SECURITIES AND EXCHANGE COMMISSION | |
Washington, D.C 2049 | |
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FORM 10-Q | |
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE | |
ACT OF 1934 | |
For the Quarterly Period Ended March 31, 2003 | |
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 | |
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1st Franklin Financial Corporation | |
A Georgia Corporation I.R.S. Employer No. 58-0521233 | |
213 East Tugalo Street | |
Post Office Box 880 | |
Toccoa, Georgia 30577 | |
(706) 886-7571 | |
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Indicate by check mark whether the registrant: (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ | |
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 126-2 of the Exchange Act). Yes __ No X | |
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 April 30, 2003 | |
Voting Common Stock, par value $100 per share 1,700 Shares | |
Non-Voting Common Stock, no par value 168,300 Shares | |
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PART I. FINANCIAL INFORMATION | ||||
ITEM 1. | Financial Statements: | |||
The following financial statements required hereunder are incorporated by reference from the Company's Quarterly Report to Investors for the Three Months Ended March 31, 2003. See Exhibit 19. | ||||
Consolidated Statements of Financial Position: | ||||
March 31, 2003 and December 31, 2002 | ||||
Consolidated Statements of Income and Retained Earnings: | ||||
Three Months Ended March 31, 2003 and March 31, 2002 | ||||
Consolidated Statements of Cash Flows: | ||||
Three Months Ended March 31, 2003 and March 31, 2002 | ||||
Notes to Consolidated Financial Statements | ||||
ITEM 2. | Managements' Discussion and Analysis of Financial Condition and Results of Operations: | |||
The information required hereunder is set forth under “Management's Letter” of the Company's Quarterly Report to Investors for the Three Months Ended March 31, 2003. See Exhibit 19. | ||||
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk: | |||
The information required hereunder is set forth under “Management's Letter --Quantitative and Qualitative Disclosures about Market Risk" of the Company's Quarterly Report to Investors for the Three Months Ended March 31,2003. See Exhibit 19. | ||||
ITEM 4. | Controls And Procedures: | |||
We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Within the 90-day period prior to the filing of this report, an evaluation was carried out under the supervision and with the participation of the Company's management, including the Chairman and Chief Executive Officer ("CEO") and Executive Vice President and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective. Subsequent to the date of their evaluation, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls. | ||||
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PART II. OTHER INFORMATION | |
ITEM 1. | Legal Proceedings: |
Lillie Barnes, et al. vs 1st Franklin Financial Corporation, et al.: Filed in the Circuit Court of Holmes County, Mississippi, Civil Action No. CV 2002-75. (Originally reported in the Company's Form 10-Q for the period ended September 30, 2002.) | |
This lawsuit alleges fraud and deceit in the Company's sale of credit insurance, refinancing practices and use of arbitration agreements. The plaintiffs seek statutory, compensatory and punitive damages. The case was initially filed on February 21, 2002, but the defendants were not served until the latter part of June 2002. The case was removed to the United States District Court for the Southern District of Mississippi, Jackson Division. The Plaintiffs' Motion to Remand was denied on March 31, 2003. In addition, independent actions to compel arbitration have been filed, and motions to consolidate the actions under the lea d case are pending. A motion to compel arbitration was filed in the lead case as well. Enforcement of arbitration continues by way of the motion to compel arbitration and the independent actions. Management believes that it is too early to asses the Company's potential liability in connection with this suit, and the Company is diligently contesting and defending this case. Carolyn Robinson, etal. Vs 1st Franklin Financial Corporation, et al.: Filed in the Circuit Court of Panola County, Mississippi, Second Judicial District, Civil Action No. CV2002-339BP2. (Originally reported in the Company's Form 10-K for the period ended December 31, 2002.) This lawsuit alleges fraud, deceit and misrepresentation in the Company's sale of credit insurance, refinancing practices and use of arbitration agreements. The plaintiffs seek statutory, compensatory and punitive damages. The case was initially filed on November 13, 2002. Service has not been properly perfected on the Company. Other defendants have filed a motion to remove the case to Federal District Court. The Company has chosen to join in the removal of the action. Plaintiffs have filed a Motion for Remand. The Court initially set a conference regarding Remand but cancelled it, delaying until a decision is made in other similar actions. Remand-related discovery has begun. Upon completion or remand-related discovery, the Plaintiffs' motion to remand will be briefed. Independent actions to compel arbitration of the plaintiffs' claims are being prep ared for filing. Management believes that it is too early to assess the Company's potential liability in connection with this suit, and the Company is diligently contesting and defending this case. Dennis and Collie Pearson, et al. vs 1st Franklin Financial Corporation, et al.: Filed in Circuit Court of Panola County, Mississippi, Second Judicial District, Civil Action No. CV2002-339BP2. (Originally reported in the Company's Form 10-K for the period ended December 31, 2002.) This lawsuit alleges fraud and deceit in the Company's sale of credit insurance, refinancing practices and use of arbitration agreements. The plaintiffs seek statutory, compensatory and punitive damages. The case was initially filed on January 7, 2003. Service has not been properly perfected on the Company. A motion on behalf of all served defendants to remove the case to Federal District Court has been filed. Plaintiffs have filed a motion to remand and remand-related discovery is proceeding. Since 1st Franklin Financial Corporation has not been served, the Company has chosen not to join the action and participate in the litigation. Management believes that it is too early to assess the Company's potential liability in connection with this suit. | |
ITEM 6. | Exhibits and Reports on Form 8-K: | |||
(a) | Exhibits: | |||
19 | Quarterly Report to Investors as of and for the Three Months Ended March 31, 2003. | |||
(b) | Reports on Form 8-K | |||
No reports on Form 8-K were filed during the quarter ended March 31, 2003 | ||||
SIGNATURES | |
Pursuant to the requirements 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 | |
Registrant | |
/s/ Ben F. Cheek, III | |
Chairman of Board | |
/s/ A. Roger Guimond | |
Vice President, Chief Financial | |
Officer and Principal Accounting Officer | |
Date: May 15, 2003 | |
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CERTIFICATIONS |
I, Ben F. Cheek, III, certify that: 1. I have reviewed this quarterly report on Form 10-Q of 1st Franklin Financial Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluations as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 1. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
Date: May 15, 2003 /s/ Ben F. Cheek, III Ben F. Cheek, III, Chairman and Chief Executive Officer |
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CERTIFICATIONS |
I, A. Roger Guimond, certify that: 1. I have reviewed this quarterly report on Form 10-Q of 1st Franklin Financial Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have; a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluations as of the Evaluation Date; 1. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 1. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
Date: May 15, 2003 s/ A. Roger Guimond A. Roger Guimond, Executive Vice President and Chief Financial Officer |
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1st FRANKLIN FINANCIAL CORPORATION | ||
INDEX TO EXHIBITS | ||
Exhibit No. | Description | Page No. |
19 | Quarterly Report to Investors as of and for the Three Months Ended March 31, 2003 | 7 |
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