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<DIV style="width:450pt"><P style="margin:0pt; text-indent:450.05pt; font-family:Arial"><FONT FACE="Arial">&nbsp;&nbsp;</FONT></P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=right>Registration No. <U>333- &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt"><BR></P>
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<TR><TD valign=top width=625.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>Washington, D.C. &nbsp;20549</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>-----------------------</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=625.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center><B>Form S-1</B></P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>-----------------------</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center><B>1<SUP>st</SUP> FRANKLIN FINANCIAL CORPORATION</B></P>
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<TR><TD valign=top width=625.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=145.2><P style="margin:0pt"><BR></P>
<P style="line-height:10pt; margin:0pt; font-family:Arial; font-size:8pt">A Georgia Corporation</P>
</TD><TD valign=top width=288><P style="line-height:10pt; margin:0pt; font-family:Arial; font-size:8pt" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6141</P>
<P style="line-height:10pt; margin:0pt; font-family:Arial; font-size:8pt">(Primary Standard Industrial Classification Code Number)</P>
</TD><TD valign=top width=192><P style="margin:0pt"><BR></P>
<P style="line-height:10pt; margin:0pt; font-family:Arial; font-size:8pt">I.R.S. Employer No. 58-0521233</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>213 East Tugalo Street</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>Post Office Box 880</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>Toccoa, Georgia &nbsp;30577</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>(706) 886-7571</P>
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<TR><TD valign=top width=625.2 colspan=3><P style="margin:0pt; font-family:Arial" align=center>-----------------------</P>
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<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=230.4></TD><TD width=230.45></TD></TR>
<TR><TD valign=top width=307.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=307.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=307.2><P style="margin:0pt; font-family:Arial" align=center>Agent for Service:</P>
</TD><TD valign=top width=307.267><P style="margin:0pt; font-family:Arial" align=center>Copy To:</P>
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<TR><TD valign=top width=307.2><P style="margin:0pt; font-family:Arial" align=center>A. Roger Guimond</P>
<P style="margin:0pt; font-family:Arial" align=center>213 East Tugalo Street</P>
<P style="margin:0pt; padding-left:18pt; font-family:Arial" align=center>Post Office Box 880 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0pt; padding-left:18pt; font-family:Arial" align=center>Toccoa, Georgia &nbsp;30577 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0pt; padding-left:18pt; font-family:Arial" align=center>(706) 886-7571 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top width=307.267><P style="margin:0pt; font-family:Arial" align=center>Mark L. Hanson, Esq.</P>
<P style="margin:0pt; font-family:Arial" align=center>Jones Day</P>
<P style="margin:0pt; font-family:Arial" align=center>1420 Peachtree Street, N.E.</P>
<P style="margin:0pt; font-family:Arial" align=center>Suite 800</P>
<P style="margin:0pt; font-family:Arial" align=center>Atlanta, Georgia &nbsp;30309</P>
<P style="margin:0pt; font-family:Arial" align=center>(404) 521-3939</P>
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<TR><TD valign=top width=307.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=307.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="margin:0pt; font-family:Arial" align=center>-----------------------</P>
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<TR><TD valign=top width=614.467 colspan=2><P style="margin:0pt; font-family:Arial" align=center>Approximate date of proposed sale to public: &nbsp;From time to time</P>
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<TR><TD valign=top width=614.467 colspan=2><P style="margin:0pt; font-family:Arial" align=center>commencing as soon as possible after the registration statement becomes effective.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="margin:0pt; font-family:Arial">If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. &nbsp;(X)</P>
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<TR><TD valign=top width=614.467 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="margin:0pt; font-family:Arial">If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. &nbsp;( &nbsp;)</P>
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<TR><TD valign=top width=614.467 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="margin:0pt; font-family:Arial">If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. &nbsp;&nbsp;&nbsp;( &nbsp;)</P>
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<TR><TD valign=top width=614.467 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="margin:0pt; font-family:Arial">If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. &nbsp;&nbsp;&nbsp;( &nbsp;)</P>
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<TR><TD valign=top width=614.467 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=2><P style="margin:0pt; font-family:Arial" align=center>-----------------------</P>
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<P style="margin:0pt" align=center><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt"><BR>
<BR></P>
</DIV><DIV style="width:450.05pt"><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial; page-break-before:always" align=center><B>CALCULATION OF REGISTRATION FEE</B></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=23.4></TD><TD width=68.75></TD><TD width=92.15></TD><TD width=92.15></TD><TD width=92.2></TD><TD width=92.2></TD></TR>
<TR><TD style="border:0.5pt solid #000000" valign=top width=122.867 colspan=2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>Title of each class of securities to be registered</P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.867><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>Amount to be registered</P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.867><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>Proposed maximum offering price per unit</P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.933><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>Proposed maximum aggregate offering price</P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.933><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>Amount of registration fee (1)</P>
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<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.867 colspan=2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>Variable Rate Subordinated Debentures</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.867><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>$100,000,000</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.867><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>(2)</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.933><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>$100,000,000</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=122.933><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>$3,930</P>
</TD></TR>
<TR><TD valign=top width=31.2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><BR>
(1)</P>
</TD><TD valign=top width=583.267 colspan=5><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><BR>
Calculated in accordance with rule 457(c) by multiplying the maximum aggregate offering price by .00003930.</P>
</TD></TR>
<TR><TD valign=top width=31.2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">(2)</P>
</TD><TD valign=top width=583.267 colspan=5><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Variable Rate Subordinated Debentures will be issued in denominations selected by the purchasers thereof, subject to minimum denominations established by the Company.</P>
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</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 2008</B></P>
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<P style="margin-top:0pt; margin-bottom:10pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt"><BR>
<BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:5pt; font-family:Arial" align=center><B>1<SUP>st</SUP> FRANKLIN FINANCIAL CORPORATION</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:5pt; font-family:Arial" align=center><B>PROSPECTUS DATED [-]</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:5pt; font-family:Arial" align=center><B>$100,000,000 VARIABLE RATE SUBORDINATED DEBENTURES</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;_________________________________________________</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">1<SUP>st</SUP> Franklin Financial Corporation is offering to sell its Variable Rate Subordinated Debentures, referred to as the Debentures, in varying minimum purchase amounts that we will establish each week. On each Thursday, and for each separate minimum purchase amount, we will establish an interest rate and a time period after which the interest rate will adjust, referred to as an interest adjustment period, that may range from one month to four years. &nbsp;The interest rate and the interest adjustment period of each Debenture are referred to as that Debenture's established features. Debentures having these established features will be offered and sold from each Thursday through the following Wednesday, and those established features will be applicable to all Debentures sold during that period. &nbsp;Prior to the end of each Debenture's interest adjustment period, we will provide a holder of such Debenture with written notice of the upcoming interest rate adjustment, and the holder may elect to redeem his or her Debenture at the end of the interest adjustment period (or within the 14 day period after the interest adjustment date); if the holder does not so elect, the interest rate will automatically adjust to the then currently offered rate, until that Debenture&#146;s next interest adjustment date. All other provisions, including the interest adjustment period, will remain unchanged for the entire term of each Debenture not redeemed by the holder.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial">We will publish the most recently determined interest rate for each balance range weekly in a newspaper of general circulation in Toccoa, Georgia, the location of the Company&#146;s principal place of business, and on our web site at http://www.1ffc.com. &nbsp;You can also obtain a list of the most recently determined interest rates by calling or visiting our executive offices in Toccoa, Georgia. &nbsp;A Rule 424(b) prospectus supplement setting forth the most recently determined interest rates will be filed with the SEC, as appropriate.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">We may redeem any Debenture, upon at least 30 days' written notice, at any time before its stated maturity for a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption. Holders of Debentures may redeem their Debentures at the end of any interest adjustment period or within the 14 day period thereafter at a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption. &nbsp;In addition, at the request of a holder of Debentures, we may, at our option, redeem that holder's Debentures during any interest adjustment period for a redemption price equal to the principal amount plus any accrued and unpaid interest at one-half the stated interest rate on that holder's Debentures up to the date of redemption.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial">We are offering the Debentures without an underwriter. &nbsp;We do not have to sell any minimum amount of Debentures to accept and use the proceeds of this offering. &nbsp;We cannot assure you that all or any portion of the Debentures we are offering will be sold. &nbsp;We have not made any arrangement to place any of the proceeds from this offering in an escrow, trust or similar account. &nbsp;Therefore, you cannot be guaranteed of the return of your investment. &nbsp;The Debentures are not listed on any securities exchange and there is no public trading market for the Debentures. &nbsp;We have the right to reject any subscription for Debentures, in whole or in part, for any reason.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Each Debenture initially matures four years from its date of issue, subject to earlier redemption by a holder without penalty at the end of any interest adjustment period or within the 14 day period thereafter. &nbsp;We will provide a holder of a Debenture with written notice of the upcoming maturity of his or her Debenture and a then-current prospectus relating to the Debentures and, unless such holder acts to redeem such Debenture at the maturity date or within the 14 day period after the original maturity date, such maturity date will be automatically extended for one additional four-year period, subject to the same established features and early redemption rights that existed during the initial term of the Debenture.</P>
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</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>1</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial">You should read this prospectus and any applicable prospectus supplement carefully before you decide whether to invest in Debentures.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; padding-right:54pt; font-family:Arial" align=justify><B>Investing in our Debentures involves risks. &nbsp;See &quot;Risk Factors&quot; beginning on page 7 for a description of these risks.</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial"><B>Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the Debentures, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">1<SUP>st</SUP> FRANKLIN FINANCIAL CORPORATION IS NOT A BANK AND THE DEBENTURES ARE NOT BANK DEPOSITS OR SIMILAR OBLIGATIONS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE SECURITIES INVESTOR PROTECTION CORPORATION OR ANY OTHER FEDERAL OR STATE AGENCY.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=115.2></TD><TD width=115.2></TD><TD width=115.2></TD><TD width=115.2></TD></TR>
<TR><TD style="border-top:0.5pt solid #000000" valign=top width=153.6><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-top:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=center>Price to</P>
<P style="margin:0pt; font-family:Arial" align=center>Public</P>
</TD><TD style="border-top:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=center>Underwriting</P>
<P style="margin:0pt; font-family:Arial" align=center>Discounts and Commissions (a)</P>
</TD><TD style="border-top:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=center>Proceeds to</P>
<P style="margin:0pt; font-family:Arial" align=center>Company (b)</P>
</TD></TR>
<TR><TD style="border-top:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial">Per Debenture</P>
</TD><TD style="border-top:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=right>100%&nbsp;</P>
</TD><TD style="border-top:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=right>None&nbsp;</P>
</TD><TD style="border-top:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=right>100%&nbsp;</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; text-indent:18pt; font-family:Arial">Total </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=right>$100,000,000</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=right>None&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=153.6><P style="margin:0pt; font-family:Arial" align=right>$100,000,000</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=27.9></TD><TD width=432.9></TD></TR>
<TR><TD valign=top width=37.2><P style="margin:0pt; font-family:Arial">(a)</P>
</TD><TD valign=top width=577.2><P style="margin:0pt; font-family:Arial">The Debentures are not being offered or sold pursuant to any underwriting or similar agreement, and no commissions or other remuneration will be paid in connection with their sale. &nbsp;The Debentures will be sold at face value.</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="margin:0pt; font-family:Arial">(b)</P>
</TD><TD valign=top width=577.2><P style="margin:0pt; font-family:Arial">Before deduction of the Company's expenses, estimated at $90,930.</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=577.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=577.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=577.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=577.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.4 colspan=2><P style="margin:0pt; font-family:Arial" align=center>SUBJECT TO COMPLETION, DATED APRIL 14, 2008</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt" align=center><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>2</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial">You should rely only on the information contained or incorporated by reference in this prospectus. &nbsp;We have not authorized anyone to provide you with any different information. You should not assume that the information contained or incorporated by reference in this prospectus is accurate as of any date other than as of the date of this prospectus or the date the documents incorporated by reference were filed with the SEC. &nbsp;We are offering to sell, and seeking offers to buy, the securities registered by this prospectus only in jurisdictions where these offers and sales are permitted. </P>
<P style="margin:0pt"><BR></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial" align=center><B>TABLE OF CONTENTS</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=36.9></TD><TD width=351></TD><TD width=72.9></TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Prospectus Summary </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;4&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Risk Factors </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>7&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Ratios of Earnings to Fixed Charges </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;13&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Use of Proceeds </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;13&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Plan of Distribution </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;13&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Forward-Looking Information </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;14&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Description of the Debentures </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;14&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Legal Matters </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;19&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Experts</P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>19&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Where You Can Find More Information</P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>19&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Incorporation of Certain Information by Reference</P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>19&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Reports to Security Holders</P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>20&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=468><P style="margin:0pt; font-family:Arial">Appendix I </P>
</TD><TD valign=top width=97.2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;21&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>3</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=140.4></TD><TD width=63></TD><TD width=76.5></TD><TD width=67.5></TD><TD width=113.45></TD></TR>
<TR><TD valign=top width=614.467 colspan=5><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>PROSPECTUS SUMMARY</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=5><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><I>The following summary highlights some of the information from this prospectus and may not contain all of the information that may be important to you. &nbsp;Before deciding whether to invest in the Debentures, you should read the entire prospectus, and the information that is incorporated by reference into the prospectus, carefully.</I></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=5><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=5><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>1<SUP>st</SUP> FRANKLIN FINANCIAL CORPORATION</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=5><P style="margin:0pt; font-family:Arial">1<SUP>st</SUP> Franklin Financial Corporation has been engaged in the consumer finance business since 1941, particularly in making consumer loans to individuals in relatively small amounts for short periods of time. Other lending activities include the purchase of sales finance contracts from dealers and the making of first and second mortgage loans on real estate to homeowners. &nbsp;As of December 31, 2007 our business was operated through a network of 238 branch offices located in Alabama, Georgia, Louisiana, Mississippi and South Carolina.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; font-family:Arial">We fund our loans through a combination of the issuance of short and longer-term debt securities, including our debentures and our senior demand notes, as well as with borrowings from time to time under our revolving credit facility. &nbsp;This credit facility provides for unsecured borrowings of up to $50.0 million or a lesser amount as determined based on our then-applicable borrowing base (as defined in our credit agreement). &nbsp;As of December 31, 2007, we had $33.3 million in available borrowings under our credit facility. &nbsp;</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; font-family:Arial">We also offer optional credit insurance coverage to our customers when making a loan. &nbsp;This coverage may include credit life insurance, credit accident and health insurance, and/or credit property insurance. Customers may request credit life insurance coverage to help assure any outstanding loan balance is repaid if the customer dies before the loan is repaid, or they may request credit accident and health coverage to help continue loan payments if the customer becomes sick or disabled for an extended period of time. &nbsp;Customers may also choose credit property coverage to protect the value of loan collateral against damage, theft or destruction. &nbsp;We write these various insurance products as an agent for a non-affiliated insurance company. &nbsp;Under various agreements, our wholly-owned insurance subsidiaries reinsure the insurance coverage on our customers written on behalf of this non-affiliated insurance company.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; font-family:Arial">1<SUP>st</SUP> FRANKLIN FINANCIAL CORPORATION IS NOT A BANK AND THE DEBENTURES ARE NOT BANK DEPOSITS OR SIMILAR OBLIGATIONS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE SECURITIES INVESTOR PROTECTION CORPORATION OR ANY OTHER FEDERAL OR STATE AGENCY.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; font-family:Arial">Our principal executive office is located at 135 East Tugalo Street, Toccoa, Georgia 30577, and our phone number at that address is (706) 886-7571 or (800) 282-0709 (in Georgia) or (800) 700-7943 (outside of Georgia).</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=5><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=614.467 colspan=5><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>SUMMARY DESCRIPTION OF THE DEBENTURES</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Denominations</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">Minimum denominations will be established weekly by us.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Indenture Trustee</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">The Debentures will be issued under an indenture between the Company and Synovus Trust Company, N.A., a successor in interest to Columbus Bank and Trust Company, as trustee.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Interest Rate</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">The interest rate is established at the time of purchase of a Debenture and compounded daily for each established amount.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>4</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=140.4></TD><TD width=63></TD><TD width=76.5></TD><TD width=67.5></TD><TD width=113.45></TD></TR>
