<PAGE> 1
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30,1998
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period
Commission File Number 0-16362
First Franklin Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 31-1221029
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
4750 Ashwood Drive Cincinnati, Ohio 45241
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (513) 469-5352
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 twelve months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
requirements for the past 90 days.
Yes [X] NO [ ]
As of June 30,1998 there were issued and outstanding 1,783,034 shares of the
Registrant's Common Stock.
Transitional Small Business Format (check one)
Yes [ ] NO [X]
<PAGE> 2
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets -
June 30, 1998 and December 31, 1997 3
Consolidated Statements of Income and Retained
Earnings - Three and Six Month Periods ended
June 30,1998 and 1997 4
Consolidated Statements of Cash Flows - Six Month
Periods ended June 30,1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION 13
Item 5. Press Release Dated June 22,1998 14
Press Release Dated June 23,1998 15
Press Release Dated July 14, 1998 16
Signatures
<PAGE> 3
PART I - ITEM 1.
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
JUNE 30,1998 DEC 31,1997
------------ -----------
(Unaudited)
ASSETS
Cash, including CD's & other interest-earning
deposits of $4,420 and $3,380, respectively $4,320 $5,990
Investment securities
Available-for-sale, at market value
(amortized cost of $36,024 and
$29,740, respectively) 36,057 29,829
Mortgage-backed securities
Available-for-sale, at market value
(amortized cost of $23,558 and
$18,208, respectively) 23,863 18,755
Held-to-maturity, at amortized cost
(market value of $14,719 and
$17,165, respectively) 14,660 17,158
Loans receivable, net 152,377 152,753
Real estate owned, net 0 0
Stock in Federal Home Loan Bank
of Cincinnati, at cost 1,726 1,809
Accrued interest receivable 1,841 1,433
Property and equipment, net 2,054 1,980
Other assets 781 797
-------- --------
$237,679 $230,504
LIABILITIES
Savings accounts $205,504 $202,206
Borrowings 9,209 5,462
Advances by borrowers for taxes
and insurance 440 1,067
Other liabilities 846 541
-------- --------
Total liabilities 215,999 209,276
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock; $.01 par value per share;
500,000 shares authorized; no shares issued Common
stock; $.01 par value per share; 2,500,000 shares
authorized; 2,010,867 shares issued. 13 13
Additional paid in capital 6,190 6,190
Treasury stock, at cost- 227,833 and 222,833
shares, respectively (1,422) (1,344)
Unrealized gain on available-for-sale securities,
net of taxes of $115 and $216, respectively 223 420
Retained earnings, substantially restricted 16,676 15,949
-------- --------
Total stockholders' equity 21,680 21,228
-------- --------
$237,679 $230,504
The accompanying notes are an integral part of the
consolidated financial statements.
Page 3
<PAGE> 4
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Dollars in Thousands Except per Share Data)
<TABLE>
<CAPTION>
For The Three Months Ended For The Six Months Ended
JUNE 30,1998 JUNE 30,1997 JUNE 30,1998 JUNE 30,1997
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $3,014 $3,070 $6,061 $6,012
Mortgage-backed securities 548 616 1,115 1,250
Investment securities 643 402 1,232 781
------- ------- ------- -------
4,205 4,088 8,408 8,043
Interest expense:
Savings accounts 2,581 2,473 5,129 4,885
Borrowings 92 103 180 206
------- ------- ------- -------
2,673 2,576 5,309 5,091
------- ------- ------- -------
Net interest income 1,532 1,512 3,099 2,952
Provision for loan losses 10 21 42 42
------- ------- ------- -------
Net interest income after
provision for loan losses 1,522 1,491 3,057 2,910
------- ------- ------- -------
Noninterest income:
Gain on loans sold 43 44 92 64
Gain on sale of investments 25 0 168 0
Service fees on NOW accounts 59 48 114 97
Other income 39 50 156 91
------- ------- ------- -------
166 142 530 252
Noninterest expenses:
Salaries and employee benefits 497 436 958 872
Occupancy expense 134 147 322 296
Federal insurance premiums 31 31 63 38
