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United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Quarterly Period Ended September 30, 2000
[ ] Transition Report Pursuant to 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
--------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 31-1221029
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
4750 Ashwood Drive Cincinnati, Ohio 45241
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(Address of Principal Executive Offices) (Zip Code)
(513) 469-5352
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(Issuer's Telephone Number)
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(Former name, former address and former fiscal year, if changed since last
report)
APPLICABLE ONLY TO CORPORATE ISSUERS
As of September 30, 2000 there were issued and outstanding 1,613,873 shares of
the Issuer's Common Stock.
Transitional Small Business Format (check one)
Yes [ ] No [X]
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
INDEX
Page No.
Part I Financial Information
Item 1. Consolidated Balance Sheets -
September 30, 2000 and December 31, 1999 3
Consolidated Statements of Income and Retained
Earnings - Three and Nine-month Periods ended September 30,
2000 and 1999 4
Consolidated Statements of Cash Flows - Nine-month
Periods ended September 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information 15
Item 5. Press Release dated September 26, 2000 16
Press Release dated October 12, 2000 17
Signatures
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Sept. 30,2000 Dec 31,1999
------------- -----------
(Unaudited)
ASSETS
Cash, including CD's & other interest-earning
deposits of $160 and $205, respectively $ 1,398 $ 3,688
Investment securities
Available-for-sale, at market value
(amortized cost of $20,187 and
$20,190, respectively) 19,375 19,197
Mortgage-backed securities
Available-for-sale, at market value
(amortized cost of $32,813 and
$39,719, respectively) 32,391 39,342
Held-to-maturity, at amortized cost
(market value of $11,504 and
$13,336, respectively) 11,639 13,596
Loans receivable, net 196,247 167,601
Real estate owned, net 0 0
Stock in Federal Home Loan Bank
of Cincinnati ("FHLB"), at cost 3,128 1,971
Accrued interest receivable 1,800 1,311
Property and equipment, net 1,885 1,942
Other assets 1,934 1,557
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$269,797 $250,205
LIABILITIES
Savings accounts $186,001 $191,673
Borrowings 62,162 37,110
Advances by borrowers for taxes
and insurance 755 1,171
Other liabilities 448 496
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Total liabilities 249,366 230,450
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STOCKHOLDERS' EQUITY
Preferred stock; $.01 par value per share;
500,000 shares authorized; no shares issued
Common stock; $.01 par value per share;
2,500,000 shares authorized; 2,010,867
shares issued at 09/30/00 and 12/31/99,
respectively 13 13
Additional paid in capital 6,189 6,189
Treasury stock, at cost- 396,994 shares at
09/30/00 and 380,494 shares at 12/31/99 (3,888) (3,733)
Retained earnings, substantially restricted 18,931 18,190
Accumulated other comprehensive income:
Unrealized loss on available-for-sale
securities, net of taxes of $(420) at 09/30/00
and $(466) at 12/31/99 (814) (904)
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Total stockholders' equity 20,431 19,755
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$269,797 $ 250,205
The accompanying notes are an integral part of the consolidated financial
statements.
