##### 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 March 31, 2010
 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
    
    (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
 Yes o No 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  
March 31, 2010 and December 31, 2009
    
    
    3Consolidated Statements of Income and Retained
Earnings  
Three Month Periods ended March 31, 2010 and 2009
    
    
    4Consolidated Statements of Cash Flows  
Three Month
Periods ended March 31, 2010 and 2009
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21Part II Other Information
    
    
    22Item 1. Legal Proceeding
    
    
    22Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3. Defaults Upon Senior Securities
    
    
    22Item 4. (Removed and Reserved)
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    22Signatures
    
    
    23Exhibit 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
 March. 31, 2010
    
    
    Dec. 31, 2009(Unaudited)ASSETSCash, including certificates of deposit and other interest-earning
deposits of $100 at 03/31/10 and $100 at 12/31/09
    
    $
    3,364
    
    
    $
    6,875Investment securities:Securities available-for-sale, at market value
(amortized cost of $17,082 at 03/31/10 and $20,185 at 12/31/09)
    
    
    17,070
    
    
    
    19,949Mortgage-backed securities:Securities available-for-sale, at market value
(amortized cost of $2,347 at 03/31/10 and $2,731 at 12/31/09)
    
    
    2,418
    
    
    
    2,809Securities held-to-maturity, at amortized cost
(market value of $3,894 at 03/31/10 and $4,155 at 12/31/09)
    
    
    3,709
    
    
    
    3,989Loans held for sale
    
    
    7,369
    
    
    
    7,552Loans receivable, net
    
    
    228,661
    
    
    
    236,085Investment in Federal Home Loan Bank of Cincinnati stock, at cost
    
    
    4,991
    
    
    
    4,991Real estate owned, net
    
    
    3,045
    
    
    
    2,792Accrued interest receivable
    
    
    1,183
    
    
    
    1,135Property and equipment, net
    
    
    3,398
    
    
    
    3,448Bank owned life insurance
    
    
    6,037
    
    
    
    5,983Other assets
    
    
    6,748
    
    
    
    6,112Total assets
    
    $
    287,993
    
    
    $
    301,720LIABILITIESDeposits
    
    $
    230,021
    
    
    $
    244,010Borrowings
    
    
    33,083
    
    
    
    32,419Advances by borrowers for taxes and insurance
    
    
    1,502
    
    
    
    2,160Other liabilities
    
    
    971
    
    
    
    786Total liabilities
    
    
    265,577
    
    
    
    279,375Minority 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 03/31/10 and 12/31/09
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    6,189
    
    
    
    6,189Treasury stock, at cost  330,183 shares at 03/31/10 and 12/31/09
    
    
    (3,270
    )
    
    
    (3,270
    )Retained earnings, substantially restricted
    
    
    19,296
    
    
    
    19,378Accumulated other comprehensive income:Unrealized gain (loss) on available-for-sale securities, net
of taxes of 17 at 03/31/10 and $(48) at 12/31/09
    
    
    48
    
    
    
    (105
    )Total stockholders equity
    
    
    22,276
    
    
    
    22,205$
    287,993
    
    
    $
    301,720
   3




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the three months endedMarch 31, 2010
    
    
    March 31, 2009(Unaudited)
    
    
    (Unaudited)Interest income:Loans receivable
    
    $
    3,212
    
    
    $
    3,716Mortgage-backed securities
    
    
    77
    
    
    
    102Investments
    
    
    232
    
    
    
    2343,521
    
    
    
    4,052Interest expense:Deposits
    
    
    1,433
    
    
    
    1,863Borrowings
    
    
    367
    
    
    
    6131,800
    
    
    
    2,476Net interest income
    
    
    1,721
    
    
    
    1,576Provision for loan losses
    
    
    353
    
    
    
    176Net interest income after provision for
loan losses
    
    
    1,368
    
    
    
    1,400Noninterest income:Gain on loans sold
    
    
    445
    
    
    
    614Gain on sale of investments
    
    
    21
    
    
    
    1Service fees on NOW accounts
    
    
    205
    
    
    
    195Other income
    
    
    291
    
    
    
    193962
    
    
    
    1,003Noninterest expense:Salaries and employee benefits
    
    
    1,031
    
    
    
    943Occupancy
    
    
    286
    
    
    
    273Federal deposit insurance premiums
    
    
    163
    
    
    
    10Advertising
    
    
    45
    
    
    
    22Service bureau
    
    
    131
    
    
    
    161Other
    
    
    828
    
    
    
