10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934

For the quarterly period ended March 31, 2017

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period From                                 to                                   .

Commission file number: 000-52613

FIRST TRINITY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Oklahoma	34-1991436
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

7633 East 63rd Place, Suite 230

Tulsa, Oklahoma 74133-1246

(Address of principal executive offices)

(918) 249-2438

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑       No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes ☑ No ☐

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

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

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

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

Yes ☐       No ☑

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: Common stock .01 par value as of May 8, 2017: 7,802,593 shares

FIRST TRINITY FINANCIAL CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR QUARTERLY PERIOD ENDED MARCH 31, 2017

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	Page Number
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Position as of March 31, 2017 (Unaudited) and December 31, 2016	3
Consolidated Statements of Operations for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	4
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	5
Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	6
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016 (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 4. Controls and Procedures	56
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	56
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3. Defaults upon Senior Securities	58
Item 4. Mine Safety Disclosures	58
Item 5. Other Information	58
Item 6. Exhibits	58
Signatures	59

Exhibit No. 31.1

Exhibit No. 31.2

Exhibit No. 32.1

Exhibit No. 32.2

Exhibit No. 101.INS

Exhibit No. 101.SCH

Exhibit No. 101.CAL

Exhibit No. 101.DEF

Exhibit No. 101.LAB

Exhibit No. 101.PRE

2

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Financial Position

	(Unaudited)
	March 31, 2017			December 31, 2016
Assets
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $149,863,882 and $128,310,265 as of March 31, 2017 and December 31, 2016, respectively)	$	151,925,813		$	129,311,155
Available-for-sale equity securities at fair value (cost: $600,529 and $599,400 as of March 31, 2017 and December 31, 2016, respectively)		657,560			638,407
Mortgage loans on real estate		86,878,848			74,371,286
Investment real estate		2,365,621			2,506,673
Policy loans		1,576,307			1,598,116
Other long-term investments		49,515,018			46,788,873
Total investments		292,919,167			255,214,510
Cash and cash equivalents		25,962,536			34,223,945
Accrued investment income		2,542,754			2,176,770
Recoverable from reinsurers		1,211,881			1,258,938
Agents' balances and due premiums		1,505,643			1,419,250
Deferred policy acquisition costs		19,906,373			18,191,990
Value of insurance business acquired		5,806,667			5,908,835
Other assets		7,977,339			14,858,375
Total assets	$	357,832,360		$	333,252,613
Liabilities and Shareholders' Equity
Policy liabilities
Policyholders' account balances	$	267,911,869		$	245,346,489
Future policy benefits		45,222,673			44,266,227
Policy claims		938,779			997,814
Other policy liabilities		80,238			69,854
Total policy liabilities		314,153,559			290,680,384
Deferred federal income taxes		993,422			693,470
Other liabilities		5,295,974			5,598,484
Total liabilities		320,442,955			296,972,338
Shareholders' equity
Common stock, par value $.01 per share (20,000,000 shares authorized, 8,050,173 issued as of March 31, 2017 and December 31, 2016 and 7,802,593 outstanding as of March 31, 2017 and December 31, 2016)		80,502			80,502
Additional paid-in capital		28,684,598			28,684,598
Treasury stock, at cost (247,580 shares as of March 31, 2017 and December 31, 2016)		(893,947	)		(893,947	)
Accumulated other comprehensive income		1,666,328			818,676
Accumulated earnings		7,851,924			7,590,446
Total shareholders' equity		37,389,405			36,280,275
Total liabilities and shareholders' equity	$	357,832,360		$	333,252,613

See notes to consolidated financial statements (unaudited).

3

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended March 31,
	2017			2016
Revenues
Premiums	$	3,621,690		$	3,192,542
Net investment income		3,669,871			3,360,203
Net realized investment gains (losses)		166,506			(19,151	)
Other income		49,892			7,313
Total revenues		7,507,959			6,540,907
Benefits, Claims and Expenses
Benefits and claims
Increase in future policy benefits		959,805			1,358,144
Death benefits		1,545,836			952,058
Surrenders		283,376			137,726
Interest credited to policyholders		2,035,054			1,653,720
Dividend, endowment and supplementary life contract benefits		66,973			66,058
Total benefits and claims		4,891,044			4,167,706
Policy acquisition costs deferred		(2,414,719	)		(1,576,209	)
Amortization of deferred policy acquisition costs		680,836			696,546
Amortization of value of insurance business acquired		102,168			90,132
Commissions		2,244,910			1,280,086
Other underwriting, insurance and acquisition expenses		1,654,203			1,534,440
Total expenses		2,267,398			2,024,995
Total benefits, claims and expenses		7,158,442			6,192,701
Income before total federal income tax expense		349,517			348,206
Current federal income tax expense		-			3,298
Deferred federal income tax expense		88,039			49,595
Total federal income tax expense		88,039			52,893
Net income	$	261,478		$	295,313
Net income per common share basic and diluted	$	0.03		$	0.04

See notes to consolidated financial statements (unaudited).

4

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income 

(Unaudited)

	Three Months Ended March 31,
	2017		2016
Net income	$	261,478	$	295,313
Other comprehensive income
Total net unrealized gains arising during the period		1,243,084		3,779,522
Less net realized investment gains (losses)		164,019		(22,726	)
Net unrealized gains		1,079,065		3,802,248
Less adjustment to deferred acquisition costs		19,500		60,130
Other comprehensive income before income tax expense		1,059,565		3,742,118
Income tax expense		211,913		748,423
Total other comprehensive income		847,652		2,993,695
Total comprehensive income	$	1,109,130	$	3,289,008

See notes to consolidated financial statements (unaudited).

5

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity

Three Months Ended March 31, 2017 and 2016

(Unaudited)

								Accumulated
	Common		Additional					Other					Total
	Stock		Paid-in		Treasury			Comprehensive			Accumulated		Shareholders'
	$.01 Par Value		Capital		Stock			Income (loss)			Earnings		Equity
Balance as of January 1, 2016	$	80,502	$	28,684,598	$	(893,947	)	$	(2,655,817	)	$	4,999,707	$	30,215,043
Comprehensive income:
Net income		-		-		-			-			295,313		295,313
Other comprehensive income		-		-		-			2,993,695			-		2,993,695
Balance as of March 31, 2016	$	80,502	$	28,684,598	$	(893,947	)	$	337,878		$	5,295,020	$	33,504,051
Balance as of January 1, 2017	$	80,502	$	28,684,598	$	(893,947	)	$	818,676		$	7,590,446	$	36,280,275
Comprehensive income:
Net income		-		-		-			-			261,478		261,478
Other comprehensive income		-		-		-			847,652			-		847,652
Balance as of March 31, 2017	$	80,502	$	28,684,598	$	(893,947	)	$	1,666,328		$	7,851,924	$	37,389,405

See notes to consolidated financial statements (unaudited).

6

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows 

(Unaudited) 

	Three Months Ended March 31,
	2017			2016
Operating activities
Net income	$	261,478		$	295,313
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for depreciation		36,531			36,530
Accretion of discount on investments		(685,817	)		(375,081	)
Net realized investment losses (gains)		(166,506	)		19,151
Amortization of policy acquisition cost		680,836			696,546
Policy acquisition cost deferred		(2,414,719	)		(1,576,209	)
Amortization of loan origination fees		14,797			7,251
Amortization of value of insurance business acquired		102,168			90,132
Allowance for mortgage loan losses		42,054			6,369
Provision for deferred federal income tax expense		88,039			49,595
Interest credited to policyholders		2,035,054			1,653,720
Change in assets and liabilities:
Accrued investment income		(365,984	)		(68,967	)
Policy loans		21,809			(8,261	)
Short-term investments		-			549,795
Recoverable from reinsurers		47,057			(8,587	)
Agents' balances and due premiums		(86,393	)		(66,883	)
Other assets (excludes depreciation of $159 in 2017 and change in receivable for securities sold of $6,288,274 and ($1,904) in 2017 and 2016, respectively.		592,603			(1,441,577	)
Future policy benefits		956,446			1,362,476
Policy claims		(59,035	)		90,501
Other policy liabilities		10,384			(2,972	)
Other liabilities (exclude change in payable for securities purchased of ($17,569) and $40,907 in 2017 and 2016, respectively.		(284,941	)		757,093
Net cash provided by operating activities		825,861			2,065,935
Investing activities
Purchases of fixed maturity securities available-for-sale		(26,056,647	)		(2,222,996	)
Maturities of fixed maturity securities available-for-sale		2,770,000			1,138,000
Sales of fixed maturity securities available-for-sale		1,679,231			1,136,413
Purchases of equity securities available-for-sale		(1,129	)		(4,552	)
Sales of equity securities available-for-sale		-			108,800
Purchases of mortgage loans		(17,643,638	)		(3,710,052	)
Payments on mortgage loans		5,125,389			1,572,244
Purchases of other long-term investments		(3,648,817	)		(2,024,317	)
Payments on other long-term investments		1,780,143			1,141,454
Sale of real estate		107,167			-
Net change in receivable and payable for securities sold and purchased		6,270,705			39,003
Net cash used in investing activities		(29,617,596	)		(2,826,003	)
Financing activities
Policyholders' account deposits		25,052,131			5,326,249
Policyholders' account withdrawals		(4,521,805	)		(3,912,525	)
Net cash provided by financing activities		20,530,326			1,413,724
Increase (decrease) in cash		(8,261,409	)		653,656
Cash and cash equivalents, beginning of period		34,223,945			9,047,586
Cash and cash equivalents, end of period	$	25,962,536		$	9,701,242

See notes to consolidated financial statements (unaudited).

7

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

1. Organization and Significant Accounting Policies

Nature of Operations

First Trinity Financial Corporation (the “Company” or “FTFC”) is the parent holding company of Trinity Life Insurance Company (“TLIC”), Family Benefit Life Insurance Company (“FBLIC”) and First Trinity Capital Corporation (“FTCC”). 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 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 Illinois, Kansas, Kentucky, Nebraska, North Dakota, Ohio, Oklahoma and Texas. FBLIC is licensed in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia.

The Company owns 100% of FTCC that was incorporated in 2006, and began operations in January 2007. FTCC provided financing for casualty insurance premiums for individuals and companies and was licensed to conduct premium financing business in the states of Alabama, Arkansas, Louisiana, Mississippi and Oklahoma. FTCC has made no premium financing loans since June 30, 2012.

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.

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.

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 the Oklahoma Insurance Department (“OID”). This surplus note is eliminated in consolidation.

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

8

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

1. Organization and Significant Accounting Policies (continued)

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.

Basis of Presentation

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

The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ended December 31, 2017 or for any other interim period or for any other future year. Certain financial information which is normally included in notes to consolidated financial statements prepared in accordance with U.S. GAAP, but which is not required for interim reporting purposes, has been condensed or omitted. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company's report on Form 10-K for the year ended December 31, 2016.

Principles of Consolidation

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

Reclassifications

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

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

Common stock is fully paid, non-assessable and has a par value of $.01 per share.

Treasury Stock

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.

9

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

1. Organization and Significant Accounting Policies (continued)

Subsequent Events

Management has evaluated all events subsequent to March 31, 2017 through the date that these financial statements have been issued.

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board ("FASB") issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

In July 2015, the FASB deferred the effective date of the updated guidance on revenue recognition by one year to the quarter ending March 31, 2018.  The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

In August 2014, the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is not alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions. The guidance is effective for annual periods ending after December 15, 2016, and interim and annual periods thereafter. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity since there are no uncertainties about the Company’s ability to continue as a going concern.

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

10

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

1. Organization and Significant Accounting Policies (continued)

This guidance is effective for fiscal years beginning after December 15, 2017. The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is not permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss). The effect of the adoption of this guidance on the Company’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods, the existence of a deferred tax asset related to available-for-sale securities in future periods and the economic conditions at the time of that future adoption.

Leases

In February 2016, the FASB issued updated guidance regarding leases that generally requires the lessee and lessor to recognize lease assets and lease liabilities on the statement of financial position. A lessee should recognize on the statement of financial position a liability to make lease payments and an asset representing its right-to-use the underlying assets for the lease term. Optional payments to extend the lease or purchase the underlying leased asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise the option(s).

If the lease has a term of 12 months or less, a lessee can make an election to recognize lease expenses for such leases on a straight-line basis over the lease term. There is a differentiation between finance leases and operating leases for the lessee in the statements of operations and cash flows. Finance leases recognize interest on the lease liability separately from the right-to-use the asset whereas an operating lease recognizes a single lease cost allocated over the lease term on a generally straight-line basis. All cash payments are within operating activities in the statement of cash flows except finance leases classify repayments of the principal portion of the lease liability within financing activities.

The accounting applied by the lessor is largely unchanged from that applied under previous U.S. GAAP. Key aspects of the lessor accounting model, however, were aligned with the revenue recognition guidance of Codification Topic 606. The previous accounting model for leverage leases continues to apply only to those leveraged leases that commenced before the effective date of Codification Update 2016-02 Leases (Topic 842).

Entities will generally continue to account for leases that commenced before the effective date of this update in accordance with previous U.S. GAAP unless the lease is modified. Lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimal rental payments that were tracked and disclosed under previous U.S. GAAP. The updated guidance is to be applied using a modified retrospective approach effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Investments — Equity Method and Joint Ventures:  Simplifying the Transition to the Equity Method of Accounting

In March 2016, the FASB issued updated guidance that eliminates the requirement to retroactively apply the equity method of accounting when an investment that was previously accounted for using another method of accounting becomes qualified to apply the equity method due to an increase in the level of ownership interest or degree of influence.  If the investment was previously accounted for as an available-for-sale security, any related unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for the equity method is recognized through earnings.  The updated guidance is effective for reporting periods beginning after December 15, 2016, and is to be applied prospectively. Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

11

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

1. Organization and Significant Accounting Policies (continued)

Derivatives and Hedging:  Contingent Put and Call Options in Debt Instruments

In March 2016, the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument is contingently exercisable, the event that triggers the ability to exercise the option is considered to be clearly and closely related to the debt instrument (i.e., the economic characteristics and risks of the option are related to interest rates or credit risks) and the entity does not have to assess whether the option should be accounted for separately. The updated guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Financial Instruments — Credit Losses:  Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. reinsurance amounts recoverable) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after December 15, 2019. Early adoption is permitted for reporting periods beginning after December 15, 2018. Based on the financial instruments currently held by the Company, there would not be a material effect on the Company’s results of operations, financial position or liquidity if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s results of operations, financial position or liquidity at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued specific guidance to reduce the existing diversity in practice in how eight specific cash flow issues of certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Consolidation – Interests Held through Related Parties that Are Under Common Control

In October 2016, the FASB issued further guidance that makes targeted amendments to consolidation accounting. This update changes how a reporting entity that is the primary beneficiary of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The updated guidance is effective for annual and interim periods beginning after December 15, 2016, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

12

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

1. Organization and Significant Accounting Policies (continued)

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In November 2016, the FASB issued specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Business Combinations – Clarifying the Definition of a Business

In January 2017, the FASB issued guidance to clarify the definition of a business to assist reporting entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. This update provides a screen to determine when an integrated set of assets or activities is not a business and the requirements to be met to be considered a business.

The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted in certain situations.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Intangibles – Goodwill and Other - Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued guidance to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Reporting entities will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Compensation — Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued updated guidance to improve the presentation of net periodic pension cost and net periodic post retirement cost (net benefit costs). Net benefit costs comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to employees.  The update requires that theemployer service cost component be reported in the same lines as other employee compensation cost and that the other components (non-service costs) be presented separately from the service cost and outside of a subtotal of income from operations if one is presented.  The update also allows only the service cost component to be eligible for capitalization in assets when applicable.

The updated guidance is effective for reporting periods beginning after December 15, 2017. The update is to be applied retrospectively with respect to the presentation of service cost and non-service cost and prospectively with respect to applying the service cost only eligible for capitalization in assets guidance. Early adoption is permitted as of the first interim period of an annual period if an entity issues interim financial statements. This pronouncement will not impact the Company since it does not have any pension or postretirement benefit plans and has no intention to adopt such plans.

13

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

2. Investments

Fixed Maturity and Equity Securities Available-For-Sale

Investments in fixed maturity and equity securities available-for-sale as of March 31, 2017 and December 31, 2016 are summarized as follows:

			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair
	or Cost		Gains		Losses		Value
	March 31, 2017 (Unaudited)
Fixed maturity securities
U.S. government and U.S. government agencies	$	3,375,460	$	88,510	$	68,402	$	3,395,568
States and political subdivisions		9,602,066		167,836		50,211		9,719,691
Residential mortgage-backed securities		33,938		36,689		-		70,627
Corporate bonds		116,778,608		2,713,348		1,202,824		118,289,132
Foreign bonds		20,073,810		544,739		167,754		20,450,795
Total fixed maturity securities		149,863,882		3,551,122		1,489,191		151,925,813
Equity securities
Mutual funds		345,607		805		-		346,412
Corporate preferred stock		99,945		2,015		-		101,960
Corporate common stock		154,977		54,211		-		209,188
Total equity securities		600,529		57,031		-		657,560
Total fixed maturity and equity securities	$	150,464,411	$	3,608,153	$	1,489,191	$	152,583,373

	December 31, 2016
Fixed maturity securities
U.S. government and U.S. government agencies	$	3,157,889	$	99,086	$	71,592	$	3,185,383
States and political subdivisions		9,172,533		144,947		66,584		9,250,896
Residential mortgage-backed securities		33,970		36,757		-		70,727
Corporate bonds		100,268,424		2,324,712		1,613,095		100,980,041
Foreign bonds		15,677,449		394,742		248,083		15,824,108
Total fixed maturity securities		128,310,265		3,000,244		1,999,354		129,311,155
Equity securities
Mutual funds		344,783		-		2,869		341,914
Corporate preferred stock		99,945		-		3,585		96,360
Corporate common stock		154,672		45,461		-		200,133
Total equity securities		599,400		45,461		6,454		638,407
Total fixed maturity and equity securities	$	128,909,665	$	3,045,705	$	2,005,808	$	129,949,562

14

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

2. Investments (continued)

All securities in an unrealized loss position as of the financial statement dates, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time that those securities have been continuously in an unrealized loss position as of March 31, 2017 and December 31, 2016 are summarized as follows:

			Unrealized		Number of
	Fair Value		Loss		Securities
	March 31, 2017 (Unaudited)
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	2,086,562	$	68,402		7
States and political subdivisions		2,518,618		50,211		13
Corporate bonds		26,306,196		480,601		85
Foreign bonds		3,271,284		105,406		12
Total less than 12 months		34,182,660		704,620		117
More than 12 months
Corporate bonds		7,317,575		722,223		36
Foreign bonds		1,021,479		62,348		6
Total more than 12 months		8,339,054		784,571		42
Total fixed maturity securities	$	42,521,714	$	1,489,191		159

	December 31, 2016
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	1,878,308	$	71,592	6
States and political subdivisions		2,532,653		66,584	14
Corporate bonds		23,721,217		696,066	92
Foreign bonds		5,087,133		155,833	16
Total less than 12 months		33,219,311		990,075	128
More than 12 months
Corporate bonds		8,004,923		917,029	36
Foreign bonds		1,024,548		92,250	6
Total more than 12 months		9,029,471		1,009,279	42
Total fixed maturity securities		42,248,782		1,999,354	170
Equity securities
Less than 12 months
Corporate preferred stock		96,360		3,585	2
Total less than 12 months		96,360		3,585	2
More than 12 months
Mutual funds		89,113		2,869	1
Total more than 12 months		89,113		2,869	1
Total equity securities		185,473		6,454	3
Total fixed maturity and equity securities	$	42,434,255	$	2,005,808	173

15

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

2. Investments (continued)

As of March 31, 2017, the Company held 159 available-for-sale fixed maturity securities with an unrealized loss of $1,489,191, fair value of $42,521,714 and amortized cost of $44,010,905. These unrealized losses were primarily due to market interest rate movements in the bond market as of March 31, 2017. The ratio of the fair value to the amortized cost of these 159 securities is 97%.

As of December 31, 2016, the Company held 170 available-for-sale fixed maturity securities with an unrealized loss of $1,999,354, fair value of $42,248,782 and amortized cost of $44,248,136. These unrealized losses were primarily due to market interest rate movements in the bond market as of December 31, 2016. The ratio of the fair value to the amortized cost of these 170 securities is 95%.

As of March 31, 2017, the Company had no available-for-sale equity securities with unrealized losses.

As of December 31, 2016, the Company had three available-for-sale equity securities with an unrealized loss of $6,454, fair value of $185,473 and cost of $191,927. The ratio of fair value to cost of these securities is 97%. 

Fixed maturity securities were 93% and 92% investment grade as rated by Standard & Poor’s as of March 31, 2017 and December 31, 2016, respectively.

The Company’s decision to record an impairment loss is primarily based on whether the security’s fair value is likely to remain significantly below its book value based on all of the factors considered. Factors that are considered include the length of time the security’s fair value has been below its carrying amount, the severity of the decline in value, the credit worthiness of the issuer, and the coupon and/or dividend payment history of the issuer. The Company also assesses whether it intends to sell or whether it is more likely than not that it may be required to sell the security prior to its recovery in value.

For any fixed maturity securities that are other-than-temporarily impaired, the Company determines the portion of the other-than-temporary impairment that is credit-related and the portion that is related to other factors. The credit-related portion is the difference between the expected future cash flows and the amortized cost basis of the fixed maturity security, and that difference is charged to earnings. The non-credit-related portion representing the remaining difference to fair value is recognized in other comprehensive income (loss). Only in the case of a credit-related impairment where management has the intent to sell the security, or it is more likely than not that it will be required to sell the security before recovery of its cost basis, is a fixed maturity security adjusted to fair value and the resulting losses recognized in realized gains (losses) in the consolidated statements of operations. Any other-than-temporary impairments on equity securities are recorded in the consolidated statements of operations in the periods incurred as the difference between fair value and cost.

There were no impairments during the three months ended March 31, 2017 and 2016.

The Company recorded one other-than-temporary impairment during fourth quarter 2016.  During fourth quarter 2016, the Company impaired its bonds in an energy corporation with a total par value of $650,000 as a result of continuing unrealized losses. This impairment was considered fully credit-related, resulting in a charge to the statement of operations before tax of $207,450 for the year ended December 31, 2016. This charge represents the credit-related portion of the difference between the amortized cost basis of the security and its fair value. The Company experienced no additional other-than-temporary impairments on fixed maturity available-for-sale securities during 2016.

Management believes that the Company will fully recover its cost basis in the securities held as of March 31, 2017, and management does not have the intent to sell nor is it more likely than not that the Company will be required to sell such securities until they recover or mature.  The remaining temporary impairments shown herein are primarily the result of the current interest rate environment rather than credit factors that would imply other-than-temporary impairment. 

16

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

2. Investments (continued)

Net unrealized gains included in other comprehensive income for investments classified as available-for-sale, net of the effect of deferred income taxes and deferred acquisition costs assuming that the appreciation had been realized as of March 31, 2017 and December 31, 2016, are summarized as follows:

	(Unaudited)
	March 31, 2017			December 31, 2016
Unrealized appreciation on available-for-sale securities	$	2,118,962		$	1,039,897
Adjustment to deferred acquisition costs		(36,053	)		(16,553	)
Deferred income taxes		(416,581	)		(204,668	)
Net unrealized appreciation on available-for-sale securities	$	1,666,328		$	818,676

The Company’s investment in lottery prize cash flows categorized as other long-term investments in the statement of financial position was $49,515,018 and $46,788,873 as of March 31, 2017 and December 31, 2016, 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 amortized cost and fair value of fixed maturity available-for-sale securities and other long-term investments as of March 31, 2017, by contractual maturity, are summarized as follows:

	March 31, 2017 (Unaudited)
	Fixed Maturity Available-For-Sale Securities				Other Long-Term Investments
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	8,564,969	$	8,646,613	$	6,978,927	$	7,081,822
Due after one year through five years		31,765,292		32,499,328		19,501,912		21,055,897
Due after five years through ten years		42,243,357		43,132,728		13,854,164		16,558,746
Due after ten years		67,256,326		67,576,517		9,180,015		14,151,045
Due at multiple maturity dates		33,938		70,627		-		-
	$	149,863,882	$	151,925,813	$	49,515,018	$	58,847,510

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.

