FTFC's Revenue Climbs 12% YOY, But Net Income Dips Slightly

TL;DR

**FTFC is growing top-line revenue, but rising policyholder costs are eating into the bottom line, making it a hold for now.**

AI Summary

First Trinity Financial Corporation (FTFC) reported a mixed financial performance for the nine months ended September 30, 2025. Total revenues increased by 12.3% to $63,029,646 from $56,106,859 in the prior year, driven primarily by a significant rise in service fees to $3,979,827 from $1,556,193, and an increase in net investment income to $25,830,349 from $23,495,461. Premiums also saw a modest increase to $32,273,329 from $30,747,471. However, net income slightly decreased by 1.3% to $5,058,167 from $5,125,417, largely due to a substantial increase in total benefits, claims, and expenses, which rose to $56,539,665 from $49,652,019. This increase was driven by higher interest credited to policyholders, up to $14,382,254 from $11,252,165, and increased death benefits of $11,486,401 compared to $9,930,857. The company's total assets grew to $690,014,536 from $686,448,898 at December 31, 2024, while total shareholders' equity improved to $80,036,342 from $69,050,228, partly due to a reduction in accumulated other comprehensive loss. Cash and cash equivalents, however, significantly decreased to $32,854,961 from $64,344,122.

Why It Matters

FTFC's ability to grow revenues, particularly in service fees and net investment income, suggests resilience in its core operations and investment strategy, which is positive for investors. However, the slight dip in net income despite revenue growth indicates rising operational costs, especially in policyholder benefits and interest, which could pressure future profitability and impact dividend capacity. For employees, stable revenue growth could signal job security, while customers might see continued product offerings. In a competitive insurance market, managing these rising costs will be crucial for FTFC to maintain its market position and attract new policyholders, influencing broader market sentiment for regional insurers.

Risk Assessment

Risk Level: medium — The company experienced a significant decrease in cash and cash equivalents, falling from $64,344,122 at December 31, 2024, to $32,854,961 at September 30, 2025, representing a 48.9% reduction. This substantial cash outflow, coupled with increased policy liabilities (up to $576,514,911 from $571,922,942), indicates potential liquidity management challenges despite overall asset growth.

Analyst Insight

Investors should monitor FTFC's cash flow statements closely in upcoming quarters, specifically looking for trends in operating and financing activities. While revenue growth is positive, the significant reduction in cash and cash equivalents warrants caution; consider holding existing positions but deferring new investments until cash flow stability improves.

Financial Highlights

debt To Equity

N/A

revenue

$63.0M

operating Margin

N/A

total Assets

$690.01M

total Debt

N/A

net Income

$5.06M

eps

$0.54

gross Margin

N/A

cash Position

$32.85M

revenue Growth

+12.3%

Revenue Breakdown

Key Numbers

• $63.0M — Total Revenues (Increased by 12.3% for the nine months ended September 30, 2025, from $56.1M in 2024.)
• $5.06M — Net Income (Slightly decreased by 1.3% for the nine months ended September 30, 2025, from $5.13M in 2024.)
• $3.98M — Service Fees (Increased significantly from $1.56M for the nine months ended September 30, 2024.)
• $25.83M — Net Investment Income (Increased from $23.50M for the nine months ended September 30, 2024.)
• $32.27M — Premiums (Increased from $30.75M for the nine months ended September 30, 2024.)
• $56.54M — Total Benefits, Claims and Expenses (Increased from $49.65M for the nine months ended September 30, 2024.)
• $14.38M — Interest Credited to Policyholders (Increased from $11.25M for the nine months ended September 30, 2024.)
• $32.85M — Cash and Cash Equivalents (Decreased by 48.9% from $64.34M at December 31, 2024.)
• $80.04M — Total Shareholders' Equity (Increased from $69.05M at December 31, 2024.)
• $576.51M — Total Policy Liabilities (Increased from $571.92M at December 31, 2024.)