    6082,484
    
    
    
    2,017Income (loss) before federal income taxes
    
    
    (154
    )
    
    
    386Provision (benefit) for federal income taxes
    
    
    (72
    )
    
    
    126Net income (loss)
    
    $
    (82
    )
    
    $
    260Retained Earnings-Beginning of period
    
    $
    19,378
    
    
    $
    20,919Net Income (loss)
    
    
    (82
    )
    
    
    260Retained Earnings-end of period
    
    $
    19,296
    
    
    $
    21,179Net income (loss) per common share:Basic
    
    $
    (0.05
    )
    
    $
    0.15Diluted
    
    $
    (0.05
    )
    
    $
    0.15
   4




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the three months endedMarch 31, 2010
    
    
    March 31, 2009(unaudited)
    
    
    (unaudited)Cash flows from operating activities:Net income (loss)
    
    $
    (82
    )
    
    $
    260Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Provision for loan losses
    
    
    353
    
    
    
    176Gain on sale of investments
    
    
    (21
    )
    
    
    (1
    )Gain on sale of loans
    
    
    (445
    )
    
    
    (614
    )Loss on sale of real estate owned
    
    
    26
    
    
    
    Depreciation
    
    
    87
    
    
    
    87Amortization
    
    
    (5
    )
    
    
    (12
    )Deferred income taxes
    
    
    (50
    )
    
    
    (65
    )Deferred loan fees
    
    
    14
    
    
    
    (28
    )Proceeds from sale of loans originated for sale
    
    
    28,071
    
    
    
    54,774Disbursements on loans originated for sale
    
    
    (27,443
    )
    
    
    (55,148
    )Net change in operating assets and liabilities:Bank Owned Life Insurance
    
    
    (55
    )
    
    
    (58
    )(Increase) decrease in accrued interest receivable
    
    
    (48
    )
    
    
    137(Increase) decrease in other assets
    
    
    (645
    )
    
    
    113Increase (decrease) in other liabilities
    
    
    186
    
    
    
    (396
    )Other, net
    
    
    4
    
    
    
    9Net cash used by operating activities
    
    
    (53
    )
    
    
    (766
    )Cash flows from investing activities:Net change in loans receivable
    
    
    6,713
    
    
    
    4,493Principal reduction on mortgage-backed securities
    
    
    663
    
    
    
    422Purchase of available-for-sale investment securities:
    
    
    (1,625
    )
    
    
    (2,000
    )Proceeds from maturities/calls of investment securities:Available-for-sale
    
    
    4,750
    
    
    
    1,500Net real estate owned activity
    
    
    61
    
    
    
    (87
    )Capital expenditures
    
    
    (37
    )
    
    
    (30
    )Net cash provided by investing activities
    
    
    10,525
    
    
    
    4,298Cash flows from financing activities:Net change in deposits
    
    
    (13,989
    )
    
    
    16,709Net change in borrowed money
    
    
    664
    
    
    
    (17,326
    )Decrease in advances by borrowers for taxes and insurance
    
    
    (658
    )
    
    
    (728
    )Net cash used by financing activities
    
    
    (13,983
    )
    
    
    (1,345
    )Net increase (decrease) in cash
    
    
    (3,511
    )
    
    
    2,187Cash at beginning of year
    
    
    6,875
    
    
    
    7,438Cash at end of year
    
    $
    3,364
    
    
    $
    9,625Supplemental disclosure of cash flow information:Cash paid during the year for:Interest, including interest credited to savings accounts
    
    
    1,798
    
    
    
    1,854Income taxes
    
    
    
    
    
    
    75Supplemental disclosure of noncash activities:Real estate acquired in settlement of loans
    
    
    340
    
    
    
    793Change in unrealized gain (loss) on available-for sale securities, net of taxes
    
    
    153
    
    
    
    65
   5




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March 31, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies
    
    $
    15,492
    
    
    
    26
    
    
    
    63
    
    
    
    15,455Obligations of states and
Municipalities
    
    
    1,590
    
    
    
    37
    
    
    
    12
    
    
    
    1,615$
    17,082
    
    
    
    63
    
    
    
    75
    
    
    
    17,070
 December 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies
    
    $
    18,720
    
    
    
    16
    
    
    
    273
    
    
    
    18,463Obligations of states and
municipalities
    
    
    1,465
    
    
    
    31
    
    
    
    10
    
    
    
    1,486$
    20,185
    
    
    
    47
    
    
    
    283
    
    
    
