Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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 predominantly middle income households in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia through independent agents.

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

Acquisitions

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

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

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

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

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

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

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

Critical Accounting Policies and Estimates

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

For a description of the Company's critical accounting policies and estimates, please refer to "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. The Company considers its most critical accounting estimates to be those applied to investments in fixed maturities securities, mortgage loans on real estate, deferred policy acquisition costs, value of insurance business acquired and future policy benefits. There have been no material changes to the Company's critical accounting policies and estimates since December 31, 2025.

Cybersecurity

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

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

●

Computer hardware and software,

●

Security access, logging and user termination,

●

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

●

Encryption,

●

System change control,

●

Data back up and remote sites,

●

Data recovery,

●

and Disaster recovery

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

Adopted Accounting Standards

Improvements to Income Tax Disclosures

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

The Company adopted this Update and prescribed disclosures for year-end 2025 in accordance with the required effective date. The Company also disclosed the information required by this Update for 2024 year-end reporting. The Company disclosed and will continue to disclose annually the supplementary information for taxes paid (recovered). Interim and annual periods will not disclose income (loss) from continuing operations before tax for domestic and foreign operations but will show the impact of foreign operating losses in the rate reconciliation. In addition, the total amounts of interest and penalties, if any, included in operating results and accrued in the statement of financial position will be disclosed. The Company will not disclose rate reconciliations on an interim basis unless there is a significant change in the Company's estimated annual effective tax rate compared to the effective tax rate from the prior annual reporting period. If there is a significant change, the Company will disclose the reason for the significant change to the estimated annual effective tax rate.

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

Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the FASB issued updated guidance, Accounting Standards Update 2018-12 (ASU 2018-12) to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The objective of this Update was to improve the timeliness of recognizing changes in the liability for future policy benefits, modified the rate used to discount future cash flows, simplified and improved accounting for certain market-based options or guarantees associated with deposit (i.e., account balance) contracts, simplified the amortization of deferred acquisitions costs and expanded required disclosures.

The expanded disclosure required an insurance entity to provide disaggregated roll forwards of beginning to ending balances of the following: liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities and deferred acquisition costs including disclosure about, changes to and effect of changes for significant inputs, judgments, assumptions and methods used in measurements.

The Company adopted ASU 2018-12 on January 1, 2025 for the liability for its non-participating future policy benefits and deferred policy acquisition costs but initially reported and disclosed this adoption with the Company's December 31, 2025 financial statements in accordance with the guidelines of the pronouncement. The Company's 2025 quarterly financial statements were not required to adopt this guidance, but those 2025 quarterly financial statements have been be restated in 2026 in accordance with the provisions of the Update.

ASU 2018-12 was adopted on a modified retrospective basis such that those balances for the liability for future policy benefits, deferred policy acquisition costs were adjusted to conform to ASU 2018-12 effective January 1, 2024 (i.e., the earliest period presented at adoption). With respect to an analysis for market risk benefits, the Company concluded that it had no market-based options or guarantees associated with its liability for policyholders' account balances. The financial impact of this guidance on the Company's 2023, 2024 and 2025 results of operations, financial position and liquidity were reported and disclosed in the Company's December 31, 2025 financial statements.

The increase (decrease) on the impacted caption in the consolidated statement of operations and consolidated statement of comprehensive income related to the restatement adjustments of ASU 2018-12 for the nine months ended September 30, 2025, is summarized as follows:

		As Previously				ASU 2018-12				Post ASU 2018-12
Financial Statement Caption		Reported				Adoption Impact				Adoption
Consolidated Statements of Operations		Nine Months Ended September 30, 2025
Increase in future policy benefits		$	10,964,452			$	(451,604	)		$	10,512,848
Amortization of deferred policy acquisition costs			7,836,743				(743,421	)			7,093,322
Amortization of value of insurance business acquired			133,218				145,893				279,111
Deferred federal income tax expense (benefit)			(107,937	)			220,317				112,380
Net income			5,058,167				828,815				5,886,982
Net income per common share:
Class A		$	0.5341			$	0.0875			$	0.6216
Class B			0.4540				0.0744				0.5284
Consolidated Statements of Comprehensive Income		Nine Months Ended September 30, 2025
Net income		$	5,058,167			$	828,815			$	5,886,982
Adjustment to deferred acquisition costs			1,891				(1,891	)			-
Remeasurement gains (losses) on future policy benefit related to discount rates			-				(2,626,285	)			(2,626,285	)
Federal income tax expense (benefit)			1,575,783				(551,123	)			1,024,660
Total other comprehensive income			5,927,947				(2,073,271	)			3,854,676
Total comprehensive income			10,986,114				(1,244,456	)			9,741,658

Recent Accounting Pronouncements

Expense Disaggregation Disclosures

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

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

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

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

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

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

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

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

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

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

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

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

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

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

g. The acquirer is usually the individual or group that pays a premium over the pre-combination fair value of the other combined entity or entities.

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

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

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

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

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

Business Segments

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

Our business segments are as follows:

●

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

●

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

●

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

Please see below and Note 4 to the Consolidated Financial Statements for the three months and nine months ended September 30, 2026 and 2025 and as of September 30, 2026 and December 31, 2025 for additional information regarding segment information.

FINANCIAL HIGHLIGHTS

Consolidated Condensed Results of Operations for the Three Months Ended September 30, 2026 and 2025

		(Unaudited)
		Three Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Premiums		$	11,848,894			$	11,128,532			$	720,362
Net investment income			9,207,176				8,900,828				306,348
Net realized investment gains (losses)			(37,366	)			84,159				(121,525	)
Service fees			1,118,002				923,473				194,529
Other income			1,722				1,307				415
Total revenues			22,138,428				21,038,299				1,100,129
Benefits and claims			14,407,061				13,529,502				877,559
Expenses			5,899,032				5,037,510				861,522
Total benefits, claims and expenses			20,306,093				18,567,012				1,739,081
Income before federal income tax expense			1,832,335				2,471,287				(638,952	)
Federal income tax expense			355,469				527,656				(172,187	)
Net income		$	1,476,866			$	1,943,631			$	(466,765	)
Net income per common share
Class A common stock		$	0.1568			$	0.2052			$	(0.0484	)
Class B common stock		$	0.1333			$	0.1744			$	(0.0411	)

