##### Table of Contents



United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended September 30, 2009
 o
    
    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: 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
 (Registrants telephone number)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
 Applicable Only to Corporate Issuers




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##### 



FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 INDEX
 Page No.Part I Financial InformationItem 1. Financial statementsConsolidated Balance Sheets  
September 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations and Retained
Earnings  
Three and Nine Month Periods ended September 30, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows  
Nine Month
Periods ended September 30, 2009 and 2008
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    19Item 4. Controls and Procedures
    
    
    19Part II Other Information
    
    
    20Item 1. Legal Proceeding
    
    
    20Item 1A. Risk Factors
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3. Defaults Upon Senior Securities
    
    
    20Item 4. Submission of Matters to a Vote of Security Holders
    
    
    20Item 5. Other Information
    
    
    20Item 6. Exhibits
    
    
    20Signatures
    
    
    21Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



ITEM 1.
    
    FINANCIAL STATEMENTS
 FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  Sept. 30, 2009
    
    
    Dec. 31, 2008(Unaudited)ASSETSCash, including certificates of deposit and other interest-earning
deposits of $3,100 at 09/30/09 and $1,100 at 12/31/08
    
    $
    5,585
    
    
    $
    7,438Investment securities:Securities available-for-sale, at market value
(amortized cost of $13,993 at 09/30/09 and $13,356 at 12/31/08)
    
    
    14,042
    
    
    
    13,408Mortgage-backed securities:Securities available-for-sale, at market value
(amortized cost of $2,851 at 09/30/09 and $3,254 at 12/31/08)
    
    
    2,905
    
    
    
    3,236Securities held-to-maturity, at amortized cost
(market value of $4,354 at 09/30/09 and $5,181 at 12/31/08)
    
    
    4,185
    
    
    
    5,058Loans held for sale
    
    
    9,803
    
    
    
    Loans receivable, net
    
    
    246,436
    
    
    
    270,049Investment in Federal Home Loan Bank of Cincinnati stock, at cost
    
    
    4,991
    
    
    
    4,991Real estate owned, net
    
    
    2,564
    
    
    
    1,849Accrued interest receivable
    
    
    919
    
    
    
    1,104Property and equipment, net
    
    
    3,475
    
    
    
    3,511Bank owned life insurance
    
    
    5,924
    
    
    
    5,745Other assets
    
    
    3,231
    
    
    
    2,392Total assets
    
    $
    304,060
    
    
    $
    318,781LIABILITIESDeposits
    
    $
    242,232
    
    
    $
    223,108Borrowings
    
    
    35,887
    
    
    
    68,477Advances by borrowers for taxes and insurance
    
    
    1,581
    
    
    
    2,315Other liabilities
    
    
    948
    
    
    
    891Total liabilities
    
    
    280,648
    
    
    
    294,791Minority interest in consolidated subsidiary
    
    
    140
    
    
    
    140STOCKHOLDERS 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 09/30/09 and 12/31/08
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    6,189
    
    
    
    6,189Treasury stock, at cost  330,183 shares at 09/30/09 and 12/31/08
    
    
    (3,270
    )
    
    
    (3,270
    )Retained earnings, substantially restricted
    
    
    20,275
    
    
    
    20,919Accumulated other comprehensive income:Unrealized loss on available-for-sale securities, net
of taxes of $37 at 09/30/09 and $(1) at 12/31/08
    
    
    65
    
    
    
    (1
    )Total stockholders equity
    
    
    23,272
    
    
    
    23,850$
    304,060
    
    
    $
    318,781
   3




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##### Table of Contents



FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
  For the three months ended
    
    
    For the nine months endedSept. 30, 2009
    
    
    Sept. 30, 2008
    
    
    Sept. 30, 2009
    
    
    Sept. 30, 2008(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Interest income:Loans receivable
    
    $
    3,471
    
    
    $
    3,870
    
    
    $
    10,768
    
    
    $
    11,780Mortgage-backed securities
    
    
    88
    
    
    
    96
    
    
    
    286
    
    
    
    244Investments
    
    
    203
    
    
    
    269
    
    
    
    635
    
    
    
    8323,762
    
    
    
    4,235
    
    
    
    11,689
    
    
    
    12,856Interest expense:Deposits
    
    
    1,838
    
    
    
    1,913
    
    
    
    5,587
    
    
    
    6,003Borrowings
    
    
    464
    
    
    
