10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C  20549

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FORM 10-Q

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

For the Quarterly Period Ended June 30, 2016

OR

(  )

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _____________

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Commission File Number 2-27985

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1^st Franklin Financial Corporation

A Georgia Corporation

I.R.S. Employer Identification No. 58-0521233

135 East Tugalo Street

Post Office Box 880

Toccoa, Georgia 30577

(706) 886-7571

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Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),  and  (2) has been subject to such filing requirements for the past 90 days.  Yes  _X   No __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes _X_  No__

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one)  Large Accelerated Filer ___  Accelerated Filer ___  Non-Accelerated Filer   X_  Smaller Reporting Company   __

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes __   No  X

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class

Outstanding at August 12, 2016

Voting Common Stock, par value $100 per share

1,700 Shares

Non-Voting Common Stock, no par value

168,300 Shares

PART I.  FINANCIAL INFORMATION
ITEM 1.		Financial Statements:
		The information contained under the following captions in the Company's Quarterly Report to Investors as of and for the six months ended June 30, 2016 is incorporated by reference herein.  See Exhibit 19.
				Condensed Consolidated Statements of Financial Position (Unaudited):
					June 30, 2016 and December 31, 2015
				Condensed Consolidated Statements of Income and Retained Earnings (Unaudited):
					Three and Six Months Ended June 30, 2016 and June 30, 2015
				Condensed Consolidated Statements of Comprehensive Income (Unaudited):
					Three and Six Months Ended June 30, 2016 and June 30, 2015
				Condensed Consolidated Statements of Cash Flows (Unaudited):
					Six Months Ended June 30, 2016 and June 30, 2015
				Notes to Unaudited Condensed Consolidated Financial Statements
ITEM 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations:
		The information contained under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Company's Quarterly Report to Investors as of and for the six months ended June 30, 2016 is incorporated by reference herein.  See Exhibit 19.
ITEM 3.		Quantitative and Qualitative Disclosures About Market Risk:
		The information contained under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations -- Quantitative and Qualitative Disclosures About Market Risk" in the Company's Quarterly Report to Investors as of and for the six months ended June 30, 2016 is incorporated by reference herein.  See Exhibit 19.
ITEM 4.	Controls and Procedures:
	We maintain a set of disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  An evaluation was carried out as of the end of the period covered by this report, under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures.  Based on that evaluation, the CEO and CFO have concluded that, as of June 30, 2016, the Company’s disclosure controls and procedures were effective.  No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
	There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II.  OTHER INFORMATION
ITEM 1.		Legal Proceedings:
		The Company is, and expects to be, involved in various legal proceedings incidental to its business from time to time.  In the opinion of Management, the ultimate resolution of any such known claims or proceedings is not expected to have a material effect on the Company’s financial position, liquidity or results of operations.
ITEM 6.		Exhibits:
		(a)	Exhibits:
			19 31.1 31.2 32.1 32.2 101.INS 101.SCH 101.CAL 101.LAB 101.PRE 101.DEF			Quarterly Report to Investors as of and for the Six Months Ended June 30, 2016. Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934. Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934. Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. XBRL Instance Document. XBRL Taxonomy Extension Schema Document. XBRL Taxonomy Extension Calculation Linkbase Document. XBRL Taxonomy Extension Label Linkbase Document. XBRL Taxonomy Extension Presentation Linkbase Document. XBRL Taxonomy Extension Definition Linkbase Document.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
	1st FRANKLIN FINANCIAL CORPORATION
	Registrant
	__/s/  Virginia C. Herring___________
	President and Chief Executive Officer
	(Principal Executive Officer)
	__/s/  A. Roger Guimond__________
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)
Date: August 12, 2016

1st FRANKLIN FINANCIAL CORPORATION
INDEX TO EXHIBITS
Exhibit No.	Description
19 31.1 31.2 32.1 32.2	Quarterly Report to Investors as of and for the Six Months      Ended June 30, 2016 Certification of Principal Executive Officer Pursuant to      Rule 13a-14(a) / 15d-14(a) of the Securities Exchange      Act of 1934 Certification of Principal Financial Officer Pursuant to      Rule 13a-14(a) / 15d-14(a) of the Securities Exchange      Act of 1934 Certification of Principal Executive Officer Pursuant to      18 U.S.C. Section 1350, as Adopted Pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002 Certification of Principal Financial Officer Pursuant to      18 U.S.C. Section 1350, as Adopted Pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002
101.INS 101.SCH 101.CAL 101.LAB 101.PRE 101.DEF	XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document

EX-19

Exhibit 19

1^st

FRANKLIN

FINANCIAL

CORPORATION

QUARTERLY

REPORT TO INVESTORS

AS OF AND FOR THE

SIX MONTHS ENDED

JUNE 30, 2016

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following narrative is Management’s discussion and analysis of the foremost factors that influenced 1^st Franklin Financial Corporation’s and its consolidated subsidiaries’ (the “Company”, “our” or “we”) financial condition and operating results as of and for the three- and six-month periods ended June 30, 2016 and 2015.  This analysis and the accompanying unaudited condensed consolidated financial information should be read in conjunction with the Company's audited consolidated financial statements and related notes included in the Company’s 2015 Annual Report.  Results achieved in any interim period are not necessarily reflective of the results to be expected for any other interim or full year period.

Forward-Looking Statements:

Certain information in this discussion, and other statements contained in this Quarterly Report which are not historical facts, may be forward-looking statements within the meaning of the federal securities laws.  Such forward-looking statements involve known and unknown risks and uncertainties.  The Company's actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein.  Possible factors which could cause actual future results to differ from expectations include, but are not limited to, adverse general economic conditions, including changes in the interest rate environment, unexpected reductions in the size of or collectability of our loan portfolio, reduced sales or increased redemptions of our securities, unavailability of borrowings under our credit facility, federal and state regulatory changes affecting consumer finance companies, unfavorable outcomes in legal proceedings and adverse or unforeseen developments in any of the matters described under “Risk Factors” in our 2015 Annual Report, as well as other factors referenced elsewhere in our filings with the Securities and Exchange Commission from time to time.  The Company undertakes no obligation to update any forward-looking statements, except as required by law.

The Company:

We are engaged in the consumer finance business, primarily in making consumer loans to individuals in relatively small amounts for short periods of time.  Other lending-related activities include the purchase of sales finance contracts from various dealers and the making of first and second mortgage real estate loans on real estate.  As of June 30, 2016, the Company’s business was operated through a network of 285 branch offices located in Alabama, Georgia, Louisiana, Mississippi, South Carolina and Tennessee.

We also offer optional credit insurance coverage to our customers when making a loan.  Such 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 that any outstanding loan balance is repaid if the customer dies before the loan is repaid or they may request accident and health insurance coverage to help continue loan payments if the customer becomes sick or disabled for an extended period of time.  Customers may also choose property insurance coverage to protect the value of loan collateral against damage, theft or destruction.  We write these various insurance policies as an agent for a non-affiliated insurance company.  Under various agreements, our wholly-owned insurance subsidiaries, Frandisco Life Insurance Company and Frandisco Property and Casualty Insurance Company, reinsure the insurance coverage on our customers written on behalf of this non-affiliated insurance company.

The Company's operations are subject to various state and federal laws and regulations.  We believe our operations are in compliance with applicable state and federal laws and regulations.

Financial Condition:

Total assets of the Company were $685.9 million at June 30, 2016 compared to $674.4 million at December 31, 2015, representing a $11.5 million (2%) increase.  The primary area of growth was in the Company's investment portfolios.  Short-term investments increased $32.2 million (70%) and our investment securities portfolio increased $18.8 million (12%) at June 30,

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2016 compared to prior year end.  The increase in investments was a result of surplus funds generated from operating and financing activities.

Cash and cash equivalents (excluding restricted cash) declined $3.0 million (55%) at June 30, 2016 compared to December 31, 2015.  Management moved surplus cash to the Company's investment portfolios to increase yield.

Restricted cash consists of funds maintained in restricted accounts at the Company's  insurance subsidiaries in order to comply with certain requirements imposed on insurance companies by the State of Georgia and to meet the reserve requirements of its reinsurance agreements.  Restricted cash also includes escrow deposits held by the Company on behalf of certain mortgage real estate customers.  At June 30, 2016, restricted cash decreased $6.7 million (71%) compared to December 31, 2015 mainly due to Management's decision to move a portion of restricted funds into trust accounts in the investment portfolios for purposes of increasing yields.  See Note 3, "Investment Securities" in the accompaning "Notes to Unaudited Condensed Consolidated Financial Statements" for further discussion of amounts held in trust.

Loan liquidations exceed loan originations during the six months just ended resulting an a $31.9 million (8%) decrease in our net loan portfolio.  At June 30, 2016 our net loan portfolio was $374.5 million compared to $406.4 million at December 31, 2015. Included in our net loan portfolio is our allowance for loan losses which reflects Management’s estimate of the level of allowance adequate to cover probable losses inherent in the loan portfolio as of the date of the statement of financial position.  To evaluate the overall adequacy of our allowance for loan losses, we consider the level of loan receivables, historical loss trends, loan delinquency trends, bankruptcy trends and overall economic conditions.  Also contributing to the decrease in our net loan portfolio was a $2.7 million increase in the allowance for loan losses.  See Note 2, “Allowance for Loan Losses,” in the accompanying “Notes to Unaudited Condensed Consolidated Financial Statements” for further discussion of the Company’s allowance for loan losses.  Management believes the allowance for loan losses is adequate to cover probable losses inherent in the portfolio at June 30, 2016; however, unexpected changes in trends or deterioration in economic conditions could result in additional changes in the allowance.  Any increase could have a material adverse impact on our results of operations or financial condition in the future.

As previously mentioned, our investment securities portfolio increased $18.8 million at June 30, 2016 compared to the prior year end.  The Company's investment portfolio consists mainly of U.S. Treasury bonds, government agency bonds and various municipal bonds.  A portion of these investment securities have been designated as “available for sale” (92% as of June 30, 2016 and 89% as of December 31, 2015) with any unrealized gain or loss, net of deferred income taxes, accounted for as other comprehensive income in the Company’s Condensed Consolidated Statements of Comprehensive Income.  The remainder of the Company’s investment portfolio represents securities carried at amortized cost and designated as “held to maturity,” as Management does not intend to sell, and does not believe that it is more likely than not that it would be required to sell, such securities before recovery of the amortized cost basis.  In addition to the investment portfolio, the Company maintains an investment accounted for under the equity method.  The balance of the Company's investment in the fund at June 30, 2016 was $25.1 million compared to $25.0 million at December 31, 2015.  The Company has no additional investment commitments to the fund.  For additional information on this equity method investment, see Note 5 "Equity Method Investment" in the accompanying "Notes to Unaudited Condensed Consolidated Financial Statements".  Management believes the Company has adequate funding available to meet liquidity needs for the foreseeable future.

Other assets increased $1.9 million at June 30, 2016 compared to December 31, 2015.  The majority of the growth was due to an increase in purchases of fixed assets.

The aggregate amount of senior and subordinated debt outstanding at June 30, 2016 was $436.8 million compared to $424.5 million at December 31, 2015, representing an increase of $12.3 million (3%) increase.  Higher sales of the Company's commercial paper was responsible for the increase.

Accrued expenses and other liabilities declined $4.5 million at June 30, 2016 compared to December 31, 2015 mainly due to disbursement of the 2015 incentive bonus in February 2016.  Also contributing to the decrease were lower outstanding payroll taxes due as of June 30, 2016.

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Results of Operations:

During the three- and six-month periods ended June 30, 2016, total revenues were $50.7 million and $104.3 million, respectively, compared to $50.6 million and $101.7 million during the same periods a year ago.  Higher interest and finance charge income earned on our loan and investment portfolios was the primary factor responsible for the increase in revenues during the six-month period just ended compared to the same period a year ago.  Revenues were slightly higher during the three-month period just ended compared to the same three-month period a year ago.  During the quarter just ended, the Company experienced higher interest and finance charge income earned on our loan and investment portfolios; however, most of the increase was offset by a decline in insurance revenue.  Although revenues were higher, net income declined $5.5 million (64%) and $8.1 million (47%) during the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods during 2015.  The decrease in net income during the comparable periods is mainly due to significant increases in our  provision for loan losses.