Service bureau expense 58 55 116 112
Other expenses 309 305 663 664
------- ------- ------- -------
1,029 974 2,122 1,982
Income before federal income taxes 659 659 1465 1180
Provision for federal income taxes 216 217 485 390
------- ------- ------- -------
Net Income $443 $442 $980 $790
RETAINED EARNINGS-BEGINNING OF PERIOD $16,367 $14,943 $15,949 $14,688
Net income 443 442 980 790
Less: dividends declared (134) (96) (253) (189)
------- ------- ------- -------
RETAINED EARNINGS-END OF PERIOD $16,676 $15,289 $16,676 $15,289
EARNINGS PER COMMON SHARE
Basic $0.25 $0.25 $0.55 $0.45
Diluted $0.25 $0.24 $0.55 $0.43
DIVIDENDS DECLARED PER
COMMON SHARE $0.100 $0.053 $0.167 $0.107
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
Page 4
<PAGE> 5
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
For The Six Months Ended
JUNE 30,1998 JUNE 30,1997
------------ ------------
(Unaudited)
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $980 $790
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Provision for loan losses 42 42
Depreciation and amortization 89 87
FHLB stock dividend (63) (61)
Increase in accrued interest receivable (408) (143)
Decrease (Increase) in other assets 16 (66)
Increase (Decrease) in other liabilities 305 (42)
Other, net 13 84
Loans sold 4,895 3,420
Disbursements on loans originated for sale (3,504) (2,899)
------- -------
Net cash provided by operating activities 2,365 1,212
------- -------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Loan principal reductions 21,182 13,588
Disbursements on mortgage and other
loans purchased or originated for investment (22,180) (18,101)
Repayments on mortgage-backed
securities 5,005 2,543
Purchase of available-for-sale mortgage-backed securities (12,402) 0
Sale of available-for-sale mortgage-backed securities 4,544 0
Purchase of available-for-sale investment securities (24,425) (10,149)
Proceeds from the sale of or maturity of available-for-sale
investment securities 18,155 3,820
Sale of Federal Home Loan Bank stock 146 67
Capital expenditures (147) (127)
------- -------
Net cash used in investing activities (10,122) (8,359)
------- -------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net decrease in passbook accounts
and demand deposits (1,646) (3,941)
Proceeds from the sale of certificates
of deposit 34,726 42,475
Payments for maturing certificates
of deposit (29,782) (33,718)
Borrowed money (repayments) 3,747 (235)
Decrease in advances by borrowers
for taxes and insurance (627) (636)
Proceeds from the sale of common stock 0 35
Repurchase of common stock (78) 0
Payment of dividends (253) (189)
------- -------
Net cash provided by financing activities 6,087 3,791
------- -------
Net decrease in cash ($1,670) ($3,356)
Cash at beginning of period 5,990 10,009
------- -------
CASH AT END OF PERIOD $4,320 $6,653
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended June
30,1998 are not necessarily indicative of the results that may be expected for
the full year. The December 31,1997 Balance Sheet data was derived from audited
Financial Statements, but does not include all disclosures required by generally
accepted accounting principles.
STOCK SPLIT
On May 11, 1998, a three-for-two stock split took place. All references in the
accompanying financial statements to the number of common shares and per share
amounts have been adjusted to reflect the stock split. Common shares have also
been adjusted to reflect the split.
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
On March 3, 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 128 "Earnings per Share"
which replaces the previous presentation of "primary" and "fully diluted"
earnings per share with newly defined "basic" and "diluted" earnings per share.
"Basic" earnings per share do not include dilutive effects on earnings.
"Diluted" earnings per share reflect the potential dilution of securities that
could share in an enterprise's earnings. The statement requires dual
presentation of basic and diluted earnings per share on the income statement for
all entities having complex capital structures. It is effective for all
financial statements issued for periods ending after December 15, 1997.
