<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
June 30, 1998 0-24133
FRANKLIN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Tennessee 62-1376024
- ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
230 Public Square, Franklin, Tennessee 37064
- -------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (615)790-2265
--------------------------------
Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and formal fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
-------- ----------
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, No Par Value 28,649,149
-------------------------- ------------------------------
Class Outstanding at August 10, 1998
Transitional Small Business Disclosure Format (check one):
Yes No X
----- ---------
<PAGE> 2
PART I. - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
FRANKLIN FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(In Thousands)
June 30, December 31,
ASSETS 1998 1997
<S> <C> <C>
Cash and due from banks $ 8,715 10,696
Federal funds sold 5,736 --
Investment securities available-for-sale, at fair value 29,212 25,401
Mortgage-backed securities available-for-sale, at fair value 32,736 29,654
Investment securities held-to-maturity, market value $4,359,000
at June 30, 1998 and $5,232,000 December 31, 1997 4,260 5,103
Mortgage-backed securities held-to-maturity, market value
$745,000 at June 30, 1998 and $863,000
at December 31, 1997 734 857
Federal Home Loan and Federal Reserve Bank Stock 1,335 1,129
Loans held for resale, at cost, which approximates market 13,255 3,737
Loans - portfolio 204,063 190,345
Allowance for loan losses (1,981) (1,828)
- ----------------------------------------------------------------------------------------------------
Loans, net 202,082 188,517
- ----------------------------------------------------------------------------------------------------
Premises and equipment 6,981 6,306
Accrued income receivable 1,990 1,890
Other assets 1,899 1,143
- ----------------------------------------------------------------------------------------------------
$ 308,935 274,433
- ----------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing $ 30,905 28,113
Interest-bearing 246,570 219,459
- ----------------------------------------------------------------------------------------------------
Total deposits 277,475 247,572
Advances from Federal Home Loan Bank
and other borrowings 9,358 7,451
Other liabilities 1,543 1,620
- ----------------------------------------------------------------------------------------------------
Total liabilities 288,376 256,643
- ----------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, No par value. Authorized
500,000,000 shares; issued 28,646,301 and 6,990,362
at June 30, 1998 and December 31, 1997, respectively 10,381 9,820
Unrealized gain on securities available-for-sale 76 214
Retained earnings 10,102 7,756
- ----------------------------------------------------------------------------------------------------
Total stockholders' equity 20,559 17,790
- ----------------------------------------------------------------------------------------------------
$ 308,935 274,433
- ----------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
FRANKLIN FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands except for per share information)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $5,592 4,550 10,730 8,707
Investment securities, taxable 906 777 1,819 1,451
Investment securities, tax-exempt 92 74 175 147
Federal funds sold 56 16 75 70
- --------------------------------------------------------------------------------------------
Total interest income 6,646 5,417 12,799 10,375
- --------------------------------------------------------------------------------------------
Interest expense:
Deposits 3,116 2,442 5,989 4,747
Other borrowings 181 164 347 217
- --------------------------------------------------------------------------------------------
Total interest expense 3,297 2,606 6,336 4,964
- --------------------------------------------------------------------------------------------
Net interest income 3,349 2,811 6,463 5,411
Provision for loan losses 100 135 165 250
- --------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 3,249 2,676 6,298 5,161
Other income:
Service charges on deposit accounts 354 268 666 519
Mortgage banking activities 482 319 807 527
Other service charges, commissions and fees 245 75 518 149
Gains on securities transactions 63 12 141 20
- --------------------------------------------------------------------------------------------
Total other income 1,144 674 2,132 1,215
- --------------------------------------------------------------------------------------------
Other expenses:
Salaries and employee benefits 1,419 1,105 2,719 2,101
Occupancy expense 469 425 894 768
Other operating expenses 648 377 1,135 742
- --------------------------------------------------------------------------------------------
Total other expenses 2,536 1,907 4,748 3,611