<TR><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Interest Rate Adjustment</P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">The interest rate adjusts at the end of the interest adjustment period applicable to the specific Debenture to the then-current interest rate. &nbsp;We will send a holder written notice of an upcoming interest rate adjustment, and the holder can elect to redeem his or her Debenture at such interest adjustment date or within the 14 day period thereafter or, after such date, continue to hold the Debenture and receive the then currently offered interest rate.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Interest Adjustment Period</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">The period of time, set when the Debenture is purchased, after which the interest rate on a specific Debenture is adjusted.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Notification of Interest Rate Adjustment</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">Written notice will be sent to a holder of a Debenture not less than seven days prior to the end of each applicable interest adjustment period, which notice will set forth the date of the upcoming interest rate adjustment, information regarding redemption, the approximate value of the Debenture (including all outstanding principal and any accrued but unpaid interest) and, if such Debenture is not redeemed, the interest rate which will be applicable for that Debenture after such date and until the next interest rate adjustment.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Payment of Interest</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">Interest is earned daily and is payable at any time promptly upon the holder&#146;s request. A request for the payment of interest may be made in person or by telephone, fax, Internet or regular mail.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Notification of Upcoming Maturity</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">Written notice will be sent to a holder of a Debenture not less than 30 days prior to the maturity date of a particular Debenture, which notice will set forth the upcoming maturity date and information regarding renewal (if applicable) and redemption procedures. &nbsp;A subsequent written notice will be sent not less than seven days prior to the maturity date and will set forth the upcoming maturity date, information regarding renewal (if applicable) and redemption procedures, the approximate maturity value of the Debenture (including all outstanding principal and any accrued but unpaid interest) and the interest rate which will be applicable on a renewal of that Debenture during the initial interest adjustment period following the upcoming maturity date.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Maturity</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">Each Debenture has an initial maturity date of four years from its date of issue, subject to earlier redemption by a holder without penalty at the end of any interest adjustment period or within the 14 day period thereafter,<B> </B>or by us as provided for herein. Additionally, if a Debenture is not redeemed at its original maturity date or within the 14 day period thereafter as provided for herein, the term of the Debenture is automatically extended for one additional four-year term, subject to the same early redemption rights that existed during the initial term of the Debenture.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Redemption by Holder</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">Each Debenture may be redeemed by a holder at the end of each interest adjustment period applicable to the specific Debenture or within the 14 day period thereafter, or at maturity without penalty; redemption at any other time is at our discretion and is subject to an interest penalty. &nbsp;We will send written notice to a holder not less than seven days in advance of an upcoming termination of an interest adjustment period and not less than 30 days in advance of, and again not less than seven days in advance of, an upcoming maturity date.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>5</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=140.4></TD><TD width=63></TD><TD width=76.5></TD><TD width=67.5></TD><TD width=113.45></TD></TR>
<TR><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Redemption by 1<SUP>st</SUP> Franklin</P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">1<SUP>st</SUP> Franklin may redeem a Debenture prior to its maturity upon 30 days<FONT FACE="(normal text)">'</FONT> written notice to the holder for a price equal to the principal amount of the Debenture plus accrued and unpaid interest up to the date of redemption.</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; font-family:Arial">Extension of Maturity</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">The maturity of each Debenture will be automatically extended on its original terms for one additional four-year term, unless 1<SUP>st</SUP> Franklin or the holder acts to redeem the Debenture in accordance with the redemption provisions at the original maturity date or within the 14 day period thereafter. &nbsp;During any extended maturity, a holder of a Debenture will have the same redemption rights such holder had during the original term of the Debenture. &nbsp;We will send written notice and a then-current prospectus relating to the Debentures to holders not less than 30 days in advance of, and a second written notice not less than seven days prior to, a Debenture's upcoming maturity date.</P>
</TD></TR>
<TR><TD valign=top width=187.2><P style="margin:0pt; font-family:Arial">Compound Interest</P>
</TD><TD valign=top width=427.267 colspan=4><P style="margin:0pt; font-family:Arial">Debentures are offered at interest rates, set weekly, with interest compounded daily. &nbsp;Examples of annualized effective yields for daily compounded rates are set forth below:</P>
</TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; font-family:Arial" align=center>Example</P>
<P style="margin:0pt; font-family:Arial" align=center>Nominal</P>
<P style="margin:0pt; font-family:Arial" align=center><U>Rates</U></P>
</TD><TD valign=top width=90><P style="margin:0pt; font-family:Arial" align=center>Effective</P>
<P style="margin:0pt; font-family:Arial" align=center>Annual</P>
<P style="margin:0pt; font-family:Arial" align=center><U>Rates</U></P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; padding-left:21.6pt; font-family:Arial">3.00%&nbsp;</P>
</TD><TD valign=top width=90><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">3.05%&nbsp;</P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; padding-left:21.6pt; font-family:Arial">5.00&nbsp;</P>
</TD><TD valign=top width=90><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">5.13&nbsp;</P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; padding-left:21.6pt; font-family:Arial">5.50&nbsp;</P>
</TD><TD valign=top width=90><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">5.65&nbsp;</P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; padding-left:21.6pt; font-family:Arial">6.00&nbsp;</P>
</TD><TD valign=top width=90><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">6.18&nbsp;</P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; padding-left:21.6pt; font-family:Arial">6.25</P>
</TD><TD valign=top width=90><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">6.45</P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; padding-left:21.6pt; font-family:Arial">6.75</P>
</TD><TD valign=top width=90><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">6.98</P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; padding-left:21.6pt; font-family:Arial">7.00</P>
</TD><TD valign=top width=90><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">7.25</P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=271.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=102><P style="margin:0pt; padding-left:21.6pt; font-family:Arial">7.25</P>
</TD><TD valign=top width=90><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">7.52</P>
</TD><TD valign=top width=151.267><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=5><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=5><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>6</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=158.4></TD><TD width=59.75></TD><TD width=59.75></TD><TD width=59.75></TD><TD width=59.75></TD><TD width=58></TD><TD width=1.75></TD></TR>
<TR><TD valign=top width=609.533 colspan=7><P style="margin:0pt; font-family:Arial" align=center>SUMMARY FINANCIAL INFORMATION</P>
</TD></TR>
<TR><TD valign=top width=609.533 colspan=7><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=609.533 colspan=7><P style="margin:0pt; font-family:Arial">The tables below set forth certain summary consolidated financial data of 1<SUP>st</SUP> Franklin. &nbsp;This information is only a summary and you should read it together with 1<SUP>st</SUP> Franklin&#146;s consolidated historical financial statements and the related notes contained in the annual report and the other information incorporated by reference in this prospectus. &nbsp;These historical results are not necessarily indicative of our results or financial condition to be expected in the future.</P>
</TD></TR>
<TR><TD valign=top width=609.533 colspan=7><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=159.333 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=398.333 colspan=6><P style="margin:0pt; font-family:Arial" align=center><U>Year Ended December 31</U></P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2007</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2006</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2005</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2004</U></P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; font-family:Arial" align=center><U>2003</U></P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=398.333 colspan=6><P style="line-height:10pt; margin:0pt; font-family:Arial; font-size:8pt" align=center>(In thousands)</P>
</TD></TR>
<TR><TD valign=top width=609.533 colspan=7><P style="margin:0pt; font-family:Arial"><B>Selected Income Statement Data:</B></P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Revenues </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>$130,297</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>$115,042</P>
</TD><TD valign=top width=79.667><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:3.6pt; font-family:Arial">$</P>
<P style="margin:0pt; text-indent:11.6pt; font-family:Arial">101,826</P>
</TD><TD valign=top width=79.667><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:3.6pt; font-family:Arial">$</P>
<P style="margin:0pt; text-indent:14.1pt; font-family:Arial">98,459&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:3.6pt; font-family:Arial">$</P>
<P style="margin:0pt; text-indent:14.1pt; font-family:Arial">91,367&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Net Interest Income </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>75,669</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>69,632</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">64,387</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">61,541&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">56,698&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Interest Expense </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>15,746</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>11,994</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:21.6pt; font-family:Arial">8,016</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:19.1pt; font-family:Arial">7,137&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:19.1pt; font-family:Arial">6,813&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Provision for Loan Losses </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>21,434</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>19,109</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">19,484</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">18,097&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">15,245&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Income Before Income Taxes </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>15,754</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>11,023</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:21.6pt; font-family:Arial">7,621</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:19.1pt; font-family:Arial">7,527&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">11,159&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Net Income </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>12,205</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>7,672</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:21.6pt; font-family:Arial">5,109</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:19.1pt; font-family:Arial">4,981&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:19.1pt; font-family:Arial">8,654&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=398.333 colspan=6><P style="margin:0pt; font-family:Arial" align=center><U>As of December 31</U></P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2007</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2006</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2005</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2004</U></P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; font-family:Arial" align=center><U>2003</U></P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=398.333 colspan=6><P style="line-height:10pt; margin:0pt; font-family:Arial; font-size:8pt" align=center>(In thousands)</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial"><B>Selected Balance Sheet Data:</B></P>
</TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Net Loans </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>$276,655</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>$249,862</P>
</TD><TD valign=top width=79.667><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial">$</P>
<P style="margin:0pt; text-indent:11.6pt; font-family:Arial">224,660</P>
</TD><TD valign=top width=79.667><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial">$</P>
<P style="margin:0pt; text-indent:9.1pt; font-family:Arial">218,893&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial">$</P>
<P style="margin:0pt; text-indent:9.1pt; font-family:Arial">206,462&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Total Assets </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>402,454</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>362,567</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:11.6pt; font-family:Arial">324,910</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:9.1pt; font-family:Arial">312,366&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:9.1pt; font-family:Arial">292,868&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Senior Debt </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>182,373</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>181,474</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:11.6pt; font-family:Arial">180,713</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:9.1pt; font-family:Arial">168,668&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:9.1pt; font-family:Arial">148,204&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Subordinated Debt </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>91,966</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>67,190</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">38,902</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">41,311&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">44,076&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Stockholders&#146; Equity </P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>109,841</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=right>98,365</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:16.6pt; font-family:Arial">91,185</P>
</TD><TD valign=top width=79.667><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">87,102&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; text-indent:14.1pt; font-family:Arial">83,844&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=398.333 colspan=6><P style="margin:0pt; font-family:Arial" align=center><U>As of December 31</U></P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2007</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2006</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2005</U></P>
</TD><TD valign=top width=79.667><P style="margin:0pt; font-family:Arial" align=center><U>2004</U></P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt; font-family:Arial" align=center><U>2003</U></P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial"><B>Other Data:</B></P>
</TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Ratio of Earnings to </P>
<P style="margin:0pt; text-indent:13.5pt; font-family:Arial">Fixed Charges </P>
</TD><TD valign=top width=79.667><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; font-family:Arial" align=right>&nbsp;&nbsp;1.92</P>
</TD><TD valign=top width=79.667><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; font-family:Arial" align=right>&nbsp;&nbsp;1.83</P>
</TD><TD valign=top width=79.667><P style="margin:0pt"><BR></P>
<P style="margin:0pt; text-indent:26.6pt; font-family:Arial">1.83</P>
</TD><TD valign=top width=79.667><P style="margin:0pt"><BR></P>
<P style="margin:0pt; text-indent:24.1pt; font-family:Arial">1.91&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt"><BR></P>
<P style="margin:0pt; text-indent:24.1pt; font-family:Arial">2.42&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="margin:0pt; font-family:Arial">Ratio of Total Liabilities</P>
<P style="margin:0pt; text-indent:13.5pt; font-family:Arial">To Stockholders&#146; Equity </P>
</TD><TD valign=top width=79.667><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; font-family:Arial" align=right>2.66</P>
</TD><TD valign=top width=79.667><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; font-family:Arial" align=right>2.69</P>
</TD><TD valign=top width=79.667><P style="margin:0pt"><BR></P>
<P style="margin:0pt; text-indent:26.6pt; font-family:Arial">2.56</P>
</TD><TD valign=top width=79.667><P style="margin:0pt"><BR></P>
<P style="margin:0pt; text-indent:24.1pt; font-family:Arial">2.59&nbsp;</P>
</TD><TD valign=top width=79.667 colspan=2><P style="margin:0pt"><BR></P>
<P style="margin:0pt; text-indent:24.1pt; font-family:Arial">2.49&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=211.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=79.667 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt" align=center><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>RISK FACTORS</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><I>The risks described below set forth known material risks of purchasing the Debentures and investing in 1<SUP>st</SUP> Franklin. &nbsp;You should carefully consider the risks described below, as well as the other information in the prospectus or incorporated by reference in the prospectus, before deciding whether to invest in the Debentures. &nbsp;If any of the situations described in the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. &nbsp;In any of these events, you may lose part or all of your investment.</I></P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt" align=center><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>7</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always" align=center><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>RISK FACTORS RELATING TO THE DEBENTURES</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>The Debentures may not be a suitable investment for you.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Debentures may not be a suitable investment for you, and we advise you to consult your investment, tax and other professional financial advisors prior to deciding whether to invest in Debentures. &nbsp;The characteristics of the Debentures, including the maturity and interest rate, may not satisfy your investment objectives. The Debentures may not be a suitable investment for you based on your ability to withstand a loss of interest or principal or other aspects of your financial situation, including your income, net worth, financial needs, investment risk profile, return objectives, investment experience and other factors. Before deciding whether to purchase Debentures, you should consider your investment allocation with respect to the amount of your contemplated investment in the Debentures in relation to your other investment holdings and the diversity of those holdings.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Because the Debentures are general, unsecured obligations and are subordinate to substantially all of our debt, the holders of our other debt have priority over the Debenture holders to recover invested amounts in the event we are unable to meet all of our obligations.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Debentures are general, unsecured obligations of 1<SUP>st</SUP> Franklin and are subordinated in right of payment to substantially all of our other existing and future debt, except for our other Variable Rate Subordinated Debentures, which rank pari passu. &nbsp;As of December 31, 2007, we had $182.4 million in senior debt outstanding, and we expect to issue more senior debt in the future.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Because the Debentures are subordinated obligations, in the event of our insolvency, bankruptcy or liquidation, or other similar proceeding, then the holders of senior debt and all other obligations senior to the Debentures will be entitled to receive payment in full of all principal and interest due to them before the holders of the Debentures are entitled to receive any payments. &nbsp;We may not have sufficient assets after all such senior payments have been made to make any payments to you under the Debentures, including payments of interest when due or principal upon maturity.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Because the Debentures will have no sinking fund, security, insurance or guarantee, you may lose all or part of your investment in the Debentures if we do not have enough cash to pay the Debentures.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">There is no sinking fund, security, insurance or guarantee of our obligation to make payments on the Debentures. &nbsp;The Debentures are not secured by any of our assets. &nbsp;We will not contribute funds to a separate account, commonly known as a sinking fund, to make any interest or principal payments on the Debentures. &nbsp;The Debentures are not certificates of deposit or similar obligations of, and are not guaranteed or insured by, any depository institution, the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation, or any other federal or state agency. &nbsp;Therefore, if you invest in the Debentures, you will have to rely only on our cash flow from operations and other sources of funds for repayment of principal at maturity or redemption and for payment of interest when due. If our cash flow from operations and other sources of funds are not sufficient to pay the amounts due under the Debentures, then you may lose all or part of your investment. &nbsp;</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>If we incur substantially more indebtedness that is senior to the Debentures, our ability to repay the amounts due under the Debentures may be impaired.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Subject to any limitations contained in any of our credit agreements, we may incur substantial additional indebtedness in the future. Any of these borrowings may be senior in payment preference to the Debentures. If we borrow more money, the risks to holders of Debentures described in this prospectus could increase.</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt" align=center><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>8</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always" align=center><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Our management has broad discretion over the use of proceeds from this offering.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">We expect to use the proceeds from the offering for general corporate purposes, including the repayment of senior and other debt as it becomes due. &nbsp;Because no specific allocation of the proceeds is required in the Indenture, our management will have broad discretion in determining how the proceeds of the offering will be used.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Because there are only limited restrictions on our activities under the Indenture, you will have only limited protections under the Indenture.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">In comparison to the restrictive covenants that are imposed on us by our existing credit agreement, the Indenture that governs the Debentures contains relatively minimal restrictions on our activities. In addition, the Indenture contains only limited events of default other than our failure to timely pay principal and interest on the Debentures. Because there are only very limited restrictions and limited events of default under the Indenture, we will not be restricted from issuing additional debt that is senior to the Debentures. Further, if we default in any payment on the Debentures or otherwise under the Indenture, you will likely have to rely on the Trustee to exercise your remedies on your behalf. You may not be able to seek remedies against us directly.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Because we may redeem the Debentures at any time, you may be subject to reinvestment risk.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">We have the right to redeem any Debenture at any time prior to its stated maturity upon 30 days' written notice to you. &nbsp;The Debentures would be redeemed at 100% of the principal amount plus accrued but unpaid interest up to the redemption date. &nbsp;Any such redemption may have the effect of reducing the income or return on investment that you would otherwise receive on an investment in the Debentures by reducing the term of the investment. &nbsp;If this occurs, you may not be able to reinvest the proceeds at an interest rate comparable to the rate paid on the Debentures.</P>
<P style="margin:0pt; font-family:Arial"><B>No public market exists in which to transfer Debentures.</B></P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">An investor may redeem any or all of his or her Debentures as described in this prospectus. &nbsp;However, no public trading or secondary market for the Debentures currently exists, or ever will exist, and, consequently, there is no public market valuation to help investors evaluate the Debentures.</P>