SFAS No. 130, "Reporting Comprehensive Income" was issued by the FASB in June
1997. This statement requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be reported in
a financial statement that is displayed with the same prominence as other
financial statements. For interim period reporting, an enterprise is required to
report a total for comprehensive income. The Company adopted SFAS No. 130
beginning January 1, 1998.
Comprehensive income for the six months ended June 30, 1998 and 1997 was
$893,000 and $894,000, respectively. The difference between net income and
comprehensive income consists solely of the effect of unrealized gains and
losses, net of taxes, on available for sale securities.
Page 6
<PAGE> 7
PART I - ITEM 2.
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
First Franklin Corporation ("Company") is a savings and loan holding company
which was incorporated under the laws of the State of Delaware in September 1987
by authorization of the Board of Directors of the Franklin Savings and Loan
Company ("Franklin"). The Company acquired all of the common stock of Franklin
issued in connection with its conversion from the mutual to stock form of
ownership, which was completed on January 25,1988.
The Company's operating philosophy is to be an efficient and profitable
financial services organization with a professional staff committed to
maximizing shareholder value by structuring and delivering quality services that
attract customers and satisfy their needs and preferences. Management's goal has
been to maintain profitability and a strong capital position. It seeks to
accomplish this goal by pursuing the following strategies: (i) emphasizing
lending in the one- to four-family residential mortgage market, (ii) managing
deposit pricing, (iii) controlling interest rate risk, (iv) controlling
operating expenses (v) controlling asset growth, and (vi) maintaining asset
quality.
As a Delaware corporation, First Franklin is authorized to engage in any
activity permitted by the Delaware General Corporation Law. As a unitary savings
and loan holding company, the Company is subject to examination and supervision
by the Office of Thrift Supervision ("OTS"), although the Company's activities
are not limited by the OTS as long as certain conditions are met. The Company's
assets consist of cash, investment securities, and investments in Franklin and
DirectTeller Systems Inc. ("DirectTeller").
Franklin is an Ohio chartered stock savings and loan headquartered in
Cincinnati, Ohio. It was originally chartered in 1883 as the Green Street Number
2 Loan and Building Company. The business of Franklin consists primarily of
attracting deposits from the general public and using those deposits, together
with borrowings and other funds, to originate and purchase investments and real
estate loans for retention in its portfolio and sale in the secondary market.
Franklin operates seven banking offices in Hamilton County, Ohio through which
it offers a full range of consumer banking services, including mortgage loans,
credit and debit cards, checking accounts, auto loans, savings accounts,
automated teller machines and a voice response telephone inquiry system. To
generate additional fee income and enhance the products and services available
to its customers, Franklin also offers annuities, mutual funds and discount
brokerage services in its offices through an agreement with a third party.
Franklin receives a portion of the sales commissions earned on these products.
Legislation has been proposed which would restructure the federal banking
system. First Franklin might be required to become a bank holding company, which
would subject it to more restrictive activity limits and to capital requirements
similar to those imposed on Franklin Savings. The Company cannot evaluate how
this legislation may impact it until it has been enacted.
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<PAGE> 8
Franklin has one wholly-owned subsidiary, Madison Service Corporation
("Madison"). Madison was formed in 1972 to allow Franklin to diversify into
certain types of business which, by regulation, savings and loans were unable to
enter. At the present time, Madison's assets consist solely of cash and
interest-earning deposits. Its only sources of income are the interest earned on
these deposits and the fees received as a result of the agreement with the third
party broker dealer that provides the discount brokerage services at Franklin's
offices.
First Franklin owns 51% of DirectTeller's outstanding common stock. DirectTeller
was formed in 1989 by the Company and DataTech Services Inc. to develop and
market a voice response telephone inquiry system to allow financial institution
customers to access information about their accounts via the telephone and a
facsimile machine. Franklin currently offers this service to its customers. The
inquiry system is currently in operation at Intrieve Inc., a computer service
bureau which offers the DirectTeller system to the savings and loans it
services. The agreement with Intrieve gives DirectTeller a portion of the
profits generated by the use of the inquiry system by Intrieve's clients.
