<PAGE> 1
United States
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, 2000
[ ] 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 small business issuer 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)
Issuer's Telephone Number, including Area Code (513) 469-5352
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
APPLICABLE ONLY TO CORPORATE ISSUERS
As of June 30, 2000 there were issued and outstanding 1,613,873 shares of the
Registrant's Common Stock.
Transitional Small Business Format (check one)
Yes [ ] No [X]
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
INDEX
Page No.
Part I Financial Information
Item 1. Consolidated Balance Sheets -
June 30, 2000 and December 31, 1999 3
Consolidated Statements of Income and Retained
Earnings - Three and Six-month Periods ended June 30, 2000
and 1999 4
Consolidated Statements of Cash Flows - Six-month
Periods ended June 30, 2000 and 1999 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 15
Item 5. Press Release dated June 27, 2000 16
Press Release dated July 13, 2000 17
Signatures
2
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PART I - ITEM 1.
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30,2000 Dec 31,1999
------------ -----------
(Unaudited)
ASSETS
Cash, including CD's & other interest-earning
deposits of $170 and $205, respectively $ 1,267 $ 3,688
Investment securities
Available-for-sale, at market value
(amortized cost of $20,186 and
$20,190, respectively) 19,148 19,197
Mortgage-backed securities
Available-for-sale, at market value
(amortized cost of $35,136 and
$39,719, respectively) 34,588 39,342
Held-to-maturity, at amortized cost
(market value of $12,330 and
$13,336, respectively) 12,600 13,596
Loans receivable, net 191,632 167,601
Real estate owned, net 0 0
Stock in Federal Home Loan Bank
of Cincinnati ("FHLB"), at cost 2,805 1,971
Accrued interest receivable 1,551 1,311
Property and equipment, net 1,905 1,942
Other assets 2,057 1,557
--------- ---------
$ 267,553 $ 250,205
LIABILITIES
Savings accounts $ 188,113 $ 191,673
Borrowings 58,724 37,110
Advances by borrowers for taxes
and insurance 365 1,171
Other liabilities 360 496
--------- ---------
Total liabilities 247,562 230,450
--------- ---------
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 at 06/30/00 and 12/31/99,
respectively 13 13
Additional paid in capital 6,189 6,189
Treasury stock, at cost- 396,994 shares at
06/30/00 and 380,494 shares at 12/31/99 (3,888) (3,733)
Retained earnings, substantially restricted 18,724 18,190
Accumulated other comprehensive income:
Unrealized loss on available-for-sale
securities, net of taxes of $(539) at 06/30/00
and $(466) at 12/31/99 (1,047) (904)
--------- ---------
Total stockholders' equity 19,991 19,755
--------- ---------
$ 267,553 $ 250,205
The accompanying notes are an integral part of the consolidated financial
statements.
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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 30,2000 June 30,1999 June 30,2000 June 30,1999
------------- ------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 3,466 $ 2,941 $ 6,686 $ 5,802
Mortgage-backed securities 811 694 1,636 1,412
Investment securities 338 344 695 665
-------- -------- -------- --------
4,615 3,979 9,017 7,879
Interest expense:
Savings accounts 2,280 2,221 4,555 4,540
Borrowings 721 251 1,238 455
-------- -------- -------- --------
3,001 2,472 5,793 4,995
-------- -------- -------- --------
Net interest income 1,614 1,507 3,224 2,884
Provision (credit) for loan losses 18 (143) 37 (123)
-------- -------- -------- --------
Net interest income after
provision (credit) for loan losses 1,596 1,650 3,187 3,007
-------- -------- -------- --------
Noninterest income:
Gain on loans sold 1 16 3 65
Gain on sale of investments 0 23 0 23
Service fees on NOW accounts 63 58 116 111
Other income 90 83 179 158
-------- -------- -------- --------
154 180 298 357
Noninterest expense:
Salaries and employee benefits 538 548 1,078 1,069
Occupancy expense 144 166 293 326
Advertising 75 32 189 90
Federal deposit insurance premiums 10 30 20 60
Service bureau expense 63 61 125 126
Other expenses 320 290 628 621
-------- -------- -------- --------
1,150 1,127 2,333 2,292
Income before federal income taxes 600 703 1,152 1,072
Provision for federal income taxes 198 235 377 353
