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United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-QSB
 þ
    
    Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended September 30, 2007
 o
    
    Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Transition Period from  to
 Commission File Number 0-16362
 FIRST FRANKLIN CORPORATION
  Delaware
    
    31-1221029(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
 4750 Ashwood Drive Cincinnati, Ohio 45241
 (513) 469-5352
  
 þ o
 o þ
 Applicable Only to Corporate Issuers
   o þ




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##### 



FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 INDEX
 Page No.Part I Financial InformationItem 1 .
    
    Consolidated Balance
Sheets  September 30, 2007 and December 31, 2006
    
    
    3Consolidated Statements of Income and Retained Earnings  Three-and Nine-month periods ended September 30, 2007 and 2006
    
    
    4Consolidated Statements of Cash Flows  Nine-month periods ended September 30, 2007 and 2006
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    8Item 3.
    
    Controls and Procedures
    
    
    14Part II
    
    Other Information
    
    
    15Signatures
    
    
    
    
    16EX-31.1EX-31.2EX-32.1EX-32.2
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ITEM 1. FINANCIAL STATEMENTS
 
 FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 Sept. 30, 2007
    
    
    Dec. 31, 2006(Unaudited)ASSETSCash, including certificates of deposit and other interest-earning
deposits of $100 at 09/30/07 and $3,100 at 12/31/06
    
    $
    3,354
    
    
    $
    7,828Investment securities:Securities available-for-sale, at market value
(amortized cost of $20,010 at 09/30/07 and $22,038 at 12/31/06)
    
    
    19,840
    
    
    
    21,725Mortgage-backed securities:Securities available-for-sale, at market value
(amortized cost of $3,526 at 09/30/07 and $4,889 at 12/31/06)
    
    
    3,543
    
    
    
    4,900Securities held-to-maturity, at amortized cost
(market value of $363 at 09/30/07 and $486 at 12/31/06)
    
    
    349
    
    
    
    473Loans receivable, net
    
    
    274,940
    
    
    
    278,253Investment in Federal Home Loan Bank of Cincinnati stock, at cost
    
    
    4,797
    
    
    
    4,797Real estate owned, net
    
    
    1,005
    
    
    
    408Accrued interest receivable
    
    
    1,413
    
    
    
    1,120Property and equipment, net
    
    
    3,810
    
    
    
    4,084Bank owned life insurance
    
    
    5,460
    
    
    
    5,293Other assets
    
    
    1,819
    
    
    
    3,158Total assets
    
    $
    320,330
    
    
    $
    332,039LIABILITIESDeposits
    
    $
    228,635
    
    
    $
    231,179Borrowings
    
    
    63,583
    
    
    
    72,217Advances by borrowers for taxes and insurance
    
    
    1,692
    
    
    
    2,036Other liabilities
    
    
    527
    
    
    
    456Total liabilities
    
    
    294,437
    
    
    
    305,888Minority interest in consolidated subsidiary
    
    
    242
    
    
    
    405STOCKHOLDERS EQUITYPreferred stock  $.01 par value, 500,000 shares authorized,
none issued and outstanding
    
    
    
    
    
    
    Common stock  $.01 par value, 2,500,000 shares authorized,
2,010,867 shares issued at 09/30/07 and 12/31/06
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    6,189
    
    
    
    6,189Treasury
stock, at cost  330,183 shares at 09/30/07 and
324,882 shares at 12/31/06
    
    
    (3,270
    )
    
    
    (3,174
    )Retained earnings, substantially restricted
    
    
    22,841
    
    
    
    22,927Accumulated other comprehensive income:Unrealized loss on available-for-sale securities, net
of taxes of $(62) at 09/30/07 and $(108) at 12/31/06
    
    
    (122
    )
    
    
    (209
    )Total stockholders equity
    
    
    25,651
    
    
    
    25,746$
    320,330
    
    
    $
    332,039
  3




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
 For the three months ended
    
    
    For the nine months endedSept. 30, 2007
    
    

Sept. 30, 2006
    
    

Sept. 30, 2007
    
    