Consolidated Condensed Results of Operations for the Nine Months Ended September 30, 2026 and 2025

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Premiums		$	34,279,457			$	32,273,329			$	2,006,128
Net investment income			26,992,979				25,830,349				1,162,630
Net realized investment gains			40,931				923,405				(882,474	)
Service fees			2,158,402				3,979,827				(1,821,425	)
Other income			270,863				22,736				248,127
Total revenues			63,742,632				63,029,646				712,986
Benefits and claims			40,883,331				39,107,215				1,776,116
Expenses			16,286,546				16,383,318				(96,772	)
Total benefits, claims and expenses			57,169,877				55,490,533				1,679,344
Income before federal income tax expense			6,572,755				7,539,113				(966,358	)
Federal income tax expense			1,445,473				1,652,131				(206,658	)
Net income		$	5,127,282			$	5,886,982			$	(759,700	)
Net income per common share
Class A common stock		$	0.5443			$	0.6216			$	(0.0773	)
Class B common stock		$	0.4627			$	0.5284			$	(0.0657	)

Consolidated Condensed Financial Position as of September 30, 2026 and December 31, 2025

		(Unaudited)								Amount Change
		September 30, 2026				December 31, 2025				2026 less 2025
Investment assets		$	556,833,974			$	525,598,084			$	31,235,890
Assets held in trust under coinsurance agreement			13,496,616				21,066,069				(7,569,453	)
Other assets			153,665,137				142,520,126				11,145,011
Total assets		$	723,995,727			$	689,184,279			$	34,811,448
Policy liabilities		$	609,546,369			$	569,737,114			$	39,809,255
Funds withheld under coinsurance agreement			13,186,913				20,001,969				(6,815,056	)
Deferred federal income taxes			6,686,822				6,584,494				102,328
Other liabilities			5,970,258				6,288,104				(317,846	)
Total liabilities			635,390,362				602,611,681				32,778,681
Shareholders' equity			88,605,365				86,572,598				2,032,767
Total liabilities and shareholders' equity		$	723,995,727			$	689,184,279			$	34,811,448
Shareholders' equity per common share
Class A common stock		$	9.4067			$	9.1909			$	0.2157
Class B common stock		$	7.9957			$	7.8123			$	0.1833

Results of Operations - Three Months Ended September 30, 2026 and 2025

Revenues

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

Our revenues for the three months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Three Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Premiums		$	11,848,894			$	11,128,532			$	720,362
Net investment income			9,207,176				8,900,828				306,348
Net realized investment gains (losses)			(37,366	)			84,159				(121,525	)
Service fees			1,118,002				923,473				194,529
Other income			1,722				1,307				415
Total revenues		$	22,138,428			$	21,038,299			$	1,100,129

The $1,100,129 increase in total revenues for the three months ended September 30, 2026 is discussed below.

Premiums

Our premiums for the three months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Three Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Ordinary life first year		$	883,337			$	824,881			$	58,456
Ordinary life renewal			3,570,751				2,996,001				574,750
Final expense first year			880,183				746,076				134,107
Final expense renewal			6,514,623				6,561,574				(46,951	)
Total premiums		$	11,848,894			$	11,128,532			$	720,362

The $720,362 increase in premiums for the three months ended September 30, 2026 is primarily due to a $574,750 increase in ordinary life renewal premiums and a $134,107 increase in final expense first year premiums.

The ordinary life renewal premiums and ordinary life first year premiums reflects ordinary dollar denominated life insurance policies sold in the international market by TAI. The increase in final expense first year premiums are due to distribution channel enhancements by eliminating phone interviews.

Net Investment Income

The major components of our net investment income for the three months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Three Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Fixed maturity securities		$	3,007,238			$	2,821,303			$	185,935
Equity securities			152,223				86,812				65,411
Other long-term investments			883,278				976,201				(92,923	)
Mortgage loans			5,469,266				5,261,881				207,385
Policy loans			110,504				91,429				19,075
Short-term and other investments			350,542				355,129				(4,587	)
Gross investment income			9,973,051				9,592,755				380,296
Investment expenses			(765,875	)			(691,927	)			73,948
Net investment income		$	9,207,176			$	8,900,828			$	306,348

The $380,296 increase in gross investment income for the three months ended September 30, 2026 is primarily due to $207,385 increase in mortgage loans and a $185,935 increase in fixed maturity securities that exceeded a $92,923 decrease in other long-term investments.

The increase in mortgage loans investment income is primarily due to increased mortgage loans investments of $13.2 million since September 30, 2025. The increase in fixed maturity securities investment income is primarily due to increased fixed maturity securities investments of $15.0 million since September 30, 2025. The decrease in other long-term investments income is primarily due to decreased other long-term investments of $6.8 million since September 30, 2025.

Net Realized Investment Gains (Losses)

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

Our net realized investment gains (losses) for the three months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Three Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Fixed maturity securities available-for-sale:
Sale proceeds		$	3,667,826			$	4,839,500			$	(1,171,674	)
Amortized cost at sale date			3,667,717				4,858,633				(1,190,916	)
Net realized gains (losses)		$	109			$	(19,133	)		$	19,242
Mortgage loans on real estate:
Payment and sale proceeds on mortgage loans		$	29,154,152			$	42,582,562			$	(13,428,410	)
Principal collections			29,154,152				42,582,562				(13,428,410	)
Net realized gains (losses)		$	-			$	-			$	-
Investment real estate:
Sale proceeds		$	-			$	201,442			$	(201,442	)
Carrying value at sale date			-				186,800				(186,800	)
Net realized gains		$	-			$	14,642			$	(14,642	)
Equity securities, changes in fair value		$	68,440			$	64,583			$	3,857
Changes in current estimate of credit losses		$	(105,915	)		$	24,067			$	(129,982	)
Net realized investment gains (losses)		$	(37,366	)		$	84,159			$	(121,525	)

Service Fees

The $194,529 increase in service fees for the three months ended September 30, 2026 is primarily due to an increase in fees from Trinity Mortgage Corporation brokering mortgage loans for a fee to third parties.