-------- -------- -------- --------
Net Income $ 402 $ 468 $ 775 $ 719
RETAINED EARNINGS-BEGINNING OF PERIOD $ 18,443 $ 17,396 $ 18,192 $ 17,274
Net income 402 468 775 719
Less: dividends declared (121) (124) (243) (253)
-------- -------- -------- --------
RETAINED EARNINGS-END OF PERIOD $ 18,724 $ 17,740 $ 18,724 $ 17,740
EARNINGS PER COMMON SHARE
Basic $ 0.25 $ 0.27 $ 0.48 $ 0.42
Diluted $ 0.25 $ 0.27 $ 0.48 $ 0.42
DIVIDENDS DECLARED PER COMMON SHARE $ 0.075 $ 0.075 $ 0.150 $ 0.150
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For The Six Months Ended
June 30,2000 June 30,1999
------------ ------------
(Unaudited)
<S> <C> <C>
Cash provided by (used in) operating activities:
Net income $ 775 $ 719
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision (credit) for loan losses 37 (123)
Depreciation and amortization 97 282
FHLB stock dividend (77) (63)
Decrease (increase) in accrued interest receivable (240) 54
Increase in other assets (500) (50)
Decrease in other liabilities (136) (32)
Other, net (31) 304
Loans sold 147 6,646
Disbursements on loans originated for sale 0 (6,469)
-------- --------
Net cash provided by operating activities 72 1,268
-------- --------
Cash provided by (used in) investing activities:
Loan principal reductions 16,399 18,942
Disbursements on mortgage and other
loans purchased or originated for investment (40,507) (25,098)
Repayments on mortgage-backed securities 5,527 13,937
Purchase of available-for-sale mortgage-backed securities 0 (12,547)
Sale of available-for-sale mortgage-backed securities 0 2,887
Purchase of available-for-sale investment securities 0 (9,999)
Proceeds from the sale of or maturity of available-for-sale
investment securities 5 9,215
Purchase of FHLB stock (759) (50)
Capital expenditures (8) (9)
-------- --------
Net cash used in investing activities (19,343) (2,722)
-------- --------
Cash provided by (used in) financing activities:
Net decrease in deposits (3,560) (11,191)
Borrowed money 21,614 7,563
Decrease in advances by borrowers
for taxes and insurance (806) (799)
Repurchase of common stock (155) (1,069)
Payment of dividends (243) (253)
-------- --------
Net cash provided by (used in) financing activities 16,850 (5,749)
-------- --------
Net decrease in cash ($2,421) ($7,203)
Cash at beginning of period 3,688 8,369
-------- --------
CASH AT END OF PERIOD $ 1,267 $ 1,166
</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, 2000 are not necessarily indicative of the results that may be expected for
the full year. The December 31, 1999 Balance Sheet data was derived from audited
Financial Statements, but does not include all disclosures required by generally
accepted accounting principles.
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities" which establishes standards for derivative instruments,
including derivative instruments imbedded in other contracts and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. Management does not believe that the
adoption of this standard will impact the Company because, at this time, the
Company does not hold any of the instruments covered by the standard.
SFAS No. 130, "Reporting Comprehensive Income" 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 organization is required to report a total for comprehensive income.
Comprehensive income for the six months ended June 30, 2000 and 1999 was
$632,000 and $121,000, 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.
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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, the Company 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, interest-earning deposits, and investments in Franklin,
DirectTeller Systems Inc. ("DirectTeller") and Financial Institutions Partners
III, L.P.
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 six 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. In
January 2000, Franklin began offering an internet banking service called
"Franklin Online" which allows users to pay bills, transfer funds, obtain
account information and download account and transaction information into
financial management programs using their home computer. 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.
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 that, 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.
