# EDGAR Filing Document

**Accession Number:** 0001395585
**File Stem:** 0001437749-26-008581
**Filing Date:** 2026-3
**Character Count:** 326125
**Document Hash:** e065c073ee6edf82a92c15e4e1a9d83b
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-26-008581.hdr.sgml**: 20260317

**ACCESSION NUMBER**: 0001437749-26-008581

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 98

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260317

**DATE AS OF CHANGE**: 20260317

**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-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-52613
- **FILM NUMBER:** 26761189

**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'? ftfc20251231_10k.htm

United States

Securities and Exchange Commission

Washington, D.C. 20549

**FORM 10-K**

(Mark One)

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the fiscal year ended December 31, 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 **<u>000-52613</u>**

<u>FIRST TRINITY FINANCIAL CORPORATION</u>

(Exact name of small business issuer as specified in its charter)

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| | |
|:---|:---|
| Oklahoma | 34-1991436 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer number) |
| 7633 East 63rd Place, Suite 230 Tulsa, Oklahoma | 74133-1246 |
| (Address of principal executive offices) | (Address of principal executive offices) |

---

<u>(918) 249-2438</u>

(Issuer's telephone number)

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

<u>Title of Each Class</u>

None

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

<u>Title of Each Class</u>

Class A Common Stock, $0.01 Par Value

Class B Common Stock, $0.01 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.&nbsp;&nbsp;&nbsp;&nbsp;Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.&nbsp;&nbsp;&nbsp;&nbsp;Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

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

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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):

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

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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 checkmark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

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 aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.

Because of the absence of an established trading market for the common stock, the registrant is unable to calculate the aggregate market value of the voting stock held by non-affiliates as of the last business day of the registrant's most recently completed second fiscal quarter.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of March 9, 2026, the registrant had 9,333,404 shares of Class A common stock, 0.01 par value, outstanding and 101,102 shares of Class B common stock, 0.01 par value, outstanding.

**DOCUMENTS INCORPORATED BY REFERENCE**

Portions of the registrant's definitive Proxy Statement to be used in connection with its 2026 Annual Meeting of Shareholders, which is expected to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this Form 10-K, are incorporated by reference into Part III of this report.

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FIRST TRINITY FINANCIAL CORPORATION

**TABLE OF CONTENTS**

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| | | |
|:---|:---|:---|
| Part I |  |  |
| Item 1. | Business | 4 |
| Item 2. | Properties | 10 |
| Item 3. | Legal Proceedings | 10 |
| Item 4. | Mine Safety Disclosures | 11 |
| Part II |  |  |
| Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities | 11 |
| Item 6 | Reserved | 12 |
| Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 12 |
| Item 8. | Financial Statements | 38 |
| Item 9. | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure | 92 |
| Item 9A. | Controls and Procedures | 92 |
| Item 9B. | Other Information | 93 |
| Part III |  |  |
| Item 10. | Directors, Executive Officers and Corporate Governance | 93 |
| Item 11. | Executive Compensation | 93 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 93 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 93 |
| Item 14. | Principal Accounting Fees and Services. | 93 |
| Item 15. | Exhibits | 93 |
| Item 16. | Form 10-K Summary | 93 |
| Exhibit index | Exhibit index | 94 |
| Signatures | Signatures | 95 |

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Exhibit 21.1

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 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

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**PART I**

**Item 1. Business**

**Business Development**

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 and operating 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 products and annuity contracts 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 policies and annuity contracts. 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 policies are 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 (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 contracts but is now issuing life insurance policies and annuity contracts through an association with distribution channels. The Company's acquisition of TAI was formally approved by Barbados regulators and the certifications were received in 2019.

**Company Capitalization**

Our operations have been financed primarily through the private placement of equity securities and intrastate public stock offerings. Through December 31, 2024, 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 Class A common stock and additional paid-in capital.

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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.

In settlement of a lawsuit, the Company was awarded 50,936 shares of its own Class A common stock. The 50,936 shares of the Company's Class A common stock were transferred to treasury stock at a cost basis of $85,422.

**Acquisitions**

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 cost 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 Oklahoma Insurance Department ("OID"). This surplus note is eliminated in consolidation. On December 18, 2025, TLIC paid FTFC the $250,000 surplus note.

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 (including cash), 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. The acquisition of RCLIC was accounted for as a purchase and the net acquisition consideration was recorded at $4,596,764. 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.

**Financial Information about Segments**

The Financial Accounting Standards Board ("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

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

Please see Item 8 below and Note 13 to the consolidated financial statements as of and for the years ended December 31, 2025 and 2024 for additional information regarding segment information.

**Life Insurance and Annuity Operations**

Our Life Insurance and Annuity Operations consists of issuing ordinary whole life insurance, endowments, modified premium whole life with an annuity rider, term, final expense and accidental death and dismemberment policies and annuity contracts. The policies can be issued with premiums fully guaranteed for the entire term period or with a limited premium guarantee. The final expense policies are issued as either a simplified issue or as a graded benefit, determined by underwriting. Our products are marketed through independent agents.

FBLIC renewed its administrative services agreement with Investors Heritage Life Insurance Company ("IHLIC") on November 1, 2022. Under the terms of this agreement, the services provided by IHLIC include underwriting, policy issue, accounting, claims processing and other services incidental to the operations of FBLIC. The agreement is effective for a period of five (5) years from November 1, 2022 through October 31, 2027 and includes a provision that the agreement may be terminated at any time by either party with a 12 month written notice.

FBLIC executed an actuarial consulting services agreement with IHLIC on November 1, 2022. Under the terms of this agreement, the services provided by IHLIC include actuarial services for the operations of FBLIC. The agreement is effective for a period of five (5) years from November 1, 2022 through October 31, 2027 and includes a provision that the agreement may be terminated at any time by either party with a 12 month written notice.

TLIC renewed its administrative services agreement with IHLIC on November 1, 2022, after a written extension of the previous administrative services agreement. Under the terms of this agreement, the services provided by IHLIC include underwriting, policy issue, accounting, claims processing and other services incidental to the operations of TLIC. The agreement is effective for a period of five (5) years from November 1, 2022 through October 31, 2027 and includes a provision that the agreement may be terminated at any time by either party with a 12 month written notice.

TLIC executed an actuarial consulting services agreement with IHLIC on November 1, 2022. Under the terms of this agreement, the services provided by IHLIC include actuarial services for the operations of TLIC. The agreement is effective for a period of five (5) years from November 1, 2022 through October 31, 2027 and includes a provision that the agreement may be terminated at any time by either party with a 12 month written notice.

TLIC continues to seek to serve middle income households and markets its products through independent agents. TLIC was originally licensed in Oklahoma and with the acquisition of FLAC in late 2008, expanded into Illinois, Kansas, Kentucky, Nebraska, North Dakota, Ohio and Texas. With the acquisition of FBLIC in late 2011, we expanded into Arizona, Colorado, Missouri and New Mexico. FBLIC also had initial licenses in Kansas, Nebraska and Oklahoma where TLIC was also licensed. In late 2012, FBLIC was licensed in Arkansas, Indiana, Kentucky, North Dakota, South Dakota, Texas and West Virginia. In 2013, FBLIC was licensed in Illinois and Pennsylvania. In 2014, FBLIC was licensed in Georgia, Louisiana, Michigan, Mississippi, North Carolina, Ohio, Tennessee and Virginia. In 2015, FBLIC was licensed in Alabama and Utah. In 2018, FBLIC and TLIC were licensed in Montana. In 2019, TLIC was licensed in Tennessee. In 2020, TLIC was licensed in Alabama, Indiana, Louisiana, Mississippi, New Mexico, South Dakota and Utah. In 2021, TLIC was licensed in Georgia and West Virginia.

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The following tables sets forth our direct collected life insurance premiums and annuity considerations by the policyholder's state of residence at the time of premium collection and annuity consideration, for the most significant states in which we are licensed, for the years ended December 31, 2025 and 2024, in accordance with statutory accounting practices prescribed by the states of domicile of TLIC and FBLIC.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Year Ended December 31, 2025 | Year Ended December 31, 2025 | Year Ended December 31, 2025 | Year Ended December 31, 2025 |
|  | Life | Life | Annuity | Annuity |
| State | Premiums | Percentage | Considerations | Percentage |
| Alabama | $935442 | 2.92% | $- | 0.00% |
| Arizona | 589331 | 1.84% | 209991 | 0.86% |
| Arkansas | 743214 | 2.32% | 52700 | 0.22% |
| Colorado | 1062262 | 3.31% | 725 | 0.00% |
| Florida | 84037 | 0.26% | 182415 | 0.74% |
| Georgia | 1701407 | 5.30% | 423417 | 1.73% |
| Illinois | 1829395 | 5.70% | 350892 | 1.43% |
| Indiana | 1350938 | 4.21% | 6710338 | 27.40% |
| Kansas | 1518101 | 4.73% | 559628 | 2.28% |
| Kentucky | 1013905 | 3.16% | 57115 | 0.23% |
| Louisiana | 1009792 | 3.15% |  | 0.00% |
| Michigan | 801661 | 2.50% | 838409 | 3.42% |
| Minnesota | 3653 | 0.01% | 250000 | 1.02% |
| Mississippi | 575908 | 1.80% | 52455 | 0.21% |
| Missouri | 1547930 | 4.83% | 349943 | 1.43% |
| Nebraska | 411776 | 1.28% | 46000 | 0.19% |
| North Carolina | 3642015 | 11.35% | 1066138 | 4.35% |
| North Dakota | 76042 | 0.24% | 4879861 | 19.91% |
| Ohio | 3239002 | 10.10% | 121146 | 0.49% |
| Oklahoma | 1003193 | 3.13% | 809622 | 3.30% |
| Pennsylvania | 1078884 | 3.36% | 4125440 | 16.84% |
| South Carolina | 39487 | 0.12% |  | 0.00% |
| South Dakota | 16030 | 0.05% | 4800 | 0.02% |
| Tennessee | 1256897 | 3.92% | 83759 | 0.34% |
| Texas | 4754456 | 14.81% | 2800008 | 11.43% |
| Virginia | 1129752 | 3.52% | 87116 | 0.36% |
| All other states | 666294 | 2.08% | 442052 | 1.80% |
| Total direct collected premiums and considerations | $32080804 | 100.00% | $24503970 | 100.00% |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 |
|  | Life | Life | Annuity | Annuity |
| State | Premiums | Percentage | Considerations | Percentage |
| Alabama | $940009 | 2.93% | $22306 | 0.02% |
| Arizona | 555660 | 1.73% | 1209314 | 0.86% |
| Arkansas | 703355 | 2.19% | 190258 | 0.14% |
| Colorado | 1015152 | 3.17% | 909 | 0.00% |
| Florida | 89843 | 0.28% | 1550448 | 1.11% |
| Georgia | 1711581 | 5.34% | 3185002 | 2.27% |
| Illinois | 1950364 | 6.09% | 1205801 | 0.86% |
| Indiana | 1318628 | 4.11% | 6494206 | 4.64% |
| Kansas | 1624449 | 5.07% | 6474856 | 4.62% |
| Kentucky | 1012984 | 3.16% | 526578 | 0.38% |
| Louisiana | 977336 | 3.05% |  | 0.00% |
| Michigan | 723454 | 2.26% | 2302557 | 1.64% |
| Minnesota | 5344 | 0.02% | 1018473 | 0.73% |
| Mississippi | 527418 | 1.65% | 707675 | 0.51% |
| Missouri | 1592662 | 4.97% | 1993787 | 1.42% |
| Nebraska | 410874 | 1.28% | 11620434 | 8.30% |
| North Carolina | 3604383 | 11.25% | 26167970 | 18.68% |
| North Dakota | 77322 | 0.24% | 25914663 | 18.50% |
| Ohio | 3332358 | 10.40% | 2196163 | 1.57% |
| Oklahoma | 1012009 | 3.16% | 6358136 | 4.54% |
| Pennsylvania | 1097077 | 3.42% | 1606370 | 1.15% |
| South Carolina | 38131 | 0.12% | 791246 | 0.56% |
| South Dakota | 14725 | 0.05% | 900236 | 0.64% |
| Tennessee | 1226524 | 3.83% | 1005778 | 0.72% |
| Texas | 4799546 | 14.96% | 33003935 | 23.55% |
| Virginia | 1044554 | 3.26% | 2458685 | 1.76% |
| All other states | 645640 | 2.01% | 1163091 | 0.83% |
| Total direct collected premiums and considerations | $32051382 | 100.00% | $140068877 | 100.00% |

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**Reinsurance**

TLIC cedes reinsurance under various agreements allowing management to control exposure to potential losses arising from large risks and providing additional capacity for growth and risk diversification. TLIC reinsures all amounts of risk on any one life in excess of $100,000 for individual life insurance with IHLIC, Optimum Re Insurance Company ("Optimum Re"), RGA Reinsurance Company and Wilton Reassurance Company ("Wilton Re").

The Company also assumes reinsurance under various agreements allowing management to increase growth in assets and profitability. TLIC is a party to an Automatic Retrocession Pool Agreement (the "Reinsurance Pool") with Optimum Re, Catholic Order of Foresters, American Home Life Insurance Company and Woodmen of the World. The agreement provides for automatic retrocession of coverage in excess of Optimum Re's retention on business ceded to Optimum Re by the other parties to the Reinsurance Pool. TLIC's maximum exposure on any one insured under the Reinsurance Pool is $100,000. As of January 1, 2008, the Reinsurance Pool stopped accepting new cessions.

Effective September 29, 2005, FLAC and Wilton Re executed a binding letter of intent whereby both parties agreed that FLAC would cede the simplified issue version of its Golden Eagle Whole Life (Final Expense) product to Wilton Re on a 50/50 quota share original term coinsurance basis. The letter of intent was executed on a retroactive basis to cover all applicable business issued by FLAC subsequent to January 1, 2005. Wilton Re agreed to provide various commission and expense allowances to FLAC in exchange for FLAC ceding 50% of the applicable premiums to Wilton Re as they were collected. As of June 24, 2006, Wilton Re terminated the reinsurance agreement for new business issued after the termination date.

FBLIC also participates in reinsurance in order to provide risk diversification, additional capacity for future growth and limit the maximum net loss potential arising from large amounts of risk. FBLIC reinsures initial amounts of risk on any one life in excess of $100,000 for individual life insurance with Optimum Re. TLIC and FBLIC also reinsure its accidental death benefit portion of their life policies under a bulk agreement with Optimum Re. To the extent that the reinsurance companies are unable to meet their obligations under the reinsurance agreements, TLIC and FBLIC remain primarily liable for the entire amount at risk.

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**Coinsurance**

Effective January 1, 2018, TLIC entered into an annuity coinsurance agreement with an offshore annuity and life insurance company whereby 90% of TLIC's annuity considerations originated after December 31, 2017 were ceded to the assuming company. The assuming company contractually reimburses TLIC for the related commissions, withdrawals, settlements, interest credited, submission costs, maintenance costs, marketing costs, excise taxes and other costs plus a placement fee. Effective April 1, 2020, the Company and an offshore annuity and life insurance company mutually agreed that the Quota Share under its existing reinsurance agreement shall be 0% for future business instead of the original contractual amount of 90%.

In accordance with this annuity coinsurance agreement, 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 2019, TLIC entered into a life insurance coinsurance agreement with TAI, effective October 1, 2018, whereby 100% of TAI's life insurance policies and annuity contracts issued after September 30, 2018 were ceded to TLIC. TLIC contractually reimburses TAI for the related commissions, submission costs, maintenance costs, marketing costs and other costs related to the production of life insurance policies and annuity contracts.

In 2022, FBLIC entered into group life insurance coinsurance agreement with Texas Republic Life Insurance Company ("TRLIC"), whereby generally 50% of TRLIC group life insurance policies and premiums were ceded to FBLIC. FBLIC contractually reimburses TRLIC for generally 50% of the related commissions, submission costs, maintenance costs, marketing costs and other costs related to the production of group life insurance policies.

**Competition** 

The U.S. life insurance industry is a mature industry that has experienced little to no growth. Competition is intense because the life insurance industry is consolidating, with larger, more efficient and more effective organizations emerging from consolidation. In addition, legislation became effective in the United States that permits commercial banks, insurance companies and investment banks to combine. These factors have increased competitive pressures in general.

Many domestic life insurance companies have significantly greater financial, marketing and other resources, longer business histories and more diversified lines of insurance products than we do. We also face competition from companies marketing in person as well as with direct mail and internet sales campaigns. Although we may be at a competitive disadvantage to these entities, we believe that our premium rates, policy features, marketing approaches and policyholder services are generally competitive with those of other life insurance companies selling similar types of products and provide us with niche marketing opportunities not actively pursued by other life insurance companies.

**Governmental Regulation**

TLIC and FBLIC are subject to regulation and supervision by the OID. The insurance laws of Oklahoma give the OID broad regulatory authority, including powers to: (i) grant and revoke licenses to transact business; (ii) regulate and supervise trade practices and market conduct; (iii) establish guaranty associations; (iv) license agents; (v) approve policy forms; (vi) approve premium rates for some lines of business; (vii) establish reserve requirements; (viii) prescribe the form and content of required financial statements and reports; (ix) determine the reasonableness and adequacy of statutory capital and surplus and (x) regulate the type and amount of permitted investments. TLIC and FBLIC can be required, under the solvency or guaranty laws of most states in which they do business, to pay assessments (up to prescribed limits) to fund policyholder losses or liabilities of other insurance companies that become insolvent. These assessments may be deferred or foregone under most guaranty laws if they would threaten an insurer's financial strength and, in certain instances, may be offset against future premium taxes.

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TLIC and FBLIC are subject to Oklahoma laws that limit the amount of dividends insurance companies can pay to stockholders without approval of the Departments of Insurance. 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 $532,472 as of December 31, 2025. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $2,899,895 in 2026 without prior approval. FBLIC paid no dividends to TLIC in 2025 and 2024. TLIC has paid no dividends to FTFC.

There are certain factors particular to the life insurance business which may have an adverse effect on the statutory operating results of TLIC and FBLIC. One such factor is that the costs associated with issuing a new policy in force is usually greater than the first year's policy premium. Accordingly, in the early years of a new life insurance company, these initial costs and the required provisions for reserves often have an adverse effect on statutory operating results.

**Employees**

As of March 9, 2026, the Company had nineteen full-time employees.

**Item 2. Properties**

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 sold investment real estate property with an aggregate carrying value of $452,370. The Company recorded a gross realized investment gain on sale of $44,054 based on an aggregate sales price of $496,424. 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.

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. 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.

**Item 3. 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 two 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.

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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 4. Mine Safety Disclosures**

None

**PART II**

**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities**

**(a)** Market Information

Trading of the Company's common stock is limited and an established public market does not exist.

**(b)** Holders

As of March 9, 2026, there were approximately 7,800 shareholders of the Company's outstanding common stock.

FTFC has authorized 40,000,000 shares of Class A common stock and 10,000,000 shares of Class B common stock. 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.

**(c)** Dividends

Prior to 2020, we had never declared or paid cash dividends on our common stock. In 2020, our Board of Directors declared and paid a $0.05 per share cash dividend (amounting to $393,178) on our Class A common stock.

The Board of Directors of the Company has not adopted a formal dividend payment policy. The timing, declaration and payment of future dividends to holders of our common stock fall within the discretion of our Board of Directors and will depend on our operating results, earnings, financial condition, the capital requirements of our business and other factors.

Provisions of the Oklahoma Insurance Code relating to insurance holding companies subject transactions between the Company and TLIC and the Company and FBLIC, including dividend payments, to certain standards generally intended to prevent such transactions from adversely affecting the adequacy of life insurance subsidiaries' capital and surplus available to support policyholder obligations. In addition, under the Oklahoma General Corporation Act, the Company may not pay dividends if, after giving effect to a dividend, it would not be able to pay its debts as they become due in the usual course of business or if its total liabilities would exceed its total assets.