- --------------------------------------------------------------------------------------------
Income before income taxes 1,857 1,443 3,682 2,765
Income taxes 667 526 1,336 1,007
- --------------------------------------------------------------------------------------------
NET INCOME $1,190 917 2,346 1,758
- --------------------------------------------------------------------------------------------
NET INCOME PER COMMON
AND COMMON EQUIVALENT SHARE: $ 0.04 0.03 0.08 0.06
- --------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE -
ASSUMING FULL DILUTION: $ 0.03 0.03 0.07 0.06
- --------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
FRANKLIN FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands)
Six Months Ended
June 30,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,346 1,758
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 447 332
Provision for loan losses 165 250
Gain on sale of securities (141) (20)
Loss(gain) on sale of loans sold 51 (26)
Increase in accrued income receivable (100) (282)
Increase in other assets (727) (353)
(Decrease)increase in other liabilities (77) 166
- ------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,964 1,825
- ------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Increase in federal funds sold (5,736) (357)
Proceeds from maturities of securities available-for-sale 8,321 4,904
Proceeds from sale of securities available-for-sale 25,395 2,561
Proceeds from maturities of securities held-to-maturity 960 773
Purchases of securities available-for-sale (40,745) (17,663)
Purchases of securities held-to-maturity -- (235)
Purchase of Federal Home Loan and Federal Reserve Stock (206) (11)
Loans originated for resale (35,380) (19,795)
Proceeds from sale of loans 33,085 22,500
Net increase in portfolio loans (21,004) (27,369)
Purchases of premises and equipment (1,006) (1,390)
- ------------------------------------------------------------------------------------------------
Net cash used by investing activities (36,316) (36,082)
- ------------------------------------------------------------------------------------------------
Cash flows from financing activities
Net proceeds from sale of common stock 561 114
Increase in deposits 29,903 26,612
Increase in other borrowings 1,907 7,582
- ------------------------------------------------------------------------------------------------
Net cash provided by financing activities 32,371 34,308
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (1,981) 51
Cash and due from banks at beginning of period 10,696 8,272
- ------------------------------------------------------------------------------------------------
Cash and due from banks at end of period $ 8,715 8,323
- ------------------------------------------------------------------------------------------------
Cash payments for interest $ 3,125 4,703
Cash payments for income taxes $ 1,884 1,204
- ------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
FRANKLIN FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited 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. Accordingly,
they do not include all 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 six month period ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997.
NOTE B - COMPREHENSIVE INCOME
On January 1, 1998 the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS establishes
standards for reporting comprehensive income. Comprehensive income includes net
income and other comprehensive income which is defined as non-owner related
transactions in equity. The following table sets forth (in thousands) the
amounts of other comprehensive income included in equity for the six months
ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
Net unrealized gain(loss) on securities available for sale for the six months $(138) $37
</TABLE>
NOTE C - STOCK SPLITS
During April 1998, the Company's Board of Directors approved a four-for-one
stock split which was payable on June 3, 1998 to shareholders of record at the
close of business on May 20, 1998. The Company also had two-for-one stock splits
in May 1997 and February 1998. All per share data and weighted average share
data has been restated as if the splits had occurred at the beginning of the
years presented.
5
<PAGE> 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Franklin National Bank (the "Bank") represents virtually all the assets of
Franklin Financial Corporation (the "Company"). The Bank, located in Franklin,
Tennessee, was opened in December of 1989 and continues to experience
substantial growth. The Bank's first full service branch was opened in the
second quarter of 1994 and a stock offering, which netted $3.3 million, was
completed that same quarter. The Bank opened its second full service branch in
January, 1995, its third full service branch in April, 1995 and its fourth full
service branch in May, 1997. In August, 1996 the Bank opened an insurance
subsidiary, Franklin Financial Insurance (formerly Hometown Insurance Agency.)