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The Company owns 51% of DirectTeller's outstanding common stock. DirectTeller
was formed in 1989 by the Company and Data Tech 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.("Intrieve"), a
computer service bureau that 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 1999, management and the Board of Directors reviewed the Company's
strategic plan and established various strategic objectives for the next two
years. The primary objectives of this plan are asset growth, profitability,
independence, capital adequacy and enhancing shareholder value. The Company will
pursue these objectives through loan growth, the use of technology to improve
efficiency and/or customer service, an enhanced marketing effort to take full
advantage of the opportunities that exist in the marketplace, and expansion
through the addition of branch and/or loan origination offices. Accomplishing
these objectives are subject to a variety of factors, some of which are beyond
the control of the Company.
Since the results of operations of Madison and DirectTelller 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 $17.34 million (6.9%) from $250.21 million at
December 31, 1999 to $267.55 million at June 30, 2000, compared to a $5.68
million (2.4%) decrease for the same period in 1999. During 2000,
mortgage-backed securities decreased $5.75 million, cash and investments
decreased $2.47 million, loans receivable increased $24.03 million, deposits
decreased $3.56 million and borrowings increased $21.61 million
Loan disbursements were $40.51 million during the current six-month period
compared to $31.57 million during the six months ended June 30, 1999.
Disbursements during the second quarter of 2000 were $25.58 million compared to
$13.35 million during the same quarter in 1999. No mortgage loans were sold
during the current six-month period compared to sales of $6.65 million during
the first six months of 1999. At June 30, 2000, commitments to originate
mortgage loans were $4.67 million. At the same date, $4.67 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 decreased $2.47 million during the six months ended June 30, 2000,
to $20.42 million. This decrease reflects loan and mortgage-backed securities
repayments of $21.93 million and borrowings of $21.61 million less loan
disbursements of $40.51 million and a decrease in savings accounts of $3.56
million. At June 30, 2000, liquid assets were 7.6% 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, 2000. No
securities are classified as trading.
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Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------------------------------------------
(in thousands)
Available-for-sale
Investment securities $20,186 $ 27 $ 1,065 $19,148
Mortgage-backed securities 35,136 88 636 34,588
Held-to-maturity
Mortgage-backed securities 12,600 0 270 12,330
At June 30, 2000, savings deposits were $188.11 million compared to $191.67
million at December 31, 1999. This is a decrease of $5.03 million during the
current quarter and $3.56 million during the six months ended June 30,2000.
During the six months ended June 30, 2000, core deposits (transaction and
passbook savings accounts) decreased $572,000. During the same period,
short-term certificates (two years or less) decreased $21.43 million and
certificates with original terms greater than two years increased $18.44
million. The decline in short-term certificates and increase in long-term
certificates reflects management's efforts to lengthen the maturity of its
deposits. Interest of $2.01 million during the current quarter and $4.05 million
during the current six-month period was credited to accounts. After eliminating
the effect of interest credited, savings decreased $7.04 million during the
current quarter and $7.61 million during the six months ended June 30, 2000.
At June 30, 2000 Franklin had outstanding Federal Home Loan Bank ("FHLB")
advances of $58.72 million at an average cost of 6.52%. During the next twelve
months, $7.29 million of the advances mature.
In the current interest rate environment, the Company is subject to significant
interest rate risk. In the low interest rate environment that prevailed
throughout much of the 1990s, Franklin, like many financial institutions, was
not able to attract a significant amount of long-term deposits as customers
opted to pursue short-term investments so they would be poised to take advantage
of rates when they did rise. As a result, Franklin experienced a shortening of
the maturities of its liabilities. The low rates had the opposite effect on
Franklin's assets, as consumers took advantage of the low rates to lock-in
long-term mortgages. Although Franklin has sold some of its fixed-rate mortgages
in recent years, timing considerations and other market conditions have not
always been conducive to a sale. Consequently, Franklin is experiencing a
mismatch between the repricing terms of its assets and liabilities.
