# EDGAR Filing Document

**Accession Number:** 0001395585
**File Stem:** 0001437749-25-026741
**Filing Date:** 2025-8
**Character Count:** 237670
**Document Hash:** 9caf243e1aa0fd5613a6c64ab68adeb3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-026741.hdr.sgml**: 20250814

**ACCESSION NUMBER**: 0001437749-25-026741

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 65

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250814

**DATE AS OF CHANGE**: 20250814

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** First Trinity Financial CORP
- **CENTRAL INDEX KEY:** 0001395585
- **STANDARD INDUSTRIAL CLASSIFICATION:** LIFE INSURANCE [6311]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 341991436
- **STATE OF INCORPORATION:** OK
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-52613
- **FILM NUMBER:** 251215385

**BUSINESS ADDRESS:**
- **STREET 1:** 7633 EAST 63RD PLACE, SUITE 230
- **CITY:** TULSA
- **STATE:** OK
- **ZIP:** 74133
- **BUSINESS PHONE:** 918-249-2438

**MAIL ADDRESS:**
- **STREET 1:** 7633 EAST 63RD PLACE, SUITE 230
- **CITY:** TULSA
- **STATE:** OK
- **ZIP:** 74133

?xml version='1.0' encoding='ASCII'? ftfc20250630_10q.htm

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM **10-Q**

(Mark One)

**☒** **Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934**

For the quarterly period ended June 30, 2025

☐ **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**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Oklahoma** | **34-1991436** |
| (State or other jurisdiction of incorporation or organization)&nbsp;&nbsp;&nbsp;&nbsp; | (I.R.S. Employer Identification Number) |

---

**7633 East 63rd Place, Suite 230**

**Tulsa, Oklahoma 74133-1246**

(Address of principal executive offices)

**(918) 249-2438**

(Registrant's telephone number, including area code)

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 past 12 months (or for 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 ☑ &nbsp;&nbsp;&nbsp;&nbsp; No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

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

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer: ☐  | Accelerated filer: ☐ | Non-accelerated filer: ☑ | Smaller reporting company: ☑ |
| Emerging growth company: ☐ |  |  |  |

---

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes ☐ &nbsp;&nbsp;&nbsp;&nbsp; No ☑

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of August 11, 2025, the registrant had 9,384,340 shares of Class A common stock, .01 par value, outstanding and 101,102 shares of Class B common stock, .01 par value, outstanding.

Securities registered pursuant to section 12(b) of the Act: None.

------

**FIRST TRINITY FINANCIAL CORPORATION**

**QUARTERLY REPORT ON FORM 10-Q**

**FOR QUARTERLY PERIOD ENDED JUNE 30, 2025**

**<u>**TABLE OF CONTENTS**</u>**

---

| | |
|:---|:---|
| **<u>PART I. FINANCIAL INFORMATION</u>** | **<u>Page Number</u>** |
| Item 1. Consolidated Financial Statements |  |
| Consolidated Statements of Financial Position as of June 30, 2025 (Unaudited) and December 31, 2024 | 3 |
| Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited) | 4 |
| Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited) | 5 |
| Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited) | 6 |
| Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (Unaudited) | 7 |
| Notes to Consolidated Financial Statements (Unaudited) | 9 |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 41 |
| Item 4. Controls and Procedures | 70 |
| **<u>Part II. OTHER INFORMATION</u>** |  |
| Item 1. Legal Proceedings | 71 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 71 |
| Item 3. Defaults upon Senior Securities | 71 |
| Item 4. Mine Safety Disclosures | 71 |
| Item 5. Other Information  | 71 |
| Item 6. Exhibits | 72 |
| Signatures | 73 |

---

Exhibit No. 31.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Exhibit No. 31.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Exhibit No. 32.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Exhibit No. 32.2

Exhibit No. 101.INS

Exhibit No. 101.SCH

Exhibit No. 101.CAL

Exhibit No. 101.DEF

Exhibit No. 101.LAB

Exhibit No. 101.PRE

------

**PART I** – **FINANCIAL INFORMATION**

**Item 1. Consolidated Financial Statements**

---

| |
|:---|
| First Trinity Financial Corporation and Subsidiaries |
| Consolidated Statements of Financial Position |

---

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | June 30, 2025 | December 31, 2024 |
| **Assets** |  |  |
| Investments |  |  |
| Available-for-sale fixed maturity securities at fair value (amortized cost: $222,527,562 and $227,703,702 as of June 30, 2025 and December 31, 2024, respectively) | $213049532 | $213745821 |
| Equity securities at fair value (cost: $5,449,372 and $5,301,191 as of June 30, 2025 and December 31, 2024, respectively) | 5517371 | 5336062 |
| Mortgage loans on real estate | 249291677 | 209364504 |
| Investment real estate | 2545159 | 2351549 |
| Policy loans | 4708650 | 4367534 |
| Other long-term investments | 54583080 | 58223514 |
| Total investments | 529695469 | 493388984 |
| Cash and cash equivalents | 37602752 | 64344122 |
| Accrued investment income | 6766776 | 5746167 |
| Recoverable from reinsurers | 9679675 | 9845838 |
| Assets held in trust under coinsurance agreement |  |  |
| Available-for-sale fixed maturity securities at fair value (amortized cost: $19,882,007 and $22,559,107 as of June 30, 2025 and December 31, 2024, respectively) | 15478829 | 17932297 |
| Mortgage loans on real estate | 10471682 | 12660117 |
| Receivable for securities |  | 674405 |
| Payable for securities | (2096) | (783) |
| Cash and cash equivalents | 679920 | (89726) |
| Total assets held in trust under coinsurance agreement | 26628335 | 31176310 |
| Agents' balances and due premiums | 1354254 | 1393277 |
| Deferred policy acquisition costs | 67552685 | 66640453 |
| Value of insurance business acquired | 3501657 | 3593440 |
| Other assets | 11403722 | 10320307 |
| **Total assets** | $694185325 | $686448898 |
| **Liabilities and Shareholders' Equity** |  |  |
| Policy liabilities |  |  |
| Policyholders' account balances | $432133688 | $431190092 |
| Future policy benefits | 144970399 | 138027832 |
| Policy claims | 2653269 | 2478465 |
| Other policy liabilities | 321734 | 226553 |
| Total policy liabilities | 580079090 | 571922942 |
| Funds withheld under coinsurance agreement | 26319584 | 31032174 |
| Deferred federal income taxes | 4828761 | 4023492 |
| Other liabilities | 7347178 | 10420062 |
| **Total liabilities** | 618574613 | 617398670 |
| **Shareholders' equity** |  |  |
| Class A common stock, par value $.01 per share (40,000,000 shares authorized as of June 30, 2025 and December 31, 2024, 9,631,920 issued as of June 30, 2025 and December 31, 2024, 9,384,340 outstanding as of June 30, 2025 and December 31, 2024) | 96319 | 96319 |
| Class B common stock, par value $.01 per share (10,000,000 shares authorized, 101,102 issued and outstanding as of June 30, 2025 and December 31, 2024) | 1011 | 1011 |
| Additional paid-in capital | 43668023 | 43668023 |
| Treasury stock, at cost (247,580 shares as of June 30, 2025 and December 31, 2024) | (893947) | (893947) |
| Accumulated other comprehensive loss | (7527146) | (11024079) |
| Accumulated earnings | 40266452 | 37202901 |
| **Total shareholders' equity** | 75610712 | 69050228 |
| **Total liabilities and shareholders' equity** | $694185325 | $686448898 |

---

*See notes to consolidated financial statements.*

------

---

| |
|:---|
| First Trinity Financial Corporation and Subsidiaries |
| Consolidated Statements of Operations |
| (Unaudited) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 | 2025 | 2024 |
| **Revenues** |  |  |  |  |
| Premiums | $10985721 | $10302404 | $21144797 | $19953409 |
| Net investment income | 9111238 | 7668417 | 16929521 | 15626294 |
| Net realized investment gains (losses) | (22958) | (159965) | 839246 | (119904) |
| Loss on impairments |  | (129436) |  | (129436) |
| Service fees | 2304439 | 498484 | 3056354 | 746166 |
| Other income | 3212 | (36774) | 21429 | 608809 |
| **Total revenues** | 22381652 | 18143130 | 41991347 | 36685338 |
| **Benefits, Claims and Expenses** |  |  |  |  |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 3646797 | 3835769 | 7143671 | 6416784 |
| Death benefits | 3878238 | 3370887 | 7843231 | 6881640 |
| Surrenders | 750541 | 581841 | 1526108 | 1159198 |
| Interest credited to policyholders | 4818377 | 3600321 | 9589981 | 7267805 |
| Dividend, endowment and supplementary life contract benefits | 101740 | 95642 | 230527 | 180658 |
| Total benefits and claims | 13195693 | 11484460 | 26333518 | 21906085 |
| Policy acquisition costs deferred | (3233202) | (4341346) | (6106464) | (7266639) |
| Amortization of deferred policy acquisition costs | 2764431 | 2671126 | 5193070 | 4996837 |
| Amortization of value of insurance business acquired | 45147 | 43839 | 91783 | 95176 |
| Commissions | 3177497 | 4030610 | 5877340 | 6812337 |
| Other underwriting, insurance and acquisition expenses | 3205866 | 2466099 | 6647945 | 6075598 |
| Total expenses | 5959739 | 4870328 | 11703674 | 10713309 |
| **Total benefits, claims and expenses** | 19155432 | 16354788 | 38037192 | 32619394 |
| **Income before total federal income tax expense (benefit)** | 3226220 | 1788342 | 3954155 | 4065944 |
| Current federal income tax expense | 799314 | 263435 | 1014899 | 397007 |
| Deferred federal income tax expense (benefit) | (68531) | 134927 | (124295) | 484804 |
| **Total federal income tax expense**  | 730783 | 398362 | 890604 | 881811 |
| **Net income** | $2495437 | $1389980 | $3063551 | $3184133 |
| **Net income per common share** |  |  |  |  |
| **Class A common stock** | $0.2635 | $0.1468 | $0.3235 | $0.3362 |
| **Class B common stock** | $0.2240 | $0.1248 | $0.2750 | $0.2858 |

---

*See notes to consolidated financial statements (unaudited).*

------

---

| |
|:---|
| First Trinity Financial Corporation and Subsidiaries |
| Consolidated Statements of Comprehensive Income |
| (Unaudited) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 | 2025 | 2024 |
| **Net income** | $2495437 | $1389980 | $3063551 | $3184133 |
| **Other comprehensive income (loss)** |  |  |  |  |
| Total net unrealized investment gains (losses) arising during the period | 505990 | (895539) | 4580448 | (1593362) |
| Less net realized investment gains (losses) having no credit losses | (73291) | (42415) | 152789 | (44113) |
| Net unrealized investment gains (losses) | 579281 | (853124) | 4427659 | (1549249) |
| Less adjustment to deferred acquisition costs | 185 | (191) | 1162 | (94) |
| Other comprehensive income (loss) before federal income tax expense (benefit) | 579096 | (852933) | 4426497 | (1549155) |
| Federal income tax expense (benefit) | 121611 | (179116) | 929564 | (325322) |
| **Total other comprehensive income (loss)**  | 457485 | (673817) | 3496933 | (1223833) |
| **Total comprehensive income**  | $2952922 | $716163 | $6560484 | $1960300 |

---

*See notes to consolidated financial statements (unaudited).*

------

---

| |
|:---|
| First Trinity Financial Corporation and Subsidiaries |
| Consolidated Statements of Changes in Shareholders' Equity |
| Three and Six Months Ended June 30, 2025 and 2024 |
| (Unaudited) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Class A | Class B |  |  | Accumulated |  |  |
|  | Common | Common | Additional |  | Other |  | Total |
|  | Stock | Stock | Paid-in | Treasury | Comprehensive | Accumulated | Shareholders' |
|  | $.01 Par Value | $.01 Par Value | Capital | Stock | Loss | Earnings | Equity |
| <u>**Three months ended June 30, 2024**</u> |  |  |  |  |  |  |  |
| **Balance as of April 1, 2024** | $96319 | $1011 | $43668023 | $(893947) | $(10191324) | $32580263 | $65260345 |
| Comprehensive income (loss): |  |  |  |  |  |  |  |
| Net income |  |  |  |  |  | 1389980 | 1389980 |
| Other comprehensive loss |  |  |  |  | (673817) |  | (673817) |
| **Balance as of June 30, 2024** | $96319 | $1011 | $43668023 | $(893947) | $(10865141) | $33970243 | $65976508 |
| **<u>Six months ended June 30, 2024</u>** |  |  |  |  |  |  |  |
| **Balance as of January 1, 2024** | $96319 | $1011 | $43668023 | $(893947) | $(9641308) | $30786110 | $64016208 |
| Comprehensive income (loss): |  |  |  |  |  |  |  |
| Net income |  |  |  |  |  | 3184133 | 3184133 |
| Other comprehensive loss |  |  |  |  | (1223833) |  | (1223833) |
| **Balance as of June 30, 2024** | $96319 | $1011 | $43668023 | $(893947) | $(10865141) | $33970243 | $65976508 |
| **<u>Three months ended June 30, 2025</u>** |  |  |  |  |  |  |  |
| **Balance as of April 1, 2025** | $96319 | $1011 | $43668023 | $(893947) | $(7984631) | $37771015 | $72657790 |
| Comprehensive income: |  |  |  |  |  |  |  |
| Net income |  |  |  |  |  | 2495437 | 2495437 |
| Other comprehensive income |  |  |  |  | 457485 |  | 457485 |
| **Balance as of June 30, 2025** | $96319 | $1011 | $43668023 | $(893947) | $(7527146) | $40266452 | $75610712 |
| **<u>Six months ended June 30, 2025</u>** |  |  |  |  |  |  |  |
| **Balance as of January 1, 2025** | $96319 | $1011 | $43668023 | $(893947) | $(11024079) | $37202901 | $69050228 |
| Comprehensive income: |  |  |  |  |  |  |  |
| Net income |  |  |  |  |  | 3063551 | 3063551 |
| Other comprehensive income |  |  |  |  | 3496933 |  | 3496933 |
| **Balance as of June 30, 2025** | $96319 | $1011 | $43668023 | $(893947) | $(7527146) | $40266452 | $75610712 |

---

*See notes to consolidated financial statements (unaudited).*

------

---

| |
|:---|
| First Trinity Financial Corporation and Subsidiaries |
| Consolidated Statements of Cash Flows |
| (Unaudited) |

---

---

| | | |
|:---|:---|:---|
|  | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 |
| **Operating activities** |  |  |
| Net income | $3063551 | $3184133 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| Accretion of discount on investments | (1400000) | (2346688) |
| Net realized investment (gains) losses | (839246) | 119904 |
| Loss on impairments |  | 129436 |
| Amortization of policy acquisition cost | 5193070 | 4996837 |
| Policy acquisition cost deferred | (6106464) | (7266639) |
| Amortization of value of insurance business acquired | 91783 | 95176 |
| Allowance for mortgage loan losses | 204909 | (158346) |
| Provision for deferred federal income tax expense | (124295) | 484804 |
| Interest credited to policyholders | 9589981 | 7267805 |
| Change in assets and liabilities: |  |  |
| Accrued investment income | (1020609) | 615087 |
| Recoverable from reinsurers | 166163 | 268085 |
| Assets held in trust under coinsurance agreement | 5585504 | 39968624 |
| Agents' balances and due premiums | 39023 | (171186) |
| Other assets (excludes change in receivable for securities sold of $8,561 in 2025) | (1091976) | 8629803 |
| Future policy benefits | 6942567 | 6253021 |
| Policy claims | 174804 | 56948 |
| Other policy liabilities | 95181 | 57394 |
| Other liabilities (excludes change in payable for securities purchased of $10,088 and $538,068 in 2025 and 2024, respectively) | (3082972) | 8680602 |
| **Net cash provided by operating activities** | 17480974 | 70864800 |
| **Investing activities** |  |  |
| Purchases of fixed maturity securities | (50575278) | (7196831) |
| Maturities of fixed maturity securities | 250000 | 1400000 |
| Sales of fixed maturity securities | 55446776 | 2051501 |
| Purchases of equity securities | (215855) | (45542) |
| Proceeds from realized capital gains, equity securities | 6944 |  |
| Joint venture distributions | 67674 | 53409 |
| Purchases of mortgage loans | (99467865) | (37309014) |
| Payments on mortgage loans | 58809803 | 72861854 |
| Purchases of other long-term investments | (1823500) | (4932676) |
| Payments on other long-term investments | 7702946 | 7902326 |
| Sale of real estate | 294982 |  |
| Net change in policy loans | (341116) | (268166) |
| Net change in short-term investments |  | 298257 |
| Net change in receivable and payable for securities sold and purchased | 18649 | 538068 |
| **Net cash provided by (used in) investing activities** | (29825840) | 35353186 |
| **Financing activities** |  |  |
| Policyholders' account deposits | 18392643 | 47417280 |
| Policyholders' account withdrawals | (32789147) | (125662977) |
| **Net cash used in financing activities** | (14396504) | (78245697) |
| **Increase (decrease) in cash and cash equivalents** | (26741370) | 27972289 |
| Cash and cash equivalents, beginning of period | 64344122 | 33839741 |
| Cash and cash equivalents, end of period | $37602752 | $61812030 |

---

*See notes to consolidated financial statements (unaudited).*

------

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows (continued)

Supplemental Disclosure – Cash and Non-Cash Impact on Investing Activities

(Unaudited)

During the six months ended June 30, 2025 and 2024, the Company foreclosed on residential mortgage loans of real estate totaling $459,180 and $563,081 and transferred that property to investment real estate that is now held for sale.

In conjunction with this foreclosure, the non-cash impact on investing activities is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Six Months Ended | Six Months Ended |
|  | June 30, 2025 | June 30, 2024 |
| Reductions in mortgage loans due to foreclosure | $459180 | $563081 |
| Investment real estate held-for-sale acquired through foreclosure | (459180) | (563081) |
| Net cash used in investing activities | $- | $- |

---

*See notes to consolidated financial statements (unaudited).*

------

**First Trinity Financial Corporation and Subsidiaries**

**Notes to Consolidated Financial Statements**

**June 30, 2025**

**(Unaudited)**

**1. Organization and Significant Accounting Policies**

***Nature of Operations***

First Trinity Financial Corporation (the "Company" or "FTFC") is the parent holding company of Trinity Life Insurance Company ("TLIC"), Family Benefit Life Insurance Company ("FBLIC"), Trinity Mortgage Corporation ("TMC") and Trinity American, Inc. ("TAI"). The Company was incorporated in Oklahoma on April 19, 2004, for the primary purpose of organizing a life insurance subsidiary.

The Company owns 100% of TLIC. TLIC owns 100% of FBLIC. TLIC and FBLIC are primarily engaged in the business of marketing, underwriting and distributing a broad range of individual life insurance and annuity products to individuals. TLIC's and FBLIC's current product portfolio consists of a modified premium whole life insurance policy with a flexible premium deferred annuity rider, whole life, term, final expense, accidental death and dismemberment and annuity products. The term products are both renewable and convertible and issued for 10, 15, 20 and 30 years. They can be issued with premiums fully guaranteed for the entire term period or with a limited premium guarantee. The final expense product is issued as either a simplified issue or as a graded benefit, determined by underwriting. The TLIC and FBLIC products are sold through independent agents. TLIC is licensed in the states of Alabama, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah and West Virginia. FBLIC is licensed in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia.

The Company owns 100% of TMC that was incorporated in 2006 and began operations in January 2007. TMC's primary focus changed during 2020 from premium financing loans to originating, brokering and administrating residential and commercial mortgage loans for third parties.

The Company owns 100% of TAI. TAI was incorporated in Barbados, West Indies on March 24, 2016 for the primary purpose of forming a life insurance company producing United States of America (U.S.) dollar denominated life insurance policies and annuity contracts outside of the United States and Barbados. TAI is licensed as an Exempt Insurance Company under the Exempt Insurance Act of Barbados. TAI was initially involved in developing life insurance and annuity contracts through an association with distribution channels but is now issuing life insurance policies and annuity contracts. The Company's acquisition of TAI was formally approved by Barbados regulators and the certifications were received in 2019.

***Company Capitalization***

The Company raised $1,450,000 from two private placement stock offerings during 2004 and $25,669,480 from two public stock offerings and one private placement stock offering from June 22, 2005 through February 23, 2007; June 29, 2010 through April 30, 2012 and August 15, 2012 through March 8, 2013. The Company issued 7,347,488 shares of its common stock and incurred $3,624,518 of offering costs during these private placements and public stock offerings. On January 1, 2020, the Company issued 168,866 shares in connection with its acquisition of K-TENN Insurance Company ("K-TENN").

The Company also issued 702,685 shares of its common stock in connection with two stock dividends paid to shareholders in 2011 and 2012 that resulted in accumulated earnings being charged $5,270,138 with an offsetting credit of $5,270,138 to common stock and additional paid-in capital. In 2020, the Company paid a $0.05 per share cash dividend for a total of $393,178 and issued 791,339 shares of Class A common stock in connection with a 10% stock dividend to its Class A shareholders. The 10% stock dividend resulted in accumulated earnings being charged $8,657,249 with an offsetting credit of $8,657,249 to common stock and additional paid-in capital.