On January 10, 2011, the Company's Board of Directors approved a 5% share dividend by which shareholders received a share of common stock for each 20 shares of common stock of the Company they hold. The dividend was payable to the holders of shares of the Corporation as of March 10, 2011. Fractional shares were rounded to the nearest whole number of shares. The Company issued 323,777 shares in connection with the stock dividend.

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On January 11, 2012, the Company's Board of Directors approved another 5% share dividend by which shareholders received a share of common stock for each 20 shares of common stock of the Company they hold. The dividend was payable to the holders of shares of the Corporation as of March 10, 2012. Fractional shares were rounded to the nearest whole number of shares. The Company issued 378,908 shares in connection with the stock dividend.

On November 12, 2020, the Company's Board of Directors approved a 10% share dividend by which shareholders received a share of Class A common stock for each 10 shares of Class A common stock of the Company they hold. The dividend was payable to the holders of shares of the Corporation as of November 12, 2020. Fractional shares were rounded up to the nearest whole number of shares. The Company issued 791,339 shares in connection with the stock dividend.

**(d)** Securities Authorized for Issuance Under Equity Compensation Plans

In March 2020, our Board formally adopted the 2019 Equity Incentive Plan which had been previously approved by our shareholders in 2019. Under the Plan, up to 1,000,000 shares of Class A Common Stock are authorized for issuance. No awards have been granted or shares issued pursuant to the Plan.

**(e)** Performance Graph – Not Required

**(f)** Purchases of Equity Securities by Issuer

The Company did not repurchase any of its shares of common stock during 2025 or 2024.

**Item 6. Reserved**

**Item 7. 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.

Our profitability in the life insurance and annuity segments is a function of our ability to accurately price the policies that we write, adequately value life insurance business acquired, administer life insurance company acquisitions at an expense level that validates the acquisition cost and invest the premiums and annuity considerations in assets that earn investment income with a positive spread.

**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.

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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 accounting principles generally accepted in the United States ("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, value of insurance business acquired and policy liabilities. 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. We believe the following accounting policies, judgments and estimates are the most critical to the preparation of our consolidated financial statements.

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.

***Investments in Fixed Maturity Securities***

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.

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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.

***Mortgage Loans on Real Estate***

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. If the allowance for credit losses for mortgage loans with a more-than-insignificant amount of credit deterioration since origination is determined, then the initial allowance for credit losses is added to the purchase price of mortgage loans rather than being reported as a credit loss expense.

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 records credit losses for mortgage loans not supported by funds held in escrow in a valuation account against mortgage loans on real estate.

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.

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***Deferred Policy Acquisition Costs***

Commissions and other acquisition costs which vary with and are primarily related to the successful production of new and renewal insurance contracts are deferred and amortized on a constant level basis over the expected life of the related insurance contracts. With the adoption of ASU 2018-12, impairment testing is no longer applicable to deferred policy acquisition costs. The Company, however, reviews and updates actuarial experience assumptions (such as mortality, surrenders, lapse, and premium persistency) serving as inputs to the models that establish the expected life for deferred policy acquisition costs and other actuarial balances during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. The Company makes model refinements as necessary, and any changes resulting from these assumption updates are applied prospectively.

Deferred policy acquisition costs are amortized by issue year month and product cohorts (defined as the unit for asset amortization measurement) with the amortization based upon projected policy counts. In addition, since the amortization of deferred policy acquisition costs is no longer impacted by investment gains and losses, the unrealized gain (loss) adjustment is also no longer applicable to accumulated other comprehensive income (loss).

***Value of Insurance Business Acquired***

As a result of our purchases of FLAC and FBLIC, an asset was recorded in the application of purchase accounting to recognize the value of acquired insurance in force. The Company's value of acquired insurance in force is an intangible asset with a definite life. With the adoption of ASU 2018-12 effective as of January 1, 2025, the Company's value of insurance business acquired is now amortized on a constant level basis over the expected life of the insurance contracts acquired in order for this amortization to be on a basis that remains consistent with the amortization of deferred acquisition costs that is now in compliance with ASU 2018-12. The recovery of the value of insurance business acquired is dependent on the future profitability of the underlying business that was initially recorded in the purchases of FLAC and FBLIC. Each reporting period, we evaluate the recoverability of the unamortized balance of the value of insurance business acquired. In the event actual experience differs significantly from assumptions or assumptions are significantly revised, the Company is required to record a charge or credit to amortization expense for the period in which an adjustment is made.

***Future Policy Benefits***

Our liability for future policy benefits is primarily comprised of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums. Estimating liabilities for life insurance contracts requires management to make various assumptions, including policyholder persistency, mortality rates, investment yields, discretionary benefit increases, new business pricing and operating expense levels.

For life insurance products, expected mortality and morbidity is generally based on the Company's expectations, historical experience or standard industry tables. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Since many of these factors are interdependent and subject to volatility during the long-duration contract period, substantial judgment is required. Actual experience may emerge differently from that previously estimated.

For long-duration insurance contracts, reserves for non-participating life insurance are generally equal to the present value of expected future policy benefits less the present value of expected net premiums. Issue-year, product and limited pay cohorts (defined as the unit of account for liability measurement) are used for the reserve calculation and assumptions are periodically reviewed and updated. An interest accretion rate is determined for an identified cohort and remains unchanged after the issue year. Reserves are measured as of each reporting date to reflect the current upper-medium grade fixed income instrument yields, with the impact reported in accumulated other comprehensive income (loss).

The Company reviews and updates, if necessary, assumptions used to measure cash flows for the liability for future policy benefits during the third quarter of each year, or more frequently if evidence suggests that assumptions should be revised. Actual cash flows are grouped into issue year cohorts for this liability for future policy benefits calculation. A change in the liability for future policy benefits as a result of updating cash flow assumptions is recognized in net income.

Discount rate assumptions are selected in accordance with the applicable duration of the life insurance contracts based on the future benefit liability cash flow projection and are prescribed as the current upper-medium grade (low credit risk) fixed income instrument yield. If the discount rate is updated at any reporting date, the impact of the discount rate update is recognized in accumulated other comprehensive income (loss).

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Reserves for participating life insurance contracts are based on the net level premium reserve for death and endowment policy benefits. This net level premium reserve is calculated based on dividend fund interest rates and mortality rates guaranteed in calculating the cash surrender values described in the contract. Expected mortality and morbidity for participating life insurance contracts is generally based on the Company's historical experience or standard industry tables including a provision for the risk of adverse deviation. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality and morbidity and interest rate assumptions are "locked-in" upon the issuance of new insurance with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves. Since many of these factors are interdependent and subject to short-term volatility during the long-duration contract period, substantial judgment is required. Actual experience may emerge differently from that originally estimated. Any such difference would be recognized in the current year's consolidated statement of operations.

***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.

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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 was permitted. The Company adopted this Update for year-end reporting in 2024 and for interim periods beginning in 2025.

*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 was permitted. The Company adopted this Update and prescribed disclosures for year-end reporting in 2025 and also disclosed the information required by this Update for 2024 year-end reporting.

The Company will disclose supplementary information for taxes paid (recovered) for both 2025 and 2024. Interim periods in 2025 will not disclose income (loss) from continuing operations before tax for domestic and foreign operations but will show the impact of foreign operating losses in the rate reconciliation. In addition, the total amounts of interest and penalties, if any, included in operating results and accrued in the statement of financial position will be disclosed.

Since FTFC is a holding company for life insurance and mortgage loan operations, FTFC pays premium taxes and very limited amounts of franchise taxes to states that are not based on allocated amounts of net income (loss). The Company only pays state income taxes on the stand-alone taxable income of FTFC and TMC operations domiciled and operating in the state of Oklahoma. In addition, FTFC pays no foreign taxes or recovers any foreign losses on its operations outside the United States. Based upon these facts, FTFC will not present disaggregated information for state taxes and foreign operations in its disclosures of federal income and other taxes in 2025 or 2024 but will have a rate reconciling item for non-taxable foreign tax income or losses . This pronouncement is being applied on a prospective basis during 2025 and 2024 disclosures will be enhanced to be comparable to those of 2025. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity.

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

In August 2018, the FASB issued updated guidance, Accounting Standards Update 2018-12 (ASU 2018-12) to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. This update improved the timeliness of recognizing changes in the liability for future policy benefits, modified the rate used to discount future cash flows, simplified and improved accounting for certain market-based options or guarantees associated with deposit (i.e., account balance) contracts, simplified the amortization of deferred acquisitions costs and expanded 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 Company adopted ASU 2018-12 on January 1, 2025 for the liability for future policy benefits, deferred policy acquisition costs and value of insurance business acquired. ASU 2018-12 was adopted on a modified retrospective basis such that those balances for the liability for future policy benefits, deferred policy acquisition costs were adjusted to conform to ASU 2018-12 effective January 1, 2024 (i.e., the earliest period presented). With respect to an analysis for market risk benefits, the Company concluded that it had no market-based options or guarantees associated with its liability for policyholders' account balances.

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Based upon the adoption of ASU 2018-12, a cumulative effect adjustment of ($8,916,920) was recorded as a decrease to retained earnings, net of tax, and a cumulative effect adjustment of $7,125,531 was recorded as an increase to Accumulated Other Comprehensive Loss, net of tax, as of January 1, 2024, summarized as follows:

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| | | |
|:---|:---|:---|
|  | As of January 1, 2024 | As of January 1, 2024 |
|  | Retained Earnings | Accumulated Other Comprehensive Loss |
| Financial Component Impacted: |  |  |
| Future policy benefits | $(8916920) | $7127976 |
| Deferred policy acquisition costs |  | (2445) |
| Total impact on January 1, 2024 balance | $(8916920) | $7125531 |

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The increase (decrease) on the impacted caption in the consolidated statements of financial position, consolidated statement of operations and consolidated statement of comprehensive income related to the retrospective cumulative effect adjustments of ASU 2018-12 as of January 1, 2024 is summarized as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | As of December 31, 2024 | As of December 31, 2024 | As of December 31, 2024 | As of December 31, 2024 |
|  |  | ASU 2018-12 | ASU 2018-12 |  |
|  | As Previously | Adoption Impact | Adoption Impact | Post ASU 2018-12 |
| Financial Statement Caption | Reported | January 1, 2024 | December 31, 2024 | Adoption |
| Statement of Financial Position |  |  |  |  |
| Recoverable from reinsurer | $9845838 | $(22581) | $65851 | $9889108 |
| Deferred policy acquisition costs | 66640453 | (3094) | 2762007 | 69399366 |
| Value of insurance business acquired | 3593440 |  | (216288) | 3377152 |
| Total assets | 686448898 | (25675) | 2611570 | 689034793 |
| Future policy benefits | 138027832 | 2241906 | (7239525) | 133030213 |
| Deferred federal income taxes | 4023492 | (476192) | 2068729 | 5616029 |
| Total liabilities | 617398670 | 1765714 | (5170796) | 613993588 |
| Accumulated other comprehensive income (loss) | (11024079) | 7125531 | 6938409 | 3039861 |
| Accumulated earnings | 37202901 | (8916920) | 843957 | 29129938 |
| Total shareholders' equity | 69050228 | (1791389) | 7782366 | 75041205 |
| Total liabilities and shareholders' equity | 686448898 | (25675) | 2611570 | 689034793 |

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| | | | |
|:---|:---|:---|:---|
|  | As Previously | ASU 2018-12 | Post ASU 2018-12 |
| Financial Statement Caption | Reported | Adoption Impact | Adoption |
| Statement of Operations | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 |
| Increase in future policy benefits | $14565010 | $1477678 | $16042688 |
| Amortization of deferred policy acquisition costs | 10775374 | (2762265) | 8013109 |
| Amortization of value of insurance business acquired | 183913 | 216288 | 400201 |
| Deferred federal income tax expense | 162874 | 224342 | 387216 |
| Net income | 6416791 | 843957 | 7260748 |
| Net income per common share: |  |  |  |
| Class A | $0.6776 | $0.0891 | $0.7667 |
| Class B | 0.5759 | 0.0758 | 0.6517 |

---

---

| | | | |
|:---|:---|:---|:---|
| Consolidated Statement of Comprehensive Income | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 |
| Net income | $6416791 | $843957 | $7260748 |
| Adjustment to deferred acquisition costs | (257) | 257 |  |
| Remeasurement gains on future policy benefit related to discount rate |  | 8783053 | 8783053 |
| Federal income tax expense (benefit) | (367571) | 1844387 | 1476816 |
| Total other comprehensive income (loss) | (1382771) | 6938409 | 5555638 |
| Total comprehensive income | 5034020 | 7782366 | 12816386 |

---

------

*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 would have reduced implementation costs and complexity associated with the adoption of targeted improvements in accounting for long-duration contracts that would 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 have been 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 have been useful to users of financial information.

The amendments in this guidance were effective for fiscal years beginning after December 15, 2024. Early adoption was permitted but was not elected by the Company. The Company adopted 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. Since the Company did not elect early adoption of ASU 2018-12, the adoption of this standard had no impact on the Company's results of operations, financial position and liquidity.

***Recent Accounting Pronouncements***

*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:

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.

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.

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

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.

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

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

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.

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.

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.

**FINANCIAL HIGHLIGHTS**

**Consolidated Condensed Results of Operations for the Years Ended December 31, 2025 and 2024**

---

| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Premiums | $44042620 | $41878896 | $2163724 |
| Net investment income | 34681376 | 30522580 | 4158796 |
| Net realized investment gains | 497174 | 264821 | 232353 |
| Loss on impairments |  | (129436) | 129436 |
| Service fees | 5067846 | 3161535 | 1906311 |
| Other income | 29282 | 652793 | (623511) |
| Total revenues | 84318298 | 76351189 | 7967109 |
| Benefits and claims | 53613588 | 47959976 | 5653612 |
| Expenses | 22816973 | 19246623 | 3570350 |
| Total benefits, claims and expenses | 76430561 | 67206599 | 9223962 |
| Income before federal income tax expense | 7887737 | 9144590 | (1256853) |
| Federal income tax expense | 1731617 | 1883842 | (152225) |
| Net income | $6156120 | $7260748 | $(1104628) |
| **Net income per common share** |  |  |  |
| **Class A common stock** | $0.6502 | $0.7667 | $(0.1165) |
| **Class B common stock** | $0.5527 | $0.6517 | $(0.0990) |

---

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

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | Amount Change |
|  | December 31, 2025 | December 31, 2024 | 2025 less 2024 |
| Investment assets | $525598084 | $493388984 | $32209100 |
| Assets held in trust under coinsurance agreement | 21066069 | 31176310 | (10110241) |
| Other assets | 142520126 | 164469499 | (21949373) |
| Total assets | $689184279 | $689034793 | $149486 |
| Policy liabilities | $569737114 | $566925323 | $2811791 |
| Funds withheld under coinsurance agreement | 20001969 | 31032174 | (11030205) |
| Deferred federal income taxes | 6584494 | 5616029 | 968465 |
| Other liabilities | 6288104 | 10420062 | (4131958) |
| Total liabilities | 602611681 | 613993588 | (11381907) |
| Shareholders' equity | 86572598 | 75041205 | 11531393 |
| Total liabilities and shareholders' equity | $689184279 | $689034793 | $149486 |
| Shareholders' equity per common share |  |  |  |
| Class A common stock | $9.1909 | $7.9239 | $1.2670 |
| Class B common stock | $7.8123 | $6.7353 | $1.0770 |

---

------

**Results of Operations** – **Years Ended December 31, 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 years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Premiums | $44042620 | $41878896 | $2163724 |
| Net investment income | 34681376 | 30522580 | 4158796 |
| Net realized investment gains | 497174 | 264821 | 232353 |
| Loss on impairments |  | (129436) | 129436 |
| Service fees | 5067846 | 3161535 | 1906311 |
| Other income | 29282 | 652793 | (623511) |
| Total revenues | $84318298 | $76351189 | $7967109 |

---

The $7,967,109 increase in total revenues for the year ended December 31, 2025 is discussed below.

***Premiums***

Our premiums for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Ordinary life first year | $3294475 | $3742607 | $(448132) |
| Ordinary life renewal | 11479351 | 8874166 | 2605185 |
| Supplementary contracts | 17576 |  | 17576 |
| Final expense first year | 3025994 | 3423413 | (397419) |
| Final expense renewal | 26225224 | 25838710 | 386514 |
| Total premiums | $44042620 | $41878896 | $2163724 |

---

The $2,163,724 increase in premiums for the year ended December 31, 2025 is primarily due to the $2,605,185 increase in ordinary life renewal premiums and a $386,514 increase in final expense renewal premiums that exceeded a $448,132 decrease in ordinary life first year premiums and a $397,419 decrease in final expense first year premiums.

The ordinary life renewal premiums and ordinary life first year 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 years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Fixed maturity securities | $10151308 | $8534951 | $1616357 |
| Equity securities | 344075 | 135911 | 208164 |
| Other long-term investments | 4134695 | 4444639 | (309944) |
| Mortgage loans | 21044829 | 17079731 | 3965098 |
| Policy loans | 363968 | 291170 | 72798 |
| Short-term and other investments | 1420409 | 2531767 | (1111358) |
| Gross investment income | 37459284 | 33018169 | 4441115 |
| Investment expenses | (2777908) | (2495589) | 282319 |
| Net investment income | $34681376 | $30522580 | $4158796 |

---

The $4,441,115 increase in gross investment income for the year ended December 31, 2025 is primarily due to $3,965,098 increase in mortgage loans, $1,616,357 increase in fixed maturity securities and $208,164 increase in equity securities that exceeded a $1,111,358 decrease in short-term and other investments and $309,944 decrease in other long-term investments.

The increase in mortgage loans investment income is primarily due to increased mortgage loans investments of $41.5 million since December 31, 2024. The increase in fixed maturity securities investment income is primarily due to the average monthly holdings in 2025 exceeding the average monthly holdings in 2024 and the weighted average investment yield also increasing. The increase in equity securities investment income is primarily due to the average monthly holdings in 2025 exceeding the average monthly holdings in 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 decrease in other long-term investments income is primarily due to decreased other long-term investments of $6.9 million since December 31, 2024.

The $282,319 increase in investment expense for the year ended December 31, 2025 is primarily due to increased mortgage loan costs.

------

***Net Realized Investment Gains***

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

Our net realized investment gains (losses) for the years ended December 31, 2025 and 2024 are summarized as follows:

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| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Fixed maturity securities available-for-sale: |  |  |  |
| Sale proceeds and maturities | $78586070 | $15179021 | $63407049 |
| Amortized cost at sale date | 78460273 | 15278204 | 63182069 |
| Net realized gains (losses) | $125797 | $(99183) | $224980 |
| Equity securities at fair value: |  |  |  |
| Sale proceeds | $6944 | $5 | $6939 |
| Cost at sale date |  | 9 | (9) |
| Net realized gains (losses) | $6944 | $(4) | $6948 |
| Mortgage loans on real estate: |  |  |  |
| Payment and sale proceeds on mortgage loans | $137548533 | $173048603 | $(35500070) |
| Cost at sale date | 137549670 | 172348722 | (34799052) |
| Net realized gains (losses) | $(1137) | $699881 | $(701018) |
| Other long-term investments: |  |  |  |
| Sales proceeds | $- | $17288490 | $(17288490) |
| Cost at sale date |  | 17242840 | (17242840) |
| Net realized gains | $- | $45650 | $(45650) |
| Investment real estate: |  |  |  |
| Sale proceeds | $496424 | $276956 | $219468 |
| Carrying value at sale date | 452370 | 265705 | 186665 |
| Net realized gains | $44054 | $11251 | $32803 |
| Equity securities, changes in fair value | $125540 | $(97284) | $222824 |
| Changes in current estimate of credit losses | $195976 | $(295490) | $491466 |
| Net realized investment gains | $497174 | $264821 | $232353 |

---

***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 $1,906,311 increase in service fees for the year ended December 31, 2025, is primarily due to an increase in fees from Trinity Mortgage Corporation brokering and administrating mortgage loans for a fee to third parties.

