1
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 19931994

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from __________to _________

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Commission File Number 2-27985

1st FRANKLIN FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

Georgia 58-0521233
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

213 East Tugalo Street
Post Office Box 880
Toccoa, Georgia 30577
(Address of principal executive offices)

Registrant's telephone number, including area code: (706) 886-7571

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_X No ___

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (X)

(Cover page 1 of 2 pages)

State the aggregate market value of the voting stock held by nonaffiliatesnonaffiliated
of the Registrant: Not Applicable.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

Class Outstanding at February 28, 19941995
---------------------------- --------------------------------
Common Stock, $100 Par Value 1,700 shares

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Registrant's Annual Report to security holders for the
fiscal year ended December 31, 19931994 are incorporated by reference into
Parts I, II and IV of this Form 10-K.

(Cover page 2 of 2 pages)

PART I

Item 1. BUSINESS:

The Company, Page 1; Business, Pages 95 - 17;12; and Financial
Statements, Pages 20-3218-30 of Registrant's Annual Report to security
holders for the fiscal year ended December 31, 19931994 are incorporated
herein by reference.

Item 2. PROPERTIES:

Paragraph 1 of The Company, Page 1; Footnote 7 (Commitments) of
Notes to Consolidated Financial Statements, Page 30;28; and map on
back cover of Registrant's Annual Report to security holders for
the fiscal year ended December 31, 19931994 are incorporated herein by
reference.

Item 3. LEGAL PROCEEDINGS:

The Company has been named as defendant in the following legal
proceedings in the state of Alabama:

Annie E. Erkins, et al. v. 1st Franklin, et al.; Filed in the
United States District Court for the Northern District of
Alabama, Southern Division; Civil Action No. CV-94-N-2500-S.
This was a lawsuit originally filed in the Circuit Court for
Jefferson County in May, 1994 as a class action suit seeking
recovery for an alleged violation of the Alabama Mini-Code and
for fraud arising out of the practice of charging for non-
filing insurance premiums, charges for credit property
insurance and refinancing practices. This case has been
dismissed.

Princess Nobels, et al. v. 1st Franklin, et al.; Filed in the
United States District Court for the Middle District of Alabama,
Southern Division; Civil Action No. CV-94-T-699-N.
This is a class action pending in federal district court in
Montgomery. Alabama. The case was filed in July, 1994 alleging
that certain lending practices violated the federal Truth-in-
Lending Act and the federal Racketeer Influenced and Corrupt
Organizations Act. The Plaintiffs are filing an amendment in
which they express claims for liability arising out of the non-
filing insurance under the following theories: (a) Antitrust
violations; (b) Truth-in-Lending Act violations; (c) Fraud;
(d) RICO; (e) Breach of Contract; (f) Conversion. Plantiffs
are seeking to have this case certified as a nationwide class.
At the present, it is too early to reach any type of informed
assessment of the liability of the case. The case is being
vigorously defended.

Dorothy C. Jackson and Rudolph Jackson v. 1st Franklin Financial
Corporation and Voyager Guaranty Insurance Company; Filed in
Circuit Court for Barbour County, Alabama, Clayton Division;
Civil Action No. CV-94-052
This class action case attacked the practice of charging for
credit life insurance premiums based upon the total payments,
rather than for the amount financed, and also attacked the
practice of 1st Franklin's obtaining a commission on sales of
credit life insurance. The claims were based upon fraud,
unconsicionability, and breach of contract. Plantifffs sought
to have certified a state-wide class action. The case has been
dismissed.

Carl J. White v. 1st Franklin Financial, et al.; Filed in
Circuit Court of Talladega County, Alabama; Civil Action No.
CV-94-374.
This case involves an individual claim of fraud against 1st
Franklin and Voyager Insurance Company arising out of an
allegation of fraud in connection with the sale of a policy.
The plaintiff has recently died, and the case has not been
revived on behalf of his estate. It is unclear whether or
not the case will proceed. It will be vigorously defended.