The Company has also purchased 247,580 shares of treasury stock at a cost of $893,947 from former members of the Board of Directors including the former Chairman of the Board of Directors, a former agent, the former spouse of the Company's Chairman, Chief Executive Officer and President and a charitable organization where a former member of the Board of Directors had donated shares of the Company's common stock.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

***Acquisition of Other Companies*** 

On December 23, 2008, FTFC acquired 100% of the outstanding common stock of First Life America Corporation ("FLAC") from an unaffiliated company. The acquisition of FLAC was accounted for as a purchase. The aggregate purchase price for FLAC was $2,695,234 including direct costs associated with the acquisition of $195,234. The acquisition of FLAC was financed with the working capital of FTFC.

On December 31, 2008, FTFC made FLAC a 15 year loan in the form of a surplus note in the amount of $250,000 with an interest rate of 6% payable monthly, that was approved by the Oklahoma Insurance Department ("OID"). This surplus note is eliminated in consolidation.

On August 31, 2009, two of the Company's subsidiaries, Trinity Life Insurance Company ("Old TLIC") and FLAC, were merged, with FLAC being the surviving company. Immediately following the merger, FLAC changed its name to TLIC.

On December 28, 2011, TLIC acquired 100% of the outstanding common stock of FBLIC from FBLIC's shareholders. The acquisition of FBLIC was accounted for as a purchase. The aggregate purchase price for the acquisition of FBLIC was $13,855,129. The acquisition of FBLIC was financed with the working capital of TLIC.

On April 28, 2015, the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of $3,644,839, assumed liabilities of $3,055,916 and recorded a gain on reinsurance assumption of $588,923.

On April 3, 2018, FTFC acquired 100% of the outstanding stock of TAI domiciled in Barbados, West Indies. The Barbados regulators approved the acquisition and supplied certifications during 2019. The aggregate purchase price for the acquisition of TAI was $250,000. The acquisition of TAI was financed with the working capital of FTFC.

Effective January 1, 2020, the Company acquired 100% of the outstanding common stock of K-TENN insurance company ("K-TENN") from its sole shareholder in exchange for 168,866 shares of FTFC's common stock. The acquisition of K-TENN was accounted for as a purchase. The aggregate purchase price of K-TENN was $1,746,240. Immediately subsequent to this acquisition, the $1,746,240 of net assets and liabilities of K-TENN along with the related life insurance business operations were contributed to TLIC.

On January 4, 2022, FTFC acquired Royalty Capital Life Insurance Company ("RCLIC") from Royalty Capital Corporation ("Royalty") in exchange for 722,644 shares of FTFC's Class A common stock issued to unrelated parties. Royalty was dissolved immediately after FTFC acquired RCLIC. On March 1, 2022, the Missouri Department of Commerce and Insurance approved FTFC's contribution and merger of RCLIC into FBLIC.

***Basis of Presentation***

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included.

The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ended December 31, 2025 or for any other interim period or for any other future year. Certain financial information which is normally included in notes to consolidated financial statements prepared in accordance with U.S. GAAP, but which is not required for interim reporting purposes, has been condensed or omitted. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company's report on Form 10-K for the year ended December 31, 2024.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

Fixed maturity securities comprised of bonds and redeemable preferred securities are classified as available-for-sale and are carried at fair value with unrealized gains and losses, net of applicable income taxes, reported in accumulated other comprehensive income. The amortized cost of fixed maturity securities available-for-sale is adjusted for amortization of premium and accretion of discount to maturity.

Interest income on fixed maturity securities, as well as the related amortization of premium and accretion of discount, is included in net investment income under the effective yield method. Dividend income on redeemable preferred securities are recognized in net investment income when declared. The amortized cost of fixed maturity securities available-for-sale are written down to fair value when a decline in value is considered to be other-than-temporary.

The Company evaluates the difference between the cost or amortized cost and estimated fair value of its fixed maturity securities to determine whether any decline in value is the result of a credit loss or other factors. An allowance for credit losses is recorded against available-for-sale securities to reflect the amount of an unrealized loss attributed to credit. This impairment is limited by the amount that the fair value is less than the amortized cost basis. Any remaining unrealized loss is recognized in other comprehensive income (loss) with no change to the cost basis of the security. This determination involves a degree of uncertainty. Changes in the allowance for credit losses are recognized in earnings.

The assessment and determination of whether or not a credit loss exists is based on consideration of the cash flows expected to be collected from the fixed maturity security. The Company develops those expectations after considering various factors such as agency ratings, the financial condition of the issuer or underlying obligors, payment history, payment structure of the security, industry and market conditions, underlying collateral, and other factors that may be relevant based on the facts and circumstances pertaining to individual securities.

If the Company intends to sell the fixed maturity security or will be more likely than not be required to sell the fixed maturity security before recovery of its amortized cost basis, then any allowance for credit losses, if previously recorded is written off and the fixed maturity security's amortized cost is written down to the security's fair value as of the reporting date with any incremental impairment recorded as a charge to noninterest income.

Equity securities are comprised of mutual funds and common stocks and are carried at fair value. The associated unrealized gains and losses are included in net realized investment gains (losses). Dividends from these investments are recognized in net investment income when declared.

Mortgage loans are carried at unpaid balances, net of unamortized premium or discounts. This measurement of mortgage loans on an amortized cost basis is reduced by an allowance for credit losses representing a valuation allowance that is deducted from the amortized costs basis of mortgage loans to present the net carrying value at the amount expected to be collected on the mortgage loans.

Interest income and the amortization of premiums or discounts are included in net investment income. Mortgage loan fees, certain direct loan origination costs, and purchase premiums and discounts on loans are recognized as an adjustment of yield by the interest method based on the contractual terms of the loan. In certain circumstances, prepayments may be anticipated.

The statement of operations reflects the measurement of credit losses for newly recognized mortgage loans as well as the expected increases or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported mortgage loan balances. The Company uses judgment in determining the relevant information and estimation methods that are appropriate in establishing the valuation allowance for credit losses. The allowance for credit losses for mortgage loans with a more-than-insignificant amount of credit determination since origination is determined and the initial allowance for credit losses should be added to the purchase price of mortgage loans rather than being reported as a credit loss expenses.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

The Company, however, has established and will continue to establish a valuation allowance for mortgage loans on real estate that are not supported by funds held in escrow based on historical patterns. The Company's foreclosed properties have not resulted in accumulated losses and due to the low loan-to-value the Company holds with respect to its mortgage loans, the Company has not recorded and does not expect to record the addition to the purchase price of mortgage loans an initial allowance for credit losses to be amortized over the life of the mortgage loans. The Company will continue to record credit losses for mortgage loans not supported by funds held in escrow in accordance with its valuation policy for mortgage loans on real estate followed before 2023.

While the Company utilizes its best judgment and information available, the ultimate adequacy of this allowance is dependent upon a variety of factors beyond our control, including the performance of the residential and commercial mortgage loan portfolio, the economy and changes in interest rates. The allowance for possible mortgage loan losses consists of specific valuation allowances established for probable losses on specific loans and a portfolio reserve for probable incurred but not specifically identified loans.

The Company considers mortgage loans on real estate impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the mortgage loan agreement. Impairment is measured on a loan-by-loan basis. Factors that the Company considers in determining impairment include payment status, collateral value of the real estate subject to the mortgage loan and the probability of collecting scheduled principal and interest payments when due. Mortgage loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

The Company determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the mortgage loan on real estate and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed.

Investment real estate in land held for both the production of income and for sale is carried at cost. Investment real estate obtained through foreclosure on mortgage loans on real estate is carried at the lower of acquisition cost or net realizable value.

Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned.

Other long-term investments are comprised of lottery prize receivables and are carried at amortized cost. Interest income and the accretion of discount are included in net investment income. These investments are backed by the lottery departments at the various states by U.S. Treasury Bonds and Notes or in the case of Pennsylvania, by annuities purchased from a highly rated life insurance company. Given this support to lottery prize receivables, the Company has not recorded and does not expect to incur any current estimated credit losses on its investments in lottery prize receivables.

***Principles of Consolidation***

The consolidated financial statements include the accounts and operations of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

***Reclassifications***

Certain reclassifications have been made in the prior year and prior quarter financial statements to conform to current year and current quarter classifications. These reclassifications had no effect on previously reported net income or shareholders' equity.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

***Use of Estimates***

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.

***Common Stock and Treasury Stock***

Class A and Class B common stock are both fully paid, non-assessable and has a par value of $.01 per share. Class B shareholders are entitled to elect a majority of FTFC's Board of Directors (one-half plus one) but will only receive, compared to FTFC's Class A shareholders, 85% of cash dividends, stock dividends or amounts due upon any FTFC merger, sale or liquidation event. FTFC's Class B shareholders may also convert one share of FTFC's Class B common stock for a .85 share of FTFC's Class A common stock. FTFC's Class A shareholders will elect the remaining Board of Directors members and will receive 100% of cash dividends, stock dividends or amounts due upon any Company merger, sale or liquidation event.

Treasury stock, representing shares of the Company's common stock that have been reacquired after having been issued and fully paid, is recorded at the reacquisition cost and the shares are no longer outstanding.

***Funds Withheld Coinsurance***

In accordance with an annuity coinsurance agreement with an offshore annuity and life insurance company, TLIC holds assets and recognizes a funds withheld liability for the benefit of the assuming company in an amount at least equal to the annuity reserves in accordance with U.S. statutory accounting principles generated by this ceded business. In addition, the assuming company maintains a trust related to this ceded business amounting to at least an additional 4% of assets above the annuity reserve required under U.S. statutory accounting principles. This coinsurance agreement may be terminated for new business by either party at any time upon 30 days prior written notice to the other party.

In addition, in accordance with this annuity coinsurance agreement, investment income, investment expenses, other income and other expenses earned or incurred in relation to the operations of this annuity coinsurance agreement are not reported on the Company's *Consolidated Statements of Operations*. The unrealized appreciation (depreciation) of fixed available-for-sale fixed maturity securities and the related income tax expense (benefit) is not reported as accumulated other comprehensive income in the shareholders' equity section of the Company's *Consolidated Statements of Financial Position*. Correspondingly, the net unrealized gains (losses) arising during the period, the net realized gains (losses) having no credit gains (losses) and the related income tax expense (benefit) associated with the available-for-sale fixed maturities held under this coinsurance agreement are not included in the computation of total other comprehensive income (loss) in the Company's *Consolidated Statement of Comprehensive Loss*.

The Company's *Consolidated Statement of Cash Flows* only includes the cash flow activities related to the assets and funds withheld under the coinsurance agreement in a one-line presentation and does not include those cash flow activities in the other financial captions and categories presented in that financial statement.

***Cybersecurity***

The Company has established and continues to enhance its cybersecurity enterprise risk management program. The Company's executive team meets formally at least monthly, and informally as needed, to set and maintain a strategy focused on achieving a high level of cybersecurity protection. The Company's executive management team makes quarterly reports to the Company's Board of Directors and Audit Committee.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

The Company's executive management team is enhanced by the inclusion of an information technology external consultant to advise the Company's executive management team and to focus on developing and maintaining external and internal cybersecurity. Working with Company executives and staff, the information technology consultant advises and helps the Company implement its strategy with respect to:

● Computer hardware and software,

● Security access, logging and user termination,

● In house and remote user access – user accounts, password protection, authentication, monitoring usage, intrusion detection, incident identification and related controls,

● Encryption,

● System change control,

● Data back up and remote sites,

● Data recovery,

● And Disaster recovery

The Company also utilizes training to foster an environment of information security awareness, training and education. Beyond making employees aware of its cybersecurity risk management program, strategy and governance, this training also introduces all employees to many types of cybersecurity risks to introduce skepticism and enhance skills to identify and report potential situations encountered to the executive management team for further assessment.

***Subsequent Events***

Management has evaluated all events subsequent to June 30, 2025 through the date that these financial statements have been issued.

***Adopted Accounting Standards***

*Improvements to Reportable Segment Disclosures*

In November 2023, the FASB issued amendments (Accounting Standards Update 2023-07) to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses on both an annual and interim basis. The amendments require public entities to follow the *significant expense principle* and disclose on an annual and interim basis significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") with additional disclosure of the CODM's title, position and how the reported measure(s) of segment profit or loss are used in assessing segment performance and allocating resources. In addition, amounts for *other segment items* are required to be disclosed including a description of its composition. If the COMD uses more than one measure in assessing segment performance and allocating resources, at least one of the measures should be consistent with the corresponding amounts utilized in the public entity's consolidated financial statements.

The amendments in this guidance are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted this Update for year-end reporting in 2024 and for interim periods beginning in 2025.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

***Recent Accounting Pronouncements***

*Targeted Improvements to the Accounting for Long-Duration Contracts*

In August 2018, the FASB issued updated guidance (Accounting Standards Update 2018-12) to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. This update improves the timeliness of recognizing changes in the liability for future policy benefits, modifies the rate used to discount future cash flows, simplifies and improves accounting for certain market-based options or guarantees associated with deposit (i.e., account balance) contracts, simplifies the amortization of deferred acquisitions costs and expands required disclosures. The expanded disclosure requires an insurance entity to provide disaggregated roll forwards of beginning to ending balances of the following: liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities and deferred acquisition costs including disclosure about, changes to and effect of changes for significant inputs, judgments, assumptions and methods used in measurements.

The updated guidance was effective for reporting periods beginning after December 15, 2020. As a Smaller Reporting Company, the effective date has been changed twice and the delayed effective date is now for reporting periods beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025. Early adoption was permitted. The Company, however, will adopt this pronouncement for its annual reporting as of and for the year ended December 31, 2025.

With respect to the liability for future policyholder benefits for traditional and limited-payment contracts and deferred acquisition costs, the Company will apply the amendments (including market risks benefits) retrospectively as of the beginning of the earliest period presented that will be January 1, 2024. The Company expects that the impact on the Company's results of operations, financial position and liquidity at the date of adoption of the updated guidance in 2025 will be determined by the long-duration contracts then held by the Company and the economic conditions at that time.

*Transition for Sold Contracts*

In December 2022, the FASB issued amendments (Accounting Standards Update 2022-5) to Accounting Standards Update 2018-12 (Targeted Improvements for Long-Duration Contracts) that originally required an insurance entity to apply a retrospective transition method as of the beginning of the earliest period presented or the beginning of the prior fiscal year if early application was elected. This updated guidance reduces implementation costs and complexity associated with the adoption of targeted improvements in accounting for long-duration contracts that have been derecognized in accordance with Accounting Standards Update 2018-12 before the delayed effective date. Without the amendments in this Update, an insurance entity would be required to reclassify a portion of gains or losses previously recognized in the sale or disposal of insurance contracts or legal entities because of the adoption of a new accounting standard. Because there is no effect on an insurance entity's future cash flows, this reclassification may not be useful to users of financial information.

The amendments in this guidance are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted but was not elected by the Company. The Company will adopt this pronouncement for its annual reporting as of and for the year ended December 31, 2025, with the amendments applied retrospectively as of January 1, 2024. The Company expects that the impact on the Company's results of operations, financial position and liquidity at the date of adoption of the updated guidance in 2025 will be determined by the long-duration contracts then held by the Company and the economic conditions at that time.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

*Improvements to Income Tax Disclosures*

In December 2023, the FASB issued amendments (Accounting Standards Update 2023-09) to enhance the transparency and decision usefulness of income tax disclosures. The amendments require that public business entities on an annual basis disclose information about taxes paid and a tabular reconciliation using both percentages and amounts of specific categories in the rate reconciliation. In addition, separate disclosure is required for any reconciling item equal to or greater than five (5) percent of the amount computed by multiplying the income or loss from continuing operations before income taxes by the statutory income tax rate. If not otherwise evident, a public business entity is required to provide an explanation of the individual reconciling items such as the nature, effect and causes of the reconciling items.

The amendments in this guidance are effective for public companies for fiscal years beginning after December 15, 2024. This guidance should be applied on a prospective basis but retrospective application is permitted. Early adoption is permitted. The Company will adopt and disclose the information required by this Update for year-end reporting in 2025.

*Expense Disaggregation Disclosures*

In November 2024, the FASB issued amendments (Accounting Standards Update 2024-03) to disclose more granular information about costs of sales and general and administrative expenses including employee compensation to improve the disclosure about a public enterprise's expenses by providing more detailed information about the types of expenses commonly presented in expense captions such as costs of sales and general and administrative expenses.

The amendments in this Update require disclosing, in the notes to the financial statements, the following specified information about costs and expenses included in general captions on the face of the financial statements at each interim and annual reporting period of the entity: (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization and (e) depreciation, depletion and amortization recognized as part of oil and gas producing activities or other amounts of depletion expenses.

An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. In addition, the amendments in this Update do not change or remove current expense disclosure requirements including those of specialized industries.

The amendments to this Update are effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company anticipates adopting and disclosing the information required by this Update for year-end reporting in 2027 and interim reporting beginning in first quarter 2028.

In January 2025, the FASB issued Accounting Standards Update 2025-01 that amended Accounting Standards Update 2024-03 to clarify the effective date of the original pronouncement regarding Expense Disaggregation Disclosures. The FASB's intent in Accounting Standards Update 2024-03 was that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The FASB acknowledges, however, that there was ambiguity that only potentially affected non-calendar year-end entities when Accounting Standards Update 2024-03 was issued.

The amendment in this pronouncement amends the effective date of Accounting Standards Update 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of Accounting Standards Update 2024-03 is permitted. This amendment does not impact the Company.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

*Debt With Conversion and Other Options*

In November 2024, the FASB issued amendments (Accounting Standards Update 2024-04) to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted as an induced conversion. Under this Update, an inducement offer is required to provide the debt holder with, at a minimum, the consideration in form and amount issuable under the conversion privileges provided in the instrument. If the convertible debt instrument has been exchanged, modified or deemed not substantially different within the one-year period before the settlement date, the current inducement offer should be compared to the inducement offer that existed one-year before the settlement date.

In addition, the incorporation, elimination or modification of a volume weighted average price formula does not automatically cause a settlement to be accounted for as an extinguishment; there is instead a need to assess whether the form and amount of the conversion consideration is preserves using the fair value of the shares as of the settlement date. This induced conversion guidance applies to convertible debt instruments that are not currently convertible as long as there was a substantive conversion feature as of its issuance date or settlement date.

The amendments to this Update are effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within that annual reporting period. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. The amendments in this Update permit an entity to apply the new guidance on either a prospective or a retrospective basis. The Company does not have or anticipate having any debt instruments and anticipates never being required to adopt the information required by this Update.

*Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity*

In May 2025, the FASB issued amendments (Accounting Standards Update 2025-03) to revise current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a Variable Interest Entity ("VIE" defined as a legal structure in which controlling interest is determined by something other than majority voting rights and controlling interest is arranged via a contractual relationship rather than through direct ownership) that meets the definition of a business. This amendment requires that the following factors be considered when a VIE is involved to determine which entity is the accounting acquirer:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. If the business combination is effected primarily by transferring cash or other assets or incurring liabilities, the acquirer is usually the entity that transfers the cash or other assets or incurs the liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Other than a reverse acquisition, if the business combination is effected primarily by exchanging equity interests, the acquirer is usually the entity that issues its equity interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. The acquirer is usually the entity that receives the largest portion of the voting rights of the combined entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. If no owner has a majority voting interest, the acquirer is usually the individual or group that owns the largest minority interest of the combined entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. The acquirer is usually the individual or group that has the ability to elect, appoint or remove members of the combined entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. The acquirer is usually the individual or group that dominates management of the combined entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. The acquirer is usually the individual or group that pays a premium over the precombination fair value of the other combined entity or entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. The acquirer is usually the individual or group whose relative size in terms of assets, revenues, earnings or some other measure is significantly larger than the other combining entity or entities.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**1. Organization and Significant Accounting Policies** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. In a business combination involving more than two entities, the acquirer is usually the entity that initiated the combination and is significantly larger than the other combining entity or entities.

The amendments in this guidance are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance). If an entity adopts these amendments in an interim reporting period, it shall adopt as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period.

An entity shall apply this guidance on a prospective basis to all business combinations that have an acquisition date that occurs on or after the date of initial application. An entity shall disclose in both the interim reporting period (if applicable) and the annual reporting period of the change the nature of and reason for the change in accounting principle.