    19,949
  6




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EstimatedAmortized
    
    
    marketcost
    
    
    valueAvailable-for-sale:Due in one year or less
    
    $
    
    
    
    
    Due after one year through five years
    
    
    2,097
    
    
    
    2,110Due after five years through ten years
    
    
    5,500
    
    
    
    5,506Due after ten years
    
    
    9,485
    
    
    
    9,454$
    17,082
    
    
    
    17,070
   March 31, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:FHLMC certificates
    
    $
    640
    
    
    
    42
    
    
    
    
    
    
    
    682FNMA certificates
    
    
    327
    
    
    
    4
    
    
    
    
    
    
    
    331GNMA certificates
    
    
    1,157
    
    
    
    20
    
    
    
    
    
    
    
    1,177Collateralized mortgage obligations
    
    
    223
    
    
    
    5
    
    
    
    
    
    
    
    228$
    2,347
    
    
    
    71
    
    
    
    
    
    
    
    2,418Held-to-maturity:FHLMC certificates
    
    $
    109
    
    
    
    12
    
    
    
    
    
    
    
    121FNMA certificates
    
    
    3,528
    
    
    
    165
    
    
    
    
    
    
    
    3,693GNMA certificates
    
    
    73
    
    
    
    8
    
    
    
    
    
    
    
    81$
    3,710
    
    
    
    185
    
    
    
    
    
    
    
    3,895
 December 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:FHLMC certificates
    
    $
    956
    
    
    
    53
    
    
    
    
    
    
    
    1,009FNMA certificates
    
    
    338
    
    
    
    5
    
    
    
    
    
    
    
    343GNMA certificates
    
    
    1,203
    
    
    
    15
    
    
    
    
    
    
    
    1,218Collateralized mortgage obligations
    
    
    234
    
    
    
    5
    
    
    
    
    
    
    
    239$
    2,731
    
    
    
    78
    
    
    
    
    
    
    
    2,809Held-to-maturity:FHLMC certificates
    
    $
    141
    
    
    
    14
    
    
    
    
    
    
    
    155FNMA certificates
    
    
    3,773
    
    
    
    144
    
    
    
    
    
    
    
    3,917GNMA certificates
    
    
    75
    
    
    
    8
    
    
    
    
    
    
    
    83$
    3,989
    
    
    
    166
    
    
    
    
    
    
    
    4,155
  7




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March 31, 2010Less 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
    
    $
    5,444
    
    
    
    54
    
    
    $
    991
    
    
    
    9
    
    
    $
    6,435
    
    
    
    63Obligations of
state and
municipalities
    
    
    169
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    12Mortgage-backed
Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,613
    
    
    
    66
    
    
    $
    991
    
    
    
    9
    
    
    $
    6,604
    
    
    
    75Number of
Investments
    
    
    10
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    12
     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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Fair Value Measurements atMarch 31, 2010Quoted pricesin active
    
    
    Significant
    
    
    Significantmarkets for
    
    
    other
    
    
    otheridentical
    
    
    observable
    
    
    unobservableassets
    
    
    inputs
    
    
    inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)U.S. Treasury securities and
Obligations of U.S. Government
Corporations and agencies
    
    $
    15,455
    
    
    $
    15,455Obligations of states and
Municipalities
    
    
    1,615
    
    
    
    1,615FHLMC certificates
    
    
    682
    
    
    
    682FNMA certificates
    
    
    331
    
    
    
    331GNMA certificates
    
    
    1,177
    
    
    
    1,177Collateralized mortgage obligations
    
    
    228
    
    
    
    228
    Cash and Cash Equivalents and Investment in FHLB Stock
  Investment and Mortgage-Backed Securities
   9




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Loans Receivable
   Deposits
  Borrowed Money
  Commitments to Extend Credit
   March 31, 2010Carrying
    
    
    Fairamount
    
    
    value(dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    3,364
    
    
    
    3,364Investment securities
    
    
    17,070
    
    
    
    17,070Mortgage-backed
securities
    
    
    6,127
    
    
    
    6,312Loans receivable
    
    
    236,030
    
    
    
    240,950Investment in FHLB stock
    
    
    4,991
    
    
    
    4,991Financial liabilities:Deposits
    
    
    230,021
    
    
    
    235,327Borrowed money
    
    
    33,083
    
    
    
    34,738
 March 31, 2010Contractual
    
    
    Fairamount
    
    
    valueUnrecognized financial
instruments:Commitments to extend credit
    
    $
    1,621
    
    
    
    1,621Unfunded construction loans
    
    
    207
    
    
    
    207Undisbursed lines of credit
    
    
    19,007
    
    
    
    19,007
  10




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11




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12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 GENERAL
   The Franklin Savings and Loan Company
      Forward-Looking Statements
   13




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CRITICAL ACCOUNTING POLICIES
       14




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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
 Assets
  
    
    $6.39 million reduction in cash and investments. This decrease reflected $10.67 million
of loan and mortgage-backed securities repayments, $27.63 million of loan sales and
$664,000 of new borrowings, less $30.95 million in loan disbursements and $13.99 million of
deposit outflows.
    