17

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

2. Investments (continued)

Proceeds and gross realized gains (losses) from the sales, calls and maturities of fixed maturity securities available-for-sale, equity securities available-for-sale, mortgage loans on real estate and investment real estate for the three months ended March 31, 2017 and 2016 are summarized as follows:

	Three Months Ended March 31, (Unaudited)
	Fixed Maturity Securities						Equity Securities					Mortgage Loans on Real Estate				Investment Real Estate
	2017			2016			2017		2016			2017		2016		2017		2016
Proceeds	$	4,449,231		$	2,274,413		$	-	$	108,800		$	5,125,389	$	1,572,244	$	107,167	$	-
Gross realized gains		171,105			7,094			-		-			-		3,575		2,487		-
Gross realized losses		(7,086	)		(28,352	)		-		(1,468	)		-		-		-		-

The accumulated change in unrealized investment gains (losses) for fixed maturity and equity securities available-for-sale for the three months ended March 31, 2017 and 2016 and the amount of net realized investment gains (losses) on fixed maturity securities available-for-sale, equity securities available-for-sale, mortgage loans on real estate and investment real estate for the three months ended March 31, 2017 and 2016 are summarized as follows:

18

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

2. Investments (continued)

Major categories of net investment income for the three months ended March 31, 2017 and 2016 are summarized as follows:

	Three Months Ended March 31, (Unaudited)
	2017			2016
Fixed maturity securities	$	1,490,370		$	1,567,218
Equity securities		5,072			7,182
Other long-term investments		857,470			547,822
Mortgage loans		1,667,394			1,353,071
Policy loans		27,564			26,098
Real estate		93,711			91,968
Short-term and other investments		110,286			72,270
Gross investment income		4,251,867			3,665,629
Investment expenses		(581,996	)		(305,426	)
Net investment income	$	3,669,871		$	3,360,203

TLIC and FBLIC are required to hold assets on deposit with various state insurance departments for the benefit of policyholders and other special deposits in accordance with statutory rules and regulations. As of March 31, 2017 and December 31, 2016, these required deposits, included in investment assets, had amortized costs that totaled $4,107,553 and $4,099,405, respectively. As of March 31, 2017 and December 31, 2016, these required deposits had fair values that totaled $4,132,879 and $4,125,116, respectively.

The Company’s mortgage loans by property type as of March 31, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)
	March 31, 2017		December 31, 2016
Commercial mortgage loans
Retail stores	$	1,055,651	$	1,075,324
Office buildings		177,494		179,484
Total commercial mortgage loans		1,233,145		1,254,808
Residential mortgage loans		85,645,703		73,116,478
Total mortgage loans	$	86,878,848	$	74,371,286

19

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

2. Investments (continued)

The Company’s investment real estate as of March 31, 2017 and December 31, 2016 is summarized as follows:

	(Unaudited)
	March 31, 2017			December 31, 2016
Land - held for the production of income	$	213,160		$	213,160
Land - held for investment		745,155			745,155
Total land		958,315			958,315
Building - held for the production of income		2,267,557			2,267,557
Less - accumulated depreciation		(1,086,067	)		(1,049,695	)
Buildings net of accumulated depreciation		1,181,490			1,217,862
Residential real estate - held for sale		225,816			330,496
Total residential real estate		225,816			330,496
Investment real estate, net of accumulated depreciation	$	2,365,621		$	2,506,673

TLIC owns approximately six and one-half acres of land located in Topeka, Kansas that includes a 20,000 square foot office building on approximately one-fourth of this land. This building and land on one of the four lots is held for the production of income. The other three lots of land owned in Topeka, Kansas are held for investment. In addition, FBLIC owns one-half acre of undeveloped land located in Jefferson City, Missouri. During fourth quarter 2016 management impaired the undeveloped land by $4,892 from its carrying value to its net realizable value expected at the time of ultimate resale.

During 2016 the Company foreclosed on seven residential mortgage loans of real estate totaling $394,427 and transferred those properties to investment real estate that are now held for sale. The Company reduced the carrying value of this residential real estate obtained through foreclosure to the lower of acquisition cost or net realizable value. On November 30, 2016, the Company sold one investment real estate property with an aggregate carrying value of $63,931. The Company recorded a gross realized investment loss on sale of $20,662 based on an aggregate sales price of $43,269.

During 2017, the Company sold investment real estate property with an aggregate carrying value of $104,680. The Company recorded a gross realized investment gain on sale of $2,487 based on an aggregate sales price of $107,167.

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:

Level 1 - 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.

20

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

3. Fair Value Measurements (continued)

Level 2 - 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 agency mortgage-backed debt securities, state and political subdivision securities, corporate debt securities and foreign debt securities.

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

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three-level fair value hierarchy. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs, or their ability to be observed, may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in and out of the Level 3 category as of the beginning of the period in which the reclassifications occur.

21

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

3. Fair Value Measurements (continued)

The Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of March 31, 2017 and December 31, 2016 is summarized as follows:

	Level 1		Level 2		Level 3		Total
	March 31, 2017 (Unaudited)
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	3,395,568	$	-	$	3,395,568
States and political subdivisions		-		9,719,691		-		9,719,691
Residential mortgage-backed securities		-		70,627		-		70,627
Corporate bonds		-		118,289,132		-		118,289,132
Foreign bonds		-		20,450,795		-		20,450,795
Total fixed maturity securities	$	-	$	151,925,813	$	-	$	151,925,813
Equity securities, available-for-sale
Mutual funds	$	-	$	346,412	$	-	$	346,412
Corporate preferred stock		101,960		-		-		101,960
Corporate common stock		147,688		-		61,500		209,188
Total equity securities	$	249,648	$	346,412	$	61,500	$	657,560

	December 31, 2016
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	3,185,383	$	-	$	3,185,383
States and political subdivisions		-		9,250,896		-		9,250,896
Residential mortgage-backed securities		-		70,727		-		70,727
Corporate bonds		-		100,980,041		-		100,980,041
Foreign bonds		-		15,824,108		-		15,824,108
Total fixed maturity securities	$	-	$	129,311,155	$	-	$	129,311,155
Equity securities, available-for-sale
Mutual funds	$	-	$	341,914	$	-	$	341,914
Corporate preferred stock		96,360		-		-		96,360
Corporate common stock		138,633		-		61,500		200,133
Total equity securities	$	234,993	$	341,914	$	61,500	$	638,407

As of March 31, 2017 and December 31, 2016, Level 3 financial instruments consisted of two private placement common stocks that have no active trading.

These private placement stocks represent investments in small insurance holding companies. The fair value for these securities was determined through the use of unobservable assumptions about market participants. The Company has assumed a willing market participant would purchase the securities for the same price as the Company paid until such time as these small insurance holding companies commence operations.

22

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

3. Fair Value Measurements (continued)

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

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

The Company’s equity securities are included in Level 1 and Level 2 and the private placement common stocks are included in Level 3. Level 1 for those 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 and equity securities available-for-sale portfolio is highly liquid and allows for a high percentage of the portfolio to be priced through pricing services.

23

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

3. Fair Value Measurements (continued)

The carrying amount and fair value of the Company’s financial assets and financial liabilities disclosed, but not carried, at fair value as of March 31, 2017 and December 31, 2016, and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis are summarized as follows:

Financial Instruments Disclosed, But Not Carried, at Fair Value:

	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
	March 31, 2017 (Unaudited)
Financial assets
Mortgage loans on real estate
Commercial	$	1,233,145	$	1,245,615	$	-	$	-	$	1,245,615
Residential		85,645,703		86,519,153		-		-		86,519,153
Policy loans		1,576,307		1,576,307		-		-		1,576,307
Other long-term investments		49,515,018		58,847,510		-		-		58,847,510
Cash and cash equivalents		25,962,536		25,962,536		25,962,536		-		-
Accrued investment income		2,542,754		2,542,754		-		-		2,542,754
Total financial assets	$	166,475,463	$	150,458,439	$	25,962,536	$	-	$	124,495,903
Financial liabilities
Policyholders' account balances	$	267,911,869	$	226,181,661	$	-	$	-	$	226,181,661
Policy claims		938,779		938,779		-		-		938,779
Total financial liabilities	$	268,850,648	$	185,368,033	$	-	$	-	$	185,368,033

	December 31, 2016
Financial assets
Mortgage loans on real estate
Commercial	$	1,254,808	$	1,268,140	$	-	$	-	$	1,268,140
Residential		73,116,478		70,383,661		-		-		70,383,661
Policy loans		1,598,116		1,598,116		-		-		1,598,116
Other long-term investments		46,788,873		55,890,429		-		-		55,890,429
Cash and cash equivalents		34,223,945		34,223,945		34,223,945		-		-
Accrued investment income		2,176,770		2,176,770		-		-		2,176,770
Total financial assets	$	159,158,990	$	165,541,061	$	34,223,945	$	-	$	131,317,116
Financial liabilities
Policyholders' account balances	$	245,346,489	$	206,541,702	$	-	$	-	$	206,541,702
Policy claims		997,814		997,814		-		-		997,814
Total financial liabilities	$	246,344,303	$	207,539,516	$	-	$	-	$	207,539,516

24

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

3. Fair Value Measurements (continued)

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

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

Fixed Maturity 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 residential mortgage loans, the discount rate used was indexed to the LIBOR yield curve adjusted for an appropriate credit spread. For commercial mortgage loans, the discount rate used was assumed to be the interest rate on the last commercial mortgage acquired by the Company.

Cash and Cash Equivalents, Accrued Investment Income and Policy Loans

The carrying value of these financial instruments approximates their fair values. Cash and cash equivalents 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 Citigroup 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.

25

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

4. Segment Data

The Company has a life insurance segment, consisting of the life insurance operations of TLIC and FBLIC, an annuity segment, consisting of the annuity operations of TLIC and FBLIC and a corporate segment. Results for the parent company and the operations of FTCC, after elimination of intercompany amounts, are allocated to the corporate segment. These segments as of March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and 2016 are summarized as follows:

	Three Months Ended March 31, (Unaudited)
	2017		2016
Revenues:
Life insurance operations	$	4,184,653	$	3,745,244
Annuity operations		3,188,969		2,637,424
Corporate operations		134,337		158,239
Total	$	7,507,959	$	6,540,907
Income before income taxes:
Life insurance operations	$	117,848	$	29,953
Annuity operations		160,414		228,256
Corporate operations		71,255		89,997
Total	$	349,517	$	348,206
Depreciation and amortization expense:
Life insurance operations	$	414,284	$	674,547
Annuity operations		420,048		155,912
Corporate operations		-		-
Total	$	834,332	$	830,459

	(Unaudited)
	March 31, 2017		December 31, 2016
Assets:
Life insurance operations	$	51,429,483	$	50,577,282
Annuity operations		299,630,314		275,745,766
Corporate operations		6,772,563		6,929,565
Total	$	357,832,360	$	333,252,613

5. Federal Income Taxes

The provision for federal income taxes is based on the asset and liability method of accounting for income taxes. Deferred income taxes are provided for the cumulative temporary differences between balances of assets and liabilities determined under GAAP and the balances using tax bases. A valuation allowance has been established due to the uncertainty of certain loss carry forwards.

The Company has no known uncertain tax benefits within its provision for income taxes. In addition, the Company does not believe it would be subject to any penalties or interest relative to any open tax years and, therefore, has not accrued any such amounts. The Company files U.S. federal income tax returns and income tax returns in various state jurisdictions.  The 2013 through 2016 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.

26

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

6. Legal Matters and Contingent Liabilities

A lawsuit filed by the Company and Chairman, President and Chief Executive Officer, Gregg E. Zahn, against former Company Board of Directors member Wayne Pettigrew and Mr. Pettigrew's company, Group & Pension Planners, Inc. (the "Defendants"), concluded on February 17, 2017. The lawsuit was filed in the District Court of Tulsa County, Oklahoma (Case No. CJ-2013-03385). In the lawsuit, the Company alleged that Mr. Pettigrew had defamed the Company by making untrue statements to certain shareholders of the Company, to the press and to regulators of the state of Oklahoma and had breached his fiduciary duties.

The jury concluded that Mr. Pettigrew, while still a member of the Company’s Board of Directors, did, in fact, make untrue statements regarding the Company and Mr. Zahn and committed breaches of his fiduciary duties to the Company and awarded it $800,000 of damages against Mr. Pettigrew. In addition, the jury found that Mr. Pettigrew had defamed Mr. Zahn and intentionally inflicted emotional distress on Mr. Zahn and awarded Mr. Zahn $3,500,000 of damages against Mr. Pettigrew.

Mr. Pettigrew can appeal this decision by the jury that will require him to post a bond in the amount of the total judgment of $4,300,000. Should Mr. Pettigrew fail to post such a bond, the Company and Mr. Zahn will be permitted to execute on Mr. Pettigrew's assets.

In addition to the damages awarded by the jury, the Company and Mr. Zahn have initiated steps to aggressively communicate the correction of the untrue statements to outside parties.

Prior to its acquisition by TLIC, FBLIC developed, marketed, and sold life insurance products known as “Decreasing Term to 95” policies. On January 17, 2013, FBLIC’s Board of Directors voted that, effective March 1, 2013, it was not approving, and therefore was not providing, a dividend for the Decreasing Term to 95 policies. On November 22, 2013, three individuals who owned Decreasing Term to 95 policies filed a Petition in the Circuit Court of Greene County, Missouri asserting claims against FBLIC relating to FBLIC’s decision to not provide a dividend under the Decreasing Term to 95 policies.

On June 18, 2015, plaintiffs filed an amended petition. Like the original Petition, the amended Petition asserts claims for breach of contract and anticipatory breach of contract, and alleges that FBLIC breached, and will anticipatorily breach, the Decreasing Term to 95 policies of insurance by not providing a dividend sufficient to purchase a one year term life insurance policy which would keep the death benefit under the Decreasing Term to 95 policies the same as that provided during the first year of coverage under the policy. It also asserts claims for negligent misrepresentation, fraud, and violation of the Missouri Merchandising Practices Act (“MMPA”). It alleges that during its sale of the Decreasing Term to 95 policies, FBLIC represented that the owners of these policies would always be entitled to dividends to purchase a one-year term life insurance policy and that the owners would have a level death benefit without an increase in premium.

The main difference between the original Petition and the amended Petition is that the amended Petition also seeks equitable relief based on two new theories: that the Decreasing Term to 95 policies should be reformed so that they will provide a level death benefit for a level premium payment until the policyholder reaches 95 years of age; and alternatively, Count VIII of the amended Petition asks the Court to (1) find that the dividend provisions in the Decreasing Term to 95 policies violate Missouri law, specifically, § 376.360 RSMo.; (2) order that the policies are void ab initio; and (3) order that FBLIC return all premiums collected under these policies. In addition, as part of the MMPA claim, plaintiffs are now alleging that FBLIC undertook a fraudulent scheme to sell the Decreasing Term to 95 policies as a level premium for level benefit even though FBLIC never intended to pay dividends for the life of the policies and that part of this alleged fraudulent scheme included having a dividend option which is not allowed under Missouri law. FBLIC denies the allegations in the amended Petition and will continue to defend against them.

27

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

6. Legal Matters and Contingent Liabilities (continued)

On February 1, 2016, the plaintiffs asked that the Court certify the case as a class action. With their motion, Plaintiffs filed an affidavit from an actuary stating the opinion that FBLIC has collected at least $2,548,939 in premiums on the Decreasing Term to 95 policies. This presumably is the amount that Plaintiffs will seek to be refunded to policyholders if the policies are declared void. FBLIC opposed the request for class certification. On July 21, 2016, the Court certified three classes to maintain the claims for breach of contract, anticipatory breach of contract, violation of the MMPA, reformation, and to void the Decreasing Term to 95 policies.

On August 1, 2016, FBLIC filed a Petition for Leave to Appeal with the Missouri Court of Appeals, Southern District asking for permission to appeal the Court’s class certification. The Petition for Leave to Appeal was denied. FBLIC intends to defend vigorously against the class and individual allegations. The Company is unable to determine the potential magnitude of the claims in the event of a final certification and the plaintiffs prevailing on this substantive action.

On May 13, 2015, FBLIC filed a Counterclaim against Doyle Nimmo seeking indemnity and seeking damages for breach of fiduciary duty in the event FBLIC is liable under Plaintiffs’ underlying claims. In addition, on April 29, 2015, TLIC filed a lawsuit against Doyle Nimmo and Michael Teel alleging that they were liable for violations of federal and state securities laws for failing to disclose information relating to the Decreasing Term to 95 policies. This lawsuit is currently pending in the District Court for the Western District of Missouri (hereinafter the “Federal Lawsuit”). No claims have been made against TLIC in the Federal Lawsuit. The Federal Lawsuit has been stayed pending resolution of the lawsuit against FBLIC in the Circuit Court of Greene County, Missouri.

On September 28, 2015, Doyle Nimmo filed a Third-Party Petition for Declaratory Judgment (and Other Relief) against FBLIC. In this Third-Party Petition, Doyle Nimmo, a former director for FBLIC, seeks a declaratory judgment that the corporate by-laws of FBLIC require FBLIC to indemnify him for attorney’s fees, judgments, costs, fines, and amounts paid in defense of both the Counterclaim and the Federal Lawsuit and seeks a monetary judgment for the amounts expended by Doyle Nimmo in such defense. Prior to Doyle Nimmo’s filing of the Third-Party Petition, FBLIC’s Board of Directors executed a Unanimous Written Consent in Lieu of a Special Meeting in which it denied Doyle Nimmo’s tender of defense and request for indemnification finding Mr. Nimmo did not meet the applicable standard of conduct for indemnification under Missouri law. FBLIC intends to vigorously defend the Third-Party Petition on these grounds. The Company is unable to determine the potential magnitude of the claims in the event Doyle Nimmo prevails on his Third-Party Petition.

As stated above, FBLIC filed a Counterclaim and TLIC filed the Federal Lawsuit against Doyle Nimmo. Doyle Nimmo submitted a claim and tendered the defense of these claims to Utica Mutual Insurance Company under a policy providing Insurance Agents and Brokers Errors and Omissions Liability coverage. On November 4, 2015, Utica Mutual Insurance Company filed a lawsuit against Doyle Nimmo and other interested parties, including FBLIC and TLIC. The lawsuit is pending in the District Court for the Western District of Missouri and asks the Court to determine whether the Errors and Omissions policy provides coverage for the lawsuits filed against Doyle Nimmo. Utica Mutual Insurance Company does not seek a monetary judgment against FBLIC or TLIC. All parties to the lawsuit pending in the Circuit Court of Greene County, Missouri agreed to waive their right to a trial by jury and have all claims submitted to the Judge for decision. The trial in that case is scheduled to begin on November 27, 2017.

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.

28

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

7. Other Comprehensive Income and Accumulated Other Comprehensive Income

The changes in the components of the Company’s accumulated other comprehensive income for the three months ended March 31, 2017 and 2016 are summarized as follows:

	Three Months Ended March 31, 2017 and 2016 (Unaudited)
	Unrealized
	Appreciation						Accumulated
	(Depreciation) on			Adjustment to			Other
	Available-For-Sale			Deferred Acquisition			Comprehensive
	Securities			Costs			Income (Loss)
Balance as of January 1, 2017	$	831,917		$	(13,241	)	$	818,676
Other comprehensive income before reclassifications, net of tax		994,467			(15,600	)		978,867
Less amounts reclassified from accumulated other comprehensive income, net of tax		131,215			-			131,215
Other comprehensive income		863,252			(15,600	)		847,652
Balance as of March 31, 2017	$	1,695,169		$	(28,841	)	$	1,666,328
Balance as of January 1, 2016	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of tax		3,023,618			(48,104	)		2,975,514
Less amounts reclassified from accumulated other comprehensive income, net of tax		(18,181	)		-			(18,181	)
Other comprehensive income		3,041,799			(48,104	)		2,993,695
Balance as of March 31, 2016	$	345,923		$	(8,045	)	$	337,878

The pretax components of the Company’s other comprehensive income and the related income tax expense for each component for the three months ended March 31, 2017 and 2016 are summarized as follows:

				Income Tax
	Pretax			Expense			Net of Tax
	Three Months Ended March 31, 2017 (Unaudited)
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	1,243,084		$	248,617		$	994,467
Reclassification adjustment for net gains included in operations		164,019			32,804			131,215
Net unrealized gains on investments		1,079,065			215,813			863,252
Adjustment to deferred acquisition costs		(19,500	)		(3,900	)		(15,600	)
Total other comprehensive income	$	1,059,565		$	211,913		$	847,652

	Three Months Ended March 31, 2016 (Unaudited)
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	3,779,522		$	755,904		$	3,023,618
Reclassification adjustment for net losses included in operations		(22,726	)		(4,545	)		(18,181	)
Net unrealized gains on investments		3,802,248			760,449			3,041,799
Adjustment to deferred acquisition costs		(60,130	)		(12,026	)		(48,104	)
Total other comprehensive income	$	3,742,118		$	748,423		$	2,993,695

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.

29

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

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

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 statement of operations for the three months ended March 31, 2017 and 2016 are summarized as follows:

	Three Months Ended March 31, (Unaudited)
Reclassification Adjustments	2017		2016
Unrealized gains on available-for-sale securities:
Realized gains (losses) on sales of securities (a)	$	164,019	$	(22,726	)
Income tax expense (benefit) (b)		32,804		(4,545	)
Total reclassification adjustments	$	131,215	$	(18,181	)

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

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

8. Allowance for Loan Losses from Mortgage Loans on Real Estate and Loans from Premium Financing

The allowance for possible loan losses from investments in mortgage loans on real estate and loans from premium financing is a reserve established through a provision for possible loan losses charged to expense which represents, in the Company’s judgment, the known and inherent credit losses existing in the residential and commercial mortgage loan and premium financing loan portfolios. The allowance, in the judgment of the Company, is necessary to reserve for estimated loan losses inherent in the residential and commercial mortgage loan and premium finance loan portfolios and reduces the carrying value of investments in mortgage loans on real estate and premium finance loans to the estimated net realizable value on the consolidated statement of financial position.

While the Company utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including the performance of the residential and commercial mortgage loan and premium finance loan portfolios, the economy and changes in interest rates. The Company’s allowance for possible mortgage loan and premium finance 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.

Mortgage loans and premium finance loans are considered 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 or premium finance loan agreement. Factors considered by the Company 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 and premium finance 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 or premium finance loan 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. Impairment is measured on a loan-by-loan basis.

As of March 31, 2017, $544,016 of independent residential mortgage loans on real estate are held in escrow by a third party for the benefit of the Company.   As of March 31, 2017, $148,387 of that escrow amount is available to the Company for possible losses on its investment of $29,677,438 in residential mortgage loans on real estate with one loan originator.

30

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

8. Allowance for Loan Losses from Mortgage Loans on Real Estate and Loans from Premium Financing (continued)

In addition, the Company has an additional $286,481 allowance for possible loan losses in the remaining $57,201,410 of investments in mortgage loans on real estate as of March 31, 2017.

As of December 31, 2016, $525,063 of independent mortgage loan balances were held in escrow by a third party for the benefit of the Company related to its investment in $25,523,757 of mortgage loans on real estate with one loan originator. In addition, the Company had an additional $244,427 allowance for possible loan losses in the remaining $48,847,529 of investments in mortgage loans on real estate as of December 31, 2016.

Through June 30, 2012, FTCC financed amounts up to 80% of the premium on property and casualty insurance policies after a 20% or greater down payment was made by the policy owner. The premiums financed were collateralized by the amount of the unearned premium of the insurance policy. Policies that became delinquent were submitted for cancellation and recovery of the unearned premium, up to the amount of the loan balance, 25 days after a payment became delinquent. As of December 31, 2016 the Company established a full allowance for uncollectible receivables against the premium financing asset. In late December of 2016, the Company wrote off the asset by netting the allowance for uncollectible receivables against the premium financing asset. The Company has made no premium financing loans since June 30, 2012.

The balances of and changes in the Company’s credit losses related to mortgage loans on real estate and loans from premium financing as of and for the three months ended March 31, 2017 and 2016 are summarized as follows (excluding $29,677,438 and $22,649,615 of mortgage loans on real estate as of March 31, 2017 and 2016, respectively, with one loan originator where independent mortgage loan balances are held in escrow by a third party for the benefit of the Company):

	As of and for the Three Months Ended March 31, (Unaudited)
	Residential Mortgage Loans				Commercial Mortgage Loans						Premium Finance Loans					Total
	2017		2016		2017			2016			2017		2016			2017		2016
Allowance, beginning	$	238,121	$	175,988	$	6,306		$	7,360		$	-	$	197,172		$	244,427	$	380,520
Charge offs		-		-		-			-			-		-			-		-
Recoveries		-		-		-			-			-		-			-		-
Provision		42,163		6,484		(109	)		(115	)		-		(4,482	)		42,054		1,887
Allowance, ending	$	280,284	$	182,472	$	6,197		$	7,245		$	-	$	192,690		$	286,481	$	382,407
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	192,690		$	-	$	192,690
Collectively evaluated for impairment	$	280,284	$	182,472	$	6,197		$	7,245		$	-	$	-		$	286,481	$	189,717
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	347,885		$	-	$	347,885
Collectively evaluated for impairment	$	55,968,265	$	36,840,353	$	1,233,145		$	1,441,814		$	-	$	-		$	57,201,410	$	38,282,167

31

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

(Unaudited)

8. Allowance for Loan Losses from Mortgage Loans on Real Estate and Loans from Premium Financing (continued)

The Company utilizes the ratio of the carrying value of individual residential and commercial mortgage loans compared to the individual appraisal value to evaluate the credit quality of its mortgage loans on real estate (commonly referred to as the loan-to-value ratio). The Company’s residential and commercial mortgage loans on real estate by credit quality using this ratio as of March 31, 2017 and December 31, 2016 are summarized as follows:

	Residential Mortgage Loans				Commercial Mortgage Loans				Total Mortgage Loans
	(Unaudited)				(Unaudited)				(Unaudited)
Loan-To-Value Ratio	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
Over 70% to 80%	$	15,380,587	$	14,559,541	$	-	$	-	$	15,380,587	$	14,559,541
Over 60% to 70%		32,049,451		29,738,887		-		-		32,049,451		29,738,887
Over 50% to 60%		21,712,187		15,440,364		1,040,222		1,051,155		22,752,409		16,491,519
Over 40% to 50%		12,345,596		10,399,031		-		-		12,345,596		10,399,031
Over 30% to 40%		2,276,132		2,184,351		192,923		203,653		2,469,055		2,388,004
Over 20% to 30%		1,544,076		467,410		-		-		1,544,076		467,410
Over 10% to 20%		333,013		317,936		-		-		333,013		317,936
10% or less		4,661		8,958		-		-		4,661		8,958
Total	$	85,645,703	$	73,116,478	$	1,233,145	$	1,254,808	$	86,878,848	$	74,371,286

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

Overview

First Trinity Financial Corporation (“we” “us”, “our”, “FTFC” or the “Company”) conducts operations as an insurance holding company emphasizing ordinary life insurance products 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, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia through independent agents.