The agency is located in the Bank's Spring Hill facility. In October, 1997 the
Bank opened a financial services subsidiary, Franklin Financial Securities. The
subsidiary offers financial planning and securities broker services through
Invest Financial Corporation of Tampa, Florida. In January, 1998 the Bank began
operating its mortgage division in a separate subsidiary, Franklin Financial
Mortgage. Also in January, 1998, the mortgage subsidiary began a wholesale
mortgage operation located in an office in Bartlett, Tennessee. Franklin
Financial Mortgage originates, sells and services mortgage loans.
FINANCIAL CONDITION
Total assets have grown $34.5 million since December 31, 1997, for a total of
$308.9 million at June 30, 1998. The growth has been mostly funded by a $29.9
and $1.9 million increase in deposits and other borrowings, respectively.
The Bank continues to experience strong loan demand. Net loans have increased
7.2% or $13.6 million since December 31, 1997, to $202.1 million at June 30,
1998. Securities available-for-sale increased $6.9 million or 12.5% while
securities held-to-maturity decreased $966,000 or 16.2% during the six months
ended June 30, 1998. Loans held for resale increased $9.5 million or 255% since
December 31, 1997. This is due to an increase in mortgage loan originations.
Premises and equipment increased by $675,000 since December 31, 1997 primarily
due to the permanent Fairview branch facility completed during the second
quarter and additional computer equipment related to overall Bank and employee
growth.
Accrued income receivable increased $100,000 or 5.3% since December 31, 1997.
This increase is due to the combined increase of $29.0 million in loans and
securities since December 31, 1997.
The allowance for loan losses increased $153,000 since December 31, 1997, for a
total of $1,981,000 or approximately .91% of total loans. This increase is
primarily additional provision for loan losses to allow for growth in the loan
portfolio. Net charge-offs were $12,000 during the first six months of 1998.
Asset quality remains good and management believes that the allowance for loan
losses is adequate at June 30, 1998. Management reviews in detail the level of
the allowance for loan losses on a quarterly basis. In addition, Professional
Bankers Services, Inc., an external bank consulting firm, performs an annual
review of the loan portfolio to provide management an independent third party
opinion regarding the adequacy of the allowance for loan losses. The allowance
is below the Bank's peer group average as a percentage of loans. However, this
level is supported based on two significant facts: the Bank has no loans
accounted for on a nonaccrual basis at June 30, 1998 and past due loans, at .37%
of total loans, are substantially below the peer group average.
6
<PAGE> 7
LIQUIDITY AND CAPITAL RESOURCES
Management continuously monitors the Bank's liquidity, but strives to maintain
an asset/liability mix that provides the highest possible net interest margin
without taking undue risk with regard to asset quality or liquidity.
Liquidity is at an adequate level with cash and due from banks of $8.7 million
at June 30, 1998. Loans and securities scheduled to mature within one year
exceed $131 million at June 30, 1998, which should provide further liquidity. In
addition, approximately $61.9 million of securities are classified as
available-for-sale to help meet liquidity needs should they arise. The Company
has lines of credit of $7.5 million with lending institutions and the Bank is
approved to borrow up to $7.5 million in funds from the Federal Home Loan Bank
and $21.5 million in federal funds lines to assist with capital and liquidity
needs. The Company has $2.2 million in borrowings against its line of credit and
the Bank has no federal funds purchased outstanding at June 30, 1998. In
February, 1998 the Bank entered into a $3.0 million convertible Federal Home
Loan Bank advance with a 10/1 call option. The Bank has $3.4 million outstanding
in repurchase agreements to further develop it's relationship with a customer.
This is included in other borrowings. The Bank has approximately $41.0 million
in brokered deposits at June 30, 1998 to help fund strong loan demand. The
majority of these deposits are $100,000 or less, but they are generally
considered to be more volatile than the Bank's core deposit base.
Approximately $16.1 million in loan commitments are expected to be funded within
the next six months. Furthermore, the Bank has approximately $37.6 million of
other loan commitments, primarily unused lines and letters of credit, which may
or may not be funded.
