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 September 30, 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.  (Check one):

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

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

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

Yes ☐       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 November 6, 2017: 7,802,593 shares

FIRST TRINITY FINANCIAL CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	Page Number
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Position as of September 30, 2017 (Unaudited) and December 31, 2016	3
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)	4
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)	5
Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2017 and 2016 (Unaudited)	6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 4. Controls and Procedures	67
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	67
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3. Defaults upon Senior Securities	69
Item 4. Mine Safety Disclosures	69
Item 5. Other Information	69
Item 6. Exhibits	69
Signatures	70
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)
	September 30, 2017			December 31, 2016
Assets
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $142,612,677 and $128,310,265 as of September 30, 2017 and December 31, 2016, respectively)	$	148,042,788		$	129,311,155
Available-for-sale equity securities at fair value (cost: $602,232 and $599,400 as of September 30, 2017 and December 31, 2016, respectively)		672,358			638,407
Mortgage loans on real estate		103,013,015			74,371,286
Investment real estate		2,354,311			2,506,673
Policy loans		1,626,771			1,598,116
Other long-term investments		57,675,405			46,788,873
Total investments		313,384,648			255,214,510
Cash and cash equivalents		28,959,503			34,223,945
Accrued investment income		2,618,245			2,176,770
Recoverable from reinsurers		1,157,109			1,258,938
Agents' balances and due premiums		1,602,599			1,419,250
Deferred policy acquisition costs		23,164,372			18,191,990
Value of insurance business acquired		5,610,747			5,908,835
Other assets		10,059,398			14,858,375
Total assets	$	386,556,621		$	333,252,613
Liabilities and Shareholders' Equity
Policy liabilities
Policyholders' account balances	$	292,128,688		$	245,346,489
Future policy benefits		48,002,489			44,266,227
Policy claims		1,027,121			997,814
Other policy liabilities		90,487			69,854
Total policy liabilities		341,248,785			290,680,384
Deferred federal income taxes		2,071,174			693,470
Other liabilities		1,395,790			5,598,484
Total liabilities		344,715,749			296,972,338
Shareholders' equity
Common stock, par value $.01 per share (20,000,000 shares authorized, 8,050,173 issued as of September 30, 2017 and December 31, 2016 and 7,802,593 outstanding as of September 30, 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 September 30, 2017 andDecember 31, 2016)		(893,947	)		(893,947	)
Accumulated other comprehensive income		4,323,099			818,676
Accumulated earnings		9,646,620			7,590,446
Total shareholders' equity		41,840,872			36,280,275
Total liabilities and shareholders' equity	$	386,556,621		$	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 September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues
Premiums	$	4,058,629		$	3,197,228		$	11,560,664		$	9,426,803
Net investment income		4,631,892			3,303,980			12,296,827			9,922,817
Net realized investment gains (losses)		(3,486	)		160,308			254,108			307,250
Loss on other-than-temporary impairments		-			-			(224,250	)		-
Other income		25,249			10,053			92,376			25,259
Total revenues		8,712,284			6,671,569			23,979,725			19,682,129
Benefits, Claims and Expenses
Benefits and claims
Increase in future policy benefits		1,291,943			1,357,212			3,733,907			3,995,230
Death benefits		1,310,697			881,928			3,744,278			2,868,216
Surrenders		186,202			205,356			717,790			541,725
Interest credited to policyholders		2,293,419			1,754,941			6,530,403			5,090,162
Dividend, endowment and supplementary life contract benefits		68,492			81,040			200,260			214,552
Total benefits and claims		5,150,753			4,280,477			14,926,638			12,709,885
Policy acquisition costs deferred		(2,369,432	)		(2,023,246	)		(7,370,469	)		(5,142,381	)
Amortization of deferred policy acquisition costs		890,135			536,901			2,318,277			1,588,938
Amortization of value of insurance business acquired		88,625			91,966			298,089			281,175
Commissions		2,051,910			1,954,586			6,641,883			4,783,307
Other underwriting, insurance and acquisition expenses		1,362,524			1,244,013			4,588,947			4,123,540
Total expenses		2,023,762			1,804,220			6,476,727			5,634,579
Total benefits, claims and expenses		7,174,515			6,084,697			21,403,365			18,344,464
Income before total federal income tax expense		1,537,769			586,872			2,576,360			1,337,665
Current federal income tax expense (benefit)		(1,320	)		4,472			18,589			41,982
Deferred federal income tax expense		294,437			83,814			501,597			163,685
Total federal income tax expense		293,117			88,286			520,186			205,667
Net income	$	1,244,652		$	498,586		$	2,056,174		$	1,131,998
Net income per common share basic and diluted	$	0.16		$	0.06		$	0.26		$	0.15

See notes to consolidated financial statements (unaudited).

4

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Net income	$	1,244,652		$	498,586	$	2,056,174		$	1,131,998
Other comprehensive income
Total net unrealized investment gains arising during the period		703,274			1,058,518		4,423,541			9,440,894
Less net realized investment gains (losses)		(3,486	)		206,890		(36,799	)		335,841
Net unrealized investment gains		706,760			851,628		4,460,340			9,105,053
Less adjustment to deferred acquisition costs		10,532			19,392		79,810			146,605
Other comprehensive income before federal income tax expense		696,228			832,236		4,380,530			8,958,448
Federal income tax expense		139,246			166,449		876,107			1,791,689
Total other comprehensive income		556,982			665,787		3,504,423			7,166,759
Total comprehensive income	$	1,801,634		$	1,164,373	$	5,560,597		$	8,298,757

See notes to consolidated financial statements (unaudited).

5

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity

Nine Months Ended September 30, 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		-		-		-			-			1,131,998		1,131,998
Other comprehensive income		-		-		-			7,166,759			-		7,166,759
Balance as of September 30, 2016	$	80,502	$	28,684,598	$	(893,947	)	$	4,510,942		$	6,131,705	$	38,513,800
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		-		-		-			-			2,056,174		2,056,174
Other comprehensive income		-		-		-			3,504,423			-		3,504,423
Balance as of September 30, 2017	$	80,502	$	28,684,598	$	(893,947	)	$	4,323,099		$	9,646,620	$	41,840,872

See notes to consolidated financial statements (unaudited). 

6

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2017			2016
Operating activities
Net income	$	2,056,174		$	1,131,998
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for depreciation		109,435			109,587
Accretion of discount on investments		(2,298,768	)		(1,278,028	)
Net realized investment gains		(254,108	)		(307,250	)
Loss on other-than-temporary impairment		224,250			-
Amortization of policy acquisition cost		2,318,277			1,588,938
Policy acquisition cost deferred		(7,370,469	)		(5,142,381	)
Mortgage loan origination fees deferred		-			(4,530	)
Amortization of loan origination fees		44,351			54,032
Amortization of value of insurance business acquired		298,089			281,175
Allowance for mortgage loan losses		105,024			36,096
Provision for deferred federal income tax expense		501,597			163,685
Interest credited to policyholders		6,530,403			5,090,162
Change in assets and liabilities:
Accrued investment income		(441,475	)		56,974
Policy loans		(28,655	)		(75,655	)
Short-term investments		-			549,850
Recoverable from reinsurers		101,829			(37,538	)
Agents' balances and due premiums		(183,349	)		(344,558	)
Other assets (excludes depreciation of $320 in 2017 and change in receivable for securities sold of $5,738,274 and ($44,068) in 2017 and 2016, respectively).		(939,617	)		(3,998,677	)
Future policy benefits		3,736,262			4,002,756
Policy claims		29,307			94,291
Other policy liabilities		20,633			5,631
Other liabilities (excludes change in payable for securities purchased of ($57,976) and $15,424 in 2017 and 2016, respectively).		(4,144,719	)		2,252,361
Net cash provided by operating activities		414,471			4,228,919
Investing activities
Purchases of fixed maturity securities		(32,830,057	)		(6,163,564	)
Maturities of fixed maturity securities		6,762,000			4,657,000
Sales of fixed maturity securities		10,378,173			10,205,935
Purchases of equity securities		(2,832	)		(14,480	)
Sales of equity securities		-			128,010
Purchases of mortgage loans		(44,857,137	)		(20,669,087	)
Payments on mortgage loans		16,129,739			11,317,427
Purchases of other long-term investments		(14,036,084	)		(11,340,463	)
Payments on other long-term investments		5,863,095			3,114,728
Sale of other long-term investments		792,012			-
Sales of real estate		190,084			-
Net change in receivable and payable for securities sold and purchased		5,680,298			(28,644	)
Net cash used in investing activities		(45,930,709	)		(8,793,138	)
Financing activities
Policyholders' account deposits		54,296,750			32,177,094
Policyholders' account withdrawals		(14,044,954	)		(9,957,150	)
Net cash provided by financing activities		40,251,796			22,219,944
Increase (decrease) in cash		(5,264,442	)		17,655,725
Cash and cash equivalents, beginning of period		34,223,945			9,047,586
Cash and cash equivalents, end of period	$	28,959,503		$	26,703,311

See notes to consolidated financial statements (unaudited).

7

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows (continued)

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

(Unaudited)

During 2017 the Company reclassified an available-for-sale fixed maturity security totaling $729,737 to other long-term investments due to a recent third party information change indicating the security does not qualify for available-for-sale treatment.

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

	Nine Months Ended
	September 30, 2017
Reduction in available-for-securities fixed maturity securities	$	729,737
Other long-term invesments		(729,737	)
Net cash provided (used) in investing activities	$	-

During 2017 and 2016, the Company foreclosed on residential mortgage loans of real estate totaling $142,455 and $198,622, respectively, 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.

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

	Nine Months Ended			Nine Months Ended
	September 30, 2017			September 30, 2016
Reductions in mortgage loans due to foreclosure	$	142,455		$	198,622
Investment real estate held-for-sale acquired through foreclosure		(142,455	)		(198,622	)
Net cash provided (used) in investing activities	$	-		$	-

8

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 costs associated with the acquisition of $195,234. The acquisition of FLAC was financed with the working capital of FTFC.

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

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

9

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 nine months ended September 30, 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 consolidated 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.

10

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

1. Organization and Significant Accounting Policies (continued)

Subsequent Events

Management has evaluated all events subsequent to September 30, 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.

11

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 was 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

September 30, 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 was 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 was permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

13

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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.

14

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

1. Organization and Significant Accounting Policies (continued)

Compensation — Stock Compensation: Scope of Modification Accounting

In May 2017, the FASB issued updated guidance related to a change to the terms or conditions (modification) of a share-based payment award.  The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the modified award (equity or liability instrument) are the same as the original award immediately before the modification.

The updated guidance is effective for the quarter ending March 31, 2018.  The update is to be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted in any interim periods for which financial statements have not yet been made available for issuance. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

15

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

2. Investments

Fixed Maturity and Equity Securities Available-For-Sale

Investments in fixed maturity and equity securities available-for-sale as of September 30, 2017 and December 31, 2016 are summarized as follows:

			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair
	or Cost		Gains		Losses		Value
	September 30, 2017 (Unaudited)
Fixed maturity securities
U.S. government and U.S. government agencies	$	2,976,500	$	62,463	$	57,498	$	2,981,465
States and political subdivisions		9,386,211		310,486		27,856		9,668,841
Residential mortgage-backed securities		29,190		42,635		-		71,825
Corporate bonds		109,002,252		4,696,310		504,634		113,193,928
Foreign bonds		21,218,524		1,008,329		100,124		22,126,729
Total fixed maturity securities		142,612,677		6,120,223		690,112		148,042,788
Equity securities
Mutual funds		347,311		2,162		-		349,473
Corporate preferred stock		99,945		2,075		-		102,020
Corporate common stock		154,976		65,889		-		220,865
Total equity securities		602,232		70,126		-		672,358
Total fixed maturity and equity securities	$	143,214,909	$	6,190,349	$	690,112	$	148,715,146
	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

16

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 September 30, 2017 and December 31, 2016 are summarized as follows:

			Unrealized		Number of
	Fair Value		Loss		Securities
	September 30, 2017 (Unaudited)
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	476,388	$	4,294		4
States and political subdivisions		1,409,461		27,856		8
Corporate bonds		4,658,050		94,634		19
Foreign bonds		1,557,436		39,316		5
Total less than 12 months		8,101,335		166,100		36
More than 12 months
U.S. government and U.S. government agencies		1,196,274		53,204		3
Corporate bonds		4,783,721		410,000		18
Foreign bonds		516,695		60,808		3
Total more than 12 months		6,496,690		524,012		24
Total fixed maturity securities in an unrealized loss position	$	14,598,025	$	690,112		60
	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 in an unrealized loss position		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 in an unrealized loss position		185,473		6,454		3
Total fixed maturity and equity securities in an unrealized loss position	$	42,434,255	$	2,005,808		173

As of September 30, 2017, the Company held 60 available-for-sale fixed maturity securities with an unrealized loss of $690,112, fair value of $14,598,025 and amortized cost of $15,288,137. These unrealized losses were primarily due to market interest rate movements in the bond market as of September 30, 2017. The ratio of the fair value to the amortized cost of these 60 securities is 95%.

17

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

2. Investments (continued)

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 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 September 30, 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.

The Company has recorded other-than-temporary impairments on its fixed maturity available-for-sale investment in an energy corporation with a total par value of $650,000 as a result of continuing unrealized losses. During fourth quarter 2016 this security was initially impaired by a $207,450 charge to the statement of operations. During second quarter 2017 this security was further impaired by a $224,250 charge to the statement of operations. These impairments were considered fully credit-related and represent 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 for the three and nine months ended September 30, 2017 and the year ended December 31, 2016.

Management believes that the Company will fully recover its cost basis in the securities held as of September 30, 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. 

18

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 September 30, 2017 and December 31, 2016, are summarized as follows:

	(Unaudited)
	September 30, 2017			December 31, 2016
Unrealized appreciationon available-for-sale securities	$	5,500,237		$	1,039,897
Adjustment to deferred acquisition costs		(96,363	)		(16,553	)
Deferred income taxes		(1,080,775	)		(204,668	)
Net unrealized appreciationon available-for-sale securities	$	4,323,099		$	818,676

The Company’s investment in lottery prize cash flows categorized as other long-term investments in the statement of financial position was $57,675,405 and $46,788,873 as of September 30, 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 September 30, 2017, by contractual maturity, are summarized as follows:

	September 30, 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	$	7,267,264	$	7,331,950	$	8,248,410	$	8,361,971
Due after one year through five years		30,208,994		31,312,939		23,377,949		25,433,045
Due after five years through ten years		38,476,332		39,833,033		16,190,560		19,790,751
Due after ten years		66,630,897		69,493,041		9,858,486		15,836,022
Due at multiple maturity dates		29,190		71,825		-		-
	$	142,612,677	$	148,042,788	$	57,675,405	$	69,421,789

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.

19

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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, investment real estate and other long-term investments for the three and nine months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30, (Unaudited)
	Fixed Maturity Securities						Equity Securities				Mortgage Loans on Real Estate					Investment Real Estate
	2017			2016			2017		2016		2017		2016			2017		2016
Proceeds	$	4,536,924		$	7,368,724		$	-	$	-	$	5,405,626	$	7,655,905		$	-	$	-
Gross realized gains		37,337			242,910			-		-		-		-			-		-
Gross realized losses		(40,823	)		(36,020	)		-		-		-		(46,582	)		-		-
Loss on other-than-temporary impairment		-			-			-		-		-		-			-		-

	Three Months Ended September 30, (Unaudited)
	Other Long-Term Investments
	2017		2016
Proceeds	$	-	$	-
Gross realized gains		-		-
Gross realized losses		-		-
Loss on other-than-temporary impairment		-		-

	Nine Months Ended September 30, (Unaudited)
	Fixed Maturity Securities						Equity Securities					Mortgage Loans on Real Estate					Investment Real Estate
	2017			2016			2017		2016			2017		2016			2017			2016
Proceeds	$	17,140,173		$	14,862,935		$	-	$	128,010		$	16,129,739	$	11,317,427		$	190,084		$	-
Gross realized gains		564,589			405,960			-		8,711			-		-			6,050			-
Gross realized losses		(377,138	)		(77,362	)		-		(1,468	)		-		(28,591	)		(1,668	)		-
Loss on other-than-temporary impairment		(224,250	)		-			-		-			-		-			-			-

	Nine Months Ended September 30, (Unaudited)
	Other Long-Term Investments
	2017		2016
Proceeds	$	792,012	$	-
Gross realized gains		62,275		-
Gross realized losses		-		-
Loss on other-than-temporary impairment		-		-

20

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

2. Investments (continued)

The accumulated change in net unrealized investment gains (losses) for fixed maturity and equity securities available-for-sale for the three and nine months ended September 30, 2017 and 2016 and the amount of realized investment gains on fixed maturity securities available-for-sale, equity securities available-for-sale, mortgage loans on real estate, investment real estate and other long-term investments for the three and nine months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30, (Unaudited)						Nine Months Ended September 30, (Unaudited)
	2017			2016			2017		2016
Change in unrealized investment gains:
Available-for-sale securities:
Fixed maturity securities	$	694,379		$	817,963		$	4,429,221	$	9,078,142
Equity securities		12,381			33,665			31,119		26,911
Net realized investment gains (losses):
Available-for-sale securities:
Fixed maturity securities		(3,486	)		206,890			187,451		328,598
Equity securities		-			-			-		7,243
Mortgage loans on real estate		-			(46,582	)		-		(28,591	)
Investment real estate		-			-			4,382		-
Other long-term investments		-			-			62,275		-

Major categories of net investment income for the three and nine months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30, (Unaudited)						Nine Months Ended September 30, (Unaudited)
	2017			2016			2017			2016
Fixed maturity securities	$	1,731,931		$	1,435,041		$	4,887,826		$	4,535,560
Equity securities		4,382			6,728			14,540			20,568
Other long-term investments		967,959			687,042			2,707,438			1,857,366
Mortgage loans		2,379,176			1,417,445			5,923,207			4,098,943
Policy loans		28,640			27,348			84,657			79,937
Real estate		93,943			62,391			281,366			246,327
Short-term and other investments		72,935			56,806			296,019			198,950
Gross investment income		5,278,966			3,692,801			14,195,053			11,037,651
Investment expenses		(647,074	)		(388,821	)		(1,898,226	)		(1,114,834	)
Net investment income	$	4,631,892		$	3,303,980		$	12,296,827		$	9,922,817

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 September 30, 2017 and December 31, 2016, these required deposits, included in investment assets, had amortized costs that totaled $3,702,658 and $4,099,405, respectively. As of September 30, 2017 and December 31, 2016, these required deposits had fair values that totaled $3,726,812 and $4,125,116, respectively.

21

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

2. Investments (continued)

The Company’s mortgage loans by property type as of September 30, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)
	September 30, 2017		December 31, 2016
Commercial and industrial mortgage loans
Retail stores	$	1,250,052	$	1,075,324
Office buildings		138,463		179,484
Industrial		432,351		-
Total commercial and industrial mortgage loans		1,820,866		1,254,808
Residential mortgage loans		101,192,149		73,116,478
Total mortgage loans	$	103,013,015	$	74,371,286

The Company’s investment real estate as of September 30, 2017 and December 31, 2016 is summarized as follows:

	(Unaudited)
	September 30, 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		(1,158,810	)		(1,049,695	)
Buildings net of accumulated depreciation		1,108,747			1,217,862
Residential real estate - held for sale		287,249			330,496
Total residential real estate		287,249			330,496
Investment real estate, net of accumulated depreciation	$	2,354,311		$	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 2017 and 2016, the Company foreclosed on residential mortgage loans of real estate totaling $142,455 and $198,622, respectively, and transferred those properties to investment real estate that are now held for sale.

