##### 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 June 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
  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 June 30, 2009 (Unaudited) and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations 
for the three and six months ended June 30, 2009 and 2008 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows 
for the six months ended June 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
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3. Defaults upon Senior Securities
    
    
    28Item 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
  
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)AssetsInvestmentsAvailable-for-sale fixed maturities at fair value
(amortized cost: $19,211,333 and $18,203,764 at June 30, 2009 and December 31, 2008)
    
    $
    20,357,913
    
    
    $
    18,207,905Equity
securities 
(cost: $213,752 at June 30, 2009 and December 31, 2008)
    
    
    225,562
    
    
    
    213,752Mortgage loans on real estate
    
    
    1,268,248
    
    
    
    1,315,401Investment real estate
    
    
    372,000
    
    
    
    372,000Policy loans
    
    
    309,584
    
    
    
    253,092Other long-term investments
    
    
    4,136,825
    
    
    
    4,464,280Total investments
    
    
    26,670,132
    
    
    
    24,826,430Cash and cash equivalents 
($325,000 is restricted as to withdrawal at December 31, 2008)
    
    
    5,670,007
    
    
    
    5,669,795Certificate of deposit (restricted)
    
    
    100,000
    
    
    
    100,000Accrued investment income
    
    
    356,158
    
    
    
    345,069Recoverable from reinsurers
    
    
    734,857
    
    
    
    884,211Accounts receivable
    
    
    216,118
    
    
    
    179,699Loans from premium financing
    
    
    4,932,592
    
    
    
    4,702,590Deferred policy acquisition costs
    
    
    1,326,379
    
    
    
    898,134Value of insurance business acquired
    
    
    2,375,472
    
    
    
    2,509,950Property and equipment 
(net of accumulated depreciation: $67,689 and $29,168 at June 30, 2009 and December 31, 2008)
    
    
    2,709,302
    
    
    
    2,747,822Deferred federal income tax asset
    
    
    65,026
    
    
    
    454,824Other assets
    
    
    350,716
    
    
    
    262,393Total assets
    
    $
    45,506,759
    
    
    $
    43,580,917Liabilities and Shareholders EquityPolicy liabilitiesPolicyholders account balances
    
    $
    22,700,708
    
    
    $
    21,189,567Future policy benefits
    
    
    10,563,229
    
    
    
    9,621,845Policy claims
    
    
    232,973
    
    
    
    343,469Other policyholder funds
    
    
    84,847
    
    
    
    102,025Total policy liabilities
    
    
    33,581,757
    
    
    
    31,256,906Other liabilities
    
    
    248,469
    
    
    
    1,047,241Total liabilities
    
    
    33,830,226
    
    
    
    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
    
    
    926,223
    
    
    
    2,733Accumulated deficit
    
    
    (3,114,243
    )
    
    
    (2,590,516
    )Total shareholders equity
    
    
    11,676,533
    
    
    
    11,276,770Total liabilities and shareholders equity
    
    $
    45,506,759
    
    
    $
    43,580,917
 See notes to condensed consolidated financial statements.
  3




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##### Table of Contents



Three months ended
    
    
    Six months endedJune 30,

    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesPremiums
    
    $
    1,319,563
    
    
    $
    456,894
    
    
    $
    2,863,092
    
    
    $
    791,833Income from premium financing
    
    
    174,907
    
    
    
    107,983
    
    
    
    315,438
    
    
    
    193,888Net investment income
    
    
    560,533
    
    
    
    42,742
    
    
    
    1,135,611
    
    
    
    113,857Realized investment loss
    
    
    (9,279
    )
    
    
    
    
    
    
    (9,279
    )
    
    
    Total revenues
    
    
    2,045,724
    
    
    
    607,619
    
    
    
    4,304,862
    
    
    
    1,099,578Benefits, Losses and ExpensesBenefits and claims
    
    
    1,107,670
    
    
    
    174,308
    
    
    
    2,254,087
    
    
    
    378,196Acquisition costs deferred
    
    
    (275,647
    )
    
    
    (146,241
    )
    
    
    (576,156
    )
    
    
    (273,852
    )Amortization of deferred acquisition costs
    
    
    91,694
    
    
    
    41,316
    
    
    
    147,911
    
    
    
    53,081Amortization of value of insurance business acquired
    
    
    67,240
    
    
    
    
    
    
    
    134,479
    
    
    
    Commissions
    
    
    340,620
    
    
    
    166,149
    
    
    
    666,827
    
    
    