Sept. 30, 2006(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Interest income:Loans receivable
    
    $
    4,086
    
    
    $
    4,173
    
    
    $
    12,367
    
    
    $
    11,579Mortgage-backed securities
    
    
    58
    
    
    
    77
    
    
    
    187
    
    
    
    239Investments
    
    
    383
    
    
    
    344
    
    
    
    1,238
    
    
    
    9984,527
    
    
    
    4,594
    
    
    
    13,792
    
    
    
    12,816Interest expense:Deposits
    
    
    2,194
    
    
    
    2,055
    
    
    
    6,561
    
    
    
    5,667Borrowings
    
    
    810
    
    
    
    846
    
    
    
    2,564
    
    
    
    2,2043,004
    
    
    
    2,901
    
    
    
    9,125
    
    
    
    7,871Net interest income
    
    
    1,523
    
    
    
    1,693
    
    
    
    4,667
    
    
    
    4,945Provision for loan losses
    
    
    41
    
    
    
    215
    
    
    
    186
    
    
    
    331Net interest income after provision
for loan losses
    
    
    1,482
    
    
    
    1,478
    
    
    
    4,481
    
    
    
    4,614Noninterest income:Gain on loans sold
    
    
    27
    
    
    
    7
    
    
    
    95
    
    
    
    31Gain on sale of investments
    
    
    12
    
    
    
    
    
    
    
    12
    
    
    
    5Gain on sale of Intrieve investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42Gain on sale of Financial Institution
Partners III investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    575Service fees on checking accounts
    
    
    216
    
    
    
    139
    
    
    
    620
    
    
    
    427Other income
    
    
    172
    
    
    
    127
    
    
    
    532
    
    
    
    424427
    
    
    
    273
    
    
    
    1,259
    
    
    
    1,504Noninterest expense:Salaries and employee benefits
    
    
    718
    
    
    
    725
    
    
    
    2,170
    
    
    
    2,150Occupancy
    
    
    254
    
    
    
    267
    
    
    
    774
    
    
    
    777Federal deposit insurance premiums
    
    
    7
    
    
    
    7
    
    
    
    21
    
    
    
    21Advertising
    
    
    69
    
    
    
    71
    
    
    
    178
    
    
    
    231Service bureau
    
    
    126
    
    
    
    111
    
    
    
    385
    
    
    
    323Other
    
    
    622
    
    
    
    482
    
    
    
    1,746
    
    
    
    1,4111,796
    
    
    
    1,663
    
    
    
    5,274
    
    
    
    4,913Income before federal income taxes
    
    
    113
    
    
    
    88
    
    
    
    466
    
    
    
    1,205Provision for federal income taxes
    
    
    9
    
    
    
    19
    
    
    
    99
    
    
    
    381Net income
    
    $
    104
    
    
    $
    69
    
    
    $
    367
    
    
    $
    824Retained
EarningsBeginning of period
    
    $
    22,887
    
    
    $
    22,629
    
    
    $
    22,927
    
    
    $
    22,177Net Income
    
    
    104
    
    
    
    69
    
    
    
    367
    
    
    
    824Less: Dividends declared
    
    
    (150
    )
    
    
    (152
    )
    
    
    (453
    )
    
    
    (455
    )Retained
Earningsend of period
    
    $
    22,841
    
    
    $
    22,546
    
    
    $
    22,841
    
    
    $
    22,546Net income per common share:Basic
    
    $
    0.06
    
    
    $
    0.04
    
    
    $
    0.22
    
    
    $
    0.49Diluted
    
    $
    0.06
    
    
    $
    0.04
    
    
    $
    0.22
    
    
    $
    0.48
  4




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the nine months endedSept. 30, 2007
    
    
    Sept. 30, 2006(unaudited)
    
    
    (unaudited)Cash flows from operating activities:Net income
    
    $
    367
    
    
    $
    824Adjustments to reconcile net income to net cash
provided (used) by operating activities:Provision for loan losses
    
    
    186
    
    
    
    331Gain on sale of investments
    
    
    (12
    )
    
