Bank of America”), successor-in-interest by the April 27, 2009 de jure merger to Countrywide Bank, FSB.  Under the terms of the Settlement Agreement, SecurityNational Mortgage is required to pay a settlement amount to Bank of America and Countrywide Home Loans, jointly as settlement purchasers.  On December 23, 2014, SecurityNational Mortgage made the full and final settlement payment from its mortgage loan loss reserve to Bank of America and Countrywide Home Loans by wire transfer.

The payment of the settlement amount is in full and final settlement of the claims and disputes between Bank of America and Countrywide Home Loans, and SecurityNational Mortgage under certain loan purchase agreements.  Bank of America, Countrywide Home Loans and SecurityNational Mortgage are parties to the Loan Purchase Agreement, originally entered into between Countrywide Funding Corporation and SecurityNational Mortgage, dated September 27, 1994; and Countrywide Home Loans and SecurityNational Mortgage are parties to the Home Equity Loan Purchase Agreement, dated January 15, 1997, including any amendments or modifications to such agreements (collectively, the “Loan Purchase Agreements”).

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

9) Reinsurance, Commitments and Contingencies

Under the terms of the Settlement Agreement, SecurityNational Mortgage, Bank of America and Countrywide Home Loans agreed to full, complete and general mutual releases with respect to the alleged claims and disputes.  In particular, Bank of America and Countrywide Home Loans, as settlement purchasers, and SecurityNational Mortgage Company, as settlement seller, and their respective parent and subsidiary entities, predecessors, successors and affiliates agree to fully, finally and completely release and forever discharge each other and their respective parent and subsidiary entities, predecessors, successors, affiliates, assigns and their respective current and past directors, officers, employees, representatives and agents from any and all claims and disputes under the Loan Purchase Agreements. The settlement agreement is subject to an exception for pervasive or system-wide fraud.

Mortgage Loan Loss Demands

Third Party Investors

There have been assertions in third party investor correspondence that SecurityNational Mortgage sold mortgage loans that allegedly contained borrower misrepresentations or experienced early payment defaults, or that were otherwise allegedly defective or not in compliance with agreements between SecurityNational Mortgage and the third party investors consisting principally of financial institutions.  As a result of these claims, third party investors have made demands that SecurityNational Mortgage repurchase certain alleged defective mortgage loans that were sold to such investors or indemnify them against any losses related to such loans.

The total amount of potential claims by third party investors is difficult to determine.  The Company has reserved and accrued $1,702,000 as of December 31, 2014 to settle all such investor related claims.  The Company believes that the reserve for mortgage loan loss, which includes provisions for probable losses and indemnification on mortgage loans sold to investors, is reasonable based on available information.  Moreover, the Company has successfully negotiated acceptable settlement terms with other third party investors that asserted claims for mortgage loan losses against SecurityNational Mortgage.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

9) Reinsurance, Commitments and Contingencies

SecurityNational Mortgage disagrees with the repurchase demands and notices of potential claims from third party investors. Furthermore, SecurityNational Mortgage believes there is potential to resolve the alleged claims by the third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.

JP Morgan Chase Indemnification Demand

The Company and its wholly owned subsidiary, SecurityNational Mortgage, received a notice of claim for indemnification dated December 21, 2011, from JP Morgan Chase & Co. (“JP Morgan Chase”) on behalf of EMC Mortgage, LLC (“EMC Mortgage”), relating to 21 mortgage loans that EMC Mortgage allegedly purchased as a third party investor from SecurityNational Mortgage.  The notice also referenced a guaranty agreement, dated February 23, 2006, by the Company for the benefit of EMC Mortgage.  The indemnification notice additionally stated that EMC Mortgage had been named in a lawsuit by the Bear Stearns Mortgage Funding Trust 2007-AR2 (the “Trust”), which was filed on September 13, 2011 in the Delaware Court of Chancery.

The lawsuit the Trust brought against EMC Mortgage contends that more than 800 residential mortgage loans that EMC Mortgage sold to the Trust (including the 21 loans allegedly originated by SecurityNational Mortgage) contained breaches of representations and warranties with respect to the mortgage loans, as well as defaults and foreclosures in many of such loans.  As a result of the alleged breaches of representations and warranties by EMC Mortgage, the complaint requests that EMC Mortgage be ordered to repurchase from the Trust any loans for which it breached its representations and warranties, in the amount of the mortgage loans’ outstanding principal balance and all accrued but unpaid interest.

The indemnification notice from JP Morgan Chase further alleged that the Company and SecurityNational Mortgage are required to indemnify EMC Mortgage for any of its losses arising from the lawsuit that the Trust brought against EMC based upon allegedly untrue statements of material fact related to information that was provided by SecurityNational Mortgage. To the extent the claims in the complaint relate to the 21 mortgage loans that SecurityNational Mortgage allegedly sold to EMC Mortgage, the Company believes it has significant defenses to such claims. The Company intends to vigorously defend itself and SecurityNational Mortgage in the event that JP Morgan Chase were to bring any legal action to require the Company or SecurityNational Mortgage to indemnify it for any loss, liability or expense in connection with the lawsuit that the Trust brought against EMC Mortgage.

Mortgage Loan Loss Litigation

Lehman Brothers - Aurora Loan Services Litigation

On April 15, 2005, SecurityNational Mortgage entered into a loan purchase agreement with Lehman Brothers Bank, FSB (“Lehman Bank”). Under the terms of the loan purchase agreement, Lehman Bank agreed to purchase mortgage loans from time to time from SecurityNational Mortgage. During 2007, Lehman Bank and its wholly owned subsidiary, Aurora Loan Services LLC (“Aurora Loan Services”), purchased a total of 1,490 mortgage loans in the aggregate amount of $352,774,000 from SecurityNational Mortgage. Lehman Bank asserted that certain of the mortgage loans that it purchased from SecurityNational Mortgage during 2007 contained alleged misrepresentations and early payment defaults. As a result of these alleged issues with the mortgage loans, Lehman Bank contended it had the right to require SecurityNational Mortgage to repurchase certain loans or be liable for losses related to such loans under the loan purchase agreement. SecurityNational Mortgage disagrees with these claims.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

9) Reinsurance, Commitments and Contingencies

On December 17, 2007, SecurityNational Mortgage entered into an Indemnification Agreement with Lehman Bank and Aurora Loan Services. Under the terms of the Indemnification Agreement, SecurityNational Mortgage agreed to indemnify Lehman Bank and Aurora Loan Services for 75% of all losses that Lehman Bank and Aurora Loan Services may incur relative to breaches by mortgagors pertaining to 55 mortgage loans that were purchased from SecurityNational Mortgage. SecurityNational Mortgage was released from any obligation to pay the remaining 25% of such losses. The Indemnification Agreement also required SecurityNational Mortgage to indemnify Lehman Bank and Aurora Loan Services for 100% of any future losses incurred on mortgage loans with breaches that were not among the 55 mortgage loans.

Pursuant to the Indemnification Agreement, SecurityNational Mortgage paid $395,000 to Aurora Loan Services as a deposit into a reserve account, to secure any obligations of SecurityNational Mortgage under the Indemnification Agreement. This deposit was in addition to a $250,000 deposit that SecurityNational Mortgage previously made into the reserve account for a total of $645,000. Losses from mortgage loans with alleged breaches were payable from the reserve account. Lehman Bank and Aurora Loan Services were not to apply any funds from the reserve account to a particular mortgage loan, however, until an actual loss had occurred. Under the Indemnification Agreement SecurityNational Mortgage was to pay to Aurora Loan Services each calendar month the difference between the reserve account balance and $645,000, but in no event would SecurityNational Mortgage be required to make payments into the reserve account in excess of $125,000 for any calendar month.

Since the time the reserve account was established, SecurityNational Mortgage paid a total of $4,281,000 from the reserve account to indemnify Lehman Brothers Bank and Aurora Loan Services for alleged losses from 31 mortgage loans that were among 55 mortgage loans with alleged breaches that were covered by the Indemnification Agreement and ten other mortgage loans with alleged breaches. In the last monthly billing statement dated April 24, 2011 to SecurityNational Mortgage, Lehman Brothers Holdings Inc. (“Lehman Holdings”) claimed that SecurityNational Mortgage owed approximately $3,745,000 for mortgage loan losses under the Indemnification Agreement.

During 2010 and 2011, the Company recognized alleged losses of $1,289,000 and $-0-, respectively. Management cannot fully determine the total losses, however, because there could be potential claims for losses that have not yet been determined.  As of December 31, 2014, the Company had not accrued for any losses under the Indemnification Agreement. SecurityNational Mortgage was involved in discussions with Lehman Bank and Lehman Holdings concerning issues under the Indemnification Agreement. During the discussion period, monthly payments for December 2010 and January, February, March and April of 2011 totaling $625,000 were abated or deferred.

On May 11, 2011, SecurityNational Mortgage filed a complaint against Aurora Bank FSB, formerly known as Lehman Bank, and Aurora Loan Services in the United States District Court for the District of Utah because it had been unable to resolve certain issues under the Indemnification Agreement with Lehman Bank and Aurora Loan Services. The complaint alleges, among other claims, material breach of the Indemnification Agreement, including a claim that neither Lehman Bank nor Aurora Loan Services owned the mortgage loans that SecurityNational Mortgage sold so as to justify the amount of payments demanded from, and made by, SecurityNational Mortgage. As a result, SecurityNational Mortgage claims it is entitled to judgment of approximately $4,000,000 against Lehman Bank, as well as Aurora Loan Services to the extent of its involvement and complicity with Lehman Bank. The complaint also alleges a second claim for material breach of a section of the Indemnification Agreement that contains an alleged “sunset” provision and that the amount of the requested payments made was not justified under the “sunset” provision.

On June 8, 2011, Lehman Holdings, which had filed for bankruptcy in September 2008, filed a complaint against SecurityNational Mortgage in the United States District Court for the District of Utah. A subsidiary of Lehman Holdings owns Lehman Bank. The complaint alleges that SecurityNational Mortgage sold loans to Lehman Bank, which were then sold to Lehman Holdings. The complaint additionally alleges that Lehman Bank and Aurora Loan Services assigned their rights and remedies under the loan purchase agreement, as well as the Indemnification Agreement, to Lehman Holdings, which latter assignment purportedly took place on March 28, 2011. Lehman Holdings declared in a letter dated June 2, 2011 that the Indemnification Agreement was null and void except as to losses previously released and discharged, which is disputed by SecurityNational Mortgage.

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 SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

9) Reinsurance, Commitments and Contingencies

Lehman Holdings’ alleged claims are for damages for breach of contract and breach of warranty pursuant to a loan purchase agreement and Seller’s Guide. Based on claiming that the Indemnification Agreement is null and void pursuant to its lawsuit, Lehman Holdings has initially claimed damages in excess of $5,000,000. Prior to declaring the Indemnification Agreement null and void, Lehman Holdings claimed in a then recent billing statement under the terms of the Indemnification Agreement, that SecurityNational Mortgage owed approximately $3,745,000 for mortgage loan losses under the Indemnification Agreement. SecurityNational Mortgage strongly disagrees with the position of Lehman Holdings and, as set forth in its May 11, 2011 complaint, seeks affirmative relief of approximately $4,000,000 from Lehman Bank and Aurora Loan Services. Lehman Bank is a subsidiary of a company owned by Lehman Holdings, and Aurora Loan Services is a subsidiary of Lehman Bank.

On September 4, 2012, SecurityNational Mortgage filed a motion for summary judgment in its action against Lehman Bank and Aurora Loan Services on certain material issues, as well as against Lehman Holdings regarding its claims against SecurityNational Mortgage. Lehman Bank and Aurora Loan Services filed a cross motion for summary judgment as to the issues in SecurityNational Mortgage’s motion and, in the Lehman Holdings case, Lehman Holdings has requested that the Court allow a cross motion on the issues which are the subject of SecurityNational Mortgage’s September 4, 2012 motion. The cases are before two different federal judges.

On February 27, 2013, SecurityNational Mortgage’s motion for summary judgment against Lehman Bank and Aurora Loan Services and the related cross motion were heard by Judge David Nuffer of the United States District Court for the District of Utah. After an extensive hearing, Judge Nuffer requested that the parties prepare findings of fact in accordance with the Court’s earlier promulgated findings as modified at the hearing, and that each party submit proposed conclusions of law related to the motions. The motion and cross motion were taken under advisement. SecurityNational Mortgage’s motion in the Lehman Holdings case was heard on April 22, 2014 before Judge Ted Stewart of the United States District Court for the District of Utah, and is under advisement.

On May 6, 2014, Judge Nuffer issued his summary of facts, conclusions of law and order granting SecurityNational Mortgage’s motion for summary judgment and denying the cross motion of Lehman Bank and Aurora Loan Services. On May 27, 2014, Lehman Bank and Aurora Loan Services filed a motion to reconsider Judge Nuffer’s summary judgment ruling. On June 2, 2014, a hearing was held before Judge Nuffer to determine the amount owing to SecurityNational Mortgage pursuant to the summary judgment ruling. On December 23, 2014, Judge Nuffer issued an order denying Lehman Bank’s and Aurora Loan Services’ motion for reconsideration of his summary judgment ruling in favor of SecurityNational Mortgage.

On December 24, 2014, Judge Nuffer issued an amended order granting SecurityNational Mortgage’s motion for summary judgment. The amended order provided that the amount of monies previously paid by SecurityNational Mortgage that were wrongfully applied by Lehman Bank to losses on loans actually owed by Lehman Holdings, as established at the June 2, 2014 hearing, was $3,892,974. The amended order also provided for prejudgment interest at 9% per annum to SecurityNational Mortgage. The total amount of prejudgment interest awarded is $1,674,240 through May 31, 2014, with a per diem of $960 for each day after May 31, 2014 until judgment. The court also commented that further replenishment of the indemnification fund under the Indemnification Agreement appears to be barred by language in the assignment effecting a waiver, but that this issue had not been briefed before the June 2, 2014 hearing. In addition, the court stated that the offset that Lehman Bank and Aurora Loan Services pled as an affirmative defense had not yet been adjudicated by the court. Finally, the court ordered the parties to meet and confer by January 16, 2015, and to file a motion to schedule the disposition of the remaining issues in the case. The motion is to clarify whether any issues other than the offset remain to be resolved.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

9) Reinsurance, Commitments and Contingencies

On May 7, 2014, Judge Stewart issued an order for the parties to submit supplemental briefs as to the effect of Judge Nuffer’s summary judgment order on SecurityNational Mortgage’s motion for summary judgment in the Lehman Holdings case. The supplemental briefing was continued until January 16, 2015. Judge Stewart also granted leave for SecurityNational Mortgage to file an additional motion for summary judgment in the Lehman Holdings case on the basis that the claims of Lehman Holdings are barred by the statute of limitations.  The motion was also to be filed by January 16, 2015.  The August 11, 2014 trial setting before Judge Stewart in the Lehman Holdings case was stricken without providing a new trial date.

On January 16, 2015, SecurityNational Mortgage and Lehman Holdings filed briefs with Judge Stewart concerning the effect of the rulings in Judge Nuffer’s case on the case before Judge Stewart, and on the same date SecurityNational Mortgage filed a motion for summary judgment in the Lehman Holdings case based on the statute of limitations.  A hearing concerning SecurityNational Mortgage’s summary judgment motion based on the statute of limitations is scheduled before Judge Stuart on April 14, 2015. On February 28, 2015, Lehman Bank and Aurora Loan Services filed a partial summary judgment motion before Judge Nuffer asserting that the Indemnification Agreement security fund should be replenished, and for a right to offset alleged losses of approximately $8.6 million, based on more than 100 loans retained by Lehman Bank, against the amount owing to SecurityNational per Judge Nuffer’s summary judgment order. Lehman Bank and Aurora Loan Services asserts that another 124 loans are not analyzed yet for potential breaches.

SecurityNational Mortgage had until March 30, 2015 to respond to the motion of Lehman Bank and Aurora Loan Services, and to file a motion if so determined by SecurityNational Mortgage. SecurityNational Mortgage asserts that Lehman Bank and Aurora Loan Services have no rights to a replenishment of the Indemnification Agreement reserve account, or for any offset against the liability of Lehman Bank and Aurora Loan Services to SecurityNational Mortgage, including the assertion that Lehman Bank and Aurora Loan Services executed an assignment to Lehman Holdings containing a waiver and release of rights and remedies which affect the foregoing asserted replenishment and offset matters. On March 30, 2015, SecurityNational Mortgage filed a response in opposition to the partial summary judgement motion of Lehman Bank and Aurora Loan Services and also filed its own partial summary judgment motion on the same issue against Lehman Bank and Aurora Loan Services.

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

Non-Cancelable Leases

The Company leases office space and equipment under various non-cancelable agreements, with remaining terms up to five years. Minimum lease payments under these non-cancelable operating leases as of December 31, 2014, are approximately as follows:

Years Ending
December 31
2015	$	4,299,185
2016		3,610,599
2017		2,835,947
2018		1,188,581
2019		563,956
Total	$	12,498,268

Total rent expense related to non-cancelable operating leases for the years ended December 31, 2014, 2013, and 2012 was approximately $5,589,000, $4,307,000 and $3,425,000, respectively.

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 SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

9)       Reinsurance, Commitments and Contingencies

Other Contingencies and Commitments

The Company has entered into commitments to fund new residential construction loans. As of December 31, 2014, the Company’s commitments were $49,307,000, for these loans of which $33,072,000 had been funded. The Company will advance funds once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 80% of appraised value. The Company receives fees from the borrowers and the interest rate is generally 2% to 6.75% over the bank prime rate (3.25% as of December 31, 2014). Maturities range between six and twelve months.

The Company belongs to a captive insurance group for certain casualty insurance, worker compensation and liability programs. Insurance reserves are maintained relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive insurance management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. If actual claims or adverse development of loss reserves occurs and exceed these estimates, additional reserves may be required. The estimation process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date. At December 31, 2014, $929,417 of reserves was established related to such insurance programs versus $524,034 at December 31, 2013.

The Company is a defendant in various other legal actions arising from the normal conduct of business. Management believes that none of the actions will have a material effect on the Company’s financial position or results of operations. Based on management’s assessment and legal counsel’s representations concerning the likelihood of unfavorable outcomes, no amounts have been accrued for the above claims in the consolidated financial statements.

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

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 1,000 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. The Company did not make any contributions for 2014, 2013 and 2012. At December 31, 2014, the ESOP held 579,918 shares of Class A and 252,974 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 three 401(k) savings plans 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 plans allow participants to make pretax contributions up to a maximum of $17,500, $17,500 and $17,000 for the years 2014, 2013 and 2012, respectively or the statutory limits.

Beginning January 1, 2008, the Company elected to be a “Safe Harbor” Plan for its matching 401(k) contributions. The Company matched 100% of up to 3% of an employee’s total annual compensation and matched 50% of 4% to 5% of an employee’s annual compensation. The match was in Company stock. The Company’s contribution for 2014, 2013 and 2012 was $808,572, $749,898 and $222,719, respectively under the “Safe Harbor” plan.

82

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

10)      Retirement Plans (Continued)

In 2001, the Company’s Board of Directors adopted a Deferred Compensation Plan. Under the terms of the Plan, the Company will provide deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Board has appointed a Committee of the Company to be the Plan Administrator and to determine the employees who are eligible to participate in the plan. The employees who participate may elect to defer a portion of their compensation into the plan. The Company may contribute into the plan at the discretion of the Company’s Board of Directors. The Company did not make any contributions for 2014, 2013 and 2012.

The Company had a deferred compensation agreement with its past Chief Executive Officer. The deferred compensation was payable on the retirement or death of this individual either in annual installments over 10 years or in a lump sum settlement, if approved by the Board of Directors. The amount to be paid was $60,000 per year with cost of living adjustments each anniversary. The compensation agreement also provided that any remaining balance would be paid to his heirs in the event of his death. In 2014, the Board of Directors approved a lump sum for the payment of  $598,426, which represented a full and final payment

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

On In the event of a sale or merger of the Company and Mr. Quist is not retained in his current position, the Company would be obligated to continue Mr. Quist’s current compensation and benefits for seven years following the merger or sale. The agreement further provides that Mr. Quist is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 65), (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of twenty years in annual installments in the amount equal to 75% of his then current rate of compensation. However, in the event that Mr. Quist dies prior to receiving all retirement benefits there under, the remaining benefits are to be paid to his heirs. The Company expensed $833,183 and $264,000 in fiscal 2014 and 2013, respectively, to cover the present value of anticipated retirement benefits under the employment agreement. The liability accrued is $2,270,425 and $1,437,242 as of December 31, 2014 and 2013, respectively.

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

83

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

10)     Retirement Plans (Continued)

In the event of a sale or merger of the Company and Mr. Beckstead is not retained in his current position, the Company would be obligated to continue Mr. Beckstead’s current compensation and benefits for five years following the merger or sale. The agreement further provides that Mr. Beckstead is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 62½) (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of ten years in annual installments in the amount equal to one-half of his then current annual salary. However, in the event that Mr. Beckstead dies prior to receiving all retirement benefits there under, the remaining benefits are to be paid to his heirs. The Company expensed $154,817 and $-0- in fiscal 2014 and 2013, respectively, to cover the present value of the retirement benefit of the agreement. The liability accrued is $768,220 and $613,403, as of December 31, 2014 and 2013, respectively.

In the event of a sale or merger of the Company and Mr. Quist is not retained in his current position, the Company would be obligated to continue Mr. Quist’s current compensation and benefits for seven years following the merger or sale. The agreement further provides that Mr. Quist is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 65), (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of twenty years in annual installments in the amount equal to 75% of his then current rate of compensation. However, in the event that Mr. Quist dies prior to receiving all retirement benefits there under, the remaining benefits are to be paid to his heirs. The Company expensed $833,183 and $264,000 in fiscal 2014 and 2013, respectively, to cover the present value of anticipated retirement benefits under the employment agreement. The liability accrued is $2,270,425 and $1,437,242 as of December 31, 2014 and 2013, respectively.

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

In the event of a sale or merger of the Company and Mr. Beckstead is not retained in his current position, the Company would be obligated to continue Mr. Beckstead’s current compensation and benefits for five years following the merger or sale. The agreement further provides that Mr. Beckstead is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 62½) (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of ten years in annual installments in the amount equal to one-half of his then current annual salary. However, in the event that Mr. Beckstead dies prior to receiving all retirement benefits there under, the remaining benefits are to be paid to his heirs. The Company expensed $154,817 and $-0- in fiscal 2014 and 2013, respectively, to cover the present value of the retirement benefit of the agreement. The liability accrued is $768,220 and $613,403, as of December 31, 2014 and 2013, respectively.

11)     Capital Stock

The Company has two classes of common stock with shares outstanding, Class A common shares and Class C common shares. Class C shares have 10 votes per share on all matters except for the election of one third of the directors who are elected solely by the Class A shares. Class C shares are convertible into Class A shares at any time on a one to one ratio. The decrease in treasury stock was the result of treasury stock being used to fund the company’s 401(k) and Deferred Compensation Plans.

84

 SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

11)     Capital Stock (Continued)

Stockholders of both classes of common stock have received 5% stock dividends in the years 1990 through 2014, 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.

On July 2, 2014, the stockholders approved a 1-for-10 reverse stock split of the Company’s Class C common stock at the Annual Meeting of Stockholders.  Concurrently with the approval of the reverse stock split, the stockholders also approved amendments to Article V of the Company’s Articles of Incorporation to provide that each share of Class C common stock will have weighted voting of ten votes per share and that each share of Class C common stock may be converted into one share of Class A common stock.  The Board of Directors had previously approved the reverse stock split and weighted voting of Class C common stock.  Prior to the approval of the reverse stock split and weighted voting of Class C shares, the Company’s Articles of Incorporation provided that each share of Class C common stock had one vote per share and that Class C common shares were convertible into Class A common shares at a conversion ratio of ten shares of Class C common stock for one share of Class A common stock.

The reverse stock split and weighted voting of the Company's Class C common stock became effective on August 1, 2014, when the Articles of Restatement and Amendment to the Company's Articles of Incorporation were filed with the Utah Division of Corporations and Commercial Code. The reverse stock split will affect all of the holders of the Company's Class C common stock uniformly but will not affect any Class C stockholder's percentage ownership interest in the Company or proportionate voting power, except for insignificant changes that will result from the rounding up of fractional shares. Additionally, the reverse stock split will not impact the existing shares of Class A common stock.

The following table summarizes the activity in shares of capital stock for the three-year period ended December 31, 2014:

	Class A		Class C (1)
Balance at December 31, 2011		9,638,798		1,013,598
Exercise of stock options		685,753		31,891
Stock dividends		518,702		52,244
Conversion of Class C to Class A		323		(323	)
Balance at December 31, 2012		10,843,576		1,097,410
Exercise of stock options		359,786		211,211
Stock dividends		562,152		63,342
Conversion of Class C to Class A		41,773		(41,773	)
Balance at December 31, 2013		11,807,287		1,330,191
Exercise of stock options		54,412		-
Stock dividends		595,020		66,384
Reverse stock split true up				15
Conversion of Class C to Class A		2,521		(2,521	)
Balance at December 31, 2014		12,459,240		1,394,069

(1) Class C shares have been retroactively adjusted for the effect of the 1-for-10 reverse stock split that was approved by the stockholders in 2014.

 

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

11)     Capital Stock (Continued)

Earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. In accordance with accounting principles generally accepted in the United States of America, the basic and diluted earnings per share amounts were calculated as follows:

	2014		2013		2012
Numerator:
Net earnings	$	7,754,648	$	7,585,921	$	16,712,518
Denominator:
Denominator for basic earnings per share-weighted-average shares		12,518,743		12,366,029		11,427,568
Effect of dilutive securities
Employee stock options		409,266		615,547		599,281
Dilutive potential common shares		409,266		615,547		599,281
Denominator for diluted earnings (loss) per share-adjusted weighted-average shares and assumed conversions		12,928,009		12,981,576		12,026,849
Basic earnings per share	$	0.62	$	0.61	$	1.46
Diluted earnings per share	$	0.60	$	0.58	$	1.39

12)     Stock Compensation Plans

The Company has four fixed option plans (the “2003 Plan”, the “2006 Director Plan”, the “2013 Plan” and the “2014 Director Plan”). Compensation expense for options issued of $391,220, $88,369 and $251,031 has been recognized under these plans for 2014, 2013 and 2012, respectively. As of December 31, 2014, the total unrecognized compensation expense related to the options issued in December 2014 and July 2014 were $280,287 and $86,924, respectively, which is expected to be recognized over the vesting period of one year.

The weighted-average fair value of each option granted in 2014 under the 2013 Plan, is estimated at $1.74 for the July 2, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 57.77%, risk-free interest rate of 1.79%, and an expected term of 5.32 years.

The weighted-average fair value of each option granted in 2014 under the 2013 Plan and the 2014 Director Plan, is estimated at $1.56 for the December 5, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 52.31%, risk-free interest rate of 1.69%, and an expected term of 5.31 years.

The weighted-average fair value of each option granted in 2014 under the 2014 Director Plan, is estimated at $1.56 for the December 7, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 52.27%, risk-free interest rate of 1.76%, and an expected term of 5.31 years.

The weighted-average fair value of each option granted in 2013 under the 2013 Plan and the 2006 Director Plan, is estimated at $1.96 for the December 6, 2013 and December 7, 2013 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 67.93%, risk-free interest rate of 1.68%, and an expected term of 5.31 years.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

12)     Stock Compensation Plans (Continued)

The weighted-average fair value of each option granted in 2012 under the 2006 Director Plan, is estimated at $3.18 for the December 7, 2012 options as of the grant date using the Black Scholes Option Pricing Model with the following weighted-average assumptions: dividend yield of 5%, volatility of 73.89%, risk-free interest rate of 0.70%, and an expected term of 5.31 years.

The weighted-average fair value of each option granted in 2012 under the 2003 Plan and the 2006 Director Plan, is estimated at $0.64 and $0.66, respectively for the April 13, 2012 options as of the grant date using the Black Scholes Option Pricing Model with the following weighted-average assumptions: dividend yield of 5% and 5%, volatility of

70.26% and 72.58%, risk-free interest rate of 0.84% and 1.04%, and an expected term of 4.53 to 5.32 years, respectively.

The Company generally estimates the expected life of the options based upon the contractual term of the options adjusted for actual experience.Future volatility is estimated based upon the weighted historical volatility of the Company’s Class A common stock and three peer company stocks over a period equal to the estimated life of the options.Common stock issued upon exercise of stock options are generally new share issuances rather than from treasury shares.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

12) Stock Compensation Plans (Continued)

Activity of the stock option plans is summarized as follows:
	Number of Class A Shares			Weighted Average  Exercise  Price		Number of Class C  Shares			Weighted Average Exercise Price
Outstanding at December 31, 2011		1,996,543		$	2.40		361,028		$	2.38
Adjustment for the effect of stock dividends		43,928					24,515
Granted		347,000					-
Exercised		(1,041,276	)				(52,500	)
Cancelled		(123,134	)				-
Reclass from A to C		(250,808	)				250,808
Outstanding at December 31, 2012		972,253		$	2.07		583,851		$	2.18
Adjustment for the effect of stock dividends		17,962					24,222
Granted		81,960					50,000
Exercised		(485,366	)				(190,602	)
Cancelled		(76,676	)				(63,814	)
Reclass from A to C		(105,000	)				105,000
Outstanding at December 31, 2013		405,133		$	2.41		508,657		$	2.00
Adjustment for the effect of stock dividends		24,446					32,934
Granted		173,500					150,000
Exercised		(59,713	)				-
Cancelled		(30,571	)				-
Outstanding at December 31, 2014		512,795		$	3.20		691,591		$	2.54
Exercisable at end of year		343,987		$	2.50		547,216		$	2.00
Available options for future grant		265,198					-
Weighted average contractual term of options outstanding at December 31, 2014	7.70 years					3.42 years
Weighted average contractual term of options exercisable at December 31, 2014	6.65 years					1.79 years
Aggregated intrinsic value of options outstanding at December 31, 2014 (1)	$	1,042,682				$	1,856,886
Aggregated intrinsic value of options exercisableat December 31, 2014 (1)	$	940,079				$	1,780,498

(1) The Company used a stock price of $5.22 as of December 31, 2014 to derive intrinsic value.

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the years ended December 31, 2014 and 2013 was $173,650 and $2,179,393, respectively.

88

 SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

13)     Statutory Financial Information and Dividend Limitations

The Company’s insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (“NAIC”), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed.

All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner and/or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis.

Statutory net income and capital and surplus of the Company’s insurance subsidiaries, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities are as follows:

	Net Income						Capital and Surplus
	2014		2013		2012		2014		2013
Amounts by insurance subsidiary:
Security National Life Insurance Company	$	5,137,208	$	1,283,311	$	391,533	$	34,356,157	$	29,597,289
Memorial Insurance Company of America		415		237		159		1,082,587		1,083,237
Southern Security Life Insurance Company, Inc.		467		1,288		184		1,590,424		1,586,832
Trans-Western Life Insurance Company		1,304		1,906		2,113		499,182		497,878
Total	$	5,139,394	$	1,286,742	$	393,989	$	37,528,350	$	32,765,236

The Utah, Arkansas, Mississippi and Texas Insurance Departments impose minimum risk-based capital requirements (“RBC”) that were developed by the NAIC on insurance enterprises. The formulas for determining the RBC specify various factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio (the “Ratio”) of the enterprise’s regulatory total adjusted capital, as defined by the NAIC, to its authorized control level, as defined by the NAIC. Enterprises below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The life insurance subsidiaries have a combined weighted Ratio that is greater than the first level of regulatory action as of December 31, 2014.

Generally, the net assets of the life insurance subsidiaries available for transfer to the Company are limited to the amounts of the life insurance subsidiaries net assets, as determined in accordance with statutory accounting practices, which were $37,528,350 at December 31, 2014, exceed minimum statutory capital requirements; however, payments of such amounts as dividends are subject to approval by regulatory authorities.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

14)     Business Segment Information

Description of Products and Services by Segment

The Company has three reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment consists of life insurance premiums and operating expenses from the sale of insurance products sold by the Company’s independent agency force and net investment income derived from investing policyholder and segment surplus funds. The Company’s cemetery and mortuary segment consists of revenues and operating expenses from the sale of at-need cemetery and mortuary merchandise and services at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10% or more of the purchase price and the net investment income from investing segment surplus funds. The Company’s mortgage loan segment consists of loan originations fee income and expenses from the originations of residential mortgage loans and interest earned and interest expenses from warehousing pre-sold loans before the funds are received from financial institutional investors.

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, and are eliminated upon consolidation.

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.

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SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

14)     Business Segment Information (Continued)

	2014
	Life			Cemetery/					Reconciling
	Insurance			Mortuary		Mortgage			Items			Consolidated
Revenues:
From external sources:
Revenue from customers	$	57,037,623		$	11,426,308	$	124,668,054		$	-		$	193,131,985
Net investment income		23,008,489			275,324		5,019,927			-			28,303,740
Realized gains (losses) on
investments and other assets		1,208,391			585,543		124,242			-			1,918,176
Other than temporary impairments		(164,240	)		-		-			-			(164,240	)
Other revenues		682,682			169,464		2,894,867			-			3,747,013
Intersegment revenues:
Net investment income		6,128,389			1,288,856		642,880			(8,060,125	)		-
Total revenues		87,901,334			13,745,495		133,349,970			(8,060,125	)		226,936,674
Expenses:
Death and other policy benefits		29,789,964			-		-			-			29,789,964
Increase in future policy benefits		18,060,151			-		-			-			18,060,151
Amortization of deferred policy and preneed acquisition costs and value of business acquired		6,561,589			331,389		-			-			6,892,978
Depreciation		644,510			436,390		1,096,265			-			2,177,165
General, administrative and other costs:
Intersegment		24,000			166,079		208,513			(398,592	)		-
Provision for loan losses		-			-		3,053,403			-			3,053,403
Costs related to funding mortgage
loans		-			-		6,877,069			-			6,877,069
Other		23,045,928			10,245,144		111,319,492			(2	)		144,610,562
Interest expense:
Intersegment		725,354			1,481,317		5,454,860			(7,661,531	)		-
Other		578,083			421,920		1,994,426			-			2,994,429
Total benefits and expenses		79,429,579			13,082,239		130,004,028			(8,060,125	)		214,455,721
Earnings before income taxes	$	8,471,755		$	663,256	$	3,345,942		$	-		$	12,480,953
Income tax expense		(3,427,254	)		-		(1,299,051	)		-			(4,726,305	)
Net earnings	$	5,044,501		$	663,256	$	2,046,891		$	-		$	7,754,648
Identifiable assets	$	652,348,803		$	109,114,226	$	52,349,204		$	(142,742,671	)	$	671,069,562
Goodwill	$	2,765,570		$	-	$	-		$	-		$	2,765,570
Expenditures for long-lived assets	$	1,420,950		$	121,677	$	737,936		$	-		$	2,280,563

91

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

14)     Business Segment Information (Continued)

	2013
	Life			Cemetery/					Reconciling
	Insurance			Mortuary		Mortgage			Items			Consolidated
Revenues:
From external sources:
Revenue from customers	$	51,322,567		$	12,000,375	$	127,950,021		$	-		$	191,272,963
Net investment income		15,877,784			268,923		4,207,295			-			20,354,002
Realized gains (losses) on investments and other assets		1,402,352			15,699		-			-			1,418,051
Other than temporary impairments		(336,226	)		-		-			-			(336,226	)
Other revenues		538,009			94,703		1,973,518			-			2,606,230
Intersegment revenues:
Net investment income		7,220,282			1,356,825		262,074			(8,839,181	)		-
Total revenues		76,024,768			13,736,525		134,392,908			(8,839,181	)		215,315,020
Expenses:
Death and other policy benefits		28,534,936			-		-			-			28,534,936
Increase in future policy benefits		19,594,890			-		-			-			19,594,890
Amortization of deferred policy and preneed acquisition costs and value of business acquired		4,811,300			370,537		-			-			5,181,837
Depreciation		401,893			426,641		792,535			-			1,621,069
General, administrative and other costs:
Intersegment		24,000			141,367		199,193			(364,560	)		-
Provision for loan losses		-			-		1,751,472			-			1,751,472
Costs related to funding mortgage
loans		-			-		6,635,290			-			6,635,290
Other		18,753,753			10,467,717		110,096,627			1			139,318,098
Interest expense:
Intersegment		802,352			1,664,096		6,008,174			(8,474,622	)		-
Other		233,343			443,133		2,177,225			-			2,853,701
Total benefits and expenses		73,156,467			13,513,491		127,660,516			(8,839,181	)		205,491,293
Earnings before income taxes	$	2,868,301		$	223,034	$	6,732,392		$	-		$	9,823,727
Income tax (expense) benefit		399,304			-		(2,637,110	)		-			(2,237,806	)
Net earnings	$	3,267,605		$	223,034	$	4,095,282		$	-		$	7,585,921
Identifiable assets	$	591,465,834		$	114,454,631	$	50,250,677		$	(137,413,688	)	$	618,757,454
Goodwill	$	391,848		$	285,191	$	-		$	-		$	677,039
Expenditures for long-lived assets	$	659,259		$	1,100,195	$	1,810,879		$	-		$	3,570,333

92

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

14)     Business Segment Information (Continued)

	2012
	Life			Cemetery/					Reconciling
	Insurance			Mortuary		Mortgage			Items			Consolidated
Revenues:
From external sources:
Revenue from customers	$	49,550,904		$	10,864,497	$	150,553,261		$	-		$	210,968,662
Net investment income		16,616,541			333,625		4,965,411			-			21,915,577
Realized gains (losses) on investments and other assets		1,415,556			8,954		-			-			1,424,510
Other than temporary impairments		(1,207,632	)		-		-			-			(1,207,632	)
Other revenues		482,325			136,189		540,538			-			1,159,052
Intersegment revenues:
Net investment income		7,570,979			1,435,891		294,980			(9,301,850	)		-
Total revenues		74,428,673			12,779,156		156,354,190			(9,301,850	)		234,260,169
Expenses:
Death and other policy benefits		24,246,088			-		-			-			24,246,088
Increase in future policy benefits		21,435,191			-		-			-			21,435,191
Amortization of deferred policy and preneed acquisition costs and value of business acquired		5,137,586			311,843		-			-			5,449,429
Depreciation		315,960			426,006		516,131			-			1,258,097
General, administrative and other costs:
Intersegment		24,000			102,726		137,696			(264,422	)		-
Provision for loan losses		-			-		4,239,418			-			4,239,418
Costs related to funding mortgage
loans		-			-		6,931,045			-			6,931,045
Other		17,824,800			9,582,499		118,198,014			2			145,605,315
Interest expense:
Intersegment		694,442			1,681,987		6,661,001			(9,037,430	)		-
Other		159,659			455,449		3,129,185			-			3,744,293
Total benefits and expenses		69,837,726			12,560,510		139,812,490			(9,301,850	)		212,908,876
Earnings before income taxes	$	4,590,947		$	218,646	$	16,541,700		$	-		$	21,351,293
Income tax (expense) benefit		1,755,258			-		(6,394,033	)		-			(4,638,775	)
Net earnings	$	6,346,205		$	218,646	$	10,147,667		$	-		$	16,712,518
Identifiable assets	$	558,845,424		$	116,368,747	$	55,613,678		$	(133,611,226	)	$	597,216,623
Goodwill	$	391,848		$	285,191	$	-		$	-		$	677,039
Expenditures for long-lived assets	$	400,605		$	689,154	$	2,131,861		$	-		$	3,221,620

93

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

15)     Related Party Transactions

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

16)     Fair Value of Financial Instruments

Generally accepted accounting principles (GAAP) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. GAAP also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value measurements are classified under the following hierarchy:

Level 1:  Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we can access.

Level 2: Financial assets and financial liabilities whose values are based on the following:

a)	Quoted prices for similar assets or liabilities in active markets;
b)	Quoted prices for identical or similar assets or liabilities in non-active markets; or
c)	Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect our estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.

The Company utilizes a combination of third party valuation service providers, brokers, and internal valuation models to determine fair value.

The following methods and assumptions were used by the Company in estimating the fair value disclosures related to other significant financial instruments:

The items shown under Level 1 and Level 2 are valued as follows:

Securities Available for Sale and Held to Maturity: The fair values of investments in fixed maturity and equity securities along with methods used to estimate such values are disclosed in Note 2 of the Notes to Consolidated Statements.

Restricted Assets:A portion of these assets include mutual funds and equity securities that have quoted market prices. Also included are cash and cash equivalents and participations in mortgage loans. The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Cemetery Perpetual Care Trust Investments:  A portion of these assets include equity securities that have quoted market prices. Also included are cash and cash equivalents. The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Call and Put Options: The Company uses quoted market prices to value its call and put options.

94

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

16)      Fair Value of Financial Instruments (Continued)

The items shown under Level 3 are valued as follows:

Policyholder Account Balances and Future Policy Benefits-Annuities: 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%. The fair values for the Company’s liabilities under investment-type insurance contracts (disclosed as policyholder account balances and future policy benefits – annuities) are estimated based on the contracts’ cash surrender values.

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.

Interest Rate Lock Commitments: The Company’s mortgage banking activities enters into interest rate lock commitments with potential borrowers and forward commitments to sell loans to third-party investors. The Company also implements a hedging strategy for these transactions. A mortgage loan commitment binds the Company to lend funds to a qualified borrower at a specified interest rate and within a specified period of time, generally up to 30 days after inception of the mortgage loan commitment. Mortgage loan commitments are defined to be derivatives under generally accepted accounting principles and are recognized at fair value on the consolidated balance sheet with changes in their fair values recorded as part of other comprehensive income from mortgage banking operations.

The Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage loan and the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the mortgage loan commitment is issued. Therefore, at the time of issuance, the estimated fair value is zero. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates derived from the Company’s recent historical empirical data are used to estimate the quantity of mortgage loans that will fund within the terms of the commitments.

Bank Loan Interest Rate Swaps: Management considers the interest rate swap instruments to be an effective cash flow hedge against the variable interest rate on bank borrowings since the interest rate swap mirrors the term of the note payable and expires on the maturity date of the bank loan it hedges. The interest rate swaps are a derivative financial instruments carried at its fair value. The fair value of the interest rate swap was derived from a proprietary model of the bank from whom the interest rate swap was purchased and to whom the note is payable.

Mortgage Loans on Real Estate: The fair values are estimated using interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Real Estate Held for Investment: The Company believes that in an orderly market fair value will approximate the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for future estimated policy claims. Accordingly, the fair value determination will be weighted more heavily toward the rental analysis.

It should be noted that for replacement cost, when determining the fair value of mortgage properties, the Company uses Marshall and Swift, a provider of building cost information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and projected the present value of the net rental income over seven years. The Company used 60% of the projected cash flow analysis and 40% of the replacement cost to approximate fair value of the collateral.

In addition to this analysis performed by the Company, the Company depreciates Other Real Estate Held for Investment. This depreciation reduces the book value of these properties and lessens the exposure to the Company from further deterioration in real estate values.

95

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

16)     Fair Value of Financial Instruments (Continued)

Mortgage Servicing Rights: The Company initially recognizes MSRs at their estimated fair values derived from the net cash flows associated with the servicing contracts, where the Company assumes the obligation to service the loan in the sale transaction. The precise fair value of MSRs cannot be readily determined because MSRs are not actively traded in stand-alone markets. Considerable judgment is required to estimate the fair values of these assets and the exercise of such judgment can significantly affect the Company’s earnings.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. MSR amortization is determined by amortizing the balance straight-line over an estimated nine year life.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

96

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

16)      Fair Value of Financial Instruments (Continued)

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the consolidated balance sheet at December 31, 2014.

	Total			Quoted Prices  in Active Markets for  Identical Assets (Level 1)			Significant  Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Assets accounted for at fair value on a recurring basis
Common stock	$	6,752,750		$	6,752,750		$	-	$	-
Total securities available for sale		6,752,750			6,752,750			-		-
Restricted assets of cemeteries and mortuaries		715,202			715,202			-		-
Cemetery perpetual care trust investments		695,235			695,235			-		-
Derivatives - interest rate lock commitments		2,111,529			-			-		2,111,529
Total assets accounted for at fair value on a recurring basis	$	10,274,716		$	8,163,187		$	-	$	2,111,529
Liabilities accounted for at fair value on a recurring basis
Policyholder account balances	$	(45,310,699	)	$	-		$	-	$	(45,310,699	)
Future policy benefits - annuities		(65,540,985	)		-			-		(65,540,985	)
Derivatives  - bank loan interest rate swaps		(31,370	)		-			-		(31,370	)
- call options		(116,036	)		(116,036	)		-		-
- put options		(11,867	)		(11,867	)
- interest rate lock commitments		(181,678	)		-			-		(181,678	)
Total liabilities accounted for at fair value on a recurring basis	$	(111,192,635	)	$	(127,903	)	$	-	$	(111,064,732	)

97

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

16)     Fair Value of Financial Instruments (Continued)

Following is a summary of changes in the consolidated balance sheet line items measured using level 3 inputs:

	Policyholder  Account  Balances			Future  Policy  Benefits - Annuities			Interest  Rate Lock Commitments		Bank Loan  Interest Rate  Swaps
Balance - December 31, 2013	$	(48,000,668	)	$	(65,052,928	)	$	1,487,908	$	(58,310	)
Total Losses (Gains):
Included in earnings		2,689,969			(488,057	)		-		-
Included in other comprehensive income (loss)		-			-			441,943		26,940
Balance - December 31, 2014	$	(45,310,699	)	$	(65,540,985	)	$	1,929,851	$	(31,370	)

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the consolidated balance sheet at December 31, 2014.

	Total		Quoted  Prices in  Active Markets for Identical Assets (Level 1)		Significant  Observable  Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Assets accounted for at fair value on a nonrecurring basis
Mortgage servicing rights	$	3,741,381	$	-	$	-	$	3,741,381
Real estate held for investment		53,500		-		-		53,500
Total assets accounted for at fair value on a nonrecurring basis	$	3,794,881	$	-	$	-	$	3,794,881

98

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

16)     Fair Value of Financial Instruments (Continued)

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the consolidated balance sheet at December 31, 2013.

	Total			Quoted  Prices in  Active  Markets for  Identical Assets (Level 1)			Significant  Observable  Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Assets accounted for at fair value on a recurring basis
Non-redeemable preferred stock
Common stock	$	4,498,756		$	4,498,756		$	-	$	-
Total securities available for sale		4,498,756			4,498,756			-		-
Restricted assets of cemeteries and mortuaries		667,149			667,149			-		-
Cemetery perpetual care trust investments		695,616			695,616			-		-
Derivatives - interest rate lock commitments		1,511,111			-			-		1,511,111
Total assets accounted for at fair value on a recurring basis	$	7,372,632		$	5,861,521		$	-	$	1,511,111
Liabilities accounted for at fair value on a recurring basis
Policyholder account balances	$	(48,000,668	)	$	-		$	-	$	(48,000,668	)
Future policy benefits - annuities		(65,052,928	)		-			-		(65,052,928	)
Derivatives  - bank loan interest rate swaps		(58,310	)		-			-		(58,310	)
- call options		(124,174	)		(124,174	)		-		-
- interest rate lock commitments		(23,203	)		-			-		(23,203	)
Total liabilities accounted for at fair value on a recurring basis	$	(113,259,283	)	$	(124,174	)	$	-	$	(113,135,109	)

Following is a summary of changes in the consolidated balance sheet line items measured using level 3 inputs:

	Policyholder Account  Balances			Future  Policy  Benefits - Annuities			Interest  Rate  Lock  Commitments			Bank  Loan  Interest  Rate Swaps
Balance - December 31, 2012	$	(49,746,337	)	$	(65,171,687	)	$	2,961,465		$	(93,572	)
Total Losses (Gains):
Included in earnings		1,745,669			118,759			-			-
Included in other comprehensive income (loss)		-			-			(1,473,557	)		35,262
Balance - December 31, 2013	$	(48,000,668	)	$	(65,052,928	)	$	1,487,908		$	(58,310	)

99

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

16)     Fair Value of Financial Instruments (Continued)

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the consolidated balance sheet at December 31, 2013.