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Dollars in thousands, except per share data)
For the Three Months Ended For the Nine Months Ended
Sept 30,2000 Sept 30,1999 Sept 30,2000 Sept 30,1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Interest income:
Loans receivable $ 3,699 $ 2,947 $10,385 $ 8,749
Mortgage-backed securities 773 683 2,409 2,095
Investment securities 351 351 1,046 1,016
------- ------- ------- -------
4,823 3,981 13,840 11,860
Interest expense:
Savings accounts 2,384 2,209 6,939 6,749
Borrowings 956 322 2,194 777
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3,340 2,531 9,133 7,526
------- ------- ------- -------
Net interest income 1,483 1,450 4,707 4,334
Provision (credit) for loan losses 19 0 56 (123)
------- ------- ------- -------
Net interest income after
provision (credit) for loan losses 1,464 1,450 4,651 4,457
------- ------- ------- -------
Noninterest income:
Gain on loans sold 8 1 11 66
Gain on sale of investments 0 0 0 23
Service fees on NOW accounts 66 59 182 170
Other income 106 81 285 239
------- ------- ------- -------
180 141 478 498
Noninterest expense:
Salaries and employee benefits 531 549 1,609 1,618
Occupancy expense 147 164 440 490
Federal deposit insurance premiums 24 28 44 88
Service bureau expense 69 67 194 193
Advertising 66 39 255 129
Other expenses 322 286 950 907
------- ------- ------- -------
1,159 1,133 3,492 3,425
Income before federal income taxes 485 458 1,637 1,530
Provision for federal income taxes 156 149 533 502
------- ------- ------- -------
Net Income $ 329 $ 309 $ 1,104 $ 1,028
RETAINED EARNINGS-BEGINNING OF PERIOD $18,721 $17,740 $18,190 $17,274
Net income 329 309 1,104 1,028
Less: dividends declared (119) (119) (363) (372)
------- ------- ------- -------
RETAINED EARNINGS-END OF PERIOD $18,931 $17,930 $18,931 $17,930
EARNINGS PER COMMON SHARE
Basic $ 0.20 $ 0.19 $ 0.68 $ 0.61
Diluted $ 0.20 $ 0.19 $ 0.68 $ 0.61
DIVIDENDS DECLARED PER COMMON SHARE $ 0.075 $ 0.075 $ 0.225 $ 0.225
The accompanying notes are an integral part of the consolidated financial
statements.
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For The Nine Months Ended
Sept 30,2000 Sept 30,1999
-----------------------------
(Unaudited)
Cash provided by (used in) operating activities:
Net income $ 1,104 $ 1,028
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision (credit) for loan losses 56 (123)
Depreciation and amortization 161 397
FHLB stock dividend (132) (98)
Increase in accrued interest receivable (489) (202)
Increase in other assets (377) (3)
Decrease in other liabilities (48) (24)
Other, net (148) 575
Loans sold 683 6,721
Disbursements on loans originated for sale (285) (6,647)
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Net cash provided by operating activities 525 1,624
-------- --------
Cash provided by (used in) investing activities:
Loan principal reductions 24,899 26,508
Disbursements on mortgage and other
loans purchased or originated for investment (53,898) (40,112)
Repayments on mortgage-backed securities 8,785 19,820
Purchase of available-for-sale mortgage-backed securities 0 (17,541)
Purchase of held-to-maturity mortgage-backed securities 0 (4,950)
Sale of available-for-sale mortgage-backed securities 0 2,887
Purchase of available-for-sale investment securities 0 (10,114)
Proceeds from the sale of or maturity of available-for-sale
investment securities 5 9,215
Purchase of FHLB Stock (1,025) (50)
Capital expenditures (27) (32)
-------- --------
Net cash used in investing activities (21,261) (14,369)
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Cash provided by (used in) financing activities:
Net decrease in deposits (5,672) (13,276)
Borrowed money 25,052 19,984
Decrease in advances by borrowers
for taxes and insurance (416) (393)
Repurchase of common stock (155) (1,083)
Payment of dividends (363) (372)
-------- --------
Net cash provided by financing activities 18,446 4,860
-------- --------
Net decrease in cash ($2,290) ($7,885)
Cash at beginning of period 3,688 8,369
-------- --------
CASH AT END OF PERIOD $ 1,398 $ 484
The accompanying notes are an integral part of the consolidated financial
statements.
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-and nine-month periods ended
September 30, 2000 are not necessarily indicative of the results that may be
expected for the full year. The December 31, 1999 Balance Sheet data was derived
from audited Financial Statements, but does not include all disclosures required
by generally accepted accounting principles.
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities" which establishes standards for derivative instruments,
including derivative instruments imbedded in other contracts and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. Management does not believe that the
adoption of this standard will impact the Company because, at this time, the
Company does not hold any of the instruments covered by the standard.
SFAS No. 130, "Reporting Comprehensive Income" requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. For interim period reporting,
an organization is required to report a total for comprehensive income.
Comprehensive income for the nine months ended September 30, 2000 and 1999 was
$1,194,000 and $263,000, respectively. The difference between net income and
comprehensive income consists solely of the effect of unrealized gains and
losses, net of taxes, on available-for-sale securities.