Key Players & Entities

• First Trinity Financial Corporation (company) — Parent holding company
• Trinity Life Insurance Company (company) — Wholly-owned subsidiary
• Family Benefit Life Insurance Company (company) — Wholly-owned subsidiary of TLIC
• Trinity Mortgage Corporation (company) — Wholly-owned subsidiary
• Trinity American, Inc. (company) — Wholly-owned subsidiary domiciled in Barbados
• Oklahoma Insurance Department (regulator) — Approved surplus note
• $63,029,646 (dollar_amount) — Total revenues for nine months ended September 30, 2025
• $5,058,167 (dollar_amount) — Net income for nine months ended September 30, 2025
• $32,854,961 (dollar_amount) — Cash and cash equivalents as of September 30, 2025
• $80,036,342 (dollar_amount) — Total shareholders' equity as of September 30, 2025

FAQ

Risk Factors

• Decreased Cash and Cash Equivalents [medium — financial]: Cash and cash equivalents decreased by 48.9% to $32.85 million from $64.34 million at December 31, 2024. This significant reduction could impact liquidity and the company's ability to meet short-term obligations or fund new initiatives.
• Rising Policyholder Benefits and Expenses [medium — financial]: Total benefits, claims, and expenses increased by 13.9% to $56.54 million from $49.65 million. This was driven by higher interest credited to policyholders ($14.38M vs $11.25M) and increased death benefits ($11.49M vs $9.93M), putting pressure on net income.
• Interest Rate Sensitivity [medium — market]: As an insurance company with significant investment assets, FTFC is exposed to interest rate fluctuations. Changes in interest rates can affect the fair value of its investment portfolio and the profitability of new business.
• Insurance Regulatory Compliance [medium — regulatory]: FTFC operates in a highly regulated industry. Compliance with state and federal insurance regulations, including solvency requirements and consumer protection laws, is critical and can involve significant costs.
• Dependence on Independent Agents [low — operational]: The company's products are sold through independent agents. Reliance on this distribution channel introduces risks related to agent recruitment, retention, and sales performance.

Industry Context

First Trinity Financial Corporation operates within the life insurance and annuity sector, a market characterized by stable demand for long-term financial security products. The industry is competitive, with companies differentiating themselves through product offerings, pricing, and customer service. Trends include a focus on digital distribution, product innovation to meet evolving consumer needs, and managing investment portfolios in a dynamic interest rate environment.

Regulatory Implications

As a regulated insurance entity, FTFC must adhere to stringent solvency requirements and consumer protection laws. Changes in accounting standards or regulatory frameworks, particularly concerning reserves and capital adequacy, could impact financial reporting and operational flexibility. Compliance efforts represent an ongoing operational cost and potential risk.

What Investors Should Do

1. Monitor expense management, particularly interest credited to policyholders and death benefits, to understand their impact on profitability.
2. Analyze the drivers behind the substantial decrease in cash and cash equivalents.
3. Evaluate the growth in service fees and its sustainability as a revenue driver.
4. Assess the company's investment portfolio performance and its sensitivity to interest rate changes.

Key Dates

• 2025-09-30: Nine Months Ended — Reporting period for the 10-Q, showing revenue growth but a slight net income decrease.
• 2024-12-31: Year-End — Prior period comparison point for assets, equity, and cash position.

Glossary

Accumulated Other Comprehensive Income (Loss)

A component of shareholders' equity that includes unrealized gains and losses on certain investments and foreign currency translations that have not been realized in net income. (A reduction in accumulated other comprehensive loss contributed to the improvement in total shareholders' equity.)

Deferred Policy Acquisition Costs

Costs incurred in acquiring new insurance policies, such as commissions and underwriting expenses, that are capitalized and amortized over the expected life of the policies. (These costs represent a significant asset on the balance sheet, reflecting future revenue streams.)

Policy Liabilities

Obligations of the insurance company to policyholders, including future policy benefits, claims, and account balances. (The largest liability category, totaling $576.51M, indicating the company's core insurance obligations.)

Net Investment Income

Income generated from the company's investments, such as interest, dividends, and realized gains, net of investment expenses. (A key driver of revenue growth, increasing by 9.9%.)

Interest Credited to Policyholders

The amount of interest paid or accrued on policyholder account balances, particularly in annuity products. (A significant expense item that increased substantially, impacting net income.)

Year-Over-Year Comparison

Compared to the prior year, First Trinity Financial Corporation reported a healthy 12.3% increase in total revenues to $63.0 million, primarily driven by a substantial rise in service fees and growth in net investment income. However, net income saw a slight 1.3% decrease to $5.06 million due to a significant increase in total benefits, claims, and expenses, notably higher interest credited to policyholders and death benefits. While total assets and shareholders' equity grew, cash and cash equivalents experienced a sharp 48.9% decline, indicating a potential shift in liquidity management or operational cash usage.