	Total		Quoted  Prices in Active Markets for Identical Assets (Level 1)		Significant  Observable  Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a nonrecurring basis
Mortgage servicing rights	$	2,494,254	$	-	$	-	$	2,494,254
Mortgage loans on real estate		89,000		-		-		89,000
Real estate held for investment		660,784		-		-		660,784
Total assets accounted for at fair value on a nonrecurring basis	$	3,244,038	$	-	$	-	$	3,244,038

Fair Value of Financial Instruments Carried at Other Than Fair Value

ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 2014. The estimated fair value amounts for December 31, 2014 have been measured as of period-end, and have not been reevaluated or updated for purposes of these Consolidated Financial Statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at period-end.

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2014:

	Carrying Value			Level 1		Level 2		Level 3			Total Estimated Fair Value
Assets
Mortgage loans:
Residential	$	51,876,621		$	-	$	-	$	55,247,638		$	55,247,638
Residential construction		32,971,824			-		-		32,971,824			32,971,824
Commercial		35,201,627			-		-		36,829,266			36,829,266
Mortgage loans, net	$	120,050,072		$	-	$	-	$	125,048,728		$	125,048,728
Policy loans		7,011,012			-		-		7,011,012			7,011,012
Other loans		27,114,416			-		-		27,114,416			27,114,416
Short-term investments		27,059,495			-		-		27,059,495			27,059,495
Liabilities
Bank and other loans payable	$	(28,989,008	)	$	-	$	-	$	(28,989,008	)	$	(28,989,008	)

100

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

16)     Fair Value of Financial Instruments (Continued)

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2013:

	Carrying Value			Level 1		Level 2		Level 3			Total Estimated Fair Value
Assets
Mortgage loans:
Residential	$	48,503,639		$	-	$	-	$	51,537,154		$	51,537,154
Residential construction		12,812,359			-		-		12,812,359			12,812,359
Commercial		41,465,880			-		-		42,441,268			42,441,268
Mortgage loans, net	$	102,781,878		$	-	$	-	$	106,790,781		$	106,790,781
Policy loans		7,520,376			-		-		7,520,376			7,520,376
Other loans		12,203,630			-		-		12,203,630			12,203,630
Short-term investments		12,135,719			-		-		12,135,719			12,135,719
Liabilities
Bank and other loans payable	$	(18,231,128	)	$	-	$	-	$	(18,231,128	)	$	(18,231,128	)

The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of financial instruments are summarized as follows:

Mortgage Loans on Real Estate: The estimated fair value of the Company’s mortgage loans is determined using various methods. The Company’s mortgage loans are grouped into three categories: Residential, Residential Construction and Commercial. When estimating the expected future cash flows, it is assumed that all loans will be held to maturity, and any loans that are non-performing are evaluated individually for impairment.

Residential – The estimated fair value of mortgage loans originated prior to 2013 is determined by estimating expected future cash flows of interest payments and discounting them using current interest rates from single family mortgages. The estimated fair value of mortgage loans originated in 2013 and 2014 is determined from pricing of similar loans that were sold in 2013 and 2014.

Residential Construction – These loans are primarily short in maturity (4-6 months) accordingly, the estimated fair value is determined to be the net book value.

Commercial – The estimated fair value is determined by estimating expected future cash flows of interest payments and discounting them using current interest rates for commercial mortgages.

Policy and Other Loans: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Short-Term Investments: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Bank and Other Loans Payable: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

101

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

17)     Accumulated Other Comprehensive Income

The following summarizes the changes in accumulated other comprehensive income:

	December 31
	2014			2013
Unrealized losses on available for-sale securities	$	(390,143	)	$	(12,299	)
Reclassification adjustment for net realized gains in net income		293,985			538,311
Net unrealized gains (losses) before taxes		(96,158	)		526,012
Tax (expense) benefit		30,310			(221,221	)
Net		(65,848	)		304,791
Potential unrealized gains for derivative bank loans (interest rate swaps) before taxes		26,940			35,262
Tax expense		(10,507	)		(9,073	)
Net		16,433			26,189
Potential unrealized gains (losses) for derivative mortgage loans before taxes		441,943			(1,473,557	)
Tax (expense) benefit		(172,358	)		426,614
Net		269,585			(1,046,943	)
Other comprehensive income (loss) changes	$	220,170		$	(715,963	)

The following is the accumulated balances of other comprehensive income as of December 31, 2014:

	Beginning  Balance December 31, 2013			Change for the period			Ending Balance  December 31, 2014
Unrealized net gains on available-for-sale securities and trust investments	$	346,341		$	(65,848	)	$	280,493
Unrealized gains (losses) on derivative mortgage loans		907,624			269,585			1,177,209
Unrealized gains (losses) on  derivative bank loan interest rate swaps		(35,569	)		16,433			(19,136	)
Other comprehensive income	$	1,218,396		$	220,170		$	1,438,566

The following is the accumulated balances of other comprehensive income as of December 31, 2013:

	Beginning  Balance December 31,  2012			Change for  the period			Ending Balance  December 31, 2013
Unrealized net gains on available-for-sale securities and trust investments	$	41,550		$	304,791		$	346,341
Unrealized gains (losses) on derivative mortgage loans		1,954,567			(1,046,943	)		907,624
Unrealized gains (losses) on  derivative bank loan interest rate swaps		(61,758	)		26,189			(35,569	)
Other comprehensive income	$	1,934,359		$	(715,963	)	$	1,218,396

102

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

18)    Derivative Commitments

The Company has adopted a strategy of selling “out of the money” call options on its available for sale equity securities as a source of revenue.  The options give the purchaser the right to buy from the Company specified equity securities at a set price up to a pre-determined date in the future.  The Company has adopted the selling of put options as a means of generating cash or purchasing equity securities at lower than current market prices.  The Company receives an immediate payment of cash for the value of the option and establishes a liability for the market value of the option.  The liability for options is adjusted to market value at each reporting date. The market value of outstanding options as of December 31, 2014 and December 31, 2013 was $127,903 and $124,174, respectively.  In the event a call option is exercised, the Company recognizes a gain on the sale of the equity security and a gain from the sale of the option.  If the option expires unexercised, the Company recognizes a gain from the sale of the option.

 The following table shows the fair value of derivatives as of December 31, 2014 and December 31, 2013.

	Fair Value of Derivative Instruments
	Asset Derivatives						Liability Derivatives
	December 31, 2014			December 31, 2013			December 31, 2014			December 31, 2013
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet  Location	Fair Value		Balance Sheet  Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate lock and forward sales commitments	other assets	$	2,111,529	other assets	$	1,511,111	Other liabilities	$	181,678	Other liabilities	$	23,203
Call Options			-			-	Other liabilities		116,036	Other liabilities		124,174
Put Options			-			-	Other liabilities		11,867	Other liabilities		-
Interest rate swaps			-			-	Bank loans payable		31,370	Bank loans payable		58,310
Total		$	2,111,529		$	1,511,111		$	340,951		$	205,687

The following table shows the gain (loss) on derivatives for the periods presented. There were no gains or losses reclassified from accumulated other comprehensive income (OCI) into income or gains or losses recognized in income on derivatives ineffective portion or any amounts excluded from effective testing.

	Net Amount Gain (Loss) Recognized in OCI
	Years ended December 31
Derivative - Cash Flow Hedging Relationships:	2014		2013
Interest Rate Lock Commitments	$	441,943	$	(1,473,557	)
Interest Rate Swaps		26,940		35,262
Sub Total		468,883		(1,438,295	)
Tax Effect		182,865		(417,541	)
Total	$	286,018	$	(1,020,754	)

103

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

19)     Acquisitions

Acquisition of American Funeral Financial

On June 4, 2014, the Company, through its wholly owned subsidiary, SNFC Subsidiary, LLC (“SNFC Subsidiary”), completed a purchase transaction with American Funeral Financial, LLC, a South Carolina limited liability company (“American Funeral Financial”) and Hypershop, LLC, a North Carolina  limited liability  company (“Hypershop”), the sole owner of all the limited liability company interests of American Funeral Financial, to purchase all of the outstanding limited liability company interests, or membership units, of American Funeral Financial.  American Funeral Financial is engaged in the operation of a factoring business with the principal purpose of providing funding for funeral homes and mortuaries.  

Under the terms of the transaction, as set forth in the Unit Purchase Agreement dated June 4, 2014 (the “Purchase Agreement”), among the Company, SNFC Subsidiary, American Funeral Financial and Hypershop, the Company paid Hypershop purchase consideration equal to (i) $3,000,000 in cash, of which $175,000 was deposited into an interest bearing escrow account to be held for a period of twelve months from the closing date to pay off the indebtedness and other liabilities of American Funeral Financial, plus (ii) $12,011,183, representing the amount of the good standing receivables of American Funeral Financial, plus (iii) earn-out payments equal to .0042 of the aggregate amount of life insurance assignments funded by American Funeral Financial during the three year period following the closing date of the transaction. This earn-out liability was estimated to be $1,368,000. The purchase consideration was to be used to pay off the indebtedness that American Funeral Financial owed to Security Finance Corporation of Spartanburg, as well as to pay off all other indebtedness and liabilities of American Funeral Financial.

The estimated fair values ofthe assets acquired and the liabilities assumedat the date ofacquisition were as follows:

Other loans, net	$	11,866,193
Property and equipment		760,120
Goodwill		2,373,722
Other		1,379,158
Total assets acquired		16,379,193
Other liabilities and accrued expenses		(1,368,000	)
Total liabilities assumed		(1,368,000	)
Fair value of net assets acquired	$	15,011,193

The estimated fair value of the acquisition is based on market assumptions of the future value of the business acquired, the collectability of receivables, the current value of equipment purchased and the useful life of proprietary software.  Based on the unobservable nature of certain of these assumptions, the valuation is considered Level 3 under the fair value hierarchy.

The following unaudited pro forma information has been prepared to present the results of operations of the Company assuming the acquisition of American Funeral Financial had occurred at the beginning of the years ended December 31, 2014, 2013 and 2012, respectively. This pro forma information is supplemental and does not necessarily present the operations of the Company that would have occurred had the acquisition occurred on those dates and may not reflect the operations that will occur in the future:

104

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

19)     Acquisitions (Continued)

	For the Year Ended December 31 (unaudited)
	2014		2013		2012
Total revenues	$	229,268,653	$	220,011,370	$	236,854,910
Net earnings	$	7,996,405	$	7,963,589	$	16,576,647
Net earnings per Class A equivalent common share	$	0.64	$	0.64	$	1.45
Net earnings per Class A equivalent common share
assuming dilution	$	0.62	$	0.61	$	1.38

20)     Mortgage Servicing Rights

The following table presents the MSR activity for 2014 and 2013.

	December 31 2013
	2014			2013
Amortized cost:
Balance before valuation allowance at beginning of year	$	4,844,101		$	2,797,470
MSRs received as proceeds from loan sales		3,741,381			2,494,254
Amortization		(750,735	)		(447,623	)
Application of valuation allowance to write down MSRs with other than temporary impairment		-			-
Balance before valuation allowance at year end	$	7,834,747		$	4,844,101
Valuation allowance for impairment of MSRs:
Balance at beginning of year	$	-		$	-
Additions		-			-
Application of valuation allowance to write down MSRs with other than temporary impairment		-			-
Balance at year end	$	-		$	-
Mortgage servicing rights, net	$	7,834,747		$	4,844,101
Estimated fair value of MSRs at year end	$	8,485,570		$	5,491,270

105

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

20)     Mortgage Servicing Rights (Continued)

The Company reports these MSRs pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements. The following table summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the assumptions made by management in its December 31, 2014 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

	Estimated MSR Amortization
2015	$	870,527
2016		870,527
2017		870,527
2018		870,527
2019		870,527
Thereafter		3,482,112
Total	$	7,834,747

106

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2014, 2013 and 2012

21)     Quarterly Financial Data (Unaudited)

	2014
	Three Months Ended
	March 31			June 30			September 30			December 31
Revenues	$	45,053,276		$	59,411,730		$	61,725,792		$	60,745,876
Benefits and expenses		44,887,289			55,224,633			58,348,652			55,995,147
Earnings before income taxes		165,987			4,187,097			3,377,140			4,750,729
Income tax expense		(27,139	)		(1,563,034	)		(1,239,318	)		(1,896,814	)
Net earnings		138,848			2,624,063			2,137,822			2,853,915
Net earnings per common share (1)	$	0.01		$	0.21		$	0.17		$	0.23
Net earnings per common share assuming dilution (1)	$	0.01		$	0.20		$	0.17		$	0.22

	2013
	Three Months Ended
	March 31			June 30			September 30			December 31
Revenues	$	54,852,234		$	61,332,289		$	50,552,791		$	48,577,706
Benefits and expenses		51,624,611			56,862,769			48,588,507			48,415,406
Earnings before income taxes		3,227,623			4,469,520			1,964,284			162,300
Income tax benefit (expense)		(1,194,357	)		(1,670,275	)		(697,793	)		1,324,619
Net earnings		2,033,266			2,799,245			1,266,491			1,486,919
Net earnings per common share (1)	$	0.17		$	0.23		$	0.10		$	0.12
Net earnings per common share assuming dilution (1)	$	0.15		$	0.21		$	0.10		$	0.11

	2012
	Three Months Ended
	March 31			June 30			September 30			December 31
Revenues	$	47,323,223		$	56,528,210		$	63,747,903		$	66,660,833
Benefits and expenses		44,994,631			51,491,833			57,615,608			58,806,804
Earnings before income taxes		2,328,592			5,036,377			6,132,295			7,854,029
Income tax expense		(666,409	)		(1,443,345	)		(2,142,249	)		(386,772	)
Net earnings		1,662,183			3,593,032			3,990,046			7,467,257
Net earnings per common share (1)	$	0.16		$	0.34		$	0.37		$	0.67
Net earnings per common share assuming dilution (1)	$	0.15		$	0.32		$	0.34		$	0.61

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

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

None

Item 9A.  Controls and Procedures

Under the supervision and with the participation of  the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

(a)     Management’s annual report on internal control over financial reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

· Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company, 

· Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors of the Company, and

· Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management performed an assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2014 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 1992. The objective of this assessment was to determine whether the Company's internal control over financial reporting was effective as of December 31, 2014. Based on that assessment the Company believes that, at December 31, 2014, its internal control over financial reporting was effective.

This annual report on internal control over financial reporting does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities Exchange Commission that permit the Company to provide only management’s report in this annual report.

(b)  Changes in internal control over financial reporting.

There was no change in our internal control over financial reporting that occurred in the fourth quarter of 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Approval of Reverse Stock Split and Weighted Voting of Class C Common Stock

On July 2, 2014, the stockholders approved a 1-for-10 reverse stock split of the Company’s Class C common stock at the Annual Meeting of Stockholders.  Concurrently with the approval of the reverse stock split, the stockholders also approved amendments to Article V of the Company’s Articles of Incorporation to provide that each share of Class C common stock will have weighted voting of ten votes per share and that each share of Class C common stock may be converted into one share of Class A common stock.  The Board of Directors had previously approved the reverse stock split and weighted voting of Class C common stock.  Prior to the approval of the reverse stock split and weighted voting of Class C shares, the Company’s Articles of Incorporation provided that each share of Class C common stock had one vote per share and that Class C common shares were convertible into Class A common shares at a conversion ratio of ten shares of Class C common stock for one share of Class A common stock.

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The Board of Directors believes the 1-for-10 reverse stock split and the weighted voting of the shares of Class C common stock are in the Company’s best interest.  The Company’s per share net income or loss and net book value have often been misreported and understated by the financial community due to a misunderstanding of the conversion and other rights of the Company’s Class C common stock.  As a result, the Company’s per share net income or loss and net book value have often been understated because the financial community would often convert Class C common shares to Class A common shares at a one-to-one conversion ratio rather than a ten-to-one ratio when reporting per share net income or loss and net book value.  The Company believes that the amendments to the Articles of Incorporation, which were approved by the Board of Directors and stockholders of the Company, will help correct this problem.

The reverse stock split and weighted voting of the Company's Class C common stock became effective on August 1, 2014, when the Articles of Restatement and Amendment to the Company's Articles of Incorporation were filed with the Utah Division of Corporations and Commercial Code. The reverse stock split will affect all of the holders of the Company's Class C common stock uniformly but will not affect any Class C stockholder's percentage ownership interest in the Company or proportionate voting power, except for insignificant changes that will result from the rounding up of fractional shares. Additionally, the reverse stock split will not impact the existing shares of Class A common stock.

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PART III

Item 10.  Directors, Executive Officers and Corporate Governance

The Company’s Board of Directors consists of nine persons, five of whom are not employees of the Company. There are no family relationships between or among any of the directors and executive officers, except that Scott M. Quist and Christie Q. Overbaugh are brother and sister, Jason G. Overbaugh is the son of Ms. Christie Q. Overbaugh, and S. Andrew Quist is the son of Scott M. Quist. The following table sets forth certain information with respect to the directors and executive officers of the Company.

Name	Age	Position with the Company
Scott M. Quist	61	Chairman of the Board, President, Chief Executive Officer and Director
Garrett S. Sill	44	Chief Financial Officer and Treasurer
J. Lynn Beckstead, Jr.	61	Vice President Mortgage Operations and Director
Christie Q. Overbaugh	66	Senior Vice President of Internal Operations
Jason G. Overbaugh	40	Vice President, Assistant Secretary, National Marketing Director of Life Insurance and Director
Jeffrey R. Stephens	61	General Counsel and Corporate Secretary
S. Andrew Quist	34	Vice President, Associate General Counsel and Director
John L. Cook	60	Director
Gilbert A. Fuller	74	Director
Robert G. Hunter	55	Director
H. Craig Moody	63	Director
Norman G. Wilbur	76	Director

Directors

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

Scott M. Quist has served as Chairman of the Board and Chief Executive Officer of the Company since September 2012. Mr. Quist also serves as the Company’s President, a position he has held since 2002. He has also served as a director of the Company since 1986.  Mr. Quist served as First Vice President of the Company from 1986 to 2002.  From 1980 to 1982, Mr. Quist was a tax specialist with Peat, Marwick, Mitchell, & Co., in Dallas, Texas.  From 1986 to 1991, he was Treasurer and a director of The National Association of Life Companies, a trade association of 642 insurance companies until its merger with the American Council of Life Companies.  Mr. Quist has been a member of the Board of Governors of the Forum 500 Section (representing small insurance companies) of the American Council of Life Insurance.  He has also served as a regional director of Key Bank of Utah since November 1993.  Mr. Quist is currently a director and a past president of the National Alliance of Life Companies, a trade association of over 200 life companies.  Mr. Quist holds a B.S. degree in Accounting from Brigham Young University and also received his law degree from Brigham Young University.  Mr. Quist’s significant expertise and deep understanding of the technical, organizational and strategic business aspects of the insurance industry, his management expertise, his thirteen year tenure as President of the Company and 28 year tenure as a director, and his years of business and leadership experience led the Board of Directors to conclude that he should be appointed as Chairman of the Board and Chief Executive Officer of the Company.

J. Lynn Beckstead, Jr. has served as Vice President of Mortgage Operations and a director of the Company since 2002.  In addition, Mr. Beckstead is President of SecurityNational Mortgage, a wholly owned subsidiary of the Company, having served in this position since 1993.  From 1990 to 1993, Mr. Beckstead was Vice President and a director of Republic Mortgage Corporation.  From 1983 to 1990, Mr. Beckstead was Vice President and a director of Richards Woodbury Mortgage Corporation.  From 1980 to 1983, he was a principal broker for Boardwalk Properties.  From 1978 to 1980, Mr. Beckstead was a residential loan officer for Medallion Mortgage Company.  From 1977 to 1978, he was a residential construction loan manager for Citizens Bank.  Mr. Beckstead’s expertise in real estate, his 21 year tenure serving as President of SecurityNational Mortgage Company, and his business and leadership experience led the Board of Directors to conclude that he should serve as a director.

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Jason G. Overbaugh has served as Vice President and Assistant Secretary of the Company since 2002. He has also served as a director of the Company since July 2013. Mr. Overbaugh has additionally served as a Vice President and National Marketing Director of Security National Life Insurance Company, a wholly owned subsidiary of the Company, since 2006. From 2003 to 2006, he served as a Vice President of Security National Life Insurance Company with responsibilities as an investment manager over construction lending and commercial real estate investments. From 2000 to 2003, he served as a Vice President of Memorial Estates, Inc., a wholly owned subsidiary of the Company, with responsibilities over operations and sales. In addition, Mr. Overbaugh has served since 2007 as a director of the LOMA Life Insurance Council, a trade association of life insurance companies. He is also a member of the NFDA Trade Association. Mr. Overbaugh received a B.S. degree in Finance from the University of Utah. Mr. Overbaugh’s expertise in insurance and marketing, and his 18 years of experience with the Company in its insurance, real estate, and mortuary and cemetery operations, led the Board of Directors to conclude that he should serve as a director.

S. Andrew Quist has served as Vice President of the Company since 2010. He has also served as a director of the Company since July 2013. Mr. Quist has additionally served as the Company’s Associate General Counsel since 2007, where his responsibilities have included the Company’s regulatory matters and acquisitions. In addition, Mr. Quist has been Vice President and Chief Operating Officer since 2010, and Vice President from 2008 to 2010, of C&J Financial, LLC, a wholly owned subsidiary of the Company, which funds the purchase of funeral and burial policies from funeral homes after the death of the insureds.  Mr. Quist has also served since 2013 as a director of the National Alliance of Life Companies (NALC), a national trade association of over 200 life insurance companies, where he also serves as Vice President and Treasurer. Mr. Quist further serves as President of the Utah Life Convention, a consortium of Utah domestic life insurers. Mr. Quist holds a B.S. degree in Accounting from Brigham Young University and received his law degree from the University of Southern California. Mr. Quist’s expertise in insurance, legal, and regulatory matters led the Board of Directors to conclude that he should serve as a director.

John L. Cook has served as a director of the Company since December 2013.  Mr. Cook has served since 1982 as co-owner and operator of Cook Brothers Painting, Inc., a painting company that provides painting services for contractors and builders of residential and commercial properties. In addition, Mr. Cook attended the University of Utah. Mr. Cook’s years of experience with the construction industry and construction projects led the Board of Directors to conclude that Mr. Cook should serve as a director. As a director Mr. Cook advises the Board regarding the Company’s investments in commercial and residential real estate projects, including Dry Creek at East Village, a 282 unit multifamily development in Sandy City, Utah. Moreover, Mr. Cook’s extensive background in construction and building is important as the Company continues to acquire new real estate holdings and develop its current portfolio of undeveloped land into future developments that could provide additional long term revenues for the Company.

Gilbert A. Fuller has served as a director of the Company since December 2012. From 2006 until his retirement in 2008, Mr. Fuller served as Executive Vice President, Chief Financial Officer and Secretary of USANA Health Sciences, Inc., a multinational manufacturer and direct seller of nutritional supplements. Mr. Fuller joined USANA in 1996 as the Vice President of Finance and served in that role until 1999 when he was appointed as its Senior Vice President. Mr. Fuller has served as a member of the Board of Directors of USANA since 2008. Before joining USANA, Mr. Fuller served in various executive positions for several different companies. Mr. Fuller served as Chief Administrative Officer and Treasurer of Melaleuca, Inc., a manufacturer and direct seller of personal care products. He was also the Vice President and Treasurer of Norton Company, a multinational manufacturer of ceramics and abrasives. Mr. Fuller obtained his certified public accountant license in 1970 and kept it current until his career path developed into corporate finance. Mr. Fuller received a B.S. degree in Accounting and an M.B.A. degree from the University of Utah. Mr. Fuller’s accounting, finance and corporate strategy expertise and his years of financial, accounting and business experience in public and private companies, including USANA Health Sciences, Inc., which is listed on the New York Stock Exchange, where he served as an executive officer and continues to serve as a director, led the Board of Directors to conclude that he should serve as a director.

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Robert G. Hunter, M.D. has served as a director of the Company since 1998.  Dr. Hunter is currently a practicing physician in private practice.  Dr. Hunter created the statewide E.N.T. Organization (Rocky Mountain E.N.T., Inc.) where he is currently a member of the Executive Committee.  Dr. Hunter is Department Head of Otolaryngology, Head and Neck Surgery at Intermountain Medical Center and a past President of the medical staff of the Intermountain Medical Center.  He is also a delegate to the Utah Medical Association and has served as a delegate representing the State of Utah to the American Medical Association, and a member of several medical advisory boards.  Dr. Hunter holds a B.S. degree in Microbiology from the University of Utah and received his medical degree from the University of Utah College of Medicine.  Dr. Hunter’s medical expertise and experience, and his administrative and leadership experience from serving in a number of administrative positions in the medical profession led the Board of Directors to conclude that he should serve as a director.

H. Craig Moody has served as a director of the Company since 1995.  Mr. Moody is owner of Moody & Associates, a political consulting and real estate company.  He is a former Speaker and House Majority Leader of the House of Representatives of the State of Utah.  Mr. Moody holds a B.S. degree in Political Science from the University of Utah.  Mr. Moody’s real estate and governmental affairs expertise and years of business and leadership experience led the Board of Directors to conclude that he should serve as a director.

Norman G. Wilbur has served as a director of the Company since 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, Mr. Wilbur opted for early retirement in 1997.  Mr. Wilbur holds a B.S. degree in Accounting from the University of Utah.  Mr. Wilbur is a past executive director of the Dallas area Habitat for Humanity.  Mr. Wilbur’s financial expertise and business experience from a successful career at JC Penny’s led the Board of Directors to conclude that he should serve as a director.  In addition, the Board of Directors’ determination that Mr. Wilbur is the Audit Committee “financial expert” lends further support to his financial acumen and qualification for serving as a director.

The Board of Directors, Board Committees and Meetings

The Company's Bylaws provide that the Board of Directors shall consist of not less than five or more than twelve members.  The term of office of each director is for a period of one year or until the election and qualification of his successor.  A director is not required to be a resident of the State of Utah or a stockholder of the Company.  The Board of Directors held a total of five meetings during the fiscal year ended December 31, 2014. Each of the directors attended 75% or more of the meetings of the Board of Directors during the 2014 fiscal year.

The size of the Board of Directors of the Company for the coming year is nine members.  A majority of the Board of Directors must qualify as "independent" as that term is defined in Rule 4200 of the listing standards of the Nasdaq Stock Market.  The Board of Directors has affirmatively determined that five of the nine members of the Board of Directors, Messrs. John L. Cook, Gilbert A. Fuller, Robert G. Hunter, M.D., H. Craig Moody and Norman G. Wilbur, are independent under the listing standards of the Nasdaq Stock Market.

There are four committees of the Board of Directors, which meet periodically during the year: the Audit Committee, the Compensation Committee, the Executive Committee, and the Nominating and Corporate Governance Committee.

The Audit Committee directs the auditing activities of the Company's internal auditors and outside public accounting firm and approves the services of the outside public accounting firm.  The Audit Committee consists of Messrs. Gilbert A. Fuller, H. Craig Moody and Norman G. Wilbur (Chairman of the committee).  During 2014, the Audit Committee met on three occasions.

The Compensation Committee is responsible for recommending to the Board of Directors for approval the annual compensation of each executive officer of the Company and the executive officers of the Company's subsidiaries, developing policy in the areas of compensation and fringe benefits, contributions under the Employee Stock Ownership Plan, contributions under the 401(k) Retirement Savings Plans, Deferred Compensation Plan, granting of options under the stock option plans, and creating other employee compensation plans.  The Compensation Committee consists of Messrs. Gilbert A. Fuller, Robert G. Hunter, M.D., H. Craig Moody and Norman G. Wilbur (Chairman of the committee).  During 2014, the Compensation Committee met on three occasions.

The Executive Committee reviews Company policy, major investment activities and other pertinent transactions of the Company.   The Executive Committee consists of Messrs. Gilbert A. Fuller, H. Craig Moody, S. Andrew Quist and Scott M. Quist (Chairman of the committee).  During 2014, the Executive Committee met on one occasion.

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The Nominating and Corporate Governance Committee identifies individuals qualified to become board members consistent with criteria approved by the board, recommends to the board the persons to be nominated by the board for election as directors at a meeting of stockholders, and develops and recommends to the board a set of corporate governance principles.  The Nominating and Corporate Governance Committee consists of Messrs. John L. Cook, Gilbert A. Fuller, Robert G. Hunter, M.D., H. Craig Moody (Chairman of the committee), and Norman G. Wilbur.  The Nominating and Corporate Governance Committee is composed solely of independent directors, as defined in the listing standards of the Nasdaq Stock Market.  During 2014, the Nominating and Corporate Governance Committee met on three occasions.

Director Nominating Process

The process for identifying and evaluating nominees for directors include the following steps: (1) the Nominating and Corporate Governance Committee, Chairman of the Board or other board members identify a need to fill vacancies or add newly created directorships; (2) the Chairman of the Nominating and Corporate Governance Committee initiates a search and seeks input from board members and senior management and, if necessary, obtains advice from legal or other advisors (but does not hire an outside search firm); (3) director candidates, including any candidates properly proposed by stockholders in accordance with the Company's Bylaws, are identified and presented to the Nominating and Corporate Governance Committee; (4) initial interviews with candidates are conducted by the Chairman of the Nominating and Corporate Governance Committee; (5) the Nominating and Corporate Governance Committee meets to consider and approve final candidate(s) and conduct further interviews as necessary; and (6) the Nominating and Corporate Governance Committee makes recommendations to the board for inclusion in the slate of directors at the annual meeting.  The evaluation process will be the same whether the nominee is recommended by a stockholder or by a member of the Board of Directors.

Meetings of Non-Management Directors

The Company's independent directors meet regularly in executive session without management.  The Board of Directors has designated a lead director to preside at executive sessions of independent directors.  Mr. H. Craig Moody is currently the lead director.

Executive Officers

Garrett S. Sill has served as Chief Financial Officer and Treasurer since July 2013. From January 2013 to July 2013, Mr. Sill served as Acting Chief Financial Officer and Acting Treasurer. From 2011 to January 2013, Mr. Sill served as Vice President and Assistant Treasurer of Security National Life Insurance Company, a wholly owned subsidiary of the Company. From 2002 to 2011, Mr. Sill was Chief Financial Officer and Treasurer of SecurityNational Mortgage Company, a wholly owned subsidiary of the Company. From 1997 to 2002, Mr. Sill was Vice President and Controller of SecurityNational Mortgage Company. Mr. Sill is a certified public accountant, having been licensed since 2002. He holds a B.A. degree in Accounting from Weber State University and an M.B.A. degree in Business Administration from the University of Utah. Mr. Sill also serves as a member of the Advisory Council of the School of Accounting and Taxation at Weber State University.

Christie Q. Overbaugh has been Senior Vice President of Internal Operations of the Company since June 2006, and a Vice President of the Company from 1998 to June 2006.  Ms. Overbaugh has also served as Vice President of Underwriting for Security National Life Insurance Company since 1998.  From 1986 to 1991, she was Chief Underwriter for Investors Equity Life Insurance Company of Hawaii and Security National Life Insurance Company.  From 1990 to 1991, Ms. Overbaugh was President of the Utah Home Office Underwriters Association.  Ms. Overbaugh is currently a member of the Utah Home Office Underwriters Association and an Associate Member of LOMA (Life Office Management Association).

Jeffrey R. Stephens was appointed General Counsel and Corporate Secretary of the Company in December 2008. Mr. Stephens had served as General Counsel for the Company from November 2006 to December 2008. He was in private practice from 1981 to 2006 in the states of Washington and Utah. Mr. Stephens holds a B.S. degree in Geography from the University of Utah and received his law degree from Brigham Young University.  He is a member of the Utah State Bar and the Washington State Bar Association.

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

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

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Corporate Governance

Corporate Governance Guidelines. The Board of Directors has adopted the Security National Financial Corporation Corporate Governance Guidelines. These guidelines outline the functions of the board, director qualifications and responsibilities, and various processes and procedures designed to insure effective and responsive governance. The Board of Directors has also adopted a written committee charter for its Audit Committee and Compensation Committee. The guidelines and committee charters are reviewed from time to time in response to regulatory requirements and best practices and are revised accordingly. The full text of the guidelines and the committee charters are available on the Company’s website at www.securitynational.com. A copy of the Corporate Governance Guidelines may also be obtained at no charge by written request to the attention of Jeffrey R. Stephens, Secretary, Security National Financial Corporation, 5300 South 360 West, Suite 250, Salt Lake City, Utah 84123.

Code of Business Conduct. All of the Company’s officers, employees and directors are required to comply with the Company’s Code of Business Conduct and Ethics to help insure that the Company’s business is conducted in accordance with appropriate standards of ethical behavior. The Company’s Code of Business Conduct and Ethics covers all areas of professional conduct, including customer relationships, conflicts of interest, insider trading, financial disclosures, intellectual property and confidential information, as well as requiring adherence to all laws and regulations applicable to the Company’s business. Employees are required to report any violations or suspected violations of the Code. The Code includes an anti-retaliation statement. The full text of the Code of Business Conduct and Ethics is available on the Company’s website at www.securitynational.com. A copy of the Code of Business Conduct and Ethics may also be obtained at no charge by written request to the attention of Jeffrey R. Stephens, Secretary, Security National Financial Corporation, 5300 South 360 West, Suite 250, Salt Lake City, Utah 84123.

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Item 11.  Executive Compensation

The following table sets forth, for each of the last three fiscal years, the compensation received by the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and the Company’s three other most highly compensated executive officers who were serving as executive officers at the end of 2014 (collectively, the “Named Executive Officers”).

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)		Bonus ($)		Options  Awards ($)		Non-Equity  Incentive Plan Compen- sation ($)		Change in  Pension Value  Non-qualified  Deferred  Compensation  Earnings (1) ($)		All Other Compen- sation (2) ($)		Total ($)
Scott M. Quist   Chairman of the Board,   President and Chief   Executive Officer	2014	$	429,400	$	21,200		--		--		--	$	40,066	$	490,666
	2013		427,525		121,200		--		--		--		39,381		588,106
	2012		384,400		193,950		--		--		--		41,330		619,680
Garrett S. Sill   Chief Financial   Officer and Treasurer	2014	$	173,903	$	13,250		--		--		--	$	16,180	$	203,333
	2013		161,273		7,370		--		--		--		17,499		186,142
	2012		143,342		12,030		--		--		--		19,120		174,492
J. Lynn Beckstead, Jr.   Vice President of Mortgage   Operations	2014	$	267,622	$	81,826		--		--		--	$	30,299	$	379,747
	2013		265,997		117,277		--		--		--		31,098		414,372
	2012		255,667		144,916		--		--		--		23,996		424,579
Jeffrey R. Stephens   General Counsel and   Corporate Secretary	2014	$	167,957	$	12,350		--		--		--	$	19,788	$	200,095
	2013		164,123		8,100		--		--		--		17,663		189,886
	2012		156,833		16,850		--		--		--		19,926		193,609
S. Andrew Quist   Vice President and Associate   General Counsel	2014	$	166,388	$	54,325		--		--		--	$	21,771	$	242,484
	2013		154,186		7,725		--		--		--		19,889		181,800
	2012		138,267		42,955		--		--		--		19,080		200,302

(1)	The amounts indicated under “Change in Pension Value and Non-qualified Deferred Compensation Earnings” consist of amounts contributed by the Company into a trust for the benefit of the Named Executive Officers under the Company’s Deferred Compensation Plan.
(2)	The amounts indicated under “All Other  Compensation” consist of the following amounts paid by the Company for the benefit of the Named Executive Officers:
a)	payments related to the operation of automobiles were for Scott M. Quist ($7,200 for each of the years 2014, 2013 and 2012); Garrett S. Sill ($-0- for each of the years 2014, 2013 and 2012); J. Lynn Beckstead Jr. ($-0- for each of the years 2014, 2013 and 2012); Jeffrey R. Stephens ($-0- for each of the years 2014, 2013 and 2012) and S. Andrew Quist ($-0- for each of the years 2014, 2013 and 2012). However, such payments do not include the furnishing of an automobile by the Company to Scott M. Quist and J. Lynn Beckstead Jr., nor the payment of insurance and property taxes with respect to the automobiles operated by the such executive officers;
b)	group life insurance premiums paid by the Company to a group life insurance plan for Scott M. Quist and J. Lynn Beckstead Jr. ($191 for 2014, $191 for 2013, and $207 for 2012); Garrett S. Sill ($191 for 2014, $191 for 2013, and $262 for 2012); Jeffrey R. Stephens ($191 for 2014, $191 for 2013, and $207 for 2012) and S. Andrew Quist ($191 for 2014, $191 for 2013, and $202 for 2012);
c)	life insurance premiums paid by the Company for the benefit of Scott M. Quist ($12,390 for 2014, $12,390 for 2013, and $15,016 for 2012); Garrett S. Sill ($-0- for each of the years 2014, 2013 and 2012, respectively); J. Lynn Beckstead Jr. ($4,200 for 2014, $4,200 2013, and $4,500 for 2012); Jeffrey R. Stephens ($-0- for each of the years 2014, 2013 and 2012, respectively); and S. Andrew Quist ($-0- for each of the years 2014, 2013 and 2012, respectively);
d)	medical insurance premiums paid by the Company to a medical insurance plan: Scott M. Quist ($9,625 for 2014, $9,140 for 2013, and $8,644 for 2012); Garrett S. Sill ($7,243 for 2014, $10,302 for 2013, and $12,441 for 2012); J. Lynn Beckstead Jr. ($7,243 for 2014, $10,302 for 2013, and $12,441 for 2012); Jeffrey R. Stephens ($11,725 for 2014, $10,323 for 2013, and $12,510 for 2012); and S. Andrew Quist ($13,850 for 2014, $13,154 for 2013, and $12,441 for 2012);
e)	long term disability insurance paid by the Company to a provider of such insurance; Scott M. Quist, Garrett S. Sill, J. Lynn Beckstead Jr., Jeffrey R. Stephens, and S. Andrew Quist ($260 for 2014, $260 for 2013 and $262 for 2012);
f)	membership dues paid by the Company to Alpine Country Club for the benefit of J. Lynn Beckstead Jr. ($7,605 for 2014, $5,945 for 2013, and $6,586 for 2012);
g)	contributions to defined contribution plans paid by the Company; Scott M. Quist ($10,400 for 2014, $10,200 for 2013, and $10,000 for 2012); Garrett S. Sill ($7,486 for 2014, $6,746 for 2013, and $6,215 for 2012); J. Lynn Beckstead Jr. ($10,400 for 2014, $10,200 for 2013, and $-0- for 2012); Jeffrey R. Stephens ($7,212 for 2014, $6,889 for 2013, and $6,947 for 2012); and S. Andrew Quist ($7,470 for 2014, $6,284 for 2013, and $6,175 for 2012);
h)	contributions to health savings accounts paid by the Company: Scott M. Quist ($-0- for each of the years 2014, 2013 and 2012); Garrett S. Sill ($1,000 for 2014, $1,400 for 2013, and $-0- for 2012); J. Lynn Beckstead Jr. ($400 for 2014, $1,400 for 2013, and $-0- for 2012); Jeffrey R. Stephens ($400 for 2014, $1,400 for 2013, and $-0- for 2012); and S. Andrew Quist ($-0- for each of the years 2014, 2013 and 2012)

115

SUPPLEMENTAL ALL OTHER COMPENSATION TABLE

The following table sets forth all other compensation provided the Named Executive Officers for fiscal years 2014, 2013 and 2012.

Name of Executive Officer	Year	Perks and Other  Personal Benefits		Tax  Reimburse- ments		Discounted Securities Purchases		Payments/ Accruals on Termination  Plans		Registrant  Contributions to Defined Contribution Plans		Insurance Premiums		Dividends or Earnings on Stock or Option Awards		Other (1)
Scott M. Quist	2014	$	7,200		--		--		--	$	10,400	$	22,466		--		--
	2013		7,200		--		--		--		10,200		21,981		--		--
	2012		7,200		--		--		--		10,000		24,130		--		--
Garrett S. Sill	2014	$	-		--		--		--	$	7,486	$	8,694		--		--
	2013		-		--		--		--		6,746		10,753		--		--
	2012		-		--		--		--		6,215		12,905		--		--
J. Lynn Beckstead Jr.	2014	$	7,605		--		--		--	$	10,400	$	12,294		--		--
	2013		5,945		--		--		--		10,200		14,953		--		--
	2012		6,586		--		--		--		-		17,410		--		--
Jeffrey R. Stephens	2014	$	-		--		--		--	$	7,212	$	12,576		--		--
	2013		-		--		--		--		6,889		10,774		--		--
	2012		-		--		--		--		6,947		12,979		--		--
S. Andrew Quist	2014	$	-		--		--		--	$	7,470	$	14,301		--		--
	2013		-		--		--		--		6,284		13,605		--		--
	2012		-		--		--		--		6,175		12,905		--		--

116

GRANTS OF PLAN-BASED AWARDS

The following table sets forth certain information regarding options granted to the named Executive Officers during the fiscal year ended December 31, 2014.

		Estimated Future Payouts Under Equity Incentive Plan Awards
Name of Executive Officer	Grant Date	Threshold ($)	Target ($)	Maximum ($)	All Other Awards:  Number of  Securities  Underlying  Options (#)			Exercise or  Base Price of Option Awards ($/Sh) (2)	Closing Price on  Grant Date  ($/Sh) (2)	Grant Date  Fair Value of Stock  and Option  Awards ($)
Scott M. Quist	7/2/14	--	--	--	52,500	(1	)	4.480	4.080	103,014
Garrett S. Sill	7/2/14	--	--	--	4,200	(1	)	4.080	4.080	6,161
J. Lynn Beckstead, Jr.	7/2/14	--	--	--	1,575	(1	)	4.080	4.080	2,309
Jeffrey R. Stephens	7/2/14	--	--	--	2,625	(1	)	4.080	4.080	3,850
S. Andrew Quist	7/2/14	--	--	--	10,500	(1	)	4.080	4.080	15,401
Scott M. Quist	12/5/14	--	--	--	105,000	(1	)	5.247	4.770	162,530
Garrett S. Sill	12/5/14	--	--	--	8,400	(1	)	4.770	4.770	13,252
J. Lynn Beckstead, Jr.	12/5/14	--	--	--	3,150	(1	)	4.770	4.770	4,876
Jeffrey R. Stephens	12/5/14	--	--	--	5,250	(1	)	4.770	4.770	8,127
S. Andrew Quist	12/5/14	--	--	--	21,000	(1	)	4.770	4.770	32,506

(1) The stock options have been adjusted for the 5% annual stock dividend declared December 5, 2014.

(2) Prices have been adjusted for the effect of the 5% annual stock dividend declared December 5, 2014.

117

OUTSTANDING EQUITY AWARDS

The following table sets forth information concerning outstanding equity awards held by Named Executive Officers at December 31, 2014.

	Option Awards												Stock Awards
Name of  Executive  Officer	Option  Grant Date	Number of Securities Underlying Unexercised Options Exercisable (1) (#)				Number of  Securities Underlying Unexercised Options  Unexercisable (#)				Option Exercise Price (11) ($)		Option  Expiration  Date	Stock  Award  Grant Date		Number of  Shares or  Units of Stock That Have Not Vested (#)		Market Value of Shares  or Units  of Stock That Have Not Vested ($)		Equity  Incentive Plan Awards: Number of  Unearned Shares, Units or Other Rights That Have  Not Vested (#)		Equity Incentive Plan Awards: Market or Payout  Value of Unearned Shares,  Units or Other Rights That Have Not Vested ($)
Scott M. Quist	3/25/05		114,023	(2	)		--			$	2.14	03/25/15		--		--		--		--		--
	12/03/10		127,629	(3	)		--				1.55	12/03/15		--		--		--		--		--
	12/02/11		121,551	(4	)		--				1.18	12/02/16		--		--		--		--		--
	4/13/12		115,763	(5	)		--				1.45	04/13/17		--		--		--		--		--
	12/6/13		55,125	(7	)		--				4.79	12/06/18		--		--		--		--		--
	7/2/14		13,125	(8	) (9)		39,375	(9	)		4.48	07/02/19
	12/5/14		--				105,000	(10	)		5.25	12/05/19
Garrett S. Sill	12/6/13		4,410				--			$	4.38	12/06/23		--		--		--		--		--
	7/2/14		1,050	(9	)		3,150	(9	)		4.08	07/02/24		--		--		--		--		--
	12/5/14		--				8,400	(10	)		4.77	12/05/24
J. Lynn Beckstead Jr.	12/02/11		5,469				--			$	1.06	12/02/21		--		--		--		--		--
	4/13/12		10,419				--				1.34	04/13/22		--		--		--		--		--
	12/6/13		1,654				--				4.38	12/06/23		--		--		--		--		--
	7/2/14		394	(9	)		1,181	(9	)		4.08	07/02/24
	12/5/14		--				3,150	(10	)		4.77	12/05/24
Jeffrey R. Stephens	4/13/12		2,894				--			$	1.34	04/13/22		--		--		--		--		--
	12/6/13		2,756				--				4.38	12/06/23		--		--		--		--		--
	7/2/14		656	(9	)		1,969	(9	)		4.08	07/02/24
	12/5/14		--				5,250	(10	)		4.77	12/05/24
S. Andrew Quist	12/2/11		18,233				--			$	1.06	12/02/21		--		--		--		--		--
	4/13/12		17,365				--				1.34	04/13/22		--		--		--		--		--
	12/6/13		11,025				--				4.38	12/06/23		--		--		--		--		--
	7/2/14		2,625	(9	)		7,875	(9	)		4.08	07/02/24
	12/5/14		--				21,000	(10	)		4.77	12/05/24

(1)	Except for options granted to Scott M. Quist after May 31, 2007, which have a five year term, such grants have ten year terms. The vesting of any unvested shares is subject to the recipient’s continuous employment. This reflects the equivalent of Class A common shares.
(2)	On March 25, 2005, Scott Quist was granted stock options to purchase either 70,000 shares of Class A common stock at an exercise price of $2.14 per share or 70,000 shares of Class C common stock at an exercise price of $2.14 per share, or any combination thereof.
(3)	On December 3, 2010, Scott Quist was granted stock options to purchase 100,000 shares of Class A common stock at an exercise price of $1.55 per share or 100,000 shares of Class C common stock at an exercise price of $1.55 per share, or any combination thereof.
(4)	On December 2, 2011, Scott Quist was granted stock options to purchase 100,000 shares of Class A common stock at an exercise price of $1.18 per share or 100,000 shares of Class C common stock at an exercise price of $1.18 per share, or any combination thereof.
(5)	On April 13, 2012 Scott Quist was granted stock options to purchase 100,000 shares of Class A common stock at an exercise price of $1.45 per share or 100,000 shares of Class C common stock at an exercise price of $1.45 per share, or any combination thereof.
(6)	On December 6, 2013 Scott Quist was granted stock options to purchase 50,000 shares of Class A common stock at an exercise price of $4.79 per share or 50,000 shares of Class C common stock at an exercise price of $4.79 per share, or any combination thereof.
(7)	On July 2, 2014 Scott Quist was granted stock options to purchase 50,000 shares of Class A common stock at an exercise price of $4.48 per share or 50,000 shares of Class C common stock at an exercise price of $4.48 per share, or any combination thereof.
(8)	On December 5, 2014 Scott Quist was granted stock options to purchase 100,000 shares of Class A common stock at an exercise price of $5.25 per share or 100,000 shares of Class C common stock at an exercise price of $5.25 per share, or any combination thereof.
(9)	Stock options vested at the rate of 25% of the total number of shares subject to the options on October 2, 2014 and 25% of the total number of shares on the last day of each three month period thereafter.
(10)	Stock options vest at the rate of 25% of the total number of shares subject to the options on March 5, 2015 and 25% of the total number of shares on the last day of each three month period thereafter.
(11)	Exercise prices have been adjusted for the effect of annual stock dividends.