During 2017, the Company sold investment real estate property with an aggregate carrying value of $185,702. The Company recorded a gross realized investment gain on sale of $4,382 based on an aggregate sales price of $190,084.

22

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

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 consolidated 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.

23

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 September 30, 2017 and December 31, 2016 is summarized as follows:

	Level 1		Level 2		Level 3		Total
	September 30, 2017 (Unaudited)
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	2,981,465	$	-	$	2,981,465
States and political subdivisions		-		9,668,841		-		9,668,841
Residential mortgage-backed securities		-		71,825		-		71,825
Corporate bonds		-		113,193,928		-		113,193,928
Foreign bonds		-		22,126,729		-		22,126,729
Total fixed maturity securities	$	-	$	148,042,788	$	-	$	148,042,788
Equity securities, available-for-sale
Mutual funds	$	-	$	349,473	$	-	$	349,473
Corporate preferred stock		102,020		-		-		102,020
Corporate common stock		159,365		-		61,500		220,865
Total equity securities	$	261,385	$	349,473	$	61,500	$	672,358
	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 September 30, 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.

24

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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.

25

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 September 30, 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
	September 30, 2017 (Unaudited)
Financial assets
Mortgage loans on real estate
Commercial and industrial	$	1,820,866	$	1,823,474	$	-	$	-	$	1,823,474
Residential		101,192,149		103,364,612		-		-		103,364,612
Policy loans		1,626,771		1,626,771		-		-		1,626,771
Other long-term investments		57,675,405		69,421,789		-		-		69,421,789
Cash and cash equivalents		28,959,503		28,959,503		28,959,503		-		-
Accrued investment income		2,618,245		2,618,245		-		-		2,618,245
Total financial assets	$	193,892,939	$	205,973,290	$	28,959,503	$	-	$	177,013,787
Financial liabilities
Policyholders' account balances	$	292,128,688	$	239,162,237	$	-	$	-	$	239,162,237
Policy claims		1,027,121		1,027,121		-		-		1,027,121
Total financial liabilities	$	293,155,809	$	240,189,358	$	-	$	-	$	240,189,358
	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

26

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 and industrial 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.

27

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30, (Unaudited)				Nine Months Ended September 30, (Unaudited)
	2017		2016		2017		2016
Revenues:
Life insurance operations	$	4,723,138	$	3,720,401	$	13,321,087	$	11,068,191
Annuity operations		3,903,408		2,802,934		10,377,974		8,158,645
Corporate operations		85,738		148,234		280,664		455,293
Total	$	8,712,284	$	6,671,569	$	23,979,725	$	19,682,129
Income before income taxes:
Life insurance operations	$	345,522	$	35,230	$	899,547	$	87,745
Annuity operations		1,141,492		436,051		1,488,848		1,014,476
Corporate operations		50,755		115,591		187,965		235,444
Total	$	1,537,769	$	586,872	$	2,576,360	$	1,337,665
Depreciation and amortization expense:
Life insurance operations	$	858,012	$	541,995	$	1,828,933	$	1,540,582
Annuity operations		178,063		154,648		941,219		493,151
Corporate operations		-		-		-		-
Total	$	1,036,075	$	696,643	$	2,770,152	$	2,033,733

	(Unaudited)
	September 30, 2017		December 31, 2016
Assets:
Life insurance operations	$	54,305,804	$	50,577,282
Annuity operations		325,089,923		275,745,766
Corporate operations		7,160,894		6,929,565
Total	$	386,556,621	$	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.

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 2014 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.

28

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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. To date, Mr. Pettigrew has failed to post this bond and, as a consequence, the Company and Mr. Zahn are in the process of executing on the judgments against Mr. Pettigrew’s assets. While the Company and Mr. Zahn will continue to execute on the judgments, any money or property collected during the execution of the judgments would have to be returned to Mr. Pettigrew in the event the judgments are reversed by the appellate courts.

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.

29

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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. The trial in this case will be before a judge and is scheduled to begin on November 27, 2017.

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.

Doyle Nimmo subsequently 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 was pending in the District Court for the Western District of Missouri and asked the Court to determine whether the Errors and Omissions policy provides coverage for the lawsuits filed against Doyle Nimmo. Utica Mutual Insurance Company did not seek a monetary judgment against FBLIC or TLIC.

On June 14, 2017, FBLIC and Doyle Nimmo executed a settlement to dismiss with prejudice all claims, causes of action and demands between them arising out of or in any way relating to the transactions and occurrences connected to the legal proceedings described above. The settlement proceeds included payments of $90,000 to FBLIC by Utica Mutual Insurance Company and $10,000 to FBLIC by Doyle Nimmo. The settlement also included an agreement whereby FBLIC and Doyle Nimmo bore exclusive liability for payment of their respective attorneys’ fees, lawsuit expenses, expert consulting fees and taxable costs of court incurred in connection with prosecution and/or defense of the claims, causes of action and demands related to the legal proceedings described above.

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.

30

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

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

The changes in the components of the Company’s accumulated other comprehensive income for the three and nine months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30, 2017 and 2016 (Unaudited)
	Unrealized						Accumulated
	Appreciation on			Adjustment to			Other
	Available-For-Sale			Deferred Acquisition			Comprehensive
	Securities			Costs			Income
Balance as of July 1, 2017	$	3,834,781		$	(68,664	)	$	3,766,117
Other comprehensive income before reclassifications, net of tax		562,619			(8,426	)		554,193
Less amounts reclassified from accumulated other comprehensive income, net of tax		(2,789	)		-			(2,789	)
Other comprehensive income		565,408			(8,426	)		556,982
Balance as of September 30, 2017	$	4,400,189		$	(77,090	)	$	4,323,099
Balance as of July 1, 2016	$	3,906,866		$	(61,711	)	$	3,845,155
Other comprehensive income before reclassifications, net of tax		846,814			(15,514	)		831,300
Less amounts reclassified from accumulated other comprehensive income, net of tax		165,513			-			165,513
Other comprehensive income		681,301			(15,514	)		665,787
Balance as of September 30, 2016	$	4,588,167		$	(77,225	)	$	4,510,942

	Nine Months Ended September 30, 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		3,538,833			(63,849	)		3,474,984
Less amounts reclassified from accumulated other comprehensive income, net of tax		(29,439	)		-			(29,439	)
Other comprehensive income		3,568,272			(63,849	)		3,504,423
Balance as of September 30, 2017	$	4,400,189		$	(77,090	)	$	4,323,099
Balance as of January 1, 2016	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of tax		7,552,715			(117,284	)		7,435,431
Less amounts reclassified from accumulated other comprehensive loss, net of tax		268,672			-			268,672
Other comprehensive income		7,284,043			(117,284	)		7,166,759
Balance as of September 30, 2016	$	4,588,167		$	(77,225	)	$	4,510,942

31

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

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

The pretax components of the Company’s other comprehensive income and the related income tax expense (benefit) for each component for the three and nine months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30, 2017 (Unaudited)
				Income Tax
	Pretax			Expense			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	703,274		$	140,655		$	562,619
Reclassification adjustment for net losses included in operations		(3,486	)		(697	)		(2,789	)
Net unrealized gains on investments		706,760			141,352			565,408
Adjustment to deferred acquisition costs		(10,532	)		(2,106	)		(8,426	)
Total other comprehensive income	$	696,228		$	139,246		$	556,982

	Three Months Ended September 30, 2016 (Unaudited)
				Income Tax
				Expense
	Pretax			(Benefit)			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	1,058,518		$	211,704		$	846,814
Reclassification adjustment for net gains included in operations		206,890			41,377			165,513
Net unrealized gains on investments		851,628			170,327			681,301
Adjustment to deferred acquisition costs		(19,392	)		(3,878	)		(15,514	)
Total other comprehensive income	$	832,236		$	166,449		$	665,787

	Nine Months Ended September 30, 2017 (Unaudited)
				Income Tax
	Pretax			Expense			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	4,423,541		$	884,708		$	3,538,833
Reclassification adjustment for net losses included in operations		(36,799	)		(7,360	)		(29,439	)
Net unrealized gains on investments		4,460,340			892,068			3,568,272
Adjustment to deferred acquisition costs		(79,810	)		(15,961	)		(63,849	)
Total other comprehensive income	$	4,380,530		$	876,107		$	3,504,423

	Nine Months Ended September 30, 2016 (Unaudited)
				Income Tax
				Expense
	Pretax			(Benefit)			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	9,440,894		$	1,888,179		$	7,552,715
Reclassification adjustment for net gains included in operations		335,841			67,169			268,672
Net unrealized gains on investments		9,105,053			1,821,010			7,284,043
Adjustment to deferred acquisition costs		(146,605	)		(29,321	)		(117,284	)
Total other comprehensive income	$	8,958,448		$	1,791,689		$	7,166,759

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

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

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 and nine months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30, (Unaudited)					Nine Months Ended September 30, (Unaudited)
Reclassification Adjustments	2017			2016		2017			2016
Unrealized gains on available-for-sale securities:
Realized gains (losses) on sales of securities (a)	$	(3,486	)	$	206,890	$	(36,799	)	$	335,841
Income tax expense (benefit) (b)		(697	)		41,377		(7,360	)		67,169
Total reclassification adjustments	$	(2,789	)	$	165,513	$	(29,439	)	$	268,672

(a) These items appear within net realized investment gains (losses) and other-than-temporary impairments in the consolidated statements of operations.

(b) These items appear within federal income taxes in the consolidated statements 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 and industrial 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 and industrial 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 September 30, 2017, $559,570 of independent residential mortgage loans on real estate are held in escrow by a third party for the benefit of the Company.   As of September 30, 2017, $161,907 of that escrow amount is available to the Company for possible losses on its investment of $32,381,460 in residential mortgage loans on real estate with one loan originator.

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 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 $349,451 allowance for possible loan losses in the remaining $70,631,555 of investments in mortgage loans on real estate as of September 30, 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 and nine months ended September 30, 2017 and 2016 are summarized as follows (excluding $32,381,460 and $23,962,879 of mortgage loans on real estate as of September 30, 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):

	(Unaudited)
	As of and for the Three Months Ended September 30,
	Residential Mortgage Loans				Commercial and Industrial Mortgage Loans						Premium Finance Loans				Total
	2017		2016		2017			2016			2017		2016		2017		2016
Allowance, beginning:	$	336,180	$	191,332	$	9,278		$	6,532		$	-	$	279,662	$	345,458	$	477,526
Charge offs		-		-		-			-			-		-		-		-
Recoveries		-		-		-			-			-		-		-		-
Provision		4,121		21,690		(128	)		(110	)		-		-		3,993		21,580
Allowance, ending	$	340,301	$	213,022	$	9,150		$	6,422		$	-	$	279,662	$	349,451	$	499,106
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	279,662	$	-	$	279,662
Collectively evaluated for impairment	$	340,301	$	213,022	$	9,150		$	6,422		$	-	$	-	$	349,451	$	219,444
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	347,885	$	-	$	347,885
Collectively evaluated for impairment	$	68,810,689	$	42,656,344	$	1,820,866		$	1,278,080		$	-	$	-	$	70,631,555	$	43,934,424

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First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2017

(Unaudited)

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

	(Unaudited)
	As of and for the Nine Months Ended September 30,
	Residential Mortgage Loans				Commercial and Industrial 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		102,180		37,034		2,844		(938	)		-		82,490		105,024		118,586
Allowance, ending	$	340,301	$	213,022	$	9,150	$	6,422		$	-	$	279,662	$	349,451	$	499,106
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-	$	-		$	-	$	279,662	$	-	$	279,662
Collectively evaluated for impairment	$	340,301	$	213,022	$	9,150	$	6,422		$	-	$	-	$	349,451	$	219,444
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-	$	-		$	-	$	347,885	$	-	$	347,885
Collectively evaluated for impairment	$	68,810,689	$	42,656,344	$	1,820,866	$	1,278,080		$	-	$	-	$	70,631,555	$	43,934,424

The Company utilizes the ratio of the carrying value of individual residential and commercial and industrial 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 and industrial mortgage loans on real estate by credit quality using this ratio as of September 30, 2017 and December 31, 2016 are summarized as follows:

			Residential Mortgage Loans				Commercial and Industrial Mortgage Loans				Total Mortgage Loans
			(Unaudited)				(Unaudited)				(Unaudited)
Loan-To-Value Ratio			September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Over 70%	to	80%	$	19,116,003	$	14,559,541	$	-	$	-	$	19,116,003	$	14,559,541
Over 60%	to	70%		35,351,370		29,738,887		-		-		35,351,370		29,738,887
Over 50%	to	60%		25,489,059		15,440,364		844,438		1,051,155		26,333,497		16,491,519
Over 40%	to	50%		13,520,426		10,399,031		-		-		13,520,426		10,399,031
Over 30%	to	40%		4,628,716		2,184,351		661,367		203,653		5,290,083		2,388,004
Over 20%	to	30%		2,287,087		467,410		170,935		-		2,458,022		467,410
Over 10%	to	20%		755,782		317,936		144,126		-		899,908		317,936
10%	or	less		43,706		8,958		-		-		43,706		8,958
Total			$	101,192,149	$	73,116,478	$	1,820,866	$	1,254,808	$	103,013,015	$	74,371,286

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

Overview

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

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

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

Acquisitions

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

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

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

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.

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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). 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.

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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 was 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.

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The updated guidance is effective for reporting periods beginning after December 15, 2016. Early adoption was 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 was 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.

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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.

Compensation — Stock Compensation: Scope of Modification Accounting

In May 2017, the FASB issued updated guidance related to a change to the terms or conditions (modification) of a share-based payment award.  The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the modified award (equity or liability instrument) are the same as the original award immediately before the modification.

The updated guidance is effective for the quarter ending March 31, 2018.  The update is to be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted in any interim periods for which financial statements have not yet been made available for issuance. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

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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.

Please see below and Note 4 to the Consolidated Financial Statements for the three and nine months ended September 30, 2017 and 2016 and as of September 30, 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 September 30, 2017 and 2016

	(Unaudited)
	Three Months Ended September 30,					Amount Change
	2017			2016		2017 less 2016
Premiums	$	4,058,629		$	3,197,228	$	861,401
Net investment income		4,631,892			3,303,980		1,327,912
Net realized investment gains (losses)		(3,486	)		160,308		(163,794	)
Other income		25,249			10,053		15,196
Total revenues		8,712,284			6,671,569		2,040,715
Benefits and claims		5,150,753			4,280,477		870,276
Expenses		2,023,762			1,804,220		219,542
Total benefits, claims and expenses		7,174,515			6,084,697		1,089,818
Income before federal income tax expense		1,537,769			586,872		950,897
Federal income tax expense		293,117			88,286		204,831
Net income	$	1,244,652		$	498,586	$	746,066
Net income per common share basic and diluted	$	0.16		$	0.06	$	0.10

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Consolidated Condensed Results of Operations for the Nine Months Ended September 30, 2017 and 2016

	(Unaudited)
	Nine Months Ended September 30,					Amount Change
	2017			2016		2017 less 2016
Premiums	$	11,560,664		$	9,426,803	$	2,133,861
Net investment income		12,296,827			9,922,817		2,374,010
Net realized investment gains		254,108			307,250		(53,142	)
Loss on other-than-temporary impairment		(224,250	)		-		(224,250	)
Other income		92,376			25,259		67,117
Total revenues		23,979,725			19,682,129		4,297,596
Benefits and claims		14,926,638			12,709,885		2,216,753
Expenses		6,476,727			5,634,579		842,148
Total benefits, claims and expenses		21,403,365			18,344,464		3,058,901
Income before federal income tax expense		2,576,360			1,337,665		1,238,695
Federal income tax expense		520,186			205,667		314,519
Net income	$	2,056,174		$	1,131,998	$	924,176
Net income per common share basic and diluted	$	0.26		$	0.15	$	0.11

Consolidated Condensed Financial Position as of September 30, 2017 and December 31, 2016

	(Unaudited)				Amount Change
	September 30, 2017		December 31, 2016		2017 less 2016
Investment assets	$	313,384,648	$	255,214,510	$	58,170,138
Other assets		73,171,973		78,038,103		(4,866,130	)
Total assets	$	386,556,621	$	333,252,613	$	53,304,008
Policy liabilities	$	341,248,785	$	290,680,384	$	50,568,401
Deferred federal income taxes		2,071,174		693,470		1,377,704
Other liabilities		1,395,790		5,598,484		(4,202,694	)
Total liabilities		344,715,749		296,972,338		47,743,411
Shareholders' equity		41,840,872		36,280,275		5,560,597
Total liabilities and shareholders' equity	$	386,556,621	$	333,252,613	$	53,304,008
Shareholders' equity per common share	$	5.36	$	4.65	$	0.71

Results of Operations – Three Months Ended September 30, 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.

42

Our revenues for the three months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended September 30,					Amount Change
	2017			2016		2017 less 2016
Premiums	$	4,058,629		$	3,197,228	$	861,401
Net investment income		4,631,892			3,303,980		1,327,912
Net realized investment gains (losses)		(3,486	)		160,308		(163,794	)
Other income		25,249			10,053		15,196
Total revenues	$	8,712,284		$	6,671,569	$	2,040,715

The $2,040,715 increase in total revenues for the three months ended September 30, 2017 is discussed below.

Premiums

Our premiums for the three months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended September 30,				Amount Change
	2017		2016		2017 less 2016
Whole life and term first year	$	43,122	$	44,599	$	(1,477	)
Whole life and term renewal		557,335		588,416		(31,081	)
Final expense first year		1,215,515		920,613		294,902
Final expense renewal		2,242,657		1,643,600		599,057
Total premiums	$	4,058,629	$	3,197,228	$	861,401

The $861,401 increase in premiums for the three months ended September 30, 2017 is primarily due to a $599,057 increase in final expense renewal premiums and a $294,902 increase in final expense first year premiums. 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.

43

Net Investment Income

The major components of our net investment income for the three months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended September 30,						Amount Change
	2017			2016			2017 less 2016
Fixed maturity securities	$	1,731,931		$	1,435,041		$	296,890
Equity securities		4,382			6,728			(2,346	)
Other long-term investments		967,959			687,042			280,917
Mortgage loans		2,379,176			1,417,445			961,731
Policy loans		28,640			27,348			1,292
Real estate		93,943			62,391			31,552
Short-term and other investments		72,935			56,806			16,129
Gross investment income		5,278,966			3,692,801			1,586,165
Investment expenses		(647,074	)		(388,821	)		258,253
Net investment income	$	4,631,892		$	3,303,980		$	1,327,912

The $1,586,165 increase in gross investment income for the three months ended September 30, 2017 is primarily due to increases in investments in mortgage loans, fixed maturity securities and other long-term investments. In the twelve months since September 30, 2016, we had increased investments in mortgage loans of $35.1 million, fixed maturity securities of $13.5 million and other long-term investments of $16.0 million.

The $258,253 increase in investment expenses for the three months ended September 30, 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 beginning in 2017.

Net Realized Investment Gains (Losses)

Our net realized investment gains (losses) result from sales of fixed maturity and equity securities available-for-sale, early payoff of acquired mortgage loans on real estate, sales of investment real estate and sales of other long-term investments.

