SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

------------------------------

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

For the fiscal year ended December 31, 19941995

( ) 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 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
nonaffiliated 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, 1995
----------------------------1996
------------------------------------- --------------------------------
Voting Common Stock, $100 Par Value 1,700 shares
Non-Voting Common Stock, No Par Value 168,201 shares

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Registrant's Annual Report to security holders for the
fiscal year ended December 31, 19941995 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 5 - 12; and Financial
Statements, Pages 18-30 of Registrant's Annual Report to security
holders for the fiscal year ended December 31, 19941995 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 28; and map on back
cover of Registrant's Annual Report to security holders for the
fiscal year ended December 31, 19941995 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.Debra Underwood v. 1st Franklin Financial Corporation, et al.;
Filed in the United States District Court for the Northern District of Alabama, Southern Division;Chilton County, Alabama;
Civil Action No. CV-94-N-2500-S.CV-96-001-R.
This was a lawsuit originallywas filed in January 1, 1996. The plaintiffs
allege that the Circuit Court for
Jefferson CountyCompany required them to purchase credit life
insurance before extending a loan to them. The plaintiffs
allege that, in May, 1994 as a class action suit seeking
recovery for an alleged violation ofso requiring, the Company violated the Alabama
Mini-Code, committed fraudulent misrepresentation and
for fraud arising out ofsuppression, and engaged in a conspiracy. Plaintiffs also
allege that 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 ActCompany and the federal Racketeer Influenced and Corrupt
Organizations Act. The Plaintiffs are filing an amendment in
which they express claims for liability arising outother defendants fraudulently
suppressed the costs 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.refinancing their existing loan. 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.Annie Liptrot, et al. v 1st Franklin Financial Corporation,
and Voyager Guaranty Insurance Company;et al.; Filed in Circuitthe United States District Court for Barbour County, Alabama, Clayton Division;the Middle
District of Alabama; Civil Action No. CV-94-052CV-95-T-1656-N.
This lawsuit was filed November 28, 1995 as a putative
statewide class action, case attackedin which the practiceplaintiff alleges that
the Company has violated the Alabama Mini-Code and committed
fraud arising out 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 salessale of credit life insurance. The claims were based upon fraud,
unconsicionability, and breachAt
the present, it is too early to reach any type of contract. Plantifffs sought
to have certified a state-wide class action.informed
assessment of the liability of the case. The case has been
dismissed.

Carl J. Whiteis being
vigorously defended.

Earnestine B. Simmons v. 1st Franklin Financial, et al.; Filed
January, 1996 in CircuitSuperior Court of Talladegafor Dougherty County, Alabama;Georgia;
Civil Action No. CV-94-374.96-CV-020
This class action case involves an individual claimseeks recovery for alleged violations
of fraud against 1st
Franklin and Voyager Insurance Companydeceit, breach of contract and violations under
the Georgia RICO act arising out of an
allegation of fraud in connection with the sale of a policy.non-filing
and personal property insurance. At the present, it is too
early to reach any type of informed assessment of the
liability of the case. The plaintiff has recently died,case is being vigorously defended.

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During recent months, the Company entered into settlement
agreements with certain borrowers who had previously asserted
claims against the Company. Although the Company and its employees
deny that they are guilty of any wrongdoing or any breach of any
legal obligation or duty to the case has notClaimants, in recognition of the
expense and uncertainty of litigation, Management felt it was in
the best interest of the Company to dispose of these cases. The
following cases previously reported have been revived on behalf of his estate. It is unclear whether or
not the case will proceed. It will be vigorously defended.disposed of:

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 fraudCV-94-084; previously disclosed in connection with the
sale of credit
insurance and in connection withCompany's Form 10-K for the refinancing of loans.period ended December 31, 1994. The
case is being vigorously defended.was settled on December 29, 1995.

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 fraudCV-94-92; previously disclosed in connection with the sale of credit
insurance and in connection withCompany's
Form 10-K for the refinancing of loans.period ended December 31, 1994. The case is being vigorously defended.

Robbie Martin, et al.was
settled on December 29, 1995.

Vicie Davis v. 1st Franklin Financial Corporation, et al.;
Filed
November, 1994Originally filed on May 11, 1995 in the United States DistrictCircuit Court for the Middle
District of Alabama, Southern Division;Barbour
County, Alabama; Civil Action No. 94-T-1431-S.
This case alleges fraud and Mini-Code violations arising out
ofCV-95-0139; previously
disclosed in the sale of non-filing insurance and loan refinancing.Company's Form 10-Q for the period ended
June 30, 1995. The case is being vigorously defended.