    
    (5
    )Gain on sale of Intrieve investment
    
    
    
    
    
    
    (42
    )Gain on sale of Financial Institution Partners III investment
    
    
    
    
    
    
    (575
    )Depreciation and amortization
    
    
    315
    
    
    
    274FHLB stock dividends
    
    
    
    
    
    
    (197
    )Bank Owned Life Insurance
    
    
    (166
    )
    
    
    (92
    )Increase in accrued interest receivable
    
    
    (293
    )
    
    
    (263
    )Increase in other assets
    
    
    (19
    )
    
    
    (285
    )Increase (decrease) in other liabilities
    
    
    71
    
    
    
    (26
    )Other, net
    
    
    (1,163
    )
    
    
    (113
    )Proceeds from sale of loans originated for sale
    
    
    7,261
    
    
    
    4,252Disbursements on loans originated for sale
    
    
    (7,049
    )
    
    
    (3,287
    )Net cash provided (used) by operating activities
    
    
    (502
    )
    
    
    796Cash flows from investing activities:Net change in loans receivable
    
    
    2,697
    
    
    
    (34,269
    )Principal reduction on mortgage-backed securities
    
    
    1,483
    
    
    
    1,840Proceeds from sale of SBA loans
    
    
    206
    
    
    
    Proceeds from sale of student loans
    
    
    223
    
    
    
    264Proceeds from maturities/calls of investment securities:Available-for-sale
    
    
    2,050
    
    
    
    2,000Decrease (increase) in real estate owned
    
    
    (55
    )
    
    
    15Proceeds from sale of Intrieve investment
    
    
    
    
    
    
    42Proceeds from sale of Financial Institutions Partners III investment
    
    
    1,358
    
    
    
    1,350Dividend from DirectTeller Systems Inc.
    
    
    153
    
    
    
    Capital expenditures
    
    
    (15
    )
    
    
    (124
    )Net cash provided (used) by investing activities
    
    
    8,100
    
    
    
    (28,882
    )Cash flows from financing activities:Net change in deposits
    
    
    (2,544
    )
    
    
    15,175Net change in borrowed money
    
    
    (8,635
    )
    
    
    11,362Decrease in advances by borrowers for taxes and insurance
    
    
    (344
    )
    
    
    (285
    )Issuance (purchase) of treasury stock
    
    
    (96
    )
    
    
    361Payment of dividends
    
    
    (453
    )
    
    
    (455
    )Net cash provided (used) by financing activities
    
    
    (12,072
    )
    
    
    26,158Net decrease in cash
    
    
    (4,474
    )
    
    
    (1,928
    )Cash at beginning of year
    
    
    7,828
    
    
    
    5,116Cash at end of year
    
    $
    3,354
    
    
    $
    3,188
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7




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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 GENERAL
   1.
    
    Exceed customers expectations regarding service and products.2.
    
    Achieve success through our employees efforts.3.
    
    Stockholder satisfaction will enable us to continue serving our customers.4.
    
    Support the communities we serve.5.
    
    Combine business success with integrity.
      8




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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
    9




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Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Available-for-saleInvestment securities
    
    $
    20,010
    
    
    $
    28
    
    
    $
    198
    
    
    $
    19,840Mortgage-backed securities
    
    
    3,526
    
    
    
    28
    
    
    
    11
    
    
    
    3,543Held-to-maturityMortgage-backed securities
    
    
    349
    
    
    
    14
    
    
    
    0
    
    
    
    363$
    23,885
    
    
    $
    70
    
    
    $
    209
    
    
    $
    23,746
      10




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(Dollars in thousands)Balance at beginning of period
    
    $
    1,613Charge offs
    
    
    210Additions charged to operations
    
    
    186Transfers to real estate owned
    
    
    318Recoveries
    
    
    33Balance at end of period
    
    $
    1,304
   Capital Standard
    
    Actual
    
    Required
    
    Excess
    
    Actual
    
    Required
    
    Excess(Dollars in thousands)Core
    
    $
    24,044
    
    
    $
    12,797
    
    
    $
    11,247
    
    
    
