Annual Report (Form 10-K), fiscal year 1993

Item 1. BUSINESS:
The Company, Page 1; Business, Pages 9 - 17; and Financial Statements, Pages 20-32 of Registrant's Annual Report to security holders for the fiscal year ended December 31, 1993 are incorporated herein by reference.
Item 2.



Item 2. PROPERTIES:
Paragraph 1 of The Company, Page 1; Footnote 7 (Commitments) of Notes to Consolidated Financial Statements, Page 30; and map on back cover of Registrant's Annual Report to security holders for the fiscal year ended December 31, 1993 are incorporated herein by reference.
Item 3.

Item 3. LEGAL PROCEEDINGS:
Other than ordinary routine litigation incidental to the finance business, there are no material pending legal proceedings.
Item 4.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable. PART II
Item 5.

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS:
Source of Funds, Page 16 of Registrant's Annual Report to security holders for the fiscal year ended December 31, 1993 is incorporated herein by reference.
Item 6.

Item 6. SELECTED FINANCIAL DATA:
Selected Consolidated Financial Information, Page 4 of Registrant's Annual Report to security holders for the fiscal year ended December 31, 1993 is incorporated herein by reference.
Item 7.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
Management's Discussion of Operations, Pages 5 - 8 of Registrant's Annual Report to security holders for the fiscal year ended December 31, 1993 is incorporated herein by reference.
Item 8.


Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
Pages 20 - 32 of Registrant's Annual Report to security holders for the fiscal year ended December 31, 1993 are incorporated herein by reference.
Item 9.

Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:
Not applicable. - 1 -
PART III
Item 10.



Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
DIRECTORS
Director Since and Date on Which Position Name of Director Age Term Will Expire With Company
W. Richard Acree (1)(2) 66 Since 1970; None When successor elected and qualified
Ben F. Cheek, III (3)(4)(5) 57 Since 1967; Chairman of When successor Board elected and qualified
Lorene M. Cheek (2)(4)(6) 84 Since 1946; None When successor elected and qualified
Jack D. Stovall (1)(2) 58 Since 1983; None When successor elected and qualified
Robert E. Thompson (1)(2) 62 Since 1970; None When successor elected and qualified
_______________________________________________________________________
(1) Member of Audit Committee.
(2) Mr. Acree is President of Acree Oil Company, a distributor of petroleum products in Northeast Georgia; Mrs. Cheek is an honorary member of the Board of Trustees of Tallulah Falls School; Dr. Thompson is a physician at Toccoa Clinic; and Mr. Stovall is President of Stovall Building Supplies, Inc.
(3) Reference is made to the business experience of executive officers of the Company as detailed below.
(4) Member of Executive Committee.
(5) Son of Lorene M. Cheek.
(6) Mother of Ben F. Cheek, III.
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EXECUTIVE OFFICERS
Name, Age, Position and Family Relationship Business Experience
Ben F. Cheek, III, 57 Joined the Company in 1961 as attorney Chairman of Board and became Vice President in 1962, President in 1972 and Chairman of Board in 1989.
T. Bruce Childs, 57 Joined the Company in 1958 and was named President Vice President in charge of Operations in No Family Relationship 1973 and President in 1989.
Lynn E. Cox, 36 Joined the Company in 1983 and became Secretary Secretary in 1989. No Family Relationship
A. Roger Guimond, 39 Joined the Company in 1976 as an Vice President accountant and became Chief Accounting and Chief Financial Officer Officer in 1978, Chief Financial Officer No Family Relationship in 1991 and Vice President in 1992.
Linda L. Sessa, 39 Joined the Company in 1984 and became Treasurer Treasurer in 1989. No Family Relationship
The term of office of each Executive Officer expires when a successor is elected and qualified. There was no, nor is there presently any arrangement or understanding between any officer and any other person (except directors or officers of the registrant acting solely in their capacities as such) pursuant to which the officer was selected.
No event such as bankruptcy, criminal proceedings or securities violation proceeding has occurred within the past 5 years with regard to any Director or Executive Officer of the Company.
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Item 11.