This guidance does not currently impact the Company's consolidation of its subsidiaries but Update 2025-03 will be followed in any future business combination situations.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**2. Investments**

Investments in fixed maturity available-for-sale securities as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Gross | Gross |  |
|  | Amortized Cost | Unrealized | Unrealized | Fair |
|  | or Cost | Gains | Losses | Value |
|  | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) |
| Fixed maturity securities |  |  |  |  |
| U.S. government and U.S. government agencies | $4266801 | $7871 | $42 | $4274630 |
| States and political subdivisions | 7529064 | 35624 | 285317 | 7279371 |
| U.S. government agency mortgage backed securities | 32574218 | 108432 | 375575 | 32307075 |
| Commercial mortgage-backed securities | 23860092 | 153881 | 1079297 | 22934676 |
| Residential mortgage-backed securities | 9333 | 4940 |  | 14273 |
| Corporate bonds | 109442502 | 378778 | 6078777 | 103742503 |
| Asset-backed securities | 13549907 | 60421 | 635478 | 12974850 |
| Exchange traded securities | 500000 |  | 14400 | 485600 |
| Foreign bonds | 29545645 | 39197 | 1550288 | 28034554 |
| Redeemable preferred securities | 1250000 |  | 248000 | 1002000 |
| Total fixed maturity securities | $222527562 | $789144 | $10267174 | $213049532 |
| Fixed maturity securities held in trust under coinsurance agreement | $19882007 | $474 | $4403652 | $15478829 |

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---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 |
| Fixed maturity securities |  |  |  |  |
| U.S. government and U.S. government agencies | $4263791 | $12654 | $480 | $4275965 |
| States and political subdivisions | 8156851 | 173 | 463791 | 7693233 |
| U.S. government agency mortgage backed securities | 41085693 | 20347 | 870659 | 40235381 |
| Commercial mortgage-backed securities | 19999386 | 5070 | 1505058 | 18499398 |
| Residential mortgage-backed securities | 9750 | 4361 |  | 14111 |
| Corporate bonds | 106678530 | 28519 | 7350495 | 99356554 |
| Asset-backed securities | 15628104 | 67390 | 796910 | 14898584 |
| Exchange traded securities | 1184560 |  | 687760 | 496800 |
| Foreign bonds | 29447037 | 5683 | 2212925 | 27239795 |
| Redeemable preferred securities | 1250000 |  | 214000 | 1036000 |
| Total fixed maturity securities | $227703702 | $144197 | $14102078 | $213745821 |
| Fixed maturity securities held in trust under coinsurance agreement | $22559107 | $21034 | $4647844 | $17932297 |

---

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**2. Investments** (continued)

All securities in an unrealized loss position as of the financial statement dates, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time that those securities have been continuously in an unrealized loss position as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | Unrealized | Number of |
|  | Fair Value | Loss | Securities |
|  | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) |
| Fixed maturity securities |  |  |  |
| Less than 12 months in an unrealized loss position |  |  |  |
| U.S. government and U.S. government agencies | $244508 | $42 | 1 |
| States and political subdivisions | 1375679 | 38088 | 4 |
| U.S. government agency mortgage backed securities | 20696513 | 375575 | 31 |
| Commercial mortgage-backed securities | 2292140 | 15958 | 3 |
| Corporate bonds | 17487623 | 350262 | 46 |
| Asset-backed securities | 1546714 | 9577 | 4 |
| Foreign bonds | 3253891 | 73777 | 7 |
| Total less than 12 months in an unrealized loss position | 46897068 | 863279 | 96 |
| More than 12 months in an unrealized loss position |  |  |  |
| States and political subdivisions | 2527445 | 247229 | 15 |
| Commercial mortgage-backed securities | 7692121 | 1063339 | 20 |
| Corporate bonds | 57878650 | 5728515 | 167 |
| Asset-backed securities | 7065093 | 625901 | 20 |
| Exchange traded securities | 485600 | 14400 | 2 |
| Foreign bonds | 21455483 | 1476511 | 56 |
| Redeemable preferred securities | 1002000 | 248000 | 4 |
| Total more than 12 months in an unrealized loss position | 98106392 | 9403895 | 284 |
| Total fixed maturity securities in an unrealized loss position | $145003460 | $10267174 | 380 |
| Fixed maturity securities held in trust under coinsurance agreement |  |  |  |
| Total less than 12 months in an unrealized loss position | $797080 | $2920 | 1 |
| Total more than 12 months in an unrealized loss position | 13941640 | 4400732 | 61 |
| Total fixed maturity securities held in trust under coinsurance agreement in a unrealized loss position | $14738720 | $4403652 | 62 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, 2024 | December 31, 2024 | December 31, 2024 |
| Fixed maturity securities |  |  |  |
| Less than 12 months in an unrealized loss position |  |  |  |
| U.S. government and U.S. government agencies | $810291 | $480 | 4 |
| States and political subdivisions | 4350258 | 95994 | 12 |
| U.S. government agency mortgage backed securities | 35821510 | 870659 | 52 |
| Commercial mortgage-backed securities | 9319025 | 91842 | 15 |
| Corporate bonds | 33196771 | 810633 | 84 |
| Asset-backed securities | 1811793 | 29633 | 6 |
| Foreign bonds | 5707531 | 185096 | 11 |
| Total less than 12 months in an unrealized loss position | 91017179 | 2084337 | 184 |
| More than 12 months in an unrealized loss position |  |  |  |
| States and political subdivisions | 3102931 | 367797 | 18 |
| Commercial mortgage-backed securities | 7541167 | 1413216 | 21 |
| Corporate bonds | 61587904 | 6539862 | 182 |
| Asset-backed securities | 7391463 | 767277 | 21 |
| Exchange traded securities | 496800 | 687760 | 2 |
| Foreign bonds | 20747051 | 2027829 | 55 |
| Redeemable preferred securities | 1036000 | 214000 | 4 |
| Total more than 12 months in an unrealized loss position | 101903316 | 12017741 | 303 |
| Total fixed maturity securities in an unrealized loss position | $192920495 | $14102078 | 487 |
| Fixed maturity securities held in trust under coinsurance agreement |  |  |  |
| Total less than 12 months in an unrealized loss position | $110506 | $616 | 1 |
| Total more than 12 months in an unrealized loss position | 15142397 | 4647228 | 67 |
| Total fixed maturity securities held in trust under coinsurance agreement in a unrealized loss position | $15252903 | $4647844 | 68 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**2. Investments** (continued)

As of June 30, 2025, the Company held 380 available-for-sale fixed maturity securities with an unrealized loss of $10,267,174, fair value of $145,003,460 and amortized cost of $155,270,634. These unrealized losses were primarily due to the market interest rate movements in the bond market as of June 30, 2025. The ratio of the fair value to the amortized cost of these 380 securities is 93%.

As of December 31, 2024, the Company held 487 available-for-sale fixed maturity securities with an unrealized loss of $14,102,078, fair value of $192,920,495 and amortized cost of $207,022,573. These unrealized losses were primarily due to market interest rate movements in the bond market as of December 31, 2024. The ratio of the fair value to the amortized cost of these 487 securities is 93%.

The change in the current estimate of credit losses on fixed maturity available-for-sale securities for the six months ended June 30, 2025 and December 31, 2024, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | June 30, 2025 | December 31, 2024 |
| Beginning balance | $(725960) | $(430470) |
| Current estimate of credit losses | 618110 | (295490) |
| Ending balance | $(107850) | $(725960) |

---

Net unrealized losses included in other comprehensive income (loss) for investments classified as available-for-sale, net of the effect of deferred income taxes and deferred acquisition costs assuming that the depreciation had been realized as of June 30, 2025 and December 31, 2024, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | June 30, 2025 | December 31, 2024 |
| Unrealized depreciation |  |  |
| Available-for-sale fixed maturity securities | $(9478030) | $(13957881) |
| Other long-term investments | (52192) |  |
| Adjustment to deferred acquisition costs | 2189 | 3351 |
| Deferred income taxes | 2000887 | 2930451 |
| Net unrealized depreciation on available-for-sale securities | $(7527146) | $(11024079) |
| Assets held in trust under coinsurance agreement |  |  |
| Unrealized depreciation on fixed maturity securities available-for-sale | $(4403178) | $(4626810) |

---

The Company's other long-term investments as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | June 30, 2025 | December 31, 2024 |
| Lotteries | $53926506 | $57462681 |
| Co-op loans | 552676 | 760833 |
| Comercial mortgage-backed securities | 103898 |  |
| Total long-term investments | $54583080 | $58223514 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**2. Investments** (continued)

The Company's other long-term investments in lottery prize cash flows were $53,926,506 and $57,462,681 as of June 30, 2025 and December 31, 2024, respectively. The lottery prize cash flows are assignments of the future rights from lottery winners purchased at a discounted price. Payments on these investments are made by state run lotteries.

The Company's other long-term investments in co-op loans were $552,676 and $760,833 as of June 30, 2025 and December 31, 2024, respectively. A co-op ownership is represented by shares of stock in a corporation that owns the real estate. Co-op loans use the shares of stock and not the real estate to secure the debt.

The Company's amortized cost and fair value of other long-term investments in commercial mortgage-backed securities that lack substantive credit enhancement were $156,090 and $103,898, respectively, as of June 30, 2025.

The amortized cost and fair value of fixed maturity available-for-sale securities and other long-term investments as of June 30, 2025, by contractual maturity, are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) |
|  | Fixed Maturity Available-For-Sale Securities | Fixed Maturity Available-For-Sale Securities | Lottery Prize Cash Flows | Lottery Prize Cash Flows |
|  | Amortized Cost | Fair Value | Amortized Cost | Fair Value |
| Due in one year or less | $9363801 | $9329447 | $13129381 | $13265892 |
| Due after one year through five years | 34733073 | 34121820 | 26006691 | 27488541 |
| Due after five years through ten years | 47687305 | 45857991 | 9952452 | 11509564 |
| Due after ten years | 105467868 | 99685428 | 4837982 | 6280144 |
| Due at multiple maturity dates | 25275515 | 24054846 |  |  |
|  | $222527562 | $213049532 | $53926506 | $58544141 |

---

The amortized cost and fair value of fixed maturity available-for-sale securities held in trust under coinsurance agreement as of June 30, 2025, by contractual maturity, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) |
|  | Fixed Maturity Available-For-Sale Securities | Fixed Maturity Available-For-Sale Securities |
|  | Amortized Cost | Fair Value |
| Due in one year or less | $259629 | $259715 |
| Due after one year through five years | 930281 | 897878 |
| Due after five years through ten years | 2054198 | 2005860 |
| Due after ten years | 13862355 | 9793837 |
| Due at multiple maturity dates | 2775544 | 2521539 |
|  | $19882007 | $15478829 |

---

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**2. Investments** (continued)

Proceeds and gross realized gains (losses) from the sales, calls and maturities of fixed maturity securities available-for-sale, mortgage loans on real estate, investment real estate and equity securities for the three and six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) |
|  | Fixed Maturity Securities | Fixed Maturity Securities | Mortgage Loans on Real Estate | Mortgage Loans on Real Estate | Investment Real Estate | Investment Real Estate | Equity Securities | Equity Securities |
|  | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| Proceeds | $23889372 | $2418152 | $38122063 | $36322107 | $- | $- | $4222 | $- |
| Gross realized gains |  | 24791 |  |  |  |  | 4222 |  |
| Gross realized losses | (73291) | (67206) | (1137) | (34442) |  |  |  |  |
| Loss on impairments |  |  |  |  |  | (129436) |  |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) |
|  | Fixed Maturity Securities | Fixed Maturity Securities | Mortgage Loans on Real Estate | Mortgage Loans on Real Estate | Investment Real Estate | Investment Real Estate | Equity Securities | Equity Securities |
|  | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| Proceeds | $55696776 | $3451501 | $58809803 | $72861854 | $294982 | $- | $6944 | $- |
| Gross realized gains | 221430 | 25165 |  | 59858 | 29412 |  | 6944 |  |
| Gross realized losses | (68641) | (69278) | (1137) | (34442) |  |  |  |  |
| Loss on impairments |  |  |  |  |  | (129436) |  |  |

---

The accumulated change in unrealized investment gains (losses) for fixed maturity available-for-sale securities and other long-term investments for the three and six months ended June 30, 2025 and 2024 and the amount of net realized investment gains (losses) on fixed maturity securities available-for-sale, mortgage loans on real estate, investment real estate and equity securities for the three and six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) |
|  | 2025 | 2024 | 2025 | 2024 |
| Change in unrealized investment gains (losses): |  |  |  |  |
| Available-for-sale securities: |  |  |  |  |
| Fixed maturity securities | $631473 | $(853124) | $4479851 | $(1549249) |
| Fixed maturity securities held in trust under coinsurance agreement | 37699 | 124551 | 223632 | 84295 |
| Other long-term investments | (52192) |  | (52192) |  |
| Net realized investment gains (losses): |  |  |  |  |
| Available-for-sale securities: |  |  |  |  |
| Fixed maturity securities | (73291) | (42415) | 152789 | (44113) |
| Fixed maturity securities credit losses | (13056) | (79477) | 618110 | (136572) |
| Mortgage loans on real estate | (1137) | (34442) | (1137) | 25416 |
| Investment real estate |  |  | 29412 |  |
| Equity securities | 4222 |  | 6944 |  |
| Equity securities, changes in fair value | 60304 | (3631) | 33128 | 35365 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**2. Investments** (continued)

Major categories of net investment income for the three and six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) |
|  | 2025 | 2024 | 2025 | 2024 |
| Fixed maturity securities | $2530774 | $1908083 | $4670728 | $3670108 |
| Equity securities | 86081 | 38118 | 163027 | 52752 |
| Other long-term investments | 1069651 | 1124968 | 2191549 | 2292211 |
| Mortgage loans | 5612876 | 4490460 | 10456826 | 9437977 |
| Policy loans | 88103 | 66039 | 171410 | 134790 |
| Short-term and other investments | 410977 | 662925 | 741125 | 1135364 |
| Gross investment income | 9798462 | 8290593 | 18394665 | 16723202 |
| Investment expenses | (687224) | (622176) | (1465144) | (1096908) |
| Net investment income | $9111238 | $7668417 | $16929521 | $15626294 |

---

TLIC and FBLIC are required to hold assets on deposit with various state insurance departments for the benefit of policyholders and other special deposits in accordance with statutory rules and regulations. As of June 30, 2025 and December 31, 2024, these required deposits, included in investment assets, had amortized costs that totaled $5,065,649 and $6,740,988, respectively. As of June 30, 2025 and December 31, 2024, these required deposits had fair values that totaled $5,060,118 and $6,735,209, respectively.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**2. Investments** (continued)

The Company's mortgage loans by property type as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | June 30, 2025 | December 31, 2024 |
| Residential mortgage loans | $231327847 | $195050397 |
| Commercial mortgage loans by property type |  |  |
| Agricultural | 243030 | 244253 |
| Apartment | 5173343 | 4634586 |
| Industrial | 336537 | 357193 |
| Office building | 4728825 | 4120057 |
| Retail | 7482095 | 4958018 |
| Total commercial mortgage loans by property type | 17963830 | 14314107 |
| Total mortgage loans | $249291677 | $209364504 |
| Mortgage loans held in trust under coinsurance agreement |  |  |
| Commercial mortgage loans | $10471682 | $12660117 |
| Total mortgage loans held in trust under coinsurance agreement | $10471682 | $12660117 |

---

There were 33 mortgage loans with a remaining principal balance of $7,935,123 that were more than 90 days past due as of June 30, 2025. There were 27 mortgage loans with a remaining principal balance of $7,375,244 that were more than 90 days past due as of June 30, 2024.

There were 10 mortgage loans in default and in the foreclosure process with a remaining principal balance of $2,304,822 as of June 30, 2025. There were 11 mortgage loans in default and in the foreclosure process with a remaining principal balance of $4,130,357 as of June 30, 2024.

The Company's investment real estate as of June 30, 2025 and December 31, 2024 is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | June 30, 2025 | December 31, 2024 |
| Land - held for investment | $411000 | $411000 |
| Residential real estate - held for sale | 2134159 | 1940549 |
| Total investment in real estate | $2545159 | $2351549 |

---

TLIC owns approximately three acres of undeveloped land located in Topeka, Kansas with a carrying value of $280,000. During 2024, the company recognized an impairment loss of $129,436 from a market value appraisal that resulted in fair value estimation less than the carrying value.

FBLIC owns approximately one-half acre of undeveloped land located in Jefferson City, Missouri with a carrying value of $131,000.

During 2025, the Company foreclosed on residential mortgage loans of real estate totaling $459,180 and transferred those properties to investment real estate held for sale.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**2. Investments** (continued)

During 2024, the Company foreclosed on residential mortgage loans of real estate totaling $1,441,287 and transferred those properties to investment real estate held for sale.

During 2025, the Company sold investment real estate property with an aggregate carrying value of $265,570. The Company recorded a gross realized investment gain on sale of $29,412 based on an aggregate sales price of $294,982. During 2024, the Company sold investment real estate property with an aggregate carrying value of $265,705. The Company recorded a gross realized investment gain on sale of $11,251 based on an aggregate sales price of $276,956.

**3. Fair Value Measurements**

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) on the measurement date. The Company also considers the impact on fair value of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity.

The Company holds fixed maturity and equity securities that are measured and reported at fair market value on the statement of financial position. The Company determines the fair market values of its financial instruments based on the fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value, as follows:

<u>Level 1</u> - Quoted prices in active markets for identical assets or liabilities. The Company's Level 1 assets include equity securities that are traded in an active exchange market.

<u>Level 2</u> - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company's Level 2 assets and liabilities include fixed maturity securities with quoted prices that are traded less frequently than exchange-traded instruments or assets and liabilities whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes U.S. government and U.S. government agencies, state and political subdivisions, U.S. government agency mortgage backed securities, commercial and residential mortgage-backed securities, corporate bonds, asset-backed securities, exchange traded securities, foreign bonds and redeemable preferred stocks.

<u>Level 3</u> - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company's Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments where independent pricing information was not able to be obtained for a significant portion of the underlying assets.

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three-level fair value hierarchy. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs, or their ability to be observed, may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in and out of the Level 3 category as of the beginning of the period in which the reclassifications occur.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**3. Fair Value Measurements** (continued)

The Company's fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 is summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Level 1 | Level 2 | Level 3 | Total |
|  | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) |
| Fixed maturity securities, available-for-sale |  |  |  |  |
| U.S. government and U.S. government agencies | $- | $4274630 | $- | $4274630 |
| States and political subdivisions |  | 7279371 |  | 7279371 |
| U.S. government agency mortgage backed securities |  | 32307075 |  | 32307075 |
| Commercial mortgage-backed securities |  | 22934676 |  | 22934676 |
| Residential mortgage-backed securities |  | 14273 |  | 14273 |
| Corporate bonds |  | 103742503 |  | 103742503 |
| Asset-backed securities |  | 12974850 |  | 12974850 |
| Exchange traded securities |  | 485600 |  | 485600 |
| Foreign bonds |  | 28034554 |  | 28034554 |
| Redeemable preferred securities |  | 1002000 |  | 1002000 |
| Total fixed maturity securities | $- | $213049532 | $- | $213049532 |
| Fixed maturity securities, available-for-sale held in trust under coinsurance agreement | $- | $15478829 | $- | $15478829 |
| Equity securities |  |  |  |  |
| Mutual funds | $- | $47808 | $- | $47808 |
| Corporate common stock | 219290 | 5174462 | 75811 | 5469563 |
| Total equity securities | $219290 | $5222270 | $75811 | $5517371 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 |
| Fixed maturity securities, available-for-sale |  |  |  |  |
| U.S. government and U.S. government agencies | $- | $4275965 | $- | $4275965 |
| States and political subdivisions |  | 7693233 |  | 7693233 |
| U.S. government agency mortgage backed securities |  | 40235381 |  | 40235381 |
| Commercial mortgage-backed securities |  | 18499398 |  | 18499398 |
| Residential mortgage-backed securities |  | 14111 |  | 14111 |
| Corporate bonds |  | 99356554 |  | 99356554 |
| Asset-backed securities |  | 14898584 |  | 14898584 |
| Exchange traded securities |  | 496800 |  | 496800 |
| Foreign bonds |  | 27239795 |  | 27239795 |
| Redeemable preferred securities |  | 1036000 |  | 1036000 |
| Total fixed maturity securities | $- | $213745821 | $- | $213745821 |
| Fixed maturity securities, available-for-sale held in trust under coinsurance agreement | $- | $17932297 | $- | $17932297 |
| Equity securities |  |  |  |  |
| Mutual funds | $- | $48375 | $- | $48375 |
| Corporate common stock | 232365 | 4999414 | 55908 | 5287687 |
| Total equity securities | $232365 | $5047789 | $55908 | $5336062 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**3. Fair Value Measurements** (continued)

As of June 30, 2025 and December 31, 2024, Level 3 financial instruments consisted of a private placement common stock that has no active trading and two joint venture investment with a mortgage loan originator.

This private placement common stock represents an investment in a small insurance holding company. The fair value for this security was determined through the use of unobservable assumptions about market participants. The Company has assumed a willing market participant would purchase the security for the same price as the Company paid until such time as this small insurance holding company commences significant operations. The joint venture investments with a mortgage loan originator are accounted for under the equity method of accounting.

Fair values for Level 1 and Level 2 assets for the Company's fixed maturity available-for-sale and equity securities are primarily based on prices supplied by a third party investment service. The third party investment service provides quoted prices in the market which use observable inputs in developing such rates.

The Company analyzes market valuations received to verify reasonableness and to understand the key assumptions used and the sources. Since the fixed maturity securities owned by the Company do not trade on a daily basis, the third party investment service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. As the fair value estimates of the Company's fixed maturity securities are based on observable market information rather than market quotes, the estimates of fair value on these fixed maturity securities are included in Level 2 of the hierarchy. The Company's Level 2 investments include obligations of U.S. government and U.S. government agencies, state and political subdivisions, U.S. government agency mortgage backed securities, commercial and residential mortgage-backed securities, corporate bonds, asset-backed securities, exchange traded securities, foreign bonds and redeemable preferred stocks.

The Company's equity securities are included in Level 1 and Level 2 and the private placement common stocks and joint venture investment are included in Level 3. Level 1 for the equity securities classified as such is appropriate since they trade on a daily basis, are based on quoted market prices in active markets and are based upon unadjusted prices. Level 2 for those equity securities classified as such is appropriate since they are not actively traded.

The Company's fixed maturity available-for-sale securities and equity securities are highly liquid and allows for a high percentage of the portfolio to be priced through pricing services.