    7.52
    %
    
    
    4.00
    %
    
    
    3.52
    %Risk-based
    
    
    24,645
    
    
    
    17,053
    
    
    
    7,592
    
    
    
    11.56
    %
    
    
    8.00
    %
    
    
    3.56
    %
      11




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For the nine month periods ended September 30,2007 vs 2006TotalIncrease (decrease) due to
    
    
    increaseVolume
    
    
    Rate
    
    
    (decrease)(Dollars in thousands)Interest income attributable to:Loans receivable (1)
    
    $
    501
    
    
    $
    287
    
    
    $
    788Mortgage-backed securities
    
    
    (104
    )
    
    
    52
    
    
    
    (52
    )Investments
    
    
    36
    
    
    
    170
    
    
    
    206FHLB stock
    
    
    8
    
    
    
    26
    
    
    
    34Total interest-earning assets
    
    $
    441
    
    
    $
    535
    
    
    $
    976Interest expense attributable to:Demand deposits
    
    
    ($20
    )
    
    $
    51
    
    
    $
    31Savings accounts
    
    
    23
    
    
    
    147
    
    
    
    170Certificates
    
    
    67
    
    
    
    626
    
    
    
    693FHLB advances and other borrowings
    
    
    398
    
    
    
    (38
    )
    
    
    360Total interest-bearing liabilities
    
    $
    468
    
    
    $
    786
    
    
    $
    1,254Increase in net interest income
    
    
    ($27
    )
    
    
    ($251
    )
    
    
    ($278
    )
 
 (1)
    
    Includes non-accruing loans.   12




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For the nine months ended September 30, 2007Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    274,263
    
    
    
    6.01
    %Mortgage-backed securities
    
    
    4,543
    
    
    
    5.49
    %Investments
    
    
    24,046
    
    
    
    5.58
    %FHLB stock
    
    
    4,797
    
    
    
    6.45
    %Total
    
    $
    307,649
    
    
    
    5.98
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    31,349
    
    
    
    1.22
    %Savings accounts
    
    
    29,507
    
    
    
    1.78
    %Certificates
    
    
    168,772
    
    
    
    4.64
    %FHLB advances
    
    
    67,320
    
    
    
    5.08
    %Total
    
    $
    296,948
    
    
    
    4.10
    %Net interest-earning assets/interest rate spread
    
    $
    10,701
    
    
    
    1.88
    %
 For the nine months ended September 30, 2006Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    263,028
    
    
    
    5.87
    %Mortgage-backed securities
    
    
    6,755
    
    
    
    4.72
    %Investments
    
    
    23,085
    
    
    
    4.63
    %FHLB stock
    
    
    4,615
    
    
    
    5.72
    %Total
    
    $
    297,483
    
    
    
    5.74
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    34,484
    
    
    
    0.99
    %Savings accounts
    
    
    26,832
    
    
    
    1.11
    %Certificates
    
    
    166,649
    
    
    
    4.15
    %FHLB advances
    
    
    56,845
    
    
    
    5.17
    %Total
    
    $
    284,810
    
    
    
    3.68
    %Net interest-earning assets/interest rate spread
    
    $
    12,673
    
    
    
    2.06
    %
   13




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Item 3.
Controls and Procedures
 The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of
the Companys disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of
the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this
report. Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer
have concluded that the Companys disclosure controls and procedures are effective.There were no changes in the Companys internal controls which materially affected, or are
reasonably likely to materially affect, the Companys internal controls over financial
reporting.
 14




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There are no material pending legal proceedings to which the Company or any subsidiary is a
party or to which any of their property is subject.
  (a)
    
    None(b)
    
    None(c)
    
    None(d)
    
    None
  None
  None
  None
  31.1
    
    CEO certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    CFO certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002.32.1
    
    CEO certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    CFO certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 15




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SIGNATURES
  FIRST FRANKLIN CORPORATION/s/ Daniel T. VoelpelDaniel T. VoelpelVice President and Chief Financial
Officer  16