##### Table of Contents



United States
Securities and Exchange Commission
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934
 For the quarterly period ended September 30, 2009
 o
    
    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 000-52613
 FIRST TRINITY FINANCIAL CORPORATION
  Oklahoma
    
    34-1991436(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Number)
 7633 East 63rd Place, Suite 230 Tulsa, Oklahoma 74133
 (Issuers telephone number)
 þ o
 o o
 12b-2 of the
Exchange Act. (Check one):
 Large accelerated filer: o
    
    Accelerated filer: o
    
    Non-accelerated filer: o
    
    Smaller reporting company: þ
 o þ
 5,805,000
shares




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##### 



INDEX TO FORM 10-Q
 Page NumberPART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets at
September 30, 2009 (Unaudited) and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations
for the three and nine months ended September 30, 2009 and 2008 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 2009 and 2008 (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    17Item 4T. Controls and Procedures
    
    
    27Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3. Defaults upon Senior Securities
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 5. Other Information
    
    
    29Item 6. Exhibits
    
    
    29Signatures
    
    
    30Exhibit No. 31.1Exhibit No. 31.2Exhibit No. 32.1Exhibit No. 32.2
   2




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##### Table of Contents



Item 1. Financial Statements
  
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)AssetsInvestmentsAvailable-for-sale fixed maturities at fair value
(amortized cost: $18,821,726 and $18,203,764 at September 30, 2009 and December 31, 2008)
    
    $
    21,505,271
    
    
    $
    18,207,905Equity securities 
(cost: $248,752 at September 30, 2009 and $213,752 at December 31, 2008)
    
    
    309,341
    
    
    
    213,752Mortgage loans on real estate
    
    
    1,386,954
    
    
    
    1,315,401Investment real estate
    
    
    521,278
    
    
    
    372,000Policy loans
    
    
    313,088
    
    
    
    253,092Other long-term investments
    
    
    4,067,657
    
    
    
    4,464,280Total investments
    
    
    28,103,589
    
    
    
    24,826,430Cash and cash equivalents
($325,000 is restricted as to withdrawal at December 31, 2008)
    
    
    7,760,457
    
    
    
    5,669,795Certificate of deposit (restricted)
    
    
    100,000
    
    
    
    100,000Accrued investment income
    
    
    352,750
    
    
    
    345,069Recoverable from reinsurers
    
    
    875,296
    
    
    
    884,211Accounts receivable
    
    
    239,136
    
    
    
    179,699Loans from premium financing
    
    
    3,699,638
    
    
    
    4,702,590Deferred policy acquisition costs
    
    
    1,576,183
    
    
    
    898,134Value of insurance business acquired
    
    
    2,308,232
    
    
    
    2,509,950Property and equipment
(net of accumulated depreciation: $88,481 and $29,168 at September 30, 2009 and December
31, 2008)
    
    
    2,766,509
    
    
    
    2,747,822Deferred federal income tax asset
    
    
    
    
    
    
    454,824Other assets
    
    
    848,463
    
    
    
    262,393Total assets
    
    $
    48,630,253
    
    
    $
    43,580,917Liabilities and Shareholders EquityPolicy liabilitiesPolicyholders account balances
    
    $
    23,610,466
    
    
    $
    21,189,567Future policy benefits
    
    
    10,653,092
    
    
    
    9,621,845Policy claims
    
    
    401,993
    
    
    
    343,469Other policyholder funds
    
    
    150,387
    
    
    
    102,025Total policy liabilities
    
    
    34,815,938
    
    
    
    31,256,906Notes payable
    
    
    100,000
    
    
    
    Deferred federal income taxes
    
    
    235,934
    
    
    
    Other liabilities
    
    
    314,978
    
    
    
    1,047,241Total liabilities
    
    
    35,466,850
    
    
    
    32,304,147Shareholders EquityCommon stock, par value $.01 per share
8,000,000 shares authorized, 5,805,000 issued and outstanding
    
    
    58,050
    
    
    
    58,050Additional paid-in capital
    
    
    13,806,503
    
    
    
    13,806,503Accumulated other comprehensive income
    
    
    2,195,308
    
    
    