    766
    
    
    
    1,598
    
    
    
    2,3242,302
    
    
    
    2,679
    
    
    
    7,185
    
    
    
    8,327Net interest income
    
    
    1,460
    
    
    
    1,556
    
    
    
    4,504
    
    
    
    4,529Provision for loan losses
    
    
    1,317
    
    
    
    60
    
    
    
    1,564
    
    
    
    1,541Net interest income after provision
for loan losses
    
    
    143
    
    
    
    1,496
    
    
    
    2,940
    
    
    
    2,988Noninterest income:Gain on loans sold
    
    
    463
    
    
    
    29
    
    
    
    1,588
    
    
    
    116Gain on sale of investments
    
    
    
    
    
    
    23
    
    
    
    1
    
    
    
    106Service fees on checking accounts
    
    
    235
    
    
    
    239
    
    
    
    657
    
    
    
    671Other income
    
    
    325
    
    
    
    190
    
    
    
    955
    
    
    
    5511,023
    
    
    
    481
    
    
    
    3,201
    
    
    
    1,444Noninterest expense:Salaries and employee benefits
    
    
    1,049
    
    
    
    750
    
    
    
    3,134
    
    
    
    2,226Occupancy
    
    
    275
    
    
    
    251
    
    
    
    818
    
    
    
    733Federal deposit insurance premiums
    
    
    100
    
    
    
    11
    
    
    
    298
    
    
    
    24Advertising
    
    
    37
    
    
    
    64
    
    
    
    94
    
    
    
    193Service bureau
    
    
    132
    
    
    
    141
    
    
    
    435
    
    
    
    429Other
    
    
    967
    
    
    
    863
    
    
    
    2,374
    
    
    
    2,1852,560
    
    
    
    2,080
    
    
    
    7,153
    
    
    
    5,790Loss before federal income taxes
    
    
    (1,394
    )
    
    
    (103
    )
    
    
    (1,012
    )
    
    
    (1,358
    )Provision for federal income taxes
    
    
    (483
    )
    
    
    (64
    )
    
    
    (368
    )
    
    
    (549
    )Net loss
    
    $
    (911
    )
    
    $
    (39
    )
    
    $
    (644
    )
    
    $
    (809
    )Retained Earnings-Beginning of period
    
    $
    21,186
    
    
    $
    21,705
    
    
    $
    20,919
    
    
    $
    22,778Net loss
    
    
    (911
    )
    
    
    (39
    )
    
    
    (644
    )
    
    
    (809
    )Less: Dividends declared
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    (379
    )Retained Earnings-end of period
    
    $
    20,275
    
    
    $
    21,590
    
    
    $
    20,275
    
    
    $
    21,590Net loss per common share:Basic
    
    $
    (0.54
    )
    
    $
    (0.02
    )
    
    $
    (0.38
    )
    
    $
    (0.48
    )Diluted
    
    $
    (0.54
    )
    
    $
    (0.02
    )
    
    $
    (0.38
    )
    
    $
    (0.48
    )
   4




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the nine months endedSept. 30, 2009
    
    
    Sept. 30, 2008(unaudited)
    
    
    (unaudited)Cash flows from operating activities:Net income (loss)
    
    $
    (644
    )
    
    $
    (809
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Provision for loan losses
    
    
    1,564
    
    
    
    1,541Gain on sale of investments
    
    
    (1
    )
    
    
    (106
    )Gain on sale of loans
    
    
    (1,588
    )
    
    
    (116
    )Loss on sale of real estate owned
    
    
    345
    
    
    
    191Depreciation
    
    
    249
    
    
    
    274Amortization
    
    
    (2
    )
    
    
    (31
    )Deferred income taxes
    
    
    (703
    )
    
    
    12Deferred loan fees
    
    
    3
    
    
    
    71Proceeds from sale of loans originated for sale
    
    
    131,423
    
    
    
    8,676Disbursements on loans originated for sale
    
    
    (139,326
    )
    
    
    (8,018
    )Net change in operating assets and liabilities:FHLB stock dividends
    
    
    
    
    
    
    (194
    )Bank Owned Life Insurance
    
    
    (179
    )
    
    
    (168
    )Decrease in accrued interest receivable
    
    
    185
    
    
    
    23Increase in other assets
    
    
    (139
    )
    
    
    (369
    )Increase in other liabilities
    
    
    57
    
    
    
    541Other, net
    
    
    