Net Interest Income

Net interest income represents the difference between income on earning assets (loans and investments) and the cost of funds on interest bearing liabilities.  Our net interest income is affected by the size and mix of our loan and investment portfolios as well as the spread between interest and finance charges earned on the respective assets and interest incurred on our debt.  Our net interest income increased $.7 million (2%) and $2.6 million (4%) during the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods in 2015.  Average net receivables increased $26.7 million (6%) during the six months just ended compared to the same period a year ago.  The higher level of average net receivables led to an increase in interest and finance charges earned of .9 million (2%) and $3.3 million (4%) during the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods in 2015.

Although average daily borrowings increased $48.6 million during the six-month period ended June 30, 2016 compared to the same period in 2015, the lower interest rate environment has enabled management to minimize increases in borrowing costs.  The Company's average borrowing rates were 3.19% and 3.25% during the six-month periods ended June 30, 2016 and 2015, respectively.  Interest expense increased approximately $.2 million (8%) and $.7 million (11%) during the three- and six-month periods just ended compared to the same periods a year ago due to the increased borrowings outstanding.

Management projects that, based on historical results, average net receivables will grow during the second half of 2016, and earnings are expected to increase accordingly.  However, a decrease in net receivables or an increase in interest rates on outstanding borrowings, could negatively impact our net interest margin.  

Insurance Income

During the three-month period just ended, insurance revenue declined $1.0 million (8%) compared to the same period a year ago.  A $.7 million (21%) decrease in insurance claims and expenses during the same comparable three-month period offset a portion of the decline in insurance revenues resulting in an overall decline of $.3 million (3%) in net insurance income.  During the six-month period just ended insurance revenue declined $.5 million (2%) offset by a $.5 million (9%) decline in insurance claims and expenses, resulting in only a minimal increase in overall net insurance income.

A decrease in the number of customers opting for credit insurance products offered by the Company on certain loan products and a higher percentage of loan originations on loan products that do not include an option for insurance during the current year were the principal  factors contributing to the decline in insurance revenue in the 2016 periods.

Other Revenue

Other revenue increased $.2 million (18%) for the three-month period ended June 30, 2016 compared to the same period in 2015 mainly due to higher earnings on our equity method investment.  During the six-month period just ended, other revenue declined $.2 million compared

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to the same period a year ago mainly as a result of losses on the equity method investment during the first quarter of this year and decreases in revenue from the sale of auto club memberships to loan customers during the six months just ended.

Provision for Loan Losses

The Company’s provision for loan losses is a charge against earnings to maintain the allowance for loan losses at a level that Management estimates is adequate to cover probable losses inherent as of the date of the statement of financial position.

Our provision for loan losses increased $4.7 million (73%) and $9.7 million (76%) during the three- and six-month periods ended June 30, 2016, respectively, compared to same periods in during 2015.  The increases were mainly due to higher net charge offs.  Net charge offs were $9.6 million and $19.8 million during the three- and six-month periods just ended, respectively, compared to $6.5 million and $12.8 million during the same comparable periods a year ago.  Our industry has come under increased regulation by federal and state regulators.  As a result, the Company has adopted more stringent collection practices to meet newly enacted and anticipated governmental regulations.  These changes along with higher bankruptcies have resulted in the increased net charge offs during the currenty year.

As a result of the aforementioned trends through June 30, 2016, Management added an additional $2.7 million to the allowance for loan losses which also contributed to the increase in the provision for loan losses. Determining a proper allowance for loan losses is a critical accounting estimate which involves Management’s judgment with respect to certain relevant factors, such as historical and expected loss trends, unemployment rates in various locales, current and expected net charge offs, delinquency levels, bankruptcy trends and overall general and industry specific economic conditions.

We believe that the allowance for loans losses is adequate to cover probable losses inherent in our portfolio; however, because the allowance for loan losses is based on estimates, there can be no assurance that the ultimate charge off amount will not exceed such estimates or that our loss assumptions will not increase.  Management may determine it is appropriate to increase the allowance for loan losses in future periods, or actual losses could exceed allowances in any period, either of which events could have a material negative impact on our results of operations in the future.

Other Operating Expenses

Other operating expenses increased $1.0 million and $.1 million during the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods a year ago.  Other operating expenses encompass personnel expense, occupancy expense and miscellaneous other expenses.  

Personnel expense increased $.2 million (1%) during the three- and six-month periods just ended compared to the same periods in 2015.  The increases were primarily due to increases in our employee base, annual merit salary increases, increases in contributions to the Company's 401(k) plan and increased payroll taxes.  An increase in claims associated with the Company's self-insured medical program also contributed to the increases in 2016 over the comparable periods.  Lower accruals for the Company's incentive bonus plan offset a majority of the aforementioned increases.

Higher utility expenses, depreciation expenses and increased rent expense caused occupancy expense to increase $.1 million (3%) and $.1 million (2%) during the three- and six-month periods ended June 30, 2016 compared to the same periods a year ago.

During the three-month period ended June 30, 2016, miscellaneous other operating expenses increased $.7 million (12%) compared to the same period a year ago.  Increases in advertising expenses, business promotion expenses, computer expenses, consultant fees, insurance premiums paid, postage, stationary and supplies, and travel expenses led to the increase in the current three-month period just ended.  During the six-month period ended June 30, 2016, miscellaneous other operating expenses declined $.2 million (1%) compared to the same period in 2015.  Costs were lower primarily due to declines in advertising expenses,

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collection expenses, legal and audit expenses, consultant fees, computer expenses, securities sales expenses, management meeting expenses and taxes and licenses.  

Income Taxes

The Company has elected to be, and is, treated as an S corporation for income tax reporting purposes.  Taxable income or loss of an S corporation is passed through to, and included in the individual tax returns of, the shareholders of the Company, rather then being taxed at the corporate level.  Notwithstanding this election, however, income taxes continue to be reported for, and paid by, the Company's insurance subsidiaries as they are not allowed to be treated as S corporations, and for the Company’s state taxes in Louisiana, which does not recognize S corporation status.  Deferred income tax assets and liabilities are recognized and provisions for current and deferred income taxes continue to be recorded by the Company’s subsidiaries.  The Company uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences.  

Effective income tax rates were 29% and 23% during the three- and six-month periods ended June 30, 2016, respectively compared to 10% and 11% during each of the same periods during 2015.  The portion of pre-tax income during the three- and six-month periods just ended generated by the insurance subsidiaries were 110% and 86%, respectively, compared to 40% and 42%, during the same respective periods a year ago.  These higher percentages were the cause of the increase in the tax rate during the comparable periods just ended.  The Company’s effective tax rates during the reporting periods were lower than statutory rates due to income at the S corporation level being passed to the shareholders of the Company for tax reporting purposes, whereas income earned at the insurance subsidiary level was taxed at the corporate level.  The tax rates of the Company’s insurance subsidiaries are below statutory rates primarily due to investments in tax exempt bonds held by the Company’s insurance subsidiaries.

Quantitative and Qualitative Disclosures About Market Risk:

Interest rates continued to be near historical low levels during the reporting period.  The possibility of market fluctuations in market interest rates during the remainder of the year could have an impact on our net interest margin.  Please refer to the market risk analysis discussion contained in our 2015 Annual Report on Form 10-K as of and for the year ended December 31, 2015 for a more detailed analysis of our market risk exposure.  There were no material changes in our risk exposures in the six months ended June 30, 2016 as compared to those at December 31, 2015.

Liquidity and Capital Resources:

As of June 30, 2016 and December 31, 2015, the Company had $80.6 million and $51.4 million, respectively, invested in cash and cash equivalents (excluding restricted cash), the majority of which was held by the parent company.  

The Company’s investments in marketable securities can be readily converted into cash, if necessary.  State insurance regulations limit the use an insurance company can make of its assets.  Dividend payments to a parent company by its wholly-owned insurance subsidiaries are subject to annual limitations and are restricted to the greater of 10% of policyholders’ surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiary.  At December 31, 2015, Frandisco Property and Casualty Insurance Company (“Frandisco P&C”) and Frandisco Life Insurance Company (“Frandisco Life”), the Company’s wholly-owned insurance subsidiaries, had policyholders’ surpluses of $70.5 million and $67.3 million, respectively.  The maximum aggregate amount of dividends these subsidiaries can pay to the Company in 2016, without prior approval of the Georgia Insurance Commissioner, is approximately $11.8 million.  No dividends were paid during the six-month period ended June 30, 2016.

The majority of the Company’s liquidity requirements are financed through the collection of receivables and through the sale of short- and long-term debt securities.  The Company’s continued liquidity is therefore dependent on the collection of its receivables and the sale of debt securities that meet the investment requirements of the public.  In addition to its receivables and securities sales, the Company has an external source of funds available under a credit facility

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with Wells Fargo Preferred Capital, Inc. (the “credit agreement”). The credit agreement, as amended, provides for borrowings of up to $100.0 million or 70% of the Company's net finance receivables (as defined in the Credit Agreement), whichever is less, and has a maturity date of September 11, 2018.  Available borrowings under the credit agreement were $100.0 million at June 30, 2016 and December 31, 2015, at an interest rate of 3.75%.  The credit agreement contains covenants customary for financing transactions of this type.  At June 30, 2016, the Company was in compliance with all covenants.  Management believes this credit facility, when considered with the Company’s other expected sources of funds, should provide sufficient liquidity for the continued growth of the Company for the foreseeable future.

Critical Accounting Policies:

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States and conform to general practices within the financial services industry. The Company’s critical accounting and reporting policies include the allowance for loan losses, revenue recognition and insurance claims reserves.  During the six months ended June 30, 2016, there were no material changes to the critical accounting policies or related estimates previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Allowance for Loan Losses

Provisions for loan losses are charged to operations in amounts sufficient to maintain the allowance for loan losses at a level considered adequate to cover probable credit losses inherent in our loan portfolio.  

The allowance for loan losses is established based on the determination of the amount of probable losses inherent in the loan portfolio as of the reporting date.  We review, among other things, historical charge off experience factors, delinquency reports, historical collection rates, economic trends such as unemployment rates, gasoline prices, bankruptcy filings and other information in order to make what we believe are the necessary judgments as to probable losses.  Assumptions regarding probable losses are reviewed periodically and may be impacted by our actual loss experience and changes in any of the factors discussed above.

Revenue Recognition

Accounting principles generally accepted in the United States require that an interest yield method be used to calculate the income recognized on accounts which have precomputed charges.  An interest yield method is used by the Company on each individual account with precomputed charges to calculate income for those active accounts; however, state regulations often allow interest refunds to be made according to the Rule of 78’s method for payoffs and renewals.  Since the majority of the Company's accounts with precomputed charges are paid off or renewed prior to maturity, the result is that most of those accounts effectively yield on a Rule of 78's basis.

Precomputed finance charges are included in the gross amount of certain direct cash loans, sales finance contracts and certain real estate loans.  These precomputed charges are deferred and recognized as income on an accrual basis using the effective interest method.  Some other cash loans and real estate loans, which do not have precomputed charges, have income recognized on a simple interest accrual basis.  Income is not accrued on any loan that is more than 60 days past due.

Loan fees and origination costs are deferred and recognized as adjustments to the loan yield over the contractual life of the related loan.  

The property and casualty credit insurance policies written by the Company, as agent for a non-affiliated insurance company, are reinsured by the Company’s property and casualty insurance subsidiary.  The premiums on these policies are deferred and earned over the period of insurance coverage using the pro-rata method or the effective yield method, depending on whether the amount of insurance coverage generally remains level or declines.