    2,733Accumulated deficit
    
    
    (2,896,458
    )
    
    
    (2,590,516
    )Total shareholders equity
    
    
    13,163,403
    
    
    
    11,276,770Total liabilities and shareholders equity
    
    $
    48,630,253
    
    
    $
    43,580,917
 See
notes to condensed consolidated financial statements.
  3




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Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesPremiums
    
    $
    1,440,654
    
    
    $
    417,248
    
    
    $
    4,303,746
    
    
    $
    1,209,081Income from premium financing
    
    
    178,769
    
    
    
    141,515
    
    
    
    494,207
    
    
    
    335,403Net investment income
    
    
    358,920
    
    
    
    34,008
    
    
    
    1,494,531
    
    
    
    147,865Realized investment loss
    
    
    (178,890
    )
    
    
    
    
    
    
    (188,169
    )
    
    
    Total revenues
    
    
    1,799,453
    
    
    
    592,771
    
    
    
    6,104,315
    
    
    
    1,692,349Benefits, losses and expensesBenefits and claims
    
    
    711,574
    
    
    
    194,824
    
    
    
    2,965,661
    
    
    
    573,020Acquisition costs deferred
    
    
    (281,727
    )
    
    
    (146,805
    )
    
    
    (857,883
    )
    
    
    (420,657
    )Amortization of deferred acquisition costs
    
    
    31,923
    
    
    
    40,730
    
    
    
    179,834
    
    
    
    93,811Amortization of value of insurance business acquired
    
    
    67,239
    
    
    
    
    
    
    
    201,718
    
    
    
    Commissions
    
    
    364,552
    
    
    
    168,198
    
    
    
    1,031,379
    
    
    
    477,129Loan fees and losses
    
    
    20,425
    
    
    
    29,383
    
    
    
    246,441
    
    
    
    61,194Salaries and wages
    
    
    352,162
    
    
    
    162,267
    
    
    
    1,070,485
    
    
    
    510,969Third party administration fees
    
    
    92,697
    
    
    
    34,293
    
    
    
    154,155
    
    
    
    122,318Other underwriting, insurance and acquisition expense
    
    
    264,650
    
    
    
    233,046
    
    
    
    1,275,127
    
    
    
    696,173Total benefits, losses and expenses
    
    
    1,623,495
    
    
    
    715,936
    
    
    
    6,266,917
    
    
    
    2,113,957Income (loss) before income tax expense
    
    
    175,958
    
    
    
    (123,165
    )
    
    
    (162,602
    )
    
    
    (421,608
    )Provision for federal income taxesCurrent
    
    
    (26,127
    )
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    (15,700
    )
    
    
    
    
    
    
    143,339
    
    
    
    (832
    )Total
federal income tax (benefit)
    
    
    (41,827
    )
    
    
    
    
    
    
    143,339
    
    
    
    (832
    )Net income (loss)
    
    $
    217,785
    
    
    $
    (123,165
    )
    
    $
    (305,941
    )
    
    $
    (420,776
    )Net income (loss) per common share basic and diluted
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    (0.05
    )
    
    $
    (0.07
    )
 See notes to condensed consolidated financial statements.
  4




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Nine Months EndedSeptember 30,2009
    
    
    2008Net cash used in operating activities
    
    $
    (79,555
    )
    
    $
    (238,976
    )Investing activitiesPurchase of fixed maturities
    
    
    (2,083,832
    )
    
    
    Sales and maturity of fixed maturities
    
    
    1,483,567
    
    
    
    300,000Purchase of equity securities
    
    
    (35,000
    )
    
    
    Purchase of mortgage loans
    
    
    (110,000
    )
    
    
    Payments on mortgae loans
    
    
    40,319
    
    
    
    Payments on other long term investments
    
    
    600,590
    
    
    
    Loans made for premiums financed
    
    
    (8,615,093
    )
    
    
    (6,528,101
    )Loans repaid for premiums financed
    
    
    9,354,104
    
    
    
    4,884,205Purchase of real estate
    
    
    (49,400
    )
    
    
    Purchases of property and equipment
    
    
    (78,122
    )
    