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

Acquisitions 

The Company expects to facilitate growth through acquisitions of other life insurance companies and/or blocks of life insurance and annuity business. In late December 2008, the Company completed its acquisition of 100% of the outstanding stock of FLAC for $2,500,000 and had additional acquisition related expenses of $195,234.

32

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.

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.

Critical Accounting Policies and Estimates 

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

For a description of the Company’s critical accounting policies and estimates, please refer to “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.  The Company considers its most critical accounting estimates to be those applied to investments in fixed maturity and equity securities, mortgage loans on real estate, deferred policy acquisition costs, value of insurance business acquired and future policy benefits. There have been no material changes to the Company’s critical accounting policies and estimates since December 31, 2016.

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In May 2014, the FASB issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

In July 2015, the FASB deferred the effective date of the updated guidance on revenue recognition by one year to the quarter ending March 31, 2018.  The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

In August 2014, the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued).

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The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is not alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions. The guidance is effective for annual periods ending after December 15, 2016, and interim and annual periods thereafter. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity since there are no uncertainties about the Company’s ability to continue as a going concern.

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after December 15, 2017. The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is not permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss). The effect of the adoption of this guidance on the Company’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods, the existence of a deferred tax asset related to available-for-sale securities in future periods and the economic conditions at the time of that future adoption.

Leases

In February 2016, the FASB issued updated guidance regarding leases that generally requires the lessee and lessor to recognize lease assets and lease liabilities on the statement of financial position. A lessee should recognize on the statement of financial position a liability to make lease payments and an asset representing its right-to-use the underlying assets for the lease term. Optional payments to extend the lease or purchase the underlying leased asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise the option(s).

If the lease has a term of 12 months or less, a lessee can make an election to recognize lease expenses for such leases on a straight-line basis over the lease term. There is a differentiation between finance leases and operating leases for the lessee in the statements of operations and cash flows. Finance leases recognize interest on the lease liability separately from the right-to-use the asset whereas an operating lease recognizes a single lease cost allocated over the lease term on a generally straight-line basis. All cash payments are within operating activities in the statement of cash flows except finance leases classify repayments of the principal portion of the lease liability within financing activities.

The accounting applied by the lessor is largely unchanged from that applied under previous U.S. GAAP. Key aspects of the lessor accounting model, however, were aligned with the revenue recognition guidance of Codification Topic 606. The previous accounting model for leverage leases continues to apply only to those leveraged leases that commenced before the effective date of Codification Update 2016-02 Leases (Topic 842).

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Entities will generally continue to account for leases that commenced before the effective date of this update in accordance with previous U.S. GAAP unless the lease is modified. Lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimal rental payments that were tracked and disclosed under previous U.S. GAAP. The updated guidance is to be applied using a modified retrospective approach effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Investments — Equity Method and Joint Ventures:  Simplifying the Transition to the Equity Method of Accounting

In March 2016, the FASB issued updated guidance that eliminates the requirement to retroactively apply the equity method of accounting when an investment that was previously accounted for using another method of accounting becomes qualified to apply the equity method due to an increase in the level of ownership interest or degree of influence.  If the investment was previously accounted for as an available-for-sale security, any related unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for the equity method is recognized through earnings.  The updated guidance is effective for reporting periods beginning after December 15, 2016, and is to be applied prospectively. Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Derivatives and Hedging:  Contingent Put and Call Options in Debt Instruments

In March 2016, the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument is contingently exercisable, the event that triggers the ability to exercise the option is considered to be clearly and closely related to the debt instrument (i.e., the economic characteristics and risks of the option are related to interest rates or credit risks) and the entity does not have to assess whether the option should be accounted for separately. The updated guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Financial Instruments — Credit Losses:  Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. reinsurance amounts recoverable) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after December 15, 2019. Early adoption is permitted for reporting periods beginning after December 15, 2018. Based on the financial instruments currently held by the Company, there would not be a material effect on the Company’s results of operations, financial position or liquidity if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s results of operations, financial position or liquidity at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time.

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Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued specific guidance to reduce the existing diversity in practice in how eight specific cash flow issues of certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Consolidation – Interests Held through Related Parties that Are Under Common Control

In October 2016, the FASB issued further guidance that makes targeted amendments to consolidation accounting. This update changes how a reporting entity that is the primary beneficiary of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The updated guidance is effective for annual and interim periods beginning after December 15, 2016, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In November 2016, the FASB issued specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Business Combinations – Clarifying the Definition of a Business

In January 2017, the FASB issued guidance to clarify the definition of a business to assist reporting entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. This update provides a screen to determine when an integrated set of assets or activities is not a business and the requirements to be met to be considered a business.

The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted in certain situations.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Intangibles – Goodwill and Other - Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued guidance to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Reporting entities will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Compensation — Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued updated guidance to improve the presentation of net periodic pension cost and net periodic post retirement cost (net benefit costs). Net benefit costs comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to employees.

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The update requires that theemployer service cost component be reported in the same lines as other employee compensation cost and that the other components (non-service costs) be presented separately from the service cost and outside of a subtotal of income from operations if one is presented.  The update also allows only the service cost component to be eligible for capitalization in assets when applicable.

The updated guidance is effective for reporting periods beginning after December 15, 2017. The update is to be applied retrospectively with respect to the presentation of service cost and non-service cost and prospectively with respect to applying the service cost only eligible for capitalization in assets guidance. Early adoption is permitted as of the first interim period of an annual period if an entity issues interim financial statements. This pronouncement will not impact the Company since it does not have any pension or postretirement benefit plans and has no intention to adopt such plans.

Business Segments

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

Our business segments are as follows:

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

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

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

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Please see below and Note 4 to the Consolidated Financial Statements for the three months ended March 31, 2017 and 2016 and as of March 31, 2017 and December 31, 2016 for additional information regarding segment information.

The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources.

FINANCIAL HIGHLIGHTS

Consolidated Condensed Results of Operations for the Three Months Ended March 31, 2017 and 2016

	(Unaudited)
	Three Months Ended March 31,					Amount Change
	2017		2016			2017 less 2016
Premiums	$	3,621,690	$	3,192,542		$	429,148
Net investment income		3,669,871		3,360,203			309,668
Net realized investment gains (losses)		166,506		(19,151	)		185,657
Other income		49,892		7,313			42,579
Total revenues		7,507,959		6,540,907			967,052
Benefits and claims		4,891,044		4,167,706			723,338
Expenses		2,267,398		2,024,995			242,403
Total benefits, claims and expenses		7,158,442		6,192,701			965,741
Income before federal income tax expense		349,517		348,206			1,311
Federal income tax expense		88,039		52,893			35,146
Net income	$	261,478	$	295,313		$	(33,835	)
Net income per common share basic and diluted	$	0.03	$	0.04		$	(0.01	)

Consolidated Condensed Financial Position as of March 31, 2017 and December 31, 2016 

	(Unaudited)				Amount Change
	March 31, 2017		December 31, 2016		2017 to 2016
Investment assets	$	292,919,167	$	255,214,510	$	37,704,657
Other assets		64,913,193		78,038,103		(13,124,910	)
Total assets	$	357,832,360	$	333,252,613	$	24,579,747
Policy liabilities	$	314,153,559	$	290,680,384	$	23,473,175
Deferred federal income taxes		993,422		693,470		299,952
Other liabilities		5,295,974		5,598,484		(302,510	)
Total liabilities		320,442,955		296,972,338		23,470,617
Shareholders' equity		37,389,405		36,280,275		1,109,130
Total liabilities and shareholders' equity	$	357,832,360	$	333,252,613	$	24,579,747
Shareholders' equity per common share	$	4.79	$	4.65	$	0.14

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Results of Operations – Three Months Ended March 31, 2017 and 2016

Revenues

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

Our revenues for the three months ended March 31, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,					Amount Change
	2017		2016			2017 less 2016
Premiums	$	3,621,690	$	3,192,542		$	429,148
Net investment income		3,669,871		3,360,203			309,668
Net realized investment gains (losses)		166,506		(19,151	)		185,657
Other income		49,892		7,313			42,579
Total revenues	$	7,507,959	$	6,540,907		$	967,052

The $967,052 increase in total revenues for the three months ended March 31, 2017 is discussed below.

Premiums

Our premiums for the three months ended March 31, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,				Amount Change
	2017		2016		2017 less 2016
Whole life and term first year	$	39,624	$	28,133	$	11,491
Whole life and term renewal		596,440		671,342		(74,902	)
Final expense first year		1,075,980		756,204		319,776
Final expense renewal		1,903,076		1,358,289		544,787
Supplementary contracts with life contingencies		6,570		378,574		(372,004	)
Total premiums	$	3,621,690	$	3,192,542	$	429,148

The $429,148 increase in premiums for the three months ended March 31, 2017 is primarily due to a $544,787 increase in final expense renewal premiums, $319,776 increase in final expense first year premiums and a $372,004 decrease in supplementary contracts with life contingencies.

The increase in final expense first year premiums represents management’s focus on expanding final expense production by contracting new, independent agents in expanded locations. The increase in final expense renewal premiums reflects the persistency of prior years’ final expense production. Our marketing efforts are focused on final expense and annuity production.

The decrease in supplementary contracts with life contingencies reflects a decrease in policyholder decisions to receive future payment streams during their remaining lifetime instead of a lump sum payment.

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Net Investment Income

The major components of our net investment income for the three months ended March 31, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,						Amount Change
	2017			2016			2017 less 2016
Fixed maturity securities	$	1,490,370		$	1,567,218		$	(76,848	)
Equity securities		5,072			7,182			(2,110	)
Other long-term investments		857,470			547,822			309,648
Mortgage loans		1,667,394			1,353,071			314,323
Policy loans		27,564			26,098			1,466
Real Estate		93,711			91,968			1,743
Short-term and other investments		110,286			72,270			38,016
Gross investment income		4,251,867			3,665,629			586,238
Investment expenses		(581,996	)		(305,426	)		276,570
Net investment income	$	3,669,871		$	3,360,203		$	309,668

The $586,238 increase in gross investment income for the three months ended March 31, 2017 is primarily due to the 2016 increase in investments in mortgage loans and other long-term investments. In the twelve months since March 31, 2016, we had increased investment in mortgage loans of $25.9 million and other long term investments of $16.5 million. The decrease in gross investment income from fixed maturity securities is primarily due to securities that have been called or matured and replaced with securities with lower yields.

The $276,570 increase in investment expenses for the three months ended March 31, 2017 is primarily related to increased production of investments in mortgage loans on real estate including the costs of the Company’s mortgage loan department that are fully assigned to investment expenses in 2017.

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Net Realized Investment Gains (Losses)

Our net realized investment gains (losses) result from sales of fixed maturity and equity securities available-for-sale, the sale of investment real estate and the early payoff of mortgage loans on real estate that the Company had acquired at a discount.

Our net realized investment gains (losses) for the three months ended March 31, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,					Amount Change
	2017		2016			2017 less 2016
Fixed maturity securities available-for-sale:
Sale proceeds	$	4,449,231	$	2,274,413		$	2,174,818
Amortized cost at sale date		4,285,212		2,295,671			1,989,541
Net realized gains (losses)	$	164,019	$	(21,258	)	$	185,277
Equity securities available-for-sale:
Sale proceeds	$	-	$	108,800		$	(108,800	)
Cost at sale date		-		110,268			(110,268	)
Net realized losses	$	-	$	(1,468	)	$	1,468
Mortgage loans on real estate:
Payments and early payoffs of mortgage loans	$	5,125,389	$	1,572,244		$	3,553,145
Principal collections		5,125,389		1,568,669			3,556,720
Net realized gains	$	-	$	3,575		$	(3,575	)
Investment real estate:
Sale proceeds	$	107,167	$	-		$	107,167
Carrying value at sale date		104,680		-			104,680
Net realized gains	$	2,487	$	-		$	2,487
Net realized investment gains (losses)	$	166,506	$	(19,151	)	$	185,657

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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 three months ended March 31, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,						Amount Change
	2017			2016			2017 less 2016
Benefits and claims
Increase in future policy benefits	$	959,805		$	1,358,144		$	(398,339	)
Death benefits		1,545,836			952,058			593,778
Surrenders		283,376			137,726			145,650
Interest credited to policyholders		2,035,054			1,653,720			381,334
Dividend, endowment and supplementary life contract benefits		66,973			66,058			915
Total benefits and claims		4,891,044			4,167,706			723,338
Expenses
Policy acquisition costs deferred		(2,414,719	)		(1,576,209	)		(838,510	)
Amortization of deferred policy acquisition costs		680,836			696,546			(15,710	)
Amortization of value of insurance business acquired		102,168			90,132			12,036
Commissions		2,244,910			1,280,086			964,824
Other underwriting, insurance and acquisition expenses		1,654,203			1,534,440			119,763
Total expenses		2,267,398			2,024,995			242,403
Total benefits, claims and expenses	$	7,158,442		$	6,192,701		$	965,741

The $965,741 increase in total benefits, claims and expenses for the three months ended March 31, 2017 is discussed below.

Benefits and Claims

The $723,338 increase in benefits and claims for the three months ended March 31, 2017 is primarily due to the following:

● $593,778 increase in death benefits primarily related to the settlement of seven additional whole life and term policy claims averaging $45,000, 32 additional final expense claims averaging $6,000 with the remaining increase attributed to an actuarial estimate of incurred but not reported claims.

● $381,334 increase in interest credited to policyholders is primarily due to an increase of approximately $67.2 million in the amount of policyholders’ account balances in the consolidated statement of financial position (increased deposits and interest credited in excess of withdrawals) since March 31, 2016.

● $145,650 increase in surrenders primarily corresponding to lapsation decisions of whole life and term policyholders.

● $398,339 decrease in future policy benefits primarily related to decreases in the number and amount of in force insurance related to the following products: modified premium whole life, traditional whole life and renewable and convertible term with either fully guaranteed or limited guaranteed premiums.

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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 life insurance policies and annuity contracts.

For the three months ended March 31, 2017 and 2016, capitalized costs were $2,414,719 and $1,576,209, respectively. Amortization of deferred policy acquisition costs for the three months ended March 31, 2017 and 2016 were $680,836 and $696,546, respectively.

The $838,510 increase in the 2017 acquisition costs deferred primarily relates to increased final expense and annuity production by appointed agents based upon expansion into additional states and recruiting of additional agents. There was a $15,710 decrease in the 2017 amortization of deferred acquisition costs.

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 $102,168 and $90,132 for the three months ended March 31, 2017 and 2016, respectively, resulting in a minimal increase of $12,036.

Commissions

Our commissions for the three months ended March, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,				Amount Change
	2017		2016		2017 less 2016
Annuity	$	718,911	$	211,649	$	507,262
Whole life and term first year		35,826		24,453		11,373
Whole life and term renewal		23,984		28,319		(4,335	)
Final expense first year		1,287,695		898,008		389,687
Final expense renewal		178,494		117,657		60,837
Total commissions	$	2,244,910	$	1,280,086	$	964,824

The $964,824 increase in commissions for the three months ended March 31, 2017 is primarily due to a $507,262 increase in annuity commissions that corresponds to a $19,725,882 increase in policyholders’ account deposits and a $389,687 increase in final expense first year commissions that correspond to the $319,776 increase in final expense first year premiums.

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Other Underwriting, Insurance and Acquisition Expenses

The $119,763 increase in other underwriting, insurance and acquisition expenses for the three months ended March 31, 2017 was primarily related to increased acquisition and maintenance costs associated with increased final expense and annuity production, increased third party administration fees primarily related to the increased number of policies in force and increased service requests, increased salaries and benefits due to increased staffing levels and increased salary and bonus levels that exceeded the costs of the Company’s mortgage loan department that are fully assigned to investment expenses in 2017.

Federal Income Taxes

FTFC files a consolidated federal income tax return with FTCC but does not file a consolidated tax return with TLIC or FBLIC. TLIC and FBLIC are taxed as life insurance companies under the provisions of the Internal Revenue Code. Life insurance companies must file separate tax returns until they have been a member of the consolidated filing group for five years. We continue to file consolidated life insurance company federal tax returns for TLIC and FBLIC. Certain items included in income reported for financial statement purposes are not included in taxable income for the current period, resulting in deferred income taxes.

For the three months ended March 31, 2016, current income tax expense was $3,298. Deferred federal income tax expense was $88,039 and $49,595 for the three months ended March 31, 2017 and 2016, respectively.

Net Income Per Common Share Basic and Diluted

Net income was $261,478 ($0.03 per common share basic and diluted) and $295,313 ($0.04 per common share basic and diluted) for the three months ended March 31, 2017 and 2016, respectively. Net income per common share basic and diluted is calculated using the weighted average number of common shares outstanding during the year. The weighted average outstanding and subscribed common shares basic and diluted for the three months ended March 31, 2017 and 2016 were 7,802,593.

Business Segments

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

The revenues and income before federal income taxes from our business segments for the three months ended March 31, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,				Amount Change
	2017		2016		2017 less 2016
Revenues:
Life insurance operations	$	4,184,653	$	3,745,244	$	439,409
Annuity operations		3,188,969		2,637,424		551,545
Corporate operations		134,337		158,239		(23,902	)
Total	$	7,507,959	$	6,540,907	$	967,052
Income before federal income taxes:
Life insurance operations	$	117,848	$	29,953	$	87,895
Annuity operations		160,414		228,256		(67,842	)
Corporate operations		71,255		89,997		(18,742	)
Total	$	349,517	$	348,206	$	1,311

44

Life Insurance Operations

The $439,409 increase in revenues from Life Insurance Operations for the three months ended March 31, 2017 is primarily due to the following:

● $429,148 increase in premiums

● $29,314 increase in net realized investment gains

● $6,918 increase in other income

● $25,971 decrease in net investment income

The $87,895 increased profitability from Life Insurance Operations for the three months ended March 31, 2017 is primarily due to the following:

● $429,148 increase in premiums

● $411,224 increase in policy acquisition costs deferred net of amortization

● $398,339 decrease in future policy benefits

● $42,846 decrease in other underwriting, insurance and acquisition expenses

● $29,314 increase in net realized investment gains

● $6,918 increase in other income

● $915 increase in dividend, endowment and supplementary life contract benefits

● $6,018 increase in amortization of value of insurance business acquired

● $25,971 decrease in net investment income

● $145,650 increase in surrenders

● $457,562 increase in commissions

● $593,778 increase in death benefits

Annuity Operations

The $551,545 increase in revenues from Annuity Operations for the three months ended March 31, 2017 is due to the following:

● $395,202 increase in net investment income

● $156,343 increase in net realized investment gains

The $67,842 decreased profitability from Annuity Operations for the three months ended March 31, 2017 is due to the following:

● $507,262 increase in commissions

● $381,334 increase in interest credited to policyholders

45

● $167,769 increase in other underwriting, insurance and acquisition expenses

● $6,018 increase in amortization of value of insurance business acquired

● $156,343 increase in net realized investment gains

● $395,202 increase in net investment income

● $442,996 increase in policy acquisition costs deferred net of amortization

Corporate Operations

The $23,902 decrease in revenues from Corporate Operations for the three months ended March 31, 2017 is due to $59,563 of decreased net investment income that exceeded $35,661 of increased other income from service fees.

The $18,742 decrease in Corporate Operations profitability for the three months ended March 31, 2017 is primarily due to $59,563 of decreased net investment income that exceeded $35,661 of increased other income and $5,160 of decreased operating expenses.

Consolidated Financial Condition

Our invested assets as of March 31, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)				Amount Change
	March 31, 2017		December 31, 2016		2017 less 2016
Assets
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $149,863,882 and $128,310,625 as of March 31, 2017 and December 31, 2016, respectively)	$	151,925,813	$	129,311,155	$	22,614,658
Available-for-sale equity securities at fair value (cost: $600,529 and $599,400 as of March 31, 2017 and December 31, 2016, respectively)		657,560		638,407		19,153
Mortgage loans on real estate		86,878,848		74,371,286		12,507,562
Investment real estate		2,365,621		2,506,673		(141,052	)
Policy loans		1,576,307		1,598,116		(21,809	)
Other long-term investments		49,515,018		46,788,873		2,726,145
Total investments	$	292,919,167	$	255,214,510	$	37,704,657

46

The $22,614,658 and $3,529,825 increases in fixed maturity available-for-sale securities for the three months ended March 31, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,
	2017			2016
	Amount			Amount
Fixed maturity securities, available-for-sale, beginning	$	129,311,155		$	134,556,027
Purchases		26,056,647			2,222,996
Unrealized appreciation		1,061,041			3,807,398
Net realized investment gains (losses)		164,019			(21,258	)
Sales proceeds		(1,679,231	)		(1,136,413	)
Maturities		(2,770,000	)		(1,138,000	)
Premium amortization		(217,818	)		(204,898	)
Increase		22,614,658			3,529,825
Fixed maturity securities, available-for-sale, ending	$	151,925,813		$	138,085,852

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 Income (Loss).” The available-for-sale fixed maturity securities portfolio is invested primarily in a variety of companies, U. S. government and government agencies, states and political subdivisions and foreign securities.

The $19,153 increase and $110,866 decrease in equity securities available-for-sale for the three months ended March 31, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,
	2017		2016
	Amount		Amount
Equity securities, available-for-sale, beginning	$	638,407	$	892,800
Purchases		1,129		4,552
Sales proceeds		-		(108,800	)
Unrealized appreciation (depreciation)		18,024		(5,150	)
Net realized investment losses		-		(1,468	)
Increase (decrease)		19,153		(110,866	)
Equity securities, available-for-sale, ending	$	657,560	$	781,934

Equity securities available-for-sale are also 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 Income (Loss).” The available-for-sale equity securities portfolio is invested in a variety of companies.

47

The $12,507,562 and $2,156,864 increases in mortgage loans on real estate for the three months ended March 31, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,
	2017			2016
	Amount			Amount
Mortgage loans on real estate, beginning	$	74,371,286		$	58,774,918
Purchases		17,643,638			3,710,052
Discount accretion		46,164			29,101
Net realized investment gains		-			3,575
Payments		(5,125,389	)		(1,572,244	)
Increase in allowance for bad debts		(42,054	)		(6,369	)
Amortization of loan origination fees		(14,797	)		(7,251	)
Increase		12,507,562			2,156,864
Mortgage loans on real estate, ending	$	86,878,848		$	60,931,782

The $141,052 and $36,372 decreases in investment real estate for the three months ended March 31, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,
	2017			2016
	Amount			Amount
Investment real estate, beginning	$	2,506,673		$	2,326,558
Sales proceeds		(107,167	)		-
Depreciation of building		(36,372	)		(36,372	)
Net realized investment gains		2,487			-
Decrease		(141,052	)		(36,372	)
Investment real estate, ending	$	2,365,621		$	2,290,186

The $2,726,145 and $1,433,741 increases in other long-term investments (composed of lottery receivables) for the three months ended March 31, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,
	2017			2016
	Amount			Amount
Other long-term investments, beginning	$	46,788,873		$	31,566,927
Purchases		3,648,817			2,024,317
Accretion of discount		857,471			550,878
Payments		(1,780,143	)		(1,141,454	)
Increase		2,726,145			1,433,741
Other long-term investments, ending	$	49,515,018		$	33,000,668

48

Our assets other than invested assets as of March 31, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)				Amount Change
	March 31, 2017		December 31, 2016		2017 less 2016
Cash and cash equivalents	$	25,962,536	$	34,223,945	$	(8,261,409	)
Accrued investment income		2,542,754		2,176,770		365,984
Recoverable from reinsurers		1,211,881		1,258,938		(47,057	)
Agents' balances and due premiums		1,505,643		1,419,250		86,393
Deferred policy acquisition costs		19,906,373		18,191,990		1,714,383
Value of insurance business acquired		5,806,667		5,908,835		(102,168	)
Other assets		7,977,339		14,858,375		(6,881,036	)
Assets other than investment assets	$	64,913,193	$	78,038,103	$	(13,124,910	)

The $8,261,409 decrease in cash and cash equivalents is discussed below in the “Liquidity and Capital Resources” section where cash flows are addressed.