In September 1997 management and the Board of Directors reviewed the Company's
strategic plan and established the strategic objectives for the next few years.
These objectives include greater emphasis on training, technology, new lending
programs and noninterest income.
Since the results of operations of Madison and DirectTeller have not been
material to the operations and financial condition of the Company, the following
discussion focuses primarily on Franklin.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Consolidated assets increased $7.2 million (3.1%) from $230.5 million at
December 31, 1997 to $237.7 million at June 30,1998, compared to a $4.6 million
(2.1%) increase for the same period in 1997. The 1998 increase reflects a $8.8
million increase investments and mortgage -backed securities which was funded by
an increase of $3.3 million in deposits and $3.7 million in borrowings.
Loan disbursements were $25.7 million during the current six month period
compared to $21.0 million during the six months ended June 30,1997.
Disbursements during the second quarter of 1998 were $11.5 million compared to
$11.7 million during the same quarter in 1997. Loan sales during the current six
month period were $4.9 million. At June 30, 1998, commitments to originate
mortgage loans and purchase mortgage-backed securities were $4.3 million. At the
same date, $2.6 million of undisbursed loan funds were being held on various
construction loans. Management believes that sufficient cash flow and borrowing
capacity exists to fund these commitments.
Liquid assets increased $4.6 million during the six months ended June 30,1998 to
$40.4 million. This increase reflects net increase in savings deposits of $3.3
million, loan sales of $4.9 million, loan and mortgage-backed securities
repayments of $26.2 million, sales of of mortgage-backed securities of $4.5
million and an increase in borrowings of $3.7 million less loan disbursements of
$25.7 million and purchases of mortgage-backed securities of $12.4 million. At
June 30, 1998 liquid assets were 17.0 % of total assets.
The Company's investment and mortgage-backed securities are classified based on
its current intention to hold to maturity or have available for sale, if
necessary. The following table shows the gross unrealized gains or losses on
mortgage-backed securities and investment securities as of June 30,1998. During
the current six month period, sales of investments and mortgage-backed
securities were $12.0 million. These sales resulted in a profit of $168,000. No
securities are classified as trading.
Page 8
<PAGE> 9
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-----------------------------------------
(in thousands)
Available-for-sale
Investment securities $36,024 $ 82 $49 $36,057
Mortgage-backed securities 23,558 309 4 23,863
Held-to-maturity
Mortgage-backed securities 14,660 132 73 14,719
At June 30,1998 savings deposits were $205.5 million compared to $202.2 million
at December 31,1997. This is an increase of $3.3 million during the current six
month period. During the six months ended June 30,1998, core deposits
(transaction and passbook savings accounts) decreased $1.6 million. During the
same period, short term certificates (two years or less) increased $4.0 million
and certificates with original terms greater than two years increased $960,000.
Interest of $2.3 million during the current quarter and $4.6 million during the
current six month period was credited to accounts. After eliminating the effect
of interest credited, savings decreased $1.0 million during the three month
period and $1.3 million during the six month period ended June 30, 1998.
Borrowings at June 30, 1998 consisted of the following fixed-rate Federal Home
Loan Bank advances:
Maturity Interest
Date Rate Balance
(Dollars in Thousands)
5/1/06 8.15% $207
6/17/08 5.10% 2,000
6/18/08 5.38% 2,000
10/1/10 6.35% 3,564
12/1/10 6.30% 1,438
Total 5.90% $9,209
At June 30,1998, $2.7 million of assets were classified substandard, $373,000
classified loss and $824,000 classified as special mention compared to $1.2
million as substandard, $333,000 as loss and $2.0 million as special mention at
December 31,1997. Non-accruing loans and accruing loans delinquent ninety days
or more, net of reserves, were $2.04 million at June 30, 1998 and $936,000 at
December 31,1997. The Company believes that the increase in delinquent loans and
substandard assets will be reversed in the next three to six months. At June 30,
1998 the recorded investment in loans for which impairment under SFAS No. 114
has been recognized was immaterial to the Company's financial statements.