The credit life and accident and health insurance policies written by the Company, as agent for a non-affiliated insurance company, are reinsured by the Company’s life insurance

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subsidiary.  The premiums are deferred and earned using the pro-rata method for level-term life insurance policies and the effective yield method for decreasing-term life policies.  Premiums on accident and health insurance policies are earned based on an average of the pro-rata method and the effective yield method.

Insurance Claims Reserves

Included in unearned insurance premiums and commissions on the Unaudited Condensed Consolidated Statements of Financial Position are reserves for incurred but unpaid credit insurance claims for policies written by the Company, as agent for a non-affiliated insurance underwriter, and reinsured by the Company’s wholly-owned insurance subsidiaries.  These reserves are established based on generally accepted actuarial methods.  In the event that the Company’s actual reported losses for any given period are materially in excess of the previously estimated amounts, such losses could have a material adverse effect on the Company’s results of operations.

Different assumptions in the application of any of these policies could result in material changes in the Company’s consolidated financial position or consolidated results of operations.

Recent Accounting Pronouncements:

See “Recent Accounting Pronouncements” in Note 1 to the accompanying “Notes to Unaudited Condensed Consolidated Financial Statements” for a discussion of any applicable recently adopted accounting standards and the expected impact of accounting standards recently issued but not yet required to be adopted.  For pronouncements already adopted, any material impacts on the Company’s consolidated financial statements are discussed in the applicable section(s) of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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1st FRANKLIN FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
	June 30,	December 31,
	2016	2015
ASSETS
CASH AND CASH EQUIVALENTS	$ 80,644,749	$ 51,449,417
RESTRICTED CASH	2,663,977	9,335,466
LOANS: Direct Cash Loans Real Estate Loans Sales Finance Contracts Less: Unearned Finance Charges Unearned Insurance Premiums and Commissions Allowance for Loan Losses Net Loans	449,619,836  22,811,653  31,236,573  503,668,062  56,760,222  36,201,849  36,200,000  374,505,991	494,836,733 22,128,090 30,071,077 547,035,900 65,699,425 41,446,393 33,500,000 406,390,082
INVESTMENT SECURITIES: Available for Sale, at fair value Held to Maturity, at amortized cost	165,362,864  14,308,129  179,670,993	143,862,165 17,058,181 160,920,346
EQUITY METHOD INVESTMENT	25,130,891	24,989,505
OTHER ASSETS	23,250,409	21,328,993
TOTAL ASSETS	$ 685,867,010	$ 674,413,809
LIABILITIES AND STOCKHOLDERS' EQUITY
SENIOR DEBT	$ 401,083,868	$ 388,489,295
ACCRUED EXPENSES AND OTHER LIABILITIES	20,912,435	25,430,137
SUBORDINATED DEBT	35,718,934	36,004,009
Total Liabilities	457,715,237	449,923,441
COMMITMENTS AND CONTINGENCIES (Note 6) STOCKHOLDERS' EQUITY:
Preferred Stock: $100 par value, 6,000 shares authorized;  no shares outstanding	--	--
Common Stock Voting Shares; $100 par value; 2,000 shares authorized; 1,700 shares outstanding Non-Voting Shares; no par value; 198,000 shares authorized; 168,300 shares outstanding	170,000  --	170,000 --
Accumulated Other Comprehensive Income	7,336,401	4,142,986
Retained Earnings	220,645,372	220,177,382
Total Stockholders' Equity	228,151,773	224,490,368
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 685,867,010	$ 674,413,809
See Notes to Unaudited Condensed Consolidated Financial Statements

8

1st FRANKLIN FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF  INCOME AND RETAINED EARNINGS (Unaudited)
	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2016	2015	2016	2015
INTEREST INCOME	$ 37,757,878	$ 36,836,987	$ 78,114,937	$ 74,860,439
INTEREST EXPENSE	3,425,822	3,176,729	6,904,894	6,245,806
NET INTEREST INCOME	34,332,056	33,660,258	71,210,043	68,614,633
Provision for Loan Losses	11,272,680	6,528,953	22,451,680	12,751,029
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	23,059,376	27,131,305	48,758,363	55,863,604
INSURANCE INCOME Premiums and Commissions Insurance Claims and Expenses Total Net Insurance Income	11,478,249 2,830,733 8,647,516	12,516,191 3,573,368 8,942,823	24,158,590 5,631,985 18,526,605	24,689,235 6,181,212 18,508,023
OTHER REVENUE	1,434,958	1,217,290	1,986,594	2,160,838
OTHER OPERATING EXPENSES: Personnel Expense Occupancy Expense Other Total	18,138,892 3,575,912 7,003,870 28,718,674	17,949,653 3,472,837 6,269,733 27,692,223	36,185,920 7,029,538 14,191,887 57,407,345	35,953,991 6,911,201 14,398,498 57,263,690
INCOME BEFORE INCOME TAXES	4,423,176	9,599,195	11,864,217	19,268,775
Provision for Income Taxes	1,274,302	971,199	2,745,797	2,084,789
NET INCOME	3,148,874	8,627,996	9,118,420	17,183,986
RETAINED EARNINGS, Beginning       of Period	223,379,048	212,392,699	220,177,382	204,613,711
Distributions on Common Stock	5,882,550	6,297,000	8,650,430	7,074,002
RETAINED EARNINGS, End of Period	$220,645,372	$214,723,695	$ 220,645,372	$ 214,723,695
BASIC EARNINGS PER SHARE: 170,000 Shares Outstanding for All Periods (1,700 voting, 168,300 non-voting)	$18.52	$50.75	$53.64	$101.08
See Notes to Unaudited Condensed Consolidated Financial Statements

9

1st FRANKLIN FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended		Six Months Ended
	June 30,	June 30,	June 30,	June 30,
	2016	2015	2016	2015
Net Income	$ 3,148,874	$ 8,627,996	$ 9,118,420	$ 17,183,986
Other Comprehensive Income (Loss):
Net changes related to available-for-sale
Securities:
Unrealized gaines (losses)	3,634,390	(3,148,206)	5,420,412	(3,297,626)
Income tax (expense) benefit	(1,239,124)	843,156	(2,226,472)	830,641
Net unrealized gains (losses)	2,395,266	(2,305,050)	3,193,940	(2,466,985)
Less reclassification of gain to
net income (1)	525	41,523	525	41,523
Total Other Comprehensive
Income (Loss)	2,394,741	(2,346,573)	3,193,415	(2,508,508)
Total Comprehensive Income	$ 5,543,615	$ 6,281,423	$ 12,311,835	$ 14,675,478

(1)

Reclassified $795 to other operating expenses and $270 to provision for income taxes

on the Condensed Consolidated Statements of Income and Retained Earnings (Unaudited)   during the three- and six-month periods ended June 30, 2016, respectively.

Reclassified $56,113 to other operating expenses and $14,590 to provision for income taxes

on the Condensed Consolidated Statements of Income and Retained Earnings (Unaudited)   during the three- and six-month periods ended June 30, 2015, respectively.  

See Notes to Unaudited Condensed Consolidated Financial Statements

10

1ST FRANKLIN FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Six Months Ended
	June 30,
	2016	2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 9,118,420	$ 17,183,986
Adjustments to reconcile net income to net cash Provided by operating activities:
Provision for loan losses	22,451,680	12,751,029
Depreciation and amortization	1,760,312	1,696,876
(Benefit) provision for deferred income taxes	(434,782)	646,734
Earnings in equity method investment	(141,386)	(185,623)
Other	320,937	439,997
Decrease (increase) in miscellaneous other assets	991,546	(9,674,382)
Decrease in other liabilities	(6,309,122)	(3,930,313)
Net Cash Provided	27,757,605	18,928,304
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans originated or purchased	(165,131,637)	(165,507,067)
Loan payments	174,564,048	171,964,643
Decrease (increase) in restricted cash	6,671,489	(582,839)
Purchases of marketable debt securities	(21,015,433)	(2,744,065)
Sales of marketable debt securities	-	797,246
Redemptions of marketable debt securities	7,360,000	8,650,000
Fixed asset additions, net	(4,669,808)	(1,966,549)
Net Cash (Used) Provided	(2,221,341)	10,611,369
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in senior demand notes	(4,666,391)	1,017,578
Advances on credit line	266,185	264,810
Payments on credit line	(266,185)	(264,810)
Commercial paper issued	31,794,845	28,852,577
Commercial paper redeemed	(14,533,881)	(11,556,015)
Subordinated debt securities issued	3,469,847	4,168,923
Subordinated debt securities redeemed	(3,754,922)	(5,209,266)
Dividends / Distributions	(8,650,430)	(7,074,002)
Net Cash Provided	3,659,068	10,199,795
NET INCREASE CASH AND CASH EQUIVALENTS	29,195,332	39,739,468
CASH AND CASH EQUIVALENTS, beginning	51,449,417	14,726,542
CASH AND CASH EQUIVALENTS, ending	$ 80,644,749	$ 54,466,010
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest	$ 6,934,461	$ 6,177,011
Income Taxes	3,617,000	1,844,000
See Notes to Unaudited Condensed Consolidated Financial Statements

11

-NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of 1^st Franklin Financial Corporation and subsidiaries (the "Company") should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto as of December 31, 2015 and for the year then ended included in the Company's 2015 Annual Report filed with the Securities and Exchange Commission.

In the opinion of Management of the Company, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the Company's consolidated financial position as of June 30, 2016 and December 31, 2015, and its consolidated results of operations and comprehensive income for the three and six-month periods ended June 30, 2016 and 2015 and its consolidated cash flows for the six months ended June 30, 2016 and 2015. While certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, the Company believes that the disclosures herein are adequate to make the information presented not misleading.

The Company’s financial condition and results of operations as of and for the three- and six-month periods ended June 30, 2016 are not necessarily indicative of the results to be expected for the full fiscal year or any other future period.  The preparation of financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities at and as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ materially from those estimates.

The computation of earnings per share is self-evident from the accompanying Condensed Consolidated Statements of Income and Retained Earnings (Unaudited).  The Company has no dilutive securities outstanding.

Recent Accounting Pronouncements:

There have been no updates to recent accounting pronouncements reported in our 2015 annual report and no new pronouncements effective this year that Management believes would have a material impact on the Company.  

Note 2 – Allowance for Loan Losses

The allowance for loan losses is based on Management's evaluation of the inherent risks and changes in the composition of the Company's loan portfolio.  Management’s approach to estimating and evaluating the allowance for loan losses is on a total portfolio level based on historical loss trends, bankruptcy trends, the level of receivables at the balance sheet date, payment patterns and economic conditions primarily including, but not limited to, unemployment levels and gasoline prices.  Historical loss trends are tracked on an on-going basis.  The trend analysis includes statistical analysis of the correlation between loan date and charge off date, charge off statistics by the total loan portfolio, and charge off statistics by branch, division and state.  Delinquency and bankruptcy filing trends are also tracked.  If trends indicate an adjustment to the allowance for loan losses is warranted, Management will make what it considers to be appropriate adjustments.  The level of receivables at the balance sheet date is reviewed and adjustments to the allowance for loan losses are made if Management determines increases or decreases in the level of receivables warrants an adjustment.  The Company uses monthly unemployment statistics, and various other monthly or periodic economic statistics, published by departments of the U.S. government and other economic statistics providers to determine the economic component of the allowance for loan losses.  Such allowance is, in the opinion of Management, sufficiently adequate for probable losses in the current loan portfolio.  As the estimates used in determining the loan loss reserve are influenced by outside factors, such as consumer payment patterns and general economic conditions, there is uncertainty inherent in these estimates.  Actual results could vary based on future changes in significant assumptions.