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OPTION AWARDS VESTING SCHEDULE

The following table sets forth the vesting schedule of unexercisable options reported in the “Number of Securities Underlying Unexercised Options – Unexercisable” column of the table above.

Grant Date	Vesting
3/25/05	These options vested on the grant date.
12/03/10	These options vested 25% per quarter over a one year period after the grant date.
12/02/11	These options vested 25% per quarter over a one year period after the grant date.
4/13/12	These options vested 25% per quarter over a one year period after the grant date.
12/06/13	These options vested 25% per quarter over a one year period after the grant date.
07/02/14	These options vest 25% per quarter over a one year period after the grant date.
12/05/14	These options vest 25% per quarter over a one year period after the grant date.

OPTION EXERCISES AND STOCK VESTED

The following table sets forth all stock options exercised and value received upon exercise, and all stock awards vested and value realized upon vesting, by the Named Executive Officers during the year ended December 31, 2014.

	Option Awards				Stock Awards
	Number of Shares Acquired on Exercise		Value Realized  on Exercise		Number of  Shares Acquired  on Vesting		Value Realized on  Vesting
Name of Executive Officer		(#)	($)			(#)	($)
Scott M. Quist		--		--		--		--
Garrett S. Sill		28,877		96,880		--		--
J. Lynn Beckstead, Jr.		--		--		--		--
Jeffrey R. Stephens		--		--		--		--
S. Andrew Quist		--		--		--		--

119

PENSION BENEFITS

The following table sets forth the present value as of December 31, 2014 of the benefit of the Named Executive Officers under the defined benefit pension plan.

Name of Executive Officer	Plan Name	Number of Years Credited Service (#)		Present Value of Accumulated  Benefit ($)		Payments  During Las t Fiscal Year ($)
Scott M. Quist	None		--		--		--
Garrett S. Sill	None		--		--		--
J. Lynn Beckstead, Jr.	None		--		--		--
Jeffrey R.Stephens	None		--		--		--
S. Andrew Quist	None		--		--		--

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth certain information as of December 31, 2014 with respect to compensation plans (including individual compensation arrangements) under which the Company’s equity securities are authorized for issuance, aggregated as follows:

· All compensation plans previously approved by security holders; and

· All compensation plans not previously approved by security holders.

		A		B		C
Plan Category	Number of  Securities to  be Issued  upon Exercise  of Outstanding  Options, Warrants  and Rights		Weighted Average  Exercise Price  of Outstanding Options, Warrants and Rights		Number of  Securities Remaining  Available for Future Issuance  under  Equity Compensation Plans (Excluding Securities Reflected in Column A)
Equity compensation plans approved by stockholders[1]		1,204,386	$3.20[2}			265,198	[3]
Equity compensation plans not approved by stockholders		0		-		0

[1]  This reflects the the 2003 Stock Option Plan (the “2003 Plan”), the 2006 Director Stock Option Plan (the “2006 Director Plan”), the 2013 Stock Option Plan (the "2013 Plan") and the 2014 Director Stock Option Plan (the "2014 Director Plan").  The 2003 Plan was approved by stockholders at the annual stockholders meeting held on July 11, 2003, which reserved 500,000 shares of Class A common stock and 1,000,000 shares of Class C common stock for issuance thereunder.  The 2006 Director Plan was approved by stockholders at the annual stockholders meeting held on December 7, 2006, which reserved 100,000 shares of Class A common stock for issuance thereunder.  The 2013 Plan was approved by stockholders at the annual stockholders meeting held on July 12, 2013, which reserved 450,000 shares of Class A common stock of which 150,000 shares of Class A common stock could be issued in place of up to 1,500,000 shares of Class C common stock for issuance thereunder.  The 2014 Director Plan was approved by stockholders at the annual stockholders meeting held on July 2, 2014, which reserved 150,000 shares of Class A common stock for issuance thereunder. As a result of the stockholder approval of the 2013 Plan, the Company terminated the 2003 Plan.

[2]  The weighted average exercise prices reflect solely the shares of Class A common stock that will be issued upon exercise of outstanding options.

[3]  This number includes 135,213 shares of Class A common stock available for future issuance under the 2013 Plan, 2,485 shares of Class A common stock available for future issuance under the 2006 Director Plan, and 127,500 shares of Class A common stock available for future issuance under the 2014 Director Plan.

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Retirement Plans

On December 8, 1988, the Company entered into a deferred compensation plan with George R. Quist, the former Chairman and Chief Executive Officer of the Company. The plan was later amended on three occasions with the third amendment effective February 1, 2001. Under the terms of the plan as amended, upon the retirement of Mr. Quist, the Company is required to pay him ten annual installments in the amount of $60,000. The $60,000 annual payments were adjusted for inflation in accordance with the United States Consumer Price Index each year.

The plan also provided that the Board of Directors may, in its discretion, pay the amounts due under the plan in a single, lump-sum payment. The Company accrued $-0- and $-0- in fiscal 2014 and 2013, respectively, to cover the present value of anticipated retirement benefits under the employment agreement of $598,426 as of December 31, 2014. Mr. Quist passed away on September 6, 2012, pursuant to the plan, the $598,426 was paid to his estate on December 31, 2014.

Employment Agreements

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

In the event of a sale or merger of the Company and Mr. Quist is not retained in his current position, the Company would be obligated to continue paying Mr. Quist’s current compensation and benefits for seven years following the merger or sale. The agreement further provides that Mr. Quist is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 65), (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of twenty years in annual installments in the amount equal to 75% of his then current rate of compensation. However, in the event that Mr. Quist dies prior to receiving all retirement benefits thereunder, the remaining benefits are to be paid to his heirs. The Company expensed $833,183 and $264,000 in fiscal 2014 and 2013, respectively, to cover the present value of anticipated retirement benefits under the employment agreement. The liability accrued is $2,270,425 and $1,437,242 as of December 31, 2014 and 2013, respectively.

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

In the event of a sale or merger of the Company, and Mr. Beckstead was not retained in his current position, the Company would be obligated to continue paying Mr. Beckstead’s current compensation and benefits for five years following the merger or sale. The agreement further provides that Mr. Beckstead is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 62½) (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of ten years in annual installments in the amount equal to one-half of his then current annual salary. However, in the event that Mr. Beckstead dies prior to receiving all retirement benefits thereunder, the remaining benefits are to be paid to his heirs. The Company expensed $154,817 and $-0- in fiscal 2014 and 2013, respectively, to cover the present value of the retirement benefit of the agreement. The liability accrued is $768,220 and $613,403 as of December 31, 2014 and 2013, respectively.

121

Director Compensation

Directors of the Company (but not including directors who are employees) are currently paid a director’s fee of $16,800 per year by the Company for their services and are reimbursed for their expenses in attending board and committee meetings. An additional fee of $750 is paid to each audit committee member for each audit committee meeting attended. Each director is provided with an annual grant of stock options to purchase 1,000 shares of Class A common stock, which occurred under the 2000 Director Stock Option Plan for years 2000 to 2005, under the 2006 Director Stock Option Plan and under the 2014 Director Plan for years 2006 to 2014. During 2014 and 2013 each director was granted additional stock options to purchase 5,000 shares and 4,842 shares, respectively, of Class A common stock.

DIRECTOR COMPENSATION

The following table sets forth the compensation of the Company’s non-employee directors for fiscal 2014.

Name	Fees Earned or Paid in Cash ($)		Stock  Awards ($)		Option Awards ($)		Non-Equity  Incentive Plan Compensation ($)		Change in  Pension Value  and Nonqualified  Deferred Compensation Earnings		All Other Compensation ($)		Total ($)
John L. Cook (1)	$	16,800		--	$	9,757		--		--		--	$	26,557
Robert G. Hunter (2)		16,800		--		9,757		--		--		--		26,557
Gilbert A. Fuller (3)		19,050		--		9,757		--		--		--		28,807
H. Craig Moody (4)		19,050		--		9,757		--		--		--		28,807
Norman G. Wilbur (5)		19,050		--		9,757		--		--		--		28,807

(1)	John L. Cook has 12,741 options to purchase the Company stock.
(2)	Robert G. Hunter has 57,676 options to purchase the Company stock.
(3)	Gilbert A. Fuller has 13,899 options to purchase the Company stock.
(4)	H. Craig Moody has 57,676 options to purchase the Company stock.
(5)	Norman G. Wilbur has 28,490 options to purchase the Company stock.

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 made discretionary employer matching contributions to its employees who choose to participate in the plan. The plan allowed the board to determine the amount of the contribution at the end of each year. During the period from January 1, 1995 to December 31, 2007 the Board had 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 the Company’s stock up to a maximum discretionary employee contribution of 1/2 of 1% of participating employees’ 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. 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 is to be divided among three different classes of participants in the plan based upon the participant’s title in the Company. All amounts contributed to the plan are deposited into a trust fund administered by an independent trustee.

Beginning January 1, 2008, the Company elected to be a “Safe Harbor” Plan for its matching 401(k) contributions. The Company will match 100% of up to 3% of an employee’s total annual compensation and 50% of 4% to 5% of an employee’s annual compensation. The match is in shares of the Company’s Class A common stock. The Company’s contribution for 2014, 2013 and 2012 was $808,572, $749,898 and $222,719, respectively, under the “Safe Harbor” plan.

122

Employee Stock Ownership Plan

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

Under the ESOP Plan, the Company has discretionary power to make contributions on behalf of all eligible employees into a trust created under the ESOP Plan. Employees become eligible to participate in the ESOP 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 ESOP 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 ESOP Plan has approximately 314 participants and had $-0- contributions payable to the Plan in 2014. Benefits under the ESOP Plan vest as follows: 20% after the second year of eligible service by an employee, an additional 20% in the third, fourth, fifth and sixth years of eligible service by an employee.

Benefits under the ESOP 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 ESOP Plan Committee, however, retains discretion to determine the final method of payment. Finally, the Company reserves the right to amend or terminate the ESOP Plan at any time. The trustees of the trust fund under the ESOP Plan are Scott M. Quist (Chairman), S. Andrew Quist, and Robert G. Hunter, who each serve as a director of the Company.

Deferred Compensation Plan

In 2001, the Company’s Board of Directors adopted a Deferred Compensation Plan. Under the terms of the Deferred Compensation Plan, the Company will provide deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The board has appointed a committee of the Company to be the plan administrator and to determine the employees who are eligible to participate in the plan. The employees who participate may elect to defer a portion of their compensation into the plan. The Company may contribute into the plan at the discretion of the Company’s Board of Directors. The Company did not make any contributions for 2014, 2013 and 2012.

NON-QUALIFIED DEFERRED COMPENSATION

The following table sets forth contributions to the deferred compensation account of the Named Executive Officers in fiscal 2014 and the aggregate balance of deferred compensation of the Named Executive Officers at December 31, 2014.

	Executive		Registrant		Aggregate		Aggregate		Aggregate
	Contributions		Contributions		Earnings		Withdrawals		Balance
	In Last FY		In Last FY		in last FY		Distributions		at last FYE
Name	($)		($)		($)		($)		($)
Scott M. Quist		--		--		--		--	$	415,773
Garrett S. Sill		--		--		--		--		--
J. Lynn Beckstead, Jr.		--		--		--		--	$	210,418
Jeffrey R. Stephens		--		--		--		--		--
S. Andrew Quist		--		--		--		--		--

2006 Director Stock Option Plan

On December 7, 2006, the Company adopted the 2006 Director Stock Option Plan (the “2006 Director Plan”) effective December 7, 2006. The 2006 Director Plan provides for the grant by the Company of options to purchase up to an aggregate of 100,000 shares of Class A common stock for issuance there under. The 2006 Director Plan provides that each member of the Company’s Board of Directors who is not an employee or paid consultant of the Company is automatically eligible to receive options to purchase the Company’s Class A common stock under the 2006 Director Plan.

123

Effective as of December 7, 2006, and on each anniversary date thereof during the term of the 2006 Director Plan, each outside director shall automatically receive an option to purchase 1,000 shares of Class A common stock. In addition, each new outside director who shall first join the Board after the effective date shall be granted an option to purchase 1,000 shares upon the date which such person first becomes an outside director and an annual grant of an option to purchase 1,000 shares on each anniversary date thereof during the term of the 2006 Director Plan. The options granted to outside directors shall vest in four equal quarterly installments over a one year period from the date of grant, until such shares are fully vested. The primary purposes of the 2006 Director Plan are to enhance the Company’s ability to attract and retain well-qualified persons for service as directors and to provide incentives to such directors to continue their association with the Company.

In the event of a merger of the Company with or into another company, or a consolidation, acquisition of stock or assets or other change in control transaction involving the Company, each option becomes exercisable in full, unless such option is assumed by the successor corporation. In the event the transaction is not approved by a majority of the “Continuing Directors” (as defined in the 2006 Director Plan), each option becomes fully vested and exercisable in full immediately prior to the consummation of such transaction, whether or not assumed by the successor corporation.

2013 Stock Option Plan

On August 24, 2013, the Company adopted the Security National Financial Corporation 2013 Stock Option Plan (the “2013 Plan”), which reserved 450,000 shares of Class A common stock to be made available for issuance thereunder, of which up to 1,500,000 shares of Class C common stock could be issued in place of up to 150,000 shares of Class A common stock. The 2013 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 and “non-qualified options” may be granted under the 2013 Plan.

The 2013 Plan is to be administered by the Board of Directors or by a committee designated by the Board. The terms of options granted or stock awards or sales affected under the 2013 Plan are to be determined by the Board of Directors or its committee. No options may be exercised for a term of more than ten years from the date of the grant. Options intended as incentive stock options may be issued only to employees, and must meet certain conditions imposed by the Internal Revenue 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 2013 Plan provides that the exercise price for non-qualified options will not be less than at least 50% of the fair market value of the stock subject to such option as of the date of grant of such options, as determined by the Company’s Board of Directors.

The 2013 Plan has a term of ten years. The Board of Directors may amend or terminate the 2013 Plan at any time, from time to time, subject to approval of certain modifications to the 2013 Plan by the stockholders of the Company as may be required by law or the 2013 Plan.

2014 Director Stock Option Plan

On May 16, 2014, the Company adopted the 2014 Director Stock Option Plan (the “2014 Director Plan”) effective May 16, 2014. The 2014 Director Plan provides for the grant by the Company of options to purchase up to an aggregate of 150,000 shares of Class A common stock for issuance there under. The 2014 Director Plan provides that each member of the Company’s Board of Directors who is not an employee or paid consultant of the Company is automatically eligible to receive options to purchase the Company’s Class A common stock under the 2014 Director Plan.

Effective as of December 7, 2014, and on each anniversary date thereof during the term of the 2014 Director Plan, each outside director shall automatically receive an option to purchase 1,000 shares of Class A common stock. In addition, each new outside director who shall first join the Board after the effective date shall be granted an option to purchase 1,000 shares upon the date which such person first becomes an outside director and an annual grant of an option to purchase 1,000 shares on each anniversary date thereof during the term of the 2014 Director Plan. The options granted to outside directors shall vest in four equal quarterly installments over a one year period from the date of grant, until such shares are fully vested. The primary purposes of the 2014 Director Plan are to enhance the Company’s ability to attract and retain well-qualified persons for service as directors and to provide incentives to such directors to continue their association with the Company.

In the event of a merger of the Company with or into another company, or a consolidation, acquisition of stock or assets or other change in control transaction involving the Company, each option becomes exercisable in full, unless such option is assumed by the successor corporation. In the event the transaction is not approved by a majority of the “Continuing Directors” (as defined in the 2014 Director Plan), each option becomes fully vested and exercisable in full immediately prior to the consummation of such transaction, whether or not assumed by the successor corporation.

124

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers, directors and persons who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and periodic changes in ownership of the Company’s common stock with the Securities and Exchange Commission. Such persons are also required to furnish the Company with copies of all Section 16(a) reports they file.

Based solely on its review of the copies of stock reports received by it with respect to fiscal 2014, or written representations from certain reporting persons, the Company believes that its directors, executive officers and greater than 10% beneficial owners complied with all Section 16(a) filing requirements applicable to them, except that each of the Company’s executive officers and directors, through an oversight, filed two late Form 4 reports reporting the granting of stock options on July 2, 2014 and December 5, 2014.

Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth security ownership information of the Company’s Class A and Class C common stock as of March 31, 2015, (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 Common Stock					Class C Common Stock					Class A and Class C Common Stock
	Amount		Percent			Amount		Percent			Amount		Percent
	Beneficially		of			Beneficially		of			Beneficially		of
Name and Address (1)	Owned		Class			Owned		Class			Owned		Class
George R. and Shirley C. Quist Family Partnership, Ltd. (2)		1,062,719		9.2	%		547,097		39.3	%		1,609,816		12.5	%
Scott M. Quist (3)(5)(6)(7)(8)		401,114		3.5	%		1,104,012		55.8	%		1,505,126		11.2	%
401(k) Retirement Savings Plan (11)		1,343,906		11.7	%		-		-			1,343,906		10.4	%
Employee Stock Ownership Plan (ESOP) (4)		579,918		5.0	%		252,974		18.2	%		832,892		6.5	%
Non-Qualified Deferred Compensation Plan (10)		723,942		6.3	%		-		-			723,942		5.6	%
Estate of George R. Quist		522,076		4.5	%		63,535		4.6	%		585,611		4.5	%
Christie Q. Overbaugh (12)		230,105		2.0	%		18,452		1.3	%		248,557		1.9	%
J. Lynn Beckstead, Jr. (6)(7)(13)		230,054		2.0	%		-		-			230,054		1.8	%
Associated Investors (9)		66,334		*			106,792		7.7	%		173,126		1.3	%
Jason G. Overbaugh (14)		170,557		1.5	%		-		-			170,557		1.3	%
S. Andrew Quist (3)(15)		107,039		*			-		-			107,039		*
Jeffrey R. Stephens (16)		70,122		*			-		-			70,122		*
Robert G. Hunter, M.D. (3)(17)		61,104		*			-		-			61,104		*
H. Craig Moody (18)		59,437		*			-		-			59,437		*
Garrett S. Sill (6)(7)(19)		51,728		*			-		-			51,728		*
Norman G. Wilbur (20)		27,437		*			-		-			27,437		*
Gilbert A. Fuller (21)		9,725		*			-		-			9,725		*
John L. Cook (22)		8,016		*			-		-			8,016		*
All directors and executive officers (12 persons) (3)(5)(6)(7)		1,426,438		12.1	%		1,122,464		56.7	%		2,548,902		18.5	%

* Less than 1%

125

(1)	Unless otherwise indicated, the address of each listed stockholder is c/o Security National Financial Corporation, 5300 South 360 West, Suite 250, Salt Lake City, Utah 84123.
(2)	This stock is owned by the George R. and Shirley C. Quist Family Partnership, Ltd., of which Scott M. Quist is the managing general partner and, accordingly, exercises sole voting and investment powers with respect to such shares.
(3)	Does not include 579,918 shares of Class A common stock and 252,974 shares of Class C common stock owned by the Company’s Employee Stock Ownership Plan (ESOP), of which Scott M. Quist, S. Andrew Quist and Robert G. Hunter are the trustees and accordingly, exercise shared voting and investment powers with respect to such shares.
(4)	The trustees of the Employee Stock Ownership Plan (ESOP) consist of Scott M. Quist, S. Andrew Quist and Robert G. Hunter who exercise shared voting and investment powers.
(5)	Does not include 66,334 shares of Class A common stock and 106,792 shares of Class C common stock owned by Associated Investors, a Utah general partnership, of which Scott M. Quist is the managing partner and, accordingly, exercises sole voting and investment powers with respect to such shares.
(6)	Does not include 1,343,906 shares of Class A common stock owned by the Company’s 401(k) Retirement Savings Plan, of which Scott M. Quist, J. Lynn Beckstead and Garrett S. Sill are members of the investment committee and, accordingly, exercise shared voting and investment powers with respect to such shares.
(7)	Does not include 723,942 shares of Class A common stock owned by the Company’s Deferred Compensation Plan, of which Scott M. Quist, J. Lynn Beckstead and Garrett S. Sill are members of the investment committee and, accordingly, exercise shared voting and investment powers with respect to such shares.
(8)	Includes options to purchase 585,966 shares of Class C common stock granted to Scott M. Quist that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(9)	The managing partner of Associated Investors is Scott M. Quist, who exercises sole voting and investment powers.
(10)	The investment committee of the Company’s Non-Qualified Deferred Compensation Plan consists of Scott M. Quist, J. Lynn Beckstead and Garrett S. Sill and, accordingly, exercised shared voting and investment powers with respect to such shares.
(11)	The investment committee of the Company’s 401(k) retirement savings plan consists of Scott Quist, J. Lynn Beckstead Jr. and Garrett S. Sill and, accordingly, exercise shared voting and investment powers with respect to such shares.
(12)	Includes options to purchase 16,489 shares of Class A common stock granted to Ms. Overbaugh that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(13)	Includes options to purchase 19,097 shares of Class A common stock granted to Mr. Beckstead that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(14)	Includes options to purchase 30,082 shares of Class A common stock granted to Mr. Overbaugh that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(15)	Includes options to purchase 56,998 shares of Class A common stock granted to Mr. Andrew Quist that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(16)	Includes options to purchase 8,243 shares of Class A common stock granted to Mr. Stephens that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(17)	Includes options to purchase 52,951 shares of Class A common stock granted to Mr. Hunter that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(18)	Includes options to purchase 52,951 shares of Class A common stock granted to Mr. Moody that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(19)	Includes options to purchase 8,560 shares of Class A common stock granted to Mr. Sill that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(20)	Includes options to purchase 23,765 shares of Class A common stock granted to Mr. Wilbur that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(21)	Includes options to purchase 9,174 shares of Class A common stock granted to Mr. Fuller that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.
(22)	Includes options to purchase 8,016 shares of Class A common stock granted to Mr. Cook that are currently exercisable, or will become exercisable within 60 days of March 31, 2015.

The Company’s executive officers and directors, as a group, own beneficially approximately 18.5% of the outstanding shares of the Company’s Class A and Class C common stock. At the Annual Meeting of Stockholders that was held on July 2, 2014, the stockholders approved resolutions providing for a 1-for-10 reverse stock split of the Company’s Class C common stock and for weighted voting of the Class C common stock. As a result, each share of Class C common stock has weighted voting of ten votes per share and may be converted into one share of Class A common stock.

126

Item 13. Certain Relationships and Related Transactions and Director Independence

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

On December 19, 2013, Mr. and Mrs. Scott M. Quist and Security National Life jointly purchased a house in St. George, Utah, pursuant to the terms of the Amendment to the Use and Buy Sale Agreement, dated February 15, 2007 (the “Agreement”), among Security National Life and Mr. and Mrs. Quist.  The Amendment is dated December 6, 2013.  Mr. Quist is the Company’s Chairman, President and Chief Executive Officer.  The house is to be used in place of the St. George condominium, which was purchased in 2007, for the entertainment of the Company’s executive officers, employees, outside vendors and prospective customers.

The purchase price of the house was $695,000.  Mr. Quist paid $185,000 of the purchase price plus closing costs, Security National Life paid $100,000, and Mr. Quist and his wife signed a note for $410,000, which is secured by a first trust deed on the property.  The St. George condominium has been sold and the proceeds from the sale were applied toward the purchase price of the St. George house.

The other terms of the Agreement are to remain the same.  Accordingly, Security National Life and Mr. and Mrs. Quist will continue to have the right to use the house in proportion to their respective contributions toward the purchase price, including furnishings and fixtures.  Mr. Quist will be responsible for the care and maintenance of the house.  The payment of taxes, insurance, utilities and homeowners’ fees will be divided among Security National Life and Mr. and Mrs. Quist according to their respective ownership percentages in the house.

Upon the death, disability or retirement of Mr. Quist or his separation from employment with the Company, Mr. Quist or his estate will have the right to purchase Security National Life’s share of the house at a purchase price equal to Security National Life’s contribution to the purchase price of the house or the fair market value of its interest in the house, whichever is less. Security National Life’s contribution to the purchase price of the house is equal to the amount of the accrued but unpaid bonus owed to Mr. Quist for fiscal year 2013, which he agreed to defer for the option to purchase Security National Life’s interest in the house upon his death, disability or retirement or his separation from employment with the Company.

Item 14.  Principal Accounting Fees and Services

The following table summarizes the fees of the Company’s current independent auditors, billed to the Company for each of the last two fiscal years for audit and other services. All of these fees were reviewed and approved by the Audit Committee of the Board of Directors:

Fee Category	2014		2013
Audit Fees (1)	$	296,631	$	309,027
Audit-Related Fees (2)		30,217		29,000
Tax Fees (3)		94,008		91,028
All Other Fees (4)		2,717		13,375
	$	423,573	$	442,430

(1)	Audit fees consist of aggregate fees billed for professional services rendered for the audit of the Company’s annual financial statements and review of the interim financial statements included in quarterly reports or services that are normally provided by the independent auditor in connection with statutory and regulatory filings for the years ended December 31, 2014 and 2013.
(2)	Audit related fees consist of aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees”. These fees include review of registration statements, and audits of the Company’s ESOP and 401(k) Plans.
(3)	Tax fees consist of aggregate fees billed for professional services for tax compliance, tax advice, and tax planning.
(4)	All other fees consist of aggregate fees billed for products and services by the independent auditors, other than those disclosed above.

127

PART IV

Item 15.  Exhibits, Financial Statement Schedules

(a)(1) Financial Statements

See “Index to Consolidated Financial Statements” under Item 8 above.

(a)(2)              Financial Statement Schedules

II.      Condensed Balance Sheets as of December 31, 2014 and 2013 and Condensed Statement of Earnings and Cash Flows for the years ended 2014, 2013 and 2012

    IV.      Reinsurance

V.     Valuation and Qualifying Accounts

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.

(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.

3.1	Articles of Restatement of Articles of Incorporation (3)
3.2	Amended Bylaws (5)
4.1	Specimen Class A Stock Certificate (1)
4.2	Specimen Class C Stock Certificate (1)
4.3	Specimen Preferred Stock Certificate and Certificate of Designation of Preferred Stock (1)
10.1	Restated and Amended Employee Stock Ownership Plan and Trust Agreement (1)
10.2	2003 Stock Option Plan (4)
10.3	2006 Director Stock Option Plan (8)
10.4	2013 Stock Option Plan (11)
10.5	2014 Director Stock Option Plan (13)
10.6	Deferred Compensation Plan (2)
10.7	Employment agreement with J. Lynn Beckstead, Jr. (6)
10.8	Employment agreement with Scott M. Quist (7)
10.9	Indemnification Agreement among SecurityNational Mortgage Company, Lehman Brothers Bank, and Aurora Loan Services (9)
10.10	Agreement and Plan of Reorganization among Security National Financial Corporation and certain subsidiaries (10)
10.11	Purchase Agreement among Security National Financial Corporation, SNFC Subsidiary, LLC, American Funeral Financial, LLC, and Hypershop, LLC (12)

128

21	Subsidiaries of the Registrant
31.1	Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 INS	XBRL Instance Document*
101 SCH	XBRL Schema Document*
101 CAL	XBRL Calculation Linkbase Document*
101 DEF	XBRL Definition Linkbase Document*
101 LAB	XBRL Labels Linkbase Document*
101 PRE	XBRL Presentation Linkbase Document*

*           The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

(1)	Incorporated by reference from Registration Statement on Form S-1, as filed on September 29, 1987
(2)	Incorporated by reference from Annual Report on Form 10-K, as filed on April 3, 2002
(3)	Incorporated by reference from Report on Form 8-K/A, as filed on January 8, 2003
(4)	Incorporated by reference from Schedule 14A Definitive Proxy Statement, as filed on September 5, 2003, relating to the Company’s Annual Meeting of Stockholders
(5)	Incorporated by reference from Report on Form 10-Q, as filed on November 14, 2003
(6)	Incorporated by reference from Report on Form 10-K, as filed on March 30, 2004
(7)	Incorporated by reference from Report on Form 10-Q, as filed on August 13, 2004
(8)	Incorporated by reference from Schedule 14A Definitive Proxy Statement, as filed on June 1, 2007, relating to the Company’s Annual Meeting of Stockholders
(9)	Incorporated by reference from Report on Form 10-K, as filed on March 31, 2009
(10)	Incorporated by reference from Report on Form 10-Q, as filed on May 15, 2013
(11)	Incorporated by reference from Schedule 14A Definitive Proxy Statement, as filed on June 5, 2013, relating to the Company’s Annual Meeting of Stockholders
(12)	Incorporated by reference from Report on Form 8-K, as filed on June 13, 2014
(13)	Incorporated by reference from Schedule 14A Definitive Proxy Statement, as filed on June 2, 2014, related to Company’s Annual Meeting of Stockholders

129

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: March 31, 2015	By:	/s/ Scott M. Quist
		Scott M. Quist
		Chairman of the Board, President and Chief Executive Officer

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

SIGNATURE	TITLE	DATE
/s/ Scott M. Quist	Chairman of the Board, President
Scott M. Quist	and Chief Executive Officer
	(Principal Executive Officer)	March 31, 2015
/s/ Garrett S. Sill	Chief Financial Officer and
Garrett S. Sill	Treasurer (Principal Financial
	and Accounting Officer)	March 31, 2015
/s/ J. Lynn Beckstead, Jr.	Vice President and Director	March 31, 2015
J. Lynn Beckstead, Jr.
/s/ Jason G. Overbaugh	Vice President and Director	March 31, 2015
Jason G. Overbaugh
/s/ S. Andrew Quist	Vice President and Director	March 31, 2015
S. Andrew Quist
/s/ John L. Cook	Director	March 31, 2015
John L. Cook
/s/ Gilbert A. Fuller	Director	March 31, 2015
Gilbert A. Fuller
/s/ H. Craig Moody	Director	March 31, 2015
H. Craig Moody
/s/ Norman G. Wilbur	Director	March 31, 2015
Norman G. Wilbur
/s/ Robert G. Hunter	Director	March 31, 2015
Robert G. Hunter

130

Schedule II

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Condensed Balance Sheets

	December 31
	2014			2013
Assets
Cash	$	(135,523	)	$	3,439,321
Investment in subsidiaries (equity method)		111,293,649			97,478,606
Receivables:
Receivable from affiliates		11,339,690			9,507,403
Total receivables		11,339,690			9,507,403
Property and equipment, at cost, net of accumulated depreciation of $1,663,396 for 2014 and $1,663,087 for 2013.		-			309
Other assets		2,802			16,098
Total assets	$	122,500,618		$	110,441,737

See accompanying notes to condensed financial statements.

131

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Condensed Balance Sheets (Continued)

	December 31
	2014			2013
Liabilities and Stockholders’ Equity Liabilities
Bank and other loans payable:
Current installments	$	1,394,915		$	1,891,728
Long-term		2,062,934			3,378,124
Advances from affiliated companies		9,060,918			9,147,653
Other liabilities and accrued expenses		1,070,462			1,269,514
Income taxes		11,820,288			7,002,568
Total liabilities		25,409,517			22,689,587
Stockholders’ Equity
Class A common stock $2.00 par value; 20,000,000 shares authorized; issued 12,459,240 shares in 2014 11,807,287 shares in 2013		24,918,480			23,614,574
Class B non-voting common stock-$1.00 par value; 5,000,000 shares authorized; none issued or outstanding		--			--
Class C convertible common stock, $2.00 par value; 2,000,000 shares authorized; issued 1,394,069 shares in 2014 and 1,330,191 shares in 2013		2,788,138			2,660,382
Additional paid-in capital		25,931,119			23,215,875
Accumulated other comprehensive income		1,438,566			1,218,396
Retained Earnings		44,101,252			39,666,587
Treasury stock at cost - (986,264 Class A shares and -0- Class C shares in 2014; 1,141,021 Class A shares and -0- Class C shares in 2013, held by affiliated companies)		(2,086,454	)		(2,624,625	)
Total stockholders’ equity		97,091,101			87,751,189
Total Liabilities and Stockholders’ Equity	$	122,500,618		$	110,440,776

See accompanying notes to condensed financial statements.

132

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Condensed Statements of Earnings

	Year Ended December 31
	2014			2013		2012
Revenue
Net investment income	$	91,748		$	11,658	$	18,607
Fees from affiliates		1,009,552			1,120,109		925,496
Other Income		-			30,002		686
Total revenue		1,101,300			1,161,769		944,789
Benefits and Expenses:
General and administrative expenses		728,929			516,360		560,426
Interest expense		173,362			232,635		124,112
Total benefits and expenses		902,291			748,995		684,538
Earnings before income taxes, and earnings of subsidiaries		199,009			412,774		260,251
Income tax benefit (expense)		(3,519,697	)		303,266		1,659,194
Equity in earnings of subsidiaries		11,075,336			6,869,881		14,793,073
Net earnings	$	7,754,648		$	7,585,921	$	16,712,518

See accompanying notes to condensed financial statements.

133

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Condensed Statements of Cash Flow

	Year Ended December 31
	2014			2013			2012
Cash flows from operating activities:
Net earnings	$	7,754,648		$	7,585,921		$	16,712,518
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		309			1,910			11,351
Undistributed earnings of affiliates		11,075,336			6,869,881			14,793,073
Provision for income taxes		4,817,720			1,163,836			(2,644,194	)
Receivables for mortgage loans held for sale		-			-			2,986,110
Stock based compensation expense		391,220			88,369			251,031
Benefit plans funded with treasury stock		899,850			727,937			319,751
Change in assets and liabilities:
Accounts receivable		-			-			177,509
Other assets		13,296			72,346			-
Other liabilities		(199,052	)		(66,945	)		(22,533	)
Net cash provided by operating activities		24,753,327			16,443,255			32,584,616
		-			-			-
Cash flows from investing activities:
Investment in subsidiaries		(21,670,209	)		(15,079,788	)		(29,586,144	)
Cash paid for purchase of subsidiaries, net of cash acquired		(3,000,000	)		--			--
Net cash used in investing activities		(24,670,209	)		(15,079,788	)		(29,586,144	)
Cash flows from financing activities:
Advances from (to) affiliates		(1,919,022	)		681,679			(2,770,019	)
Proceeds from stock options exercised		74,024			252,815			18,306
Payments of notes and contracts payable		(1,812,964	)		(1,898,324	)		(1,146,997	)
Proceeds from borrowings on notes and contracts payable		-			4,684,208			--
Change in line of credit borrowings		-			(4,608,204	)		3,208,204
Net cash used in financing activities		(3,657,962	)		(887,826	)		(690,506	)
Net change in cash		(3,574,844	)		475,641			2,307,966
Cash at beginning of year		3,439,321			2,963,680			655,714
Cash at end of year	$	(135,523	)	$	3,439,321		$	2,963,680

See accompanying notes to condensed financial statements.

134

Schedule II (Continued)

SECURITY NATIONAL FINANCIAL CORPORATION

(Parent Company Only)

Condensed Financial Information

Notes to Condensed Financial Statements

1)         Bank and Other Loans Payable

	December 31
	2014		2013
3.85% note payable in monthly installments of $79,468 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due June 2015.	$	461,889	$	1,377,925
3.85% note payable in monthly installments of $86,059 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due December 2017.		2,994,999		3,891,926
Other notes payable		961		961
Total bank and other loans		3,457,849		5,270,812
		-		-
Less current installments		1,394,915		1,891,728
Bank and other loans, excluding current installments	$	2,062,934	$	3,379,084

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75% (2.50% at December 31, 2014), secured by the capital stock of Security National Life and maturing June 30, 2015, renewable annually. As of December 31, 2014, $699,671, was reserved for an outstanding letter of credit. As of December 31, 2014, there were no amounts outstanding under the revolving line-of-credit.

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

2015	$	1,394,915
2016		969,216
2017		1,093,718
2018		-
2019		-
Thereafter		-
Total	$	3,457,849

2)         Advances from Affiliated Companies

	December 31
	2014		2013
Non-interest bearing advances from affiliates:
Cemetery and Mortuary subsidiary	$	1,459,841	$	1,459,841
Life insurance subsidiaries		7,601,077		7,687,812
	$	9,060,918	$	9,147,653

3)         Dividends and Capital Contributions

In 2014, 2013 and 2012, SecurityNational Mortgage Company, a wholly owned subsidiary of the Registrant, paid to the registrant cash dividends of $480,461, $1,309,712, and $1,500,000, respectively.

In 2014, 2013 and 2012 the Registrant made a capital contribution to Security National Life Insurance Company, a wholly owned subsidiary of the Registrant, in the amount of $-0-, $-0-, and $4,684,204, respectively.

In 2014, 2013 and 2012 the Registrant made capital contributions to Green Street Mortgage Services, Inc., a wholly owned subsidiary of the Registrant, in the amount of $-0-, $2,649,735, and $1,500,000, respectively.

135

Schedule IV

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Reinsurance
	Direct Amount		Ceded to Other  Companies		Assumed from other Companies		Net Amount		Percentage  of Amount Assumed to Net
2014
Life Insurance in force ($000)	$	1,301,156	$	63,457	$	1,462,340	$	2,700,039		54.2%
Premiums:
Life Insurance	$	51,938,012	$	855,266	$	1,792,910	$	52,875,656		3.4%
Accident and Health Insurance		133,002		-		21		133,023		0.0%
Total premiums	$	52,071,014	$	855,266	$	1,792,931	$	53,008,679		3.4%
2013
Life Insurance in force ($000)	$	1,262,134	$	75,181	$	1,566,336	$	2,753,289		56.9%
Premiums:
Life Insurancel	$	49,421,429	$	1,028,150	$	1,935,376	$	50,328,655		3.8%
Accident and Health Insurance		142,972		-		31		143,003		0.0%
Total premiums	$	49,564,401	$	1,028,150	$	1,935,407	$	50,471,658		3.8%
2012
Life Insurance in force ($000)	$	1,248,846	$	87,684	$	1,664,573	$	2,825,735		58.9%
Premiums:
Life Insurance	$	47,121,650	$	1,409,325	$	2,345,324	$	48,057,649		4.9%
Accident and Health Insurance		158,648		-		30		158,678		0.0%
Total premiums	$	47,280,298	$	1,409,325	$	2,345,354	$	48,216,327		4.9%

136

Schedule V

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Valuation and Qualifying Accounts

			Additions		Deductions
	Balance at		Charged to		Disposals			Balance
	Beginning		Costs and		and			at End of
	of Year		Expenses		Write-offs			Year
For the Year Ended December 31, 2014
Accumulated depreciation on real estate	$	9,658,599	$	2,009,521	$	(792,701	)	$	10,875,419
Allowance for losses on mortgage loans on real estate and construction loans held for investment.		1,652,090		389,409		(38,444	)		2,003,055
Accumulated depreciation on property and equipment		15,260,635		2,177,165		(1,018,457	)		16,419,343
Allowance for doubtful accounts on receivables		1,248,633		403,146		(370,920	)		1,280,859
Allowance for doubtful accounts on collateral loans		269,175		524,192		(99,954	)		693,413
For the Year Ended December 31, 2013
Accumulated depreciation on real estate	$	7,441,418	$	2,539,691	$	(322,510	)	$	9,658,599
Allowance for losses on mortgage loans on real estate and construction loans held for investment.		4,239,861		220,652		(2,808,423	)		1,652,090
Accumulated depreciation on property and equipment		16,974,898		1,621,069		(3,335,332	)		15,260,635
Allowance for doubtful accounts on receivables		1,190,592		261,911		(203,870	)		1,248,633
Allowance for doubtful accounts on collateral loans		505,030		207,616		(443,471	)		269,175
For the Year Ended December 31, 2012
Accumulated depreciation on real estate	$	5,999,879	$	1,619,646	$	(178,107	)	$	7,441,418
Allowance for losses on mortgage loans on real estate and construction loans held for investment.		4,881,173		433,829		(1,075,141	)		4,239,861
Accumulated depreciation on property and equipment		16,103,305		1,258,097		(386,504	)		16,974,898
Allowance for doubtful accounts on receivables		2,278,969		208,472		(1,296,849	)		1,190,592
Allowance for doubtful accounts on collateral loans		427,136		232,081		(154,187	)		505,030

137
 

EX-21.1

EXHIBIT 21

Subsidiaries of Security National

Financial Corporation

as of March 31, 2015

SecurityNational Mortgage Company

Security National Life Insurance Company

Southern Security Life Insurance Company, Inc.

Trans-Western Life Insurance Company

Memorial Insurance Company of America

C & J Financial, LLC

American Funeral Financial, LLC

FFC Acquisition Co., LLC dba Funeral Funding Center

Mortician's Choice, LLC

Canadian Funeral Financial, LLC

Insuradyne Corporation

Green Street Mortgage Services, Inc.

Marketing Source Center, Inc. dba Security National Travel Services

Adobe Chapel Funeral Home, Inc.

California Memorial Estates, Inc.

Cottonwood Mortuary, Inc.

Crystal Rose Funeral Home, Inc.

Deseret Memorial, Inc.

Greer-Wilson Funeral Home, Inc.

Holladay Cottonwood Memorial Foundation

Holladay Memorial Park, Inc.

Memorial Estates, Inc.

Memorial Mortuary, Inc.

Memorial Travel Benefits, Inc.

Paradise Chapel Funeral Home

Dry Creek Property Development, Inc.

New York Land Holdings, Inc.

Security National Capital, Inc.

Security National Funding Company

Security National Life Scholarship Foundation, Inc.

Security National Reverse Mortgage of Utah

Select Appraisal Management, Inc.

Security National Real Estate Services, Inc.

55-05 Flushing, LLC

SNFC Subsidiary, LLC

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350,

AS ENACTED BY

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott M. Quist, certify that:
1. I have reviewed this annual report on Form 10-K of Security National Financial Corporation.
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant to have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period covered in which this report is being prepared;
	(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 31, 2015
	By: /s/ Scott M. Quist
	Scott M. Quist
	Chairman of the Board, President and
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350,

AS ENACED BY

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Garrett S. Sill, certify that:
1. I have reviewed this annual report on Form 10-K of Security National Financial Corporation.
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant to have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period covered in which this report is being prepared;
	(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 31, 2015
	By: /s/ Garrett S. Sill
	Garrett S. Sill
	Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Security National Financial Corporation (the “Company”) on Form 10-K for the period ending December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott M. Quist, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

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

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

By:	/s/ Scott M. Quist
	Scott M. Quist
	Chairman of the Board, President
	and Chief Executive Officer

March 31, 2015

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Security National Financial Corporation (the “Company”) on Form 10-K for the period ending December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Garrett S. Sill, Vice President, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

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

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

By:	/s/ Garrett S. Sill
	Garrett S. Sill
	Chief Financial Officer and Treasurer
	March 31, 2015

XML

Note 1: Significant Accounting Policies: Derivatives (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Derivatives

Derivatives

The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of mortgage loan commitments from the time a derivative loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of derivative loan commitments that will be exercised (i.e., the number of loan commitments that will be funded) fluctuates. The probability that a loan will not be funded within the terms of the commitment is driven by a number of factors, particularly the change, if any, in mortgage rates following the inception of the interest rate lock. However, many borrowers continue to exercise derivative loan commitments even when interest rates have fallen.

In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance) product type and the application approval status. The Company has developed fallout estimates using historical data that take into account all of the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the mortgage loan commitments and are updated periodically to reflect the most current data.

The Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage loan and the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the mortgage loan commitment is issued. Therefore, at the time of issuance, the estimated fair value is zero. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates derived from the Company’s recent historical empirical data are used to estimate the quantity of mortgage loans that will fund within the terms of the commitments.

The Company utilizes forward loan sales commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward loan sales commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments by securing the ultimate sales price and delivery date of the loans. Management expects these derivatives will experience changes in fair value opposite to changes in fair value of the derivative loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

XML

Note 9: Reinsurance, Commitments and Contingencies: Other Contingencies and Commitments (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Reserve related to Insurance programs	$ 929,417	$ 524,034

XML

Note 2: Investments: Schedule of Impaired Mortgage Loans (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Residential Mortgage
Impaired Financing Receivable, with Related Allowance, Recorded Investment	$ 1,556,182	$ 1,518,327
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	1,556,182	1,518,327
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	1,556,182	1,518,327
Impaired Financing Receivable, Average Recorded Investment	1,556,182	1,518,327
Impaired Financing Receivable, Unpaid Principal Balance	1,556,182	1,518,327
Impaired Financing Receivable, Related Allowance	153,446	152,745
Residential Construction
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	414,499
Impaired Financing Receivable, Average Recorded Investment	$ 414,499

XML

Note 1: Significant Accounting Policies: Recent Accounting Pronouncements (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Standards Update (“ASU”) No. 2014-17: “Business Combinations (Topic 805) – Pushdown Accounting” – Issued in November 2014, ASU 2014-17 provides guidance for determining whether and at what threshold an acquiree (acquired entity) that is a business or nonprofit activity can reflect the acquirer’s accounting and reporting basis (pushdown accounting) in its separate financial statements. The amendments in this Update provide that an acquired entity may elect to apply pushdown accounting in its separate financial statements upon a change-in-control event in which an acquirer obtains control of the acquired entity. The amendments in this Update are effective November 18, 2014. This new guidance did not have a significant impact on the Company’s results of operations or financial position.

Accounting Standards Update (“ASU”) No. 2014-11: "Transfers and Servicing - Repurchase to Maturity Transactions, Repurchase Financings, and Disclosures (Topic 860)" – Issued in June 2014, ASU 2014-11 aligns the accounting for repurchase to maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The new authoritative guidance is effective for the first interim or annual period beginning after December 15, 2014. In addition the disclosure of certain transactions accounted for as a sale is effective for the first interim or annual period beginning on or after December 15, 2014, and the disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. Early adoption is prohibited. This new guidance will not have a significant impact on the Company’s results of operations or financial position.

ASU No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” - Issued in May 2014, ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition”, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Insurance contracts are excluded from the scope of this new guidance. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2016. The Company is in the process of evaluating the potential impact of this standard, which is not expected to be material to the Company’s results of operations or financial position.

ASU No. 2014-14: “Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40)” - In January 2014, ASU No. 2014-14 amended ASC Topic 310, "Receivables" to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2014 and will not have a significant impact on the Company’s results of operations or financial position.

The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.

XML

Note 16: Fair Value of Financial Instruments: Schedule of fair value assets and liabilities measured on a recurring basis (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Trading Securities, Equity	$ 6,752,750	$ 4,498,756
Available-for-sale Securities	6,752,750	4,498,756
Restricted assets of cemeteries and mortuaries	715,202	667,149
Cemetery perpetual care trust investments	695,235	695,616
Derivatives - interest rate lock commitments	2,111,529	1,511,111
Assets, Fair Value Disclosure	10,274,716	7,372,632
Policyholder account balances	(45,310,699)
Future policy benefits - annuities	(65,540,985)	(65,052,928)
Derivatives - bank loan interest rate swaps	(31,370)	(58,310)
Derivatives - bank loan interest rate swaps, Call Options	(116,036)	(124,174)
Derivatives - bank loan interest rate swaps, Put Options	(11,867)
Derivatives - bank loan interest rate swaps, Interest rate lock commitments	(181,678)	(23,203)
Liabilities accounted for at fair value	(111,192,635)	(113,259,283)
Policyholder account balances		(48,000,668)
Fair Value, Inputs, Level 1
Trading Securities, Equity	6,752,750	4,498,756
Available-for-sale Securities	6,752,750	4,498,756
Restricted assets of cemeteries and mortuaries	715,202	667,149
Cemetery perpetual care trust investments	695,235	695,616
Assets, Fair Value Disclosure	8,163,187	5,861,521
Derivatives - bank loan interest rate swaps, Call Options	(116,036)	(124,174)
Derivatives - bank loan interest rate swaps, Put Options	(11,867)
Liabilities accounted for at fair value	(127,903)	(124,174)
Fair Value, Inputs, Level 3
Derivatives - interest rate lock commitments	2,111,529	1,511,111
Assets, Fair Value Disclosure	2,111,529	1,511,111
Policyholder account balances	(45,310,699)
Future policy benefits - annuities	(65,540,985)	(65,052,928)
Derivatives - bank loan interest rate swaps	(31,370)	(58,310)
Derivatives - bank loan interest rate swaps, Interest rate lock commitments	(181,678)	(23,203)
Liabilities accounted for at fair value	(111,064,732)	(113,135,109)
Policyholder account balances		$ (48,000,668)

XML

Note 1: Significant Accounting Policies: Long-lived Assets (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Long-lived Assets

Long-lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset, and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. No impairment of long-lived assets has been recognized in the accompanying financial statements.