Item 11. EXECUTIVE COMPENSATION:
(b) Summary Compensation Table: Other All Name Annual Other and Compen- Compen- Principal Salary Bonus sation sation Position Year $ $ $ $ * ----------------- ---- ------- ------- ------ ------ Ben F. Cheek, III 1993 216,000 154,653 2,867 44,268 Chairman and 1992 204,000 124,106 2,592 45,594 CEO 1991 188,000 101,209 2,770 39,164
T. Bruce Childs 1993 194,000 153,773 7,179 34,878 President 1992 178,000 123,066 4,683 34,878 1991 164,000 100,249 3,583 30,969
A. Roger Guimond 1993 96,000 36,790 1,650 15,354 Vice President 1992 84,000 29,145 1,625 11,427 and CFO 1991 70,800 23,349 2,000 8,961
* Represents Company contributions to profit-sharing plan, and reported compensation from premiums on life insurance policies for the benefit of Ben F. Cheek, III in the amount of $5,984 for 1993, $7,310 for 1992 and $5,168 for 1991.
(g) Compensation of Directors:
Directors who are not employees of the Company receive $1,000 per year for attending scheduled board meetings.
(k) Board Compensation Committee Report on Executive Compensation:
The Company has no official executive compensation committee. Ben F. Cheek, III (Chairman of the Company) establishes the bases for all executive compensation. The Company is a wholly-owned subsidiary of 1st Franklin Corporation ("Parent"). 1st Franklin Corporation is a family owned business with Ben F. Cheek, III being the majority stockholder.
Item 12.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners:
Name and Address of Amount and Nature of Percent Beneficial Owner Title of Class Beneficial Ownership Of Class ---------------- -------------- -------------------- -------- 1st Franklin Corporation Common 1700 Shares - Direct 100.00% 213 East Tugalo Street Toccoa, Georgia 30577
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(b) Security Ownership of Management:
Ownership listed below represents ownership in 1st Franklin Corporation which in turn is sole owner of 1st Franklin Financial Corporation, of (i) Directors and named Executive Officers of the Company and (ii) all Directors and Executive Officers as a group:
Amount and Nature of Percent Name Title of Class Beneficial Ownership Of Class ----------------- -------------- --------------------- -------- Ben F. Cheek, III Common Stock 1,160 Shares - Direct 68.24%
T. Bruce Childs Common Stock None None
A. Roger Guimond Common Stock None None __________________________________________
All Directors and Executive Officers as a Group Common Stock 1,160 Shares - Direct 68.24%
(c) The Company knows of no contractual arrangements which may at a subsequent date result in a change in control of the Company.
Item 13.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Company leases its Home Office building and print shop for a total of $10,600 per month from Franklin Enterprises, Inc. under leases which expire January 1, 1995. Franklin Enterprises, Inc. is 66.67% owned by Ben F. Cheek, III, a director and executive officer of the Company. In management's opinion, these leases are at rates which approximate those obtainable from independent third parties.
The Company's Credit Agreement with four major banks provides for maximum borrowings of $21,000,000. The Company also has two additional Credit Agreements for $1,500,000 and $2,000,000 which are used for general operating purposes. Repayment of borrowings under the three Agreements are guaranteed by the Company's Parent.
As the result of normal recurring intercompany transactions, the Parent owed the Company $2,231,455 at December 31, 1993.
Beneficial owners of the Company's parent are also beneficial owners of Liberty Bank & Trust ("Liberty"). The Company and Liberty have management and data processing agreements whereby the Company provides certain administrative and data processing services to Liberty for a fee. Income recorded by the Company in 1993, 1992 and 1991 related to these agreements was $63,800, $63,800, and $78,375 per year, respectively, which in Management's opinion approximates the Company's actual cost of these services.
At December 31, 1993, the Company maintained $500,000 of certificates of deposit and $172,989 in a money market account with Liberty at market rates and terms. The Company also had $2,038,013 in demand deposits with Liberty at December 31, 1993.
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PART IV
Item 14.