    
    (9,006
    )Net cash provided by investing activities
    
    
    507,133
    
    
    
    (1,352,902
    )Financing activitiesPolicyholders account deposits
    
    
    2,866,570
    
    
    
    278,230Policyholders account withdrawals
    
    
    (1,203,486
    )
    
    
    Net cash provided by financing activities
    
    
    1,663,084
    
    
    
    278,230Increase (decrease) in cash
    
    
    2,090,662
    
    
    
    (1,313,648
    )Cash and cash equivalents, beginning of period
    
    
    5,669,795
    
    
    
    9,021,411Cash and cash equivalents, end of period
    
    $
    7,760,457
    
    
    $
    7,707,763
 See notes to condensed consolidated financial statements.
  5




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##### Table of Contents



1. Organization and Accounting Policies
 Nature of Operations
     Basis of Presentation
   Principles of Consolidation
   6




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##### Table of Contents



1. Organization and Accounting Policies (continued)
 Reclassifications
  Use of Estimates
  Recent Accounting Pronouncements
      7




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##### Table of Contents



1. Organization and Accounting Policies (continued)
   2. Earnings per Share
  3. Segment Data
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues:Life and annuity insurance operations
    
    $
    1,623,620
    
    
    $
    429,830
    
    
    $
    5,612,353
    
    
    $
    1,250,985Premium finance operations
    
    
    175,832
    
    
    
    141,515
    
    
    
    491,270
    
    
    
    337,061Corporate operations
    
    
    1
    
    
    
    21,426
    
    
    
    692
    
    
    
    104,303Total
    
    $
    1,799,453
    
    
    $
    592,771
    
    
    $
    6,104,315
    
    
    $
    1,692,349Income
(loss) from operations before federal income taxes:Life and annuity insurance operations
    
    $
    233,576
    
    
    $
    (40,771
    )
    
    $
    349,506
    
    
    $
    (150,181
    )Premium finance operations
    
    
    12,224
    
    
    
    9,065
    
    
    
    (160,667
    )
    
    
    33,870Corporate operations
    
    
    (69,842
    )
    
    
    (91,459
    )
    
    
    (351,441
    )
    
    
    (305,297
    )Total
    
    $
    175,958
    
    
    $
    (123,165
    )
    
    $
    (162,602
    )
    
    $
    (421,608
    )
 4. Reinsurance
    8




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##### Table of Contents



5. Federal Income Taxes
    6. Comprehensive Income (Loss)
   Three months ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    217,785
    
    
    $
    (123,165
    )
    
    $
    (305,941
    )
    
    $
    (420,776
    )Unrealized gains (losses) on securities, net of
federal income taxes of $316,660 and $(932)
for the three months ended September 30,
2009 and 2008, respectively and $547,419 and
and ($245) for the nine months ended
September 30, 2009 and 2008 respectively
    
    
    1,269,085
    
    
    
    (1,808
    )
    
    
    2,192,575
    
    
    
    (475
    )Other comprehensive income (loss)
    
    $
    1,486,870
    
    
    $
    (124,973
    )
    
    $
    1,886,634
    
    
    $
    (421,251
    )
  9




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7. Investments
  Gross
    
    
    Gross Unrealized LossesAmortized
    
    
    Unrealized
    
    
    Less Than
    
    
    Greater Than
    
    
    FairCost
    
    
    Gains
    
    
    12 Months
    
    
    12 Months
    
    
    ValueFixed maturity securitiesU.S. Government Agency
    
    $
    696,538
    
    
    $
    12,521
    
    
    $
    8,027
    
    
    $
    
    
    
    $
    701,032Residential mortgage-backed securities
    
    
    189,852
    
    
    
    16,433
    
    
    
    
    
    
    
    
    
    
    
    206,285Corporate bonds
    
    
    17,935,336
    
    
    
    2,720,405
    
    
    
    57,787
    
    
    
    
    
    
    
    20,597,954Total fixed maturity securities
    
    $
    18,821,726
    
    
    $
    2,749,359
    
    
    $
    65,814
    
    
    $
    
    
    