Total Benefits, Claims and Expenses

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

Our benefits, claims and expenses for the three months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Three Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Benefits and claims
Increase in future policy benefits		$	4,043,238			$	4,124,982			$	(81,744	)
Death benefits			4,065,601				3,643,170				422,431
Surrenders			915,202				863,341				51,861
Interest credited to policyholders			5,260,896				4,792,273				468,623
Dividend, endowment and supplementary life contract benefits			122,124				105,736				16,388
Total benefits and claims			14,407,061				13,529,502				877,559
Expenses
Policy acquisition costs deferred			(4,068,205	)			(2,842,912	)			(1,225,293	)
Amortization of deferred policy acquisition costs			2,078,891				2,352,407				(273,516	)
Amortization of value of insurance business acquired			88,192				93,039				(4,847	)
Commissions			3,933,238				2,860,232				1,073,006
Other underwriting, insurance and acquisition expenses			3,866,916				2,574,744				1,292,172
Total expenses			5,899,032				5,037,510				861,522
Total benefits, claims and expenses		$	20,306,093			$	18,567,012			$	1,739,081

The $1,739,081 increase in total benefits, claims and expenses for the three months ended September 30, 2026 is discussed below.

Benefits and Claims

The $877,559 increase in benefits and claims for the three months ended September 30, 2026 is primarily due to the following:

●

$468,623 increase in interest credited to policyholders is primarily due to an increase in policyholders' account balances of $32.4 million since September 30, 2025.

●

$422,431 increase in death benefits is primarily due to approximately $633,000 of increased final expense benefits that exceed $211,000 of decreased ordinary life benefits.

Deferral and Amortization of Deferred Acquisition Costs

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

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

For the three months ended September 30, 2026 and 2025, capitalized costs were $4,068,205 and $2,842,912, respectively. Amortization of deferred policy acquisition costs for the three months ended September 30, 2026 and 2025 were $2,078,891 and $2,352,407, respectively.

The $1,225,293 increase in the 2026 acquisition costs deferred primarily relates to increased annuity and final expense first year production with a corresponding increase in deferral of eligible annuity and final expense first year commissions. There was a $273,516 decrease in the 2026 amortization of deferred acquisition costs primarily due to the adoption of ASU 2018-12.

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 $88,192 and $93,039 for the three months ended September 30, 2026 and 2025, respectively, representing a $4,847 decrease.

Commissions

Our commissions for the three months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Three Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Annuity		$	929,698			$	131,587			$	798,111
Ordinary life first year			977,691				894,513				83,178
Ordinary life renewal			418,839				362,797				56,042
Final expense first year			1,037,995				880,889				157,106
Final expense renewal			569,015				590,446				(21,431	)
Total commissions		$	3,933,238			$	2,860,232			$	1,073,006

The $1,073,006 increase in commissions for the three months ended September 30, 2026 is primarily due to a $798,111 increase in annuity commissions (corresponding to $23,194,415 increased annuity considerations) and a $157,106 increase in final expense first year commissions (corresponding to $134,107 increased final expense first year premiums).

Other Underwriting, Insurance and Acquisition Expenses

The $1,292,172 increase in underwriting, insurance and acquisition expenses for the three months ended September 30, 2026 was primarily related to increases in staff and life insurance production and an executive bonus.

Federal Income Taxes

FTFC filed its 2025 consolidated federal income tax return with TLIC, FBLIC and TMC on October 9, 2026. 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, 2026 and 2025, current income tax expense (benefit) was ($37,217) and $524,852, respectively. For the three months ended September 30, 2026 and 2025, deferred federal income tax expense was $392,686 and $2,804, respectively.

Net Income Per Common Share Basic

For the three months ended September 30, 2026, the net income allocated to the Class B shareholders is the total net income multiplied by the right to receive dividends at 85% for Class B shares (85,937) as of the reporting date divided by the allocated total shares (9,419,341) of Class A shares (9,333,404) and Class B shares (85,937) as of the reporting date. For the three months ended September 30, 2025 the net income allocated to the Class B shareholders is the total net income multiplied by the right to receive dividends at 85% for Class B shares (85,937) as of the reporting date divided by the allocated total shares (9,470,277) of Class A shares (9,384,340) and Class B shares (85,937) as of the reporting date.

For the three months ended September 30, 2026, the net income allocated to the Class A shareholders of $1,463,392 is the total net income $1,476,866 less the net income allocated to the Class B shareholders $13,474. For the three months ended September 30, 2025, the net income allocated to the Class A shareholders of $1,925,994 is the total net income $1,943,631 less the net income allocated to the Class B shareholders $17,637.

The weighted average outstanding common shares basic for the three months ended September 30, 2026 and 2025 were 9,333,404 and 9,384,340 for Class A shares and 101,102 for Class B shares.

Business Segments

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

The revenues and income before federal income taxes from our business segments for the three months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Three Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Revenues:
Life insurance operations		$	13,939,593			$	13,645,545			$	294,048
Annuity operations			7,266,532				6,495,641				770,891
Corporate operations			932,303				897,113				35,190
Total		$	22,138,428			$	21,038,299			$	1,100,129
Income (loss) before federal income taxes:
Life insurance operations		$	1,933,697			$	1,991,551			$	(57,854	)
Annuity operations			(63,729	)			165,959				(229,688	)
Corporate operations			(37,633	)			313,777				(351,410	)
Total		$	1,832,335			$	2,471,287			$	(638,952	)

The increases and decreases of revenues and profitability from our business segments for the three months ended September 30, 2026 and 2025 are summarized as follows:

