-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BBlopOk49JK5b0Hu6mqmmGbTS0W4f9zj86MZswuErbPTCBxT/zwiQirciEFO8RMe 13Yrv8zoNu3exmw45PmIdQ== 0000038723-95-000021.txt : 19950517 0000038723-95-000021.hdr.sgml : 19950516 ACCESSION NUMBER: 0000038723-95-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FRANKLIN FINANCIAL CORP CENTRAL INDEX KEY: 0000038723 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 580521233 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-27985 FILM NUMBER: 95537752 BUSINESS ADDRESS: STREET 1: 213 E TUGALO ST STREET 2: P O BOX 880 CITY: TOCCOA STATE: GA ZIP: 30577 BUSINESS PHONE: 4048867571 FORMER COMPANY: FORMER CONFORMED NAME: FRANKLIN DISCOUNT CO DATE OF NAME CHANGE: 19840115 10-Q 1 SEC FORM 10-Q FOR PERIOD ENDED 03/31/95 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ ------------------------------ Commission File Number 2-27985 ------------------------------ 1st Franklin Financial Corporation A Georgia Corporation I.R.S. Employer No. 58-0521233 213 East Tugalo Street Post Office Box 880 Toccoa, Georgia 30577 (706) 886-7571 ----------------------------- Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 30, 1995 - -------------------------------------- ----------------------------- Common Stock, par value $100 per share 1,700 Shares PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements: The following financial statements required hereunder are incorporated by reference from the Company's Quarterly Report to Investors for the Three Months Ended March 31, 1995. See Exhibit 19 Consolidated Statements of Financial Position: March 31, 1995 and December 31, 1994 Consolidated Statements of Income: Quarters Ended March 31, 1995 and March 31, 1994 Consolidated Statements of Cash Flows: Quarters Ended March 31, 1995 and March 31, 1994 Notes to Consolidated Financial Statements ITEM 2. Managements' Discussion and Analysis of Financial Condition and Results of Operations. The information required hereunder is set forth under "Management's Letter" of the Company's Quarterly Report to Investors for the Three Months Ended March 31, 1995. See Exhibit 19 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits: 19 Quarterly Report to Investors for the Three Months Ended March 31, 1995. 27 Financial Data Schedule (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended March 31,1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 1st FRANKLIN FINANCIAL CORPORATION ----------------------------------- Registrant Ben F. Cheek, III -------------------- Chairman of Board A. Roger Guimond ------------------------------------------ Vice President and Chief Financial Officer Date: May 12, 1995 EX-99 2 SEC FORM 10-Q EXHIBIT INDEX 1st FRANKLIN FINANCIAL CORPORATION INDEX TO EXHIBITS Exhibit No. Page No. 19 Quarterly Report to Investors for the Three Months Ended March 31, 1995 .................... 4 27 Financial Data Schedule........................... 13 EX-19 3 SEC FORM 10-Q EXHIBIT 19 Exhibit 19 1st FRANKLIN FINANCIAL CORPORATION QUARTERLY REPORT TO INVESTORS FOR THE THREE MONTHS ENDED MARCH 31, 1995 MANAGEMENT'S LETTER Total assets of the Company grew $14,570,882 (11%) during the first three months of 1995 mainly due to increases in cash and cash equivalents and increases in investment securities. Cash and cash equivalents increased $11,997,396 (179%) due to increases in the sales of the Company's debt securities and increases in loan payments. The Company's investment portfolio increased $3,743,622 (28%) primarily because of increases in funds invested by the Company's insurance subsidiaries. The additional funds were invested in securities designated as "held to maturity" which are carried at amortized cost, as Management has both the ability and intent to hold these securities to maturity. Improvement in bond market values during the quarter just ended also contributed to the increase in the portfolio as the carrying value of investment securities designated as "available for sale" increased 4%. The aforementioned increase in sales of the Company's public debt securities caused senior debt and subordinated debt to increase $14,261,794 (16%) during the period just ended. Other liabilities decreased $2,095,077 (28%) due to disbursement of the 1994 incentive bonus in February. Total revenues increased $1,223,720 (10%) during the quarter ended March 31, 1995 as compared to the same quarter in 1994 primarily due to increases in interest income. Average net receivables were $121,546,602 as compared