Our net realized investment gains (losses) for the three months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended September 30,						Amount Change
	2017			2016			2017 less 2016
Fixed maturity securities available-for-sale:
Sale proceeds	$	4,536,924		$	7,368,724		$	(2,831,800	)
Amortized cost at sale date		4,540,410			7,161,834			(2,621,424	)
Net realized gains (losses)	$	(3,486	)	$	206,890		$	(210,376	)
Mortgage loans on real estate:
Payments and early payoffs of mortgage loans	$	5,405,626		$	7,655,905		$	(2,250,279	)
Principal collections		5,405,626			7,702,487			(2,296,861	)
Net realized (losses)	$	-		$	(46,582	)	$	46,582
Net realized investment gains (losses)	$	(3,486	)	$	160,308		$	(163,794	)

44

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 September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended September 30,						Amount Change
	2017			2016			2017 less 2016
Benefits and claims
Increase in future policy benefits	$	1,291,943		$	1,357,212		$	(65,269	)
Death benefits		1,310,697			881,928			428,769
Surrenders		186,202			205,356			(19,154	)
Interest credited to policyholders		2,293,419			1,754,941			538,478
Dividend, endowment and supplementary life contract benefits		68,492			81,040			(12,548	)
Total benefits and claims		5,150,753			4,280,477			870,276
Expenses
Policy acquisition costs deferred		(2,369,432	)		(2,023,246	)		(346,186	)
Amortization of deferred policy acquisition costs		890,135			536,901			353,234
Amortization of value of insurance business acquired		88,625			91,966			(3,341	)
Commissions		2,051,910			1,954,586			97,324
Other underwriting, insurance and acquisition expenses		1,362,524			1,244,013			118,511
Total expenses		2,023,762			1,804,220			219,542
Total benefits, claims and expenses	$	7,174,515		$	6,084,697		$	1,089,818

The $1,089,818 increase in total benefits, claims and expenses for the three months ended September 30, 2017 is discussed below.

Benefits and Claims

The $870,276 increase in benefits and claims for the three months ended September 30, 2017 is primarily due to the following:

● $538,478 increase in interest credited to policyholders is primarily due to an increase of approximately $67,100,000 in the amount of policyholders’ account balances in the consolidated statement of financial position (increased deposits and interest credited in excess of withdrawals) since September 30, 2016.

● $428,769 increase in death benefits is primarily related to an increase in the settlement of whole life and term policy claims of approximately $113,000, final expense claims of approximately $223,000 and a decrease in ceded claims of approximately $96,000.

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.

45

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

For the three months ended September 30, 2017 and 2016, capitalized costs were $2,369,432 and $2,023,246, respectively. Amortization of deferred policy acquisition costs for the three months ended September 30, 2017 and 2016 were $890,135 and $536,901, respectively.

The $346,186 increase in the 2017 acquisition costs deferred primarily relates to increased final expense production by appointed agents based upon expansion into additional states and recruiting of additional agents. The $353,234 increase in the 2017 third quarter amortization of deferred acquisition costs is primarily due to an increased number and amount of final expense policies in force, lapsation of ordinary life policies and annuity contracts with increased death benefits and annuity withdrawals.

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 $88,625 and $91,966 for the three months ended September 30, 2017 and 2016, respectively.

Commissions

Our commissions for the three months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended September 30,				Amount Change
	2017		2016		2017 less 2016
Annuity	$	325,415	$	652,377	$	(326,962	)
Whole life and term first year		37,637		30,368		7,269
Whole life and term renewal		19,890		24,033		(4,143	)
Final expense first year		1,453,356		1,098,269		355,087
Final expense renewal		215,612		149,539		66,073
Total commissions	$	2,051,910	$	1,954,586	$	97,324

The $97,324 increase in commissions for the three months ended September 30, 2017 is primarily due to a $355,087 increase in final expense first year commissions that corresponds to the $294,902 increase in final expense first year premiums and a $66,073 increase in final expense renewal commissions that corresponds to the $599,057 increase in final expense renewal premiums that was offset by a $326,962 decrease in annuity commissions that corresponds to a $9,417,188 decrease in policyholders’ account deposits for the three months ended September 30, 2017 compared to the corresponding period in 2016.

Other Underwriting, Insurance and Acquisition Expenses

The $118,511 increase in other underwriting, insurance and acquisition expenses for the three months ended September 30, 2017 was primarily related to increased third party administration fees primarily related to the increased number of policies in force and increased service requests, increased legal fees, increased salaries and benefits due to increased staffing levels and increased salary that exceeded the costs of the Company’s mortgage loan department that are fully assigned to investment expenses beginning in 2017 and no bad debts recorded in 2017 for FTCC.

46

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 September 30, 2017 and 2016, current income tax expense (benefit) was ($1,320) and $4,472, respectively. Deferred federal income tax expense was $294,437 and $83,814 for the three months ended September 30, 2017 and 2016, respectively. The increase in deferred income taxes for the three months ended September 30, 2017 is primarily due to faster growth in deferred policy acquisition costs on the U.S. GAAP statement of financial position compared to the tax-basis balance sheet.

Net Income Per Common Share Basic and Diluted

Net income was $1,244,652 ($0.16 per common share basic and diluted) and $498,586 ($0.06 per common share basic and diluted) for the three months ended September 30, 2017 and 2016, respectively.

Net income per common share basic and diluted is calculated using the weighted average number of common shares outstanding and subscribed during the year. The weighted average outstanding and subscribed common shares basic and diluted were 7,802,593 for both the three months ended September 30, 2017 and 2016.

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 September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Three Months Ended September 30,				Amount Change
	2017		2016		2017 less 2016
Revenues:
Life insurance operations	$	4,723,138	$	3,720,401	$	1,002,737
Annuity operations		3,903,408		2,802,934		1,100,474
Corporate operations		85,738		148,234		(62,496	)
Total	$	8,712,284	$	6,671,569	$	2,040,715
Income before income taxes:
Life insurance operations	$	345,522	$	35,230	$	310,292
Annuity operations		1,141,492		436,051		705,441
Corporate operations		50,755		115,591		(64,836	)
Total	$	1,537,769	$	586,872	$	950,897

47

Life Insurance Operations

The $1,002,737 increase in revenues from Life Insurance Operations for the three months ended September 30, 2017 is primarily due to the following:

● $861,401 increase in premiums

● $174,789 increase in net investment income

● $5,935 decrease in other income

● $27,518 decrease in net realized investment gains

The $310,292 increased profitability from Life Insurance Operations for the three months ended September 30, 2017 is primarily due to the following:

● $861,401 increase in premiums

● $401,057 increase in policy acquisition costs deferred net of amortization

● $174,789 increase in net investment income

● $65,269 decrease in future policy benefits

● $19,154 decrease in surrenders

● $12,548 decrease in dividend, endowment and supplementary life contract benefits

● $1,671 decrease in amortization of value of insurance business acquired

● $5,935 decrease in other income

● $27,518 decrease in net realized investment gains

● $339,089 increase in other underwriting, insurance and acquisition expenses

● $424,286 increase in commissions

● $428,769 increase in death benefits

Annuity Operations

The $1,100,474 increase in revenues from Annuity Operations for the three months ended September 30, 2017 is due to the following:

● $1,236,750 increase in net investment income

● $136,276 decrease in net realized investment gains

The $705,441 increased profitability from Annuity Operations for the three months ended September 30, 2017 is due to the following:

● $1,236,750 increase in net investment income

● $326,962 decrease in commissions

48

● $222,918 decrease in other underwriting, insurance and acquisition expenses

● $1,670 decrease in amortization of value of insurance business acquired

● $136,276 decrease in net realized investment gains

● $408,105 decrease in policy acquisition costs deferred net of amortization

● $538,478 increase in interest credited to policyholders

Corporate Operations

The $62,496 decrease in revenues from Corporate Operations for the three months ended September 30, 2017 is primarily due to $83,627 of decreased net investment income that exceeded $21,131 of increased other income.

The $64,836 decreased Corporate Operations profitability for the three months ended September 30, 2017 is primarily due to $83,627 of decreased net investment income and $2,340 of increased operating expenses that exceeded $21,131 of increased other income.

Results of Operations – Nine Months Ended September 30, 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 nine months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,					Amount Change
	2017			2016		2017 less 2016
Premiums	$	11,560,664		$	9,426,803	$	2,133,861
Net investment income		12,296,827			9,922,817		2,374,010
Net realized investment gains		254,108			307,250		(53,142	)
Loss on other-than-temporary impairment		(224,250	)		-		(224,250	)
Other income		92,376			25,259		67,117
Total revenues	$	23,979,725		$	19,682,129	$	4,297,596

The $4,297,596 increase in total revenues for the nine months ended September 30, 2017 is discussed below.

49

Premiums

Our premiums for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,				Amount Change
	2017		2016		2017 less 2016
Whole life and term first year	$	125,009	$	167,783	$	(42,774	)
Whole life and term renewal		1,718,302		1,857,418		(139,116	)
Final expense first year		3,496,902		2,526,244		970,658
Final expense renewal		6,213,881		4,496,784		1,717,097
Supplementary contracts with life contingencies		6,570		378,574		(372,004	)
Total premiums	$	11,560,664	$	9,426,803	$	2,133,861

The $2,133,861 increase in premiums for the nine months ended September 30, 2017 is primarily due to the following: $1,717,097 increase in final expense renewal premiums, $970,658 increase in final expense first year premiums and $372,004 decrease in supplementary contracts with life contingencies consideration.

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 and we have not been focused on whole life and term production the past few years. The decrease in supplementary contracts with life contingencies reflects policyholder decisions to receive future payment streams during their remaining life instead of a lump sum payment.

Net Investment Income

The major components of our net investment income for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,						Amount Change
	2017			2016			2017 less 2016
Fixed maturity securities	$	4,887,826		$	4,535,560		$	352,266
Equity securities		14,540			20,568			(6,028	)
Other long-term investments		2,707,438			1,857,366			850,072
Mortgage loans		5,923,207			4,098,943			1,824,264
Policy loans		84,657			79,937			4,720
Real estate		281,366			246,327			35,039
Short-term and other investments		296,019			198,950			97,069
Gross investment income		14,195,053			11,037,651			3,157,402
Investment expenses		(1,898,226	)		(1,114,834	)		783,392
Net investment income	$	12,296,827		$	9,922,817		$	2,374,010

The $3,157,402 increase in gross investment income for the nine months ended September 30, 2017 is primarily due to increases in investments in mortgage loans, other long-term investments and fixed maturity securities. In the twelve months since September 30, 2016, we had increased investments in mortgage loans of $35.1 million, other long-term investments of $16.0 million and fixed maturity securities of $13.5 million.

50

The $783,392 increase in investment expense 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 beginning in 2017.

Net Realized Investment Gains (Losses)

Our net realized investment gains (losses) result from sales of fixed maturity and equity securities available-for-sale, early payoff of mortgage loans on real estate, sales of investment real estate and sales of other long-term investments.

Our net realized investment gains (losses) for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,					Amount Change
	2017		2016			2017 less 2016
Fixed maturity securities available-for-sale:
Sale proceeds	$	17,140,173	$	14,862,935		$	2,277,238
Amortized cost at sale date		16,952,722		14,534,337			2,418,385
Net realized gains	$	187,451	$	328,598		$	(141,147	)
Equity securities available-for-sale:
Sale proceeds	$	-	$	128,010		$	(128,010	)
Cost at sale date		-		120,767			(120,767	)
Net realized gains	$	-	$	7,243		$	(7,243	)
Mortgage loans on real estate:
Payments and early payoffs of mortgage loans	$	16,129,739	$	11,317,427		$	4,812,312
Principal collections		16,129,739		11,346,018			4,783,721
Net realized losses	$	-	$	(28,591	)	$	28,591
Investment real estate:
Sale proceeds	$	190,084	$	-		$	190,084
Carrying value at sale date		185,702		-			185,702
Net realized gains	$	4,382	$	-		$	4,382
Other long-term investments
Sale proceeds	$	792,012	$	-		$	792,012
Carrying value at sale date		729,737		-			729,737
Net realized gains	$	62,275	$	-		$	62,275
Net realized investment gains	$	254,108	$	307,250		$	(53,142	)

The Company has recorded other-than-temporary impairments on its fixed maturity available-for-sale investment in an energy corporation with a total par value of $650,000 as a result of continuing unrealized losses. During fourth quarter 2016 this security was initially impaired by a $207,450 charge to the statement of operations. During second quarter 2017 this security was further impaired by a $224,250 charge to the statement of operations. These impairments were considered fully credit-related and represent 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 for the nine months ended September 30, 2017 and the year ended December 31, 2016. 

51

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 nine months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,						Amount Change
	2017			2016			2017 less 2016
Benefits and claims
Increase in future policy benefits	$	3,733,907		$	3,995,230		$	(261,323	)
Death benefits		3,744,278			2,868,216			876,062
Surrenders		717,790			541,725			176,065
Interest credited to policyholders		6,530,403			5,090,162			1,440,241
Dividend, endowment and supplementary life contract benefits		200,260			214,552			(14,292	)
Total benefits and claims		14,926,638			12,709,885			2,216,753
Expenses
Policy acquisition costs deferred		(7,370,469	)		(5,142,381	)		(2,228,088	)
Amortization of deferred policy acquisition costs		2,318,277			1,588,938			729,339
Amortization of value of insurance business acquired		298,089			281,175			16,914
Commissions		6,641,883			4,783,307			1,858,576
Other underwriting, insurance and acquisition expenses		4,588,947			4,123,540			465,407
Total expenses		6,476,727			5,634,579			842,148
Total benefits, claims and expenses	$	21,403,365		$	18,344,464		$	3,058,901

The $3,058,901 increase in total benefits, claims and expenses for the nine months ended September 30, 2017 is discussed below.

Benefits and Claims

The $2,216,753 increase in benefits and claims for the nine months ended September 30, 2017 is primarily due to the following:

● $1,440,241 increase in interest credited to policyholders is primarily due to an increase of approximately $67,100,000 in the amount of policyholders’ account balances in the consolidated statement of financial position (increased deposits and interest credited in excess of withdrawals) since September 30, 2016.

● $876,062 increase in death benefits is primarily due to a $353,000 increase in whole life and term settlements, $374,000 increase in final expense settlements and a $146,000 decrease in ceded claims. The increase in final expense incurred claims is expected by the Company due to the continued growth in the number and amount of final expense policies in force.

52

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 life insurance, which vary with, and are primarily related to, the successful production of new and renewal insurance and annuity contracts.

For the nine months ended September 30, 2017 and 2016, capitalized costs were $7,370,469 and $5,142,381, respectively. Amortization of deferred policy acquisition costs for the nine months ended September 30, 2017 and 2016 were $2,318,277 and $1,588,938, respectively.

The $2,228,088 increase in the 2017 acquisition costs deferred primarily relates to increased final expense and annuity production. The $729,339 increase in the 2017 amortization of deferred acquisition costs is primarily due to an increased number and amount of final expense policies in force, lapsation of ordinary life policies and annuity contracts reflected by increased death benefits, surrenders and annuity withdrawals.

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 $298,089 and $281,175 for the nine months ended September 30, 2017 and 2016, respectively.

Commissions

Our commissions for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,				Amount Change
	2017		2016		2017 less 2016
Annuity	$	1,697,220	$	1,209,118	$	488,102
Whole life and term first year		110,426		89,432		20,994
Whole life and term renewal		61,762		77,099		(15,337	)
Final expense first year		4,181,772		3,006,846		1,174,926
Final expense renewal		590,703		400,812		189,891
Total commissions	$	6,641,883	$	4,783,307	$	1,858,576

The $1,858,576 increase in commissions for the nine months ended September 30, 2017 is primarily due to a $1,174,926 increase in final expense first year commissions that correspond to the $970,658 increase in final expense first year premiums, a $189,891 increase in final expense renewal commissions that corresponds to the $1,717,097 increase in final expense renewal premiums and a $488,102 increase in annuity commissions that corresponds to a $22,119,656 increase in policyholders’ account deposits for the nine months ended September 30, 2017 compared to the corresponding period in 2016.

.

53

Other Underwriting, Insurance and Acquisition Expenses

The $465,407 increase in other underwriting, insurance and acquisition expenses for the nine months ended September 30, 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 beginning in 2017, decreased legal fees and no bad debts recorded in 2017 for FTCC.

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 nine months ended September 30, 2017 and 2016, current income tax expense was $18,589 and $41,982, respectively. Deferred federal income tax expense was $501,597 and $163,685 for the nine months ended September 30, 2017 and 2016, respectively. The increase in deferred income taxes is primarily due to faster growth in deferred policy acquisition costs on the U.S. GAAP statement of financial position compared to the tax-basis balance sheet.

Net Income Per Common Share Basic and Diluted

Net income was $2,056,174 ($0.26 per common share basic and diluted) and $1,131,998 ($0.15 per common share basic and diluted) for the nine months ended September 30, 2017 and 2016, respectively.

Net income per common share basic and diluted is calculated using the weighted average number of common shares outstanding and subscribed during the year. The weighted average outstanding and subscribed common shares basic and diluted were 7,802,593 for both the nine months ended September 30, 2017 and 2016.

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.

54

The revenues and income before federal income taxes from our business segments for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,				Amount Change
	2017		2016		2017 less 2016
Revenues:
Life insurance operations	$	13,321,087	$	11,068,191	$	2,252,896
Annuity operations		10,377,974		8,158,645		2,219,329
Corporate operations		280,664		455,293		(174,629	)
Total	$	23,979,725	$	19,682,129	$	4,297,596
Income before income taxes:
Life insurance operations	$	899,547	$	87,745	$	811,802
Annuity operations		1,488,848		1,014,476		474,372
Corporate operations		187,965		235,444		(47,479	)
Total	$	2,576,360	$	1,337,665	$	1,238,695

Life Insurance Operations

The $2,252,896 increase in revenues from Life Insurance Operations for the nine months ended September 30, 2017 is primarily due to the following:

● $2,133,861 increase in premiums

● $167,146 increase in net investment income

● $4,095 decrease in other income

● $44,016 decrease in net realized investment gains (that also includes a loss on other-than-temporary impairment)

The $811,802 increased profitability from Life Insurance Operations for the nine months ended September 30, 2017 is primarily due to the following:

● $2,133,861 increase in premiums

● $1,230,193 increase in policy acquisition costs deferred net of amortization

● $261,323 decrease in future policy benefits

● $167,146 increase in net investment income

● $14,292 decrease in dividend, endowment and supplementary life contract benefits

● $4,095 decrease in other income

● $8,457 increase in amortization of value of insurance business acquired

● $44,016 decrease in net realized investment gains (that also includes a loss on other-than-temporary impairment)

● $176,065 increase in surrenders

● $515,844 increase in other underwriting, insurance and acquisition expenses

55

● $876,062 increase in death benefits

● $1,370,474 increase in commissions

Annuity Operations

The $2,219,329 increase in revenues from Annuity Operations for the nine months ended September 30, 2017 is due to the following:

● $2,452,705 increase in net investment income

● $233,376 decrease in net realized investment gains (that also includes a loss on other-than-temporary impairment)

The $474,372 increased profitability from Annuity Operations for the nine months ended September 30, 2017 is due to the following:

● $2,452,705 increase in net investment income

● $268,556 increase in policy acquisition costs deferred net of amortization

● $8,457 increase in amortization of value of insurance business acquired

● $76,713 increase in other underwriting, insurance and acquisition expenses

● $233,376 decrease in net realized investment gains (that also includes a loss on other-than-temporary impairment)

● $488,102 increase in commissions

● $1,440,241 increase in interest credited to policyholders

Corporate Operations

The $174,629 decrease in revenues from Corporate Operations for the nine months ended September 30, 2017 is primarily due to $245,841 of decreased net investment income that exceeded $71,212 of increased other income.

The $47,479 decreased Corporate Operations profitability for the nine months ended September 30, 2017 is primarily due to $245,841 of decreased net investment income that exceeded $71,212 of increased other income and $127,150 of decreased operating expenses.