The change in the fair value of the Company's Level 3 equity securities available-for-sale for the six months ended June 30, 2025 and December 31, 2024 is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | June 30, 2025 | December 31, 2024 |
| Beginning balance | $55908 | $65240 |
| Joint venture investment | 50000 |  |
| Joint venture net income | 37577 | 106039 |
| Joint venture distribution | (67674) | (115371) |
| Ending balance | $75811 | $55908 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**3. Fair Value Measurements** (continued)

The carrying amount and fair value of the Company's financial assets and financial liabilities disclosed, but not carried, at fair value as of June 30, 2025 and December 31, 2024, and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis are summarized as follows:

Financial instruments disclosed, but not carried, at fair value:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Carrying | Fair |  |  |  |
|  | Amount | Value | Level 1 | Level 2 | Level 3 |
|  | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) | June 30, 2025 (Unaudited) |
| Financial assets |  |  |  |  |  |
| Mortgage loans on real estate |  |  |  |  |  |
| Commercial | $17963830 | $18672289 | $- | $- | $18672289 |
| Residential | 231327847 | 254177198 |  |  | 254177198 |
| Policy loans | 4708650 | 4708650 |  |  | 4708650 |
| Other long-term investments | 54583080 | 59200715 |  |  | 59200715 |
| Cash and cash equivalents | 37602752 | 37602752 | 37602752 |  |  |
| Accrued investment income | 6766776 | 6766776 |  |  | 6766776 |
| Total financial assets | $352952935 | $381128380 | $37602752 | $- | $343525628 |
| Held in trust under coinsurance agreement |  |  |  |  |  |
| Mortgage loans on real estate |  |  |  |  |  |
| Commercial | $10471682 | $10471682 | $- | $- | $10471682 |
| Cash and cash equivalents | 679920 | 679920 | 679920 |  |  |
| Total financial assets held in trust under coinsurance agreement | $11151602 | $11151602 | $679920 | $- | $10471682 |
| Policyholders' account balances | $432133688 | $390046342 | $- | $- | $390046342 |
| Policy claims | 2653269 | 2653269 |  |  | 2653269 |
| Total financial liabilities | $434786957 | $392699611 | $- | $- | $392699611 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 |
| Financial assets |  |  |  |  |
| Mortgage loans on real estate |  |  |  |  |
| Commercial | $14314107 | $14724122 | $- | $14724122 |
| Residential | 195050397 | 211590742 |  | 211590742 |
| Policy loans | 4367534 | 4367534 |  | 4367534 |
| Other long-term investments | 58223514 | 63062063 |  | 63062063 |
| Cash and cash equivalents | 64344122 | 64344122 | 64344122 |  |
| Accrued investment income | 5746167 | 5746167 |  | 5746167 |
| Total financial assets | $342045841 | $363834750 | $64344122 | $299490628 |
| Held in trust under coinsurance agreement |  |  |  |  |
| Mortgage loans on real estate |  |  |  |  |
| Commercial | $12660117 | $12660117 | $- | $12660117 |
| Overdraft | (89726) | (89726) | (89726) |  |
| Total financial assets held in trust under coinsurance agreement | $12570391 | $12570391 | $(89726) | $12660117 |
| Financial liabilities |  |  |  |  |
| Policyholders' account balances | $431190092 | $365288900 | $- | $365288900 |
| Policy claims | 2478465 | 2478465 |  | 2478465 |
| Total financial liabilities | $433668557 | $367767365 | $- | $367767365 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**3. Fair Value Measurements** (continued)

The estimated fair value amounts have been determined using available market information and appropriate valuation methodologies. However, considerable judgment was required to interpret market data to develop these estimates. Accordingly, the estimates are not necessarily indicative of the amounts which could be realized in a current market exchange. The use of different market assumptions or estimation methodologies may have a material effect on the fair value amounts.

The following methods and assumptions were used in estimating the fair value disclosures for financial instruments in the accompanying financial statements and notes thereto:

***Fixed Maturity and Equity Securities***

The fair value of fixed maturity securities and equity securities are based on the principles previously discussed as Level 1, Level 2 and Level 3.

***Mortgage Loans on Real Estate***

The fair values for mortgage loans are estimated using discounted cash flow analyses. For both residential and commercial mortgage loans, the discount rate used was indexed to the Secured Overnight Financing Rate.

***Cash and Cash Equivalents, Short-Term Investments, Accrued Investment Income and Policy Loans***

The carrying value of these financial instruments approximates their fair values. Cash and cash equivalents and short-term investments are included in Level 1 of the fair value hierarchy due to their highly liquid nature.

***Other Long-Term Investments***

Other long-term investments are comprised of lottery prize receivables and fair value is derived by using a discounted cash flow approach. Projected cash flows are discounted using the average FTSE Pension Liability Index in effect at the end of each period.

***Investment Contracts*** – ***Policyholders***' ***Account Balances***

The fair value for liabilities under investment-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach. Cash flows are projected using actuarial assumptions and discounted to the valuation date using risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

The fair values for insurance contracts other than investment-type contracts are not required to be disclosed.

***Policy Claims***

The carrying amounts reported for these liabilities approximate their fair value.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**4. Segment Data**

The Company has a life insurance segment, consisting of the life insurance operations of TLIC, FBLIC and TAI, an annuity segment, consisting of the annuity operations of TLIC, FBLIC and TAI and a corporate segment. Results for the parent company and the operations of TMC, after elimination of intercompany amounts, are allocated to the corporate segment. These segments as of June 30, 2025 and December 31, 2024 and for the three and six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) |
|  | 2025 | 2024 | 2025 | 2024 |
| Revenues: |  |  |  |  |
| Life insurance operations | $13374112 | $12282831 | $25640281 | $24133009 |
| Annuity operations | 6825022 | 5265190 | 13091552 | 11443705 |
| Corporate operations | 2182518 | 595109 | 3259514 | 1108624 |
| Total | $22381652 | $18143130 | $41991347 | $36685338 |
| Income (loss) before income taxes: |  |  |  |  |
| Life insurance operations | $1500901 | $1039421 | $1923272 | $2927650 |
| Annuity operations | 408337 | 161114 | 205611 | 768716 |
| Corporate operations | 1316982 | 587807 | 1825272 | 369578 |
| Total | $3226220 | $1788342 | $3954155 | $4065944 |
| Depreciation and amortization expense: |  |  |  |  |
| Life insurance operations | $2331018 | $2262786 | $4383040 | $4286093 |
| Annuity operations | 478560 | 452179 | 901813 | 805920 |
| Total | $2809578 | $2714965 | $5284853 | $5092013 |

---

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | June 30, 2025 | December 31, 2024 |
| Assets: |  |  |
| Life insurance operations | $173854716 | $165925854 |
| Annuity operations | 506726207 | 506980782 |
| Corporate operations | 13604402 | 13542262 |
| Total | $694185325 | $686448898 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**4. Segment Data (continued)**

The increases and decreases of revenues and profitability from our business segments for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $683317 | $- | $- | $683317 |
| Net investment income | 311674 | 1287177 | (156030) | 1442821 |
| Net realized investment gains and loss on impairments | 78892 | 187551 |  | 266443 |
| Service fees and other income | 17398 | 85104 | 1743439 | 1845941 |
| Total revenue | 1091281 | 1559832 | 1587409 | 4238522 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | (188972) |  |  | (188972) |
| Death benefits | 507351 |  |  | 507351 |
| Surrenders | 168700 |  |  | 168700 |
| Interest credited to policyholders |  | 1218056 |  | 1218056 |
| Dividend, endowment and supplementary life contract benefits | 6098 |  |  | 6098 |
| Total benefits and claims | 493177 | 1218056 |  | 1711233 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | 357968 | 843481 |  | 1201449 |
| Amortization of value of insurance business acquired | 653 | 655 |  | 1308 |
| Commissions | 71865 | (924978) |  | (853113) |
| Other underwriting, insurance and acquisition expenses | (293862) | 175395 | 858234 | 739767 |
| Total expenses | 136624 | 94553 | 858234 | 1089411 |
| Total benefits, claims and expenses | 629801 | 1312609 | 858234 | 2800644 |
| Income before federal income taxes | $461480 | $247223 | $729175 | $1437878 |

---

The increases and decreases of revenues and profitability from our business segments for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $1191388 | $- | $- | $1191388 |
| Net investment income | 180459 | 1192621 | (69853) | 1303227 |
| Net realized investment gains and loss on impairments | 280788 | 807798 |  | 1088586 |
| Service fees and other income | (145363) | (352572) | 2220743 | 1722808 |
| Total revenue | 1507272 | 1647847 | 2150890 | 5306009 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 726887 |  |  | 726887 |
| Death benefits | 961591 |  |  | 961591 |
| Surrenders | 366910 |  |  | 366910 |
| Interest credited to policyholders |  | 2322176 |  | 2322176 |
| Dividend, endowment and supplementary life contract benefits | 49869 |  |  | 49869 |
| Total benefits and claims | 2105257 | 2322176 |  | 4427433 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | 670512 | 685896 |  | 1356408 |
| Amortization of value of insurance business acquired | (1697) | (1696) |  | (3393) |
| Commissions | (18374) | (916623) |  | (934997) |
| Other underwriting, insurance and acquisition expenses | (244048) | 121199 | 695196 | 572347 |
| Total expenses | 406393 | (111224) | 695196 | 990365 |
| Total benefits, claims and expenses | 2511650 | 2210952 | 695196 | 5417798 |
| Income (loss) before federal income taxes (benefits) | $(1004378) | $(563105) | $1455694 | $(111789) |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**4. Segment Data (continued)**

The Company conducts and manages its business through three reporting business segments. The two reporting segments representing the major lines of business, are: (1) Life Insurance Operations and (2) Annuity Operations. The third reporting business segment is Corporate Operations that represents the activities of the financial holding companies that own all consolidated subsidiaries and include excess assets that are invested primarily in mortgage loan activities. The Company allocates the impact of corporate-level transactions to all three reporting segments, consistent with the basis for management's evaluation of the results of those reporting segments.

The accounting policies of the reporting segments are the same as those described in Note 1 - Organization and Significant Accounting Policies. Business segment allocations are based on certain assumptions and estimates primarily related to asset and liability holdings and revenue and cost activity with methodologies applied consistently from year-to-year. Stated segment operating results would change if different methods were applied.

The Company's Chief Executive Officer is the chief operating decision maker (CODM), responsible for reviewing financial performance and making decisions regarding the allocation of resources for the reporting segments. The Company measures and analyzes segment performance based on earnings focused on investment yield, mortality of life insurance operations, interest assumptions inherent in life insurance future policy benefits, policyholders' balances interest crediting rates and relative ratios of commission to life insurance premiums and annuity deposits as presented in our consolidated statements of operations. FTFC believes that U.S. GAAP earnings before federal income taxes is an appropriate indicator of the profitability and underlying trends in our life insurance and annuity business. The CODM considers actual-to-budget variances in U.S. GAAP earnings on a quarterly basis when making decisions about allocating capital and personnel to segments and evaluating product pricing.

Disaggregated financial information for these segments, as regularly provided to the CODM, for the three and six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2025 |
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $10985721 | $- | $- | $10985721 |
| Net invesment income | 2317562 | 6609583 | 184093 | 9111238 |
| Net realized investment losses | (1398) | (21560) |  | (22958) |
| Service fees and other income | 72227 | 236999 | 1998425 | 2307651 |
| Total revenue | 13374112 | 6825022 | 2182518 | 22381652 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 3646797 |  |  | 3646797 |
| Death benefits | 3878238 |  |  | 3878238 |
| Surrenders | 750541 |  |  | 750541 |
| Interest credited to policyholders |  | 4818377 |  | 4818377 |
| Dividend, endowment and supplementary life contract benefits | 101740 |  |  | 101740 |
| Total benefits and claims | 8377316 | 4818377 |  | 13195693 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | (402837) | (65934) |  | (468771) |
| Amortization of value of insurance business acquired | 22574 | 22573 |  | 45147 |
| Commissions | 2777147 | 400350 |  | 3177497 |
| Other underwriting, insurance and acquisition expenses | 1099011 | 1241319 | 865536 | 3205866 |
| Total expenses | 3495895 | 1598308 | 865536 | 5959739 |
| Total benefits, claims and expenses | 11873211 | 6416685 | 865536 | 19155432 |
| Income before federal income tax expense | $1500901 | $408337 | $1316982 | $3226220 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**4. Segment Data (continued)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2024 |
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $10302404 | $- | $- | $10302404 |
| Net invesment income | 2005888 | 5322405 | 340124 | 7668417 |
| Net realized investment gains and loss on impairments | (80290) | (209111) |  | (289401) |
| Service fees and other income | 54829 | 151896 | 254985 | 461710 |
| Total revenue | 12282831 | 5265190 | 595109 | 18143130 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 3835769 |  |  | 3835769 |
| Death benefits | 3370887 |  |  | 3370887 |
| Surrenders | 581841 |  |  | 581841 |
| Interest credited to policyholders |  | 3600321 |  | 3600321 |
| Dividend, endowment and supplementary life contract benefits | 95642 |  |  | 95642 |
| Total benefits and claims | 7884139 | 3600321 |  | 11484460 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | (760805) | (909415) |  | (1670220) |
| Amortization of value of insurance business acquired | 21920 | 21919 |  | 43839 |
| Commissions | 2706381 | 1324229 |  | 4030610 |
| Other underwriting, insurance and acquisition expenses | 1391775 | 1067022 | 7302 | 2466099 |
| Total expenses | 3359271 | 1503755 | 7302 | 4870328 |
| Total benefits, claims and expenses | 11243410 | 5104076 | 7302 | 16354788 |
| Income before federal income tax expense | $1039421 | $161114 | $587807 | $1788342 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2025 |
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $21144797 | $- | $- | $21144797 |
| Net invesment income | 4220687 | 12259607 | 449227 | 16929521 |
| Net realized investment gains | 212842 | 626404 |  | 839246 |
| Service fees and other income | 61955 | 205541 | 2810287 | 3077783 |
| Total revenue | 25640281 | 13091552 | 3259514 | 41991347 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 7143671 |  |  | 7143671 |
| Death benefits | 7843231 |  |  | 7843231 |
| Surrenders | 1526108 |  |  | 1526108 |
| Interest credited to policyholders |  | 9589981 |  | 9589981 |
| Dividend, endowment and supplementary life contract benefits | 230527 |  |  | 230527 |
| Total benefits and claims | 16743537 | 9589981 |  | 26333518 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | (925591) | 12197 |  | (913394) |
| Amortization of value of insurance business acquired | 45891 | 45892 |  | 91783 |
| Commissions | 5295597 | 581743 |  | 5877340 |
| Other underwriting, insurance and acquisition expenses | 2557575 | 2656128 | 1434242 | 6647945 |
| Total expenses | 6973472 | 3295960 | 1434242 | 11703674 |
| Total benefits, claims and expenses | 23717009 | 12885941 | 1434242 | 38037192 |
| Income before federal income tax expense | $1923272 | $205611 | $1825272 | $3954155 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**4. Segment Data (continued)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2024 |
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $19953409 | $- | $- | $19953409 |
| Net invesment income | 4040228 | 11066986 | 519080 | 15626294 |
| Net realized investment gains and loss on impairments | (67946) | (181394) |  | (249340) |
| Service fees and other income | 207318 | 558113 | 589544 | 1354975 |
| Total revenue | 24133009 | 11443705 | 1108624 | 36685338 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 6416784 |  |  | 6416784 |
| Death benefits | 6881640 |  |  | 6881640 |
| Surrenders | 1159198 |  |  | 1159198 |
| Interest credited to policyholders |  | 7267805 |  | 7267805 |
| Dividend, endowment and supplementary life contract benefits | 180658 |  |  | 180658 |
| Total benefits and claims | 14638280 | 7267805 |  | 21906085 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | (1596103) | (673699) |  | (2269802) |
| Amortization of value of insurance business acquired | 47588 | 47588 |  | 95176 |
| Commissions | 5313971 | 1498366 |  | 6812337 |
| Other underwriting, insurance and acquisition expenses | 2801623 | 2534929 | 739046 | 6075598 |
| Total expenses | 6567079 | 3407184 | 739046 | 10713309 |
| Total benefits, claims and expenses | 21205359 | 10674989 | 739046 | 32619394 |
| Income before federal income tax expense | $2927650 | $768716 | $369578 | $4065944 |

---

**5. Federal Income Taxes**

The provision for federal income taxes is based on the asset and liability method of accounting for income taxes. Deferred income taxes are provided for the cumulative temporary differences between balances of assets and liabilities determined under GAAP and the balances using tax bases.

The Company has no known uncertain tax benefits within its provision for income taxes. In addition, the Company does not believe it would be subject to any penalties or interest relative to any open tax years and, therefore, has not accrued any such amounts. The Company files U.S. federal income tax returns and income tax returns in various state jurisdictions. The 2021 through 2023 U.S. federal tax years are subject to income tax examination by tax authorities. The Company classifies any interest and penalties (if applicable) as income tax expense in the financial statements.

**6. Contingent Liabilities**

From time to time, we are a party to various legal proceedings in the ordinary course of business. While management is unable to predict the ultimate outcome of these actions, it believes that any ultimate liability arising from them will not have a material effect on the Company's financial position, results of operations or cash flow. We are not currently a party to any bankruptcy, receivership, reorganization, adjustment or similar proceeding, and we are not aware of any material threatened litigation. As summarized below, the Company is currently involved in three pending lawsuits.

A lawsuit filed by the Company and its Chairman and Chief Executive Officer, Gregg E. Zahn ("Mr. Zahn") styled First Trinity Financial Corporation and Gregg E. Zahn vs. C. Wayne Pettigrew and Group & Pension Planners was originally filed in 2013 in the District Court of Tulsa County, Oklahoma against former Company Board of Director, C. Wayne Pettigrew ("Mr. Pettigrew"). The Company and Mr. Zahn alleged that Mr. Pettigrew defamed Mr. Zahn and the Company and that Mr. Pettigrew breached his fiduciary duties to the Company by making untrue statements about the Company and Mr. Zahn to the press, state regulators and to certain shareholders.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**6. Contingent Liabilities** (continued)

In February 2017, the lawsuit resulted in a jury verdict in favor of the Company and Mr. Zahn, with the jury awarding damages of $800,000 to the Company and $3,500,000 to Mr. Zahn. In February 2020, the Oklahoma Court of Civil Appeals, upon an appeal by Mr. Pettigrew, reversed the judgment and remanded the case for a new trial. A Petition for Certiorari review with the Oklahoma Supreme Court by the Company and Mr. Zahn was declined in December, 2020. The case was scheduled to be retried in the district court but was settled with the defendant on April 14, 2025.

The Company, through its life insurance subsidiary, TLIC, commenced two lawsuits as plaintiff, both in the New York Supreme Court, New York County, one on June 29, 2020 and another on March 4, 2022, for breach of contract against a company for failure to advance funding to lottery ticket winners to the detriment of TLIC and against various of that company's associated persons for unjust enrichment and fraud perpetuated on TLIC. The cases are entitled "Trinity Life Insurance Company v. Advance Funding LLC, Dan Cevallos, and Monica L. Ray, Index No. 652780/2020" (New York Supreme Court, New York County) and "Trinity Life Insurance Company v. Advance Funding LLC, Dan Cevallos, Julie Casal, and Monica L. Ray, Index No. 651023/2022" (New York Supreme Court, New York County). The Company is vigorously prosecuting this case against the defendants. The Company faces no exposure in connection with either action since no counterclaims or cross claims have been made against the Company. Management believes that these lawsuits are not material in relation to the Company's financial position or results of operations.

Guaranty fund assessments, brought about by the insolvency of life and health insurers, are levied at the discretion of the various state guaranty fund associations to cover association obligations. In most states, guaranty fund assessments may be taken as a credit against premium taxes, typically over a five-year period.