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FIRST FRANKLIN CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
First Franklin Corporation ("Company") is a savings and loan holding company,
which was incorporated under the laws of the State of Delaware in September 1987
by authorization of the Board of Directors of the Franklin Savings and Loan
Company ("Franklin"). The Company acquired all of the common stock of Franklin
issued in connection with its conversion from the mutual to stock form of
ownership, which was completed on January 25, 1988.
The Company's operating philosophy is to be an efficient and profitable
financial services organization with a professional staff committed to
maximizing shareholder value by structuring and delivering quality services that
attract customers and satisfy their needs and preferences. Management's goal has
been to maintain profitability and a strong capital position. It seeks to
accomplish this goal by pursuing the following strategies: (i) emphasizing
lending in the one- to four-family residential mortgage market, (ii) managing
deposit pricing, (iii) controlling interest rate risk, (iv) controlling
operating expenses (v) controlling asset growth, and (vi) maintaining asset
quality.
As a Delaware corporation, the Company is authorized to engage in any activity
permitted by the Delaware General Corporation Law. As a unitary savings and loan
holding company, the Company is subject to examination and supervision by the
Office of Thrift Supervision ("OTS"), although, the Company's activities are not
limited by the OTS as long as certain conditions are met. The Company's assets
consist of cash, interest-earning deposits, and investments in Franklin,
DirectTeller Systems Inc. ("DirectTeller") and Financial Institutions Partners
III, L.P.
Franklin is an Ohio chartered stock savings and loan headquartered in
Cincinnati, Ohio. It was originally chartered in 1883 as the Green Street Number
2 Loan and Building Company. The business of Franklin consists primarily of
attracting deposits from the general public and using those deposits, together
with borrowings and other funds, to originate and purchase investments and real
estate loans for retention in its portfolio and sale in the secondary market.
Franklin operates six banking offices and one loan origination office in
Hamilton County, Ohio through which it offers a full range of consumer banking
services, including mortgage loans, credit and debit cards, checking accounts,
auto loans, savings accounts, automated teller machines, and a voice response
telephone inquiry system. In January 2000, Franklin began offering an internet
banking service called "Franklin Online" which allows users to pay bills,
transfer funds, obtain account information and download account and transaction
information into financial management programs using their home computer. To
generate additional fee income and enhance the products and services available
to its customers, Franklin also offers annuities, mutual funds, and discount
brokerage services in its offices through an agreement with a third party.
Franklin receives a portion of the sales commissions earned on these products.
Franklin has one wholly owned subsidiary, Madison Service Corporation
("Madison"). Madison was formed in 1972 to allow Franklin to diversify into
certain types of business that, by regulation, savings and loans were unable to
enter. At the present time, Madison's assets consist solely of cash and
interest-earning deposits. Its only sources of income are the interest earned on
these deposits and the fees received as a result of the agreement with the third
party broker dealer that provides the discount brokerage services at Franklin's
offices.
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The Company owns 51% of DirectTeller's outstanding common stock. DirectTeller
was formed in 1989 by the Company and Data Tech Services Inc. to develop and
market a voice response telephone inquiry system to allow financial institution
customers to access information about their accounts via the telephone and a
facsimile machine. Franklin currently offers this service to its customers. The
inquiry system is currently in operation at Intrieve Inc.("Intrieve"), a
computer service bureau that offers the DirectTeller system to the savings and
loans it services. The agreement with Intrieve gives DirectTeller a portion of
the profits generated by the use of the inquiry system by Intrieve's clients.
In September 1999, management and the Board of Directors reviewed the Company's
strategic plan and established various strategic objectives for the next two
years. The primary objectives of this plan are asset growth, profitability,
independence, capital adequacy and enhancing shareholder value. The Company will
pursue these objectives through loan growth, the use of technology to improve
efficiency and/or customer service, an enhanced marketing effort to take full
advantage of the opportunities that exist in the marketplace, and expansion
through the addition of branch and/or loan origination offices. At the beginning
of October 2000, Franklin opened a loan origination office to serve the eastern
side of Hamilton County. Accomplishing these objectives is subject to a variety
of factors, some of which are beyond the control of the Company.