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Consolidated Financial Condition

Our invested assets as of September 30, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)				Amount Change
	September 30, 2017		December 31, 2016		2017 less 2016
Assets
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $142,612,677 and $128,310,625 as of September 30, 2017 and December 31, 2016, respectively)	$	148,042,788	$	129,311,155	$	18,731,633
Available-for-sale equity securities at fair value (cost: $602,232 and $599,400 as of September 30, 2017 and December 31, 2016, respectively)		672,358		638,407		33,951
Mortgage loans on real estate		103,013,015		74,371,286		28,641,729
Investment real estate		2,354,311		2,506,673		(152,362	)
Policy loans		1,626,771		1,598,116		28,655
Other long-term investments		57,675,405		46,788,873		10,886,532
Total investments	$	313,384,648	$	255,214,510	$	58,170,138

The $18,731,633 and $36,034 increases in fixed maturity available-for-sale securities for the nine months ended September 30, 2017 and 2016, respectively, are summarized as follows:

	Nine Months Ended September 30, (Unaudited)
	2017			2016
	Amount			Amount
Fixed maturity securities, available-for-sale, beginning	$	129,311,155		$	134,556,027
Purchases		32,830,057			6,163,564
Unrealized appreciation		4,429,221			9,078,142
Net realized investment gains (losses)		(36,799	)		328,598
Sales proceeds		(10,378,173	)		(10,205,935	)
Maturities		(6,762,000	)		(4,657,000	)
Transfer to other long-term investments		(729,737	)		-
Premium amortization		(620,936	)		(671,335	)
Increase		18,731,633			36,034
Fixed maturity securities, available-for-sale, ending	$	148,042,788		$	134,592,061

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.

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The $33,951 increase and $79,376 decrease in equity securities available-for-sale for the nine months ended September 30, 2017 and 2016, respectively, are summarized as follows:

	Nine Months Ended September 30, (Unaudited)
	2017		2016
	Amount		Amount
Equity securities, available-for-sale, beginning	$	638,407	$	892,800
Purchases		2,832		14,480
Sales proceeds		-		(128,010	)
Unrealized appreciation		31,119		26,911
Net realized investment gains		-		7,243
Increase (decrease)		33,951		(79,376	)
Equity securities, available-for-sale, ending	$	672,358	$	813,424

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.

The $28,641,729 and $9,122,385 increases in mortgage loans on real estate for the nine months ended September 30, 2017 and 2016, respectively, are summarized as follows:

	Nine Months Ended September 30, (Unaudited)
	2017			2016
	Amount			Amount
Mortgage loans on real estate, beginning	$	74,371,286		$	58,774,918
Purchases		44,857,137			20,669,087
Capitalization of loan origination fees		-			4,530
Discount accretion		206,161			83,536
Net realized investment gains		-			(28,591	)
Payments		(16,129,739	)		(11,317,427	)
Foreclosed - transferred to real estate		(142,455	)		(198,622	)
Increase in allowance for bad debts		(105,024	)		(36,096	)
Amortization of loan origination fees		(44,351	)		(54,032	)
Increase		28,641,729			9,122,385
Mortgage loans on real estate, ending	$	103,013,015		$	67,897,303

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The $152,362 decrease and $89,505 increase in investment real estate for the nine months ended September 30, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,
	2017			2016
	Amount			Amount
Investment real estate, beginning	$	2,506,673		$	2,326,558
Acquired through foreclosure		142,455			198,622
Sales proceeds		(190,084	)		-
Depreciation of building		(109,115	)		(109,117	)
Net realized investment gains		4,382			-
Increase (decrease)		(152,362	)		89,505
Investment real estate, ending	$	2,354,311		$	2,416,063

The $10,886,532 and $10,091,564 increases in other long-term investments (composed primarily of lottery receivables) for the nine months ended September 30, 2017 and 2016, respectively, are summarized as follows:

	Nine Months Ended September 30, (Unaudited)
	2017			2016
	Amount			Amount
Other long-term investments, beginning	$	46,788,873		$	31,566,927
Purchases		14,036,084			11,340,463
Transfer from fixed maturity available-for-sale securities		729,737			-
Accretion of discount		2,713,543			1,865,829
Net realized investment gains		62,275			-
Sales proceeds		(792,012	)		-
Payments		(5,863,095	)		(3,114,728	)
Increase		10,886,532			10,091,564
Other long-term investments, ending	$	57,675,405		$	41,658,491

Our assets other than invested assets as of September 30, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)				Amount Change
	September 30, 2017		December 31, 2016		2017 less 2016
Cash and cash equivalents	$	28,959,503	$	34,223,945	$	(5,264,442	)
Accrued investment income		2,618,245		2,176,770		441,475
Recoverable from reinsurers		1,157,109		1,258,938		(101,829	)
Agents' balances and due premiums		1,602,599		1,419,250		183,349
Deferred policy acquisition costs		23,164,372		18,191,990		4,972,382
Value of insurance business acquired		5,610,747		5,908,835		(298,088	)
Other assets		10,059,398		14,858,375		(4,798,977	)
Assets other than investment assets	$	73,171,973	$	78,038,103	$	(4,866,130	)

The $5,264,442 decrease in cash and cash equivalents is discussed below in the “Liquidity and Capital Resources” section where cash flows are addressed.

59

The $441,475 increase in accrued investment income is primarily due to the $58,170,138 increase in invested assets during the first nine months of 2017.

The $183,349 increase in 2017 agents’ balances and due premiums is due to a $183,033 increase in agents’ balances and $316 increase 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 September 30, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)				Amount Change
	September 30, 2017		December 31, 2016		2017 less 2016
Advances to mortgage loan originator	$	4,654,494	$	5,207,380	$	(552,886	)
Federal and state income taxes recoverable		2,941,670		2,220,566		721,104
Notes receivable		448,258		464,366		(16,108	)
Accrual of mortgage loan and long-term investment payments due		1,298,343		511,585		786,758
Receivable for securities sold		550,000		6,288,274		(5,738,274	)
Guaranty funds		78,800		78,711		89
Other receivables, prepaid assets and deposits		87,833		87,493		340
Total other assets	$	10,059,398	$	14,858,375	$	(4,798,977	)

There was a $552,886 decrease in advances to one mortgage loan originator who acquires residential mortgage loans for our life companies.  

As of September 30, 2017, the Company had $550,000 in 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 $721,104 increase in federal and state income taxes recoverable is primarily due to federal and state tax withholdings on lottery receivables.

There was a $786,758 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 October 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.

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Our liabilities as of September 30, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)				Amount Change
	September 30, 2017		December 31, 2016		2017 less 2016
Policy liabilities
Policyholders' account balances	$	292,128,688	$	245,346,489	$	46,782,199
Future policy benefits		48,002,489		44,266,227		3,736,262
Policy claims		1,027,121		997,814		29,307
Other policy liabilities		90,487		69,854		20,633
Total policy liabilities		341,248,785		290,680,384		50,568,401
Deferred federal income taxes		2,071,174		693,470		1,377,704
Other liabilities		1,395,790		5,598,484		(4,202,694	)
Total liabilities	$	344,715,749	$	296,972,338	$	47,743,411

The $46,782,199 and $27,310,106 increase in policyholders’ account balances for the nine months ended September 30, 2017 and 2016, respectively, are summarized as follows:

	Nine Months Ended September 30, (Unaudited)
	2017			2016
	Amount			Amount
Policyholders' account balances, beginning	$	245,346,489		$	197,688,616
Deposits		54,296,750			32,177,094
Withdrawals		(14,044,954	)		(9,957,150	)
Interest credited		6,530,403			5,090,162
Increase		46,782,199			27,310,106
Policyholders' account balances, ending	$	292,128,688		$	224,998,722

The $3,736,262 increase in future policy benefits during the nine months ended September 30, 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 $1,377,704 increase in deferred federal income taxes during the nine months ended September 30, 2017 was due to $876,107 of increased deferred federal income taxes on the unrealized appreciation of fixed maturity and equity securities available-for-sale and $501,597 of operating deferred federal tax expense.

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Our other liabilities as of September 30, 2017 and December 31, 2016 are summarized as follows:

	(Unaudited)						Amount Change
	September 30, 2017			December 31, 2016			2017 less 2016
Suspense accounts payable	$	575,853		$	4,684,726		$	(4,108,873	)
Accrued expenses payable		565,762			527,938			37,824
Payable for securities purchased		176,249			234,225			(57,976	)
Guaranty fund assessments		60,000			60,000			-
Unearned investment income		57,398			48,466			8,932
Deferred revenue		32,491			29,632			2,859
Unclaimed funds		25,820			23,057			2,763
Other payables, withholdings and escrows		(97,783	)		(9,560	)		(88,223	)
Total other liabilities	$	1,395,790		$	5,598,484		$	(4,202,694	)

The $4,108,873 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 September 30, 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 September 30, 2017, we had cash and cash equivalents totaling $28,959,503. As of September 30, 2017, cash and cash equivalents of $10,594,184 and $15,125,591, respectively, were held by FBLIC and TLIC and may not be available for use by FTFC due to the required pre-approval by the Missouri Department of Insurance and OID of any dividend or intercompany transaction to transfer funds to FTFC. The maximum dividend, which may be paid in any twelve-month period without notification or approval, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year.

Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, there is 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.

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 $18,349,060 and $22,117,921 as of September 30, 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.

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On September 1, 2017, the Company agreed to a $1.0 million line of credit with a bank to provide working capital and funds for expansion.  The terms of the line of credit allow for advances, repayments and re-borrowings through the maturity date of July 1, 2018.  The outstanding advances incur interest at a variable interest rate of the prime rate set forth in the Wall Street Journal plus 1% per annum adjusting monthly based on a 360 day year.  This line of credit is subject to annual renewal based upon the discretion of both the Company and the bank.

Our cash flows for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,						Amount Change
	2017			2016			2017 less 2016
Net cash provided by operating activities	$	414,471		$	4,228,919		$	(3,814,448	)
Net cash used in investing activities		(45,930,709	)		(8,793,138	)		(37,137,571	)
Net cash provided by financing activities		40,251,796			22,219,944			18,031,852
Increase (decrease) in cash		(5,264,442	)		17,655,725			(22,920,167	)
Cash and cash equivalents, beginning of period		34,223,945			9,047,586			25,176,359
Cash and cash equivalents, end of period	$	28,959,503		$	26,703,311		$	2,256,192

The $414,471 and $4,228,919 of cash provided by operating activities for the nine months ended September 30, 2017 and 2016, respectively, are summarized as follows:

	(Unaudited)
	Nine Months Ended September 30,						Amount Change
	2017			2016			2017 less 2016
Premiums collected	$	11,582,534		$	9,441,443		$	2,141,091
Net investment income collected		8,778,763			7,429,581			1,349,182
Death benefits paid		(3,613,141	)		(2,811,463	)		(801,678	)
Surrenders paid		(717,790	)		(541,725	)		(176,065	)
Commissions paid		(6,824,917	)		(5,135,536	)		(1,689,381	)
Other underwriting, insurance and acquisition expenses paid		(4,359,559	)		(3,679,616	)		(679,943	)
Taxes paid		(739,692	)		(518,966	)		(220,726	)
Advances to mortgage loan originator		552,886			(2,466,020	)		3,018,906
Deposited policy applications unissued		(4,108,873	)		2,220,132			(6,329,005	)
Decrease in short-term investments		-			549,851			(549,851	)
Other		(135,740	)		(258,762	)		123,022
Increase in cash provided by operating activities	$	414,471		$	4,228,919		$	(3,814,448	)

Please see the statements of cash flows for the nine months ended September 30, 2017 and 2016 for a summary of the components of net cash used in investing activities and provided by financing activities.

63

Our shareholders’ equity as of September 30, 2017 and December 31, 2016 is summarized as follows:

	(Unaudited)						Amount Change
	September 30, 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 September 30, 2017 and December 31, 2016 and 7,802,593 outstanding as of September 30, 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 September 30, 2017 and December 31, 2016)		(893,947	)		(893,947	)		-
Accumulated other comprehensive income		4,323,099			818,676			3,504,423
Accumulated earnings		9,646,620			7,590,446			2,056,174
Total shareholders' equity	$	41,840,872		$	36,280,275		$	5,560,597

The increase in shareholders’ equity of $5,560,597 for the nine months ended September 30, 2017 is due to $3,504,423 of other comprehensive income and net income of $2,056,174.

Equity per common share outstanding increased 15.3% from $4.65 per share as of December 31, 2016 to $5.36 per share as of September 30, 2017, based upon 7,802,593 common shares outstanding as of both September 30, 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 $5,500,237 and $1,039,897 as of September 30, 2017 and December 31, 2016, respectively, prior to the impact of income taxes and deferred acquisition cost adjustments. An increase of $4,423,541 in unrealized gains arising for the nine months ended September 30, 2017 has been offset by the 2017 net realized investment losses of $36,799 originating from the sale and call activity for fixed maturity securities available-for-sale resulting in net unrealized gains on investments of $4,460,340.

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.

64

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

As of September 30, 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 13.1% 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 September 30, 2017, the Company has outstanding advances to this loan originator totaling $4,654,494. The advances are secured by $6,015,814 of residential mortgage loans on real estate that are assigned to the Company. The Company has committed to fund up to an additional $845,506 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 September 30, 2017, $559,570 of additional and secured residential mortgage loan balances on real estate are held in escrow by the Company.  As of September 30, 2017, $397,663 of that escrow amount is available to the Company as additional collateral on $4,654,494 of advances to the loan originator. The remaining September 30, 2017 escrow amount of $161,907 is available to the Company as additional collateral on its investment of $32,381,460 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 September 30, 2017 will be sufficient to fund our anticipated operating expenses.

Off-Balance Sheet Arrangements

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

65

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained herein are forward-looking statements. The forward-looking statements are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, and include estimates and assumptions related to economic, competitive and legislative developments. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “estimates,” “will” or words of similar meaning; and include, but are not limited to, statements regarding the outlook of our business and financial performance. These forward-looking statements are subject to change and uncertainty, which are, in many instances, beyond our control and have been made based upon our expectations and beliefs concerning future developments and their potential effect upon us. There can be no assurance that future developments will be in accordance with our expectations, or that the effect of future developments on us will be as anticipated. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties. There are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements. These factors include among others:

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

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

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

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

66

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 September 30, 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. 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.

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. To date, Mr. Pettigrew has failed to post this bond and, as a consequence, the Company and Mr. Zahn are in the process of executing on the judgments against Mr. Pettigrew’s assets. While the Company and Mr. Zahn will continue to execute on the judgments, any money or property collected during the execution of the judgments would have to be returned to Mr. Pettigrew in the event the judgments are reversed by the appellate courts.

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.

67

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. The trial in this case will be before a judge and is scheduled to begin on November 27, 2017.

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.

Doyle Nimmo subsequently 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 was pending in the District Court for the Western District of Missouri and asked the Court to determine whether the Errors and Omissions policy provides coverage for the lawsuits filed against Doyle Nimmo. Utica Mutual Insurance Company did not seek a monetary judgment against FBLIC or TLIC.

68

On June 14, 2017, FBLIC and Doyle Nimmo executed a settlement to dismiss with prejudice all claims, causes of action and demands between them arising out of or in any way relating to the transactions and occurrences connected to the legal proceedings described above. The settlement proceeds included payments of $90,000 to FBLIC by Utica Mutual Insurance Company and $10,000 to FBLIC by Doyle Nimmo. The settlement also included an agreement whereby FBLIC and Doyle Nimmo bore exclusive liability for payment of their respective attorneys’ fees, lawsuit expenses, expert consulting fees and taxable costs of court incurred in connection with prosecution and/or defense of the claims, causes of action and demands related to the legal proceedings described above.

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.

69

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
November 9, 2017	By:	/s/ Gregg E. Zahn
		Gregg E. Zahn, President and Chief Executive Officer
November 9, 2017	By:	/s/ Jeffrey J. Wood
		Jeffrey J. Wood, Chief Financial Officer

70

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: November 9, 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: November 9, 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 September 30, 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: November 9, 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 September 30, 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: November 9, 2017	By: /s/ Jeffrey J. Wood
	Jeffrey J. Wood, Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 06, 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	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Statements of Financial Position (Current Period Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $142,612,677 and $128,310,265 as of September 30, 2017 and December 31, 2016, respectively)	$ 148,042,788	$ 129,311,155
Available-for-sale equity securities at fair value (cost: $602,232 and $599,400 as of September 30, 2017 and December 31, 2016, respectively)	672,358	638,407
Mortgage loans on real estate	103,013,015	74,371,286
Investment real estate	2,354,311	2,506,673
Policy loans	1,626,771	1,598,116
Other long-term investments	57,675,405	46,788,873
Total investments	313,384,648	255,214,510
Cash and cash equivalents	28,959,503	34,223,945
Accrued investment income	2,618,245	2,176,770
Recoverable from reinsurers	1,157,109	1,258,938
Agents' balances and due premiums	1,602,599	1,419,250
Deferred policy acquisition costs	23,164,372	18,191,990
Value of insurance business acquired	5,610,747	5,908,835
Other assets	10,059,398	14,858,375
Total assets	386,556,621	333,252,613
Policy liabilities
Policyholders' account balances	292,128,688	245,346,489
Future policy benefits	48,002,489	44,266,227
Policy claims	1,027,121	997,814
Other policy liabilities	90,487	69,854
Total policy liabilities	341,248,785	290,680,384
Deferred federal income taxes	2,071,174	693,470
Other liabilities	1,395,790	5,598,484
Total liabilities	344,715,749	296,972,338
Shareholders' equity
Common stock, par value $.01 per share (20,000,000 shares authorized, 8,050,173 issued as of September 30, 2017 and December 31, 2016 and 7,802,593 outstanding as of September 30, 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 September 30, 2017 and December 31, 2016)	(893,947)	(893,947)
Accumulated other comprehensive income	4,323,099	818,676
Accumulated earnings	9,646,620	7,590,446
Total shareholders' equity	41,840,872	36,280,275
Total liabilities and shareholders' equity	$ 386,556,621	$ 333,252,613

XML

Consolidated Statements of Financial Position (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Available-for-sale fixed maturity securities at cost	$ 142,612,677	$ 128,310,265
Available-for-sale equity securities at cost	$ 602,232	$ 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		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues
Premiums	$ 4,058,629	$ 3,197,228	$ 11,560,664	$ 9,426,803
Net investment income	4,631,892	3,303,980	12,296,827	9,922,817
Net realized investment gains (losses)	(3,486)	160,308	254,108	307,250
Loss on other-than-temporary impairments			(224,250)
Other income	25,249	10,053	92,376	25,259
Total revenues	8,712,284	6,671,569	23,979,725	19,682,129
Benefits and claims
Increase in future policy benefits	1,291,943	1,357,212	3,733,907	3,995,230
Death benefits	1,310,697	881,928	3,744,278	2,868,216
Surrenders	186,202	205,356	717,790	541,725
Interest credited to policyholders	2,293,419	1,754,941	6,530,403	5,090,162
Dividend, endowment and supplementary life contract benefits	68,492	81,040	200,260	214,552
Total benefits and claims	5,150,753	4,280,477	14,926,638	12,709,885
Policy acquisition costs deferred	(2,369,432)	(2,023,246)	(7,370,469)	(5,142,381)
Amortization of deferred policy acquisition costs	890,135	536,901	2,318,277	1,588,938
Amortization of value of insurance business acquired	88,625	91,966	298,089	281,175
Commissions	2,051,910	1,954,586	6,641,883	4,783,307
Other underwriting, insurance and acquisition expenses	1,362,524	1,244,013	4,588,947	4,123,540
Total expenses	2,023,762	1,804,220	6,476,727	5,634,579
Total benefits, claims and expenses	7,174,515	6,084,697	21,403,365	18,344,464
Income before total federal income tax expense	1,537,769	586,872	2,576,360	1,337,665
Current federal income tax expense (benefit)	(1,320)	4,472	18,589	41,982
Deferred federal income tax expense	294,437	83,814	501,597	163,685
Total federal income tax expense	293,117	88,286	520,186	205,667
Net income	$ 1,244,652	$ 498,586	$ 2,056,174	$ 1,131,998
Net income per common share basic and diluted (in dollars per share)	$ 0.16	$ 0.06	$ 0.26	$ 0.15

