##### 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 June 30, 2009
 o
    
    Transition Report Pursuant 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 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)4750 Ashwood Drive, Cincinnati, Ohio
    
    45241(Address of principal executive offices)
    
    (Zip code)
 (Registrants Telephone Number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 Yes þ No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ
 Applicable Only to Corporate Issuers




---



##### 



FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 INDEX
 Page No.Part I Financial InformationItem 1. Financial statementsConsolidated Balance Sheets  June 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations and Retained Earnings  Three- and Six-Month Periods ended June 30, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows  Six Month Periods ended June 30, 2009 and 2008
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    17Item 4T. Controls and Procedures
    
    
    17Part II Other Information
    
    
    18Item 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3. Defaults Upon Senior Securities
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    18Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    19SignaturesExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




---



##### Table of Contents



ITEM 1.
    
    FINANCIAL STATEMENTS
 FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  June 30, 2009
    
    
    Dec. 31, 2008(Unaudited)ASSETSCash, including certificates of deposit and other interest-earning
deposits of $1,250 at 06/30/09 and $1,100 at 12/31/08
    
    $
    6,326
    
    
    $
    7,438Investment securities:Securities available-for-sale, at market value
(amortized cost of $11,110 at 06/30/09 and $13,356 at 12/31/08)
    
    
    10,893
    
    
    
    13,408Mortgage-backed securities:Securities available-for-sale, at market value
(amortized cost of $2,991 at 06/30/09 and $3,254 at 12/31/08)
    
    
    3,035
    
    
    
    3,236Securities held-to-maturity, at amortized cost
(market value of $4,561 at 06/30/09 and $5,181 at 12/31/08)
    
    
    4,468
    
    
    
    5,058Loans held for sale
    
    
    10,060
    
    
    
    Loans receivable, net
    
    
    255,166
    
    
    
    270,049Investment in Federal Home Loan Bank of Cincinnati stock, at cost
    
    
    4,991
    
    
    
    4,991Real estate owned, net
    
    
    2,438
    
    
    
    1,849Accrued interest receivable
    
    
    1,033
    
    
    
    1,104Property and equipment, net
    
    
    3,444
    
    
    
    3,511Bank owned life insurance
    
    
    5,860
    
    
    
    5,745Other assets
    
    
    2,824
    
    
    
    2,392Total assets
    
    $
    310,538
    
    
    $
    318,781LIABILITIESDeposits
    
    $
    242,472
    
    
    $
    223,108Borrowings
    
    
    41,964
    
    
    
    68,477Advances by borrowers for taxes and insurance
    
    
    1,216
    
    
    
    2,315Other liabilities
    
    
    735
    
    
    
    891Total liabilities
    
    
    286,387
    
    
    
    294,791Minority interest in consolidated subsidiary
    
    
    150
    
    
    
    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 06/30/09 and 12/31/08
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    6,189
    
    
    
    6,189Treasury stock, at cost  330,183 shares at 06/30/09 and 12/31/08
    
    
    (3,270
    )
    
    
    (3,270
    )Retained earnings, substantially restricted
    
    
    21,186
    
    
    
    20,919Accumulated other comprehensive income:Unrealized loss on available-for-sale securities, net
of taxes of $(60) at 06/30/09 and $(1) at 12/31/08
    
    
    (117
    )
    
    
    (1
    )Total stockholders equity
    
    
    24,001
    
    
    
    23,850$
    310,538
    
    
    $
    318,781
   3




---



##### Table of Contents



FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
  For the three months ended
    
    
    For the six months endedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Interest income:Loans receivable
    
    $
    3,581
    
    
    $
    3,893
    
    
    $
    7,297
    
    
    $
    7,910Mortgage-backed securities
    
    
    96
    
    
    
    102
    
    
    
    198
    
    
    
    148Investments
    
    
    198
    
    
    
    272
    
    
    
    432
    
    
    
    5633,875
    
    
    
    4,267
    
    
    
    7,927
    
    
    
    8,621Interest expense:Deposits
    
    
    1,886
    
    
    
    1,992
    
    
    
    3,749
    
    
    
    4,090Borrowings
    
    
    521
    
    
    
    778
    
    
    
    1,134
    
    
    
    1,5582,407
    
    
    
    2,770
    
    
    
    4,883
    
    
    
    5,648Net interest income
    
    
    1,468
    
    
    
    1,497
    
    
    
    3,044
    
    
    
    2,973Provision for loan losses
    
    
    71
    
    
    