12

Management does not disaggregate the Company’s loan portfolio by loan class when evaluating loan performance.  The total portfolio is evaluated for credit losses based on contractual delinquency and other economic conditions. The Company classifies delinquent accounts at the end of each month according to the number of installments past due at that time, based on the then-existing terms of the contract.  Accounts are classified in delinquency categories based on the number of days past due.  When three installments are past due, Management classifies the account as being 60-89 days past due; when four or more installments are past due, Management classifies the account as being 90 days or more past due.  When a loan becomes five installments past due, it is charged off unless Management directs that it be retained as an active loan. In making this charge off evaluation, Management considers factors such as pending insurance, bankruptcy status and other indicators of collectability. In addition, no installment is counted as being past due if at least 80% of the contractual payment has been paid. In connection with any bankruptcy court-initiated repayment plan and as allowed by state regulatory authorities, the Company effectively resets the delinquency rating of each account to coincide with the court initiated repayment plan. The amount charged off is the unpaid balance less the unearned finance charges and the unearned insurance premiums, if applicable.

When a loan becomes 60 days or more past due based on its original terms, it is placed in nonaccrual status.  At such time, the accrual of any additional finance charges is discontinued.  Finance charges are then only recognized to the extent there is a loan payment received or when the account qualifies for return to accrual status.  Nonaccrual loans return to accrual status when the loan becomes less than 60 days past due.  There were no loans 60 days or more past due and still accruing interest at June 30, 2016 or December 31, 2015.  The Company’s principal balances on non-accrual loans by loan class as of June 30, 2016 and December 31, 2015 are as follows:

Loan Class	June 30,  2016	December 31, 2015
Consumer Loans	$ 24,876,649	$ 25,070,209
Real Estate Loans	1,219,505	846,894
Sales Finance Contracts	1,013,562	1,009,475
Total	$ 27,109,716	$ 26,925,578

An age analysis of principal balances on past due loans, segregated by loan class, as of June 30, 2016 and December 31, 2015 follows:

June 30, 2016	30-59 Days Past Due	60-89 Days Past Due	90 Days or More Past Due	Total Past Due Loans
Consumer Loans	$ 14,967,358	$ 8,624,553	$ 16,355,155	$ 39,947,066
Real Estate Loans	461,593	207,729	877,829	1,547,151
Sales Finance Contracts	582,184	338,546	642,961	1,563,691
Total	$ 16,011,135	$ 9,170,828	$ 17,875,945	$ 43,057,908

December 31, 2015	30-59 Days Past Due	60-89 Days Past Due	90 Days or More Past Due	Total Past Due Loans
Consumer Loans	$ 13,836,033	$ 8,073,384	$ 15,895,050	$ 37,804,467
Real Estate Loans	321,249	161,974	480,929	964,152
Sales Finance Contracts	498,374	346,930	584,919	1,430,223
Total	$ 14,655,656	$ 8,582,288	$ 16,960,898	$ 40,198,842

In addition to the delinquency rating analysis, the ratio of bankrupt accounts to the total loan portfolio is also used as a credit quality indicator.  The ratio of bankrupt accounts outstanding to total principal loan balances outstanding at June 30, 2016 and December 31, 2015 was 2.66% and 2.40%, respectively.

Nearly our entire loan portfolio consists of small homogeneous consumer loans (of the product types set forth in the table below).  

13

June 30, 2016	Principal Balance	% Portfolio	6 Months Net Charge Off (Recoveries)	% Net Charge Offs
Consumer Loans	$ 447,818,672	89.4%	$ 19,114,687	96.8
Real Estate Loans	22,360,620	4.4	(5,480)	-
Sales Finance Contracts	30,982,347	6.2	642,473	3.2
Total	$ 501,161,639	100.0%	$ 19,751,680	100.0%

June 30, 2015	Principal Balance	% Portfolio	6 Months Net Charge Offs	% Net Charge Offs
Consumer Loans	$ 442,293,400	90.1%	$ 12,470,695	97.8
Real Estate Loans	21,268,492	4.3	(2,747)	-
Sales Finance Contracts	27,592,288	5.6	283,081	2.2
Total	$ 491,154,180	100.0%	$ 12,751,029	100.0%

Sales finance contracts are similar to consumer loans in nature of loan product, terms, customer base to whom these products are marketed, factors contributing to risk of loss and historical payment performance, and together with consumer loans, represented approximately 96% of principal balances outstanding in Company’s loan portfolio at June 30, 2016 and 2015.  As a result of these similarities, which have resulted in similar historical performance, consumer loans and sales finance contracts represent substantially all loan losses.  Real estate loans and related losses have historically been insignificant, and, as a result, we do not stratify the loan portfolio for purposes of determining and evaluating our loan loss allowance.  Due to the composition of the loan portfolio, the Company determines and monitors the allowance for loan losses on a collectively evaluated, single portfolio segment basis.  Therefore, a roll forward of the allowance for loan loss activity at the portfolio segment level is the same as at the total portfolio level.  We have not acquired any impaired loans with deteriorating quality during any period reported.  The following table provides additional information on our allowance for loan losses based on a collective evaluation:

	Three Months Ended		Six Months Ended
	June 30, 2016	June 30, 2015	June 30, 2016	June 30, 2015
Allowance for Credit Losses:
Beginning Balance	$ 34,500,000	$ 28,620,000	$ 33,500,000	$ 28,620,000
Provision for Loan Losses	11,272,680	6,528,953	22,451,680	12,751,029
Charge-offs	(12,325,334)	(8,940,284)	(25,428,484)	(17,800,005)
Recoveries	2,752,654	2,411,331	5,676,804	5,048,976
Ending Balance	$ 36,200,000	$ 28,620,000	$ 36,200,000	$ 28,620,000
Ending balance; collectively evaluated for impairment	$ 36,200,000	$ 28,620,000	$ 36,200,000	$ 28,620,000
	Three Months Ended		Six Months Ended
	June 30, 2016	June 30, 2015	June 30, 2016	June 30, 2015
Finance receivables:
Ending balance	$ 501,161,639	$ 491,154,180	$ 501,161,639	$ 491,154,180
Ending balance; collectively evaluated for impairment	$ 501,161,639	$ 491,154,180	$ 501,161,639	$ 491,154,180

Troubled Debt Restructings ("TDR's") represent loans on which the original terms of the loans have been modified as a result of the following conditions: (i) the restructuring constitutes a concession and (ii) the borrower is experiencing financial difficulties. Loan modifications by the Company involve payment alterations, interest rate concessions and/ or reductions in the amount owed by the borrower.  The following table presents a summary of loans that were restructured during the three months ended June 30, 2016.

14

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	2,797	$ 5,669,352	$ 5,443,901
Real Estate Loans	4	37,071	37,071
Sales Finance Contracts	86	196,502	179,493
Total	2,887	$ 5,902,925	$ 5,660,465

The following table presents a summary of loans that were restructured during the three months ended June 30, 2015.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	2,031	$ 4,362,336	$ 4,111,093
Real Estate Loans	12	101,501	95,640
Sales Finance Contracts	67	123,912	112,384
Total	2,110	$ 4,587,749	$ 4,319,117

The following table presents a summary of loans that were restructured during the six months ended June 30, 2016.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	5,254	$ 10,486,236	$ 9,976,972
Real Estate Loans	15	156,745	156,746
Sales Finance Contracts	186	396,701	366,078
Total	5,455	$ 11,039,682	$ 10,499,796

The following table presents a summary of loans that were restructured during the six months ended June 30, 2015.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	3,055	$ 7,022,140	$ 6,628,457
Real Estate Loans	21	177,574	171,663
Sales Finance Contracts	114	217,208	202,764
Total	3,190	$ 7,416,922	$ 7,002,884

TDRs that occurred during the previous twelve months and subsequently defaulted during the three months ended June 30, 2016 are listed below.  

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	1,186	$ 1,635,616
Real Estate Loans	1	1,358
Sales Finance Contracts	39	73,366
Total	1,226	$ 1,710,340

15

TDRs that occurred during the twelve months ended June 30, 2015 and subsequently defaulted during the three months ended June 30, 2015 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	560	$ 798,237
Real Estate Loans	-	-
Sales Finance Contracts	25	28,184
Total	585	$ 826,421

TDRs that occurred during the previous twelve months and subsequently defaulted during the six months ended June 30, 2016 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	1,911	$ 2,728,640
Real Estate Loans	1	1,358
Sales Finance Contracts	75	125,229
Total	1,987	$ 2,855,227

TDRs that occurred during the twelve months ended June 30, 2015 and subsequently defaulted during the six months ended June 30, 2015 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	728	$ 1,089,968
Real Estate Loans	1	1,000
Sales Finance Contracts	31	33,522
Total	760	$ 1,124,490

The level of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of allowance of loan losses.

Note 3 – Investment Securities

Debt securities available-for-sale are carried at estimated fair value. Debt securities designated as "Held to Maturity" are carried at amortized cost based on Management's intent and ability to hold such securities to maturity.  The amortized cost and estimated fair values of these debt securities were as follows:

	As of June 30, 2016		As of December 31, 2015
	Amortized Cost	Estimated Fair Value	Amortized Cost	Estimated Fair Value
Available-for-Sale: Obligations of states and political subdivisions Corporate securities	$ 154,204,218 130,316 $ 154,334,534	$ 165,062,835 300,029 $ 165,362,864	$ 138,123,137 130,316 $ 138,253,453	$ 143,533,384 328,781 $ 143,862,165
Held to Maturity: Obligations of states and political subdivisions	$ 14,308,129	$ 14,311,281	$ 17,058,181	$ 17,171,053

16

Gross unrealized losses on investment securities totaled $210,125 and $342,867 at June 30, 2016 and December 31, 2015, respectively.  The following table provides an analysis of investment securities in an unrealized loss position for which other-than-temporary impairments have not been recognized as of June 30, 2016 and December 31, 2015:

	Less than 12 Months			12 Months or Longer		Total
June 30, 2016	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions		$ 897,966	$(10,873)	$ -	$ -	$ 897,966	$ (10,873)
Held to Maturity:
Obligations of states and political subdivisions		4,149,804	(69,901)	2,555,452	(129,351)	6,705,256	(199,252)
Overall Total		$ 5,047,770	$ (80,774)	$ 2,555,452	$ (129,351)	$7,603,222	$ (210,125)

	Less than 12 Months		12 Months or Longer		Total
December 31, 2015	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$ 7,154,930	$  (75,054)	$ 4,287,447	$ (137,308)	$ 11,442,377	$  (212,362)
Held to Maturity:
Obligations of states and political subdivisions	4,471,673	(61,813)	1,406,089	(68,692)	5,877,762	(130,505)
Overall Total	$ 11,626,603	$ (125,024)	$ 5,693,536	$ (206,000)	$  17,320,139	$ (342,867)

The previous two tables represent 6 and 25 investments held by the Company at June 30, 2016 and December 31, 2015, respectively, the majority of which are rated “A” or higher by Standard & Poor’s.  The unrealized losses on the Company’s investments listed in the above table were primarily the result of interest rate and market fluctuations.  Based on the credit ratings of these investments, along with the consideration of whether the Company has the intent to sell or will be more likely than not required to sell the applicable investment before recovery of amortized cost basis, the Company does not consider the impairment of any of these investments to be other-than-temporary at June 30, 2016 or December 31, 2015.

The Company’s insurance subsidiaries internally designate certain investments as restricted to cover their policy reserves and loss reserves.  Funds are held in separate trusts for the benefit of each insurance subsidiary at U.S. Bank National Association ("US Bank").  US Bank serves as trustee under trust agreements with the Company's property and casualty insurance company subsidiary, as grantor, and the non-affiliated insurance companies (who underwrite the policies), as beneficiaries.  At June 30, 2016, these trust accounts held $29.8 million in available-for-sale investment securities at market value and $7.9 million in held-to-maturity investment securities at amortized cost.  US Bank also serves as trustee under trust agreements with the Company's life insurance subsidiary, as grantor, and non-affiliated insurance companies (who underwrite the policies), as beneficiaries.  At June 30, 2016, these trust accounts held $5.2 million in available-for-sale investment securities at market value.  The amounts required to be in each Trust change as required reserves change.  All earnings on assets in the trusts are remitted to the Company's insurance subsidiaries.  