Mose Burks v. 1st Franklin, et al.; Filed May, 1994, in the
Circuit Court of Barbour County, Alabama, Clayton Division;
Civil Action No. CV-94-084.
This case alleges fraud in connection with the sale of credit
insurance and in connection with the refinancing of loans.
The case is being vigorously defended.

Karen Hilliary v. 1st Franklin Financial, et al.; Filed
September, 1994 in the Circuit Court of Bullock County, Alabama;
Civil Action No. CV-94-92.
This case alleges fraud in connection with the sale of credit
insurance and in connection with the refinancing of loans.
The case is being vigorously defended.

Robbie Martin, et al. v. 1st Franklin Financial, et al.; Filed
November, 1994 in the United States District Court for the Middle
District of Alabama, Southern Division; Civil Action
No. 94-T-1431-S.
This case alleges fraud and Mini-Code violations arising out
of the sale of non-filing insurance and loan refinancing. The
case is being vigorously defended.

James Russaw v. 1st Franklin Financial, et al.; Filed
February, 1995 in the Circuit Court for Barbour County, Alabama,
Clayton Division; Civil Action No. CV-95-023.
This case alleges fraud in connection with the sale of credit
insurance and in connection with the refinancing of loans. The
case is being vigorously defended.

These actions (except the two cases which have been dismissed) are
in their early stages and their outcome currently is not
determinable.

Other than ordinary routine litigation incidental to the finance
business, there are no other material pending legal proceedings.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

Not applicable.
PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS:

Source of Funds, Page 1612 of Registrant's Annual Report to security
holders for the fiscal year ended December 31, 19931994 is incorporated
herein by reference.

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, 19931994 is incorporated herein by reference.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:

Management's Discussion of Operations, Pages 513 - 816 of Registrant's
Annual Report to security holders for the fiscal year ended
December 31, 19931994 is incorporated herein by reference.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

Pages 2018 - 3230 of Registrant's Annual Report to security holders for
the fiscal year ended December 31, 19931994 are incorporated herein by
reference.

Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:

Not applicable.
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PART III

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) 6667 Since 1970; None
When successor
elected and qualified

Ben F. Cheek, III (3)(4)(5) 5758 Since 1967; Chairman of
When successor Board
elected and qualified

Lorene M. Cheek (2)(4)(6) 8485 Since 1946; None
When successor
elected and qualified

Jack D. Stovall (1)(2) 5859 Since 1983; None
When successor
elected and qualified

Robert E. Thompson (1)(2) 6263 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, 5758 Joined the Company in 1961 as attorney and became
Chairman of Board and became Vice President in 1962, President in 1972 and ChairmanChair-
man of Board in 1989.

T. Bruce Childs, 5758 Joined the Company in 1958 and was named Vice
President Vice President in charge of Operations in 1973 and
No Family Relationship 1973 and President in 1989.

Lynn E. Cox, 3637 Joined the Company in 1983 and became
Secretary Secretary in 1989.
No Family Relationship

A. Roger Guimond, 3940 Joined the Company in 1976 as an accountant and
Vice President accountant and became Chief Accounting andOfficer in 1978, Chief
Chief Financial Officer Officer in 1978, Chief Financial Officer
No Family Relationship in 1991 and Vice President in 1992.
No Family Relationship

Linda L. Sessa, 3940 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. 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 1994 228,000 189,693 2,760 38,594
Chairman and 1993 216,000 154,653 2,867 44,268
Chairman andCEO 1992 204,000 124,106 2,592 45,594

CEO 1991 188,000 101,209 2,770 39,164

T. Bruce Childs 1994 210,000 188,973 4,682 31,071
President 1993 194,000 153,773 7,179 34,878
President38,574
1992 178,000 123,066 4,683 34,878

1991 164,000 100,249 3,583 30,969

A. Roger Guimond 1994 108,000 62,174 1,650 20,255
Vice President 1993 96,000 36,790 1,650 15,354
Vice Presidentand CFO 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 $3,816 for 1994, $5,984 for
1993 and $7,310 for 1992 and $5,168 for
1991.1992.