<P style="margin-top:0pt; margin-bottom:10pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center>RISK FACTORS RELATING TO 1<SUP>st</SUP> FRANKLIN</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Because we require a substantial amount of cash to service our debt, we may not be able to pay our obligations under the Debentures.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">To service our indebtedness, we require a significant amount of cash. &nbsp;Our ability to generate cash depends on many factors, including our successful financial and operating performance. &nbsp;We cannot assure you that our business strategy will continue to succeed or that we will achieve our anticipated financial results.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">If we do not achieve our anticipated results, we may not be able to generate sufficient cash flow from operations or to obtain sufficient funding to satisfy all of our obligations, including our obligations under the Debentures.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt" align=center><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>9</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always" align=center><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Because we depend on liquidity to operate our business, a decrease in the sale of our debt securities or an increase in requests for their redemption may make it more difficult for us to pay our obligations under the Debentures.</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Our liquidity depends on, and we fund our operations through, the sale of our debt securities, the continued availability of unused borrowings under our credit agreement and the collection of our receivables. &nbsp;Numerous existing investment alternatives have resulted in investors evaluating more critically their investment opportunities. &nbsp;We cannot assure you that the Debentures will have interest rates and redemption terms which will generate sufficient sales to meet our liquidity requirements.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Debentures are subject to redemption at the end of any interest adjustment period prior to maturity at the option of the Debenture holder and may be requested to be redeemed during an interest adjustment period, although we are not obligated to accept requests for redemption of Debentures during any interest adjustment period, and any of those requests are subject to one-half the interest earned since the most recent interest adjustment date, if applicable, or the purchase date. &nbsp;It is possible that a significant number of redemption requests could adversely affect our liquidity.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">In either event, our reduced liquidity could negatively impact our ability to pay the principal and interest on the Debentures when due.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>All of our offers and sales of securities must comply with applicable securities laws, or we could be liable for damages, which could impact our ability to make payments on the Debentures.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Offers and sales of all of our securities, including the Debentures, must comply with all applicable federal and state securities laws, including Section 5 of the Securities Act of 1933. &nbsp;If any of our offers, including those deemed to be made pursuant to newspaper or radio advertisements, or sales are found not to be in compliance with any of these laws, we could be liable to certain purchasers of the security, could be required to repurchase the security, or could be liable for damages or other penalties. &nbsp;If we are required to repurchase any of our securities other than in the ordinary course of our business as a result of any such violation, or otherwise are found to be liable for any damages or penalties as a result of any such violation, our financial condition could be materially adversely affected. &nbsp;Any such adverse affect on our financial condition could materially impair our ability to pay principal and interest on the Debentures.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>We depend on funds from our credit facility to meet our obligations and fund a portion of our general operations. &nbsp;If we are unable to continue to borrow under this credit facility, we may not be able to pay our obligations under the Debentures.</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial">We rely on borrowings under our revolving credit facility to meet the redemption requests of our security holders and our other liquidity and operating requirements. &nbsp;This credit facility provides for maximum borrowings of up to $50.0 million, or a lesser amount as determined by our then-applicable borrowing base. The credit facility has a commitment termination date of December 15, 2009. &nbsp;The bank may terminate the credit facility prior to its stated maturity if we violate any of the financial ratio requirements or covenants contained in the credit agreement, according to standards contained in the credit agreement. If we lose our ability to borrow money under the credit facility or if the credit facility is terminated, we may not be able to make payments on the Debentures.</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt" align=center><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>10</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always" align=center><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Because our liquidity also depends on receivables collections, if our collections are reduced, it may make it more difficult for us to pay our obligations under the Debentures.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Our liquidity is also dependent on, among other things, the collection of our receivables. &nbsp;Delinquencies in our consumer finance receivables are likely to be affected by worsening general economic conditions and, because we mainly make loans to individuals who depend on their earnings to make repayments, are often dependent upon the continued employment of those people. &nbsp;If general economic conditions worsen, or we are otherwise unable to collect on our receivables, we may not be able to make payments on the Debentures.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>An increase in the interest we pay on our debt and borrowings can materially and adversely affect our net interest margin.</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Net interest margin represents the difference between the amount that we earn on loans and investments and the amount that we pay on debt securities and other borrowings. &nbsp;The loans we make in the ordinary course of our business are subject to the interest rate and regulatory provisions of each applicable state's lending laws and are sometimes made at fixed rates which are not adjustable during the term of the loan. Since some loans are made at fixed interest rates and are made using the proceeds from the sale of our fixed and variable rate securities (including the Debentures), we may experience a decrease in our net interest margin because increased interest costs cannot be passed on to all of our loan customers. &nbsp;A reduction in our net interest margin could adversely affect our ability to make payments on the Debentures.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Neither the Company nor the Debentures will be rated by any nationally recognized statistical rating agency, and this may increase the risk of your investment.</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Neither 1<SUP>st</SUP> Franklin nor the Debentures are, or are expected to be, rated by any nationally recognized statistical rating organization. &nbsp;Typically, credit ratings assigned by such organizations are based upon an assessment of a company&#146;s creditworthiness and are a measure used in establishing the interest rate that a company offers on debt securities it issues. &nbsp;Without any such rating, it is possible that fluctuations in general economic, or industry specific, business conditions, changes in results of operations, or other factors that affect the creditworthiness of a debt issuer may not be fully reflected in the interest rate on any outstanding indebtedness of that issuer. &nbsp;Investors in Debentures must depend solely on the creditworthiness of 1<SUP>st</SUP> Franklin for the payment of principal and interest on those securities. &nbsp;In the absence of any third party credit rating, it is possible that the interest rates offered by the Company on its debt securities may not represent the credit risk that an investor assumes in purchasing Debentures.</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt" align=center><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>11</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always" align=center><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Consumer finance companies such as the Company are subject to an increasing number of laws and government regulations, and if we fail to comply with these laws or regulations, our business may suffer and our ability to pay our obligations under the Debentures may be impaired.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Our operations are subject to increasing focus by federal, state and local government authorities and state attorneys general and are subject to various laws and judicial and administrative decisions imposing various requirements and restrictions on certain lending practices by companies in the consumer finance industry, sometimes referred to as &quot;predatory lending&quot; practices. &nbsp;These requirements and restrictions, among other things:</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">require that we obtain and maintain certain licenses and qualifications;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">limit the interest rates, fees and other charges that we are allowed to charge;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">require specified disclosures to borrowers;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">limit or prescribe other terms of our loans;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">govern the sale and terms of insurance products that we offer and the insurers for which we act as agent; and </P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">define our rights to repossess and sell collateral.<BR>
</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">In addition, other state and local laws, public policy and general principles of equity relating to the protection of consumers, unfair and deceptive practices and debt collection practices may apply to the loans we make. &nbsp;Although we believe that we are in compliance in all material respects with applicable federal, state and local laws, rules and regulations, there can be no assurance that a change in any of those laws, or in their interpretation, will not make our compliance therewith more difficult or expensive, restrict our ability to originate loans, further limit or restrict the amount of interest and other charges we earn under such loans, or otherwise adversely affect our financial condition or business operations. &nbsp;The burdens of complying with these laws and regulations, and the possible sanctions if we do not so comply, are significant, and may result in a downturn in our business or our inability to carry on our business in a manner similar to how we currently operate.</P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>If we experience unfavorable litigation results, our ability to pay our obligations under the Debentures may be impaired.</B></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties. &nbsp;The damages and penalties claimed by consumers and others can be substantial. &nbsp;The relief requested by the plaintiffs varies but generally includes requests for compensatory, statutory and punitive damages. &nbsp;Unfavorable outcomes in any of our current or future litigation proceedings could materially and adversely affect our results of operations, financial condition and cash flows and our ability to make payments on the Debentures. &nbsp;</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">While we intend to vigorously defend ourselves against any of these proceedings, there is a chance that our results of operations, financial condition and cash flows could be materially and adversely affected by unfavorable outcomes which, in turn, could affect our ability to make interest payments on, or repay, the Debentures.</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt" align=center><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>12</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always" align=center><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Out internal control over financial reporting may not prevent or detect every misstatement, and controls are subject to certain limits.</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. &nbsp;An internal control system over financial reporting has been designed to provide reasonable assurance regarding the reliability and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. &nbsp;Management recognizes that there are inherent limitations in the effectiveness of any internal control system. &nbsp;Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. &nbsp;Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. &nbsp;Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.4></TD><TD width=81></TD><TD width=52.45></TD><TD width=59.35></TD><TD width=59.3></TD><TD width=59.35></TD><TD width=59.35></TD><TD width=57.65></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>RATIOS OF EARNINGS TO FIXED CHARGES</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">For purposes of calculating the ratios of earnings to fixed charges below, we calculated earnings by adding fixed charges to income before income taxes. &nbsp;Fixed charges consist of the interest on our indebtedness and the amount which we believe is representative of the interest factor component of our rent expense.</P>
</TD></TR>
<TR><TD valign=top width=151.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=386.4 colspan=5><P style="margin:0pt; font-family:Arial" align=center>December 31</P>
</TD><TD valign=top width=76.867><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=43.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=108><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=69.933><P style="margin:0pt; font-family:Arial" align=center><U>2007</U></P>
</TD><TD valign=top width=79.133><P style="margin:0pt; font-family:Arial" align=center><U>2006</U></P>
</TD><TD valign=top width=79.067><P style="margin:0pt; font-family:Arial" align=center><U>2005</U></P>
</TD><TD valign=top width=79.133><P style="margin:0pt; font-family:Arial" align=center><U>2004</U></P>
</TD><TD valign=top width=79.133><P style="margin:0pt; font-family:Arial" align=center><U>2003</U></P>
</TD><TD valign=top width=76.867><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=43.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=108><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=69.933><P style="margin:0pt; font-family:Arial" align=center>1.92</P>
</TD><TD valign=top width=79.133><P style="margin:0pt; font-family:Arial" align=center>1.83</P>
</TD><TD valign=top width=79.067><P style="margin:0pt; font-family:Arial" align=center>1.83</P>
</TD><TD valign=top width=79.133><P style="margin:0pt; font-family:Arial" align=center>1.91</P>
</TD><TD valign=top width=79.133><P style="margin:0pt; font-family:Arial" align=center>2.42</P>
</TD><TD valign=top width=76.867><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>USE OF PROCEEDS</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Net proceeds from sales of the Debentures, after payment of applicable expenses, will be placed in our general treasury. &nbsp;No segregation of proceeds will be made, but we expect to use the net proceeds for the redemption, from time to time, of various outstanding senior and subordinated securities, with various interest rates, as those securities mature and as such debtholders request redemption. &nbsp;Our subordinated securities include Debentures of the same series as the Debentures offered by this prospectus; the senior securities include our senior demand notes, which are sold from time to time in varying principal amounts and at various interest rates. &nbsp;Given the varying maturity dates and interest rates on our outstanding debt securities, we cannot presently estimate the timing or amount of proceeds which will be required to make mandatory maturity or redemption payments. &nbsp;Any proceeds not used for redemptions will be used to repay bank borrowings and repay amounts outstanding under our commercial paper program as those amounts come due from time to time, make additional consumer finance loans and for general operating purposes.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>PLAN OF DISTRIBUTION</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Debentures will be offered by us. &nbsp;No selling commissions or other remuneration will be paid directly or indirectly to any of our officers, directors or employees in connection with the sale of the Debentures. &nbsp;All proceeds from sales of the Debentures will be placed in the general treasury of the Company as sales are made, as described in the &quot;Use of Proceeds&quot; section of this prospectus. &nbsp;All offering expenses, including registration fees, printing, advertising, postage and professional fees, will be paid by us.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">There is no assurance that any or all of the Debentures offered by this prospectus will be sold. &nbsp;This offering, however, is not made contingent upon any minimum amount of Debentures being sold.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>13</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.4></TD><TD width=81></TD><TD width=52.45></TD><TD width=59.35></TD><TD width=59.3></TD><TD width=59.35></TD><TD width=59.35></TD><TD width=57.65></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Debentures will be sold and redeemed at our executive office located at 135 East Tugalo Street, Post Office Box 880, Toccoa, Georgia 30577. &nbsp;The telephone number is (706) 886-7571 or (800) 282-0709.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>FORWARD-LOOKING INFORMATION</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">This prospectus, and the information incorporated by reference in it, contains &quot;forward-looking statements&quot; within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those forward-looking statements. Such factors include the known risks we face that are described in the Risk Factors section of this prospectus and as otherwise may be described in our periodic reports that we file with the SEC from time to time. If any of the events described in the Risk Factors section or elsewhere in this prospectus occur, they could impact our ability to pay the interest and principal on the Debentures, as well as have an adverse effect on our business, financial condition and results of operation. &nbsp;We undertake no obligation to update any forward-looking statements.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>DESCRIPTION OF THE DEBENTURES</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>General</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Variable Rate Subordinated Debentures we are offering will represent subordinated, unsecured debt obligations of 1<SUP>st</SUP> Franklin. &nbsp;The Debentures will be issued under an Indenture dated October&nbsp;31, 1984 between us and The First National Bank of Gainesville, Trustee, as amended (the &#147;Indenture&#148;). &nbsp;In January 1995, Columbus Bank and Trust Company (as successor to the original trustee) transferred its trust operations to a separate affiliated trust company, Synovus Trust Company, N.A.. &nbsp;As a result of this transfer, Synovus Trust Company, N.A. became the successor in interest Trustee under the Indenture. &nbsp;We have been informed that the counsel to Columbus Bank and Trust Company believes that, under applicable banking regulations and as a result of an agreement with us, Columbus Bank and Trust Company remains responsible to holders of Debentures for all actions of Synovus Trust Company, N.A. as if the actions were taken by Columbus Bank and Trust Company. &nbsp;The terms and conditions of the Debentures include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939. &nbsp;The following is a summary of the material provisions of the Indenture. &nbsp;For a complete understanding of the Debentures, you should review the definitive terms and conditions contained in the Indenture, which include definitions of certain terms used below. &nbsp;A copy of the Indenture has been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part and is available from us at no charge upon request.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Debentures are registered and issued without coupons in series form. &nbsp;Any amount of any series may be issued. &nbsp;There is no limit on the principal amount of Debentures of any series, or of all series issuable under the Indenture. &nbsp;The dollar amount of Debentures outstanding under the Indenture as of December 31, 2007 was $92.0 million. &nbsp;1<SUP>st</SUP> Franklin and the Trustee may amend the Indenture to limit the principal amount of a particular series or to allow additional series with no limitations as to the maximum amount of any increase or to the number of increases which may be made. &nbsp;We may change the interest rates and the maturities of the Debentures offered by this prospectus and of any subsequent series which may be offered, provided that no such change will affect any Debenture of any series issued prior to the date of that change.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>14</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.4></TD><TD width=81></TD><TD width=52.45></TD><TD width=59.35></TD><TD width=59.3></TD><TD width=59.35></TD><TD width=59.35></TD><TD width=57.65></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Debentures are direct obligations of 1<SUP>st</SUP> Franklin, but are not secured by any collateral or lien. &nbsp;In addition, the Debentures are not bank certificates of deposit and are not insured by the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or any other agency or company. Investors must rely solely on 1<SUP>st</SUP> Franklin's ability to repay its obligations under the Debentures. Principal and interest are payable at our executive office in Toccoa, Georgia, which is sometimes referred to as the Investment Center. &nbsp;The Debentures are executed by 1<SUP>st</SUP> Franklin and authenticated and delivered to the purchaser by the Trustee upon the written order of 1<SUP>st</SUP> Franklin.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Established Features of the Debentures</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Debentures offered by this prospectus are issued and dated as of the date when purchased. &nbsp;The interest rate for a Debenture is compounded daily and is payable at any time at the holder's request. &nbsp;An interest payment request may be made to 1<SUP>st</SUP> Franklin in person at the Investment Center or by telephone, fax, Internet or regular mail. &nbsp;An interest payment request may be made by a holder one or more times from time-to-time, or a holder may request that such payments occur on a specified periodic basis until the redemption or maturity of the particular Debenture.</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Each Debenture matures four years from the date of its issue, although the maturity thereof may be extended for one additional four-year term as described under &quot;Extension After Maturity,&quot; in each case subject to earlier redemption as provided for herein and in the Debenture.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">On a weekly basis, 1<SUP>st</SUP> Franklin will establish various minimum purchase amounts with corresponding interest rates and interest adjustment periods that will be available on Debentures that are sold beginning on the following Thursday and continuing through the Wednesday thereafter for each minimum purchase amount, all based upon Management's evaluation of general market conditions for investments with similar characteristics such as investment amount, redemption rights, risk profile and term to maturity. The interest rate offered on the Debentures will depend on the interest adjustment period selected by the holder from those offered by 1<SUP>st</SUP> Franklin. &nbsp;At the time of an initial investment, a holder will select an interest adjustment period from those then being offered by 1<SUP>st</SUP> Franklin. &nbsp;The selected interest adjustment period will remain unchanged for the term of the Debenture, including any extension of the original maturity date. During this period, the interest rate on a Debenture will not change. &nbsp;At the end of each interest adjustment period, unless the Debenture is redeemed, the interest rate will automatically adjust to the interest rate then currently offered rate for Debentures with the same interest adjustment period. 1<SUP>st</SUP> Franklin anticipates that it will offer the Debentures with interest rate adjustment periods ranging from one month to four years.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Not less than seven days prior to the end of each interest adjustment period, we will send written notice to the holder of a Debenture of the interest rate which will be applicable to the Debenture during the upcoming interest adjustment period, which will be the same interest rate that will be applicable to all new Debentures being offered during that week with the same interest adjustment period. &nbsp;If the holder elects to retain the Debenture at the new rate, no action is required of the holder as the new rate will become effective as of the first day of the interest adjustment period. &nbsp;If the holder elects not to accept the new rate, the holder can redeem the Debenture without penalty at the interest adjustment date or within the 14 day period after the interest adjustment date, referred to as the &quot;grace period,&quot; either in person at, or by mail to, the Investment Center or, in certain limited circumstances, by fax. &nbsp;See &quot;Redemption at Request of Holder Prior to Maturity.