The $365,984 increase in accrued investment income is due to the $37,704,657 increase in invested assets during the first three months of 2017.

The $86,393 increase in 2017 agents’ balances and due premiums is due to a $120,760 increase in agents’ balances and $34,367 decrease in due premiums. The increase in agents’ balances is due to increased production of final expense policies resulting in increased advances of commissions to agents. The Company closely monitors commission advances and has not historically experienced, nor expects to experience, future collection problems.

Our other assets as of March 31, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)				Amount Change
	March 31, 2017		December 31, 2016		2017 less 2016
Advances to mortgage loan originator	$	3,730,157	$	5,207,380	$	(1,477,223	)
Federal and state income taxes recoverable		1,973,302		2,220,566		(247,264	)
Notes receivable		449,002		464,366		(15,364	)
Accrual of mortgage loan and long-term investment payments due		1,685,925		511,585		1,174,340
Receivable for securities sold		-		6,288,274		(6,288,274	)
Guaranty funds		70,860		78,711		(7,851	)
Other receivables, prepaid assets and deposits		68,093		87,493		(19,400	)
Total other assets	$	7,977,339	$	14,858,375	$	(6,881,036	)

As of March 31, 2017, the Company had no security sales where the trade date and settlement date were in different financial reporting periods compared to $6,288,274 of security sales overlapping financial reporting periods as of December 31, 2016.

There was a $1,477,223 decrease in advances from one mortgage loan originator who acquires residential mortgage loans for our life companies. 

There was a $1,174,340 increase in the accrual of mortgage loans and long-term investment payments due based upon the scheduled timing of investment payments remitted by the third party servicers. Those cash payments were received in April 2017.

On April 15, 2017, the Company renewed its previous one-year loan of $400,000 to its former Chairman. The renewed loan also has a term of one year and a contractual interest rate of 5.00%. The loan is collateralized by 100,000 shares of the Company’s Class A Common stock owned by the former Chairman.

49

Our liabilities as of March 31, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)				Amount Change
	March 31, 2017		December 31, 2016		2017 less 2016
Policy liabilities
Policyholders' account balances	$	267,911,869	$	245,346,489	$	22,565,380
Future policy benefits		45,222,673		44,266,227		956,446
Policy claims		938,779		997,814		(59,035	)
Other policy liabilities		80,238		69,854		10,384
Total policy liabilities		314,153,559		290,680,384		23,473,175
Deferred federal income taxes		993,422		693,470		299,952
Other liabilities		5,295,974		5,598,484		(302,510	)
Total liabilities	$	320,442,955	$	296,972,338	$	23,470,617

The $22,565,380 and $3,067,444 increases in policyholders’ account balances for the three months ended March 31, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,
	2017			2016
	Amount			Amount
Policyholders' account balances, beginning	$	245,346,489		$	197,688,616
Deposits		25,052,131			5,326,249
Withdrawals		(4,521,805	)		(3,912,525	)
Interest credited		2,035,054			1,653,720
Increase		22,565,380			3,067,444
Policyholders' account balances, ending	$	267,911,869		$	200,756,060

Annuity deposits increased by $19,725,882 from $5,326,249 for the three months ended March 31, 2016 to $25,052,131 for the three months ended March 31, 2017. This increase in annuity deposits is due to the annuity contract provisions that are sought by policyholders especially current interest rates paid to policyholders and the minimum guaranteed interest rates during the contractual period.

The $956,446 increase in future policy benefits during the three months ended March 31, 2017 is primarily related to the production of new life insurance policies, initial sales of policies to older age bands (resulting in increased mortality reserve charges) and the aging of existing policies.

The $299,952 increase in deferred federal income taxes during the three months ended March 31, 2017 was due to $211,913 of increased deferred federal income taxes on the unrealized appreciation of fixed maturity and equity securities available-for-sale and $88,039 of operating deferred federal tax expense.

50

Our other liabilities as of March 31, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)						Amount Change
	March 31, 2017			December 31, 2016			2017 less 2016
Suspense accounts payable	$	4,434,220		$	4,684,726		$	(250,506	)
Accrued expenses payable		490,284			527,938			(37,654	)
Payable for securities purchased		216,656			234,225			(17,569	)
Guaranty fund assessments		60,000			60,000			-
Unearned investment income		70,183			48,466			21,717
Deferred revenue		37,906			29,632			8,274
Unclaimed funds		37,198			23,057			14,141
Other payables, withholdings and escrows		(50,473	)		(9,560	)		(40,913	)
Total other liabilities	$	5,295,974		$	5,598,484		$	(302,510	)

The $250,506 decrease in suspense accounts payable is primarily due to decreased deposits on policy applications that had not been issued as of the financial reporting date.

Liquidity and Capital Resources

Our operations have been financed primarily through the private placement of equity securities and intrastate public stock offerings. Through March 31, 2017, 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.

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

As of March 31, 2017, we had cash and cash equivalents totaling $25,962,536. As of March 31, 2017, cash and cash equivalents of $16,414,642 and $4,823,451, respectively, of the total $25,962,536 were held by TLIC and FBLIC and may not be available for use by FTFC due to the required pre-approval by the OID and Missouri Department of Insurance 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 capacity for TLIC to pay a dividend up to $1,852,287 in 2017 without prior approval. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $914,179 in 2017 without prior approval. FBLIC paid dividends of $1,000,000 to TLIC in 2016. Dividends paid by FBLIC are eliminated in consolidation. TLIC has paid no dividends to FTFC.

51

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 $22,125,813 and $22,117,921 as of March 31, 2017 and December 31, 2016, 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 three months ended March 31, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,						Amount Change
	2017			2016			2017 less 2016
Net cash provided by operating activities	$	825,861		$	2,065,935		$	(1,240,074	)
Net cash used in investing activities		(29,617,596	)		(2,826,003	)		(26,791,593	)
Net cash provided by financing activities		20,530,326			1,413,724			19,116,602
Increase (decrease) in cash and cash equivalents		(8,261,409	)		653,656			(8,915,065	)
Cash and cash equivalents, beginning of period		34,223,945			9,047,586			25,176,359
Cash and cash equivalents, end of period	$	25,962,536		$	9,701,242		$	16,261,294

The $825,861 and $2,065,935 of cash provided by operating activities for the three months ended March 31, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Three Months Ended March 31,						Amount Change
	2017			2016			2017 less 2016
Premiums collected	$	3,666,596		$	3,197,616			468,980
Net investment income collected		1,465,450			3,177,962			(1,712,512	)
Other income collected		49,892			7,313			42,579
Death benefits paid		(1,557,814	)		(870,144	)		(687,670	)
Surrenders paid		(283,376	)		(135,744	)		(147,632	)
Dividends and endowments paid		(67,129	)		(68,317	)		1,188
Commissions paid		(2,365,670	)		(1,360,858	)		(1,004,812	)
Other underwriting, insurance and acquisition expenses paid		(1,574,517	)		(1,477,591	)		(96,926	)
Taxes (paid) recovered		247,264			(53,317	)		300,581
(Advances to) payments from mortgage loan originator		1,477,223			(1,722,181	)		3,199,404
Deposited policy applications unissued (issued)		(250,506	)		823,422			(1,073,928	)
Increase in short-term investments		-			549,794			(549,794	)
Increase (decrease) in policy loans		21,809			(8,261	)		30,070
Other		(3,361	)		6,241			(9,602	)
Increase in cash provided by operating activities	$	825,861		$	2,065,935		$	(1,240,074	)

Please see the statements of cash flows for the three months ended March 31, 2017 and 2016 for a summary of the components of net cash used in investing activities and net cash provided by financing activities.

52

Our shareholders’ equity as of March 31, 2017 and December 31, 2016 is summarized as follows:

	(Unaudited)						Amount Change
	March 31, 2017			December 31, 2016			2017 less 2016
Common stock, par value $.01 per share (20,000,000 shares authorized, 8,050,173 issued as of March 31, 2017 and December 31, 2016 and 7,802,593 outstanding as of March 31, 2017 and December 31, 2016)	$	80,502		$	80,502		$	-
Additional paid-in capital		28,684,598			28,684,598			-
Treasury stock, at cost (247,580 shares as of March 31, 2017 and December 31, 2016)		(893,947	)		(893,947	)		-
Accumulated other comprehensive income		1,666,328			818,676			847,652
Accumulated earnings		7,851,924			7,590,446			261,478
Total shareholders' equity	$	37,389,405		$	36,280,275		$	1,109,130

The increase in shareholders’ equity of $1,109,130 for the three months ended March 31, 2017 is due to $847,652 of other comprehensive income and net income of $261,478.

Equity per common share outstanding increased 3.0% from $4.65 per share as of December 31, 2016 to $4.79 per share as of March 31, 2017, based upon 7,802,593 common shares outstanding as of both March 31, 2017 and December 31, 2016.

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 2017 or 2016. 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 appreciation (depreciation) on available-for-sale securities of $2,118,962 and $1,039,897 as of March 31, 2017 and December 31, 2016, respectively, prior to the impact of income taxes and deferred acquisition cost adjustments. An increase of $1,243,084 in unrealized gains arising for the three months ended March 31, 2017 has been offset by the 2017 net realized investment gains of $164,019 originating from the sale and call activity for fixed maturity securities available-for-sale resulting in net unrealized gains on investments of $1,079,065.

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.

53

As of March 31, 2017, cash and cash equivalents, 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 13.3% 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 2016, 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, 2017, the Company entered into a revised advance agreement with one loan originator. As of March 31, 2017, the Company has outstanding advances to this loan originator totaling $3,730,157. The advances are secured by $4,437,934 of residential mortgage loans on real estate that are assigned to the Company. The Company has committed to fund up to an additional $1,769,843 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, 2017, 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 March 31, 2017, $544,016 of additional and secured residential mortgage loan balances on real estate are held in escrow by the Company.  As of March 31, 2017, $395,629 of that escrow amount is available to the Company as additional collateral on $3,730,157 of advances to the loan originator. The remaining March 31, 2017 escrow amount of $148,387 is available to the Company as additional collateral on its investment of $29,677,438 in residential mortgage loans on real estate.

We are not aware of any commitments or unusual events that could materially affect our capital resources. We are not aware of any current recommendations by any regulatory authority which, if implemented, would have a material adverse effect on our liquidity, capital resources or operations. We believe that our existing cash and cash equivalents as of March 31, 2017 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.

54

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, including and in connection with our divestiture or winding down of businesses such as FTCC;

● 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.

55

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Changes to Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the three months ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

A lawsuit filed by the Company and Chairman, President and Chief Executive Officer, Gregg E. Zahn, against former Company Board of Directors member Wayne Pettigrew and Mr. Pettigrew's company, Group & Pension Planners, Inc. (the "Defendants"), concluded on February 17, 2017. The lawsuit was filed in the District Court of Tulsa County, Oklahoma (Case No. CJ-2013-03385). In the lawsuit, the Company alleged that Mr. Pettigrew had defamed the Company by making untrue statements to certain shareholders of the Company, to the press and to regulators of the state of Oklahoma and had breached his fiduciary duties.

The jury concluded that Mr. Pettigrew, while still a member of the Company’s Board of Directors, did, in fact, make untrue statements regarding the Company and Mr. Zahn and committed breaches of his fiduciary duties to the Company and awarded it $800,000 of damages against Mr. Pettigrew. In addition, the jury found that Mr. Pettigrew had defamed Mr. Zahn and intentionally inflicted emotional distress on Mr. Zahn and awarded Mr. Zahn $3,500,000 of damages against Mr. Pettigrew.

Mr. Pettigrew can appeal this decision by the jury that will require him to post a bond in the amount of the total judgment of $4,300,000. Should Mr. Pettigrew fail to post such a bond, the Company and Mr. Zahn will be permitted to execute on Mr. Pettigrew's assets.

In addition to the damages awarded by the jury, the Company and Mr. Zahn have initiated steps to aggressively communicate the correction of the untrue statements to outside parties.

Prior to its acquisition by TLIC, FBLIC developed, marketed, and sold life insurance products known as “Decreasing Term to 95” policies. On January 17, 2013, FBLIC’s Board of Directors voted that, effective March 1, 2013, it was not approving, and therefore was not providing, a dividend for the Decreasing Term to 95 policies. On November 22, 2013, three individuals who owned Decreasing Term to 95 policies filed a Petition in the Circuit Court of Greene County, Missouri asserting claims against FBLIC relating to FBLIC’s decision to not provide a dividend under the Decreasing Term to 95 policies.

On June 18, 2015, plaintiffs filed an amended petition. Like the original Petition, the amended Petition asserts claims for breach of contract and anticipatory breach of contract, and alleges that FBLIC breached, and will anticipatorily breach, the Decreasing Term to 95 policies of insurance by not providing a dividend sufficient to purchase a one year term life insurance policy which would keep the death benefit under the Decreasing Term to 95 policies the same as that provided during the first year of coverage under the policy.

56

It also asserts claims for negligent misrepresentation, fraud, and violation of the Missouri Merchandising Practices Act (“MMPA”). It alleges that during its sale of the Decreasing Term to 95 policies, FBLIC represented that the owners of these policies would always be entitled to dividends to purchase a one-year term life insurance policy and that the owners would have a level death benefit without an increase in premium.

The main difference between the original Petition and the amended Petition is that the amended Petition also seeks equitable relief based on two new theories: that the Decreasing Term to 95 policies should be reformed so that they will provide a level death benefit for a level premium payment until the policyholder reaches 95 years of age; and alternatively, Count VIII of the amended Petition asks the Court to (1) find that the dividend provisions in the Decreasing Term to 95 policies violate Missouri law, specifically, § 376.360 RSMo.; (2) order that the policies are void ab initio; and (3) order that FBLIC return all premiums collected under these policies.

In addition, as part of the MMPA claim, plaintiffs are now alleging that FBLIC undertook a fraudulent scheme to sell the Decreasing Term to 95 policies as a level premium for level benefit even though FBLIC never intended to pay dividends for the life of the policies and that part of this alleged fraudulent scheme included having a dividend option which is not allowed under Missouri law. FBLIC denies the allegations in the amended Petition and will continue to defend against them.

On February 1, 2016, the plaintiffs asked that the Court certify the case as a class action. With their motion, Plaintiffs filed an affidavit from an actuary stating the opinion that FBLIC has collected at least $2,548,939 in premiums on the Decreasing Term to 95 policies. This presumably is the amount that Plaintiffs will seek to be refunded to policyholders if the policies are declared void. FBLIC opposed the request for class certification.

On July 21, 2016, the Court certified three classes to maintain the claims for breach of contract, anticipatory breach of contract, violation of the MMPA, reformation, and to void the Decreasing Term to 95 policies. On August 1, 2016, FBLIC filed a Petition for Leave to Appeal with the Missouri Court of Appeals, Southern District asking for permission to appeal the Court’s class certification. The Petition for Leave to Appeal was denied. FBLIC intends to defend vigorously against the class and individual allegations. The Company is unable to determine the potential magnitude of the claims in the event of a final certification and the plaintiffs prevailing on this substantive action.

On May 13, 2015, FBLIC filed a Counterclaim against Doyle Nimmo seeking indemnity and seeking damages for breach of fiduciary duty in the event FBLIC is liable under Plaintiffs’ underlying claims. In addition, on April 29, 2015, TLIC filed a lawsuit against Doyle Nimmo and Michael Teel alleging that they were liable for violations of federal and state securities laws for failing to disclose information relating to the Decreasing Term to 95 policies. This lawsuit is currently pending in the District Court for the Western District of Missouri (hereinafter the “Federal Lawsuit”). No claims have been made against TLIC in the Federal Lawsuit. The Federal Lawsuit has been stayed pending resolution of the lawsuit against FBLIC in the Circuit Court of Greene County, Missouri.

On September 28, 2015, Doyle Nimmo filed a Third-Party Petition for Declaratory Judgment (and Other Relief) against FBLIC. In this Third-Party Petition, Doyle Nimmo, a former director for FBLIC, seeks a declaratory judgment that the corporate by-laws of FBLIC require FBLIC to indemnify him for attorney’s fees, judgments, costs, fines, and amounts paid in defense of both the Counterclaim and the Federal Lawsuit and seeks a monetary judgment for the amounts expended by Doyle Nimmo in such defense. Prior to Doyle Nimmo’s filing of the Third-Party Petition, FBLIC’s Board of Directors executed a Unanimous Written Consent in Lieu of a Special Meeting in which it denied Doyle Nimmo’s tender of defense and request for indemnification finding Mr. Nimmo did not meet the applicable standard of conduct for indemnification under Missouri law. FBLIC intends to vigorously defend the Third-Party Petition on these grounds. The Company is unable to determine the potential magnitude of the claims in the event Doyle Nimmo prevails on his Third-Party Petition.

As stated above, FBLIC filed a Counterclaim and TLIC filed the Federal Lawsuit against Doyle Nimmo. Doyle Nimmo submitted a claim and tendered the defense of these claims to Utica Mutual Insurance Company under a policy providing Insurance Agents and Brokers Errors and Omissions Liability coverage. On November 4, 2015, Utica Mutual Insurance Company filed a lawsuit against Doyle Nimmo and other interested parties, including FBLIC and TLIC. The lawsuit is pending in the District Court for the Western District of Missouri and asks the Court to determine whether the Errors and Omissions policy provides coverage for the lawsuits filed against Doyle Nimmo. Utica Mutual Insurance Company does not seek a monetary judgment against FBLIC or TLIC. All parties to the lawsuit pending in the Circuit Court of Greene County, Missouri agreed to waive their right to a trial by jury and have all claims submitted to the Judge for decision. The trial in that case is scheduled to begin on November 27, 2017.

57

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

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

Item 6. Exhibits

31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1 Section 1350 Certification of Principal Executive Officer

32.2 Section 1350 Certification of Principal Financial Officer

101.INS** XBRL Instance

101.SCH** XBRL Taxonomy Extension Schema

101.CAL** XBRL Taxonomy Extension Calculation

101.DEF** XBRL Taxonomy Extension Definition

101.LAB** XBRL Taxonomy Extension Labels

101.PRE** XBRL Taxonomy Extension Presentation

**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.

58

SIGNATURES

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

	FIRST TRINITY FINANCIAL CORPORATION   an Oklahoma corporation
May 11, 2017	By:	/s/ Gregg E. Zahn
		Gregg E. Zahn, President and Chief Executive Officer
May 11, 2017	By:	/s/ Jeffrey J. Wood
		Jeffrey J. Wood, Chief Financial Officer

59

EX-31.1

EXHIBIT NO. 31.1

CERTIFICATION

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

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

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant, and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter, the registrant’s fourth quarter in the case of an annual report, that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 11, 2017	By:	/s/ Gregg E. Zahn
	Gregg E. Zahn, President and Chief Executive Officer

EX-31.2

EXHIBIT NO. 31.2

CERTIFICATION

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

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

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant, and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter, the registrant’s fourth quarter in the case of an annual report, that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 11, 2017	By:	/s/ Jeffrey J. Wood
	Jeffrey J. Wood, Chief Financial Officer

EX-32.1

EXHIBIT NO. 32.1

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

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

To my knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 11, 2017	By:	/s/ Gregg E. Zahn
	Gregg E. Zahn, President and Chief Executive Officer

EX-32.2

EXHIBIT NO. 32.2

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

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

To my knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 11, 2017	By:	/s/ Jeffrey J. Wood
	Jeffrey J. Wood, Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 08, 2017
Document Information [Line Items]
Entity Registrant Name	First Trinity Financial Corp.
Entity Central Index Key	0001395585
Trading Symbol	ftfc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		7,802,593
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Statements of Financial Position (Current Period Unaudited) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $149,863,882 and $128,310,265 as of March 31, 2017 and December 31, 2016, respectively)	$ 151,925,813	$ 129,311,155
Available-for-sale equity securities at fair value (cost: $600,529 and $599,400 as of March 31, 2017 and December 31, 2016, respectively)	657,560	638,407
Mortgage loans on real estate	86,878,848	74,371,286
Investment real estate	2,365,621	2,506,673
Policy loans	1,576,307	1,598,116
Other long-term investments	49,515,018	46,788,873
Total investments	292,919,167	255,214,510
Cash and cash equivalents	25,962,536	34,223,945
Accrued investment income	2,542,754	2,176,770
Recoverable from reinsurers	1,211,881	1,258,938
Agents' balances and due premiums	1,505,643	1,419,250
Deferred policy acquisition costs	19,906,373	18,191,990
Value of insurance business acquired	5,806,667	5,908,835
Other assets	7,977,339	14,858,375
Total assets	357,832,360	333,252,613
Policy liabilities
Policyholders' account balances	267,911,869	245,346,489
Future policy benefits	45,222,673	44,266,227
Policy claims	938,779	997,814
Other policy liabilities	80,238	69,854
Total policy liabilities	314,153,559	290,680,384
Deferred federal income taxes	993,422	693,470
Other liabilities	5,295,974	5,598,484
Total liabilities	320,442,955	296,972,338
Shareholders' equity
Common stock, par value $.01 per share (20,000,000 shares authorized, 8,050,173 issued as of March 31, 2017 and December 31, 2016 and 7,802,593 outstanding as of March 31, 2017 and December 31, 2016)	80,502	80,502
Additional paid-in capital	28,684,598	28,684,598
Treasury stock, at cost (247,580 shares as of March 31, 2017 and December 31, 2016)	(893,947)	(893,947)
Accumulated other comprehensive income	1,666,328	818,676
Accumulated earnings	7,851,924	7,590,446
Total shareholders' equity	37,389,405	36,280,275
Total liabilities and shareholders' equity	$ 357,832,360	$ 333,252,613

XML

Consolidated Statements of Financial Position (Current Period Unaudited) (Parentheticals) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Available-for-sale fixed maturity securities at cost	$ 149,863,882	$ 128,310,265
Available-for-sale equity securities at cost	$ 600,529	$ 599,400
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	8,050,173	8,050,173
Common stock, shares outstanding (in shares)	7,802,593	7,802,593
Treasury stock, shares (in shares)	247,580	247,580

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues
Premiums	$ 3,621,690	$ 3,192,542
Net investment income	3,669,871	3,360,203
Net realized investment gains (losses)	166,506	(19,151)
Other income	49,892	7,313
Total revenues	7,507,959	6,540,907
Benefits and claims
Increase in future policy benefits	959,805	1,358,144
Death benefits	1,545,836	952,058
Surrenders	283,376	137,726
Interest credited to policyholders	2,035,054	1,653,720
Dividend, endowment and supplementary life contract benefits	66,973	66,058
Total benefits and claims	4,891,044	4,167,706
Policy acquisition costs deferred	(2,414,719)	(1,576,209)
Amortization of deferred policy acquisition costs	680,836	696,546
Amortization of value of insurance business acquired	102,168	90,132
Commissions	2,244,910	1,280,086
Other underwriting, insurance and acquisition expenses	1,654,203	1,534,440
Total expenses	2,267,398	2,024,995
Total benefits, claims and expenses	7,158,442	6,192,701
Income before total federal income tax expense	349,517	348,206
Current federal income tax expense		3,298
Deferred federal income tax expense	88,039	49,595
Total federal income tax expense	88,039	52,893
Net income	$ 261,478	$ 295,313
Net income per common share basic and diluted (in dollars per share)	$ 0.03	$ 0.04

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Net income		$ 261,478	$ 295,313
Other Comprehensive Income (loss)
Total net unrealized gains arising during the period		1,243,084	3,779,522
Less net realized investment gains (losses)	[1]	164,019	(22,726)
Net unrealized gains		1,079,065	3,802,248
Less adjustment to deferred acquisition costs		19,500	60,130
Other comprehensive income before income tax expense		1,059,565	3,742,118
Income tax expense		211,913	748,423
Total other comprehensive income		847,652	2,993,695
Total comprehensive income		$ 1,109,130	$ 3,289,008

[1] These items appear within net realized investment gains (losses) in the consolidated statement of operations.