		Unaudited
		Life Insurance				Annuity				Corporate
		Operations				Operations				Operations				Total
Revenues
Premiums		$	720,362			$	-			$	-			$	720,362
Net investment income			(410,812	)			721,639				(4,479	)			306,348
Net realized investment losses			(41,194	)			(80,331	)			-				(121,525	)
Service fees and other income			25,692				129,583				39,669				194,944
Total revenue			294,048				770,891				35,190				1,100,129
Benefits and claims
Increase in future policy benefits			(81,744	)			-				-				(81,744	)
Death benefits			422,431				-				-				422,431
Surrenders			51,861				-				-				51,861
Interest credited to policyholders			-				468,623				-				468,623
Dividend, endowment and supplementary life contract benefits			16,388				-				-				16,388
Total benefits and claims			408,936				468,623				-				877,559
Expenses
Policy acquisition costs deferred net of amortization			(660,750	)			(838,059	)			-				(1,498,809	)
Amortization of value of insurance business acquired			(2,424	)			(2,423	)			-				(4,847	)
Commissions			274,895				798,111				-				1,073,006
Other underwriting, insurance and acquisition expenses			331,245				574,327				386,600				1,292,172
Total expenses			(57,034	)			531,956				386,600				861,522
Total benefits, claims and expenses			351,902				1,000,579				386,600				1,739,081
Loss before federal income tax benefit		$	(57,854	)		$	(229,688	)		$	(351,410	)		$	(638,952	)

Results of Operations - Nine Months Ended September 30, 2026 and 2025

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, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Premiums		$	34,279,457			$	32,273,329			$	2,006,128
Net investment income			26,992,979				25,830,349				1,162,630
Net realized investment gains			40,931				923,405				(882,474	)
Service fees			2,158,402				3,979,827				(1,821,425	)
Other income			270,863				22,736				248,127
Total revenues		$	63,742,632			$	63,029,646			$	712,986

The $712,986 increase in total revenues for the nine months ended September 30, 2026 is discussed below.

Premiums

Our premiums for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Ordinary life first year		$	2,638,129			$	2,419,400			$	218,729
Ordinary life renewal			9,726,663				7,986,326				1,740,337
Supplementary contracts			-				17,576				(17,576	)
Final expense first year			2,416,841				2,271,722				145,119
Final expense renewal			19,497,824				19,578,305				(80,481	)
Total premiums		$	34,279,457			$	32,273,329			$	2,006,128

The $2,006,128 increase in premiums for the nine months ended September 30, 2026 is primarily due to a $1,740,337 increase in ordinary life renewal premiums, $218,729 increase in ordinary life first year premiums and a $145,119 increase in final expense first year premiums.

The ordinary life renewal premiums and ordinary life first year premiums reflects ordinary dollar denominated life insurance policies sold in the international market by TAI. The increase in final expense first year premiums are due to distribution channel enhancements by eliminating phone interviews.

Net Investment Income

The major components of our net investment income for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Fixed maturity securities		$	8,323,343			$	7,492,031			$	831,312
Equity securities			369,007				249,839				119,168
Other long-term investments			2,789,805				3,167,750				(377,945	)
Mortgage loans			16,254,007				15,718,707				535,300
Policy loans			319,730				262,839				56,891
Short-term and other investments			917,665				1,096,254				(178,589	)
Gross investment income			28,973,557				27,987,420				986,137
Investment expenses			(1,980,578	)			(2,157,071	)			(176,493	)
Net investment income		$	26,992,979			$	25,830,349			$	1,162,630

The $986,137 increase in gross investment income for the nine months ended September 30, 2026 is primarily due to $831,312 increase in fixed maturity securities, $535,300 increase in mortgage loans and a $119,168 increase in equity securities that exceeded a $377,945 decrease in other long-term investments and $178,589 decrease in short-term and other investments.

The increase in fixed maturity securities is primarily due to increased fixed maturity investments of $15.0 million since September 30, 2025. The increase in mortgage loans is primarily due to increased mortgage loans investments of $13.2 million since September 30, 2025. The increase in equity securities is primarily due to increased equity securities investments of $1.5 million since September 30, 2025. The decrease in other long-term investments is due to decreased other long-term investments of $6.8 million since September 30, 2025. The decline in short-term and other investments is primarily due to a decline in the annual percentage yield earned on invested cash and cash equivalent balances.

The $176,493 decrease in investment expense for the nine months ended September 30, 2026 is primarily due to decreased mortgage loan costs.

Net Realized Investment Gains

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

Our net realized investment gains for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Fixed maturity securities available-for-sale:
Sale proceeds		$	16,068,888			$	60,536,276			$	(44,467,388	)
Amortized cost at sale date			16,021,422				60,402,620				(44,381,198	)
Net realized gains		$	47,466			$	133,656			$	(86,190	)
Equity securities:
Sale proceeds		$	-			$	6,944			$	(6,944	)
Cost at sale date			-				-				-
Net realized gains (losses)		$	-			$	6,944			$	(6,944	)
Mortgage loans on real estate:
Payment and sale proceeds on mortgage loans		$	67,303,036			$	101,392,365			$	(34,089,329	)
Principal collections			67,303,036				101,393,502				(34,090,466	)
Net realized gains (losses)		$	-			$	(1,137	)		$	1,137
Investment real estate:
Sale proceeds		$	184,832			$	496,424			$	(311,592	)
Carrying value at sale date			150,370				452,370				(302,000	)
Net realized gains		$	34,462			$	44,054			$	(9,592	)
Equity securities, changes in fair value		$	132,103			$	97,711			$	34,392
Changes in current estimate of credit losses		$	(173,100	)		$	642,177			$	(815,277	)
Net realized investment gains		$	40,931			$	923,405			$	(882,474	)

Service Fees

The $1,821,425 decrease in service fees for the nine months ended September 30, 2026 is primarily due to a decrease in fees from Trinity Mortgage Corporation brokering mortgage loans for a fee to third parties.

Other Income

The $248,127 increase in other income is primarily due to interest of $189,061 from the Internal Revenue Service on a federal income tax refund of $1,817,859 for the tax year 2023.

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, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Benefits and claims
Increase in future policy benefits		$	10,755,565			$	10,512,848			$	242,717
Death benefits			12,291,076				11,486,401				804,675
Surrenders			2,495,694				2,389,449				106,245
Interest credited to policyholders			14,986,553				14,382,254				604,299
Dividend, endowment and supplementary life contract benefits			354,443				336,263				18,180
Total benefits and claims			40,883,331				39,107,215				1,776,116
Expenses
Policy acquisition costs deferred			(11,093,281	)			(8,949,376	)			(2,143,905	)
Amortization of deferred policy acquisition costs			5,903,197				7,093,322				(1,190,125	)
Amortization of value of insurance business acquired			264,575				279,111				(14,536	)
Commissions			10,889,997				8,737,572				2,152,425
Other underwriting, insurance and acquisition expenses			10,322,058				9,222,689				1,099,369
Total expenses			16,286,546				16,383,318				(96,772	)
Total benefits, claims and expenses		$	57,169,877			$	55,490,533			$	1,679,344

The $1,679,344 increase in total benefits, claims and expenses for the nine months ended September 30, 2026, is discussed below.