&quot; &nbsp;</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Debentures with the then-current established features will be available for purchase beginning on the Thursday after the date of the determination of such features through the following Wednesday. &nbsp;The most recently determined established features will be applicable to all Debentures sold by us during that period. &nbsp;We publish this information weekly in a newspaper of general circulation and on our web site maintained at <U>http://www.1ffc.com</U> or it can be obtained directly from us by calling or visiting our executive offices in Toccoa, Georgia. &nbsp;The most recently determined established features will also be set forth in applicable prospectus supplements that will be filed with the SEC as appropriate. </P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>15</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.4></TD><TD width=81></TD><TD width=52.45></TD><TD width=59.35></TD><TD width=59.3></TD><TD width=59.35></TD><TD width=59.35></TD><TD width=57.65></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Payment of Interest on the Debentures</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Interest on the Debentures is earned daily and is payable promptly on the request therefor by the holder, subject to any limitations described in &quot;Subordination&quot; below. &nbsp;A request for the payment of interest may be made in person at, or by mail to, the Investment Center, by telephone at (706) 886-7571 or (800) 282-0709, by fax at (706) 886-7369 or on the Internet by visiting our web site at http://www.1ffc.com and clicking on the &quot;Contact Info&quot; button and completing the form. &nbsp;Any request for the payment of interest may be made by a holder one or more times from time-to-time, or may be made to occur at specified intervals, such as monthly, quarterly, semi-annually or annually for so long as the Debenture is outstanding.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Subordination</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The payment of the principal and interest on the Debentures is subordinate in right of payment to all of our senior debt. &nbsp;The term &quot;senior debt&quot; means all of our indebtedness outstanding at any time except debt that by its terms is not senior in right of payment to the Debentures and indebtedness represented by our outstanding Debentures, each of which are pari passu. &nbsp;No sinking fund is required to be established to provide for payments on the Debentures.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">In the event that the Debentures are declared due and payable before their expressed maturity because of a default under the Indenture, a holder of a Debenture will be entitled to payment only after all principal and interest on all senior debt has been paid in full. &nbsp;Likewise, in the event of our insolvency, bankruptcy or liquidation, or other similar proceeding relating to 1<SUP>st</SUP> Franklin or to its creditors, as such, or to our property, or in the event of any dissolution or other winding up, whether or not involving insolvency or bankruptcy, then the holders of any senior debt and all other obligations senior to the Debentures will be entitled to receive payment in full of all principal and interest due to them before the holders of the Debentures are entitled to receive any payments.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The amount of our senior debt outstanding as of December 31, 2007 was $182.3 million.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Redemption by 1<SUP>st</SUP> Franklin Prior to Maturity</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">We may redeem any Debenture at any time prior to maturity for a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption. &nbsp;We will provide written notice to the holder of a Debenture whose Debenture is to be redeemed not less than 30 nor more than 60 days prior to the date fixed for redemption. &nbsp;In the event the entire series of Debentures is not called for redemption, the redemption call will be made by the Trustee pro rata or by lot.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Redemption at Request of Holder Prior to Maturity</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">At the request of the holder, we will redeem any Debenture at the end of that Debenture's interest adjustment period or within the 14 day period after the interest adjustment date for a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">If a request for redemption is made for a time other than at the end of an interest adjustment period or within the applicable grace period, or at maturity, we may, at our option, redeem that Debenture for a price equal to the principal amount plus one-half of any accrued and unpaid interest since the most recent interest adjustment date, if applicable, or the purchase date on that Debenture up to the date of redemption.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">If the holder of a Debenture dies before its maturity, we may, at our option, redeem any Debenture held by that holder for a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>16</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.4></TD><TD width=81></TD><TD width=52.45></TD><TD width=59.35></TD><TD width=59.3></TD><TD width=59.35></TD><TD width=59.35></TD><TD width=57.65></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">All requests for redemption must be made either in person at, or by mail to, our executive offices in Toccoa, Georgia. &nbsp;In the event a holder has lost, destroyed or had their Debenture stolen and such holder desires to redeem the same, redemption can be accomplished by completing the requisite form available from the Company and returning it to us in person or by mail, or by faxing it to us at the number above.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Extension After Maturity</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">Subject to redemption at the request of a holder at and as of the maturity date as described above, and our right to redeem a Debenture, the maturity of a Debenture will be automatically extended beyond its initial four-year term for one additional four-year period. &nbsp;In the event of such an extension, all provisions of the Debenture will remain unchanged with the exception of the interest rate, which will change in accordance with the interest adjustment provision of that particular Debenture. &nbsp;Written notice and a then-current prospectus relating to the Debentures will be sent to a holder of a Debenture not less than 30 days prior to the maturity date of a particular Debenture, which notice will set forth, among other things, the upcoming maturity date and information regarding renewal (if applicable) and redemption procedures. &nbsp;A subsequent written notice will be sent not less than seven days prior to the maturity date and will set forth, among other things, the upcoming maturity date, information regarding renewal (if applicable) and redemption procedures, the approximate maturity value of the Debenture (including all outstanding principal and any accrued but unpaid interest) and the interest rate which will be applicable on a renewal of that Debenture for the initial interest adjustment period following the upcoming maturity date (if applicable).</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">In no event may the maturity of a Debenture be extended more than one additional term.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Restrictions on Additional Debt</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">There are no restrictions in the Indenture against the issuance of additional securities or the incurring of additional debt, including senior debt and secured obligations.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Successors</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Indenture generally permits a consolidation or merger between us and another entity. &nbsp;It also permits the transfer or lease by us of all or substantially all of our assets. &nbsp;These transactions are permitted if:</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">the resulting or acquiring entity, if other than us, is a corporation and assumes all of our responsibilities and liabilities under the Debentures and the Indenture; and</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">immediately after the transaction, and giving effect to the transaction, no event of default under the Indenture exists.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Modification of the Indenture</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Indenture contains provisions permitting 1<SUP>st</SUP> Franklin and the Trustee, with the consent of the holders of not less than two-thirds of the outstanding principal amount of the Debentures, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental Indenture or modifying in any manner the rights of the holders of such Debentures; provided, however, that no such supplemental Indenture can do any of the following:</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>17</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.4></TD><TD width=81></TD><TD width=52.45></TD><TD width=59.35></TD><TD width=59.3></TD><TD width=59.35></TD><TD width=59.35></TD><TD width=57.65></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">change the fixed maturity of any Debenture;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">reduce the principal amount of any Debenture;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">reduce the rate, or change the time of payment of interest on any Debenture;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">reduce the amount of Debentures whose holders must consent to an amendment; or</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">make any changes regarding the Indenture that relate to a waiver of default, the rights of holders to receive payments, and the requirements of consent of the holders of Debentures, in each case without the consent of the holder of each Debenture so affected.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">We, along with the Trustee, may amend the Indenture to allow for the issuance of additional amounts of a particular series or additional series of Debentures without the consent of the holders of Debentures. There are no limitations as to the maximum amount of any increase or to the number of increases which may be made. &nbsp;We may change the interest rates and the maturities of the Debentures offered by this prospectus and of any subsequent series which may be offered without entering into a supplemental indenture, provided that no such change will affect any Debenture of any series issued prior to the date of that change.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Events of Default and Notice Thereof</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">An event of default is generally defined by the Indenture to mean any of the following:</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">failure to pay principal on any Debenture when it becomes due;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">failure to pay interest on any Debenture when it becomes due and the failure continues for 30 days;</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">failure, after notice from the Trustee or from the holders of at least 25% in principal amount of the Debentures of the affected series, to observe or perform within 30 days any of the covenants contained in the Indenture or Debentures; or</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">the occurrence of certain events of bankruptcy, insolvency or reorganization.<BR>
</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Indenture provides that the Trustee will, within 90 days after its occurrence, give the registered holders of Debentures notice of any existing default known to the Trustee, but, except in case of a default in the payment of principal or interest, the Trustee may withhold such notice if and for so long as the Trustee in good faith determines that the withholding of such notice is in the interest of those holders.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Rights on Default</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Trustee by notice to 1<SUP>st</SUP> Franklin, or the holders of at least 25% in principal amount of Debentures of the affected series, may declare the principal of and accrued but unpaid interest on all Debentures due upon the happening of any of the events of default specified in the Indenture, but the holders of a majority of the outstanding principal amount of those Debentures may waive any default and rescind such declaration if the default is cured within the 30 day period, except a default in the payment of the principal of or interest on any Debenture or a default on any senior debt. &nbsp;The holders of a majority of the outstanding principal amount of the Debentures of any affected series may direct the time, method and place of conducting any proceeding for any remedy available to, or exercising any power or trust conferred upon, the Trustee, but the Trustee may decline to follow any direction that conflicts with law or any provision of the Indenture, or is unduly prejudicial to the rights of the other holders of Debentures or would involve the Trustee in personal liability. &nbsp;Holders may not institute any proceeding to enforce the Indenture unless the Trustee refuses to act for 60 days after request from the holders of at least 25% in principal amount of the Debentures of the affected series and during that 60 day period the holders of a majority in principal amount do not give the Trustee a direction inconsistent with the request, and tender to the Trustee of satisfactory indemnity. &nbsp;Nevertheless, any holder may enforce the payment of the principal of and interest on the holder's Debenture when due.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Concerning the Trustee</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>18</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.4></TD><TD width=81></TD><TD width=52.45></TD><TD width=59.35></TD><TD width=59.3></TD><TD width=59.35></TD><TD width=59.35></TD><TD width=57.65></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Trustee does not have any other business relationship with 1<SUP>st</SUP> Franklin. &nbsp;The Trustee maintains its principal corporate trust office in Columbus, Georgia.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial"><B>Evidence to be Furnished to the Trustee</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The Indenture provides that, upon any application or request by us to the Trustee to act, we will provide the Trustee an officer's certificate and an opinion of counsel stating that any necessary conditions precedent have been met. &nbsp;Within 120 days after the end of each fiscal year, 1<SUP>st</SUP> Franklin is required to file with the Trustee an officers' certificate stating whether or not, to the best knowledge of the signers, 1<SUP>st</SUP> Franklin is in default in the performance of any covenant, agreement or condition in the Indenture and, if so, specifying each such default and, with respect to each, the action taken or proposed to be taken by 1<SUP>st</SUP> Franklin to remedy such default.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>LEGAL MATTERS</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The validity of the issuance of the Debentures being offered by this prospectus will be passed upon for us by Jones Day, Atlanta, Georgia.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>EXPERTS</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">The consolidated financial statements and the related financial statement schedule incorporated in this prospectus by reference from the Company&#146;s Annual Report on Form 10-K for the year ended December 31, 2007 have been audited by Deloitte &amp; Touche LLP, an independent registered public accounting firm, as stated in their reports which are incorporated herein by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin:0pt; font-family:Arial" align=center><B>WHERE YOU CAN FIND MORE INFORMATION</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin:0pt; font-family:Arial">We file annual, quarterly and special reports, and other information, with the SEC. &nbsp;You may read and copy any document we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. &nbsp;Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. &nbsp;Our SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. </P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin:0pt; font-family:Arial" align=center><B>INCORPORATION OF CERTAIN INFORMATION BY REFERENCE</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin:0pt; font-family:Arial">The SEC allows us to &quot;incorporate by reference&quot; the information we file with it, which means that we can disclose important information to you by referring you to those documents. &nbsp;The information incorporated by reference into this prospectus is an important part of this prospectus. &nbsp;Specifically, we are incorporating by reference the following: &nbsp;</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-36pt; font-family:Arial" align=justify>(a)</P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:72pt; font-family:Arial" align=justify>The Annual Report of the Company on Form 10-K for the year ended December 31, 2007, filed on March 20, 2008;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-36pt; font-family:Arial" align=justify>(b)</P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:72pt; font-family:Arial" align=justify>The Current Reports of the Company on Form 8-K, filed on January 30, 2008 and April 7, 2008.</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-36pt; font-family:Arial" align=justify>(c)</P>
<P style="margin:0pt; padding-left:72pt; font-family:Arial" align=justify>All other reports filed with the Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, since December 31, 2007.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>19</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=32.4></TD><TD width=81></TD><TD width=52.45></TD><TD width=59.35></TD><TD width=59.3></TD><TD width=59.35></TD><TD width=59.35></TD><TD width=57.65></TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin:0pt; font-family:Arial">Any statement contained in this prospectus or in a document incorporated by reference in this prospectus is deemed to be modified or superseded for purposes of this prospectus to the extent that any of the following modifies or supersedes such statement:</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">in the case of a statement in a previously filed document incorporated by reference in this prospectus, a statement contained in this prospectus; or</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-18pt; font-family:Arial; font-size:12pt">&#8226;</P>
<P style="margin:0pt; padding-left:54pt; font-family:Arial">a statement contained in any prospectus supplement relating to the offering of Debentures.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; font-family:Arial">Any modified or superseded statement will not be deemed to constitute a part of this prospectus or any prospectus supplement, except as modified or superseded. &nbsp;Except as provided by the above-mentioned exceptions, all information appearing in this prospectus and each prospectus supplement is qualified in its entirety by the information appearing in the documents incorporated by reference.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin:0pt; font-family:Arial">Copies of documents incorporated by reference will be provided without charge upon request to our Corporate Secretary at 135 East Tugalo Street, Post Office Box 880, Toccoa, Georgia 30577, telephone number (706) 886-7571 or (800)-282-0709 (within Georgia) or (800) 700-7943 (outside of Georgia). &nbsp;You can also access any or all of these filings free of charge at our website http://www.1ffc.com. &nbsp;Information contained on our website does not constitute part of this prospectus, and you should rely only on the information contained, or specifically incorporated by reference, in this prospectus in deciding whether to invest in Debentures.</P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>REPORTS TO SECURITY HOLDERS</B></P>
</TD></TR>
<TR><TD valign=top width=614.467 colspan=8><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial">A copy of the above-mentioned annual report, containing financial information that has been examined and reported upon, with an opinion expressed, by an independent registered public accounting firm, is being delivered with this prospectus. &nbsp;We also provide each security holder with a copy &nbsp;of our most recent subsequent quarterly report containing unaudited financial information. &nbsp;Each of these reports for the current year are also available on our web site at http://www.1ffc.com. &nbsp;Information contained on our website does not constitute part of this prospectus, and you should rely only on the information contained, or specifically incorporated by reference, in this prospectus in deciding whether to invest in Debentures.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>20</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=23.4></TD><TD width=91.8></TD><TD width=57.6></TD><TD width=57.6></TD><TD width=57.6></TD><TD width=57.6></TD><TD width=57.6></TD><TD width=38.7></TD><TD width=18.9></TD></TR>
<TR><TD valign=top width=614.4 colspan=9><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><B>APPENDIX I TO PROSPECTUS<BR>
INFORMATION AS OF DECEMBER 31, 2007</B></P>
</TD></TR>
<TR><TD valign=top width=31.2><P style="margin:0pt; font-family:Arial">1.</P>
</TD><TD valign=top width=429.6 colspan=5><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial">Unused borrowings under our $50,000,000 Credit Agreement </P>
<P style="margin:0pt"><BR></P>
</TD><TD valign=top width=128.4 colspan=2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;$33,315,319</P>
</TD><TD valign=top width=25.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=31.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=122.4><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=31.2><P style="margin:0pt; font-family:Arial">2.</P>
</TD><TD valign=top width=429.6 colspan=5><P style="margin:0pt; font-family:Arial">Debentures outstanding under Indenture </P>
</TD><TD valign=top width=128.4 colspan=2><P style="margin:0pt; font-family:Arial" align=right>&nbsp;$91,965,714</P>
</TD><TD valign=top width=25.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=31.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=122.4><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=31.2><P style="margin:0pt; font-family:Arial">3.</P>
</TD><TD valign=top width=429.6 colspan=5><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial">Senior debt outstanding </P>
<P style="margin:0pt"><BR></P>
</TD><TD valign=top width=128.4 colspan=2><P style="margin:0pt; font-family:Arial" align=right>$182,372,949</P>
</TD><TD valign=top width=25.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=31.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=122.4><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=31.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=122.4><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=76.8 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.4 colspan=9><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>21</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; font-family:Arial" align=center><B>PART II. &nbsp;INFORMATION NOT REQUIRED IN PROSPECTUS</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=36.9></TD><TD width=36></TD><TD width=42.3></TD><TD width=115.2></TD><TD width=115.2></TD><TD width=115.2></TD></TR>
<TR><TD valign=top width=614.4 colspan=6><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><U>Item 13.</U></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><U>Other Expenses of Issuance and Distribution</U></P>
</TD></TR>
<TR><TD valign=top width=153.6 colspan=3><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=153.6><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=153.6><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=153.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=49.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=565.2 colspan=5><P style="margin:0pt; font-family:Arial">The expenses to be incurred in the issuance and distribution of the securities being registered hereby are estimated as follows:</P>
</TD></TR>
<TR><TD valign=top width=97.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=363.6 colspan=3><P style="margin:0pt; padding-right:-7.2pt; font-family:Arial">Filing Fee - Securities and Exchange Commission </P>
<P style="margin:0pt; padding-right:-7.2pt; font-family:Arial">State Registration Fees</P>
<P style="margin:0pt; padding-right:-7.2pt; font-family:Arial">Legal Fees and Expenses </P>
<P style="margin:0pt; padding-right:-7.2pt; font-family:Arial">Accounting Fees </P>
<P style="margin:0pt; padding-right:-7.2pt; font-family:Arial">Printing Costs </P>
<P style="margin:0pt; padding-right:-7.2pt; font-family:Arial">Advertising </P>
<P style="margin:0pt; padding-right:-7.2pt; font-family:Arial">Trustee's Fees </P>
<P style="margin:0pt; padding-right:-7.2pt; font-family:Arial">Postage and Miscellaneous </P>
<P style="margin:0pt; padding-right:-7.2pt; text-indent:48.6pt; font-family:Arial">Total </P>
</TD><TD valign=top width=153.6><P style="margin-top:0pt; margin-bottom:-12pt; text-indent:32.4pt; font-family:Arial">$</P>
<P style="margin:0pt; text-indent:50.4pt; font-family:Arial">3,930</P>
<P style="margin:0pt; text-indent:50.4pt; font-family:Arial">2,000</P>
<P style="margin:0pt; text-indent:45.4pt; font-family:Arial">40,000</P>
<P style="margin:0pt; text-indent:50.4pt; font-family:Arial">6,000</P>
<P style="margin:0pt; text-indent:50.4pt; font-family:Arial">2,500</P>
<P style="margin:0pt; text-indent:50.4pt; font-family:Arial">7,500</P>
<P style="margin:0pt; text-indent:45.4pt; font-family:Arial">16,000</P>
<P style="margin:0pt; text-indent:45.4pt; font-family:Arial"><U>13,000</U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; text-indent:32.4pt; font-family:Arial"><U>$</U></P>