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2017		Sep. 30, 2016	Sep. 30, 2017		Sep. 30, 2016
Net income	$ 1,244,652		$ 498,586	$ 2,056,174		$ 1,131,998
Other Comprehensive Income (loss)
Total net unrealized investment gains arising during the period	703,274		1,058,518	4,423,541		9,440,894
Less net realized investment gains (losses)	(3,486)	[1]	206,890	(36,799)	[1]	335,841	[1]
Net unrealized investment gains	706,760		851,628	4,460,340		9,105,053
Less adjustment to deferred acquisition costs	10,532		19,392	79,810		146,605
Other comprehensive income before federal income tax expense	696,228		832,236	4,380,530		8,958,448
Federal income tax expense	139,246		166,449	876,107		1,791,689
Total other comprehensive income	556,982		665,787	3,504,423		7,166,759
Total comprehensive income	$ 1,801,634		$ 1,164,373	$ 5,560,597		$ 8,298,757

[1] These items appear within net realized investment gains (losses) and other-than-temporary impairment in the consolidated statements 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					1,131,998	1,131,998
Other comprehensive income				7,166,759		7,166,759
Balance at Dec. 31, 2015	80,502	28,684,598	(893,947)	(2,655,817)	4,999,707	30,215,043
Balance at Sep. 30, 2016	80,502	28,684,598	(893,947)	4,510,942	6,131,705	38,513,800
Balance at Dec. 31, 2016	80,502	28,684,598	(893,947)	818,676	7,590,446	36,280,275
Comprehensive income:
Net income					2,056,174	2,056,174
Other comprehensive income				3,504,423		3,504,423
Balance at Dec. 31, 2016	80,502	28,684,598	(893,947)	818,676	7,590,446	36,280,275
Balance at Sep. 30, 2017	$ 80,502	$ 28,684,598	$ (893,947)	$ 4,323,099	$ 9,646,620	$ 41,840,872

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities
Net income	$ 2,056,174	$ 1,131,998
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for depreciation	109,435	109,587
Accretion of discount on investments	(2,298,768)	(1,278,028)
Net realized investment gains	(254,108)	(307,250)
Loss on other-than-temporary impairment	224,250
Amortization of policy acquisition cost	2,318,277	1,588,938
Policy acquisition costs deferred	(7,370,469)	(5,142,381)
Mortgage loan origination fees deferred		(4,530)
Amortization of loan origination fees	44,351	54,032
Amortization of value of insurance business acquired	298,089	281,175
Allowance for mortgage loan losses	105,024	36,096
Provision for deferred federal income tax expense	501,597	163,685
Interest credited to policyholders	6,530,403	5,090,162
Change in assets and liabilities:
Accrued investment income	(441,475)	56,974
Policy loans	(28,655)	(75,655)
Short-term investments		549,850
Recoverable from reinsurers	101,829	(37,538)
Agents' balances and due premiums	(183,349)	(344,558)
Other assets (excludes depreciation of $320 in 2017 and change in receivable for securities sold of $5,738,274 and ($44,068) in 2017 and 2016, respectively).	(939,617)	(3,998,677)
Future policy benefits	3,736,262	4,002,756
Policy claims	29,307	94,291
Other policy liabilities	20,633	5,631
Other liabilities (excludes change in payable for securities purchased of ($57,976) and $15,424 in 2017 and 2016, respectively).	(4,144,719)	2,252,361
Net cash provided by operating activities	414,471	4,228,919
Investing activities
Purchases of fixed maturity securities	(32,830,057)	(6,163,564)
Maturities of fixed maturity securities	6,762,000	4,657,000
Sales of fixed maturity securities	10,378,173	10,205,935
Purchases of equity securities	(2,832)	(14,480)
Sales of equity securities		128,010
Purchases of mortgage loans	(44,857,137)	(20,669,087)
Payments on mortgage loans	16,129,739	11,317,427
Purchases of other long-term investments	(14,036,084)	(11,340,463)
Payments on other long-term investments	5,863,095	3,114,728
Sale of other long-term investments	792,012
Sales of real estate	190,084
Net change in receivable and payable for securities sold and purchased	5,680,298	(28,644)
Net cash used in investing activities	(45,930,709)	(8,793,138)
Financing activities
Policyholders' account deposits	54,296,750	32,177,094
Policyholders' account withdrawals	(14,044,954)	(9,957,150)
Net cash provided by financing activities	40,251,796	22,219,944
Increase (decrease) in cash	(5,264,442)	17,655,725
Cash and cash equivalents, beginning of period	34,223,945	9,047,586
Cash and cash equivalents, end of period	$ 28,959,503	$ 26,703,311

XML

Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Depreciation	$ 320
Change in receivable for securities sold	5,738,274	$ (44,068)
Change in payable for securities purchased	$ (57,976)	$ 15,424

XML

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

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

During

201

7

the Company reclassified an available-for-sale fixed maturity security totaling

$729,737

to other long-term investments due to a recent

third

party information change indicating the security does

not

qualify for available-for-sale treatment.

In conjunction with th

is reclassification, the non-cash impact on investing activities is summarized as follows:

	Nine Months Ended
	September 30, 2017
Reduction in available-for-securities fixed maturity securities	$	729,737
Other long-term invesments		(729,737	)
Net cash provided (used) in investing activities	$	-

During

2017

and

2016,

the Company foreclosed on residential mortgage loans of real estate totaling

$142,455

and

$198,622,

respectively, 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.

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

	Nine Months Ended			Nine Months Ended
	September 30, 2017			September 30, 2016
Reductions in mortgage loans due to foreclosure	$	142,455		$	198,622
Investment real estate held-for-sale acquired through foreclosure		(142,455	)		(198,622	)
Net cash provided (used) in investing activities	$	-		$	-

XML

Note 1 - Organization and Significant Accounting Policies

9 Months Ended

Sep. 30, 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 F

BLIC. 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 inc

orporated 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,

201

2

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 al

so 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 Cor

poration (“FLAC”) from an unaffiliated company. The acquisition of FLAC was accounted for as a purchase. The aggregate purchase price for FLAC was

$2,695,234

including direct costs associated with the acquisition of

$195,234.

The acquisition of FLAC was financed with the working capital of FTFC.

On

December 31, 2008,

FTFC made FLAC a

15

year loan in the form of a surplus note in the amount of

$250,000

with an interest rate of

6%

payable monthly, that was approved by the Oklahoma Insurance Department (“

OID”). This surplus note is eliminated in consolidation.

On

August 31, 2009,

two

of the Company

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

On

December 28, 2011,

TLIC acquired

100%

of the outstanding common stock of FBLIC from FBLIC

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

$13,855,129.

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

On

April 28, 2015,

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

$3,644,839

(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

nine

months ended

September 30, 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 consolidated 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

September 30, 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 was 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 was 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 was 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.

Compensation

— Stock Compensation: Scope of Modification Accounting

In

May

 

2017,

the FASB issued updated guidance related to a change to the terms or conditions (modification) of a share-based payment award.  The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the modified award (equity or liability instrument) are the same as the original award immediately before the modification.

The updated guidance is effective for the quarter ending

March

 

31,

2018.

  The update is to be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted in any interim periods for which financial statements have

not

yet been made available for issuance. The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

XML

Note 2 - Investments

9 Months Ended

Sep. 30, 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

In

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

September 30, 2017

and

December 31, 2016

are summarized as follows:

			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair
	or Cost		Gains		Losses		Value
	September 30, 2017 (Unaudited)
Fixed maturity securities
U.S. government and U.S. government agencies	$	2,976,500	$	62,463	$	57,498	$	2,981,465
States and political subdivisions		9,386,211		310,486		27,856		9,668,841
Residential mortgage-backed securities		29,190		42,635		-		71,825
Corporate bonds		109,002,252		4,696,310		504,634		113,193,928
Foreign bonds		21,218,524		1,008,329		100,124		22,126,729
Total fixed maturity securities		142,612,677		6,120,223		690,112		148,042,788
Equity securities
Mutual funds		347,311		2,162		-		349,473
Corporate preferred stock		99,945		2,075		-		102,020
Corporate common stock		154,976		65,889		-		220,865
Total equity securities		602,232		70,126		-		672,358
Total fixed maturity and equity securities	$	143,214,909	$	6,190,349	$	690,112	$	148,715,146
	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

A

ll 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

September 30, 2017

and

December 31, 2016

are summarized as follows:

			Unrealized		Number of
	Fair Value		Loss		Securities
	September 30, 2017 (Unaudited)
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	476,388	$	4,294		4
States and political subdivisions		1,409,461		27,856		8
Corporate bonds		4,658,050		94,634		19
Foreign bonds		1,557,436		39,316		5
Total less than 12 months		8,101,335		166,100		36
More than 12 months
U.S. government and U.S. government agencies		1,196,274		53,204		3
Corporate bonds		4,783,721		410,000		18
Foreign bonds		516,695		60,808		3
Total more than 12 months		6,496,690		524,012		24
Total fixed maturity securities in an unrealized loss position	$	14,598,025	$	690,112		60
	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 in an unrealized loss position		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 in an unrealized loss position		185,473		6,454		3
Total fixed maturity and equity securities in an unrealized loss position	$	42,434,255	$	2,005,808		173

As of

September 30, 2017,

the Company held

60

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

$690,112,

fair value of

$14,598,025

and amortized cost of

$15,288,137.

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

September 30, 2017.

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

60

securities is

95%.

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

December 31, 2016,

the Company ha

d

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

September 30, 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.

The Company

has recorded other-than-temporary impairments on its fixed maturity available-for-sale investment in an energy corporation with a total par value of

$650,000

as a result of continuing unrealized losses. During

fourth

quarter

2016

this security was initially impaired by a

$207,450

charge to the statement of operations. During

second

quarter

2017

this security was further impaired by a

$224,250

charge to the statement of operations. These impairments were considered fully credit-related and represent 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 for the

three

and

nine

months ended

September 30, 2017

and the year ended

December 31, 2016.

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

September 30, 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

September 30, 2017

and

December 31, 2016,

are summarized as follows:

	(Unaudited)
	September 30, 2017			December 31, 2016
Unrealized appreciationon available-for-sale securities	$	5,500,237		$	1,039,897
Adjustment to deferred acquisition costs		(96,363	)		(16,553	)
Deferred income taxes		(1,080,775	)		(204,668	)
Net unrealized appreciationon available-for-sale securities	$	4,323,099		$	818,676

The Company

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

$57,675,405

and

$46,788,873

as of

September 30, 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

September 30, 2017,

by contractual maturity, are summarized as follows:

	September 30, 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	$	7,267,264	$	7,331,950	$	8,248,410	$	8,361,971
Due after one year through five years		30,208,994		31,312,939		23,377,949		25,433,045
Due after five years through ten years		38,476,332		39,833,033		16,190,560		19,790,751
Due after ten years		66,630,897		69,493,041		9,858,486		15,836,022
Due at multiple maturity dates		29,190		71,825		-		-
	$	142,612,677	$	148,042,788	$	57,675,405	$	69,421,789

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 m

aturities of fixed maturity securities available-for-sale, equity securities available-for-sale, mortgage loans on real estate, investment real estate and other long-term investments for the

three

and

nine

months ended

September 30, 2017

and

2016

are summarized as follows:

	Three Months Ended September 30, (Unaudited)
	Fixed Maturity Securities						Equity Securities				Mortgage Loans on Real Estate					Investment Real Estate
	2017			2016			2017		2016		2017		2016			2017		2016
Proceeds	$	4,536,924		$	7,368,724		$	-	$	-	$	5,405,626	$	7,655,905		$	-	$	-
Gross realized gains		37,337			242,910			-		-		-		-			-		-
Gross realized losses		(40,823	)		(36,020	)		-		-		-		(46,582	)		-		-
Loss on other-than-temporary impairment		-			-			-		-		-		-			-		-

	Three Months Ended September 30, (Unaudited)
	Other Long-Term Investments
	2017		2016
Proceeds	$	-	$	-
Gross realized gains		-		-
Gross realized losses		-		-
Loss on other-than-temporary impairment		-		-

	Nine Months Ended September 30, (Unaudited)
	Fixed Maturity Securities						Equity Securities					Mortgage Loans on Real Estate					Investment Real Estate
	2017			2016			2017		2016			2017		2016			2017			2016
Proceeds	$	17,140,173		$	14,862,935		$	-	$	128,010		$	16,129,739	$	11,317,427		$	190,084		$	-
Gross realized gains		564,589			405,960			-		8,711			-		-			6,050			-
Gross realized losses		(377,138	)		(77,362	)		-		(1,468	)		-		(28,591	)		(1,668	)		-
Loss on other-than-temporary impairment		(224,250	)		-			-		-			-		-			-			-

	Nine Months Ended September 30, (Unaudited)
	Other Long-Term Investments
	2017		2016
Proceeds	$	792,012	$	-
Gross realized gains		62,275		-
Gross realized losses		-		-
Loss on other-than-temporary impairment		-		-

The accumulated change in net unrealized investment

gains (losses) for fixed maturity and equity securities available-for-sale for the

three

and

nine

months ended

September 30, 2017

and

2016

and the amount of realized investment gains on fixed maturity securities available-for-sale, equity securities available-for-sale, mortgage loans on real estate, investment real estate and other long-term investments for the

three

and

nine

months ended

September 30, 2017

and

2016

are summarized as follows:

	Three Months Ended September 30, (Unaudited)						Nine Months Ended September 30, (Unaudited)
	2017			2016			2017		2016
Change in unrealized investment gains:
Available-for-sale securities:
Fixed maturity securities	$	694,379		$	817,963		$	4,429,221	$	9,078,142
Equity securities		12,381			33,665			31,119		26,911
Net realized investment gains (losses):
Available-for-sale securities:
Fixed maturity securities		(3,486	)		206,890			187,451		328,598
Equity securities		-			-			-		7,243
Mortgage loans on real estate		-			(46,582	)		-		(28,591	)
Investment real estate		-			-			4,382		-
Other long-term investments		-			-			62,275		-

Major categories of net investment income for

the

three

and

nine

months ended

September 30, 2017

and

2016

are summarized as follows:

	Three Months Ended September 30, (Unaudited)						Nine Months Ended September 30, (Unaudited)
	2017			2016			2017			2016
Fixed maturity securities	$	1,731,931		$	1,435,041		$	4,887,826		$	4,535,560
Equity securities		4,382			6,728			14,540			20,568
Other long-term investments		967,959			687,042			2,707,438			1,857,366
Mortgage loans		2,379,176			1,417,445			5,923,207			4,098,943
Policy loans		28,640			27,348			84,657			79,937
Real estate		93,943			62,391			281,366			246,327
Short-term and other investments		72,935			56,806			296,019			198,950
Gross investment income		5,278,966			3,692,801			14,195,053			11,037,651
Investment expenses		(647,074	)		(388,821	)		(1,898,226	)		(1,114,834	)
Net investment income	$	4,631,892		$	3,303,980		$	12,296,827		$	9,922,817

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

September 30, 2017

and

December 31, 2016,

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

$3,702,658

and

$4,099,405,

respectively.

As of

September 30, 2017

and

December 31, 2016,

these required deposits had fair values that totaled

$3,726,812

and

$4,125,116,

respectively.

The Company

’s mortgage loans by property type as of

September 30, 2017

and

December 31, 2016

are summarized as follows:

	(Unaudited)
	September 30, 2017		December 31, 2016
Commercial and industrial mortgage loans
Retail stores	$	1,250,052	$	1,075,324
Office buildings		138,463		179,484
Industrial		432,351		-
Total commercial and industrial mortgage loans		1,820,866		1,254,808
Residential mortgage loans		101,192,149		73,116,478
Total mortgage loans	$	103,013,015	$	74,371,286

The Company

’s investment real estate as of

September 30, 2017

and

December 31, 2016

is summarized as follows:

	(Unaudited)
	September 30, 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		(1,158,810	)		(1,049,695	)
Buildings net of accumulated depreciation		1,108,747			1,217,862
Residential real estate - held for sale		287,249			330,496
Total residential real estate		287,249			330,496
Investment real estate, net of accumulated depreciation	$	2,354,311		$	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

2017

and

2016,

the Company foreclosed on residential mortgage loans of real estate totaling

$142,455

and

$198,622,

respectively

, and transferred those properties to investment real estate that are now held for sale.

During

2017,

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

$1

85,702.

The Company recorded a gross realized investment gain on sale of

$4,382

based on an aggregate sales price of

$190,084.

XML

Note 3 - Fair Value Measurements

9 Months Ended

Sep. 30, 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

consolidated 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

September 30, 2017

and

December 31, 2016

is summarized as follows:

	Level 1		Level 2		Level 3		Total
	September 30, 2017 (Unaudited)
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	2,981,465	$	-	$	2,981,465
States and political subdivisions		-		9,668,841		-		9,668,841
Residential mortgage-backed securities		-		71,825		-		71,825
Corporate bonds		-		113,193,928		-		113,193,928
Foreign bonds		-		22,126,729		-		22,126,729
Total fixed maturity securities	$	-	$	148,042,788	$	-	$	148,042,788
Equity securities, available-for-sale
Mutual funds	$	-	$	349,473	$	-	$	349,473
Corporate preferred stock		102,020		-		-		102,020
Corporate common stock		159,365		-		61,500		220,865
Total equity securities	$	261,385	$	349,473	$	61,500	$	672,358
	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

September 30, 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.

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.

T

he carrying amount and fair value of the Company’s financial assets and financial liabilities disclosed, but

not

carried, at fair value as of

September 30, 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
	September 30, 2017 (Unaudited)
Financial assets
Mortgage loans on real estate
Commercial and industrial	$	1,820,866	$	1,823,474	$	-	$	-	$	1,823,474
Residential		101,192,149		103,364,612		-		-		103,364,612
Policy loans		1,626,771		1,626,771		-		-		1,626,771
Other long-term investments		57,675,405		69,421,789		-		-		69,421,789
Cash and cash equivalents		28,959,503		28,959,503		28,959,503		-		-
Accrued investment income		2,618,245		2,618,245		-		-		2,618,245
Total financial assets	$	193,892,939	$	205,973,290	$	28,959,503	$	-	$	177,013,787
Financial liabilities
Policyholders' account balances	$	292,128,688	$	239,162,237	$	-	$	-	$	239,162,237
Policy claims		1,027,121		1,027,121		-		-		1,027,121
Total financial liabilities	$	293,155,809	$	240,189,358	$	-	$	-	$	240,189,358
	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

and industrial 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

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

4

.