The following table shows the activity that has occurred on loss reserves during
the six months ended June 30,1998.
(Dollars in Thousands)
Balance at beginning of period $1,015
Charge offs 0
Additions charged to operations 42
Recoveries 1
-------
Balance at end of period $1,058
The Company's capital supports business growth, provides protection to
depositors, and represents the investment of stockholders on which management
strives to achieve adequate returns. First Franklin continues to enjoy a strong
capital position. At June 30,1998, net worth was $21.7 million, which is 9.12%
of assets. At the same date, book value per share was $12.16 compared to $11.87
at December 31,1997.
The following table summarizes, as of June 30,1998, the regulatory capital
position of our subsidiary, Franklin Savings.
CAPITAL STANDARD Actual Required Excess Actual Required Excess
(Dollars in Thousands)
Core $15,145 $9,400 $5,745 6.44% 4.00% 2.44%
Risk-based 15,831 8,610 7,221 14.71% 8.00% 6.71%
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RESULTS OF OPERATIONS
Net income was $443,000 ($0.25 per basic share) for the current quarter compared
to $442,000 ($0.25 per basic share) for the quarter ended June 30, 1997. During
the current six month period, income increased 24% to $980,000 ($0.55 per basic
share) from $790,000 ($0.45 per basic share) for the six months ended June 30,
1997. This $190,000 increase in net income during the six month period reflects
a $147,000 increase in net interest income, $168,000 profits on the sale of
investments, and a $28,000 increase in gains on the sale of loans less a
$140,000 increase in operating expenses.
Net interest income, before provisions for loan losses, was $1.53 million for
the current quarter and $3.10 million for the first six months of 1998 compared
to $1.51 and $2.95 million, respectively, for the same periods in 1997. The most
significant impact on net interest income between periods relates to the
interaction of changes in the volume of and rates earned or paid on
interest-earning assets and interest-bearing liabilities. The following
rate/volume analysis describes the extent to which changes in interest rates and
the volume of interest related assets and liabilities have affected net interest
income during the periods indicated.
For the Six Month Periods ended June 30,
1998 vs 1997
Increase (Decrease) Total
due to Increase
Volume Rate (Decrease)
------ ---- ----------
INTEREST INCOME ATTRIBUTABLE TO: (Dollars in Thousands)
Loans receivable (1) ($4) $53 $49
Mortgage-backed securities (85) (50) (135)
Investments 361 88 449
FHLB stock 1 1 2
---- ---- ----
Total interest-earning assets $273 $92 $365
INTEREST EXPENSE ATTRIBUTABLE TO:
Demand deposits ($18) ($9) ($27)
Savings accounts (10) 0 (10)
Certificates 264 17 281
FHLB advances (11) (15) (26)
---- ---- ----
Total interest-bearing liabilities $225 ($7) $218
Increase in net interest income $48 $99 $147
(1) Includes non-accruing loans.
As the tables below illustrate, average interest-earning assets increased $9.0
million to $226.8 million during the six months ended June 30,1998 from $217.7
million for the six months ended June 30,1997. Average interest-bearing
liabilities increased $6.3 million from $203.0 million for the six months ended
June 30,1997 to $209.3 million for the current six month period. Thus, average
net interest-earning assets increased $2.7 million when comparing the two
periods. The interest rate spread (the yield on interest-earning assets less the
cost of interest-bearing liabilities) was 2.35% for the six months ended June
30, 1998 compared to 2.37% for the same period in 1997. The decline in the
interest rate spread was the result of an increase in the cost of
interest-bearing liabilities from 5.02% for the six months ended June 30, 1997
to 5.07% for the same six month period in 1998.