    $
    21,505,271Corporate equity securities
    
    
    248,752
    
    
    
    61,848
    
    
    
    1,259
    
    
    
    
    
    
    
    309,341Total
    
    $
    19,070,478
    
    
    $
    2,811,207
    
    
    $
    67,073
    
    
    $
    
    
    
    $
    21,814,612December 31, 2008Fixed maturity securitiesU.S. Government Agency
    
    $
    953,650
    
    
    $
    4,141
    
    
    $
    
    
    
    $
    
    
    
    $
    957,791Residential mortgage-backed securities
    
    
    221,951
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221,951Corporate bonds
    
    
    17,028,163
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,028,163Total fixed maturity securities
    
    $
    18,203,764
    
    
    $
    4,141
    
    
    $
    
    
    
    $
    
    
    
    $
    18,207,905Corporate equity securities
    
    
    213,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    213,752Total
    
    $
    18,417,516
    
    
    $
    4,141
    
    
    $
    
    
    
    $
    
    
    
    $
    18,421,657
  GrossEstimated
    
    
    Unrealized
    
    
    Number ofFair Value
    
    
    Loss
    
    
    SecuritiesSeptember 30, 2009:Fixed maturity securitiesFewer than 6 months:Corporate bonds
    
    $
    116,778
    
    
    $
    1,670
    
    
    
    27-12 months:U.S. Government Agency
    
    
    387,687
    
    
    
    8,027
    
    
    
    2Corporate bonds
    
    
    485,574
    
    
    
    56,117
    
    
    
    4Total fixed maturity securities
    
    
    990,039
    
    
    
    65,814
    
    
    
    8Equity SecuritiesFewer than 6 months
    
    
    38,847
    
    
    
    1,259
    
    
    
    1Total equity securities
    
    
    38,847
    
    
    
    1,259
    
    
    
    1Total
    
    $
    1,028,886
    
    
    $
    67,073
    
    
    
    9
  10




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##### Table of Contents



7. Investments (continued)
   Available-for-SaleAmortized
    
    
    FairCost
    
    
    ValueDue in one year or less
    
    $
    527,446
    
    
    $
    527,273Due in one year through five years
    
    
    5,219,000
    
    
    
    5,957,785Due after five years through ten years
    
    
    8,942,714
    
    
    
    10,209,868Due after ten years
    
    
    3,942,714
    
    
    
    4,604,060Due at multiple maturity dates
    
    
    189,852
    
    
    
    206,285$
    18,821,726
    
    
    $
    21,505,271
    September 30,
    
    
    December 31,2009
    
    
    2008Unrealized appreciation on
available-for-sale securities
    
    $
    2,744,134
    
    
    $
    4,141Deferred income taxes
    
    
    (548,826
    )
    
    
    (1,408
    )Net unrealized appreciation on
available-for-sale securities
    
    $
    2,195,308
    
    
    $
    2,733
  11




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##### Table of Contents



7. Investments (continued)
   Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Change in unrealized investment
gains (losses):Fixed maturities
    
    $
    1,536,965
    
    
    $
    (2,740
    )
    
    $
    2,679,404
    
    
    $
    720Equity securities
    
    
    48,779
    
    
    
    
    
    
    
    60,589
    
    
    
    Realized investment lossesFixed maturities
    
    $
    (178,890
    )
    
    $
    
    
    
    $
    (188,169
    )
    
    $
    Equity securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Fixed maturities
    
    $
    405,375
    
    
    $
    5,778
    
    
    $
    1,367,481
    
    
    $
    18,372Equity securities
    
    
    3,779
    
    
    
    
    
    
    
    11,630
    
    
    
    Mortgage loans
    
    
    49,456
    
    
    
    
    
    
    
    99,998
    
    
    
    Real estate
    
    
    60,428
    
    
    
    
    
    
    
    181,611
    
    
    
    Short-term and other investments
    
    
    26,447
    
    
    
    29,130
    
    
    
    26,447
    
    
    
    132,193Gross investment income
    
    
    545,485
    
    
    
    34,908
    
    
    
    1,687,167
    
    
    