Segment Data

T

he 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

September 30, 2017

and

December 31, 2016

and

for the

three

and

nine

months ended

September 30, 2017

and

2016

are summarized as follows:

	Three Months Ended September 30, (Unaudited)				Nine Months Ended September 30, (Unaudited)
	2017		2016		2017		2016
Revenues:
Life insurance operations	$	4,723,138	$	3,720,401	$	13,321,087	$	11,068,191
Annuity operations		3,903,408		2,802,934		10,377,974		8,158,645
Corporate operations		85,738		148,234		280,664		455,293
Total	$	8,712,284	$	6,671,569	$	23,979,725	$	19,682,129
Income before income taxes:
Life insurance operations	$	345,522	$	35,230	$	899,547	$	87,745
Annuity operations		1,141,492		436,051		1,488,848		1,014,476
Corporate operations		50,755		115,591		187,965		235,444
Total	$	1,537,769	$	586,872	$	2,576,360	$	1,337,665
Depreciation and amortization expense:
Life insurance operations	$	858,012	$	541,995	$	1,828,933	$	1,540,582
Annuity operations		178,063		154,648		941,219		493,151
Corporate operations		-		-		-		-
Total	$	1,036,075	$	696,643	$	2,770,152	$	2,033,733

	(Unaudited)
	September 30, 2017		December 31, 2016
Assets:
Life insurance operations	$	54,305,804	$	50,577,282
Annuity operations		325,089,923		275,745,766
Corporate operations		7,160,894		6,929,565
Total	$	386,556,621	$	333,252,613

XML

Note 5 - Federal Income Taxes

9 Months Ended

Sep. 30, 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.

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 ope

n 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

2014

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

9 Months Ended

Sep. 30, 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 Wa

yne 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. To date, Mr. Pettigrew has failed to post this bond and, as a consequence, the Company and Mr. Zahn are in the process of executing on the judgments against Mr. Pettigrew’s assets. While the Company and Mr. Zahn will continue to execute on the judgments, any money or property collected during the execution of the judgments would have to be returned to Mr. Pettigrew in the event the judgments are reversed by the appellate courts.

In addition to the damages awarded by the jury, the Company and Mr. Zahn have initiated steps to aggressively communicate the correct

ion 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. The trial in this case will be before a judge and is scheduled to begin on

November 27, 2017.

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.

Doyle Nimmo

subsequently 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 was pending in the District Court for the Western District of Missouri and asked the Court to determine whether the Errors and Omissions policy provides coverage for the lawsuits filed against Doyle Nimmo. Utica Mutual Insurance Company did

not

seek a monetary judgment against FBLIC or TLIC.

On

June 14, 2017,

FBLIC and Doyle Nimmo executed a settlement to dismiss with prejudice all claims, causes of action and demands between them arising out of or in any way relating to the transactions and occurrences connected to the legal proceedings described above. The settlement proceeds included payments of

$90,000

to FBLIC by Utica Mutual Insurance Company and

$10,000

to FBLIC by Doyle Nimmo. The settlement also included an agreement whereby FBLIC and Doyle Nimmo bore exclusive liability for payment of their respective attorneys

’ fees, lawsuit expenses, expert consulting fees and taxable costs of court incurred in connection with prosecution and/or defense of the claims, causes of action and demands related to the legal proceedings described above.

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.

XML

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

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

7

.

Other Comprehensive Income and Accumulated Other Comprehensive Income

(Loss)

The changes in the components of the Company

’s accumulated other comprehensive income for the

three

and

nine

months ended

September 30, 2017

and

2016

are summarized as follows:

	Three Months Ended September 30, 2017 and 2016 (Unaudited)
	Unrealized						Accumulated
	Appreciation on			Adjustment to			Other
	Available-For-Sale			Deferred Acquisition			Comprehensive
	Securities			Costs			Income
Balance as of July 1, 2017	$	3,834,781		$	(68,664	)	$	3,766,117
Other comprehensive income before reclassifications, net of tax		562,619			(8,426	)		554,193
Less amounts reclassified from accumulated other comprehensive income, net of tax		(2,789	)		-			(2,789	)
Other comprehensive income		565,408			(8,426	)		556,982
Balance as of September 30, 2017	$	4,400,189		$	(77,090	)	$	4,323,099
Balance as of July 1, 2016	$	3,906,866		$	(61,711	)	$	3,845,155
Other comprehensive income before reclassifications, net of tax		846,814			(15,514	)		831,300
Less amounts reclassified from accumulated other comprehensive income, net of tax		165,513			-			165,513
Other comprehensive income		681,301			(15,514	)		665,787
Balance as of September 30, 2016	$	4,588,167		$	(77,225	)	$	4,510,942

	Nine Months Ended September 30, 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		3,538,833			(63,849	)		3,474,984
Less amounts reclassified from accumulated other comprehensive income, net of tax		(29,439	)		-			(29,439	)
Other comprehensive income		3,568,272			(63,849	)		3,504,423
Balance as of September 30, 2017	$	4,400,189		$	(77,090	)	$	4,323,099
Balance as of January 1, 2016	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of tax		7,552,715			(117,284	)		7,435,431
Less amounts reclassified from accumulated other comprehensive loss, net of tax		268,672			-			268,672
Other comprehensive income		7,284,043			(117,284	)		7,166,759
Balance as of September 30, 2016	$	4,588,167		$	(77,225	)	$	4,510,942

The pretax components of the Company

’s other comprehensive income and the related income tax expense (benefit) for each component for the

three

and

nine

months ended

September 30, 2017

and

2016

are summarized as follows:

	Three Months Ended September 30, 2017 (Unaudited)
				Income Tax
	Pretax			Expense			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	703,274		$	140,655		$	562,619
Reclassification adjustment for net losses included in operations		(3,486	)		(697	)		(2,789	)
Net unrealized gains on investments		706,760			141,352			565,408
Adjustment to deferred acquisition costs		(10,532	)		(2,106	)		(8,426	)
Total other comprehensive income	$	696,228		$	139,246		$	556,982

	Three Months Ended September 30, 2016 (Unaudited)
				Income Tax
				Expense
	Pretax			(Benefit)			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	1,058,518		$	211,704		$	846,814
Reclassification adjustment for net gains included in operations		206,890			41,377			165,513
Net unrealized gains on investments		851,628			170,327			681,301
Adjustment to deferred acquisition costs		(19,392	)		(3,878	)		(15,514	)
Total other comprehensive income	$	832,236		$	166,449		$	665,787

	Nine Months Ended September 30, 2017 (Unaudited)
				Income Tax
	Pretax			Expense			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	4,423,541		$	884,708		$	3,538,833
Reclassification adjustment for net losses included in operations		(36,799	)		(7,360	)		(29,439	)
Net unrealized gains on investments		4,460,340			892,068			3,568,272
Adjustment to deferred acquisition costs		(79,810	)		(15,961	)		(63,849	)
Total other comprehensive income	$	4,380,530		$	876,107		$	3,504,423

	Nine Months Ended September 30, 2016 (Unaudited)
				Income Tax
				Expense
	Pretax			(Benefit)			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	9,440,894		$	1,888,179		$	7,552,715
Reclassification adjustment for net gains included in operations		335,841			67,169			268,672
Net unrealized gains on investments		9,105,053			1,821,010			7,284,043
Adjustment to deferred acquisition costs		(146,605	)		(29,321	)		(117,284	)
Total other comprehensive income	$	8,958,448		$	1,791,689		$	7,166,759

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

and

nine

months ended

September 30, 2017

and

2016

are summarized as follows:

	Three Months Ended September 30, (Unaudited)					Nine Months Ended September 30, (Unaudited)
Reclassification Adjustments	2017			2016		2017			2016
Unrealized gains on available-for-sale securities:
Realized gains (losses) on sales of securities (a)	$	(3,486	)	$	206,890	$	(36,799	)	$	335,841
Income tax expense (benefit) (b)		(697	)		41,377		(7,360	)		67,169
Total reclassification adjustments	$	(2,789	)	$	165,513	$	(29,439	)	$	268,672

(a) These items appear within net realized investment gains (losses) and other-than-temporary impairments in the consolidated statements of operations.

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

XML

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

9 Months Ended

Sep. 30, 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 and industrial 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 and industrial 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 o

f

September 30, 2017,

$559,570

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

third

party for the benefit of the Company

.   As of

September 30, 2017,

$161,907

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

$32,381,460

in residential mortgage loans on real estate with

one

loan originator.

In addition, the Company has an

additional

$349,451

allowance for possible loan losses in the remaining

$70,631,555

of investments in mortgage loans on real estate as of

September 30, 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 paym

ent 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

and

nine

months ended

September 30, 2017

and

2016

are summarized as follows (excluding

$32,381,460

and

$23,962,879

of mortgage loans on real estate as of

September 30, 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):

	(Unaudited)
	As of and for the Three Months Ended September 30,
	Residential Mortgage Loans				Commercial and Industrial Mortgage Loans						Premium Finance Loans				Total
	2017		2016		2017			2016			2017		2016		2017		2016
Allowance, beginning:	$	336,180	$	191,332	$	9,278		$	6,532		$	-	$	279,662	$	345,458	$	477,526
Charge offs		-		-		-			-			-		-		-		-
Recoveries		-		-		-			-			-		-		-		-
Provision		4,121		21,690		(128	)		(110	)		-		-		3,993		21,580
Allowance, ending	$	340,301	$	213,022	$	9,150		$	6,422		$	-	$	279,662	$	349,451	$	499,106
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	279,662	$	-	$	279,662
Collectively evaluated for impairment	$	340,301	$	213,022	$	9,150		$	6,422		$	-	$	-	$	349,451	$	219,444
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	347,885	$	-	$	347,885
Collectively evaluated for impairment	$	68,810,689	$	42,656,344	$	1,820,866		$	1,278,080		$	-	$	-	$	70,631,555	$	43,934,424

	(Unaudited)
	As of and for the Nine Months Ended September 30,
	Residential Mortgage Loans				Commercial and Industrial 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		102,180		37,034		2,844		(938	)		-		82,490		105,024		118,586
Allowance, ending	$	340,301	$	213,022	$	9,150	$	6,422		$	-	$	279,662	$	349,451	$	499,106
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-	$	-		$	-	$	279,662	$	-	$	279,662
Collectively evaluated for impairment	$	340,301	$	213,022	$	9,150	$	6,422		$	-	$	-	$	349,451	$	219,444
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-	$	-		$	-	$	347,885	$	-	$	347,885
Collectively evaluated for impairment	$	68,810,689	$	42,656,344	$	1,820,866	$	1,278,080		$	-	$	-	$	70,631,555	$	43,934,424

The Company utilizes the ratio of the carrying value of individual residential and commercial and industrial 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 and industrial mortgage loans on real estate by credit quality using this ratio as of

September 30, 2017

and

December 31, 2016

are summarized as follows:

			Residential Mortgage Loans				Commercial and Industrial Mortgage Loans				Total Mortgage Loans
			(Unaudited)				(Unaudited)				(Unaudited)
Loan-To-Value Ratio			September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Over 70%	to	80%	$	19,116,003	$	14,559,541	$	-	$	-	$	19,116,003	$	14,559,541
Over 60%	to	70%		35,351,370		29,738,887		-		-		35,351,370		29,738,887
Over 50%	to	60%		25,489,059		15,440,364		844,438		1,051,155		26,333,497		16,491,519
Over 40%	to	50%		13,520,426		10,399,031		-		-		13,520,426		10,399,031
Over 30%	to	40%		4,628,716		2,184,351		661,367		203,653		5,290,083		2,388,004
Over 20%	to	30%		2,287,087		467,410		170,935		-		2,458,022		467,410
Over 10%	to	20%		755,782		317,936		144,126		-		899,908		317,936
10%	or	less		43,706		8,958		-		-		43,706		8,958
Total			$	101,192,149	$	73,116,478	$	1,820,866	$	1,254,808	$	103,013,015	$	74,371,286

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 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,

201

2

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 al

so 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 Cor

poration (“FLAC”) from an unaffiliated company. The acquisition of FLAC was accounted for as a purchase. The aggregate purchase price for FLAC was

$2,695,234

including direct costs associated with the acquisition of

$195,234.

The acquisition of FLAC was financed with the working capital of FTFC.

On

December 31, 2008,

FTFC made FLAC a

15

year loan in the form of a surplus note in the amount of

$250,000

with an interest rate of

6%

payable monthly, that was approved by the Oklahoma Insurance Department (“

OID”). This surplus note is eliminated in consolidation.

On

August 31, 2009,

two

of the Company

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

On

December 28, 2011,

TLIC acquired

100%

of the outstanding common stock of FBLIC from FBLIC

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

$13,855,129.

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

On

April 28, 2015,

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

$3,644,839

(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

nine

months ended

September 30, 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 consolidated 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

September 30, 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 was 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 was 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 was 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.

Compensation

— Stock Compensation: Scope of Modification Accounting

In

May

 

2017,

the FASB issued updated guidance related to a change to the terms or conditions (modification) of a share-based payment award.  The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the modified award (equity or liability instrument) are the same as the original award immediately before the modification.

The updated guidance is effective for the quarter ending

March

 

31,

2018.

  The update is to be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted in any interim periods for which financial statements have

not

yet been made available for issuance. The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

XML

Supplemental Disclosure - Cash and Non-cash Impact on Investing Activities (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

	Nine Months Ended
	September 30, 2017
Reduction in available-for-securities fixed maturity securities	$	729,737
Other long-term invesments		(729,737	)
Net cash provided (used) in investing activities	$	-

	Nine Months Ended			Nine Months Ended
	September 30, 2017			September 30, 2016
Reductions in mortgage loans due to foreclosure	$	142,455		$	198,622
Investment real estate held-for-sale acquired through foreclosure		(142,455	)		(198,622	)
Net cash provided (used) in investing activities	$	-		$	-

XML

Note 2 - Investments (Tables)

9 Months Ended

Sep. 30, 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
	September 30, 2017 (Unaudited)
Fixed maturity securities
U.S. government and U.S. government agencies	$	2,976,500	$	62,463	$	57,498	$	2,981,465
States and political subdivisions		9,386,211		310,486		27,856		9,668,841
Residential mortgage-backed securities		29,190		42,635		-		71,825
Corporate bonds		109,002,252		4,696,310		504,634		113,193,928
Foreign bonds		21,218,524		1,008,329		100,124		22,126,729
Total fixed maturity securities		142,612,677		6,120,223		690,112		148,042,788
Equity securities
Mutual funds		347,311		2,162		-		349,473
Corporate preferred stock		99,945		2,075		-		102,020
Corporate common stock		154,976		65,889		-		220,865
Total equity securities		602,232		70,126		-		672,358
Total fixed maturity and equity securities	$	143,214,909	$	6,190,349	$	690,112	$	148,715,146
	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
	September 30, 2017 (Unaudited)
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	476,388	$	4,294		4
States and political subdivisions		1,409,461		27,856		8
Corporate bonds		4,658,050		94,634		19
Foreign bonds		1,557,436		39,316		5
Total less than 12 months		8,101,335		166,100		36
More than 12 months
U.S. government and U.S. government agencies		1,196,274		53,204		3
Corporate bonds		4,783,721		410,000		18
Foreign bonds		516,695		60,808		3
Total more than 12 months		6,496,690		524,012		24
Total fixed maturity securities in an unrealized loss position	$	14,598,025	$	690,112		60
	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 in an unrealized loss position		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 in an unrealized loss position		185,473		6,454		3
Total fixed maturity and equity securities in an unrealized loss position	$	42,434,255	$	2,005,808		173

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

	(Unaudited)
	September 30, 2017			December 31, 2016
Unrealized appreciationon available-for-sale securities	$	5,500,237		$	1,039,897
Adjustment to deferred acquisition costs		(96,363	)		(16,553	)
Deferred income taxes		(1,080,775	)		(204,668	)
Net unrealized appreciationon available-for-sale securities	$	4,323,099		$	818,676

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

	Three Months Ended September 30, (Unaudited)
	Fixed Maturity Securities						Equity Securities				Mortgage Loans on Real Estate					Investment Real Estate
	2017			2016			2017		2016		2017		2016			2017		2016
Proceeds	$	4,536,924		$	7,368,724		$	-	$	-	$	5,405,626	$	7,655,905		$	-	$	-
Gross realized gains		37,337			242,910			-		-		-		-			-		-
Gross realized losses		(40,823	)		(36,020	)		-		-		-		(46,582	)		-		-
Loss on other-than-temporary impairment		-			-			-		-		-		-			-		-

	Three Months Ended September 30, (Unaudited)
	Other Long-Term Investments
	2017		2016
Proceeds	$	-	$	-
Gross realized gains		-		-
Gross realized losses		-		-
Loss on other-than-temporary impairment		-		-

	Nine Months Ended September 30, (Unaudited)
	Fixed Maturity Securities						Equity Securities					Mortgage Loans on Real Estate					Investment Real Estate
	2017			2016			2017		2016			2017		2016			2017			2016
Proceeds	$	17,140,173		$	14,862,935		$	-	$	128,010		$	16,129,739	$	11,317,427		$	190,084		$	-
Gross realized gains		564,589			405,960			-		8,711			-		-			6,050			-
Gross realized losses		(377,138	)		(77,362	)		-		(1,468	)		-		(28,591	)		(1,668	)		-
Loss on other-than-temporary impairment		(224,250	)		-			-		-			-		-			-			-

	Nine Months Ended September 30, (Unaudited)
	Other Long-Term Investments
	2017		2016
Proceeds	$	792,012	$	-
Gross realized gains		62,275		-
Gross realized losses		-		-
Loss on other-than-temporary impairment		-		-

Available-for-sale Securities [Table Text Block]

	Three Months Ended September 30, (Unaudited)						Nine Months Ended September 30, (Unaudited)
	2017			2016			2017		2016
Change in unrealized investment gains:
Available-for-sale securities:
Fixed maturity securities	$	694,379		$	817,963		$	4,429,221	$	9,078,142
Equity securities		12,381			33,665			31,119		26,911
Net realized investment gains (losses):
Available-for-sale securities:
Fixed maturity securities		(3,486	)		206,890			187,451		328,598
Equity securities		-			-			-		7,243
Mortgage loans on real estate		-			(46,582	)		-		(28,591	)
Investment real estate		-			-			4,382		-
Other long-term investments		-			-			62,275		-

Investment Income [Table Text Block]

	Three Months Ended September 30, (Unaudited)						Nine Months Ended September 30, (Unaudited)
	2017			2016			2017			2016
Fixed maturity securities	$	1,731,931		$	1,435,041		$	4,887,826		$	4,535,560
Equity securities		4,382			6,728			14,540			20,568
Other long-term investments		967,959			687,042			2,707,438			1,857,366
Mortgage loans		2,379,176			1,417,445			5,923,207			4,098,943
Policy loans		28,640			27,348			84,657			79,937
Real estate		93,943			62,391			281,366			246,327
Short-term and other investments		72,935			56,806			296,019			198,950
Gross investment income		5,278,966			3,692,801			14,195,053			11,037,651
Investment expenses		(647,074	)		(388,821	)		(1,898,226	)		(1,114,834	)
Net investment income	$	4,631,892		$	3,303,980		$	12,296,827		$	9,922,817

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

	(Unaudited)
	September 30, 2017		December 31, 2016
Commercial and industrial mortgage loans
Retail stores	$	1,250,052	$	1,075,324
Office buildings		138,463		179,484
Industrial		432,351		-
Total commercial and industrial mortgage loans		1,820,866		1,254,808
Residential mortgage loans		101,192,149		73,116,478
Total mortgage loans	$	103,013,015	$	74,371,286

Schedule of Real Estate Properties [Table Text Block]

	(Unaudited)
	September 30, 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		(1,158,810	)		(1,049,695	)
Buildings net of accumulated depreciation		1,108,747			1,217,862
Residential real estate - held for sale		287,249			330,496
Total residential real estate		287,249			330,496
Investment real estate, net of accumulated depreciation	$	2,354,311		$	2,506,673