Benefits and Claims

The $1,776,116 increase in benefits and claims for the nine months ended September 30, 2026, is primarily due to the following:

●

$804,675 increase in death benefits is primarily due to approximately $1,401,000 of increased final expense benefit that exceeded $597,000 of decreased ordinary life benefits.

●

$604,299 increase in interest credited to policyholders is primarily due to an increase in policyholders' account balances of $32.4 million since September 30, 2025.

●

$242,717 increase in future policy benefits is primarily due to the increased number of life policies in force and the aging of existing life policies.

●

$106,245 increase in surrenders is based upon policyholder election and corresponds to the growth in the number of policies in force.

Deferral and Amortization of Deferred Acquisition Costs

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

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

For the nine months ended September 30, 2026 and 2025, capitalized costs were $11,093,281 and $8,949,376, respectively. Amortization of deferred policy acquisition costs for the nine months ended September 30, 2026 and 2025 were $5,903,197 and $7,093,322, respectively.

There was a $2,143,905 increase in the 2026 acquisition costs deferred primarily relates to increased annuity, ordinary life first year and final expense first year production with a corresponding increase in deferral of eligible annuity, ordinary life first year and final expense first year commissions. There was a $1,190,125 decrease in the 2026 amortization of deferred acquisition costs due to adoption of ASU 2018-12.

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 $264,575 and $279,111 for the nine months ended September 30, 2026 and 2025, respectively, representing a $14,536 decrease.

Commissions

Our commissions for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Annuity		$	2,245,652			$	713,330			$	1,532,322
Ordinary life first year			2,883,993				2,601,669				282,324
Ordinary life renewal			1,192,989				967,567				225,422
Final expense first year			2,852,027				2,682,732				169,295
Final expense renewal			1,715,336				1,772,274				(56,938	)
Total commissions		$	10,889,997			$	8,737,572			$	2,152,425

The $2,152,425 increase in commissions for the nine months ended September 30, 2026 is primarily due a $1,532,322 increase in annuity commissions (corresponding to $45,145,980 increased annuity considerations), $282,324 increase in ordinary life first year commissions (corresponding to $218,729 increased ordinary life first year premiums), $225,422 increase in ordinary life renewal commissions (corresponding to $1,740,337 increased ordinary life renewal premiums) and a $169,295 increase in final expense first year commissions (corresponding to $145,119 increased final expense first year premiums).

Other Underwriting, Insurance and Acquisition Expenses

The $1,099,369 increase in other underwriting, insurance and acquisition expenses for the nine months ended September 30, 2026 was primarily related to increases in staff and life insurance production and an executive bonus.

Federal Income Taxes

FTFC filed its 2025 consolidated federal income tax return with TLIC, FBLIC and TMC on October 9, 2026. 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, 2026 and 2025, current income tax expense was $520,552 and $1,539,751, respectively. Deferred federal income tax expense was $924,921 and $112,380 for the nine months ended September 30, 2026 and 2025, respectively.

Net Income Per Common Share Basic

For the nine months ended September 30, 2026, the net income allocated to the Class B shareholders is the total net income multiplied by the right to receive dividends at 85% for Class B shares (85,937) as of the reporting date divided by the allocated total shares (9,419,341) of Class A shares (9,333,404) and Class B shares (85,937) as of the reporting date. For the nine months ended September 30, 2025 the net income allocated to the Class B shareholders is the total net income multiplied by the right to receive dividends at 85% for Class B shares (85,937) as of the reporting date divided by the allocated total shares (9,470,277) of Class A shares (9,384,340) and Class B shares (85,937) as of the reporting date.

For the nine months ended September 30, 2026, the net income allocated to the Class A shareholders of $5,080,503 is the total net income $5,127,282 less the net income allocated to the Class B shareholders $46,779. For the nine months ended September 30, 2025, the net income allocated to the Class A shareholders of $5,833,561 is the total net income $5,886,982 less the net income allocated to the Class B shareholders $53,421.

The weighted average outstanding common shares basic for the nine months ended September 30, 2026 and 2025 were 9,333,404 and 9,384,340 for Class A shares and 101,102 for Class B shares.

Business Segments

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

The revenues and income before federal income taxes from our business segments for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Revenues:
Life insurance operations		$	41,044,206			$	39,285,825			$	1,758,381
Annuity operations			20,207,728				19,587,194				620,534
Corporate operations			2,490,698				4,156,627				(1,665,929	)
Total		$	63,742,632			$	63,029,646			$	712,986
Income (loss) before income taxes:
Life insurance operations		$	7,050,582			$	5,660,026			$	1,390,556
Annuity operations			(522,863	)			(259,961	)			(262,902	)
Corporate operations			45,036				2,139,048				(2,094,012	)
Total		$	6,572,755			$	7,539,113			$	(966,358	)

The increases and decreases of revenues and profitability from our business segments for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		Unaudited
		Life Insurance				Annuity				Corporate
		Operations				Operations				Operations				Total
Revenues
Premiums		$	2,006,128			$	-			$	-			$	2,006,128
Net investment income			(46,214	)			1,171,344				37,500				1,162,630
Net realized investment losses			(232,616	)			(649,858	)			-				(882,474	)
Service fees and other income			31,083				99,048				(1,703,429	)			(1,573,298	)
Total revenue			1,758,381				620,534				(1,665,929	)			712,986
Benefits and claims
Increase in future policy benefits			242,717				-				-				242,717
Death benefits			804,675				-				-				804,675
Surrenders			106,245				-				-				106,245
Interest credited to policyholders			-				604,299				-				604,299
Dividend, endowment and supplementary life contract benefits			18,180				-				-				18,180
Total benefits and claims			1,171,817				604,299				-				1,776,116
Expenses
Policy acquisition costs deferred net of amortization			(1,695,198	)			(1,638,832	)			-				(3,334,030	)
Amortization of value of insurance business acquired			(7,268	)			(7,268	)			-				(14,536	)
Commissions			620,103				1,532,322				-				2,152,425
Other underwriting, insurance and acquisition expenses			278,371				392,915				428,083				1,099,369
Total expenses			(803,992	)			279,137				428,083				(96,772	)
Total benefits, claims and expenses			367,825				883,436				428,083				1,679,344
Income (loss) before federal income taxes expense (benefits)		$	1,390,556			$	(262,902	)		$	(2,094,012	)		$	(966,358	)