During the second quarter of 1998, the Bank entered into a lease agreement with
Gordon E. Inman, Chairman of the Company, for a 4,000 square foot building which
adjoins the Bank's main office building property. The annual lease payments on
this facility are approximately $59,000. This lease was entered into on terms no
less favorable to the Bank than it could have obtained from a non-affiliated
third party. The Bank houses its insurance sales function and training facility
at this location. The Bank has been approved to open a full service branch
facility in Nolensville, Tennessee. To date, no land has been acquired on which
to locate this facility. The Bank has also been approved to open a full service
branch in the Cool Springs area of Franklin. The Bank has a contract on a parcel
of land in this area and expenditures related to this land and facility are
expected to be approximately $1.2 million with completion in the second quarter
of 1999. The Bank has filed application with its regulators for a branch in
Belle Meade, Tennessee and a replacement branch facility in Brentwood, Tennessee
with anticipated opening dates of January, 1999 and July, 1999, respectively.
The Belle Meade facility will be leased with expenditures relating to
renovations of approximately $600,000 and annual lease payments of $70,000. The
Brentwood facility will be leased with annual payments of $124,000 and
constructed to the Bank's specifications, therefore, no renovation expenditures
will be needed. Other than as set forth above, there are no known trends,
commitments, or uncertainties that will result in the Company's liquidity
increasing or decreasing in a material way.
The Company had a net decrease in cash and due from banks of $2.0 million during
the six months ended June 30, 1998 as compared to a $51,000 decrease for the
same period in 1997. Cash provided by operating activities increased $139,000
during the first six months of 1998, as compared to the same period in 1997.
This increase is due to an increase in net income of $588,000 offset by a
$374,000 increase in other assets for the six months ended June 30, 1998 as
compared to the previous year.
7
<PAGE> 8
Net cash used by investing activities increased slightly by $234,000 during the
first six months of 1998 compared to the same period in 1997. The net increase
in portfolio loans used $6.4 million less in funds for the six months ended June
30, 1998 as compared to the same period in 1997. Due to the securities
portfolio, investing activities required $3.4 million less use of funds during
the six months June 30, 1998 as compared to the previous year. Federal funds
sold used $5.4 million in additional funds for the six months ended June 30,
1998 as compared to the same period in 1997. Although substantial cash flow has
been required related to loans originated for resale, proceeds from the sale of
such loans has served to fund much of the cash flow requirements with $2.3
million in additional funds used.
Cash provided by financing activities decreased $1.9 million during the first
six months of 1998 as compared to the same period in 1997. The decrease is
attributable to a $5.7 million decrease in other borrowings offset partially by
a $3.3 million increase in deposits during the first six months of 1998 as
compared to the same period in 1997.
Equity capital exceeds regulatory requirements at June 30, 1998, at 6.7% of
average assets. The Company and Bank's minimum capital requirements and
compliance with the same are shown in the following table.
<TABLE>
<CAPTION>
LEVERAGE CAPITAL TIER 1 CAPITAL TOTAL RISK-BASED CAPITAL
--------------------- ---------------------- ------------------------
REGULATORY REGULATORY REGULATORY
MINIMUM ACTUAL MINIMUM ACTUAL MINIMUM ACTUAL
------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Company 3.0% 6.7% 4.0% 9.4% 8.0% 10.3%
Bank 3.0% 7.2% 4.0% 10.2% 8.0% 11.1%
</TABLE>
RESULTS OF OPERATIONS
The Company had net income of $1.2 million in the second quarter and $2.3
million for the first six months of 1998 compared to net income of $917,000 and
$1.8 million for the same periods in 1997. Net income for the second quarter and
six months ending June 30, 1998 increased $273,000 and $588,000, respectively,
as compared to the same periods in 1997. Increases in net interest income,
mortgage banking fees and other fees offset partially by expenses related to the
overall growth of the Bank are the primary reasons for the increase in earnings
for the three and six months ended June 30, 1998 as compared to the same periods
in 1997.