    308,931Loan fees and losses
    
    
    175,585
    
    
    
    14,599
    
    
    
    226,016
    
    
    
    31,811Salaries and wages
    
    
    356,497
    
    
    
    184,896
    
    
    
    659,264
    
    
    
    348,702Employee and agent benefits
    
    
    28,014
    
    
    
    29,122
    
    
    
    59,059
    
    
    
    65,540Third party administration fees
    
    
    25,221
    
    
    
    40,800
    
    
    
    61,458
    
    
    
    88,025Other underwriting, insurance and acquisition expense
    
    
    583,696
    
    
    
    237,781
    
    
    
    1,010,477
    
    
    
    397,587Total benefits, losses and expenses
    
    
    2,500,590
    
    
    
    742,730
    
    
    
    4,643,422
    
    
    
    1,398,021Loss before income tax expense
    
    
    (454,866
    )
    
    
    (135,111
    )
    
    
    (338,560
    )
    
    
    (298,443
    )Provision for federal income taxesCurrent
    
    
    26,127
    
    
    
    
    
    
    
    26,127
    
    
    
    Deferred
    
    
    58,513
    
    
    
    
    
    
    
    159,039
    
    
    
    (832
    )Total Federal income tax
    
    
    84,640
    
    
    
    
    
    
    
    185,166
    
    
    
    (832
    )Net loss
    
    $
    (539,506
    )
    
    $
    (135,111
    )
    
    $
    (523,726
    )
    
    $
    (297,611
    )Net loss per common share basic and diluted
    
    $
    (0.09
    )
    
    $
    (0.02
    )
    
    $
    (0.09
    )
    
    $
    (0.05
    )
 See notes to condensed consolidated financial statements.
  4




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##### Table of Contents



Six Months EndedJune 30,2009
    
    
    2008Net cash used in operating activities
    
    $
    (270,280
    )
    
    $
    (142,670
    )Investing activitiesPurchase of fixed maturities
    
    
    (1,973,477
    )
    
    
    Maturity of fixed maturities
    
    
    1,124,352
    
    
    
    Loans made for premiums financed
    
    
    (6,016,944
    )
    
    
    (1,148,610
    )Loans repaid for premiums financed
    
    
    5,617,180
    
    
    
    Principal payments on mortgage loans
    
    
    47,910
    
    
    
    Principal payments on other long term investments
    
    
    464,852
    
    
    
    Purchases of furniture and equipment
    
    
    
    
    
    
    (6,769
    )Net cash used in investing activities
    
    
    (736,127
    )
    
    
    (1,155,379
    )Financing activitiesPolicyholders account deposits
    
    
    1,848,146
    
    
    
    189,082Policyholders account withdrawals
    
    
    (841,527
    )
    
    
    Net cash provided by financing activities
    
    
    1,006,619
    
    
    
    189,082Increase (decrease) in cash
    
    
    212
    
    
    
    (1,108,967
    )Cash and cash equivalents, beginning of period
    
    
    5,669,795
    
    
    
    9,021,411Cash and cash equivalents, end of period
    
    $
    5,670,007
    
    
    $
    7,912,444
 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
    
    
    Six months endedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues:Life and annuity insurance operations
    
    $
    1,874,525
    
    
    $
    469,945
    
    
    $
    3,988,733
    
    
    $
    821,155Premium finance operations
    
    
    174,907
    
    
    
    108,300
    
    
    
    315,438
    
    
    
    195,546Corporate operations
    
    
    (3,708
    )
    
    
    29,374
    
    
    
    691
    
    
    
    82,877Total
    
    $
    2,045,724
    
    
    $
    607,619
    
    
    $
    4,304,862
    
    
    $
    1,099,578Income (loss) from operations before federal income taxes:Life and annuity insurance operations
    
    $
    (105,612
    )
    
    $
    (45,223
    )
    
    $
    115,930
    
    
    $
    (109,410
    )Premium finance operations
    
    
    (147,580
    )
    
    
    10,623
    
    
    
    (172,891
    )
    
    
    24,805Corporate operations
    
    
    (201,674
    )
    
    
    (100,511
    )
    
    
    (281,599
    )
    
    
    (213,838
    )Total
    
    $
    (454,866
    )
    
    $
    (135,111
    )
    
    $
    (338,560
    )
    
    $
    (298,443
    )
  8




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##### Table of Contents



4. Reinsurance
   5. Federal Income Taxes
    6. Comprehensive Income (Loss)
   Three months ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (539,506
    )
    