XML

Note 5: Property and Equipment: Property, Plant and Equipment (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Land and buildings	$ 11,904,100	$ 12,482,082
Furniture and equipment	15,822,957	14,301,713
Property, Plant and Equipment, Gross	27,727,057	26,783,795
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(16,419,343)	(15,260,635)
Property and equipment, net	$ 11,307,714	$ 11,523,160

XML

Note 5: Property and Equipment: Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Property, Plant and Equipment

	December 31
	2014	2013
Land and buildings	$        11,904,100	$        12,482,082
Furniture and equipment	15,822,957	14,301,713
	27,727,057	26,783,795
Less accumulated depreciation	(16,419,343)	(15,260,635)
Total	$        11,307,714	$        11,523,160

XML

Note 6: Bank and Other Loans Payable: Loan Agreements (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Interest Rate Swap Instrument
Long-term Debt, Fair Value	$ 31,370	$ 58,310
Debt Instrument, Interest Rate, Effective Percentage	2.65%
Derivative Liability	31,370		58,310
Change in accumulated other comprehensive income	26,940	32,262
Revolving Line of Credit 1
Line of Credit Facility, Description	The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75%
Line of Credit Facility, Maximum Borrowing Capacity	2,000,000
Line of Credit Facility, Interest Rate at Period End	2.50%
Line of Credit Facility, Collateral	secured by the capital stock of Security National Life
Line of Credit Facility, Amount Outstanding	0
Revolving Line of Credit 2
Line of Credit Facility, Description	The Company has a $15,000,000 revolving line-of-credit with a bank with interest payable at the variable overnight Libor rate plus 2%
Line of Credit Facility, Interest Rate at Period End	2.11%
Line of Credit Facility, Collateral	secured by bond investments of the Company
Line of Credit Facility, Amount Outstanding	0
Revolving Line of Credit 3
Line of Credit Facility, Description	The Company has a $2,150,000 revolving line-of-credit with a bank with interest payable at the prime rate plus 1.25%
Line of Credit Facility, Maximum Borrowing Capacity	2,150,000
Line of Credit Facility, Interest Rate at Period End	4.50%
Line of Credit Facility, Collateral	secured by the capital stock of Security National Life
Line of Credit Facility, Amount Outstanding	$ 0

XML

Note 2: Investments: Held-to-maturity Securities (Tables)

12 Months Ended

Dec. 31, 2014

AsOfDecember312014Member

Held-to-maturity Securities

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2014:
Fixed maturity securities held to maturity carried at amortized cost:
U.S. Treasury securities and obligations of U.S. Government agencies	$         1,873,146	$          345,715	$                      -	$          2,218,861
Obligations of states and political subdivisions	1,736,489	221,893	(5,278)	1,953,104
Corporate securities including public utilities	126,533,483	15,841,536	(980,357)	141,394,662
Mortgage-backed securities	4,263,206	305,381	(11,894)	4,556,693
Redeemable preferred stock	612,023	22,032	-	634,055
Total fixed maturity securities held to maturity	$     135,018,347	$     16,736,557	$         (997,529)	$      150,757,375

As Of December 31 2013

Held-to-maturity Securities

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2013:
Fixed maturity securities held to maturity carried at amortized cost:
U.S. Treasury securities and obligations of U.S. Government agencies	$         2,284,261	$          298,901	$                      -	$         2,583,162
Obligations of states and political subdivisions	1,790,661	197,340	(9,404)	1,978,597
Corporate securities including public utilities	134,257,468	10,513,448	(1,394,919)	143,375,997
Mortgage-backed securities	4,522,081	206,617	(11,351)	4,717,347
Redeemable preferred stock	612,023	12,994	(5,900)	619,117
Total fixed maturity securities held to maturity	$     143,466,494	$     11,229,300	$      (1,421,574)	$     153,274,220

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Note 8: Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Effective Income Tax Rate Reconciliation

	2014	2013	2012
Computed expense at statutory rate	$    4,243,524	$    3,340,067	$    7,472,953
Tax audit settlements	-	20,371	-
Other, net	482,781	(1,122,632)	(2,834,178)
Tax expense (benefit)	$    4,726,305	$    2,237,806	$    4,638,775

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Note 16: Fair Value of Financial Instruments: Schedule of Financial Instruments Carried at Other Than Fair Value (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Carrying Value	$ (28,989,008)	$ (18,231,128)
Estimated Carrying Value	(28,989,008)	(18,231,128)
Residential Mortgage
Carrying Value	51,876,621	48,503,639
Estimated Carrying Value	55,247,638	51,537,154
Residential Construction
Carrying Value	32,971,824	12,812,359
Estimated Carrying Value	32,971,824	12,812,359
Commercial Loan
Carrying Value	35,201,627	41,465,880
Estimated Carrying Value	36,829,266	42,441,268
Mortgage loans, net
Carrying Value	120,050,072	102,781,878
Estimated Carrying Value	125,048,728	106,790,781
Policy Loan
Carrying Value	7,011,012	7,520,376
Estimated Carrying Value	7,011,012	7,520,376
Other loans
Carrying Value	27,114,416	12,203,630
Estimated Carrying Value	27,114,416	12,203,630
Short term investments
Carrying Value	27,059,495	12,135,719
Estimated Carrying Value	27,059,495	12,135,719
Fair Value, Inputs, Level 3
Estimated Carrying Value	(28,989,008)	(18,231,128)
Fair Value, Inputs, Level 3 | Residential Mortgage
Estimated Carrying Value	55,247,638	51,537,154
Fair Value, Inputs, Level 3 | Residential Construction
Estimated Carrying Value	32,971,824	12,812,359
Fair Value, Inputs, Level 3 | Commercial Loan
Estimated Carrying Value	36,829,266	42,441,268
Fair Value, Inputs, Level 3 | Mortgage loans, net
Estimated Carrying Value	125,048,728	106,790,781
Fair Value, Inputs, Level 3 | Policy Loan
Estimated Carrying Value	7,011,012	7,520,376
Fair Value, Inputs, Level 3 | Other loans
Estimated Carrying Value	27,114,416	12,203,630
Fair Value, Inputs, Level 3 | Short term investments
Estimated Carrying Value	$ 27,059,495	$ 12,135,719

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Note 2: Investments: Investments Classified by Contractual Maturity Date (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	$ 135,018,347	$ 143,466,494
HeldToMaturitySecuritiesEstimatedFairValue	150,757,375	153,274,220
Collateralized Mortgage Backed Securities
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	4,263,206	4,522,081
HeldToMaturitySecuritiesEstimatedFairValue	4,556,693	4,717,347
Redeemable Preferred Stock
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	612,023	612,023
HeldToMaturitySecuritiesEstimatedFairValue	634,055	619,117
Common Stock
Available-for-sale Securities, Amortized Cost Basis	7,179,010
AvailableForSaleSecuritiesEstimatedFairValue	6,752,750
Due in 2015
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	4,961,596
HeldToMaturitySecuritiesEstimatedFairValue	5,075,769
Due in 2016 Through 2019
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	33,920,182
HeldToMaturitySecuritiesEstimatedFairValue	37,561,840
Due in 2020 through 2024
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	25,074,149
HeldToMaturitySecuritiesEstimatedFairValue	27,690,447
Due after 2024
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	66,187,191
HeldToMaturitySecuritiesEstimatedFairValue	$ 75,238,571

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Note 1: Significant Accounting Policies: Mortgage Fee Income (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Mortgage Fee Income

Mortgage Fee Income

Mortgagefeeincomeconsistsoforiginationfees,processingfeesandcertainotherincomerelated totheoriginationandsaleofmortgageloans.Formortgage loans sold to third party investors, mortgage fee income and related expenses are recognized pursuant to generally accepted accounting principles at the time the sales of mortgage loans comply with the sales criteria for the transfer of financial assets, which are: (i) the transferred assets have been isolated from the Companyanditscreditors,(ii) thetransfereehastherighttopledgeorexchangethemortgage,and(iii)theCompanydoesnotmaintain effectivecontroloverthetransferredmortgage. The Company must determine that all three criteria are met at the time a loan is funded. Allrightsandtitletothemortgageloansareassigned tounrelatedfinancialinstitutioninvestors,includinginvestorcommitmentsfortheloans,prior towarehouse bankspurchasingtheloansunderthepurchasecommitments.

The Company, through its mortgage subsidiaries, sells all mortgage loans to third party investors without recourse. However, it may be required to repurchase a loan or pay a fee instead of repurchase under certain events, which include the following:

·         Failure to deliver original documents specified by the investor,

·         The existence of misrepresentation or fraud in the origination of the loan,

·         The loan becomes delinquent due to nonpayment during the first several months after it is sold,

·         Early pay-off of a loan, as defined by the agreements,

·         Excessive time to settle a loan,

·         Investor declines purchase, and

·         Discontinued product and expired commitment.

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company. Generally, a ten day extension will cost .125% (12.5 basis points) of the loan amount. The Company’s historical data shows that 99% of all loans originated by its mortgage subsidiaries are generally settled by the investors as agreed within 16 days after delivery. There are situations, however, when the Company determines that it is unable to enforce the settlement of loans rejected by the third-party investors and that it is in its best interest to repurchase those loans from the warehouse banks.

It is the Company's policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month time period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

·         Research reasons for rejection,

·         Provide additional documents,

·         Request investor exceptions,

·         Appeal rejection decision to purchase committee, and

·         Commit to secondary investors.

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six month time period, the loans are repurchased and transferred to the long term investment portfolio at the lower of cost or fair value and previously recorded sales revenue is reversed. Any loan that later becomes delinquent is evaluated by the Company at that time and any impairment is adjusted accordingly.

Determining Lower of Cost or Market

Cost is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Market value is often difficult to determine, but is based on the following:

·         For loans that have an active market the Company uses the market price on the repurchased date.

·         For loans where there is no market but there is a similar product, the Company uses the market value for the similar product on the repurchased date.

·         For loans where no active market exists on the repurchased date, the Company determines that the unpaid principal balance best approximates the market value on the repurchased date, after considering the fair value of the underlying real estate collateral and estimated future cash flows.

The appraised value of the real estate underlying the original mortgage loan adds support to the Company’s determination of fair value because if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan. In determining the market value on the date of repurchase, the Company considers the total value of all of the loans because any sale of loans would be made as a pool.

Formortgagesoriginatedandheldforinvestment,mortgagefeeincomeandrelatedexpensesare recognized when the loan is originated.

The Company provides an allowance for loan losses on its mortgage loans held for investment. The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired.

Commercial Loans

Each quarter, management reviews the current commercial loans and determines if an allowance is required based on the Company’s actual experience of losses on impaired commercial loans. To date, the Company has not incurred any significant losses. The carrying value of all commercial loans is supported by appraisals and cash flow analysis of revenue received. Also, the Company has not accrued any interest income or capitalized any of the foreclosure costs on the impaired commercial loans.

Residential and Construction Loans

The Company believes that in an orderly market fair value will approximate the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for future estimated policy claims. Accordingly, the fair value determination will be weighted more heavily toward the rental analysis.

It should be noted that for replacement cost, when determining the fair value of mortgage properties, the Company uses Marshall and Swift, a provider of building cost information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and projected the present value of the net rental income over seven years. The Company used 60% of the projected cash flow analysis and 40% of the replacement cost to approximate fair value of the collateral.

Each quarter the Company also analyzes its current loan portfolio and determines the level of allowance needed for loans that are listed as current in the portfolio. The basis of the analysis places a higher weight on loans with high loan to value ratios, those that lack mortgage insurance, and certain loan types that have a higher percentage of default based on the Company’s experience.

Each quarter the Company makes further analysis of the foreclosed properties to determine if any additional allowances are necessary by comparing national indexes of loan to value ratios by region to the Company’s loan to value ratios. Based upon the above procedures, the Company’s management believes that residential and residential construction loans are reflected in the Company’s financial statements at the lower of cost or market in accordance with GAAP requirements.

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Note 1: Significant Accounting Policies: Cash and Cash Equivalents (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Cash and Cash Equivalents

Cash and Cash Equivalents

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

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Note 9: Reinsurance, Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Future Minimum Rental Payments for Operating Leases

Years Ending
December 31
2015	$       4,299,185
2016	3,610,599
2017	2,835,947
2018	1,188,581
2019	563,956
Total	$     12,498,268

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Note 3: Receivables: Schedule of Receivables (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Trade contracts	$ 12,166,838	$ 9,993,755
Receivables from sales agents	1,951,677	994,056
Receivables held in escrow	278,331	312,167
Other Receivables	1,428,106	1,601,227
Accounts Receivable, Gross	15,824,952	12,901,205
Allowance for Doubtful Accounts Receivable	(1,280,859)	(1,248,633)
Receivables, net	$ 14,544,093	$ 11,652,572

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Note 7: Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds: Schedule of the components of the cemetery perpetual care obligation (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Cemetery perpetual care obligation, trust investments at market value	$ 2,645,423	$ 2,414,883
Cemetery perpetual care obligation, note receivables eliminated in consolidation	1,847,892	1,881,565
Cemetery perpetual care obligation, trust assets	4,493,315	4,296,448
CemeteryPerpetualCareObligation	(3,406,718)	(3,266,131)
Cemetery perpetual care obligation, fair value of trust assets in excess of trust obligations	$ 1,086,597	$ 1,030,317

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Note 8: Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount	$ 4,243,524	$ 3,340,067	$ 7,472,953
Effective Income Tax Rate Reconciliation, Tax Settlement, Amount		20,371
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount	482,781	(1,122,632)	(2,834,178)
Income Tax Expense (Benefit), Continuing Operations	$ 4,726,305	$ 2,237,806	$ 4,638,775

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Note 7: Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds: Schedule of the components of the cemetery perpetual care obligation (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of the components of the cemetery perpetual care obligation

	December 31
	2014	2013
Trust investments, at market value	$     2,645,423	$     2,414,883
Note receivables from Cottonwood Mortuary
Singing Hills Cemetery and Memorial Estates - Pinehill
eliminated in consolidation	1,847,892	1,881,565
Total trust assets	4,493,315	4,296,448
Cemetery perpetual care obligation	(3,406,718)	(3,266,131)
Fair value of trust assets in excess of trust obligations	$     1,086,597	$     1,030,317

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Note 17: Accumulated Other Comprehensive Income: Schedule of Changes in accumulated other comprehensive income (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Changes in accumulated other comprehensive income

	December 31
	2014	2013
Unrealized losses on available for-sale securities	$      (390,143)	$         (12,299)
Reclassification adjustment for net realized gains in net income	293,985	538,311
Net unrealized gains (losses) before taxes	(96,158)	526,012
Tax (expense) benefit	30,310	(221,221)
Net	(65,848)	304,791
Potential unrealized gains for derivative bank loans (interest rate swaps) before taxes	26,940	35,262
Tax expense	(10,507)	(9,073)
Net	16,433	26,189
Potential unrealized gains (losses) for derivative mortgage loans before taxes	441,943	(1,473,557)
Tax (expense) benefit	(172,358)	426,614
Net	269,585	(1,046,943)
Other comprehensive income (loss) changes	$       220,170	$       (715,963)

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Note 2: Investments: Schedule of Unrealized Loss on Investments (Tables)

12 Months Ended

Dec. 31, 2014

Fixed Maturities

Schedule of Unrealized Loss on Investments

	Unrealized Losses for Less than Twelve Months	No. of Investment Positions	Unrealized Losses for More than Twelve Months	No. of Investment Positions	Total Unrealized Loss
At December 31, 2014
Redeemable Preferred Stock	$              -	0	$              -	0	$               -
Obligations of States and
Political Subdivisions	-	0	5,278	1	5,278
Corporate Securities	548,310	21	432,047	11	980,357
Mortgage and other
asset-backed securities	3,966	1	7,928	0	11,894
Total unrealized losses	$   552,276	22	$  445,253	12	$   997,529
Fair Value	$ 7,081,352		$2,777,587		$9,858,939
At December 31, 2013
Redeemable Preferred Stock	$       5,900	1	$              -	0	$       5,900
Obligations of States and
Political Subdivisions	7,131	1	2,273	1	9,404
Corporate Securities	1,134,415	72	260,504	10	1,394,919
Mortgage and other
asset-backed securities	3,109	1	8,242	1	11,351
Total unrealized losses	$ 1,150,555	75	$  271,019	12	$1,421,574
Fair Value	$22,002,277		$2,308,464		$24,310,741

Equity Securities

Schedule of Unrealized Loss on Investments

	Unrealized Losses for Less than Twelve Months	No. of Investment Positions	Unrealized Losses for More than Twelve Months	No. of Investment Positions	Total Unrealized Losses
At December 31, 2014
Industrial, miscellaneous and all other	$ 327,389	138	$ 492,744	27	$ 820,133
Total unrealized losses	$ 327,389	138	$ 492,744	27	$ 820,133
Fair Value	$2,162,425		$ 676,706		$2,839,131
At December 31, 2013
Industrial, miscellaneous and all other	$  119,449	28	$ 405,936	28	$  525,386
Total unrealized losses	$  119,449	28	$ 405,936	28	$  525,386
Fair Value	$  993,612		$ 772,345		$1,765,957

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Note 2: Investments: Mortgage Loans - Additional (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Mortgage loans on real estate balances, net of allowance for losses	2,003,055	$ 1,652,090
Minimum
Mortgage Loan, Interest Rate	2.00%
Maximum
Mortgage Loan, Interest Rate	10.50%

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Note 8: Income Taxes: Unrecognized tax benefits, interest and penalties (Details) (USD $)	Dec. 31, 2014
Details
Unrecognized Tax Benefits	$ 0

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Note 8: Income Taxes: Schedule of components of Deferred Tax Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of components of Deferred Tax Liabilities

	December 31
	2014	2013
Assets
Future policy benefits	$ (6,856,001)	$ (5,381,385)
Loan loss reserve	(670,078)	(2,147,547)
Unearned premium	(1,687,059)	(1,759,087)
Available for sale securities	(125,797)	(566,316)
Net operating loss	(1,738,137)	(873,412)
Deferred compensation	(1,279,860)	(1,057,551)
Deposit obligations	(1,018,313)	(1,043,964)
Other	(1,398,152)	(1,287,773)
Less: Valuation allowance	5,276,431	5,593,063
Total deferred tax assets	(9,496,966)	(8,523,972)
Liabilities
Deferred policy acquisition costs	12,271,954	10,914,618
Basis difference in property and equipment	7,049,551	6,242,266
Value of business acquired	2,906,193	2,951,487
Deferred gains	5,472,003	3,545,692
Trusts	1,599,657	1,599,657
Tax on unrealized appreciation	952,725	800,171
Total deferred tax liabilities	30,252,083	26,053,891
Net deferred tax liability	$ 20,755,117	$ 17,529,919

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Note 12: Stock Compensation Plans (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Employee Service Share-based Compensation, Allocation of Recognized Period Costs, Capitalized Amount	$ 391,220	$ 88,369	$ 251,031
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	$ 173,650	$ 2,179,393

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Note 16: Fair Value of Financial Instruments: Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs (Tables)

12 Months Ended

Dec. 31, 2014

As Of December 31 2013

Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs

	Policyholder Account Balances	Future Policy Benefits - Annuities	Interest Rate Lock Commitments	Bank Loan Interest Rate Swaps
Balance - December 31, 2013	$    (48,000,668)	$       (65,052,928)	$         1,487,908	$           (58,310)
Total Losses (Gains):
Included in earnings	2,689,969	(488,057)	-	-
Included in other
comprehensive income (loss)	-	-	441,943	26,940
Balance - December 31, 2014	$    (45,310,699)	$       (65,540,985)	$         1,929,851	$           (31,370)

AsOfDecember312012Member

Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs

	Policyholder Account Balances	Future Policy Benefits - Annuities	Interest Rate Lock Commitments	Bank Loan Interest Rate Swaps
Balance - December 31, 2012	$            (49,746,337)	$            (65,171,687)	$        2,961,465	$         (93,572)
Total Losses (Gains):
Included in earnings	1,745,669	118,759	-	-
Included in other comprehensive income (loss)	-	-	(1,473,557)	35,262
Balance - December 31, 2013	$            (48,000,668)	$            (65,052,928)	$        1,487,908	$         (58,310)

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Note 10: Retirement Plans: Deferred Compensation Plans (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
CEO, and past senior VP
Deferred Compensation Arrangement with Individual, Recorded Liability	$ 598,426
Scott M. Quist
Deferred Compensation Arrangement with Individual, Recorded Liability	2,270,425	1,437,242
Present value of anticipated benefits	833,183	264,000
Deferred Tax Credits related to compensation expense
Deferred Compensation Arrangement with Individual, Recorded Liability	768,220	613,403
Present value of anticipated benefits	$ 154,817
Deferred Compensation Plan
Deferred Compensation Arrangements, Overall, Description	Under the terms of the Plan, the Company will provide deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Board has appointed a Committee of the Company to be the Plan Administrator and to determine the employees who are eligible to participate in the plan. The employees who participate may elect to defer a portion of their compensation into the plan.

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Note 12: Stock Compensation Plans: Schedule of Activity of the 2003 Plan (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	512,795	405,133	972,253	1,996,543
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 3.20	$ 2.41	$ 2.07	$ 2.40
Adjustment for the effect of stock dividends	24,446	17,962	43,928
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	173,500	81,960	347,000
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised	(59,713)	(485,366)	(1,041,276)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Forfeited	(30,571)	(76,676)	(123,134)
Shares Reclassifies		(105,000)	(250,808)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	343,987
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 2.50
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	265,198
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	7.70
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	6.65
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 1,042,682
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	940,079
Class C Common Stock
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	691,591	508,657	583,851	361,028
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 2.54	$ 2.00	$ 2.18
Adjustment for the effect of stock dividends	32,934	24,222	24,515
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	150,000	50,000
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised		(190,602)	(52,500)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Forfeited		(63,814)
Shares Reclassifies		105,000	250,808
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	547,216
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 2.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	3.42
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	1.79
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	1,856,886
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	$ 1,780,498

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Note 11: Capital Stock: Schedule of Basic and diluted earnings per share (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Basic and diluted earnings per share

	2014	2013	2012
Numerator:
Net earnings	$    7,754,648	$    7,585,921	$ 16,712,518
Denominator:
Denominator for basic earnings
per share-weighted-average shares	12,518,743	12,366,029	11,427,568
Effect of dilutive securities
Employee stock options	409,266	615,547	599,281
Dilutive potential common shares	409,266	615,547	599,281
Denominator for diluted earnings (loss)
per share-adjusted weighted-average
shares and assumed conversions	12,928,009	12,981,576	12,026,849
Basic earnings per share	$0.62	$0.61	$1.46
Diluted earnings per share	$0.60	$0.58	$1.39

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Note 16: Fair Value of Financial Instruments: Fair Value Assets Measured on a Nonrecurring Basis (Tables)

12 Months Ended

Dec. 31, 2014

AsOfDecember312014Member

Fair Value Assets Measured on a Nonrecurring Basis

	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a nonrecurring basis
Mortgage servicing rights	$        3,741,381	$                        -	$                -	$        3,741,381
Real estate held for investment	53,500	-	-	53,500
Total assets accounted for at fair value on    a nonrecurring basis	$        3,794,881	$                        -	$                -	$        3,794,881

As Of December 31 2013

Fair Value Assets Measured on a Nonrecurring Basis

	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a nonrecurring basis
Mortgage servicing rights	$    2,494,254	$                        -	$                 -	$      2,494,254
Mortgage loans on real estate	89,000	-	-	89,000
Real estate held for investment	660,784	-	-	660,784
Total assets accounted for at fair value on a nonrecurring basis	$    3,244,038	$                        -	$                 -	$      3,244,038

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Note 8: Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Components of Income Tax Expense (Benefit)

	2014	2013	2012
Current	$    1,653,663	$    1,821,539	$    2,707,962
Deferred	3,072,642	416,267	1,930,813
Total	$    4,726,305	$    2,237,806	$    4,638,775

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Note 6: Bank and Other Loans Payable: Summary of Bank Loans Payable (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Summary of Bank Loans Payable

	December 31
	2014	2013
6.34% note payable in monthly installments of $13,556 including principal and interest, collateralized by real property with a book value of approximately $498,000, due November 2017.	$      466,937	$      612,068
5.75% note payable in monthly installments of $28,271 including principal and interest, collateralized by real property with a book value of approximately $5,890,000 due March 2015.	3,398,099	3,509,944
Mark to market of interest rate swaps (discussed below) adjustment	31,370	58,310
3.85% note payable in monthly installments of $79,468 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due June 2015.	461,889	1,377,925
3.85% note payable in monthly installments of $86,059 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due December 2017.	2,994,999	3,891,926
4.40% note payable in monthly installments of $46,825 including principal and interest, collateralized by real property with a book value of approximately $12,450,000 due January 2026.	8,333,550	8,500,000
2.75% above the 90-day LIBOR rate (3.0052% at December 31, 2014) construction and term loan payable, collateralized by real property with a book value of approximately $22,855,000 due July 2017.	13,085,189	-
Other collateralized bank loans payable	247,384	338,304
Other notes payable	961	961
Total bank and other loans	29,020,378	18,289,438
Less current installments	5,248,043	5,849,926
Bank and other loans, excluding current installments	$ 23,772,335	$ 12,439,512

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Note 18: Derivative Commitments

12 Months Ended

Dec. 31, 2014

Notes

Note 18: Derivative Commitments

18)    Derivative Commitments

The Company has adopted a strategy of selling “out of the money” call options on its available for sale equity securities as a source of revenue.  The options give the purchaser the right to buy from the Company specified equity securities at a set price up to a pre-determined date in the future.  The Company has adopted the selling of put options as a means of generating cash or purchasing equity securities at lower than current market prices.  The Company receives an immediate payment of cash for the value of the option and establishes a liability for the market value of the option.  The liability for options is adjusted to market value at each reporting date. The market value of outstanding options as of December 31, 2014 and December 31, 2013 was $127,903 and $124,174, respectively.  In the event a call option is exercised, the Company recognizes a gain on the sale of the equity security and a gain from the sale of the option.  If the option expires unexercised, the Company recognizes a gain from the sale of the option.

The following table shows the fair value of derivatives as of December 31, 2014 and December 31, 2013.

	Fair Value of Derivative Instruments
	Asset Derivatives				Liability Derivatives
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013
	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate lock and forward sales commitments	other assets	$2,111,529	other assets	$1,511,111	Other liabilities	$181,678	Other liabilities	$  23,203
Call Options		-		-	Other liabilities	116,036	Other liabilities	124,174
Put Options		-		-	Other liabilities	11,867	Other liabilities	-
Interest rate swaps		-		-	Bank loans payable	31,370	Bank loans payable	58,310
Total		$2,111,529		$1,511,111		$340,951		$205,687

The following table shows the gain (loss) on derivatives for the periods presented. There were no gains or losses reclassified from accumulated other comprehensive income (OCI) into income or gains or losses recognized in income on derivatives ineffective portion or any amounts excluded from effective testing.

	Net Amount Gain (Loss) Recognized in OCI
	Years ended December 31
Derivative - Cash Flow Hedging Relationships:	2014	2013
Interest Rate Lock Commitments	$                    441,943	$                (1,473,557)
Interest Rate Swaps	26,940	35,262
Sub Total	468,883	(1,438,295)
Tax Effect	182,865	(417,541)
Total	$                    286,018	$                (1,020,754)

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Note 9: Reinsurance, Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Rent expense related to non-cancelable operating leases	$ 5,589,000	$ 4,307,000	$ 3,425,000

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Note 1: Significant Accounting Policies: Earnings Per Common Share (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Earnings Per Common Share

Earnings Per Common Share

The Company computes earnings per share in accordance with accounting principles generally accepted in the United States of America which requires presentation of basic and diluted earnings per share. Basic earnings per equivalent Class A common share are computed by dividing net earnings by the weighted-average number of Class A common shares outstanding during each year presented, after the effect of the assumed conversion of Class C common stock to Class A common stock. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the year used to compute basic earnings per share plus dilutive potential incremental shares. Basic and diluted earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

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Note 17: Accumulated Other Comprehensive Income: Schedule of Changes in accumulated other comprehensive income (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Accumulated other comprehensive income, Unrealized gains (losses) on Available for Sale Securities	$ (390,143)	$ (12,299)
Reclassification adjustment for net realized gains in net income	293,985	538,311
Net unrealized gains (losses) before taxes	(96,158)	526,012
Tax (expense) benefit	30,310	(221,221)
Net Unrealized Gain (Loss)	(65,848)	304,791
Net Potential unrealized gains (losses) for derivative mortgage loans before taxes	26,940	35,262
Potential Tax Expense Benefit	(10,507)	(9,073)
Net Unrealized Gain (Loss) including Derivatie Bank Loans and Tax benefit	16,433	26,189
Potential unrealized gains (losses) for derivative mortgage loans before taxes	441,943	(1,473,557)
Tax (expense) benefit on Derivative Mortgage Loans	(172,358)	426,614
Net Unrealized Gain (Loss) including Derivatie Bank Loans, Mortgage Loans and Tax Benefits	269,585	(1,046,943)
Other comprehensive income changes	$ 220,170	$ (715,963)

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Note 1: Significant Accounting Policies: Future Life, Annuity and Other Policy Benefits (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Future Life, Annuity and Other Policy Benefits

Future Life, Annuity and Other Policy Benefits

Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, mortality, morbidity, withdrawals, and other assumptions based on the life insurance subsidiaries’ experience, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are, for some plans, graded to equal statutory values or cash values at or prior to maturity. The range of assumed interest rates for all traditional life insurance policy reserves was 4.5% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit claims are charged to expense in the period the claims are incurred. Increases in future policy benefits are charged to expense.

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 3% to 6.5%.

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Note 8: Income Taxes: Summary of Income Tax Liability (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Summary of Income Tax Liability

	December 31	December 31
	2014	2013
Current	$   (333,350)	$ (1,578,071)
Deferred	20,755,117	17,529,919
Total	$ 20,421,767	$ 15,951,848

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Note 21: Quarterly Financial Data (unaudited): Schedule of Quarterly Financial Information (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Quarterly Financial Information

	2014
	Three Months Ended
	March 31	June 30	September 30	December 31
Revenues	$     45,053,276	$     59,411,730	$     61,725,792	$     60,745,876
Benefits and expenses	44,887,289	55,224,633	58,348,652	55,995,147
Earnings before income taxes	165,987	4,187,097	3,377,140	4,750,729
Income tax expense	(27,139)	(1,563,034)	(1,239,318)	(1,896,814)
Net earnings	138,848	2,624,063	2,137,822	2,853,915
Net earnings per common share (1)	$0.01	$0.21	$0.17	$0.23
Net earnings per common share    assuming dilution (1)	$0.01	$0.20	$0.17	$0.22

	2013
	Three Months Ended
	March 31	June 30	September 30	December 31
Revenues	$     54,852,234	$     61,332,289	$     50,552,791	$     48,577,706
Benefits and expenses	51,624,611	56,862,769	48,588,507	48,415,406
Earnings before income taxes	3,227,623	4,469,520	1,964,284	162,300
Income tax benefit (expense)	(1,194,357)	(1,670,275)	(697,793)	1,324,619
Net earnings	2,033,266	2,799,245	1,266,491	1,486,919
Net earnings per common share	$0.17	$0.23	$0.10	$0.12
Net earnings per common share    assuming dilution	$0.15	$0.21	$0.10	$0.11

	2012
	Three Months Ended
	March 31	June 30	September 30	December 31
Revenues	$     47,323,223	$     56,528,210	$     63,747,903	$     66,660,833
Benefits and expenses	44,994,631	51,491,833	57,615,608	58,806,804
Earnings before income taxes	2,328,592	5,036,377	6,132,295	7,854,029
Income tax expense	(666,409)	(1,443,345)	(2,142,249)	(386,772)
Net earnings	1,662,183	3,593,032	3,990,046	7,467,257
Net earnings per common share (1)	$0.16	$0.34	$0.37	$0.67
Net earnings per common share    assuming dilution (1)	$0.15	$0.32	$0.34	$0.61

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Note 1: Significant Accounting Policies: Deferred Policy Acquisition Costs and Value of Business Acquired (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Deferred Policy Acquisition Costs and Value of Business Acquired

Deferred Policy Acquisition Costs and Value of Business 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 (“DAC”) for traditional life insurance are amortized over the premium paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For interest-sensitive insurance products, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges, investment, mortality and expense margins. This amortization is adjusted when estimates of current or future gross profits to be realized from a group of products are reevaluated. Deferred acquisition costs are written off when policies lapse or are surrendered.

The Company follows accounting principles generally accepted in the United States of America when accounting for DAC on internal replacements of insurance and investment contracts. An internal replacement is a modification in product benefits, features, rights or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to contract, or by the election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract are accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced contract are written-off. Modifications that result in a contract that is substantially unchanged from the replaced contract are accounted for as a continuation of the replaced contract.

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

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Note 1: Significant Accounting Policies: Concentration of Credit Risk (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Concentration of Credit Risk

Concentration of Credit Risk

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

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Note 2: Investments: Schedule of loan loss reserve which is included in other liabilities and accrued expenses (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of loan loss reserve which is included in other liabilities and accrued expenses

	Years Ended December 31
	2014	2013
Balance, beginning of period	$          5,506,532	$          6,035,295
Provisions for losses	3,053,403	1,846,285
Charge-offs and settlements	(6,841,785)	(2,375,048)
Balance, at December 31	$          1,718,150	$          5,506,532

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Note 18: Derivative Commitments (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Market value of outstanding call options	$ 127,903	$ 124,174

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Note 2: Investments: Schedule of aging of mortgage loans (Details) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
Mortgage Loans during period	$ 122,053,127		$ 104,433,968
Mortgage Loans, Allowance for Loan Losses	(2,003,055)		(1,652,090)
Mortgage Loans, Net	120,050,072		102,781,878
Commercial Loan
Mortgage Loans during period	35,388,756		41,653,009
Mortgage Loans, Allowance for Loan Losses	(187,129)		(187,129)
Mortgage Loans, Net	35,201,627		41,465,880
Residential Mortgage
Mortgage Loans during period	53,592,433		49,868,486
Mortgage Loans, Allowance for Loan Losses	(1,715,812)		(1,364,847)
Mortgage Loans, Net	51,876,621		48,503,639
Residential Construction
Mortgage Loans during period	33,071,938		12,912,473
Mortgage Loans, Allowance for Loan Losses	(100,114)		(100,114)
Mortgage Loans, Net	32,971,824		12,812,359
Past due 30 to 59 days
Mortgage Loans during period	1,631,142		1,646,953
Past due 30 to 59 days | Residential Mortgage
Mortgage Loans during period	1,631,142		1,646,953
Past due 60 to 89 days
Mortgage Loans during period	1,174,516		1,604,847
Past due 60 to 89 days | Residential Mortgage
Mortgage Loans during period	1,174,516		1,604,847
Past due 90 or more days
Mortgage Loans during period	5,529,796	[1]	5,932,396	[1]
Past due 90 or more days | Residential Mortgage
Mortgage Loans during period	5,464,901	[1]	5,867,501	[1]
Past due 90 or more days | Residential Construction
Mortgage Loans during period	64,895	[1]	64,895	[1]
In Foreclosure
Mortgage Loans during period	1,970,681	[1]	6,492,072	[1]
In Foreclosure | Commercial Loan
Mortgage Loans during period			4,973,745	[1]
In Foreclosure | Residential Mortgage
Mortgage Loans during period	1,556,182	[1]	1,518,327	[1]
In Foreclosure | Residential Construction
Mortgage Loans during period	414,499	[1]
Total Past Due
Mortgage Loans during period	10,306,135		15,676,268
Total Past Due | Commercial Loan
Mortgage Loans during period			4,973,745
Total Past Due | Residential Mortgage
Mortgage Loans during period	9,826,741		10,637,628
Total Past Due | Residential Construction
Mortgage Loans during period	479,394		64,895
Current
Mortgage Loans during period	111,746,992		88,757,700
Current | Commercial Loan
Mortgage Loans during period	35,388,756		36,679,264
Current | Residential Mortgage
Mortgage Loans during period	43,765,692		39,230,858
Current | Residential Construction
Mortgage Loans during period	$ 32,592,544		$ 12,847,578

[1] There was not any interest income recognized on loans past due greater than 90 days or in foreclosure.

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Note 14: Business Segment Information: Schedule of Segment Reporting Information, by Segment (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenue from customers	$ 193,131,985	$ 191,272,963	$ 210,968,662
Net investment income	28,303,740	20,354,002	21,915,577
Gain (Loss) on Investments	1,918,176	1,418,051	1,424,510
Other than Temporary Impairment Losses, Investments	(164,240)	(336,226)	(1,207,632)
Other Revenue, Net	3,747,013	2,606,230	1,159,052
Net Investment Income	28,303,740	20,354,002	21,915,577
Segment Reporting Information, Revenue for Reportable Segment	226,936,674	215,315,020	234,260,169
Death and other policy benefits	29,789,964	28,534,936	24,246,088
Increase (Decrease) in Future Policy Benefit Reserves	18,060,151	19,594,890	21,435,191
Amortization of deferred policy and preneed acquisition costs and Value of Business Acquired	6,892,978	5,181,837	5,449,429
Depreciation	2,177,165	1,621,069	1,258,097
Provision for Loan and Lease Losses	3,053,403	1,751,472	4,239,418
Costs related to funding mortgage loans	6,877,069	6,635,290	6,931,045
Other General Expense	144,610,562	139,318,098	145,605,315
Interest Expense, Other	2,994,429	2,853,701	3,744,293
Benefits and Expenses	214,455,721	205,491,293	212,908,876
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	12,480,953	9,823,727	21,351,293
Income tax expemse (benefit)	(4,726,305)	(2,237,806)	(4,638,775)
Net Earnings (Loss)	7,754,648	7,585,921	16,712,518
Identifiable Assets	671,069,562	618,757,454	597,216,623
Goodwill	2,765,570	677,039	677,039
Expenditures for long-lived assets	2,280,563	3,570,333	3,221,620
Life Insurance Segment
Revenue from customers	57,037,623	51,322,567	49,550,904
Net investment income	23,008,489	15,877,784	16,616,541
Gain (Loss) on Investments	1,208,391	1,402,352	1,415,556
Other than Temporary Impairment Losses, Investments	(164,240)	(336,226)	(1,207,632)
Other Revenue, Net	682,682	538,009	482,325
Net Investment Income	6,128,389	7,220,282	7,570,979
Segment Reporting Information, Revenue for Reportable Segment	87,901,334	76,024,768	74,428,673
Death and other policy benefits	29,789,964	28,534,936	24,246,088
Increase (Decrease) in Future Policy Benefit Reserves	18,060,151	19,594,890	21,435,191
Amortization of deferred policy and preneed acquisition costs and Value of Business Acquired	6,561,589	4,811,300	5,137,586
Depreciation	644,510	401,893	315,960
Administrative costs, intersegment	24,000	24,000	24,000
Other General Expense	23,045,928	18,753,753	17,824,800
Interest Expense, intersegment	725,354	802,352	694,442
Interest Expense, Other	578,083	233,343	159,659
Benefits and Expenses	79,429,579	73,156,467	69,837,726
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	8,471,755	2,868,301	4,590,947
Income tax expemse (benefit)	(3,427,254)	399,304	1,755,258
Net Earnings (Loss)	5,044,501	3,267,605	6,346,205
Identifiable Assets	652,348,803	591,465,834	558,845,424
Goodwill	2,765,570	391,848	391,848
Expenditures for long-lived assets	1,420,950	659,259	400,605
Cemetery and Mortuary
Revenue from customers	11,426,308	12,000,375	10,864,497
Net investment income	275,324	268,923	333,625
Gain (Loss) on Investments	585,543	15,699	8,954
Other Revenue, Net	169,464	94,703	136,189
Net Investment Income	1,288,856	1,356,825	1,435,891
Segment Reporting Information, Revenue for Reportable Segment	13,745,495	13,736,525	12,779,156
Amortization of deferred policy and preneed acquisition costs and Value of Business Acquired	331,389	370,537	311,843
Depreciation	436,390	426,641	426,006
Administrative costs, intersegment	166,079	141,367	102,726
Other General Expense	10,245,144	10,467,717	9,582,499
Interest Expense, intersegment	1,481,317	1,664,096	1,681,987
Interest Expense, Other	421,920	443,133	455,449
Benefits and Expenses	13,082,239	13,513,491	12,560,510
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	663,256	223,034	218,646
Net Earnings (Loss)	663,256	223,034	218,646
Identifiable Assets	109,114,226	114,454,631	116,368,747
Goodwill		285,191	285,191
Expenditures for long-lived assets	121,677	1,100,195	689,154
Mortgage
Revenue from customers	124,668,054	127,950,021	150,553,261
Net investment income	5,019,927	4,207,295	4,965,411
Gain (Loss) on Investments	124,242
Other Revenue, Net	2,894,867	1,973,518	540,538
Net Investment Income	642,880	262,074	294,980
Segment Reporting Information, Revenue for Reportable Segment	133,349,970	134,392,908	156,354,190
Depreciation	1,096,265	792,535	516,131
Administrative costs, intersegment	208,513	199,193	137,696
Provision for Loan and Lease Losses	3,053,403	1,751,472	4,239,418
Costs related to funding mortgage loans	6,877,069	6,635,290	6,931,045
Other General Expense	111,319,492	110,096,627	118,198,014
Interest Expense, intersegment	5,454,860	6,008,174	6,661,001
Interest Expense, Other	1,994,426	2,177,225	3,129,185
Benefits and Expenses	130,004,028	127,660,516	139,812,490
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	3,345,942	6,732,392	16,541,700
Income tax expemse (benefit)	(1,299,051)	(2,637,110)	(6,394,033)
Net Earnings (Loss)	2,046,891	4,095,282	10,147,667
Identifiable Assets	52,349,204	50,250,677	55,613,678
Expenditures for long-lived assets	737,936	1,810,879	2,131,861
Significant Reconciling Items
Net Investment Income	(8,060,125)	(8,839,181)	(9,301,850)
Segment Reporting Information, Revenue for Reportable Segment	(8,060,125)	(8,839,181)	(9,301,850)
Administrative costs, intersegment	(398,592)	(364,560)	(264,422)
Other General Expense	(2)	1	2
Interest Expense, intersegment	(7,661,531)	(8,474,622)	(9,037,430)
Benefits and Expenses	(8,060,125)	(8,839,181)	(9,301,850)
Identifiable Assets	$ (142,742,671)	$ (137,413,688)	$ (133,611,226)

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Note 2: Investments: The Following Is A Summary of The Allowance For Loan Losses As A Contra-asset Account For The Periods Presented (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

The Following Is A Summary of The Allowance For Loan Losses As A Contra-asset Account For The Periods Presented:

Allowance for Credit Losses and Recorded Investment in Mortgage Loans
For the Years Ended December 31, 2014, and 2013
	Commercial	Residential	Residential Construction	Total
2014
Allowance for credit losses:
Beginning balance	$      187,129	$   1,364,847	$      100,114	$     1,652,090
Charge-offs	-	(38,444)	-	(38,444)
Provision	-	389,409	-	389,409
Ending balance	$      187,129	$   1,715,812	$      100,114	$     2,003,055
Ending balance: individually evaluated for impairment	$                  -	$      153,446	$                  -	$        153,446
Ending balance: collectively evaluated for impairment	$      187,129	$   1,562,366	$      100,114	$     1,849,609
Ending balance: loans acquired with deteriorated credit quality	$                  -	$                  -	$                  -	$                    -
Mortgage loans:
Ending balance	$ 35,388,756	$ 53,592,433	$ 33,071,938	$ 122,053,127
Ending balance: individually evaluated for impairment	$                  -	$   1,556,182	$      414,499	$     1,970,681
Ending balance: collectively evaluated for impairment	$ 35,388,756	$ 52,036,251	$ 32,657,439	$ 120,082,446
Ending balance: loans acquired with deteriorated credit quality	$                  -	$                  -	$                  -	$                    -
2013
Allowance for credit losses:
Beginning balance	$                  -	$   4,193,674	$        46,187	$     4,239,861
Charge-offs	-	(2,670,794)	(137,629)	(2,808,423)
Provision	187,129	(158,033)	191,556	220,652
Ending balance	$      187,129	$   1,364,847	$      100,114	$     1,652,090
Ending balance: individually evaluated for impairment	$                  -	$      152,745	$                  -	$        152,745
Ending balance: collectively evaluated for impairment	$      187,129	$   1,212,102	$      100,114	$     1,499,345
Ending balance: loans acquired with deteriorated credit quality	$                  -	$                  -	$                  -	$                    -
Mortgage loans:
Ending balance	$ 41,653,009	$ 49,868,486	$ 12,912,473	$ 104,433,968
Ending balance: individually evaluated for impairment	$                  -	$   1,518,327	$                  -	$     1,518,327
Ending balance: collectively evaluated for impairment	$ 41,653,009	$ 48,350,159	$ 12,912,473	$ 102,915,641
Ending balance: loans acquired with deteriorated credit quality	$                  -	$                  -	$                  -	$                    -

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Note 1: Significant Accounting Policies: Goodwill (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Goodwill

Goodwill

Previous acquisitions have been accounted for as purchases under which assets acquired and liabilities assumed were recorded at their fair values with the excess purchase price recognized as goodwill. The Company evaluates annually or when changes in circumstances warrant the recoverability of goodwill and if there is a decrease in value, the related impairment is recognized as a charge against income. No impairment of goodwill has been recognized in the accompanying financial statements.