to $109,424,530 during the comparable periods and interest earned on loans increased $632,034 (8%) as a direct result of this growth in average net outstanding receivables. Interest income from investments increased $191,665 (93%) as a result of the surplus cash generated during the quarter just ended being invested in short-term instruments and the previously discussed increases in investment debt securities by the Company's insurance subsidiaries. The higher level of average net receivables during the first quarter of 1995 also led to a $317,368 (11%) increase in net insurance income. Changes in net insurance income generally correspond to changes in the level of average net receivables outstanding. Increases in average net receivables normally lead to higher levels of insurance in force which increases insurance income. Interest expense increased $377,893 (29%) during the comparable periods due to the aforementioned increase in the Company's debt securities issued and an increase in borrowing cost. Higer interest rates caused borrowing costs to increase to 6.91% during the quarter ended March 31, 1995 as compared to 6.28% during the quarter ended March 31, 1994. Net charge-offs increased $151,792 (28%) during the quarter just ended as compared to the same period a year ago, mainly due to the aforementioned increase in average receivables outstanding and increases in bankruptcies. This increase in net charge-offs caused the Company's provision for loan losses to increase $123,495 (24%) during the comparable periods. Other operating expenses increased $555,516 (8%) during the quarter ended March 31, 1995 as compared to the same quarter a year ago. Higher payroll and employee benefit costs, increases in rent expense, telephone expense, advertising, computer expense and legal and audit expenses are factors primarily responsible for the increase in other operating expenses. Effective income tax rates were 30.5% and 31.8% for the quarters ended March 31, 1995 and 1994, respectively. Certain tax benefits provided by law to life insurance companies substantially reduce the life insurance subsidiary's effective tax rate and thus decreases the Company's general tax rate below statutory rates. The increase in the effective rate for the quarter just ended was mainly due to the Company and the property insurance subsidiary, which are taxed at higher rates, earning a larger portion of pretax income as compared to the prior year. Liquidity requirements of the Company are financed through the collection of receivables and through the issuance of public debt securities. Net cash flows from financing activities, excluding bank borrowings, increased $8,218,846 during the first quarter of 1995 as compared to the same period a year ago and collections on loans increased $1,089,459 over the same period. In addition to the securities program, the Company has two external sources of funds through the use of two Credit Agreements. One agreement provides for available borrowings of $21,000,000. Available borrowings were $21,000,000 and $20,626,000 at March 31, 1995 and December 31, 1994, respectively, relating to this agreement. Another agreement provides for an additional $2,000,000 for general operating purposes. Available borrowings under this agreement were $2,000,000 at March 31, 1995 and December 31, 1994. Liquidity was not adversely affected by delinquent accounts even though the percentage of outstanding receivables 60 days or more past due increased to 4.1% of receivables at March 31, 1994 from 4.0% of receivables at December 31, 1993. The Company's 1994 Annual Report reported various legal proceedings pending against the Company in the state of Alabama alleging different violations of Alabama consumer lending laws and violations in connection with the sale of credit insurance and loan refinancing. All of the actions are still in their early stages and their outcome currently is not determinable. The financial condition and operating results of the Company could be materially affected in the event of an unfavorable outcome. However, Management believes that the Company's Alabama operations are in compliance with applicable regulations and that the actions are without merit. The Company is diligently contesting them. 1st FRANKLIN FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION March 31, December 31, -------- ----------- 1995 1994 (Unaudited) (Audited) ASSETS CASH AND CASH EQUIVALENTS. . . . . . . . $ 18,686,940 $ 6,689,544 ------------ ------------ LOANS, net . . . . . . . . . . . . . . . 