In 1999, Franklin implemented several new initiatives to improve its interest
rate sensitivity. One initiative is to increase Franklin's capital position,
which Franklin has addressed by suspending the payment of dividends to the
Company. It is not anticipated that this action will adversely affect the
ability of the Company to pay dividends to its shareholders. Another initiative
is to lengthen the maturities of its liabilities, which Franklin has undertaken
by emphasizing three-year and five-year certificates of deposit by pricing those
products more attractively, and to shorten the maturities of its assets, which
Franklin is addressing by limiting the origination of fixed-rate mortgages and
emphasizing the origination of one, three and five year adjustable-rate
mortgages. In addition, commercial and multi-family real estate loans will have
shorter maturities with balloon payments due in five years or less. More
emphasis is also being placed on the origination of home equity lines of credit
and adjustable-rate second mortgages, which are normally originated at higher
rates.
As a result of these initiatives, the composition of the loan portfolio has gone
from 33% adjustable, 56% fixed and 11% balloons at December 31, 1999 to 43%
adjustable, 46% fixed and 11% balloons at June 30, 2000. During the same time
frame, core deposits have increased from 24% to 25% of
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total deposits and certificates with original maturities of three years or more
have increased to 34% of total deposits from 24% at December 31, 1999.
There are different ways to measure the effects that repricing differences will
have on net income. Under the methodology being utilized by Franklin, based on
models developed by an outside consultant, which are tailored to the specific
characteristics of Franklin's balance sheet, Franklin's interest rate risk would
be classified as significant at June 30, 2000. Under the methodology used by the
OTS, however, Franklin's interest rate risk position would be classified as high
risk at the same date. Franklin has submitted to the OTS an interest rate risk
compliance plan, which includes many of the initiatives discussed above. The OTS
has reviewed the plan and requested additional information and clarification of
some items. If the plan is not approved or subsequently not complied with, the
OTS could take other action, which could limit Franklin's activities, growth or
earnings.
At June 30, 2000, $1.68 million of assets were classified substandard, $162,000
classified loss and $2.67 million classified as special mention compared to
$989,000 as substandard, $163,000 as loss and $3.02 million as special mention
at December 31, 1999. Non-accruing loans and accruing loans delinquent ninety
days or more, net of reserves, were $996,000 at June 30, 2000 and $777,000 at
December 31, 1999. Because of the increase in delinquent loans and substandard
assets, the Company has enhanced its collection efforts. At June 30, 2000, 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, 2000.
(Dollars in thousands)
Balance at beginning of period $977
Charge offs 1
Additions charged to operations 37
Recoveries 0
-
Balance at end of period $1,013
During the Second Quarter of 1999, additions to loss reserves were reduced by
$163,000 due to the recapture of a specific reserve established in 1990 and 1991
against a renegotiated loan secured by a 50 unit motel located in Cincinnati,
Ohio as a result of an unanticipated payoff of the loan.
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. The Company continues to enjoy a strong
capital position. At June 30, 2000, net worth was $19.99 million, which is 7.47%
of assets. At the same date, book value per share was $12.39 compared to $12.12
at December 31, 1999.
The following table summarizes, as of June 30, 2000, the regulatory capital
position of Franklin. Under the OTS prompt corrective action regulation Franklin
is considered well-capitalized.
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Capital Standard Actual Required Excess Actual Required Excess
------ -------- ------ ------ -------- ------
(Dollars in thousands)
Core $18,451 $10,719 $ 7,732 6.89% 4.00% 2.89%
Risk-based 19,302 10,843 8,459 14.24% 8.00% 6.24%
RESULTS OF OPERATIONS
Net income was $402,000 ($0.25 per basic share) for the current quarter and
$775,000 ($0.48 per basic share) for the six months ended June 30, 2000. This
compares to earnings, excluding the one-time recapture of a loan loss reserve of
$108,000 ($0.06 per basic share) after taxes, of $360,000 ($0.21 per basic
share) for the second quarter of 1999 and $611,000 ($0.36 per basic share) for
the first six months of 1999. After recapture of the loan loss reserve, earnings
were $468,000 ($0.27 per basic share) for the second quarter of 1999 and
$719,000 ($0.42 per basic share) for the six months ended June 30, 1999. The
increase in net income during the current six-month period reflects a $340,000
increase in net interest income, less a $160,000 increase in the provision for
loan losses due to the recapture of the loan loss reserve during 1999, a decline
of $85,000 in profits on the sale of loans and investments when compared to the
same period in 1999, and a $41,000 increase in operating expenses.