    $
    (135,111
    )
    
    $
    (523,726
    )
    
    $
    (297,611
    )Unrealized gains (losses) on securities, net of
federal income taxes of $295,843 and $(1,453)
for the three months ended June 30, 2009
and 2008, respectively and $230,759 and
and $687 for the six months ended
June 30, 2009 and 2008 respectively
    
    
    1,173,820
    
    
    
    (2,822
    )
    
    
    923,490
    
    
    
    1,333Other comprehensive income (loss)
    
    $
    634,314
    
    
    $
    (137,933
    )
    
    $
    399,764
    
    
    $
    (296,278
    )
  9




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##### Table of Contents



7. Investments
  Gross
    
    
    Gross Unrealized LossesAmortized
    
    
    Unrealized
    
    
    Less Than
    
    
    Greater Than
    
    
    FairCost
    
    
    Gains
    
    
    12 Months
    
    
    12 Months
    
    
    ValueJune 30, 2009Fixed maturity securitiesU.S. Government Agency
    
    $
    370,421
    
    
    $
    608
    
    
    $
    9,805
    
    
    $
    
    
    
    $
    361,224Mortgage-backed securities
    
    
    207,754
    
    
    
    932
    
    
    
    12,331
    
    
    
    
    
    
    
    196,355Corporate bonds
    
    
    18,633,158
    
    
    
    1,445,131
    
    
    
    277,955
    
    
    
    
    
    
    
    19,800,334Total fixed maturity securities
    
    $
    19,211,333
    
    
    $
    1,446,671
    
    
    $
    300,091
    
    
    $
    
    
    
    $
    20,357,913Corporate equity securities
    
    
    213,752
    
    
    
    22,182
    
    
    
    10,372
    
    
    
    
    
    
    
    225,562Total
    
    $
    19,425,085
    
    
    $
    1,468,853
    
    
    $
    310,463
    
    
    $
    
    
    
    $
    20,583,475December 31, 2008Fixed maturity securitiesU.S. Government Agency
    
    $
    953,650
    
    
    $
    4,141
    
    
    $
    
    
    
    $
    
    
    
    $
    957,791Mortgage-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
    
    
    SecuritiesJune 30, 2009:Fixed maturity securitiesFewer than 6 months:U.S. Government Agency
    
    $
    253,630
    
    
    $
    9,805
    
    
    
    2Mortgaged-backed securities
    
    
    121,178
    
    
    
    12,331
    
    
    
    1Corporate bonds
    
    
    5,203,495
    
    
    
    277,955
    
    
    
    39Total fixed maturity securities
    
    
    5,578,303
    
    
    
    300,091
    
    
    
    42Corporate equity SecuritiesFewer than 6 months
    
    
    77,695
    
    
    
    10,372
    
    
    
    3Total equity securities
    
    
    77,695
    
    
    
    10,372
    
    
    
    3Total
    
    $
    5,655,998
    
    
    $
    310,463
    
    
    
    45
   10




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##### Table of Contents



7. Investments (continued)
  Available-for-SaleAmortized
    
    
    FairCost
    
    
    ValueDue in one year or less
    
    $
    901,709
    
    
    
    878,940Due in one year through five years
    
    
    4,772,988
    
    
    
    5,113,683Due after five years through ten years
    
    
    9,315,252
    
    
    
    10,010,549Due after ten years
    
    
    4,013,630
    
    
    
    4,158,386Due at multiple maturity dates
    
    
    207,754
    
    
    
    196,355$
    19,211,333
    
    
    
    20,357,913
    June 30,
    
    
    December 31,2009
    
    
    2008Unrealized appreciation on
available-for-sale securities
    
    $
    1,158,390
    
    
    $
    4,141Deferred income taxes
    
    
    (232,167
    )
    
    
    (1,408
    )Net unrealized appreciation on
available-for-sale securities
    
    $
    926,223
    
    
    $
    2,733
   11




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##### Table of Contents



7. Investments (continued)
  Three Months Ended June 30
    
    
    Six Months Ended June 302009
    
    
    2008
    
    
    2009
    
    
    2008Change in unrealized investment
gains (losses):Fixed maturities
    
    $
    1,433,931
    
    
    $
    (4,275
    )
    
    $
    1,142,439
    
    
    $
    2,020Equity securities
    
    
    35,732
    
    
    
    
    
    
    
    11,810
    
    
    
    Realized investment lossesFixed maturities
    
    $
    (9,279
    )
    
    $
    
    
    