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**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 years ended December 31, 2025 and 2024 are summarized as follows:

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| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Benefits and claims |  |  |  |
| Increase in future policy benefits | $15579671 | $16042688 | $(463017) |
| Death benefits | 15159686 | 13176508 | 1983178 |
| Surrenders | 3274487 | 2471376 | 803111 |
| Interest credited to policyholders | 19140915 | 15880681 | 3260234 |
| Dividend, endowment and supplementary life contract benefits | 458829 | 388723 | 70106 |
| Total benefits and claims | 53613588 | 47959976 | 5653612 |
| Expenses |  |  |  |
| Policy acquisition costs deferred | (11979702) | (16620462) | 4640760 |
| Amortization of deferred policy acquisition costs | 10942051 | 8013109 | 2928942 |
| Amortization of value of insurance business acquired | 372146 | 400201 | (28055) |
| Commissions | 11628983 | 16030481 | (4401498) |
| Other underwriting, insurance and acquisition expenses | 11853495 | 11423294 | 430201 |
| Total expenses | 22816973 | 19246623 | 3570350 |
| Total benefits, claims and expenses | $76430561 | $67206599 | $9223962 |

---

The $9,223,962 increase in total benefits, claims and expenses for the year ended December 31, 2025 is discussed below.

***Benefits and Claims***

The $5,653,612 increase in total benefits and claims for the year ended December 31, 2025 is primarily due to the following:

● $3,260,234 increase in interest credited to policyholders is primarily due to an increase in the crediting rate on annuity contract.

● $1,983,178 increase in death benefits is primarily due to approximately $1,240,000 of increased final expense benefit and $743,000 of increased ordinary life benefits.

● $808,111 increase in surrenders is based upon policyholder election and corresponds to the growth in the number of policies in force.

● $463,017 decrease in future policy benefits is primarily due death benefits, surrenders and low first year production.

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***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 years ended December 31, 2025 and 2024, capitalized costs were $11,979,702 and $16,620,462, respectively. Amortization of deferred policy acquisition costs for the years ended December 31, 2025 and 2024 were $10,942,051 and $8,013,109.

The $4,640,760 decrease in the 2025 acquisition costs deferred primarily relates to decreased annuity production with a corresponding decrease in deferral of eligible annuity commissions. There was a $2,928,942 increase in the 2025 amortization of deferred acquisition costs primarily due to 2025 surrenders and withdrawal activity and the impacts 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 $372,146 and $400,201 for the years ended December 31, 2025 and 2024, respectively.

***Commissions***

Our commissions for the years ended December 31, 2025 and 2024 are summarized as follows:

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| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Annuity | $790523 | $4637570 | $(3847047) |
| Ordinary life first year | 3544576 | 3977122 | (432546) |
| Ordinary life renewal | 1354355 | 999372 | 354983 |
| Final expense first year | 3573278 | 4033281 | (460003) |
| Final expense renewal | 2366251 | 2383136 | (16885) |
| Total commissions | $11628983 | $16030481 | $(4401498) |

---

The $4,401,498 decrease in commissions for the year ended December 31, 2025 is primarily due to a $3,847,047 decrease annuity commissions (corresponding to $115,094,974 of decreased annuity deposits retained), $460,003 decrease in final expense first year commissions (corresponding to $397,419 decreased final expense first year premiums) and a $432,546 decrease in ordinary life first year commissions (corresponding to $448,132 decreased ordinary life first year premiums) that exceed a $354,983 increase in ordinary life renewal commissions (corresponding to $2,605,185 increased ordinary life renewal premiums).

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

The $430,201 increase in other underwriting, insurance and acquisition expenses for the year ended December 31, 2025 was primarily related to an increase in service fees, international consulting fees and third party administrative fees.

------

***Federal Income Taxes***

FTFC files a 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 years ended December 31, 2025 and 2024, current income tax expense was $2,214,729 and $1,496,626, respectively. Deferred federal income tax expense (benefit) was ($483,112) and $387,216 for the years ended December 31, 2025 and 2024, respectively.

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

For the year ended December 31, 2025 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 (9,468,155) of Class A shares (9,382,218) and Class B shares (85,937) as of the reporting date. For the year ended December 31, 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 year ended December 31, 2025, the net income allocated to the Class A shareholders of $6,100,244 is the total net income $6,156,120 less the net income allocated to the Class B shareholders $55,876. For the year ended December 31, 2024, the net income allocated to the Class A shareholders of $7,194,861 is the total net income $7,260,748 less the net income allocated to the Class B shareholders $65,887.

The weighted average outstanding common shares basic for the year ended December 31, 2025 and 2024 were 9,382,218 and 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 years ended December 31, 2025 and 2024 are summarized as follows:

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| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Revenues: |  |  |  |
| Life insurance operations | $53435145 | $49513873 | $3921272 |
| Annuity operations | 25660366 | 24316397 | 1343969 |
| Corporate operations | 5222787 | 2520919 | 2701868 |
| Total | $84318298 | $76351189 | $7967109 |
| Income before federal income taxes: |  |  |  |
| Life insurance operations | $5673241 | $6310062 | $(636821) |
| Annuity operations | (523101) | 1600856 | (2123957) |
| Corporate operations | 2737597 | 1233672 | 1503925 |
| Total | $7887737 | $9144590 | $(1256853) |

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The increases and decreases of revenues and profitability from our business segments for the years ended December 31, 2025 and 2024 are summarized as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $2163724 | $- | $- | $2163724 |
| Net invesment income | 2037110 | 2329509 | (207823) | 4158796 |
| Net realized investment gains less impairments | 99984 | 261805 |  | 361789 |
| Service fees and other income | (379546) | (1247345) | 2909691 | 1282800 |
| Total revenue | 3921272 | 1343969 | 2701868 | 7967109 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | (463017) |  |  | (463017) |
| Death benefits | 1983178 |  |  | 1983178 |
| Surrenders | 803111 |  |  | 803111 |
| Interest credited to policyholders |  | 3260234 |  | 3260234 |
| Dividend, endowment and supplementary life contract benefits | 70106 |  |  | 70106 |
| Total benefits and claims | 2393378 | 3260234 |  | 5653612 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | 3294160 | 4275542 |  | 7569702 |
| Amortization of value of insurance business acquired | (14028) | (14027) |  | (28055) |
| Commissions | (554451) | (3847047) |  | (4401498) |
| Other underwriting, insurance and acquisition expenses | (560966) | (206776) | 1197943 | 430201 |
| Total expenses | 2164715 | 207692 | 1197943 | 3570350 |
| Total benefits, claims and expenses | 4558093 | 3467926 | 1197943 | 9223962 |
| Income (loss) before federal income tax expense (benefit) | $(636821) | $(2123957) | $1503925 | $(1256853) |

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**Consolidated Financial Condition**

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

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| | | | |
|:---|:---|:---|:---|
|  |  |  | Amount Change |
|  | December 31, 2025 | December 31, 2024 | 2025 less 2024 |
| **Assets** |  |  |  |
| Investments |  |  |  |
| Available-for-sale fixed maturity securities at fair value (amortized cost: $215,989,423 and $227,703,702 as of December 31, 2025 and 2024, respectively) | $209926505 | $213745821 | $(3819316) |
| Equity securities at fair value (cost: $5,677,164 and $5,301,191 as of December 31, 2025 and 2024, respectively) | 5837575 | 5336062 | 501513 |
| Mortgage loans on real estate | 250899714 | 209364504 | 41535210 |
| Investment real estate | 2526085 | 2351549 | 174536 |
| Policy loans | 5132086 | 4367534 | 764552 |
| Other long-term investments | 51276119 | 58223514 | (6947395) |
| Total investments | $525598084 | $493388984 | $32209100 |

---

------

The decrease and increase in fixed maturity available-for-sale securities for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Fixed maturity securities, available-for-sale, beginning | $213745821 | $149700948 |
| Purchases | 67351350 | 81180014 |
| Unrealized appreciation (depreciation) | 7894963 | (1750599) |
| Net realized investment gains (losses), including credit (losses) | 321773 | (394673) |
| Transfer to other long-term investments | (156068) |  |
| Sales proceeds | (76134070) | (11744021) |
| Maturities | (2452000) | (3435000) |
| Accretion of discounts (premium amortization) | (645264) | 189152 |
| Increase (decrease) | (3819316) | 64044873 |
| Fixed maturity securities, available-for-sale, ending | $209926505 | $213745821 |

---

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 in 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 available-for-sale for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Equity securities, available-for-sale, beginning | $5336062 | $419530 |
| Purchases | 492748 | 5129196 |
| Sales proceeds | (6944) | (5) |
| Joint venture distribution | (116775) | (115371) |
| Net realized investment gains (losses), sale of securities | 6944 | (4) |
| Net realized investment gains (losses), changes in fair value | 125540 | (97284) |
| Increase | 501513 | 4916532 |
| Equity securities, available-for-sale, ending | $5837575 | $5336062 |

---

Equity securities are reported at fair value with the change in fair value reflected in net realized investment gains within the consolidated statements of operations.

------

The increase and decrease in mortgage loans on real estate for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Mortgage loans on real estate, beginning | $209364504 | $239831447 |
| Purchases | 179933175 | 143991455 |
| Premium amortization | (175437) | (796526) |
| Net realized investment gains (losses) | (1137) | 699881 |
| Payments | (137548533) | (173048603) |
| Foreclosed - transferred to real estate | (459180) | (1441287) |
| (Increase) decrese in allowance for bad debts | (213678) | 128137 |
| Increase (decrease) | 41535210 | (30466943) |
| Mortgage loans on real estate, ending | $250899714 | $209364504 |

---

The increase in investment real estate for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Investment real estate, beginning | $2351549 | $1305403 |
| Purchase | 167726 |  |
| Real estate acquired through mortgage loan foreclosure | 459180 | 1441287 |
| Net realized investment gains | 44054 | 11251 |
| Sales proceeds | (496424) | (276956) |
| Loss on impairments |  | (129436) |
| Increase | 174536 | 1046146 |
| Investment real estate, ending | $2526085 | $2351549 |

---

The decrease in other long-term investments (comprised mainly of lottery receivables) for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Other long-term investments, beginning | $58223514 | $61487939 |
| Purchases | 3455654 | 9470507 |
| Accretion of discount | 4088942 | 4507908 |
| Transfer from fixed maturity securities, available for sale | 156068 |  |
| Unrealized depreciation | (50714) |  |
| Net realized investment gains |  | 45650 |
| Payments | (14597345) | (17288490) |
| Decrease | (6947395) | (3264425) |
| Other long-term investments, ending | $51276119 | $58223514 |

---

------

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

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | Amount Change |
|  | December 31, 2025 | December 31, 2024 | 2025 less 2024 |
| Cash and cash equivalents | $39496427 | $64344122 | $(24847695) |
| Accrued investment income | 6454380 | 5746167 | 708213 |
| Recoverable from reinsurers | 9547506 | 9889108 | (341602) |
| Assets held in trust under coinsurance agreement | 21066069 | 31176310 | (10110241) |
| Agents' balances and due premiums | 1391105 | 1393277 | (2172) |
| Deferred policy acquisition costs | 70437017 | 69399366 | 1037651 |
| Value of insurance business acquired | 3005006 | 3377152 | (372146) |
| Other assets | 12188685 | 10320307 | 1868378 |
| Assets other than investment assets | $163586195 | $195645809 | $(32059614) |

---

The $24,847,695 decrease in cash and cash equivalents for the year ended December 31, 2025 and the corresponding increase of $30,504,381 for the year ended December 31, 2024 are summarized in the Company's consolidated statements of cash flows.

The $10,110,241 decrease in assets held in trust under the coinsurance agreement is due to a reduction in assets from the significant surrenders of annuity contracts 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 years ended December 31, 2025 and 2024, respectively, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Balance, beginning of year | $69399366 | $60792013 |
| Capitalization of commissions, sales and issue expenses | 11979702 | 16620462 |
| Amortization | (10942051) | (8013109) |
| Increase | 1037651 | 8607353 |
| Balance, end of year | $70437017 | $69399366 |

---

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

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | Amount Change |
|  | December 31, 2025 | December 31, 2024 | 2025 less 2024 |
| Federal and state income taxes recoverable | $5890172 | $4708718 | $1181454 |
| Advances to mortgage loan originator | 4722878 | 4746638 | (23760) |
| Lease asset - right to use | 924201 | 270679 | 653522 |
| Accrued management fee | 498389 | 393159 | 105230 |
| Other receivables, prepaid assets and deposits | 138254 | 171032 | (32778) |
| Notes receivable | 14791 | 30081 | (15290) |
| Total other assets | $12188685 | $10320307 | $1868378 |

---

There was a $1,181,454 increase in federal and state income taxes recoverable primarily due to federal and state tax withholdings on lottery receivables.

The Company reported an increased lease asset of $653,522 due to signing an amended lease agreement expiring in 2032.

There was a $105,230 increase in accrued management fees for managing mortgage loans for a third party.

------

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

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | Amount Change |
|  | December 31, 2025 | December 31, 2024 | 2025 less 2024 |
| Policy liabilities |  |  |  |
| Policyholders' account balances | $417120647 | $431190092 | $(14069445) |
| Future policy benefits | 149228807 | 133030213 | 16198594 |
| Policy claims | 3143579 | 2478465 | 665114 |
| Other policy liabilities | 244081 | 226553 | 17528 |
| Total policy liabilities | 569737114 | 566925323 | 2811791 |
| Funds withheld under coinsurance agreement | 20001969 | 31032174 | (11030205) |
| Deferred federal income taxes | 6584494 | 5616029 | 968465 |
| Other liabilities | 6288104 | 10420062 | (4131958) |
| Total liabilities | $602611681 | $613993588 | $(11381907) |

---

The $16,198,594 increase in future policy benefits is primarily related to the production of new life insurance policies and the aging of existing policies an additional year.

The decrease and increase in policyholders' account balances for the years ended December 31, 2025 and 2024, respectively, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Policyholders' account balances, beginning | $431190092 | $391247676 |
| Deposits | 26337459 | 141387484 |
| Withdrawals | (71889578) | (166419069) |
| Funds withheld under coinsurance agreement | 12341759 | 49093320 |
| Interest credited | 19140915 | 15880681 |
| Increase (decrease) | (14069445) | 39942416 |
| Policyholders' account balances, ending | $417120647 | $431190092 |

---

The $968,465 increase in deferred federal income taxes was due to $1,451,577 of increased deferred federal income taxes expense on the unrealized depreciation of fixed maturity securities available-for-sale and $483,112 of operating deferred federal tax benefit.

The $11,030,205 decrease in funds withheld under coinsurance agreement is due to significant 2025 surrenders of coinsured annuity contracts under coinsurance agreement with an offshore annuity and life insurance company.

------

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

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | Amount Change |
|  | December 31, 2025 | December 31, 2024 | 2025 less 2024 |
| Mortgage loans suspense | $3179575 | $5910871 | $(2731296) |
| Lease liability | 924201 | 270679 | 653522 |
| Accrued expenses payable | 687000 | 611000 | 76000 |
| Unclaimed funds | 658404 | 582040 | 76364 |
| Suspense accounts payable | 568025 | 2695069 | (2127044) |
| Unearned investment income | 169315 | 148233 | 21082 |
| Accounts payable | 113285 | 274493 | (161208) |
| Guaranty fund assessments | 55000 | 86000 | (31000) |
| Deferred revenue | 19250 | 30250 | (11000) |
| Payable for securities purchased |  | 6179 | (6179) |
| Other payables, withholdings and escrows | (85951) | (194751) | 108800 |
| Total other liabilities | $6288104 | $10420062 | $(4131958) |

---

The decrease in mortgage loan suspense of $2,731,296 is primarily due to timing of principal loan payments on mortgage loans.

The $2,127,044 decrease in suspense accounts payable is due to decreased deposits on policy applications that had not been issued as of the financial reporting date.

The Company reported an increased lease liability of $653,522 due to signing an amended lease agreement expiring in 2032.

The decrease in accounts payable of $161,208 is primarily due to payments to a lottery vendor.

The $108,800 increase in other payables, withholdings and escrows is primarily due to a decrease in escrow advances.

**Liquidity and Capital Resources**

Our operations have been financed primarily through the private placement of equity securities and intrastate public stock offerings. Through December 31, 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.

------

In settlement of a lawsuit, the Company was awarded 50,936 shares of its own Class A common stock. The 50,936 shares of the Company's Class A common stock were transferred to treasury stock at a cost basis of $85,422.

As of December 31, 2025, we had cash and cash equivalents totaling $39,496,427. As of December 31, 2025, cash and cash equivalents of $11,622,425 and $15,744,370, respectively, totaling $27,366,795 were held by TLIC and FBLIC and may not be available for use by FTFC due to the required pre-approval by the OID 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 $532,472 as of December 31, 2025. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $2,899,895 in 2025 without prior approval. FBLIC has paid no dividends to TLIC in 2024 and 2023. 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 $34,131,790 and $50,995,135 as of December 31, 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 years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Net cash provided by operating activities | $41597511 | $90007676 | $(48410165) |
| Net cash used in investing activities | (20807665) | (34471710) | 13664045 |
| Net cash used in financing activities | (45637541) | (25031585) | (20605956) |
| Increase (decrease) in cash | (24847695) | 30504381 | (55352076) |
| Cash and cash equivalents, beginning of period | 64344122 | 33839741 | 30504381 |
| Cash and cash equivalents, end of period | $39496427 | $64344122 | $(24847695) |

---

The cash provided by operating activities for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Amount Change |
|  | 2025 | 2024 | 2025 less 2024 |
| Premiums collected | $44002505 | $41852394 | $2150111 |
| Net investment income collected | 30726003 | 27123406 | 3602597 |
| Service fees and other income collected | 4991899 | 3766316 | 1225583 |
| Death benefits paid | (14130389) | (12600450) | (1529939) |
| Surrenders paid | (3274487) | (2471376) | (803111) |
| Dividends and endowments paid | (462714) | (390831) | (71883) |
| Commissions paid | (11565283) | (16134886) | 4569603 |
| Other underwriting, insurance and acquisition expenses paid | (11545421) | (11190335) | (355086) |
| Taxes received (paid) | (3396184) | 4640446 | (8036630) |
| (Increased) decreased advances to a mortgage loan originator | 23760 | (258923) | 282683 |
| Decreased advances to independently owned investment firm |  | 2045191 | (2045191) |
| Decreased advances to an investment vendor |  | 296477 | (296477) |
| Decreased funds under coinsurance agreement | 11421795 | 51632390 | (40210595) |
| Increased (decreased) deposits of pending policy applications | (2127044) | 1894807 | (4021851) |
| Increased (decreased) mortgage loan suspense | (2731295) | 69757 | (2801052) |
| Other | (335634) | (266707) | (68927) |
| Cash provided by operating activities | $41597511 | $90007676 | $(48410165) |

---

------

Please see the consolidated statements of cash flows for the years ended December 31, 2025 and 2024 for a summary of the components of net cash used in investing activities and financing activities.