    
    
    
    (90
    )Net cash provided (used) by operating activities
    
    
    (8,756
    )
    
    
    1,428Cash flows from investing activities:Net change in loans receivable
    
    
    20,301
    
    
    
    (2,766
    )Principal reduction on mortgage-backed securities
    
    
    1,276
    
    
    
    981Purchase of available-for-sale investment securities:
    
    
    (12,174
    )
    
    
    (12,201
    )Purchase of held-to-maturity mortgage-backed securities:
    
    
    
    
    
    
    (4,994
    )Proceeds from maturities/calls of investment securities:Available-for-sale
    
    
    11,540
    
    
    
    13,294Proceeds from sale of investment securities:Available-for-sale
    
    
    
    
    
    
    2,071Decrease in real estate owned
    
    
    373
    
    
    
    289Proceeds from sale of property and equipment
    
    
    
    
    
    
    15Capital expenditures
    
    
    (213
    )
    
    
    (88
    )Net cash provided (used) by investing activities
    
    
    21,103
    
    
    
    (3,399
    )Cash flows from financing activities:Net change in deposits
    
    
    19,124
    
    
    
    (7,867
    )Net change in borrowed money
    
    
    (32,590
    )
    
    
    7,619Decrease in advances by borrowers for taxes and insurance
    
    
    (734
    )
    
    
    (483
    )Issuance (purchase) of treasury stock
    
    
    
    
    
    
    Payment of dividends
    
    
    
    
    
    
    (379
    )Net cash used by financing activities
    
    
    (14,200
    )
    
    
    (1,110
    )Net decrease in cash
    
    
    (1,853
    )
    
    
    (3,081
    )Cash at beginning of year
    
    
    7,438
    
    
    
    6,897Cash at end of year
    
    $
    5,585
    
    
    $
    3,816Supplemental disclosure of cash flow information:Cash paid during the year for:Interest, including interest credited to savings accounts
    
    
    5,582
    
    
    
    6,010Income taxes
    
    
    150
    
    
    
    65Supplemental disclosure of noncash activities:Real estate acquired in settlement of loans
    
    
    1,433
    
    
    
    1,169Change in unrealized gain (loss) on available-for sale securities, net of taxes
    
    
    66
    
    
    
    (388
    )
   5




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 BASIS OF PRESENTATION
   INVESTMENT AND MORTGAGE-BACKED SECURITIES
  September 30, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies
    
    $
    12,709
    
    
    
    67
    
    
    
    61
    
    
    
    12,715Obligations of states and
Municipalities
    
    
    1,284
    
    
    
    43
    
    
    
    
    
    
    
    1,327$
    13,993
    
    
    
    110
    
    
    
    61
    
    
    
    14,042
 December 31, 2008Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies
    
    $
    13,216
    
    
    
    47
    
    
    
    
    
    
    
    13,263Obligations of states and
municipalities
    
    
    140
    
    
    
    5
    
    
    
    
    
    
    
    145$
    13,356
    
    
    
    52
    
    
    
    
    
    
    
    13,408
  EstimatedAmortized
    
    
    marketcost
    
    
    valueAvailable-for-sale:Due in one year or less
    
    $
    
    
    
    
    Due after one year through five years
    
    
    2,095
    
    
    
    2,107Due after five years through ten years
    
    
    500
    
    
    
    490Due after ten years
    
    
    11,398
    
    
    
    11,445$
    13,993
    
    
    
    14,042
  6




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September 30, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:FHLMC certificates
    
    $
    983
    
    
    
    45
    
    
    
    
    
    
    
    1,028FNMA certificates
    
    
    344
    
    
    
    4
    
    
    
    
    
    
    
    348GNMA certificates
    
    
    1,280
    
    
    
    9
    
    
    
    
    
    
    
    1,289Collateralized mortgage obligations
    
    
    244
    
    
    
    
    
    
    
    4
    
    
    
    240$
    2,851
    
    
    
    58
    
    
    
    4
    
    
    
    2,905Held-to-maturity:FHLMC certificates
    
    $
    144
    
    
    
    13
    
    
    
    
    
    
    
    157FNMA certificates
    
    
    3,960
    
    
    
    149
    
    
    
    
    
    
    
    4,109GNMA certificates
    
    
    81
    
    
    
    7
    
    
    
    
    
    
    
    88$
    4,185
    
    
    
    169
    
    
    