James Russawwas settled during February, 1996.

Corinthia Holman v. 1st Franklin Financial Corporation, et al.;
Filed February,May 11, 1995 in the Circuit Court forof Barbour County,
Alabama,
Clayton Division;Alabama; Civil Action No. CV-95-023.
This case alleges fraudCV-95-0142; previously disclosed in
connection with the sale of credit
insurance and in connection withCompany's Form 10-Q for the refinancing of loans.period ended June 30, 1995. The
case is being vigorously defended.

These actions (exceptwas settled during February, 1996.

Teri Foster v. 1st Franklin Financial Corporation, et al.;
Filed May 11, 1995 in the twoCircuit Court of Barbour County,
Alabama; Civil Action No. CV-95-0123; previously disclosed in
the Company's Form 10-Q for the period ended June 30, 1995. The
case was settled during February, 1996.

Nine other cases which have been dismissed) are
in their early stagesAlabama, similar in nature to the
aforementioned, were filed during January and their outcome currently is not
determinable.February, 1996.
The Company settled all of these during the first quarter
of 1996.

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.

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PART II

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

Source of Funds, Page 12 of Registrant's Annual Report to
security holders for the fiscal year ended December 31, 19941995 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, 19941995 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 13 - 1615 of
Registrant's Annual Report to security holders for the fiscal
year ended December 31, 19941995 is incorporated herein by reference.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

Pages 18 - 30 of Registrant's Annual Report to security holders
for the fiscal year ended December 31, 19941995 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) 6768 Since 1970; None
When successor
elected and qualified

Ben F. Cheek, III (3)(4)(5) 5859 Since 1967; Chairman of
When successor Board
elected and qualified

Lorene M. Cheek (2)(4)(6) 8586 Since 1946; None
When successor
elected and qualified

Jack D. Stovall (1)(2) 5960 Since 1983; None
When successor
elected and qualified

Robert E. Thompson (1)(2) 6364 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. These positions have
been held by each respective Director for more than five years.

(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, 5859 Joined the Company in 1961 as attorney and
became
Chairman of Board became Vice President in 1962, President in
1972 and Chair-
manChairman of Board in 1989.

T. Bruce Childs, 5859 Joined the Company in 1958 and was named Vice
President President in charge of Operations in 1973 and
No Family Relationship President in 1989.

Lynn E. Cox, 3738 Joined the Company in 1983 and became
Secretary Secretary in 1989.
No Family Relationship

A. Roger Guimond, 4041 Joined the Company in 1976 as an accountant and
Vice President and became Chief Accounting Officer in 1978, Chief
Chief Financial Officer Financial Officer in 1991 and Vice President in
1992.
No Family Relationship 1992.

Linda L. Sessa, 4041 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 1995 240,000 220,466 3,033 146,114
Chairman and 1994 228,000 189,693 2,760 38,594
Chairman andCEO 1993 216,000 154,653 2,867 44,268

CEO 1992 204,000 124,106 2,592 45,594

T. Bruce Childs 19941995 228,000 219,986 4,236 130,447
President 1993 210,000 188,973 4,682 31,071
President 19931992 194,000 153,773 7,179 38,574

1992 178,000 123,066 4,683 34,878

A. Roger Guimond 1995 120,000 74,816 1,650 40,959
Vice President 1994 108,000 62,174 1,650 20,255
Vice President17,945
and CFO 1993 96,000 36,790 1,650 15,354
and CFO 1992 84,000 29,145 1,625 11,427

* 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 $4,425 for 1995, $3,816 for 1994 and
$5,984 for 19931993. Includes Company contributions to profit-sharing plan
for the benefit of T. Bruce Childs. Also represents contributions to
profit-sharing plan, and $7,310reported compensation from premiums on a life
insurance policy for 1992.the benefit of A. Roger Guimond in the amount
of $574 for 1995.

(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 family owned business with
Ben F. Cheek, III being the majority stockholder.

