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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, 1993
OR
( ) 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)
2
State the aggregate market value of the voting stock held by
nonaffiliates 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, 1994
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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, 1993 are incorporated by reference into Parts
I, II and IV of this Form 10-K.
(Cover page 2 of 2 pages)
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PART I
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. 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. LEGAL PROCEEDINGS:
Other than ordinary routine litigation incidental to the finance
business, there are no 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 16 of Registrant's Annual Report to
security holders for the fiscal year ended December 31, 1993 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, 1993 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 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. 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. 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) 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. 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. 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. 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. 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.
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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, 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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