10-K/A 1 sec10k2004amendment2edgarr.htm SEC FORM 10-K/A Form 10K  1993


SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C.  20549

 

FORM 10-K/A
Amendment No. 2

 

------------------------------

 

(X)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE


ACT OF 1934

 

For the fiscal year ended December 31, 2004

 

OR

 

(  )

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                


EXCHANGE ACT OF 1934

 

For the transition period from __________to _________

 
 

------------------------------

 

Commission File Number 2-27985

 
 

1st FRANKLIN FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)


Georgia

58-0521233

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

  

213 East Tugalo Street

 

Post Office Box 880

 

Toccoa, Georgia

30577

(Address of principal executive offices)

(Zip Code)


Registrant's telephone number, including area code:  (706) 886-7571

 

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

None


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.     Yes  X   No  __

 








Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    X

 

Information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   X

(Cover page 1 of 2 pages)

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes  _  No  X

 


State the aggregate market value of the voting and non voting common equity held by non-affiliates of the registrant:    Not Applicable.

  


Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

 
 

Outstanding at February 28, 2005

Class

Outstanding at February 28, 2005

Common Stock, $100 Par Value

1,700 Shares

Non-Voting Common Stock, No Par Value

168,300 Shares


DOCUMENTS INCORPORATED BY REFERENCE:

 

Portions of the Registrant's Annual Report to security holders for the fiscal year ended December 31, 2004 are incorporated by reference into Parts I, II and IV of this Form 10-K.

 
 

(Cover page 2 of 2 pages)








EXPLANATORY NOTE

 

1ST Franklin Financial Corporation (the “Company”) is filing this Amendment No. 2 to its Annual Report on Form 10-K for the year ended December 31, 2004, originally filed with the Securities and Exchange Commission on March 30, 2005 and amended on March 31, 2005 (as so amended, the “Annual Report”) solely to include the financial statement schedule that was previously omitted from Item 15 of the Annual Report.  In accordance with, and pursuant to, Rule 12b-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the complete text of Item 15, as so amended, is set forth below.  In addition, and pursuant to Rule 12b-15 of the Exchange Act, the Company is filing  herewith certain currently dated certifications.



ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES:


(a) (1)   Financial Statements:


Incorporated by reference from the Annual Report:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Position at December 31, 2004 and 2003

Consolidated Statements of Income for the three years ended December 31, 2004

Consolidated Statements of  Stockholders’ Equity for the three years ended

     December 31, 2004

Consolidated Statements of Cash Flows for the three years ended December 31, 2004

Notes to Consolidated Financial Statements

 

 (2)   Financial Statement Schedules:

Report of Independent Registered Public Accounting Firm

Schedule I – Condensed Financial Information of Registrant

 

 (3)   Exhibits:

2.

(a)

Articles of Merger of 1st Franklin Financial Corporation with and into 1st Franklin Financial Corporation dated December 31, 1994 (incorporated herein by reference to Exhibit 3(2)(a) from Form 10-K for the fiscal year ended December 31 1994).

 

3.

(a)

Restated Articles of Incorporation as amended January 26, 1996 (incorporated herein by reference to Exhibit 3(3)(a) from Form 10-K for the fiscal year ended December 31, 1995).

 

(b )

Bylaws (incorporated herein by reference to Exhibit 3(3)(b) from Form 10-K for the fiscal year ended December 31, 1995).

 
 

4.

(a)

Indenture dated October 31, 1984, covering the Variable Rate Subordinated Debentures – Series 1 (incorporated herein by reference to Exhibit 4(a) from Registration Statement No. 2-94191).

 

(b)

Modification of Indenture dated March 29, 1995 (incorporated herein by reference to Exhibit 3(4)(b) from Form 10-K for the fiscal year ended December 31, 1994).

  

(c)

Second Modification of Indenture, dated December 2, 2004, by and among Synovus Trust Company, N.A., as trustee, and 1st Franklin Financial Corporation (incorporated herein by reference to Exhibit 4(e) to the Registration Statement on Form S-2 (Reg. No. 333-126589).