Total interest income increased $1.2 million or 22.7% in the three months ended
June 30, 1998 and $2.4 million or 23.4% for the first six months of 1998
compared to the same periods in 1997. The increase in total interest income is
primarily attributable to the similar increase in average earning assets and an
increase in prime rate for the first six months of 1998 compared to 1997. Total
interest expense increased $691,000 or 26.5% in the second quarter and $1.4
million or 27.6% in the first half of 1998 as compared to the same periods in
1997. Total interest-bearing liabilities have increased 12.8% from December 31,
1997 and 21.9% from June 30, 1997. The increases in deposits and other
borrowings are the primary reasons for the increase in interest expense. Net
interest income increased $538,000 or 19.1% during the second quarter and $1.1
million or 19.4% in the first half of 1998 as compared to the prior year. Total
earning assets increased 253.1% since June 30, 1997 and was the primary factor
in the increase in net interest margin.
8
<PAGE> 9
The provision for loan losses was $100,000 for the three months ended June 30,
1998 as compared to $135,000 for the same period in 1997. The year-to-date
provision is $165,000 for the six months ended June 30, 1998 as compared to
$250,000 for the same period in 1997. While the Bank's asset quality remains
good, provisions for loan losses continue to be needed to allow for growth in
the Bank's loan portfolio.
Total other income of $1.1 million in the second quarter of 1998 is $470,000 or
69.7% more than the same period in 1997. The increase is primarily attributed to
an increase in mortgage banking fees resulting from an increase in loans
originated. Total other income of $2.1 million for the six months ended June 30,
1998 is $917,000 or 75.5% more than the same period in 1997. Mortgage banking
fees increased $280,000 or 53.1% for the six months ended June 30, 1998 as
compared to the same period in 1997. Other fees increased $369,000 or 248% for
the first six months of 1998 as compared to the same period in 1997. The
increase is primarily the result of a $95,000 increase in investment portfolio
call option fees, a $40,000 increase in insurance commissions through Franklin
Financial Insurance, a $172,000 increase in income on the sale of financial
products through Franklin Financial Securities and a $58,000 increase in
commercial loan servicing rights.
Total other expenses increased $629,000 or 33.0% during the second quarter and
$1.1 million or 31.5% for the first half of 1998 as compared to the same periods
in 1997. The increases are attributable to additional personnel and other
incremental costs related to the overall growth of the Company.
ACCOUNTING PRONOUNCEMENTS
The Company adopted SFAS No. 131 "Disclosures about Segments of an Enterprise
and Related Information" on January 1, 1998. This accounting pronouncement
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports to shareholders. Operating segments are components of
an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. Adoption of SFAS No. 131 will
expand disclosures related to the consolidated financial statements. The Company
is currently evaluating SFAS No. 131's operations to determine the appropriate
disclosures.
YEAR 2000
A critical issue affecting companies that rely extensively on electronic data
processing systems, such as the Company, is the Year 2000 issue. The Year 2000
issue has arisen due to the widespread use of computer programs that rely on
two-digit date codes to perform computations or decision-making functions. Many
of these programs may fail as a result of their inability to properly interpret
date codes beginning January 1, 2000. For example, such programs may
misinterpret "00" as the year 1900 rather than 2000. In addition, some
equipment, being controlled by microprocessor chips, may not deal appropriately
with the year "00." This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions or engage in similar normal business
activities.
9
<PAGE> 10
The Bank primarily uses a third-party vendor for processing its primary banking
applications. During 1997, the Company formed an internal task force, chaired by
a Vice President, to address the Year 2000 issue, conduct a comprehensive review
of the Company's systems and insure that the Company takes any necessary
measures. The Company believes that its systems, those of the Bank and its data
processing vendor are currently Year 2000 compliant and does not believe that
material expenditures will be necessary to implement any further modifications.
As of June 30, 1998, no expenditures have been required to upgrade the Company's
software and hardware systems to help ensure that its systems would be Year 2000
compliant. Further, the Company has issued a certification request to its data
processing vendor seeking assurance that its systems will be Year 2000
compliant. The vendor has responded that its systems are Year 2000 compliant.