    
    
    
    
    4,354
 December 31, 2008Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:FHLMC certificates
    
    $
    1,068
    
    
    
    19
    
    
    
    1
    
    
    
    1,086FNMA certificates
    
    
    367
    
    
    
    1
    
    
    
    8
    
    
    
    360GNMA certificates
    
    
    1,491
    
    
    
    
    
    
    
    22
    
    
    
    1,469Collateralized mortgage obligations
    
    
    328
    
    
    
    
    
    
    
    7
    
    
    
    321$
    3,254
    
    
    
    20
    
    
    
    38
    
    
    
    3,236Held-to-maturity:FHLMC certificates
    
    $
    152
    
    
    
    8
    
    
    
    
    
    
    
    160FNMA certificates
    
    
    4,815
    
    
    
    109
    
    
    
    
    
    
    
    4,924GNMA certificates
    
    
    91
    
    
    
    5
    
    
    
    
    
    
    
    96$
    5,058
    
    
    
    122
    
    
    
    
    
    
    
    5,180
  7




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##### Table of Contents



September 30, 2009Less than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S Treasury
securities and
obligations
of U.S.
Government
Agencies
    
    $
    4,934
    
    
    
    61
    
    
    $
    
    
    
    
    
    
    
    $
    4,934
    
    
    
    61Obligations of
state and
municipalities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed
Securities
    
    
    
    
    
    
    
    
    
    
    240
    
    
    
    4
    
    
    
    240
    
    
    
    4$
    4,934
    
    
    
    61
    
    
    $
    240
    
    
    
    4
    
    
    $
    5,174
    
    
    
    65Number of
Investments
    
    
    7
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    8
  DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
   Level 1
    
    Quoted prices in active markets for identical assets or liabilitiesLevel 2
    
    Observable inputs other than Level 1 prices, such as quoted
prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable
or can be corroborated by observable market data for
substantially the full term of the assets or liabilitiesLevel 3
    
    Unobservable inputs that are supported by little or no
market activity and that are significant to the fair value
of the assets or liabilities.
    8




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##### Table of Contents



Fair Value Measurements atSeptember 30, 2009Quoted pricesin active
    
    
    Significant
    
    
    Significantmarkets for
    
    
    other
    
    
    otheridentical
    
    
    observable
    
    
    unobservableassets
    
    
    inputs
    
    
    inputsSeptember 30, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Securities available for sale
    
    $
    16,947
    
    
    
    
    
    
    
    16,947
  Fair Values of Financial Instruments:
  Cash and Cash Equivalents and Investment in FHLB Stock
  Investment and Mortgage-Backed Securities
  Loans Receivable
   Deposits
  Borrowed Money
  Commitments to Extend Credit
   9




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##### Table of Contents



September 30, 2009Carrying
    
    
    Fairamount
    
    
    value(dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    5,585
    
    
    
    5,585Investment securities
    
    
    14,042
    
    
    
    14,042Mortgage-backed
securities
    
    
    7,090
    
    
    
    7,259Loans receivable
    
    
    256,239
    
    
    
    261,451Investment in FHLB stock
    
    
    4,991
    
    
    
    4,991Financial liabilities:Deposits
    
    
    242,232
    
    
    
    249,262Borrowed money
    
    
    35,887
    
    
    
    38,007
 September 30, 2009Contractual
    
    
    Fairamount
    
    
    valueUnrecognized financial
instruments:Commitments to extend credit
    
    $
    2,606
    
    
    
    2,606Unfunded construction loans
    
    
    879
    
    
    
    879Undisbursed lines of credit
    
    
    19,445
    
    
    
    19,445
 EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
     10




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SUBSEQUENT EVENTS
   11




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
 GENERAL
        12




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##### Table of Contents



FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
   13




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##### Table of Contents



Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Available-for-saleInvestment
securities
    
    $
    13,993
    
    
    $
    110
    
    
    $
    61
    
    
    $
    14,042Mortgage-backed
securities
    
    
    2,851
    
    
    
    58
    
    
    
    4
    
    
    
    2,905Held-to-maturityMortgage-backed
securities
    
    
    4,185
    
    
    
    169
    
    
    
    0
    
    
    