Since the results of operations of Madison and DirectTelller have not been
material to the operations and financial condition of the Company, the following
discussion focuses primarily on Franklin.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Consolidated assets increased $19.59 million (7.8%) from $250.21 million at
December 31, 1999 to $269.80 million at September 30, 2000, compared to a $5.08
million (2.1%) increase for the same period in 1999. During 2000,
mortgage-backed securities decreased $8.91 million, cash and investments
decreased $2.11 million, loans receivable increased $28.65 million, deposits
decreased $5.67 million and borrowings increased $25.05 million
Loan disbursements were $54.18 million during the current nine-month period
compared to $46.76 million during the nine months ended September 30, 1999.
Disbursements during the third quarter of 2000 were $13.67 million compared to
$15.19 million during the same quarter in 1999. Mortgage loan sales during the
current nine-month period were $285,000 compared to sales of $6.72 million
during the first nine months of 1999. At September 30, 2000, commitments to
originate mortgage loans were $2.75 million. At the same date, $4.81 million of
undisbursed loan funds were being held on various construction loans. Management
believes that sufficient cash flow and borrowing capacity exists to fund these
commitments.
Liquid assets decreased $2.11 million during the nine months ended September 30,
2000, to $20.77 million. This decrease reflects loan and mortgage-backed
securities repayments of $33.68 million and borrowings of $25.05 million less
loan disbursements of $54.18 million and a decrease in savings accounts of $5.67
million. At September 30, 2000, liquid assets were 7.7% of total assets.
The Company's investment and mortgage-backed securities are classified based on
its current intention to hold to maturity or have available for sale, if
necessary. The following table shows the gross unrealized gains or losses on
mortgage-backed securities and investment securities as of September 30, 2000.
No securities are classified as trading.
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Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------------------------------------------------
(in thousands)
Available-for-sale
Investment securities $20,187 $32 $844 $19,375
Mortgage-backed securities 32,813 90 512 32,391
Held-to-maturity
Mortgage-backed securities 11,639 1 136 11,504
At September 30, 2000, savings deposits were $186.00 million compared to $191.67
million at December 31, 1999. This is a decrease of $2.11 million during the
current quarter and $5.67 million during the nine months ended September 30,
2000. During the nine months ended September 30, 2000, core deposits
(transaction and passbook savings accounts) decreased $1.63 million. During the
same period, short-term certificates (two years or less) decreased $19.43
million and certificates with original terms greater than two years increased
$15.39 million. The decline in short-term certificates and increase in long-term
certificates reflects management's efforts to lengthen the maturity of its
deposits. Interest of $2.08 million during the current quarter and $6.13 million
during the current nine-month period was credited to accounts. After eliminating
the effect of interest credited, savings decreased $4.19 million during the
current quarter and $11.80 million during the nine months ended September 30,
2000.
At September 30, 2000, Franklin had outstanding Federal Home Loan Bank ("FHLB")
advances of $62.16 million at an average cost of 6.53%. During the next twelve
months, principal payments of $12.89 million are required on these advances.
In the current interest rate environment, the Company is subject to significant
interest rate risk. In the low interest rate environment that prevailed
throughout much of the 1990s, Franklin, like many financial institutions, was
not able to attract a significant amount of long-term deposits as customers
opted to pursue short-term investments so they would be poised to take advantage
of rates when they did rise. As a result, Franklin experienced a shortening of
the maturities of its liabilities. The low rates had the opposite effect on
Franklin's assets, as consumers took advantage of the low rates to lock-in
long-term mortgages. Although Franklin has sold some of its fixed-rate mortgages
in recent years, timing considerations and other market conditions have not
always been conducive to a sale. Consequently, Franklin is experiencing a
mismatch between the repricing terms of its assets and liabilities.