    1,392
    
    
    
    247
    
    
    
    1,481Net interest income after provision
for loan losses
    
    
    1,397
    
    
    
    105
    
    
    
    2,797
    
    
    
    1,492Noninterest income:Gain on loans sold
    
    
    511
    
    
    
    38
    
    
    
    1,125
    
    
    
    87Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    83Service fees on checking accounts
    
    
    227
    
    
    
    222
    
    
    
    422
    
    
    
    432Other income
    
    
    437
    
    
    
    173
    
    
    
    630
    
    
    
    3611,175
    
    
    
    433
    
    
    
    2,178
    
    
    
    963Noninterest expense:Salaries and employee benefits
    
    
    1,142
    
    
    
    752
    
    
    
    2,085
    
    
    
    1,476Occupancy
    
    
    270
    
    
    
    242
    
    
    
    543
    
    
    
    482Federal deposit insurance premiums
    
    
    188
    
    
    
    6
    
    
    
    198
    
    
    
    13Advertising
    
    
    35
    
    
    
    78
    
    
    
    57
    
    
    
    129Service bureau
    
    
    142
    
    
    
    140
    
    
    
    303
    
    
    
    288Other
    
    
    799
    
    
    
    701
    
    
    
    1,407
    
    
    
    1,3222,576
    
    
    
    1,919
    
    
    
    4,593
    
    
    
    3,710Income (loss) before federal income taxes
    
    
    (4
    )
    
    
    (1,381
    )
    
    
    382
    
    
    
    (1,255
    )Provision for federal income taxes
    
    
    (11
    )
    
    
    (507
    )
    
    
    115
    
    
    
    (485
    )Net income (loss)
    
    $
    7
    
    
    $
    (874
    )
    
    $
    267
    
    
    $
    (770
    )Retained Earnings-Beginning of period
    
    $
    21,179
    
    
    $
    22,731
    
    
    $
    20,919
    
    
    $
    22,778Net Income (loss)
    
    
    7
    
    
    
    (874
    )
    
    
    267
    
    
    
    (770
    )Less: Dividends declared
    
    
    
    
    
    
    (152
    )
    
    
    
    
    
    
    (303
    )Retained Earnings-end of period
    
    $
    21,186
    
    
    $
    21,705
    
    
    $
    21,186
    
    
    $
    21,705Net income (loss) per common share:Basic
    
    $
    0.01
    
    
    $
    (0.52
    )
    
    $
    0.16
    
    
    $
    (0.46
    )Diluted
    
    $
    0.01
    
    
    $
    (0.52
    )
    
    $
    0.16
    
    
    $
    (0.46
    )
   4




---



##### Table of Contents



FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the six months endedJune 30, 2009
    
    
    June 30, 2008(unaudited)
    
    
    (unaudited)Cash flows from operating activities:Net income (loss)
    
    $
    267
    
    
    $
    (770
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Provision for loan losses
    
    
    247
    
    
    
    1,481Gain on sale of investments
    
    
    (1
    )
    
    
    (83
    )Gain on sale of loans
    
    
    (1,125
    )
    
    
    (87
    )Loss on sale of real estate owned
    
    
    31
    
    
    
    76Depreciation
    
    
    162
    
    
    
    185Amortization
    
    
    (2
    )
    
    
    (25
    )Deferred income taxes
    
    
    42
    
    
    
    12Deferred loan fees
    
    
    58
    
    
    
    94Proceeds from sale of loans originated for sale
    
    
    96,695
    
    
    
    6,564Disbursements on loans originated for sale
    
    
    (104,855
    )
    
    
    (5,907
    )Net change in operating assets and liabilities:FHLB stock dividends
    
    
    
    
    
    
    (128
    )Bank Owned Life Insurance
    
    
    (115
    )
    
    
    (114
    )Decrease (increase) in accrued interest receivable
    
    
    71
    
    
    
    (121
    )Increase in other assets
    
    
    (373
    )
    
    
    (461
    )Increase in other liabilities
    
    
    (157
    )
    
    
    (65
    )Other, net
    
    
    10
    
    
    
    (59
    )Net cash provided (used) by operating activities
    
    
    (9,045
    )
    
    
    592Cash flows from investing activities:Net change in loans receivable
    
    
    13,010
    
    
    
    (3,646
    )Principal reduction on mortgage-backed securities
    
    
    853
    
    
    
    711Purchase of available-for-sale investment securities:
    
    
    (7,752
    )
    