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Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT:

(a) Security Ownership of Certain Beneficial Owners:Owners as of March 26, 1996:

Name and Address of Amount and Nature of Percent
Beneficial Owner Title of Class Beneficial Ownership Of Class
------------------- -------------- --------------------- --------
Ben F. Cheek, III Voting Common 1,160 Shares - Direct 68.24%
225 Valley Drive
Toccoa, Georgia 30577

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

(b) Security Ownership of Management:Management as of March 26, 1996:

Ownership listed below represents ownership in 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 Voting Common Stock 1,160 Shares - Direct 68.24%
Non-Voting Common Stock 114,840 Shares (1) 68.24%

T. Bruce Childs Voting Common Stock None None
Non-Voting Common Stock None None

A. Roger Guimond Voting Common Stock None None
Non-Voting Common Stock None None
__________________________________________

All Directors and
Executive Officers
as a Group Voting Common Stock 1,160 Shares - Direct 68.24%
Non-Voting Common Stock 114,840 Shares 68.24%

(1) Such shares are owned by Cheek Investments, L.P., of which
Ben F. Cheek, III and his wife are the general partners.

(c) The Company knows of no contractual arrangements which may at a
subsequent date result in a change in control of the Company.

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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

The Company leases its Home Office building and print shop for a
total of $12,600 per month from Franklin Enterprises, Inc. under
leases which expire 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's opinion, these leases are
at rates which approximate those obtainable from independent third
parties.

Beneficial owners of the Company 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 during the three
year period ended December 31, 19941995 related to these agreements
was $63,800 per year 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 areis at ratesa rate which
approximate theseapproximates that obtainable from independent third parties.

At December 31, 1994,1995, the Company maintained $300,000$2,300,000 of
certificates of deposit and $55,518$2,360 in a money market account with
Liberty at market rates and terms. The Company also had $1,460,003$1,431,090
in demand deposits with Liberty at December 31, 1994.1995.

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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, 1994:1995:

Report of Independent Public Accountants.

Consolidated Statements of Financial Position at December 31, 19941995
and 1993.1994.

Consolidated Statements of Income and Retained Earnings for the
three years ended December 31, 1994.1995.

Consolidated Statements of Cash Flows for the three years ended
December 31, 1994.1995.

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,
19831994 (incorporated herein by reference to Exhibit 3(2)(a)
from Form 10-K for the fiscal year ended December 31, 1983)1994).

3. (a) Restated Articles of Incorporation as amended January 26,
1996.

(b) Bylaws

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 , 1995.29, 1995
(incorporated herein by reference to Exhibit 3(4)(b) from
Form 10-K for the fiscal year ended December 31, 1994).

9. Not applicable.

10. (a) Credit Agreement dated May, 1993 between the registrant
and SouthTrust Bank of Georgia, N.A.. (Incorporated
herein by reference from Form 10-K for the fiscal year
ended December 31, 1993.)

(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. (Incorporated by reference to Exhibit 10(e)
from Form 10-K for the fiscal year ended December 31, 1994.)

(f) Merger of 1st Franklin Corporation with 1st Franklin
Financial Corporation Consent, Waiver and Eighth Amendment
to Revolving Credit and Term Loan Agreement. (Incorporated
herein by reference to Exhibit 10(f) from Form 10-K for
the fiscal year ended December 31, 1994.)

11. Computation of Earnings per Share is self-evident from the
Consolidated Statement of Income and Retained Earnings in the
Registrant's Annual Report to Security Holders for the fiscal
year ended December 31, 1994,1995, 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, 1994.1995.

18. Not applicable.

19. Not applicable.

21. Subsidiaries of Registrant.

22. Not applicable.

23. Consent of Independent Public Accountants.

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, 1994.1995.

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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 30, 199529, 1996 By: s/ Ben F. Cheek, III
--------------- ------------------------------------------------ --------------------
Date Chairman of BoardBoad

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

---------- ----- ----s/ Ben F. Cheek, III Chairman of Board; March 30, 1995
--------------------------29, 1996
- --------------------- Chief Executive --------------
Officer

s/ T. Bruce Childs President March 30, 1995
--------------------------29, 1996
- --------------------- --------------

s/ A. Roger Guimond Vice President; March 30, 1995
--------------------------29, 1996
- --------------------- Chief Financial --------------
Officer

s/ W. Richard Acree Director March 30, 1995
--------------------------29, 1996
- --------------------- --------------

s/ Lorene M. Cheek Director March 30, 1995
--------------------------29, 1996
- --------------------- --------------

s/ Jack D. Stovall Director March 30, 1995
--------------------------29, 1996
- --------------------- --------------

s/ Robert E. Thompson Director March 30, 1995
--------------------------29, 1996
- --------------------- --------------

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, 1994,1995, which is filed as Exhibit 13 hereto. The
Registrant is a privately held corporation and therefore does not
distribute proxy statements or information statements.

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