Available For Sale Fixed Maturity Securities [Member]

Notes Tables

Investments Classified by Contractual Maturity Date [Table Text Block]

	September 30, 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	$	7,267,264	$	7,331,950	$	8,248,410	$	8,361,971
Due after one year through five years		30,208,994		31,312,939		23,377,949		25,433,045
Due after five years through ten years		38,476,332		39,833,033		16,190,560		19,790,751
Due after ten years		66,630,897		69,493,041		9,858,486		15,836,022
Due at multiple maturity dates		29,190		71,825		-		-
	$	142,612,677	$	148,042,788	$	57,675,405	$	69,421,789

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Note 3 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

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

	Level 1		Level 2		Level 3		Total
	September 30, 2017 (Unaudited)
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	2,981,465	$	-	$	2,981,465
States and political subdivisions		-		9,668,841		-		9,668,841
Residential mortgage-backed securities		-		71,825		-		71,825
Corporate bonds		-		113,193,928		-		113,193,928
Foreign bonds		-		22,126,729		-		22,126,729
Total fixed maturity securities	$	-	$	148,042,788	$	-	$	148,042,788
Equity securities, available-for-sale
Mutual funds	$	-	$	349,473	$	-	$	349,473
Corporate preferred stock		102,020		-		-		102,020
Corporate common stock		159,365		-		61,500		220,865
Total equity securities	$	261,385	$	349,473	$	61,500	$	672,358
	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
	September 30, 2017 (Unaudited)
Financial assets
Mortgage loans on real estate
Commercial and industrial	$	1,820,866	$	1,823,474	$	-	$	-	$	1,823,474
Residential		101,192,149		103,364,612		-		-		103,364,612
Policy loans		1,626,771		1,626,771		-		-		1,626,771
Other long-term investments		57,675,405		69,421,789		-		-		69,421,789
Cash and cash equivalents		28,959,503		28,959,503		28,959,503		-		-
Accrued investment income		2,618,245		2,618,245		-		-		2,618,245
Total financial assets	$	193,892,939	$	205,973,290	$	28,959,503	$	-	$	177,013,787
Financial liabilities
Policyholders' account balances	$	292,128,688	$	239,162,237	$	-	$	-	$	239,162,237
Policy claims		1,027,121		1,027,121		-		-		1,027,121
Total financial liabilities	$	293,155,809	$	240,189,358	$	-	$	-	$	240,189,358
	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)

9 Months Ended

Sep. 30, 2017

Notes Tables

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

	Three Months Ended September 30, (Unaudited)				Nine Months Ended September 30, (Unaudited)
	2017		2016		2017		2016
Revenues:
Life insurance operations	$	4,723,138	$	3,720,401	$	13,321,087	$	11,068,191
Annuity operations		3,903,408		2,802,934		10,377,974		8,158,645
Corporate operations		85,738		148,234		280,664		455,293
Total	$	8,712,284	$	6,671,569	$	23,979,725	$	19,682,129
Income before income taxes:
Life insurance operations	$	345,522	$	35,230	$	899,547	$	87,745
Annuity operations		1,141,492		436,051		1,488,848		1,014,476
Corporate operations		50,755		115,591		187,965		235,444
Total	$	1,537,769	$	586,872	$	2,576,360	$	1,337,665
Depreciation and amortization expense:
Life insurance operations	$	858,012	$	541,995	$	1,828,933	$	1,540,582
Annuity operations		178,063		154,648		941,219		493,151
Corporate operations		-		-		-		-
Total	$	1,036,075	$	696,643	$	2,770,152	$	2,033,733

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

	(Unaudited)
	September 30, 2017		December 31, 2016
Assets:
Life insurance operations	$	54,305,804	$	50,577,282
Annuity operations		325,089,923		275,745,766
Corporate operations		7,160,894		6,929,565
Total	$	386,556,621	$	333,252,613

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

9 Months Ended

Sep. 30, 2017

Notes Tables

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

	Three Months Ended September 30, 2017 and 2016 (Unaudited)
	Unrealized						Accumulated
	Appreciation on			Adjustment to			Other
	Available-For-Sale			Deferred Acquisition			Comprehensive
	Securities			Costs			Income
Balance as of July 1, 2017	$	3,834,781		$	(68,664	)	$	3,766,117
Other comprehensive income before reclassifications, net of tax		562,619			(8,426	)		554,193
Less amounts reclassified from accumulated other comprehensive income, net of tax		(2,789	)		-			(2,789	)
Other comprehensive income		565,408			(8,426	)		556,982
Balance as of September 30, 2017	$	4,400,189		$	(77,090	)	$	4,323,099
Balance as of July 1, 2016	$	3,906,866		$	(61,711	)	$	3,845,155
Other comprehensive income before reclassifications, net of tax		846,814			(15,514	)		831,300
Less amounts reclassified from accumulated other comprehensive income, net of tax		165,513			-			165,513
Other comprehensive income		681,301			(15,514	)		665,787
Balance as of September 30, 2016	$	4,588,167		$	(77,225	)	$	4,510,942

	Nine Months Ended September 30, 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		3,538,833			(63,849	)		3,474,984
Less amounts reclassified from accumulated other comprehensive income, net of tax		(29,439	)		-			(29,439	)
Other comprehensive income		3,568,272			(63,849	)		3,504,423
Balance as of September 30, 2017	$	4,400,189		$	(77,090	)	$	4,323,099
Balance as of January 1, 2016	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of tax		7,552,715			(117,284	)		7,435,431
Less amounts reclassified from accumulated other comprehensive loss, net of tax		268,672			-			268,672
Other comprehensive income		7,284,043			(117,284	)		7,166,759
Balance as of September 30, 2016	$	4,588,167		$	(77,225	)	$	4,510,942

Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended September 30, 2017 (Unaudited)
				Income Tax
	Pretax			Expense			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	703,274		$	140,655		$	562,619
Reclassification adjustment for net losses included in operations		(3,486	)		(697	)		(2,789	)
Net unrealized gains on investments		706,760			141,352			565,408
Adjustment to deferred acquisition costs		(10,532	)		(2,106	)		(8,426	)
Total other comprehensive income	$	696,228		$	139,246		$	556,982

	Three Months Ended September 30, 2016 (Unaudited)
				Income Tax
				Expense
	Pretax			(Benefit)			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	1,058,518		$	211,704		$	846,814
Reclassification adjustment for net gains included in operations		206,890			41,377			165,513
Net unrealized gains on investments		851,628			170,327			681,301
Adjustment to deferred acquisition costs		(19,392	)		(3,878	)		(15,514	)
Total other comprehensive income	$	832,236		$	166,449		$	665,787

	Nine Months Ended September 30, 2017 (Unaudited)
				Income Tax
	Pretax			Expense			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	4,423,541		$	884,708		$	3,538,833
Reclassification adjustment for net losses included in operations		(36,799	)		(7,360	)		(29,439	)
Net unrealized gains on investments		4,460,340			892,068			3,568,272
Adjustment to deferred acquisition costs		(79,810	)		(15,961	)		(63,849	)
Total other comprehensive income	$	4,380,530		$	876,107		$	3,504,423

	Nine Months Ended September 30, 2016 (Unaudited)
				Income Tax
				Expense
	Pretax			(Benefit)			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	9,440,894		$	1,888,179		$	7,552,715
Reclassification adjustment for net gains included in operations		335,841			67,169			268,672
Net unrealized gains on investments		9,105,053			1,821,010			7,284,043
Adjustment to deferred acquisition costs		(146,605	)		(29,321	)		(117,284	)
Total other comprehensive income	$	8,958,448		$	1,791,689		$	7,166,759

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

	Three Months Ended September 30, (Unaudited)					Nine Months Ended September 30, (Unaudited)
Reclassification Adjustments	2017			2016		2017			2016
Unrealized gains on available-for-sale securities:
Realized gains (losses) on sales of securities (a)	$	(3,486	)	$	206,890	$	(36,799	)	$	335,841
Income tax expense (benefit) (b)		(697	)		41,377		(7,360	)		67,169
Total reclassification adjustments	$	(2,789	)	$	165,513	$	(29,439	)	$	268,672

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

9 Months Ended

Sep. 30, 2017

Notes Tables

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

	(Unaudited)
	As of and for the Three Months Ended September 30,
	Residential Mortgage Loans				Commercial and Industrial Mortgage Loans						Premium Finance Loans				Total
	2017		2016		2017			2016			2017		2016		2017		2016
Allowance, beginning:	$	336,180	$	191,332	$	9,278		$	6,532		$	-	$	279,662	$	345,458	$	477,526
Charge offs		-		-		-			-			-		-		-		-
Recoveries		-		-		-			-			-		-		-		-
Provision		4,121		21,690		(128	)		(110	)		-		-		3,993		21,580
Allowance, ending	$	340,301	$	213,022	$	9,150		$	6,422		$	-	$	279,662	$	349,451	$	499,106
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	279,662	$	-	$	279,662
Collectively evaluated for impairment	$	340,301	$	213,022	$	9,150		$	6,422		$	-	$	-	$	349,451	$	219,444
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-	$	347,885	$	-	$	347,885
Collectively evaluated for impairment	$	68,810,689	$	42,656,344	$	1,820,866		$	1,278,080		$	-	$	-	$	70,631,555	$	43,934,424

	(Unaudited)
	As of and for the Nine Months Ended September 30,
	Residential Mortgage Loans				Commercial and Industrial 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		102,180		37,034		2,844		(938	)		-		82,490		105,024		118,586
Allowance, ending	$	340,301	$	213,022	$	9,150	$	6,422		$	-	$	279,662	$	349,451	$	499,106
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-	$	-		$	-	$	279,662	$	-	$	279,662
Collectively evaluated for impairment	$	340,301	$	213,022	$	9,150	$	6,422		$	-	$	-	$	349,451	$	219,444
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-	$	-		$	-	$	347,885	$	-	$	347,885
Collectively evaluated for impairment	$	68,810,689	$	42,656,344	$	1,820,866	$	1,278,080		$	-	$	-	$	70,631,555	$	43,934,424

Financing Receivable Credit Quality Indicators [Table Text Block]

			Residential Mortgage Loans				Commercial and Industrial Mortgage Loans				Total Mortgage Loans
			(Unaudited)				(Unaudited)				(Unaudited)
Loan-To-Value Ratio			September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Over 70%	to	80%	$	19,116,003	$	14,559,541	$	-	$	-	$	19,116,003	$	14,559,541
Over 60%	to	70%		35,351,370		29,738,887		-		-		35,351,370		29,738,887
Over 50%	to	60%		25,489,059		15,440,364		844,438		1,051,155		26,333,497		16,491,519
Over 40%	to	50%		13,520,426		10,399,031		-		-		13,520,426		10,399,031
Over 30%	to	40%		4,628,716		2,184,351		661,367		203,653		5,290,083		2,388,004
Over 20%	to	30%		2,287,087		467,410		170,935		-		2,458,022		467,410
Over 10%	to	20%		755,782		317,936		144,126		-		899,908		317,936
10%	or	less		43,706		8,958		-		-		43,706		8,958
Total			$	101,192,149	$	73,116,478	$	1,820,866	$	1,254,808	$	103,013,015	$	74,371,286

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Supplemental Disclosure - Cash and Non-cash Impact on Investing Activities (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Reduction in Available-for-sale Securities Fixed Maturity Securities	$ 729,737
Mortgage Loans on Real Estate, Foreclosures	142,455	$ 198,622
Residential Mortgage [Member]
Mortgage Loans on Real Estate, Foreclosures	$ 142,455	$ 198,622

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Supplemental Disclosure - Cash and Non-cash Impact on Investing Activities - Supplement Disclosures to Consolidated Statements of Cash Flows (Unaudited) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Reduction in available-for-securities fixed maturity securities	$ 729,737
Other long-term invesments	(729,737)
Net cash provided (used) in investing activities	0	$ 0
Reductions in mortgage loans due to foreclosure	142,455	198,622
Investment real estate held-for-sale acquired through foreclosure	$ (142,455)	$ (198,622)

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Note 1 - Organization and Significant Accounting Policies (Details Textual)					9 Months Ended	12 Months Ended	24 Months Ended	93 Months Ended	110 Months Ended	162 Months Ended
	Apr. 28, 2015 USD ($)	Dec. 28, 2011 USD ($)	Dec. 31, 2008 USD ($)	Dec. 23, 2008 USD ($)	Sep. 30, 2017 $ / shares	Dec. 31, 2004 USD ($)	Dec. 31, 2012 USD ($) shares	Mar. 08, 2013 USD ($)	Mar. 08, 2013 USD ($) shares	Jun. 30, 2017 USD ($) shares	Dec. 31, 2016 $ / 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	9 Months Ended		12 Months Ended
	Dec. 31, 2016 USD ($)	Sep. 30, 2017 USD ($) ft² a	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Jun. 30, 2017 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	$ 224,250
Deposit Assets	4,099,405	$ 3,702,658		4,099,405
Other Assets, Fair Value Disclosure	4,125,116	3,726,812		4,125,116
Mortgage Loans on Real Estate, Foreclosures		142,455	$ 198,622
Real Estate Investments, Carrying Value of Real Estate Property Sold During the Period		185,702
Gains (Losses) on Sales of Investment Real Estate		4,382
Proceeds from Sale of Real Estate Held-for-investment		190,084
Residential Mortgage [Member]
Mortgage Loans on Real Estate, Foreclosures		$ 142,455	$ 198,622
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	$ 46,788,873	$ 57,675,405		$ 46,788,873
Debt Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	170	60		170
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 1,999,354	$ 690,112		$ 1,999,354
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	42,248,782	14,598,025		42,248,782
Available-for-sale Securities Continuous Unrealized Loss Position Amortized Cost	$ 44,248,136	$ 15,288,137		$ 44,248,136
Fair Value to Cost Ratio	95.00%	95.00%		95.00%
Fixed Maturity Securities, Investment Grade Percentage	92.00%	93.00%		92.00%
Equity Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	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 ($)	Sep. 30, 2017	Dec. 31, 2016
Securities, amortized cost	$ 143,214,909	$ 128,909,665
Securities, gross unrealized gains	6,190,349	3,045,705
Securities, gross unrealized losses	690,112	2,005,808
Available-for-sale securities	148,715,146	129,949,562
US Treasury and Government [Member]
Securities, amortized cost	2,976,500	3,157,889
Securities, gross unrealized gains	62,463	99,086
Securities, gross unrealized losses	57,498	71,592
Available-for-sale securities	2,981,465	3,185,383
US States and Political Subdivisions Debt Securities [Member]
Securities, amortized cost	9,386,211	9,172,533
Securities, gross unrealized gains	310,486	144,947
Securities, gross unrealized losses	27,856	66,584
Available-for-sale securities	9,668,841	9,250,896
Residential Mortgage Backed Securities [Member]
Securities, amortized cost	29,190	33,970
Securities, gross unrealized gains	42,635	36,757
Securities, gross unrealized losses
Available-for-sale securities	71,825	70,727
Corporate Debt Securities [Member]
Securities, amortized cost	109,002,252	100,268,424
Securities, gross unrealized gains	4,696,310	2,324,712
Securities, gross unrealized losses	504,634	1,613,095
Available-for-sale securities	113,193,928	100,980,041
Foreign Government Debt Securities [Member]
Securities, amortized cost	21,218,524	15,677,449
Securities, gross unrealized gains	1,008,329	394,742
Securities, gross unrealized losses	100,124	248,083
Available-for-sale securities	22,126,729	15,824,108
Debt Securities [Member]
Securities, amortized cost	142,612,677	128,310,265
Securities, gross unrealized gains	6,120,223	3,000,244
Securities, gross unrealized losses	690,112	1,999,354
Available-for-sale securities	148,042,788	129,311,155
Mutual Funds [Member]
Securities, amortized cost	347,311	344,783
Securities, gross unrealized gains	2,162
Securities, gross unrealized losses		2,869
Available-for-sale securities	349,473	341,914
Preferred Stock [Member]
Securities, amortized cost	99,945	99,945
Securities, gross unrealized gains	2,075
Securities, gross unrealized losses		3,585
Available-for-sale securities	102,020	96,360
Common Stock [Member]
Securities, amortized cost	154,976	154,672
Securities, gross unrealized gains	65,889	45,461
Securities, gross unrealized losses
Available-for-sale securities	220,865	200,133
Equity Securities [Member]
Securities, amortized cost	602,232	599,400
Securities, gross unrealized gains	70,126	45,461
Securities, gross unrealized losses		6,454
Available-for-sale securities	$ 672,358	$ 638,407

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Note 2 - Investments - Securities in an Unrealized Loss Position (Details)	Sep. 30, 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	$ 476,388	$ 1,878,308
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 4,294	$ 71,592
Securities in an unrealized loss position, less than twelve months, number	4	6
Securities in an unrealized loss position, more than twelve months, fair value	$ 1,196,274
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 53,204
Securities in an unrealized loss position, more than twelve months, number	3
US States and Political Subdivisions Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 1,409,461	$ 2,532,653
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 27,856	$ 66,584
Securities in an unrealized loss position, less than twelve months, number	8	14
Corporate Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 4,658,050	$ 23,721,217
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 94,634	$ 696,066
Securities in an unrealized loss position, less than twelve months, number	19	92
Securities in an unrealized loss position, more than twelve months, fair value	$ 4,783,721	$ 8,004,923
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 410,000	$ 917,029
Securities in an unrealized loss position, more than twelve months, number	18	36
Foreign Government Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 1,557,436	$ 5,087,133
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 39,316	$ 155,833
Securities in an unrealized loss position, less than twelve months, number	5	16
Securities in an unrealized loss position, more than twelve months, fair value	$ 516,695	$ 1,024,548
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 60,808	$ 92,250
Securities in an unrealized loss position, more than twelve months, number	3	6
Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 8,101,335	$ 96,360
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 166,100	$ 3,585
Securities in an unrealized loss position, less than twelve months, number	36	2
Securities in an unrealized loss position, more than twelve months, fair value	$ 6,496,690	$ 9,029,471
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 524,012	$ 1,009,279
Securities in an unrealized loss position, more than twelve months, number	24	42
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 14,598,025	$ 42,248,782
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 690,112	$ 1,999,354
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	60	170
Equity Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value		$ 33,219,311
Securities in an unrealized loss position, less than twelve months, unrealized loss		$ 990,075
Securities in an unrealized loss position, less than twelve months, number		128
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
Securities 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		3
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
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
Securities 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 ($)	Sep. 30, 2017	Dec. 31, 2016
Unrealized appreciation on available-for-sale securities	$ 5,500,237	$ 1,039,897
Adjustment to deferred acquisition costs	(96,363)	(16,553)
Deferred income taxes	(1,080,775)	(204,668)
Net unrealized appreciation on available-for-sale securities	$ 4,323,099	$ 818,676