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<TABLE>
<CAPTION>
For the Six Months ended June 30,1998
Average
Outstanding Yield/Cost
----------- ----------
($ in thousands)
<S> <C> <C>
AVERAGE INTEREST-EARNING ASSETS
Loans $153,106 7.92%
Mortgage-backed securities 34,702 6.43%
Investments 37,192 6.29%
FHLB stock 1,763 7.15%
-------- -----
Total $226,763 7.42%
AVERAGE INTEREST-BEARING LIABILITIES
Demand deposits $22,243 2.10%
Savings accounts 22,494 2.73%
Certificates 158,585 5.79%
FHLB advances 6,008 5.99%
-------- -----
Total $209,330 5.07%
NET INTEREST-EARNING ASSETS/INTEREST RATE SPREAD $ 17,433 2.35%
</TABLE>
<TABLE>
<CAPTION>
For the Six Months ended June 30,1997
Average
Outstanding Yield/Cost
----------- ----------
($ in thousands)
<S> <C> <C>
AVERAGE INTEREST-EARNING ASSETS
Loans $153,202 7.85%
Mortgage-backed securities 37,313 6.70%
Investments 25,463 5.66%
FHLB stock 1,742 7.00%
-------- -----
Total $217,720 7.39%
Average interest-bearing liabilities
Demand deposits $23,933 2.18%
Savings accounts 23,235 2.73%
Certificates 149,440 5.76%
FHLB advances 6,371 6.47%
-------- -----
Total $202,979 5.02%
NET INTEREST-EARNING ASSETS/INTEREST RATE SPREAD $14,741 2.37%
</TABLE>
Noninterest income was $166,000 for the quarter and $530,000 for the six months
ended June 30,1998 compared to $142,000 for the same quarter in 1997 and
$252,000 for the six months ended June 30, 1997. The increase in noninterest
income when comparing the six month periods is the result of profits on the sale
of investments and mortgage-backed securities of $168,000, an increase of
$28,000 in profits on the sale of loans, increased rental income on the
corporate office building and increased service fees on NOW accounts.
Noninterest expenses were $1.03 million for the current quarter and $2.12
million for the current six month period compared to $974,000 and $1.98 million
for the three and six month periods ended June 30,1997. As a percentage of
average assets, this is 1.82% for the current six month period compared to 1.76%
for the first six months of 1997.
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<PAGE> 12
YEAR 2000 ISSUES
As with all financial institutions, Franklin's operations depend almost entirely
on computer systems. Franklin is addressing the potential problems associated
with the possibility that the computers which control or operate Franklin's
operating systems, facilities and infrastructure may not be programmed to read
four-digit date codes and, upon arrival of the year 2000, may recognize the
two-digit code "00" as the year 1900, causing systems to fail to function or to
generate erroneous data. Franklin is working with the companies that supply or
service its computer-operated or -dependent systems to identify and remedy any
year 2000 related problems.
At this time, Franklin has not identified any specific expenses which are
reasonably likely to be incurred in connection with this issue and does not
expect to incur significant expense to implement corrective measures. No
assurance can be given, at this time, that significant expense will not be
incurred in future periods. In the unlikely event that Franklin is ultimately
required to purchase replacement computer systems, programs and equipment, or
that substantial expense must be incurred to make Franklin's current systems,
programs and equipment Year 2000 compliant, Franklin's net income and financial
condition could be adversely affected.
In addition to possible expense related to its own systems, Franklin could incur
losses if loan payments are delayed due to year 2000 problems affecting any of
its significant borrowers or impairing the payroll systems of large employers in
Franklin's primary market area. Because Franklin's loan portfolio is highly
diversified with regard to individual borrowers and types of businesses and its
primary market area is not significantly dependent upon one employer or
industry, Franklin does not expect any significant or prolonged difficulties
that could affect net earnings or cash flow.