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

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | Amount Change |
|  | December 31, 2025 | December 31, 2024 | 2025 less 2024 |
| Class A common stock, par value $.01 per share (40,000,000 shares authorized as of December 31, 2025 and 2024, 9,631,920 issued as of December 31, 2025 and 2024, 9,333,404 and 9,384,340, outstanding as of December 31, 2025 and 2024, respectively) | $96319 | $96319 | $- |
| Class B common stock, par value $.01 per share (10,000,000 shares authorized, 101,102 issued and outstanding as of December 31, 2025 and 2024) | 1011 | 1011 |  |
| Additional paid-in capital | 43668023 | 43668023 |  |
| Treasury stock, at cost (298,516 and 247,580 shares as of December 31, 2025 and 2024, respectively) | (979369) | (893947) | (85422) |
| Accumulated other comprehensive income | 8500556 | 3039861 | 5460695 |
| Accumulated earnings | 35286058 | 29129938 | 6156120 |
| Total shareholders' equity | $86572598 | $75041205 | $11531393 |

---

The increase in shareholders' equity of $11,531,393 for the year ended December 31, 2025 is primarily due to $6,156,120 in net income and $5,460,695 increase in accumulated other comprehensive income.

In settlement of a lawsuit in 2025, the Company was awarded 50,936 shares of its own Class A common stock. The 50,936 shares of the Company's Class A common stock were transferred to treasury stock at a cost basis of $85,422.

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 ($6,113,632) and ($13,957,881) as of December 31, 2025 and 2024, respectively, prior to the impact of income taxes and future policy benefits related to discount rate. An increase of $7,970,046 in unrealized gains arising for year ended December 31, 2025 has been increased by 2025 net realized investment gains of $125,797 originating from the sale, calls and maturities for fixed maturity securities available-for-sale resulting in net unrealized gains on investments of $7,844,249.

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 December 31, 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 10.6% 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 2025, 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 December 31, 2025, the Company has outstanding advances to this loan originator totaling $4,722,878. The advances are secured by $8,643,349 of residential mortgage loans on real estate that are assigned to the Company. The Company has committed to fund up to an additional $2,277,122 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 December 31, 2025, $890,250 of additional and secured residential mortgage loan balances on real estate are held in escrow by the loan originator. As of December 31, 2025, $879,146 of that escrow amount is available to the Company as additional collateral on $4,722,878 of advances to the loan originator. The remaining December 31, 2025 escrow amount of $11,104 is available to the Company as additional collateral on its investment of $2,220,809 in 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 December 31, 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.

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**Item 8. Financial Statements**

**FIRST TRINITY FINANCIAL CORPORATION AND SUBSIDIARIES**

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024**

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| | |
|:---|:---|
| Consolidated Financial Statements | Page<br> Numbers |
| Report of Independent Registered Public Accounting Firm (PCAOB ID 718) | 39 |
| Consolidated Statements of Financial Position | 41 |
| Consolidated Statements of Operations | 42 |
| Consolidated Statements of Comprehensive Income | 43 |
| Consolidated Statements of Changes in Shareholders' Equity | 44 |
| Consolidated Statements of Cash Flows | 45 |
| Notes to Consolidated Financial Statements | 47 |

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**Report of Independent Registered Public Accounting Firm**

------

To the Board of Directors and

Shareholders of First Trinity Financial Corporation

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated statements of financial position of First Trinity Financial Corporation and Subsidiaries (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive income, changes in shareholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

***Critical Audit Matters***

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

***Amortization of Deferred Policy Acquisition Costs*** – ***Refer to Notes 1 and 6***

*Critical Audit Matter Description*

The Company's products include traditional life insurance contracts and annuities in which certain acquisition costs are capitalized and the expenses are deferred into future periods. Management amortizes the capitalized costs on a constant level basis over the expected life of the contracts. The amortization occurs by grouping contracts and their capitalized costs by issue year and by product cohorts, with the amortization based on projected policy counts inclusive of actuarial projections and assumptions as to the life of the grouped contracts. The unamortized deferred policy acquisition cost asset was $70.4 million as of December 31, 2025.

As a result, the audit of this area requires a high degree of judgment due to the complex nature of determining the amortization of these deferred costs.

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How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to the amortization of the unamortized deferred policy acquisition cost asset included, among others, the following:

● We gained an understanding of the processes utilized and controls implemented in grouping contracts and in amortizing the deferred policy acquisition costs

● We tested data utilized by management for completeness and accuracy

● We engaged an independent actuarial specialist to assist with the testing of amortization and the review and evaluation of the assumptions and methodologies used by management in determining the life of the grouped contracts

***Future Policy Benefits*** – ***Refer to Note 1 and 7***

*Critical Audit Matter Description*

Liabilities for amounts payable under the Company's life insurance products are recorded as future policy benefits liabilities. Liabilities for participating life contracts are established based on actuarial assumptions at the time policies are issued. Liabilities for nonparticpating life contracts are established based on the present value of estimated future benefit payments, less the present value of future net premiums. Management applies considerable judgment in developing the assumptions based on expectations of future economic conditions and policyholder behavior. These assumptions include policyholder mortality, persistency, investment yields and discount rates, among other necessary assumptions. For participating life contracts, if actual experience is adverse in nature when compared to the original assumptions in developing the future policy benefits liability, management may be required to establish premium deficiency reserves. For nonparticipating life contracts, assumptions are periodically reviewed and updated, if necessary, with the changes in assumptions impacting the resulting liability and earnings of the Company. Further, nonparticipating life contracts are discounted to present value based on the current upper-medium grade fixed income instrument yield which further impacts the resulting liability and overall comprehensive income of the Company. The Company's future policy benefits liability was $149.2 million as of December 31, 2025.

The audit of future policy benefits requires a high degree of auditor judgment when considering the judgment required in determining assumptions and complex models management utilizes.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to the liability for future policy benefits included the following procedures, among others:

● We gained an understanding of the processes utilized and controls implemented in determining the valuation of future policy benefits

● We tested the underlying data used by management in developing the valuation and the completeness and accuracy of the data

● We obtained assumption information utilized and subsequent experience studies

● We engaged an independent actuarial specialist to evaluate the assumptions and methodologies for reasonableness, to develop an independent estimate of future policy benefits on a sample basis and to evaluate and review management's development of experience studies

/s/ Kerber, Eck & Braeckel LLP

We have served as the Company's auditor since 2004.

Springfield, Illinois

March 14, 2026

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First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Financial Position

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| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
|  |  | (Restated) |
| **Assets** |  |  |
| Investments |  |  |
| Available-for-sale fixed maturity securities at fair value (amortized cost: $215,989,423 and $227,703,702 as of December 31, 2025 and 2024, respectively) | $209926505 | $213745821 |
| Equity securities at fair value (cost: $5,677,164 and $5,301,191 as of December 31, 2025 and 2024, respectively) | 5837575 | 5336062 |
| Mortgage loans on real estate | 250899714 | 209364504 |
| Investment real estate | 2526085 | 2351549 |
| Policy loans | 5132086 | 4367534 |
| Other long-term investments | 51276119 | 58223514 |
| Total investments | 525598084 | 493388984 |
| Cash and cash equivalents | 39496427 | 64344122 |
| Accrued investment income | 6454380 | 5746167 |
| Recoverable from reinsurers | 9547506 | 9889108 |
| Assets held in trust under coinsurance agreement |  |  |
| Available-for-sale fixed maturity securities at fair value (amortized cost: $16,595,881 and $22,559,107 as of December 31, 2025 and 2024, respectively) | 12377603 | 17932297 |
| Mortgage loans on real estate | 5298828 | 12660117 |
| Investment real estate | 271056 |  |
| Receivable for securities |  | 674405 |
| Payable for securities |  | (783) |
| Cash and cash equivalents (overdraft) | 3118582 | (89726) |
| Total assets held in trust under coinsurance agreement | 21066069 | 31176310 |
| Agents' balances and due premiums | 1391105 | 1393277 |
| Deferred policy acquisition costs | 70437017 | 69399366 |
| Value of insurance business acquired | 3005006 | 3377152 |
| Other assets | 12188685 | 10320307 |
| **Total assets** | $689184279 | $689034793 |
| **Liabilities and Shareholders' Equity** |  |  |
| Policy liabilities |  |  |
| Policyholders' account balances | $417120647 | $431190092 |
| Future policy benefits | 149228807 | 133030213 |
| Policy claims | 3143579 | 2478465 |
| Other policy liabilities | 244081 | 226553 |
| Total policy liabilities | 569737114 | 566925323 |
| Funds withheld under coinsurance agreement | 20001969 | 31032174 |
| Deferred federal income taxes | 6584494 | 5616029 |
| Other liabilities | 6288104 | 10420062 |
| **Total liabilities** | 602611681 | 613993588 |
| **Shareholders' equity** |  |  |
| Class A common stock, par value $.01 per share (40,000,000 shares authorized as of December 31, 2025 and 2024, 9,631,920 issued as of December 31, 2025 and 2024, 9,333,404 and 9,384,340 outstanding as of December 31, 2025 and 2024, respectively) | 96319 | 96319 |
| Class B common stock, par value $.01 per share (10,000,000 shares authorized, 101,102 issued and outstanding as of December 31, 2025 and 2024) | 1011 | 1011 |
| Additional paid-in capital | 43668023 | 43668023 |
| Treasury stock, at cost (298,516 and 247,580 shares as of December 31, 2025 and 2024, respectively) | (979369) | (893947) |
| Accumulated other comprehensive income | 8500556 | 3039861 |
| Accumulated earnings | 35286058 | 29129938 |
| **Total shareholders' equity** | 86572598 | 75041205 |
| **Total liabilities and shareholders' equity** | $689184279 | $689034793 |

---

*See notes to consolidated financial statements.*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Operations

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
|  |  | (Restated) |
| **Revenues** |  |  |
| Premiums | $44042620 | $41878896 |
| Net investment income | 34681376 | 30522580 |
| Net realized investment gains | 497174 | 264821 |
| Loss on impairments |  | (129436) |
| Service fees | 5067846 | 3161535 |
| Other income | 29282 | 652793 |
| **Total revenues** | 84318298 | 76351189 |
| **Benefits, Claims and Expenses** |  |  |
| Benefits and claims |  |  |
| Increase in future policy benefits | 15579671 | 16042688 |
| Death benefits | 15159686 | 13176508 |
| Surrenders | 3274487 | 2471376 |
| Interest credited to policyholders | 19140915 | 15880681 |
| Dividend, endowment and supplementary life contract benefits | 458829 | 388723 |
| Total benefits and claims | 53613588 | 47959976 |
| Policy acquisition costs deferred | (11979702) | (16620462) |
| Amortization of deferred policy acquisition costs | 10942051 | 8013109 |
| Amortization of value of insurance business acquired | 372146 | 400201 |
| Commissions | 11628983 | 16030481 |
| Other underwriting, insurance and acquisition expenses | 11853495 | 11423294 |
| Total expenses | 22816973 | 19246623 |
| **Total benefits, claims and expenses** | 76430561 | 67206599 |
| **Income before total federal income tax expense** | 7887737 | 9144590 |
| Current federal income tax expense | 2214729 | 1496626 |
| Deferred federal income tax expense (benefit) | (483112) | 387216 |
| **Total federal income tax expense** | 1731617 | 1883842 |
| **Net income** | $6156120 | $7260748 |
| **Net income per common share** |  |  |
| **Class A common stock** | $0.6502 | $0.7667 |
| **Class B common stock** | $0.5527 | $0.6517 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

*See notes to consolidated financial statements.*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
|  |  | (Restated) |
| **Net income** | $6156120 | $7260748 |
| **Other comprehensive income** |  |  |
| Total net unrealized investment gains (losses) arising during the period | 7970046 | (1849782) |
| Less net realized investment gains (losses) | 125797 | (99183) |
| Net unrealized investment gains (losses) | 7844249 | (1750599) |
| Remeasurement gains (losses) on future policy benefits related to discount rate | (931977) | 8783053 |
| Other comprehensive income before federal income tax expense | 6912272 | 7032454 |
| Federal income tax expense | 1451577 | 1476816 |
| **Total other comprehensive income** | 5460695 | 5555638 |
| **Total comprehensive income** | $11616815 | $12816386 |

---

*See notes to consolidated financial statements.*

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Consolidated Statements of Changes in Shareholders' Equity

Years Ended December 31, 2025 and 2024

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | 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 | Income (Loss) | Earnings | Equity |
| **Balance as of January 1, 2024** | $96319 | $1011 | $43668023 | $(893947) | $(9641308) | $30786110 | $64016208 |
| Cumulative effect adjustment as of January 1, 2024 |  |  |  |  |  |  |  |
| Accumulated long-duration contracts January 1, 2024 |  |  |  |  | 7125531 | (8916920) | (1791389) |
| Adjusted balance as of January 1, 2024 | 96319 | 1011 | 43668023 | (893947) | (2515777) | 21869190 | 62224819 |
| Comprehensive income: |  |  |  |  |  |  |  |
| Net income |  |  |  |  |  | 7260748 | 7260748 |
| Other comprehensive income |  |  |  |  | 5555638 |  | 5555638 |
| **Balance as of December 31, 2024** | $96319 | $1011 | $43668023 | $(893947) | $3039861 | $29129938 | $75041205 |
| Class A common stock return |  |  |  | (85422) |  |  | (85422) |
| Comprehensive income: |  |  |  |  |  |  |  |
| Net income |  |  |  |  |  | 6156120 | 6156120 |
| Other comprehensive income |  |  |  |  | 5460695 |  | 5460695 |
| **Balance as of December 31, 2025** | $96319 | $1011 | $43668023 | $(979369) | $8500556 | $35286058 | $86572598 |

---

*See notes to consolidated financial statements.*

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First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| **Operating activities** |  | (Restated) |
| Net income | $6156120 | $7260748 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| Accretion of discount on investments | (3268241) | (3900534) |
| Net realized investment gains | (497174) | (264821) |
| Loss on impairments |  | 129436 |
| Amortization of policy acquisition cost | 10942051 | 8013109 |
| Policy acquisition cost deferred | (11979702) | (16620462) |
| Amortization of value of insurance business acquired | 372146 | 400201 |
| Allowance for mortgage loan losses | 213678 | (128137) |
| Provision for deferred federal income tax expense (benefit) | (483112) | 387216 |
| Interest credited to policyholders | 19140915 | 15880681 |
| Change in assets and liabilities: |  |  |
| Accrued investment income | (708213) | 468292 |
| Recoverable from reinsurers | 341602 | 507836 |
| Assets held in trust under coinsurance agreement | 11421795 | 51632390 |
| Agents' balances and due premiums | 2172 | (109274) |
| Other assets (excludes change in receivable for securities sold of $11,628 and $12,920 in 2025 and 2024, respectively) | (1880006) | 8991711 |
| Future policy benefits | 15266617 | 15775980 |
| Policy claims | 665114 | 68222 |
| Other policy liabilities | 17528 | (23741) |
| Other liabilities (excludes change in payable of securities purchased of ($6179) and ($903) in 2025 and 2024, respectively) | (4125779) | 1538823 |
| **Net cash provided by operating activities** | 41597511 | 90007676 |
| **Investing activities** |  |  |
| Purchases of fixed maturity securities | (67351350) | (81180014) |
| Maturities of fixed maturity securities | 2452000 | 3435000 |
| Sales of fixed maturity securities | 76134070 | 11744021 |
| Purchases of equity securities | (492748) | (5129196) |
| Sale of equity securities | 6944 | 5 |
| Joint venture distribution | 116775 | 115371 |
| Purchases of mortgage loans | (179933175) | (143991455) |
| Payments on mortgage loans | 137548533 | 173048603 |
| Purchases of other long-term investments | (3455654) | (9470507) |
| Collections on other long-term investments | 14597345 | 17288490 |
| Purchase of real estate | (167726) |  |
| Sales of real estate | 496424 | 276956 |
| Policy loans | (764552) | (893418) |
| Short-term investments |  | 298257 |
| Net change in receivable and payable for securities sold and purchased | 5449 | (13823) |
| **Net cash used in investing activities** | (20807665) | (34471710) |
| **Financing activities** |  |  |
| Policyholders' account deposits | 26337459 | 141387484 |
| Policyholders' account withdrawals | (71889578) | (166419069) |
| Class A common stock return | (85422) |  |
| **Net cash used in financing activities** | (45637541) | (25031585) |
| **Increase (decrease) in cash and cash equivalents** | (24847695) | 30504381 |
| Cash and cash equivalents, beginning of period | 64344122 | 33839741 |
| Cash and cash equivalents, end of period | $39496427 | $64344122 |

---

*See notes to consolidated financial statements.*

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First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows (continued)

Supplemental Disclosure – Cash and Non-Cash Impact on Operating, Investing and Financing Activities

During 2025 and 2024, the Company foreclosed on residential mortgage loans of real estate totaling $459,180 and $1,441,287, respectively and transferred the 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:

---

| | | |
|:---|:---|:---|
|  | Year Ended | Year Ended |
|  | December 31, 2025 | December 31, 2024 |
| Reductions in mortgage loans due to foreclosure | $459180 | $1441287 |
| Investment real estate held-for-sale acquired through foreclosure | (459180) | (1441287) |
| Net cash used in investing activities | $- | $- |

---

*See notes to consolidated financial statements.*

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**1. Organization and Significant Accounting Policies**

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 (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 contracts but is now issuing life insurance policies and annuity contracts through an association with distribution channels. 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.

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.

In settlement of a lawsuit in 2025, the Company was awarded 50,936 shares of its own Class A common stock. The 50,936 shares of the Company's Class A common stock were returned to treasury stock at a cost basis of $85,422.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**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 December 18, 2025, TLIC paid FTFC the $250,000 surplus note.

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 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

***Investments***

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.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

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. If the allowance for credit losses for mortgage loans with a more-than-insignificant amount of credit deterioration since origination is determined, then the initial allowance for credit losses is added to the purchase price of mortgage loans rather than being reported as a credit loss expense.

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 records credit losses for mortgage loans not supported by funds held in escrow in a valuation account against mortgage loans on real estate.

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.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

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 financial statements to conform to current year classifications. These reclassifications had no effect on previously reported net income or shareholders' equity**.**

***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.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

***Cash and Cash Equivalents***

Cash and cash equivalents include cash on hand, amounts due from banks and money market instruments.

***Investment Income and Realized Gains and Losses on Sales of Investments***

Interest and dividends earned on investments are included in net investment income. Realized gains and losses on sales of investments are recognized in operations on the specific identification basis.

***Deferred Policy Acquisition Costs***

Commissions and other acquisition costs which vary with and are primarily related to the successful production of new and renewal insurance contracts are deferred and amortized on a constant level basis over the expected life of the related insurance contracts. With the adoption of ASU 2018-12, impairment testing is no longer applicable to deferred policy acquisition costs. The Company, however, reviews and updates actuarial experience assumptions (such as mortality, surrenders, lapse, and premium persistency) serving as inputs to the models that establish the expected life for deferred policy acquisition costs and other actuarial balances during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. The Company makes model refinements as necessary, and any changes resulting from these assumption updates are applied prospectively.

Deferred policy acquisition costs are amortized by issue year month and product cohorts (defined as the unit for asset amortization measurement) with the amortization based upon projected policy counts. In addition, since the amortization of deferred policy acquisition costs is no longer impacted by investment gains and losses, the unrealized gain (loss) adjustment is also no longer applicable to accumulated other comprehensive income (loss).

***Property and Equipment***

Property and equipment are carried at cost less accumulated depreciation or amortization. Office furniture, equipment and computer software is recorded at cost or fair value at acquisition less accumulated depreciation or amortization using the straight-line method over the estimated useful life of the respective assets of three to ten years. Leasehold improvements are recorded at cost and depreciated over the remaining non-cancellable lease term.