    $
    (9,279
    )
    
    $
    Equity securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Fixed maturities
    
    $
    375,022
    
    
    $
    6,297
    
    
    $
    777,949
    
    
    $
    12,594Equity securities
    
    
    3,748
    
    
    
    
    
    
    
    7,851
    
    
    
    Mortgage loans
    
    
    24,976
    
    
    
    
    
    
    
    50,542
    
    
    
    Real estate
    
    
    60,596
    
    
    
    
    
    
    
    121,183
    
    
    
    Short-term and other investments
    
    
    99,715
    
    
    
    37,345
    
    
    
    184,157
    
    
    
    103,063Gross investment income
    
    
    564,057
    
    
    
    43,642
    
    
    
    1,141,682
    
    
    
    115,657Investment expenses
    
    
    (3,524
    )
    
    
    (900
    )
    
    
    (6,071
    )
    
    
    (1,800
    )Net investment income
    
    $
    560,533
    
    
    $
    42,742
    
    
    $
    1,135,611
    
    
    $
    113,857
 8. Fair Values of Financial Instruments
   12




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##### Table of Contents



8. Fair Values of Financial Instruments (continued)
  Level 1
 Level 2
 Level 3
   Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalJune 30, 2009Fixed maturity securitiesU.S. Government Agency
    
    $
    
    
    
    $
    361,224
    
    
    $
    
    
    
    $
    361,224Mortgage-backed securities
    
    
    
    
    
    
    196,355
    
    
    
    
    
    
    
    196,355Corporate bonds
    
    
    
    
    
    
    19,800,334
    
    
    
    
    
    
    
    19,800,334Total fixed maturity securities
    
    
    
    
    
    
    20,357,913
    
    
    
    
    
    
    
    20,357,913Corporate equity securities
    
    
    
    
    
    
    225,562
    
    
    
    
    
    
    
    225,562Total
    
    $
    
    
    
    $
    20,583,475
    
    
    
    
    
    
    $
    20,583,475December 31, 2008Fixed maturity securitiesU.S. Government Agency
    
    $
    
    
    
    $
    957,791
    
    
    $
    
    
    
    $
    957,791Mortgage-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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##### Table of Contents



8. Fair Values of Financial Instruments (continued)
 Fair Value of Financial Instruments
  Fixed Maturities and Equity Securities
  Commercial Mortgage Loans
  Investment Real Estate
  Cash and Cash Equivalents and Policy loans
  Other Long-Term Investments
  Loans from Premium Financing
  Investment Contracts  Policyholders Account Balances
   14




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##### Table of Contents



8. Fair Value of Financial Instruments (continued)
  June 30, 2009
    
    
    December 31, 2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueAssetsFixed maturities
    
    $
    20,357,913
    
    
    $
    20,357,913
    
    
    $
    18,207,905
    
    
    $
    18,207,905Equity securities
    
    
    225,562
    
    
    
    225,562
    
    
    
    213,752
    
    
    
    213,752Commercial mortgage loans
    
    
    1,268,248
    
    
    
    1,268,248
    
    
    
    1,315,401
    
    
    
    1,315,401Investment real estate
    
    
    372,000
    
    
    
    372,000
    
    
    
    372,000
    
    
    
    372,000Policy loans
    
    
    309,584
    
    
    
    309,584
    
    
    
    253,092
    
    
    
    253,092Other long-term investments
    
    
    4,136,825
    
    
    
    4,293,815
    
    
    
    4,464,280
    
    
    
    4,464,280Cash and cash equivalents
    
    
    5,670,007
    
    
    
    5,670,007
    
    
    
    5,669,795
    
    
    
    5,669,795Loans from premium financing
    
    
    4,932,592
    
    
    
    4,932,592
    
    
    
    4,702,590
    
    
    
    4,702,590LiabilitiesPolicyholders account balances
    
    
    22,700,708
    
    
    
    22,700,708
    
    
    
    21,189,567
    
    
    
    21,189,567
 9. Value of Insurance Business Acquired
 Goodwill and Other Intangible Assets
 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
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Allowance at beginning of period
    
    $
    40,284
    
    
    $
    3,500
    
    
    $
    21,305
    
    
    $
    3,500Additions charged to operations
    
    
    147,984
    
    
    
    
    
    
    
    153,114
    
    
    
    Direct write downs
    
    
    2,799
    
    
    
    3,500
    
    
    
    16,648
    
    
    
    3,500Recoveries of amounts previously charged off
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Allowance at end of period
    