  

9.


Not applicable

10.

(a)

Credit Agreement dated May 1993, between the Company and SouthTrust Bank of Georgia, N.A. (incorporated herein by reference to Exhibit 10(a) from the Form 10-K for the fiscal year ended December 31, 1993).

  

(b)

Credit Agreement dated September 25, 2001, between the Company and SouthTrust Bank of Georgia, N.A. (incorporated herein by reference to Exhibit 10 from Form 10-Q for the quarter ended September 30, 2001).

  

(c)

First Amendment to Loan Agreement and Line of Credit Promissory Note dated September 25, 2002, between the Company and SouthTrust Bank of Georgia, N.A. (incorporated herein by reference to Exhibit 10.1 from Form 10-Q for the quarter ended September 30, 2002).

  

(d)

Loan Documents Modification Agreement dated September 25, 2003, between the Company and SouthTrust Bank of Georgia, N.A. (incorporated herein by reference to Exhibit 10.1 from Form 10-Q for the quarter ended September 30, 2003).

  

(e)

Loan Documents Modification Agreement dated September 24, 2004, between the Company and SouthTrust Bank of Georgia, N.A. (incorporated herein by reference to Exhibit 10.1 from Form 10-Q for the quarter ended September 30, 2004).

  

(f)

Amended and Restated Line of Credit Promissory Note dated September 24, 2004, between the Company and SouthTrust Bank of Georgia, N.A. (incorporated herein by reference to Exhibit 10.2 from Form 10-Q for the quarter ended September 30, 2004).

  

11.


Computation of Earnings per Share is self-evident from the Consolidated Statement of Income and Retained Earnings in the Annual Report, incorporated by reference herein.

  

12.


Ratio of Earnings to Fixed Charges.

  

13.


The Annual Report.

  

18.


Not applicable

  

19.


Not applicable

  

21.


Subsidiaries of Registrant.

  

22.


Not applicable

  

*

23.


Consent of Independent Registered Public Accounting Firm.

  

24.


Not applicable

  

27.


Not applicable

  
 

28.


Not applicable

   
 

*

31.1


Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

   
 

*

31.2


Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

 

*

32.1


Certification of Principal Executive Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

   
 

*

32.2


Certification of Principal Executive Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

   
 

(b)

Reports on Form 8-K:

  

No reports on Form 8-K were filed by the Registrant during the quarter ended December 31, 2004.

   
 

------------------------------

 
 

* Filed herewith

 











SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized:


 

1st FRANKLIN FINANCIAL CORPORATION

  

October 5,  2005

By:   

       /s/ Ben F. Cheek, III


Date

Ben F. Cheek, III


 

Chairman of Board










REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To:  The Board of Directors

1st Franklin Financial Corporation

 

We have audited the consolidated financial statements of 1st Franklin Financial Corporation and subsidiaries (the “Company”) as of December 31, 2004 and 2003, and for each of the three years in  the period ended December 31, 2004, and have issued our report thereon dated March 18, 2005; such report has previously been filed as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.  Our audits also included the financial statement schedule of the Company listed in the accompanying index at Item 15.  This financial statement schedule is the responsibility of the Company’s management.  Our responsibility is to express an opinion based on our audits.  In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

 

/s/ Deloitte & Touche LLP

 

Atlanta, Georgia

March 18, 2005











SCHEDULE I

Page 1 of 4

 

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

1st FRANKLIN FINANCIAL CORPORATION

(Parent Company Only)

 

DECEMBER 31, 2004 AND 2003

 

ASSETS

   

2004    

  2003     


CASH AND CASH EQUIVALENTS:

  

   Cash and Due From Banks

$

2,649,818

$

916,446

   Short-term Investments

734,903

3,798,698

 

3,384,721

4,715,144

   

LOANS:

  

   Direct Cash Loans

229,043,613

211,202,608

   Real Estate Loans

26,989,611

31,520,134

   Sales Finance Contracts

30,510,881

26,678,509

 

 

286,544,105

 

269,401,251

   

   Less:

Unearned Finance Charges

34,343,193

31,519,343

 

Unearned Insurance Premiums

9,194,384

9,354,774

 

Allowance for Loan Losses

15,285,085

13,515,085

 

        Net Loans

227,721,443

215,012,049

   

INVESTMENT IN SUBSIDIARIES

68,529,016

60,867,909

   

MARKETABLE DEBT SECURITIES:

  

   Available for Sale, at fair market value

506,999

614,203

   Held to Maturity, at amortized cost

--

--

 

506,999

614,203

   

OTHER ASSETS:

  

   Land, Buildings, Equipment and Leasehold Improvements,

  

      less accumulated depreciation and amortization

  

         of $13,185,739 and $12,077,943 in 2004

         and 2003, respectively


7,185,341


5,686,724

   Miscellaneous

2,217,973

2,628,019

 

9,403,314

8,314,743

   

                TOTAL ASSETS

$

309,545,493

$

289,524,048










SCHEDULE I

Page 2 of 4

 

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

1st FRANKLIN FINANCIAL CORPORATION

(Parent Company Only)

 

DECEMBER 31, 2004 AND 2003

 

LIABILITIES AND STOCKHOLDERS' EQUITY

   
 

2004

 2003


SENIOR DEBT:

  

   Notes Payable to Banks

$

 10,387,000

$

 --

   Senior Demand Notes, including accrued interest

 66,331,059

 67,905,065

   Commercial Paper

91,949,693

80,298,949

 

168,667,752

148,204,014

 

  
   
   

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

12,915,235

14,223,924

   
   

SUBORDINATED DEBT

41,310,529

44,075,934

   
   

        Total Liabilities

222,893,516

206,503,872

   
   
   

STOCKHOLDERS' EQUITY:

  

   Preferred Stock; $100 par value

  

6,000 shares authorized; no shares outstanding

--

--

   Common Stock:

  

Voting Shares; $100 par value;

  

       

2,000 shares authorized; 1,700 shares outstanding

170,000

170,000

   

Non-Voting Shares; no par value;

  

        

198,000 shares authorized; 168,300 shares

  

         

outstanding as of December 31, 2004 and 2003

--

--

   Accumulated Other Comprehensive Income

376,683

227,222

   Retained Earnings

86,105,294

82,622,954

               Total Stockholders' Equity

86,651,977

83,020,176

   

                    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

309,545,493

 

$

289,524,048

 






 






SCHEDULE I

Page 3 of 4

 

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

1st FRANKLIN FINANCIAL CORPORATION

(Parent Company Only)

 

STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

    
 

2004

2003

2002

INTEREST INCOME:

   

Finance Charges


$

66,068,779 

$

60,773,100 

$

60,302,706 

Investment Income

35,621 

186,703 

606,701 

 

66,104,400 

60,959,803 

60,909,407 

    

INTEREST EXPENSE:

   

Senior Debt

5,073,818 

4,564,880 

4,717,991 

Subordinated Debt

2,063,150 

2,247,738 

3,233,578 

 

7,136,968 

6,812,618 

7,951,569 

    

NET INTEREST INCOME

58,967,432 

54,147,185 

52,957,838 

    

PROVISION FOR LOAN LOSSES

18,096,969 

15,244,755 

14,159,392 

    

NET INTEREST INCOME AFTER

PROVISION FOR LOAN LOSSES


40,870,463 


38,902,430 


38,798,446 

    

NET INSURANCE INCOME

14,169,770 

13,515,517 

12,921,183 

    

OTHER REVENUE

903,917 

868,184 

850,427 

    

OPERATING EXPENSES:

   

Personnel Expense

34,312,589 

31,588,132 

32,528,422 

Occupancy Expense

8,287,737 

7,239,664 

6,701,904 

Other Expense

15,998,782 

13,190,031 

12,140,886 

 

58,599,108 

52,017,827 

51,371,212 

    

INCOME (LOSS) BEFORE INCOME

TAXES AND EQUITY IN EARNINGS

OF SUBSIDIARIES



(2,654,958)



1,268,304 



1,198,844 

    