Net interest income, before provisions for loan losses, was $1.61 million for
the current quarter and $3.22 million for the first six months of 2000 compared
to $1.51 and $2.88 million, respectively, for the same periods in1999. 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.
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For the Six Month periods ended June 30,
2000 vs 1999
Total
Increase (decrease) due to increase
Volume Rate (decrease)
------- ------- -------
Interest income attributable to: (Dollars in thousands)
Loans receivable (1) $ 905 ($22) $ 883
Mortgage-backed securities (74) 298 224
Investments 16 1 17
FHLB stock 14 0 14
------- ------- -------
Total interest-earning assets $ 861 $ 277 $ 1,138
Interest expense attributable to:
Demand deposits $ 20 $ 12 $ 32
Savings accounts (20) (2) (22)
Certificates (68) 73 5
FHLB advances 695 88 783
------- ------- -------
Total interest-bearing liabilities $ 627 $ 171 $ 798
Increase in net interest income $ 234 $ 106 $ 340
(1) Includes non-accruing loans.
As the above table indicates, the increase in net interest income of $340,000 is
due to a $1.14 million increase in income on interest-earning assets offset by a
$798,000 increase in the cost of interest-bearing liabilities. In both cases,
the majority of the change resulted from an increase in volume, due to an
increase in loans outstanding and borrowed money.
As the tables below illustrate, average interest-earning assets increased $22.07
million to $251.05 million during the six months ended June 30, 2000, from
$228.98 million for the six months ended June 30, 1999. Average interest-bearing
liabilities increased $20.28 million from $212.81 million for the six months
ended June 30, 1999, to $233.09 million for the current six-month period. Thus,
average net interest-earning assets increased $1.79 million when comparing the
two periods. The interest rate spread (the yield on interest-earning assets less
the cost of interest-bearing liabilities) was 2.21% for the six months ended
June 30, 2000, compared to 2.19% for the same period in 1999. The increase in
the interest rate spread was the result of an increase in the yield on
interest-earning assets from 6.88% for the six months ended June 30, 1999, to
7.18% for the same six-month period in 2000. This increase in the yield on
interest-earning assets reflects an increase in the yield on mortgage-backed
securities from 5.34% for the six months ended June 30, 1999 to 6.56% for the
current six months. This was due to the upward repricing of the interest rates
on the adjustable-rate mortgage-backed securities and a reduction in the level
of prepayments, which tend to reduce the yield because of the amortization of
the premium.
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<TABLE>
<CAPTION>
For the Six Months ended June 30, 2000
Average
outstanding Yield/cost
----------- ----------
(Dollars in thousands)
<S> <C> <C>
Average interest-earning assets
Loans $178,525 7.49%
Mortgage-backed securities 49,910 6.56%
Investments 20,375 6.07%
FHLB stock 2,243 6.87%
-------- ----
Total $251,053 7.18%
Average interest-bearing liabilities
Demand deposits $ 25,569 2.14%
Savings accounts 21,306 2.72%
Certificates 143,147 5.57%
FHLB advances 43,070 5.75%
-------- ----
Total $233,092 4.97%
Net interest-earning assets/interest rate spread $ 17,961 2.21%
<CAPTION>
For the Six Months ended June 30,1999
Average
outstanding Yield/cost
----------- ----------
(Dollars in thousands)
<S> <C> <C>
Average interest-earning assets
Loans $154,354 7.52%
Mortgage-backed securities 52,926 5.34%
Investments 19,863 6.05%
FHLB stock 1,840 6.85%
-------- ----
Total $228,983 6.88%
Average interest-bearing liabilities
Demand deposits $ 23,680 2.04%
Savings accounts 22,758 2.74%
Certificates 147,857 5.39%
FHLB advances 18,514 4.93%
-------- ----
Total $212,809 4.69%
Net interest-earning assets/interest rate spread $ 16,174 2.19%
</TABLE>
Noninterest income was $154,000 for the quarter and $298,000 for the six months
ended June 30, 2000 compared to $180,000 for the same quarter in 1999 and
$357,000 for the six months ended June 30, 1999. The decrease in noninterest
income when comparing the six-month periods is the result of a decline in
profits on the sale of investments and mortgage-backed securities of $23,000 and
a $62,000 decrease in profits on sale of loans.