**7. Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss**

The changes in the components of the Company's accumulated other comprehensive loss for the three and six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Three Months Ended June 30, 2025 and 2024 (Unaudited) | Three Months Ended June 30, 2025 and 2024 (Unaudited) | Three Months Ended June 30, 2025 and 2024 (Unaudited) |
|  | Unrealized |  | Accumulated |
|  | Depreciation on | Adjustment to | Other |
|  | Available-For-Sale | Deferred Acquisition | Comprehensive |
|  | Securities | Costs | Loss |
| Balance as of April 1, 2025 | $(7986521) | $1890 | $(7984631) |
| Other comprehensive income before reclassifications, net of tax | 399732 | (146) | 399586 |
| Less amounts reclassified from accumulated other comprehensive loss having no credit losses, net of tax | (57899) |  | (57899) |
| Other comprehensive income | 457631 | (146) | 457485 |
| Balance as of June 30, 2025 | $(7528890) | $1744 | $(7527146) |
| Balance as of April 1, 2024 | $(10193705) | $2381 | $(10191324) |
| Other comprehensive loss before reclassifications, net of tax | (707476) | 151 | (707325) |
| Less amounts reclassified from accumulated other comprehensive loss having no credit losses, net of tax | (33508) |  | (33508) |
| Other comprehensive loss | (673968) | 151 | (673817) |
| Balance as of June 30, 2024 | $(10867673) | $2532 | $(10865141) |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

7. O**ther Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss** (continued)

---

| | | | |
|:---|:---|:---|:---|
|  | Six Months Ended June 30, 2025 and 2024 (Unaudited) | Six Months Ended June 30, 2025 and 2024 (Unaudited) | Six Months Ended June 30, 2025 and 2024 (Unaudited) |
|  | Unrealized |  | Accumulated |
|  | Depreciation on | Adjustment to | Other |
|  | Available-For-Sale | Deferred Acquisition | Comprehensive |
|  | Securities | Costs | Loss |
| Balance as of January 1, 2025 | $(11026740) | $2661 | $(11024079) |
| Other comprehensive income before reclassifications, net of tax | 3618554 | (917) | 3617637 |
| Less amounts reclassified from accumulated other comprehensive loss having no credit losses, net of tax | 120704 |  | 120704 |
| Other comprehensive income | 3497850 | (917) | 3496933 |
| Balance as of June 30, 2025 | $(7528890) | $1744 | $(7527146) |
| Balance as of January 1, 2024 | $(9643766) | $2458 | $(9641308) |
| Other comprehensive loss before reclassifications, net of tax | (1258756) | 74 | (1258682) |
| Less amounts reclassified from accumulated other comprehensive loss having no credit losses, net of tax | (34849) |  | (34849) |
| Other comprehensive loss | (1223907) | 74 | (1223833) |
| Balance as of June 30, 2024 | $(10867673) | $2532 | $(10865141) |

---

The pretax components of the Company's other comprehensive income (loss) and the related income tax expense (benefit) for each component for the three and six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Three Months Ended June 30, 2025 (Unaudited) | Three Months Ended June 30, 2025 (Unaudited) | Three Months Ended June 30, 2025 (Unaudited) |
|  |  | Income Tax |  |
|  | Pretax | Expense (Benefit) | Net of Tax |
| Other comprehensive income: |  |  |  |
| Change in net unrealized gains on available-for-sale securities: |  |  |  |
| Unrealized holding gains arising during the period | $505990 | $106258 | $399732 |
| Reclassification adjustment for net losses included in operations having no credit losses | (73291) | (15392) | (57899) |
| Net unrealized gains on investments | 579281 | 121650 | 457631 |
| Adjustment to deferred acquisition costs | (185) | (39) | (146) |
| Total other comprehensive income | $579096 | $121611 | $457485 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | Three Months Ended June 30, 2024 (Unaudited) | Three Months Ended June 30, 2024 (Unaudited) | Three Months Ended June 30, 2024 (Unaudited) |
|  |  | Income Tax |  |
|  | Pretax | Expense (Benefit) | Net of Tax |
| Other comprehensive loss: |  |  |  |
| Change in net unrealized losses on available-for-sale securities: |  |  |  |
| Unrealized holding losses arising during the period | $(895539) | $(188063) | $(707476) |
| Reclassification adjustment for net losses included in operations having no credit losses | (42415) | (8907) | (33508) |
| Net unrealized losses on investments | (853124) | (179156) | (673968) |
| Adjustment to deferred acquisition costs | 191 | 40 | 151 |
| Total other comprehensive loss | $(852933) | $(179116) | $(673817) |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**7. Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss** (continued)

---

| | | | |
|:---|:---|:---|:---|
|  | Six Months Ended June 30, 2025 (Unaudited) | Six Months Ended June 30, 2025 (Unaudited) | Six Months Ended June 30, 2025 (Unaudited) |
|  |  | Income Tax |  |
|  | Pretax | Expense (Benefit) | Net of Tax |
| Other comprehensive income: |  |  |  |
| Change in net unrealized gains on available-for-sale securities: |  |  |  |
| Unrealized holding gains arising during the period | $4580448 | $961894 | $3618554 |
| Reclassification adjustment for net gains included in operations having no credit losses | 152789 | 32085 | 120704 |
| Net unrealized gains on investments | 4427659 | 929809 | 3497850 |
| Adjustment to deferred acquisition costs | (1162) | (245) | (917) |
| Total other comprehensive income | $4426497 | $929564 | $3496933 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | Six Months Ended June 30, 2024 (Unaudited) | Six Months Ended June 30, 2024 (Unaudited) | Six Months Ended June 30, 2024 (Unaudited) |
|  |  | Income Tax |  |
|  | Pretax | Expense (Benefit) | Net of Tax |
| Other comprehensive loss: |  |  |  |
| Change in net unrealized losses on available-for-sale securities: |  |  |  |
| Unrealized holding losses arising during the period | $(1593362) | $(334606) | $(1258756) |
| Reclassification adjustment for net losses included in operations having no credit losses | (44113) | (9264) | (34849) |
| Net unrealized losses on investments | (1549249) | (325342) | (1223907) |
| Adjustment to deferred acquisition costs | 94 | 20 | 74 |
| Total other comprehensive loss | $(1549155) | $(325322) | $(1223833) |

---

Realized gains and losses on the sales of investments are determined based upon the specific identification method and include provisions for other-than-temporary impairments where appropriate.

The pretax and the related income tax components of the amounts reclassified from the Company's accumulated other comprehensive loss to the Company's consolidated statement of operations for the three and six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended June 30, (Unaudited) | Three Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) | Six Months Ended June 30, (Unaudited) |
| Reclassification Adjustments | 2025 | 2024 | 2025 | 2024 |
| Unrealized losses on available-for-sale securities having no credit losses: |  |  |  |  |
| Realized losses on sales of securities (a) | $(73291) | $(42415) | $152789 | $(44113) |
| Income tax benefit (b) | (15392) | (8907) | 32085 | (9264) |
| Total reclassification adjustments | $(57899) | $(33508) | $120704 | $(34849) |

---

(a) These items appear within net realized investment gains (losses) in the consolidated statements of operations.

(b) These items appear within federal income taxes in the consolidated statements of operations.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**8. Allowance for Loan Losses from Mortgage Loans on Real Estate** 

As of June 30, 2025, $920,250 of independent residential mortgage loans on real estate is held in escrow by a third party for the benefit of the Company. As of June 30, 2025, $908,461 of that escrow amount is available to the Company as additional collateral on $5,026,284 of advances to the loan originator. The remaining June 30, 2025 escrow amount of $11,789 is available to the Company as additional collateral on its investment of $2,357,772 in residential mortgage loans on real estate. In addition, the Company has an additional $1,240,874 allowance for possible loan losses in the remaining $246,933,905 of investments in mortgage loans on real estate as of June 30, 2025.

As of December 31, 2024, $754,448 of independent residential mortgage loans on real estate are held in escrow by a third party for the benefit of the Company. As of December 31, 2024, $738,411 of that escrow amount is available to the Company as additional collateral on $4,746,638 of advances to the loan originator. The remaining December 31, 2024 escrow amount of $16,037 is available to the Company as additional collateral on its investment of $3,207,399 in mortgage loans on real estate. In addition, the Company has an additional $1,035,965 allowance for possible loan losses in the remaining $206,157,105 of investments in mortgage loans on real estate as of December 31, 2024.

As of June 30, 2025, the Company's Chairman, President and Chief Executive Officer has provided approximately $2,500,000 of loans to this mortgage loan originator and with Board of Directors approval, may provide an additional amount of $500,000 so not to exceed $3.0 million in the aggregate.

The balances of and changes in the Company's credit losses related to mortgage loans on real estate as of and for the three and six months ended June 30, 2025 and 2024 are summarized as follows (excluding $2,357,772 and $3,771,488 of mortgage loans on real estate as of June 30, 2025 and 2024, respectively, with one loan originator where independent mortgage loan balances are held in escrow by a third party for the benefit of the Company):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, |
|  | Residential Mortgage Loans | Residential Mortgage Loans | Commercial Mortgage Loans | Commercial Mortgage Loans | Total | Total |
|  | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| Allowance, beginning | $1027453 | $983456 | $71288 | $68505 | $1098741 | $1051961 |
| Charge offs |  |  |  |  |  |  |
| Recoveries |  |  |  |  |  |  |
| Provision | 123150 | (49939) | 18983 | 3734 | 142133 | (46205) |
| Allowance, ending | $1150603 | $933517 | $90271 | $72239 | $1240874 | $1005756 |
| Allowance, ending: |  |  |  |  |  |  |
| Individually evaluated for impairment | $- | $- | $- | $- | $- | $- |
| Collectively evaluated for impairment | $1150603 | $933517 | $90271 | $72239 | $1240874 | $1005756 |
| Carrying Values: |  |  |  |  |  |  |
| Individually evaluated for reserve allowance | $- | $- | $- | $- | $- | $- |
| Collectively evaluated for reserve allowance | $228970075 | $185769847 | $17963830 | $14375636 | $246933905 | $200145483 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

**8. Allowance for Loan Losses from Mortgage Loans on Real Estate** (continued)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, |
|  | Residential Mortgage Loans | Residential Mortgage Loans | Commercial Mortgage Loans | Commercial Mortgage Loans | Total | Total |
|  | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| Allowance, beginning | $964035 | $1085919 | $71930 | $78183 | $1035965 | $1164102 |
| Charge offs |  |  |  |  |  |  |
| Recoveries |  |  |  |  |  |  |
| Provision | 186568 | (152402) | 18341 | (5944) | 204909 | (158346) |
| Allowance, ending | $1150603 | $933517 | $90271 | $72239 | $1240874 | $1005756 |
| Allowance, ending: |  |  |  |  |  |  |
| Individually evaluated for impairment | $- | $- | $- | $- | $- | $- |
| Collectively evaluated for impairment | $1150603 | $933517 | $90271 | $72239 | $1240874 | $1005756 |
| Carrying Values: |  |  |  |  |  |  |
| Individually evaluated for reserve allowance | $- | $- | $- | $- | $- | $- |
| Collectively evaluated for reserve allowance | $228970075 | $185769847 | $17963830 | $14375636 | $246933905 | $200145483 |

---

The Company utilizes the ratio of the carrying value of individual mortgage loans compared to the individual appraisal value to evaluate the credit quality of its mortgage loans on real estate (commonly referred to as the loan-to-value ratio). The Company's residential and commercial mortgage loans on real estate by credit quality using this ratio as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Residential Mortgage Loans | Residential Mortgage Loans | Commercial Mortgage Loans | Commercial Mortgage Loans | Total Mortgage Loans | Total Mortgage Loans |
|  | (Unaudited) |  | (Unaudited) |  | (Unaudited) |  |
| Loan-To-Value Ratio | June 30, 2025 | December 31, 2024 | June 30, 2025 | December 31, 2024 | June 30, 2025 | December 31, 2024 |
| Over 70% to 80% | $74100603 | $59821794 | $1698102 | $3119335 | $75798705 | $62941129 |
| Over 60% to 70% | 58211347 | 55743022 | 2307896 | 2178948 | 60519243 | 57921970 |
| Over 50% to 60% | 46394915 | 36901362 | 2858133 | 2754800 | 49253048 | 39656162 |
| Over 40% to 50% | 25031181 | 23308719 | 5390778 | 3020985 | 30421959 | 26329704 |
| Over 30% to 40% | 15374442 | 10242789 | 2676143 | 1094274 | 18050585 | 11337063 |
| Over 20% to 30% | 5163990 | 4944666 | 2130186 | 1232344 | 7294176 | 6177010 |
| Over 10% to 20% | 6063120 | 3052985 | 540150 | 420896 | 6603270 | 3473881 |
| 10% or less | 988249 | 1035060 | 362442 | 492525 | 1350691 | 1527585 |
| Total | $231327847 | $195050397 | $17963830 | $14314107 | $249291677 | $209364504 |

---

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**Item 2: Management**'**s Discussion and Analysis of Financial Condition and Results of Operations**

**Overview**

First Trinity Financial Corporation ("we" "us", "our", "FTFC" or the "Company") conducts operations as an insurance holding company emphasizing ordinary life insurance products and annuity contracts in niche markets.

As an insurance provider, we collect premiums in the current period to pay future benefits to our policy and contract holders. Our core TLIC and FBLIC operations include issuing modified premium whole life insurance with a flexible premium deferred annuity, ordinary whole life, final expense, term and annuity products to predominately middle income households in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia through independent agents.

We also realize revenues from our investment portfolio, which is a key component of our operations. The revenues we collect as premiums from policyholders are invested to ensure future benefit payments under the policy contracts. Life insurance companies earn profits on the investment spread, which reflects the investment income earned on the premiums paid to the insurer between the time of receipt and the time benefits are paid out under policies. Changes in interest rates, changes in economic conditions and volatility in the capital markets can all impact the amount of earnings that we realize from our investment portfolio.

**Acquisitions**

The Company expects to facilitate growth through acquisitions of other life insurance companies and/or blocks of life insurance and annuity business.

In late December 2008, the Company completed its acquisition of 100% of the outstanding stock of FLAC for $2,500,000 and had additional acquisition related expenses of $195,234.

In late December 2011, the Company completed its acquisition of 100% of the outstanding stock of FBLIC for $13,855,129.

On April 28, 2015, the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement and assumed liabilities of $3,055,916.

In 2019, FTFC's acquisition of TAI for $250,000 was approved by the Barbados, West Indies regulators.

Effective January 1, 2020, the Company acquired 100% of the outstanding common stock of K-TENN Insurance Company ("K-TENN") from its sole shareholder in exchange for 168,866 shares of FTFC's common stock. The aggregate purchase price of K-TENN was $1,746,240.

On January 4, 2022, FTFC acquired RCLIC from Royalty in exchange for 722,644 shares of FTFC's Class A common stock issued to unrelated parties. Royalty was dissolved immediately after FTFC acquired RCLIC. On March 1, 2022, the Missouri Department of Commerce and Insurance approved FTFC's contribution and merger of RCLIC into FBLIC.

**Critical Accounting Policies and Estimates**

The discussion and analysis of our financial condition, results of operations and liquidity and capital resources is based on our consolidated financial statements that have been prepared in accordance with U.S. GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We evaluate our estimates and assumptions continually, including those related to investments, deferred acquisition costs, allowance for loan losses from mortgages, value of insurance business acquired, policy liabilities, regulatory requirements, contingencies and litigation. We base our estimates on historical experience and on various other factors and assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

------

For a description of the Company's critical accounting policies and estimates, please refer to "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. The Company considers its most critical accounting estimates to be those applied to investments in fixed maturities securities, mortgage loans on real estate, deferred policy acquisition costs, value of insurance business acquired and future policy benefits. There have been no material changes to the Company's critical accounting policies and estimates since December 31, 2024.

***Cybersecurity***

The Company has established and continues to enhance its cybersecurity enterprise risk management program. The Company's executive team meets formally at least monthly, and informally as needed, to set and maintain a strategy focused on achieving a high level of cybersecurity protection. The Company's executive management team makes quarterly reports to the Company's Board of Directors and Audit Committee.

The Company's executive management team is enhanced by the inclusion of an information technology external consultant to advise the Company's executive management team and to focus on developing and maintaining external and internal cybersecurity. Working with Company executives and staff, the information technology consultant advises and helps the Company implement its strategy with respect to:

● Computer hardware and software,

● Security access, logging and user termination,

● In house and remote user access – user accounts, password protection, authentication, monitoring usage, intrusion detection, incident identification and related controls,

● Encryption,

● System change control,

● Data back up and remote sites,

● Data recovery,

● And Disaster recovery

The Company also utilizes training to foster an environment of information security awareness, training and education. Beyond making employees aware of its cybersecurity risk management program, strategy and governance, this training also introduces all employees to many types of cybersecurity risks to introduce skepticism and enhance skills to identify and report potential situations encountered to the executive management team for further assessment.

***Adopted Accounting Standards***

*Improvements to Reportable Segment Disclosures*

In November 2023, the FASB issued amendments (Accounting Standards Update 2023-07) to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses on both an annual and interim basis. The amendments require public entities to follow the *significant expense principle* and disclose on an annual and interim basis significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") with additional disclosure of the CODM's title, position and how the reported measure(s) of segment profit or loss are used in assessing segment performance and allocating resources. In addition, amounts for *other segment items* are required to be disclosed including a description of its composition. If the COMD uses more than one measure in assessing segment performance and allocating resources, at least one of the measures should be consistent with the corresponding amounts utilized in the public entity's consolidated financial statements.

The amendments in this guidance are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted this Update for year-end reporting in 2024 and for interim periods beginning in 2025.

------

***Recent Accounting Pronouncements***

*Targeted Improvements to the Accounting for Long-Duration Contracts*

In August 2018, the FASB issued updated guidance (Accounting Standards Update 2018-12) to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. This update improves the timeliness of recognizing changes in the liability for future policy benefits, modifies the rate used to discount future cash flows, simplifies and improves accounting for certain market-based options or guarantees associated with deposit (i.e., account balance) contracts, simplifies the amortization of deferred acquisitions costs and expands required disclosures. The expanded disclosure requires an insurance entity to provide disaggregated roll forwards of beginning to ending balances of the following: liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities and deferred acquisition costs including disclosure about, changes to and effect of changes for significant inputs, judgments, assumptions and methods used in measurements.

The updated guidance was effective for reporting periods beginning after December 15, 2020. As a Smaller Reporting Company, the effective date has been changed twice and the delayed effective date is now for reporting periods beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025. Early adoption was permitted. The Company, however, will adopt this pronouncement for its annual reporting as of and for the year ended December 31, 2025.

With respect to the liability for future policyholder benefits for traditional and limited-payment contracts and deferred acquisition costs, the Company will apply the amendments (including market risks benefits) retrospectively as of the beginning of the earliest period presented that will be January 1, 2024. The Company expects that the impact on the Company's results of operations, financial position and liquidity at the date of adoption of the updated guidance in 2025 will be determined by the long-duration contracts then held by the Company and the economic conditions at that time.

*Transition for Sold Contracts*

In December 2022, the FASB issued amendments (Accounting Standards Update 2022-5) to Accounting Standards Update 2018-12 (Targeted Improvements for Long-Duration Contracts) that originally required an insurance entity to apply a retrospective transition method as of the beginning of the earliest period presented or the beginning of the prior fiscal year if early application was elected. This updated guidance reduces implementation costs and complexity associated with the adoption of targeted improvements in accounting for long-duration contracts that have been derecognized in accordance with Accounting Standards Update 2018-12 before the delayed effective date. Without the amendments in this Update, an insurance entity would be required to reclassify a portion of gains or losses previously recognized in the sale or disposal of insurance contracts or legal entities because of the adoption of a new accounting standard. Because there is no effect on an insurance entity's future cash flows, this reclassification may not be useful to users of financial information.

The amendments in this guidance are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted but was not elected by the Company. The Company will adopt this pronouncement for its annual reporting as of and for the year ended December 31, 2025, with the amendments applied retrospectively as of January 1, 2024. The Company expects that the impact on the Company's results of operations, financial position and liquidity at the date of adoption of the updated guidance in 2025 will be determined by the long-duration contracts then held by the Company and the economic conditions at that time.

*Improvements to Income Tax Disclosures*

In December 2023, the FASB issued amendments (Accounting Standards Update 2023-09) to enhance the transparency and decision usefulness of income tax disclosures. The amendments require that public business entities on an annual basis disclose information about taxes paid and a tabular reconciliation using both percentages and amounts of specific categories in the rate reconciliation. In addition, separate disclosure is required for any reconciling item equal to or greater than five (5) percent of the amount computed by multiplying the income or loss from continuing operations before income taxes by the statutory income tax rate. If not otherwise evident, a public business entity is required to provide an explanation of the individual reconciling items such as the nature, effect and causes of the reconciling items.

------

The amendments in this guidance are effective for public companies for fiscal years beginning after December 15, 2024. This guidance should be applied on a prospective basis but retrospective application is permitted. Early adoption is permitted. The Company will adopt and disclose the information required by this Update for year-end reporting in 2025.

*Expense Disaggregation Disclosures*

In November 2024, the FASB issued amendments (Accounting Standards Update 2024-03) to disclose more granular information about costs of sales and general and administrative expenses including employee compensation to improve the disclosure about a public enterprise's expenses by providing more detailed information about the types of expenses commonly presented in expense captions such as costs of sales and general and administrative expenses.

The amendments in this Update require disclosing, in the notes to the financial statements, the following specified information about costs and expenses included in general captions on the face of the financial statements at each interim and annual reporting period of the entity: (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization and (e) depreciation, depletion and amortization recognized as part of oil and gas producing activities or other amounts of depletion expenses.

An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. In addition, the amendments in this Update do not change or remove current expense disclosure requirements including those of specialized industries.

The amendments to this Update are effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company anticipates adopting and disclosing the information required by this Update for year-end reporting in 2027 and interim reporting beginning in first quarter 2028.

In January 2025, the FASB issued Accounting Standards Update 2025-01 that amended Accounting Standards Update 2024-03 to clarify the effective date of the original pronouncement regarding Expense Disaggregation Disclosures. The FASB's intent in Accounting Standards Update 2024-03 was that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The FASB acknowledges, however, that there was ambiguity that only potentially affected non-calendar year-end entities when Accounting Standards Update 2024-03 was issued.

The amendment in this pronouncement amends the effective date of Accounting Standards Update 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of Accounting Standards Update 2024-03 is permitted. This amendment does not impact the Company.

*Debt With Conversion and Other Options*

In November 2024, the FASB issued amendments (Accounting Standards Update 2024-04) to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted as an induced conversion. Under this Update, an inducement offer is required to provide the debt holder with, at a minimum, the consideration in form and amount issuable under the conversion privileges provided in the instrument. If the convertible debt instrument has been exchanged, modified or deemed not substantially different within the one-year period before the settlement date, the current inducement offer should be compared to the inducement offer that existed one-year before the settlement date.