    
    (12,201
    )Purchase of held-to-maturity mortgage-backed securities:
    
    
    
    
    
    
    (4,994
    )Proceeds from maturities/calls of investment securities:Available-for-sale
    
    
    10,000
    
    
    
    12,259Proceeds from sale of investment securities:Available-for-sale
    
    
    
    
    
    
    2,071Decrease in real estate owned
    
    
    165
    
    
    
    68Proceeds from sale of property and equipment
    
    
    
    
    
    
    15Capital expenditures
    
    
    (95
    )
    
    
    (67
    )Net cash provided (used) by investing activities
    
    
    16,181
    
    
    
    (5,784
    )Cash flows from financing activities:Net change in deposits
    
    
    19,364
    
    
    
    (1,059
    )Net change in borrowed money
    
    
    (26,513
    )
    
    
    2,231Decrease in advances by borrowers for taxes and insurance
    
    
    (1,099
    )
    
    
    (837
    )Issuance (purchase) of treasury stock
    
    
    
    
    
    
    Payment of dividends
    
    
    
    
    
    
    (303
    )Net cash provided (used) by financing activities
    
    
    (8,248
    )
    
    
    32Net decrease in cash
    
    
    (1,112
    )
    
    
    (5,160
    )Cash at beginning of year
    
    
    7,438
    
    
    
    6,897Cash at end of year
    
    $
    6,326
    
    
    $
    1,737Supplemental disclosure of cash flow information:Cash paid during the year for:Interest, including interest credited to savings accounts
    
    
    3,733
    
    
    
    4,073Income taxes
    
    
    75
    
    
    
    65Supplemental disclosure of noncash activities:Real estate acquired in settlement of loans
    
    
    793
    
    
    
    843Change in unrealized gain (loss) on available-for sale securities, net of taxes
    
    
    (118
    )
    
    
    (280
    )
   5




---



##### Table of Contents



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.
    6




---



##### Table of Contents



Fair Value Measurements atJune 30, 2009Quoted pricesin active
    
    
    Significant
    
    
    Significantmarkets for
    
    
    other
    
    
    otheridentical
    
    
    observable
    
    
    unobservableassets
    
    
    inputs
    
    
    inputsJune 30, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Securities available for sale
    
    $
    18,489
    
    
    
    
    
    
    
    18,489
                  June 30, 2009Carrying
    
    
    Fairamount
    
    
    value(dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    6,326
    
    
    
    6,326Investment securities
    
    
    10,893
    
    
    
    10,893Mortgage-backed securities
    
    
    7,503
    
    
    
    7,596Loans receivable
    
    
    265,226
    
    
    
    269,262Investment in FHLB stock
    
    
    4,991
    
    
    
    4,991Financial liabilities:Deposits
    
    
    242,742
    
    
    
    249,812Borrowed money
    
    
    41,964
    
    
    
    44,073
 June 30, 2009Contractual
    
    
    Fairamount
    
    
    valueUnrecognized financial instruments:Commitments to extend credit
    
    $
    3,000
    
    
    
    3,000Unfunded construction loans
    
    
    1,169
    
    
    
    1,169Undisbursed lines of credit
    
    
    19,141
    
    
    
    19,141
   .
   7




---



##### Table of Contents



8




---



##### Table of Contents



9




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 GENERAL
        10




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES
      11




---



##### Table of Contents



FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
     Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Available-for-saleInvestment securities
    
    $
    11,110
    
    
    $
    6
    
    
    $
    223
    
    
    $
    10,893Mortgage-backed securities
    
    
    2,991
    
    
    
    48
    
    
    
    4
    
    
    
    3,035Held-to-maturityMortgage-backed securities
    
    
    4,468
    
    
    
    93
    
    
    
    0
    
    
    
    4,561$
    18,569
    
    
    $
    147
    
    
    $
    227
    
    
    $
    18,489
   12




---



##### Table of Contents



(Dollars in thousands)Balance at beginning of period
    
    $
    3,668Charge offs
    
    
    454Additions charged to operations
    
    
    247Transfers to real estate owned
    
    
    0Recoveries
    
    
    17Balance at end of period
    
    $
    3,478
   13




---



##### Table of Contents



Capital Standard
    
    Actual
    
    
    Required
    
    
    Excess
    
    
    Actual
    
    
    Required
    
    
    Excess(Dollars in thousands)Core
    
    $
    23,285
    
    
    $
    12,392
    
    
    
    10,893
    
    
    
    7.51
    %
    
    
    4.00
    %
    
    
    3.51
    %Risk-based
    
    
    24,805
    
    
    