Key Financial Figures

• $1 — curities at fair value (amortized cost: $1 6,602,599 and $ 22,559,107 as of Septem
• $459,180 — mortgage loans of real estate totaling $459,180 and $1,285,621, respectively and transf
• $1,285,621 — ns of real estate totaling $459,180 and $1,285,621, respectively and transferred that prop

Filing Documents

• ftfc20250930_10q.htm (10-Q) — 3760KB
• ex_885045.htm (EX-31.1) — 11KB
• ex_885046.htm (EX-31.2) — 11KB
• ex_885047.htm (EX-32.1) — 6KB
• ex_885048.htm (EX-32.2) — 7KB
• 0001437749-25-034742.txt ( ) — 15213KB
• ftfc-20250930.xsd (EX-101.SCH) — 71KB
• ftfc-20250930_def.xml (EX-101.DEF) — 529KB
• ftfc-20250930_lab.xml (EX-101.LAB) — 422KB
• ftfc-20250930_pre.xml (EX-101.PRE) — 561KB
• ftfc-20250930_cal.xml (EX-101.CAL) — 57KB
• ftfc20250930_10q_htm.xml (XML) — 4011KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Page Number

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Consolidated Statements of Financial Position as of September 30, 2025 (Unaudited) and December 31, 2024 3 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 4 Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 5 Consolidated Statements of Changes in Shareholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) 7

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 41

Controls and Procedures

Item 4. Controls and Procedures 70

OTHER INFORMATION

Part II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 71

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 71

Defaults upon Senior Securities

Item 3. Defaults upon Senior Securities 71

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 71

Other Information

Item 5. Other Information 72

Exhibits

Item 6. Exhibits 72

Signatures

Signatures 73 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

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements First Trinity Financial Corporation and Subsidiaries Consolidated Statements of Financial Position (Unaudited) September 30, 2025 December 31, 2024 Assets Investments Available-for-sale fixed maturity securities at fair value (amortized cost: $ 224,777,058 and $ 227,703,702 as of September 30, 2025 and December 31, 2024, respectively) $ 218,375,248 $ 213,745,821 Equity securities at fair value (cost: $ 5,552,850 and $ 5,301,191 as of September 30, 2025 and December 31, 2024, respectively) 5,685,432 5,336,062 Mortgage loans on real estate 247,320,834 209,364,504 Investment real estate 2,358,359 2,351,549 Policy loans 4,876,998 4,367,534 Other long-term investments 53,747,163 58,223,514 Total investments 532,364,034 493,388,984 Cash and cash equivalents 32,854,961 64,344,122 Accrued investment income 6,318,856 5,746,167 Recoverable from reinsurers 9,523,927 9,845,838 Assets held in trust under coinsurance agreement Available-for-sale fixed maturity securities at fair value (amortized cost: $1 6,602,599 and $ 22,559,107 as of September 30, 2025 and December 31, 2024, respectively) 12,556,915 17,932,297 Mortgage loans on real estate 10,086,395 12,660,117 Investment real estate 295,652 - Receivable for securities 674,405 Payable for securities ( 2,845 ) ( 783 ) Cash and cash equivalents 1,363,093 ( 89,726 ) Total assets held in trust under coinsurance agreement 24,299,210 31,176,310 Agents' balances and due premiums 1,480,352 1,393,277 Deferred policy acquisition costs 67,751,195 66,640,453 Value of insurance business acquired 3,460,222 3,593,440 Other assets 11,961,779 10,320,307 Total assets $ 690,014,536 $ 686,448,898 Liabilities and Shareholders' Equity Policy liabilities Policyholders' account balances $ 424,689,742 $ 431,190,092 Future policy benefits 148,694,752 138,027,832 Policy cl