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2015	$ 80,502	$ 28,684,598	$ (893,947)	$ (2,655,817)	$ 4,999,707	$ 30,215,043
Comprehensive income:
Net income					295,313	295,313
Other comprehensive income				2,993,695		2,993,695
Balance at Mar. 31, 2016	80,502	28,684,598	(893,947)	337,878	5,295,020	33,504,051
Balance at Dec. 31, 2015	80,502	28,684,598	(893,947)	(2,655,817)	4,999,707	30,215,043
Balance at Dec. 31, 2016	80,502	28,684,598	(893,947)	818,676	7,590,446	36,280,275
Comprehensive income:
Net income					261,478	261,478
Other comprehensive income				847,652		847,652
Balance at Mar. 31, 2017	80,502	28,684,598	(893,947)	1,666,328	7,851,924	37,389,405
Balance at Dec. 31, 2016	$ 80,502	$ 28,684,598	$ (893,947)	$ 818,676	$ 7,590,446	$ 36,280,275

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities
Net income	$ 261,478	$ 295,313
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for depreciation	36,531	36,530
Accretion of discount on investments	(685,817)	(375,081)
Net realized investment losses (gains)	(166,506)	19,151
Amortization of deferred policy acquisition costs	680,836	696,546
Policy acquisition costs deferred	(2,414,719)	(1,576,209)
Amortization of loan origination fees	14,797	7,251
Amortization of value of insurance business acquired	102,168	90,132
Allowance for mortgage loan losses	42,054	6,369
Deferred federal income tax expense	88,039	49,595
Interest credited to policyholders	2,035,054	1,653,720
Change in assets and liabilities:
Accrued investment income	(365,984)	(68,967)
Policy loans	21,809	(8,261)
Short-term investments		549,795
Recoverable from reinsurers	47,057	(8,587)
Agents' balances and due premiums	(86,393)	(66,883)
Other assets (excludes depreciation of $159 in 2017 and change in receivable for securities sold of $6,288,274 and ($1,904) in 2017 and 2016, respectively.	592,603	(1,441,577)
Future policy benefits	956,446	1,362,476
Policy claims	(59,035)	90,501
Other policy liabilities	10,384	(2,972)
Other liabilities (exclude change in payable for securities purchased of ($17,569) and $40,907 in 2017 and 2016, respectively.	(284,941)	757,093
Net cash provided by operating activities	825,861	2,065,935
Investing activities
Purchases of fixed maturity securities available-for-sale	(26,056,647)	(2,222,996)
Maturities of fixed maturity securities available-for-sale	2,770,000	1,138,000
Sales of fixed maturity securities available-for-sale	1,679,231	1,136,413
Purchases of equity securities available-for-sale	(1,129)	(4,552)
Sales of equity securities available-for-sale		108,800
Purchases of mortgage loans	(17,643,638)	(3,710,052)
Payments on mortgage loans	5,125,389	1,572,244
Purchases of other long-term investments	(3,648,817)	(2,024,317)
Payments on other long-term investments	1,780,143	1,141,454
Sale of real estate	107,167
Net change in receivable and payable for securities sold and purchased	6,270,705	39,003
Net cash used in investing activities	(29,617,596)	(2,826,003)
Financing activities
Policyholders' account deposits	25,052,131	5,326,249
Policyholders' account withdrawals	(4,521,805)	(3,912,525)
Net cash provided by financing activities	20,530,326	1,413,724
Increase (decrease) in cash	(8,261,409)	653,656
Cash and cash equivalents, beginning of period	34,223,945	9,047,586
Cash and cash equivalents, end of period	$ 25,962,536	$ 9,701,242

XML

Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Depreciation	$ 159
Change in receivable for securities sold	6,288,274	$ (1,904)
Change in payable for securities purchased	$ (17,569)	$ 40,907

XML

Note 1 - Organization and Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

1.

Organization and Significant Accounting Policies

Nature of Operations

First Trinity Financial Corporation (the “Company” or “FTFC”) is the parent holding company of Trinity Life Insurance Company (“TLIC”), Family Benefit Life Insurance Company (“FBLIC”) and First Trinity Capital Corporation (“FTCC”). 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 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 Illinois, Kansas, Kentucky, Nebraska, North Dakota, Ohio, Oklahoma and Texas. FBLIC is licensed in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia.

The Company owns

100%

of FTCC that was incorporated in

2006,

and began operations in

January

2007.

FTCC provided financing for casualty insurance premiums for individuals and companies and was licensed to conduct premium financing business in the states of Alabama, Arkansas, Louisiana, Mississippi and Oklahoma. FTCC has made no premium financing loans since

June

30,

2012.

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.

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.

Acquisition

s

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 the Oklahoma Insurance Department (“OID”). This surplus note is eliminated in consolidation.

On

August

31,

2009,

two

of the Company’s subsidiaries, Trinity Life Insurance Company (“Old TLIC”) and FLAC, were merged, with FLAC being the surviving company. Immediately following the merger, FLAC changed its name to TLIC.

On

December

28,

2011,

TLIC acquired

100%

of the outstanding common stock of FBLIC from FBLIC’s shareholders. The acquisition of FBLIC was accounted for as a purchase. The aggregate purchase price for the acquisition of FBLIC was

$13,855,129.

The acquisition of FBLIC was financed with the working capital of TLIC.

On

April

28,

2015,

the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of

$3,644,839

(including cash), assumed liabilities of

$3,055,916

and recorded a gain on reinsurance assumption of

$588,923.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included.

The

results of operations for the

three

months ended

March

31,

2017

are not necessarily indicative of the results to be expected for the year ended

December

31,

2017

or for any other interim period or for any other future year. Certain financial information which is normally included in notes to consolidated financial statements prepared in accordance with U.S. GAAP, but which is not required for interim reporting purposes, has been condensed or omitted. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company's report on Form

10

-K for the year ended

December

31,

2016.

Principles of Consolidation

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

Reclassifications

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

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

Common stock is fully paid, non-assessable and has a par value of

$.01

per share.

Treasury Stock

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.

Subsequent Events

Management has evaluated all events subsequent to

March

31,

2017

through the date that these financial statements have been issued.

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In

May

2014,

the Financial Accounting Standards Board ("FASB") issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance:

(1)

 identify the contract(s) with a customer;

(2)

 identify the performance obligations in the contract;

(3)

 determine the transaction price;

(4)

 allocate the transaction price to the performance obligations in the contract and

(5)

 recognize revenue when, or as, the entity satisfies a performance obligation.

In

July

 

2015,

the FASB deferred the effective date of the updated guidance on revenue recognitionby

one

year to the quarter ending

March

 

31,

2018.

  The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

In

August

2014,

the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is not alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions.

The guidance is effective for annual periods ending after

December

 

15,

2016,

and interim and annual periods thereafter. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity since there are no uncertainties about the Company’s ability to continue as a going concern.

Recognition and Measurement of Financial Assets and Financial Liabilities

In

January

2016,

the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after

December

15,

2017.

The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is not permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss). The effect of the adoption of this guidance on the Company’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods, the existence of a deferred tax asset related to available-for-sale securities in future periods and the economic conditions at the time of that future adoption.

Leases

In

February

2016,

the FASB issued updated guidance regarding leases that generally requires the lessee and lessor to recognize lease assets and lease liabilities on the statement of financial position. A lessee should recognize on the statement of financial position a liability to make lease payments and an asset representing its right-to-use the underlying assets for the lease term. Optional payments to extend the lease or purchase the underlying leased asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise the option(s).

If the lease has a term of

12

months or less, a lessee can make an election to recognize lease expenses for such leases on a straight-line basis over the lease term. There is a differentiation between finance leases and operating leases for the lessee in the statements of operations and cash flows. Finance leases recognize interest on the lease liability separately from the right-to-use the asset whereas an operating lease recognizes a single lease cost allocated over the lease term on a generally straight-line basis. All cash payments are within operating activities in the statement of cash flows except finance leases classify repayments of the principal portion of the lease liability within financing activities.

The accounting applied by the lessor is largely unchanged from that applied under previous U.S. GAAP. Key aspects of the lessor accounting model, however, were aligned with the revenue recognition guidance of Codification Topic

606.

The previous accounting model for leverage leases continues to apply only to those leveraged leases that commenced before the effective date of Codification Update

2016

-

02

Leases (Topic

842).

Entities will generally continue to account for leases that commenced before the effective date of this update in accordance with previous U.S. GAAP unless the lease is modified. Lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimal rental payments that were tracked and disclosed under previous U.S. GAAP. The updated guidance is to be applied using a modified retrospective approach effective for annual and interim periods beginning after

December

 

15,

2018.

Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Investments — Equity Method and Joint Ventures:  Simplifying the Transition to the Equity Method of Accounting

In

March

 

2016,

the FASB issued updated guidance that eliminates the requirement to retroactively apply the equity method of accounting when an investment that was previously accounted for using another method of accounting becomes qualified to apply the equity method due to an increase in the level of ownership interest or degree of influence.  If the investment was previously accounted for as an available-for-sale security, any related unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for the equity method is recognized through earnings.  The updated guidance is effective for reporting periods beginning after

December

 

15,

2016,

and is to be applied prospectively. Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Derivatives and Hedging:  Contingent Put and Call Options in Debt Instruments

In

March

 

2016,

the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument is contingently exercisable, the event that triggers the ability to exercise the option is considered to be clearly and closely related to the debt instrument (i.e., the economic characteristics and risks of the option are related to interest rates or credit risks) and the entity does not have to assess whether the option should be accounted for separately. The updated guidance is effective for reporting periods beginning after

December

 

15,

2016.

Early adoption is permitted. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Financial Instruments — Credit Losses:  Measurement of Credit Losses on Financial Instruments

In

June

 

2016,

the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. reinsurance amounts recoverable) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2019.

Early adoption is permitted for reporting periods beginning after

December

 

15,

2018.

Based on the financial instruments currently held by the Company, there would not be a material effect on the Company’s results of operations, financial position or liquidity if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s results of operations, financial position or liquidity at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In

August

2016,

the FASB issued specific guidance to reduce the existing diversity in practice in how

eight

specific cash flow issues of certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Consolidation – Interests Held through Related Parties that Are Under Common Control

In

October

2016,

the FASB issued further guidance that makes targeted amendments to consolidation accounting. This update changes how a reporting entity that is the primary beneficiary of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2016,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In

November

2016,

the FASB issued specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Business Combinations – Clarifying the Definition of a Business

In

January

2017,

the FASB issued guidance to clarify the definition of a business to assist reporting entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. This update provides a screen to determine when an integrated set of assets or activities is not a business and the requirements to be met to be considered a business.

The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted in certain situations.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Intangibles – Goodwill and Other - Simplifying the Test for Goodwill Impairment

In

January

2017,

the FASB issued guidance to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Reporting entities will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January

1,

2017.

  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Compensation — Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In

March

 

2017,

the FASB issued updated guidance to improve the presentation of net periodic pension cost and net periodic post retirement cost (net benefit costs). Net benefit costs comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to employees.  The update requires that the

employer service cost component be reported in the same lines as other employee compensation cost and that the other components (non-service costs) be presented separately from the service cost and outside of a subtotal of income from operations if

one

is presented.  The update also allows only the service cost component to be eligible for capitalization in assets when applicable.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2017.

The update is to be applied retrospectively with respect to the presentation of service cost and non-service cost and prospectively with respect to applying the service cost only eligible for capitalization in assets guidance. Early adoption is permitted as of the

first

interim period of an annual period if an entity issues interim financial statements. This pronouncement will not impact the Company since it does not have any pension or postretirement benefit plans and has no intention to adopt such plans.

XML

Note 2 - Investments

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

2.

Investments

Fixed Maturity and Equity Securities Available-For-Sale

Investments in fixed maturity and equity securities available-for-sale as of

March

31,

2017

and

December

31,

2016

are summarized as follows:

			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair
	or Cost		Gains		Losses		Value
	March 31, 2017 (Unaudited)
Fixed maturity securities
U.S. government and U.S. government agencies	$	3,375,460	$	88,510	$	68,402	$	3,395,568
States and political subdivisions		9,602,066		167,836		50,211		9,719,691
Residential mortgage-backed securities		33,938		36,689		-		70,627
Corporate bonds		116,778,608		2,713,348		1,202,824		118,289,132
Foreign bonds		20,073,810		544,739		167,754		20,450,795
Total fixed maturity securities		149,863,882		3,551,122		1,489,191		151,925,813
Equity securities
Mutual funds		345,607		805		-		346,412
Corporate preferred stock		99,945		2,015		-		101,960
Corporate common stock		154,977		54,211		-		209,188
Total equity securities		600,529		57,031		-		657,560
Total fixed maturity and equity securities	$	150,464,411	$	3,608,153	$	1,489,191	$	152,583,373

	December 31, 2016
Fixed maturity securities
U.S. government and U.S. government agencies	$	3,157,889	$	99,086	$	71,592	$	3,185,383
States and political subdivisions		9,172,533		144,947		66,584		9,250,896
Residential mortgage-backed securities		33,970		36,757		-		70,727
Corporate bonds		100,268,424		2,324,712		1,613,095		100,980,041
Foreign bonds		15,677,449		394,742		248,083		15,824,108
Total fixed maturity securities		128,310,265		3,000,244		1,999,354		129,311,155
Equity securities
Mutual funds		344,783		-		2,869		341,914
Corporate preferred stock		99,945		-		3,585		96,360
Corporate common stock		154,672		45,461		-		200,133
Total equity securities		599,400		45,461		6,454		638,407
Total fixed maturity and equity securities	$	128,909,665	$	3,045,705	$	2,005,808	$	129,949,562

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

March

31,

2017

and

December

31,

2016

are summarized as follows:

			Unrealized		Number of
	Fair Value		Loss		Securities
	March 31, 2017 (Unaudited)
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	2,086,562	$	68,402		7
States and political subdivisions		2,518,618		50,211		13
Corporate bonds		26,306,196		480,601		85
Foreign bonds		3,271,284		105,406		12
Total less than 12 months		34,182,660		704,620		117
More than 12 months
Corporate bonds		7,317,575		722,223		36
Foreign bonds		1,021,479		62,348		6
Total more than 12 months		8,339,054		784,571		42
Total fixed maturity securities	$	42,521,714	$	1,489,191		159

	December 31, 2016
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	1,878,308	$	71,592	6
States and political subdivisions		2,532,653		66,584	14
Corporate bonds		23,721,217		696,066	92
Foreign bonds		5,087,133		155,833	16
Total less than 12 months		33,219,311		990,075	128
More than 12 months
Corporate bonds		8,004,923		917,029	36
Foreign bonds		1,024,548		92,250	6
Total more than 12 months		9,029,471		1,009,279	42
Total fixed maturity securities		42,248,782		1,999,354	170
Equity securities
Less than 12 months
Corporate preferred stock		96,360		3,585	2
Total less than 12 months		96,360		3,585	2
More than 12 months
Mutual funds		89,113		2,869	1
Total more than 12 months		89,113		2,869	1
Total equity securities		185,473		6,454	3
Total fixed maturity and equity securities	$	42,434,255	$	2,005,808	173

As of

March

31,

2017,

the Company held

159

available-for-sale fixed maturity securities with an unrealized loss of

$1,489,191,

fair value of

$42,521,714

and amortized cost of

$44,010,905.

These unrealized losses were primarily due to market interest rate movements in the bond market as of

March

31,

2017.

The ratio of the fair value to the amortized cost of these

159

securities is

97%.

As of

December

31,

2016,

the Company held

170

available-for-sale fixed maturity securities with an unrealized loss of

$1,999,354,

fair value of

$42,248,782

and amortized cost of

$44,248,136.

These unrealized losses were primarily due to market interest rate movements in the bond market as of

December

31,

2016.

The ratio of the fair value to the amortized cost of these

170

securities is

95%.

As of

March

31,

2017,

the Company had no available-for-sale equity securities with unrealized losses.

As of

December

31,

2016,

the Company had

three

available-for-sale equity securities with an unrealized loss of

$6,454,

fair value of

$185,473

and cost of

$191,927.

The ratio of fair value to cost of these securities is

97%.

 

Fixed maturity securities were

93%

and

92%

investment grade as rated by Standard & Poor’s as of

March

31,

2017

and

December

31,

2016,

respectively.

The Company’s decision to record an impairment loss is primarily based on whether the security’s fair value is likely to remain significantly below its book value based on all of the factors considered. Factors that are considered include the length of time the security’s fair value has been below its carrying amount, the severity of the decline in value, the credit worthiness of the issuer, and the coupon and/or dividend payment history of the issuer. The Company also assesses whether it intends to sell or whether it is more likely than not that it

may

be required to sell the security prior to its recovery in value.

For any fixed maturity securities that are other-than-temporarily impaired, the Company determines the portion of the other-than-temporary impairment that is credit-related and the portion that is related to other factors. The credit-related portion is the difference between the expected future cash flows and the amortized cost basis of the fixed maturity security, and that difference is charged to earnings. The non-credit-related portion representing the remaining difference to fair value is recognized in other comprehensive income (loss). Only in the case of a credit-related impairment where management has the intent to sell the security, or it is more likely than not that it will be required to sell the security before recovery of its cost basis, is a fixed maturity security adjusted to fair value and the resulting losses recognized in realized gains (losses) in the consolidated statements of operations. Any other-than-temporary impairments on equity securities are recorded in the consolidated statements of operations in the periods incurred as the difference between fair value and cost.

There were no impairments during the

three

months ended

March

31,

2017

and

2016.

The Company recorded

one

other-than-temporary impairment during

fourth

quarter 

2016.

  During

fourth

quarter

2016,

the Company impaired its bonds in an energy corporation with a total par value of

$650,000

as a result of continuing unrealized losses. This impairment was considered fully credit-related, resulting in a charge to the statement of operations before tax of

$207,450

for the year ended

December

31,

2016.

This charge represents the credit-related portion of the difference between the amortized cost basis of the security and its fair value.

The Company experienced no additional other-than-temporary impairments on fixed maturity available-for-sale securities during

2016.

Management believes that the Company will fully recover its cost basis in the securities held as of

March

31,

2017,

and management does not have the intent to sell nor is it more likely than not that the Company will be required to sell such securities until they recover or mature.  The remaining temporary impairments shown herein are primarily the result of the current interest rate environment rather than credit factors that would imply other-than-temporary impairment. 

Net unrealized gains included in other comprehensive income for investments classified as available-for-sale, net of the effect of deferred income taxes and deferred acquisition costs assuming that the appreciation had been realized as of

March

31,

2017

and

December

31,

2016,

are summarized as follows:

	(Unaudited)
	March 31, 2017			December 31, 2016
Unrealized appreciation on available-for-sale securities	$	2,118,962		$	1,039,897
Adjustment to deferred acquisition costs		(36,053	)		(16,553	)
Deferred income taxes		(416,581	)		(204,668	)
Net unrealized appreciation on available-for-sale securities	$	1,666,328		$	818,676

The Company’s investment in lottery prize cash flows categorized as other long-term investments in the statement of financial position was

$49,515,018

and

$46,788,873

as of

March

31,

2017

and

December

31,

2016,

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 amortized cost and fair value of fixed maturity available-for-sale securities and other long-term investments as of

March

31,

2017,

by contractual maturity, are summarized as follows:

	March 31, 2017 (Unaudited)
	Fixed Maturity Available-For-Sale Securities				Other Long-Term Investments
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	8,564,969	$	8,646,613	$	6,978,927	$	7,081,822
Due after one year through five years		31,765,292		32,499,328		19,501,912		21,055,897
Due after five years through ten years		42,243,357		43,132,728		13,854,164		16,558,746
Due after ten years		67,256,326		67,576,517		9,180,015		14,151,045
Due at multiple maturity dates		33,938		70,627		-		-
	$	149,863,882	$	151,925,813	$	49,515,018	$	58,847,510

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.

Proceeds and gross realized gains (losses) from the sales, calls and maturities of fixed maturity securities available-for-sale, equity securities available-for-sale, mortgage loans on real estate and investment real estate for the

three

months ended

March

31,

2017

and

2016

are summarized as follows:

	Three Months Ended March 31, (Unaudited)
	Fixed Maturity Securities						Equity Securities					Mortgage Loans on Real Estate				Investment Real Estate
	2017			2016			2017		2016			2017		2016		2017		2016
Proceeds	$	4,449,231		$	2,274,413		$	-	$	108,800		$	5,125,389	$	1,572,244	$	107,167	$	-
Gross realized gains		171,105			7,094			-		-			-		3,575		2,487		-
Gross realized losses		(7,086	)		(28,352	)		-		(1,468	)		-		-		-		-

The accumulated change in unrealized investment gains (losses) for fixed maturity and equity securities available-for-sale for the

three

months ended

March

31,

2017

and

2016

and the amount of net realized investment gains (losses) on fixed maturity securities available-for-sale, equity securities available-for-sale, mortgage loans on real estate and investment real estate for the

three

months ended

March

31,

2017

and

2016

are summarized as follows:

Major categories of net investment income for the

three

months ended

March

31,

2017

and

2016

are summarized as follows:

	Three Months Ended March 31, (Unaudited)
	2017			2016
Fixed maturity securities	$	1,490,370		$	1,567,218
Equity securities		5,072			7,182
Other long-term investments		857,470			547,822
Mortgage loans		1,667,394			1,353,071
Policy loans		27,564			26,098
Real estate		93,711			91,968
Short-term and other investments		110,286			72,270
Gross investment income		4,251,867			3,665,629
Investment expenses		(581,996	)		(305,426	)
Net investment income	$	3,669,871		$	3,360,203

TLIC and FBLIC are required to hold assets on deposit with various state insurance departments for the benefit of policyholders and other special deposits in accordance with statutory rules and regulations. As of

March

31,

2017

and

December

31,

2016,

these required deposits, included in investment assets, had amortized costs that totaled

$4,107,553

and

$4,099,405,

respectively.

As of

March

31,

2017

and

December

31,

2016,

these required deposits had fair values that totaled

$4,132,879

and

$4,125,116,

respectively.

The Company’s mortgage loans by property type as of

March

31,

2017

and

December

31,

2016

are summarized as follows:

	(Unaudited)
	March 31, 2017		December 31, 2016
Commercial mortgage loans
Retail stores	$	1,055,651	$	1,075,324
Office buildings		177,494		179,484
Total commercial mortgage loans		1,233,145		1,254,808
Residential mortgage loans		85,645,703		73,116,478
Total mortgage loans	$	86,878,848	$	74,371,286

The Company’s investment real estate as of

March

31,

2017

and

December

31,

2016

is summarized as follows:

	(Unaudited)
	March 31, 2017			December 31, 2016
Land - held for the production of income	$	213,160		$	213,160
Land - held for investment		745,155			745,155
Total land		958,315			958,315
Building - held for the production of income		2,267,557			2,267,557
Less - accumulated depreciation		(1,086,067	)		(1,049,695	)
Buildings net of accumulated depreciation		1,181,490			1,217,862
Residential real estate - held for sale		225,816			330,496
Total residential real estate		225,816			330,496
Investment real estate, net of accumulated depreciation	$	2,365,621		$	2,506,673

TLIC owns approximately

six

and

one

-half acres of land located in Topeka, Kansas that includes a

20,000

square foot office building on approximately

one

-

fourth

of this land. This building and land on

one

of the

four

lots is held for the production of income. The other

three

lots of land owned in Topeka, Kansas are held for investment. In addition, FBLIC owns

one

-half acre of undeveloped land located in Jefferson City, Missouri. During

fourth

quarter

2016

management impaired the undeveloped land by

$4,892

from its carrying value to its net realizable value expected at the time of ultimate resale.

During

2016

the Company foreclosed on

seven

residential mortgage loans of real estate totaling

$394,427

and transferred those properties to investment real estate that are now held for sale. The Company reduced the carrying value of this residential real estate obtained through foreclosure to the lower of acquisition cost or net realizable value. On

November

30,

2016,

the Company sold

one

investment real estate property with an aggregate carrying value of

$63,931.

The Company recorded a gross realized investment loss on sale of

$20,662

based on an aggregate sales price of

$43,269.

During

2017,

the Company sold investment real estate property with an aggregate carrying value of

$104,680.

The Company recorded a gross realized investment gain on sale of

$2,487

based on an aggregate sales price of

$107,167.

XML

Note 3 - Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

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:

Level

1

- 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.

Level

2

- 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 agency mortgage-backed debt securities, state and political subdivision securities, corporate debt securities and foreign debt securities.

Level

3

- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s Level

3

assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments where independent pricing information was not able to be obtained for a significant portion of the underlying assets.

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the

three

-level fair value hierarchy. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs, or their ability to be observed,

may

result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level

3

of the fair value hierarchy are reported as transfers in and out of the Level

3

category as of the beginning of the period in which the reclassifications occur.

The Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of

March

31,

2017

and

December

31,

2016

is summarized as follows:

	Level 1		Level 2		Level 3		Total
	March 31, 2017 (Unaudited)
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	3,395,568	$	-	$	3,395,568
States and political subdivisions		-		9,719,691		-		9,719,691
Residential mortgage-backed securities		-		70,627		-		70,627
Corporate bonds		-		118,289,132		-		118,289,132
Foreign bonds		-		20,450,795		-		20,450,795
Total fixed maturity securities	$	-	$	151,925,813	$	-	$	151,925,813
Equity securities, available-for-sale
Mutual funds	$	-	$	346,412	$	-	$	346,412
Corporate preferred stock		101,960		-		-		101,960
Corporate common stock		147,688		-		61,500		209,188
Total equity securities	$	249,648	$	346,412	$	61,500	$	657,560

	December 31, 2016
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	3,185,383	$	-	$	3,185,383
States and political subdivisions		-		9,250,896		-		9,250,896
Residential mortgage-backed securities		-		70,727		-		70,727
Corporate bonds		-		100,980,041		-		100,980,041
Foreign bonds		-		15,824,108		-		15,824,108
Total fixed maturity securities	$	-	$	129,311,155	$	-	$	129,311,155
Equity securities, available-for-sale
Mutual funds	$	-	$	341,914	$	-	$	341,914
Corporate preferred stock		96,360		-		-		96,360
Corporate common stock		138,633		-		61,500		200,133
Total equity securities	$	234,993	$	341,914	$	61,500	$	638,407

As of

March

31,

2017

and

December

31,

2016,

Level

3

financial instruments consisted of

two

private placement common stocks that have no active trading.