    17,532
    
    
    
    7,273
    
    
    
    11.32
    %
    
    
    8.00
    %
    
    
    3.32
    %
       14




---



##### Table of Contents



For the six month periods ended June 30,2009 vs 2008TotalIncrease (decrease) due to
    
    
    increaseVolume
    
    
    Rate
    
    
    (decrease)(Dollars in thousands)Interest income attributable to:Loans receivable (1)
    
    $
    (184
    )
    
    $
    (429
    )
    
    $
    (613
    )Mortgage-backed securities
    
    
    35
    
    
    
    15
    
    
    
    50Investment securities
    
    
    (21
    )
    
    
    (94
    )
    
    
    (115
    )FHLB stock
    
    
    4
    
    
    
    (20
    )
    
    
    (16
    )Total interest-earning assets
    
    $
    (166
    )
    
    $
    (528
    )
    
    $
    (694
    )Interest expense attributable to:Demand deposits
    
    $
    7
    
    
    $
    (63
    )
    
    $
    (56
    )Savings accounts
    
    
    5
    
    
    
    (63
    )
    
    
    (58
    )Certificates
    
    
    221
    
    
    
    (448
    )
    
    
    (227
    )FHLB advances and other borrowings
    
    
    (278
    )
    
    
    (146
    )
    
    
    (424
    )Total interest-bearing liabilities
    
    $
    (45
    )
    
    $
    (720
    )
    
    $
    (765
    )Decrease in net interest income
    
    $
    (121
    )
    
    $
    192
    
    
    $
    71
 (1)
    
    Includes non-accruing loans.   15




---



##### Table of Contents



For the six months ended June 30, 2009Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    268,652
    
    
    
    5.43
    %Mortgage-backed securities
    
    
    7,842
    
    
    
    5.05
    %Investment securities
    
    
    15,091
    
    
    
    4.24
    %FHLB stock
    
    
    4,991
    
    
    
    4.49
    %Total
    
    $
    296,576
    
    
    
    5.35
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    32,408
    
    
    
    0.41
    %Savings accounts
    
    
    29,505
    
    
    
    0.79
    %Certificates
    
    
    176,080
    
    
    
    4.05
    %FHLB advances
    
    
    52,029
    
    
    
    4.36
    %Total
    
    $
    290,022
    
    
    
    3.37
    %Net interest-earning assets/interest rate spread
    
    $
    6,554
    
    
    
    1.98
    %
 For the six months ended June 30, 2008Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    275,074
    
    
    
    5.75
    %Mortgage-backed securities
    
    
    6,431
    
    
    
    4.60
    %Investment securities
    
    
    15,896
    
    
    
    5.47
    %FHLB stock
    
    
    4,849
    
    
    
    5.28
    %Total
    
    $
    302,250
    
    
    
    5.70
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    30,747
    
    
    
    0.80
    %Savings accounts
    
    
    28,670
    
    
    
    1.21
    %Certificates
    
    
    167,225
    
    
    
    4.54
    %FHLB advances
    
    
    64,315
    
    
    
    4.84
    %Total
    
    $
    290,957
    
    
    
    3.88
    %Net interest-earning assets/interest rate spread
    
    $
    11,293
    
    
    
    1.82
    %
   16




---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4T.
    
    Controls and Procedures
    17




---



##### Table of Contents



PART II
 
 Item 1.
    
    LEGAL PROCEEDINGS
  
 Item 1A.
    
    RISK FACTORS
  
 Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 (a)
    
    None(b)
    
    None(c)
    
    None
  
 Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
 (a)
    
    None
 (b)
    
    None
 
 Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Voting
    
    
    Withheld orAffirmative
    
    
    negative
    
    
    abstainingElection of two directors:Richard H. Finan
    
    
    1,110,226
    
    
    
    321,412Mary W. Sullivan
    
    
    1,110,226
    
    
    
    321,412Ratification of the selection of Clark, Schaefer,
Hackett & Co. as independent accountants
for the current fiscal year.
    
    
    1,320,773
    
    
    
    110,862
    
    
    
    2
   18




---



##### Table of Contents



Item 5.
    
    OTHER INFORMATION
 (a)
    
    None(b)
    
    None
 
 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.
  19




---



##### Table of Contents



FIRST FRANKLIN CORPORATION/s/ Daniel T VoelpelDaniel T. VoelpelVice President and Chief Financial Officer   20




---



##### Table of Contents



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.
 
  21