In addition, the incorporation, elimination or modification of a volume weighted average price formula does not automatically cause a settlement to be accounted for as an extinguishment; there is instead a need to assess whether the form and amount of the conversion consideration is preserves using the fair value of the shares as of the settlement date. This induced conversion guidance applies to convertible debt instruments that are not currently convertible as long as there was a substantive conversion feature as of its issuance date or settlement date.

------

The amendments to this Update are effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within that annual reporting period. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. The amendments in this Update permit an entity to apply the new guidance on either a prospective or a retrospective basis. The Company does not have or anticipate having any debt instruments and anticipates never being required to adopt the information required by this Update.

*Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity*

In May 2025, the FASB issued amendments (Accounting Standards Update 2025-03) to revise current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a Variable Interest Entity ("VIE" defined as a legal structure in which controlling interest is determined by something other than majority voting rights and controlling interest is arranged via a contractual relationship rather than through direct ownership) that meets the definition of a business. This amendment requires that the following factors be considered when a VIE is involved to determine which entity is the accounting acquirer:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. If the business combination is effected primarily by transferring cash or other assets or incurring liabilities, the acquirer is usually the entity that transfers the cash or other assets or incurs the liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Other than a reverse acquisition, if the business combination is effected primarily by exchanging equity interests, the acquirer is usually the entity that issues its equity interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. The acquirer is usually the entity that receives the largest portion of the voting rights of the combined entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. If no owner has a majority voting interest, the acquirer is usually the individual or group that owns the largest minority interest of the combined entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. The acquirer is usually the individual or group that has the ability to elect, appoint or remove members of the combined entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. The acquirer is usually the individual or group that dominates management of the combined entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. The acquirer is usually the individual or group that pays a premium over the precombination fair value of the other combined entity or entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. The acquirer is usually the individual or group whose relative size in terms of assets, revenues, earnings or some other measure is significantly larger than the other combining entity or entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. In a business combination involving more than two entities, the acquirer is usually the entity that initiated the combination and is significantly larger than the other combining entity or entities.

The amendments in this guidance are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued (or made available for issuance). If an entity adopts these amendments in an interim reporting period, it shall adopt as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period.

An entity shall apply this guidance on a prospective basis to all business combinations that have an acquisition date that occurs on or after the date of initial application. An entity shall disclose in both the interim reporting period (if applicable) and the annual reporting period of the change the nature of and reason for the change in accounting principle.

This guidance does not currently impact the Company's consolidation of its subsidiaries but Update 2025-03 will be followed in any future business combination situations.

------

**Business Segments**

FASB guidance requires a "management approach" in the presentation of business segments based on how management internally evaluates the operating performance of business units. The discussion of segment operating results that follows is being provided based on segment data prepared in accordance with this methodology.

Our business segments are as follows:

● Life insurance operations, consisting of the life insurance operations of TLIC, FBLIC and TAI;

● Annuity operations, consisting of the annuity operations of TLIC, FBLIC and TAI and

● Corporate operations, which includes the results of the parent company and TMC after the elimination of intercompany amounts.

Please see below and Note 4 to the Consolidated Financial Statements for the three months and six months ended June 30, 2025 and 2024 and as of June 30, 2025 and December 31, 2024 for additional information regarding segment information.

**FINANCIAL HIGHLIGHTS**

**Consolidated Condensed Results of Operations for the Three Months Ended June 30, 2025 and 2024**

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Three Months Ended June 30, | Three Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Premiums | $10985721 | $10302404 | $683317 |
| Net investment income | 9111238 | 7668417 | 1442821 |
| Net realized investment losses | (22958) | (159965) | 137007 |
| Loss on impairments |  | (129436) | 129436 |
| Service fees | 2304439 | 498484 | 1805955 |
| Other income | 3212 | (36774) | 39986 |
| Total revenues | 22381652 | 18143130 | 4238522 |
| Benefits and claims | 13195693 | 11484460 | 1711233 |
| Expenses | 5959739 | 4870328 | 1089411 |
| Total benefits, claims and expenses | 19155432 | 16354788 | 2800644 |
| Income before federal income tax expense | 3226220 | 1788342 | 1437878 |
| Federal income tax expense | 730783 | 398362 | 332421 |
| Net income | $2495437 | $1389980 | $1105457 |
| Net income per common share |  |  |  |
| Class A common stock | $0.2635 | $0.1468 | $0.1167 |
| Class B common stock | $0.2240 | $0.1248 | $0.0992 |

---

------

**Consolidated Condensed Results of Operations for the Six Months Ended June 30, 2025 and 2024**

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Premiums | $21144797 | $19953409 | $1191388 |
| Net investment income | 16929521 | 15626294 | 1303227 |
| Net realized investment gains (losses) | 839246 | (119904) | 959150 |
| Loss on impairments |  | (129436) | 129436 |
| Service fees | 3056354 | 746166 | 2310188 |
| Other income | 21429 | 608809 | (587380) |
| Total revenues | 41991347 | 36685338 | 5306009 |
| Benefits and claims | 26333518 | 21906085 | 4427433 |
| Expenses | 11703674 | 10713309 | 990365 |
| Total benefits, claims and expenses | 38037192 | 32619394 | 5417798 |
| Income before federal income tax expense | 3954155 | 4065944 | (111789) |
| Federal income tax expense | 890604 | 881811 | 8793 |
| Net income | $3063551 | $3184133 | $(120582) |
| Net income per common share |  |  |  |
| Class A common stock | $0.3235 | $0.3362 | $(0.0127) |
| Class B common stock | $0.2750 | $0.2858 | $(0.0108) |

---

**Consolidated Condensed Financial Position as of June 30, 2025 and December 31, 2024**

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) |  | Amount Change |
|  | June 30, 2025 | December 31, 2024 | 2025 to 2024 |
| Investment assets | $529695469 | $493388984 | $36306485 |
| Assets held in trust under coinsurance agreement | 26628335 | 31176310 | (4547975) |
| Other assets | 137861521 | 161883604 | (24022083) |
| Total assets | $694185325 | $686448898 | $7736427 |
| Policy liabilities | $580079090 | $571922942 | $8156148 |
| Funds withheld under coinsurance agreement | 26319584 | 31032174 | (4712590) |
| Deferred federal income taxes | 4828761 | 4023492 | 805269 |
| Other liabilities | 7347178 | 10420062 | (3072884) |
| Total liabilities | 618574613 | 617398670 | 1175943 |
| Shareholders' equity | 75610712 | 69050228 | 6560484 |
| Total liabilities and shareholders' equity | $694185325 | $686448898 | $7736427 |
| Shareholders' equity per common share |  |  |  |
| Class A common stock | $7.9840 | $7.2913 | $0.6927 |
| Class B common stock | $6.7864 | $6.1976 | $0.5888 |

---

------

**Results of Operations** – **Three Months Ended June 30, 2025 and 2024**

**Revenues**

Our primary sources of revenue are life insurance premium income and investment income. Premium payments are classified as first-year, renewal and single. In addition, realized gains and losses on investment holdings can significantly impact revenues from period to period.

Our revenues for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Three Months Ended June 30, | Three Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Premiums | $10985721 | $10302404 | $683317 |
| Net investment income | 9111238 | 7668417 | 1442821 |
| Net realized investment losses | (22958) | (159965) | 137007 |
| Loss on impairments |  | (129436) | 129436 |
| Service fees | 2304439 | 498484 | 1805955 |
| Other income | 3212 | (36774) | 39986 |
| Total revenues | $22381652 | $18143130 | $4238522 |

---

The $4,238,522 increase in total revenues for the three months ended June 30, 2025, is discussed below.

***Premiums***

Our premiums for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Three Months Ended June 30, | Three Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Ordinary life first year | $879303 | $812019 | $67284 |
| Ordinary life renewal | 2768494 | 2180739 | 587755 |
| Supplementary contracts | 17576 |  | 17576 |
| Final expense first year | 761888 | 863409 | (101521) |
| Final expense renewal | 6558460 | 6446237 | 112223 |
| Total premiums | $10985721 | $10302404 | $683317 |

---

The $683,317 increase in premiums for the three months ended June 30, 2025 is primarily due to a $587,755 increase in ordinary life renewal premiums, $112,223 increase in final expense renewal premiums and a $67,284 increase in ordinary life first year premiums that exceeded a $101,521 decrease in final expense first year premiums.

The increase in ordinary life renewal premiums reflects ordinary dollar denominated life insurance policies sold in the international market by TAI. The increase in final expense renewal premiums reflects the persistency of prior years' final expense production. The decrease in final expense first year premiums reflects changes in competitor underwriting guidelines that are relaxed compared to our restricted underwriting standards.

------

***Net Investment Income***

The major components of our net investment income for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Three Months Ended June 30, | Three Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Fixed maturity securities | $2530774 | $1908083 | $622691 |
| Equity securities | 86081 | 38118 | 47963 |
| Other long-term investments | 1069651 | 1124968 | (55317) |
| Mortgage loans | 5612876 | 4490460 | 1122416 |
| Policy loans | 88103 | 66039 | 22064 |
| Short-term and other investments | 410977 | 662925 | (251948) |
| Gross investment income | 9798462 | 8290593 | 1507869 |
| Investment expenses | (687224) | (622176) | 65048 |
| Net investment income | $9111238 | $7668417 | $1442821 |

---

The $1,507,869 increase in gross investment income for the three months ended June 30, 2025 is primarily due to $1,122,416 increase in mortgage loans and a $622,691 increase in fixed maturity securities that exceeded a $251,948 decrease in short-term and other investments.

The increase in mortgage loans investment income is primarily due to increased mortgage loans investments of $45.4 million since June 30, 2024. The increase in fixed maturity securities investment income is primarily due to increased fixed maturity securities investments of $61.3 million since June 30, 2024. The decline in short-term and other investments is primarily due to a decline in the annual percentage yield earned on invested cash and cash equivalent balances.

The $65,048 increase in investment expense for the three months ended June 30, 2025 is primarily due to increased mortgage loan costs.

------

***Net Realized Investment Losses***

Our net realized investment losses result from sales of fixed maturity securities available-for-sale, mortgage loans on real estate, equity securities, changes in fair value of equity securities and changes in current estimate of credit losses.

Our net realized investment gains for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Three Months Ended June 30, | Three Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Fixed maturity securities available-for-sale: |  |  |  |
| Sale proceeds | $23889372 | $2418152 | $21471220 |
| Amortized cost at sale date | 23962663 | 2460567 | 21502096 |
| Net realized losses | $(73291) | $(42415) | $(30876) |
| Mortgage loans on real estate |  |  |  |
| Payment and sale proceeds on mortgage loans | $38122063 | $36322107 | $1799956 |
| Principal collections | 38123200 | 36356549 | 1766651 |
| Net realized losses | $(1137) | $(34442) | $33305 |
| Equity securities |  |  |  |
| Sales proceeds | $4222 | $- | $4222 |
| Cost at sale date |  |  |  |
| Net realized losses | $4222 | $- | $4222 |
| Equity securities, changes in fair value | $60304 | $(3631) | $63935 |
| Changes in current estimate of credit losses | $(13056) | $(79477) | $66421 |
| Net realized investment losses | $(22958) | $(159965) | $137007 |

---

***Loss on Impairments***

During 2024, management impaired TLIC's three acres of undeveloped land located in Topeka, Kansas by $129,436 from its carrying value to its net realizable value expected at the time of ultimate resale based on a third party appraisal.

***Service Fees***

The $1,805,955 increase in service fees for the three months ended June 30, 2025 is primarily due to an increase in fees from Trinity Mortgage Corporation brokering mortgage loans for a fee to third parties.

------

**Total Benefits, Claims and Expenses**

Our benefits, claims and expenses are primarily generated from benefit payments, surrenders, interest credited to policyholders, change in reserves, commissions and other underwriting, insurance and acquisition expenses. Benefit payments can significantly impact expenses from period to period.

Our benefits, claims and expenses for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Three Months Ended June 30, | Three Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Benefits and claims |  |  |  |
| Increase in future policy benefits | $3646797 | $3835769 | $(188972) |
| Death benefits | 3878238 | 3370887 | 507351 |
| Surrenders | 750541 | 581841 | 168700 |
| Interest credited to policyholders | 4818377 | 3600321 | 1218056 |
| Dividend, endowment and supplementary life contract benefits | 101740 | 95642 | 6098 |
| Total benefits and claims | 13195693 | 11484460 | 1711233 |
| Expenses |  |  |  |
| Policy acquisition costs deferred | (3233202) | (4341346) | 1108144 |
| Amortization of deferred policy acquisition costs | 2764431 | 2671126 | 93305 |
| Amortization of value of insurance business acquired | 45147 | 43839 | 1308 |
| Commissions | 3177497 | 4030610 | (853113) |
| Other underwriting, insurance and acquisition expenses | 3205866 | 2466099 | 739767 |
| Total expenses | 5959739 | 4870328 | 1089411 |
| Total benefits, claims and expenses | $19155432 | $16354788 | $2800644 |

---

The $2,800,644 increase in total benefits, claims and expenses for the three months ended June 30, 2025, is discussed below.

***Benefits and Claims***

The $1,711,233 increase in benefits and claims for the three months ended June 30, 2025 is primarily due to the following:

● $1,218,056 increase in interest credited to policyholders is primarily due to an increase in the crediting rate on new annuity contracts issued during 2024 compared to annuity contracts surrendered during 2024.

● $507,351 increase in death benefits is primarily due to approximately $395,000 of increased ordinary life benefits and $112,000 of increased final expense benefits.

● $168,700 increase in surrenders is based upon policyholder election.

● $188,972 decrease in future policy benefits is primarily due to a slight decrease in the average value of the life policies in force and the aging of existing life policies.

------

***Deferral and Amortization of Deferred Acquisition Costs***

Certain costs related to the successful acquisition of traditional life insurance policies are capitalized and amortized over the premium-paying period of the policies. Certain costs related to the successful acquisition of insurance and annuity policies that subject us to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed (i.e., limited-payment long-duration annuity contracts) are capitalized and amortized in relation to the present value of actual and expected gross profits on the policies.

These acquisition costs, which are referred to as deferred policy acquisition costs, include commissions and other successful costs of acquiring policies and contracts, which vary with, and are primarily related to, the successful production of new and renewal life insurance policies and annuity contracts.

For the three months ended June 30, 2025 and 2024, capitalized costs were $3,233,202 and $4,341,346, respectively. Amortization of deferred policy acquisition costs for the three months ended June 30, 2025 and 2024 were $2,764,431 and $2,671,126, respectively.

The $1,108,144 decrease in the 2025 acquisition costs deferred primarily relates to decreased annuity and final expense first year production with a corresponding decrease in deferral of eligible annuity and final expense first year commissions. There was a $93,305 increase in the 2025 amortization of deferred acquisition costs primarily due to increased 2025 surrenders and withdrawal activity and the impact of mortality.

***Amortization of Value of Insurance Business Acquired***

The cost of acquiring insurance business is amortized over the emerging profit of the related policies using the same assumptions that were used in computing liabilities for future policy benefits. Amortization of the value of insurance business acquired was $45,147 and $43,839 for the three months ended June 30, 2025 and 2024, respectively, representing a $1,308 increase.

***Commissions***

Our commissions for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Three Months Ended June 30, | Three Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Annuity | $399251 | $1324229 | $(924978) |
| Ordinary life first year | 954535 | 855150 | 99385 |
| Ordinary life renewal | 330599 | 241687 | 88912 |
| Final expense first year | 899016 | 1013512 | (114496) |
| Final expense renewal | 594096 | 596032 | (1936) |
| Total commissions | $3177497 | $4030610 | $(853113) |

---

The $853,113 decrease in commissions for the three months ended June 30, 2025 is primarily due to a $924,978 decrease in annuity commissions (corresponding to $28,431,969 decreased annuity considerations), $114,496 decrease in final expense first year commissions (corresponding to $101,521 decreased final expense first year premiums) that exceed a $99,385 increase in ordinary life first year commissions (corresponding to $67,284 increased ordinary life first year premiums) and a $88,912 increase in ordinary life renewal commissions (corresponding to $587,755 increased ordinary life renewal premiums).

------

***Other Underwriting, Insurance and Acquisition Expenses***

The $739,767 increase in other underwriting, insurance and acquisition expenses for the three months ended June 30, 2025 was primarily related to an increase in agency conference fees, third party administrative fees and legal fees.

***Federal Income Taxes***

FTFC filed its 2023 consolidated federal income tax return with TLIC, FBLIC and TMC. Certain items included in income reported for financial statement purposes are not included in taxable income for the current period, resulting in deferred income taxes.

For the three months ended June 30, 2025 and 2024, current income tax expense was $799,314 and $263,435, respectively. For the three months ended June 30, 2025 and 2024, deferred federal income tax expense (benefit) was ($68,531) and $134,927, respectively.

***Net Income Per Common Share Basic***

For the three months ended June 30, 2025 and 2024, the net income allocated to the Class B shareholders is the total net income multiplied by the right to receive dividends at 85% for Class B shares (85,937) as of the reporting date divided by the allocated total shares (9,470,277) of Class A shares (9,384,340) and Class B shares (85,937) as of the reporting date.

For the three months ended June 30, 2025, the net income allocated to the Class A shareholders of $2,472,792 is the total net income $2,495,437 less the net income allocated to the Class B shareholders $22,645. For the three months ended June 30, 2024, the net income allocated to the Class A shareholders of $1,377,367 is the total net income $1,389,980 less the net income allocated to the Class B shareholders $12,613.

The weighted average outstanding common shares basic for the three months ended June 30, 2025 and 2024 were 9,384,340 for Class A shares and 101,102 for Class B shares.

**Business Segments**

The Company has a life insurance segment, consisting of the life insurance operations of TLIC, FBLIC and TAI, an annuity segment, consisting of the annuity operations of TLIC, FBLIC and TAI and a corporate segment. Results for the parent company and the operations of TMC, after elimination of intercompany amounts, are allocated to the corporate segment.

The revenues and income before federal income taxes from our business segments for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Three Months Ended June 30, | Three Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Revenues: |  |  |  |
| Life insurance operations | $13374112 | $12282831 | $1091281 |
| Annuity operations | 6825022 | 5265190 | 1559832 |
| Corporate operations | 2182518 | 595109 | 1587409 |
| Total | $22381652 | $18143130 | $4238522 |
| Income (loss) before federal income taxes: |  |  |  |
| Life insurance operations | $1500901 | $1039421 | $461480 |
| Annuity operations | 408337 | 161114 | 247223 |
| Corporate operations | 1316982 | 587807 | 729175 |
| Total | $3226220 | $1788342 | $1437878 |

---

------

The increases and decreases of revenues and profitability from our business segments for the three months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $683317 | $- | $- | $683317 |
| Net investment income | 311674 | 1287177 | (156030) | 1442821 |
| Net realized investment gains | 78892 | 187551 |  | 266443 |
| Service fees and other income | 17398 | 85104 | 1743439 | 1845941 |
| Total revenue | 1091281 | 1559832 | 1587409 | 4238522 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | (188972) |  |  | (188972) |
| Death benefits | 507351 |  |  | 507351 |
| Surrenders | 168700 |  |  | 168700 |
| Interest credited to policyholders |  | 1218056 |  | 1218056 |
| Dividend, endowment and supplementary life contract benefits | 6098 |  |  | 6098 |
| Total benefits and claims | 493177 | 1218056 |  | 1711233 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | 357968 | 843481 |  | 1201449 |
| Amortization of value of insurance business acquired | 653 | 655 |  | 1308 |
| Commissions | 71865 | (924978) |  | (853113) |
| Other underwriting, insurance and acquisition expenses | (293862) | 175395 | 858234 | 739767 |
| Total expenses | 136624 | 94553 | 858234 | 1089411 |
| Total benefits, claims and expenses | 629801 | 1312609 | 858234 | 2800644 |
| Income before federal income taxes | $461480 | $247223 | $729175 | $1437878 |

---

**Results of Operations** – **Six Months Ended June 30, 2025 and 2024**

**Revenues**

Our primary sources of revenue are life insurance premium income and investment income. Premium payments are classified as first-year, renewal and single. In addition, realized gains and losses on investment holdings can significantly impact revenues from period to period.

Our revenues for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Premiums | $21144797 | $19953409 | $1191388 |
| Net investment income | 16929521 | 15626294 | 1303227 |
| Net realized investment gains (losses) | 839246 | (119904) | 959150 |
| Loss on impairments |  | (129436) | 129436 |
| Service fees | 3056354 | 746166 | 2310188 |
| Other income | 21429 | 608809 | (587380) |
| Total revenues | $41991347 | $36685338 | $5306009 |

---

The $5,306,009 increase in total revenues for the six months ended June 30, 2025 is discussed below.

------

***Premiums***

Our premiums for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Ordinary life first year | $1594519 | $1601572 | $(7053) |
| Ordinary life renewal | 4990325 | 3864120 | 1126205 |
| Supplementary contracts | 17576 |  | 17576 |
| Final expense first year | 1525646 | 1709773 | (184127) |
| Final expense renewal | 13016731 | 12777944 | 238787 |
| Total premiums | $21144797 | $19953409 | $1191388 |

---

The $1,191,388 increase in premiums for the six months ended June 30, 2025 is primarily due to a $1,126,205 increase in ordinary life renewal premiums and a $238,787 increase in final expense renewal premiums that exceeded a $184,127 decrease in final expense first year premiums.