Consolidated Financial Condition

Our invested assets as of September 30, 2026 and December 31, 2025 are summarized as follows:

		(Unaudited)								Amount Change
		September 30, 2026				December 31, 2025				2026 less 2025
Assets
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $253,673,907 and $215,989,423 as of September 30, 2026 and December 31, 2025, respectively)		$	233,390,294			$	209,926,505			$	23,463,789
Equity securities at fair value (cost: $6,922,708 and $5,677,164 as of September 30, 2026 and December 31, 2025, respectively)			7,215,222				5,837,575				1,377,647
Mortgage loans on real estate			260,543,359				250,899,714				9,643,645
Investment real estate			2,753,381				2,526,085				227,296
Policy loans			5,986,122				5,132,086				854,036
Other long-term investments			46,945,596				51,276,119				(4,330,523	)
Total investments		$	556,833,974			$	525,598,084			$	31,235,890

The increases in fixed maturity available-for-sale securities for the nine months ended September 30, 2026 and 2025, are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,
		2026				2025
Fixed maturity securities, available-for-sale, beginning		$	209,926,505			$	213,745,821
Purchases			53,802,297				57,647,235
Unrealized appreciation (depreciation)			(14,220,695	)			7,556,071
Net realized investment gains (losses), including credit (losses)			(125,634	)			775,833
Transfer to other long-term investments			-				(156,068	)
Sales proceeds			(12,293,888	)			(58,517,276	)
Maturities			(3,775,000	)			(2,019,000	)
Accretion of discounts (premium amortization)			76,709				(657,368	)
Increase			23,463,789				4,629,427
Fixed maturity securities, available-for-sale, ending		$	233,390,294			$	218,375,248

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." The available-for-sale fixed maturity securities portfolio is invested primarily in a variety of companies, U.S. government and U.S. government agencies, state and political subdivisions, U.S. government agency mortgage backed securities, commercial and residential mortgage-backed securities, corporate bonds, asset-backed securities, foreign bonds and redeemable preferred stocks.

The increases in equity securities for the nine months ended September 30, 2026 and 2025, are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,
		2026				2025
Equity securities, beginning		$	5,837,575			$	5,336,062
Purchases			1,355,665				350,585
Sales proceeds			-				(6,944	)
Joint venture distributions			(110,121	)			(98,926	)
Net realized investment gains (losses), sale of securities			-				6,944
Net realized investment gains, changes in fair value			132,103				97,711
Increase			1,377,647				349,370
Equity securities, ending		$	7,215,222			$	5,685,432

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

The increases in mortgage loans on real estate for the nine months ended September 30, 2026 and 2025, are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,
		2026				2025
Mortgage loans on real estate, beginning		$	250,899,714			$	209,364,504
Purchases			77,701,165				140,117,649
Premium amortization			(325,653	)			(113,377	)
Net realized investment gains (losses)			-				(1,137	)
Payments			(67,303,036	)			(101,392,365	)
Foreclosed - transferred to real estate			(377,666	)			(459,180	)
Increase in allowance for bad debts			(51,165	)			(195,260	)
Increase			9,643,645				37,956,330
Mortgage loans on real estate, ending		$	260,543,359			$	247,320,834

The increase in investment real estate for the nine months ended September 30, 2026 and 2025, are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,
		2026				2025
Investment real estate, beginning		$	2,526,085			$	2,351,549
Real estate acquired through mortgage loans foreclosures			377,666				459,180
Net realized investment gains			34,462				44,054
Sales proceeds			(184,832	)			(496,424	)
Increase			227,296				6,810
Investment real estate, ending		$	2,753,381			$	2,358,359

The decreases in other long-term investments (composed mainly of lottery receivables) for the nine months ended September 30, 2026 and 2025, are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,
		2026				2025
Other long-term investments, beginning		$	51,276,119			$	58,223,514
Purchases			2,437,056				3,256,000
Accretion of discount			2,730,156				3,130,502
Transfer from fixed maturity securities, available for sale			-				156,068
Unrealized depreciation			(2,292	)			(50,450	)
Payments			(9,495,443	)			(10,968,471	)
Decrease			(4,330,523	)			(4,476,351	)
Other long-term investments, ending		$	46,945,596			$	53,747,163

Our assets other than invested assets as of September 30, 2026 and December 31, 2025 are summarized as follows:

		(Unaudited)								Amount Change
		September 30, 2026				December 31, 2025				2026 less 2025
Cash and cash equivalents		$	45,269,093			$	39,496,427			$	5,772,666
Accrued investment income			6,760,624				6,454,380				306,244
Recoverable from reinsurers			9,279,828				9,547,506				(267,678	)
Assets held in trust under coinsurance agreement			13,496,616				21,066,069				(7,569,453	)
Agents' balances and due premiums			1,983,162				1,391,105				592,057
Deferred policy acquisition costs			75,627,101				70,437,017				5,190,084
Value of insurance business acquired			2,740,432				3,005,006				(264,574	)
Other assets			12,004,897				12,188,685				(183,788	)
Assets other than investment assets		$	167,161,753			$	163,586,195			$	3,575,558

The $5,772,666 increase in cash and cash equivalents is discussed below in the "Liquidity and Capital Resources" section where cash flows are addressed.

The $7,569,453 decrease in assets held in trust under the coinsurance agreement is due to a reduction in assets under TLIC's annuity coinsurance agreement with an offshore annuity and life insurance company that is administered on a funds withheld basis.

