EXHIBIT 10.1

SECOND AMENDMENT TO

LOAN AND SECURITY AGREEMENT

This Second Amendment to Loan and Security Agreement (“Amendment”) is dated as
of August 11, 2010 by and among 1ST FRANKLIN FINANCIAL CORPORATION (“Borrower”),
WELLS FARGO PREFERRED CAPITAL, INC., as agent for Lenders (in such capacity,
“Agent”) and the financial institutions a party hereto as lenders (collectively,
the “Lenders” and each is a “Lender”).

BACKGROUND

A.

Borrower, Lenders, and Agent are parties to a certain Loan and Security
Agreement dated as of September 11, 2009 (as amended or modified from time to
time, the “Loan Agreement”) and related agreements, instruments and documents
(collectively with the Loan Agreement, the “Existing Loan Documents”).
 Capitalized terms used but not otherwise defined in this Amendment shall have
the meanings respectively ascribed to them in the Loan Agreement.

B.

Borrowers have requested and Agent and Lenders have agreed to amend the Loan
Agreement in certain respects, all on the terms and conditions set forth herein.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
promise and agree as follows:

1.

Amendments.   

(a)

Definition. The following definition contained in Section 1.1 of the Loan
Agreement is hereby amended and restated as follows:

“Maturity Date” means September 11, 2013, as such date may be extended from time
to time in accordance with the provisions of Section 2.4 of this Agreement.

(b)

Tangible Net Worth. Section 6.4(f) the Loan Agreement is hereby amended and
restated as follows:

(f)

Tangible Net Worth.  As of the end of each calendar month, a Tangible Net Worth
of at least $100,000,000 (such amount to be increased on an annual basis upon
WFPC’s receipt of Borrowers’ audited financial statements by the positive
amount, if any, equal to 75% of Borrowers’ net income (less Permitted Tax
Distributions and Insurance Premium Dividends) for the prior fiscal year,
commencing with the fiscal year ending December 31, 2010).

2.

Effectiveness Conditions.  This Amendment shall be effective upon the completion
of the following conditions precedent (all agreements, documents and instruments
to be in form and substance satisfactory to Agent and Agent’s counsel):

(a)

Execution and delivery by Borrower, Guarantors and Lenders of this Amendment to
Agent;

(b)

Execution and/or delivery by the parties of all other agreements, instruments
and documents requested by Agent to effectuate and implement the terms hereof
and the Existing Loan Documents.

3.

Representations and Warranties.  Borrower represents and warrants to Agent and
Lenders that:

(a)

All warranties and representations made to Agent and Lenders under the Loan
Agreement and the Existing Loan Documents are true and correct in all material
respects.

(b)

The execution and delivery by Borrowers and Guarantors of this Amendment and the
performance by each of them of the transactions herein and therein contemplated
do not and will not violate any provisions of any law, rule, regulation,
judgment, order, writ, decree, determination or award or breach any provisions
of the charter, bylaws or other organizational documents of any Borrower or any
Guarantor, or constitute a default or result in the creation or imposition of
any security interest in, or lien or encumbrance upon, any assets of any
Borrower or any Guarantor (immediately or with the passage of time or with the
giving of notice and passage of time, or both) under any other contract,
agreement, indenture or instrument to which a Borrower or a Guarantor is a party
or by which a Borrower or a Guarantor or its property is bound with failure to
comply resulting in a material adverse change in the business, operations,
property (including the Collateral), prospects or financial condition of any
Borrower or any Guarantor.

(c)

This Amendment and any assignment, instrument, document, or agreement executed
and delivered in connection herewith will be valid, binding and enforceable in
accordance with its respective terms.

(d)

No Event of Default or Default has occurred under the Loan Agreement.

4.

Representations and Release of Claims.  Except as otherwise specified herein,
the terms and provisions hereof shall in no manner impair, limit, restrict or
otherwise affect the obligations of Borrower, any Guarantor or any third party
to Agent and Lenders as evidenced by the Existing Loan Documents.  Borrower and
each Guarantor hereby acknowledge, agree, and represent that (a) as of the date
of this Amendment, there are no known claims or offsets against, or defenses or
counterclaims to, the terms or provisions of the Existing Loan Documents or the
other obligations created or evidenced by the Existing Loan Documents; (b) as of
the date of this Amendment, neither Borrower nor any Guarantor has any known
claims, offsets, defenses or counterclaims arising from any of Agent’s acts or
omissions with respect to the Existing Loan Documents or Agent’s performance
under the Existing Loan Documents; (c) as of the date of this Amendment,
Borrower has reviewed and reconciled all Advances, calculations of interest due
and principal owing, and agrees with and has no claims regarding any such
matters and (d) Borrower promises to pay to the order of Agent and Lenders the
indebtedness evidenced by the Note according to the terms thereof.  In
consideration of the modification of certain provisions of the Existing Loan
Documents, all as herein provided, and the other benefits received by Borrower
hereunder, Borrower and each Guarantor hereby RELEASE, RELINQUISH and forever
DISCHARGE Agent and Lenders, and their predecessors, successors, assigns,
shareholders, principals, parents, subsidiaries, agents, officers, directors,
employees, attorneys and representatives (collectively, the “Released Parties”),
of and from any and all present known claims, demands, actions and causes of
action of any and every kind or character, which Borrower or Guarantors, or any
of them, has or may have against Released Parties arising out of or with respect
to any and all transactions relating to the Loan Agreement, the Note, the
Guaranties, and the other Existing Loan Documents occurring prior to the date
hereof.  Further, Borrower and Guarantors warrant and represent that they are
not now aware of any claims or potential claims against Agent or Lenders
pursuant to the Loan Agreement.