<P style="margin:0pt; text-indent:45.4pt; font-family:Arial"><U>90,930</U></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><U>Item 14.</U></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><U>Indemnification of Directors and Officers</U></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>22</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:6.65pt; padding-left:36pt; font-family:Arial">The bylaws of the registrant (the &quot;Bylaws&quot;) provide that the registrant will indemnify any officer, director, employee or agent of the registrant who was or is a party or is threatened to be made a party to any threatened, pending or completed action (other than an action by or in the right of the registrant) by reason of the fact that such person is or was a director, officer, employee or agent of the registrant, or is or was serving at the request of the registrant as a director, officer, employee or agent of another entity against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action if such person acted in a manner he reasonably believed to be in or not opposed to the best interests of the registrant, and, with respect to any criminal action or proceeding, and had no reasonable cause to believe his conduct was unlawful. &nbsp;The termination of any action by judgment, order, settlement or conviction, or upon a plea of nolo contendre or its equivalent, shall not, of itself, create a presumption that a person did not act in a manner which he reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.</P>
<P style="margin-top:0pt; margin-bottom:6.65pt; padding-left:36pt; font-family:Arial">The Bylaws further provide that the registrant will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the registrant to procure a judgment in its favor by reason of the fact such person was a director, officer, employee or agent of the registrant, or is or was serving at the request of the registrant as a director, officer, employee or agent of another entity against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant. &nbsp;However, no indemnification will be made in respect of any claim, issue or matter as to which such person has been adjudged to be liable for negligence or misconduct in the performance of his duty to the registrant unless and only to the extent that the court in which such action or suit was brought determines that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.</P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">Any of the foregoing indemnification shall be made by the registrant only as authorized in the specific case upon a determination that indemnification of the person is proper in the circumstances because such person has met the applicable standard of conduct set forth in the Bylaws, unless otherwise ordered by a court. &nbsp;Such determination will be made (i) by the board of directors of the registrant by a majority vote of a quorum consisting of directors who were not parties to such action, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the affirmative vote of a majority of the shares of stock of the registrant entitled to vote thereon.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">To the extent that any of the foregoing persons is successful on the merits or otherwise in the defense of an action, such person will be indemnified against expenses incurred by such person in connection therewith.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">The registrant reserves the right to advance sums for the defense of any action in advance of the final disposition of such action provided that the registrant receives from the person requesting the advance an undertaking to repay any sums unless it is determined that such person is entitled to be indemnified as provided in the Bylaws.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">The indemnification provided by the Bylaws is not exclusive of any other rights, in respect of indemnification or otherwise, to which those seeking indemnification may be entitled under any bylaw or resolution approved by the affirmative vote of the holders of a majority of the shares of the registrant entitled to vote thereon taken at a meeting the notice of which specified that such bylaw or resolution would be placed before the shareholders of the registrant.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>23</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; padding-left:36pt; font-family:Arial">The registrant has the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the registrant, or is or was serving at the request of the registrant as a director, officer, employee or agent of another entity against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the registrant would have the power to indemnify him against such liability under the provisions of the Bylaws.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">If any expenses or other amounts are paid by way of indemnification, otherwise than by court order or action by the shareholders of the registrant or by an insurance carrier pursuant to insurance maintained by the registrant, the registrant will, not later than the next annual meeting of shareholders (unless such meeting is held within three months from the date of such payment) and, in any event, within 15 months from the date of such payment, send by first class mail to its shareholders of record at the time entitled to vote for the election of directors a statement specifying the persons paid, the amounts paid, and the nature and status at the time of such payment of the litigation or threatened litigation.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=460.85></TD></TR>
<TR><TD valign=top width=614.467><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><U>Item 15.</U></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><U>Recent Sales of Unregistered Securities</U></P>
</TD></TR>
<TR><TD valign=top width=614.467><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.467><P style="margin:0pt; padding-left:36pt; font-family:Arial">In the ordinary course of its business and to assist in the funding of its day-to-day operations involving, primarily, the making of consumer loans and first and second mortgage loans, the registrant makes periodic sales of certain of its securities which are exempt from the registration provisions of the Securities Act of 1933, as amended (the &quot;Act&quot;). &nbsp;None of such sales in the past three years have involved, or have been made through, any underwriters, and all such sales were made by executive officers of the registrant. &nbsp;</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">During the past three years, the registrant has offered and sold certain senior demand notes (&quot;Notes&quot;) only to residents of Georgia in reliance on the exemption from the federal securities registration requirements provided by Section 3(a)(11) of the Act and Rule 147 thereunder. &nbsp;In addition, the registrant has offered and sold its commercial paper (&quot;Commercial Paper&quot;) to investors meeting certain minimum investment qualifications pursuant to the exemption from the federal securities regulation requirements provided by Section 3(a)(3) of the Act. &nbsp;</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; padding-left:36pt; font-family:Arial">During the previous three years, the registrant has sold approximately $184.7 million of Notes and approximately $631.9 million of Commercial Paper.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=27.9></TD><TD width=40.5></TD><TD width=40.5></TD><TD width=351.9></TD></TR>
<TR><TD valign=top width=614.4 colspan=4><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial"><U>Item 16.</U></P>
<P style="margin:0pt; text-indent:36pt; font-family:Arial"><U>Exhibits and Financial Statement Schedules</U></P>
</TD></TR>
<TR><TD valign=top width=614.4 colspan=4><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">3.</P>
</TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(a)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Restated Articles of Incorporation of the registrant, as amended January 26, 1996 (incorporated herein by reference to Exhibit 3(a) to the registrant's annual report on Form 10-K for the year ended December 31, 1995). &nbsp;<BR>
</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(b)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Bylaws of the registrant (incorporated herein by reference to Exhibit 3(b) to the registrant's annual report on Form 10-K for the year ended December 31, 1995).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">4.</P>
</TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(a)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Indenture dated October 31, 1984, between the Company and the First National Bank of Gainesville, Trustee (incorporated by reference to Exhibit 4(a) to the Company&#146;s Amendment No. 1 dated April 24, 1998 to the Registration Statement on Form S-2, File No. 333-47515).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(b)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Form of Series 1 Variable Rate Subordinated Debenture (incorporated by reference to Exhibit 4(b) to Amendment No. 3 to the Company&#146;s registration statement on Form S-2 dated November 14, 2005, File No. 333-126589).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>24</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=27.9></TD><TD width=40.5></TD><TD width=40.5></TD><TD width=351.9></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(c)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Agreement of Resignation, Appointment and Acceptance dated as of May 28, 1993 between the Company, The First National Bank of Gainesville and Columbus Bank and Trust Company (incorporated by reference to Exhibit 4(c) to the Company&#146;s Post-Effective Amendment No. 1 dated June 8, 1993 to the registration statement on Form S-2, File No. 33-49151).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">5. &nbsp;</P>
</TD><TD valign=top width=523.2 colspan=2><P style="margin:0pt; text-indent:12.6pt; font-family:Arial">Opinion of Counsel Regarding Legality.*</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">10.</P>
</TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(a)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Credit Agreement, dated as of December 15, 2006, by and among the registrant, Wachovia Bank, National Association, as administrative agent and as a lender, and BMO Capital Markets Financing, Inc., as a lender (incorporated by reference to Exhibit 10.1 to the Company&#146;s current report on Form 8-K, dated December 21, 2006).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(b)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Form of the Company&#146;s 2007 Executive Bonus Plan (incorporated by reference to Exhibit 10.1 to the Company&#146;s current report on Form 8-K dated January 30, 2008).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(c)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Director Compensation Summary Term Sheet (incorporated by reference to Exhibit 10(c) to the Company&#146;s annual report on Form 10-K for the year ended December 31, 2007).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">11.</P>
</TD><TD valign=top width=523.2 colspan=2><P style="margin:0pt; padding-left:8.1pt; font-family:Arial">Computation of Per Share Earnings (can be determined from the consolidated statements of income contained in the registrant's annual report on Form 10-K for the year ended December 31, 2007, incorporated herein by reference).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">12. </P>
</TD><TD valign=top width=523.2 colspan=2><P style="margin:0pt; padding-left:8.1pt; font-family:Arial">Calculation of Ratio of Earnings to Fixed Charges.</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">21.</P>
</TD><TD valign=top width=523.2 colspan=2><P style="margin:0pt; padding-left:8.1pt; font-family:Arial">Subsidiaries of the registrant (incorporated by reference to Exhibit 21 to the registrant's annual report on Form 10-K for the year ended December 31, 2007).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=523.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">23.</P>
</TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(a)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Consent of Independent Registered Public Accounting Firm.<BR>
</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(b)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">Consent of Counsel. *</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">24. </P>
</TD><TD valign=top width=523.2 colspan=2><P style="margin:0pt; padding-left:8.1pt; font-family:Arial">Power of attorney (included on signature page hereto).</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial">25.</P>
</TD><TD valign=top width=523.2 colspan=2><P style="margin:0pt; padding-left:8.1pt; font-family:Arial">Form T-1 as to the eligibility and qualification of U.S. Bank National Association, Trustee, under the Indenture between the registrant and U.S. Bank National Association.<BR>
</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.4 colspan=4><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial">*</P>
<P style="margin:0pt; text-indent:13.5pt; font-family:Arial">To be filed by amendment.</P>
</TD></TR>
<TR><TD valign=top width=614.4 colspan=4><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=469.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>25</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=27.9></TD><TD width=40.5></TD><TD width=40.5></TD><TD width=351.9></TD></TR>
<TR><TD valign=top width=614.4 colspan=4><P style="margin:0pt; font-family:Arial"><U>Item 17. &nbsp;&nbsp;&nbsp;Undertakings</U></P>
</TD></TR>
<TR><TD valign=top width=614.4 colspan=4><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=577.2 colspan=3><P style="margin:0pt; font-family:Arial">The undersigned registrant hereby undertakes:</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(1)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: &nbsp;(i) &nbsp;to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; &nbsp;(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. &nbsp;Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the <FONT FACE="(normal text)">&quot;</FONT>Calculation of Registration Fee&quot; table in the effective registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(2)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(3)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.</P>
</TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(4)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. &nbsp;Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, <I>provided</I> that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. &nbsp;Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>26</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=27.9></TD><TD width=40.5></TD><TD width=40.5></TD><TD width=351.9></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(5)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Arial">i.</P>
<P style="margin:0pt; text-indent:17.1pt; font-family:Arial">If the registrant is relying on Rule 430B (&#167; 230.430B of this chapter):</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:44.1pt; text-indent:-27pt; font-family:Arial">A.</P>
<P style="margin:0pt; padding-left:44.1pt; font-family:Arial">Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:44.1pt; text-indent:-27pt; font-family:Arial">B.</P>
<P style="margin:0pt; padding-left:44.1pt; font-family:Arial">Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. &nbsp;As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. &nbsp;Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:17.1pt; text-indent:-17.1pt; font-family:Arial">ii.</P>
<P style="margin:0pt; padding-left:17.1pt; font-family:Arial">If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. &nbsp;Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt; font-family:Arial" align=center>27</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
<P style="margin:0pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=27.9></TD><TD width=40.5></TD><TD width=40.5></TD><TD width=351.9></TD></TR>
<TR><TD valign=top width=37.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=54><P style="margin:0pt; font-family:Arial" align=center>(6)</P>
</TD><TD valign=top width=469.2><P style="margin:0pt; font-family:Arial">That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: &nbsp;The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:17.1pt; text-indent:-17.1pt; font-family:Arial">i.</P>
<P style="margin:0pt; padding-left:17.1pt; font-family:Arial">Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:17.1pt; text-indent:-17.1pt; font-family:Arial">ii.</P>
<P style="margin:0pt; padding-left:17.1pt; font-family:Arial">Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:17.1pt; text-indent:-17.1pt; font-family:Arial">iii.</P>
<P style="margin:0pt; padding-left:17.1pt; font-family:Arial">The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:17.1pt; text-indent:-17.1pt; font-family:Arial">iv.</P>
<P style="margin:0pt; padding-left:17.1pt; font-family:Arial">Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
</DIV><DIV style="width:450pt"><TABLE style="font-size:10pt" cellspacing=0><TR><TD width=461.2></TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial">The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.</P>
</TD></TR>
<TR><TD valign=top width=614.933><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial">Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. &nbsp;In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-bottom:10pt"><BR>
<BR></P>
</DIV><DIV style="width:450.05pt"><P style="margin:0pt; font-family:Arial" align=center>28</P>
<P style="line-height:10pt; margin:0pt"><BR></P>
</DIV><DIV style="width:450pt"><P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=461.2></TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial" align=center><B>SIGNATURES</B></P>
</TD></TR>
<TR><TD valign=top width=614.933><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial">Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toccoa, State of Georgia, on the 11<SUP>th</SUP> day of April, 2008.</P>
</TD></TR>
<TR><TD valign=top width=614.933><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; text-indent:256pt; font-family:Arial">1<SUP>st</SUP> FRANKLIN FINANCIAL CORPORATION</P>
</TD></TR>
<TR><TD valign=top width=614.933><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial" align=right><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Ben F. Cheek, III&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>
</TD></TR>
<TR><TD valign=top width=614.933><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial" align=right>Ben F. Cheek, III</P>
</TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial" align=right>Chairman of the Board</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=461.2></TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial">KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ben F. Cheek, III and A. Roger Guimond, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and their substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and their substitutes, may lawfully do or cause to be done by virtue hereof.</P>
</TD></TR>
<TR><TD valign=top width=614.933><P style="margin:0pt; font-family:Arial">Pursuant to the requirements of the Securities Act of 1933, this registration statement or amendment thereto has been signed by the following persons in the capacities and on the dates indicated:</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=126.9></TD><TD width=216></TD><TD width=118.2></TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial" align=center><U>Signature</U></P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial" align=center><U>Title</U></P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center><U>Date</U></P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=288><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=157.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial"><U>&nbsp;/s/ Ben F. Cheek, III </U></P>
<P style="margin:0pt; font-family:Arial">Ben F. Cheek, III</P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial">Chairman of the Board and Chief Executive Officer (Principal Executive Officer)</P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center>April 11, 2008</P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial"><U>/s/ Ben F. Cheek, IV</U></P>
<P style="margin:0pt; font-family:Arial">Ben F. Cheek IV</P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial">Vice Chairman</P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center>April 11, 2008</P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=288><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=157.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial"><U>/s/ /Virginia C. Herring</U></P>
<P style="margin:0pt; font-family:Arial">Virginia C. Herring</P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial">President</P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center>April 11, 2008</P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=288><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=157.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial"><U>/s/ A. Roger Guimond</U></P>
<P style="margin:0pt; font-family:Arial">A. Roger Guimond</P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial">Executive Vice President and Chief Financial Officer &nbsp;(Principal Financial Officer and Principal Accounting Officer); Director</P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center>April 11, 2008</P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=288><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=157.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial"><U>/s/ John G. Sample, Jr.</U></P>
<P style="margin:0pt; font-family:Arial">John G. Sample, Jr.</P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial">Director</P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center>April 11, 2008</P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=288><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=157.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial"><U>/s/ Dean Scarborough</U></P>
<P style="margin:0pt; font-family:Arial">Dean Scarborough</P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial">Director</P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center>April 11, 2008</P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=288><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=157.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial"><U>/s/ Robert E. Thompson</U></P>
<P style="margin:0pt; font-family:Arial">Robert E. Thompson</P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial">Director</P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center>April 11, 2008</P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=288><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=157.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=169.2><P style="margin:0pt; font-family:Arial"><U>/s/ Keith Watson</U></P>
<P style="margin:0pt; font-family:Arial">Keith Watson</P>
</TD><TD valign=top width=288><P style="margin:0pt; font-family:Arial">Director</P>
</TD><TD valign=top width=157.6><P style="margin:0pt; font-family:Arial" align=center>April 11, 2008</P>
</TD></TR>
<TR><TD valign=top width=169.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=288><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=157.6><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt"><BR>
<BR></P>
<P style="line-height:10pt; margin:0pt; font-size:8pt"><FONT FACE="Times New Roman">ATI-2235061v2</FONT><FONT FACE="Arial"><BIG> </BIG></FONT></P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=135.9></TD><TD width=324.9></TD></TR>
<TR><TD valign=top width=614.4 colspan=2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Arial" align=center><FONT FACE="Arial"><B>EXHIBIT INDEX</B></FONT></P>
</TD></TR>
<TR><TD valign=top width=181.2><P style="margin:0pt; font-family:Arial"><U>Exhibit No.</U></P>
</TD><TD valign=top width=433.2><P style="margin:0pt; font-family:Arial"><U>Description</U></P>
</TD></TR>
<TR><TD valign=top width=181.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=433.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=181.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=433.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=181.2><P style="margin:0pt; font-family:Arial">12</P>
</TD><TD valign=top width=433.2><P style="margin:0pt; font-family:Arial">Calculation of Ratio of Earnings to Fixed Charges</P>
</TD></TR>
<TR><TD valign=top width=181.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=433.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=181.2><P style="margin:0pt; font-family:Arial">23 (a)</P>
</TD><TD valign=top width=433.2><P style="margin:0pt; font-family:Arial">Consent of Independent Registered Public Accounting Firm</P>
</TD></TR>
<TR><TD valign=top width=181.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=433.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=181.2><P style="margin:0pt; font-family:Arial">25</P>
</TD><TD valign=top width=433.2><P style="margin:0pt; font-family:Arial">Form T-1 as to the eligibility and qualification of Synovus Trust Company, N.A., Trustee, under the Indenture dated as of October 31, 1984, as amended, between the registrant and Synovus Trust Company, N.A., an affiliate of Columbus Bank and Trust Company. &nbsp;<BR>
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<P style="line-height:10pt; margin:0pt; font-size:8pt"><FONT FACE="Times New Roman">ATI-2235061v2</FONT><FONT FACE="Arial"><BIG> </BIG></FONT></P>
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{"company-data": {"conformed-name": "FIRST FRANKLIN FINANCIAL CORP", "cik": "0000038723", "assigned-sic": "6141", "irs-number": "580521233", "state-of-incorporation": "GA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-150223", "film-number": "08753256"}, "business-address": {"street1": "213 E TUGALO ST", "street2": "P O BOX 880", "city": "TOCCOA", "state": "GA", "zip": "30577", "phone": "4048867571"}, "former-company": {"former-conformed-name": "FRANKLIN DISCOUNT CO", "date-changed": "19840115"}}
Converted by EDGARwiz
Registration No.
333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
-----------------------
Form S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------
1
st
FRANKLIN FINANCIAL CORPORATION
A Georgia Corporation
6141
(Primary Standard Industrial Classification Code Number)
I.R.S. Employer No. 58-0521233
213 East Tugalo Street
Post Office Box 880
Toccoa, Georgia  30577
(706) 886-7571
-----------------------
Agent for Service:
Copy To:
A. Roger Guimond
213 East Tugalo Street
Post Office Box 880
Toccoa, Georgia  30577
(706) 886-7571
Mark L. Hanson, Esq.