    150,565Investment expenses
    
    
    (186,565
    )
    
    
    (900
    )
    
    
    (192,636
    )
    
    
    (2,700
    )Net investment income
    
    $
    358,920
    
    
    $
    34,008
    
    
    $
    1,494,531
    
    
    $
    147,865
 8. Fair Values of Financial Instruments
   12




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8. Fair Values of Financial Instruments (continued)
  Level 1
 Level 2
 Level 3
   Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalSeptember 30, 2009Fixed maturity securitiesU S Government
    
    $
    
    
    
    $
    701,032
    
    
    $
    
    
    
    $
    701,032Residential mortgage-backed securities
    
    
    
    
    
    
    206,285
    
    
    
    
    
    
    
    206,285Corporate bonds
    
    
    
    
    
    
    20,597,954
    
    
    
    
    
    
    
    20,597,954Total fixed maturity securities
    
    
    
    
    
    
    21,505,271
    
    
    
    
    
    
    
    21,505,271Corporate equity securities
    
    
    
    
    
    
    309,341
    
    
    
    
    
    
    
    309,341Total
    
    $
    
    
    
    $
    21,814,612
    
    
    $
    
    
    
    $
    21,814,612December 31, 2008Fixed maturity securitiesU.S. Government Agency
    
    $
    
    
    
    $
    957,791
    
    
    $
    
    
    
    $
    957,791Residential mortgage-backed securities
    
    
    
    
    
    
    221,951
    
    
    
    
    
    
    
    221,951Corporate bonds
    
    
    
    
    
    
    17,028,163
    
    
    
    
    
    
    
    17,028,163Total fixed maturity securities
    
    
    
    
    
    
    18,207,905
    
    
    
    
    
    
    
    18,207,905Corporate equity securities
    
    
    
    
    
    
    213,752
    
    
    
    
    
    
    
    213,752Total
    
    $
    
    
    
    $
    18,421,657
    
    
    $
    
    
    
    $
    18,421,657
  13




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8. Fair Values of Financial Instruments (continued)
       
          14




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##### Table of Contents



8. Fair Values of Financial Instruments (continued)
 September 30, 2009
    
    
    December 31, 2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueAssetsFixed maturities
    
    $
    21,505,271
    
    
    $
    21,505,271
    
    
    $
    18,207,905
    
    
    $
    18,207,905Equity securities
    
    
    309,341
    
    
    
    309,341
    
    
    
    213,752
    
    
    
    213,752Commercial mortgage loans
    
    
    1,386,954
    
    
    
    1,431,558
    
    
    
    1,315,401
    
    
    
    1,315,401Investment real estate
    
    
    521,278
    
    
    
    521,278
    
    
    
    372,000
    
    
    
    372,000Policy loans
    
    
    313,088
    
    
    
    313,088
    
    
    
    253,092
    
    
    
    253,092Other long-term investments
    
    
    4,067,657
    
    
    
    4,067,657
    
    
    
    4,464,280
    
    
    
    4,464,280Cash and cash equivalents
    
    
    7,760,457
    
    
    
    7,760,457
    
    
    
    5,669,795
    
    
    
    5,669,795Loans from
premium financing
    
    
    3,699,638
    
    
    
    3,699,638
    
    
    
    4,702,590
    
    
    
    4,702,590LiabilitiesPolicyholders account
balances
    
    
    23,610,466
    
    
    
    22,399,365
    
    
    
    21,189,567
    
    
    
    21,189,567
 9. Value of Insurance Business Acquired
  10. Revolving Line of Credit
  11. Acquisition of First Life America Corporation
   15




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##### Table of Contents



12. Allowance for Loss on Premium Finance Contracts
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Allowance at beginning of period
    
    $
    191,067
    
    
    $
    3,500
    
    
    $
    21,305
    
    
    $
    3,500Additions charged to operations
    
    
    (119,328
    )
    
    
    
    
    
    
    33,786
    
    
    
    Direct write downs
    
    
    213,507
    
    
    
    3,500
    
    
    
    230,155
    
    
    
    3,500Recoveries of amounts previously charged off
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Allowance at end of period
    