These private placement stocks represent investments in small insurance holding companies. The fair value for these securities was determined through the use of unobservable assumptions about market participants. The Company has assumed a willing market participant would purchase the securities for the same price as the Company paid until such time as these small insurance holding companies commence operations.

Fair values for Level

1

and Level

2

assets for the Company’s fixed maturity and equity securities available-for-sale are primarily based on prices supplied by a

third

party investment service. The

third

party investment service provides quoted prices in the market which use observable inputs in developing such rates.

The Company analyzes market valuations received to verify reasonableness and to understand the key assumptions used and the sources. Since the fixed maturity securities owned by the Company do not trade on a daily basis, the

third

party investment service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. As the fair value estimates of the Company’s fixed maturity securities are based on observable market information rather than market quotes, the estimates of fair value on these fixed maturity securities are included in Level

2

of the hierarchy. The Company’s Level

2

investments include obligations of U.S. government, U.S. government agencies, state and political subdivisions, mortgage-backed securities, corporate bonds and foreign bonds.

The Company’s equity securities are included in Level

1

and Level

2

and the private placement common stocks are included in Level

3.

Level

1

for those 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 and equity securities available-for-sale portfolio is highly liquid and allows for a high percentage of the portfolio to be priced through pricing services.

The carrying amount and fair value of the Company’s financial assets and financial liabilities disclosed, but not carried, at fair value as of

March

31,

2017

and

December

31,

2016,

and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis are summarized as follows:

Financial Instruments Disclosed, But Not Carried, at Fair Value:

	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
	March 31, 2017 (Unaudited)
Financial assets
Mortgage loans on real estate
Commercial	$	1,233,145	$	1,245,615	$	-	$	-	$	1,245,615
Residential		85,645,703		86,519,153		-		-		86,519,153
Policy loans		1,576,307		1,576,307		-		-		1,576,307
Other long-term investments		49,515,018		58,847,510		-		-		58,847,510
Cash and cash equivalents		25,962,536		25,962,536		25,962,536		-		-
Accrued investment income		2,542,754		2,542,754		-		-		2,542,754
Total financial assets	$	166,475,463	$	150,458,439	$	25,962,536	$	-	$	124,495,903
Financial liabilities
Policyholders' account balances	$	267,911,869	$	226,181,661	$	-	$	-	$	226,181,661
Policy claims		938,779		938,779		-		-		938,779
Total financial liabilities	$	268,850,648	$	185,368,033	$	-	$	-	$	185,368,033

	December 31, 2016
Financial assets
Mortgage loans on real estate
Commercial	$	1,254,808	$	1,268,140	$	-	$	-	$	1,268,140
Residential		73,116,478		70,383,661		-		-		70,383,661
Policy loans		1,598,116		1,598,116		-		-		1,598,116
Other long-term investments		46,788,873		55,890,429		-		-		55,890,429
Cash and cash equivalents		34,223,945		34,223,945		34,223,945		-		-
Accrued investment income		2,176,770		2,176,770		-		-		2,176,770
Total financial assets	$	159,158,990	$	165,541,061	$	34,223,945	$	-	$	131,317,116
Financial liabilities
Policyholders' account balances	$	245,346,489	$	206,541,702	$	-	$	-	$	206,541,702
Policy claims		997,814		997,814		-		-		997,814
Total financial liabilities	$	246,344,303	$	207,539,516	$	-	$	-	$	207,539,516

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 residential mortgage loans, the discount rate used was indexed to the LIBOR yield curve adjusted for an appropriate credit spread. For commercial mortgage loans, the discount rate used was assumed to be the interest rate on the last commercial mortgage acquired by the Company.

Cash and Cash Equivalents, Accrued Investment Income and

Policy Loans

The carrying value of these financial instruments approximates their fair values. Cash and cash equivalents 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 Citigroup 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.

XML

Note 4 - Segment Data

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

4.

Segment Data

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

. These segments as of

March

31,

2017

and

December

31,

2016

and

for the

three

months ended

March

31,

2017

and

2016

are summarized as follows:

	Three Months Ended March 31, (Unaudited)
	2017		2016
Revenues:
Life insurance operations	$	4,184,653	$	3,745,244
Annuity operations		3,188,969		2,637,424
Corporate operations		134,337		158,239
Total	$	7,507,959	$	6,540,907
Income before income taxes:
Life insurance operations	$	117,848	$	29,953
Annuity operations		160,414		228,256
Corporate operations		71,255		89,997
Total	$	349,517	$	348,206
Depreciation and amortization expense:
Life insurance operations	$	414,284	$	674,547
Annuity operations		420,048		155,912
Corporate operations		-		-
Total	$	834,332	$	830,459

	(Unaudited)
	March 31, 2017		December 31, 2016
Assets:
Life insurance operations	$	51,429,483	$	50,577,282
Annuity operations		299,630,314		275,745,766
Corporate operations		6,772,563		6,929,565
Total	$	357,832,360	$	333,252,613

XML

Note 5 - Federal Income Taxes

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

5.

Federal Income Taxes

The provision for federal income taxes is based on the asset and liability method of accounting for income taxes. Deferred income taxes are provided for the cumulative temporary differences between balances of assets and liabilities determined under GAAP and the balances using tax bases. A valuation allowance has been established due to the uncertainty of certain loss carry forwards.

The Company has no known uncertain tax benefits within its provision for income taxes. In addition, the Company does not believe it would be subject to any penalties or interest relative to any open tax years and, therefore, has not accrued any such amounts. The Company files U.S. federal income tax returns and income tax returns in various state jurisdictions.  The

2013

through

2016

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.

XML

Note 6 - Legal Matters and Contingent Liabilities

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Contingencies Disclosure [Text Block]

6

. Legal Matters and Contingent Liabilities

A lawsuit filed by the Company and Chairman, President and Chief Executive Officer, Gregg E. Zahn, against former Company Board of Directors member Wayne Pettigrew and Mr. Pettigrew's company, Group & Pension Planners, Inc. (the "Defendants"), concluded on

February

17,

2017.

The lawsuit was filed in the District Court of Tulsa County, Oklahoma (Case No. CJ-

2013

-

03385).

In the lawsuit, the Company alleged that Mr. Pettigrew had defamed the Company by making untrue statements to certain shareholders of the Company, to the press and to regulators of the state of Oklahoma and had breached his fiduciary duties.

The jury concluded that Mr. Pettigrew, while still a member of the Company’s Board of Directors, did, in fact, make untrue statements regarding the Company and Mr. Zahn and committed breaches of his fiduciary duties to the Company and awarded it

$800,000

of damages against Mr. Pettigrew. In addition, the jury found that Mr. Pettigrew had defamed Mr. Zahn and intentionally inflicted emotional distress on Mr. Zahn and awarded Mr. Zahn

$3,500,000

of damages against Mr. Pettigrew.

Mr. Pettigrew can appeal this decision by the jury that will require him to post a bond in the amount of the total judgment of

$4,300,000.

Should Mr. Pettigrew fail to post such a bond, the Company and Mr. Zahn will be permitted to execute on Mr. Pettigrew's assets.

In addition to the damages awarded by the jury, the Company and Mr. Zahn have initiated steps to aggressively communicate the correction of the untrue statements to outside parties.

Prior to its acquisition by TLIC, FBLIC developed, marketed, and sold life insurance products known as “Decreasing Term to

95”

policies. On

January

17,

2013,

FBLIC’s Board of Directors voted that, effective

March

1,

2013,

it was not approving, and therefore was not providing, a dividend for the Decreasing Term to

95

policies. On

November

 

22,

2013,

three

individuals who owned Decreasing Term to

95

policies filed a Petition in the Circuit Court of Greene County, Missouri asserting claims against FBLIC relating to FBLIC’s decision to not provide a dividend under the Decreasing Term to

95

policies.

On

June

18,

2015,

plaintiffs filed an amended petition. Like the original Petition, the amended Petition asserts claims for breach of contract and anticipatory breach of contract, and alleges that FBLIC breached, and will anticipatorily breach, the Decreasing Term to

95

policies of insurance by not providing a dividend sufficient to purchase a

one

year term life insurance policy which would keep the death benefit under the Decreasing Term to

95

policies the same as that provided during the

first

year of coverage under the policy. It also asserts claims for negligent misrepresentation, fraud, and violation of the Missouri Merchandising Practices Act (“MMPA”). It alleges that during its sale of the Decreasing Term to

95

policies, FBLIC represented that the owners of these policies would always be entitled to dividends to purchase a

one

-year term life insurance policy and that the owners would have a level death benefit without an increase in premium.

The main difference between the original Petition and the amended Petition is that the amended Petition also seeks equitable relief based on

two

new theories: that the Decreasing Term to

95

policies should be reformed so that they will provide a level death benefit for a level premium payment until the policyholder reaches

95

years of age; and alternatively, Count VIII of the amended Petition asks the Court to

(1)

find that the dividend provisions in the Decreasing Term to

95

policies violate Missouri law, specifically, §

376.360

RSMo.;

(2)

order that the policies are

void

ab initio; and

(3)

order that FBLIC return all premiums collected under these policies. In addition, as part of the MMPA claim, plaintiffs are now alleging that FBLIC undertook a fraudulent scheme to sell the Decreasing Term to

95

policies as a level premium for level benefit even though FBLIC never intended to pay dividends for the life of the policies and that part of this alleged fraudulent scheme included having a dividend option which is not allowed under Missouri law. FBLIC denies the allegations in the amended Petition and will continue to defend against them.

On

February

1,

2016,

the plaintiffs asked that the Court certify the case as a class action. With their motion, Plaintiffs filed an affidavit from an actuary stating the opinion that FBLIC has collected at least

$2,548,939

in premiums on the Decreasing Term to

95

policies. This presumably is the amount that Plaintiffs will seek to be refunded to policyholders if the policies are declared void. FBLIC opposed the request for class certification. On

July

21,

2016,

the Court certified

three

classes to maintain the claims for breach of contract, anticipatory breach of contract, violation of the MMPA, reformation, and to void the Decreasing Term to

95

policies.

On

August

1,

2016,

FBLIC filed a Petition for Leave to Appeal with the Missouri Court of Appeals, Southern District asking for permission to appeal the Court’s class certification. The Petition for Leave to Appeal was denied. FBLIC intends to defend vigorously against the class and individual allegations. The Company is unable to determine the potential magnitude of the claims in the event of a final certification and the plaintiffs prevailing on this substantive action.

On

May

13,

2015,

FBLIC filed a Counterclaim against Doyle Nimmo seeking indemnity and seeking damages for breach of fiduciary duty in the event FBLIC is liable under Plaintiffs’ underlying claims. In addition, on

April

29,

2015,

TLIC filed a lawsuit against Doyle Nimmo and Michael Teel alleging that they were liable for violations of federal and state securities laws for failing to disclose information relating to the Decreasing Term to

95

policies. This lawsuit is currently pending in the District Court for the Western District of Missouri (hereinafter the “Federal Lawsuit”). No claims have been made against TLIC in the Federal Lawsuit. The Federal Lawsuit has been stayed pending resolution of the lawsuit against FBLIC in the Circuit Court of Greene County, Missouri.

On

September

28,

2015,

Doyle Nimmo filed a Third-Party Petition for Declaratory Judgment (and Other Relief) against FBLIC. In this Third-Party Petition, Doyle Nimmo, a former director for FBLIC, seeks a declaratory judgment that the corporate by-laws of FBLIC require FBLIC to indemnify him for attorney’s fees, judgments, costs, fines, and amounts paid in defense of both the Counterclaim and the Federal Lawsuit and seeks a monetary judgment for the amounts expended by Doyle Nimmo in such defense. Prior to Doyle Nimmo’s filing of the Third-Party Petition, FBLIC’s Board of Directors executed a Unanimous Written Consent in Lieu of a Special Meeting in which it denied Doyle Nimmo’s

tender

of defense and request for indemnification finding Mr. Nimmo did not meet the applicable standard of conduct for indemnification under Missouri law. FBLIC intends to vigorously defend the Third-Party Petition on these grounds. The Company is unable to determine the potential magnitude of the claims in the event Doyle Nimmo prevails on his Third-Party Petition.

As stated above, FBLIC filed a Counterclaim and TLIC filed the Federal Lawsuit against Doyle Nimmo. Doyle Nimmo submitted a claim and

tendered

the defense of these claims to Utica Mutual Insurance Company under a policy providing Insurance Agents and Brokers Errors and Omissions Liability coverage. On

November

4,

2015,

Utica Mutual Insurance Company filed a lawsuit against Doyle Nimmo and other interested parties, including FBLIC and TLIC. The lawsuit is pending in the District Court for the Western District of Missouri and asks the Court to determine whether the Errors and Omissions policy provides coverage for the lawsuits filed against Doyle Nimmo. Utica Mutual Insurance Company does not seek a monetary judgment against FBLIC or TLIC. All parties to the lawsuit pending in the Circuit Court of Greene County, Missouri agreed to waive their right to a trial by jury and have all claims submitted to the Judge for decision. The trial in that case is scheduled to begin on

November

27,

2017.

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.

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Note 7 - Other Comprehensive Income and Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

7

. Other Comprehensive Income and Accumulated O

ther Comprehensive Income

The changes in the components of the Company’s accumulated other comprehensive income for the

three

months ended

March

31,

2017

and

2016

are summarized as follows:

	Three Months Ended March 31, 2017 and 2016 (Unaudited)
	Unrealized
	Appreciation						Accumulated
	(Depreciation) on			Adjustment to			Other
	Available-For-Sale			Deferred Acquisition			Comprehensive
	Securities			Costs			Income (Loss)
Balance as of January 1, 2017	$	831,917		$	(13,241	)	$	818,676
Other comprehensive income before reclassifications, net of tax		994,467			(15,600	)		978,867
Less amounts reclassified from accumulated other comprehensive income, net of tax		131,215			-			131,215
Other comprehensive income		863,252			(15,600	)		847,652
Balance as of March 31, 2017	$	1,695,169		$	(28,841	)	$	1,666,328
Balance as of January 1, 2016	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of tax		3,023,618			(48,104	)		2,975,514
Less amounts reclassified from accumulated other comprehensive income, net of tax		(18,181	)		-			(18,181	)
Other comprehensive income		3,041,799			(48,104	)		2,993,695
Balance as of March 31, 2016	$	345,923		$	(8,045	)	$	337,878

The pretax components of the Company’s other comprehensive income and the related income tax expense for each component for the

three

months ended

March

31,

2017

and

2016

are summarized as follows:

				Income Tax
	Pretax			Expense			Net of Tax
	Three Months Ended March 31, 2017 (Unaudited)
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	1,243,084		$	248,617		$	994,467
Reclassification adjustment for net gains included in operations		164,019			32,804			131,215
Net unrealized gains on investments		1,079,065			215,813			863,252
Adjustment to deferred acquisition costs		(19,500	)		(3,900	)		(15,600	)
Total other comprehensive income	$	1,059,565		$	211,913		$	847,652

	Three Months Ended March 31, 2016 (Unaudited)
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	3,779,522		$	755,904		$	3,023,618
Reclassification adjustment for net losses included in operations		(22,726	)		(4,545	)		(18,181	)
Net unrealized gains on investments		3,802,248			760,449			3,041,799
Adjustment to deferred acquisition costs		(60,130	)		(12,026	)		(48,104	)
Total other comprehensive income	$	3,742,118		$	748,423		$	2,993,695

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 statement of operations for the

three

months ended

March

31,

2017

and

2016

are summarized as follows:

	Three Months Ended March 31, (Unaudited)
Reclassification Adjustments	2017		2016
Unrealized gains on available-for-sale securities:
Realized gains (losses) on sales of securities (a)	$	164,019	$	(22,726	)
Income tax expense (benefit) (b)		32,804		(4,545	)
Total reclassification adjustments	$	131,215	$	(18,181	)

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

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

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Note 8 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Premiums Receivable Note [Text Block]

8

. Allowance for Loan Losses from Mortgage Loans on Real Estate and Loans from Premium Financing

The allowance for possible loan losses from investments in mortgage loans on real estate and loans from premium financing is a reserve established through a provision for possible loan losses charged to expense which represents, in the Company’s judgment, the known and inherent credit losses existing in the residential and commercial mortgage loan and premium financing loan portfolios. The allowance, in the judgment of the Company, is necessary to reserve for estimated loan losses inherent in the residential and commercial mortgage loan and premium finance loan portfolios and reduces the carrying value of investments in mortgage loans on real estate and premium finance loans to the estimated net realizable value on the consolidated statement of financial position.

While the Company utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including the performance of the residential and commercial mortgage loan and premium finance loan portfolios, the economy and changes in interest rates. The Company’s allowance for possible mortgage loan and premium finance 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.

Mortgage loans and premium finance loans are considered 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 or premium finance loan agreement. Factors considered by the Company 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 and premium finance 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 or premium finance loan 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. Impairment is measured on a loan-by-loan basis.

As of

March

31,

2017,

$544,016

of independent residential mortgage loans on real estate are held in escrow by a

third

party for the benefit of the Company.   As of

March

31,

2017,

$148,387

of that escrow amount is available to the Company for possible losses on its investment of

$29,677,438

in residential mortgage loans on real estate with

one

loan originator

.

In addition, the Company has an additional

$286,481

allowance for possible loan losses in the remaining

$57,201,410

of investments in mortgage loans on real estate as of

March

31,

2017.

As of

December

31,

2016,

$525,063

of independent mortgage loan balances were held in escrow by a

third

party for the benefit of the Company related to its investment in

$25,523,757

of mortgage loans on real estate with

one

loan originator. In addition, the Company had an additional

$244,427

allowance for possible loan losses in the remaining

$48,847,529

of investments in mortgage loans on real estate as of

December

31,

2016.

Through

June

30,

2012,

FTCC financed amounts up to

80%

of the premium on property and casualty insurance policies after a

20%

or greater down payment was made by the policy owner. The premiums financed were collateralized by the amount of the unearned premium of the insurance policy. Policies that became delinquent were submitted for cancellation and recovery of the unearned premium, up to the amount of the loan balance,

25

days after a payment became delinquent.

As of

December

31,

2016

the Company established a full allowance for uncollectible receivables against the premium financing asset. In late

December

of

2016,

the Company wrote off the asset by netting the allowance for uncollectible receivables against the premium financing asset. The Company has made no premium financing loans since

June

30,

2012.

The balances of and changes in the Company’s credit losses related to mortgage loans on real estate and loans from premium financing as of and for the

three

months ended

March

31,

2017

and

2016

are summarized as follows (excluding

$29,677,438

and

$22,649,615

of mortgage loans on real estate as of

March

31,

2017

and

2016,

respectively, with

one

loan originator where independent mortgage loan balances are held in escrow by a

third

party for the benefit of the Company):

	As of and for the Three Months Ended March 31, (Unaudited)
	Residential Mortgage Loans				Commercial Mortgage Loans						Premium Finance Loans					Total
	2017		2016		2017			2016			2017		2016			2017		2016
Allowance, beginning	$	238,121	$	175,988	$	6,306		$	7,360		$	-	$	197,172		$	244,427	$	380,520
Charge offs		-		-		-			-			-		-			-		-
Recoveries		-		-		-			-			-		-			-		-
Provision		42,163		6,484		(109	)		(115	)		-		(4,482	)		42,054		1,887
Allowance, ending	$	280,284	$	182,472	$	6,197		$	7,245		$	-	$	192,690		$	286,481	$	382,407
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	192,690		$	-	$	192,690
Collectively evaluated for impairment	$	280,284	$	182,472	$	6,197		$	7,245		$	-	$	-		$	286,481	$	189,717
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	347,885		$	-	$	347,885
Collectively evaluated for impairment	$	55,968,265	$	36,840,353	$	1,233,145		$	1,441,814		$	-	$	-		$	57,201,410	$	38,282,167

The Company utilizes the ratio of the carrying value of individual residential and commercial mortgage loans compared to the individual appraisal value to evaluate the credit quality of its mortgage loans on real estate (commonly referred to as the loan-to-value ratio). The Company’s residential and commercial mortgage loans on real estate by credit quality using this ratio as of

March

31,

2017

and

December

31,

2016

are summarized as follows:

	Residential Mortgage Loans				Commercial Mortgage Loans				Total Mortgage Loans
	(Unaudited)				(Unaudited)				(Unaudited)
Loan-To-Value Ratio	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
Over 70% to 80%	$	15,380,587	$	14,559,541	$	-	$	-	$	15,380,587	$	14,559,541
Over 60% to 70%		32,049,451		29,738,887		-		-		32,049,451		29,738,887
Over 50% to 60%		21,712,187		15,440,364		1,040,222		1,051,155		22,752,409		16,491,519
Over 40% to 50%		12,345,596		10,399,031		-		-		12,345,596		10,399,031
Over 30% to 40%		2,276,132		2,184,351		192,923		203,653		2,469,055		2,388,004
Over 20% to 30%		1,544,076		467,410		-		-		1,544,076		467,410
Over 10% to 20%		333,013		317,936		-		-		333,013		317,936
10% or less		4,661		8,958		-		-		4,661		8,958
Total	$	85,645,703	$	73,116,478	$	1,233,145	$	1,254,808	$	86,878,848	$	74,371,286

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Stockholders' Equity, Policy [Policy Text Block]

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.

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.

Business Combinations Policy [Policy Text Block]

Acquisition

s

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 the Oklahoma Insurance Department (“OID”). This surplus note is eliminated in consolidation.

On

August

31,

2009,

two

of the Company’s subsidiaries, Trinity Life Insurance Company (“Old TLIC”) and FLAC, were merged, with FLAC being the surviving company. Immediately following the merger, FLAC changed its name to TLIC.

On

December

28,

2011,

TLIC acquired

100%

of the outstanding common stock of FBLIC from FBLIC’s shareholders. The acquisition of FBLIC was accounted for as a purchase. The aggregate purchase price for the acquisition of FBLIC was

$13,855,129.

The acquisition of FBLIC was financed with the working capital of TLIC.

On

April

28,

2015,

the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of

$3,644,839

(including cash), assumed liabilities of

$3,055,916

and recorded a gain on reinsurance assumption of

$588,923.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included.

The

results of operations for the

three

months ended

March

31,

2017

are not necessarily indicative of the results to be expected for the year ended

December

31,

2017

or for any other interim period or for any other future year. Certain financial information which is normally included in notes to consolidated financial statements prepared in accordance with U.S. GAAP, but which is not required for interim reporting purposes, has been condensed or omitted. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company's report on Form

10

-K for the year ended

December

31,

2016.

Consolidation, Policy [Policy Text Block]

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.

Reclassification, Policy [Policy Text Block]

Reclassifications

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

Use of Estimates, Policy [Policy Text Block]

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 Policy [Policy Text Block]

Common Stock

Common stock is fully paid, non-assessable and has a par value of

$.01

per share.

Treasury Stock [Policy Text Block]

Treasury Stock

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.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

Management has evaluated all events subsequent to

March

31,

2017

through the date that these financial statements have been issued.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In

May

2014,

the Financial Accounting Standards Board ("FASB") issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance:

(1)

 identify the contract(s) with a customer;

(2)

 identify the performance obligations in the contract;

(3)

 determine the transaction price;

(4)

 allocate the transaction price to the performance obligations in the contract and

(5)

 recognize revenue when, or as, the entity satisfies a performance obligation.

In

July

 

2015,

the FASB deferred the effective date of the updated guidance on revenue recognitionby

one

year to the quarter ending

March

 

31,

2018.

  The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

In

August

2014,

the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is not alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions.

The guidance is effective for annual periods ending after

December

 

15,

2016,

and interim and annual periods thereafter. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity since there are no uncertainties about the Company’s ability to continue as a going concern.

Recognition and Measurement of Financial Assets and Financial Liabilities

In

January

2016,

the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after

December

15,

2017.

The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is not permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss). The effect of the adoption of this guidance on the Company’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods, the existence of a deferred tax asset related to available-for-sale securities in future periods and the economic conditions at the time of that future adoption.

Leases

In

February

2016,

the FASB issued updated guidance regarding leases that generally requires the lessee and lessor to recognize lease assets and lease liabilities on the statement of financial position. A lessee should recognize on the statement of financial position a liability to make lease payments and an asset representing its right-to-use the underlying assets for the lease term. Optional payments to extend the lease or purchase the underlying leased asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise the option(s).

