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United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended March 31, 2008
 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
   (Registrants Telephone Number)
 (Former name, former address and former fiscal year, if changed since last report)
 þ 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  March 31, 2008 and December 31, 2007
    
    3Consolidated Statements of Income and Retained
Earnings  Three Month Periods ended March 31, 2008 and 2007
    
    4Consolidated Statements of Cash Flows  Three Month
Periods ended March 31, 2008 and 2007
    
    5Notes to Consolidated Financial Statements
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    7Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    13Item 4. Controls and Procedures
    
    13Part II Other Information
    
    14Item 1. Legal Proceeding
    
    14Item 1A. Risk Factors
    
    14Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    14Item 3. Defaults Upon Senior Securities
    
    14Item 4. Submission of Matters to a Vote of Security Holders
    
    14Item 5. Other Information
    
    14Item 6. Exhibits
    
    14SignaturesEX-31.1EX-31.2EX-32.1EX-32.2
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ITEM 1. FINANCIAL STATEMENTS
 FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS   ASSETS
 March 31, 2008
    
    
    Dec. 31, 2007(Unaudited)Cash, including certificates of deposit and other interest-earning
deposits of $2,100 at 03/31/08 and 12/31/07
    
    $
    5,764
    
    
    $
    6,897Investment securities:Securities available-for-sale, at market value
(amortized cost of $13,980 at 03/31/08 and $17,011 at 12/31/07)
    
    
    13,979
    
    
    
    17,030Mortgage-backed securities:Securities available-for-sale, at market value
(amortized cost of $2,830 at 03/31/08 and $3,193 at 12/31/07)
    
    
    2,816
    
    
    
    3,184Securities held-to-maturity, at amortized cost
(market value of $5,203 at 03/31/08 and $340 at 12/31/07)
    
    
    5,289
    
    
    
    322Loans receivable, net
    
    
    276,669
    
    
    
    273,310Investment in Federal Home Loan Bank of Cincinnati stock, at cost
    
    
    4,859
    
    
    
    4,797Real estate owned, net
    
    
    1,490
    
    
    
    948Accrued interest receivable
    
    
    1,088
    
    
    
    1,053Property and equipment, net
    
    
    3,678
    
    
    
    3,728Bank owned life insurance
    
    
    5,574
    
    
    
    5,517Other assets
    
    
    1,969
    
    
    
    2,132Total assets
    
    $
    323,175
    
    
    $
    318,918LIABILITIESDeposits
    
    $
    229,070
    
    
    $
    226,521Borrowings
    
    
    66,130
    
    
    
    63,353Advances by borrowers for taxes and insurance
    
    
    1,730
    
    
    
    2,315Other liabilities
    
    
    370
    
    
    
    785Total liabilities
    
    
    297,300
    
    
    
    292,974Minority interest in consolidated subsidiary
    
    
    233
    
    
    
    238STOCKHOLDERS 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 03/31/08 and 12/31/07
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    6,189
    
    
    
    6,189Treasury stock, at cost - 330,183 shares at 03/31/08 and 12/31/07
    
    
    (3,270
    )
    
    
    (3,270
    )Retained earnings, substantially restricted
    
    
    22,731
    
    
    
    22,778Accumulated other comprehensive income:Unrealized loss on available-for-sale securities, net
of taxes of $(10) at 03/31/08 and $(2) at 12/31/07
    
    
    (21
    )
    
    
    (4
    )Total stockholders equity
    
    
    25,642
    
    
    
    25,706$
    323,175
    
    
    $
    318,918
  3




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the three months endedMarch 31,2008
    
    
    March 31, 2007(Unaudited)
    
    
    (Unaudited)Interest income:Loans receivable
    
    $
    4,017
    
    
    $
    4,187Mortgage-backed securities
    
    
    46
    
    
    
    67Investments
    
    
    291
    
    
    
    4184,354
    
    
    
    4,672Interest expense:Deposits
    
    
    2,098
    
    
    
    2,166Borrowings
    
    
    780
    
    
    
    8972,878
    
    
    
    3,063Net interest income
    
    
    1,476
    
    
    
    1,609Provision for loan losses
    
    
    89
    
    
    
    70Net interest income after provision for
loan losses
    
    
    1,387
    
    
    
    1,539Noninterest income:Gain on loans sold
    
    
    49
    
    
    
    23Gain on sale of investments
    
    
    84
    
    
    
    Service fees on NOW accounts
    
    
    210
    
    
    
    194Other income
    
    
    187
    
    
    
    167530
    
    
    