    $
    285,246
    
    
    $
    7,000
    
    
    $
    285,246
    
    
    $
    7,000
 13. Subsequent Events
    16




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
            17




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##### Table of Contents



Critical Accounting Policies and Significant Judgments and Estimates
  Investments in Fixed Maturities, Equity Securities, Mortgage Loans and Other Long Term
Investments
        18




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##### Table of Contents



Loans from Premium Financing
  Allowance for Loan Losses from Premium Financing
    Deferred Policy Acquisition Costs
     19




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##### Table of Contents



Property and Equipment
  Value of Insurance Business Acquired
  Policy Liabilities
  Federal Income Taxes
  Recent Accounting Pronouncements
    20




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##### Table of Contents



Business Segments
  
    
    Life and annuity insurance operations, consisting of the operations of TLIC;
    
    Premium finance operations, consisting of the operations of FTCC; and
    
    Corporate operations, which includes the results of the parent company after the
elimination of intercompany amounts.
  Results of Operations
      21




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##### Table of Contents



Results of Operations
2009 to 2008 Three Month Comparison
 Revenues
  Life and Annuity Insurance Operations
  Premium Finance Operations
  Corporate Operations
   Benefits, Losses and Expenses
          22




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##### Table of Contents



2009 to 2008 Nine Month Comparison
 Revenues
  Life and Annuity Insurance Operations
  Premium Finance Operations
  Corporate Operations
   Benefits, Losses and Expenses
       23




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##### Table of Contents



Consolidated Financial Condition
     September 30,
    
    
    December 31,2009
    
    
    2008Balance, beginning of period
    
    $
    4,702,590
    
    
    $
    2,366,165Loans financed
    
    
    8,164,009
    
    
    
    9,279,014Unearned interest added to loans
    
    
    425,773
    
    
    
    493,989Capitalized fees and interest reversed
    
    
    (25,311
    )
    
    
    Payment of loans and unearned interest
    
    
    (9,171,323
    )
    
    
    (7,290,323
    )Ending loan balance including unearned interest
    
    
    4,095,738
    
    
    
    4,848,845Unearned interest included in ending loan balances
    
    
    (110,854
    )
    
    
    (124,950
    )Loan balance net of unearned interest
    
    
    3,984,884
    
    
    
    4,723,895Less:Allowance for loan loss
    
    
    (285,246
    )
    
    
    (21,305
    )Loan balance net of unearned interest and
allowance for loan losses at the end of the period
    
    $
    3,699,638
    
    
    $
    4,702,590
  24




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Allowance at beginning of period
    
    $
    191,067
    
    
    $
    3,500
    
    
    $
    21,305
    
    
    $
    3,500Additions charged to operations
    
    
    (119,328
    )
    
    
    
    
    
    
    33,786
    
    
    
    Direct write downs
    
    
    213,507
    
    
    
    3,500
    
    
    
    230,155
    
    
    
    3,500Recoveries of amounts
previously charged off
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Allowance at end of period
    
    $
    285,246
    
    
    $
    7,000
    
    
    $
    285,246
    
    
    $
    7,000
   Liquidity and Capital Resources
 Extraordinary Market Conditions and their Impact on our Liquidity and Capital Resources
   Insurance Companies
  Premium Finance Company
  Corporate
   25




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##### Table of Contents



Cash Flows
     Future Liquidity and Capital Needs
    Off-Balance Sheet Arrangements
  Forward Looking Information
    26




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##### Table of Contents



Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
 Internal-Control Integrated Framework
   27




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##### Table of Contents



Limitations on the Effectiveness of Controls
   Changes to Internal Control over Financial Reporting
   28




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer32.1
    
    
    Section 1350 Certification of Principal Executive Officer32.2
    
    
    Section 1350 Certification of Principal Financial Officer
  29




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##### Table of Contents



FIRST TRINITY FINANCIAL CORPORATION
an Oklahoma corporationNovember 16, 2009
    By:
    /s/ Gregg ZahnGregg Zahn, President and Chief Executive OfficerNovember 16, 2009
    By:
    /s/ William LayWilliam Lay, Treasurer and Chief Financial Officer  30