If the lease has a term of

12

months or less, a lessee can make an election to recognize lease expenses for such leases on a straight-line basis over the lease term. There is a differentiation between finance leases and operating leases for the lessee in the statements of operations and cash flows. Finance leases recognize interest on the lease liability separately from the right-to-use the asset whereas an operating lease recognizes a single lease cost allocated over the lease term on a generally straight-line basis. All cash payments are within operating activities in the statement of cash flows except finance leases classify repayments of the principal portion of the lease liability within financing activities.

The accounting applied by the lessor is largely unchanged from that applied under previous U.S. GAAP. Key aspects of the lessor accounting model, however, were aligned with the revenue recognition guidance of Codification Topic

606.

The previous accounting model for leverage leases continues to apply only to those leveraged leases that commenced before the effective date of Codification Update

2016

-

02

Leases (Topic

842).

Entities will generally continue to account for leases that commenced before the effective date of this update in accordance with previous U.S. GAAP unless the lease is modified. Lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimal rental payments that were tracked and disclosed under previous U.S. GAAP. The updated guidance is to be applied using a modified retrospective approach effective for annual and interim periods beginning after

December

 

15,

2018.

Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Investments — Equity Method and Joint Ventures:  Simplifying the Transition to the Equity Method of Accounting

In

March

 

2016,

the FASB issued updated guidance that eliminates the requirement to retroactively apply the equity method of accounting when an investment that was previously accounted for using another method of accounting becomes qualified to apply the equity method due to an increase in the level of ownership interest or degree of influence.  If the investment was previously accounted for as an available-for-sale security, any related unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for the equity method is recognized through earnings.  The updated guidance is effective for reporting periods beginning after

December

 

15,

2016,

and is to be applied prospectively. Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Derivatives and Hedging:  Contingent Put and Call Options in Debt Instruments

In

March

 

2016,

the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument is contingently exercisable, the event that triggers the ability to exercise the option is considered to be clearly and closely related to the debt instrument (i.e., the economic characteristics and risks of the option are related to interest rates or credit risks) and the entity does not have to assess whether the option should be accounted for separately. The updated guidance is effective for reporting periods beginning after

December

 

15,

2016.

Early adoption is permitted. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Financial Instruments — Credit Losses:  Measurement of Credit Losses on Financial Instruments

In

June

 

2016,

the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. reinsurance amounts recoverable) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2019.

Early adoption is permitted for reporting periods beginning after

December

 

15,

2018.

Based on the financial instruments currently held by the Company, there would not be a material effect on the Company’s results of operations, financial position or liquidity if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s results of operations, financial position or liquidity at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In

August

2016,

the FASB issued specific guidance to reduce the existing diversity in practice in how

eight

specific cash flow issues of certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Consolidation – Interests Held through Related Parties that Are Under Common Control

In

October

2016,

the FASB issued further guidance that makes targeted amendments to consolidation accounting. This update changes how a reporting entity that is the primary beneficiary of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2016,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In

November

2016,

the FASB issued specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Business Combinations – Clarifying the Definition of a Business

In

January

2017,

the FASB issued guidance to clarify the definition of a business to assist reporting entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. This update provides a screen to determine when an integrated set of assets or activities is not a business and the requirements to be met to be considered a business.

The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted in certain situations.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Intangibles – Goodwill and Other - Simplifying the Test for Goodwill Impairment

In

January

2017,

the FASB issued guidance to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Reporting entities will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January

1,

2017.

  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Compensation — Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In

March

 

2017,

the FASB issued updated guidance to improve the presentation of net periodic pension cost and net periodic post retirement cost (net benefit costs). Net benefit costs comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to employees.  The update requires that the

employer service cost component be reported in the same lines as other employee compensation cost and that the other components (non-service costs) be presented separately from the service cost and outside of a subtotal of income from operations if

one

is presented.  The update also allows only the service cost component to be eligible for capitalization in assets when applicable.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2017.

The update is to be applied retrospectively with respect to the presentation of service cost and non-service cost and prospectively with respect to applying the service cost only eligible for capitalization in assets guidance. Early adoption is permitted as of the

first

interim period of an annual period if an entity issues interim financial statements. This pronouncement will not impact the Company since it does not have any pension or postretirement benefit plans and has no intention to adopt such plans.

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Note 2 - Investments (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair
	or Cost		Gains		Losses		Value
	March 31, 2017 (Unaudited)
Fixed maturity securities
U.S. government and U.S. government agencies	$	3,375,460	$	88,510	$	68,402	$	3,395,568
States and political subdivisions		9,602,066		167,836		50,211		9,719,691
Residential mortgage-backed securities		33,938		36,689		-		70,627
Corporate bonds		116,778,608		2,713,348		1,202,824		118,289,132
Foreign bonds		20,073,810		544,739		167,754		20,450,795
Total fixed maturity securities		149,863,882		3,551,122		1,489,191		151,925,813
Equity securities
Mutual funds		345,607		805		-		346,412
Corporate preferred stock		99,945		2,015		-		101,960
Corporate common stock		154,977		54,211		-		209,188
Total equity securities		600,529		57,031		-		657,560
Total fixed maturity and equity securities	$	150,464,411	$	3,608,153	$	1,489,191	$	152,583,373

	December 31, 2016
Fixed maturity securities
U.S. government and U.S. government agencies	$	3,157,889	$	99,086	$	71,592	$	3,185,383
States and political subdivisions		9,172,533		144,947		66,584		9,250,896
Residential mortgage-backed securities		33,970		36,757		-		70,727
Corporate bonds		100,268,424		2,324,712		1,613,095		100,980,041
Foreign bonds		15,677,449		394,742		248,083		15,824,108
Total fixed maturity securities		128,310,265		3,000,244		1,999,354		129,311,155
Equity securities
Mutual funds		344,783		-		2,869		341,914
Corporate preferred stock		99,945		-		3,585		96,360
Corporate common stock		154,672		45,461		-		200,133
Total equity securities		599,400		45,461		6,454		638,407
Total fixed maturity and equity securities	$	128,909,665	$	3,045,705	$	2,005,808	$	129,949,562

Schedule of Unrealized Loss on Investments [Table Text Block]

			Unrealized		Number of
	Fair Value		Loss		Securities
	March 31, 2017 (Unaudited)
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	2,086,562	$	68,402		7
States and political subdivisions		2,518,618		50,211		13
Corporate bonds		26,306,196		480,601		85
Foreign bonds		3,271,284		105,406		12
Total less than 12 months		34,182,660		704,620		117
More than 12 months
Corporate bonds		7,317,575		722,223		36
Foreign bonds		1,021,479		62,348		6
Total more than 12 months		8,339,054		784,571		42
Total fixed maturity securities	$	42,521,714	$	1,489,191		159

	December 31, 2016
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	1,878,308	$	71,592	6
States and political subdivisions		2,532,653		66,584	14
Corporate bonds		23,721,217		696,066	92
Foreign bonds		5,087,133		155,833	16
Total less than 12 months		33,219,311		990,075	128
More than 12 months
Corporate bonds		8,004,923		917,029	36
Foreign bonds		1,024,548		92,250	6
Total more than 12 months		9,029,471		1,009,279	42
Total fixed maturity securities		42,248,782		1,999,354	170
Equity securities
Less than 12 months
Corporate preferred stock		96,360		3,585	2
Total less than 12 months		96,360		3,585	2
More than 12 months
Mutual funds		89,113		2,869	1
Total more than 12 months		89,113		2,869	1
Total equity securities		185,473		6,454	3
Total fixed maturity and equity securities	$	42,434,255	$	2,005,808	173

Unrealized Gain (Loss) on Investments [Table Text Block]

	(Unaudited)
	March 31, 2017			December 31, 2016
Unrealized appreciation on available-for-sale securities	$	2,118,962		$	1,039,897
Adjustment to deferred acquisition costs		(36,053	)		(16,553	)
Deferred income taxes		(416,581	)		(204,668	)
Net unrealized appreciation on available-for-sale securities	$	1,666,328		$	818,676

Realized Gain (Loss) on Investments [Table Text Block]

	Three Months Ended March 31, (Unaudited)
	Fixed Maturity Securities						Equity Securities					Mortgage Loans on Real Estate				Investment Real Estate
	2017			2016			2017		2016			2017		2016		2017		2016
Proceeds	$	4,449,231		$	2,274,413		$	-	$	108,800		$	5,125,389	$	1,572,244	$	107,167	$	-
Gross realized gains		171,105			7,094			-		-			-		3,575		2,487		-
Gross realized losses		(7,086	)		(28,352	)		-		(1,468	)		-		-		-		-

Investment Income [Table Text Block]

	Three Months Ended March 31, (Unaudited)
	2017			2016
Fixed maturity securities	$	1,490,370		$	1,567,218
Equity securities		5,072			7,182
Other long-term investments		857,470			547,822
Mortgage loans		1,667,394			1,353,071
Policy loans		27,564			26,098
Real estate		93,711			91,968
Short-term and other investments		110,286			72,270
Gross investment income		4,251,867			3,665,629
Investment expenses		(581,996	)		(305,426	)
Net investment income	$	3,669,871		$	3,360,203

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	(Unaudited)
	March 31, 2017		December 31, 2016
Commercial mortgage loans
Retail stores	$	1,055,651	$	1,075,324
Office buildings		177,494		179,484
Total commercial mortgage loans		1,233,145		1,254,808
Residential mortgage loans		85,645,703		73,116,478
Total mortgage loans	$	86,878,848	$	74,371,286

Schedule of Real Estate Properties [Table Text Block]

	(Unaudited)
	March 31, 2017			December 31, 2016
Land - held for the production of income	$	213,160		$	213,160
Land - held for investment		745,155			745,155
Total land		958,315			958,315
Building - held for the production of income		2,267,557			2,267,557
Less - accumulated depreciation		(1,086,067	)		(1,049,695	)
Buildings net of accumulated depreciation		1,181,490			1,217,862
Residential real estate - held for sale		225,816			330,496
Total residential real estate		225,816			330,496
Investment real estate, net of accumulated depreciation	$	2,365,621		$	2,506,673

Available For Sale Fixed Maturity Securities [Member]

Notes Tables

Investments Classified by Contractual Maturity Date [Table Text Block]

	March 31, 2017 (Unaudited)
	Fixed Maturity Available-For-Sale Securities				Other Long-Term Investments
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	8,564,969	$	8,646,613	$	6,978,927	$	7,081,822
Due after one year through five years		31,765,292		32,499,328		19,501,912		21,055,897
Due after five years through ten years		42,243,357		43,132,728		13,854,164		16,558,746
Due after ten years		67,256,326		67,576,517		9,180,015		14,151,045
Due at multiple maturity dates		33,938		70,627		-		-
	$	149,863,882	$	151,925,813	$	49,515,018	$	58,847,510

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Note 3 - Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Level 1		Level 2		Level 3		Total
	March 31, 2017 (Unaudited)
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	3,395,568	$	-	$	3,395,568
States and political subdivisions		-		9,719,691		-		9,719,691
Residential mortgage-backed securities		-		70,627		-		70,627
Corporate bonds		-		118,289,132		-		118,289,132
Foreign bonds		-		20,450,795		-		20,450,795
Total fixed maturity securities	$	-	$	151,925,813	$	-	$	151,925,813
Equity securities, available-for-sale
Mutual funds	$	-	$	346,412	$	-	$	346,412
Corporate preferred stock		101,960		-		-		101,960
Corporate common stock		147,688		-		61,500		209,188
Total equity securities	$	249,648	$	346,412	$	61,500	$	657,560

	December 31, 2016
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	3,185,383	$	-	$	3,185,383
States and political subdivisions		-		9,250,896		-		9,250,896
Residential mortgage-backed securities		-		70,727		-		70,727
Corporate bonds		-		100,980,041		-		100,980,041
Foreign bonds		-		15,824,108		-		15,824,108
Total fixed maturity securities	$	-	$	129,311,155	$	-	$	129,311,155
Equity securities, available-for-sale
Mutual funds	$	-	$	341,914	$	-	$	341,914
Corporate preferred stock		96,360		-		-		96,360
Corporate common stock		138,633		-		61,500		200,133
Total equity securities	$	234,993	$	341,914	$	61,500	$	638,407

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
	March 31, 2017 (Unaudited)
Financial assets
Mortgage loans on real estate
Commercial	$	1,233,145	$	1,245,615	$	-	$	-	$	1,245,615
Residential		85,645,703		86,519,153		-		-		86,519,153
Policy loans		1,576,307		1,576,307		-		-		1,576,307
Other long-term investments		49,515,018		58,847,510		-		-		58,847,510
Cash and cash equivalents		25,962,536		25,962,536		25,962,536		-		-
Accrued investment income		2,542,754		2,542,754		-		-		2,542,754
Total financial assets	$	166,475,463	$	150,458,439	$	25,962,536	$	-	$	124,495,903
Financial liabilities
Policyholders' account balances	$	267,911,869	$	226,181,661	$	-	$	-	$	226,181,661
Policy claims		938,779		938,779		-		-		938,779
Total financial liabilities	$	268,850,648	$	185,368,033	$	-	$	-	$	185,368,033

	December 31, 2016
Financial assets
Mortgage loans on real estate
Commercial	$	1,254,808	$	1,268,140	$	-	$	-	$	1,268,140
Residential		73,116,478		70,383,661		-		-		70,383,661
Policy loans		1,598,116		1,598,116		-		-		1,598,116
Other long-term investments		46,788,873		55,890,429		-		-		55,890,429
Cash and cash equivalents		34,223,945		34,223,945		34,223,945		-		-
Accrued investment income		2,176,770		2,176,770		-		-		2,176,770
Total financial assets	$	159,158,990	$	165,541,061	$	34,223,945	$	-	$	131,317,116
Financial liabilities
Policyholders' account balances	$	245,346,489	$	206,541,702	$	-	$	-	$	206,541,702
Policy claims		997,814		997,814		-		-		997,814
Total financial liabilities	$	246,344,303	$	207,539,516	$	-	$	-	$	207,539,516

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Note 4 - Segment Data (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended March 31, (Unaudited)
	2017		2016
Revenues:
Life insurance operations	$	4,184,653	$	3,745,244
Annuity operations		3,188,969		2,637,424
Corporate operations		134,337		158,239
Total	$	7,507,959	$	6,540,907
Income before income taxes:
Life insurance operations	$	117,848	$	29,953
Annuity operations		160,414		228,256
Corporate operations		71,255		89,997
Total	$	349,517	$	348,206
Depreciation and amortization expense:
Life insurance operations	$	414,284	$	674,547
Annuity operations		420,048		155,912
Corporate operations		-		-
Total	$	834,332	$	830,459

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	(Unaudited)
	March 31, 2017		December 31, 2016
Assets:
Life insurance operations	$	51,429,483	$	50,577,282
Annuity operations		299,630,314		275,745,766
Corporate operations		6,772,563		6,929,565
Total	$	357,832,360	$	333,252,613

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Note 7 - Other Comprehensive Income and Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended March 31, 2017 and 2016 (Unaudited)
	Unrealized
	Appreciation						Accumulated
	(Depreciation) on			Adjustment to			Other
	Available-For-Sale			Deferred Acquisition			Comprehensive
	Securities			Costs			Income (Loss)
Balance as of January 1, 2017	$	831,917		$	(13,241	)	$	818,676
Other comprehensive income before reclassifications, net of tax		994,467			(15,600	)		978,867
Less amounts reclassified from accumulated other comprehensive income, net of tax		131,215			-			131,215
Other comprehensive income		863,252			(15,600	)		847,652
Balance as of March 31, 2017	$	1,695,169		$	(28,841	)	$	1,666,328
Balance as of January 1, 2016	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of tax		3,023,618			(48,104	)		2,975,514
Less amounts reclassified from accumulated other comprehensive income, net of tax		(18,181	)		-			(18,181	)
Other comprehensive income		3,041,799			(48,104	)		2,993,695
Balance as of March 31, 2016	$	345,923		$	(8,045	)	$	337,878

Comprehensive Income (Loss) [Table Text Block]

				Income Tax
	Pretax			Expense			Net of Tax
	Three Months Ended March 31, 2017 (Unaudited)
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	1,243,084		$	248,617		$	994,467
Reclassification adjustment for net gains included in operations		164,019			32,804			131,215
Net unrealized gains on investments		1,079,065			215,813			863,252
Adjustment to deferred acquisition costs		(19,500	)		(3,900	)		(15,600	)
Total other comprehensive income	$	1,059,565		$	211,913		$	847,652

	Three Months Ended March 31, 2016 (Unaudited)
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	3,779,522		$	755,904		$	3,023,618
Reclassification adjustment for net losses included in operations		(22,726	)		(4,545	)		(18,181	)
Net unrealized gains on investments		3,802,248			760,449			3,041,799
Adjustment to deferred acquisition costs		(60,130	)		(12,026	)		(48,104	)
Total other comprehensive income	$	3,742,118		$	748,423		$	2,993,695

Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended March 31, (Unaudited)
Reclassification Adjustments	2017		2016
Unrealized gains on available-for-sale securities:
Realized gains (losses) on sales of securities (a)	$	164,019	$	(22,726	)
Income tax expense (benefit) (b)		32,804		(4,545	)
Total reclassification adjustments	$	131,215	$	(18,181	)

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Note 8 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	As of and for the Three Months Ended March 31, (Unaudited)
	Residential Mortgage Loans				Commercial Mortgage Loans						Premium Finance Loans					Total
	2017		2016		2017			2016			2017		2016			2017		2016
Allowance, beginning	$	238,121	$	175,988	$	6,306		$	7,360		$	-	$	197,172		$	244,427	$	380,520
Charge offs		-		-		-			-			-		-			-		-
Recoveries		-		-		-			-			-		-			-		-
Provision		42,163		6,484		(109	)		(115	)		-		(4,482	)		42,054		1,887
Allowance, ending	$	280,284	$	182,472	$	6,197		$	7,245		$	-	$	192,690		$	286,481	$	382,407
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	192,690		$	-	$	192,690
Collectively evaluated for impairment	$	280,284	$	182,472	$	6,197		$	7,245		$	-	$	-		$	286,481	$	189,717
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	347,885		$	-	$	347,885
Collectively evaluated for impairment	$	55,968,265	$	36,840,353	$	1,233,145		$	1,441,814		$	-	$	-		$	57,201,410	$	38,282,167

Financing Receivable Credit Quality Indicators [Table Text Block]

	Residential Mortgage Loans				Commercial Mortgage Loans				Total Mortgage Loans
	(Unaudited)				(Unaudited)				(Unaudited)
Loan-To-Value Ratio	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
Over 70% to 80%	$	15,380,587	$	14,559,541	$	-	$	-	$	15,380,587	$	14,559,541
Over 60% to 70%		32,049,451		29,738,887		-		-		32,049,451		29,738,887
Over 50% to 60%		21,712,187		15,440,364		1,040,222		1,051,155		22,752,409		16,491,519
Over 40% to 50%		12,345,596		10,399,031		-		-		12,345,596		10,399,031
Over 30% to 40%		2,276,132		2,184,351		192,923		203,653		2,469,055		2,388,004
Over 20% to 30%		1,544,076		467,410		-		-		1,544,076		467,410
Over 10% to 20%		333,013		317,936		-		-		333,013		317,936
10% or less		4,661		8,958		-		-		4,661		8,958
Total	$	85,645,703	$	73,116,478	$	1,233,145	$	1,254,808	$	86,878,848	$	74,371,286

XML

Note 1 - Organization and Significant Accounting Policies (Details Textual)					3 Months Ended	12 Months Ended	24 Months Ended	93 Months Ended	110 Months Ended	156 Months Ended
	Apr. 28, 2015 USD ($)	Dec. 28, 2011 USD ($)	Dec. 31, 2008 USD ($)	Dec. 23, 2008 USD ($)	Mar. 31, 2017 $ / shares	Dec. 31, 2004 USD ($)	Dec. 31, 2012 USD ($) shares	Mar. 08, 2013 USD ($)	Mar. 08, 2013 USD ($) shares	Dec. 31, 2016 USD ($) $ / shares shares	Aug. 31, 2009
Proceeds from Issuance of Private Placement						$ 1,450,000
Number Of Private Placements						2		1
Proceeds from Issuance Initial Public Offering								$ 25,669,480
Number of Public Offerings								2
Common Stock Dividends, Shares | shares							702,685
Number of Stock Dividends							2
Treasury Stock, Shares, Acquired | shares										247,580
Treasury Stock, Value, Acquired, Cost Method										$ 893,947
Business Combination, Consideration Transferred		$ 13,855,129
Number of Subsidiaries Merged											2
Asset Acquired Under Assumption Reinsurance Agreement	$ 3,644,839
Liabilities Assumed Under Reinsurance Assumption Agreement	3,055,916
Gain on Reinsurance Assumption	$ 588,923
Common Stock, Par or Stated Value Per Share | $ / shares					$ 0.01					$ 0.01
Retained Earnings [Member]
Dividends							$ 5,270,138
Common Stock Including Additional Paid in Capital [Member]
Stock Issued During Period, Value, Stock Dividend							$ 5,270,138
Term Products 10 Year [Member]
Term Products Number of Years					10 years
Term Products 15 Year [Member]
Term Products Number of Years					15 years
Term Products 20 Year [Member]
Term Products Number of Years					20 years
Term Products 30 Year [Member]
Term Products Number of Years					30 years
Trinity Life Insurance Company [Member] | Family Benefit Life Insurance Company [Member]
Business Acquisition, Percentage of Voting Interests Acquired		100.00%
First Trinity Financial Corporation [Member] | First Life America Corporation [Member
Business Acquisition, Percentage of Voting Interests Acquired				100.00%
Business Combination, Consideration Transferred				$ 2,695,234
Business Combination, Acquisition Related Costs				$ 195,234
Debt Instrument, Term			15 years
Debt Instrument, Face Amount			$ 250,000
Debt Instrument, Interest Rate, Stated Percentage			6.00%
Trinity Life Insurance Company [Member]
Wholly Owned Subsidiary Ownership Percentage					100.00%
Family Benefit Life Insurance Company [Member] | Trinity Life Insurance Company [Member]
Wholly Owned Subsidiary Ownership Percentage					100.00%
First Trinity Capital Corporation [Member]
Wholly Owned Subsidiary Ownership Percentage					100.00%
First Trinity Capital Corporation [Member] | First Life America Corporation [Member
Stock Issued During Period, Shares, New Issues | shares									7,347,488
Payments of Stock Issuance Costs									$ 3,624,518

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Note 2 - Investments (Details Textual)		3 Months Ended			12 Months Ended
	Nov. 30, 2016 USD ($)	Mar. 31, 2017 USD ($) ft² a	Dec. 31, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions			173		173
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss			$ 2,005,808		$ 2,005,808
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value			42,434,255		42,434,255
Investment Impaired Par Value					650,000
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held			207,450		207,450
Deposit Assets		$ 4,107,553	4,099,405		4,099,405
Other Assets, Fair Value Disclosure		4,132,879	4,125,116		$ 4,125,116
Number of Investment Real Estate Properties Sold	1
Real Estate Investments, Carrying Value of Real Estate Property Sold During the Period	$ 63,931	104,680
Gains (Losses) on Sales of Investment Real Estate	(20,662)	2,487
Proceeds from Sale of Real Estate Held-for-investment	$ 43,269	$ 107,167
Impairment of Investments Number of Securities		0		0
Residential Mortgage [Member]
Number of Mortgage Loans Foreclosed					7
Mortgage Loans on Real Estate, Foreclosures					$ 394,427
Topeka Kansas [Member] | Trinity Life Insurance Company [Member]
Area of Land | a		6.5
Topeka Kansas [Member] | Trinity Life Insurance Company [Member] | Held for the Production of Income [Member] | Office Building [Member]
Area of Real Estate Property | ft²		20,000
Jefferson City Missouri [Member] | FBLIC [Member] | Assets Held-for-sale not Part of a Disposal Group [Member]
Area of Land | a		0.5
Impairment of Real Estate			4,892
Lottery Prize Cash Flows [Member]
Other Investments		$ 49,515,018	$ 46,788,873		$ 46,788,873
Debt Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions		159	170		170
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		$ 1,489,191	$ 1,999,354		$ 1,999,354
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		42,521,714	42,248,782		42,248,782
Available-for-sale Securities Continuous Unrealized Loss Position Amortized Cost		$ 44,010,905	$ 44,248,136		$ 44,248,136
Fair Value to Cost Ratio		97.00%	95.00%		95.00%
Fixed Maturity Securities, Investment Grade Percentage		93.00%	92.00%		92.00%
Impairment of Investments Number of Securities			1
Equity Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions		0	3		3
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss			$ 6,454		$ 6,454
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value			185,473		185,473
Available-for-sale Securities Continuous Unrealized Loss Position Amortized Cost			$ 191,927		$ 191,927
Fair Value to Cost Ratio			97.00%		97.00%