***Reinsurance***

The Company cedes reinsurance under various agreements allowing management to control exposure to potential losses arising from large risks and providing additional capacity for growth. Estimated reinsurance recoverable balances are reported as assets and are recognized in a manner consistent with the liabilities related to the underlying reinsured ceded contracts. The Company also assumes reinsurance under various agreements allowing management to increase growth in assets and profitability. Estimated reinsurance payable balances are reported as liabilities and are recognized in a manner consistent with the assets related to the underlying assumed reinsurance contracts.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

***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.

***Value of Insurance Business Acquired***

As a result of our purchases of FLAC and FBLIC, an asset was recorded in the application of purchase accounting to recognize the value of acquired insurance in force. The Company's value of acquired insurance in force is an intangible asset with a definite life. With the adoption of ASU 2018-12 effective as of January 1, 2025, the Company's value of insurance business acquired is now amortized on a constant level basis over the expected life of the insurance contracts acquired in order for this amortization to be on a basis that remains consistent with the amortization of deferred acquisition costs that is now in compliance with ASU 2018-12. The recovery of the value of insurance business acquired is dependent on the future profitability of the underlying business that was initially recorded in the purchases of FLAC and FBLIC. Each reporting period, we evaluate the recoverability of the unamortized balance of the value of insurance business acquired. In the event actual experience differs significantly from assumptions or assumptions are significantly revised, the Company is required to record a charge or credit to amortization expense for the period in which an adjustment is made.

As of December 31, 2025 and 2024, there was $5,734,872 and $5,362,726, respectively, of accumulated amortization of the value of insurance business acquired due to the purchases of FLAC and FBLIC. The Company expects to amortize the value of insurance business acquired by the following amounts over the next five years:, $347,522 in 2026, $326,360 in 2027, $307,124 in 2028, $290,156 in 2029 and $172,456 in 2030.

***Other Assets and Other Liabilities***

Other assets consist primarily of advances to mortgage loan originator, receivable for securities sold, federal and state income taxes recoverable, guaranty funds, notes receivable, prepaid assets, deposits, other receivables and property and equipment.

Other liabilities consist primarily of accrued expenses payable, accounts payable, remittance and suspense items not allocated, payable for securities purchased, guaranty fund assessments, unclaimed funds, deferred revenue, unearned investment income, withholdings, escrows and other payables.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

***Policyholders***' ***Account Balances***

The Company's liability for policyholders' account balances represents the contract value that has accrued to the benefit of the policyholder as of the financial statement date. This liability is generally equal to the accumulated account deposits plus interest credited less policyholders' withdrawals and other charges assessed against the account balance. Interest crediting rates for individual annuities range from 2.25% to 5.75%. Interest crediting rates for deposit-type liabilities range from 2.50% to 4.00%.

***Future Policy Benefits***

Our liability for future policy benefits is primarily comprised of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums. Estimating liabilities for insurance contracts requires management to make various assumptions, including policyholder persistency, mortality rates, investment yields, discretionary benefit increases, new business pricing and operating expense levels.

For life insurance products, expected mortality and morbidity is generally based on the Company's expectations, historical experience or standard industry tables. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Since many of these factors are interdependent and subject to volatility during the long-duration contract period, substantial judgment is required. Actual experience may emerge differently from that previously estimated.

For long-duration insurance contracts, reserves for non-participating life insurance are generally equal to the present value of expected future policy benefits less the present value of expected net premiums. Issue-year, product and limited pay cohorts (defined as the unit of account for liability measurement) are used for the reserve calculation and assumptions are periodically reviewed and updated. An interest accretion rate is determined for an identified cohort and remains unchanged after the issue year. Reserves are measured as of each reporting date to reflect the current upper-medium grade fixed income instrument yields, with the impact reported in accumulated other comprehensive income (loss).

The Company reviews and updates, if necessary, assumptions used to measure cash flows for the liability for future policy benefits during the third quarter of each year, or more frequently if evidence suggests that assumptions should be revised. Actual cash flows are grouped into issue year cohorts for this liability for future policy benefits calculation. A change in the liability for future policy benefits as a result of updating cash flow assumptions is recognized in net income.

Discount rate assumptions are selected in accordance with the applicable duration of the life insurance contracts based on the future benefit liability cash flow projection and are prescribed as the current upper-medium grade (low credit risk) fixed income instrument yield. If the discount rate is updated at any reporting date, the impact of the discount rate update is recognized in accumulated other comprehensive income (loss).

Reserves for participating life insurance contracts are based on the net level premium reserve for death and endowment policy benefits. This net level premium reserve is calculated based on dividend fund interest rates and mortality rates guaranteed in calculating the cash surrender values described in the contract. Expected mortality and morbidity for participating life insurance contracts is generally based on the Company's historical experience or standard industry tables including a provision for the risk of adverse deviation. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality and morbidity and interest rate assumptions are "locked-in" upon the issuance of new insurance with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves. Since many of these factors are interdependent and subject to short-term volatility during the long-duration contract period, substantial judgment is required. Actual experience may emerge differently from that originally estimated. Any such difference would be recognized in the current year's consolidated statement of operations.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

***Policy Claims***

Policy claim liabilities represent the estimated liabilities for claims reported plus estimated incurred but not yet reported claims developed from trends of historical market data applied to current exposure.

***Federal Income Taxes***

The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes are provided for cumulative temporary differences between balances of assets and liabilities determined under U.S. GAAP and balances determined using tax bases. A valuation allowance is established for the amount of the deferred tax asset that exceeds the amount of the estimated future taxable income needed to utilize the future tax benefits.

***Accumulated Other Comprehensive Income (Loss)***

FASB guidance requires the inclusion of unrealized gains or losses on available-for-sale securities, net of tax, as a component of other comprehensive income (loss). Unrealized gains and losses recognized in accumulated other comprehensive income (loss) that are later recognized in net income through a reclassification adjustment are identified on the specific identification method. The FASB requires that if the discount rate associated with future policy benefits is updated at any reporting date, the impact of the discount rate update is recognized in accumulated other comprehensive income (loss) net of federal income taxes.

***Revenues and Expenses***

Revenues on traditional life insurance products consist of direct premiums reported as earned when due. Liabilities for future policy benefits are provided and acquisition costs are amortized in a systematic manner based on the related contract revenues or gross profits as appropriate.

The Company generates fee income and recognizes revenue from providing contractual services to third parties that are outside traditional life insurance sources of revenues. This fee income is recognized as revenue in the Service Fees caption of the Statement of Operations for the years ended December 31, 2025 and 2024. The primary source of this fee income during 2025 and 2024 was the recognition of fee income from providing residential mortgage loan on real estate lending opportunities to third parties through the introduction of qualified borrowers identified and provided by the Company. This fee income is associated with a single performance obligation and is not recognized as revenue until the point in time the third party issues a residential mortgage loan on real estate to a qualified borrower identified and provided by the Company. Additional fee income with one specific third party is recognized by the Company as contractual revenues for the Company being available to provide and providing services to manage brokered residential mortgage loans on real estate during the period that the obligations are held by the third party for the qualified borrower identified and provided by the Company.

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

For the year ended December 31, 2025 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 (9,468,155) of Class A shares (9,382,218) and Class B shares (85,937) as of the reporting date. For the year ended December 31, 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 year ended December 31, 2025, the net income allocated to the Class A shareholders of $6,100,244 is the total net income $6,156,120 less the net income allocated to the Class B shareholders $55,876. For the year ended December 31, 2024, the net income allocated to the Class A shareholders of $7,194,861 is the total net income $7,260,748 less the net income allocated to the Class B shareholders $65,887.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

The weighted average outstanding common shares basic for the year ended December 31, 2025 and 2024 were 9,382,218 and 9,384,340 for Class A shares and 101,102 for Class B shares.

***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.

***Subsequent Events***

Management has evaluated all events subsequent to December 31, 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 was permitted. The Company adopted this Update for year-end reporting in 2024 and for interim periods beginning in 2025.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**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 was permitted. The Company adopted this Update and prescribed disclosures for year-end reporting in 2025 and also disclosed the information required by this Update for 2024 year-end reporting.

The Company will disclose supplementary information for taxes paid (recovered) for both 2025 and 2024. Interim periods in 2025 will not disclose income (loss) from continuing operations before tax for domestic and foreign operations but will show the impact of foreign operating losses in the rate reconciliation. In addition, the total amounts of interest and penalties, if any, included in operating results and accrued in the statement of financial position will be disclosed.

Since FTFC is a holding company for life insurance and mortgage loan operations, FTFC pays premium taxes and very limited amounts of franchise taxes to states that are not based on allocated amounts of net income (loss). The Company only pays state income taxes on the stand-alone taxable income of FTFC and TMC operations domiciled and operating in the state of Oklahoma. In addition, FTFC pays no foreign taxes or recovers any foreign losses on its operations outside the United States. Based upon these facts, FTFC will not present disaggregated information for state taxes and foreign operations in its disclosures of federal income and other taxes in 2025 or 2024 but will have a rate reconciling item for non-taxable foreign tax income or losses . This pronouncement is being applied on a prospective basis during 2025 and 2024 disclosures will be enhanced to be comparable to those of 2025. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity.

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

In August 2018, the FASB issued updated guidance, Accounting Standards Update 2018-12 (ASU 2018-12) to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. This update improved the timeliness of recognizing changes in the liability for future policy benefits, modified the rate used to discount future cash flows, simplified and improved accounting for certain market-based options or guarantees associated with deposit (i.e., account balance) contracts, simplified the amortization of deferred acquisitions costs and expanded 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 Company adopted ASU 2018-12 on January 1, 2025 for the liability for its non-participating future policy benefits and deferred policy acquisition costs. ASU 2018-12 was adopted on a modified retrospective basis such that those balances for the liability for future policy benefits, deferred policy acquisition costs were adjusted to conform to ASU 2018-12 effective January 1, 2024 (i.e., the earliest period presented). With respect to an analysis for market risk benefits, the Company concluded that it had no market-based options or guarantees associated with its liability for policyholders' account balances.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

Based upon the adoption of ASU 2018-12, a cumulative effect adjustment of ($8,916,920) was recorded as a decrease to retained earnings, net of tax, and a cumulative effect adjustment of $7,125,531 was recorded as an increase to Accumulated Other Comprehensive Loss, net of tax, as of January 1, 2024, summarized as follows:

---

| | | |
|:---|:---|:---|
|  | As of January 1, 2024 | As of January 1, 2024 |
|  | Retained Earnings | Accumulated Other Comprehensive Loss |
| Financial Component Impacted: |  |  |
| Future policy benefits | $(8916920) | $7127976 |
| Deferred policy acquisition costs |  | (2445) |
| Total impact on January 1, 2024 balance | $(8916920) | $7125531 |

---

The increase (decrease) on the impacted caption in the consolidated statements of financial position, consolidated statement of operations and consolidated statement of comprehensive income related to the retrospective cumulative effect adjustments of ASU 2018-12 as of January 1, 2024 is summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | As of December 31, 2024 | As of December 31, 2024 | As of December 31, 2024 | As of December 31, 2024 |
|  |  | ASU 2018-12 | ASU 2018-12 |  |
|  | As Previously | Adoption Impact | Adoption Impact | Post ASU 2018-12 |
| Financial Statement Caption | Reported | January 1, 2024 | December 31, 2024 | Adoption |
| Statement of Financial Position |  |  |  |  |
| Recoverable from reinsurer | $9845838 | $(22581) | $65851 | $9889108 |
| Deferred policy acquisition costs | 66640453 | (3094) | 2762007 | 69399366 |
| Value of insurance business acquired | 3593440 |  | (216288) | 3377152 |
| Total assets | 686448898 | (25675) | 2611570 | 689034793 |
| Future policy benefits | 138027832 | 2241906 | (7239525) | 133030213 |
| Deferred federal income taxes | 4023492 | (476192) | 2068729 | 5616029 |
| Total liabilities | 617398670 | 1765714 | (5170796) | 613993588 |
| Accumulated other comprehensive income (loss) | (11024079) | 7125531 | 6938409 | 3039861 |
| Accumulated earnings | 37202901 | (8916920) | 843957 | 29129938 |
| Total shareholders' equity | 69050228 | (1791389) | 7782366 | 75041205 |
| Total liabilities and shareholders' equity | 686448898 | (25675) | 2611570 | 689034793 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | As Previously | ASU 2018-12 | Post ASU 2018-12 |
| Financial Statement Caption | Reported | Adoption Impact | Adoption |
| Statement of Operations | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 |
| Increase in future policy benefits | $14565010 | $1477678 | $16042688 |
| Amortization of deferred policy acquisition costs | 10775374 | (2762265) | 8013109 |
| Amortization of value of insurance business acquired | 183913 | 216288 | 400201 |
| Deferred federal income tax expense | 162874 | 224342 | 387216 |
| Net income | 6416791 | 843957 | 7260748 |
| Net income per common share: |  |  |  |
| Class A | $0.6776 | $0.0891 | $0.7667 |
| Class B | 0.5759 | 0.0758 | 0.6517 |

---

---

| | | | |
|:---|:---|:---|:---|
| Consolidated Statement of Comprehensive Income | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 |
| Net income | $6416791 | $843957 | $7260748 |
| Adjustment to deferred acquisition costs | (257) | 257 |  |
| Remeasurement gains on future policy benefit related to discount rate |  | 8783053 | 8783053 |
| Federal income tax expense (benefit) | (367571) | 1844387 | 1476816 |
| Total other comprehensive income (loss) | (1382771) | 6938409 | 5555638 |
| Total comprehensive income | 5034020 | 7782366 | 12816386 |

---

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

*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 would have reduced implementation costs and complexity associated with the adoption of targeted improvements in accounting for long-duration contracts that would 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 have been 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 have been useful to users of financial information.

The amendments in this guidance were effective for fiscal years beginning after December 15, 2024. Early adoption was permitted but was not elected by the Company. The Company adopted 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. Since the Company did not elect early adoption of ASU 2018-12, the adoption of this standard had no impact on the Company's results of operations, financial position and liquidity.

***Recent Accounting Pronouncements***

*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.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

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:

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.

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.

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

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.

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

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

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

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.

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.

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

December 31, 2025 and 2024

**2. Investments**

***Fixed Maturity Securities***

Investments in fixed maturity securities as of December 31, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Gross | Gross |  |
|  | Amortized Cost | Unrealized | Unrealized | Fair |
|  | or Cost | Gains | Losses | Value |
|  | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 |
| Fixed maturity securities |  |  |  |  |
| U.S. government and U.S. government agencies | $4277139 | $8812 | $- | $4285951 |
| States and political subdivisions | 6645125 | 81942 | 221635 | 6505432 |
| U.S. government agency mortgage backed securities | 35136311 | 549560 | 145116 | 35540755 |
| Commercial mortgage-backed securities | 24293112 | 270654 | 912864 | 23650902 |
| Residential mortgage-backed securities | 2490458 | 5498 | 28357 | 2467599 |
| Corporate bonds | 102571386 | 744128 | 4714451 | 98601063 |
| Asset-backed securities | 11988613 | 59759 | 478278 | 11570094 |
| Exchange traded securities | 500000 |  | 8000 | 492000 |
| Foreign bonds | 26837279 | 79509 | 1124079 | 25792709 |
| Redeemable preferred securities | 1250000 |  | 230000 | 1020000 |
| Total fixed maturity securities | $215989423 | $1799862 | $7862780 | $209926505 |
| Fixed maturity securities held in trust under coinsurance agreement | $16595881 | $- | $4218278 | $12377603 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 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

December 31, 2025 and 2024

**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 December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | Unrealized | Number of |
|  | Fair Value | Loss | Securities |
|  | December 31, 2025 | December 31, 2025 | December 31, 2025 |
| Fixed maturity securities |  |  |  |
| Less than 12 months in an unrealized loss position |  |  |  |
| States and political subdivisions | $1307678 | $44604 | 5 |
| U.S. government agency mortgage backed securities | 5160399 | 123520 | 6 |
| Commercial mortgage-backed securities | 695052 | 1718 | 1 |
| Residential mortgage-backed securities | 2453338 | 28357 | 3 |
| Corporate bonds | 7377235 | 138721 | 20 |
| Asset-backed securities | 1210524 | 5917 | 5 |
| Total less than 12 months in an unrealized loss position | 18204226 | 342837 | 40 |
| More than 12 months in an unrealized loss position |  |  |  |
| States and political subdivisions | 2239531 | 177031 | 11 |
| U.S. government agency mortgage backed securities | 1911879 | 21596 | 3 |
| Commercial mortgage-backed securities | 7905115 | 911146 | 20 |
| Corporate bonds | 57656183 | 4575730 | 159 |
| Asset-backed securities | 7139007 | 472361 | 20 |
| Exchange traded securities | 492000 | 8000 | 2 |
| Foreign bonds | 19057958 | 1124079 | 44 |
| Redeemable preferred securities | 1020000 | 230000 | 4 |
| Total more than 12 months in an unrealized loss position | 97421673 | 7519943 | 263 |
| Total fixed maturity securities in an unrealized loss position | $115625899 | $7862780 | 303 |
| Fixed maturity securities held in trust under coinsurance agreement |  |  |  |
| Total less than 12 months in an unrealized loss position | $89555 | $356 | 1 |
| Total more than 12 months in an unrealized loss position | 12288048 | 4217922 | 56 |
| Total fixed maturity securities held in trust under coinsurance agreement in a unrealized loss position | $12377603 | $4218278 | 57 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | 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 |

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

As of December 31, 2025, the Company held 303 available-for-sale fixed maturity securities with an unrealized loss of $7,862,780, fair value of $115,625,899 and amortized cost of $123,488,679. These unrealized losses were primarily due to market interest rate movements in the bond market as of December 31, 2025. The ratio of the fair value to the amortized cost of these 303 securities is 94%.

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 year ended December 31, 2025 and 2024, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| Beginning balance | $(725960) | $(430470) |
| Current estimate of credit losses | 195976 | (295490) |
| Ending balance | $(529984) | $(725960) |

---

Net unrealized losses included in other comprehensive income for investments classified as available-for-sale, net of the effect of deferred income taxes and future policy benefits related to discount rate as of December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| Unrealized depreciation |  |  |
| Available-for-sale fixed maturity securities | $(6062918) | $(13957881) |
| Other long-term investments | (50714) |  |
| Future policy benefits related to discount rate | 16873830 | 17805807 |
| Deferred income taxes | (2259642) | (808065) |
| Accumulated other comprehensive income | $8500556 | $3039861 |
| Assets held in trust under coinsurance agreement |  |  |
| Unrealized depreciation on fixed maturity securities available-for-sale | $(4218278) | $(4626810) |

---

The information on future policy benefits related to discount rate is discussed in Note 7.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

The amortized cost and fair value of fixed maturity available-for-sale securities as of December 31, 2025, by contractual maturity, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 |
|  | Fixed Maturities Available-For-Sale Securities | Fixed Maturities Available-For-Sale Securities |
|  | Amortized Cost | Fair Value |
| Due in one year or less | $9117753 | $9048591 |
| Due in one year through five years | 28018097 | 27249555 |
| Due after five years through ten years | 50202692 | 49129703 |
| Due after ten years | 100461768 | 97255325 |
| Due at multiple maturity dates | 28189113 | 27243331 |
|  | $215989423 | $209926505 |

---

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.