PROVISION FOR INCOME TAXES

39,428 

74,109 

9,094 

    

EQUITY IN EARNINGS OF

SUBSIDIARIES, Net of Tax


7,675,608 


7,459,404 


7,225,190 

    

NET INCOME

4,981,222 

8,653,599 

8,414,940 

    

RETAINED EARNINGS, Beginning of Period

82,622,954 

78,657,682 

70,271,242 

Distributions on Common Stock

1,498,882 

4,688,327 

28,500 

RETAINED EARNINGS, End of Period

$

86,105,294 

$

82,622,954 

$

78,657,682 









 






 

SCHEDULE I

Page 4 of 4

 

1st FRANKLIN FINANCIAL CORPORATION

(Parent Company Only)

 

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

    
 

2004     

2003     

2002     

CASH FLOWS FROM OPERATING ACTIVITIES:

   Net Income

$

4,981,222 

$

8,653,599 

$

8,414,940 

   Adjustments to reconcile net income to net

   

       cash provided by operating activities:

   

    Provision for Loan Losses

18,096,969 

15,244,755 

14,159,392 

    Depreciation and Amortization

1,754,700 

1,396,117 

1,332,527 

    Equity in undistributed earnings of subsidiaries

(7,661,108)

(7,445,404)

(7,210,190)

    Loss on sale of marketable securities and

   

       equipment and premium amortization on securities

43,347 

(34,396)

79,612 

    (Increase) Decrease in Miscellaneous Assets

410,047 

(491,249)

1,555,717 

    Increase (Decrease) in Other Liabilities

(1,308,689)

1,024,789 

1,900,811 

          Net Cash Provided

16,316,488 

18,348,211 

20,232,809 

    

CASH FLOWS FROM INVESTING ACTIVITIES:

   

   Loans originated or purchased

(196,761,835)

(180,569,120)

(163,039,959)

   Loan payments

165,955,472 

146,558,514 

129,998,463 

   Purchases of securities, available for sale

--  

--  

(799,240)

   Sales of securities, available for sale

--  

2,893,910 

-- 

   Redemptions of securities, available for sale

--  

2,165,000 

4,257,400 

   Principal payments on securities, available for sale

248,854 

174,149 

202,850 

   Capital expenditures

(3,499,585)

(2,575,128)

(1,578,615)

   Proceeds from sale of equipment

210,732 

120,610 

148,684 

          Net Cash Used

(33,846,362)

(31,232,065)

(30,810,417)

    

CASH FLOWS FROM FINANCING ACTIVITIES:

   

   Net increase in Notes Payable to

   

       Banks and Senior Demand Notes

8,812,994 

813,460 

207,620 

   Commercial Paper issued

28,626,116 

29,199,674 

31,533,262 

   Commercial Paper redeemed

(16,975,372)

(17,238,336)

(21,156,420)

   Subordinated Debt issued

5,754,767 

6,053,896 

5,838,148 

   Subordinated Debt redeemed

(8,520,172)

(8,755,799)

(11,829,571)

   Dividends / Distributions Paid

(1,498,882)

(4,688,327)

(28,500)

          Net Cash Provided

16,199,451 

5,384,568 

4,564,539 

    

NET DECREASE IN

   

     CASH AND CASH EQUIVALENTS

(1,330,423)  

(7,499,286)

(6,013,069)

    

CASH AND CASH EQUIVALENTS, beginning

4,715,144 

12,214,430 

18,227,499 

    

CASH AND CASH EQUIVALENTS, ending

$

3,384,721 

$

4,715,144 

$

12,214,430 


Cash paid during the year for:

Interest

$

7,101,750 

$

6,823,904 

$

8,000,426 

 

Income Taxes

39,856 

93,940 

30,000 





 







   

1st FRANKLIN FINANCIAL CORPORATION

INDEX TO EXHIBITS

 
 

Exhibit

No.


Description

Page

No.

23

Consent of Independent Registered Public Accounting Firm

12

  31.1

Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934


13

  31.2

Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934


14

  32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


15

  32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


16