108,294,270 108,667,175 ------------ ------------ INVESTMENT SECURITIES: Available for Sale, at market value. . 13,170,869 12,651,527 Held to Maturity, at amortized cost. . 3,921,424 697,144 ------------ ------------ 17,092,293 13,348,671 ------------ ------------ OTHER ASSETS . . . . . . . . . . . . . . 6,965,636 7,762,867 ------------ ------------ TOTAL ASSETS. . . . . . . . . . $151,039,139 $136,468,257 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY SENIOR DEBT. . . . . . . . . . . . . . . $ 78,384,436 $ 66,677,289 OTHER LIABILITIES. . . . . . . . . . . . 5,487,756 7,582,833 SUBORDINATED DEBT. . . . . . . . . . . . 24,157,303 21,602,656 ------------ ------------ Total Liabilities . . . . . . . . . 108,029,495 95,862,778 ------------ ------------ STOCKHOLDERS' EQUITY: Common Stock . . . . . . . . . . . . . 170,000 170,000 Net Unrealized Gain (Loss) on Investment Securities Available for Sale. . . . . . . . . . . . . . (303,436) (693,457) Retained Earnings. . . . . . . . . . . 43,143,080 41,128,936 ------------ ------------ Total Stockholders' Equity. . . . . 43,009,644 40,605,479 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . $151,039,139 $136,468,257 ============ ============ The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 1st FRANKLIN FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31 (Unaudited) ------------------------------ 1995 1994 ---- ---- INTEREST INCOME. . . . . . . . . . . . . . . $ 9,200,263 $ 8,376,564 INTEREST EXPENSE . . . . . . . . . . . . . . 1,695,050 1,317,157 ----------- ----------- NET INTEREST INCOME. . . . . . . . . . . . . 7,505,213 7,059,407 Provision for Loan Losses . . . . . . 645,437 521,942 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES . . . . . . . . 6,859,776 6,537,465 ----------- ----------- NET INSURANCE INCOME . . . . . . . . . . . . 3,160,715 2,843,347 ----------- ----------- OTHER REVENUE. . . . . . . . . . . . . . . . 99,274 87,982 ----------- ----------- OTHER OPERATING EXPENSES: Personnel Expense . . . . . . . . . . 4,343,417 4,015,805 Occupancy . . . . . . . . . . . . . . 943,497 881,277 Other . . . . . . . . . . . . . . . . 1,933,069 1,767,385 ----------- ----------- Total. . . . . . . . . . . . . . . 7,219,983 6,664,467 ----------- ----------- INCOME BEFORE INCOME TAXES . . . . . . . . . 2,899,782 2,804,327 Provision for Income Taxes. . . . . . 885,638 893,111 ----------- ----------- NET INCOME . . . . . . . . . . . . . . . . . 2,014,144 1,911,216 RETAINED EARNINGS, beginning of period . . . 41,128,936 34,220,868 ----------- ----------- RETAINED EARNINGS, end of period . . . . . . $43,143,080 $36,132,084 =========== =========== EARNINGS PER SHARE (1,700 shares outstanding all periods) . . . . . . . . . $ 1,184.79 $ 1,124.24 =========== =========== The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 1st FRANKLIN FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents Three Months Ended March 31 -------------------------- (Unaudited) 1995 1994 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . $ 2,014,144 $ 1,911,216 Adjustments to reconcile net income to net cash provided by operating activities: Provision for Loan Losses. . . . . . 645,437 521,942 Depreciation and Amortization. . . . 256,092 240,090 Other, net . . . . . . . . . . . . . (15,620) (15,388) Decrease in Miscellaneous assets . . 623,671 648,810 (Decrease) in Accounts Payable and Accrued Expenses. . . . . . . . (2,095,077) (1,696,080) ------------ ------------ Net Cash Provided by Operating Activities . . . . . 1,428,647 1,610,590 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Loans Originated or purchased. . . . . . (21,905,562) (21,127,626) Loan Payments. . . . . . . . . . . . . . 21,633,030 20,543,571 Purchases of marketable debt securities. (3,222,735) (1,217,405) Sales of marketable securities . . . . . -- 103,897 Redemptions of securities. . . . . . . . -- 300,000 Other, net . . . . . . . . . . . . . . . (197,778) (180,927) ------------ ------------ Net Cash Provided by Operating Activities . . . . . (3,693,045) (1,578,490) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in Senior Debt . . . 11,707,147 (296,655) Subordinated Debt Issued . . . . . . . . 3,797,319 1,437,375 Subordinated Debt redeemed . . . . . . . (1,242,672) (1,500,328) ------------ ------------ Net Cash Provided by Financing Activities . . . . . 14,261,794 (359,608) ------------ ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . 11,997,396 (327,508) CASH AND CASH EQUIVALENTS, beginning . . . . . 6,689,544 5,827,748 ------------ ------------ CASH AND CASH EQUIVALENTS, ending. . . . . . . $ 18,686,940 $ 5,500,240 ============ ============ Cash Paid during the period for: Interest. . . $ 1,631,380 $ 1,290,427 Income Taxes. 77,000 190,000 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. -NOTES- 1. The accompanying interim financial information of 1st Franklin Financial Corporation and subsidiaries (the Company) should be read in conjunction with the annual financial statements and notes thereto as of December 31, 1994 and for the years then ended included in the Company's December 31, 1994 Annual Report. 2. Effective December 31, 1994, 1st Franklin Corporation (formerly the Parent of the Company) was merged into the Company, with the Company being the surviving corporation. All financial data for prior years have been restated to reflect results of the merger. 3. In the opinion of Management of the Company, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company's financial position as of March 31, 1995, and December 31, 1994, and the results of its operations and its cash flows for the three months ended March 31, 1995 and 1994. While certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, the Company believes that the disclosures herein are adequate to make the information presented not misleading. 4. The results of operations for the three months ended March 31, 1995, are not necessarily indicative of the results to be expected for the full fiscal year. 5. The computation of Earnings per Share is self-evident from the Consolidated Statement of Income and Retained Earnings. BRANCH OPERATIONS Jarrell Coffee . . . .Vice President Jack Coker . . . . . . .Vice President Isabel Vickery . . . . .Vice President SUPERVISORS Richard Asmussen Donald Floyd Melvin Osley Robert Canfield Jack Hobgood Dale Palmer Susie Cantrell Judy Landon David Reynolds Donald Carter Tommy Lennon Bob Seawright Mike Culpepper Dianne Moore Joe Seale Jimmy Davis Ronnie Morrow Timothy Schmotz Tony Ellison Gaines Snow OFFICES Alabama Offices: Georgia Offices: Georgia Offices: - --------------- --------------- --------------- Alexander City Carrollton McRae Arab Cartersville Milledgeville Athens Cedartown Monroe Bessemer Chatsworth Montezuma Birmingham Clarkesville Monticello Clanton Claxton Moultrie Cullman Clayton Nashville Decatur Cleveland Newnan Dothan Cochran Perry Enterprise Commerce Rome Florence Conyers Royston Gadsden Cordele Savannah Huntsville Cornelia Statesboro Jasper Covington Swainsboro Ozark Cumming Sylvania Prattville Dallas Sylvester Russellville Douglas Thomaston Scottsboro Douglasville Thomson Selma Eastman Tifton Sylacauga Elberton Toccoa Troy Ellijay Valdosta Tuscaloosa Forsyth Vidalia Fort Valley Warner Robins Georgia Offices: Gainesville Washington - --------------- Garden City Winder Adel Georgetown Albany Griffin South Carolina Offices: Alma Hartwell ---------------------- Americus Hawkinsville Aiken Athens Hazlehurst Anderson Barnesville Hinesville Cayce Baxley Hogansville Clemson Blue Ridge Jackson Greenwood Bremen Jasper Laurens Brunswick Jefferson Orangeburg Buford Jesup Seneca Butler Lavonia Union Cairo Lawrenceville York Calhoun Madison Canton Manchester McDonough DIRECTORS W. Richard Acree President, Acree Oil Company Ben F. Cheek, III Chairman and Chief Executive Officer 1st Franklin Financial Corporation Lorene M. Cheek Homemaker Jack D. Stovall President, Stovall Building Supplies, Inc. Dr. Robert E. Thompson Physician, Toccoa Clinic EXECUTIVE OFFICERS Ben F. Cheek, III Chairman and Chief Executive Officer T. Bruce Childs President and Chief Operating Officer A. Roger Guimond Vice President and Chief Financial Officer Lynn E. Cox Secretary Linda L. Sessa Treasurer INVESTMENT CENTER Lynn E. Cox Account Executive Phoebe P. Martin Account Executive Sandra N. Oliver New Accounts COUNSEL Jones, Day, Reavis & Pogue 3500 One Peachtree Center 303 Peachtree Street, N.E. Atlanta, Georgia 30308-3242 AUDITORS Arthur Andersen LLP 133 Peachtree Street, N.E. Atlanta, Georgia 30303 EX-27 4 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1 3-MOS DEC-31-1995 MAR-31-1995 18,686,940 17,092,293 138,264,532 4,033,804 0 0 7,850,775 5,109,831 151,039,139 83,872,192 102,212,477 170,000 0 0 42,839,644 151,039,139 0 13,370,037 0 0 7,219,983 645,437 1,695,050 2,899,782 885,638 2,014,144 0 0 0 2,014,144 1,184.79 0
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