Jones Day
1420 Peachtree Street, N.E.
Suite 800
Atlanta, Georgia  30309
(404) 521-3939
-----------------------
Approximate date of proposed sale to public:  From time to time
commencing as soon as possible after the registration statement becomes effective.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  (X)
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  (  )
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    (  )
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    (  )
-----------------------
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered
Amount to be registered
Proposed maximum offering price per unit
Proposed maximum aggregate offering price
Amount of registration fee (1)
Variable Rate Subordinated Debentures
$100,000,000
(2)
$100,000,000
$3,930
(1)
Calculated in accordance with rule 457(c) by multiplying the maximum aggregate offering price by .00003930.
(2)
The Variable Rate Subordinated Debentures will be issued in denominations selected by the purchasers thereof, subject to minimum denominations established by the Company.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 2008
1
st
FRANKLIN FINANCIAL CORPORATION
PROSPECTUS DATED [-]
$100,000,000 VARIABLE RATE SUBORDINATED DEBENTURES
_________________________________________________
1
st
Franklin Financial Corporation is offering to sell its Variable Rate Subordinated Debentures, referred to as the Debentures, in varying minimum purchase amounts that we will establish each week. On each Thursday, and for each separate minimum purchase amount, we will establish an interest rate and a time period after which the interest rate will adjust, referred to as an interest adjustment period, that may range from one month to four years.  The interest rate and the interest adjustment period of each Debenture are referred to as that Debenture's established features. Debentures having these established features will be offered and sold from each Thursday through the following Wednesday, and those established features will be applicable to all Debentures sold during that period.  Prior to the end of each Debenture's interest adjustment period, we will provide a holder of such Debenture with written notice of the upcoming interest rate adjustment, and the holder may elect to redeem his or her Debenture at the end of the interest adjustment period (or within the 14 day period after the interest adjustment date); if the holder does not so elect, the interest rate will automatically adjust to the then currently offered rate, until that Debenture's next interest adjustment date. All other provisions, including the interest adjustment period, will remain unchanged for the entire term of each Debenture not redeemed by the holder.
We will publish the most recently determined interest rate for each balance range weekly in a newspaper of general circulation in Toccoa, Georgia, the location of the Company's principal place of business, and on our web site at http://www.1ffc.com.  You can also obtain a list of the most recently determined interest rates by calling or visiting our executive offices in Toccoa, Georgia.  A Rule 424(b) prospectus supplement setting forth the most recently determined interest rates will be filed with the SEC, as appropriate.
We may redeem any Debenture, upon at least 30 days' written notice, at any time before its stated maturity for a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption. Holders of Debentures may redeem their Debentures at the end of any interest adjustment period or within the 14 day period thereafter at a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption.  In addition, at the request of a holder of Debentures, we may, at our option, redeem that holder's Debentures during any interest adjustment period for a redemption price equal to the principal amount plus any accrued and unpaid interest at one-half the stated interest rate on that holder's Debentures up to the date of redemption.
We are offering the Debentures without an underwriter.  We do not have to sell any minimum amount of Debentures to accept and use the proceeds of this offering.  We cannot assure you that all or any portion of the Debentures we are offering will be sold.  We have not made any arrangement to place any of the proceeds from this offering in an escrow, trust or similar account.  Therefore, you cannot be guaranteed of the return of your investment.  The Debentures are not listed on any securities exchange and there is no public trading market for the Debentures.  We have the right to reject any subscription for Debentures, in whole or in part, for any reason.
Each Debenture initially matures four years from its date of issue, subject to earlier redemption by a holder without penalty at the end of any interest adjustment period or within the 14 day period thereafter.  We will provide a holder of a Debenture with written notice of the upcoming maturity of his or her Debenture and a then-current prospectus relating to the Debentures and, unless such holder acts to redeem such Debenture at the maturity date or within the 14 day period after the original maturity date, such maturity date will be automatically extended for one additional four-year period, subject to the same established features and early redemption rights that existed during the initial term of the Debenture.
1
You should read this prospectus and any applicable prospectus supplement carefully before you decide whether to invest in Debentures.
Investing in our Debentures involves risks.  See "Risk Factors" beginning on page 7 for a description of these risks.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the Debentures, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
1
st
FRANKLIN FINANCIAL CORPORATION IS NOT A BANK AND THE DEBENTURES ARE NOT BANK DEPOSITS OR SIMILAR OBLIGATIONS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE SECURITIES INVESTOR PROTECTION CORPORATION OR ANY OTHER FEDERAL OR STATE AGENCY.
Price to
Public
Underwriting
Discounts and Commissions (a)
Proceeds to
Company (b)
Per Debenture
100%
None
100%
Total
$100,000,000
None
$100,000,000
(a)
The Debentures are not being offered or sold pursuant to any underwriting or similar agreement, and no commissions or other remuneration will be paid in connection with their sale.  The Debentures will be sold at face value.
(b)
Before deduction of the Company's expenses, estimated at $90,930.
SUBJECT TO COMPLETION, DATED APRIL 14, 2008
2
You should rely only on the information contained or incorporated by reference in this prospectus.  We have not authorized anyone to provide you with any different information. You should not assume that the information contained or incorporated by reference in this prospectus is accurate as of any date other than as of the date of this prospectus or the date the documents incorporated by reference were filed with the SEC.  We are offering to sell, and seeking offers to buy, the securities registered by this prospectus only in jurisdictions where these offers and sales are permitted.
TABLE OF CONTENTS
Prospectus Summary
4
Risk Factors
7
Ratios of Earnings to Fixed Charges
13
Use of Proceeds
13
Plan of Distribution
13
Forward-Looking Information
14
Description of the Debentures
14
Legal Matters
19
Experts
19
Where You Can Find More Information
19
Incorporation of Certain Information by Reference
19
Reports to Security Holders
20
Appendix I
21
3
PROSPECTUS SUMMARY
The following summary highlights some of the information from this prospectus and may not contain all of the information that may be important to you.  Before deciding whether to invest in the Debentures, you should read the entire prospectus, and the information that is incorporated by reference into the prospectus, carefully.
1
st
FRANKLIN FINANCIAL CORPORATION
1
st
Franklin Financial Corporation has been engaged in the consumer finance business since 1941, particularly in making consumer loans to individuals in relatively small amounts for short periods of time. Other lending activities include the purchase of sales finance contracts from dealers and the making of first and second mortgage loans on real estate to homeowners.  As of December 31, 2007 our business was operated through a network of 238 branch offices located in Alabama, Georgia, Louisiana, Mississippi and South Carolina.
We fund our loans through a combination of the issuance of short and longer-term debt securities, including our debentures and our senior demand notes, as well as with borrowings from time to time under our revolving credit facility.  This credit facility provides for unsecured borrowings of up to $50.0 million or a lesser amount as determined based on our then-applicable borrowing base (as defined in our credit agreement).  As of December 31, 2007, we had $33.3 million in available borrowings under our credit facility.
We also offer optional credit insurance coverage to our customers when making a loan.  This coverage may include credit life insurance, credit accident and health insurance, and/or credit property insurance. Customers may request credit life insurance coverage to help assure any outstanding loan balance is repaid if the customer dies before the loan is repaid, or they may request credit accident and health coverage to help continue loan payments if the customer becomes sick or disabled for an extended period of time.  Customers may also choose credit property coverage to protect the value of loan collateral against damage, theft or destruction.  We write these various insurance products as an agent for a non-affiliated insurance company.  Under various agreements, our wholly-owned insurance subsidiaries reinsure the insurance coverage on our customers written on behalf of this non-affiliated insurance company.
1
st
FRANKLIN FINANCIAL CORPORATION IS NOT A BANK AND THE DEBENTURES ARE NOT BANK DEPOSITS OR SIMILAR OBLIGATIONS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE SECURITIES INVESTOR PROTECTION CORPORATION OR ANY OTHER FEDERAL OR STATE AGENCY.
Our principal executive office is located at 135 East Tugalo Street, Toccoa, Georgia 30577, and our phone number at that address is (706) 886-7571 or (800) 282-0709 (in Georgia) or (800) 700-7943 (outside of Georgia).
SUMMARY DESCRIPTION OF THE DEBENTURES
Denominations
Minimum denominations will be established weekly by us.
Indenture Trustee
The Debentures will be issued under an indenture between the Company and Synovus Trust Company, N.A., a successor in interest to Columbus Bank and Trust Company, as trustee.
Interest Rate
The interest rate is established at the time of purchase of a Debenture and compounded daily for each established amount.
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Interest Rate Adjustment
The interest rate adjusts at the end of the interest adjustment period applicable to the specific Debenture to the then-current interest rate.  We will send a holder written notice of an upcoming interest rate adjustment, and the holder can elect to redeem his or her Debenture at such interest adjustment date or within the 14 day period thereafter or, after such date, continue to hold the Debenture and receive the then currently offered interest rate.
Interest Adjustment Period
The period of time, set when the Debenture is purchased, after which the interest rate on a specific Debenture is adjusted.
Notification of Interest Rate Adjustment
Written notice will be sent to a holder of a Debenture not less than seven days prior to the end of each applicable interest adjustment period, which notice will set forth the date of the upcoming interest rate adjustment, information regarding redemption, the approximate value of the Debenture (including all outstanding principal and any accrued but unpaid interest) and, if such Debenture is not redeemed, the interest rate which will be applicable for that Debenture after such date and until the next interest rate adjustment.
Payment of Interest
Interest is earned daily and is payable at any time promptly upon the holder's request. A request for the payment of interest may be made in person or by telephone, fax, Internet or regular mail.
Notification of Upcoming Maturity
Written notice will be sent to a holder of a Debenture not less than 30 days prior to the maturity date of a particular Debenture, which notice will set forth the upcoming maturity date and information regarding renewal (if applicable) and redemption procedures.  A subsequent written notice will be sent not less than seven days prior to the maturity date and will set forth the upcoming maturity date, information regarding renewal (if applicable) and redemption procedures, the approximate maturity value of the Debenture (including all outstanding principal and any accrued but unpaid interest) and the interest rate which will be applicable on a renewal of that Debenture during the initial interest adjustment period following the upcoming maturity date.
Maturity
Each Debenture has an initial maturity date of four years from its date of issue, subject to earlier redemption by a holder without penalty at the end of any interest adjustment period or within the 14 day period thereafter,
or by us as provided for herein. Additionally, if a Debenture is not redeemed at its original maturity date or within the 14 day period thereafter as provided for herein, the term of the Debenture is automatically extended for one additional four-year term, subject to the same early redemption rights that existed during the initial term of the Debenture.
Redemption by Holder
Each Debenture may be redeemed by a holder at the end of each interest adjustment period applicable to the specific Debenture or within the 14 day period thereafter, or at maturity without penalty; redemption at any other time is at our discretion and is subject to an interest penalty.  We will send written notice to a holder not less than seven days in advance of an upcoming termination of an interest adjustment period and not less than 30 days in advance of, and again not less than seven days in advance of, an upcoming maturity date.
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Redemption by 1
st
Franklin
1
st
Franklin may redeem a Debenture prior to its maturity upon 30 days
'
written notice to the holder for a price equal to the principal amount of the Debenture plus accrued and unpaid interest up to the date of redemption.
Extension of Maturity
The maturity of each Debenture will be automatically extended on its original terms for one additional four-year term, unless 1
st
Franklin or the holder acts to redeem the Debenture in accordance with the redemption provisions at the original maturity date or within the 14 day period thereafter.  During any extended maturity, a holder of a Debenture will have the same redemption rights such holder had during the original term of the Debenture.  We will send written notice and a then-current prospectus relating to the Debentures to holders not less than 30 days in advance of, and a second written notice not less than seven days prior to, a Debenture's upcoming maturity date.
Compound Interest
Debentures are offered at interest rates, set weekly, with interest compounded daily.  Examples of annualized effective yields for daily compounded rates are set forth below:
Example
Nominal
Rates
Effective
Annual
Rates
3.00%
3.05%
5.00
5.13
5.50
5.65
6.00
6.18
6.25
6.45
6.75
6.98
7.00
7.25
7.25
7.52
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SUMMARY FINANCIAL INFORMATION
The tables below set forth certain summary consolidated financial data of 1
st
Franklin.  This information is only a summary and you should read it together with 1
st
Franklin's consolidated historical financial statements and the related notes contained in the annual report and the other information incorporated by reference in this prospectus.  These historical results are not necessarily indicative of our results or financial condition to be expected in the future.
Year Ended December 31
2007
2006
2005
2004
2003
(In thousands)
Selected Income Statement Data:
Revenues
$130,297
$115,042
$
101,826
$
98,459
$
91,367
Net Interest Income
75,669
69,632
64,387
61,541
56,698
Interest Expense
15,746
11,994
8,016
7,137
6,813
Provision for Loan Losses
21,434
19,109
19,484
18,097
15,245
Income Before Income Taxes
15,754
11,023
7,621
7,527
11,159
Net Income
12,205
7,672
5,109
4,981
8,654
As of December 31
2007
2006
2005
2004
2003
(In thousands)
Selected Balance Sheet Data:
Net Loans
$276,655
$249,862
$
224,660
$
218,893
$
206,462
Total Assets
402,454
362,567
324,910
312,366
292,868
Senior Debt
182,373
181,474
180,713
168,668
148,204
Subordinated Debt
91,966
67,190
38,902
41,311
44,076
Stockholders' Equity
109,841
98,365
91,185
87,102
83,844
As of December 31
2007
2006
2005
2004
2003
Other Data:
Ratio of Earnings to
Fixed Charges
1.92
1.83
1.83
1.91
2.42
Ratio of Total Liabilities
To Stockholders' Equity
2.66
2.69
2.56
2.59
2.49
RISK FACTORS
The risks described below set forth known material risks of purchasing the Debentures and investing in 1
st
Franklin.  You should carefully consider the risks described below, as well as the other information in the prospectus or incorporated by reference in the prospectus, before deciding whether to invest in the Debentures.  If any of the situations described in the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected.  In any of these events, you may lose part or all of your investment.
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RISK FACTORS RELATING TO THE DEBENTURES
The Debentures may not be a suitable investment for you.
The Debentures may not be a suitable investment for you, and we advise you to consult your investment, tax and other professional financial advisors prior to deciding whether to invest in Debentures.  The characteristics of the Debentures, including the maturity and interest rate, may not satisfy your investment objectives. The Debentures may not be a suitable investment for you based on your ability to withstand a loss of interest or principal or other aspects of your financial situation, including your income, net worth, financial needs, investment risk profile, return objectives, investment experience and other factors. Before deciding whether to purchase Debentures, you should consider your investment allocation with respect to the amount of your contemplated investment in the Debentures in relation to your other investment holdings and the diversity of those holdings.
Because the Debentures are general, unsecured obligations and are subordinate to substantially all of our debt, the holders of our other debt have priority over the Debenture holders to recover invested amounts in the event we are unable to meet all of our obligations.
The Debentures are general, unsecured obligations of 1
st
Franklin and are subordinated in right of payment to substantially all of our other existing and future debt, except for our other Variable Rate Subordinated Debentures, which rank pari passu.  As of December 31, 2007, we had $182.4 million in senior debt outstanding, and we expect to issue more senior debt in the future.
Because the Debentures are subordinated obligations, in the event of our insolvency, bankruptcy or liquidation, or other similar proceeding, then the holders of senior debt and all other obligations senior to the Debentures will be entitled to receive payment in full of all principal and interest due to them before the holders of the Debentures are entitled to receive any payments.  We may not have sufficient assets after all such senior payments have been made to make any payments to you under the Debentures, including payments of interest when due or principal upon maturity.
Because the Debentures will have no sinking fund, security, insurance or guarantee, you may lose all or part of your investment in the Debentures if we do not have enough cash to pay the Debentures.
There is no sinking fund, security, insurance or guarantee of our obligation to make payments on the Debentures.  The Debentures are not secured by any of our assets.  We will not contribute funds to a separate account, commonly known as a sinking fund, to make any interest or principal payments on the Debentures.  The Debentures are not certificates of deposit or similar obligations of, and are not guaranteed or insured by, any depository institution, the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation, or any other federal or state agency.  Therefore, if you invest in the Debentures, you will have to rely only on our cash flow from operations and other sources of funds for repayment of principal at maturity or redemption and for payment of interest when due. If our cash flow from operations and other sources of funds are not sufficient to pay the amounts due under the Debentures, then you may lose all or part of your investment.
If we incur substantially more indebtedness that is senior to the Debentures, our ability to repay the amounts due under the Debentures may be impaired.
Subject to any limitations contained in any of our credit agreements, we may incur substantial additional indebtedness in the future. Any of these borrowings may be senior in payment preference to the Debentures. If we borrow more money, the risks to holders of Debentures described in this prospectus could increase.
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Our management has broad discretion over the use of proceeds from this offering.
We expect to use the proceeds from the offering for general corporate purposes, including the repayment of senior and other debt as it becomes due.  Because no specific allocation of the proceeds is required in the Indenture, our management will have broad discretion in determining how the proceeds of the offering will be used.
Because there are only limited restrictions on our activities under the Indenture, you will have only limited protections under the Indenture.
In comparison to the restrictive covenants that are imposed on us by our existing credit agreement, the Indenture that governs the Debentures contains relatively minimal restrictions on our activities. In addition, the Indenture contains only limited events of default other than our failure to timely pay principal and interest on the Debentures. Because there are only very limited restrictions and limited events of default under the Indenture, we will not be restricted from issuing additional debt that is senior to the Debentures. Further, if we default in any payment on the Debentures or otherwise under the Indenture, you will likely have to rely on the Trustee to exercise your remedies on your behalf. You may not be able to seek remedies against us directly.
Because we may redeem the Debentures at any time, you may be subject to reinvestment risk.
We have the right to redeem any Debenture at any time prior to its stated maturity upon 30 days' written notice to you.  The Debentures would be redeemed at 100% of the principal amount plus accrued but unpaid interest up to the redemption date.  Any such redemption may have the effect of reducing the income or return on investment that you would otherwise receive on an investment in the Debentures by reducing the term of the investment.  If this occurs, you may not be able to reinvest the proceeds at an interest rate comparable to the rate paid on the Debentures.