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
(a) 1. Financial Statements:
Incorporated by reference from the Registrant's Annual Report to security holders for the fiscal year ended December 31, 1993:
Report of Independent Public Accountants.
Consolidated Statements of Financial Position at December 31, 1993 and 1992.
Consolidated Statements of Income and Retained Earnings for the three years ended December 31, 1993.
Consolidated Statements of Cash Flows for the three years ended December 31, 1993.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules:
None - Financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto.
3. Exhibits:
3. (a) Restated Articles of Incorporation as amended December 29, 1983 (incorporated herein by reference from Form 10-K for the fiscal year ended December 31, 1983).
4. (a) Executed copy of Indenture dated October 31, 1984, covering the Variable Rate Subordinated Debentures - Series 1 (incorporated herein by reference from Registration Statement No. 2-94191, Exhibit 4a).
9. Not applicable.
10. (a) Credit Agreement dated May, 1993 between the registrant and SouthTrust Bank of Georgia, N.A.
(b) Credit Agreement dated March 17, 1992 with addendum dated March 20, 1992 between the registrant and Georgia Federal Bank, FSB. (Incorporated by reference to Exhibit 10(a) to the registrant's Form SE dated November 5, 1992.)
(c) Revolving Credit Agreement dated October 1, 1985 as amended November 10, 1986; March 1, 1988; August 31, 1989 and May 1, 1990, among the registrant and the banks named therein (Incorporated by reference to Exhibit 10 to the registrant's Form SE dated November 9, 1990.)
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(c) Fifth Amendment to Revolving Credit Agreement dated April 23, 1992. (Incorporated by reference to Exhibit 10(c) to the Registrant's Form SE dated November 5, 1992.)
(d) Sixth Amendment to Revolving Credit Agreement dated July 20, 1992. (Incorporated by reference to Exhibit 10(d) to the Registrant's Form SE dated November 5, 1992.)
11. Not applicable due to Company being a wholly-owned subsidiary.
12. Ratio of Earnings to Fixed Charges.
13. Registrant's Annual Report to security holders for fiscal year ended December 31, 1993.
18. Not applicable.
19. Not applicable.
21. Subsidiaries of Registrant.
23. Not applicable.
23. Consent of Independent Public Accountants.
25. Not applicable.
28. Not applicable.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the quarter ended December 31, 1993. - 7 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:
1st FRANKLIN FINANCIAL CORPORATION
March 29, 1994 Ben F. Cheek, III -------------- ----------------- Date Chairman of Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated:
Signatures Title Date ---------- ----- ----
Ben F. Cheek, III Chairman of Board; March 29, 1994 Chief Executive Officer
T. Bruce Childs President March 29, 1994
A. Roger Guimond Vice President; March 29, 1994 Chief Financial Officer
W. Richard Acree Director March 29, 1994
Lorene M. Cheek Director March 29, 1994
Jack D. Stovall Director March 29, 1994
Robert E. Thompson Director March 29, 1994
Supplemental Information to be Furnished with Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act.
(a) Except to the extent that the materials enumerated in (1) and/or (2) below are specifically incorporated into this Form by reference (in which case see Rule 12b-23b), every registrant which files an annual report on this Form pursuant to Section 15(d) of the Act shall furnish to the Commission for its information, at the time of filing its report on this Form, four copies of the following:
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(1) Any annual report to security holders covering the registrant's last fiscal year and
(2) Every proxy statement, form of proxy or other proxy soliciting material sent to more than ten of the registrant's security holders with respect to any annual or other meeting of security holders.
(b) The foregoing material shall not be deemed to be "filed" with the Commission or otherwise subject to the liabilities of Section 18 of the Act, except to the extent that the registrant specifically incorporates it in its annual report on this Form by reference.
(c) This Annual Report on Form 10-K incorporates by reference portions of the Registrant's Annual Report to security holders for the fiscal year ended December 31, 1993, which is filed as Exhibit 13 hereto. The Registrant is a wholly-owned subsidiary of 1st Franklin Corporation and therefore does not distribute proxy statements or information statements.
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