Note 4 – Fair Value

Under Accounting Standards Codification No. 820 ("ASC No. 820"), fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The following fair value hierarchy is used in selecting inputs used to determine the fair value of an asset or liability, with the highest priority given to Level 1, as these are the most transparent or reliable.  A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurements.

Level 1 - Quoted prices for identical instruments in active markets.

17

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

The following methods and assumptions are used by the Company in estimating fair values of its financial instruments:

Cash and Cash Equivalents:  Cash includes cash on hand and with banks.  Cash equivalents are short-term highly liquid investments with original maturities of three months or less.   The carrying value of cash and cash equivalents approximates fair value due to the relatively short period of time between origination of the instruments and their expected realization.  The estimate of the fair value of cash and cash equivalents is classified as a Level 1 financial asset.

Loans:  The carrying value of the Company’s direct cash loans and sales finance contracts approximates the fair value since the estimated life, assuming prepayments, is short-term in nature.  The fair value of the Company’s real estate loans approximate the carrying value since the interest rate charged by the Company approximates market rate.  The estimate of fair value of loans is classified as a Level 3 financial asset.

Marketable Debt Securities:  The Company values Level 2 securities using various observable market inputs obtained from a pricing service. The pricing service prepares evaluations of fair value for our Level 2 securities using proprietary valuation models based on techniques such as multi-dimensional relational models, and series of matrices that use observable market inputs. The fair value measurements and disclosures guidance defines observable market inputs as the assumptions market participants would use in pricing the asset developed on market data obtained from sources independent of the Company. The extent of the use of each observable market input for a security depends on the type of security and the market conditions at the balance sheet date. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary. The Company uses the following observable market inputs (“standard inputs”), listed in the approximate order of priority, in the pricing evaluation of Level 2 securities: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research data.  State, municipalities and political subdivisions securities are priced by our pricing service using material event notices and new issue data inputs in addition to the standard inputs.  See additional information, including the table below, regarding fair value under ASC No. 820, and the  fair value measurement of available-for-sale marketable debt securities.

Equity Method Investment:  The fair value of the equity method investment is estimated based on the Company's allocable share of the investee net asset as of the reporting date.

Senior Debt Securities:  The carrying value of the Company’s senior debt securities approximates fair value due to the relatively short period of time between the origination of the instruments and their expected repayment.  The estimate of fair value of senior debt securities is classified as a Level 2 financial liability.

Subordinated Debt Securities:  The carrying value of the Company’s variable rate subordinated debt securities approximates fair value due to the re-pricing frequency of the securities.  The estimate of fair value of subordinated debt securities is classified as a  Level 2 financial liability.

18

The Company is responsible for the valuation process and as part of this process may use data from outside sources in establishing fair value.  The Company performs due diligence to understand the inputs and how the data was calculated or derived.  The Company employs a market approach in the valuation of its obligations of states, political subdivisions and municipal revenue bonds that are available-for-sale.  These investments are valued on the basis of current market quotations provided by independent pricing services selected by Management based on the advice of an investment manager.  To determine the value of a particular investment, these independent pricing services may use certain information with respect to market transactions in such investment or comparable investments, various relationships observed in the market between investments, quotations from dealers, and pricing metrics and calculated yield measures based on valuation methodologies commonly employed in the market for such investments. Quoted prices are subject to our internal price verification procedures.  We validate prices received using a variety of methods including, but not limited, to comparison to other pricing services or corroboration of pricing by reference to independent market data such as a secondary broker.  There was no change in this methodology during any period reported.

Assets measured at fair value as of June 30, 2016 and December 31, 2015 were available-for-sale investment securities which are summarized below:

		Fair Value Measurements at Reporting Date Using
		Quoted Prices
		In Active	Significant
		Markets for	Other	Significant
		Identical	Observable	Unobservable
	June 30,	Assets	Inputs	Inputs
Description	2016	(Level 1)	(Level 2)	(Level 3)
Corporate securities Obligations of states and      political subdivisions              Total	$ 300,029 165,062,835  $ 165,362,864	$ 300,029 -- $ 300,029	$ -- 165,062,835 $ 165,062,835	$ -- -- $ --

		Fair Value Measurements at Reporting Date Using
		Quoted Prices
		In Active	Significant
		Markets for	Other	Significant
		Identical	Observable	Unobservable
	December 31,	Assets	Inputs	Inputs
Description	2015	(Level 1)	(Level 2)	(Level 3)
Corporate securities Obligations of states and      political subdivisions              Total	$ 328,781  143,533,384  $ 143,862,165	$ 328,781 -- $ 328,781	$ -- 143,533,384  $ 143,533,384	$ -- -- $ --

Note 5 – Equity Method Investment

The Company has one investment in Meritage Capital, Centennial Absolute Return Fund, L.P. (the "Fund") accounted for using the equity method of accounting.  The carrying value of this investment was $25.1 million and $25.0 million as of June 30, 2016 and December 31, 2015, respectively.  The Company earned $.4 million and $.1 million from this investment during the three- and six-month periods ended June 30, 2016, respectively, compared to $.1 million and $.2 million during the same comparable periods a year ago.  The income was recorded in Other Revenue on the Company's Unaudited Condensed Consolidated Statements of Income and Retained Earnings.  With at least 60 days notice, the Company has the ability to redeem its investment in the Fund at the end of any calendar quarter.  The Company has no investment commitments to the Fund.   

19

Condensed financial statement information of the equity method investment is as follows:

	June 30, 2016	December 31, 2015
Company's equity method investment	$ 25,130,891	$ 24,989,505
Partnership assets	$ 102,705,603	$ 97,456,613
Partnership liabilities	$ 171,316	$ 148,566
Partnership net income (loss)	$ 945,301(a)	$ (3,344,462)(b)

Note

(a)  Represents 6 months of net income.

(b)  Represents 12 months of net loss.

Note 6 – Commitments and Contingencies

The Company is, and expects in the future to be, involved in various legal proceedings incidental to its business from time to time.  Management makes provisions in its financial statements for legal, regulatory, and other contingencies when, in the opinion of Management, a loss is probable and reasonably estimable.  At June 30, 2016, no such known proceedings or amounts, individually or in the aggregate, were expected to have a material impact on the Company or its financial condition or results of operations.

Note 7 – Income Taxes

Effective income tax rates were 29% and 23% during the three- and six-month periods ended June 30, 2016, respectively compared to 10% and 11% and during each of the same periods during 2015.  The Company has elected to be, and is, treated as an S corporation for income tax reporting purposes.  Taxable income or loss of an S corporation is passed through to, and included in the individual tax returns, of the shareholders of the Company, rather than being taxed at the corporate level.  Notwithstanding this election, income taxes are reported for, and paid by, the Company's insurance subsidiaries, as they are not allowed by law to be treated as S corporations, as well as for the Company in Louisiana, which does not recognize S corporation status.  The tax rates of the Company’s insurance subsidiaries are below statutory rates due to investments in tax exempt bonds held by the Company’s insurance subsidiaries.  Tax rates increased during the current year periods due to a higher earnings in the insurance subsidiaries.

 Note 8 – Credit Agreement

Effective September 11, 2009, the Company entered into a credit facility with Wells Fargo Preferred Capital, Inc.  The credit agreement provides for borrowings of up to $100.0 million or 70% of the Company's net finance receivables (as defined in the Credit Agreement), whichever is less and has a maturity date of September 11, 2018.  Available borrowings under the credit agreement were $100.0 million at June 30, 2016 and December 31, 2015, at an interest rate of 3.75%.  The credit agreement contains covenants customary for financing transactions of this type.  At June 30, 2016, the Company was in compliance with all covenants.  

Note 9 – Related Party Transactions

The Company engages from time to time in transactions with related parties.  Please refer to the disclosure contained in Note 10 “Related Party Transactions” in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015 for additional information on such transactions.

Note 10 – Segment Financial Information

The Company discloses segment information in accordance with FASB ASC 280.  FASB ASC 280 requires companies to determine segments based on how management makes decisions about allocating resources to segments and measuring their performance.  The Company operates in five operating divisions that comprise one reportable business segment.

The Company has five operating divisions which comprise it operations:  Division I through Division V.  Each division consists of a number of branch offices that are aggregated based on vice president responsibility and geographic location.  Division I consists of offices located in

20

South Carolina.  Offices in North Georgia comprise Division II, Division III consists of offices in South Georgia.  Division IV represents our Alabama and Tennessee offices, and our offices in Louisiana and Mississippi encompass Division V.  

Accounting policies of each of the divisions are the same as those for the Company as a whole.  Performance is measured based on objectives set at the beginning of each year and include various factors such as division profit, growth in earning assets and delinquency and loan loss management.  All division revenues result from transactions with third parties.  The Company does not allocate income taxes or corporate headquarter expenses to the divisions.

The following table summarizes revenues, profit and assets by each of the Company's divisions.  Also in accordance therewith, a reconciliation to consolidated net income is provided.  

	Division	Division	Division	Division	Division
	I	II	III	IV	V	Total
	(in thousands)
Division Revenues:
3 Months ended 6/30/2016	$ 6,695	$ 11,376	$ 10,693	$ 10,162	$ 8,346	$ 47,272
3 Months ended 6/30/2015	$ 6,525	$ 11,221	$ 10,162	$ 9,563	$ 8,438	$ 45,909
6 Months ended 6/30/2016	$ 13,937	$ 23,612	$ 22,035	$ 20,778	$ 17,526	$ 97,888
6 Months ended 6/30/2015	$ 13,414	$ 23,060	$ 20,885	$ 19,415	$ 17,236	$ 94,010
Division Profit:
3 Months ended 6/30/2016	$ 1,454	$ 4,554	$ 4,470	$ 3,272	$ 1,924	$ 15,674
3 Months ended 6/30/2015	$ 2,243	$ 5,192	$ 4,428	$ 3,573	$ 2,981	$ 18,417
6 Months ended 6/30/2016	$ 3,416	$ 9,813	$ 9,359	$ 7,146	$ 4,485	$ 34,219
6 Months ended 6/30/2015	$ 4,807	$ 11,270	$ 9,556	$ 7,548	$ 6,304	$ 39,485

Division Assets:
6/30/2016	$ 57,964	$ 103,059	$ 96,969	$ 104,809	$ 73,485	$ 436,286
12/31/2015	65,026	110,524	103,027	109,469	81,984	470,030
			3 Months Ended 6/30/2016 (in Thousands)	3 Months Ended 6/30/2015 (in Thousands)	6 Months Ended 6/30/2016 (in Thousands)	6 Months Ended 6/30/2015 (in Thousands)
Reconciliation of Profit:
Profit per division			$15,674	$ 18,417	$ 34,219	$ 39,485
Corporate earnings not allocated			3,399	4,662	6,373	7,701
Corporate expenses not allocated			(14,650)	(13,479)	(28,728)	(27,917)
Income taxes not allocated			(1,275)	(972)	(2,746)	(2,085)
Net income			$ 3,148	$ 8,628	$ 9,118	$ 17,184

21

BRANCH OPERATIONS
Ronald F. Morrow	Vice President
Virginia K. Palmer	Vice President
J. Patrick Smith, III	Vice President
Marcus C. Thomas	Vice President
Michael J. Whitaker	Vice President
Joseph R. Cherry	Area Vice President
John B. Gray	Area Vice President

REGIONAL OPERATIONS DIRECTORS
Sonya Acosta	Carla Eldridge	Judy Landon	Larry Mixson
Michelle Rentz Benton	Jimmy Fairbanks	Sharon Langford	William Murillo
Bert Brown	Chad Frederick	Jeff Lee	Mike Olive
Ron Byerly	Shelia Garrett	Lynn Lewis	Hilda Phillips
Keith Chavis	Brian Hill	Jimmy Mahaffey	Jennifer Purser
Bryan Cook	David Hoard	John Massey	Summer Rhodes
Richard Corirossi	Gail Huff	Vicky McLeod	Mike Shankles
Jeremy Cranfield Joe Daniel	Jerry Hughes Janice Hyde	Brian McSwain Marty Miskelly	Harriet Welch Robert Whitlock
Loy Davis	Steve Knotts