No public market exists in which to transfer Debentures.
An investor may redeem any or all of his or her Debentures as described in this prospectus.  However, no public trading or secondary market for the Debentures currently exists, or ever will exist, and, consequently, there is no public market valuation to help investors evaluate the Debentures.
RISK FACTORS RELATING TO 1
st
FRANKLIN
Because we require a substantial amount of cash to service our debt, we may not be able to pay our obligations under the Debentures.
To service our indebtedness, we require a significant amount of cash.  Our ability to generate cash depends on many factors, including our successful financial and operating performance.  We cannot assure you that our business strategy will continue to succeed or that we will achieve our anticipated financial results.
If we do not achieve our anticipated results, we may not be able to generate sufficient cash flow from operations or to obtain sufficient funding to satisfy all of our obligations, including our obligations under the Debentures.
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Because we depend on liquidity to operate our business, a decrease in the sale of our debt securities or an increase in requests for their redemption may make it more difficult for us to pay our obligations under the Debentures.
Our liquidity depends on, and we fund our operations through, the sale of our debt securities, the continued availability of unused borrowings under our credit agreement and the collection of our receivables.  Numerous existing investment alternatives have resulted in investors evaluating more critically their investment opportunities.  We cannot assure you that the Debentures will have interest rates and redemption terms which will generate sufficient sales to meet our liquidity requirements.
The Debentures are subject to redemption at the end of any interest adjustment period prior to maturity at the option of the Debenture holder and may be requested to be redeemed during an interest adjustment period, although we are not obligated to accept requests for redemption of Debentures during any interest adjustment period, and any of those requests are subject to one-half the interest earned since the most recent interest adjustment date, if applicable, or the purchase date.  It is possible that a significant number of redemption requests could adversely affect our liquidity.
In either event, our reduced liquidity could negatively impact our ability to pay the principal and interest on the Debentures when due.
All of our offers and sales of securities must comply with applicable securities laws, or we could be liable for damages, which could impact our ability to make payments on the Debentures.
Offers and sales of all of our securities, including the Debentures, must comply with all applicable federal and state securities laws, including Section 5 of the Securities Act of 1933.  If any of our offers, including those deemed to be made pursuant to newspaper or radio advertisements, or sales are found not to be in compliance with any of these laws, we could be liable to certain purchasers of the security, could be required to repurchase the security, or could be liable for damages or other penalties.  If we are required to repurchase any of our securities other than in the ordinary course of our business as a result of any such violation, or otherwise are found to be liable for any damages or penalties as a result of any such violation, our financial condition could be materially adversely affected.  Any such adverse affect on our financial condition could materially impair our ability to pay principal and interest on the Debentures.
We depend on funds from our credit facility to meet our obligations and fund a portion of our general operations.  If we are unable to continue to borrow under this credit facility, we may not be able to pay our obligations under the Debentures.
We rely on borrowings under our revolving credit facility to meet the redemption requests of our security holders and our other liquidity and operating requirements.  This credit facility provides for maximum borrowings of up to $50.0 million, or a lesser amount as determined by our then-applicable borrowing base. The credit facility has a commitment termination date of December 15, 2009.  The bank may terminate the credit facility prior to its stated maturity if we violate any of the financial ratio requirements or covenants contained in the credit agreement, according to standards contained in the credit agreement. If we lose our ability to borrow money under the credit facility or if the credit facility is terminated, we may not be able to make payments on the Debentures.
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Because our liquidity also depends on receivables collections, if our collections are reduced, it may make it more difficult for us to pay our obligations under the Debentures.
Our liquidity is also dependent on, among other things, the collection of our receivables.  Delinquencies in our consumer finance receivables are likely to be affected by worsening general economic conditions and, because we mainly make loans to individuals who depend on their earnings to make repayments, are often dependent upon the continued employment of those people.  If general economic conditions worsen, or we are otherwise unable to collect on our receivables, we may not be able to make payments on the Debentures.
An increase in the interest we pay on our debt and borrowings can materially and adversely affect our net interest margin.
Net interest margin represents the difference between the amount that we earn on loans and investments and the amount that we pay on debt securities and other borrowings.  The loans we make in the ordinary course of our business are subject to the interest rate and regulatory provisions of each applicable state's lending laws and are sometimes made at fixed rates which are not adjustable during the term of the loan. Since some loans are made at fixed interest rates and are made using the proceeds from the sale of our fixed and variable rate securities (including the Debentures), we may experience a decrease in our net interest margin because increased interest costs cannot be passed on to all of our loan customers.  A reduction in our net interest margin could adversely affect our ability to make payments on the Debentures.
Neither the Company nor the Debentures will be rated by any nationally recognized statistical rating agency, and this may increase the risk of your investment.
Neither 1
st
Franklin nor the Debentures are, or are expected to be, rated by any nationally recognized statistical rating organization.  Typically, credit ratings assigned by such organizations are based upon an assessment of a company's creditworthiness and are a measure used in establishing the interest rate that a company offers on debt securities it issues.  Without any such rating, it is possible that fluctuations in general economic, or industry specific, business conditions, changes in results of operations, or other factors that affect the creditworthiness of a debt issuer may not be fully reflected in the interest rate on any outstanding indebtedness of that issuer.  Investors in Debentures must depend solely on the creditworthiness of 1
st
Franklin for the payment of principal and interest on those securities.  In the absence of any third party credit rating, it is possible that the interest rates offered by the Company on its debt securities may not represent the credit risk that an investor assumes in purchasing Debentures.
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Consumer finance companies such as the Company are subject to an increasing number of laws and government regulations, and if we fail to comply with these laws or regulations, our business may suffer and our ability to pay our obligations under the Debentures may be impaired.
Our operations are subject to increasing focus by federal, state and local government authorities and state attorneys general and are subject to various laws and judicial and administrative decisions imposing various requirements and restrictions on certain lending practices by companies in the consumer finance industry, sometimes referred to as "predatory lending" practices.  These requirements and restrictions, among other things:
•
require that we obtain and maintain certain licenses and qualifications;
•
limit the interest rates, fees and other charges that we are allowed to charge;
•
require specified disclosures to borrowers;
•
limit or prescribe other terms of our loans;
•
govern the sale and terms of insurance products that we offer and the insurers for which we act as agent; and
•
define our rights to repossess and sell collateral.
In addition, other state and local laws, public policy and general principles of equity relating to the protection of consumers, unfair and deceptive practices and debt collection practices may apply to the loans we make.  Although we believe that we are in compliance in all material respects with applicable federal, state and local laws, rules and regulations, there can be no assurance that a change in any of those laws, or in their interpretation, will not make our compliance therewith more difficult or expensive, restrict our ability to originate loans, further limit or restrict the amount of interest and other charges we earn under such loans, or otherwise adversely affect our financial condition or business operations.  The burdens of complying with these laws and regulations, and the possible sanctions if we do not so comply, are significant, and may result in a downturn in our business or our inability to carry on our business in a manner similar to how we currently operate.
If we experience unfavorable litigation results, our ability to pay our obligations under the Debentures may be impaired.
As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties.  The damages and penalties claimed by consumers and others can be substantial.  The relief requested by the plaintiffs varies but generally includes requests for compensatory, statutory and punitive damages.  Unfavorable outcomes in any of our current or future litigation proceedings could materially and adversely affect our results of operations, financial condition and cash flows and our ability to make payments on the Debentures.
While we intend to vigorously defend ourselves against any of these proceedings, there is a chance that our results of operations, financial condition and cash flows could be materially and adversely affected by unfavorable outcomes which, in turn, could affect our ability to make interest payments on, or repay, the Debentures.
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Out internal control over financial reporting may not prevent or detect every misstatement, and controls are subject to certain limits.
The Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  An internal control system over financial reporting has been designed to provide reasonable assurance regarding the reliability and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  Management recognizes that there are inherent limitations in the effectiveness of any internal control system.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
RATIOS OF EARNINGS TO FIXED CHARGES
For purposes of calculating the ratios of earnings to fixed charges below, we calculated earnings by adding fixed charges to income before income taxes.  Fixed charges consist of the interest on our indebtedness and the amount which we believe is representative of the interest factor component of our rent expense.
December 31
2007
2006
2005
2004
2003
1.92
1.83
1.83
1.91
2.42
USE OF PROCEEDS
Net proceeds from sales of the Debentures, after payment of applicable expenses, will be placed in our general treasury.  No segregation of proceeds will be made, but we expect to use the net proceeds for the redemption, from time to time, of various outstanding senior and subordinated securities, with various interest rates, as those securities mature and as such debtholders request redemption.  Our subordinated securities include Debentures of the same series as the Debentures offered by this prospectus; the senior securities include our senior demand notes, which are sold from time to time in varying principal amounts and at various interest rates.  Given the varying maturity dates and interest rates on our outstanding debt securities, we cannot presently estimate the timing or amount of proceeds which will be required to make mandatory maturity or redemption payments.  Any proceeds not used for redemptions will be used to repay bank borrowings and repay amounts outstanding under our commercial paper program as those amounts come due from time to time, make additional consumer finance loans and for general operating purposes.
PLAN OF DISTRIBUTION
The Debentures will be offered by us.  No selling commissions or other remuneration will be paid directly or indirectly to any of our officers, directors or employees in connection with the sale of the Debentures.  All proceeds from sales of the Debentures will be placed in the general treasury of the Company as sales are made, as described in the "Use of Proceeds" section of this prospectus.  All offering expenses, including registration fees, printing, advertising, postage and professional fees, will be paid by us.
There is no assurance that any or all of the Debentures offered by this prospectus will be sold.  This offering, however, is not made contingent upon any minimum amount of Debentures being sold.
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The Debentures will be sold and redeemed at our executive office located at 135 East Tugalo Street, Post Office Box 880, Toccoa, Georgia 30577.  The telephone number is (706) 886-7571 or (800) 282-0709.
FORWARD-LOOKING INFORMATION
This prospectus, and the information incorporated by reference in it, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those forward-looking statements. Such factors include the known risks we face that are described in the Risk Factors section of this prospectus and as otherwise may be described in our periodic reports that we file with the SEC from time to time. If any of the events described in the Risk Factors section or elsewhere in this prospectus occur, they could impact our ability to pay the interest and principal on the Debentures, as well as have an adverse effect on our business, financial condition and results of operation.  We undertake no obligation to update any forward-looking statements.
DESCRIPTION OF THE DEBENTURES
General
The Variable Rate Subordinated Debentures we are offering will represent subordinated, unsecured debt obligations of 1
st
Franklin.  The Debentures will be issued under an Indenture dated October 31, 1984 between us and The First National Bank of Gainesville, Trustee, as amended (the "Indenture").  In January 1995, Columbus Bank and Trust Company (as successor to the original trustee) transferred its trust operations to a separate affiliated trust company, Synovus Trust Company, N.A..  As a result of this transfer, Synovus Trust Company, N.A. became the successor in interest Trustee under the Indenture.  We have been informed that the counsel to Columbus Bank and Trust Company believes that, under applicable banking regulations and as a result of an agreement with us, Columbus Bank and Trust Company remains responsible to holders of Debentures for all actions of Synovus Trust Company, N.A. as if the actions were taken by Columbus Bank and Trust Company.  The terms and conditions of the Debentures include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939.  The following is a summary of the material provisions of the Indenture.  For a complete understanding of the Debentures, you should review the definitive terms and conditions contained in the Indenture, which include definitions of certain terms used below.  A copy of the Indenture has been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part and is available from us at no charge upon request.
The Debentures are registered and issued without coupons in series form.  Any amount of any series may be issued.  There is no limit on the principal amount of Debentures of any series, or of all series issuable under the Indenture.  The dollar amount of Debentures outstanding under the Indenture as of December 31, 2007 was $92.0 million.  1
st
Franklin and the Trustee may amend the Indenture to limit the principal amount of a particular series or to allow additional series with no limitations as to the maximum amount of any increase or to the number of increases which may be made.  We may change the interest rates and the maturities of the Debentures offered by this prospectus and of any subsequent series which may be offered, provided that no such change will affect any Debenture of any series issued prior to the date of that change.
14
The Debentures are direct obligations of 1
st
Franklin, but are not secured by any collateral or lien.  In addition, the Debentures are not bank certificates of deposit and are not insured by the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or any other agency or company. Investors must rely solely on 1
st
Franklin's ability to repay its obligations under the Debentures. Principal and interest are payable at our executive office in Toccoa, Georgia, which is sometimes referred to as the Investment Center.  The Debentures are executed by 1
st
Franklin and authenticated and delivered to the purchaser by the Trustee upon the written order of 1
st
Franklin.
Established Features of the Debentures
The Debentures offered by this prospectus are issued and dated as of the date when purchased.  The interest rate for a Debenture is compounded daily and is payable at any time at the holder's request.  An interest payment request may be made to 1
st
Franklin in person at the Investment Center or by telephone, fax, Internet or regular mail.  An interest payment request may be made by a holder one or more times from time-to-time, or a holder may request that such payments occur on a specified periodic basis until the redemption or maturity of the particular Debenture.
Each Debenture matures four years from the date of its issue, although the maturity thereof may be extended for one additional four-year term as described under "Extension After Maturity," in each case subject to earlier redemption as provided for herein and in the Debenture.
On a weekly basis, 1
st
Franklin will establish various minimum purchase amounts with corresponding interest rates and interest adjustment periods that will be available on Debentures that are sold beginning on the following Thursday and continuing through the Wednesday thereafter for each minimum purchase amount, all based upon Management's evaluation of general market conditions for investments with similar characteristics such as investment amount, redemption rights, risk profile and term to maturity. The interest rate offered on the Debentures will depend on the interest adjustment period selected by the holder from those offered by 1
st
Franklin.  At the time of an initial investment, a holder will select an interest adjustment period from those then being offered by 1
st
Franklin.  The selected interest adjustment period will remain unchanged for the term of the Debenture, including any extension of the original maturity date. During this period, the interest rate on a Debenture will not change.  At the end of each interest adjustment period, unless the Debenture is redeemed, the interest rate will automatically adjust to the interest rate then currently offered rate for Debentures with the same interest adjustment period. 1
st
Franklin anticipates that it will offer the Debentures with interest rate adjustment periods ranging from one month to four years.
Not less than seven days prior to the end of each interest adjustment period, we will send written notice to the holder of a Debenture of the interest rate which will be applicable to the Debenture during the upcoming interest adjustment period, which will be the same interest rate that will be applicable to all new Debentures being offered during that week with the same interest adjustment period.  If the holder elects to retain the Debenture at the new rate, no action is required of the holder as the new rate will become effective as of the first day of the interest adjustment period.  If the holder elects not to accept the new rate, the holder can redeem the Debenture without penalty at the interest adjustment date or within the 14 day period after the interest adjustment date, referred to as the "grace period," either in person at, or by mail to, the Investment Center or, in certain limited circumstances, by fax.  See "Redemption at Request of Holder Prior to Maturity."
Debentures with the then-current established features will be available for purchase beginning on the Thursday after the date of the determination of such features through the following Wednesday.  The most recently determined established features will be applicable to all Debentures sold by us during that period.  We publish this information weekly in a newspaper of general circulation and on our web site maintained at
http://www.1ffc.com
or it can be obtained directly from us by calling or visiting our executive offices in Toccoa, Georgia.  The most recently determined established features will also be set forth in applicable prospectus supplements that will be filed with the SEC as appropriate.
15
Payment of Interest on the Debentures
Interest on the Debentures is earned daily and is payable promptly on the request therefor by the holder, subject to any limitations described in "Subordination" below.  A request for the payment of interest may be made in person at, or by mail to, the Investment Center, by telephone at (706) 886-7571 or (800) 282-0709, by fax at (706) 886-7369 or on the Internet by visiting our web site at http://www.1ffc.com and clicking on the "Contact Info" button and completing the form.  Any request for the payment of interest may be made by a holder one or more times from time-to-time, or may be made to occur at specified intervals, such as monthly, quarterly, semi-annually or annually for so long as the Debenture is outstanding.
Subordination
The payment of the principal and interest on the Debentures is subordinate in right of payment to all of our senior debt.  The term "senior debt" means all of our indebtedness outstanding at any time except debt that by its terms is not senior in right of payment to the Debentures and indebtedness represented by our outstanding Debentures, each of which are pari passu.  No sinking fund is required to be established to provide for payments on the Debentures.
In the event that the Debentures are declared due and payable before their expressed maturity because of a default under the Indenture, a holder of a Debenture will be entitled to payment only after all principal and interest on all senior debt has been paid in full.  Likewise, in the event of our insolvency, bankruptcy or liquidation, or other similar proceeding relating to 1
st
Franklin or to its creditors, as such, or to our property, or in the event of any dissolution or other winding up, whether or not involving insolvency or bankruptcy, then the holders of any senior debt and all other obligations senior to the Debentures will be entitled to receive payment in full of all principal and interest due to them before the holders of the Debentures are entitled to receive any payments.
The amount of our senior debt outstanding as of December 31, 2007 was $182.3 million.
Redemption by 1
st
Franklin Prior to Maturity
We may redeem any Debenture at any time prior to maturity for a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption.  We will provide written notice to the holder of a Debenture whose Debenture is to be redeemed not less than 30 nor more than 60 days prior to the date fixed for redemption.  In the event the entire series of Debentures is not called for redemption, the redemption call will be made by the Trustee pro rata or by lot.
Redemption at Request of Holder Prior to Maturity
At the request of the holder, we will redeem any Debenture at the end of that Debenture's interest adjustment period or within the 14 day period after the interest adjustment date for a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption.
If a request for redemption is made for a time other than at the end of an interest adjustment period or within the applicable grace period, or at maturity, we may, at our option, redeem that Debenture for a price equal to the principal amount plus one-half of any accrued and unpaid interest since the most recent interest adjustment date, if applicable, or the purchase date on that Debenture up to the date of redemption.