Page 12
<PAGE> 13
PART II
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the holding
company or any subsidiary is a party or to which any of their property
is subject.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on April 27, 1998, the
following items were voted on by the shareholders:
<TABLE>
<CAPTION>
Voting
Negative
or
Affirmative * Withheld * Abstentions
<S> <C> <C> <C>
Reelection of the following directors
James E. Hoff. S.J. 933,084 98,350
Thomas H. Siemers 933,084 98,350
The amendment of the First Franklin Corporation 1997 Stock
Option and Incentive Plan to permit all employees to be
eligible for stock option awards. 927,414 103,670
Ratification of the selection of Clark, Schaefer, Hackett & Co.
as independent accountants for the current fiscal year. 1,024,634 1,900 4,900
* Not adjusted for the three-for-two stock split which was
effective May 10, 1998.
</TABLE>
Item 5. OTHER INFORMATION
A. Press Release Dated June 22,1998
B. Press Release Dated June 23,1998
C. Press Release Dated July 14,1998
D. Any proposals of shareholders intended to be included in the
Company's proxy statement and proxy card for the 1999 Annual
Meeting of Shareholders should be sent to the Company by
certified mail and must be received by the Company not later
than November 26, 1998. In addition, if a shareholder intends
to present a proposal at the 1999 Annual Meeting without
including the proposal in the proxy materials related to the
meeting, and if the proposal is not received by February 9,
1999, then the proxies designated by the Board of Directors
of the Company for the 1999 Annual Meeting of Shareholders of
the Company may vote in their discretion on any such proposal
any shares for which they have been appointed proxies without
mention of such matter in the proxy statement or on the proxy
card for such meeting.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Page 13
<PAGE> 14
First Franklin Corporation
4750 Ashwood Drive Cincinnati, Ohio 45241
(513) 469-8000 Fax (513) 469-5360
June 22, 1998
FOR IMMEDIATE RELEASE
CONTACT: Thomas H. Siemers
President and CEO
(513) 469-8000
FIRST FRANKLIN CORPORATION ANNOUNCES STOCK
REPURCHASE PROGRAM
Cincinnati, Ohio, June 22, 1998--First Franklin Corporation announced its
intention to repurchase up to 5% of its outstanding shares in the open market.
The shares will be purchased at prevailing market prices from time to time over
the next year depending upon market conditions and other considerations. The
repurchased shares will be held as Treasury stock, making them available for
general corporate purposes including issuance in connection with the exercise of
stock options.
<PAGE> 15
First Franklin Corporation
4750 Ashwood Drive Cincinnati, Ohio 45241
(513) 469-8000 Fax (513) 469-5360
June 23, 1998
FOR IMMEDIATE RELEASE
CONTACT: Thomas H. Siemers
President and CEO
(513) 469-8000
The Board of Directors of First Franklin Corporation declared a dividend of
$0.075 per share for the second quarter of 1998. This is the forty-second
consecutive dividend paid by the company and represents a 12.5% increase above
the dividend paid for the first quarter of 1998. The quarterly dividend will be
payable July 20, 1998 to shareholders of record as of July 3.
Franklin Savings has seven offices in Greater Cincinnati. The Corporation's
common stock is traded on the Nasdaq National Market under the symbol "FFHS".
<PAGE> 16
First Franklin Corporation
4750 Ashwood Drive Cincinnati, Ohio 45241
(513) 469-8000 Fax (513) 469-5360
July 14, 1998
FOR IMMEDIATE RELEASE
CONTACT: Thomas H. Siemers
President and CEO
(513) 469-8000
First Franklin Corporation, the parent of Franklin Savings and Loan Company,
Cincinnati, Ohio today announced increased earnings for the six months ended
June 30, 1998. Earnings for the second quarter of 1998 were $443,000 ($0.25 per
share) and $980,000 ($0.55 per share) for the first six months of the year. This
compares to earnings of $442,000 ($0.24 per share) for the second quarter of
1997 and $790,000 ($0.43 per share) for the six months ended June 30, 1997.
Franklin Savings has seven offices in Greater Cincinnati. The Corporation's
common stock is traded on the Nasdaq National Market under the symbol "FFHS".
<PAGE> 17
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.
FIRST FRANKLIN CORPORATION
/s/ Daniel T. Voelpel
------------------------------------------
Daniel T. Voelpel
Vice President and Chief Financial Officer
Date: August 10, 1998
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