During the fourth quarter of 1999, Franklin implemented several new initiatives
to improve its interest rate sensitivity. One initiative is to increase
Franklin's capital position, which Franklin has addressed by suspending the
payment of dividends to the Company. It is not anticipated that this action will
adversely affect the ability of the Company to pay dividends to its
shareholders. Other initiatives include lengthening the maturities of its
liabilities, which Franklin has undertaken by pricing its thirty-nine month and
five-year certificates of deposit more attractively, and shortening the
maturities of its assets by limiting the origination of fixed-rate mortgages and
emphasizing the origination of one-, three-and five-year adjustable-rate
mortgages. In addition, commercial and multi-family real estate loans will have
shorter maturities with balloon payments due in five years or less. More
emphasis is also being placed on the origination of home equity lines of credit
and adjustable-rate second mortgages, which are normally originated at higher
rates than first mortgages.
As a result of these initiatives, the composition of the loan portfolio has gone
from 33% adjustable, 56% fixed and 11% balloons at December 31, 1999, to 45%
adjustable, 44% fixed and 11% balloons
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at September 30, 2000. During the same time frame, core deposits have remained
constant at 24% of total deposits and certificates with original maturities of
three years or more have increased to 37% of total deposits from 24% at December
31, 1999.
Under current OTS regulations, Franklin's interest rate risk position was
classified as high risk at June 30, 2000. Franklin has submitted to the OTS an
interest rate risk compliance plan, which includes many of the initiatives
discussed above. The OTS has recently approved this plan. If the provisions of
this plan are not complied with, the OTS could take other action, which could
limit Franklin's activities, growth or earnings.
At September 30, 2000, $1.42 million of assets were classified substandard,
$176,000 classified loss and $3.15 million classified as special mention
compared to $989,000 substandard, $163,000 loss and $3.02 million special
mention at December 31, 1999. Non-accruing loans and accruing loans delinquent
ninety days or more, net of reserves, were $1.70 million at September 30, 2000
and $777,000 at December 31, 1999. The majority of the increase in delinquent
and classified loans is due to a $600,000 construction loans to a builder which
became delinquent during the current quarter. The house has been sold and it is
anticipated that the loan will be paid in full during the fourth quarter.
Because of the increase in delinquent loans and substandard assets, the Company
has enhanced its collection efforts. At September 30, 2000, the recorded
investment in loans for which impairment under SFAS No. 114 has been recognized
was immaterial to the Company's financial statements.
The following table shows the activity that has occurred on loss reserves during
the nine months ended September 30, 2000.
(Dollars in thousands)
Balance at beginning of period $977
Charge offs 1
Additions charged to operations 56
Recoveries 0
-
Balance at end of period $1,032
During the second quarter of 1999, loss reserves were reduced by $163,000 as the
result of an unanticipated payoff of a renegotiated loan that was secured by a
50 unit motel in Cincinnati, Ohio and for which a specific reserve was
established in 1990 and 1991.
The Company's capital supports business growth, provides protection to
depositors, and represents the investment of stockholders on which management
strives to achieve adequate returns. The Company continues to enjoy a strong
capital position. At September 30, 2000, net worth was $20.43 million, which is
7.57% of assets. At the same date, book value per share was $12.66 compared to
$12.12 at December 31, 1999.
The following table summarizes, as of September 30, 2000, the regulatory capital
position of Franklin. Under the OTS prompt corrective action regulation,
Franklin is considered well-capitalized.
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Capital Standard Actual Required Excess Actual Required Excess
------ -------- ------ ------ -------- ------
(Dollars in thousands)
Core $18,788 $10,790 $7,998 6.97% 4.00% 2.97%
Risk-based 19,644 11,159 8,485 14.08% 8.00% 6.08%
RESULTS OF OPERATIONS
Net income was $329,000 ($0.20 per basic share) for the current quarter and
$1.10 million ($0.68 per basic share) for the nine months ended September 30,
2000. This compares to earnings of $309,000 ($0.19 per basic share) for the
third quarter of 1999 and $920,000 ($0.55 per basic share), excluding the
one-time recapture of a loan loss reserve of $108,000 ($0.06 per basic share)
after taxes, for the nine months ended September 30, 1999. Including recapture
of the loan loss reserve, earnings were $1.03 million ($0.61 per basic share)
for the nine months ended September 30, 1999. The increase in net income during
the current nine-month period reflects a $373,000 increase in net interest
income, which was substantially offset by a $179,000 increase in the provision
for loan losses due to the recapture of the loan loss reserve during 1999, a
decline of $20,000 in other income when compared to the same period in 1999, and
a $67,000 increase in operating expenses.