The amortized cost and fair value of fixed maturity available-for-sale securities held in trust under coinsurance agreement as of December 31, 2025, by contractual maturity, are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 |
|  | Fixed Maturity Available-For-Sale Securities | Fixed Maturity Available-For-Sale Securities |
|  | Amortized Cost | Fair Value |
| Due in one year or less | $470681 | $469228 |
| Due after one year through five years |  |  |
| Due after five years through ten years | 542983 | 504662 |
| Due after ten years | 13711803 | 9765184 |
| Due at multiple maturity dates | 1870414 | 1638529 |
|  | $16595881 | $12377603 |

---

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

Proceeds and gross realized gains (losses) from the sales, calls and maturities of fixed maturity securities available-for-sale, equity securities, investment real estate, mortgage loans on real estate and other long-term investments for the years ended December 31, 2025 and 2024 are summarized as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, |
|  | Fixed Maturity Securities | Fixed Maturity Securities | Equity Securities | Equity Securities | Investment Real Estate | Investment Real Estate |
|  | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| Proceeds | $78586070 | $15179021 | $6944 | $5 | $496424 | $276956 |
| Gross realized gains | 235275 | 26198 | 6944 |  | 44054 | 11251 |
| Gross realized losses | (109478) | (125381) |  | (4) |  |  |
| Loss on impairments |  |  |  |  |  | (129436) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, |
|  | Mortgage Loans on Real Estate | Mortgage Loans on Real Estate | Other Long-Term Investments | Other Long-Term Investments |
|  | 2025 | 2024 | 2025 | 2024 |
| Proceeds | $137548533 | $173048603 | $14597345 | $17288490 |
| Gross realized gains |  | 734323 |  | 45650 |
| Gross realized losses | (1137) | (34442) |  |  |
| Loss on impairments |  |  |  |  |

---

The accumulated change in net unrealized investment gains (losses) for fixed maturity available-for-sale securities for the years ended December 31, 2025 and 2024 and the amount of net realized investment gains (losses) on fixed maturity securities available-for-sale, equity securities, investment real estate, mortgage loans on real estate and other long-term investments for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Change in unrealized investment gains (losses): |  |  |
| Available-for-sale securities: |  |  |
| Fixed maturity securities | $7894963 | $(1750599) |
| Fixed maturity securities held in trust under coinsurance agreement | 408532 | 546091 |
| Other long-term investments | (50714) |  |
| Net realized investment gains (losses): |  |  |
| Available-for-sale securities: |  |  |
| Fixed maturity securities | 125797 | (99183) |
| Fixed maturity securities credit losses | 195976 | (295490) |
| Equity securities, sale of securities | 6944 | (4) |
| Equity securities, changes in fair value | 125540 | (97284) |
| Investment real estate | 44054 | 11251 |
| Mortgage loans on real estate | (1137) | 699881 |
| Other long-term investments |  | 45650 |

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

***Mortgage Loans on Real Estate***

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

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| Residential mortgage loans | $221015308 | $195050397 |
| Commercial mortgage loans by property type |  |  |
| Agricultural | 241755 | 244253 |
| Apartment | 6556864 | 4634586 |
| Industrial | 2631676 | 357193 |
| Lodging | 1235173 |  |
| Office building | 5746795 | 4120057 |
| Retail | 13472143 | 4958018 |
| Total commercial mortgage loans by property type | 29884406 | 14314107 |
| Total mortgage loans | $250899714 | $209364504 |
| Mortgage loans held in trust under coinsurance agreement |  |  |
| Commercial mortgage loans | $5298828 | $12660117 |
| Less unearned interest on mortgage loans |  |  |
| Total mortgage loans held in trust under coinsurance agreement | $5298828 | $12660117 |

---

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 (includes agricultural, apartment, industrial, lodging, office building and retail) mortgage loans on real estate by credit quality using this ratio as of December 31, 2025 and 2024 are summarized as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;December 31, | &nbsp;&nbsp;&nbsp;&nbsp;December 31, | &nbsp;&nbsp;&nbsp;&nbsp;December 31, | &nbsp;&nbsp;&nbsp;&nbsp;December 31, | &nbsp;&nbsp;&nbsp;&nbsp;December 31, | &nbsp;&nbsp;&nbsp;&nbsp;December 31, |
|  | Residential Mortgage Loans | Residential Mortgage Loans | Commercial Mortgage Loans | Commercial Mortgage Loans | Total Mortgage Loans | Total Mortgage Loans |
| Loan-To-Value Ratio | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| Over 70% to 80% | $80961159 | $59821794 | $2994034 | $3119335 | $83955193 | $62941129 |
| Over 60% to 70% | 57882384 | 55743022 | 4219456 | 2178948 | 62101840 | 57921970 |
| Over 50% to 60% | 41230931 | 36901362 | 2955812 | 2754800 | 44186743 | 39656162 |
| Over 40% to 50% | 20034515 | 23308719 | 8882500 | 3020985 | 28917015 | 26329704 |
| Over 30% to 40% | 10765292 | 10242789 | 4641724 | 1094274 | 15407016 | 11337063 |
| Over 20% to 30% | 5555166 | 4944666 | 2916747 | 1232344 | 8471913 | 6177010 |
| Over 10% to 20% | 3899780 | 3052985 | 3018417 | 420896 | 6918197 | 3473881 |
| 10% or less | 686081 | 1035060 | 255716 | 492525 | 941797 | 1527585 |
| Total | $221015308 | $195050397 | $29884406 | $14314107 | $250899714 | $209364504 |

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

The outstanding principal balance of mortgage loans, by state, as of December 31, 2025 and 2024 are summarized as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 | December 31, 2024 | December 31, 2024 |
|  | Amount | Percentage | Amount | Percentage |
| Alabama | $744463 | 0.30% | $198930 | 0.10% |
| Alaska | 100133 | 0.04% |  | 0.00% |
| Arizona | 3205846 | 1.28% | 1738410 | 0.83% |
| Arkansas | 845517 | 0.34% | 583289 | 0.28% |
| California | 31789471 | 12.67% | 27618504 | 13.19% |
| Colorado | 2936896 | 1.17% | 1085111 | 0.52% |
| Connecticut | 1537210 | 0.61% | 980186 | 0.47% |
| Delaware | 384686 | 0.15% | 416918 | 0.20% |
| District of Columbia | 51657 | 0.02% | 52366 | 0.03% |
| Florida | 58037355 | 23.11% | 56399835 | 26.92% |
| Georgia | 7041641 | 2.81% | 6969271 | 3.33% |
| Hawaii | 1292086 | 0.51% | 720594 | 0.34% |
| Idaho | 601254 | 0.24% | 115280 | 0.06% |
| Illinois | 2038043 | 0.81% | 1674682 | 0.80% |
| Indiana | 240274 | 0.10% | 151162 | 0.07% |
| Kansas | 468024 | 0.19% | 176949 | 0.08% |
| Kentucky | 372389 | 0.15% | 182733 | 0.09% |
| Louisiana | 431980 | 0.17% | 313061 | 0.15% |
| Maine | 113186 | 0.05% | 116181 | 0.06% |
| Maryland | 1560787 | 0.62% | 1343155 | 0.64% |
| Massachusetts | 1386824 | 0.55% | 1913534 | 0.91% |
| Michigan | 1271033 | 0.51% | 555564 | 0.27% |
| Minnesota | 1036659 | 0.41% | 946318 | 0.45% |
| Mississippi | 221796 | 0.09% | 52819 | 0.03% |
| Missouri | 1266932 | 0.50% | 1953587 | 0.93% |
| Montana | 79179 | 0.03% |  | 0.00% |
| Nevada | 3796707 | 1.51% | 1124018 | 0.54% |
| New Hampshire | 148549 | 0.06% |  | 0.00% |
| New Jersey | 16682452 | 6.65% | 11308858 | 5.40% |
| New Mexico | 341874 | 0.14% | 172157 | 0.08% |
| New York | 28817129 | 11.49% | 27423733 | 13.10% |
| North Carolina | 8173657 | 3.26% | 6479633 | 3.09% |
| Ohio | 14885177 | 5.93% | 9993304 | 4.77% |
| Oklahoma | 695175 | 0.28% | 513490 | 0.25% |
| Oregon | 1358961 | 0.54% | 490002 | 0.23% |
| Pennsylvania | 3152990 | 1.26% | 2155957 | 1.03% |
| Rhode Island | 998682 | 0.40% | 750266 | 0.36% |
| South Carolina | 5670768 | 2.26% | 2114480 | 1.01% |
| South Dakota | 162000 | 0.06% | 162000 | 0.08% |
| Tennessee | 3104604 | 1.24% | 1916828 | 0.92% |
| Texas | 36748078 | 14.65% | 34797777 | 16.62% |
| Utah | 1996832 | 0.80% | 407721 | 0.19% |
| Vermont | 21711 | 0.01% | 22540 | 0.01% |
| Virginia | 4120054 | 1.64% | 2486671 | 1.19% |
| Washington | 1774172 | 0.71% | 1616854 | 0.77% |
| Wisconsin | 155436 | 0.06% | 160167 | 0.08% |
| West Virginia | 45003 | 0.02% | 45574 | 0.02% |
| Wyoming | 244025 | 0.10% |  | 0.00% |
| Mortgage loan allowance | (1249643) | -0.50% | (1035965) | -0.49% |
|  | $250899714 | 100.00% | $209364504 | 100.00% |

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

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. 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.

The principal balances of the 2,179 residential mortgage loans owned by the Company as of December 31, 2025 that aggregated to $221,015,308 ranged from a low of $140 to a high of $1,590,750 and the interest rates ranged from 3.427% to 16.00%. The principal balances of the 64 commercial (includes agricultural, apartment, industrial, lodging, office building and retail) mortgage loans owned by the Company as of December 31, 2025 that aggregated to $29,884,406 ranged from a low of $9,943 to a high of $2,328,086 and the interest rates ranged from 5.96% to 16.01%.

The principal balances of the 1,858 residential mortgage loans owned by the Company as of December 31, 2024 that aggregated to $195,050,397 ranged from a low of $329 to a high of $2,399,053 and the interest rates ranged from 3.427% to 16.00%. The principal balances of the 37 commercial (includes agricultural, apartment, industrial, lodging, office building and retail) mortgage loans owned by the Company as of December 31, 2024 that aggregated to $14,314,107 ranged from a low of $10,682 to a high of $1,984,500 and the interest rates ranged from 6.29% to 16.01%.

There were 40 mortgage loans with a remaining principal balance of $6,874,012 that were more than 90 days past due as of December 31, 2025. There were 11 mortgage loans in default and in the foreclosure process with a remaining principal balance of $1,179,517 as of December 31, 2025.

There were 30 mortgage loans with a remaining principal balance of $8,120,666 that were more than 90 days past due as of December 31, 2024. There were 14 mortgage loans in default and in the foreclosure process with a remaining principal balance of $4,111,940 as of December 31, 2024.

There are allowances for losses on mortgage loans of $1,249,643 and $1,035,965 as of December 31, 2025 and 2024, respectively. As of December 31, 2025, $890,250 independent mortgage loan balances are held in escrow by a third party for the benefit of the Company related to its investment in mortgage loans on real estate with one loan originator. As of December 31, 2024, $754,448 of independent mortgage loan balances are held in escrow by a third party for the benefit of the Company related to its investment in mortgage loans on real estate with one loan originator.

***Investment real estate***

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.

During 2025, the Company sold investment real estate property with an aggregate carrying value of $452,370. The Company recorded a gross realized investment gain on sale of $44,054 based on an aggregate sales price of $496,424.

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 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.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

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

---

| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
|  | 2025 | 2024 |
| Land - held for investment | $411000 | $411000 |
| Residential real estate - held for sale | 2115085 | 1940549 |
| Total investment in real estate | $2526085 | $2351549 |

---

***Other Long-Term Investments***

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

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| Lotteries | $50487453 | $57462681 |
| Co-op loans | 556682 | 760833 |
| Investments in specified properties | 231984 |  |
| Total long-term investments | $51276119 | $58223514 |

---

The Company's other long-term investments in lottery prize cash flows were $50,487,453 and $57,462,681 as of December 31, 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 $556,682 and $760,833 as of December 31, 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 investments in specified properties were $282,698 and $231,984, respectively, as of December 31, 2025. The Company has unfunded commitments for new investments totaling $4,872,846 as of December 31, 2025.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

The amortized cost and estimated fair value of lottery prize cash flows, by contractual maturity, as of December 31, 2025 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 |
|  | Amortized Cost | Fair Value |
| Due in one year or less | $11844574 | $11955704 |
| Due in one year through five years | 23838909 | 25190632 |
| Due after five years through ten years | 9796956 | 11339867 |
| Due after ten years | 5007014 | 6506648 |
|  | $50487453 | $54992851 |

---

The outstanding balance of lottery prize cash flows, by state lottery, as of December 31, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 | December 31, 2024 | December 31, 2024 |
|  | Amount | Percentage | Amount | Percentage |
| Arizona | $219710 | 0.44% | $255903 | 0.45% |
| California | 5487896 | 10.87% | 6366945 | 11.08% |
| Connecticut | 2340442 | 4.64% | 2600183 | 4.52% |
| Florida | 4522650 | 8.96% | 3304344 | 5.75% |
| Georgia | 2768456 | 5.48% | 3316521 | 5.77% |
| Illinois | 3511539 | 6.96% | 3323336 | 5.78% |
| Indiana | 2982429 | 5.91% | 3675764 | 6.40% |
| Massachusetts | 7811190 | 15.47% | 10772405 | 18.75% |
| Michigan | 145078 | 0.29% | 168551 | 0.29% |
| Missouri | 40044 | 0.08% | 51776 | 0.09% |
| New Jersey | 113848 | 0.23% | 35894 | 0.06% |
| New York | 14207946 | 28.13% | 16430600 | 28.59% |
| Ohio | 4242465 | 8.40% | 4177016 | 7.27% |
| Oregon |  | 0.00% | 15253 | 0.03% |
| Pennsylvania | 704042 | 1.39% | 728145 | 1.27% |
| Texas | 852876 | 1.69% | 1421319 | 2.47% |
| Vermont | 299521 | 0.59% | 571856 | 1.00% |
| Washington | 237321 | 0.47% | 246870 | 0.43% |
|  | $50487453 | 100.00% | $57462681 | 100.00% |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**2. Investments** (continued)

Major categories of net investment income for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Fixed maturity securities | $10151308 | $8534951 |
| Equity securities | 344075 | 135911 |
| Other long-term investments | 4134695 | 4444639 |
| Mortgage loans | 21044829 | 17079731 |
| Policy loans | 363968 | 291170 |
| Short-term and other investments | 1420409 | 2531767 |
| Gross investment income | 37459284 | 33018169 |
| Investment expenses | (2777908) | (2495589) |
| Net investment income | $34681376 | $30522580 |

---

**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.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

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.

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Level 1 | Level 2 | Level 3 | Total |
|  | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 |
| Fixed maturity securities, available-for-sale |  |  |  |  |
| U.S. government and U.S. government agencies | $- | $4285951 | $- | $4285951 |
| States and political subdivisions |  | 6505432 |  | 6505432 |
| U.S. government agency mortgage backed securities |  | 35540755 |  | 35540755 |
| Commercial mortgage-backed securities |  | 23650902 |  | 23650902 |
| Residential mortgage-backed securities |  | 2467599 |  | 2467599 |
| Corporate bonds |  | 98601063 |  | 98601063 |
| Asset-backed securities |  | 11570094 |  | 11570094 |
| Exchange traded securities |  | 492000 |  | 492000 |
| Foreign bonds |  | 25792709 |  | 25792709 |
| Redeemable preferred securities |  | 1020000 |  | 1020000 |
| Total fixed maturity securities | $- | $209926505 | $- | $209926505 |
| Fixed maturity securities, available-for-sale held in trust under coinsurance agreement | $- | $12377603 | $- | $12377603 |
| Equity securities |  |  |  |  |
| Mutual funds | $- | $43837 | $- | $43837 |
| Corporate common stock | 289214 | 5347910 | 156614 | 5793738 |
| Total equity securities | $289214 | $5391747 | $156614 | $5837575 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 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

December 31, 2025 and 2024

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

As of December 31, 2025 and 2024, Level 3 financial instruments consisted of a private placement common stock that has no active trading and two joint venture investments 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 investment with a mortgage loan originator is 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 securities 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 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 years ended December 31, 2025 and 2024 is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
|  | 2025 | 2024 |
| Beginning balance | $55908 | $65240 |
| Joint venture investment | 150000 |  |
| Joint venture net income | 67481 | 106039 |
| Joint venture distribution | (116775) | (115371) |
| Ending balance | $156614 | $55908 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

***Fair Value of Financial Instruments***

The carrying amount and fair value of the Company's financial assets and financial liabilities disclosed, but not carried, at fair value as of December 31, 2025 and 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:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Carrying | Fair |  |  |  |
|  | Amount | Value | Level 1 | Level 2 | Level 3 |
|  | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 |
| Financial assets |  |  |  |  |  |
| Mortgage loans on real estate |  |  |  |  |  |
| Commercial | $29884406 | $31628099 | $- | $- | $31628099 |
| Residential | 221015308 | 254274268 |  |  | 254274268 |
| Policy loans | 5132086 | 5132086 |  |  | 5132086 |
| Other long-term investments | 51276119 | 55781517 |  | 104830 | 55676687 |
| Cash and cash equivalents | 39496427 | 39496427 | 39496427 |  |  |
| Accrued investment income | 6454380 | 6454380 |  |  | 6454380 |
| Total financial assets | $353258726 | $392766777 | $39496427 | $104830 | $353165520 |
| Held in trust under coinsurance agreement |  |  |  |  |  |
| Mortgage loans on real estate |  |  |  |  |  |
| Commercial | $5298828 | $5298828 | $- | $- | $5298828 |
| Cash and cash equivalents | 3118582 | 3118582 | 3118582 |  |  |
| Total financial assets held in trust under coinsurance agreement | $8417410 | $8417410 | $3118582 | $- | $5298828 |
| Financial liabilities |  |  |  |  |  |
| Policyholders' account balances | $417120647 | $360391979 | $- | $- | $360391979 |
| Policy claims | 3143579 | 3143579 |  |  | 3143579 |
| Total financial liabilities | $420264226 | $363535558 | $- | $- | $363535558 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 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

December 31, 2025 and 2024

**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 Securities 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.

**4. Special Deposits**

TLIC and FBLIC are required to hold assets on deposit for the benefit of policyholders and other special deposits in accordance with statutory rules and regulations. As of December 31, 2025 and 2024, these required deposits had amortized costs that totaled $5,074,730 and $6,740,988, respectively. As of December 31, 2025 and 2024, these required deposits had fair values that totaled $5,077,193 and $6,735,209, respectively.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

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

As of December 31, 2025, $890,250 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, 2025, $879,146 of that escrow amount is available to the Company as additional collateral on $4,722,878 of advances to the loan originator. The remaining December 31, 2025 escrow amount of $11,104 is available to the Company as additional collateral on its investment of $2,220,809 in mortgage loans on real estate. In addition, the Company has an additional $1,249,643 allowance for possible loan losses in the remaining $206,157,105 of investments in mortgage loans on real estate as of December 31, 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 December 31, 2025, the Company's Chairman, President and Chief Executive Officer has provided approximately $2,617,000 of loans to this mortgage loan originator and with Board of Directors approval, may provide an additional amount of $383,000 so not to exceed $3.0 million in the aggregate.

The balances of and changes in the Company's credit losses related to residential and commercial (includes agricultural, apartment, industrial, lodging, office building and retail) mortgage loans on real estate as of and for the years ended December 31, 2025 and 2024 are summarized as follows (excluding $2,220,809 and $3,207,399 of mortgage loans on real estate as of December 31, 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):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, |
|  | 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 | 135435 | (121884) | 78243 | (6253) | 213678 | (128137) |
| Allowance, ending | $1099470 | $964035 | $150173 | $71930 | $1249643 | $1035965 |
| Allowance, ending: |  |  |  |  |  |  |
| Individually evaluated for impairment | $- | $- | $- | $- | $- | $- |
| Collectively evaluated for impairment | $1099470 | $964035 | $150173 | $71930 | $1249643 | $1035965 |
| Carrying Values: |  |  |  |  |  |  |
| Individually evaluated for reserve allowance | $- | $- | $- | $- | $- | $- |
| Collectively evaluated for reserve allowance | $218794499 | $191842998 | $29884406 | $14314107 | $248678905 | $206157105 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**6. Deferred Policy Acquisition Costs** 

Incremental direct costs of insurance contract acquisition as well as certain costs that vary with and are directly related to acquisition activities (underwriting, policy issuance and processing, medical and inspection and sales force contract selling) for the successful acquisition of new and renewal insurance policies and annuity contracts are capitalized in the period they are incurred. Maintenance costs and acquisition costs that are not deferrable are charged to operating expenses as incurred.