The increase in deferred policy acquisition costs for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,
		2026				2025
Balance, beginning of year		$	70,437,017			$	69,399,366
Capitalization of commissions, sales and issue expenses			11,093,281				8,949,376
Amortization			(5,903,197	)			(7,093,322	)
Increase			5,190,084				1,856,054
Balance, end of period		$	75,627,101			$	71,255,420

Our other assets as of September 30, 2026 and December 31, 2025 are summarized as follows:

		(Unaudited)								Amount Change
		September 30, 2026				December 31, 2025				2026 less 2025
Federal and state income taxes recoverable		$	5,404,492			$	5,890,172			$	(485,680	)
Advances to mortgage loan originator			4,568,833				4,722,878				(154,045	)
Accrued management fee			1,010,722				498,389				512,333
Lease asset - right to use			821,512				924,201				(102,689	)
Other receivables, prepaid assets and deposits			185,909				138,254				47,655
Notes receivable			12,137				14,791				(2,654	)
Receivable for securities			1,292				-				1,292
Total other assets		$	12,004,897			$	12,188,685			$	(183,788	)

There was a $485,680 decrease in federal and state income taxes recoverable primarily due to receiving a federal income tax refund of $1,817,859 for the tax year 2023.

There was a $154,045 decrease in advances to one mortgage loan originator who acquires residential mortgage loans for our life companies.

There was a $512,333 increase in accrued management fees for managing mortgage loans for a third party.

Our liabilities as of September 30, 2026 and December 31, 2025 are summarized as follows:

		(Unaudited)								Amount Change
		September 30, 2026				December 31, 2025				2026 less 2025
Policy liabilities
Policyholders' account balances		$	457,106,470			$	417,120,647			$	39,985,823
Future policy benefits			149,344,958				149,228,807				116,151
Policy claims			2,783,473				3,143,579				(360,106	)
Other policy liabilities			311,468				244,081				67,387
Total policy liabilities			609,546,369				569,737,114				39,809,255
Funds withheld under coinsurance agreement			13,186,913				20,001,969				(6,815,056	)
Deferred federal income taxes			6,686,822				6,584,494				102,328
Other liabilities			5,970,258				6,288,104				(317,846	)
Total liabilities		$	635,390,362			$	602,611,681			$	32,778,681

The increase and decrease in policyholders' account balances for the nine months ended September 30, 2026 and 2025, respectively, are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,
		2026				2025
Policyholders' account balances, beginning		$	417,120,647			$	431,190,092
Deposits			68,172,933				22,993,904
Withdrawals			(50,671,078	)			(52,745,064	)
Change in funds withheld under coinsurance agreement			7,497,415				8,868,556
Interest credited			14,986,553				14,382,254
Increase (decrease)			39,985,823				(6,500,350	)
Policyholders' account balances, ending		$	457,106,470			$	424,689,742

The $116,151 increase in future policy benefits during the nine months ended September 30, 2026 is primarily related to the production of new life insurance policies and the aging of existing policies an additional year.

The $6,815,056 decrease in funds withheld under coinsurance agreement is due to 2026 surrenders of coinsured annuity contracts under coinsurance agreement with an offshore annuity and life insurance company.

The $102,328 increase in deferred federal income taxes during the nine months ended September 30, 2026 was due to $924,921 of operating deferred federal tax and $822,593 of decreased deferred federal income taxes on the unrealized appreciation of fixed maturity securities and preferred stock available-for-sale and other long-term investments securities available-for-sale.

Our other liabilities as of September 30, 2026 and December 31, 2025 are summarized as follows:

		(Unaudited)								Amount Change
		September 30, 2026				December 31, 2025				2026 less 2025
Suspense accounts payable		$	2,756,907			$	568,025			$	2,188,882
Lease liability			821,512				924,201				(102,689	)
Mortgage loans suspense			777,703				3,179,575				(2,401,872	)
Unclaimed funds			672,899				658,404				14,495
Accrued expenses payable			623,000				687,000				(64,000	)
Unearned investment income			206,207				169,315				36,892
Accounts payable			70,710				113,285				(42,575	)
Guaranty fund assessments			55,000				55,000				-
Deferred revenue			-				19,250				(19,250	)
Other payables, withholdings and escrows			(13,680	)			(85,951	)			72,271
Total other liabilities		$	5,970,258			$	6,288,104			$	(317,846	)

The decrease in mortgage loan suspense of $2,401,872 is primarily due to timing of principal loan payments on mortgage loans.

The $2,188,882 increase in suspense accounts payable is due to increased 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, 2026, we have received $27,119,480 from the sale of our shares.

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

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

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

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

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

As of September 30, 2026, we had cash and cash equivalents totaling $45,269,093. As of September 30, 2026, cash and cash equivalents of $15,383,883 and $21,224,154, respectively, totaling $36,608,037 were held by TLIC and FBLIC, respectively and may not be available for use by FTFC due to the required pre-approval by the Oklahoma Insurance Department of any dividend or intercompany transaction to transfer funds to FTFC. The maximum dividend, which may be paid in any twelve-month period without notification or approval, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year.

Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, there is no capacity for TLIC to pay a dividend due to a negative unassigned surplus of $532,472 as of December 31, 2025. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $2,899,895 in 2026 without prior approval. FBLIC has paid no dividends to TLIC in 2026 and 2025. 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 $39,569,483 and $34,131,790 as of September 30, 2026 and December 31, 2025, respectively. Other funds are invested in mutual funds that invest in U.S. government securities. We monitor the solvency of all financial institutions in which we have funds to minimize the exposure for loss. The Company has not experienced any losses in such accounts.