Net interest income, before provisions for loan losses, was $1.48 million for
the current quarter and $4.71 million for the first nine months of 2000,
compared to $1.45 and $4.33 million, respectively, for the same periods in 1999.
The most significant impact on net interest income between periods relates to
the interaction of changes in the volume of and rates earned or paid on
interest-earning assets and interest-bearing liabilities. The following
rate/volume analysis describes the extent to which changes in interest rates and
the volume of interest related assets and liabilities have affected net interest
income during the periods indicated.
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For the Nine Month periods ended September 30,
2000 vs 1999
Total
Increase (decrease) due to increase
Volume Rate (decrease)
------------- ------------ ------------
Interest income attributable to: (Dollars in thousands)
Loans receivable(1) $1,558 $78 $1,636
Mortgage-backed securities (132) 446 314
Investments 16 (20) (4)
FHLB stock 33 1 34
------------- ------------ ------------
Total interest-earning assets $1,475 $505 $1,980
Interest expense attributable to:
Demand deposits $24 ($8) $16
Savings accounts (29) 6 (23)
Certificates (162) 359 197
FHLB advances 1,185 232 1,417
------------- ------------ ------------
Total interest-bearing liabilities $1,018 $589 $1,607
Increase in net interest income $457 ($84) $373
(1) Includes non-accruing loans.
As the above table indicates, the increase in net interest income of $373,000 is
due to a $1.98 million increase in income on interest-earning assets offset by a
$1.61 million increase in the cost of interest-bearing liabilities. In both
cases, the majority of the change resulted from an increase in volume, due to an
increase in loans outstanding and FHLB advances.
As the tables below illustrate, average interest-earning assets increased $24.92
million to $255.31 million during the nine months ended September 30, 2000, from
$230.39 million for the nine months ended September 30, 1999. Average
interest-bearing liabilities increased $22.99 million from $214.32 million for
the nine months ended September 30, 1999, to $237.31 million for the current
nine-month period. Thus, average net interest-earning assets increased $1.93
million when comparing the two periods. The interest rate spread (the yield on
interest-earning assets less the cost of interest-bearing liabilities) was 2.10%
for the nine months ended September 30, 2000, compared to 2.18% for the same
period in 1999. Generally, a reduction in the interest rate spread will have a
negative impact on net interest income. In some cases, however, the impact on
net interest income may be minimized by an increase in the amount of
interest-earning assets. The decrease in the interest rate spread was the result
of an increase in the cost of interest-bearing liabilities from 4.68% for the
nine months ended September 30, 1999, to 5.13% for the same nine-month period in
2000. This increase in the cost of interest-bearing liabilities reflects an
increase in the cost of certificates from 5.36% for the nine months ended
September 30, 1999 to 5.71% for the current nine months and an increase in the
cost of borrowed funds from 4.83% to 6.03%. The increase in the cost of both the
certificates and the borrowings reflects the increased costs associated with
acquiring the longer-term liabilities outlined in the interest rate risk
compliance plan.