For our long-duration insurance products and annuity contracts, deferred policy acquisition costs are amortized on a constant level basis over the expected life of the contracts using groupings and assumptions consistent with those used in computing policyholder liabilities. For each of our long-duration insurance products, the Company selects the number of policies inforce measure as a basis for amortization that will result in a constant level amortization pattern for the expected life of the contract. If the Company's actual contract terminations differ from our expectation, the amortization pattern is adjusted on a prospective basis.

Some of the Company's life and annuity products have renewal commissions resulting in new deferred policy acquisition cost capitalizations in the years following the initial capitalization. The new capitalizations are added to the existing deferred policy acquisition cost balance when incurred and amortized over the remaining life of the insurance products impacted.

The Company reviews and updates actuarial experience assumptions (such as mortality, surrenders, lapse, and premium persistency) serving as inputs to the models that establish the expected life for deferred policy acquisition costs and other actuarial balances during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. The Company makes model refinements as necessary, and any changes resulting from these assumption updates are applied prospectively.

The disaggregated amounts of net deferred policy acquisition costs (amount capitalized less amount amortized) allocated to the Company's life and annuity segments that reconcile to the total amounts reported in the consolidated statements of operations for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| Life | $2478717 | $5772878 |
| Annuity | (1441066) | 2834475 |
| Total | $1037651 | $8607353 |

---

The balances and changes in deferred policy acquisition costs (deferral and amortization) allocated to the Company's life and annuity segments that reconcile to the total amounts reported in the consolidated statement of financial position and consolidated statement of operations as of and for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Year Ended December 31, 2025 | Year Ended December 31, 2025 | Year Ended December 31, 2025 |
|  | Life | Annuity | Total |
| Deferred policy acquisition costs, beginning | $57778383 | $11620983 | $69399366 |
| Capitalized | 11247572 | 732130 | 11979702 |
| Amortized | (8768855) | (2173196) | (10942051) |
| Increase (decrease) | 2478717 | (1441066) | 1037651 |
| Deferred policy acquisition costs, ending | $60257100 | $10179917 | $70437017 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**6. Deferred Policy Acquisition Costs** (continued)

---

| | | | |
|:---|:---|:---|:---|
|  | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 |
|  | Life | Annuity | Total |
| Deferred policy acquisition costs, beginning | $52005505 | $8786508 | $60792013 |
| Capitalized | 12013373 | 4607089 | 16620462 |
| Amortized | (6240495) | (1772614) | (8013109) |
| Increase | 5772878 | 2834475 | 8607353 |
| Deferred policy acquisition costs, ending | $57778383 | $11620983 | $69399366 |

---

**7. Liability for Future Policy Benefits**

Future policy benefits include reserves for long-duration contracts as well as certain reinsurance balances when in a liability position.

The balances and changes in the liability for future policy benefits as of and for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 | December 21, 2024 | December 21, 2024 |
|  | Present Value of Net Premiums | Present Value of Benefits | Present Value of Net Premiums | Present Value of Benefits |
| Balance, beginning of year | $133088475 | $228572260 | $136440963 | $230960490 |
| Effect of changes in disount rate | 10348860 | 28154664 | 4387690 | 13410444 |
| Beginning balance at original discount rate | $143437335 | $256726924 | $140828653 | $244370934 |
| Effect of changes in cash flow considerations |  |  |  |  |
| Effect of actual variances from expected | (8728778) | (8881230) | (5551632) | (5698938) |
| Trued-Up balance | $134708557 | $247845694 | $135277021 | $238671996 |
| New issuances | 18261777 | 19542430 | 20072405 | 21534079 |
| Net premium collected | (18296782) |  | (18048361) |  |
| Interest accrual | 6013020 | 11231313 | 6136271 | 11020492 |
| Withdrawal/surrenders |  | (2615927) |  | (2033329) |
| Benefit payments |  | (14148145) |  | (12466315) |
| Ending balance at original discount rate | $140686572 | $261855366 | $143437335 | $256726924 |
| Effect of changes in discount rate | (9629855) | (26509626) | (10348860) | (28154664) |
| Balance, end of year | $131056717 | $235345739 | $133088475 | $228572260 |
| Reinsurance recoverable | $744285 |  | $747948 |  |
| Net liability for future policy benefits | $103544737 |  | $94735837 |  |
| Deferred profit liability | $2449123 |  | $2282071 |  |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**7. Liability for Future Policy Benefits** (continued)

The composition of future policy benefits as of December 31, 2025 and 2024 is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| Future policy benefits meetng ASU 2018-12 standards | $104289022 | $95483785 |
| Reinsurance recoverable | (744285) | (747948) |
| Subtotal | 103544737 | 94735837 |
| Deferred policy liability | 2449123 | 2282071 |
| Total future policy benefits meeting ASU 2018-12 standards | 105993860 | 97017908 |
| Future policy benefits not meetng ASU 2018-12 standards: |  |  |
| Participating life insurance contracts not on contribution basis | 26321494 | 18646923 |
| Reduced paid up and extended term life insurance contracts | 7916928 | 7922619 |
| Other | 1703169 | 1841732 |
| Total future policy benefits not meeting ASU 2018-12 standards | 35941591 | 28411274 |
| Future policy benefit reinsurance ceded | 7293356 | 7601031 |
| Total future policy benefits | $149228807 | $133030213 |

---

The undiscounted expected future benefit payments and gross premiums as of December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 | December 31, 2025 |
|  | Undiscounted | Original Present Value | Current Present Value |
| Gross premiums | $412423668 | $226864424 | $214211964 |
| Benefits | 523560543 | 261855366 | 235345739 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, 2024 | December 31, 2024 | December 31, 2024 |
|  | Undiscounted | Original Present Value | Current Present Value |
| Gross premiums | $340811452 | $232308045 | $218346357 |
| Benefits | 448944087 | 256726924 | 228572260 |

---

The weighted-average interest rates as of December 31, 2025 and 2024 are summarized as follows:

---

| | |
|:---|:---|
|  | December 31, 2025 |
|  | Weighted-average interest rate |
| Original discount rate | 3.93% |
| Current discount rate | 4.85% |

---

---

| | |
|:---|:---|
|  | December 31, 2024 |
|  | Weighted-average interest rate |
| Original discount rate | 4.29% |
| Current discount rate | 5.47% |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**7. Liability for Future Policy Benefits** (continued)

The weighted-average durations of the liability in years as of December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 |
|  | Weighted-average duration of the liability | Weighted-average duration of the liability |
| Original duration of the liability in years |  | 15.60 |
| Current duration of the liability in years |  | 15.18 |

---

---

| | | |
|:---|:---|:---|
|  | December 31, 2024 | December 31, 2024 |
|  | Weighted-average duration of liability | Weighted-average duration of liability |
| Original duration of the liability in years |  | 14.68 |
| Current duration of the liability in years |  | 14.13 |

---

The actual experience during the years ended December 31, 2025 and 2024 compared to what was expected for the years ended December 31, 2025 and 2024 is summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 |
|  | Amount Inforce | Mortality | Lapsation | Total |
| Expected | $763695013 | $14829920 | $4604833 | $19434753 |
| Expected rate |  | 1.94% | 0.60% | 2.54% |
| Actual | $763650013 | $14156154 | $2617895 | $16774048 |
| Actual rate |  | 1.85% | 0.34% | 2.20% |
| Actual to expected ratio |  | 95.46% | 56.85% | 86.31% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 |
|  | Amount Inforce | Mortality | Lapsation | Total |
| Expected | $693949092 | $12623875 | $3987836 | $16611710 |
| Expected rate |  | 1.82% | 0.57% | 2.39% |
| Actual | $693887092 | $12512389 | $2038660 | $14551048 |
| Actual rate |  | 1.80% | 0.29% | 2.10% |
| Actual to expected ratio |  | 99.13% | 51.13% | 87.60% |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**8. Policyholders**' **Account Balances**

Policyholders' Account Balances include annuity contracts and deposit-type liabilities that are composed of supplemental contracts without life contingencies, premium deposit funds, premium growth funds and dividend accumulation funds that are all included in the annuity segment of the Company's operations.

The composition of annuities and deposit-type liabilities included in Policyholders' Account Balances as of December 31, 2025 and 2024 is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| Annuity | $412013139 | $425551055 |
| Deposit-type liabilities |  |  |
| Dividend accumulations | 2558598 | 2515825 |
| Supplemental contracts with out life contingencies | 1042141 | 1301299 |
| Premium and other deposit funds | 1506769 | 1821913 |
| Total deposit-type liabilites | 5107508 | 5639037 |
| Total Policyholders' account balances' | $417120647 | $431190092 |

---

The range of crediting rates for policyholders' account balances compared to the guaranteed minimum crediting rates as of December 31, 2025 and 2024 are presented as follows:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 |
| Range of<br> Guaranteed<br> Minimum Crediting<br> Rates | Range of<br> Guaranteed<br> Minimum Crediting<br> Rates | Range of<br> Guaranteed<br> Minimum Crediting<br> Rates | At Guaranteed<br> Minimum | 1 Basis Point to 50<br> Basis Points<br> Above Guaranteed<br> Minimum | 51 Basis Point to<br> 150 Basis Points<br> Above Guaranteed<br> Minimum | Greater Than 150<br> Basis Points<br> Above Guaranteed<br> Minimum | Total |
| Less than 2.00% | Less than 2.00% | Less than 2.00% | $- | $- | $- | $- | $- |
| 2.00% | to | 2.99% | 116178 | 729836 | 1183315 | 2391536 | 4420865 |
| 3.00% | to | 3.99% | 35319569 | 6971248 | 21064564 | 17902561 | 81257941 |
| Greater than 4.00% | Greater than 4.00% | Greater than 4.00% | 36815485 | (87) | 28302393 | 259073966 | 324191759 |
| Total |  |  | $72251233 | $7700996 | $50550272 | $279368064 | $409870565 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 |
| Range of<br> Guaranteed<br> Minimum Crediting<br> Rates | Range of<br> Guaranteed<br> Minimum Crediting<br> Rates | Range of<br> Guaranteed<br> Minimum Crediting<br> Rates | At Guaranteed<br> Minimum | 1 Basis Point to 50<br> Basis Points<br> Above Guaranteed<br> Minimum | 51 Basis Point to<br> 150 Basis Points<br> Above Guaranteed<br> Minimum | Greater Than 150<br> Basis Points<br> Above Guaranteed<br> Minimum | Total |
| Less than 2.00% | Less than 2.00% | Less than 2.00% | $- | $- | $- | $- | $- |
| 2.00% | to | 2.99% | 227185 | 1409303 | 1443256 | 2786879 | 5866623 |
| 3.00% | to | 3.99% | 44530226 | 7690170 | 30121798 | 28815198 | 111157393 |
| Greater than 4.00% | Greater than 4.00% | Greater than 4.00% | 36808922 | (87) | 32918512 | 236545573 | 306272921 |
| Total |  |  | $81566334 | $9099387 | $64483566 | $268147650 | $423296937 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**8. Policyholders**' **Account Balances** (continued)

The change in the policyholders account balances for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Policyholders' account balances, beginning | $431190092 | $391247676 |
| Deposits | 26337459 | 141387484 |
| Withdrawals | (71889578) | (166419069) |
| Funds withheld under coinsurance agreement | 12341759 | 49093320 |
| Interest credited | 19140915 | 15880681 |
| Increase (decrease) | (14069445) | 39942416 |
| Policyholders' account balances, ending | $417120647 | $431190092 |
| Weighted Average Crediting Rate | 4.51% | 3.86% |
| Cash surrender value | $394039293 | $405683425 |

---

**9. Federal Income and Other Taxes**

FTFC filed 2024 and 2023 consolidated federal income tax returns that included TLIC, FBLIC, FTFC and TMC as a consolidated group of companies in accordance with federal tax regulations.

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.

A reconciliation of federal income tax expense amounts and percentages computed by applying the federal income tax rate of 21% to income before federal income tax expense for the years ended December 31, 2025 and 2024, respectively, are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2025 | 2024 | 2024 |
|  | Amount | Percentage | Amount | Percentage |
| Expected tax expense | $1656425 | 21.00% | $1920364 | 21.00% |
| Capital gains taxes | 151490 | 1.93% | 262248 | 2.86% |
| Meals and entertainment | 74226 | 0.94% | 12604 | 0.14% |
| Non taxable international losses | 58598 | 0.74% | 47007 | 0.51% |
| Difference in unapplied cash receipts | (13330) | -0.17% | (99571) | -1.09% |
| Future policy benefits | (13408) | -0.17% | (109104) | -1.19% |
| Reinsurance recoverable (payable) | (65984) | -0.84% | (102745) | -1.12% |
| Other | (116400) | -1.48% | (46961) | -0.51% |
| Total income tax expense | $1731617 | 21.95% | $1883842 | 20.60% |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**9. Federal Income Taxes** (continued)

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
|  | 2025 | 2024 |
| Deferred tax liabilities: |  |  |
| Deferred policy acquisition costs | $12739039 | $12439335 |
| Future policy benefits related to discount rate | 3543504 | 3738517 |
| Value of insurance business acquired | 631052 | 709202 |
| Reinsurance recoverable | 259411 | 241766 |
| Due premiums | 118201 | 105280 |
| Equity securities | 8669 |  |
| Total deferred tax liabilities | 17299876 | 17234100 |
| Deferred tax assets: |  |  |
| Policyholders' account balances and future policy benefits | $9036076 | $8321531 |
| Net unrealized investment losses | 1283862 | 2930451 |
| Mortgage loans | 260372 | 210691 |
| Available-for-sale fixed maturity securities | 77120 | 104293 |
| Unearned investment income | 17267 | 23945 |
| Equity securities |  | 17695 |
| Other liabilities | 19039 | 5709 |
| Other long-term investments | 10890 |  |
| Dividend liability | 7000 |  |
| Investment real estate | 3756 | 3756 |
| Total deferred tax assets | 10715382 | 11618071 |
| Net deferred tax liabilities | $6584494 | $5616029 |

---

The Company has no known uncertain tax benefits within its provision for federal 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 2022 through 2025 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. The Company paid (recovered) federal income taxes of $3,449,824 and ($4,603,379) for the years ended December 31, 2025 and 2024, respectively.

The Company paid premium taxes to the various state jurisdictions in which it is licensed as a life insurance operation that are not based upon income of $667,815 and $749,164 for the years ended December 31, 2025 and 2024, respectively. The Company also pays limited franchise taxes to various state jurisdictions that are not based upon income. The Company also pays a state income tax in Oklahoma related to its taxable income from its FTFC and TMC stand-alone operations that are domiciled and operate in Oklahoma. The Company paid franchise and state taxes of $191,964 and $72,106 for the years ended December 31, 2025 and 2024, respectively. These premium, franchise and state income taxes are included in the "Other underwriting, insurance and acquisition expenses" caption on the Company's Consolidated Statement of Operations.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**10. Reinsurance**

Statutory reinsurance assumed and ceded amounts for TLIC and FBLIC for 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Premiums assumed | $13941600 | $11429232 |
| Commissions and expense allowances assumed | 4601348 | 4655697 |
| Benefits assumed | 323491 | 365345 |
| Reserve credits assumed | 27860016 | 19607266 |
| In force amount assumed | 380853874 | 330534332 |
| Premiums ceded | 391787 | 446138 |
| Commissions and expense allowances ceded | 9873 | 8994 |
| Benefits ceded | 2258861 | 3773887 |
| Reserve credits ceded | 33644345 | 45161575 |
| In force amount ceded | 61992312 | 64646723 |

---

TLIC participates in ceded and assumed reinsurance in order to provide risk diversification, additional capacity for future growth and limit the maximum net loss potential arising from large risks. TLIC reinsures all amounts of risk on any one life in excess of $100,000 for individual life insurance with Investors Heritage Life Insurance Company, Optimum Re Insurance Company ("Optimum Re"), RGA Reinsurance Company and Wilton Reassurance Company ("Wilton Re").

TLIC is a party to an Automatic Retrocession Pool Agreement (the "Reinsurance Pool") with Optimum Re, Catholic Order of Foresters, American Home Life Insurance Company and Woodmen of the World. The agreement provides for automatic retrocession of coverage in excess of Optimum Re's retention on business ceded to Optimum Re by the other parties to the Reinsurance Pool. TLIC's maximum exposure on any one insured under the Reinsurance Pool is $100,000. As of January 1, 2008, the Reinsurance Pool stopped accepting new cessions.

Effective September 29, 2005, FLAC and Wilton Re executed a binding letter of intent whereby both parties agreed that FLAC would cede the simplified issue version of its Golden Eagle Whole Life (Final Expense) product to Wilton Re on a 50/50 quota share original term coinsurance basis. The letter of intent was executed on a retroactive basis to cover all applicable business issued by FLAC subsequent to January 1, 2005. Wilton Re agreed to provide various commission and expense allowances to FLAC in exchange for FLAC ceding 50% of the applicable premiums to Wilton Re as they were collected. As of June 24, 2006, Wilton Re terminated the reinsurance agreement for new business issued after the termination date.

FBLIC also participates in reinsurance in order to provide risk diversification, additional capacity for future growth and limit the maximum net loss potential arising from large risks. FBLIC reinsures initial amounts of risk on any one life in excess of $100,000 for individual life insurance with Optimum Re. TLIC and FBLIC also reinsure the accidental death benefit portion of their life policies under a bulk agreement with Optimum Re.

To the extent that the reinsurance companies are unable to meet their obligations under the reinsurance agreements, TLIC and FBLIC remain primarily liable for the entire amount at risk.

Effective January 1, 2018, TLIC entered into an annuity coinsurance agreement with an offshore annuity and life insurance company whereby 90% of TLIC's annuity considerations originated after December 31, 2017 were ceded to the assuming company. The assuming company contractually reimburses TLIC for the related commissions, withdrawals, settlements, interest credited, submission costs, maintenance costs, marketing costs, excise taxes and other costs plus a placement fee. Effective April 1, 2020, the Company and an offshore annuity and life insurance company mutually agreed that the Quota Share under its existing reinsurance agreement shall be 0% for future business instead of the original contractual amount of 90%.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**10. Reinsurance** (continued)

In accordance with this annuity coinsurance agreement, 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 2019, TLIC entered into a life insurance coinsurance agreement with TAI, effective October 1, 2018, whereby 100% of TAI's life insurance policies and annuity contracts issued after September 30, 2018 were ceded to TLIC. TLIC contractually reimburses TAI for the related commissions, submission costs, maintenance costs, marketing costs and other costs related to the production of life insurance policies and annuity contracts. These transactions are eliminated in consolidation.

In 2022, FBLIC entered into group life insurance coinsurance agreement with Texas Republic Life Insurance Company ("TRLIC"), whereby generally 50% of TRLIC group life insurance policies and premiums were ceded to FBLIC. FBLIC contractually reimburses TRLIC for generally 50% of the related commissions, submission costs, maintenance costs, marketing costs and other costs related to the production of group life insurance policies.

With the acquisition of RCLIC in 2022, FBLIC reinsures individual life insurance and annuity contracts with Security National Life Insurance Company ("SNLIC"). In addition, an agreement was established with SNLIC in which all funds associated with the reinsurance agreement are held in a trust by SNLIC. There are no cash transfers between FBLIC and SNLIC associated with this agreement. Under the trust agreement, FBLIC would have access to the funds to satisfy policy obligations in the event SNLIC's inability to meet policy obligations.