XML

Note 2: Investments

12 Months Ended

Dec. 31, 2014

Notes

Note 2: Investments

2)   Investments

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

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2014:
Fixed maturity securities held to maturity carried at amortized cost:
U.S. Treasury securities and obligations of U.S. Government agencies	$         1,873,146	$          345,715	$                      -	$          2,218,861
Obligations of states and political subdivisions	1,736,489	221,893	(5,278)	1,953,104
Corporate securities including public utilities	126,533,483	15,841,536	(980,357)	141,394,662
Mortgage-backed securities	4,263,206	305,381	(11,894)	4,556,693
Redeemable preferred stock	612,023	22,032	-	634,055
Total fixed maturity securities held to maturity	$     135,018,347	$     16,736,557	$         (997,529)	$      150,757,375

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2014:
Equity securities available for sale at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$      7,179,010	$ 393,873	$  (820,133)	$ 6,752,750
Total securities available for sale carried at estimated fair value	$      7,179,010	$  393,873	$  (820,133)	$ 6,752,750
Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$   53,592,433
Residential construction	33,071,938
Commercial	35,388,756
Less: Allowance for loan losses	(2,003,055)
Total mortgage loans on real estate and construction loans held for investment	$ 120,050,072
Real estate held for investment - net of depreciation	$ 111,411,351
Policy and other loans at amortized cost:
Policy loans	$    7,011,012
Other loans	27,807,829
Less: Allowance for doubtful accounts	(693,413)
Total policy and other loans at amortized cost	$  34,125,428
Short-term investments at amortized cost	$  27,059,495

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

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2013:
Fixed maturity securities held to maturity carried at amortized cost:
U.S. Treasury securities and obligations of U.S. Government agencies	$         2,284,261	$          298,901	$                      -	$         2,583,162
Obligations of states and political subdivisions	1,790,661	197,340	(9,404)	1,978,597
Corporate securities including public utilities	134,257,468	10,513,448	(1,394,919)	143,375,997
Mortgage-backed securities	4,522,081	206,617	(11,351)	4,717,347
Redeemable preferred stock	612,023	12,994	(5,900)	619,117
Total fixed maturity securities held to maturity	$     143,466,494	$     11,229,300	$      (1,421,574)	$     153,274,220

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2013:
Equity securities available for sale at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$      4,783,936	$  240,206	$   (525,386)	$ 4,498,756
Total securities available for sale carried at estimated fair value	$     4,783,936	$  240,206	$    (525,386)	$ 4,498,756
Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$    49,868,486
Residential construction	12,912,473
Commercial	41,653,009
Less: Allowance for loan losses	(1,652,090)
Total mortgage loans on real estate and construction loans held for investment	$  102,781,878
Real estate held for investment - net of depreciation	$    99,760,475
Policy and other loans at amortized cost:
Policy loans	$      7,520,376
Other loans	12,472,805
Less: Allowance for doubtful accounts	(269,175)
Total policy and other loans at amortized cost	$    19,724,006
Short-term investments at amortized cost	$    12,135,719

Fixed Maturity Securities

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

	Unrealized Losses for Less than Twelve Months	No. of Investment Positions	Unrealized Losses for More than Twelve Months	No. of Investment Positions	Total Unrealized Loss
At December 31, 2014
Redeemable Preferred Stock	$              -	0	$              -	0	$               -
Obligations of States and
Political Subdivisions	-	0	5,278	1	5,278
Corporate Securities	548,310	21	432,047	11	980,357
Mortgage and other
asset-backed securities	3,966	1	7,928	0	11,894
Total unrealized losses	$   552,276	22	$  445,253	12	$   997,529
Fair Value	$ 7,081,352		$2,777,587		$9,858,939
At December 31, 2013
Redeemable Preferred Stock	$       5,900	1	$              -	0	$       5,900
Obligations of States and
Political Subdivisions	7,131	1	2,273	1	9,404
Corporate Securities	1,134,415	72	260,504	10	1,394,919
Mortgage and other
asset-backed securities	3,109	1	8,242	1	11,351
Total unrealized losses	$ 1,150,555	75	$  271,019	12	$1,421,574
Fair Value	$22,002,277		$2,308,464		$24,310,741

As of December 31, 2014, the average market value of the related fixed maturities was 90.8% of amortized cost and the average market value was 94.5% of amortized cost as of December 31, 2013. During 2014, 2013 and 2012, an other than temporary decline in market value resulted in the recognition of credit losses on fixed maturity securities of $120,000, $120,000 and $165,000, respectively.

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

Equity Securities

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

	Unrealized Losses for Less than Twelve Months	No. of Investment Positions	Unrealized Losses for More than Twelve Months	No. of Investment Positions	Total Unrealized Losses
At December 31, 2014
Industrial, miscellaneous and all other	$ 327,389	138	$ 492,744	27	$ 820,133
Total unrealized losses	$ 327,389	138	$ 492,744	27	$ 820,133
Fair Value	$2,162,425		$ 676,706		$2,839,131
At December 31, 2013
Industrial, miscellaneous and all other	$  119,449	28	$ 405,936	28	$  525,386
Total unrealized losses	$  119,449	28	$ 405,936	28	$  525,386
Fair Value	$  993,612		$ 772,345		$1,765,957

As of December 31, 2014, the average market value of the equity securities available for sale was 77.6% of the original investment and the average market value was 77.1% of the original investment as of December 31, 2013. The intent of the Company is to retain equity securities for a period of time sufficient to allow for the recovery in fair value. However, the Company may sell equity securities during a period in which the fair value has declined below the amount of the original investment. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. During 2014, 2013, and 2012, an other than temporary decline in the market value resulted in the recognition of an impairment loss on equity securities of $44,240, $100,304, and $247,317, respectively.

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

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

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

	Amortized	Estimated Fair
	Cost	Value
Held to Maturity:
Due in 2015	$           4,961,596	$           5,075,769
Due in 2016 through 2019	33,920,182	37,561,840
Due in 2020 through 2024	25,074,149	27,690,447
Due after 2024	66,187,191	75,238,571
Mortgage-backed securities	4,263,206	4,556,693
Redeemable preferred stock	612,023	634,055
Total held to maturity	$       135,018,347	$       150,757,375

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

		Estimated Fair
	Cost	Value
Available for Sale:
Common stock	$           7,179,010	$           6,752,750
Total available for sale	$           7,179,010	$           6,752,750

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

	2014	2013	2012
Fixed maturity securities held
to maturity:
Gross realized gains	$    390,203	$      97,238	$    470,874
Gross realized losses	(71,800)	(41,164)	(3,875)
Other than temporary impairments	(120,000)	(120,000)	(165,000)
Securities available for sale:
Gross realized gains	349,207	540,990	392,033
Gross realized losses	(55,222)	(2,678)	(5,705)
Other than temporary impairments	(44,240)	(100,304)	(247,317)
Other assets:
Gross realized gains	1,445,596	824,203	794,346
Gross realized losses	(139,808)	(538)	(223,163)
Other than temporary impairments	-	(115,922)	(795,315)
Total	$  1,753,936	$  1,081,825	$    216,878

The net carrying amount for sales of securities classified as held to maturity was $2,840,709, $1,455,835 and $2,174,300, for the years ended December 31, 2014, 2013 and 2012, respectively.  The net realized gain related to these sales was $20,722, $12,533 and $271,364, for the years ended December 31, 2014, 2013 and 2012, respectively. Certain circumstances lead to these decisions to sell.  

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

Major categories of net investment income are as follows:

	2014	2013	2012
Fixed maturity securities	$  8,229,451	$  8,265,949	$  7,731,051
Equity securities	212,917	210,491	264,063
Mortgage loans on real estate	7,550,110	4,666,910	5,543,777
Real estate	8,433,895	6,658,185	4,927,128
Policy, student and other loans	741,220	799,703	830,683
Short-term investments, principally gains on    sale of mortgage loans	12,397,382	8,952,584	8,716,257
Gross investment income	37,564,975	29,553,822	28,012,959
Investment expenses	(9,261,235)	(9,199,820)	(6,097,382)
Net investment income	$ 28,303,740	$ 20,354,002	$ 21,915,577

 Net investment income includes net investment income earned by the restricted assets of the cemeteries and mortuaries of $356,369, $341,430 and $352,488 for 2014, 2013 and 2012, respectively.

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

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

Securities on deposit for regulatory authorities as required by law amounted to $8,886,001 at December 31, 2014 and $9,215,222 at December 31, 2013. The restricted securities are included in various assets under investments on the accompanying consolidated balance sheets.

Mortgage Loans

Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0 % to 10.5%, maturity dates range from three months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At December 31, 2014, the Company has 44%, 17%, 13% and 8% of its mortgage loans from borrowers located in the states of Utah, California, Texas and Florida, respectively. The mortgage loans on real estate balances on the consolidated balance sheet are reflected net of an allowance for loan losses of $2,003,055 and $1,652,090 at December 31, 2014 and 2013, respectively.

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

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

Allowance for Credit Losses and Recorded Investment in Mortgage Loans
For the Years Ended December 31, 2014, and 2013
	Commercial	Residential	Residential Construction	Total
2014
Allowance for credit losses:
Beginning balance	$      187,129	$   1,364,847	$      100,114	$     1,652,090
Charge-offs	-	(38,444)	-	(38,444)
Provision	-	389,409	-	389,409
Ending balance	$      187,129	$   1,715,812	$      100,114	$     2,003,055
Ending balance: individually evaluated for impairment	$                  -	$      153,446	$                  -	$        153,446
Ending balance: collectively evaluated for impairment	$      187,129	$   1,562,366	$      100,114	$     1,849,609
Ending balance: loans acquired with deteriorated credit quality	$                  -	$                  -	$                  -	$                    -
Mortgage loans:
Ending balance	$ 35,388,756	$ 53,592,433	$ 33,071,938	$ 122,053,127
Ending balance: individually evaluated for impairment	$                  -	$   1,556,182	$      414,499	$     1,970,681
Ending balance: collectively evaluated for impairment	$ 35,388,756	$ 52,036,251	$ 32,657,439	$ 120,082,446
Ending balance: loans acquired with deteriorated credit quality	$                  -	$                  -	$                  -	$                    -
2013
Allowance for credit losses:
Beginning balance	$                  -	$   4,193,674	$        46,187	$     4,239,861
Charge-offs	-	(2,670,794)	(137,629)	(2,808,423)
Provision	187,129	(158,033)	191,556	220,652
Ending balance	$      187,129	$   1,364,847	$      100,114	$     1,652,090
Ending balance: individually evaluated for impairment	$                  -	$      152,745	$                  -	$        152,745
Ending balance: collectively evaluated for impairment	$      187,129	$   1,212,102	$      100,114	$     1,499,345
Ending balance: loans acquired with deteriorated credit quality	$                  -	$                  -	$                  -	$                    -
Mortgage loans:
Ending balance	$ 41,653,009	$ 49,868,486	$ 12,912,473	$ 104,433,968
Ending balance: individually evaluated for impairment	$                  -	$   1,518,327	$                  -	$     1,518,327
Ending balance: collectively evaluated for impairment	$ 41,653,009	$ 48,350,159	$ 12,912,473	$ 102,915,641
Ending balance: loans acquired with deteriorated credit quality	$                  -	$                  -	$                  -	$                    -

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

Age Analysis of Past Due Mortgage Loans
Years Ended December 31, 2014 and 2013
	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days 1)	In Foreclosure 1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Net Mortgage Loans
2014
Commercial	$                        -	$                       -	$                       -	$                         -	$                         -	$     35,388,756	$          35,388,756	$           (187,129)	$        35,201,627
Residential	1,631,142	1,174,516	5,464,901	1,556,182	9,826,741	43,765,692	53,592,433	(1,715,812)	51,876,621
Residential   Construction	-	-	64,895	414,499	479,394	32,592,544	33,071,938	(100,114)	32,971,824
Total	$         1,631,142	$        1,174,516	$     5,529,796	$         1,970,681	$      10,306,135	$      111,746,992	$         122,053,127	$     (2,003,055)	$      120,050,072
2013
Commercial	$                        -	$                       -	$                       -	$       4,973,745	$       4,973,745	$     36,679,264	$           41,653,009	$           (187,129)	$        41,465,880
Residential	1,646,953	1,604,847	5,867,501	1,518,327	10,637,628	39,230,858	49,868,486	(1,364,847)	48,503,639
Residential   Construction	-	-	64,895	-	64,895	12,847,578	12,912,473	(100,114)	12,812,359
Total	$       1,646,953	$      1,604,847	$     5,932,396	$       6,492,072	$     15,676,268	$     88,757,700	$        104,433,968	$      (1,652,090)	$       102,781,878
1)  There was not any interest income recognized on loans past due greater than 90 days or in foreclosure.

Impaired Mortgage Loans

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

Impaired Loans
For the Years Ended December 31, 2014, and 2013
	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
2014
With no related allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	-	-	-	-	-
Residential construction	414,499	414,499	-	414,499	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,556,182	1,556,182	153,446	1,556,182	-
Residential construction	-	-	-	-	-
Total:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,556,182	1,556,182	153,446	1,556,182	-
Residential construction	414,499	414,499	-	414,499	-
2013
With no related allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	-	-	-	-	-
Residential construction	-	-	-	-	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,518,327	1,518,327	152,745	1,518,327	-
Residential construction	-	-	-	-	-
Total:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,518,327	1,518,327	152,745	1,518,327	-
Residential construction	-	-	-	-	-

Credit Risk Profile Based on Performance Status

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

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

Mortgage Loan Credit Exposure
Credit Risk Profile Based on Payment Activity
As of December 31, 2014, and 2013
	Commercial		Residential		Residential Construction		Total
	2014	2013	2014	2013	2014	2013	2014	2013
Performing	$ 35,388,756	$  36,679,264	$      46,571,350	$ 42,482,658	$   32,592,544	$   12,847,578	$        114,552,650	$   92,009,500
Non-performing	-	4,973,745	7,021,083	7,385,828	479,394	64,895	7,500,477	12,424,468
Total	$ 35,388,756	$   41,653,009	$     53,592,433	$ 49,868,486	$    33,071,938	$    12,912,473	$        122,053,127	$  104,433,968

Non-Accrual Mortgage Loans

Once a loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and write off any income that had been accrued. Interest not accrued on these loans totals $535,000 and $678,000 as of December 31, 2014 and 2013, respectively.

The following is a summary of mortgage loans on a non-accrual status for the periods presented.

	Mortgage Loans on Non-accrual Status
	As of December 31, 2014, and 2013
	2014	2013
Commercial	$                          -	$            4,973,745
Residential	7,021,083	7,385,828
Residential construction	479,394	64,895
Total	$           7,500,477	$          12,424,468

Principal Amounts Due

The amortized cost and contractual payments on mortgage loans on real estate and construction loans held for investment by category as of December 31, 2014 are shown below. Expected principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment penalties.

		Principal	Principal	Principal
		Amounts	Amounts	Amounts
		Due in	Due in	Due
	Total	2015	2016-2019	Thereafter
Residential	$      53,592,433	$    3,748,893	$ 17,225,255	$ 32,618,285
Residential Construction	33,071,938	32,648,470	423,468	-
Commercial	35,388,756	18,652,738	13,279,688	3,456,330
Total	$    122,053,127	$  55,050,101	$ 30,928,411	$ 36,074,615

Loan Loss Reserve

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

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

	Years Ended December 31
	2014	2013
Balance, beginning of period	$          5,506,532	$          6,035,295
Provisions for losses	3,053,403	1,846,285
Charge-offs and settlements	(6,841,785)	(2,375,048)
Balance, at December 31	$          1,718,150	$          5,506,532

The Company believes the loan loss reserve represents probable loan losses incurred as of the balance sheet date. Actual loan loss experience could change, in the near-term, from the established reserve based upon claims that could be asserted by third party investors. SecurityNational Mortgage believes there is potential to resolve any alleged claims by third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.

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Note 9: Reinsurance, Commitments and Contingencies: Lehman Brothers - Aurora Loan Services Litigation (Details) (Aurora Loan Services, USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2010	Dec. 31, 2014
Aurora Loan Services
Deposit to secure obligations			$ 645,000
Funds paid from deposit account			4,281,000
Alleged amount owed			3,745,000
Recognized alleged losses	$ 0	$ 1,289,000

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Note 2: Investments: Schedule of Principal amounts due on mortgage loans on real estate and construction loans held for investment by category (Details) (USD $)	Dec. 31, 2014
Mortgage Loans Principal Amount due	$ 122,053,127
Residential Mortgage
Mortgage Loans Principal Amount due	53,592,433
Residential Construction
Mortgage Loans Principal Amount due	33,071,938
Commercial Loan
Mortgage Loans Principal Amount due	35,388,756
DueInNextYearMember
Mortgage Loans Principal Amount due	55,050,101
DueInNextYearMember | Residential Mortgage
Mortgage Loans Principal Amount due	3,748,893
DueInNextYearMember | Residential Construction
Mortgage Loans Principal Amount due	32,648,470
DueInNextYearMember | Commercial Loan
Mortgage Loans Principal Amount due	18,652,738
DueInYearsTwoThroughFiveMember
Mortgage Loans Principal Amount due	30,928,411
DueInYearsTwoThroughFiveMember | Residential Mortgage
Mortgage Loans Principal Amount due	17,225,255
DueInYearsTwoThroughFiveMember | Residential Construction
Mortgage Loans Principal Amount due	423,468
DueInYearsTwoThroughFiveMember | Commercial Loan
Mortgage Loans Principal Amount due	13,279,688
DueThereafterMember
Mortgage Loans Principal Amount due	36,074,615
DueThereafterMember | Residential Mortgage
Mortgage Loans Principal Amount due	32,618,285
DueThereafterMember | Commercial Loan
Mortgage Loans Principal Amount due	$ 3,456,330

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Note 2: Investments: Schedule of aging of mortgage loans (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of aging of mortgage loans

Age Analysis of Past Due Mortgage Loans
Years Ended December 31, 2014 and 2013
	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days 1)	In Foreclosure 1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Net Mortgage Loans
2014
Commercial	$                        -	$                       -	$                       -	$                         -	$                         -	$     35,388,756	$          35,388,756	$           (187,129)	$        35,201,627
Residential	1,631,142	1,174,516	5,464,901	1,556,182	9,826,741	43,765,692	53,592,433	(1,715,812)	51,876,621
Residential   Construction	-	-	64,895	414,499	479,394	32,592,544	33,071,938	(100,114)	32,971,824
Total	$         1,631,142	$        1,174,516	$     5,529,796	$         1,970,681	$      10,306,135	$      111,746,992	$         122,053,127	$     (2,003,055)	$      120,050,072
2013
Commercial	$                        -	$                       -	$                       -	$       4,973,745	$       4,973,745	$     36,679,264	$           41,653,009	$           (187,129)	$        41,465,880
Residential	1,646,953	1,604,847	5,867,501	1,518,327	10,637,628	39,230,858	49,868,486	(1,364,847)	48,503,639
Residential   Construction	-	-	64,895	-	64,895	12,847,578	12,912,473	(100,114)	12,812,359
Total	$       1,646,953	$      1,604,847	$     5,932,396	$       6,492,072	$     15,676,268	$     88,757,700	$        104,433,968	$      (1,652,090)	$       102,781,878
1)  There was not any interest income recognized on loans past due greater than 90 days or in foreclosure.

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Note 7: Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds: Schedule of Restricted Assets in Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Restricted assets	$ 9,347,797	$ 6,670,980
Cash and Cash Equivalents
Restricted assets	7,274,685	4,746,417
Mutual Funds
Restricted assets	627,154	582,163
Fixed Maturity Securities
Restricted assets	8,775	8,775
Equity Securities
Restricted assets	88,048	84,986
Participating in Mortgage loans with Security National Life
Restricted assets	$ 1,349,135	$ 1,248,639

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Note 9: Reinsurance, Commitments and Contingencies: Reinsurance with North America Life Insurance Company (Details) (USD $)	1 Months Ended
	Feb. 28, 2014	Dec. 31, 2013	Feb. 13, 2014	Dec. 10, 2013
Recapture Payment			$ 4,684,000	$ 2,500,000
North America Life Insurance Company
Ceding commission paid	$ 57,000	$ 34,000

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Note 1: Significant Accounting Policies: Participating Insurance (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Participating Insurance

Participating Insurance

Participating business constituted 2%, 2%, and 2% of insurance in force for 2014, 2013 and 2012, 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.

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Note 1: Significant Accounting Policies: General Overview of Business (Policies)

12 Months Ended

Dec. 31, 2014

Policies

General Overview of Business

General Overview of Business

Security National Financial Corporation and its wholly owned subsidiaries (the “Company”) operate 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 and eleven southern states. The cemetery and mortuary segment of the Company consists of seven mortuaries and five cemeteries in Utah and one cemetery in California. The mortgage loan segment is an approved government and conventional lender that originates and underwrites residential and commercial loans for new construction, existing homes and real estate projects primarily in California, Florida, Nevada, Texas, and Utah.

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Note 21: Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2014

Notes

Note 21: Quarterly Financial Data (unaudited)

21)       Quarterly Financial Data (Unaudited)

	2014
	Three Months Ended
	March 31	June 30	September 30	December 31
Revenues	$     45,053,276	$     59,411,730	$     61,725,792	$     60,745,876
Benefits and expenses	44,887,289	55,224,633	58,348,652	55,995,147
Earnings before income taxes	165,987	4,187,097	3,377,140	4,750,729
Income tax expense	(27,139)	(1,563,034)	(1,239,318)	(1,896,814)
Net earnings	138,848	2,624,063	2,137,822	2,853,915
Net earnings per common share (1)	$0.01	$0.21	$0.17	$0.23
Net earnings per common share    assuming dilution (1)	$0.01	$0.20	$0.17	$0.22

	2013
	Three Months Ended
	March 31	June 30	September 30	December 31
Revenues	$     54,852,234	$     61,332,289	$     50,552,791	$     48,577,706
Benefits and expenses	51,624,611	56,862,769	48,588,507	48,415,406
Earnings before income taxes	3,227,623	4,469,520	1,964,284	162,300
Income tax benefit (expense)	(1,194,357)	(1,670,275)	(697,793)	1,324,619
Net earnings	2,033,266	2,799,245	1,266,491	1,486,919
Net earnings per common share	$0.17	$0.23	$0.10	$0.12
Net earnings per common share    assuming dilution	$0.15	$0.21	$0.10	$0.11

	2012
	Three Months Ended
	March 31	June 30	September 30	December 31
Revenues	$     47,323,223	$     56,528,210	$     63,747,903	$     66,660,833
Benefits and expenses	44,994,631	51,491,833	57,615,608	58,806,804
Earnings before income taxes	2,328,592	5,036,377	6,132,295	7,854,029
Income tax expense	(666,409)	(1,443,345)	(2,142,249)	(386,772)
Net earnings	1,662,183	3,593,032	3,990,046	7,467,257
Net earnings per common share (1)	$0.16	$0.34	$0.37	$0.67
Net earnings per common share    assuming dilution (1)	$0.15	$0.32	$0.34	$0.61

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

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Note 2: Investments: Schedule of Unrealized Loss on Investments (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Held-to-maturity Securities, Unrecognized Holding Loss	$ 997,529	$ 1,421,574
Held-to-maturity Securities, Fair Value	9,858,939	24,310,741
Available-for-sale Securities, Fair Value Disclosure	2,839,131	1,765,957
Redeemable Preferred Stock
Held-to-maturity Securities, Unrecognized Holding Loss		5,900
US States and Political Subdivisions Debt Securities
Held-to-maturity Securities, Unrecognized Holding Loss	5,278	9,404
Corporate Debt Securities
Held-to-maturity Securities, Unrecognized Holding Loss	980,357	1,394,919
Collateralized Mortgage Backed Securities
Held-to-maturity Securities, Unrecognized Holding Loss	11,894	11,351
Industrial, miscellaneous and all other equity securities
Available-for-sale Debt Securities, Gross Unrealized Loss	820,133	525,386
Equity Securities
Available-for-sale Debt Securities, Gross Unrealized Loss	820,133	525,386
Less than 12 months
Held-to-maturity Securities, Unrecognized Holding Loss	552,276	1,150,555
No. of Investment Positions	22	75
Held-to-maturity Securities, Fair Value	7,081,352	22,002,277
Available-for-sale Securities, Fair Value Disclosure	2,162,425	993,612
Less than 12 months | Redeemable Preferred Stock
Held-to-maturity Securities, Unrecognized Holding Loss		5,900
No. of Investment Positions	0	1
Less than 12 months | US States and Political Subdivisions Debt Securities
Held-to-maturity Securities, Unrecognized Holding Loss		7,131
No. of Investment Positions	0	1
Less than 12 months | Corporate Debt Securities
Held-to-maturity Securities, Unrecognized Holding Loss	548,310	1,134,415
No. of Investment Positions	21	72
Less than 12 months | Collateralized Mortgage Backed Securities
Held-to-maturity Securities, Unrecognized Holding Loss	3,966	3,109
No. of Investment Positions	1	1
Less than 12 months | Industrial, miscellaneous and all other equity securities
No. of Investment Positions	138	28
Available-for-sale Debt Securities, Gross Unrealized Loss	327,389	119,449
Less than 12 months | Equity Securities
No. of Investment Positions	138	28
Available-for-sale Debt Securities, Gross Unrealized Loss	327,389	119,449
More than 12 months
Held-to-maturity Securities, Unrecognized Holding Loss	445,253	271,019
No. of Investment Positions	12	12
Held-to-maturity Securities, Fair Value	2,777,587	2,308,464
Available-for-sale Securities, Fair Value Disclosure	676,706	772,345
More than 12 months | Redeemable Preferred Stock
No. of Investment Positions	0	0
More than 12 months | US States and Political Subdivisions Debt Securities
Held-to-maturity Securities, Unrecognized Holding Loss	5,278	2,273
No. of Investment Positions	1	1
More than 12 months | Corporate Debt Securities
Held-to-maturity Securities, Unrecognized Holding Loss	432,047	260,504
No. of Investment Positions	11	10
More than 12 months | Collateralized Mortgage Backed Securities
Held-to-maturity Securities, Unrecognized Holding Loss	7,928	8,242
No. of Investment Positions	0	1
More than 12 months | Industrial, miscellaneous and all other equity securities
No. of Investment Positions	27	28
Available-for-sale Debt Securities, Gross Unrealized Loss	492,744	405,936
More than 12 months | Equity Securities
No. of Investment Positions	27	28
Available-for-sale Debt Securities, Gross Unrealized Loss	$ 492,744	$ 405,936

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Note 2: Investments: Available-for-sale Securities (Tables)

12 Months Ended

Dec. 31, 2014

AsOfDecember312014Member

Available-for-sale Securities

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2014:
Equity securities available for sale at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$      7,179,010	$ 393,873	$  (820,133)	$ 6,752,750
Total securities available for sale carried at estimated fair value	$      7,179,010	$  393,873	$  (820,133)	$ 6,752,750
Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$   53,592,433
Residential construction	33,071,938
Commercial	35,388,756
Less: Allowance for loan losses	(2,003,055)
Total mortgage loans on real estate and construction loans held for investment	$ 120,050,072
Real estate held for investment - net of depreciation	$ 111,411,351
Policy and other loans at amortized cost:
Policy loans	$    7,011,012
Other loans	27,807,829
Less: Allowance for doubtful accounts	(693,413)
Total policy and other loans at amortized cost	$  34,125,428
Short-term investments at amortized cost	$  27,059,495

As Of December 31 2013

Available-for-sale Securities

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2013:
Equity securities available for sale at estimated fair value:
Common stock:
Industrial, miscellaneous and all other	$      4,783,936	$  240,206	$   (525,386)	$ 4,498,756
Total securities available for sale carried at estimated fair value	$     4,783,936	$  240,206	$    (525,386)	$ 4,498,756
Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$    49,868,486
Residential construction	12,912,473
Commercial	41,653,009
Less: Allowance for loan losses	(1,652,090)
Total mortgage loans on real estate and construction loans held for investment	$  102,781,878
Real estate held for investment - net of depreciation	$    99,760,475
Policy and other loans at amortized cost:
Policy loans	$      7,520,376
Other loans	12,472,805
Less: Allowance for doubtful accounts	(269,175)
Total policy and other loans at amortized cost	$    19,724,006
Short-term investments at amortized cost	$    12,135,719

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Note 1: Significant Accounting Policies: Reinsurance (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Reinsurance

Reinsurance

The Company follows the procedure of reinsuring risks in excess of $100,000 to provide for greater diversification of business to allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. The Company remains liable for amounts ceded in the event the reinsurers are unable to meet their obligations.

The Company 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.

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Note 1: Significant Accounting Policies: Basis of Presentation (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The presentation of certain amounts in prior years has been reclassified to conform to the 2014 presentation.

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Note 1: Significant Accounting Policies: Principles of Consolidation (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Principles of Consolidation

Principles of Consolidation

These consolidated financial statements include the financial statements of the Company and its majority owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

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Note 1: Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Notes

Note 1: Significant Accounting Policies

1)   Significant Accounting Policies

General Overview of Business

Security National Financial Corporation and its wholly owned subsidiaries (the “Company”) operate 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 and eleven southern states. The cemetery and mortuary segment of the Company consists of seven mortuaries and five cemeteries in Utah and one cemetery in California. The mortgage loan segment is an approved government and conventional lender that originates and underwrites residential and commercial loans for new construction, existing homes and real estate projects primarily in California, Florida, Nevada, Texas, and Utah.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The presentation of certain amounts in prior years has been reclassified to conform to the 2014 presentation.

Principles of Consolidation

These consolidated financial statements include the financial statements of the Company and its majority owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Investments

The Company’s management determines the appropriate classifications of investments in fixed maturity securities and equity securities at the acquisition date and re-evaluates the classifications at each balance sheet date.

Fixed maturity securities held to maturity are carried 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 are carried at estimated fair value. 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, and construction loans are carried at their unpaid principal balances adjusted for charge-offs, the related allowance for loan losses, and net deferred fees or costs on originated loans. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans.

Mortgage loans are collateral dependent and require an appraisal at the time of underwriting and funding.  Generally the Company will fund a loan not to exceed 80% of the loan’s collateral fair market value.  Amounts over 80% will require mortgage insurance by an approved third party insurer.  Once a loan is deemed to be impaired the Company will review the market value of the collateral and provide an allowance for any impairment.

Mortgage loans sold to investors are carried at the amount due from third party investors, which is the estimated fair value at the balance sheet date since these amounts are generally collected within a short period of time.

Real estate held for investment is carried at cost, less accumulated depreciation provided on a straight line basis over the estimated useful lives of the properties, or is adjusted to a new basis for impairment in value, if any. Included are foreclosed properties which the Company intends to hold for investment purposes.  These properties are recorded at the lower of cost or market value upon foreclosure.

Policy and other loans are carried at the aggregate unpaid balances, less allowances for possible losses.

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

Restricted assets are assets held in a trust account for future mortuary services and merchandise and consist of cash; participations in mortgage loans with Security National Life; mutual funds carried at cost; equity securities carried at fair market value; a surplus note with Security National Life. Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for the construction of a 282-unit multifamily development in Sandy City, Utah.

Cemetery and mortuary perpetual care trust business segment contains six wholly owned cemeteries. Of the six cemeteries owned by the Company, four cemeteries are endowment care properties. Under endowment care arrangements a portion of the price for each lot sold is withheld and invested in a portfolio of investments similar to those described in the prior paragraph. The earnings stream from the investments is designed to fund future maintenance and upkeep of the cemetery.

Realized gains and losses on investments arise when investments are sold (as determined on a specific identification basis) or are other-than-temporarily impaired. If in management’s judgment a decline in the value of an investment below cost is other-than-temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in judging whether an impairment is other-than-temporary include: the financial condition, business prospects and credit worthiness of the issuer, the length of time that fair value has been less than cost, the relative amount of the decline, and the Company’s ability and intent to hold the investment until the fair value recovers, which is not assured.

Cash and Cash Equivalents

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

Cemetery Land and Improvements

The development of a cemetery involves not only the initial acquisition of raw land but the installation of roads, water lines, landscaping and other costs to establish a marketable cemetery lot. The costs of developing the cemetery are shown as an asset on the balance sheet. The amount on the balance sheet is reduced by the total cost assigned to the development of a particular lot when the criterion for recognizing a sale of that lot is met.

Property and Equipment

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

Recognition of Insurance Premiums and Other Considerations

Premiums and  other consideration 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. Premiums and other consideration for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies, deferred annuities, and annuities without life contingencies) are recognized when earned and consist of amounts assessed against policyholder account balances during the period for policy administration charges and surrender charges.

Deferred Policy Acquisition Costs and Value of Business 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 (“DAC”) for traditional life insurance are amortized over the premium paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For interest-sensitive insurance products, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges, investment, mortality and expense margins. This amortization is adjusted when estimates of current or future gross profits to be realized from a group of products are reevaluated. Deferred acquisition costs are written off when policies lapse or are surrendered.

The Company follows accounting principles generally accepted in the United States of America when accounting for DAC on internal replacements of insurance and investment contracts. An internal replacement is a modification in product benefits, features, rights or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to contract, or by the election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract are accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced contract are written-off. Modifications that result in a contract that is substantially unchanged from the replaced contract are accounted for as a continuation of the replaced contract.

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

Mortgage Servicing Rights

Mortgage Service Rights (MSR) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company is obligated to retain and provide loan servicing functions on loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of REO and property dispositions.

The total residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans.  The value of MSRs is derived from the net cash flows associated with the servicing contracts. The Company receives a servicing fee of generally about 0.250% annually on the remaining outstanding principal balances of the loans. Based on the result of the cash flow analysis, an asset or liability is recorded for mortgage servicing rights. The servicing fees are collected from the monthly payments made by the mortgagors. The Company generally receives other remuneration including rights to various mortgagor-contracted fees such as late charges, and collateral reconveyance charges and the Company is generally entitled to retain the interest earned on funds held pending remittance of mortgagor principal, interest, tax and insurance payments.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. MSR amortization is determined by amortizing the balance straight-line over an estimated nine year life.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

Derivatives

The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of mortgage loan commitments from the time a derivative loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of derivative loan commitments that will be exercised (i.e., the number of loan commitments that will be funded) fluctuates. The probability that a loan will not be funded within the terms of the commitment is driven by a number of factors, particularly the change, if any, in mortgage rates following the inception of the interest rate lock. However, many borrowers continue to exercise derivative loan commitments even when interest rates have fallen.

In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicant’s committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance) product type and the application approval status. The Company has developed fallout estimates using historical data that take into account all of the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the mortgage loan commitments and are updated periodically to reflect the most current data.

The Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage loan and the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the mortgage loan commitment is issued. Therefore, at the time of issuance, the estimated fair value is zero. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates derived from the Company’s recent historical empirical data are used to estimate the quantity of mortgage loans that will fund within the terms of the commitments.

The Company utilizes forward loan sales commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward loan sales commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments by securing the ultimate sales price and delivery date of the loans. Management expects these derivatives will experience changes in fair value opposite to changes in fair value of the derivative loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.

Allowance for Doubtful Accounts and Loan Losses and Impaired Loans

The Company records an allowance and recognizes an expense for potential losses from mortgage loans, other loans and receivables in accordance with generally accepted accounting principles.

Receivables are the result of cemetery and mortuary operations, mortgage loan operations and life insurance operations. The allowance is based upon the Company’s historical experience for collectively evaluated impairment. Other allowances are based upon receivables individually evaluated for impairment. Collectability of the cemetery and mortuary receivables is significantly influenced by current economic conditions. The critical issues that impact recovery of mortgage loan operations are interest rate risk, loan underwriting, new regulations and the overall economy.

The Company provides allowances for losses on its mortgage loans held for investment through an allowance for loan losses. The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. See the schedules in Note 2 for additional information. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as other real estate owned held for investment or sale. The Company will rent the properties until it is deemed desirable to sell them.

The allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the performance status of the loans, or the Company’s actual collection experience. The actual losses could change, in the near term, from the established allowance, based upon the occurrence or non-occurrence of these events.

Loan Loss Reserve

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on mortgage loans sold to third party investors.

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

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

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

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

Additional information related to the Loan Loss Reserve is included in Note 2.

Future Life, Annuity and Other Policy Benefits

Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, mortality, morbidity, withdrawals, and other assumptions based on the life insurance subsidiaries’ experience, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are, for some plans, graded to equal statutory values or cash values at or prior to maturity. The range of assumed interest rates for all traditional life insurance policy reserves was 4.5% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit claims are charged to expense in the period the claims are incurred. Increases in future policy benefits are charged to expense.

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 3% to 6.5%.

Participating Insurance

Participating business constituted 2%, 2%, and 2% of insurance in force for 2014, 2013 and 2012, 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 $100,000 to provide for greater diversification of business to allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. The Company remains liable for amounts ceded in the event the reinsurers are unable to meet their obligations.

The Company 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.

Pre-need Sales and Costs

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

Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are recognized in accordance with the retail land sales provisions based on accounting principles generally accepted in the United States of America. Under accounting principles generally accepted in the United States of America, recognition of revenue and associated costs from constructed cemetery property must be deferred until a minimum percentage of the sales price has been collected.

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

Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral services are accounted for under the guidance of the provisions based on accounting principles generally accepted in the United States of America. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred until the merchandise is delivered or services are performed.

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

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

Mortgage Fee Income

Mortgagefeeincomeconsistsoforiginationfees,processingfeesandcertainotherincomerelated totheoriginationandsaleofmortgageloans.Formortgage loans sold to third party investors, mortgage fee income and related expenses are recognized pursuant to generally accepted accounting principles at the time the sales of mortgage loans comply with the sales criteria for the transfer of financial assets, which are: (i) the transferred assets have been isolated from the Companyanditscreditors,(ii) thetransfereehastherighttopledgeorexchangethemortgage,and(iii)theCompanydoesnotmaintain effectivecontroloverthetransferredmortgage. The Company must determine that all three criteria are met at the time a loan is funded. Allrightsandtitletothemortgageloansareassigned tounrelatedfinancialinstitutioninvestors,includinginvestorcommitmentsfortheloans,prior towarehouse bankspurchasingtheloansunderthepurchasecommitments.

The Company, through its mortgage subsidiaries, sells all mortgage loans to third party investors without recourse. However, it may be required to repurchase a loan or pay a fee instead of repurchase under certain events, which include the following:

·         Failure to deliver original documents specified by the investor,

·         The existence of misrepresentation or fraud in the origination of the loan,

·         The loan becomes delinquent due to nonpayment during the first several months after it is sold,

·         Early pay-off of a loan, as defined by the agreements,

·         Excessive time to settle a loan,

·         Investor declines purchase, and

·         Discontinued product and expired commitment.

Loan purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled. Depending on market conditions, these commitment settlement dates can be extended at a cost to the Company. Generally, a ten day extension will cost .125% (12.5 basis points) of the loan amount. The Company’s historical data shows that 99% of all loans originated by its mortgage subsidiaries are generally settled by the investors as agreed within 16 days after delivery. There are situations, however, when the Company determines that it is unable to enforce the settlement of loans rejected by the third-party investors and that it is in its best interest to repurchase those loans from the warehouse banks.

It is the Company's policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month time period and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans. The Company believes that six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives. Remedial methods include the following:

·         Research reasons for rejection,

·         Provide additional documents,

·         Request investor exceptions,

·         Appeal rejection decision to purchase committee, and

·         Commit to secondary investors.

Once purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six month time period, the loans are repurchased and transferred to the long term investment portfolio at the lower of cost or fair value and previously recorded sales revenue is reversed. Any loan that later becomes delinquent is evaluated by the Company at that time and any impairment is adjusted accordingly.

Determining Lower of Cost or Market

Cost is equal to the amount paid to the warehouse bank and the amount originally funded by the Company. Market value is often difficult to determine, but is based on the following:

·         For loans that have an active market the Company uses the market price on the repurchased date.

·         For loans where there is no market but there is a similar product, the Company uses the market value for the similar product on the repurchased date.

·         For loans where no active market exists on the repurchased date, the Company determines that the unpaid principal balance best approximates the market value on the repurchased date, after considering the fair value of the underlying real estate collateral and estimated future cash flows.

The appraised value of the real estate underlying the original mortgage loan adds support to the Company’s determination of fair value because if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying value of the loan. In determining the market value on the date of repurchase, the Company considers the total value of all of the loans because any sale of loans would be made as a pool.

Formortgagesoriginatedandheldforinvestment,mortgagefeeincomeandrelatedexpensesare recognized when the loan is originated.

The Company provides an allowance for loan losses on its mortgage loans held for investment. The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired.

Commercial Loans

Each quarter, management reviews the current commercial loans and determines if an allowance is required based on the Company’s actual experience of losses on impaired commercial loans. To date, the Company has not incurred any significant losses. The carrying value of all commercial loans is supported by appraisals and cash flow analysis of revenue received. Also, the Company has not accrued any interest income or capitalized any of the foreclosure costs on the impaired commercial loans.

Residential and Construction Loans

The Company believes that in an orderly market fair value will approximate the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for future estimated policy claims. Accordingly, the fair value determination will be weighted more heavily toward the rental analysis.

It should be noted that for replacement cost, when determining the fair value of mortgage properties, the Company uses Marshall and Swift, a provider of building cost information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and projected the present value of the net rental income over seven years. The Company used 60% of the projected cash flow analysis and 40% of the replacement cost to approximate fair value of the collateral.

Each quarter the Company also analyzes its current loan portfolio and determines the level of allowance needed for loans that are listed as current in the portfolio. The basis of the analysis places a higher weight on loans with high loan to value ratios, those that lack mortgage insurance, and certain loan types that have a higher percentage of default based on the Company’s experience.

Each quarter the Company makes further analysis of the foreclosed properties to determine if any additional allowances are necessary by comparing national indexes of loan to value ratios by region to the Company’s loan to value ratios. Based upon the above procedures, the Company’s management believes that residential and residential construction loans are reflected in the Company’s financial statements at the lower of cost or market in accordance with GAAP requirements.

Goodwill

Previous acquisitions have been accounted for as purchases under which assets acquired and liabilities assumed were recorded at their fair values with the excess purchase price recognized as goodwill. The Company evaluates annually or when changes in circumstances warrant the recoverability of goodwill and if there is a decrease in value, the related impairment is recognized as a charge against income. No impairment of goodwill has been recognized in the accompanying financial statements.

Long-lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset, and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. No impairment of long-lived assets has been recognized in the accompanying financial statements.

Income Taxes

Income taxes include taxes currently payable plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences in the financial reporting basis and tax basis of assets and liabilities and operating loss carry-forwards. Deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.

Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax penalties are included as a component of other expenses.

Earnings Per Common Share

The Company computes earnings per share in accordance with accounting principles generally accepted in the United States of America which requires presentation of basic and diluted earnings per share. Basic earnings per equivalent Class A common share are computed by dividing net earnings by the weighted-average number of Class A common shares outstanding during each year presented, after the effect of the assumed conversion of Class C common stock to Class A common stock. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the year used to compute basic earnings per share plus dilutive potential incremental shares. Basic and diluted earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

Stock Based Compensation

The cost of employee services received in exchange for an award of equity instruments is recognized in the financial statements and is measured based on the fair value on the grant date of the award. The fair value of stock options is calculated using the Black Scholes method. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award.

Concentration of Credit Risk

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

Advertising

The Company expenses advertising costs as incurred.

Recent Accounting Pronouncements

Accounting Standards Update (“ASU”) No. 2014-17: “Business Combinations (Topic 805) – Pushdown Accounting” – Issued in November 2014, ASU 2014-17 provides guidance for determining whether and at what threshold an acquiree (acquired entity) that is a business or nonprofit activity can reflect the acquirer’s accounting and reporting basis (pushdown accounting) in its separate financial statements. The amendments in this Update provide that an acquired entity may elect to apply pushdown accounting in its separate financial statements upon a change-in-control event in which an acquirer obtains control of the acquired entity. The amendments in this Update are effective November 18, 2014. This new guidance did not have a significant impact on the Company’s results of operations or financial position.

Accounting Standards Update (“ASU”) No. 2014-11: "Transfers and Servicing - Repurchase to Maturity Transactions, Repurchase Financings, and Disclosures (Topic 860)" – Issued in June 2014, ASU 2014-11 aligns the accounting for repurchase to maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The new authoritative guidance is effective for the first interim or annual period beginning after December 15, 2014. In addition the disclosure of certain transactions accounted for as a sale is effective for the first interim or annual period beginning on or after December 15, 2014, and the disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. Early adoption is prohibited. This new guidance will not have a significant impact on the Company’s results of operations or financial position.

ASU No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” - Issued in May 2014, ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition”, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Insurance contracts are excluded from the scope of this new guidance. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2016. The Company is in the process of evaluating the potential impact of this standard, which is not expected to be material to the Company’s results of operations or financial position.

ASU No. 2014-14: “Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40)” - In January 2014, ASU No. 2014-14 amended ASC Topic 310, "Receivables" to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2014 and will not have a significant impact on the Company’s results of operations or financial position.

The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.

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Note 19: Acquisitions: Acquisition of Trans-Western Pro Forma (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Total revenues	$ 226,936,674	$ 215,315,020	$ 234,260,169
Net earnings	7,754,648	7,585,921	16,712,518
Net earnings per Class A equivalent common share (1)	$ 0.62	$ 0.61	$ 1.46
Net earnings per Class A equivalent common share - assuming dilution(1)	$ 0.60	$ 0.58	$ 1.39
ProForma1Member
Total revenues	229,268,653	220,011,370	236,854,910
Net earnings	$ 7,996,405	$ 7,963,589	$ 16,576,647
Net earnings per Class A equivalent common share (1)	$ 0.64	$ 0.64	$ 1.45
Net earnings per Class A equivalent common share - assuming dilution(1)	$ 0.62	$ 0.61	$ 1.38

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Note 1: Significant Accounting Policies: Investments (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Investments

Investments

The Company’s management determines the appropriate classifications of investments in fixed maturity securities and equity securities at the acquisition date and re-evaluates the classifications at each balance sheet date.

Fixed maturity securities held to maturity are carried 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 are carried at estimated fair value. 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, and construction loans are carried at their unpaid principal balances adjusted for charge-offs, the related allowance for loan losses, and net deferred fees or costs on originated loans. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans.

Mortgage loans are collateral dependent and require an appraisal at the time of underwriting and funding.  Generally the Company will fund a loan not to exceed 80% of the loan’s collateral fair market value.  Amounts over 80% will require mortgage insurance by an approved third party insurer.  Once a loan is deemed to be impaired the Company will review the market value of the collateral and provide an allowance for any impairment.

Mortgage loans sold to investors are carried at the amount due from third party investors, which is the estimated fair value at the balance sheet date since these amounts are generally collected within a short period of time.

Real estate held for investment is carried at cost, less accumulated depreciation provided on a straight line basis over the estimated useful lives of the properties, or is adjusted to a new basis for impairment in value, if any. Included are foreclosed properties which the Company intends to hold for investment purposes.  These properties are recorded at the lower of cost or market value upon foreclosure.

Policy and other loans are carried at the aggregate unpaid balances, less allowances for possible losses.

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

Restricted assets are assets held in a trust account for future mortuary services and merchandise and consist of cash; participations in mortgage loans with Security National Life; mutual funds carried at cost; equity securities carried at fair market value; a surplus note with Security National Life. Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for the construction of a 282-unit multifamily development in Sandy City, Utah.

Cemetery and mortuary perpetual care trust business segment contains six wholly owned cemeteries. Of the six cemeteries owned by the Company, four cemeteries are endowment care properties. Under endowment care arrangements a portion of the price for each lot sold is withheld and invested in a portfolio of investments similar to those described in the prior paragraph. The earnings stream from the investments is designed to fund future maintenance and upkeep of the cemetery.

Realized gains and losses on investments arise when investments are sold (as determined on a specific identification basis) or are other-than-temporarily impaired. If in management’s judgment a decline in the value of an investment below cost is other-than-temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in judging whether an impairment is other-than-temporary include: the financial condition, business prospects and credit worthiness of the issuer, the length of time that fair value has been less than cost, the relative amount of the decline, and the Company’s ability and intent to hold the investment until the fair value recovers, which is not assured.

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Note 18: Derivative Commitments: Schedule of Derivative Assets at Fair Value (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Fair Value of Asset Derivatives, Interest rate lock and forward sales commitments	$ 2,111,529	$ 1,511,111
Fair Value of Liability Derivatives, Interest rate lock and forward sales commitments	181,678	23,203
Fair Value of Liability Derivatives, Call Options	116,036	124,174
Fair Value of Liability Derivatives, Put Options	11,867
Fair Value of Liability Derivatives, Interest Rate Swaps	31,370	58,310
Fair Value of Asset Derivatives, Total	2,111,529	1,511,111
Fair Value of Liability Derivatives, Total	$ 340,951	$ 205,687

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Note 13: Statutory Financial Information and Dividend Limitations: Schedule of statutory accounting practices (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of statutory accounting practices

	Net Income			Capital and Surplus
	2014	2013	2012	2014	2013
Amounts by insurance subsidiary:
Security National Life Insurance    Company	$ 5,137,208	$ 1,283,311	$   391,533	$ 34,356,157	$ 29,597,289
Memorial Insurance Company of    America	415	237	159	1,082,587	1,083,237
Southern Security Life Insurance    Company, Inc.	467	1,288	184	1,590,424	1,586,832
Trans-Western Life Insurance    Company	1,304	1,906	2,113	499,182	497,878
Total	$ 5,139,394	$ 1,286,742	$   393,989	$ 37,528,350	$ 32,765,236

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Note 2: Investments: Summary of Interest not accrued on non-performing mortgage loans (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Interest not acrued on non-performing loans	$ 535,000	$ 678,000

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Note 1: Significant Accounting Policies: Allowance For Doubtful Accounts and Loan Losses and Impaired Loans (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Allowance For Doubtful Accounts and Loan Losses and Impaired Loans

Allowance for Doubtful Accounts and Loan Losses and Impaired Loans

The Company records an allowance and recognizes an expense for potential losses from mortgage loans, other loans and receivables in accordance with generally accepted accounting principles.