Our cash flows for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Net cash provided by operating activities		$	31,258,710			$	26,640,347			$	4,618,363
Net cash used in investing activities			(42,987,899	)			(28,378,348	)			(14,609,551	)
Net cash provided by (used in) financing activities			17,501,855				(29,751,160	)			47,253,015
Increase (decrease) in cash and cash equivalents			5,772,666				(31,489,161	)			37,261,827
Cash and cash equivalents, beginning of period			39,496,427				64,344,122				(24,847,695	)
Cash and cash equivalents, end of period		$	45,269,093			$	32,854,961			$	12,414,132

The cash provided by operating activities for the nine months ended September 30, 2026 and 2025 are summarized as follows:

		(Unaudited)
		Nine Months Ended September 30,								Amount Change
		2026				2025				2026 less 2025
Premiums collected		$	34,247,471			$	32,449,430			$	1,798,041
Net investment income collected			24,242,415				22,916,159				1,326,256
Service fees and other income collected			1,916,932				3,898,015				(1,981,083	)
Death benefits paid			(12,383,505	)			(10,920,276	)			(1,463,229	)
Surrenders paid			(2,495,694	)			(2,389,449	)			(106,245	)
Dividends and endowments paid			(355,972	)			(339,707	)			(16,265	)
Commissions paid			(11,381,152	)			(8,816,120	)			(2,565,032	)
Other underwriting, insurance and acquisition expenses paid			(10,356,246	)			(8,762,176	)			(1,594,070	)
Taxes paid			(34,873	)			(2,867,915	)			2,833,042
(Increased) decreased advances to mortgage loan originator			154,046				(311,202	)			465,248
Increased (decreased) deposits of pending policy applications			2,188,882				(2,234,898	)			4,423,780
Decreased funds under coinsurance agreement			8,251,812				8,397,494				(145,682	)
Decreased mortgage loan suspense			(2,401,872	)			(4,081,477	)			1,679,605
Other			(333,534	)			(297,531	)			(36,003	)
Net cash provided by operating activities		$	31,258,710			$	26,640,347			$	4,618,363

Please see the statements of cash flows for the nine months ended September 30, 2026 and 2025 for a summary of the components of net cash used in investing activities and net cash provided by financing activities.

Our shareholders' equity as of September 30, 2026 and December 31, 2025 is summarized as follows:

		(Unaudited)								Amount Change
		September 30, 2026				December 31, 2025				2026 less 2025
Shareholders' equity
Class A common stock, par value $.01 per share (40,000,000 shares authorized as of September 30, 2026 and December 31, 2025, 9,631,920 issued as of September 30, 2026 and December 31, 2025, 9,333,404 outstanding as of September 30, 2026 and December 31, 2025)		$	96,319			$	96,319			$	-
Class B common stock, par value $.01 per share (10,000,000 shares authorized, 101,102 issued and outstanding as of September 30, 2026 and December 31, 2025)			1,011				1,011				-
Additional paid-in capital			43,668,023				43,668,023				-
Treasury stock, at cost (298,516 shares as of September 30, 2026 and December 31, 2025)			(979,369	)			(979,369	)			-
Accumulated other comprehensive income			5,406,041				8,500,556				(3,094,515	)
Accumulated earnings			40,413,340				35,286,058				5,127,282
Total shareholders' equity		$	88,605,365			$	86,572,598			$	2,032,767

The increase in shareholders' equity of $2,032,767 for the nine months ended September 30, 2025 is due to $5,127,282 in net income and $3,094,515 decrease in accumulated other comprehensive income.

The liquidity requirements of our life insurance companies are met primarily by funds provided from operations. Premium and annuity consideration deposits, investment income and investment maturities are the primary sources of funds, while investment purchases, policy benefits, and operating expenses are the primary uses of funds. There were no liquidity issues in 2026 or 2025. 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 investment gains (losses) from fixed maturity securities, preferred stock and other long-term investments of ($20,336,619) and ($6,113,632) as of September 30, 2026 and December 31, 2025, respectively, prior to the impact of income taxes and deferred acquisition cost adjustments. An increase of $14,175,521 in unrealized losses arising for the nine months ended September 30, 2026 has been impacted by 2026 net realized investment gains of $47,466 originating from the sale and call activity for fixed maturity securities available-for-sale resulting in net unrealized investment losses from fixed maturity securities, preferred stock and other long-term investments of $14,222,987.

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

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

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

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

As of September 30, 2026, cash and cash equivalents, short-term investments, the fair value of fixed maturity available-for-sale securities with maturities of less than one year and the fair value of lottery receivables with maturities of less than one year equaled 10.1% 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 2025, the SVL also requires the Company to perform annual cash flow testing for TLIC and FBLIC. This testing is designed to ensure that statutory reserve levels will maintain adequate protection in a variety of potential interest rate scenarios. The Actuarial Standards Board of the American Academy of Actuaries also requires cash flow testing as a basis for the actuarial opinion on the adequacy of the reserves which is a required part of the annual statutory reporting process.

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

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

Effective January 1, 2019, the Company entered into a revised advance agreement with one loan originator. As of September 30, 2026, the Company has outstanding advances to this loan originator totaling $4,568,833. The advances are secured by $8,632,935 of residential mortgage loans on real estate that are assigned to the Company. The Company has committed to fund up to an additional $2,431,167 to the loan originator that would result in additional security in the form of residential mortgage loans on real estate to be assigned to the Company.

Effective January 1, 2019, the Company also entered into a revised escrow agreement with the same loan originator. According to the revised terms of the escrow agreement, as of September 30, 2026, $1,012,490 of additional and secured residential mortgage loan balances on real estate are held in escrow by the Company. As of September 30, 2026, $1,004,077 of that escrow amount is available to the Company as additional collateral on $4,568,833 of advances to the loan originator. The remaining September 30, 2026 escrow amount of $8,413 is available to the Company as additional collateral on its investment of $1,682,591 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, 2026 will be sufficient to fund our anticipated operating expenses.

Off-Balance Sheet Arrangements

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

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

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

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

●

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

●

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

●

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

●

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

●

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

●

investment losses and defaults;

●

competition in our product lines;

●

attraction and retention of qualified employees and agents;

●

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

●

the availability, affordability and adequacy of reinsurance protection;

●

the effects of emerging claim and coverage issues;

●

the cyclical nature of the insurance business;

●

interest rate fluctuations;

●

changes in our experiences related to deferred policy acquisition costs;

●

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

●

impact of medical epidemics and viruses;

●

domestic or international military actions;

●

the effects of extensive government regulation of the insurance industry;

●

changes in tax and securities law;

●

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

●

regulatory or legislative changes or developments;

●

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

●

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

●

risks of employee error or misconduct;

●

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

●

the availability of capital to expand our business.

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