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Note 2 - Investments - Fixed Maturity Available-for-sale Securities by Contractual Maturities (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Fixed maturity available-for-sale securities - amortized cost	$ 142,612,677	$ 128,310,265
Fixed maturity available-for-sale securities - fair value	148,042,788	$ 129,311,155
Fixed Maturities [Member]
Due in one year or less - amortized cost	7,267,264
Due in one year or less - fair value	7,331,950
Due after one year through five years	30,208,994
Due after one year through five years	31,312,939
Due after five years through ten years - amortized cost	38,476,332
Due after five years through ten years - fair value	39,833,033
Due after ten years - amortized cost	66,630,897
Due after ten years - fair value	69,493,041
Due at multiple maturity dates - amortized cost	29,190
Due at multiple maturity dates - fair value	71,825
Fixed maturity available-for-sale securities - amortized cost	142,612,677
Fixed maturity available-for-sale securities - fair value	148,042,788
Other Long-term Investments [Member]
Due in one year or less - amortized cost	8,248,410
Due in one year or less - fair value	8,361,971
Due after one year through five years	23,377,949
Due after one year through five years	25,433,045
Due after five years through ten years - amortized cost	16,190,560
Due after five years through ten years - fair value	19,790,751
Due after ten years - amortized cost	9,858,486
Due after ten years - fair value	15,836,022
Due at multiple maturity dates - amortized cost
Due at multiple maturity dates - fair value
Fixed maturity available-for-sale securities - amortized cost	57,675,405
Fixed maturity available-for-sale securities - fair value	$ 69,421,789

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Note 2 - Investments - Available-for-sale Securities - Proceeds and Gross Realized Gains (Losses) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Fixed Maturities [Member]
Proceeds from sale of available-for-sale securities	$ 4,536,924	$ 7,368,724	$ 17,140,173	$ 14,862,935
Gross realized gains, available-for-sale securities	37,337	242,910	564,589	405,960
Gross realized losses, available-for-sale securities	(40,823)	(36,020)	(377,138)	(77,362)
Loss on other-than-temporary impairment, available-for-sale securities			(224,250)
Other Long-term Investments [Member]
Proceeds from sale, maturity, or collection of investments			792,012
Gross realized gains on sale of investments			62,275
Gross realized losses on sale of investments
Loss on other-than-temporary impairment, held to maturity securities
Equity Securities [Member]
Proceeds from sale of available-for-sale securities				128,010
Gross realized gains, available-for-sale securities				8,711
Gross realized losses, available-for-sale securities				(1,468)
Loss on other-than-temporary impairment, available-for-sale securities
Mortgages [Member]
Proceeds from sale, maturity, or collection of investments	5,405,626	7,655,905	16,129,739	11,317,427
Gross realized gains on sale of investments
Gross realized losses on sale of investments		(46,582)		(28,591)
Loss on other-than-temporary impairment, held to maturity securities
Real Estate Investment [Member]
Proceeds from sale, maturity, or collection of investments			190,084
Gross realized gains on sale of investments			6,050
Gross realized losses on sale of investments			(1,668)
Loss on other-than-temporary impairment, held to maturity securities

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Note 2 - Investments - Available-for-sale Securities - Accumulated Change in Net Unrealized Investment Gains (Losses) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Fixed Maturities [Member]
Available-for-sale securities - change in unrealized gains	$ 694,379	$ 817,963	$ 4,429,221	$ 9,078,142
Available-for-sale securities - realized gains	(3,486)	206,890	187,451	328,598
Equity Securities [Member]
Available-for-sale securities - change in unrealized gains	12,381	33,665	31,119	26,911
Available-for-sale securities - realized gains				7,243
Mortgages [Member]
Held to maturity securities - realized gains		(46,582)		(28,591)
Real Estate Investment [Member]
Held to maturity securities - realized gains			4,382
Other Long-term Investments [Member]
Held to maturity securities - realized gains			$ 62,275

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Note 2 - Investments - Major Categories of Net Investment Income (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Gross Investment income	$ 5,278,966	$ 3,692,801	$ 14,195,053	$ 11,037,651
Investment expenses	(647,074)	(388,821)	(1,898,226)	(1,114,834)
Net investment income	4,631,892	3,303,980	12,296,827	9,922,817
Fixed Maturities [Member]
Gross Investment income	1,731,931	1,435,041	4,887,826	4,535,560
Equity Securities [Member]
Gross Investment income	4,382	6,728	14,540	20,568
Other Long-term Investments [Member]
Gross Investment income	967,959	687,042	2,707,438	1,857,366
Mortgages [Member]
Gross Investment income	2,379,176	1,417,445	5,923,207	4,098,943
Policy Loans [Member]
Gross Investment income	28,640	27,348	84,657	79,937
Real Estate Investment [Member]
Gross Investment income	93,943	62,391	281,366	246,327
Short-term Investments [Member]
Gross Investment income	$ 72,935	$ 56,806	$ 296,019	$ 198,950

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Note 2 - Investments - Mortgage Loans on Real Estate (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 103,013,015	$ 74,371,286
Commercial Portfolio Segment [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	1,820,866	1,254,808
Commercial Portfolio Segment [Member] | Retail Site [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	1,250,052	1,075,324
Commercial Portfolio Segment [Member] | Office Building [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	138,463	179,484
Commercial Portfolio Segment [Member] | Industrial Property [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	432,351
Residential Portfolio Segment [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 101,192,149	$ 73,116,478

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Note 2 - Investments - Investment Real Estate (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Investment real estate, net	$ 2,354,311	$ 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	(1,158,810)	(1,049,695)
Investment real estate, net	1,108,747	1,217,862
Residential Real Estate - Held for Sale [Member]
Investment real estate	$ 287,249	$ 330,496

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Note 3 - Fair Value Measurements (Details Textual)	Sep. 30, 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 ($)	Sep. 30, 2017	Dec. 31, 2016
Available-for-sale securities	$ 148,715,146	$ 129,949,562
US Treasury and Government [Member]
Available-for-sale securities	2,981,465	3,185,383
US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	2,981,465	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	2,981,465	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	9,668,841	9,250,896
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	9,668,841	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	9,668,841	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	71,825	70,727
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	71,825	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	71,825	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	113,193,928	100,980,041
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	113,193,928	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	113,193,928	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	22,126,729	15,824,108
Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	22,126,729	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	22,126,729	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	148,042,788	129,311,155
Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	148,042,788	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	148,042,788	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	349,473	341,914
Mutual Funds [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	349,473	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	349,473	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	102,020	96,360
Preferred Stock [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	102,020	96,360
Preferred Stock [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	102,020	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	220,865	200,133
Common Stock [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	220,865	200,133
Common Stock [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	159,365	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	672,358	638,407
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	672,358	638,407
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	261,385	234,993
Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	349,473	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 ($)	Sep. 30, 2017	Dec. 31, 2016
Policy loans	$ 1,626,771	$ 1,598,116
Accrued investment income	2,618,245	2,176,770
Policy claims	1,027,121	997,814
Reported Value Measurement [Member]
Policy loans	1,626,771	1,598,116
Other long-term investments	57,675,405	46,788,873
Cash and cash equivalents	28,959,503	34,223,945
Accrued investment income	2,618,245	2,176,770
Total financial assets	193,892,939	159,158,990
Policyholders' account balances	292,128,688	245,346,489
Policy claims	1,027,121	997,814
Total financial liabilities	293,155,809	246,344,303
Reported Value Measurement [Member] | Commercial [Member]
Mortgage loans on real estate	1,820,866	1,254,808
Reported Value Measurement [Member] | Residential [Member]
Mortgage loans on real estate	101,192,149	73,116,478
Estimate of Fair Value Measurement [Member]
Policy loans	1,626,771	1,598,116
Other long-term investments	69,421,789	55,890,429
Cash and cash equivalents	28,959,503	34,223,945
Accrued investment income	2,618,245	2,176,770
Total financial assets	205,973,290	165,541,061
Policyholders' account balances	239,162,237	206,541,702
Policy claims	1,027,121	997,814
Total financial liabilities	240,189,358	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	28,959,503	34,223,945
Accrued investment income
Total financial assets	28,959,503	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	1,626,771	1,598,116
Other long-term investments	69,421,789	55,890,429
Cash and cash equivalents
Accrued investment income	2,618,245	2,176,770
Total financial assets	177,013,787	131,317,116
Policyholders' account balances	239,162,237	206,541,702
Policy claims	1,027,121	997,814
Total financial liabilities	240,189,358	207,539,516
Estimate of Fair Value Measurement [Member] | Commercial [Member]
Mortgage loans on real estate	1,823,474	1,268,140
Estimate of Fair Value Measurement [Member] | Commercial [Member] | Fair Value, Inputs, Level 1 [Member]
Mortgage loans on real estate
Estimate of Fair Value Measurement [Member] | Commercial [Member] | Fair Value, Inputs, Level 2 [Member]
Mortgage loans on real estate
Estimate of Fair Value Measurement [Member] | Commercial [Member] | Fair Value, Inputs, Level 3 [Member]
Mortgage loans on real estate	1,823,474	1,268,140
Estimate of Fair Value Measurement [Member] | Residential [Member]
Mortgage loans on real estate	103,364,612	70,383,661
Estimate of Fair Value Measurement [Member] | Residential [Member] | Fair Value, Inputs, Level 1 [Member]
Mortgage loans on real estate
Estimate of Fair Value Measurement [Member] | Residential [Member] | Fair Value, Inputs, Level 2 [Member]
Mortgage loans on real estate
Estimate of Fair Value Measurement [Member] | Residential [Member] | Fair Value, Inputs, Level 3 [Member]
Mortgage loans on real estate	$ 103,364,612	$ 70,383,661

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Note 4 - Segment Data - Segment Data - Operations (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Total revenue	$ 8,712,284	$ 6,671,569	$ 23,979,725	$ 19,682,129
Income before income taxes	1,537,769	586,872	2,576,360	1,337,665
Depreciation and amortization expense	1,036,075	696,643	2,770,152	2,033,733
Life Insurance Operations [Member]
Total revenue	4,723,138	3,720,401	13,321,087	11,068,191
Income before income taxes	345,522	35,230	899,547	87,745
Depreciation and amortization expense	858,012	541,995	1,828,933	1,540,582
Annuity Operations [Member]
Total revenue	3,903,408	2,802,934	10,377,974	8,158,645
Income before income taxes	1,141,492	436,051	1,488,848	1,014,476
Depreciation and amortization expense	178,063	154,648	941,219	493,151
Corporate Segment [Member]
Total revenue	85,738	148,234	280,664	455,293
Income before income taxes	50,755	115,591	187,965	235,444
Depreciation and amortization expense

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Note 4 - Segment Data - Segment Data - Assets (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Total assets	$ 386,556,621	$ 333,252,613
Life Insurance Operations [Member]
Total assets	54,305,804	50,577,282
Annuity Operations [Member]
Total assets	325,089,923	275,745,766
Corporate Segment [Member]
Total assets	$ 7,160,894	$ 6,929,565

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Note 5 - Federal Income Taxes (Details Textual) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Unrecognized Tax Benefits	$ 0
Domestic Tax Authority [Member] | Earliest Tax Year [Member]
Open Tax Year	2014
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)	Jun. 14, 2017 USD ($)	Feb. 17, 2017 USD ($)	Nov. 22, 2013	Feb. 01, 2016 USD ($)
FBLIC [Member] | Utica Mutual Insurance Company [Member] | Settled Litigation [Member]
Litigation Settlement, Amount Awarded from Other Party	$ 90,000
FBLIC [Member] | Doyle Nimmo [Member] | Settled Litigation [Member]
Litigation Settlement, Amount Awarded from Other Party	$ 10,000
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 (Loss) - Accumulated Other Comprehensive Income (Details) - USD ($)	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Beginning Balance	$ 3,766,117	$ 3,845,155		$ 818,676	$ (2,655,817)
Other comprehensive income before reclassifications, net of tax	554,193	831,300		3,474,984	7,435,431
Less amounts reclassified from accumulated other comprehensive income, net of tax	(2,789)	165,513	$ 165,513	(29,439)	268,672
Other comprehensive income	556,982	665,787		3,504,423	7,166,759
Ending Balance	4,323,099	4,510,942	4,510,942	4,323,099	4,510,942
Other comprehensive income before reclassifications, net of tax	554,193	831,300		3,474,984	7,435,431
Less amounts reclassified from accumulated other comprehensive income, net of tax	(2,789)	165,513	165,513	(29,439)	268,672
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Beginning Balance	3,834,781	3,906,866		831,917	(2,695,876)
Other comprehensive income before reclassifications, net of tax	562,619	846,814		3,538,833	7,552,715
Less amounts reclassified from accumulated other comprehensive income, net of tax	(2,789)	165,513		(29,439)	268,672
Other comprehensive income	565,408	681,301		3,568,272	7,284,043
Ending Balance	4,400,189	4,588,167	4,588,167	4,400,189	4,588,167
Other comprehensive income before reclassifications, net of tax	562,619	846,814		3,538,833	7,552,715
Less amounts reclassified from accumulated other comprehensive income, net of tax	(2,789)	165,513		(29,439)	268,672
Adjustment to Deferred Acquisition Costs [Member]
Beginning Balance	(68,664)	(61,711)		(13,241)	40,059
Other comprehensive income before reclassifications, net of tax	(8,426)	(15,514)		(63,849)	(117,284)
Less amounts reclassified from accumulated other comprehensive income, net of tax
Other comprehensive income	(8,426)	(15,514)		(63,849)	(117,284)
Ending Balance	(77,090)	(77,225)	$ (77,225)	(77,090)	(77,225)
Other comprehensive income before reclassifications, net of tax	(8,426)	(15,514)		(63,849)	(117,284)
Less amounts reclassified from accumulated other comprehensive income, net of tax

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Note 7 - Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss) - Other Comprehensive Income (Details) - USD ($)	3 Months Ended			6 Months Ended		9 Months Ended
	Sep. 30, 2017		Sep. 30, 2016	Sep. 30, 2016		Sep. 30, 2017		Sep. 30, 2016
Unrealized holding gains arising during the period, pretax	$ 703,274		$ 1,058,518			$ 4,423,541		$ 9,440,894
Unrealized holding gains arising during the period, income tax expense	140,655		211,704			884,708		1,888,179
Unrealized holding gains arising during the period, net of tax	562,619		846,814			3,538,833		7,552,715
Realized gains (losses) on sales of securities	(3,486)	[1]	206,890	$ 206,890	[1]	(36,799)	[1]	335,841	[1]
Income tax expense (benefit)	(697)	[2]	41,377	41,377	[2]	(7,360)	[2]	67,169	[2]
Less amounts reclassified from accumulated other comprehensive income, net of tax	(2,789)		165,513	$ 165,513		(29,439)		268,672
Net unrealized gains on investments, pretax	706,760		851,628			4,460,340		9,105,053
Net unrealized gains on investments, income tax expense	141,352		170,327			892,068		1,821,010
Net unrealized gains on investments, net of tax	565,408		681,301			3,568,272		7,284,043
Adjustment to deferred acquisition costs, pretax	(10,532)		(19,392)			(79,810)		(146,605)
Adjustment to deferred acquisition costs, income tax expense	(2,106)		(3,878)			(15,961)		(29,321)
Adjustment to deferred acquisition costs, net of tax	(8,426)		(15,514)			(63,849)		(117,284)
Total other comprehensive income, pretax	696,228		832,236			4,380,530		8,958,448
Total other comprehensive income, income tax expense	139,246		166,449			876,107		1,791,689
Total other comprehensive income, net of tax	$ 556,982		$ 665,787			$ 3,504,423		$ 7,166,759

[1] These items appear within net realized investment gains (losses) and other-than-temporary impairment in the consolidated statements of operations.

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

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Note 7 - Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss) - Reclassified from Accumulated Other Comprehensive Income (Details) - USD ($)	3 Months Ended			6 Months Ended		9 Months Ended
	Sep. 30, 2017		Sep. 30, 2016	Sep. 30, 2016		Sep. 30, 2017		Sep. 30, 2016
Realized gains (losses) on sales of securities	$ (3,486)	[1]	$ 206,890	$ 206,890	[1]	$ (36,799)	[1]	$ 335,841	[1]
Income tax expense (benefit)	(697)	[2]	41,377	41,377	[2]	(7,360)	[2]	67,169	[2]
Total reclassification adjustments	$ (2,789)		$ 165,513	$ 165,513		$ (29,439)		$ 268,672

[1] These items appear within net realized investment gains (losses) and other-than-temporary impairment in the consolidated statements of operations.

[2] These items appear within federal income taxes in the consolidated statements 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	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses		$ 349,451	$ 345,458	$ 244,427	$ 499,106	$ 477,526	$ 380,520
Mortgage Loans on Real Estate, Commercial and Consumer, Net		103,013,015		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		161,907
Mortgage Loans on Real Estate, Commercial and Consumer, Net		32,381,460		25,523,757	$ 23,962,879
One Loan Originator [Member] | Independent Mortgage Loan Balances [Member]
Escrow Deposit		559,570		525,063
All Other Entities [Member]
Financing Receivable, Allowance for Credit Losses		349,451		244,427
Mortgage Loans on Real Estate, Commercial and Consumer, Net		$ 70,631,555		$ 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		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Allowance, beginning:	$ 345,458	$ 477,526	$ 244,427	$ 380,520
Provision	3,993	21,580	105,024	118,586
Allowance, ending	349,451	499,106	349,451	499,106
Individually evaluated for impairment		279,662		279,662
Collectively evaluated for impairment	349,451	219,444	349,451	219,444
Individually evaluated for impairment		347,885		347,885
Collectively evaluated for impairment	70,631,555	43,934,424	70,631,555	43,934,424
Charge offs
Recoveries
Residential Portfolio Segment [Member]
Allowance, beginning:	336,180	191,332	238,121	175,988
Provision	4,121	21,690	102,180	37,034
Allowance, ending	340,301	213,022	340,301	213,022
Individually evaluated for impairment
Collectively evaluated for impairment	340,301	213,022	340,301	213,022
Individually evaluated for impairment
Collectively evaluated for impairment	68,810,689	42,656,344	68,810,689	42,656,344
Charge offs
Recoveries
Commercial Portfolio Segment [Member]
Allowance, beginning:	9,278	6,532	6,306	7,360
Provision	(128)	(110)	2,844	(938)
Allowance, ending	9,150	6,422	9,150	6,422
Individually evaluated for impairment
Collectively evaluated for impairment	9,150	6,422	9,150	6,422
Individually evaluated for impairment
Collectively evaluated for impairment	1,820,866	1,278,080	1,820,866	1,278,080
Charge offs
Recoveries
Premium Finance Loans [Member]
Allowance, beginning:		279,662		197,172
Provision				82,490
Allowance, ending		279,662		279,662
Individually evaluated for impairment		279,662		279,662
Collectively evaluated for impairment
Individually evaluated for impairment		347,885		347,885
Collectively evaluated for impairment
Charge offs
Recoveries

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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 ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Mortgage loans on real estate	$ 103,013,015	$ 74,371,286
Residential Portfolio Segment [Member]
Mortgage loans on real estate	101,192,149	73,116,478
Commercial Portfolio Segment [Member]
Mortgage loans on real estate	1,820,866	1,254,808
Loan to Value Range1 [Member]
Mortgage loans on real estate	19,116,003	14,559,541
Loan to Value Range1 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	19,116,003	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	$ 35,351,370	29,738,887
Loan to Value Range 2 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	35,351,370	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	$ 26,333,497	16,491,519
Loan to Value Range 3 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	25,489,059	15,440,364
Loan to Value Range 3 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 844,438	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	$ 13,520,426	10,399,031
Loan to Value Range 4 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	13,520,426	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	$ 5,290,083	2,388,004
Loan to Value Range 5 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	4,628,716	2,184,351
Loan to Value Range 5 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 661,367	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	$ 2,458,022	467,410
Loan to Value Range 6 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	2,287,087	467,410
Loan to Value Range 6 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 170,935
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	$ 899,908	317,936
Loan to Value Range 7 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	755,782	317,936
Loan to Value Range 7 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 144,126
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	$ 43,706	8,958
Loan to Value Range 8 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	43,706	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	0.00%
Loan to Value Range 8 [Member] | Maximum [Member]
Loan to value ratio	10.00%