    4,354$
    21,029
    
    
    $
    337
    
    
    $
    65
    
    
    $
    21,301
   14




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##### Table of Contents



(Dollars in 
thousands)Balance at beginning of period
    
    $
    3,668Charge offs
    
    
    513Additions charged to operations
    
    
    1,564Transfers to real estate owned
    
    
    0Recoveries
    
    
    7Balance at end of period
    
    $
    4,726
   Capital Standard
    
    Actual
    
    
    Required
    
    
    Excess
    
    
    Actual
    
    
    Required
    
    
    Excess(Dollars in thousands)Core
    
    $
    22,410
    
    
    $
    12,130
    
    
    $
    10,280
    
    
    
    7.39
    %
    
    
    4.00
    %
    
    
    3.39
    %Risk-based
    
    
    24,482
    
    
    
    17,403
    
    
    
    7,079
    
    
    
    11.25
    %
    
    
    8.00
    %
    
    
    3.25
    %
  15




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##### Table of Contents



For the nine month periods ended September 30,2009 vs 2008TotalIncrease (decrease) due to
    
    
    increaseVolume
    
    
    Rate
    
    
    (decrease)(Dollars in thousands)Interest income attributable to:Loans receivable (1)
    
    $
    (461
    )
    
    $
    (551
    )
    
    $
    (1,012
    )Mortgage-backed securities
    
    
    29
    
    
    
    13
    
    
    
    42Investment securities
    
    
    (16
    )
    
    
    (160
    )
    
    
    (176
    )FHLB stock
    
    
    4
    
    
    
    (25
    )
    
    
    (21
    )Total interest-earning assets
    
    $
    (444
    )
    
    $
    (723
    )
    
    $
    (1,167
    )Interest expense attributable to:Demand deposits
    
    $
    16
    
    
    $
    (69
    )
    
    $
    (53
    )Savings accounts
    
    
    15
    
    
    
    (68
    )
    
    
    (53
    )Certificates
    
    
    410
    
    
    
    (720
    )
    
    
    (310
    )FHLB advances and other borrowings
    
    
    (650
    )
    
    
    (76
    )
    
    
    (726
    )Total interest-bearing liabilities
    
    $
    (209
    )
    
    $
    (933
    )
    
    $
    (1,142
    )Increase (decrease) in net interest income
    
    $
    (235
    )
    
    $
    210
    
    
    $
    (25
    )
 (1)
    
    Includes non-accruing loans.  16




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17




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##### Table of Contents



For the nine months ended Sept. 30, 2009Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    263,818
    
    
    
    5.44
    %Mortgage-backed securities
    
    
    7,614
    
    
    
    5.01
    %Investment securities
    
    
    15,102
    
    
    
    4.07
    %FHLB stock
    
    
    4,991
    
    
    
    4.65
    %Total
    
    $
    291,525
    
    
    
    5.34
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    32,956
    
    
    
    0.48
    %Savings accounts
    
    
    30,410
    
    
    
    0.82
    %Certificates
    
    
    176,157
    
    
    
    4.00
    %FHLB advances
    
    
    47,325
    
    
    
    4.50
    %Total
    
    $
    286,848
    
    
    
    3.34
    %Net interest-earning assets/interest rate spread
    
    $
    4,677
    
    
    
    2.00
    %
 For the nine months ended September 30, 2008Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    274,811
    
    
    
    5.72
    %Mortgage-backed securities
    
    
    6,822
    
    
    
    4.77
    %Investment securities
    
    
    15,513
    
    
    
    5.47
    %FHLB stock
    
    
    4,882
    
    
    
    5.33
    %Total
    
    $
    302,028
    
    
    
    5.70
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    30,394
    
    
    
    0.75
    %Savings accounts
    
    
    28,783
    
    
    
    1.12
    %Certificates
    
    
    165,585
    
    
    
    4.50
    %FHLB advances
    
    
    66,496
    
    
    
    4.66
    %Total
    
    $
    291,258
    
    
    
    3.88
    %Net interest-earning assets/interest rate spread
    
    $
    10,770
    
    
    
    1.82
    %
    18




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4.
    
    Controls and Procedures
    19




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##### Table of Contents



PART II
 
 Item 1.
    
    LEGAL PROCEEDINGS
  
 Item 1A.
    
    RISK FACTORS
  
 Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
    
 Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
   
 Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 Item 5.
    
    OTHER INFORMATION
   
 Item 6.
    
    EXHIBITS
 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.
  20




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FIRST FRANKLIN CORPORATION/s/ Daniel T VoelpelDaniel T. VoelpelVice President and Chief Financial Officer   21