    384Noninterest expense:Salaries and employee benefits
    
    
    724
    
    
    
    716Occupancy
    
    
    240
    
    
    
    257Federal deposit insurance premiums
    
    
    7
    
    
    
    7Advertising
    
    
    51
    
    
    
    58Service bureau
    
    
    148
    
    
    
    131Other
    
    
    621
    
    
    
    5521,791
    
    
    
    1,721Income before federal income taxes
    
    
    126
    
    
    
    202Provision for federal income taxes
    
    
    22
    
    
    
    67Net income
    
    $
    104
    
    
    $
    135Retained Earnings-Beginning of period
    
    $
    22,778
    
    
    $
    22,927Net Income
    
    
    104
    
    
    
    135Less: Dividends declared
    
    
    (151
    )
    
    
    (152
    )Retained Earnings-end of period
    
    $
    22,731
    
    
    $
    22,910Net income per common share:Basic
    
    $
    0.06
    
    
    $
    0.08Diluted
    
    $
    0.06
    
    
    $
    0.08
  4




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the three months endedMarch 31, 2008
    
    
    March 31, 2007(unaudited)
    
    
    (unaudited)Cash flows from operating activities:Net income
    
    $
    104
    
    
    $
    135Adjustments to reconcile net income to net cash
provided by operating activities:Provision for loan losses
    
    
    89
    
    
    
    70Gain on sale of investments
    
    
    (71
    )
    
    
    Gain on sale of loans
    
    
    (49
    )
    
    
    (23
    )Loss on the sale of real estate owned
    
    
    
    
    
    
    49Depreciation
    
    
    94
    
    
    
    98Amortization
    
    
    (13
    )
    
    
    (3
    )Deferred income taxes
    
    
    
    
    
    
    Deferred loan fees
    
    
    99
    
    
    
    (6
    )FHLB stock dividends
    
    
    (62
    )
    
    
    Bank Owned Life Insurance
    
    
    (57
    )
    
    
    (53
    )Increase in accrued interest receivable
    
    
    (35
    )
    
    
    (188
    )Decrease (increase) in other assets
    
    
    (35
    )
    
    
    891Increase (decrease) in other liabilities
    
    
    (208
    )
    
    
    95Other, net
    
    
    (5
    )
    
    
    (4
    )Proceeds from sale of loans originated for sale
    
    
    3,715
    
    
    
    1,975Disbursements on loans originated for sale
    
    
    (3,057
    )
    
    
    (1,969
    )Net cash provided by operating activities
    
    
    509
    
    
    
    1,067Cash flows from investing activities:Net change in loans receivable
    
    
    (4,689
    )
    
    
    1,535Principal reduction on mortgage-backed securities
    
    
    390
    
    
    
    451Proceeds from sale of SBA loans
    
    
    
    
    
    
    206Purchase of available-for-sale investment securities:
    
    
    (11,216
    )
    
    
    Purchase of held-to-maturity mortgage-backed securities:
    
    
    (4,994
    )
    
    
    Proceeds from maturities/calls of investment securities:Available-for-sale
    
    
    12,259
    
    
    
    500Proceeds from sale of investment securities:Available-for-sale
    
    
    2,071
    
    
    
    Decrease (increase) in real estate owned
    
    
    (9
    )
    
    
    (31
    )Proceeds from sale of property and equipment
    
    
    15
    
    
    
    Capital expenditures
    
    
    (59
    )
    
    
    (8
    )Net cash provided (used) by investing activities
    
    
    (6,232
    )
    
    
    2,653Cash flows from financing activities:Net change in deposits
    
    
    2,549
    
    
    
    1,746Net change in borrowed money
    
    
    2,777
    
    
    
    (2,125
    )Decrease in advances by borrowers for taxes and insurance
    
    
    (585
    )
    
    
    (576
    )Issuance (purchase) of treasury stock
    
    
    
    
    
    
    (100
    )Payment of dividends
    
    
    (151
    )
    
    
    (152
    )Net cash provided (used) by financing activities
    
    
    4,590
    
    
    
    (1,207
    )Net increase (decrease) in cash
    
    
    (1,133
    )
    
    
    2,513Cash at beginning of year
    
    
    6,897
    
    
    
    7,828Cash at end of year
    
    $
    5,764
    
    
    $
    10,341




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FIRST FRANKLIN CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       6




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 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.
      7




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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
   8




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Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Available-for-saleInvestment securities
    
    $
    13,980
    
    
    $
    40
    
    
    $
    41
    
    
    $
    13,979Mortgage-backed securities
    
    
    2,830
    
    
    
    3
    
    
    