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For the Nine Months ended September 30, 2000
Average
outstanding Yield/cost
----------- ----------
(Dollars in thousands)
Average interest-earning assets
Loans $183,981 7.53%
Mortgage-backed securities 48,476 6.63%
Investments 20,366 5.98%
FHLB stock 2,490 7.07%
------ -----
Total $255,313 7.23%
Average interest-bearing liabilities
Demand deposits $25,048 2.08%
Savings accounts 21,114 2.79%
Certificates 142,664 5.71%
FHLB advances 48,488 6.03%
------- -----
Total $237,314 5.13%
Net interest-earning assets/interest rate spread $17,999 2.10%
For the Nine Months ended September 30,1999
Average
outstanding Yield/cost
----------- ----------
(Dollars in thousands)
Average interest-earning assets
Loans $156,367 7.46%
Mortgage-backed securities 52,119 5.36%
Investments 20,042 6.11%
FHLB stock 1,865 7.01%
------ -----
Total $230,393 6.86%
Average interest-bearing liabilities
Demand deposits $23,505 2.13%
Savings accounts 22,486 2.76%
Certificates 146,905 5.36%
FHLB advances 21,427 4.83%
------- -----
Total $214,323 4.68%
Net interest-earning assets/interest rate spread $16,070 2.18%
Noninterest income was $180,000 for the current quarter and $478,000 for the
nine months ended September 30, 2000 compared to $141,000 for the same quarter
in 1999 and $498,000 for the nine months ended September 30, 1999. The decrease
in noninterest income when comparing the nine-month periods is the result of a
decline in profits on the sale of investments and mortgage-backed securities of
$23,000 and a $55,000 decrease in profits on sale of loans.
Noninterest expenses were $1.16 million for the current quarter and $3.49
million for the current nine-
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month period compared to $1.13 million for the same quarter in 1999 and $3.43
million for the nine months ended September 30, 1999. As a percentage of average
assets, this is 1.80% for the nine months ended September 30, 2000 compared to
1.93% for the first nine months of 1999. The increase during the current
nine-month period reflects an increase in advertising expense.
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PART II
FIRST FRANKLIN CORPORATION AND SUBSIDIARY
Item 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or
any of its subsidiaries is a party or to which any of their property
is subject.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
A. Press release dated September 26, 2000
B. Press release dated October 12, 2000
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit 27- Financial Data Schedule
b. No current reports on Form 8-K were filed during the quarter ended
September 30, 2000.
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FIRST FRANKLIN CORPORATION
4750 Ashwood Drive Cincinnati, Ohio 45241
(513) 469-8000 Fax (513) 469-5360
September 26, 2000
Cincinnati, Ohio
FIRST FRANKLIN CORPORATION DECLARES QUARTERLY DIVIDEND
The Board of Directors of First Franklin Corporation has declared a dividend of
$0.075 per share for the third quarter of 2000. This is the fifty-first
consecutive dividend paid by the company. The quarterly dividend will be payable
October 16, 2000 to shareholders of record as of October 6, 2000. In accordance
with NASD regulations, the ex-dividend date for this dividend payment is
expected to be October 3, 2000. Persons who buy or sell shares should consult
their brokers regarding the timing of their transactions and the effect of the
ex-dividend date.
First Franklin is the parent of Franklin Savings, which has eight locations in
Greater Cincinnati. The Corporation's common stock is traded on the Nasdaq
National Market under the symbol "FFHS".
CONTACT: Thomas H. Siemers
President and CEO
(513) 469-8000
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FIRST FRANKLIN CORPORATION
4750 Ashwood Drive Cincinnati, Ohio 45241
(513) 469-8000 Fax (513) 469-5360
October 12, 2000
Cincinnati, Ohio
FIRST FRANKLIN CORPORATION ANNOUNCES EARNINGS
First Franklin Corporation, the parent of Franklin Savings and Loan Company,
Cincinnati, Ohio today announced earnings of $329,000 ($0.20 per share) for the
third quarter of 2000 compared to earnings of $309,000 ($0.19 per share) for the
third quarter of 1999. Earnings for the nine months ended September 30, 2000
were $1,104,000 ($0.68 per share) compared to $920,000 ($0.55 per share),
excluding a one-time recapture of a loan loss reserve of $108,000 ($0.06 per
share) after taxes, for the same period in 1999. After recapture of the loan
loss reserve, earnings were $1,028,000 ($0.61 per share) for the nine months
ended September 30, 1999.
Franklin Savings has eight locations in Greater Cincinnati. The Corporation's
common stock is traded on the Nasdaq National Market under the symbol "FFHS".
CONTACT: Thomas H. Siemers
President and CEO
(513) 469-8000
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST FRANKLIN CORPORATION
/s/ Daniel T. Voelpel
----------------------------
Daniel T. Voelpel
Vice President and Chief Financial Officer
Date: November 10, 2000
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