(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. 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 CorporationBen F. Cheek, III Common 17001,160 Shares - Direct 100.00%
213 East Tugalo Street68.24%
225 Valley Drive
Toccoa, Georgia 30577

John Russell Cheek Common 441 Shares - 4 -
7Direct 25.94%
181 Garland Road
Toccoa, Georgia 30577

(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. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

The Company leases its Home Office building and print shop for a
total of $10,600$12,600 per month from Franklin Enterprises, Inc. under
leases which expire January 1, 1995.December 31, 2004. Franklin Enterprises, Inc.
is 66.67% owned by Ben F. Cheek, III, a director and executive
officer of the Company. In management'sManagement'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 parentCompany 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 1991during the
three year period ended December 31, 1994 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.

Liberty leases its office space and equipment from the Company
for $4,200 per month, which in Management's opinion are at rates
which approximate these obtainable from independent third parties.

At December 31, 1993,1994, the Company maintained $500,000$300,000 of
certificates of deposit and $172,989$55,518 in a money market account
with Liberty at market rates and terms. The Company also had
$2,038,013$1,460,003 in demand deposits with Liberty at December 31, 1993.

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PART IV

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, 1993:1994:

Report of Independent Public Accountants.

Consolidated Statements of Financial Position at
December 31, 19931994 and 1992.1993.

Consolidated Statements of Income and Retained Earnings for
the three years ended December 31, 1993.1994.

Consolidated Statements of Cash Flows for the three years
ended December 31, 1993.1994.

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:

2. (a) Articles of Merger of 1st Franklin Corporation with
and into 1st Franklin Financial Corporation dated
December 31, 1994.

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).

(b) Modification of Indenture dated March , 1995.

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.N.A.. (Incorporated herein by
reference to Exhibit 10(a) tofrom Form 10-K for the registrant's Form SE dated November 5, 1992.fiscal year ended
December 31, 1993.)

(c)(b) 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.)

(e) Seventh Amendment to Revolving Credit Agreement dated
June 20, 1994.

(f) Merger of 1st Franklin Corporation with 1st Franklin
Financial Corporation Consent, Waiver and Eighth Amendment
to Revolving Credit and Term Loan Agreement.

11. Not applicable dueComputation of Earnings per Share is self-evident from the
Consolidated Statement of Income and Retained Earnings in the
Registrant's Annual Report to Company being a wholly-owned subsidiary.Security Holders for the fiscal
year ended December 31, 1994, incorporated by reference herein.

12. Ratio of Earnings to Fixed Charges.

13. Registrant's Annual Report to security holders for fiscal year
ended December 31, 1993.1994.

18. Not applicable.

19. Not applicable.

21. Subsidiaries of Registrant.

23.22. Not applicable.

23. Consent of Independent Public Accountants.

25.24. Not applicable.

27. Financial Data Schedule

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.
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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, 199430, 1995 By: 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, 199430, 1995
-------------------------- Chief Executive
Officer

T. Bruce Childs President March 29, 199430, 1995
--------------------------

A. Roger Guimond Vice President; March 29, 199430, 1995
-------------------------- Chief Financial
Officer

W. Richard Acree Director March 29, 199430, 1995
--------------------------

Lorene M. Cheek Director March 29, 199430, 1995
--------------------------

Jack D. Stovall Director March 29, 199430, 1995
--------------------------

Robert E. Thompson Director March 29, 199430, 1995
--------------------------
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, 1993,1994, which is filed as Exhibit 13 hereto. The
Registrant is a wholly-owned subsidiary of 1st Franklin
Corporationprivately held corporation and therefore does not
distribute proxy statements or information statements.

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