Receivables are the result of cemetery and mortuary operations, mortgage loan operations and life insurance operations. The allowance is based upon the Company’s historical experience for collectively evaluated impairment. Other allowances are based upon receivables individually evaluated for impairment. Collectability of the cemetery and mortuary receivables is significantly influenced by current economic conditions. The critical issues that impact recovery of mortgage loan operations are interest rate risk, loan underwriting, new regulations and the overall economy.

The Company provides allowances for losses on its mortgage loans held for investment through an allowance for loan losses. The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Company’s historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. See the schedules in Note 2 for additional information. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as other real estate owned held for investment or sale. The Company will rent the properties until it is deemed desirable to sell them.

The allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the performance status of the loans, or the Company’s actual collection experience. The actual losses could change, in the near term, from the established allowance, based upon the occurrence or non-occurrence of these events.

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Note 1: Significant Accounting Policies: Advertising (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Advertising

Advertising

The Company expenses advertising costs as incurred.

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Note 6: Bank and Other Loans Payable: Schedule of combined maturities of bank loans payable, lines of credit and notes and contracts payable (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of combined maturities of bank loans payable, lines of credit and notes and contracts payable

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

2015	$     5,248,043
2016	1,395,942
2017	14,586,183
2018	246,769
2019	246,336
Thereafter	7,297,105
Total	$    29,020,378

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Balance Sheet (USD $)	Dec. 31, 2014	Dec. 31, 2013
Fixed maturity securities, held to maturity, at amortized cost	$ 135,018,347	$ 143,466,494
Equity securities, available for sale, at estimated fair value	6,752,750	4,498,756
Mortgage loans on real estate and construction loans held for investment, net of allowances for loan losses of $2,003,055 and $1,652,090 for 2014 and 2013	120,050,072	102,781,878
Real estate held for investment, net of accumulated depreciation of $10,875,419 and $9,658,599 for 2014 and 2013	111,411,351	99,760,475
Policy and other loans, net of allowance for doubtful accounts of $693,413 and $269,175 for 2014 and 2013	34,125,428	19,724,006
Short-term investments	27,059,495	12,135,719
Accrued investment income	2,483,253	2,485,054
Total investments	436,900,696	384,852,382
Cash and cash equivalents	30,855,320	38,203,164
Mortgage loans sold to investors	67,534,400	77,179,652
Receivables, net	14,544,093	11,652,572
Restricted assets	9,347,797	6,670,980
Cemetery perpetual care trust investments	2,645,423	2,414,883
Receivable from reinsurers	12,036,263	12,033,877
Cemetery land and improvements	10,848,085	10,631,573
Deferred policy and pre-need contract acquisition costs	50,307,503	45,737,940
Mortgage servicing rights	7,834,747	4,844,101
Property and equipment, net	11,307,714	11,523,160
Value of business acquired	8,547,627	8,680,845
Goodwill	2,765,570	677,039
Other assets	5,594,324	3,655,286
Total Assets	671,069,562	618,757,454
Future life, annuity, and other benefits	476,727,465	452,130,649
Unearned premium reserve	4,961,937	5,173,785
Bank and other loans payable	29,020,378	18,289,438
Deferred pre-need cemetery and mortuary contract revenues	13,242,143	13,176,476
Cemetery perpetual care obligation	3,406,718	3,266,131
Accounts payable	1,789,387	2,850,575
Other liabilities and accrued expenses	24,408,666	20,167,363
Income taxes	20,421,767	15,951,848
Total liabilities	573,978,461	531,006,265
Commitments and Contingencies
Additional paid-in capital	25,931,119	23,215,875
Accumulated other comprehensive income, net of taxes	1,438,566	1,218,396
Retained earnings	44,101,252	39,666,587
Treasury stock, at cost - 986,264 Class A shares and -0- Class C shares in 2014; 1,141,021 Class A shares and -0- Class C shares in 2013	(2,086,454)	(2,624,625)
Total stockholders' equity	97,091,101	87,751,189
Total Liabilities and Stockholders' Equity	671,069,562	618,757,454
Class A Common Stock
Common stock	24,918,480	23,614,574
Class C Common Stock
Common stock	$ 2,788,138	$ 2,660,382

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Note 1: Significant Accounting Policies: Pre-need Sales and Costs (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Pre-need Sales and Costs

Pre-need Sales and Costs

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

Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are recognized in accordance with the retail land sales provisions based on accounting principles generally accepted in the United States of America. Under accounting principles generally accepted in the United States of America, recognition of revenue and associated costs from constructed cemetery property must be deferred until a minimum percentage of the sales price has been collected.

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

Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral services are accounted for under the guidance of the provisions based on accounting principles generally accepted in the United States of America. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred until the merchandise is delivered or services are performed.

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

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

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Note 20: Mortgage Servicing Rights: Schedule of Mortgage Servicing Rights Amortization (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Mortgage Servicing Rights Amortization

	Estimated MSR Amortization
2015	$          870,527
2016	870,527
2017	870,527
2018	870,527
2019	870,527
Thereafter	3,482,112
Total	$        7,834,747

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Note 9: Reinsurance, Commitments and Contingencies: Reinsurance (Details) (Unaudited, USD $)	Dec. 31, 2014	Dec. 31, 2013
Unaudited
Insurance assumed from other companies	$ 1,462,340,000	$ 1,566,336,000

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Note 2: Investments: The Company's Performing and Non-performing Mortgage Loans Were As Follows (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Mortgage loans	$ 122,053,127	$ 104,433,968
Performing Financing Receivable
Mortgage loans	114,552,650	92,009,500
Nonperforming Financing Receivable
Mortgage loans	7,500,477	12,424,468
Commercial Loan
Mortgage loans	35,388,756	41,653,009
Commercial Loan | Performing Financing Receivable
Mortgage loans	35,388,756	36,679,264
Commercial Loan | Nonperforming Financing Receivable
Mortgage loans		4,973,745
Residential Mortgage
Mortgage loans	53,592,433	49,868,486
Residential Mortgage | Performing Financing Receivable
Mortgage loans	46,571,350	42,482,658
Residential Mortgage | Nonperforming Financing Receivable
Mortgage loans	7,021,083	7,385,828
Residential Construction
Mortgage loans	33,071,938	12,912,473
Residential Construction | Performing Financing Receivable
Mortgage loans	32,592,544	12,847,578
Residential Construction | Nonperforming Financing Receivable
Mortgage loans	$ 479,394	$ 64,895

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Statements of Stockholders' Equity (USD $)	Class A Common Stock	Class C Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Treasury Stock	Total
Balance at Dec. 31, 2011	$ 19,277,596	$ 2,027,195	$ 19,487,565	$ 654,443	$ 22,546,623	$ (2,762,835)	$ 61,230,587
Net earnings					16,712,518		16,712,518
Other comprehensive loss				1,279,916			1,279,916
Grant of stock options			251,031				251,031
Exercise stock options	1,371,506	63,782	(1,416,982)				18,306
Sale of treasury stock			(62,650)			382,401	319,751
Stock dividends	1,037,404	104,488	3,003,177		(4,145,069)
Conversion Class C to Class A	646	(645)	(1)
Balance at Dec. 31, 2012	21,687,152	2,194,820	21,262,140	1,934,359	35,114,072	(2,380,434)	79,812,109
Net earnings					7,585,921		7,585,921
Other comprehensive loss				(715,963)			(715,963)
Grant of stock options			88,369				88,369
Exercise stock options	719,572	422,422	(345,845)			(543,334)	252,815
Sale of treasury stock			428,794			299,143	727,937
Stock dividends	1,124,304	126,685	1,782,418		(3,033,406)		1
Conversion Class C to Class A	83,546	(83,545)	(1)
Balance at Dec. 31, 2013	23,614,574	2,660,382	23,215,875	1,218,396	39,666,587	(2,624,625)	87,751,189
Net earnings					7,754,648		7,754,648
Other comprehensive loss				220,170			220,170
Grant of stock options			391,220				391,220
Reverse stock split true up		30			(30)
Exercise stock options	108,824		(34,800)				74,024
Sale of treasury stock			361,679			538,171	899,850
Stock dividends	1,190,040	132,767	1,997,147		(3,319,954)
Conversion Class C to Class A	5,042	(5,041)	(2)		1
Balance at Dec. 31, 2014	$ 24,918,480	$ 2,788,138	$ 25,931,119	$ 1,438,566	$ 44,101,252	$ (2,086,454)	$ 97,091,101

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Note 19: Acquisitions: Acquisition of Trans-Western Pro Forma (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Acquisition of Trans-Western Pro Forma

	For the Year Ended December 31 (unaudited)
	2014	2013	2012
Total revenues	$ 229,268,653	$ 220,011,370	$ 236,854,910
Net earnings	$    7,996,405	$    7,963,589	$   16,576,647
Net earnings per Class A equivalent common share	$            0.64	$            0.64	$            1.45
Net earnings per Class A equivalent common share
assuming dilution	$            0.62	$            0.61	$            1.38

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Note 18: Derivative Commitments: Schedule of Gains and Losses on Derivatives (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Gain (Loss) on Derivatives, Interest Rate Lock Commitments	$ 441,943	$ (1,473,557)
Gain (Loss) on Derivatives, Interest Rate Swaps	26,940	35,262
Sub total Gain on Derivatives	468,883	(1,438,295)
Tax Effect Gain on Derivatives	182,865	(417,541)
Gain (Loss) on Derivatives, Total	$ 286,018	$ (1,020,754)

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Note 9: Reinsurance, Commitments and Contingencies: Third Party Investors (Details) (Third Party Investors, USD $)	Dec. 31, 2014
Third Party Investors
Funds reserved and accrued to settle investor related claims	$ 1,702,000

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Note 9: Reinsurance, Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details) (USD $)	Dec. 31, 2014
Details
Operating Leases, Future Minimum Payments Due, Next Twelve Months	$ 4,299,185
Operating Leases, Future Minimum Payments, Due in Two Years	3,610,599
Operating Leases, Future Minimum Payments, Due in Three Years	2,835,947
Operating Leases, Future Minimum Payments, Due in Four Years	1,188,581
Operating Leases, Future Minimum Payments, Due in Five Years	563,956
Operating Leases, Future Minimum Payments Due	$ 12,498,268

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Note 2: Investments: Gain (Loss) on Investments (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Gain (Loss) on Investments

	2014	2013	2012
Fixed maturity securities held
to maturity:
Gross realized gains	$    390,203	$      97,238	$    470,874
Gross realized losses	(71,800)	(41,164)	(3,875)
Other than temporary impairments	(120,000)	(120,000)	(165,000)
Securities available for sale:
Gross realized gains	349,207	540,990	392,033
Gross realized losses	(55,222)	(2,678)	(5,705)
Other than temporary impairments	(44,240)	(100,304)	(247,317)
Other assets:
Gross realized gains	1,445,596	824,203	794,346
Gross realized losses	(139,808)	(538)	(223,163)
Other than temporary impairments	-	(115,922)	(795,315)
Total	$  1,753,936	$  1,081,825	$    216,878

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Note 2: Investments: Available-for-sale Securities (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Mortgage loans on real estate and construction	$ 120,050,072	$ 102,781,878
Mortgage loans on real estate and construction, allowance for losses	(2,003,055)	(1,652,090)
Real estate held for investment, net of depreciation	111,411,351	99,760,475
Policy and other loans at amortized cost	34,125,428	19,724,006
Short-term investments at amortized cost	27,059,495	12,135,719
Residential Mortgage
Mortgage loans on real estate and construction	53,592,433	49,868,486
Residential Construction
Mortgage loans on real estate and construction	33,071,938	12,912,473
Commercial Loan
Mortgage loans on real estate and construction	35,388,756	41,653,009
Policy Loan
Policy and other loans at amortized cost	7,011,012	7,520,376
Other loans
Policy and other loans at amortized cost	27,807,829	12,472,805
Allowance
Policy and other loans at amortized cost	(693,413)	(269,175)
Industrial, miscellaneous and all other equity securities
Available-for-sale Securities, Amortized Cost Basis	7,179,010	4,783,936
Available-for-sale Debt Securities Gross Unrealized Gain	393,873	240,206
Available-for-sale Debt Securities, Gross Unrealized Loss	(820,133)	(525,386)
AvailableForSaleSecuritiesEstimatedFairValue	6,752,750	4,498,756
Equity Securities
Available-for-sale Securities, Amortized Cost Basis	7,179,010	4,783,936
Available-for-sale Debt Securities Gross Unrealized Gain	393,873	240,206
Available-for-sale Debt Securities, Gross Unrealized Loss	(820,133)	(525,386)
AvailableForSaleSecuritiesEstimatedFairValue	$ 6,752,750	$ 4,498,756

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Note 1: Significant Accounting Policies: Property and Equipment (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Property and Equipment

Property and Equipment

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

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Note 11: Capital Stock: Schedule of Basic and diluted earnings per share (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Net Earnings (Loss)	$ 7,754,648	$ 7,585,921	$ 16,712,518
Weighted Average Number of Shares Outstanding, Basic and Diluted	12,518,743	12,366,029	11,427,568
Employee stock options	$ 409,266	$ 615,547	$ 599,281
Pro Forma Weighted Average Shares Outstanding, Diluted	409,266	615,547	599,281
Adjustedweighted average shares and assumed conversions	12,928,009	12,981,576	12,026,849
Net earnings per Class A equivalent common share (1)	$ 0.62	$ 0.61	$ 1.46
Net earnings per Class A equivalent common share - assuming dilution(1)	$ 0.60	$ 0.58	$ 1.39

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Note 8: Income Taxes: Deferred taxes, taxes paid and changes in valuation allowance (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Deferred Taxes Decrease In The Valuation Allowance	$ 316,632	$ 735,868
Income Taxes Paid	$ 408,939	$ 4,009,598	$ 1,900,000

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Note 2: Investments: Schedule of Mortgate loans on a nonaccrual status (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Mortgate loans on a nonaccrual status

	Mortgage Loans on Non-accrual Status
	As of December 31, 2014, and 2013
	2014	2013
Commercial	$                          -	$            4,973,745
Residential	7,021,083	7,385,828
Residential construction	479,394	64,895
Total	$           7,500,477	$          12,424,468

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Note 15: Related Party Transactions

12 Months Ended

Dec. 31, 2014

Notes

Note 15: Related Party Transactions

15)   Related Party Transactions

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

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Note 1: Significant Accounting Policies: Recognition of Insurance Premiums and Other Considerations (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Recognition of Insurance Premiums and Other Considerations

Recognition of Insurance Premiums and Other Considerations

Premiums and  other consideration 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. Premiums and other consideration for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies, deferred annuities, and annuities without life contingencies) are recognized when earned and consist of amounts assessed against policyholder account balances during the period for policy administration charges and surrender charges.

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Note 2: Investments: Held-to-maturity Securities (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	$ 135,018,347	$ 143,466,494
Held-to-maturity Securities, Unrecognized Holding Gain	16,736,557	11,229,300
Held-to-maturity Securities, Unrecognized Holding Loss	(997,529)	(1,421,574)
HeldToMaturitySecuritiesEstimatedFairValue	150,757,375	153,274,220
US Treasury and Government
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	1,873,146	2,284,261
Held-to-maturity Securities, Unrecognized Holding Gain	345,715	298,901
HeldToMaturitySecuritiesEstimatedFairValue	2,218,861	2,583,162
US States and Political Subdivisions Debt Securities
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	1,736,489	1,790,661
Held-to-maturity Securities, Unrecognized Holding Gain	221,893	197,340
Held-to-maturity Securities, Unrecognized Holding Loss	(5,278)	(9,404)
HeldToMaturitySecuritiesEstimatedFairValue	1,953,104	1,978,597
Corporate Debt Securities
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	126,533,483	134,257,468
Held-to-maturity Securities, Unrecognized Holding Gain	15,841,536	10,513,448
Held-to-maturity Securities, Unrecognized Holding Loss	(980,357)	(1,394,919)
HeldToMaturitySecuritiesEstimatedFairValue	141,394,662	143,375,997
Collateralized Mortgage Backed Securities
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	4,263,206	4,522,081
Held-to-maturity Securities, Unrecognized Holding Gain	305,381	206,617
Held-to-maturity Securities, Unrecognized Holding Loss	(11,894)	(11,351)
HeldToMaturitySecuritiesEstimatedFairValue	4,556,693	4,717,347
Redeemable Preferred Stock
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	612,023	612,023
Held-to-maturity Securities, Unrecognized Holding Gain	22,032	12,994
Held-to-maturity Securities, Unrecognized Holding Loss		(5,900)
HeldToMaturitySecuritiesEstimatedFairValue	$ 634,055	$ 619,117

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Note 6: Bank and Other Loans Payable: Summary of Bank Loans Payable (Details) (USD $)	Dec. 31, 2014		Dec. 31, 2013
Bank loans payable	$ 29,020,378		$ 18,289,438
Current Installment	5,248,043		5,849,926
Bank and other loans, excluding current installments	23,772,335		12,439,512
6.34% note payable
Bank loans payable	466,937	[1]	612,068	[1]
5.75% note payable
Bank loans payable	3,398,099	[2]	3,509,944	[2]
Mark to market of interest rate swaps
Bank loans payable	31,370		58,310
3.85% note payable
Bank loans payable	461,889	[3]	1,377,925	[3]
N385ANotePayableMember
Bank loans payable	2,994,999	[4]	3,891,926	[4]
N440NotePayableMember
Bank loans payable	8,333,550	[5]	8,500,000	[5]
N275NotePayableMember
Bank loans payable	13,085,189	[6]
Other collateralized bank loans payable
Bank loans payable	247,384		338,304
Other notes payable
Bank loans payable	$ 961		$ 961

[1] Payable in monthly installments of $13,556 including principal and interest, collateralized by real property with a book value of approximately $498,000, due November 2017.

[2] 5.75% note payable in monthly installments of $28,271 including principal and interest, collateralized by real property with a book value of approximately $6,183,000 due December 2014.

[3] 3.85% note payable in monthly installments of $79,468 including principal and interest, collateralized by shares of Security National Life Insurance Company Stock, due June 2015.

[4] 3.85% note payable in monthly installments of $86,059 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due December 2017

[5] 4.40% note payable in monthly installments of $46,825 including principal and interest, collateralized by real property with a book value of approximately $12,450,000 due January 2026.

[6] 2.75% above the 90-day LIBOR rate (3.0052% at December 31, 2014) construction and term loan payable, collateralized by real property with a book value of approximately $22,855,000 due July 2017

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Note 17: Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2014

Notes

Note 17: Accumulated Other Comprehensive Income

17)       Accumulated Other Comprehensive Income

The following summarizes the changes in accumulated other comprehensive income:

	December 31
	2014	2013
Unrealized losses on available for-sale securities	$      (390,143)	$         (12,299)
Reclassification adjustment for net realized gains in net income	293,985	538,311
Net unrealized gains (losses) before taxes	(96,158)	526,012
Tax (expense) benefit	30,310	(221,221)
Net	(65,848)	304,791
Potential unrealized gains for derivative bank loans (interest rate swaps) before taxes	26,940	35,262
Tax expense	(10,507)	(9,073)
Net	16,433	26,189
Potential unrealized gains (losses) for derivative mortgage loans before taxes	441,943	(1,473,557)
Tax (expense) benefit	(172,358)	426,614
Net	269,585	(1,046,943)
Other comprehensive income (loss) changes	$       220,170	$       (715,963)

The following is the accumulated balances of other comprehensive income as of December 31, 2014:

	Beginning Balance December 31, 2013	Change for the period	Ending Balance December 31, 2014
Unrealized net gains on available-for-sale    securities and trust investments	$        346,341	$         (65,848)	$        280,493
Unrealized gains (losses) on derivative mortgage    loans	907,624	269,585	1,177,209
Unrealized gains (losses) on  derivative    bank loan interest rate swaps	(35,569)	16,433	(19,136)
Other comprehensive income	$     1,218,396	$        220,170	$     1,438,566

The following is the accumulated balances of other comprehensive income as of December 31, 2013:

	Beginning Balance December 31, 2012	Change for the period	Ending Balance December 31, 2013
Unrealized net gains on available-for-sale    securities and trust investments	$            41,550	$          304,791	$        346,341
Unrealized gains (losses) on derivative mortgage    loans	1,954,567	(1,046,943)	907,624
Unrealized gains (losses) on  derivative    bank loan interest rate swaps	(61,758)	26,189	(35,569)
Other comprehensive income	$       1,934,359	$        (715,963)	$     1,218,396

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Note 3: Receivables: Schedule of Receivables (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Receivables

Receivables consist of the following:

	Years Ended December 31
	2014	2013
Trade contracts	$        12,166,838	$          9,993,755
Receivables from sales agents	1,951,677	994,056
Held in Escrow – Southern Security	278,331	312,167
Other	1,428,106	1,601,227
Total receivables	15,824,952	12,901,205
Allowance for doubtful accounts	(1,280,859)	(1,248,633)
Net receivables	$        14,544,093	$        11,652,572

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Note 2: Investments: Net Investment Income - Additional (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net Investment Income	$ 28,303,740	$ 20,354,002	$ 21,915,577
Securities on deposit for regulatory authorities	8,886,001	9,215,222
Cemeteries and mortuaries
Net Investment Income	$ 356,369	$ 341,430	$ 352,488

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Note 16: Fair Value of Financial Instruments: Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Policyholder Account Balances
Fair Value Balance	$ (48,000,668)	$ (49,746,337)
Fair Value, Losses (Gains) included in earnings	2,689,969	1,745,669
Fair Value Balance	(45,310,699)	(48,000,668)
Future Policy Benefits - Annuities
Fair Value Balance	(65,052,928)	(65,171,687)
Fair Value, Losses (Gains) included in earnings	(488,057)	118,759
Fair Value Balance	(65,540,985)	(65,052,928)
Interest Rate Lock Commitments
Fair Value Balance	1,487,908	2,961,465
Fair Value, Losses (Gains) included in other comprehensive income	441,943	(1,473,557)
Fair Value Balance	1,929,851	1,487,908
Bank Loan Interest Rate Swaps
Fair Value Balance	(58,310)	(93,572)
Fair Value, Losses (Gains) included in other comprehensive income	26,940	35,262
Fair Value Balance	$ (31,370)	$ (58,310)

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Statement of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net earnings	$ 7,754,648	$ 7,585,921	$ 16,712,518
Realized gains on investments and other assets	(1,918,176)	(1,418,051)	(1,424,510)
Other than temporary impairments	164,240	336,226	1,207,632
Depreciation and amortization	4,389,472	4,160,760	2,877,743
Provision for losses on real estate accounts and loans receivable	743,386	(584,873)	(963,169)
Amortization of premiums and discounts	238,687	103,032	(762,301)
Provision for deferred and other income taxes	3,072,642	416,269	953,394
Policy and pre-need acquisition costs deferred	(10,159,895)	(9,666,040)	(7,885,882)
Policy and pre-need acquisition costs amortized	5,590,332	3,841,565	4,234,271
Value of business acquired amortized	1,302,646	1,340,272	1,215,158
Servicing asset at amortized cost, additions	(3,741,381)	(2,494,254)	(2,797,470)
Amortization of mortgage servicing rights	750,735	447,623
Stock based compensation expense	391,220	88,369	251,031
Benefit plans funded with treasury stock	899,850	727,937	319,751
Land and improvements held for sale	(216,512)	(36,345)	26,054
Future life and other benefits	14,084,894	19,182,046	20,508,725
Receivables for mortgage loans sold	7,362,353	15,668,188	(18,807,956)
Other operating assets and liabilities	306,668	(3,046,791)	6,751,217
Net cash provided by operating activities	31,015,809	36,651,854	22,416,206
Cash flows from investing activities:
Purchase - fixed maturity securities	(3,449,187)	(22,849,622)	(11,365,269)
Calls and maturities - fixed maturity securities	11,850,864	8,518,848	9,601,320
Purchase - equity securities	(5,996,993)	(2,807,367)	(1,685,983)
Sales - equity securities	3,851,664	4,528,862	3,028,509
Purchases of short-term investments	(18,587,022)	(19,827,619)	(51,823,941)
Sales of short-term investments	3,663,246	48,617,290	17,830,574
Sales (purchases) of restricted assets	(2,628,764)	2,777,715	(4,436,547)
Change in assets for perpetual care trusts	(230,921)	(255,204)	(265,435)
Amount received for perpetual care trusts	140,587	113,130	169,924
Mortgage, policy, and other loans made	(286,974,069)	(160,737,841)	(117,135,836)
Payments received for mortgage, policy, and other loans	267,763,998	133,260,148	131,565,100
Purchases of property and equipment	(1,520,443)	(3,570,334)	(3,022,393)
Disposal of property and equipment	894,805	33,900	30,524
Purchases of real estate held for investment	(19,317,567)	(26,749,586)	(143,278)
Sale of real estate held for investment	7,269,475	3,352,446	6,886,821
Cash received from reinsurance	13,553,864	2,466,175	34,485,224
Cash paid for purchase of subsidiaries, net of cash acquired	(15,011,193)		(180,591)
Net cash provided by (used in) investing activities	(44,727,656)	(33,129,059)	13,538,723
Cash flows from financing activities:
Annuity contract receipts	10,051,662	9,385,168	8,939,017
Annuity contract withdrawals	(14,519,563)	(14,866,251)	(13,915,777)
Proceeds from stock options exercised	74,024	252,815	18,306
Repayment of bank loans and notes and contracts payable	(2,357,468)	(2,292,037)	(1,534,612)
Proceeds from bank borrowings	13,115,348	13,314,594	241,875
Change in line of credit borrowings		(4,608,204)	(11,791,796)
Net cash provided by (used in) financing activities	6,364,003	1,186,085	(18,042,987)
Net change in cash and cash equivalents	(7,347,844)	4,708,880	17,911,942
Cash and cash equivalents at beginning of year	38,203,164	33,494,284	15,582,342
Cash and cash equivalents at end of year	30,855,320	38,203,164	33,494,284
Non Cash Investing and Financing Activities
Mortgage loans foreclosed into real estate	$ 981,820	$ 3,930,297	$ 17,019,870

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Balance Sheet Parenthetical (USD $)	Dec. 31, 2014	Dec. 31, 2013
Allowance for losses on mortgage loans on real estate and construction loans, held for investment	$ 2,003,055	$ 1,652,090
Accumulated depreciation on real estate held for investment	10,875,419	9,658,599
Allowance for doubtful accounts on policy and other loans	$ 693,413	$ 269,175
Class A Common Stock
Common Stock Par Value	$ 2.00	$ 2.00
Common Stock Authorized	20,000,000	20,000,000
Common Stock Issued	12,459,240	11,807,287
Treasury Stock	986,264	1,141,021
Class B Common Stock
Common Stock Par Value	$ 1.00	$ 1.00
Common Stock Authorized	5,000,000	5,000,000
Common Stock Issued
Common Stock Outstanding
Class C Common Stock
Common Stock Par Value	$ 2.00	$ 2.00
Common Stock Authorized	2,000,000	2,000,000
Common Stock Issued	1,394,069	1,330,191

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Note 10: Retirement Plans

12 Months Ended

Dec. 31, 2014

Notes

Note 10: Retirement Plans

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 1,000 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.The Company did not make any contributions for 2014, 2013 and 2012. At December 31, 2014, the ESOP held 579,918 shares of Class A and 252,974 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 three 401(k) savings plans 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 plans allow participants to make pretax contributions up to a maximum of $17,500, $17,500 and $17,000 for the years 2014, 2013 and 2012, respectively or the statutory limits.

Beginning January 1, 2008, the Company elected to be a “Safe Harbor” Plan for its matching 401(k) contributions. The Company matched 100% of up to 3% of an employee’s total annual compensation and matched 50% of 4% to 5% of an employee’s annual compensation. The match was in Company stock. The Company’s contribution for 2014, 2013 and 2012 was $808,572, $749,898 and $222,719, respectively under the “Safe Harbor” plan.

In 2001, the Company’s Board of Directors adopted a Deferred Compensation Plan. Under the terms of the Plan, the Company will provide deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Board has appointed a Committee of the Company to be the Plan Administrator and to determine the employees who are eligible to participate in the plan. The employees who participate may elect to defer a portion of their compensation into the plan. The Company may contribute into the plan at the discretion of the Company’s Board of Directors. The Company did not make any contributions for 2014, 2013 and 2012.

The Company had a deferred compensation agreement with its past Chief Executive Officer. The deferred compensation was payable on the retirement or death of this individual either in annual installments over 10 years or in a lump sum settlement, if approved by the Board of Directors. The amount to be paid was $60,000 per year with cost of living adjustments each anniversary. The compensation agreement also provided that any remaining balance would be paid to his heirs in the event of his death. In 2014, the Board of Directors approved a lump sum for the payment of $598,426, which represented a full and final payment

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

On In the event of a sale or merger of the Company and Mr. Quist is not retained in his current position, the Company would be obligated to continue Mr. Quist’s current compensation and benefits for seven years following the merger or sale. The agreement further provides that Mr. Quist is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 65), (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of twenty years in annual installments in the amount equal to 75% of his then current rate of compensation. However, in the event that Mr. Quist dies prior to receiving all retirement benefits there under, the remaining benefits are to be paid to his heirs. The Company expensed $833,183 and $264,000 in fiscal 2014 and 2013, respectively, to cover the present value of anticipated retirement benefits under the employment agreement. The liability accrued is $2,270,425 and $1,437,242 as of December 31, 2014 and 2013, respectively.

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

In the event of a sale or merger of the Company and Mr. Beckstead is not retained in his current position, the Company would be obligated to continue Mr. Beckstead’s current compensation and benefits for five years following the merger or sale. The agreement further provides that Mr. Beckstead is entitled to receive annual retirement benefits beginning (i) one month from the date of his retirement (to commence no sooner than age 62½) (ii) five years following complete disability, or (iii) upon termination of his employment without cause. These retirement benefits are to be paid for a period of ten years in annual installments in the amount equal to one-half of his then current annual salary. However, in the event that Mr. Beckstead dies prior to receiving all retirement benefits there under, the remaining benefits are to be paid to his heirs. The Company expensed $154,817 and $-0- in fiscal 2014 and 2013, respectively, to cover the present value of the retirement benefit of the agreement. The liability accrued is $768,220 and $613,403, as of December 31, 2014 and 2013, respectively.

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Note 2: Investments (Details) (Equity Securities, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Equity Securities
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	$ 44,240	$ 100,304	$ 247,317

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Note 19: Acquisitions: The Estimated Fair Values of The Assets Acquired and The Liabilities Assumed At The Date of Acquisition (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

The Estimated Fair Values of The Assets Acquired and The Liabilities Assumed At The Date of Acquisition

Other loans, net	$         11,866,193
Property and equipment	760,120
Goodwill	2,373,722
Other	1,379,158
Total assets acquired	16,379,193
Other liabilities and accrued expenses	(1,368,000)
Total liabilities assumed	(1,368,000)
Fair value of net assets acquired	$         15,011,193

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Note 18: Derivative Commitments: Schedule of Derivative Assets at Fair Value (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Derivative Assets at Fair Value

	Fair Value of Derivative Instruments
	Asset Derivatives				Liability Derivatives
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013
	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate lock and forward sales commitments	other assets	$2,111,529	other assets	$1,511,111	Other liabilities	$181,678	Other liabilities	$  23,203
Call Options		-		-	Other liabilities	116,036	Other liabilities	124,174
Put Options		-		-	Other liabilities	11,867	Other liabilities	-
Interest rate swaps		-		-	Bank loans payable	31,370	Bank loans payable	58,310
Total		$2,111,529		$1,511,111		$340,951		$205,687

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Note 5: Property and Equipment (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Depreciation and amortization	$ 2,177,165	$ 1,621,069	$ 1,258,097

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Note 8: Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Current Income Tax Expense (Benefit)	$ 1,653,663	$ 1,821,539	$ 2,707,962
Deferred income tax expense	3,072,642	416,267	1,930,813
Income Tax Expense (Benefit), Continuing Operations	$ 4,726,305	$ 2,237,806	$ 4,638,775

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Note 11: Capital Stock: Schedule of Activity in shares of capital stock (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Class A Common Stock
Common Stock Outstanding	12,459,240	11,807,287	10,843,576	9,638,798
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	54,412	359,786	685,753
Dividends	$ 595,020	$ 562,152	$ 518,702
Conversion of Stock, Shares Issued	2,521	41,773	323
Class C Common Stock
Common Stock Outstanding	1,394,069	1,330,191	1,097,410	1,013,598
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		211,211	31,891
Dividends	$ 66,384	$ 63,342	$ 52,244
Conversion of Stock, Shares Issued	(2,521)	(41,773)	(323)

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Note 4: Value of Business Acquired: Schedule of Value of Business Acquired (Details) (USD $)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Details
Value of business acquired, balance at start of period					$ 8,547,627	$ 8,680,845		$ 9,829,082		$ 10,996,050
Increase (Decrease) in value of business acquired						1,169,428		192,035		48,190
Imputed interest on value of business acquired						591,412	[1]	647,848	[1]	728,880	[1]
Value of business acquired - amortization						(1,894,058)		(1,988,120)		(1,944,038)
Value of business acquired - net amortization charged to income	(790,000)	(852,000)	(958,000)	(1,031,000)	(1,113,000)	(1,302,646)		(1,340,272)		(1,215,158)
Value of business acquired, balance at start of period						$ 8,547,627		$ 8,680,845		$ 9,829,082

[1] Imputed interest at 7%.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Jun. 30, 2014	Mar. 25, 2015
Entity Registrant Name	SECURITY NATIONAL FINANCIAL CORP
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Amendment Flag	false
Entity Central Index Key	0000318673
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Entity Public Float		$ 18,028,000
Class A Common Stock
Entity Common Stock, Shares Outstanding			12,460,013
Class C Common Stock
Entity Common Stock, Shares Outstanding			1,393,538

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Note 6: Bank and Other Loans Payable: Schedule of combined maturities of bank loans payable, lines of credit and notes and contracts payable (Details) (USD $)	Dec. 31, 2014
Bank loans payable, lines of credit and notes and contracts payable	$ 29,020,378
DueInYearOneMember
Bank loans payable, lines of credit and notes and contracts payable	5,248,043
DueInYearTwoMember
Bank loans payable, lines of credit and notes and contracts payable	1,395,942
DueInYearThreeMember
Bank loans payable, lines of credit and notes and contracts payable	14,586,183
DueInYearFourMember
Bank loans payable, lines of credit and notes and contracts payable	246,769
DueInYearFiveMember
Bank loans payable, lines of credit and notes and contracts payable	246,336
DueInYearThereafterMember
Bank loans payable, lines of credit and notes and contracts payable	$ 7,297,105

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Note 11: Capital Stock

12 Months Ended

Dec. 31, 2014

Notes

Note 11: Capital Stock

11)        Capital Stock

The Company has two classes of common stock with shares outstanding, Class A common shares and Class C common shares. Class C shares have 10 votes per share on all matters except for the election of one third of the directors who are elected solely by the Class A shares. Class C shares are convertible into Class A shares at any time on a one to one ratio. The decrease in treasury stock was the result of treasury stock being used to fund the company’s 401(k) and Deferred Compensation Plans.

Stockholders of both classes of common stock have received 5% stock dividends in the years 1990 through 2014, 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.

On July 2, 2014, the stockholders approved a 1-for-10 reverse stock split of the Company’s Class C common stock at the Annual Meeting of Stockholders.  Concurrently with the approval of the reverse stock split, the stockholders also approved amendments to Article V of the Company’s Articles of Incorporation to provide that each share of Class C common stock will have weighted voting of ten votes per share and that each share of Class C common stock may be converted into one share of Class A common stock.  The Board of Directors had previously approved the reverse stock split and weighted voting of Class C common stock.  Prior to the approval of the reverse stock split and weighted voting of Class C shares, the Company’s Articles of Incorporation provided that each share of Class C common stock had one vote per share and that Class C common shares were convertible into Class A common shares at a conversion ratio of ten shares of Class C common stock for one share of Class A common stock.

The reverse stock split and weighted voting of the Company's Class C common stock became effective on August 1, 2014, when the Articles of Restatement and Amendment to the Company's Articles of Incorporation were filed with the Utah Division of Corporations and Commercial Code. The reverse stock split will affect all of the holders of the Company's Class C common stock uniformly but will not affect any Class C stockholder's percentage ownership interest in the Company or proportionate voting power, except for insignificant changes that will result from the rounding up of fractional shares. Additionally, the reverse stock split will not impact the existing shares of Class A common stock.

The following table summarizes the activity in shares of capital stock for the three-year period ended December 31, 2014:

	Class A	Class C (1)
Balance at December 31, 2011	9,638,798	1,013,598
Exercise of stock options	685,753	31,891
Stock dividends	518,702	52,244
Conversion of Class C to Class A	323	(323)
Balance at December 31, 2012	10,843,576	1,097,410
Exercise of stock options	359,786	211,211
Stock dividends	562,152	63,342
Conversion of Class C to Class A	41,773	(41,773)
Balance at December 31, 2013	11,807,287	1,330,191
Exercise of stock options	54,412	-
Stock dividends	595,020	66,384
Reverse stock split true up		15
Conversion of Class C to Class A	2,521	(2,521)
Balance at December 31, 2014	12,459,240	1,394,069

(1) Class C shares have been retroactively adjusted for the effect of the 1-for-10 reverse stock split that was approved by the stockholders in 2014.

Earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. In accordance with accounting principles generally accepted in the United States of America, the basic and diluted earnings per share amounts were calculated as follows:

	2014	2013	2012
Numerator:
Net earnings	$    7,754,648	$    7,585,921	$ 16,712,518
Denominator:
Denominator for basic earnings
per share-weighted-average shares	12,518,743	12,366,029	11,427,568
Effect of dilutive securities
Employee stock options	409,266	615,547	599,281
Dilutive potential common shares	409,266	615,547	599,281
Denominator for diluted earnings (loss)
per share-adjusted weighted-average
shares and assumed conversions	12,928,009	12,981,576	12,026,849
Basic earnings per share	$0.62	$0.61	$1.46
Diluted earnings per share	$0.60	$0.58	$1.39

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Note 20: Mortgage Servicing Rights: Schedule of Mortgage Servicing Rights Amortization (Details) (USD $)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2020	Dec. 31, 2014	Dec. 31, 2013
Details
Amortization of Mortgage Servicing Rights (MSRs)	$ 870,527	$ 870,527	$ 870,527	$ 870,527	$ 870,527
Amortization of Mortgage Servicing Rights Thereafter						3,482,112
Mortgage servicing rights							$ 7,834,747	$ 4,844,101

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Note 11: Capital Stock: Schedule of Activity in shares of capital stock (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Activity in shares of capital stock

	Class A	Class C (1)
Balance at December 31, 2011	9,638,798	1,013,598
Exercise of stock options	685,753	31,891
Stock dividends	518,702	52,244
Conversion of Class C to Class A	323	(323)
Balance at December 31, 2012	10,843,576	1,097,410
Exercise of stock options	359,786	211,211
Stock dividends	562,152	63,342
Conversion of Class C to Class A	41,773	(41,773)
Balance at December 31, 2013	11,807,287	1,330,191
Exercise of stock options	54,412	-
Stock dividends	595,020	66,384
Reverse stock split true up		15
Conversion of Class C to Class A	2,521	(2,521)
Balance at December 31, 2014	12,459,240	1,394,069

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Note 17: Accumulated Other Comprehensive Income: Accumulated Balances of Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2014

AsOfDecember312014Member

Accumulated Balances of Other Comprehensive Income

	Beginning Balance December 31, 2013	Change for the period	Ending Balance December 31, 2014
Unrealized net gains on available-for-sale    securities and trust investments	$        346,341	$         (65,848)	$        280,493
Unrealized gains (losses) on derivative mortgage    loans	907,624	269,585	1,177,209
Unrealized gains (losses) on  derivative    bank loan interest rate swaps	(35,569)	16,433	(19,136)
Other comprehensive income	$     1,218,396	$        220,170	$     1,438,566

As Of December 31 2013

Accumulated Balances of Other Comprehensive Income

	Beginning Balance December 31, 2012	Change for the period	Ending Balance December 31, 2013
Unrealized net gains on available-for-sale    securities and trust investments	$            41,550	$          304,791	$        346,341
Unrealized gains (losses) on derivative mortgage    loans	1,954,567	(1,046,943)	907,624
Unrealized gains (losses) on  derivative    bank loan interest rate swaps	(61,758)	26,189	(35,569)
Other comprehensive income	$       1,934,359	$        (715,963)	$     1,218,396

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Income Statement (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues:
Insurance premiums and other considerations	$ 53,008,679	$ 50,471,658	$ 48,216,327
Net investment income	28,303,740	20,354,002	21,915,577
Net mortuary and cemetery sales	11,426,308	12,000,375	10,864,497
Realized gains on investments and other assets	1,918,176	1,418,051	1,424,510
Other than temporary impairments	(164,240)	(336,226)	(1,207,632)
Mortgage fee income	128,696,998	128,800,930	151,887,838
Other income	3,747,013	2,606,230	1,159,052
Total revenues	226,936,674	215,315,020	234,260,169
Benefits and expenses:
Death benefits	27,100,278	26,048,325	22,277,037
Surrenders and other policy benefits	2,689,686	2,486,611	1,969,051
Increase in future policy benefits	18,060,151	19,594,890	21,435,191
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	6,892,978	5,181,837	5,449,429
Commissions	59,876,675	65,979,564	83,840,427
Personnel	49,360,406	42,795,925	35,469,486
Advertising	4,584,436	4,837,714	4,050,187
Rent and rent related	6,135,876	5,457,988	4,503,285
Depreciation on property and equipment	2,177,165	1,621,069	1,258,097
Provision for loan losses and loss reserve	3,053,403	1,751,472	4,239,418
Costs related to funding mortgage loans	6,877,069	6,635,290	6,931,045
Other expenses	22,800,066	18,328,005	16,017,975
Interest expense	2,994,429	2,853,701	3,744,293
Cost of goods and services sold - mortuaries and cemeteries	1,853,103	1,918,902	1,723,955
Total benefits and expenses	214,455,721	205,491,293	212,908,876
Earnings before income taxes	12,480,953	9,823,727	21,351,293
Income tax expense	(4,726,305)	(2,237,806)	(4,638,775)
Net earnings	$ 7,754,648	$ 7,585,921	$ 16,712,518
Net earnings per Class A equivalent common share (1)	$ 0.62	$ 0.61	$ 1.46
Net earnings per Class A equivalent common share - assuming dilution(1)	$ 0.60	$ 0.58	$ 1.39
Weighted average Class A equivalent common shares outstanding (1)	12,518,743	12,366,029	11,427,568
Weighted average Class A equivalent common shares outstanding-assuming dilution (1)	12,928,009	12,981,576	12,026,849

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Note 5: Property and Equipment

12 Months Ended

Dec. 31, 2014

Notes

Note 5: Property and Equipment

5)    Property and Equipment

The cost of property and equipment is summarized below:

	December 31
	2014	2013
Land and buildings	$        11,904,100	$        12,482,082
Furniture and equipment	15,822,957	14,301,713
	27,727,057	26,783,795
Less accumulated depreciation	(16,419,343)	(15,260,635)
Total	$        11,307,714	$        11,523,160

Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $2,177,165, $1,621,069 and $1,258,097 respectively.

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Note 4: Value of Business Acquired

12 Months Ended

Dec. 31, 2014

Notes

Note 4: Value of Business Acquired

4)    Value of Business Acquired

Information with regard to value of business acquired is as follows:

	December 31
	2014	2013	2012
Balance at beginning of year	$      8,680,845	$      9,829,082	$    10,996,050
Value of  business acquired	1,169,428	192,035	48,190
Imputed interest at 7%	591,412	647,848	728,880
Amortization	(1,894,058)	(1,988,120)	(1,944,038)
Net amortization charged to income	(1,302,646)	(1,340,272)	(1,215,158)
Balance at end of year	$      8,547,627	$      8,680,845	$      9,829,082

Presuming no additional acquisitions, net amortization charged to income is expected to approximate $1,113,000$1,031,000, $958,000, $852,000, and $790,000 for the years 2015 through 2019. Actual amortization may vary based on changes in assumptions or experience. As of December 31, 2014, value of business acquired is being amortized over a weighted average life of 6.6 years.

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Note 10: Retirement Plans: 401(k) Plans (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Description of Defined Contribution Pension and Other Postretirement Plans	The Company has three 401(k) savings plans 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 plans allow participants to make pretax contributions up to a maximum of $17,500, $17,500 and $17,000 for the years 2014, 2013 and 2012, respectively or the statutory limits.
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Amount	$ 17,500	$ 17,500	$ 17,000
SafeHarborPlanMember
Contribution to Retirement Plan	$ 808,572	$ 749,898	$ 222,719

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Note 16: Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2014

Notes

Note 16: Fair Value of Financial Instruments

16)    Fair Value of Financial Instruments

Generally accepted accounting principles (GAAP) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. GAAP also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value measurements are classified under the following hierarchy:

Level 1:  Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we can access.

Level 2: Financial assets and financial liabilities whose values are based on the following:

a) Quoted prices for similar assets or liabilities in active markets;

b) Quoted prices for identical or similar assets or liabilities in non-active markets; or

c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Level 3:  Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect our estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.

The Company utilizes a combination of third party valuation service providers, brokers, and internal valuation models to determine fair value.

The following methods and assumptions were used by the Company in estimating the fair value disclosures related to other significant financial instruments:

The items shown under Level 1 and Level 2 are valued as follows:

Securities Available for Sale and Held to Maturity: The fair values of investments in fixed maturity and equity securities along with methods used to estimate such values are disclosed in Note 2 of the Notes to Consolidated Statements.

Restricted Assets:A portion of these assets include mutual funds and equity securities that have quoted market prices. Also included are cash and cash equivalents and participations in mortgage loans. The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Cemetery Perpetual Care Trust Investments:  A portion of these assets include equity securities that have quoted market prices. Also included are cash and cash equivalents. The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Call and Put Options: The Company uses quoted market prices to value its call and put options.

The items shown under Level 3 are valued as follows:

Policyholder Account Balances and Future Policy Benefits-Annuities:  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%. The fair values for the Company’s liabilities under investment-type insurance contracts (disclosed as policyholder account balances and future policy benefits – annuities) are estimated based on the contracts’ cash surrender values.

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.

Interest Rate Lock Commitments: The Company’s mortgage banking activities enters into interest rate lock commitments with potential borrowers and forward commitments to sell loans to third-party investors. The Company also implements a hedging strategy for these transactions. A mortgage loan commitment binds the Company to lend funds to a qualified borrower at a specified interest rate and within a specified period of time, generally up to 30 days after inception of the mortgage loan commitment. Mortgage loan commitments are defined to be derivatives under generally accepted accounting principles and are recognized at fair value on the consolidated balance sheet with changes in their fair values recorded as part of other comprehensive income from mortgage banking operations.

The Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage loan and the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the mortgage loan commitment is issued. Therefore, at the time of issuance, the estimated fair value is zero. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates derived from the Company’s recent historical empirical data are used to estimate the quantity of mortgage loans that will fund within the terms of the commitments.