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Note 2 - Investments - Available-for-sale Fixed Maturity and Equity Securities (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Securities, amortized cost	$ 150,464,411	$ 128,909,665
Securities, gross unrealized gains	3,608,153	3,045,705
Securities, gross unrealized losses	1,489,191	2,005,808
Available-for-sale securities	152,583,373	129,949,562
US Treasury and Government [Member]
Securities, amortized cost	3,375,460	3,157,889
Securities, gross unrealized gains	88,510	99,086
Securities, gross unrealized losses	68,402	71,592
Available-for-sale securities	3,395,568	3,185,383
US States and Political Subdivisions Debt Securities [Member]
Securities, amortized cost	9,602,066	9,172,533
Securities, gross unrealized gains	167,836	144,947
Securities, gross unrealized losses	50,211	66,584
Available-for-sale securities	9,719,691	9,250,896
Residential Mortgage Backed Securities [Member]
Securities, amortized cost	33,938	33,970
Securities, gross unrealized gains	36,689	36,757
Securities, gross unrealized losses
Available-for-sale securities	70,627	70,727
Corporate Debt Securities [Member]
Securities, amortized cost	116,778,608	100,268,424
Securities, gross unrealized gains	2,713,348	2,324,712
Securities, gross unrealized losses	1,202,824	1,613,095
Available-for-sale securities	118,289,132	100,980,041
Foreign Government Debt Securities [Member]
Securities, amortized cost	20,073,810	15,677,449
Securities, gross unrealized gains	544,739	394,742
Securities, gross unrealized losses	167,754	248,083
Available-for-sale securities	20,450,795	15,824,108
Debt Securities [Member]
Securities, amortized cost	149,863,882	128,310,265
Securities, gross unrealized gains	3,551,122	3,000,244
Securities, gross unrealized losses	1,489,191	1,999,354
Available-for-sale securities	151,925,813	129,311,155
Mutual Funds [Member]
Securities, amortized cost	345,607	344,783
Securities, gross unrealized gains	805
Securities, gross unrealized losses		2,869
Available-for-sale securities	346,412	341,914
Preferred Stock [Member]
Securities, amortized cost	99,945	99,945
Securities, gross unrealized gains	2,015
Securities, gross unrealized losses		3,585
Available-for-sale securities	101,960	96,360
Common Stock [Member]
Securities, amortized cost	154,977	154,672
Securities, gross unrealized gains	54,211	45,461
Securities, gross unrealized losses
Available-for-sale securities	209,188	200,133
Equity Securities [Member]
Securities, amortized cost	600,529	599,400
Securities, gross unrealized gains	57,031	45,461
Securities, gross unrealized losses		6,454
Available-for-sale securities	$ 657,560	$ 638,407

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Note 2 - Investments - Securities in an Unrealized Loss Position (Details)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		$ 42,434,255
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		$ 2,005,808
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions		173
US Government Agencies Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 2,086,562	$ 1,878,308
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 68,402	$ 71,592
Securities in an unrealized loss position, less than twelve months, number	7	6
US States and Political Subdivisions Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 2,518,618	$ 2,532,653
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 50,211	$ 66,584
Securities in an unrealized loss position, less than twelve months, number	13	14
Corporate Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 26,306,196	$ 23,721,217
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 480,601	$ 696,066
Securities in an unrealized loss position, less than twelve months, number	85	92
Securities in an unrealized loss position, more than twelve months, fair value	$ 7,317,575	$ 8,004,923
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 722,223	$ 917,029
ecurities in an unrealized loss position, more than twelve months, number	36	36
Foreign Government Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 3,271,284	$ 5,087,133
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 105,406	$ 155,833
Securities in an unrealized loss position, less than twelve months, number	12	16
Securities in an unrealized loss position, more than twelve months, fair value	$ 1,021,479	$ 1,024,548
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 62,348	$ 92,250
ecurities in an unrealized loss position, more than twelve months, number	6	6
Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 34,182,660	$ 33,219,311
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 704,620	$ 990,075
Securities in an unrealized loss position, less than twelve months, number	117	128
Securities in an unrealized loss position, more than twelve months, fair value	$ 8,339,054	$ 9,029,471
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 784,571	$ 1,009,279
ecurities in an unrealized loss position, more than twelve months, number	42	42
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 42,521,714	$ 42,248,782
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 1,489,191	$ 1,999,354
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	159	170
Preferred Stock [Member]
Securities in an unrealized loss position, less than twelve months, fair value		$ 96,360
Securities in an unrealized loss position, less than twelve months, unrealized loss		$ 3,585
Securities in an unrealized loss position, less than twelve months, number		2
Equity Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value		$ 96,360
Securities in an unrealized loss position, less than twelve months, unrealized loss		$ 3,585
Securities in an unrealized loss position, less than twelve months, number		2
Securities in an unrealized loss position, more than twelve months, fair value		$ 89,113
Securities in an unrealized loss position, more than twelve months, unrealized loss		$ 2,869
ecurities in an unrealized loss position, more than twelve months, number		1
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		$ 185,473
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		$ 6,454
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	0	3
Mutual Funds [Member]
Securities in an unrealized loss position, more than twelve months, fair value		$ 89,113
Securities in an unrealized loss position, more than twelve months, unrealized loss		$ 2,869
ecurities in an unrealized loss position, more than twelve months, number		1

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Note 2 - Investments - Net Unrealized Gains Included in Accumulated Other Comprehensive Income (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Unrealized appreciation on available-for-sale securities	$ 2,118,962	$ 1,039,897
Adjustment to deferred acquisition costs	(36,053)	(16,553)
Deferred income taxes	(416,581)	(204,668)
Net unrealized appreciation on available-for-sale securities	$ 1,666,328	$ 818,676

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Note 2 - Investments - Fixed Maturity Available-for-sale Securities by Contractual Maturities (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Available-for-sale securities - amortized cost	$ 149,863,882	$ 128,310,265
Available-for-sale securities - fair value	151,925,813	$ 129,311,155
Fixed Maturities [Member]
Due in one year or less - amortized cost	8,564,969
Due in one year or less - fair value	8,646,613
Due after one year through five years	31,765,292
Due after one year through five years	32,499,328
Due after five years through ten years - amortized cost	42,243,357
Due after five years through ten years - fair value	43,132,728
Due after ten years - amortized cost	67,256,326
Due after ten years - fair value	67,576,517
Due at multiple maturity dates - amortized cost	33,938
Due at multiple maturity dates - fair value	70,627
Available-for-sale securities - amortized cost	149,863,882
Available-for-sale securities - fair value	151,925,813
Other Long-term Investments [Member]
Due in one year or less - amortized cost	6,978,927
Due in one year or less - fair value	7,081,822
Due after one year through five years	19,501,912
Due after one year through five years	21,055,897
Due after five years through ten years - amortized cost	13,854,164
Due after five years through ten years - fair value	16,558,746
Due after ten years - amortized cost	9,180,015
Due after ten years - fair value	14,151,045
Due at multiple maturity dates - amortized cost
Due at multiple maturity dates - fair value
Available-for-sale securities - amortized cost	49,515,018
Available-for-sale securities - fair value	$ 58,847,510

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Note 2 - Investments - Available-for-sale Securities - Proceeds and Gross Realized Gains (Losses) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Fixed Maturities [Member]
Proceeds	$ 4,449,231	$ 2,274,413
Gross realized gains	171,105	7,094
Gross realized losses	(7,086)	(28,352)
Equity Securities [Member]
Proceeds		108,800
Gross realized gains
Gross realized losses		(1,468)
Mortgages [Member]
Proceeds	5,125,389	1,572,244
Gross realized gains		3,575
Gross realized losses
Real Estate Investment [Member]
Proceeds	107,167
Gross realized gains	2,487
Gross realized losses

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Note 2 - Investments - Major Categories of Net Investment Income (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Gross Investment income	$ 4,251,867	$ 3,665,629
Investment expenses	(581,996)	(305,426)
Net investment income	3,669,871	3,360,203
Fixed Maturities [Member]
Gross Investment income	1,490,370	1,567,218
Equity Securities [Member]
Gross Investment income	5,072	7,182
Other Long-term Investments [Member]
Gross Investment income	857,470	547,822
Mortgages [Member]
Gross Investment income	1,667,394	1,353,071
Policy Loans [Member]
Gross Investment income	27,564	26,098
Real Estate Investment [Member]
Gross Investment income	93,711	91,968
Short-term Investments [Member]
Gross Investment income	$ 110,286	$ 72,270

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Note 2 - Investments - Mortgage Loans on Real Estate (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 86,878,848	$ 74,371,286
Commercial Portfolio Segment [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	1,233,145	1,254,808
Commercial Portfolio Segment [Member] | Retail Site [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	1,055,651	1,075,324
Commercial Portfolio Segment [Member] | Office Building [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	177,494	179,484
Residential Portfolio Segment [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 85,645,703	$ 73,116,478

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Note 2 - Investments - Investment Real Estate (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Investment real estate, net	$ 2,365,621	$ 2,506,673
Land Held for the Production of Income [Member]
Investment real estate	213,160	213,160
Land Held for Sale [Member]
Investment real estate	745,155	745,155
Land [Member]
Investment real estate	958,315	958,315
Building Held for the Production of Income [Member]
Investment real estate	2,267,557	2,267,557
Less - accumulated depreciation	(1,086,067)	(1,049,695)
Investment real estate, net	1,181,490	1,217,862
Residential Real Estate - Held for Sale [Member]
Investment real estate	$ 225,816	$ 330,496

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Note 3 - Fair Value Measurements (Details Textual)	Mar. 31, 2017	Dec. 31, 2016
Number Of Private Placement Common Stocks	2	2

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Note 3 - Fair Value Measurements - Fair Value Measured on a Recurring Basis (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Available-for-sale securities	$ 152,583,373	$ 129,949,562
US Treasury and Government [Member]
Available-for-sale securities	3,395,568	3,185,383
US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	3,395,568	3,185,383
US Treasury and Government [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
US Treasury and Government [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	3,395,568	3,185,383
US Treasury and Government [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities	9,719,691	9,250,896
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	9,719,691	9,250,896
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	9,719,691	9,250,896
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Residential Mortgage Backed Securities [Member]
Available-for-sale securities	70,627	70,727
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	70,627	70,727
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	70,627	70,727
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Corporate Debt Securities [Member]
Available-for-sale securities	118,289,132	100,980,041
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	118,289,132	100,980,041
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	118,289,132	100,980,041
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Foreign Government Debt Securities [Member]
Available-for-sale securities	20,450,795	15,824,108
Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	20,450,795	15,824,108
Foreign Government Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Foreign Government Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	20,450,795	15,824,108
Foreign Government Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Debt Securities [Member]
Available-for-sale securities	151,925,813	129,311,155
Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	151,925,813	129,311,155
Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	151,925,813	129,311,155
Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Mutual Funds [Member]
Available-for-sale securities	346,412	341,914
Mutual Funds [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	346,412	341,914
Mutual Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Mutual Funds [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	346,412	341,914
Mutual Funds [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Preferred Stock [Member]
Available-for-sale securities	101,960	96,360
Preferred Stock [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	101,960	96,360
Preferred Stock [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	101,960	96,360
Preferred Stock [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Preferred Stock [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Common Stock [Member]
Available-for-sale securities	209,188	200,133
Common Stock [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	209,188	200,133
Common Stock [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	147,688	138,633
Common Stock [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Common Stock [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	61,500	61,500
Equity Securities [Member]
Available-for-sale securities	657,560	638,407
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	657,560	638,407
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	249,648	234,993
Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	346,412	341,914
Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	$ 61,500	$ 61,500

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Note 3 - Fair Value Measurements - Estimated Fair Values of Financial Instruments (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Policy loans	$ 1,576,307	$ 1,598,116
Accrued investment income	2,542,754	2,176,770
Policy claims	938,779	997,814
Reported Value Measurement [Member]
Policy loans	1,576,307	1,598,116
Other long-term investments	49,515,018	46,788,873
Cash and cash equivalents	25,962,536	34,223,945
Accrued investment income	2,542,754	2,176,770
Total financial assets	166,475,463	159,158,990
Policyholders' account balances	267,911,869	245,346,489
Policy claims	938,779	997,814
Total financial liabilities	268,850,648	246,344,303
Estimate of Fair Value Measurement [Member]
Policy loans	1,576,307	1,598,116
Other long-term investments	58,847,510	55,890,429
Cash and cash equivalents	25,962,536	34,223,945
Accrued investment income	2,542,754	2,176,770
Total financial assets	150,458,439	165,541,061
Policyholders' account balances	226,181,661	206,541,702
Policy claims	938,779	997,814
Total financial liabilities	185,368,033	207,539,516
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Policy loans
Other long-term investments
Cash and cash equivalents	25,962,536	34,223,945
Accrued investment income
Total financial assets	25,962,536	34,223,945
Policyholders' account balances
Policy claims
Total financial liabilities
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Policy loans
Other long-term investments
Cash and cash equivalents
Accrued investment income
Total financial assets
Policyholders' account balances
Policy claims
Total financial liabilities
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Policy loans	1,576,307	1,598,116
Other long-term investments	58,847,510	55,890,429
Cash and cash equivalents
Accrued investment income	2,542,754	2,176,770
Total financial assets	124,495,903	131,317,116
Policyholders' account balances	226,181,661	206,541,702
Policy claims	938,779	997,814
Total financial liabilities	185,368,033	207,539,516
Commercial [Member] | Reported Value Measurement [Member]
Mortgage loans on real estate	1,233,145	1,254,808
Commercial [Member] | Estimate of Fair Value Measurement [Member]
Mortgage loans on real estate	1,245,615	1,268,140
Commercial [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Mortgage loans on real estate
Commercial [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Mortgage loans on real estate
Commercial [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Mortgage loans on real estate	1,245,615	1,268,140
Residential [Member] | Reported Value Measurement [Member]
Mortgage loans on real estate	85,645,703	73,116,478
Residential [Member] | Estimate of Fair Value Measurement [Member]
Mortgage loans on real estate	86,519,153	70,383,661
Residential [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Mortgage loans on real estate
Residential [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Mortgage loans on real estate
Residential [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Mortgage loans on real estate	$ 86,519,153	$ 70,383,661

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Note 4 - Segment Data - Segment Data - Operations (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Total revenue	$ 7,507,959	$ 6,540,907
Income before income taxes	349,517	348,206
Depreciation and amortization expense	834,332	830,459
Life Insurance Operations [Member]
Total revenue	4,184,653	3,745,244
Income before income taxes	117,848	29,953
Depreciation and amortization expense	414,284	674,547
Annuity Operations [Member]
Total revenue	3,188,969	2,637,424
Income before income taxes	160,414	228,256
Depreciation and amortization expense	420,048	155,912
Corporate Segment [Member]
Total revenue	134,337	158,239
Income before income taxes	71,255	89,997
Depreciation and amortization expense

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Note 4 - Segment Data - Segment Data - Assets (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Total assets	$ 357,832,360	$ 333,252,613
Life Insurance Operations [Member]
Total assets	51,429,483	50,577,282
Annuity Operations [Member]
Total assets	299,630,314	275,745,766
Corporate Segment [Member]
Total assets	$ 6,772,563	$ 6,929,565

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Note 5 - Federal Income Taxes (Details Textual) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Unrecognized Tax Benefits	$ 0
Domestic Tax Authority [Member] | Earliest Tax Year [Member]
Open Tax Year	2013
Domestic Tax Authority [Member] | Latest Tax Year [Member]
Open Tax Year	2016

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Note 6 - Legal Matters and Contingent Liabilities (Details Textual)		1 Months Ended
	Feb. 17, 2017 USD ($)	Nov. 22, 2013	Feb. 01, 2016 USD ($)
Case No. CJ-2013-03385 [Member] | Mr. Pettigrew [Member]
Loss Contingency, Damages Awarded, Value	$ 4,300,000
Case No. CJ-2013-03385 [Member] | Mr. Pettigrew [Member] | First Trinity Financial Corporation [Member]
Loss Contingency, Damages Awarded, Value	800,000
Case No. CJ-2013-03385 [Member] | Mr. Pettigrew [Member] | Mr. Zahn [Member]
Loss Contingency, Damages Awarded, Value	$ 3,500,000
Decreasing Term to 95 [Member] | Pending Litigation [Member]
Loss Contingency, Number of Plaintiffs		3
Loss Contingency, Estimate of Possible Loss			$ 2,548,939

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Note 7 - Other Comprehensive Income and Accumulated Other Comprehensive Income - Accumulated Other Comprehensive Income (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Beginning Balance	$ 818,676	$ (2,655,817)
Other comprehensive income before reclassifications, net of tax	978,867	2,975,514
Less amounts reclassified from accumulated other comprehensive income, net of tax	131,215	(18,181)
Other comprehensive income	847,652	2,993,695
Ending Balance	1,666,328	337,878
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Beginning Balance	831,917	(2,695,876)
Other comprehensive income before reclassifications, net of tax	994,467	3,023,618
Less amounts reclassified from accumulated other comprehensive income, net of tax	131,215	(18,181)
Other comprehensive income	863,252	3,041,799
Ending Balance	1,695,169	345,923
Adjustment to Deferred Acquisition Costs [Member]
Beginning Balance	(13,241)	40,059
Other comprehensive income before reclassifications, net of tax	(15,600)	(48,104)
Less amounts reclassified from accumulated other comprehensive income, net of tax
Other comprehensive income	(15,600)	(48,104)
Ending Balance	$ (28,841)	$ (8,045)

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Note 7 - Other Comprehensive Income and Accumulated Other Comprehensive Income - Other Comprehensive Income (Details) - USD ($)		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Total net unrealized gains arising during the period		$ 1,243,084	$ 3,779,522
Unrealized holding gains arising during the period, income tax expense		248,617	755,904
Unrealized holding gains arising during the period, net of tax		994,467	3,023,618
Less net realized investment gains (losses)	[1]	164,019	(22,726)
Reclassification adjustment for net gains (losses) included in operations, income tax expense	[2]	32,804	(4,545)
Reclassification adjustment for net gains (losses) included in operations, net of tax		131,215	(18,181)
Net unrealized gains on investments, pretax		1,079,065	3,802,248
Net unrealized gains on investments, income tax expense		215,813	760,449
Net unrealized gains on investments, net of tax		863,252	3,041,799
Adjustment to deferred acquisition costs, pretax		(19,500)	(60,130)
Adjustment to deferred acquisition costs, income tax expense		(3,900)	(12,026)
Adjustment to deferred acquisition costs, net of tax		(15,600)	(48,104)
Total other comprehensive income, pretax		1,059,565	3,742,118
Total other comprehensive income, income tax expense		211,913	748,423
Total other comprehensive income, net of tax		$ 847,652	$ 2,993,695

[1] These items appear within net realized investment gains (losses) in the consolidated statement of operations.

[2] These items appear within federal income taxes in the consolidated statement of operations.

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Note 7 - Other Comprehensive Income and Accumulated Other Comprehensive Income - Reclassified from Accumulated Other Comprehensive Income (Details) - USD ($)		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Realized gains (losses) on sales of securities	[1]	$ 164,019	$ (22,726)
Income tax expense (benefit)	[2]	32,804	(4,545)
Total reclassification adjustments		$ 131,215	$ (18,181)

[1] These items appear within net realized investment gains (losses) in the consolidated statement of operations.

[2] These items appear within federal income taxes in the consolidated statement of operations.

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Note 8 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing (Details Textual) - USD ($)	Jun. 30, 2012	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses		$ 286,481	$ 244,427	$ 382,407	$ 380,520
Mortgage Loans on Real Estate, Commercial and Consumer, Net		86,878,848	74,371,286
Premiums Receivable, Percent Of Premium	80.00%
Premiums Receivable Down Payment Percent Of Premium	20.00%
Premiums Receivable, Delinquent Premium Term	25 days
One Loan Originator [Member]
Financing Receivable, Allowance for Credit Losses		148,387
Mortgage Loans on Real Estate, Commercial and Consumer, Net		29,677,438	25,523,757	$ 22,649,615
One Loan Originator [Member] | Independent Mortgage Loan Balances [Member]
Escrow Deposit		544,016	525,063
All Other Entities [Member]
Financing Receivable, Allowance for Credit Losses		286,481	244,427
Mortgage Loans on Real Estate, Commercial and Consumer, Net		$ 57,201,410	$ 48,847,529

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Note 8 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing - Allowance for Loss On Premium Financing (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Allowance, beginning	$ 244,427	$ 380,520
Charge offs	0	0
Recoveries	0	0
Provision	42,054	1,887
Allowance, ending	286,481	382,407
Individually evaluated for impairment	0	192,690
Collectively evaluated for impairment	286,481	189,717
Individually evaluated for impairment	0	347,885
Collectively evaluated for impairment	57,201,410	38,282,167
Residential Portfolio Segment [Member]
Allowance, beginning	238,121	175,988
Charge offs	0	0
Recoveries	0	0
Provision	42,163	6,484
Allowance, ending	280,284	182,472
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	280,284	182,472
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	55,968,265	36,840,353
Commercial Portfolio Segment [Member]
Allowance, beginning	6,306	7,360
Charge offs	0	0
Recoveries	0	0
Provision	(109)	(115)
Allowance, ending	6,197	7,245
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	6,197	7,245
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	1,233,145	1,441,814
Premium Finance Loans [Member]
Allowance, beginning	0	197,172
Charge offs	0	0
Recoveries	0	0
Provision	0	(4,482)
Allowance, ending	0	192,690
Individually evaluated for impairment	0	192,690
Collectively evaluated for impairment	0	0
Individually evaluated for impairment	0	347,885
Collectively evaluated for impairment	$ 0	$ 0

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Note 8 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing - Mortgage Loan to Value Ratios (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Mortgage loans on real estate	$ 86,878,848	$ 74,371,286
Residential Portfolio Segment [Member]
Mortgage loans on real estate	85,645,703	73,116,478
Commercial Portfolio Segment [Member]
Mortgage loans on real estate	1,233,145	1,254,808
Loan to Value Range1 [Member]
Mortgage loans on real estate	15,380,587	14,559,541
Loan to Value Range1 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	15,380,587	14,559,541
Loan to Value Range1 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range1 [Member] | Minimum [Member]
Loan to value ratio	70.00%
Loan to Value Range1 [Member] | Maximum [Member]
Loan to value ratio		80.00%
Loan to Value Range 2 [Member]
Mortgage loans on real estate	$ 32,049,451	$ 29,738,887
Loan to Value Range 2 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	32,049,451	29,738,887
Loan to Value Range 2 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range 2 [Member] | Minimum [Member]
Loan to value ratio	60.00%
Loan to Value Range 2 [Member] | Maximum [Member]
Loan to value ratio		70.00%
Loan to Value Range 3 [Member]
Mortgage loans on real estate	$ 22,752,409	$ 16,491,519
Loan to Value Range 3 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	21,712,187	15,440,364
Loan to Value Range 3 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 1,040,222	$ 1,051,155
Loan to Value Range 3 [Member] | Minimum [Member]
Loan to value ratio	50.00%
Loan to Value Range 3 [Member] | Maximum [Member]
Loan to value ratio		60.00%
Loan to Value Range 4 [Member]
Mortgage loans on real estate	$ 12,345,596	$ 10,399,031
Loan to Value Range 4 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	12,345,596	10,399,031
Loan to Value Range 4 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range 4 [Member] | Minimum [Member]
Loan to value ratio	40.00%
Loan to Value Range 4 [Member] | Maximum [Member]
Loan to value ratio		50.00%
Loan to Value Range 5 [Member]
Mortgage loans on real estate	$ 2,469,055	$ 2,388,004
Loan to Value Range 5 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	2,276,132	2,184,351
Loan to Value Range 5 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 192,923	$ 203,653
Loan to Value Range 5 [Member] | Minimum [Member]
Loan to value ratio	30.00%
Loan to Value Range 5 [Member] | Maximum [Member]
Loan to value ratio		40.00%
Loan to Value Range 6 [Member]
Mortgage loans on real estate	$ 1,544,076	$ 467,410
Loan to Value Range 6 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	1,544,076	467,410
Loan to Value Range 6 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range 6 [Member] | Minimum [Member]
Loan to value ratio	20.00%
Loan to Value Range 6 [Member] | Maximum [Member]
Loan to value ratio		30.00%
Loan to Value Range 7 [Member]
Mortgage loans on real estate	$ 333,013	$ 317,936
Loan to Value Range 7 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	333,013	317,936
Loan to Value Range 7 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range 7 [Member] | Minimum [Member]
Loan to value ratio	10.00%
Loan to Value Range 7 [Member] | Maximum [Member]
Loan to value ratio		20.00%
Loan to Value Range 8 [Member]
Mortgage loans on real estate	$ 4,661	$ 8,958
Loan to Value Range 8 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	4,661	8,958
Loan to Value Range 8 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range 8 [Member] | Minimum [Member]
Loan to value ratio	10.00%
Loan to Value Range 8 [Member] | Maximum [Member]
Loan to value ratio		10.00%