BRANCH OPERATIONS
ALABAMA
Adamsville	Center Point	Fayette	Jasper	Oxford	Selma
Albertville	Clanton	Florence	Moody	Ozark	Sylacauga
Alexander City	Cullman	Fort Payne	Moulton	Pelham	Tallassee
Andalusia	Decatur	Gadsden	Muscle Shoals	Prattville	Troy
Arab	Dothan (2)	Hamilton	Opelika	Russellville (2)	Tuscaloosa
Athens	Enterprise	Huntsville (2)	Opp	Scottsboro	Wetumpka
Bessemer
GEORGIA
Adel	Carrollton	Dalton	Gray	Macon	Statesboro
Albany	Cartersville	Dawson	Greensboro	Madison	Stockbridge
Alma	Cedartown	Douglas (2)	Griffin	Manchester	Swainsboro
Americus	Chatsworth	Douglasville	Hartwell	McDonough	Sylvania
Athens (2)	Clarkesville	Dublin	Hawkinsville	Milledgeville	Sylvester
Augusta	Claxton	East Ellijay	Hazlehurst	Monroe	Thomaston
Bainbridge	Clayton	Eastman	Helena	Montezuma	Thomson
Barnesville	Cleveland	Eatonton	Hinesville (2)	Monticello	Tifton
Baxley	Cochran	Elberton	Hiram	Moultrie	Toccoa
Blairsville	Colquitt	Fayetteville	Hogansville	Nashville	Tucker
Blakely	Columbus	Fitzgerald	Jackson	Newnan	Valdosta
Blue Ridge	Commerce	Flowery Branch	Jasper	Perry	Vidalia
Bremen	Conyers	Forsyth	Jefferson	Pooler	Villa Rica
Brunswick	Cordele	Fort Valley	Jesup	Richmond Hill	Warner Robins
Buford	Cornelia	Ft. Oglethorpe	Kennesaw	Rome	Washington
Butler	Covington	Gainesville	LaGrange	Royston	Waycross
Cairo	Cumming	Garden City	Lavonia	Sandersville	Waynesboro
Calhoun	Dahlonega	Georgetown	Lawrenceville	Savannah	Winder

Canton

22

BRANCH OPERATIONS
(Continued)
LOUISIANA
Abbeville	Crowley	Houma	Marksville	New Iberia	Slidell
Alexandria	Denham Springs	Jena	Minden	Opelousas	Springhill
Baker	DeRidder	Lafayette	Monroe	Pineville	Sulphur
Bastrop	Eunice	Lake Charles	Morgan City	Prairieville	Thibodaux
Bossier City Covington	Franklin Hammond	LaPlace Leesville	Natchitoches	Ruston	Winnsboro
MISSISSIPPI
Amory	Columbia	Gulfport	Jackson	Newton	Pontotoc
Batesville	Columbus	Hattiesburg	Kosciusko	Olive Branch	Ripley
Bay St. Louis	Corinth	Hazlehurst	Magee	Oxford	Senatobia
Booneville	Forest	Hernando	McComb	Pearl	Starkville
Brookhaven	Greenwood	Houston	Meridian	Philadelphia	Tupelo
Carthage	Grenada	Iuka	New Albany	Picayune	Winona
SOUTH CAROLINA
Aiken	Chester	Georgetown	Laurens	North Charleston	Spartanburg
Anderson	Columbia	Greenwood	Lexington	North Greenville	Summerville
Batesburg-    Leesvile	Conway	Greer	Manning	North Myrtle    Beach	Sumter
Beaufort	Dillon	Hartsville	Marion	Orangeburg	Union
Camden	Easley	Irmo	Moncks Corner	Rock Hill	Walterboro
Cayce	Florence	Lake City	Myrtle Beach	Seneca	Winnsboro
Charleston	Gaffney	Lancaster	Newberry	Simpsonville	York
Cheraw
TENNESSEE
Alcoa	Crossville	Greenville	LaFollette	Murfreesboro *	Sparta
Athens	Dayton	Hixson	Lenior City	Newport	Tullahoma
Bristol	Elizabethton	Johnson City	Madisonville	Powell	Winchester
Cleveland	Gallatin	Kingsport	Morristown	Sevierville
*  Note:  Opened July 18, 2016

23

DIRECTORS
Ben F. Cheek, IV Chairman 1st Franklin Financial Corporation	John G. Sample, Jr. Senior Vice President and Chief Financial Officer Atlantic American Corporation
Ben F. Cheek, III Vice Chairman 1st Franklin Financial Corporation	C. Dean Scarborough Realtor
A. Roger Guimond Executive Vice President and Chief Financial Officer 1st Franklin Financial Corporation	Keith D. Watson President Bowen & Watson, Inc.
Jim H. Harris, III Founder / Co-owner Unichem Technologies Founder / Owner / President Moonrise Distillery

EXECUTIVE OFFICERS

Ben F. Cheek, IV

Chairman

Ben F. Cheek, III

Vice Chairman

Virginia C. Herring

President and Chief Executive Officer

A. Roger Guimond

Executive Vice President and Chief Financial Officer

Daniel E. Clevenger, II

Executive Vice President - Compliance

C. Michael Haynie

Executive Vice President - Human Resources

Kay S. O'Shields

Executive Vice President – Strategic and Organization Development

Chip Vercelli

Executive Vice President – General Counsel

Lynn E. Cox

Vice President / Corporate Secretary and Treasurer

LEGAL COUNSEL

Jones Day

1420 Peachtree Street, N.E.

Suite 800

Atlanta, Georgia  30309-3053

AUDITORS

Deloitte & Touche LLP

191 Peachtree Street, N.E.

Atlanta, Georgia  30303

24

EX-31.1

Exhibit 31.1

RULE 13a-14(a)/15d-14(a)

CERTIFICATIONS

I,  Virginia C. Herring, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of 1^st Franklin Financial Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

1.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:

August 12, 2016

 /s/ Virginia C. Herring

Virginia C. Herring, President and

Chief Executive Officer

EX-31.2

Exhibit 31.2

RULE 13a-14(a)/15d-14(a)

CERTIFICATIONS

I,  A. Roger Guimond, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of 1^st Franklin Financial Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

1.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:

August 12, 2016

/s/ A. Roger Guimond   

A. Roger Guimond,  Executive Vice   

President and Chief Financial Officer

EX-32.1

Exhibit 32.1

1^st FRANKLIN FINANCIAL CORPORATION

135 EAST TUGALO STREET

P.O. BOX 880

TOCCOA, GEORGIA  30577

TELEPHONE:  (706) 886-7571

August 12, 2016

Re:

Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002

Ladies and Gentlemen:

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the quarterly report of 1^st Franklin Financial Corporation (the "Company") for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission on Form 10-Q on the date hereof (the "Report"), the undersigned officer of the Company certifies, that, to such officer’s knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d)

of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Virginia C. Herring

Name:  Virginia C. Herring

Title:  President and Chief Executive Officer

EX-32.2

Exhibit 32.2

1^st FRANKLIN FINANCIAL CORPORATION

135 EAST TUGALO STREET

P.O. BOX 880

TOCCOA, GEORGIA  30577

TELEPHONE:  (706) 886-7571

August 12, 2016

Re:

Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002

Ladies and Gentlemen:

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the quarterly report of 1^st Franklin Financial Corporation (the "Company") for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on Form 10-Q on the date hereof (the "Report"), the undersigned officer of the Company certifies, that, to such officer’s knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d)

of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ A. Roger Guimond

Name:  A. Roger Guimond

Title:  Executive Vice President and

           Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 12, 2016
Entity Registrant Name	1st Franklin Financial Corporation
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Trading Symbol	ffc
Amendment Flag	false
Entity Central Index Key	0000038723
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Nonvoting Common Stock
Entity Common Stock, Shares Outstanding		168,300
Voting Common Stock
Entity Common Stock, Shares Outstanding		1,700

XML

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) - USD ($)		Jun. 30, 2016	Dec. 31, 2015
ASSETS
Cash and Cash Equivalents		$ 80,644,749	$ 51,449,417
Restricted Cash		2,663,977	9,335,466
LOANS:
Direct Cash Loans		449,619,836	494,836,733
Real Estate Loans		22,811,653	22,128,090
Sales Finance Contracts		31,236,573	30,071,077
Loans, Total		503,668,062	547,035,900
Unearned Finance Charges		56,760,222	65,699,425
Unearned Insurance Premiums and Commissions		36,201,849	41,446,393
Allowance for Loan Losses		36,200,000	33,500,000
Net Loans		374,505,991	406,390,082
INVESTMENT SECURITIES:
Available for Sale, at fair value		165,362,864	143,862,165
Held to Maturity, at amortized cost		14,308,129	17,058,181
Marketable Debt Securities, Total		179,670,993	160,920,346
EQUITY METHOD INVESTMENTS		25,130,891	24,989,505
Other Assets		23,250,409	21,328,993
ASSETS, Total		685,867,010	674,413,809
LIABILITIES AND STOCKHOLDERS' EQUITY
Senior Debt		401,083,868	388,489,295
Accrued Expenses and Other Liabilities		20,912,435	25,430,137
Subordinated Debt		35,718,934	36,004,009
LIABILITIES, Total		457,715,237	449,923,441
COMMITMENTS AND CONTINGENCIES	[1]
STOCKHOLDERS' EQUITY:
Preferred Stock	[2]
Common Stock	[3]	170,000	170,000
Accumulated Other Comprehensive Income		7,336,401	4,142,986
Retained Earnings		220,645,372	220,177,382
Stockholders' Equity, Total		228,151,773	224,490,368
LIABILITIES AND STOCKHOLDERS' EQUITY, TOTAL		685,867,010	674,413,809
Nonvoting Common Stock
STOCKHOLDERS' EQUITY:
Common Stock	[4]

[1] See Note 6.

[2] Preferred Stock: $100 par value, 6,000 shares authorized; no shares outstanding

[3] Common Stock: Voting Shares; $100 par value; 2,000 shares authorized; 1,700 shares outstanding.

[4] Non-Voting Shares; no par value; 198,000 shares authorized; 168,300 shares outstanding.

XML

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - Parenthetical (Unaudited) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Preferred Stock, Par Value	$ 100	$ 100
Preferred Stock, Shares Authorized	6,000	6,000
Voting Common Stock
Common Stock, Par Value	$ 100	$ 100
Common Stock, Shares Authorized	2,000	2,000
Common Stock, Shares Outstanding	1,700	1,700
Nonvoting Common Stock
Common Stock, Shares Authorized	198,000	198,000
Common Stock, Shares Outstanding	168,300	168,300

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CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited) - USD ($)		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
CONSOLIDATED STATEMENTS OF INCOME
Interest Income		$ 37,757,878	$ 36,836,987	$ 78,114,937	$ 74,860,439
Interest Expense		3,425,822	3,176,729	6,904,894	6,245,806
NET INTEREST INCOME		34,332,056	33,660,258	71,210,043	68,614,633
Provision for loan losses		11,272,680	6,528,953	22,451,680	12,751,029
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		23,059,376	27,131,305	48,758,363	55,863,604
NET INSURANCE INCOME
Premiums and Commissions		11,478,249	12,516,191	24,158,590	24,689,235
Insurance Claims and Expenses		2,830,733	3,573,368	5,631,985	6,181,212
Total Net Insurance Income, Total		8,647,516	8,942,823	18,526,605	18,508,023
OTHER REVENUE		1,434,958	1,217,290	1,986,594	2,160,838
OTHER OPERATING EXPENSES:
Personnel Expense		18,138,892	17,949,653	36,185,920	35,953,991
Occupancy Expense		3,575,912	3,472,837	7,029,538	6,911,201
Other Expense		7,003,870	6,269,733	14,191,887	14,398,498
Operating Expenses, Total		28,718,674	27,692,223	57,407,345	57,263,690
INCOME BEFORE INCOME TAXES		4,423,176	9,599,195	11,864,217	19,268,775
Provision for Income Taxes		1,274,302	971,199	2,745,797	2,084,789
Net Income (Loss)		3,148,874	8,627,996	9,118,420	17,183,986
RETAINED EARNINGS, Beginning of Period		223,379,048	212,392,699	220,177,382	204,613,711
Distributions on Common Stock		5,882,550	6,297,000	8,650,430	7,074,002
RETAINED EARNINGS, End of Period		$ 220,645,372	$ 214,723,695	$ 220,645,372	$ 214,723,695
BASIC EARNINGS PER SHARE	[1]	$ 18.52	$ 50.75	$ 53.64	$ 101.08

[1] Per share data is based on 170,000 Shares Outstanding for All Periods (1,700 voting, 168,300 non-voting).