**11. Leases**

The Company leases 9,031 square feet of office space in Tulsa, Oklahoma. The lease began on October 1, 2015 and the Company signed an amended lease agreement effective October 24, 2025 and ending on September 30, 2032. The amended lease agreement provides for the expansion of the existing premises from 7,302 square feet to 9,031 square feet. The Company incurred rent expense (including charges for the lessor's building operating expenses above those specified in the lease agreement less monthly amortization of the leasehold improvement allowance received from the lessor) of $126,966 and $115,309 for the years ended December 31, 2025 and 2024, respectively.

In accordance with the amended lease, the Company was provided an allowance of $60,716 for leasehold improvements. The future minimum lease payments to be paid under the non-cancellable lease agreement are $155,672, $160,323, $165,154, $170,144, $175,247, $180,507 and $138,378 for the years 2026, 2027, 2028, 2029, 2030, 2031 and 2032, respectively.

The Company has lease assets and lease liabilities in equivalent amounts totaling $924,201 and $270,649 for the years ended December 31, 2025 and 2024, respectively.

**12. Shareholders**' **Equity and Statutory Accounting Practices**

FBLIC and TLIC are domiciled in Oklahoma and prepares their statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the OID. Prescribed statutory accounting practices include publications of the National Association of Insurance Commissioners, state laws, regulations, and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing investments, deferred taxes, and certain assets on a different basis.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**12. Shareholders**' **Equity and Statutory Accounting Practices** (continued)

The statutory net income (loss) for TLIC amounted to $2,715,972 and ($1,726,700) for the years ended December 31, 2025 and 2024, respectively. The statutory capital and surplus of TLIC was $19,444,721 and $13,148,069 as of December 31, 2025 and 2024, respectively. The statutory net income (loss) for FBLIC amounted to $2,625,363 and ($2,596,050) for the years ended December 31, 2025 and 2024, respectively. The statutory capital and surplus of FBLIC was $13,586,413 and $10,677,658 as of December 31, 2025 and 2024, respectively.

TLIC and FBLIC are subject to Oklahoma laws that limit the amount of dividends insurance companies can pay to stockholders without approval of the Oklahoma Department of Insurance. 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 $532,472 as of December 31, 2025. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $2,899,895 in 2026 without prior approval. FBLIC has paid no dividends to TLIC in 2025 and 2024. TLIC has paid no dividends to FTFC in 2025 and 2024.

**13. 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 and for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
|  | 2025 | 2024 |
| Revenues: |  |  |
| Life insurance operations | $53435145 | $49513873 |
| Annuity operations | 25660366 | 24316397 |
| Corporate operations | 5222787 | 2520919 |
| Total | $84318298 | $76351189 |
| Income before federal income taxes: |  |  |
| Life insurance operations | $5673241 | $6310062 |
| Annuity operations | (523101) | 1600856 |
| Corporate operations | 2737597 | 1233672 |
| Total | $7887737 | $9144590 |
| Amortization expense: |  |  |
| Life insurance operations | $1766069 | $6920330 |
| Annuity operations | 9548128 | 1492980 |
| Total | $11314197 | $8413310 |

---

---

| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
|  | 2025 | 2024 |
| Assets: |  |  |
| Life insurance operations | $180762415 | $162051760 |
| Annuity operations | 493747063 | 513440771 |
| Corporate operations | 14674801 | 13542262 |
| Total | $689184279 | $689034793 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**13. Segment Data** (continued)

The increases and decreases of revenues and profitability from our business segments for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $2163724 | $- | $- | $2163724 |
| Net invesment income | 2037110 | 2329509 | (207823) | 4158796 |
| Net realized investment gains less impairments | 99984 | 261805 |  | 361789 |
| Service fees and other income | (379546) | (1247345) | 2909691 | 1282800 |
| Total revenue | 3921272 | 1343969 | 2701868 | 7967109 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | (463017) |  |  | (463017) |
| Death benefits | 1983178 |  |  | 1983178 |
| Surrenders | 803111 |  |  | 803111 |
| Interest credited to policyholders |  | 3260234 |  | 3260234 |
| Dividend, endowment and supplementary life contract benefits | 70106 |  |  | 70106 |
| Total benefits and claims | 2393378 | 3260234 |  | 5653612 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | 3294160 | 4275542 |  | 7569702 |
| Amortization of value of insurance business acquired | (14028) | (14027) |  | (28055) |
| Commissions | (554451) | (3847047) |  | (4401498) |
| Other underwriting, insurance and acquisition expenses | (560966) | (206776) | 1197943 | 430201 |
| Total expenses | 2164715 | 207692 | 1197943 | 3570350 |
| Total benefits, claims and expenses | 4558093 | 3467926 | 1197943 | 9223962 |
| Income (loss) before federal income tax expense (benefit) | $(636821) | $(2123957) | $1503925 | $(1256853) |

---

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.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**13. Segment Data** (continued)

Disaggregated financial information for these segments, as regularly provided to the CODM, as of December 31, 2025 and 2024 is summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Year ended December 31, 2025: | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $44042620 | $- | $- | $44042620 |
| Net invesment income | 9082045 | 24745019 | 854312 | 34681376 |
| Net realized investment gains less impairments | 133521 | 363653 |  | 497174 |
| Service fees and other income | 176959 | 551694 | 4368475 | 5097128 |
| Total revenue | 53435145 | 25660366 | 5222787 | 84318298 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 15579671 |  |  | 15579671 |
| Death benefits | 15159686 |  |  | 15159686 |
| Surrenders | 3274487 |  |  | 3274487 |
| Interest credited to policyholders |  | 19140915 |  | 19140915 |
| Dividend, endowment and supplementary life contract benefits | 458829 |  |  | 458829 |
| Total benefits and claims | 34472673 | 19140915 |  | 53613588 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | (2478717) | 1441066 |  | (1037651) |
| Amortization of value of insurance business acquired | 186073 | 186073 |  | 372146 |
| Commissions | 10838460 | 790523 |  | 11628983 |
| Other underwriting, insurance and acquisition expenses | 4743415 | 4624890 | 2485190 | 11853495 |
| Total expenses | 13289231 | 7042552 | 2485190 | 22816973 |
| Total benefits, claims and expenses | 47761904 | 26183467 | 2485190 | 76430561 |
| Income before federal income tax expense | $5673241 | $(523101) | $2737597 | $7887737 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Year ended December 31, 2024: | Life Insurance | Annuity | Corporate |  |
|  | Operations | Operations | Operations | Total |
| Revenues |  |  |  |  |
| Premiums | $41878896 | $- | $- | $41878896 |
| Net invesment income | 7044935 | 22415510 | 1062135 | 30522580 |
| Net realized investment gains less impairments | 33537 | 101848 |  | 135385 |
| Service fees and other income | 556505 | 1799039 | 1458784 | 3814328 |
| Total revenue | 49513873 | 24316397 | 2520919 | 76351189 |
| Benefits and claims |  |  |  |  |
| Increase in future policy benefits | 16042688 |  |  | 16042688 |
| Death benefits | 13176508 |  |  | 13176508 |
| Surrenders | 2471376 |  |  | 2471376 |
| Interest credited to policyholders |  | 15880681 |  | 15880681 |
| Dividend, endowment and supplementary life contract benefits | 388723 |  |  | 388723 |
| Total benefits and claims | 32079295 | 15880681 |  | 47959976 |
| Expenses |  |  |  |  |
| Policy acquisition costs deferred net of amortization | (5772878) | (2834475) |  | (8607353) |
| Amortization of value of insurance business acquired | 200101 | 200100 |  | 400201 |
| Commissions | 11392911 | 4637570 |  | 16030481 |
| Other underwriting, insurance and acquisition expenses | 5304382 | 4831665 | 1287247 | 11423294 |
| Total expenses | 11124516 | 6834860 | 1287247 | 19246623 |
| Total benefits, claims and expenses | 43203811 | 22715541 | 1287247 | 67206599 |
| Income before federal income tax expense | $6310062 | $1600856 | $1233672 | $9144590 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**14.** **Concentrations of Credit Risk**

Credit risk is limited by diversifying the Company's investments. The Company maintains cash and cash equivalents at multiple institutions. The Federal Deposit Insurance Corporation insures accounts up to $250,000. Uninsured balances aggregate $34,131,790 as of December 31, 2025. Other funds are invested in mutual funds that invest in U.S. government securities. The Company monitors the solvency of all financial institutions in which it has funds to minimize the exposure for loss. The Company has not experienced any losses in such accounts.

The Company's lottery prize receivables due from various states and the geographical distribution of the Company's mortgage loans by state are summarized in Note 2.

**15.** **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 two 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.

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.

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**16. Other Comprehensive Income and Accumulated Other Comprehensive Income** 

The changes in the components of the Company's accumulated other comprehensive income for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | Remeasurement |  |
|  | Unrealized | Gains on Future | Accumulated |
|  | Depreciation on | Policy Benefits | Other |
|  | Available-For-Sale | Related to | Comprehensive |
|  | Securities | Discount Rate | Income |
|  | Year Ended December 31, 2025 | Year Ended December 31, 2025 | Year Ended December 31, 2025 |
| Balance as of January 1, 2025 | $(11026727) | $14066588 | $3039861 |
| Other comprehensive income before reclassifications, net of tax | 6296336 | (736262) | 5560074 |
| Less amounts reclassified from accumulated other comprehensive income having no credit losses, net of tax | 99379 |  | 99379 |
| Other comprehensive income | 6196957 | (736262) | 5460695 |
| Balance as of December 31, 2025 | $(4829770) | $13330326 | $8500556 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 |
| Balance as of January 1, 2024 | $(9643753) | $7127976 | $(2515777) |
| Other comprehensive income before reclassifications, net of tax | (1461328) | 6938612 | 5477284 |
| Less amounts reclassified from accumulated other comprehensive loss having no credit losses, net of tax | (78354) |  | (78354) |
| Other comprehensive income | (1382974) | 6938612 | 5555638 |
| Balance as of December 31, 2024 | $(11026727) | $14066588 | $3039861 |

---

------

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

**16. Other Comprehensive Income and Accumulated Other Comprehensive Income** (continued)

The pretax components of the Company's other comprehensive income and the related income tax expense for each component for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | Income Tax |  |
|  | Pretax | Expense | Net of Tax |
|  | Year Ended December 31, 2025 | Year Ended December 31, 2025 | Year Ended December 31, 2025 |
| Other comprehensive income: |  |  |  |
| Change in net unrealized losses on available-for-sale securities: |  |  |  |
| Unrealized holding gains arising during the period | $7970046 | $1673710 | $6296336 |
| Reclassification adjustment for net gains included in operation having no credit losses | 125797 | 26418 | 99379 |
| Net unrealized gains on investments | 7844249 | 1647292 | 6196957 |
| Remeasurement loss on future policy benefits related to discount rate | (931977) | (195715) | (736262) |
| Total other comprehensive income | $6912272 | $1451577 | $5460695 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | Year Ended December 31, 2024 | Year Ended December 31, 2024 | Year Ended December 31, 2024 |
| Other comprehensive income: |  |  |  |
| Change in net unrealized losses on available-for-sale securities: |  |  |  |
| Unrealized holding losses arising during the period | $(1849782) | $(388454) | $(1461328) |
| Reclassification adjustment for net losses included in operation having no credit losses | (99183) | (20829) | (78354) |
| Net unrealized losses on investments | (1750599) | (367625) | (1382974) |
| Remeasurement loss on future policy benefits related to discount rate | 8783053 | 1844441 | 6938612 |
| Total other comprehensive income | $7032454 | $1476816 | $5555638 |

---

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 income to the Company's consolidated statements of operations for the years ended December 31, 2025 and 2024 are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Years Ended December 31, | Years Ended December 31, |
| Reclassification Adjustments | 2025 | 2024 |
| Realized gains (losses) on sales of securities (a) | $125797 | $(99183) |
| Income tax expense (benefit) (b) | 26418 | (20829) |
| Total reclassification adjustments | $99379 | $(78354) |

---

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

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

------

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

None

**Item 9A. 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 Exchange Act of 1934 as amended ("Exchange Act") as of the end of the fiscal period covered by this Annual Report on Form 10-K ("Annual Report"). 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.

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operating, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

**Management**'**s Report on Internal Control over Financial Reporting** 

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. As of the end of the period covered by this Annual Report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Certifying Officers, of the effectiveness of the design and operation of the Company's internal controls over financial reporting as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act. The standard measures adopted by management in making its evaluation are the measures in the *Internal-Control Integrated Framework (2013)* published by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon such evaluation, management has determined that internal control over financial reporting was effective as of December 31, 2025.

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

**Limitations on the Effectiveness of Controls** 

The Company's management, including the Certifying Officers, does not expect that the disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

------

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

**Changes to Internal Control over Financial Reporting** 

There were no changes in the Company's internal control over financial reporting during the fiscal year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

**Item 9B. Other Information**

None

**Part III**

**Item 10. Directors, Executive Officers and Corporate Governance**

The information required by this Item is incorporated by reference from the Company's proxy statement for the 2026 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

**Item 11. Executive Compensation**

The information required by this Item is incorporated by reference from the Company's proxy statement for the 2026 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

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

The information required by this Item is incorporated by reference from the Company's proxy statement for the 2026 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days subsequent to December 31, 2025.

**Item 13. Certain Relationships and Related Transactions, and Director Independence**

The information required by this Item is incorporated by reference from the Company's proxy statement for the 2026 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days subsequent to December 31, 2025.

**Item 14. Principal Accounting Fees and Services**

The information required by this Item is incorporated by reference from the Company's proxy statement for the 2026 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days subsequent to December 31, 2025.

**Item 15. Exhibits**

The exhibits are listed in the Exhibit Index, which is incorporated herein by reference.

**Item 16. Form 10-K Summary**

None

------

EXHIBIT INDEX

---

| | |
|:---|:---|
| Exhibit<br> <u>Number</u> | <u>Description of Exhibit</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 | [Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed March 30, 2020.](http://www.sec.gov/Archives/edgar/data/1395585/000143774920006497/ex_178251.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 | [Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on October 6, 2021.](http://www.sec.gov/Archives/edgar/data/1395585/000143774921023353/ex_289539.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 | [Amended and Restated Employment Agreement of Gregg E. Zahn, president, dated May 23, 2022, incorporated by reference as Exhibit 10.8 of the Company's Current Report on Form 8-K filed May 25, 2022.](http://www.sec.gov/Archives/edgar/data/1395585/000143774922013554/ex_377783.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 | [Amended and Restated Employment Agreement of Jeffrey J. Wood, dated August 15, 2024, incorporated by reference as Exhibit 10.1 of the Company's Current Report on Form 8-K filed August 20, 2024.](http://www.sec.gov/Archives/edgar/data/1395585/000143774924027420/ex_716460.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 | [2019 Long-Term Incentive Plan, incorporated by reference as Exhibit 10.15 of the Company's Current Report on Form 8-K filed March 13, 2020.](http://www.sec.gov/Archives/edgar/data/1395585/000143774920005088/ex_175890.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.1<sup>\*</sup> | [Subsidiaries of First Trinity Financial Corporation.](ex_931901.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24.1\* | [Powers of Attorney (included in the signature pages hereto and incorporated herein by reference).](#poa) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31.1\* | [Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.](ex_931900.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31.2\* | [Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.](ex_931899.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32.1\* | [Section 1350 Certification of Principal Executive Officer.](ex_931898.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32.2\* | [Section 1350 Certification of Principal Financial Officer.](ex_931897.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;101.INS\*\* | Inline XBRL Instance |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;101.SCH\*\* | Inline XBRL Taxonomy Extension Schema |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;101.CAL\*\* | Inline XBRL Taxonomy Extension Calculation |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;101.DEF\*\* | Inline XBRL Taxonomy Extension Definition |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;101.LAB\*\* | Inline XBRL Taxonomy Extension Labels |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;101.PRE\*\* | Inline XBRL Taxonomy Extension Presentation |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;104 | Cover Page Interactive Data (formatted as Inline XBRL and continued in Exhibit 101) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\*\*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. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\* Filed herewith | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\* Filed herewith |

---

------

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | FIRST TRINITY FINANCIAL CORPORATION | FIRST TRINITY FINANCIAL CORPORATION |
| Date: March 17, 2026 | By:  | /s/ Gregg E. Zahn |
|  |  | Gregg E. Zahn |
|  |  | President, Chief Executive Officer and Director |

---

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | FIRST TRINITY FINANCIAL CORPORATION | FIRST TRINITY FINANCIAL CORPORATION |
| Date: March 17, 2026 | By:  | /s/ Jeffrey J. Wood |
|  |  | Jeffrey J. Wood |
|  |  | Chief Financial Officer |

---

SIGNATURES

In accordance with the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| By | /s/ Gregg E. Zahn | Date: March 17, 2026 |
|  | Gregg E. Zahn |  |
|  | Chairman of the Board, President, Chief Executive Officer and Director |  |
| By | /s/ William S. Lay | Date: March 17, 2026 |
|  | William S. Lay, Director |  |
| By | /s/ Bill H. Hill | Date: March 17, 2026 |
|  | Bill H. Hill, Director |  |
| By | /s/ Will W. Klein | Date: March 17, 2026 |
|  | Will W. Klein, Director |  |
| By | /s/ Gerald J. Kohout | Date: March 17, 2026 |
|  | Gerald J. Kohout, Director |  |
| By | /s/ Charles W. Owens | Date: March 17, 2026 |
|  | Charles W. Owens, Director |  |
| By | /s/ George E. Peintner | Date: March 17, 2026 |
|  | George E. Peintner, Director |  |
| By | /s/ Gary L. Sherrer | Date: March 17, 2026 |
|  | Gary L. Sherrer, Director |  |
| By | /s/ Francine M Zahn | Date: March 17, 2026 |
|  | Francine M Zahn, Director |  |

---

## Exhibit 21.1

EXHIBIT NO. 21.1

**SUBSIDIARIES OF FIRST TRINITY FINANCIAL CORPORATION**<br> **AN OKLAHOMA CORPORATION**

---

| | | |
|:---|:---|:---|
|  | State of |  |
| Company Name | Incorporation | Ownership |
| Trinity Mortgage Corporation | Oklahoma | 100% Direct |
| Trinity Life Insurance Company | Oklahoma | 100% Direct |
| Family Benefit Life Insurance Company | Oklahoma | 100% Indirect |
| Trinity American, Inc. | Barbados, West Indies | 100% Direct |

---

## Exhibit 31.1

EXHIBIT NO. 31.1

CERTIFICATION

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

1. I have reviewed this annual report on Form 10-K, for the year ended December 31, 2025, 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 annual 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 annual 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: March 17, 2026 |  |  |
|  | By | /s/ Gregg E. Zahn |
|  |  | Gregg E. Zahn, President and Chief Executive Officer |

---

## Exhibit 31.2

EXHIBIT NO. 31.2

CERTIFICATION

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

1. I have reviewed this annual report on Form 10-K, for the year ended December 31, 2025, 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 annual 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 annual 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.

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| | | |
|:---|:---|:---|
| Date: March 17, 2026 |  |  |
|  | By | /s/ Jeffrey J. Wood |
|  |  | Jeffrey J. Wood, Chief Financial Officer |

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## 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 Annual Report on Form 10-K of the Company for the year ended December 31, 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.

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| | | |
|:---|:---|:---|
| Date: March 17, 2026 | By | /s/ Gregg E. Zahn |
|  |  | Gregg E. Zahn, President and Chief Executive Officer |

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## 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 Annual Report on Form 10-K of the Company for the year ended December 31, 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.

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| | | |
|:---|:---|:---|
| Date: March 17, 2026 | By | /s/ Jeffrey J. Wood |
|  |  | Jeffrey J. Wood, Chief Financial Officer |

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