5.

Collateral.  As security for the payment of the Obligations to Agent and Lenders
under the Loan Agreement and satisfaction by Borrower of all covenants and
undertakings contained in the Loan Agreement and the Existing Loan Documents,
Borrower reconfirms the prior security interest and lien on, upon and to, its
Collateral, whether now owned or hereafter acquired, created or arising and
wherever located.  Borrower hereby confirms and agrees that all security
interests and Liens granted to Agent for the ratable benefit of Lenders continue
in full force and effect and shall continue to secure the Obligations.  All
Collateral remains free and clear of any Liens other than Permitted Liens.
 Nothing herein contained is intended to in any manner impair or limit the
validity, priority and extent of Agent’s existing security interest in and Liens
upon the Collateral.

6.

Acknowledgment of Indebtedness and Obligations.  Borrower and Guarantors hereby
acknowledge and confirm that as of the date hereof, Borrower is indebted to
Agent and Lenders, without known defense, setoff or counterclaim, under the Loan
Agreement  (in addition to any other indebtedness or obligations owed by
Borrowers to WFPC Affiliates) in the aggregate principal amount of $0, plus
continually accruing interest and all fees, costs, and expenses, including
reasonable attorneys’ fees, incurred through the date hereof.

7.

Ratification of Existing Loan Documents.  This Amendment shall be incorporated
into and deemed a part of the Loan Agreement.  Except as expressly set forth
herein, all of the terms and conditions of the Loan Agreement and Existing Loan
Documents are hereby ratified and confirmed and continue unchanged and in full
force and effect.  All references to the Loan Agreement shall mean the Loan
Agreement as modified by this Amendment.

8.

Acknowledgment of Guarantors.  By execution of this Amendment, each Guarantor
hereby acknowledges the terms and conditions of this Amendment and confirms that
such Guarantor guarantees, as surety, all of Borrower’s Obligations to Agent and
Lenders pursuant to and subject to the terms, conditions and limitations
contained in its respective Guaranty.

9.

Governing Law.  THIS AMENDMENT AND ALL DOCUMENTS EXECUTED IN CONNECTION HEREWITH
SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN THE STATE OF NEW YORK
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.

10.

Counterparts.  This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same respective agreement.
 Signature by facsimile or PDF shall also bind the parties hereto.

11.

WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO
THIS AMENDMENT OR ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
 THIS PROVISION IS A MATERIAL INDUCEMENT FOR AGENT AND LENDERS TO ENTER INTO
THIS AMENDMENT.

SIGNATURES ON FOLLOWING PAGE

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
their respective duly authorized officers as of the date first above written.

BORROWER:

1ST FRANKLIN FINANCIAL CORPORATION

By:

   /s/ A. Roger Guimond

Name:

   A. Roger Guimond

Title:

   Executive Vice President and CFO

GUARANTORS:

FRANDISCO LIFE INSURANCE COMPANY

By:

   /s/ A. Roger Guimond

Name:

   A. Roger Guimond

Title:

   President

 

FRANDISCO PROPERTY & CASUALTY LIFE INSURANCE COMPANY

By:

   /s/ A. Roger Guimond

Name:

   A. Roger Guimond

Title:

   President

 

FRANKLIN SECURITIES, INC.

By:

   /s/ A. Roger Guimond

Name:

   A. Roger Guimond

Title:

   Vice President

AGENT:

WELLS FARGO PREFERRED CAPITAL, INC.

By:

   /s/ William M. Laird

William M. Laird, Senior Vice President

LENDER:

WELLS FARGO PREFERRED CAPITAL, INC.

By:

   /s/ William M. Laird

William M. Laird, Senior Vice President

[SIGNATURE PAGE TO SECOND AMENDMENT

TO LOAN AND SECURITY AGREEMENT]

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