    17
    
    
    
    2,816Held-to-maturityMortgage-backed securities
    
    
    5,289
    
    
    
    20
    
    
    
    106
    
    
    
    5,203$
    22,099
    
    
    $
    63
    
    
    $
    164
    
    
    $
    21,998
     9




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(Dollars in thousands)Balance at beginning of period
    
    $
    1,101Charge offs
    
    
    0Additions charged to operations
    
    
    89Transfers to real estate owned
    
    
    0Recoveries
    
    
    2Balance at end of period
    
    $
    1,192
   Capital Standard
    
    Actual
    
    Required
    
    Excess
    
    Actual
    
    Required
    
    Excess(Dollars in thousands)Core
    
    $
    24,306
    
    
    $
    12,907
    
    
    
    11,399
    
    
    
    7.53
    %
    
    
    4.00
    %
    
    
    3.53
    %Risk-based
    
    
    25,097
    
    
    
    17,368
    
    
    
    7,729
    
    
    
    11.56
    %
    
    
    8.00
    %
    
    
    3.56
    %
      10




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For the three month periods ended March 31,2008 vs 2007TotalIncrease (decrease) due to
    
    
    increaseVolume
    
    
    Rate
    
    
    (decrease)(Dollars in thousands)Interest income attributable to:Loans receivable (1)
    
    $
    (18
    )
    
    $
    (152
    )
    
    $
    (170
    )Mortgage-backed
securities
    
    
    (1
    )
    
    
    (20
    )
    
    
    (21
    )Investments
    
    
    (132
    )
    
    
    17
    
    
    
    (115
    )FHLB stock
    
    
    0
    
    
    
    (12
    )
    
    
    (12
    )Total
interest-earning
assets
    
    $
    (151
    )
    
    $
    (167
    )
    
    $
    (318
    )Interest expense attributable to:Demand deposits
    
    $
    (1
    )
    
    $
    (32
    )
    
    $
    (33
    )Savings accounts
    
    
    (3
    )
    
    
    (21
    )
    
    
    (24
    )Certificates
    
    
    (33
    )
    
    
    22
    
    
    
    (11
    )FHLB advances and other borrowings
    
    
    (90
    )
    
    
    (27
    )
    
    
    (117
    )Total interest-bearing liabilities
    
    $
    (127
    )
    
    $
    (58
    )
    
    $
    (185
    )Decrease in net interest income
    
    $
    (24
    )
    
    $
    (109
    )
    
    $
    (133
    )
 
 (1)
    
    Includes non-accruing loans.   11




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For the three months ended March 31, 2008Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    275,748
    
    
    
    5.83
    %Mortgage-backed securities
    
    
    4,957
    
    
    
    3.71
    %Investments
    
    
    16,236
    
    
    
    5.62
    %FHLB stock
    
    
    4,818
    
    
    
    5.23
    %Total
    
    $
    301,759
    
    
    
    5.77
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    31,260
    
    
    
    0.90
    %Savings accounts
    
    
    28,519
    
    
    
    1.43
    %Certificates
    
    
    167,434
    
    
    
    4.60
    %FHLB advances
    
    
    63,540
    
    
    
    4.91
    %Total
    
    $
    290,753
    
    
    
    3.96
    %Net interest-earning assets/interest rate spread
    
    $
    11,006
    
    
    
    1.81
    %
 For the three months ended March 31, 2007Averageoutstanding
    
    
    Yield/cost(Dollars in thousands)Average interest-earning assetsLoans
    
    $
    276,915
    
    
    
    6.05
    %Mortgage-backed securities
    
    
    4,797
    
    
    
    5.31
    %Investments
    
    
    25,591
    
    
    
    5.36
    %FHLB stock
    
    
    5,045
    
    
    
    6.25
    %Total
    
    $
    312,348
    
    
    
    5.98
    %Average interest-bearing liabilitiesDemand deposits
    
    $
    31,684
    
    
    
    1.30
    %Savings accounts
    
    
    29,145
    
    
    
    1.73
    %Certificates
    
    
    170,233
    
    
    
    4.55
    %FHLB advances
    
    
    70,801
    
    
    
    5.07
    %Total
    
    $
    301,863
    
    
    
    4.06
    %Net interest-earning assets/interest rate spread
    
    $
    10,485
    
    
    
    1.92
    %
   12




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
   13




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(a
    
    None(b)
    
    None(c)
    
    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.
 14




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FIRST FRANKLIN CORPORATION/s/ Daniel T. VoelpelDaniel T. VoelpelVice President and Chief Financial
Officer
  15