However, there can be no assurance that unforeseen difficulties or costs will
not arise. In addition, there can be no assurance that the systems of other
companies on which the Company's systems rely will be modified on a timely
basis, or that the failure by another company to properly modify its systems
will not negatively impact the Company's systems or operations.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
As set forth in the Company's 1998 Proxy Statement, proposals of shareholders
intended to be presented at the Company's 1999 Annual Meeting of Stockholders
must be received at the Company's principal executive offices by December 31,
1998 in order to be eligible for inclusion in the Company's proxy statement and
form of proxy for that meeting.
With respect to any such proposals received by the Company after March 12, 1999,
the persons named in the form of the proxy solicited by management in connection
with the 1999 annual meeting of shareholders of the Company will have
discretionary authority to vote on any such shareholder proposals in accordance
with their judgment of what is in the best interests of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following exhibits are filed with this report:
Exhibit
Number Description of Exhibit
------ ----------------------
27.1 - Financial Data Schedule
27.2 - Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended June 30, 1998.
11
<PAGE> 12
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.
FRANKLIN FINANCIAL CORPORATION
Dated: August 10, 1998 By: /s/ Richard E. Herrington
Richard E. Herrington,
President and Chief
Executive Officer (principal
executive and
financial officer)
12
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 8,715
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,736
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 63,293
<INVESTMENTS-CARRYING> 4,994
<INVESTMENTS-MARKET> 5,104
<LOANS> 217,318
<ALLOWANCE> 1,981
<TOTAL-ASSETS> 308,935
<DEPOSITS> 277,475
<SHORT-TERM> 5,611
<LIABILITIES-OTHER> 1,543
<LONG-TERM> 3,747
0
0
<COMMON> 10,391
<OTHER-SE> 10,178
<TOTAL-LIABILITIES-AND-EQUITY> 308,935
<INTEREST-LOAN> 10,730
<INTEREST-INVEST> 1,994
<INTEREST-OTHER> 75
<INTEREST-TOTAL> 12,799
<INTEREST-DEPOSIT> 5,989
<INTEREST-EXPENSE> 6,336
<INTEREST-INCOME-NET> 6,463
<LOAN-LOSSES> 165
<SECURITIES-GAINS> 141
<EXPENSE-OTHER> 4,748
<INCOME-PRETAX> 3,682
<INCOME-PRE-EXTRAORDINARY> 3,682
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,346
<EPS-PRIMARY> .08
<EPS-DILUTED> .07
<YIELD-ACTUAL> 4.48
<LOANS-NON> 0
<LOANS-PAST> 4
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 90
<ALLOWANCE-OPEN> 1,828
<CHARGE-OFFS> 17
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 1,981
<ALLOWANCE-DOMESTIC> 90
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,891
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,323
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 590
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 49,289
<INVESTMENTS-CARRYING> 4,647
<INVESTMENTS-MARKET> 4,777
<LOANS> 182,109
<ALLOWANCE> 1,687
<TOTAL-ASSETS> 251,936
<DEPOSITS> 226,523
<SHORT-TERM> 7,881
<LIABILITIES-OTHER> 1,368
<LONG-TERM> 751
0
0
<COMMON> 9,699
<OTHER-SE> 5,714
<TOTAL-LIABILITIES-AND-EQUITY> 251,936
<INTEREST-LOAN> 8,707
<INTEREST-INVEST> 1,598
<INTEREST-OTHER> 70
<INTEREST-TOTAL> 10,375
<INTEREST-DEPOSIT> 4,747
<INTEREST-EXPENSE> 4,964
<INTEREST-INCOME-NET> 5,411
<LOAN-LOSSES> 250
<SECURITIES-GAINS> 20
<EXPENSE-OTHER> 3,611
<INCOME-PRETAX> 2,765
<INCOME-PRE-EXTRAORDINARY> 2,765
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,758
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
<YIELD-ACTUAL> 4.91
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 180
<ALLOWANCE-OPEN> 1,472
<CHARGE-OFFS> 40
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 1,687
<ALLOWANCE-DOMESTIC> 16
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,671
</TABLE>