    $7.61 million decline in the loans receivable balance, reflecting the companys
strategic decision to sell mortgages originated by the bank and transfer servicing to the
purchaser and the demand for fixed-rate loans in the current interest rate environment.
 Cash and investments
   Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Available-for-saleInvestment securities
    
    $
    17,082
    
    
    $
    63
    
    
    $
    75
    
    
    $
    17,070Mortgage-backed securities
    
    
    2,347
    
    
    
    71
    
    
    
    0
    
    
    
    2,418Held-to-maturityMortgage-backed securities
    
    
    3,709
    
    
    
    185
    
    
    
    0
    
    
    
    3,894$
    23,138
    
    
    $
    319
    
    
    $
    75
    
    
    $
    23,382
  Loans receivable
      15




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Asset Quality
      (Dollars in thousands)Balance at beginning of period
    
    $
    4,915Charge offs
    
    
    444Additions charged to operations
    
    
    353Recoveries
    
    
    7Balance at end of period
    
    $
    4,831
    16




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##### Table of Contents



Liabilities
  
    
    $14.00 million decline in deposits. At March 31, 2010, deposits were $230.02 million
compared with $244.01 million at December 31, 2009. During the current quarter, core
deposits increased $1.28 million, reflecting the companys marketing efforts, while higher
earning certificates decreased $15.27 million. Interest of $1.27 million during the current
quarter was credited to accounts. After eliminating the effect of interest credited,
deposits decreased $15.26 million from year-end 2009.
 
    
    $664,000 increase in borrowings. At March 31, 2010, Franklin had outstanding FHLB
advances of $33.08 million at an average cost of 4.36%. During the next twelve months,
required principal reduction on these borrowings will be $10.99 million. Management
believes that the Company has sufficient cash flow to meet these commitments and maintain
desired liquidity levels
 
    
    Franklin has a program to diversify its deposit base by attracting more locally generated
low-cost core (checking, savings and money market ) deposits. During the first quarter of 2010,
these more stable and lower cost funds increased as a percent of total deposits, from  32.2% at
December 31, 2009 to 34.7%.  Further, as Franklins funding needs continue to decline because of
sales of loans in the secondary market, the Company has been able to begin lowering the interest
rates offered for certificates of deposit.  As a result, certificates of deposit declined by 9%
in the first quarter of 2010, which helped reduce net interest expense.
 Capital Position
    Capital Standard
    
    Actual
    
    
    Required
    
    
    Excess
    
    
    Actual
    
    
    Required
    
    
    Excess(Dollars in thousands)As of March 31, 2010Core
    
    $
    21,513
    
    
    $
    11,496
    
    
    $
    10,017
    
    
    
    7.49
    %
    
    
    4.00
    %
    
    
    3.49
    %Risk-based
    
    
    24,094
    
    
    
    16,510
    
    
    
    7,584
    
    
    
    11.67
    %
    
    
    8.00
    %
    
    
    3.67
    %As of December 31, 2009Core
    
    $
    21,548
    
    
    $
    12,050
    
    
    $
    9,498
    
    
    
    7.15
    %
    
    
    4.00
    %
    
    
    3.15
    %Risk-based
    
    
    24,107
    
    
    
    17,107
    
    
    
    7,000
    
    
    
    11.27
    %
    
    
    8.00
    %
    
    
    3.27
    %As of March 31, 2009Core
    
    $
    23,252
    
    
    $
    12,666
    
    
    $
    10,586
    
    
    
    7.34
    %
    
    
    4.00
    %
    
    
    3.34
    %Risk-based
    
    
    24,748
    
    
    
    17,533
    
    
    
    7,215
    
    
    
    11.29
    %
    
    
    8.00
    %
    
    
    3.29
    %
  17




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##### Table of Contents



RESULTS OF OPERATIONS
  
    
    $197,000 increase in the provision for loan losses  First Franklins loan portfolio
continues to be effected by the unprecedented economic downturn of the past two years,
which has resulted in declining property values, related borrower defaults and a more
stringent regulatory environment. As discussed above, the higher provision for loan losses
in the first quarter of 2010 reflected managements intent to continue building loan loss
reserves.
 