The increase in ordinary life renewal premiums reflects ordinary dollar denominated life insurance policies sold in the international market by TAI. The increase in final expense renewal premiums reflects the persistency of prior years' final expense production. The decrease in final expense first year premiums reflects changes in competitor underwriting guidelines that are relaxed compared to our restricted underwriting standards.

***Net Investment Income***

The major components of our net investment income for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Fixed maturity securities | $4670728 | $3670108 | $1000620 |
| Equity securities | 163027 | 52752 | 110275 |
| Other long-term investments | 2191549 | 2292211 | (100662) |
| Mortgage loans | 10456826 | 9437977 | 1018849 |
| Policy loans | 171410 | 134790 | 36620 |
| Short-term and other investments | 741125 | 1135364 | (394239) |
| Gross investment income | 18394665 | 16723202 | 1671463 |
| Investment expenses | (1465144) | (1096908) | 368236 |
| Net investment income | $16929521 | $15626294 | $1303227 |

---

The $1,671,463 increase in gross investment income for the six months ended June 30, 2025 is primarily due to $1,018,849 increase in mortgage loans and a $1,000,620 increase in fixed maturity securities that exceeded a $394,239 decrease in short-term and other investments.

The increase in mortgage loans investment income is primarily due to increased mortgage loans investments of $45.4 million since June 30, 2024. The increase in fixed maturity securities investment income is primarily due to increased fixed maturity securities investments of $61.3 million since June 30, 2024. The decline in short-term and other investments is primarily due to a decline in the annual percentage yield earned on invested cash and cash equivalent balances.

------

The $368,236 increase in investment expense for the six months ended June 30, 2025 is primarily due to increased mortgage loan costs.

***Net Realized Investment Gains (Losses)***

Our net realized investment gains (losses) result from sales of fixed maturity securities available-for-sale, mortgage loans on real estate, investment real estate, equity securities, changes in fair value of equity securities and changes in current estimate of credit losses.

Our net realized investment gains for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Fixed maturity securities available-for-sale: |  |  |  |
| Sale proceeds | $55696776 | $3451501 | $52245275 |
| Amortized cost at sale date | 55543987 | 3495614 | 52048373 |
| Net realized gains (losses) | $152789 | $(44113) | $196902 |
| Mortgage loans on real estate |  |  |  |
| Payment and sale proceeds on mortgage loans | $58809803 | $72861854 | $(14052051) |
| Principal collections | 58810940 | 72836438 | (14025498) |
| Net realized losses | $(1137) | $25416 | $(26553) |
| Investment real estate |  |  |  |
| Sales proceeds | $294982 | $- | $294982 |
| Carrying value at sale date | 265570 |  | 265570 |
| Net realized losses | $29412 | $- | $29412 |
| Equity securities |  |  |  |
| Sales proceeds | $6944 | $- | $6944 |
| Cost at sale date |  |  |  |
| Net realized losses | $6944 | $- | $6944 |
| Equity securities, changes in fair value | $33128 | $35365 | $(2237) |
| Changes in current estimate of credit losses | $618110 | $(136572) | $754682 |
| Net realized investment gains (losses) | $839246 | $(119904) | $959150 |

---

***Loss on Impairments***

During 2024, management impaired TLIC's three acres of undeveloped land located in Topeka, Kansas by $129,436 from its carrying value to its net realizable value expected at the time of ultimate resale based on a third party appraisal.

***Service Fees***

The $2,310,188 increase in service fees for the six months ended June 30, 2025 is primarily due to an increase in fees from Trinity Mortgage Corporation brokering mortgage loans for a fee to third parties.

***Other Income***

The $587,380 decrease in other income is primarily due to a decline in 2024 interest amounting to $602,307 from the Internal Revenue Service on a federal income tax refund of $8,087,076 for the tax years 2020, 2021 and 2022.

------

**Total Benefits, Claims and Expenses**

Our benefits, claims and expenses are primarily generated from benefit payments, surrenders, interest credited to policyholders, change in reserves, commissions and other underwriting, insurance and acquisition expenses. Benefit payments can significantly impact expenses from period to period.

Our benefits, claims and expenses for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Benefits and claims |  |  |  |
| Increase in future policy benefits | $7143671 | $6416784 | $726887 |
| Death benefits | 7843231 | 6881640 | 961591 |
| Surrenders | 1526108 | 1159198 | 366910 |
| Interest credited to policyholders | 9589981 | 7267805 | 2322176 |
| Dividend, endowment and supplementary life contract benefits | 230527 | 180658 | 49869 |
| Total benefits and claims | 26333518 | 21906085 | 4427433 |
| Expenses |  |  |  |
| Policy acquisition costs deferred | (6106464) | (7266639) | 1160175 |
| Amortization of deferred policy acquisition costs | 5193070 | 4996837 | 196233 |
| Amortization of value of insurance business acquired | 91783 | 95176 | (3393) |
| Commissions | 5877340 | 6812337 | (934997) |
| Other underwriting, insurance and acquisition expenses | 6647945 | 6075598 | 572347 |
| Total expenses | 11703674 | 10713309 | 990365 |
| Total benefits, claims and expenses | $38037192 | $32619394 | $5417798 |

---

The $5,417,798 increase in total benefits, claims and expenses for the six months ended June 30, 2025, is discussed below.

***Benefits and Claims***

The $4,427,433 increase in benefits and claims for the six months ended June 30, 2025 is primarily due to the following:

● $2,322,176 increase in interest credited to policyholders is primarily due to an increase in the crediting rate on new annuity contracts issued during 2024 compared to annuity contracts surrendered during 2024.

● $961,591 increase in death benefits is primarily due to approximately $708,000 of increased final expense benefits and $254,000 of increased ordinary life benefits.

● $726,887 increase in future policy benefits is primarily due to the increased number of life policies in force and the aging of existing life policies.

● $336,910 increase in surrenders is based upon policyholder election.

------

***Deferral and Amortization of Deferred Acquisition Costs***

Certain costs related to the successful acquisition of traditional life insurance policies are capitalized and amortized over the premium-paying period of the policies. Certain costs related to the successful acquisition of insurance and annuity policies that subject us to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed (i.e., limited-payment long-duration annuity contracts) are capitalized and amortized in relation to the present value of actual and expected gross profits on the policies.

These acquisition costs, which are referred to as deferred policy acquisition costs, include commissions and other successful costs of acquiring policies and contracts, which vary with, and are primarily related to, the successful production of new and renewal insurance and annuity contracts.

For the six months ended June 30, 2025 and 2024, capitalized costs were $6,106,464 and $7,266,639, respectively. Amortization of deferred policy acquisition costs for the six months ended June 30, 2025 and 2024 were $5,193,070 and $4,996,837, respectively.

There was a $1,160,175 decrease in the 2025 acquisition costs deferred primarily relates to decreased annuity and final expense first year production with a corresponding decrease in deferral of eligible annuity and final expense first year commissions. There was a $196,233 increase in the 2025 amortization of deferred acquisition costs due to 2025 surrenders and withdrawal activity and the impact of mortality.

***Amortization of Value of Insurance Business Acquired***

The cost of acquiring insurance business is amortized over the emerging profit of the related policies using the same assumptions that were used in computing liabilities for future policy benefits. Amortization of the value of insurance business acquired was $91,783 and $95,176 for the six months ended June 30, 2025 and 2024, respectively, representing a $3,393 decrease.

***Commissions***

Our commissions for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Annuity | $581743 | $1498366 | $(916623) |
| Ordinary life first year | 1707156 | 1691054 | 16102 |
| Ordinary life renewal | 604770 | 433549 | 171221 |
| Final expense first year | 1801843 | 2006366 | (204523) |
| Final expense renewal | 1181828 | 1183002 | (1174) |
| Total commissions | $5877340 | $6812337 | $(934997) |

---

The $934,997 decrease in commissions for the six months ended June 30, 2025 is primarily due to a $916,623 decrease annuity commissions (corresponding to $29,022,195 of decreased annuity deposits retained) and a $204,523 decrease in final expense first year commissions (corresponding to $184,127 decreased final expense first year premiums) that exceed a $171,221 increase in ordinary life renewal commissions (corresponding to $1,126,205 increased ordinary life renewal premiums).

***Underwriting, Insurance and Acquisition Expenses***

The $572,347 increase in other underwriting, insurance and acquisition expenses for the six months ended June 30, 2025 was primarily related to an increase in consulting fees, agency conference fees, third party administrative fees and legal fees.

------

***Federal Income Taxes***

FTFC filed its 2023 consolidated federal income tax return with TLIC, FBLIC and TMC. Certain items included in income reported for financial statement purposes are not included in taxable income for the current period, resulting in deferred income taxes.

For the six months ended June 30, 2025 and June 30, 2024, current income tax expense was $1,014,899 and $397,007. Deferred federal income tax expense (benefit) was ($124,295) and $484,804 for the six months ended June 30, 2025 and 2024, respectively.

***Net Income Per Common Share Basic***

For the six months ended June 30, 2025 and 2024, the net income allocated to the Class B shareholders is the total net income multiplied by the right to receive dividends at 85% for Class B shares (85,937) as of the reporting date divided by the allocated total shares (9,470,277) of Class A shares (9,384,340) and Class B shares (85,937) as of the reporting date.

For the six months ended June 30, 2025, the net income allocated to the Class A shareholders of $3,035,751 is the total net income $3,063,551 less the net income allocated to the Class B shareholders $27,800. For the six months ended June 30, 2024, the net income allocated to the Class A shareholders of $3,155,239 is the total net income $3,184,133 less the net income allocated to the Class B shareholders $28,894.

The weighted average outstanding common shares basic for the six months ended June 30, 2025 and 2024 were 9,384,340 for Class A shares and 101,102 for Class B shares.

**Business Segments**

The Company has a life insurance segment, consisting of the life insurance operations of TLIC, FBLIC and TAI, an annuity segment, consisting of the annuity operations of TLIC, FBLIC and TAI and a corporate segment. Results for the parent company and the operations of TMC, after elimination of intercompany amounts, are allocated to the corporate segment.

The revenues and income before federal income taxes from our business segments for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Revenues: |  |  |  |
| Life insurance operations | $25640281 | $24133009 | $1507272 |
| Annuity operations | 13091552 | 11443705 | 1647847 |
| Corporate operations | 3259514 | 1108624 | 2150890 |
| Total | $41991347 | $36685338 | $5306009 |
| Income (loss) before income taxes: |  |  |  |
| Life insurance operations | $1923272 | $2927650 | $(1004378) |
| Annuity operations | 205611 | 768716 | (563105) |
| Corporate operations | 1825272 | 369578 | 1455694 |
| Total | $3954155 | $4065944 | $(111789) |

---

------

The increases and decreases of revenues and profitability from our business segments for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $1191388 | $- | $- | $1191388 |
| Net investment income | 180459 | 1192621 | (69853) | 1303227 |
| Net realized investment gains | 280788 | 807798 |  | 1088586 |
| Service fees and other income | (145363) | (352572) | 2220743 | 1722808 |
| Total revenue | 1507272 | 1647847 | 2150890 | 5306009 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 726887 |  |  | 726887 |
| Death benefits | 961591 |  |  | 961591 |
| Surrenders | 366910 |  |  | 366910 |
| Interest credited to policyholders |  | 2322176 |  | 2322176 |
| Dividend, endowment and supplementary life contract benefits | 49869 |  |  | 49869 |
| Total benefits and claims | 2105257 | 2322176 |  | 4427433 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | 670512 | 685896 |  | 1356408 |
| Amortization of value of insurance business acquired | (1697) | (1696) |  | (3393) |
| Commissions | (18374) | (916623) |  | (934997) |
| Other underwriting, insurance and acquisition expenses | (244048) | 121199 | 695196 | 572347 |
| Total expenses | 406393 | (111224) | 695196 | 990365 |
| Total benefits, claims and expenses | 2511650 | 2210952 | 695196 | 5417798 |
| Income (loss) before federal income taxes (benefits) | $(1004378) | $(563105) | $1455694 | $(111789) |

---

**Consolidated Financial Condition**

Our invested assets as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) |  | Amount Change |
|  | June 30, 2025 | December 31, 2024 | 2025 less 2024 |
| **Assets** |  |  |  |
| Investments |  |  |  |
| Available-for-sale fixed maturity securities at fair value (amortized cost: $222,527,562 and $227,703,702 as of June 30, 2025 and December 31, 2024, respectively) | $213049532 | $213745821 | $(696289) |
| Equity securities at fair value (cost: $5,449,372 and $5,301,191 as of June 30, 2025 and December 31, 2024, respectively) | 5517371 | 5336062 | 181309 |
| Mortgage loans on real estate | 249291677 | 209364504 | 39927173 |
| Investment real estate | 2545159 | 2351549 | 193610 |
| Policy loans | 4708650 | 4367534 | 341116 |
| Other long-term investments | 54583080 | 58223514 | (3640434) |
| Total investments | $529695469 | $493388984 | $36306485 |

---

------

The increase and decrease in fixed maturity available-for-sale securities for the six months ended June 30, 2025 and 2024, respectively, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 |
| Fixed maturity securities, available-for-sale, beginning | $213745821 | $149700948 |
| Purchases | 50575278 | 7196831 |
| Prepayment premium adjustment | 3120 |  |
| Unrealized apprciation (depreciation) | 4479851 | (1549249) |
| Net realized investment gains (losses), including credit losses | 770899 | (180685) |
| Transfer to other long-term investments | (156068) |  |
| Sales proceeds | (55449896) | (2051501) |
| Maturities | (250000) | (1400000) |
| Accretion of discount (premium amortization) | (669473) | 36733 |
| Increase (decrease) | (696289) | 2052129 |
| Fixed maturity securities, available-for-sale, ending | $213049532 | $151753077 |

---

Fixed maturity securities available-for-sale are reported at fair value with unrealized gains and losses, net of applicable income taxes, reflected as a separate component in shareholders' equity within "Accumulated Other Comprehensive Loss." The available-for-sale fixed maturity securities portfolio is invested primarily in a variety of U.S. government and U.S. government agencies, state and political subdivisions, U.S. government agency mortgage backed securities, commercial and residential mortgage-backed securities, corporate bonds, asset-backed securities, exchange traded securities, foreign bonds and redeemable preferred stocks.

The increase in equity securities for the six months ended June 30, 2025 and 2024, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 |
| Equity securities, beginning | $5336062 | $419530 |
| Purchases | 215855 | 45542 |
| Realized capital gains | 6944 |  |
| Proceeds from realized capital gains | (6944) |  |
| Joint venture distributions | (67674) | (53409) |
| Net realized investment gains (losses), changes in fair value | 33128 | 35365 |
| Increase | 181309 | 27498 |
| Equity securities, ending | $5517371 | $447028 |

---

Equity securities are reported at fair value with the change in fair value reflected in "Net realized investment gains (losses)" within the consolidated statements of operations.

------

The decrease and increase in mortgage loans on real estate for the six months ended June 30, 2025 and 2024, respectively, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 |
| Mortgage loans on real estate, beginning | $209364504 | $239831447 |
| Purchases | 99467865 | 37309014 |
| Accretion of discounts (premium amortization) | (65663) | 17683 |
| Net realized investment gains (losses) | (1137) | 25416 |
| Payments | (58809803) | (72861854) |
| Foreclosed - transferred to real estate | (459180) | (563081) |
| (Increase) decrease in allowance for bad debts | (204909) | 158346 |
| Increase (decrease) | 39927173 | (35914476) |
| Mortgage loans on real estate, ending | $249291677 | $203916971 |

---

The increase in investment real estate for the six months ended June 30, 2025 and 2024, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 |
| Investment real estate, beginning | $2351549 | $1305403 |
| Real estate acquired through mortgage loan foreclosures | 459180 | 563081 |
| Net realized investment gains | 29412 |  |
| Sales proceeds | (294982) |  |
| Loss on impairments |  | (129436) |
| Increase (decrease) | 193610 | 433645 |
| Investment real estate, ending | $2545159 | $1739048 |

---

The decrease in other long-term investments (composed mainly of lottery receivables) for the six months ended June 30, 2025 and 2024, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 |
| Other long-term investments, beginning | $58223514 | $61487939 |
| Purchases | 1823500 | 4932676 |
| Accretion of discount | 2135136 | 2292272 |
| Transfer from fixed maturity securities, available-for-sale | 156068 |  |
| Unrealized depreciation | (52192) |  |
| Payments | (7702946) | (7902326) |
| decrease | (3640434) | (677378) |
| Other long-term investments, ending | $54583080 | $60810561 |

---

------

Our assets other than invested assets as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) |  | Amount Change |
|  | June 30, 2025 | December 31, 2024 | 2025 less 2024 |
| Cash and cash equivalents | $37602752 | $64344122 | $(26741370) |
| Accrued investment income | 6766776 | 5746167 | 1020609 |
| Recoverable from reinsurers | 9679675 | 9845838 | (166163) |
| Assets held in trust under coinsurance agreement | 26628335 | 31176310 | (4547975) |
| Agents' balances and due premiums | 1354254 | 1393277 | (39023) |
| Deferred policy acquisition costs | 67552685 | 66640453 | 912232 |
| Value of insurance business acquired | 3501657 | 3593440 | (91783) |
| Other assets | 11403722 | 10320307 | 1083415 |
| Assets other than investment assets | $164489856 | $193059914 | $(28570058) |

---

The $26,741,370 decrease in cash and cash equivalents is discussed below in the "Liquidity and Capital Resources" section where cash flows are addressed.

The $4,547,975 decrease in assets held in trust under the coinsurance agreement is due to a reduction in assets under TLIC's annuity coinsurance agreement with an offshore annuity and life insurance company that is administered on a funds withheld basis.

The increase in deferred policy acquisition costs for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 |
| Balance, beginning of year | $66640453 | $60795108 |
| Capitalization of commissions, sales and issue expenses | 6106464 | 7266639 |
| Amortization | (5193070) | (4996837) |
| Deferred acquisition costs allocated to investments | (1162) | 94 |
| Increase | 912232 | 2269896 |
| Balance, end of period | $67552685 | $63065004 |

---

------

Our other assets as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) |  | Amount Change |
|  | June 30, 2025 | December 31, 2024 | 2025 less 2024 |
| Federal and state income taxes recoverable | $5619306 | $4708718 | $910588 |
| Advances to mortgage loan originator | 5026284 | 4746638 | 279646 |
| Accrued management fee | 420655 | 393159 | 27496 |
| Lease asset - right to use | 221464 | 270679 | (49215) |
| Other receivables, prepaid assets and deposits | 91164 | 171032 | (79868) |
| Notes receivable | 20491 | 30081 | (9590) |
| Receivable for securities | 4358 |  | 4358 |
| Total other assets | $11403722 | $10320307 | $1083415 |

---

There was a $910,588 increase in federal and state income taxes recoverable primarily due to federal and state tax withholdings on lottery receivables.

There was a $279,646 increase in advances to one mortgage loan originator who acquires residential mortgage loans for our life companies.

Our liabilities as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) |  | Amount Change |
|  | June 30, 2025 | December 31, 2024 | 2025 less 2024 |
| Policy liabilities |  |  |  |
| Policyholders' account balances | $432133688 | $431190092 | $943596 |
| Future policy benefits | 144970399 | 138027832 | 6942567 |
| Policy claims | 2653269 | 2478465 | 174804 |
| Other policy liabilities | 321734 | 226553 | 95181 |
| Total policy liabilities | 580079090 | 571922942 | 8156148 |
| Funds withheld under coinsurance agreement | 26319584 | 31032174 | (4712590) |
| Deferred federal income taxes | 4828761 | 4023492 | 805269 |
| Other liabilities | 7347178 | 10420062 | (3072884) |
| Total liabilities | $618574613 | $617398670 | $1175943 |

---

------

The increase and decrease in policyholders' account balances for the six months ended June 30, 2025 and 2024, respectively, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |
|  | Six Months Ended June 30, | Six Months Ended June 30, |
|  | 2025 | 2024 |
| Policyholders' account balances, beginning | $431190092 | $391247676 |
| Deposits | 18392643 | 47417280 |
| Withdrawals | (32789147) | (125662977) |
| Change in funds withheld under coinsurance agreement | 5750119 | 41603456 |
| Interest credited | 9589981 | 7267805 |
| Increase (decrease) | 943596 | (29374436) |
| Policyholders' account balances, ending | $432133688 | $361873240 |

---

The $4,712,590 decrease in funds withheld under coinsurance agreement is due to surrenders of coinsured annuity contracts under coinsurance agreement with an offshore annuity and life insurance company.

The $6,942,567 increase in future policy benefits during the six months ended June 30, 2025, is primarily related to the production of new life insurance policies and the aging of existing policies an additional year.

The $805,269 increase in deferred federal income taxes during the six months ended June 30, 2025 was due to $929,564 increase in deferred federal income taxes on the unrealized depreciation of fixed maturity securities, preferred stock and other long-term investments securities available-for-sale that exceeds $124,295 of operating deferred federal tax benefit.