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2016		Jun. 30, 2015		Jun. 30, 2016		Jun. 30, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net Income (Loss)	$ 3,148,874		$ 8,627,996		$ 9,118,420		$ 17,183,986
Other Comprehensive Income (Loss):
Unrealized gains (losses) during period	3,634,390		(3,148,206)		5,420,412		(3,297,626)
Income tax (provision) benefit	(1,239,124)		843,156		(2,226,472)		830,641
Net unrealized (losses) gains	2,395,266		(2,305,050)		3,193,940		(2,466,985)
Reclassification of (gains)/losses to Net Income (Loss)	525	[1]	41,523	[2]	525	[1]	41,523	[2]
Total Other Comprehensive Income (Loss)	2,394,741		(2,346,573)		3,193,415		(2,508,508)
Total Comprehensive Income	$ 5,543,615		$ 6,281,423		$ 12,311,835		$ 14,675,478

[1] Reclassified $795 to other operating expenses and $270 to provision for income taxes on the Condensed Consolidated Statements of Income and Retained Earnings (Unaudited) during the three- and six-month periods ended June 30, 2016, respectively.

[2] Reclassified $56,113 to other operating expenses and $14,590 to provision for income taxes on the Condensed Consolidated Statements of Income and Retained Earnings (Unaudited) during the three- and six-month periods ended June 30, 2015, respectively.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - Parenthetical (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reclassification to other operating expenses	$ 795	$ 56,113	$ 795	$ 56,113
Reclassification to provision for income taxes	$ 270	$ 14,590	$ 270	$ 14,590

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$ 9,118,420	$ 17,183,986
Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities:
Provision for loan losses	22,451,680	12,751,029
Depreciation and amortization	1,760,312	1,696,876
(Benefit) Provision for deferred income taxes	(434,782)	646,734
Earnings (loss) in equity method investment	(141,386)	(185,623)
Other	320,937	439,997
Decrease (increase) in miscellaneous other assets	991,546	(9,674,382)
Decrease in other liablities	(6,309,122)	(3,930,313)
Net Cash Provided by (Used in) Operating Activities	27,757,605	18,928,304
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans originated or purchased	(165,131,637)	(165,507,067)
Loan payments	174,564,048	171,964,643
Increase (decrease) in restricted cash	6,671,489	(582,839)
Purchases of marketable debt securities	(21,015,433)	(2,744,065)
Sales of marketable debt securities		797,246
Redemptions of marketable debt securities	7,360,000	8,650,000
Fixed asset additions, net	(4,669,808)	(1,966,549)
Net Cash Provided by (Used in) Investing Activities	(2,221,341)	10,611,369
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in senior demand notes outstanding	(4,666,391)	1,017,578
Advances on credit line	266,185	264,810
Payments on credit line	(266,185)	(264,810)
Commercial paper issued	31,794,845	28,852,577
Commercial paper redeemed	(14,533,881)	(11,556,015)
Subordinated debt securities issued	3,469,847	4,168,923
Subordinated debt securities redeemed	(3,754,922)	(5,209,266)
Dividends / Distributions	(8,650,430)	(7,074,002)
Net Cash Provided by (Used in) Financing Activities	3,659,068	10,199,795
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	29,195,332	39,739,468
CASH AND CASH EQUIVALENTS, beginning	51,449,417	14,726,542
CASH AND CASH EQUIVALENTS, ending	80,644,749	54,466,010
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for Interest	6,934,461	6,177,011
Cash paid during the period for Taxes	$ 3,617,000	$ 1,844,000

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Note 1 - Basis of Presentation

6 Months Ended

Jun. 30, 2016

Notes

Note 1 - Basis of Presentation

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of 1^st Franklin Financial Corporation and subsidiaries (the "Company") should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto as of December 31, 2015 and for the year then ended included in the Company's 2015 Annual Report filed with the Securities and Exchange Commission.

In the opinion of Management of the Company, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the Company's consolidated financial position as of June 30, 2016 and December 31, 2015, and its consolidated results of operations and comprehensive income for the three and six-month periods ended June 30, 2016 and 2015 and its consolidated cash flows for the six months ended June 30, 2016 and 2015. While certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, the Company believes that the disclosures herein are adequate to make the information presented not misleading.

The Company’s financial condition and results of operations as of and for the three- and six-month periods ended June 30, 2016 are not necessarily indicative of the results to be expected for the full fiscal year or any other future period.  The preparation of financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities at and as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ materially from those estimates.

The computation of earnings per share is self-evident from the accompanying Condensed Consolidated Statements of Income and Retained Earnings (Unaudited).  The Company has no dilutive securities outstanding.

Recent Accounting Pronouncements:

There have been no updates to recent accounting pronouncements reported in our 2015 annual report and no new pronouncements effective this year that Management believes would have a material impact on the Company.

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Note 2 - Allowance For Loan Losses

6 Months Ended

Jun. 30, 2016

Notes

Note 2 - Allowance For Loan Losses

Note 2 – Allowance for Loan Losses

The allowance for loan losses is based on Management's evaluation of the inherent risks and changes in the composition of the Company's loan portfolio.  Management’s approach to estimating and evaluating the allowance for loan losses is on a total portfolio level based on historical loss trends, bankruptcy trends, the level of receivables at the balance sheet date, payment patterns and economic conditions primarily including, but not limited to, unemployment levels and gasoline prices.  Historical loss trends are tracked on an on-going basis.  The trend analysis includes statistical analysis of the correlation between loan date and charge off date, charge off statistics by the total loan portfolio, and charge off statistics by branch, division and state.  Delinquency and bankruptcy filing trends are also tracked.  If trends indicate an adjustment to the allowance for loan losses is warranted, Management will make what it considers to be appropriate adjustments.  The level of receivables at the balance sheet date is reviewed and adjustments to the allowance for loan losses are made if Management determines increases or decreases in the level of receivables warrants an adjustment.  The Company uses monthly unemployment statistics, and various other monthly or periodic economic statistics, published by departments of the U.S. government and other economic statistics providers to determine the economic component of the allowance for loan losses.  Such allowance is, in the opinion of Management, sufficiently adequate for probable losses in the current loan portfolio.  As the estimates used in determining the loan loss reserve are influenced by outside factors, such as consumer payment patterns and general economic conditions, there is uncertainty inherent in these estimates.  Actual results could vary based on future changes in significant assumptions.

Management does not disaggregate the Company’s loan portfolio by loan class when evaluating loan performance.  The total portfolio is evaluated for credit losses based on contractual delinquency and other economic conditions. The Company classifies delinquent accounts at the end of each month according to the number of installments past due at that time, based on the then-existing terms of the contract.  Accounts are classified in delinquency categories based on the number of days past due.  When three installments are past due, Management classifies the account as being 60-89 days past due; when four or more installments are past due, Management classifies the account as being 90 days or more past due.  When a loan becomes five installments past due, it is charged off unless Management directs that it be retained as an active loan. In making this charge off evaluation, Management considers factors such as pending insurance, bankruptcy status and other indicators of collectability. In addition, no installment is counted as being past due if at least 80% of the contractual payment has been paid. In connection with any bankruptcy court-initiated repayment plan and as allowed by state regulatory authorities, the Company effectively resets the delinquency rating of each account to coincide with the court initiated repayment plan. The amount charged off is the unpaid balance less the unearned finance charges and the unearned insurance premiums, if applicable.

When a loan becomes 60 days or more past due based on its original terms, it is placed in nonaccrual status.  At such time, the accrual of any additional finance charges is discontinued.  Finance charges are then only recognized to the extent there is a loan payment received or when the account qualifies for return to accrual status.  Nonaccrual loans return to accrual status when the loan becomes less than 60 days past due.

There were no loans 60 days or more past due and still accruing interest at June 30, 2016 or December 31, 2015.  The Company’s principal balances on non-accrual loans by loan class as of June 30, 2016 and December 31, 2015 are as follows:

Loan Class	June 30,  2016	December 31,  2015
Consumer Loans	$ 24,876,649	$ 25,070,209
Real Estate Loans	1,219,505	846,894
Sales Finance Contracts	1,013,562	1,009,475
Total	$ 27,109,716	$ 26,925,578

An age analysis of principal balances on past due loans, segregated by loan class, as of June 30, 2016 and December 31, 2015 follows:

June 30, 2016	30-59 Days Past Due	60-89 Days Past Due	90 Days or More Past Due	Total Past Due Loans
Consumer Loans	$ 14,967,358	$ 8,624,553	$ 16,355,155	$ 39,947,066
Real Estate Loans	461,593	207,729	877,829	1,547,151
Sales Finance Contracts	582,184	338,546	642,961	1,563,691
Total	$ 16,011,135	$ 9,170,828	$ 17,875,945	$ 43,057,908

December 31, 2015	30-59 Days Past Due	60-89 Days Past Due	90 Days or More Past Due	Total Past Due Loans
Consumer Loans	$ 13,836,033	$ 8,073,384	$ 15,895,050	$ 37,804,467
Real Estate Loans	321,249	161,974	480,929	964,152
Sales Finance Contracts	498,374	346,930	584,919	1,430,223
Total	$ 14,655,656	$ 8,582,288	$ 16,960,898	$ 40,198,842

In addition to the delinquency rating analysis, the ratio of bankrupt accounts to the total loan portfolio is also used as a credit quality indicator.  The ratio of bankrupt accounts outstanding to total principal loan balances outstanding at June 30, 2016 and December 31, 2015 was 2.66% and 2.40%, respectively.

Nearly our entire loan portfolio consists of small homogeneous consumer loans (of the product types set forth in the table below). 