Bank Loan Interest Rate Swaps: Management considers the interest rate swap instruments to be an effective cash flow hedge against the variable interest rate on bank borrowings since the interest rate swap mirrors the term of the note payable and expires on the maturity date of the bank loan it hedges. The interest rate swaps are a derivative financial instruments carried at its fair value. The fair value of the interest rate swap was derived from a proprietary model of the bank from whom the interest rate swap was purchased and to whom the note is payable.

Mortgage Loans on Real Estate: The fair values are estimated using interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Real Estate Held for Investment: The Company believes that in an orderly market fair value will approximate the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for future estimated policy claims. Accordingly, the fair value determination will be weighted more heavily toward the rental analysis.

It should be noted that for replacement cost, when determining the fair value of mortgage properties, the Company uses Marshall and Swift, a provider of building cost information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and projected the present value of the net rental income over seven years. The Company used 60% of the projected cash flow analysis and 40% of the replacement cost to approximate fair value of the collateral.

In addition to this analysis performed by the Company, the Company depreciates Other Real Estate Held for Investment. This depreciation reduces the book value of these properties and lessens the exposure to the Company from further deterioration in real estate values.

Mortgage Servicing Rights: The Company initially recognizes MSRs at their estimated fair values derived from the net cash flows associated with the servicing contracts, where the Company assumes the obligation to service the loan in the sale transaction. The precise fair value of MSRs cannot be readily determined because MSRs are not actively traded in stand-alone markets. Considerable judgment is required to estimate the fair values of these assets and the exercise of such judgment can significantly affect the Company’s earnings.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. MSR amortization is determined by amortizing the balance straight-line over an estimated nine year life.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the consolidated balance sheet at December 31, 2014.

	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a    recurring basis
Common stock	$           6,752,750	$          6,752,750	$                 -	$                         -
Total securities available for sale	6,752,750	6,752,750	-	-
Restricted assets of cemeteries and mortuaries	715,202	715,202	-	-
Cemetery perpetual care trust investments	695,235	695,235	-	-
Derivatives - interest rate lock commitments	2,111,529	-	-	2,111,529
Total assets accounted for at fair value on a    recurring basis	$         10,274,716	$          8,163,187	$                 -	$          2,111,529
Liabilities accounted for at fair value on a    recurring basis
Policyholder account balances	$       (45,310,699)	$                        -	$                 -	$      (45,310,699)
Future policy benefits - annuities	(65,540,985)	-	-	(65,540,985)
Derivatives  - bank loan interest rate swaps	(31,370)	-	-	(31,370)
- call options	(116,036)	(116,036)	-	-
- put options	(11,867)	(11,867)
- interest rate lock commitments	(181,678)	-	-	(181,678)
Total liabilities accounted for at fair value    on a recurring basis	$     (111,192,635)	$           (127,903)	$                 -	$    (111,064,732)

Following is a summary of changes in the consolidated balance sheet line items measured using level 3 inputs:

	Policyholder Account Balances	Future Policy Benefits - Annuities	Interest Rate Lock Commitments	Bank Loan Interest Rate Swaps
Balance - December 31, 2013	$    (48,000,668)	$       (65,052,928)	$         1,487,908	$           (58,310)
Total Losses (Gains):
Included in earnings	2,689,969	(488,057)	-	-
Included in other
comprehensive income (loss)	-	-	441,943	26,940
Balance - December 31, 2014	$    (45,310,699)	$       (65,540,985)	$         1,929,851	$           (31,370)

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the consolidated balance sheet at December 31, 2014.

	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a nonrecurring basis
Mortgage servicing rights	$        3,741,381	$                        -	$                -	$        3,741,381
Real estate held for investment	53,500	-	-	53,500
Total assets accounted for at fair value on    a nonrecurring basis	$        3,794,881	$                        -	$                -	$        3,794,881

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the consolidated balance sheet at December 31, 2013.

	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a    recurring basis
Non-redeemable preferred stock
Common stock	$           4,498,756	$        4,498,756	$                -	$                         -
Total securities available for sale	4,498,756	4,498,756	-	-
Restricted assets of cemeteries and mortuaries	667,149	667,149	-	-
Cemetery perpetual care trust investments	695,616	695,616	-	-
Derivatives - interest rate lock commitments	1,511,111	-	-	1,511,111
Total assets accounted for at fair value on a    recurring basis	$           7,372,632	$        5,861,521	$                -	$           1,511,111
Liabilities accounted for at fair value on a    recurring basis
Policyholder account balances	$       (48,000,668)	$                      -	$                -	$       (48,000,668)
Future policy benefits - annuities	(65,052,928)	-	-	(65,052,928)
Derivatives  - bank loan interest rate swaps	(58,310)	-	-	(58,310)
- call options	(124,174)	(124,174)	-	-
- interest rate lock commitments	(23,203)	-	-	(23,203)
Total liabilities accounted for at fair value   on a recurring basis	$     (113,259,283)	$         (124,174)	$                -	$     (113,135,109)

Following is a summary of changes in the consolidated balance sheet line items measured using level 3 inputs:

	Policyholder Account Balances	Future Policy Benefits - Annuities	Interest Rate Lock Commitments	Bank Loan Interest Rate Swaps
Balance - December 31, 2012	$            (49,746,337)	$            (65,171,687)	$        2,961,465	$         (93,572)
Total Losses (Gains):
Included in earnings	1,745,669	118,759	-	-
Included in other comprehensive income (loss)	-	-	(1,473,557)	35,262
Balance - December 31, 2013	$            (48,000,668)	$            (65,052,928)	$        1,487,908	$         (58,310)

The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the consolidated balance sheet at December 31, 2013.

	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a nonrecurring basis
Mortgage servicing rights	$    2,494,254	$                        -	$                 -	$      2,494,254
Mortgage loans on real estate	89,000	-	-	89,000
Real estate held for investment	660,784	-	-	660,784
Total assets accounted for at fair value on a nonrecurring basis	$    3,244,038	$                        -	$                 -	$      3,244,038

Fair Value of Financial Instruments Carried at Other Than Fair Value

ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 2014. The estimated fair value amounts for December 31, 2014 have been measured as of period-end, and have not been reevaluated or updated for purposes of these Consolidated Financial Statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at period-end.

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2014:

	Carrying Value	Level 1	Level 2	Level 3	Total Estimated Fair Value
Assets
Mortgage loans:
Residential	$       51,876,621	$                  -	$                  -	$       55,247,638	$       55,247,638
Residential construction	32,971,824	-	-	32,971,824	32,971,824
Commercial	35,201,627	-	-	36,829,266	36,829,266
Mortgage loans, net	$     120,050,072	$                  -	$                  -	$     125,048,728	$     125,048,728
Policy loans	7,011,012	-	-	7,011,012	7,011,012
Other loans	27,114,416	-	-	27,114,416	27,114,416
Short-term investments	27,059,495	-	-	27,059,495	27,059,495
Liabilities
Bank and other loans payable	$     (28,989,008)	$                  -	$                  -	$     (28,989,008)	$     (28,989,008)

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2013:

	Carrying Value	Level 1	Level 2	Level 3	Total Estimated Fair Value
Assets
Mortgage loans:
Residential	$       48,503,639	$             -	$             -	$       51,537,154	$       51,537,154
Residential construction	12,812,359	-	-	12,812,359	12,812,359
Commercial	41,465,880	-	-	42,441,268	42,441,268
Mortgage loans, net	$     102,781,878	$             -	$             -	$     106,790,781	$     106,790,781
Policy loans	7,520,376	-	-	7,520,376	7,520,376
Other loans	12,203,630	-	-	12,203,630	12,203,630
Short-term investments	12,135,719	-	-	12,135,719	12,135,719
Liabilities
Bank and other loans payable	$     (18,231,128)	$             -	$             -	$     (18,231,128)	$     (18,231,128)

The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of financial instruments are summarized as follows:

Mortgage Loans on Real Estate: The estimated fair value of the Company’s mortgage loans is determined using various methods. The Company’s mortgage loans are grouped into three categories: Residential, Residential Construction and Commercial. When estimating the expected future cash flows, it is assumed that all loans will be held to maturity, and any loans that are non-performing are evaluated individually for impairment.

Residential – The estimated fair value of mortgage loans originated prior to 2013 is determined by estimating expected future cash flows of interest payments and discounting them using current interest rates from single family mortgages. The estimated fair value of mortgage loans originated in 2013 and 2014 is determined from pricing of similar loans that were sold in 2013 and 2014.

Residential Construction – These loans are primarily short in maturity (4-6 months) accordingly, the estimated fair value is determined to be the net book value.

Commercial – The estimated fair value is determined by estimating expected future cash flows of interest payments and discounting them using current interest rates for commercial mortgages.

Policy and Other Loans: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Short-Term Investments: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

Bank and Other Loans Payable: The carrying amounts reported in the accompanying consolidated balance sheet for these financial instruments approximate their fair values.

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Note 12: Stock Compensation Plans

12 Months Ended

Dec. 31, 2014

Notes

Note 12: Stock Compensation Plans

12)     Stock Compensation Plans

The Company has four fixed option plans (the “2003 Plan”, the “2006 Director Plan”, the “2013 Plan” and the “2014 Director Plan”). Compensation expense for options issued of $391,220, $88,369 and $251,031 has been recognized under these plans for 2014, 2013 and 2012, respectively. As of December 31, 2014, the total unrecognized compensation expense related to the options issued in December 2014 and July 2014 were $280,287 and $86,924, respectively, which is expected to be recognized over the vesting period of one year.

The weighted-average fair value of each option granted in 2014 under the 2013 Plan, is estimated at $1.74 for the July 2, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 57.77%, risk-free interest rate of 1.79%, and an expected term of 5.32 years.

The weighted-average fair value of each option granted in 2014 under the 2013 Plan and the 2014 Director Plan, is estimated at $1.56 for the December 5, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 52.31%, risk-free interest rate of 1.69%, and an expected term of 5.31 years.

The weighted-average fair value of each option granted in 2014 under the 2014 Director Plan, is estimated at $1.56 for the December 7, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 52.27%, risk-free interest rate of 1.76%, and an expected term of 5.31 years.

The weighted-average fair value of each option granted in 2013 under the 2013 Plan and the 2006 Director Plan, is estimated at $1.96 for the December 6, 2013 and December 7, 2013 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 67.93%, risk-free interest rate of 1.68%, and an expected term of 5.31 years. The weighted-average fair value of each option granted in 2012 under the 2006 Director Plan, is estimated at $3.18 for the December 7, 2012 options as of the grant date using the Black Scholes Option Pricing Model with the following weighted-average assumptions: dividend yield of 5%, volatility of 73.89%, risk-free interest rate of 0.70%, and an expected term of 5.31 years.

The weighted-average fair value of each option granted in 2012 under the 2003 Plan and the 2006 Director Plan, is estimated at $0.64 and $0.66, respectively for the April 13, 2012 options as of the grant date using the Black Scholes Option Pricing Model with the following weighted-average assumptions: dividend yield of 5% and 5%, volatility of 70.26% and 72.58%, risk-free interest rate of 0.84% and 1.04%, and an expected term of 4.53 to 5.32 years, respectively.

The Company generally estimates the expected life of the options based upon the contractual term of the options adjusted for actual experience.Future volatility is estimated based upon the weighted historical volatility of the Company’s Class A common stock and three peer company stocks over a period equal to the estimated life of the options.Common stock issued upon exercise of stock options are generally new share issuances rather than from treasury shares.

Activity of the stock option plans is summarized as follows:
	Number of Class A Shares	Weighted Average Exercise Price	Number of Class C Shares	Weighted Average Exercise Price
Outstanding at December 31, 2011	1,996,543	$    2.40	361,028	$    2.38
Adjustment for the effect of stock dividends	43,928		24,515
Granted	347,000		-
Exercised	(1,041,276)		(52,500)
Cancelled	(123,134)		-
Reclass from A to C	(250,808)		250,808
Outstanding at December 31, 2012	972,253	$    2.07	583,851	$    2.18
Adjustment for the effect of stock dividends	17,962		24,222
Granted	81,960		50,000
Exercised	(485,366)		(190,602)
Cancelled	(76,676)		(63,814)
Reclass from A to C	(105,000)		105,000
Outstanding at December 31, 2013	405,133	$    2.41	508,657	$    2.00
Adjustment for the effect of stock dividends	24,446		32,934
Granted	173,500		150,000
Exercised	(59,713)		-
Cancelled	(30,571)		-
Outstanding at December 31, 2014	512,795	$    3.20	691,591	$    2.54
Exercisable at end of year	343,987	$    2.50	547,216	$    2.00
Available options for future grant	265,198		-
Weighted average contractual term of options
outstanding at December 31, 2014	7.70 years		3.42 years
Weighted average contractual term of options
exercisable at December 31, 2014	6.65 years		1.79 years
Aggregated intrinsic value of options outstanding
at December 31, 2014 (1)	$1,042,682		$1,856,886
Aggregated intrinsic value of options exercisable
at December 31, 2014 (1)	$940,079		$1,780,498
(1) The Company used a stock price of $5.22 as of December 31, 2014 to derive intrinsic value.

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the years ended December 31, 2014 and 2013 was $173,650 and $2,179,393, respectively.

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Note 14: Business Segment Information: Schedule of Segment Reporting Information, by Segment (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Segment Reporting Information, by Segment

	2014
	Life	Cemetery/		Reconciling
	Insurance	Mortuary	Mortgage	Items	Consolidated
Revenues:
From external sources:
Revenue from customers	$       57,037,623	$       11,426,308	$     124,668,054	$                         -	$     193,131,985
Net investment income	23,008,489	275,324	5,019,927	-	28,303,740
Realized gains (losses) on
investments and other assets	1,208,391	585,543	124,242	-	1,918,176
Other than temporary impairments	(164,240)	-	-	-	(164,240)
Other revenues	682,682	169,464	2,894,867	-	3,747,013
Intersegment revenues:
Net investment income	6,128,389	1,288,856	642,880	(8,060,125)	-
Total revenues	87,901,334	13,745,495	133,349,970	(8,060,125)	226,936,674
Expenses:
Death and other policy benefits	29,789,964	-	-	-	29,789,964
Increase in future policy benefits	18,060,151	-	-	-	18,060,151
Amortization of deferred policy     and preneed acquisition costs and
value of business acquired	6,561,589	331,389	-	-	6,892,978
Depreciation	644,510	436,390	1,096,265	-	2,177,165
General, administrative and
other costs:
Intersegment	24,000	166,079	208,513	(398,592)	-
Provision for loan losses	-	-	3,053,403	-	3,053,403
Costs related to funding mortgage
loans	-	-	6,877,069	-	6,877,069
Other	23,045,928	10,245,144	111,319,492	(2)	144,610,562
Interest expense:
Intersegment	725,354	1,481,317	5,454,860	(7,661,531)	-
Other	578,083	421,920	1,994,426	-	2,994,429
Total benefits and expenses	79,429,579	13,082,239	130,004,028	(8,060,125)	214,455,721
Earnings before income    taxes	$         8,471,755	$            663,256	$         3,345,942	$                         -	$       12,480,953
Income tax expense	(3,427,254)	-	(1,299,051)	-	(4,726,305)
Net earnings	$         5,044,501	$            663,256	$         2,046,891	$                         -	$         7,754,648
Identifiable assets	$     652,348,803	$     109,114,226	$       52,349,204	$     (142,742,671)	$     671,069,562
Goodwill	$         2,765,570	$                        -	$                        -	$                         -	$         2,765,570
Expenditures for long-lived assets	$         1,420,950	$            121,677	$            737,936	$                         -	$         2,280,563

	2013
	Life	Cemetery/		Reconciling
	Insurance	Mortuary	Mortgage	Items	Consolidated
Revenues:
From external sources:
Revenue from customers	$       51,322,567	$       12,000,375	$     127,950,021	$                         -	$     191,272,963
Net investment income	15,877,784	268,923	4,207,295	-	20,354,002
Realized gains (losses) on
investments and other assets	1,402,352	15,699	-	-	1,418,051
Other than temporary impairments	(336,226)	-	-	-	(336,226)
Other revenues	538,009	94,703	1,973,518	-	2,606,230
Intersegment revenues:
Net investment income	7,220,282	1,356,825	262,074	(8,839,181)	-
Total revenues	76,024,768	13,736,525	134,392,908	(8,839,181)	215,315,020
Expenses:
Death and other policy benefits	28,534,936	-	-	-	28,534,936
Increase in future policy benefits	19,594,890	-	-	-	19,594,890
Amortization of deferred policy and preneed acquisition costs and
value of business acquired	4,811,300	370,537	-	-	5,181,837
Depreciation	401,893	426,641	792,535	-	1,621,069
General, administrative and
other costs:
Intersegment	24,000	141,367	199,193	(364,560)	-
Provision for loan losses	-	-	1,751,472	-	1,751,472
Costs related to funding mortgage
loans	-	-	6,635,290	-	6,635,290
Other	18,753,753	10,467,717	110,096,627	1	139,318,098
Interest expense:
Intersegment	802,352	1,664,096	6,008,174	(8,474,622)	-
Other	233,343	443,133	2,177,225	-	2,853,701
Total benefits and expenses	73,156,467	13,513,491	127,660,516	(8,839,181)	205,491,293
Earnings before income    taxes	$         2,868,301	$            223,034	$         6,732,392	$                         -	$         9,823,727
Income tax (expense) benefit	399,304	-	(2,637,110)	-	(2,237,806)
Net earnings	$         3,267,605	$            223,034	$         4,095,282	$                         -	$         7,585,921
Identifiable assets	$     591,465,834	$     114,454,631	$       50,250,677	$     (137,413,688)	$     618,757,454
Goodwill	$            391,848	$            285,191	$                        -	$                         -	$            677,039
Expenditures for long-lived assets	$            659,259	$         1,100,195	$         1,810,879	$                         -	$         3,570,333

	2012
	Life	Cemetery/		Reconciling
	Insurance	Mortuary	Mortgage	Items	Consolidated
Revenues:
From external sources:
Revenue from customers	$       49,550,904	$       10,864,497	$     150,553,261	$                         -	$     210,968,662
Net investment income	16,616,541	333,625	4,965,411	-	21,915,577
Realized gains (losses) on
investments and other assets	1,415,556	8,954	-	-	1,424,510
Other than temporary impairments	(1,207,632)	-	-	-	(1,207,632)
Other revenues	482,325	136,189	540,538	-	1,159,052
Intersegment revenues:
Net investment income	7,570,979	1,435,891	294,980	(9,301,850)	-
Total revenues	74,428,673	12,779,156	156,354,190	(9,301,850)	234,260,169
Expenses:
Death and other policy benefits	24,246,088	-	-	-	24,246,088
Increase in future policy benefits	21,435,191	-	-	-	21,435,191
Amortization of deferred policy     and preneed acquisition costs and
value of business acquired	5,137,586	311,843	-	-	5,449,429
Depreciation	315,960	426,006	516,131	-	1,258,097
General, administrative and
other costs:
Intersegment	24,000	102,726	137,696	(264,422)	-
Provision for loan losses	-	-	4,239,418	-	4,239,418
Costs related to funding mortgage
loans	-	-	6,931,045	-	6,931,045
Other	17,824,800	9,582,499	118,198,014	2	145,605,315
Interest expense:
Intersegment	694,442	1,681,987	6,661,001	(9,037,430)	-
Other	159,659	455,449	3,129,185	-	3,744,293
Total benefits and expenses	69,837,726	12,560,510	139,812,490	(9,301,850)	212,908,876
Earnings before income    taxes	$         4,590,947	$            218,646	$       16,541,700	$                         -	$       21,351,293
Income tax (expense) benefit	1,755,258	-	(6,394,033)	-	(4,638,775)
Net earnings	$         6,346,205	$            218,646	$       10,147,667	$                         -	$       16,712,518
Identifiable assets	$     558,845,424	$     116,368,747	$       55,613,678	$     (133,611,226)	$     597,216,623
Goodwill	$            391,848	$            285,191	$                        -	$                         -	$            677,039
Expenditures for long-lived assets	$            400,605	$            689,154	$         2,131,861	$                         -	$         3,221,620

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Note 8: Income Taxes

12 Months Ended

Dec. 31, 2014

Notes

Note 8: Income Taxes

8)   Income Taxes

The Company’s income tax liability (benefit) at December 31 is summarized as follows:

	December 31	December 31
	2014	2013
Current	$   (333,350)	$ (1,578,071)
Deferred	20,755,117	17,529,919
Total	$ 20,421,767	$ 15,951,848

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

	December 31
	2014	2013
Assets
Future policy benefits	$ (6,856,001)	$ (5,381,385)
Loan loss reserve	(670,078)	(2,147,547)
Unearned premium	(1,687,059)	(1,759,087)
Available for sale securities	(125,797)	(566,316)
Net operating loss	(1,738,137)	(873,412)
Deferred compensation	(1,279,860)	(1,057,551)
Deposit obligations	(1,018,313)	(1,043,964)
Other	(1,398,152)	(1,287,773)
Less: Valuation allowance	5,276,431	5,593,063
Total deferred tax assets	(9,496,966)	(8,523,972)
Liabilities
Deferred policy acquisition costs	12,271,954	10,914,618
Basis difference in property and equipment	7,049,551	6,242,266
Value of business acquired	2,906,193	2,951,487
Deferred gains	5,472,003	3,545,692
Trusts	1,599,657	1,599,657
Tax on unrealized appreciation	952,725	800,171
Total deferred tax liabilities	30,252,083	26,053,891
Net deferred tax liability	$ 20,755,117	$ 17,529,919

The valuation allowance relates to differences between recorded deferred tax assets and liabilities and ultimate anticipated realization.

The valuation allowance decreased $316,632 during 2014 and $735,868 during 2013.

The Company paid $408,939, $4,009,598 and $1,900,000 in income taxes for 2014, 2013 and 2012, respectively.

The Company’s income tax expense (benefit) is summarized as follows for the years ended December 31:

	2014	2013	2012
Current	$    1,653,663	$    1,821,539	$    2,707,962
Deferred	3,072,642	416,267	1,930,813
Total	$    4,726,305	$    2,237,806	$    4,638,775

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

	2014	2013	2012
Computed expense at statutory rate	$    4,243,524	$    3,340,067	$    7,472,953
Tax audit settlements	-	20,371	-
Other, net	482,781	(1,122,632)	(2,834,178)
Tax expense (benefit)	$    4,726,305	$    2,237,806	$    4,638,775

At December 31, 2014, the Company had no significant unrecognized tax benefits. As of December 31, 2014, the Company does not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months. Federal and state income tax returns for 2011 through 2014 are subject to examination by taxing authorities. An examination of the Company’s 2012 federal income tax return is in process.

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Note 13: Statutory Financial Information and Dividend Limitations: Schedule of statutory accounting practices (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statutory Accounting Practices, Statutory Net Income Amount	$ 5,139,394	$ 1,286,742	$ 393,989
Statutory Accounting Practices, Statutory Capital and Surplus, Balance	37,528,350	32,765,236
SecurityNationalLifeInsuranceMember
Statutory Accounting Practices, Statutory Net Income Amount	5,137,208	1,283,311	391,533
Statutory Accounting Practices, Statutory Capital and Surplus, Balance	34,356,157	29,597,289
MemorialInsuranceCompanyOfAmericaMember
Statutory Accounting Practices, Statutory Net Income Amount	415	237	159
Statutory Accounting Practices, Statutory Capital and Surplus, Balance	1,082,587	1,083,237
SouthernSecurityLifeInsuranceCompanyIncMember
Statutory Accounting Practices, Statutory Net Income Amount	467	1,288	184
Statutory Accounting Practices, Statutory Capital and Surplus, Balance	1,590,424	1,586,832
TransWesternLifeInsuranceCompanyMember
Statutory Accounting Practices, Statutory Net Income Amount	1,304	1,906	2,113
Statutory Accounting Practices, Statutory Capital and Surplus, Balance	$ 499,182	$ 497,878

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Note 2: Investments: Schedule of Major categories of net investment income (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Major categories of net investment income

	2014	2013	2012
Fixed maturity securities	$  8,229,451	$  8,265,949	$  7,731,051
Equity securities	212,917	210,491	264,063
Mortgage loans on real estate	7,550,110	4,666,910	5,543,777
Real estate	8,433,895	6,658,185	4,927,128
Policy, student and other loans	741,220	799,703	830,683
Short-term investments, principally gains on    sale of mortgage loans	12,397,382	8,952,584	8,716,257
Gross investment income	37,564,975	29,553,822	28,012,959
Investment expenses	(9,261,235)	(9,199,820)	(6,097,382)
Net investment income	$ 28,303,740	$ 20,354,002	$ 21,915,577

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Note 16: Fair Value of Financial Instruments: Fair Value Assets Measured on a Nonrecurring Basis (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Mortgage servicing rights	$ 3,741,381	$ 2,494,254
Real estate held for investment	53,500	660,784
Assets, Fair Value Disclosure, Nonrecurring	3,794,881	3,244,038
Mortgage loans on real estate		89,000
Fair Value, Inputs, Level 3
Mortgage servicing rights	3,741,381	2,494,254
Real estate held for investment	53,500	660,784
Assets, Fair Value Disclosure, Nonrecurring	3,794,881	3,244,038
Mortgage loans on real estate		$ 89,000

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Note 2: Investments: The Following Is A Summary of The Allowance For Loan Losses As A Contra-asset Account For The Periods Presented (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses, Beginning Balance	$ 1,652,090	$ 4,239,861
Allowance for credit losses, Charge-offs	(38,444)	(2,808,423)
Allowance for credit losses, Provision	389,409
Financing Receivable, Allowance for Credit Losses, Ending Balance	2,003,055	1,652,090
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	153,446	152,745
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,849,609	1,499,345
Mortgage loans	122,053,127	104,433,968
Financing Receivable, Individually Evaluated for Impairment	1,970,681	1,518,327
Financing Receivable, Collectively Evaluated for Impairment	120,082,446	102,915,641
Allowance fo Credit losses, other charge-offs		220,652
Commercial Loan
Financing Receivable, Allowance for Credit Losses, Ending Balance	187,129	187,129
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	187,129	187,129
Mortgage loans	35,388,756	41,653,009
Financing Receivable, Collectively Evaluated for Impairment	35,388,756	41,653,009
Allowance fo Credit losses, other charge-offs		187,129
Residential Mortgage
Financing Receivable, Allowance for Credit Losses, Beginning Balance	1,364,847	4,193,674
Allowance for credit losses, Charge-offs	(38,444)	(2,670,794)
Allowance for credit losses, Provision	389,409
Financing Receivable, Allowance for Credit Losses, Ending Balance	1,715,812	1,364,847
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	153,446	152,745
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,562,366	1,212,102
Mortgage loans	53,592,433	49,868,486
Financing Receivable, Individually Evaluated for Impairment	1,556,182	1,518,327
Financing Receivable, Collectively Evaluated for Impairment	52,036,251	48,350,159
Allowance fo Credit losses, other charge-offs		(158,033)
Residential Construction
Financing Receivable, Allowance for Credit Losses, Beginning Balance		46,187
Allowance for credit losses, Charge-offs		(137,629)
Financing Receivable, Allowance for Credit Losses, Ending Balance	100,114	100,114
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	100,114	100,114
Mortgage loans	33,071,938	12,912,473
Financing Receivable, Individually Evaluated for Impairment	414,499
Financing Receivable, Collectively Evaluated for Impairment	32,657,439	12,912,473
Allowance fo Credit losses, other charge-offs		$ 191,556

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Note 6: Bank and Other Loans Payable

12 Months Ended

Dec. 31, 2014

Notes

Note 6: Bank and Other Loans Payable

6)      Bank and Other Loans Payable

Bank loans payable are summarized as follows:

	December 31
	2014	2013
6.34% note payable in monthly installments of $13,556 including principal and interest, collateralized by real property with a book value of approximately $498,000, due November 2017.	$      466,937	$      612,068
5.75% note payable in monthly installments of $28,271 including principal and interest, collateralized by real property with a book value of approximately $5,890,000 due March 2015.	3,398,099	3,509,944
Mark to market of interest rate swaps (discussed below) adjustment	31,370	58,310
3.85% note payable in monthly installments of $79,468 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due June 2015.	461,889	1,377,925
3.85% note payable in monthly installments of $86,059 including principal and interest, collateralized by shares of Security National Life Insurance Company stock, due December 2017.	2,994,999	3,891,926
4.40% note payable in monthly installments of $46,825 including principal and interest, collateralized by real property with a book value of approximately $12,450,000 due January 2026.	8,333,550	8,500,000
2.75% above the 90-day LIBOR rate (3.0052% at December 31, 2014) construction and term loan payable, collateralized by real property with a book value of approximately $22,855,000 due July 2017.	13,085,189	-
Other collateralized bank loans payable	247,384	338,304
Other notes payable	961	961
Total bank and other loans	29,020,378	18,289,438
Less current installments	5,248,043	5,849,926
Bank and other loans, excluding current installments	$ 23,772,335	$ 12,439,512

During 2001, the Company entered into an interest rate swap instrument that effectively fixed the interest rate on the note payable at 6.34% per annum. Management considers the interest rate swap instrument an effective cash flow hedge against the variable interest rate on the bank note since the interest rate swap mirrors the term of the note payable and expires on the maturity date of the bank loan it hedges. The interest rate swap is a derivative financial instrument carried at its fair value.

In the event the swap is terminated, any resulting gain or loss would be deferred and amortized to interest expense over the remaining life of the bank loan it hedged. In the event of early extinguishment of the hedged bank loan, any realized or unrealized gain or loss from the hedging swap would be recognized in income coincident with the extinguishment.  At December 31, 2014 and 2013, the fair value of the interest rate swap was an unrealized loss of $31,370 and $58,310, respectively, and was computed based on the underlying variable Libor rate plus 1.65%, or 2.65% per annum. The unrealized loss resulted in a derivative liability of $31,370 and $58,310 and has been reflected in accumulated other comprehensive income. The change in accumulated other comprehensive income from the interest rate swap in 2014 and 2013 was $26,940 and $32,262, respectively. The fair value of the interest rate swap was derived from a proprietary model of the bank from whom the interest rate swap was purchased and to whom the note is payable.

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75% (2.50% at December 31, 2014), secured by the capital stock of Security National Life and maturing June 30, 2015, renewable annually. At December 31, 2014, the Company was contingently liable under a standby letter of credit aggregating $699,671, to be used as collateral to cover any contingency related to additional risk assessments pertaining to the Company's captive insurance program. The Company does not expect any material losses to result from the issuance of the standby letter of credit because claims are not expected to exceed premiums paid. As of December 31, 2014, there were no amounts outstanding under the revolving line-of-credit.

The Company has a $15,000,000 revolving line-of-credit with a bank with interest payable at the variable overnight Libor rate plus 2% (2.1146% at December 31, 2014), secured by bond investments of the Company and maturing June 30, 2015. At December 31, 2014, the Company was contingently liable under two standby letters of credit aggregating $139,220, issued as security deposits to guarantee payment of final bills for electric and gas utility services for a commercial real estate property owned by the Company in Wichita, Kansas. As of December 31, 2014, there were no amounts outstanding under the revolving line-of-credit.

The Company has a $2,150,000 revolving line-of-credit with a bank with interest payable at the prime rate plus 1.25% (4.50% at December 31, 2014), secured by the capital stock of Security National Life and maturing June 30, 2015. At December 31, 2014, SecurityNational Mortgage was contingently liable under a standby letter of credit aggregating $1,250,000, to be used as collateral to cover any contingency relating to claims filed in states where SecurityNational Mortgage is licensed. The Company does not expect any material losses to result from the issuance of the standby letter of credit. As of December 31, 2014, there were no amounts outstanding under the revolving line-of-credit.

The Company has entered into a Construction and Term Loan Agreement (“Agreement”) between Zions First National Bank, a national banking association, and Dry Creek Property Development, Inc., the Company’s wholly owned subsidiary. Under the terms of this Agreement the Company promises to pay Zions First National Bank the principal sum of $27,500,000 plus interest. These funds will be used for the construction of a 282-unit multifamily development in Sandy City, Utah. As of December 31, 2014, the amount outstanding under this agreement was $13,085,189.

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

2015	$     5,248,043
2016	1,395,942
2017	14,586,183
2018	246,769
2019	246,336
Thereafter	7,297,105
Total	$    29,020,378

Interest paid approximated interest expense in 2014, 2013 and 2012, which was $2,994,429, $2,853,701 and $3,744,293, respectively.

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Note 7: Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds

12 Months Ended

Dec. 31, 2014

Notes

Note 7: Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds

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

The Company is required by state law to pay into perpetual care trusts a portion of the proceeds from the sale of cemetery property interment rights. The related cemetery perpetual care trusts are defined as variable interest entities pursuant to generally accepted accounting principles. Also, management has determined that the Company is the primary beneficiary of these trusts, as it absorbs both a majority of the losses and returns associated with the trusts. The Company has consolidated cemetery perpetual care trust investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets.

The components of the cemetery perpetual care obligation are as follows:

	December 31
	2014	2013
Trust investments, at market value	$     2,645,423	$     2,414,883
Note receivables from Cottonwood Mortuary
Singing Hills Cemetery and Memorial Estates - Pinehill
eliminated in consolidation	1,847,892	1,881,565
Total trust assets	4,493,315	4,296,448
Cemetery perpetual care obligation	(3,406,718)	(3,266,131)
Fair value of trust assets in excess of trust obligations	$     1,086,597	$     1,030,317

The Company has established and maintains certain restricted trust investments to provide for future merchandise and service obligations incurred in connection with its pre-need sales. Also included in cash and cash equivalents are escrows held for borrowers under servicing agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for the construction of a 282-unit multifamily development in Sandy City, Utah.

Assets in the restricted asset account are summarized as follows:

	December 31
	2014	2013
Cash and cash equivalents	$     7,274,685	$     4,746,417
Mutual funds	627,154	582,163
Fixed maturity securities	8,775	8,775
Equity securities	88,048	84,986
Participating in mortgage loans with Security National Life	1,349,135	1,248,639
Total	$     9,347,797	$     6,670,980

A surplus note receivable and interest, at December 31, 2014 and December 31, 2013 in the amount of $4,000,000 from Security National Life was eliminated in consolidation.

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Note 9: Reinsurance, Commitments and Contingencies: Mortgage Loan Loss Settlements (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Amounts accrued for loan losses	$ 1,718,000	$ 5,507,000

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Note 9: Reinsurance, Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Notes

Note 9: Reinsurance, Commitments and Contingencies

9)      Reinsurance, Commitments and Contingencies

Reinsurance

The Company follows the procedure of reinsuring risks in excess of a specified limit, which ranged from $25,000 to $100,000 during the years 2014 and 2013. 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 approximately $1,462,340,000 (unaudited) at December 31, 2014 and approximately $1,566,336,000 (unaudited) at December 31, 2013.

Reinsurance Agreement with American Republic Insurance Company

On February 11, 2015, the Company signed a coinsurance agreement to reinsure certain life insurance policies from American Republic Insurance Company (“American Republic”).  The policies were previously reinsured by North America Life under a coinsurance agreement between World Insurance Company (“World Insurance”) and North America Life entered into on July 22, 2009 which was commuted.  World Insurance was subsequently purchased by and merged into American Republic.  The current coinsurance agreement is between the Company and American Republic and became effective on January 1, 2015.  As part of the coinsurance agreement, American Republic transferred all contractual obligations and risks to the Company and the Company took control of $15,004,771 of assets in a trust account held by Texas Capital Bank as the trustee.

Reinsurance Agreement with LJA Insurance Company

On December 19, 2014, the Company entered into a Coinsurance Funds Withheld Reinsurance Agreement with LJA Insurance Company (“LJA Insurance”), a Republic of the Marshall Islands domiciled insurance company. This agreement was effective November 1, 2014. Under the terms of the funds withheld agreement, the Company ceded to LJA Insurance 100% of three blocks of deferred annuities in the amount of $4,337,000 and retained the assets and recorded a funds held under coinsurance liability for the same amount. LJA Insurance agreed to pay the Company an initial ceding commission of $60,000 and an asset management fee of $16,000 per quarter to administer the policies. The Company will also receive a 90% experience refund for any profits from the business. The Company has the right to recapture the business by giving LJA Insurance 90 days written notice, or it may be terminated by mutual consent of both parties.

Reinsurance Terminated with North America Life Insurance Company

On December 1, 2013, in accordance with the terms of the Coinsurance Agreement, Security National Life, through Trans-western Life Insurance Company (“Trans-Western Life”), recaptured additional policies of Trans-Western Life from North American Life Insurance Company (“North American Life”).  On December 10, 2013, pursuant to the Coinsurance Agreement, North America Life paid $2,500,000, less a ceding commission of $34,000 to Security National Life. On February 13, 2014, in accordance with the terms of the Coinsurance Agreement, Security National Life, through Trans-Western Life, recaptured the remaining policies of Trans-Western Life from North American Life. Pursuant to the Coinsurance Agreement, North America Life paid $4,684,000 less a ceding commission of $57,000 to Security National Life, and the Reinsurance Agreement between Trans Western Life and North America Life was terminated.

Mortgage Loan Loss Settlements

The mortgage industry has seen potential loan losses increase. Future loan losses are extremely difficult to estimate, especially in the current market.  However, management believes that the Company’s reserve methodology and its current practice of property preservation allow it to estimate its losses on loans sold. The amounts accrued for loan losses in years ended December 31, 2014 and 2013 were $3,053,000 and $1,846,000, respectively. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of December 31, 2014 and 2013, the balances were $1,718,000 and $5,507,000, respectively.

Final Settlement with Wells Fargo

On April 7, 2011, SecurityNational Mortgage Company ("SecurityNational Mortgage"), a wholly owned subsidiary of Security National Financial Corporation, entered into the Settlement Agreement and Release (the "Settlement Agreement") with Wells Fargo Funding, Inc. ("Wells Fargo Funding"). On December 4, 2014, SecurityNational Mortgage and Wells Fargo Bank (which was assigned Wells Fargo Funding's interest in the Settlement Agreement) entered into a Second Addendum (the "Addendum") to the Settlement Agreement, in which SecurityNational Mortgage agreed to make a final payment to Wells Fargo Bank by December 30, 2014, to satisfy and terminate its remaining payment obligations under the Settlement Agreement. On December 29, 2014, SecurityNational Mortgage made the final payment to Wells Fargo Bank pursuant to the terms of the Addendum from its loan loss reserve, thereby satisfying in full its payment obligations under the Settlement Agreement.

Settlement with Bank of America, N.A. and Countrywide Home Loans, Inc.

On December 23, 2014, SecurityNational Mortgage entered into a Settlement Agreement (the “Settlement Agreement”) with Countrywide Home Loans, Inc. (“Countrywide Home Loans”), Bank of America, N.A. (“Bank of America”), successor-in-interest by the April 27, 2009 de jure merger to Countrywide Bank, FSB.  Under the terms of the Settlement Agreement, SecurityNational Mortgage is required to pay a settlement amount to Bank of America and Countrywide Home Loans, jointly as settlement purchasers.  On December 23, 2014, SecurityNational Mortgage made the full and final settlement payment from its mortgage loan loss reserve to Bank of America and Countrywide Home Loans by wire transfer.

The payment of the settlement amount is in full and final settlement of the claims and disputes between Bank of America and Countrywide Home Loans, and SecurityNational Mortgage under certain loan purchase agreements.  Bank of America, Countrywide Home Loans and SecurityNational Mortgage are parties to the Loan Purchase Agreement, originally entered into between Countrywide Funding Corporation and SecurityNational Mortgage, dated September 27, 1994; and Countrywide Home Loans and SecurityNational Mortgage are parties to the Home Equity Loan Purchase Agreement, dated January 15, 1997, including any amendments or modifications to such agreements (collectively, the “Loan Purchase Agreements”).

Under the terms of the Settlement Agreement, SecurityNational Mortgage, Bank of America and Countrywide Home Loans agreed to full, complete and general mutual releases with respect to the alleged claims and disputes.  In particular, Bank of America and Countrywide Home Loans, as settlement purchasers, and SecurityNational Mortgage Company, as settlement seller, and their respective parent and subsidiary entities, predecessors, successors and affiliates agree to fully, finally and completely release and forever discharge each other and their respective parent and subsidiary entities, predecessors, successors, affiliates, assigns and their respective current and past directors, officers, employees, representatives and agents from any and all claims and disputes under the Loan Purchase Agreements.  The settlement agreement is subject to an exception for pervasive or system-wide fraud.

Mortgage Loan Loss Demands

Third Party Investors

There have been assertions in third party investor correspondence that SecurityNational Mortgage sold mortgage loans that allegedly contained borrower misrepresentations or experienced early payment defaults, or that were otherwise allegedly defective or not in compliance with agreements between SecurityNational Mortgage and the third party investors consisting principally of financial institutions.  As a result of these claims, third party investors have made demands that SecurityNational Mortgage repurchase certain alleged defective mortgage loans that were sold to such investors or indemnify them against any losses related to such loans.

The total amount of potential claims by third party investors is difficult to determine.  The Company has reserved and accrued $1,702,000 as of December 31, 2014 to settle all such investor related claims.  The Company believes that the reserve for mortgage loan loss, which includes provisions for probable losses and indemnification on mortgage loans sold to investors, is reasonable based on available information.  Moreover, the Company has successfully negotiated acceptable settlement terms with other third party investors that asserted claims for mortgage loan losses against SecurityNational Mortgage.

SecurityNational Mortgage disagrees with the repurchase demands and notices of potential claims from third party investors. Furthermore, SecurityNational Mortgage believes there is potential to resolve the alleged claims by the third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.

JP Morgan Chase Indemnification Demand

The Company and its wholly owned subsidiary, SecurityNational Mortgage, received a notice of claim for indemnification dated December 21, 2011, from JP Morgan Chase & Co. (“JP Morgan Chase”) on behalf of EMC Mortgage, LLC (“EMC Mortgage”), relating to 21 mortgage loans that EMC Mortgage allegedly purchased as a third party investor from SecurityNational Mortgage.  The notice also referenced a guaranty agreement, dated February 23, 2006, by the Company for the benefit of EMC Mortgage.  The indemnification notice additionally stated that EMC Mortgage had been named in a lawsuit by the Bear Stearns Mortgage Funding Trust 2007-AR2 (the “Trust”), which was filed on September 13, 2011 in the Delaware Court of Chancery. 

The lawsuit the Trust brought against EMC Mortgage contends that more than 800 residential mortgage loans that EMC Mortgage sold to the Trust (including the 21 loans allegedly originated by SecurityNational Mortgage) contained breaches of representations and warranties with respect to the mortgage loans, as well as defaults and foreclosures in many of such loans.  As a result of the alleged breaches of representations and warranties by EMC Mortgage, the complaint requests that EMC Mortgage be ordered to repurchase from the Trust any loans for which it breached its representations and warranties, in the amount of the mortgage loans’ outstanding principal balance and all accrued but unpaid interest.

The indemnification notice from JP Morgan Chase further alleged that the Company and SecurityNational Mortgage are required to indemnify EMC Mortgage for any of its losses arising from the lawsuit that the Trust brought against EMC based upon allegedly untrue statements of material fact related to information that was provided by SecurityNational Mortgage. To the extent the claims in the complaint relate to the 21 mortgage loans that SecurityNational Mortgage allegedly sold to EMC Mortgage, the Company believes it has significant defenses to such claims. The Company intends to vigorously defend itself and SecurityNational Mortgage in the event that JP Morgan Chase were to bring any legal action to require the Company or SecurityNational Mortgage to indemnify it for any loss, liability or expense in connection with the lawsuit that the Trust brought against EMC Mortgage.

Mortgage Loan Loss Litigation

Lehman Brothers - Aurora Loan Services Litigation

On April 15, 2005, SecurityNational Mortgage entered into a loan purchase agreement with Lehman Brothers Bank, FSB (“Lehman Bank”). Under the terms of the loan purchase agreement, Lehman Bank agreed to purchase mortgage loans from time to time from SecurityNational Mortgage. During 2007, Lehman Bank and its wholly owned subsidiary, Aurora Loan Services LLC (“Aurora Loan Services”), purchased a total of 1,490 mortgage loans in the aggregate amount of $352,774,000 from SecurityNational Mortgage. Lehman Bank asserted that certain of the mortgage loans that it purchased from SecurityNational Mortgage during 2007 contained alleged misrepresentations and early payment defaults. As a result of these alleged issues with the mortgage loans, Lehman Bank contended it had the right to require SecurityNational Mortgage to repurchase certain loans or be liable for losses related to such loans under the loan purchase agreement. SecurityNational Mortgage disagrees with these claims.

On December 17, 2007, SecurityNational Mortgage entered into an Indemnification Agreement with Lehman Bank and Aurora Loan Services. Under the terms of the Indemnification Agreement, SecurityNational Mortgage agreed to indemnify Lehman Bank and Aurora Loan Services for 75% of all losses that Lehman Bank and Aurora Loan Services may incur relative to breaches by mortgagors pertaining to 55 mortgage loans that were purchased from SecurityNational Mortgage. SecurityNational Mortgage was released from any obligation to pay the remaining 25% of such losses. The Indemnification Agreement also required SecurityNational Mortgage to indemnify Lehman Bank and Aurora Loan Services for 100% of any future losses incurred on mortgage loans with breaches that were not among the 55 mortgage loans.

Pursuant to the Indemnification Agreement, SecurityNational Mortgage paid $395,000 to Aurora Loan Services as a deposit into a reserve account, to secure any obligations of SecurityNational Mortgage under the Indemnification Agreement. This deposit was in addition to a $250,000 deposit that SecurityNational Mortgage previously made into the reserve account for a total of $645,000. Losses from mortgage loans with alleged breaches were payable from the reserve account. Lehman Bank and Aurora Loan Services were not to apply any funds from the reserve account to a particular mortgage loan, however, until an actual loss had occurred. Under the Indemnification Agreement SecurityNational Mortgage was to pay to Aurora Loan Services each calendar month the difference between the reserve account balance and $645,000, but in no event would SecurityNational Mortgage be required to make payments into the reserve account in excess of $125,000 for any calendar month.

Since the time the reserve account was established, SecurityNational Mortgage paid a total of $4,281,000 from the reserve account to indemnify Lehman Brothers Bank and Aurora Loan Services for alleged losses from 31 mortgage loans that were among 55 mortgage loans with alleged breaches that were covered by the Indemnification Agreement and ten other mortgage loans with alleged breaches. In the last monthly billing statement dated April 24, 2011 to SecurityNational Mortgage, Lehman Brothers Holdings Inc. (“Lehman Holdings”) claimed that SecurityNational Mortgage owed approximately $3,745,000 for mortgage loan losses under the Indemnification Agreement.

During 2010 and 2011, the Company recognized alleged losses of $1,289,000 and $-0-, respectively. Management cannot fully determine the total losses, however, because there could be potential claims for losses that have not yet been determined.  As of December 31, 2014, the Company had not accrued for any losses under the Indemnification Agreement. SecurityNational Mortgage was involved in discussions with Lehman Bank and Lehman Holdings concerning issues under the Indemnification Agreement. During the discussion period, monthly payments for December 2010 and January, February, March and April of 2011 totaling $625,000 were abated or deferred.

On May 11, 2011, SecurityNational Mortgage filed a complaint against Aurora Bank FSB, formerly known as Lehman Bank, and Aurora Loan Services in the United States District Court for the District of Utah because it had been unable to resolve certain issues under the Indemnification Agreement with Lehman Bank and Aurora Loan Services. The complaint alleges, among other claims, material breach of the Indemnification Agreement, including a claim that neither Lehman Bank nor Aurora Loan Services owned the mortgage loans that SecurityNational Mortgage sold so as to justify the amount of payments demanded from, and made by, SecurityNational Mortgage. As a result, SecurityNational Mortgage claims it is entitled to judgment of approximately $4,000,000 against Lehman Bank, as well as Aurora Loan Services to the extent of its involvement and complicity with Lehman Bank. The complaint also alleges a second claim for material breach of a section of the Indemnification Agreement that contains an alleged “sunset” provision and that the amount of the requested payments made was not justified under the “sunset” provision.