Our other liabilities as of June 30, 2025 and December 31, 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) |  | Amount Change |
|  | June 30, 2025 | December 31, 2024 | 2025 less 2024 |
| Mortgage loans suspense | $4756487 | $5910871 | $(1154384) |
| Unclaimed funds | 625270 | 582040 | 43230 |
| Accrued expenses payable | 598000 | 611000 | (13000) |
| Accounts payable | 505896 | 274493 | 231403 |
| Suspense accounts payable | 458152 | 2695069 | (2236917) |
| Lease liability | 221464 | 270679 | (49215) |
| Unearned investment income | 162525 | 148233 | 14292 |
| Guaranty fund assessments | 86000 | 86000 |  |
| Deferred revenue | 24750 | 30250 | (5500) |
| Payable for securities purchased | 16266 | 6179 | 10087 |
| Other payables, withholdings and escrows | (107632) | (194751) | 87119 |
| Total other liabilities | $7347178 | $10420062 | $(3072884) |

---

The $2,236,917 decrease in suspense accounts payable is due to decreased annuity deposits on policy applications that had not been issued as of the financial reporting date.

The decrease in mortgage loan suspense of $1,154,384 is primarily due to timing of principal loan payments on mortgage loans.

The increase in accounts payable of $231,403 is primarily due to the timing of consulting and legal payments.

------

**Liquidity and Capital Resources**

Our operations have been financed primarily through the private placement of equity securities and intrastate public stock offerings. Through June 30, 2025, we have received $27,119,480 from the sale of our shares.

The Company raised $1,450,000 from two private placements during 2004 and $25,669,480 from two public stock offerings and one private placement stock offering from June 22, 2005 through February 23, 2007; June 29, 2010 through April 30, 2012; and August 15, 2012 through March 8, 2013. The Company issued 7,347,488 shares of its common stock and incurred $3,624,518 of offering costs during these private placements and public stock offerings.

The Company also issued 702,685 shares of its common stock in connection with two stock dividends paid to shareholders in 2011 and 2012 that resulted in accumulated earnings being charged $5,270,138 with an offsetting credit of $5,270,138 to common stock and additional paid-in capital.

In 2020, the Company paid a $0.05 per share cash dividend for a total of $393,178 and issued 791,339 shares of class A common stock in connection with a 10% stock dividend to its Class A shareholders. The 10% stock dividend resulted in accumulated earnings being charged $8,657,249 with an offsetting credit of $8,657,249 to common stock and additional paid-in capital.

The Company has also purchased 247,580 shares of treasury stock at a cost of $893,947 from former members of the Board of Directors including the former Chairman of the Board of Directors, a former agent, the former spouse of the Company's Chairman, Chief Executive Officer and President and a charitable organization where a former member of the Board of Directors had donated shares of the Company's common stock.

As of June 30, 2025, we had cash and cash equivalents totaling $37,602,752. As of June 30, 2025, cash and cash equivalents of $11,449,810 and $16,376,649, respectively, totaling $27,826,459 were held by TLIC and FBLIC and may not be available for use by FTFC due to the required pre-approval by the Oklahoma Insurance Department of any dividend or intercompany transaction to transfer funds to FTFC. The maximum dividend, which may be paid in any twelve-month period without notification or approval, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year.

Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, there is no capacity for TLIC to pay a dividend due to a negative unassigned surplus of $7,079,124 as of December 31, 2024. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $1,067,766 in 2025 without prior approval. FBLIC has paid no dividends to TLIC in 2025 and 2024. TLIC has paid no dividends to FTFC.

The Company maintains cash and cash equivalents at multiple institutions. The Federal Deposit Insurance Corporation insures interest and non-interest bearing accounts up to $250,000. Uninsured balances aggregate $31,821,485 and $50,995,135 as of June 30, 2025 and December 31, 2024, respectively. Other funds are invested in mutual funds that invest in U.S. government securities. We monitor the solvency of all financial institutions in which we have funds to minimize the exposure for loss. The Company has not experienced any losses in such accounts.

------

Our cash flows for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Net cash provided by operating activities | $17480974 | $70864800 | $(53383826) |
| Net cash provided by (used in) investing activities | (29825840) | 35353186 | (65179026) |
| Net cash used in financing activities | (14396504) | (78245697) | 63849193 |
| Increase (decrease) in cash and cash equivalents | (26741370) | 27972289 | (54713659) |
| Cash and cash equivalents, beginning of period | 64344122 | 33839741 | 30504381 |
| Cash and cash equivalents, end of period | $37602752 | $61812030 | $(24209278) |

---

The cash provided by operating activities for the six months ended June 30, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) |  |
|  | Six Months Ended June 30, | Six Months Ended June 30, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Premiums collected | $21194606 | $20001882 | $1192724 |
| Net investment income collected | 14523204 | 13906933 | 616271 |
| Service fees and other income collected | 3050287 | 1316180 | 1734107 |
| Death benefits paid | (7502264) | (6556607) | (945657) |
| Surrenders paid | (1526108) | (1159198) | (366910) |
| Dividends and endowments paid | (232848) | (181790) | (51058) |
| Commissions paid | (5790625) | (6973470) | 1182845 |
| Other underwriting, insurance and acquisition expenses paid | (6023246) | (5858385) | (164861) |
| Taxes received (paid) | (1925488) | 6272851 | (8198339) |
| Increased advances to mortgage loan originator | (279645) | (378859) | 99214 |
| Decreased advances to independently owned investment firm |  | 2045191 | (2045191) |
| Decreased advances to investment vendor |  | 254878 | (254878) |
| Decreased funds under coinsurance agreement | 5585504 | 39968624 | (34383120) |
| Increased (decreased) deposits of pending policy applications | (2236917) | 11844657 | (14081574) |
| Decreased mortgage loan suspense | (1154384) | (3474324) | 2319940 |
| Other | (201102) | (163763) | (37339) |
| Cash provided by operating activities | $17480974 | $70864800 | $(53383826) |

---

Please see the statements of cash flows for the six months ended June 30, 2025 and 2024 for a summary of the components of net cash used in investing activities and net cash provided by financing activities.

------

Our shareholders' equity as of June 30, 2025 and December 31, 2024 is summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | (Unaudited) |  | Amount Change |
|  | June 30, 2025 | December 31, 2024 | 2025 less 2024 |
| **Shareholders' equity** |  |  |  |
| Class A common stock, par value $.01 per share (40,000,000 shares authorized as of June 30, 2025 and December 31, 2024, 9,631,920 issued as of June 30, 2025 and December 31, 2024, 9,384,340 outstanding as of June 30, 2025 and December 31, 2024) | $96319 | $96319 | $- |
| Class B common stock, par value $.01 per share (10,000,000 shares authorized, 101,102 issued and outstanding as of June 30, 2025 and December 31, 2024) | 1011 | 1011 |  |
| Additional paid-in capital | 43668023 | 43668023 |  |
| Treasury stock, at cost (247,580 shares as of June 30, 2025 and December 31, 2024) | (893947) | (893947) |  |
| Accumulated other comprehensive loss | (7527146) | (11024079) | 3496933 |
| Accumulated earnings | 40266452 | 37202901 | 3063551 |
| **Total shareholders' equity** | $75610712 | $69050228 | $6560484 |

---

The increase in shareholders' equity of $6,560,484 for the six months ended June 30, 2025 is due to $3,496,933 decrease in accumulated other comprehensive loss and $3,063,551 in net income.

The liquidity requirements of our life insurance companies are met primarily by funds provided from operations. Premium and annuity consideration deposits, investment income and investment maturities are the primary sources of funds, while investment purchases, policy benefits, and operating expenses are the primary uses of funds. There were no liquidity issues in 2025 or 2024. Our investments include marketable debt securities that could be readily converted to cash for liquidity needs.

We are subject to various market risks. The quality of our investment portfolio and the current level of shareholders' equity continue to provide a sound financial base as we strive to expand our marketing to offer competitive products. Our investment portfolio had unrealized depreciation on available-for-sale securities and other long-term investments of ($9,530,222) and ($13,957,881) as of June 30, 2025 and December 31, 2024, respectively, prior to the impact of income taxes and deferred acquisition cost adjustments. An increase of $4,580,448 in unrealized gains arising for the six months ended June 30, 2025 has been offset by 2025 net realized investment gains of $152,789 originating from the sale and call activity for fixed maturity securities available-for-sale resulting in net unrealized gains on investments of $4,427,659.

A primary liquidity concern is the risk of an extraordinary level of early policyholder withdrawals. We include provisions within our insurance policies, such as surrender charges, that help limit and discourage early withdrawals. Individual life insurance policies are less susceptible to withdrawal than annuity reserves and deposit liabilities because policyholders may incur surrender charges and undergo a new underwriting process in order to obtain a new insurance policy. Cash flow projections and cash flow tests under various market interest rate scenarios are also performed annually to assist in evaluating liquidity needs and adequacy. We currently anticipate that available liquidity sources and future cash flows will be adequate to meet our needs for funds.

One of our significant risks relates to the fluctuations in interest rates. Regarding interest rates, the value of our available-for-sale fixed maturity securities investment portfolio will increase or decrease in an inverse relationship with fluctuations in interest rates, while net investment income earned on newly acquired available-for-sale fixed maturity securities increases or decreases in direct relationship with interest rate changes.

From an income perspective, we are exposed to rising interest rates which could be a significant risk, as TLIC's and FBLIC's annuity business is impacted by changes in interest rates. Life insurance company policy liabilities bear fixed rates. From a liquidity perspective, our fixed rate policy liabilities are relatively insensitive to interest rate fluctuations.

We believe gradual increases in interest rates do not present a significant liquidity exposure for the life insurance policies and annuity contracts. We maintain conservative durations in our fixed maturity portfolio.

As of June 30, 2025, cash and cash equivalents, short-term investments, the fair value of fixed maturity available-for-sale securities with maturities of less than one year and the fair value of lottery receivables with maturities of less than one year equaled 10.4% of total policy liabilities. If interest rates rise significantly in a short time frame, there can be no assurance that the life insurance industry, including the Company, would not experience increased levels of surrenders and reduced sales, and thereby be materially adversely affected.

------

In addition to the measures described above, TLIC and FBLIC must comply with the National Association of Insurance Commissioners promulgated Standard Valuation Law ("SVL") which specifies minimum reserve levels and prescribes methods for determining them, with the intent of enhancing solvency. Upon meeting certain tests, which TLIC and FBLIC met during 2024, the SVL also requires the Company to perform annual cash flow testing for TLIC and FBLIC. This testing is designed to ensure that statutory reserve levels will maintain adequate protection in a variety of potential interest rate scenarios. The Actuarial Standards Board of the American Academy of Actuaries also requires cash flow testing as a basis for the actuarial opinion on the adequacy of the reserves which is a required part of the annual statutory reporting process.

Our marketing plan could be modified to emphasize certain product types and reduce others. New business levels could be varied in order to find the optimum level. We believe that our current liquidity, current bond portfolio maturity distribution and cash position give us substantial resources to administer our existing business and fund growth generated by direct sales.

The operations of TLIC and FBLIC may require additional capital contributions to meet statutory capital and surplus requirements mandated by state insurance departments. Life insurance contract liabilities are generally long term in nature and are generally paid from future cash flows or existing assets and reserves. We will service other expenses and commitments by: (1) using available cash, (2) dividends from TLIC and FBLIC that are limited by law to the greater of prior year net operating income or 10% of prior year-end surplus unless specifically approved by the controlling insurance department, (3) public and private offerings of our common stock and (4) corporate borrowings, if necessary.

Effective January 1, 2019, the Company entered into a revised advance agreement with one loan originator. As of June 30, 2025, the Company has outstanding advances to this loan originator totaling $5,026,284. The advances are secured by $9,025,896 of residential mortgage loans on real estate that are assigned to the Company. The Company has committed to fund up to an additional $1,973,716 to the loan originator that would result in additional security in the form of residential mortgage loans on real estate to be assigned to the Company.

Effective January 1, 2019, the Company also entered into a revised escrow agreement with the same loan originator. According to the revised terms of the escrow agreement, as of June 30, 2025, $920,250 of additional and secured residential mortgage loan balances on real estate are held in escrow by the Company. As of June 30, 2025, $908,461 that escrow amount is available to the Company as additional collateral on $5,026,284 of advances to the loan originator. The remaining June 30, 2024 escrow amount of $11,789 is available to the Company as additional collateral on its investment of $2,357,772 in residential mortgage loans on real estate.

We are not aware of any commitments or unusual events that could materially affect our capital resources. We are not aware of any current recommendations by any regulatory authority which, if implemented, would have a material adverse effect on our liquidity, capital resources or operations. We believe that our existing cash and cash equivalents as of June 30, 2025 will be sufficient to fund our anticipated operating expenses.

**Off-Balance Sheet Arrangements**

The Company does not have any off-balance sheet arrangements.

**SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS**

Certain statements contained herein are forward-looking statements. The forward-looking statements are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, and include estimates and assumptions related to economic, competitive and legislative developments. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans," "believes," "estimates," "will" or words of similar meaning; and include, but are not limited to, statements regarding the outlook of our business and financial performance. These forward-looking statements are subject to change and uncertainty, which are, in many instances, beyond our control and have been made based upon our expectations and beliefs concerning future developments and their potential effect upon us.

------

There can be no assurance that future developments will be in accordance with our expectations, or that the effect of future developments on us will be as anticipated. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties. There are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements. These factors include among others:

● general economic conditions and financial factors, including the performance and fluctuations of fixed income, equity, real estate, credit capital and other financial markets;

● differences between actual experience regarding mortality, morbidity, persistency, surrenders, investment returns, and our pricing assumptions establishing liabilities and reserves or for other purposes;

● the effect of increased claims activity from natural or man-made catastrophes, pandemic disease, or other events resulting in catastrophic loss of life;

● adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities;

● inherent uncertainties in the determination of investment allowances and impairments and in the determination of the valuation allowance on the deferred income tax asset;

● investment losses and defaults;

● competition in our product lines;

● attraction and retention of qualified employees and agents;

● ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks;

● the availability, affordability and adequacy of reinsurance protection;

● the effects of emerging claim and coverage issues;

● the cyclical nature of the insurance business;

● interest rate fluctuations;

● changes in our experiences related to deferred policy acquisition costs;

● the ability and willingness of counterparties to our reinsurance arrangements and derivative instruments to pay balances due to us;

● impact of medical epidemics and viruses;

● domestic or international military actions;

● the effects of extensive government regulation of the insurance industry;

● changes in tax and securities law;

● changes in statutory or U.S. generally accepted accounting principles ("GAAP"), practices or policies;

● regulatory or legislative changes or developments;

● the effects of unanticipated events on our disaster recovery and business continuity planning;

● failures or limitations of our computer, data security and administration systems;

● risks of employee error or misconduct;

● the assimilation of life insurance businesses we acquire and the sound management of these businesses; and

● the availability of capital to expand our business.

It is not our corporate policy to make specific projections relating to future earnings, and we do not endorse any projections regarding future performance made by others. In addition, we do not publicly update or revise forward-looking statements based on the outcome of various foreseeable or unforeseeable developments.

**Item 4. Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer ("Certifying Officers"), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934 as amended ("Exchange Act") as of the end of the fiscal period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Certifying Officers have concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is made known to management, including our Certifying Officers, as appropriate, to allow timely decisions regarding disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

------

**Changes to Internal Control over Financial Reporting**

There were no changes in the Company's internal control over financial reporting during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

**PART II - OTHER INFORMATION**

**Item 1. Legal Proceedings**

From time to time, we are a party to various legal proceedings in the ordinary course of business. While management is unable to predict the ultimate outcome of these actions, it believes that any ultimate liability arising from them will not have a material effect on the Company's financial position, results of operations or cash flow. We are not currently a party to any bankruptcy, receivership, reorganization, adjustment or similar proceeding, and we are not aware of any material threatened litigation. As summarized below, the Company is currently involved in three pending lawsuits.

A lawsuit filed by the Company and its Chairman and Chief Executive Officer, Gregg E. Zahn ("Mr. Zahn") styled First Trinity Financial Corporation and Gregg E. Zahn vs. C. Wayne Pettigrew and Group & Pension Planners was originally filed in 2013 in the District Court of Tulsa County, Oklahoma against former Company Board of Director, C. Wayne Pettigrew ("Mr. Pettigrew"). The Company and Mr. Zahn alleged that Mr. Pettigrew defamed Mr. Zahn and the Company

and that Mr. Pettigrew breached his fiduciary duties to the Company by making untrue statements about the Company and Mr. Zahn to the press, state regulators and to certain shareholders.

In February 2017, the lawsuit resulted in a jury verdict in favor of the Company and Mr. Zahn, with the jury awarding damages of $800,000 to the Company and $3,500,000 to Mr. Zahn. In February 2020, the Oklahoma Court of Civil Appeals, upon an appeal by Mr. Pettigrew, reversed the judgment and remanded the case for a new trial. A Petition for Certiorari review with the Oklahoma Supreme Court by the Company and Mr. Zahn was declined in December, 2020. The case was scheduled to be retried in the district court but was settled with the defendant on April 14, 2025.

The Company, through its life insurance subsidiary, TLIC, commenced two lawsuits as plaintiff, both in the New York Supreme Court, New York County, one on June 29, 2020 and another on March 4, 2022, for breach of contract against a company for failure to advance funding to lottery ticket winners to the detriment of TLIC and against various of that company's associated persons for unjust enrichment and fraud perpetuated on TLIC. The cases are entitled "Trinity Life Insurance Company v. Advance Funding LLC, Dan Cevallos, and Monica L. Ray, Index No. 652780/2020" (New York Supreme Court, New York County) and "Trinity Life Insurance Company v. Advance Funding LLC, Dan Cevallos, Julie Casal, and Monica L. Ray, Index No. 651023/2022" (New York Supreme Court, New York County). The Company is vigorously prosecuting this case against the defendants. The Company faces no exposure in connection with either action since no counterclaims or cross claims have been made against the Company. Management believes that these lawsuits are not material in relation to the Company's financial position or results of operations.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**

None

**Item 3. Defaults Upon Senior Securities**

None

**Item 4. Mine Safety Disclosures**

None

**Item 5. Other Information**

None

------

**Item 6. Exhibits** 

---

| | |
|:---|:---|
| 31.1 | [Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer](ex_850051.htm) |
| 31.2 | [Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer](ex_850052.htm) |
| 32.1 | [Section 1350 Certification of Principal Executive Officer](ex_850053.htm) |
| 32.2 | [Section 1350 Certification of Principal Financial Officer](ex_850054.htm) |
| 101.INS\*\* | Inline XBRL Instance |
| 101.SCH\*\* | Inline XBRL Taxonomy Extension Schema |
| 101.CAL\*\* | Inline XBRL Taxonomy Extension Calculation |
| 101.DEF\*\* | Inline XBRL Taxonomy Extension Definition |
| 101.LAB\*\* | Inline XBRL Taxonomy Extension Labels |
| 101.PRE\*\* | Inline XBRL Taxonomy Extension Presentation |
| 104 | Cover Page Interactive Data (formatted as Inline XBRL and continued in Exhibit 101) |
| \*\*XBRL | Information is furnished and not filed as part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |

---

------

SIGNATURES

In accordance with requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | FIRST TRINITY FINANCIAL CORPORATION | FIRST TRINITY FINANCIAL CORPORATION |
|  | an Oklahoma corporation | an Oklahoma corporation |
| August 13, 2025 | By**:** | /s/ Gregg E. Zahn |
|  | Gregg E. Zahn, President and Chief Executive Officer | Gregg E. Zahn, President and Chief Executive Officer |
| August 13, 2025 | By: | /s/ Jeffrey J. Wood |
|  | Jeffrey J. Wood, Chief Financial Officer | Jeffrey J. Wood, Chief Financial Officer |

---

## Exhibit 31.1

EXHIBIT NO. 31.1

CERTIFICATION

I, Gregg E. Zahn, Chief Executive Officer, certify that:

1. I have reviewed this Quarterly report on Form 10-Q of First Trinity Financial Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant's other certifying officer(s) 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, and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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 in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) 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

(d) 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 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 officer 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 the 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: August 13, 2025 |  |  |
|  | By: | /s/ Gregg E. Zahn |
|  | Gregg E. Zahn, President and Chief Executive Officer | Gregg E. Zahn, President and Chief Executive Officer |

---

## Exhibit 31.2

**EXHIBIT NO. 31.2**

CERTIFICATION

I, Jeffrey J. Wood, Chief Financial Officer and Chief Accounting Officer, certify that:

1. I have reviewed this Quarterly report on Form 10-Q of First Trinity Financial Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant's other certifying officer(s) 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, and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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 in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) 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

(d) 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 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 officer 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 the 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: August 13, 2025

---

| | |
|:---|:---|
| By: | /s/ Jeffrey J. Wood |
| Jeffrey J. Wood, Chief Financial Officer | Jeffrey J. Wood, Chief Financial Officer |

---

## Exhibit 32.1

EXHIBIT NO. 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. ss. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of First Trinity Financial Corporation, an Oklahoma corporation (the "Company"), hereby certifies that:

To my knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2025 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 13, 2025

---

| | |
|:---|:---|
| By: | /s/ Gregg E. Zahn |
| Gregg E. Zahn, President and Chief Executive Officer | Gregg E. Zahn, President and Chief Executive Officer |

---

## Exhibit 32.2

EXHIBIT NO. 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. ss. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of First Trinity Financial Corporation, an Oklahoma corporation (the "Company"), hereby certifies that:

To my knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2025 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 13, 2025

---

| | |
|:---|:---|
| By: | /s/ Jeffrey J. Wood |
| Jeffrey J. Wood, Chief Financial Officer | Jeffrey J. Wood, Chief Financial Officer |

---