    $
    191,067
    
    
    $
    7,000
    
    
    $
    191,067
    
    
    $
    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
 Overview
           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
 Goodwill and Other Intangible Assets
 Policy Liabilities
  Federal Income Taxes
  Recent Accounting Pronouncements
   20




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##### Table of Contents



Business Segments
 Disclosures about Segments of an Enterprise and Related Information,
 
    
    Life and annuity insurance operations, consisting of the operations of TLIC and FLAC;
 
    
    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.
  21




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##### Table of Contents



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




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##### Table of Contents



Benefits, Losses and Expenses
           2009 to 2008 Six Month Comparison
 Revenues
  Life and Annuity Insurance Operations
   23




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##### Table of Contents



Premium Finance Operations
  Corporate Operations
  Benefits, Losses and Expenses
            24




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##### Table of Contents



Consolidated Financial Condition
     June 30,
    
    
    December 31,2009
    
    
    2008Balance, beginning of year
    
    $
    4,848,845
    
    
    $
    2,366,165Loans financed
    
    
    6,016,944
    
    
    
    9,279,014Unearned interest added to loans
    
    
    300,921
    
    
    
    493,989Capitalized fees and interest reversed
    
    
    (49,018
    )
    
    
    Payment of loans and unearned interest
    
    
    (5,850,160
    )
    
    
    (7,290,323
    )Ending loan balance including unearned interest
    
    
    5,267,532
    
    
    
    4,848,845Unearned interest included in ending loan balances
    
    
    (143,873
    )
    
    
    (124,950
    )Loan balance net of unearned interest
    
    
    5,123,659
    
    
    
    4,723,895Less:Allowance for loan loss
    
    
    (191,067
    )
    
    
    (21,305
    )Loan balance net of unearned interest and
allowance for loan losses at the end of the year
    
    $
    4,932,592
    
    
    $
    4,702,590
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Allowance at beginning of period
    
    $
    40,284
    
    
    $
    3,500
    
    
    $
    21,305
    
    
    $
    3,500Additions charged to operations
    
    
    147,984
    
    
    
    
    
    
    
    153,114
    
    
    
    Direct write downs
    
    
    2,799
    
    
    
    3,500
    
    
    
    16,648
    
    
    
    3,500Recoveries of amounts previously charged off
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Allowance at end of period
    
    $
    191,067
    
    
    $
    7,000
    
    
    $
    191,067
    
    
    $
    7,000
    25




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##### Table of Contents



Liquidity and Capital Resources
 Extraordinary Market Conditions and their Impact on our Liquidity and Capital Resources
   Insurance Companies
  Premium Finance Company
  Corporate
  Cash Flows
     Future Liquidity and Capital Needs
   26




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##### Table of Contents



Off-Balance Sheet Arrangements
  Forward Looking Information
   
 Item 4T.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   27




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##### Table of Contents



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




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##### Table of Contents



Item 4.
    
    Submission of Matters to a Vote of Security Holders
  Directors
    
    For
    
    
    WithheldGregg E. Zahn
    
    
    2,911,696
    
    
    
    47,200Scott J. Engebritson
    
    
    2,915,296
    
    
    
    43,600William S. Lay
    
    
    2,916,296
    
    
    
    42,600H. Bryan Chrisman
    
    
    2,916,296
    
    
    
    42,600Bill H. Hill
    
    
    2,915,996
    
    
    
    42,900Charles Wayne Owens
    
    
    2,918,296
    
    
    
    40,600Loren Everett Owens
    
    
    2,916,296
    
    
    
    42,600George E. Peintner
    
    
    2,915,296
    
    
    
    43,600Shannon B. Young
    
    
    2,886,296
    
    
    
    72,600John R. Perkins
    
    
    2,915,296
    
    
    
    43,600G. Wayne Pettigrew
    
    
    2,915,296
    
    
    
    43,600Gary L Sherrer
    
    
    2,916,296
    
    
    
    42,600
   Votes
    
    For
    
    
    Against
    
    
    Abstain2,781,546
    
    
    
    144,050
    
    
    
    33,300
  Votes
    
    For
    
    
    Against
    
    
    Abstain2,892,296
    
    
    
    35,100
    
    
    
    31,500
 
 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 corporationAugust 28, 2009
    By:
    /s/ Gregg ZahnGregg Zahn, President and Chief Executive OfficerAugust 28, 2009
    By:
    /s/ William LayWilliam Lay,Treasurer and Chief Financial Officer  30




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##### Table of Contents



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