On June 8, 2011, Lehman Holdings, which had filed for bankruptcy in September 2008, filed a complaint against SecurityNational Mortgage in the United States District Court for the District of Utah. A subsidiary of Lehman Holdings owns Lehman Bank. The complaint alleges that SecurityNational Mortgage sold loans to Lehman Bank, which were then sold to Lehman Holdings. The complaint additionally alleges that Lehman Bank and Aurora Loan Services assigned their rights and remedies under the loan purchase agreement, as well as the Indemnification Agreement, to Lehman Holdings, which latter assignment purportedly took place on March 28, 2011. Lehman Holdings declared in a letter dated June 2, 2011 that the Indemnification Agreement was null and void except as to losses previously released and discharged, which is disputed by SecurityNational Mortgage.

Lehman Holdings’ alleged claims are for damages for breach of contract and breach of warranty pursuant to a loan purchase agreement and Seller’s Guide. Based on claiming that the Indemnification Agreement is null and void pursuant to its lawsuit, Lehman Holdings has initially claimed damages in excess of $5,000,000. Prior to declaring the Indemnification Agreement null and void, Lehman Holdings claimed in a then recent billing statement under the terms of the Indemnification Agreement, that SecurityNational Mortgage owed approximately $3,745,000 for mortgage loan losses under the Indemnification Agreement. SecurityNational Mortgage strongly disagrees with the position of Lehman Holdings and, as set forth in its May 11, 2011 complaint, seeks affirmative relief of approximately $4,000,000 from Lehman Bank and Aurora Loan Services. Lehman Bank is a subsidiary of a company owned by Lehman Holdings, and Aurora Loan Services is a subsidiary of Lehman Bank.

On September 4, 2012, SecurityNational Mortgage filed a motion for summary judgment in its action against Lehman Bank and Aurora Loan Services on certain material issues, as well as against Lehman Holdings regarding its claims against SecurityNational Mortgage. Lehman Bank and Aurora Loan Services filed a cross motion for summary judgment as to the issues in SecurityNational Mortgage’s motion and, in the Lehman Holdings case, Lehman Holdings has requested that the Court allow a cross motion on the issues which are the subject of SecurityNational Mortgage’s September 4, 2012 motion. The cases are before two different federal judges.

On February 27, 2013, SecurityNational Mortgage’s motion for summary judgment against Lehman Bank and Aurora Loan Services and the related cross motion were heard by Judge David Nuffer of the United States District Court for the District of Utah. After an extensive hearing, Judge Nuffer requested that the parties prepare findings of fact in accordance with the Court’s earlier promulgated findings as modified at the hearing, and that each party submit proposed conclusions of law related to the motions. The motion and cross motion were taken under advisement. SecurityNational Mortgage’s motion in the Lehman Holdings case was heard on April 22, 2014 before Judge Ted Stewart of the United States District Court for the District of Utah, and is under advisement.

On May 6, 2014, Judge Nuffer issued his summary of facts, conclusions of law and order granting SecurityNational Mortgage’s motion for summary judgment and denying the cross motion of Lehman Bank and Aurora Loan Services. On May 27, 2014, Lehman Bank and Aurora Loan Services filed a motion to reconsider Judge Nuffer’s summary judgment ruling. On June 2, 2014, a hearing was held before Judge Nuffer to determine the amount owing to SecurityNational Mortgage pursuant to the summary judgment ruling. On December 23, 2014, Judge Nuffer issued an order denying Lehman Bank’s and Aurora Loan Services’ motion for reconsideration of his summary judgment ruling in favor of SecurityNational Mortgage.

On December 24, 2014, Judge Nuffer issued an amended order granting SecurityNational Mortgage’s motion for summary judgment. The amended order provided that the amount of monies previously paid by SecurityNational Mortgage that were wrongfully applied by Lehman Bank to losses on loans actually owed by Lehman Holdings, as established at the June 2, 2014 hearing, was $3,892,974. The amended order also provided for prejudgment interest at 9% per annum to SecurityNational Mortgage. The total amount of prejudgment interest awarded is $1,674,240 through May 31, 2014, with a per diem of $960 for each day after May 31, 2014 until judgment. The court also commented that further replenishment of the indemnification fund under the Indemnification Agreement appears to be barred by language in the assignment effecting a waiver, but that this issue had not been briefed before the June 2, 2014 hearing. In addition, the court stated that the offset that Lehman Bank and Aurora Loan Services pled as an affirmative defense had not yet been adjudicated by the court. Finally, the court ordered the parties to meet and confer by January 16, 2015, and to file a motion to schedule the disposition of the remaining issues in the case. The motion is to clarify whether any issues other than the offset remain to be resolved.

On May 7, 2014, Judge Stewart issued an order for the parties to submit supplemental briefs as to the effect of Judge Nuffer’s summary judgment order on SecurityNational Mortgage’s motion for summary judgment in the Lehman Holdings case. The supplemental briefing was continued until January 16, 2015. Judge Stewart also granted leave for SecurityNational Mortgage to file an additional motion for summary judgment in the Lehman Holdings case on the basis that the claims of Lehman Holdings are barred by the statute of limitations.  The motion was also to be filed by January 16, 2015.  The August 11, 2014 trial setting before Judge Stewart in the Lehman Holdings case was stricken without providing a new trial date. 

On January 16, 2015, SecurityNational Mortgage and Lehman Holdings filed briefs with Judge Stewart concerning the effect of the rulings in Judge Nuffer’s case on the case before Judge Stewart, and on the same date SecurityNational Mortgage filed a motion for summary judgment in the Lehman Holdings case based on the statute of limitations.  A hearing concerning SecurityNational Mortgage’s summary judgment motion based on the statute of limitations is scheduled before Judge Stuart on April 14, 2015. On February 28, 2015, Lehman Bank and Aurora Loan Services filed a partial summary judgment motion before Judge Nuffer asserting that the Indemnification Agreement security fund should be replenished, and for a right to offset alleged losses of approximately $8.6 million, based on more than 100 loans retained by Lehman Bank, against the amount owing to SecurityNational per Judge Nuffer’s summary judgment order. Lehman Bank and Aurora Loan Services asserts that another 124 loans are not analyzed yet for potential breaches.

SecurityNational Mortgage had until March 30, 2015 to respond to the motion of Lehman Bank and Aurora Loan Services, and to file a motion if so determined by SecurityNational Mortgage. SecurityNational Mortgage asserts that Lehman Bank and Aurora Loan Services have no rights to a replenishment of the Indemnification Agreement reserve account, or for any offset against the liability of Lehman Bank and Aurora Loan Services to SecurityNational Mortgage, including the assertion that Lehman Bank and Aurora Loan Services executed an assignment to Lehman Holdings containing a waiver and release of rights and remedies which affect the foregoing asserted replenishment and offset matters.  On March 30, 2015, SecurityNational Mortgage filed a response in opposition to the partial summary judgment motion of Lehman Bank and Aurora Loan Services and also filed its own partial summary judgment motion on the same issue against Lehman Bank and Aurora Loan Services.

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

Non-Cancelable Leases

The Company leases office space and equipment under various non-cancelable agreements, with remaining terms up to five years. Minimum lease payments under these non-cancelable operating leases as of December 31, 2014, are approximately as follows:

Years Ending
December 31
2015	$       4,299,185
2016	3,610,599
2017	2,835,947
2018	1,188,581
2019	563,956
Total	$     12,498,268

Total rent expense related to non-cancelable operating leases for the years ended December 31, 2014, 2013, and 2012 was approximately $5,589,000, $4,307,000 and $3,425,000, respectively.

Other Contingencies and Commitments

The Company has entered into commitments to fund new residential construction loans. As of December 31, 2014, the Company’s commitments were $49,307,000, for these loans of which $33,072,000 had been funded. The Company will advance funds once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 80% of appraised value. The Company receives fees from the borrowers and the interest rate is generally 2% to 6.75% over the bank prime rate (3.25% as of December 31, 2014). Maturities range between six and twelve months.

The Company belongs to a captive insurance group for certain casualty insurance, worker compensation and liability programs. Insurance reserves are maintained relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive insurance management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. If actual claims or adverse development of loss reserves occurs and exceed these estimates, additional reserves may be required. The estimation process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date. At December 31, 2014, $929,417 of reserves was established related to such insurance programs versus $524,034 at December 31, 2013.

The Company is a defendant in various other legal actions arising from the normal conduct of business. Management believes that none of the actions will have a material effect on the Company’s financial position or results of operations. Based on management’s assessment and legal counsel’s representations concerning the likelihood of unfavorable outcomes, no amounts have been accrued for the above claims in the consolidated financial statements.

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

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Note 2: Investments: The Company's Performing and Non-performing Mortgage Loans Were As Follows (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

The Company's Performing and Non-performing Mortgage Loans Were As Follows:

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

Mortgage Loan Credit Exposure
Credit Risk Profile Based on Payment Activity
As of December 31, 2014, and 2013
	Commercial		Residential		Residential Construction		Total
	2014	2013	2014	2013	2014	2013	2014	2013
Performing	$ 35,388,756	$  36,679,264	$      46,571,350	$ 42,482,658	$   32,592,544	$   12,847,578	$        114,552,650	$   92,009,500
Non-performing	-	4,973,745	7,021,083	7,385,828	479,394	64,895	7,500,477	12,424,468
Total	$ 35,388,756	$   41,653,009	$     53,592,433	$ 49,868,486	$    33,071,938	$    12,912,473	$        122,053,127	$  104,433,968

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Note 4: Value of Business Acquired (Details) (USD $)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Value of business acquired - net amortization charged to income	$ 790,000	$ 852,000	$ 958,000	$ 1,031,000	$ 1,113,000	$ 1,302,646	$ 1,340,272	$ 1,215,158

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Note 16: Fair Value of Financial Instruments: Schedule of fair value assets and liabilities measured on a recurring basis (Tables)

12 Months Ended

Dec. 31, 2014

AsOfDecember312014Member

Schedule of fair value assets and liabilities measured on a recurring basis

	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a    recurring basis
Common stock	$           6,752,750	$          6,752,750	$                 -	$                         -
Total securities available for sale	6,752,750	6,752,750	-	-
Restricted assets of cemeteries and mortuaries	715,202	715,202	-	-
Cemetery perpetual care trust investments	695,235	695,235	-	-
Derivatives - interest rate lock commitments	2,111,529	-	-	2,111,529
Total assets accounted for at fair value on a    recurring basis	$         10,274,716	$          8,163,187	$                 -	$          2,111,529
Liabilities accounted for at fair value on a    recurring basis
Policyholder account balances	$       (45,310,699)	$                        -	$                 -	$      (45,310,699)
Future policy benefits - annuities	(65,540,985)	-	-	(65,540,985)
Derivatives  - bank loan interest rate swaps	(31,370)	-	-	(31,370)
- call options	(116,036)	(116,036)	-	-
- put options	(11,867)	(11,867)
- interest rate lock commitments	(181,678)	-	-	(181,678)
Total liabilities accounted for at fair value    on a recurring basis	$     (111,192,635)	$           (127,903)	$                 -	$    (111,064,732)

As Of December 31 2013

Schedule of fair value assets and liabilities measured on a recurring basis

	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a    recurring basis
Non-redeemable preferred stock
Common stock	$           4,498,756	$        4,498,756	$                -	$                         -
Total securities available for sale	4,498,756	4,498,756	-	-
Restricted assets of cemeteries and mortuaries	667,149	667,149	-	-
Cemetery perpetual care trust investments	695,616	695,616	-	-
Derivatives - interest rate lock commitments	1,511,111	-	-	1,511,111
Total assets accounted for at fair value on a    recurring basis	$           7,372,632	$        5,861,521	$                -	$           1,511,111
Liabilities accounted for at fair value on a    recurring basis
Policyholder account balances	$       (48,000,668)	$                      -	$                -	$       (48,000,668)
Future policy benefits - annuities	(65,052,928)	-	-	(65,052,928)
Derivatives  - bank loan interest rate swaps	(58,310)	-	-	(58,310)
- call options	(124,174)	(124,174)	-	-
- interest rate lock commitments	(23,203)	-	-	(23,203)
Total liabilities accounted for at fair value   on a recurring basis	$     (113,259,283)	$         (124,174)	$                -	$     (113,135,109)

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Note 2: Investments: Schedule of Principal amounts due on mortgage loans on real estate and construction loans held for investment by category (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Principal amounts due on mortgage loans on real estate and construction loans held for investment by category

		Principal	Principal	Principal
		Amounts	Amounts	Amounts
		Due in	Due in	Due
	Total	2015	2016-2019	Thereafter
Residential	$      53,592,433	$    3,748,893	$ 17,225,255	$ 32,618,285
Residential Construction	33,071,938	32,648,470	423,468	-
Commercial	35,388,756	18,652,738	13,279,688	3,456,330
Total	$    122,053,127	$  55,050,101	$ 30,928,411	$ 36,074,615

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Note 2: Investments: Equity Securities - Additional (Details) (Equity Securities, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Equity Securities
Average Market Value of Security over initial investment	77.60%	77.10%
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	$ 44,240	$ 100,304	$ 247,317

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Note 2: Investments: Schedule of Impaired Mortgage Loans (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Impaired Mortgage Loans

Impaired Loans
For the Years Ended December 31, 2014, and 2013
	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
2014
With no related allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	-	-	-	-	-
Residential construction	414,499	414,499	-	414,499	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,556,182	1,556,182	153,446	1,556,182	-
Residential construction	-	-	-	-	-
Total:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,556,182	1,556,182	153,446	1,556,182	-
Residential construction	414,499	414,499	-	414,499	-
2013
With no related allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	-	-	-	-	-
Residential construction	-	-	-	-	-
With an allowance recorded:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,518,327	1,518,327	152,745	1,518,327	-
Residential construction	-	-	-	-	-
Total:
Commercial	$                -	$                  -	$                -	$                      -	$                -
Residential	1,518,327	1,518,327	152,745	1,518,327	-
Residential construction	-	-	-	-	-

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Note 19: Acquisitions: The Estimated Fair Values of The Assets Acquired and The Liabilities Assumed At The Date of Acquisition (Details) (USD $)	May 02, 2012
Details
Business Acquisition, Purchase Price Allocation, Property, Plant and Equipment	$ 760,120
Business Acquisition, Purchase Price Allocation, Goodwill Amount	2,373,722
Business Acquisition, Purchase Price Allocation, Other Assets	1,379,158
Business Acquisition, Purchase Price Allocation, Assets Acquired	16,379,193
Business Acquisition, Purchase Price Allocation, Other Liabilities	(1,368,000)
Business Acquisition, Purchase Price Allocation, Liabilities Assumed	(1,368,000)
Business Acquisition, Cost of Acquired Entity, Purchase Price	$ 15,011,193

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Note 18: Derivative Commitments: Schedule of Gains and Losses on Derivatives (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Gains and Losses on Derivatives

	Net Amount Gain (Loss) Recognized in OCI
	Years ended December 31
Derivative - Cash Flow Hedging Relationships:	2014	2013
Interest Rate Lock Commitments	$                    441,943	$                (1,473,557)
Interest Rate Swaps	26,940	35,262
Sub Total	468,883	(1,438,295)
Tax Effect	182,865	(417,541)
Total	$                    286,018	$                (1,020,754)

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Note 8: Income Taxes: Summary of Income Tax Liability (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Current Income Tax Liability	$ (333,350)	$ (1,578,071)
Income Tax Liability	20,755,117	17,529,919
Income taxes	$ 20,421,767	$ 15,951,848

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Note 1: Significant Accounting Policies: Cemetery Land and Improvements (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Cemetery Land and Improvements

Cemetery Land and Improvements

The development of a cemetery involves not only the initial acquisition of raw land but the installation of roads, water lines, landscaping and other costs to establish a marketable cemetery lot. The costs of developing the cemetery are shown as an asset on the balance sheet. The amount on the balance sheet is reduced by the total cost assigned to the development of a particular lot when the criterion for recognizing a sale of that lot is met.

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Note 10: Retirement Plans: Noncontributory Employee Stock Ownership Plan (ESOP) (Details) (Employee Stock Ownership Plan (ESOP))	12 Months Ended
	Dec. 31, 2014
Employee Stock Ownership Plan (ESOP), Plan Description	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 1,000 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.
Class A Common Stock
Employee Stock Ownership Plan (ESOP), Shares in ESOP	579,918
Class C Common Stock
Employee Stock Ownership Plan (ESOP), Shares in ESOP	252,974

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Note 1: Significant Accounting Policies: Stock Based Compensation (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Stock Based Compensation

Stock Based Compensation

The cost of employee services received in exchange for an award of equity instruments is recognized in the financial statements and is measured based on the fair value on the grant date of the award. The fair value of stock options is calculated using the Black Scholes method. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award.

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Note 14: Business Segment Information

12 Months Ended

Dec. 31, 2014

Notes

Note 14: Business Segment Information

14)    Business Segment Information

Description of Products and Services by Segment

The Company has three reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment consists of life insurance premiums and operating expenses from the sale of insurance products sold by the Company’s independent agency force and net investment income derived from investing policyholder and segment surplus funds. The Company’s cemetery and mortuary segment consists of revenues and operating expenses from the sale of at-need cemetery and mortuary merchandise and services at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10% or more of the purchase price and the net investment income from investing segment surplus funds. The Company’s mortgage loan segment consists of loan originations fee income and expenses from the originations of residential mortgage loans and interest earned and interest expenses from warehousing pre-sold loans before the funds are received from financial institutional investors.

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, and are eliminated upon consolidation.

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.

	2014
	Life	Cemetery/		Reconciling
	Insurance	Mortuary	Mortgage	Items	Consolidated
Revenues:
From external sources:
Revenue from customers	$       57,037,623	$       11,426,308	$     124,668,054	$                         -	$     193,131,985
Net investment income	23,008,489	275,324	5,019,927	-	28,303,740
Realized gains (losses) on
investments and other assets	1,208,391	585,543	124,242	-	1,918,176
Other than temporary impairments	(164,240)	-	-	-	(164,240)
Other revenues	682,682	169,464	2,894,867	-	3,747,013
Intersegment revenues:
Net investment income	6,128,389	1,288,856	642,880	(8,060,125)	-
Total revenues	87,901,334	13,745,495	133,349,970	(8,060,125)	226,936,674
Expenses:
Death and other policy benefits	29,789,964	-	-	-	29,789,964
Increase in future policy benefits	18,060,151	-	-	-	18,060,151
Amortization of deferred policy     and preneed acquisition costs and
value of business acquired	6,561,589	331,389	-	-	6,892,978
Depreciation	644,510	436,390	1,096,265	-	2,177,165
General, administrative and
other costs:
Intersegment	24,000	166,079	208,513	(398,592)	-
Provision for loan losses	-	-	3,053,403	-	3,053,403
Costs related to funding mortgage
loans	-	-	6,877,069	-	6,877,069
Other	23,045,928	10,245,144	111,319,492	(2)	144,610,562
Interest expense:
Intersegment	725,354	1,481,317	5,454,860	(7,661,531)	-
Other	578,083	421,920	1,994,426	-	2,994,429
Total benefits and expenses	79,429,579	13,082,239	130,004,028	(8,060,125)	214,455,721
Earnings before income    taxes	$         8,471,755	$            663,256	$         3,345,942	$                         -	$       12,480,953
Income tax expense	(3,427,254)	-	(1,299,051)	-	(4,726,305)
Net earnings	$         5,044,501	$            663,256	$         2,046,891	$                         -	$         7,754,648
Identifiable assets	$     652,348,803	$     109,114,226	$       52,349,204	$     (142,742,671)	$     671,069,562
Goodwill	$         2,765,570	$                        -	$                        -	$                         -	$         2,765,570
Expenditures for long-lived assets	$         1,420,950	$            121,677	$            737,936	$                         -	$         2,280,563

	2013
	Life	Cemetery/		Reconciling
	Insurance	Mortuary	Mortgage	Items	Consolidated
Revenues:
From external sources:
Revenue from customers	$       51,322,567	$       12,000,375	$     127,950,021	$                         -	$     191,272,963
Net investment income	15,877,784	268,923	4,207,295	-	20,354,002
Realized gains (losses) on
investments and other assets	1,402,352	15,699	-	-	1,418,051
Other than temporary impairments	(336,226)	-	-	-	(336,226)
Other revenues	538,009	94,703	1,973,518	-	2,606,230
Intersegment revenues:
Net investment income	7,220,282	1,356,825	262,074	(8,839,181)	-
Total revenues	76,024,768	13,736,525	134,392,908	(8,839,181)	215,315,020
Expenses:
Death and other policy benefits	28,534,936	-	-	-	28,534,936
Increase in future policy benefits	19,594,890	-	-	-	19,594,890
Amortization of deferred policy and preneed acquisition costs and
value of business acquired	4,811,300	370,537	-	-	5,181,837
Depreciation	401,893	426,641	792,535	-	1,621,069
General, administrative and
other costs:
Intersegment	24,000	141,367	199,193	(364,560)	-
Provision for loan losses	-	-	1,751,472	-	1,751,472
Costs related to funding mortgage
loans	-	-	6,635,290	-	6,635,290
Other	18,753,753	10,467,717	110,096,627	1	139,318,098
Interest expense:
Intersegment	802,352	1,664,096	6,008,174	(8,474,622)	-
Other	233,343	443,133	2,177,225	-	2,853,701
Total benefits and expenses	73,156,467	13,513,491	127,660,516	(8,839,181)	205,491,293
Earnings before income    taxes	$         2,868,301	$            223,034	$         6,732,392	$                         -	$         9,823,727
Income tax (expense) benefit	399,304	-	(2,637,110)	-	(2,237,806)
Net earnings	$         3,267,605	$            223,034	$         4,095,282	$                         -	$         7,585,921
Identifiable assets	$     591,465,834	$     114,454,631	$       50,250,677	$     (137,413,688)	$     618,757,454
Goodwill	$            391,848	$            285,191	$                        -	$                         -	$            677,039
Expenditures for long-lived assets	$            659,259	$         1,100,195	$         1,810,879	$                         -	$         3,570,333

	2012
	Life	Cemetery/		Reconciling
	Insurance	Mortuary	Mortgage	Items	Consolidated
Revenues:
From external sources:
Revenue from customers	$       49,550,904	$       10,864,497	$     150,553,261	$                         -	$     210,968,662
Net investment income	16,616,541	333,625	4,965,411	-	21,915,577
Realized gains (losses) on
investments and other assets	1,415,556	8,954	-	-	1,424,510
Other than temporary impairments	(1,207,632)	-	-	-	(1,207,632)
Other revenues	482,325	136,189	540,538	-	1,159,052
Intersegment revenues:
Net investment income	7,570,979	1,435,891	294,980	(9,301,850)	-
Total revenues	74,428,673	12,779,156	156,354,190	(9,301,850)	234,260,169
Expenses:
Death and other policy benefits	24,246,088	-	-	-	24,246,088
Increase in future policy benefits	21,435,191	-	-	-	21,435,191
Amortization of deferred policy     and preneed acquisition costs and
value of business acquired	5,137,586	311,843	-	-	5,449,429
Depreciation	315,960	426,006	516,131	-	1,258,097
General, administrative and
other costs:
Intersegment	24,000	102,726	137,696	(264,422)	-
Provision for loan losses	-	-	4,239,418	-	4,239,418
Costs related to funding mortgage
loans	-	-	6,931,045	-	6,931,045
Other	17,824,800	9,582,499	118,198,014	2	145,605,315
Interest expense:
Intersegment	694,442	1,681,987	6,661,001	(9,037,430)	-
Other	159,659	455,449	3,129,185	-	3,744,293
Total benefits and expenses	69,837,726	12,560,510	139,812,490	(9,301,850)	212,908,876
Earnings before income    taxes	$         4,590,947	$            218,646	$       16,541,700	$                         -	$       21,351,293
Income tax (expense) benefit	1,755,258	-	(6,394,033)	-	(4,638,775)
Net earnings	$         6,346,205	$            218,646	$       10,147,667	$                         -	$       16,712,518
Identifiable assets	$     558,845,424	$     116,368,747	$       55,613,678	$     (133,611,226)	$     597,216,623
Goodwill	$            391,848	$            285,191	$                        -	$                         -	$            677,039
Expenditures for long-lived assets	$            400,605	$            689,154	$         2,131,861	$                         -	$         3,221,620

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Note 2: Investments: Schedule of Mortgate loans on a nonaccrual status (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 7,500,477	$ 12,424,468
Commercial Loan
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest		4,973,745
Residential Mortgage
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	7,021,083	7,385,828
Residential Construction
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 479,394	$ 64,895

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Note 19: Acquisitions

12 Months Ended

Dec. 31, 2014

Notes

Note 19: Acquisitions

19)       Acquisitions

Acquisition of American Funeral Financial

On June 4, 2014, the Company, through its wholly owned subsidiary, SNFC Subsidiary, LLC (“SNFC Subsidiary”), completed a purchase transaction with American Funeral Financial, LLC, a South Carolina limited liability company (“American Funeral Financial”) and Hypershop, LLC, a North Carolina  limited liability  company (“Hypershop”), the sole owner of all the limited liability company interests of American Funeral Financial, to purchase all of the outstanding limited liability company interests, or membership units, of American Funeral Financial.  American Funeral Financial is engaged in the operation of a factoring business with the principal purpose of providing funding for funeral homes and mortuaries.  

Under the terms of the transaction, as set forth in the Unit Purchase Agreement dated June 4, 2014 (the “Purchase Agreement”), among the Company, SNFC Subsidiary, American Funeral Financial and Hypershop, the Company paid Hypershop purchase consideration equal to (i) $3,000,000 in cash, of which $175,000 was deposited into an interest bearing escrow account to be held for a period of twelve months from the closing date to pay off the indebtedness and other liabilities of American Funeral Financial, plus (ii) $12,011,183, representing the amount of the good standing receivables of American Funeral Financial, plus (iii) earn-out payments equal to .0042 of the aggregate amount of life insurance assignments funded by American Funeral Financial during the three year period following the closing date of the transaction. This earn-out liability was estimated to be $1,368,000. The purchase consideration was to be used to pay off the indebtedness that American Funeral Financial owed to Security Finance Corporation of Spartanburg, as well as to pay off all other indebtedness and liabilities of American Funeral Financial.

The estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition were as follows:

Other loans, net	$         11,866,193
Property and equipment	760,120
Goodwill	2,373,722
Other	1,379,158
Total assets acquired	16,379,193
Other liabilities and accrued expenses	(1,368,000)
Total liabilities assumed	(1,368,000)
Fair value of net assets acquired	$         15,011,193

The estimated fair value of the acquisition is based on market assumptions of the future value of the business acquired, the collectability of receivables, the current value of equipment purchased and the useful life of proprietary software.  Based on the unobservable nature of certain of these assumptions, the valuation is considered Level 3 under the fair value hierarchy.

The following unaudited pro forma information has been prepared to present the results of operations of the Company assuming the acquisition of American Funeral Financial had occurred at the beginning of the years ended December 31, 2014, 2013 and 2012, respectively. This pro forma information is supplemental and does not necessarily present the operations of the Company that would have occurred had the acquisition occurred on those dates and may not reflect the operations that will occur in the future:

	For the Year Ended December 31 (unaudited)
	2014	2013	2012
Total revenues	$ 229,268,653	$ 220,011,370	$ 236,854,910
Net earnings	$    7,996,405	$    7,963,589	$   16,576,647
Net earnings per Class A equivalent common share	$            0.64	$            0.64	$            1.45
Net earnings per Class A equivalent common share
assuming dilution	$            0.62	$            0.61	$            1.38

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Note 20: Mortgage Servicing Rights: Schedule of mortgage servicing rights (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of mortgage servicing rights

	December 31 2013
	2014	2013
Amortized cost:
Balance before valuation allowance at beginning of year	$   4,844,101	$   2,797,470
MSRs received as proceeds from loan sales	3,741,381	2,494,254
Amortization	(750,735)	(447,623)
Application of valuation allowance to write down MSRs    with other than temporary impairment	-	-
Balance before valuation allowance at year end	$   7,834,747	$   4,844,101
Valuation allowance for impairment of MSRs:
Balance at beginning of year	$                -	$                -
Additions	-	-
Application of valuation allowance to write down MSRs    with other than temporary impairment	-	-
Balance at year end	$                -	$                -
Mortgage servicing rights, net	$   7,834,747	$   4,844,101
Estimated fair value of MSRs at year end	$   8,485,570	$   5,491,270

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Note 1: Significant Accounting Policies: Income Taxes (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Income Taxes

Income Taxes

Income taxes include taxes currently payable plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences in the financial reporting basis and tax basis of assets and liabilities and operating loss carry-forwards. Deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.

Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax penalties are included as a component of other expenses.

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Note 2: Investments: Gain (Loss) on Investments (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Gains and losses and other than temporary impairments from investments and other assets	$ 1,753,936	$ 1,081,825	$ 216,878
Categories of Investments, Marketable Securities, Held-to-maturity Securities
Gross Realized Gains	390,203	97,238	470,874
Gross Realized Losses	(71,800)	(41,164)	(3,875)
Other than Temporary Impairments	(120,000)	(120,000)	(165,000)
Categories of Investments, Marketable Securities, Available-for-sale Securities
Gross Realized Gains	349,207	540,990	392,033
Gross Realized Losses	(55,222)	(2,678)	(5,705)
Other than Temporary Impairments	(44,240)	(100,304)	(247,317)
Other Assets
Gross Realized Gains	1,445,596	824,203	794,346
Gross Realized Losses	(139,808)	(538)	(223,163)
Other than Temporary Impairments		$ (115,922)	$ (795,315)

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Note 1: Significant Accounting Policies: Loan Loss Reserve (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Loan Loss Reserve

Loan Loss Reserve

The mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on mortgage loans sold to third party investors.

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

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

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

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

Additional information related to the Loan Loss Reserve is included in Note 2.

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Note 2: Investments: Schedule of Major categories of net investment income (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Gross Investment Income	$ 37,564,975	$ 29,553,822	$ 28,012,959
Investment Income, Investment Expense	(9,261,235)	(9,199,820)	(6,097,382)
Net Investment Income	28,303,740	20,354,002	21,915,577
Fixed Maturities
Gross Investment Income	8,229,451	8,265,949	7,731,051
Equity Securities
Gross Investment Income	212,917	210,491	264,063
Collateralized Mortgage Backed Securities
Gross Investment Income	7,550,110	4,666,910	5,543,777
Real Estate
Gross Investment Income	8,433,895	6,658,185	4,927,128
Policy, Student and other loans
Gross Investment Income	741,220	799,703	830,683
Short-term investments, principally gains on sale of mortgage loans
Gross Investment Income	$ 12,397,382	$ 8,952,584	$ 8,716,257

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Comprehensive Income Statement (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Comprehensive Income Statement
Net earnings	$ 7,754,648	$ 7,585,921	$ 16,712,518
Net unrealized gains (losses) on derivative instruments	286,018	(1,020,754)	852,168
Net unrealized gains (losses) on available for sale securities	(65,848)	304,791	427,748
Other comprehensive gain (loss)	220,170	(715,963)	1,279,916
Comprehensive income	$ 7,974,818	$ 6,869,958	$ 17,992,434

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Note 16: Fair Value of Financial Instruments: Schedule of Financial Instruments Carried at Other Than Fair Value (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Financial Instruments Carried at Other Than Fair Value

	Carrying Value	Level 1	Level 2	Level 3	Total Estimated Fair Value
Assets
Mortgage loans:
Residential	$       51,876,621	$                  -	$                  -	$       55,247,638	$       55,247,638
Residential construction	32,971,824	-	-	32,971,824	32,971,824
Commercial	35,201,627	-	-	36,829,266	36,829,266
Mortgage loans, net	$     120,050,072	$                  -	$                  -	$     125,048,728	$     125,048,728
Policy loans	7,011,012	-	-	7,011,012	7,011,012
Other loans	27,114,416	-	-	27,114,416	27,114,416
Short-term investments	27,059,495	-	-	27,059,495	27,059,495
Liabilities
Bank and other loans payable	$     (28,989,008)	$                  -	$                  -	$     (28,989,008)	$     (28,989,008)

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2013:

	Carrying Value	Level 1	Level 2	Level 3	Total Estimated Fair Value
Assets
Mortgage loans:
Residential	$       48,503,639	$             -	$             -	$       51,537,154	$       51,537,154
Residential construction	12,812,359	-	-	12,812,359	12,812,359
Commercial	41,465,880	-	-	42,441,268	42,441,268
Mortgage loans, net	$     102,781,878	$             -	$             -	$     106,790,781	$     106,790,781
Policy loans	7,520,376	-	-	7,520,376	7,520,376
Other loans	12,203,630	-	-	12,203,630	12,203,630
Short-term investments	12,135,719	-	-	12,135,719	12,135,719
Liabilities
Bank and other loans payable	$     (18,231,128)	$             -	$             -	$     (18,231,128)	$     (18,231,128)

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Note 3: Receivables

12 Months Ended

Dec. 31, 2014

Notes

Note 3: Receivables

3)   Receivables

Receivables consist of the following:

	Years Ended December 31
	2014	2013
Trade contracts	$        12,166,838	$          9,993,755
Receivables from sales agents	1,951,677	994,056
Held in Escrow – Southern Security	278,331	312,167
Other	1,428,106	1,601,227
Total receivables	15,824,952	12,901,205
Allowance for doubtful accounts	(1,280,859)	(1,248,633)
Net receivables	$        14,544,093	$        11,652,572

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Note 20: Mortgage Servicing Rights: Schedule of mortgage servicing rights (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Origination of Mortgage Servicing Rights (MSRs)	$ 3,741,381	$ 2,494,254
Amortization of MSR's	(750,735)	(447,623)
Mortgage servicing rights	7,834,747	4,844,101
Estimated fair value of MSRs	$ 8,485,570	$ 5,491,270

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Note 2: Investments: Investments Classified by Contractual Maturity Date (Tables)

12 Months Ended

Dec. 31, 2014

Held-to-maturity Securities

Investments Classified by Contractual Maturity Date

	Amortized	Estimated Fair
	Cost	Value
Held to Maturity:
Due in 2015	$           4,961,596	$           5,075,769
Due in 2016 through 2019	33,920,182	37,561,840
Due in 2020 through 2024	25,074,149	27,690,447
Due after 2024	66,187,191	75,238,571
Mortgage-backed securities	4,263,206	4,556,693
Redeemable preferred stock	612,023	634,055
Total held to maturity	$       135,018,347	$       150,757,375

Available-for-sale Securities

Investments Classified by Contractual Maturity Date

		Estimated Fair
	Cost	Value
Available for Sale:
Common stock	$           7,179,010	$           6,752,750
Total available for sale	$           7,179,010	$           6,752,750

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Note 12: Stock Compensation Plans: Schedule of Activity of the 2003 Plan (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Activity of the 2003 Plan

Activity of the stock option plans is summarized as follows:
	Number of Class A Shares	Weighted Average Exercise Price	Number of Class C Shares	Weighted Average Exercise Price
Outstanding at December 31, 2011	1,996,543	$    2.40	361,028	$    2.38
Adjustment for the effect of stock dividends	43,928		24,515
Granted	347,000		-
Exercised	(1,041,276)		(52,500)
Cancelled	(123,134)		-
Reclass from A to C	(250,808)		250,808
Outstanding at December 31, 2012	972,253	$    2.07	583,851	$    2.18
Adjustment for the effect of stock dividends	17,962		24,222
Granted	81,960		50,000
Exercised	(485,366)		(190,602)
Cancelled	(76,676)		(63,814)
Reclass from A to C	(105,000)		105,000
Outstanding at December 31, 2013	405,133	$    2.41	508,657	$    2.00
Adjustment for the effect of stock dividends	24,446		32,934
Granted	173,500		150,000
Exercised	(59,713)		-
Cancelled	(30,571)		-
Outstanding at December 31, 2014	512,795	$    3.20	691,591	$    2.54
Exercisable at end of year	343,987	$    2.50	547,216	$    2.00
Available options for future grant	265,198		-
Weighted average contractual term of options
outstanding at December 31, 2014	7.70 years		3.42 years
Weighted average contractual term of options
exercisable at December 31, 2014	6.65 years		1.79 years
Aggregated intrinsic value of options outstanding
at December 31, 2014 (1)	$1,042,682		$1,856,886
Aggregated intrinsic value of options exercisable
at December 31, 2014 (1)	$940,079		$1,780,498
(1) The Company used a stock price of $5.22 as of December 31, 2014 to derive intrinsic value.

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Note 2: Investments: Fixed Maturity Securities - Carrying Amount and Net Realized Gain (Details) (Categories of Investments, Marketable Securities, Held-to-maturity Securities, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Categories of Investments, Marketable Securities, Held-to-maturity Securities
Net carrying amount for sales of securities	$ 2,840,709	$ 1,455,835	$ 2,174,300
Net realized gain related to sales of securities	$ 20,722	$ 12,533	$ 271,364

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Note 4: Value of Business Acquired: Schedule of Value of Business Acquired (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Value of Business Acquired

	December 31
	2014	2013	2012
Balance at beginning of year	$      8,680,845	$      9,829,082	$    10,996,050
Value of  business acquired	1,169,428	192,035	48,190
Imputed interest at 7%	591,412	647,848	728,880
Amortization	(1,894,058)	(1,988,120)	(1,944,038)
Net amortization charged to income	(1,302,646)	(1,340,272)	(1,215,158)
Balance at end of year	$      8,547,627	$      8,680,845	$      9,829,082

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Note 20: Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2014

Notes

Note 20: Mortgage Servicing Rights

20)       Mortgage Servicing Rights

The following table presents the MSR activity for 2014 and 2013.

	December 31 2013
	2014	2013
Amortized cost:
Balance before valuation allowance at beginning of year	$   4,844,101	$   2,797,470
MSRs received as proceeds from loan sales	3,741,381	2,494,254
Amortization	(750,735)	(447,623)
Application of valuation allowance to write down MSRs    with other than temporary impairment	-	-
Balance before valuation allowance at year end	$   7,834,747	$   4,844,101
Valuation allowance for impairment of MSRs:
Balance at beginning of year	$                -	$                -
Additions	-	-
Application of valuation allowance to write down MSRs    with other than temporary impairment	-	-
Balance at year end	$                -	$                -
Mortgage servicing rights, net	$   7,834,747	$   4,844,101
Estimated fair value of MSRs at year end	$   8,485,570	$   5,491,270

The Company reports these MSRs pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements. The following table summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the assumptions made by management in its December 31, 2014 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

	Estimated MSR Amortization
2015	$          870,527
2016	870,527
2017	870,527
2018	870,527
2019	870,527
Thereafter	3,482,112
Total	$        7,834,747

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Note 2: Investments: Schedule of loan loss reserve which is included in other liabilities and accrued expenses (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Loan loss reserve, balance at start of period	$ 5,506,532	$ 6,035,295
Loan loss reserve, Provisions for losses	3,053,403	1,846,285
Loan loss reserve, Charge-offs and settlements	(6,841,785)	(2,375,048)
Loan loss reserve, balance at end of period	$ 1,718,150	$ 5,506,532

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Note 21: Quarterly Financial Data (unaudited): Schedule of Quarterly Financial Information (Details) (USD $)	12 Months Ended			3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011
Total revenues	$ 226,936,674	$ 215,315,020	$ 234,260,169
Benefits and Expenses	214,455,721	205,491,293	212,908,876
Income tax expense	(4,726,305)	(2,237,806)	(4,638,775)
Net Earnings (Loss)	7,754,648	7,585,921	16,712,518
Net earnings per Class A equivalent common share (1)	$ 0.62	$ 0.61	$ 1.46
Net earnings per Class A equivalent common share - assuming dilution(1)	$ 0.60	$ 0.58	$ 1.39
Unaudited
Total revenues				60,745,876	61,725,792	59,411,730	45,053,276	48,577,706	50,552,791	61,332,289	54,852,234	66,660,833	63,747,903	56,528,210	47,323,223
Benefits and Expenses				55,995,147	58,348,652	55,224,633	44,887,289	48,415,406	48,588,507	56,862,769	51,624,611	58,806,804	57,615,608	51,491,833	44,994,631
Earnings (loss) before income taxes				4,750,729	3,377,140	4,187,097	165,987	162,300	1,964,284	4,469,520	3,227,623
Income tax expense				(1,896,814)	(1,239,318)	(1,563,034)	(27,139)	1,324,619	(697,793)	(1,670,275)	(1,194,357)	(386,772)	(2,142,249)	(1,443,345)	(666,409)
Net Earnings (Loss)				2,853,915	2,137,822	2,624,063	138,848	1,486,919	1,266,491	2,799,245	2,033,266
Net earnings per Class A equivalent common share (1)				$ 0.23	$ 0.17	$ 0.21	$ 0.01	$ 0.12	$ 0.10	$ 0.23	$ 0.17	$ 0.67	$ 0.37	$ 0.34	$ 0.16
Net earnings per Class A equivalent common share - assuming dilution(1)				$ 0.22	$ 0.17	$ 0.20	$ 0.01	$ 0.11	$ 0.10	$ 0.21	$ 0.15	$ 0.61	$ 0.34	$ 0.32	$ 0.15
Earnings before income taxes												7,854,029	6,132,295	5,036,377	2,328,592
NetEarnings												$ 7,467,257	$ 3,990,046	$ 3,593,032	$ 1,662,183

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Note 8: Income Taxes: Schedule of components of Deferred Tax Liabilities (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Income Tax Liability	$ 20,755,117	$ 17,529,919
Approximate
Deferred Tax, Future policy benefits	(6,856,001)	(5,381,385)
Deferred Tax, Loan Loss Reserve	(670,078)	(2,147,547)
Deferred Tax, Unearned premium	(1,687,059)	(1,759,087)
Deferred Tax, Available for sale Securities	(125,797)	(566,316)
Deferred Tax Net Operating Loss	(1,738,137)	(873,412)
Deferred Tax Deferred Compensation	(1,279,860)	(1,057,551)
Deferred Tax Deposit Obligations	(1,018,313)	(1,043,964)
Deferred Tax, Other assets	(1,398,152)	(1,287,773)
Deferred Tax, Valuation Allowance	5,276,431	5,593,063
Deferred Tax Assets, Net of Valuation Allowance	(9,496,966)	(8,523,972)
Deferred Tax, Deferred policy acquisition costs	12,271,954	10,914,618
Deferred Tax, Basis difference in property and equipment	7,049,551	6,242,266
Deferred Tax, Value of business acquired	2,906,193	2,951,487
Deferred Tax, Installment sales	5,472,003	3,545,692
Deferred Tax, Trusts	1,599,657	1,599,657
Tax on unrealized appreciation	952,725	800,171
Deferred Tax Liabilities, Net	30,252,083	26,053,891
Income Tax Liability	$ 20,755,117	$ 17,529,919

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Note 6: Bank and Other Loans Payable (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Details
Interest Paid	$ 2,994,429	$ 2,853,701	$ 3,744,293

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Note 7: Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds: Schedule of Restricted Assets in Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Restricted Assets in Cemetery and Mortuary Endowment Care and Pre need Merchandise Funds

	December 31
	2014	2013
Cash and cash equivalents	$     7,274,685	$     4,746,417
Mutual funds	627,154	582,163
Fixed maturity securities	8,775	8,775
Equity securities	88,048	84,986
Participating in mortgage loans with Security National Life	1,349,135	1,248,639
Total	$     9,347,797	$     6,670,980

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Note 17: Accumulated Other Comprehensive Income: Accumulated Balances of Other Comprehensive Income (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Unrealized net gains on available- for-sale securities and trust investments	$ 346,341	$ 41,550
Increase (Decrease) in Unrealized net gains on available- for-sale securities and trust investments	(65,848)	304,791
Unrealized net gains on available- for-sale securities and trust investments	280,493	346,341
Unrealized gains (losses) on derivative mortgage loans	907,624	1,954,567
Increase (Decrease) in Unrealized gains (losses) on derivative mortgage loans	269,585	(1,046,943)
Unrealized gains (losses) on derivative mortgage loans	1,177,209	907,624
Unrealized gains (losses) on derivative bank loan interest rate swaps	(35,569)	(61,758)
Increase (Decrease) in Unrealized gains (losses) on derivative bank loan interest rate swaps	16,433	26,189
Unrealized gains (losses) on derivative bank loan interest rate swaps	(19,136)	(35,569)
Other comprehensive income, Balance	1,218,396	1,934,359
Increase (Decrease) in Other comprehensive income, Balance	220,170	(715,963)
Other comprehensive income, Balance	$ 1,438,566	$ 1,218,396

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Note 1: Significant Accounting Policies: Mortgage Servicing Rights (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Mortgage Servicing Rights

Mortgage Servicing Rights

Mortgage Service Rights (MSR) arise from contractual agreements between the Company and third-party investors (or their agents) when mortgage loans are sold. Under these contracts, the Company is obligated to retain and provide loan servicing functions on loans sold, in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising the acquisition of REO and property dispositions.

The total residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans.  The value of MSRs is derived from the net cash flows associated with the servicing contracts. The Company receives a servicing fee of generally about 0.250% annually on the remaining outstanding principal balances of the loans. Based on the result of the cash flow analysis, an asset or liability is recorded for mortgage servicing rights. The servicing fees are collected from the monthly payments made by the mortgagors. The Company generally receives other remuneration including rights to various mortgagor-contracted fees such as late charges, and collateral reconveyance charges and the Company is generally entitled to retain the interest earned on funds held pending remittance of mortgagor principal, interest, tax and insurance payments.

The Company’s subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. MSR amortization is determined by amortizing the balance straight-line over an estimated nine year life.

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the asset’s carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

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Note 13: Statutory Financial Information and Dividend Limitations

12 Months Ended

Dec. 31, 2014

Notes

Note 13: Statutory Financial Information and Dividend Limitations

13)    Statutory Financial Information and Dividend Limitations

The Company’s insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (“NAIC”), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed.

All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner and/or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis.

Statutory net income and capital and surplus of the Company’s insurance subsidiaries, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities are as follows:

	Net Income			Capital and Surplus
	2014	2013	2012	2014	2013
Amounts by insurance subsidiary:
Security National Life Insurance    Company	$ 5,137,208	$ 1,283,311	$   391,533	$ 34,356,157	$ 29,597,289
Memorial Insurance Company of    America	415	237	159	1,082,587	1,083,237
Southern Security Life Insurance    Company, Inc.	467	1,288	184	1,590,424	1,586,832
Trans-Western Life Insurance    Company	1,304	1,906	2,113	499,182	497,878
Total	$ 5,139,394	$ 1,286,742	$   393,989	$ 37,528,350	$ 32,765,236

The Utah, Arkansas, Mississippi and Texas Insurance Departments impose minimum risk-based capital requirements (“RBC”) that were developed by the NAIC on insurance enterprises. The formulas for determining the RBC specify various factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio (the “Ratio”) of the enterprise’s regulatory total adjusted capital, as defined by the NAIC, to its authorized control level, as defined by the NAIC. Enterprises below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The life insurance subsidiaries have a combined weighted Ratio that is greater than the first level of regulatory action as of December 31, 2014.

Generally, the net assets of the life insurance subsidiaries available for transfer to the Company are limited to the amounts of the life insurance subsidiaries net assets, as determined in accordance with statutory accounting practices, which were $37,528,350 at December 31, 2014, exceed minimum statutory capital requirements; however, payments of such amounts as dividends are subject to approval by regulatory authorities.

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Note 2: Investments: Fixed Maturity Securities - Additional (Details) (Fixed Maturities, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Fixed Maturities
Average market value over amortized cost	90.80%	94.50%
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	$ 120,000	$ 120,000	$ 165,000