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements September 30, 2025 (Unaudited) 1. Organization and Significant Accounting Policies Nature of Operations First Trinity Financial Corporation (the "Company" or "FTFC") is the parent holding company of Trinity Life Insurance Company ("TLIC"), Family Benefit Life Insurance Company ("FBLIC"), Trinity Mortgage Corporation ("TMC") and Trinity American, Inc. ("TAI"). The Company was incorporated in Oklahoma on April 19, 2004, for the primary purpose of organizing a life insurance subsidiary. The Company owns 100 % of TLIC. TLIC owns 100 % of FBLIC. TLIC and FBLIC are primarily engaged in the business of marketing, underwriting and distributing a broad range of individual life insurance and annuity products to individuals. TLIC's and FBLIC's current product portfolio consists of a modified premium whole life insurance policy with a flexible premium deferred annuity rider, whole life, term, final expense, accidental death and dismemberment and annuity products. The term products are both renewable and convertible and issued for 10 , 15 , 20 and 30 years. They can be issued with premiums fully guaranteed for the entire term period or with a limited premium guarantee. The final expense product is issued as either a simplified issue or as a graded benefit, determined by underwriting. The TLIC and FBLIC products are sold through independent agents. TLIC is licensed in the states of Alabama, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah and West Virginia. FBLIC is licensed in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia. The Company owns 100 % of TMC that was in

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements September 30, 2025 (Unaudited) 1. Organization and Significant Accounting Policies (continued) Acquisition of Other Companies On December 23, 2008, FTFC acquired 100 % of the outstanding common stock of First Life America Corporation ("FLAC") from an unaffiliated company. The acquisition of FLAC was accounted for as a purchase. The aggregate purchase price for FLAC was $ 2,695,234 including direct costs associated with the acquisition of $ 195,234 . The acquisition of FLAC was financed with the working capital of FTFC. On December 31, 2008, FTFC made FLAC a 15 year loan in the form of a surplus note in the amount of $ 250,000 with an interest rate of 6 % payable monthly, that was approved by the Oklahoma Insurance Department ("OID"). This surplus note is eliminated in consolidation. On August 31, 2009, two of the Company's subsidiaries, Trinity Life Insurance Company ("Old TLIC") and FLAC, were merged, with FLAC being the surviving company. Immediately following the merger, FLAC changed its name to TLIC. On December 28, 2011, TLIC acquired 100 % of the outstanding common stock of FBLIC from FBLIC's shareholders. The acquisition of FBLIC was accounted for as a purchase. The aggregate purchase price for the acquisition of FBLIC was $ 13,855,129 . The acquisition of FBLIC was financed with the working capital of TLIC. On April 28, 2015, the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of $ 3,644,839 , assumed liabilities of $ 3,055,916 and recorded a gain on reinsurance assumption of $ 588,923 . On April 3, 2018, FTFC acquired 100 % of the outstanding stock of TAI domiciled in Barbados, West Indies. The Barbados regulators approved the acquisition and supplied certifications during 2019. The aggregate purchase price for the acquisition of TAI was $ 250,000 . The acquisition of TAI was financed with

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements September 30, 2025 (Unaudited) 1. Organization and Significant Accounting Policies (continued) Fixed maturity securities comprised of bonds and redeemable preferred securities are classified as available-for-sale and are carried at fair value with unrealized gains and losses, net of applicable income taxes, reported in accumulated other comprehensive income. The amortized cost of fixed maturity securities available-for-sale is adjusted for amortization of premium and accretion of discount to maturity. Interest income on fixed maturity securities, as well as the related amortization of premium and accretion of discount, is included in net investment income under the effective yield method. Dividend income on redeemable preferred securities are recognized in net investment income when declared. The amortized cost of fixed maturity securities available-for-sale are written down to fair value when a decline in value is considered to be other-than-temporary. The Company evaluates the difference between the cost or amortized cost and estimated fair value of its fixed maturity securities to determine whether any decline in value is the result of a credit loss or other factors. An allowance for credit losses is recorded against available-for-sale securities to reflect the amount of an unrealized loss attributed to credit. This impairment is limited by the amount that the fair value is less than the amortized cost basis. Any remaining unrealized loss is recognized in other comprehensive income (loss) with no change to the cost basis of the security. This determination involves a degree of uncertainty. Changes in the allowance for credit losses are recognized in earnings. The assessment and determination of whether or not a credit loss exists is based on consideration of the cash flows expected to be collected from the fixed maturity security. The Company develops those expectations after considering various factors such as a

View Full Filing

View this 10-Q filing on SEC EDGAR