Noninterest expenses were $1.15 million for the current quarter and $2.33
million for the current six-
13
<PAGE> 14
month period compared to $1.13 million for the same quarter in 1999 and $2.29
million for the six months ended June 30, 1999. As a percentage of average
assets, this is 1.83% for the six months ended June 30, 2000 compared to 1.95%
for the first six months of 1999. The increase during the current six-month
period reflects an increase in advertising expense.
14
<PAGE> 15
PART II
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or
any of its subsidiaries 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 24, 2000, the
following items were voted on by the shareholders:
<TABLE>
<CAPTION>
Voting
Negative
or
Affirmative Withheld Abstentions
Reelection of the following directors:
<S> <C> <C>
James E. Cross 1,320,320 96,035
Richard H. Finan 1,322,582 93,773
Ratification of the selection of Clark, Schaefer,
Hackett & Co. as independent accountants
for the current fiscal year. 1,375,731 35,490 5,134
</TABLE>
Item 5. OTHER INFORMATION
A. Press Release dated June 27, 2000
B. Press Release dated July 13, 2000
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit 27 - Financial Data Schedule
b. No current reports on Form 8-K were filed during the quarter ended
June 30, 2000
15
<PAGE> 16
FIRST FRANKLIN CORPORATION
4750 Ashwood Drive Cincinnati, Ohio 45241
(513) 469-8000 Fax (513) 469-5360
June 27, 2000
Cincinnati, Ohio
FIRST FRANKLIN CORPORATION DECLARES QUARTERLY DIVIDEND
The Board of Directors of First Franklin Corporation has declared a dividend of
$0.075 per share for the second quarter of 2000. This is the fiftieth
consecutive dividend paid by the company. The quarterly dividend will be payable
July 17, 2000 to shareholders of record as of July 6, 2000. In accordance with
NASD regulations, the ex-dividend date for this dividend payment is expected to
be July 3, 2000. Persons who buy or sell shares should consult their brokers
regarding the timing of their transactions and the effect of the ex-dividend
date.
First Franklin is the parent of Franklin Savings which has six branch locations
in Greater Cincinnati. The Corporation's common stock is traded on the Nasdaq
National Market under the symbol "FFHS".
CONTACT: Thomas H. Siemers
President and CEO
(513) 469-8000
16
<PAGE> 17
FIRST FRANKLIN CORPORATION
4750 Ashwood Drive Cincinnati, Ohio 45241
(513) 469-8000 Fax (513) 469-5360
July 13, 2000
Cincinnati, Ohio
FIRST FRANKLIN CORPORATION ANNOUNCES EARNINGS
First Franklin Corporation, the parent of Franklin Savings and Loan Company,
Cincinnati, Ohio today announced earnings of $402,000 ($0.25 per share) for the
first quarter of 2000 and $775,000 ($0.48 per share) for the six months ended
June 30, 2000. This compares to earnings, excluding the one-time recapture of a
loan loss reserve of $108,000 ($0.06 per share) after taxes, of $360,000 ($0.21
per share) for the second quarter of 1999 and $611,000 ($0.36 per share) for the
first six months of 1999. After recapture of the loan loss reserve, earnings
were $468,000 ($0.27 per share) for the second quarter of 1999 and $719,000
($0.42 per share) for the six months ended June 30, 1999.
Franklin Savings has seven offices in Greater Cincinnati. The Corporation's
common stock is traded on the Nasdaq National Market under the symbol "FFHS".
CONTACT: Thomas H. Siemers
President and CEO
(513) 469-8000
17
<PAGE> 18
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
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, 2000
18