    
    $153,000 rise in federal deposit insurance premiums  The higher FDIC premiums
reflects a substantial increase in the assessment rate and the expiration of the credits
available in the first quarter of 2009.
 Net Interest Income
  
    
    lower average balances of deposits and borrowings as the Companys funding needs have
been reduced as a result of the emphasis on loan sales, and
 
    
    declining interest expense on deposits and borrowings due to lower interest rates, in
part due to managements continued effort to add lower-cost checking deposits.
   18




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##### Table of Contents



For the three month periods ended March 31,2010 vs 2009TotalIncrease (decrease) due to
    
    
    increaseVolume
    
    
    Rate
    
    
    (decrease)(Dollars in thousands)Interest income attributable to:Loans receivable (1)
    
    $
    (459
    )
    
    $
    (43
    )
    
    $
    (502
    )Mortgage-backed securities
    
    
    (21
    )
    
    
    (4
    )
    
    
    (25
    )Investment securities
    
    
    32
    
    
    
    (35
    )
    
    
    (3
    )FHLB stock
    
    
    0
    
    
    
    0
    
    
    
    0Total interest-earning assets
    
    $
    (448
    )
    
    $
    (82
    )
    
    $
    (530
    )Interest expense attributable to:Demand deposits
    
    $
    10
    
    
    $
    3
    
    
    $
    13Savings accounts
    
    
    34
    
    
    
    (49
    )
    
    
    (15
    )Certificates
    
    
    (180
    )
    
    
    (247
    )
    
    
    (427
    )FHLB advances and other borrowings
    
    
    (336
    )
    
    
    90
    
    
    
    (246
    )Total interest-bearing liabilities
    
    $
    (472
    )
    
    $
    (203
    )
    
    $
    (675
    )Increase (decrease) in net interest income
    
    $
    24
    
    
    $
    121
    
    
    $
    145
 (1)
    
    Includes non-accruing loans.  19




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##### Table of Contents



For the three months ended March 31, 2010Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    237,150
    
    
    
    5.42
    %Mortgage-backed securities
    
    
    6,364
    
    
    
    4.84
    %Investment securities
    
    
    19,003
    
    
    
    3.68
    %FHLB stock
    
    
    4,991
    
    
    
    4.57
    %Total
    
    $
    267,508
    
    
    
    5.26
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    41,118
    
    
    
    0.43
    %Savings accounts
    
    
    37,573
    
    
    
    0.43
    %Certificates
    
    
    155,527
    
    
    
    3.47
    %FHLB advances
    
    
    32,696
    
    
    
    4.49
    %Total
    
    $
    266,914
    
    
    
    2.70
    %Net interest-earning assets/interest rate spread
    
    $
    594
    
    
    
    2.56
    %
 For the three months ended March 31, 2009Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    271,069
    
    
    
    5.48
    %Mortgage-backed securities
    
    
    8,065
    
    
    
    5.06
    %Investment securities
    
    
    17,458
    
    
    
    4.08
    %FHLB stock
    
    
    4,991
    
    
    
    4.49
    %Total
    
    $
    301,583
    
    
    
    5.37
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    31,401
    
    
    
    0.39
    %Savings accounts
    
    
    28,758
    
    
    
    0.77
    %Certificates
    
    
    174,355
    
    
    
    4.08
    %FHLB advances
    
    
    61,429
    
    
    
    3.99
    %Total
    
    $
    295,943
    
    
    
    3.35
    %Net interest-earning assets/interest rate spread
    
    $
    5,640
    
    
    
    2.02
    %
 Noninterest Income and Expense
    20




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##### Table of Contents



COMPREHENSIVE INCOME
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
   
    
    As a result of personnel issues, during the fourth quarter of 2009, we did not
perform timely reconciliations of our bank account with the Federal Home Loan Bank.
We remediated this material weakness early in fiscal year 2010 and completed the
reconciliation of the account through December 31, 2009 by February 28, 2010.
   21




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##### Table of Contents



(a)
    
    None(b)
    
    None(c)
    
    None
 
  (a)
    
    None(b)
    
    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.
  22




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##### Table of Contents



FIRST FRANKLIN CORPORATION/s/ Daniel T. VoelpelDaniel T. VoelpelVice President and Chief Financial
Officer   23