If the holder of a Debenture dies before its maturity, we may, at our option, redeem any Debenture held by that holder for a redemption price equal to the principal amount plus any accrued and unpaid interest up to the date of redemption.
16
All requests for redemption must be made either in person at, or by mail to, our executive offices in Toccoa, Georgia.  In the event a holder has lost, destroyed or had their Debenture stolen and such holder desires to redeem the same, redemption can be accomplished by completing the requisite form available from the Company and returning it to us in person or by mail, or by faxing it to us at the number above.
Extension After Maturity
Subject to redemption at the request of a holder at and as of the maturity date as described above, and our right to redeem a Debenture, the maturity of a Debenture will be automatically extended beyond its initial four-year term for one additional four-year period.  In the event of such an extension, all provisions of the Debenture will remain unchanged with the exception of the interest rate, which will change in accordance with the interest adjustment provision of that particular Debenture.  Written notice and a then-current prospectus relating to the Debentures will be sent to a holder of a Debenture not less than 30 days prior to the maturity date of a particular Debenture, which notice will set forth, among other things, the upcoming maturity date and information regarding renewal (if applicable) and redemption procedures.  A subsequent written notice will be sent not less than seven days prior to the maturity date and will set forth, among other things, the upcoming maturity date, information regarding renewal (if applicable) and redemption procedures, the approximate maturity value of the Debenture (including all outstanding principal and any accrued but unpaid interest) and the interest rate which will be applicable on a renewal of that Debenture for the initial interest adjustment period following the upcoming maturity date (if applicable).
In no event may the maturity of a Debenture be extended more than one additional term.
Restrictions on Additional Debt
There are no restrictions in the Indenture against the issuance of additional securities or the incurring of additional debt, including senior debt and secured obligations.
Successors
The Indenture generally permits a consolidation or merger between us and another entity.  It also permits the transfer or lease by us of all or substantially all of our assets.  These transactions are permitted if:
•
the resulting or acquiring entity, if other than us, is a corporation and assumes all of our responsibilities and liabilities under the Debentures and the Indenture; and
•
immediately after the transaction, and giving effect to the transaction, no event of default under the Indenture exists.
Modification of the Indenture
The Indenture contains provisions permitting 1
st
Franklin and the Trustee, with the consent of the holders of not less than two-thirds of the outstanding principal amount of the Debentures, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental Indenture or modifying in any manner the rights of the holders of such Debentures; provided, however, that no such supplemental Indenture can do any of the following:
17
•
change the fixed maturity of any Debenture;
•
reduce the principal amount of any Debenture;
•
reduce the rate, or change the time of payment of interest on any Debenture;
•
reduce the amount of Debentures whose holders must consent to an amendment; or
•
make any changes regarding the Indenture that relate to a waiver of default, the rights of holders to receive payments, and the requirements of consent of the holders of Debentures, in each case without the consent of the holder of each Debenture so affected.
We, along with the Trustee, may amend the Indenture to allow for the issuance of additional amounts of a particular series or additional series of Debentures without the consent of the holders of Debentures. There are no limitations as to the maximum amount of any increase or to the number of increases which may be made.  We may change the interest rates and the maturities of the Debentures offered by this prospectus and of any subsequent series which may be offered without entering into a supplemental indenture, provided that no such change will affect any Debenture of any series issued prior to the date of that change.
Events of Default and Notice Thereof
An event of default is generally defined by the Indenture to mean any of the following:
•
failure to pay principal on any Debenture when it becomes due;
•
failure to pay interest on any Debenture when it becomes due and the failure continues for 30 days;
•
failure, after notice from the Trustee or from the holders of at least 25% in principal amount of the Debentures of the affected series, to observe or perform within 30 days any of the covenants contained in the Indenture or Debentures; or
•
the occurrence of certain events of bankruptcy, insolvency or reorganization.
The Indenture provides that the Trustee will, within 90 days after its occurrence, give the registered holders of Debentures notice of any existing default known to the Trustee, but, except in case of a default in the payment of principal or interest, the Trustee may withhold such notice if and for so long as the Trustee in good faith determines that the withholding of such notice is in the interest of those holders.
Rights on Default
The Trustee by notice to 1
st
Franklin, or the holders of at least 25% in principal amount of Debentures of the affected series, may declare the principal of and accrued but unpaid interest on all Debentures due upon the happening of any of the events of default specified in the Indenture, but the holders of a majority of the outstanding principal amount of those Debentures may waive any default and rescind such declaration if the default is cured within the 30 day period, except a default in the payment of the principal of or interest on any Debenture or a default on any senior debt.  The holders of a majority of the outstanding principal amount of the Debentures of any affected series may direct the time, method and place of conducting any proceeding for any remedy available to, or exercising any power or trust conferred upon, the Trustee, but the Trustee may decline to follow any direction that conflicts with law or any provision of the Indenture, or is unduly prejudicial to the rights of the other holders of Debentures or would involve the Trustee in personal liability.  Holders may not institute any proceeding to enforce the Indenture unless the Trustee refuses to act for 60 days after request from the holders of at least 25% in principal amount of the Debentures of the affected series and during that 60 day period the holders of a majority in principal amount do not give the Trustee a direction inconsistent with the request, and tender to the Trustee of satisfactory indemnity.  Nevertheless, any holder may enforce the payment of the principal of and interest on the holder's Debenture when due.
Concerning the Trustee
18
The Trustee does not have any other business relationship with 1
st
Franklin.  The Trustee maintains its principal corporate trust office in Columbus, Georgia.
Evidence to be Furnished to the Trustee
The Indenture provides that, upon any application or request by us to the Trustee to act, we will provide the Trustee an officer's certificate and an opinion of counsel stating that any necessary conditions precedent have been met.  Within 120 days after the end of each fiscal year, 1
st
Franklin is required to file with the Trustee an officers' certificate stating whether or not, to the best knowledge of the signers, 1
st
Franklin is in default in the performance of any covenant, agreement or condition in the Indenture and, if so, specifying each such default and, with respect to each, the action taken or proposed to be taken by 1
st
Franklin to remedy such default.
LEGAL MATTERS
The validity of the issuance of the Debentures being offered by this prospectus will be passed upon for us by Jones Day, Atlanta, Georgia.
EXPERTS
The consolidated financial statements and the related financial statement schedule incorporated in this prospectus by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2007 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports which are incorporated herein by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, and other information, with the SEC.  You may read and copy any document we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.  Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room.  Our SEC filings are also available to the public at the SEC's web site at http://www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with it, which means that we can disclose important information to you by referring you to those documents.  The information incorporated by reference into this prospectus is an important part of this prospectus.  Specifically, we are incorporating by reference the following:
(a)
The Annual Report of the Company on Form 10-K for the year ended December 31, 2007, filed on March 20, 2008;
(b)
The Current Reports of the Company on Form 8-K, filed on January 30, 2008 and April 7, 2008.
(c)
All other reports filed with the Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, since December 31, 2007.
19
Any statement contained in this prospectus or in a document incorporated by reference in this prospectus is deemed to be modified or superseded for purposes of this prospectus to the extent that any of the following modifies or supersedes such statement:
•
in the case of a statement in a previously filed document incorporated by reference in this prospectus, a statement contained in this prospectus; or
•
a statement contained in any prospectus supplement relating to the offering of Debentures.
Any modified or superseded statement will not be deemed to constitute a part of this prospectus or any prospectus supplement, except as modified or superseded.  Except as provided by the above-mentioned exceptions, all information appearing in this prospectus and each prospectus supplement is qualified in its entirety by the information appearing in the documents incorporated by reference.
Copies of documents incorporated by reference will be provided without charge upon request to our Corporate Secretary at 135 East Tugalo Street, Post Office Box 880, Toccoa, Georgia 30577, telephone number (706) 886-7571 or (800)-282-0709 (within Georgia) or (800) 700-7943 (outside of Georgia).  You can also access any or all of these filings free of charge at our website http://www.1ffc.com.  Information contained on our website does not constitute part of this prospectus, and you should rely only on the information contained, or specifically incorporated by reference, in this prospectus in deciding whether to invest in Debentures.
REPORTS TO SECURITY HOLDERS
A copy of the above-mentioned annual report, containing financial information that has been examined and reported upon, with an opinion expressed, by an independent registered public accounting firm, is being delivered with this prospectus.  We also provide each security holder with a copy  of our most recent subsequent quarterly report containing unaudited financial information.  Each of these reports for the current year are also available on our web site at http://www.1ffc.com.  Information contained on our website does not constitute part of this prospectus, and you should rely only on the information contained, or specifically incorporated by reference, in this prospectus in deciding whether to invest in Debentures.
20
APPENDIX I TO PROSPECTUS
INFORMATION AS OF DECEMBER 31, 2007
1.
Unused borrowings under our $50,000,000 Credit Agreement
$33,315,319
2.
Debentures outstanding under Indenture
$91,965,714
3.
Senior debt outstanding
$182,372,949
21
PART II.  INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.
Other Expenses of Issuance and Distribution
The expenses to be incurred in the issuance and distribution of the securities being registered hereby are estimated as follows:
Filing Fee - Securities and Exchange Commission
State Registration Fees
Legal Fees and Expenses
Accounting Fees
Printing Costs
Advertising
Trustee's Fees
Postage and Miscellaneous
Total
$
3,930
2,000
40,000
6,000
2,500
7,500
16,000
13,000
$
90,930
Item 14.
Indemnification of Directors and Officers
22
The bylaws of the registrant (the "Bylaws") provide that the registrant will indemnify any officer, director, employee or agent of the registrant who was or is a party or is threatened to be made a party to any threatened, pending or completed action (other than an action by or in the right of the registrant) by reason of the fact that such person is or was a director, officer, employee or agent of the registrant, or is or was serving at the request of the registrant as a director, officer, employee or agent of another entity against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action if such person acted in a manner he reasonably believed to be in or not opposed to the best interests of the registrant, and, with respect to any criminal action or proceeding, and had no reasonable cause to believe his conduct was unlawful.  The termination of any action by judgment, order, settlement or conviction, or upon a plea of nolo contendre or its equivalent, shall not, of itself, create a presumption that a person did not act in a manner which he reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
The Bylaws further provide that the registrant will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the registrant to procure a judgment in its favor by reason of the fact such person was a director, officer, employee or agent of the registrant, or is or was serving at the request of the registrant as a director, officer, employee or agent of another entity against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant.  However, no indemnification will be made in respect of any claim, issue or matter as to which such person has been adjudged to be liable for negligence or misconduct in the performance of his duty to the registrant unless and only to the extent that the court in which such action or suit was brought determines that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.
Any of the foregoing indemnification shall be made by the registrant only as authorized in the specific case upon a determination that indemnification of the person is proper in the circumstances because such person has met the applicable standard of conduct set forth in the Bylaws, unless otherwise ordered by a court.  Such determination will be made (i) by the board of directors of the registrant by a majority vote of a quorum consisting of directors who were not parties to such action, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the affirmative vote of a majority of the shares of stock of the registrant entitled to vote thereon.
To the extent that any of the foregoing persons is successful on the merits or otherwise in the defense of an action, such person will be indemnified against expenses incurred by such person in connection therewith.
The registrant reserves the right to advance sums for the defense of any action in advance of the final disposition of such action provided that the registrant receives from the person requesting the advance an undertaking to repay any sums unless it is determined that such person is entitled to be indemnified as provided in the Bylaws.
The indemnification provided by the Bylaws is not exclusive of any other rights, in respect of indemnification or otherwise, to which those seeking indemnification may be entitled under any bylaw or resolution approved by the affirmative vote of the holders of a majority of the shares of the registrant entitled to vote thereon taken at a meeting the notice of which specified that such bylaw or resolution would be placed before the shareholders of the registrant.
23
The registrant has the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the registrant, or is or was serving at the request of the registrant as a director, officer, employee or agent of another entity against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the registrant would have the power to indemnify him against such liability under the provisions of the Bylaws.
If any expenses or other amounts are paid by way of indemnification, otherwise than by court order or action by the shareholders of the registrant or by an insurance carrier pursuant to insurance maintained by the registrant, the registrant will, not later than the next annual meeting of shareholders (unless such meeting is held within three months from the date of such payment) and, in any event, within 15 months from the date of such payment, send by first class mail to its shareholders of record at the time entitled to vote for the election of directors a statement specifying the persons paid, the amounts paid, and the nature and status at the time of such payment of the litigation or threatened litigation.
Item 15.
Recent Sales of Unregistered Securities
In the ordinary course of its business and to assist in the funding of its day-to-day operations involving, primarily, the making of consumer loans and first and second mortgage loans, the registrant makes periodic sales of certain of its securities which are exempt from the registration provisions of the Securities Act of 1933, as amended (the "Act").  None of such sales in the past three years have involved, or have been made through, any underwriters, and all such sales were made by executive officers of the registrant.
During the past three years, the registrant has offered and sold certain senior demand notes ("Notes") only to residents of Georgia in reliance on the exemption from the federal securities registration requirements provided by Section 3(a)(11) of the Act and Rule 147 thereunder.  In addition, the registrant has offered and sold its commercial paper ("Commercial Paper") to investors meeting certain minimum investment qualifications pursuant to the exemption from the federal securities regulation requirements provided by Section 3(a)(3) of the Act.
During the previous three years, the registrant has sold approximately $184.7 million of Notes and approximately $631.9 million of Commercial Paper.
Item 16.
Exhibits and Financial Statement Schedules
3.
(a)
Restated Articles of Incorporation of the registrant, as amended January 26, 1996 (incorporated herein by reference to Exhibit 3(a) to the registrant's annual report on Form 10-K for the year ended December 31, 1995).
(b)
Bylaws of the registrant (incorporated herein by reference to Exhibit 3(b) to the registrant's annual report on Form 10-K for the year ended December 31, 1995).
4.
(a)
Indenture dated October 31, 1984, between the Company and the First National Bank of Gainesville, Trustee (incorporated by reference to Exhibit 4(a) to the Company's Amendment No. 1 dated April 24, 1998 to the Registration Statement on Form S-2, File No. 333-47515).
(b)
Form of Series 1 Variable Rate Subordinated Debenture (incorporated by reference to Exhibit 4(b) to Amendment No. 3 to the Company's registration statement on Form S-2 dated November 14, 2005, File No. 333-126589).
24
(c)
Agreement of Resignation, Appointment and Acceptance dated as of May 28, 1993 between the Company, The First National Bank of Gainesville and Columbus Bank and Trust Company (incorporated by reference to Exhibit 4(c) to the Company's Post-Effective Amendment No. 1 dated June 8, 1993 to the registration statement on Form S-2, File No. 33-49151).
5.
Opinion of Counsel Regarding Legality.*
10.
(a)
Credit Agreement, dated as of December 15, 2006, by and among the registrant, Wachovia Bank, National Association, as administrative agent and as a lender, and BMO Capital Markets Financing, Inc., as a lender (incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K, dated December 21, 2006).
(b)
Form of the Company's 2007 Executive Bonus Plan (incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K dated January 30, 2008).
(c)
Director Compensation Summary Term Sheet (incorporated by reference to Exhibit 10(c) to the Company's annual report on Form 10-K for the year ended December 31, 2007).
11.
Computation of Per Share Earnings (can be determined from the consolidated statements of income contained in the registrant's annual report on Form 10-K for the year ended December 31, 2007, incorporated herein by reference).
12.
Calculation of Ratio of Earnings to Fixed Charges.
21.
Subsidiaries of the registrant (incorporated by reference to Exhibit 21 to the registrant's annual report on Form 10-K for the year ended December 31, 2007).
23.
(a)
Consent of Independent Registered Public Accounting Firm.
(b)
Consent of Counsel. *
24.
Power of attorney (included on signature page hereto).
25.
Form T-1 as to the eligibility and qualification of U.S. Bank National Association, Trustee, under the Indenture between the registrant and U.S. Bank National Association.
*
To be filed by amendment.
25
Item 17.    Undertakings
The undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:  (i)  to include any prospectus required by section 10(a)(3) of the Securities Act of 1933;  (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.  Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the
"
Calculation of Registration Fee" table in the effective registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)
If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering.  Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished,
provided
that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.  Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.
26
(5)
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
i.
If the registrant is relying on Rule 430B (§ 230.430B of this chapter):
A.
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
B.
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus.  As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.  Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
ii.
If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.  Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
27
(6)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:  The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
i.
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
ii.
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
iii.
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
iv.
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toccoa, State of Georgia, on the 11
th
day of April, 2008.
1
st
FRANKLIN FINANCIAL CORPORATION
/s/ Ben F. Cheek, III
Ben F. Cheek, III
Chairman of the Board
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ben F. Cheek, III and A. Roger Guimond, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and their substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement or amendment thereto has been signed by the following persons in the capacities and on the dates indicated:
Signature
Title
Date
/s/ Ben F. Cheek, III
Ben F. Cheek, III
Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
April 11, 2008
/s/ Ben F. Cheek, IV
Ben F. Cheek IV
Vice Chairman
April 11, 2008
/s/ /Virginia C. Herring
Virginia C. Herring
President
April 11, 2008
/s/ A. Roger Guimond
A. Roger Guimond
Executive Vice President and Chief Financial Officer  (Principal Financial Officer and Principal Accounting Officer); Director
April 11, 2008
/s/ John G. Sample, Jr.
John G. Sample, Jr.
Director
April 11, 2008
/s/ Dean Scarborough
Dean Scarborough
Director
April 11, 2008
/s/ Robert E. Thompson
Robert E. Thompson
Director
April 11, 2008
/s/ Keith Watson
Keith Watson
Director
April 11, 2008
ATI-2235061v2
EXHIBIT INDEX
Exhibit No.
Description
12
Calculation of Ratio of Earnings to Fixed Charges
23 (a)
Consent of Independent Registered Public Accounting Firm
25
Form T-1 as to the eligibility and qualification of Synovus Trust Company, N.A., Trustee, under the Indenture dated as of October 31, 1984, as amended, between the registrant and Synovus Trust Company, N.A., an affiliate of Columbus Bank and Trust Company.
ATI-2235061v2