June 30, 2016	Principal Balance	% Portfolio	6 Months Net Charge Off (Recoveries)	% Net Charge Offs
Consumer Loans	$ 447,818,672	89.4 %	$ 19,114,687	96.8
Real Estate Loans	22,360,620	4.4	(5,480)	-
Sales Finance Contracts.	30,982,347	6.2	642,473	3.2
Total	$ 501,161,639	100.0 %	$ 19,751,680	100.0 %

June 30, 2015	Principal Balance	% Portfolio	6 Months Net Charge Offs	% Net Charge Offs
Consumer Loans	$ 442,293,400	90.1 %	$ 12,470,695	97.8
Real Estate Loans	21,268,492	4.3	(2,747)	-
Sales Finance Contracts	27,592,288	5.6	283,081	2.2
Total	$ 491,154,180	100.0 %	$ 12,751,029	100.0 %

Sales finance contracts are similar to consumer loans in nature of loan product, terms, customer base to whom these products are marketed, factors contributing to risk of loss and historical payment performance, and together with consumer loans, represented approximately 96% of principal balances outstanding in Company’s loan portfolio at June 30, 2016 and 2015.  As a result of these similarities, which have resulted in similar historical performance, consumer loans and sales finance contracts represent substantially all loan losses.  Real estate loans and related losses have historically been insignificant, and, as a result, we do not stratify the loan portfolio for purposes of determining and evaluating our loan loss allowance.  Due to the composition of the loan portfolio, the Company determines and monitors the allowance for loan losses on a collectively evaluated, single portfolio segment basis.  Therefore, a roll forward of the allowance for loan loss activity at the portfolio segment level is the same as at the total portfolio level.  We have not acquired any impaired loans with deteriorating quality during any period reported.  The following table provides additional information on our allowance for loan losses based on a collective evaluation:

	Three Months Ended		Six Months Ended
	June 30, 2016	June 30, 2015	June 30, 2016	June 30, 2015
Allowance for Credit Losses:
Beginning Balance	$ 34,500,000	$ 28,620,000	$ 33,500,000	$ 28,620,000
Provision for Loan Losses	11,272,680	6,528,953	22,451,680	12,751,029
Charge-offs	(12,325,334)	(8,940,284)	(25,428,484)	(17,800,005)
Recoveries	2,752,654	2,411,331	5,676,804	5,048,976
Ending Balance	$ 36,200,000	$ 28,620,000	$ 36,200,000	$ 28,620,000
Ending Balance; collectively evaluated for impairment	$ 36,200,000	$ 28,620,000	$ 36,200,000	$ 28,620,000
Finance receivables:
Ending Balance	$ 501,161,639	$ 491,154,180	$ 501,161,639	$ 491,154,180
Ending Balance; collectively evaluated for impairment	$ 501,161,639	$ 491,154,180	$ 501,161,639	$ 491,154,180

Troubled Debt Restructings ("TDR's") represent loans on which the original terms of the loans have been modified as a result of the following conditions: (i) the restructuring constitutes a concession and (ii) the borrower is experiencing financial difficulties. Loan modifications by the Company involve payment alterations, interest rate concessions and/ or reductions in the amount owed by the borrower.  The following table presents a summary of loans that were restructured during the three months ended June 30, 2016.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	2,797	$ 5,669,352	$ 5,443,901
Real Estate Loans	4	37,071	37,071
Sales Finance Contracts	86	196,502	179,493
Total	2,887	$ 5,902,925	$ 5,660,465

The following table presents a summary of loans that were restructured during the three months ended June 30, 2015.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	2,031	$ 4,362,336	$ 4,111,093
Real Estate Loans	12	101,501	95,640
Sales Finance Contracts	67	123,912	112,384
Total	2,110	$ 4,587,749	$ 4,319,117

The following table presents a summary of loans that were restructured during the six months ended June 30, 2016.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	5,254	$ 10,486,236	$ 9,976,972
Real Estate Loans	15	156,745	156,746
Sales Finance Contracts	186	396,701	366,078
Total	5,455	$ 11,039,682	$ 10,499,796

The following table presents a summary of loans that were restructured during the six months ended June 30, 2015.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	3,055	$ 7,022,140	$ 6,628,457
Real Estate Loans	21	177,574	171,663
Sales Finance Contracts	114	217,208	202,764
Total	3,190	$ 7,416,922	$ 7,002,884

TDRs that occurred during the previous twelve months and subsequently defaulted during the three months ended June 30, 2016 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	1,186	$ 1,635,616
Real Estate Loans	1	1,358
Sales Finance Contracts	39	73,366
Total	1,226	$ 1,710,340

TDRs that occurred during the twelve months ended June 30, 2015 and subsequently defaulted during the three months ended June 30, 2015 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	560	$ 798,237
Real Estate Loans	-	-
Sales Finance Contracts	25	28,184
Total	585	$ 826,421

TDRs that occurred during the previous twelve months and subsequently defaulted during the six months ended June 30, 2016 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	1,911	$ 2,728,640
Real Estate Loans	1	1,358
Sales Finance Contracts	75	125,229
Total	1,987	$ 2,855,227

TDRs that occurred during the twelve months ended June 30, 2015 and subsequently defaulted during the six months ended June 30, 2015 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	728	$ 1,089,968
Real Estate Loans	1	1,000
Sales Finance Contracts	31	33,522
Total	760	$ 1,124,490

The level of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of allowance of loan losses.

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Note 3 - Investment Securities

6 Months Ended

Jun. 30, 2016

Notes

Note 3 - Investment Securities

Note 3 – Investment Securities

Debt securities available-for-sale are carried at estimated fair value. Debt securities designated as "Held to Maturity" are carried at amortized cost based on Management's intent and ability to hold such securities to maturity.  The amortized cost and estimated fair values of these debt securities were as follows:

	As of June 30, 2016		As of December 31, 2015
	Amortized Cost	Estimated Fair Value	Amortized Cost	Estimated Fair Value
Available-for-Sale:
Obligations of states and political subdivisions	$ 154,204,218	$ 165,062,835	$ 138,123,137	$ 143,533,384
Corporate securities	130,316	300,029	130,316	328,781
	$ 154,334,534	$ 165,362,864	$ 138,253,453	$ 143,862,165
Held to Maturity:
Obligations of states andpolitical subdivisions	$ 14,308,129	$ 14,311,281	$ 17,058,181	$ 17,171,053

Gross unrealized losses on investment securities totaled $210,125 and $342,867 at June 30, 2016 and December 31, 2015, respectively.  The following table provides an analysis of investment securities in an unrealized loss position for which other-than-temporary impairments have not been recognized as of June 30, 2016 and December 31, 2015:

	Less than 12 Months		12 Months or Longer		Total
June 30, 2016	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$ 897,966	$ (10,873)	$ -	$ -	$ 897,966	$ (10,873)
Held to Maturity:
Obligations of states and political subdivisions	4,149,804	(69,901)	2,555,452	(129,351)	6,705,256	(199,252)
Overall Total	$ 5,047,770	$ (80,774)	$ 2,555,452	$ (129,351)	$ 7,603,222	$ (210,125)

	Less than 12 Months		12 Months or Longer		Total
December 31, 2015	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$ 7,154,930	$ (75,054)	$ 4,287,447	$ (137,308)	$ 11,442,377	$ (212,362)
Held to Maturity:
Obligations of states and political subdivisions	4,471,673	(61,813)	1,406,089	(68,692)	5,877,762	(130,505)
Overall Total	$ 11,626,603	$ (125,024)	$ 5,693,536	$ (206,000)	$ 17,320,139	$ (342,867)

The previous two tables represent 6 and 25 investments held by the Company at June 30, 2016 and December 31, 2015, respectively, the majority of which are rated “A” or higher by Standard & Poor’s.  The unrealized losses on the Company’s investments listed in the above table were primarily the result of interest rate and market fluctuations.  Based on the credit ratings of these investments, along with the consideration of whether the Company has the intent to sell or will be more likely than not required to sell the applicable investment before recovery of amortized cost basis, the Company does not consider the impairment of any of these investments to be other-than-temporary at June 30, 2016 or December 31, 2015.

The Company’s insurance subsidiaries internally designate certain investments as restricted to cover their policy reserves and loss reserves.  Funds are held in separate trusts for the benefit of each insurance subsidiary at U.S. Bank National Association ("US Bank").  US Bank serves as trustee under trust agreements with the Company's property and casualty insurance company subsidiary, as grantor, and the non-affiliated insurance companies (who underwrite the policies), as beneficiaries.  At June 30, 2016, these trust accounts held $29.8 million in available-for-sale investment securities at market value and $7.9 million in held-to-maturity investment securities at amortized cost.  US Bank also serves as trustee under trust agreements with the Company's life insurance subsidiary, as grantor, and non-affiliated insurance companies (who underwrite the policies), as beneficiaries.  At June 30, 2016, these trust accounts held $5.2 million in available-for-sale investment securities at market value.  The amounts required to be in each Trust change as required reserves change.  All earnings on assets in the trusts are remitted to the Company's insurance subsidiaries.

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Note 4 - Fair Value

6 Months Ended

Jun. 30, 2016

Notes

Note 4 - Fair Value

Note 4 – Fair Value

Under Accounting Standards Codification No. 820 ("ASC No. 820"), fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The following fair value hierarchy is used in selecting inputs used to determine the fair value of an asset or liability, with the highest priority given to Level 1, as these are the most transparent or reliable.  A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurements.

         Level 1 - Quoted prices for identical instruments in active markets.

         Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

          Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

The following methods and assumptions are used by the Company in estimating fair values of its financial instruments:

Cash and Cash Equivalents:  Cash includes cash on hand and with banks.  Cash equivalents are short-term highly liquid investments with original maturities of three months or less.   The carrying value of cash and cash equivalents approximates fair value due to the relatively short period of time between origination of the instruments and their expected realization.  The estimate of the fair value of cash and cash equivalents is classified as a Level 1 financial asset.

Loans:  The carrying value of the Company’s direct cash loans and sales finance contracts approximates the fair value since the estimated life, assuming prepayments, is short-term in nature.  The fair value of the Company’s real estate loans approximate the carrying value since the interest rate charged by the Company approximates market rate.  The estimate of fair value of loans is classified as a Level 3 financial asset.

Marketable Debt Securities:  The Company values Level 2 securities using various observable market inputs obtained from a pricing service. The pricing service prepares evaluations of fair value for our Level 2 securities using proprietary valuation models based on techniques such as multi-dimensional relational models, and series of matrices that use observable market inputs. The fair value measurements and disclosures guidance defines observable market inputs as the assumptions market participants would use in pricing the asset developed on market data obtained from sources independent of the Company. The extent of the use of each observable market input for a security depends on the type of security and the market conditions at the balance sheet date. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary. The Company uses the following observable market inputs (“standard inputs”), listed in the approximate order of priority, in the pricing evaluation of Level 2 securities: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research data.  State, municipalities and political subdivisions securities are priced by our pricing service using material event notices and new issue data inputs in addition to the standard inputs.  See additional information, including the table below, regarding fair value under ASC No. 820, and the  fair value measurement of available-for-sale marketable debt securities.

Equity Method Investment:  The fair value of the equity method investment is estimated based on the Company's allocable share of the investee net asset as of the reporting date.

Senior Debt Securities:  The carrying value of the Company’s senior debt securities approximates fair value due to the relatively short period of time between the origination of the instruments and their expected repayment.  The estimate of fair value of senior debt securities is classified as a Level 2 financial liability.

Subordinated Debt Securities:  The carrying value of the Company’s variable rate subordinated debt securities approximates fair value due to the re-pricing frequency of the securities.  The estimate of fair value of subordinated debt securities is classified as a  Level 2 financial liability.

The Company is responsible for the valuation process and as part of this process may use data from outside sources in establishing fair value.  The Company performs due diligence to understand the inputs and how the data was calculated or derived.  The Company employs a market approach in the valuation of its obligations of states, political subdivisions and municipal revenue bonds that are available-for-sale.  These investments are valued on the basis of current market quotations provided by independent pricing services selected by Management based on the advice of an investment manager.  To determine the value of a particular investment, these independent pricing services may use certain information with respect to market transactions in such investment or comparable investments, various relationships observed in the market between investments, quotations from dealers, and pricing metrics and calculated yield measures based on valuation methodologies commonly employed in the market for such investments. Quoted prices are subject to our internal price verification procedures.  We validate prices received using a variety of methods including, but not limited, to comparison to other pricing services or corroboration of pricing by reference to independent market data such as a secondary broker.  There was no change in this methodology during any period reported.

Assets measured at fair value as of June 30, 2016 and December 31, 2015 were available-for-sale investment securities which are summarized below:

	Fair Value Measurements at Reporting Date Using
		Quoted Prices
		In Active	Significant
		Markets for	Other	Significant
		Identical	Observable	Unobservable
	June 30,	Assets	Inputs	Inputs
Description	2016	(Level 1)	(Level 2)	(Level 3)
Corporate securities	$ 300,029	$ 300,029	$ --	$ --
Obligations of states and political subdivisions	165,062,835	--	165,062,835	--
Total	$ 165,362,864	$ 300,029	$ 165,062,835	$ --

	Fair Value Measurements at Reporting Date Using
		Quoted Prices
		In Active	Significant
		Markets for	Other	Significant
		Identical	Observable	Unobservable
	December 31,	Assets	Inputs	Inputs
Description	2015	(Level 1)	(Level 2)	(Level 3)
Corporate securities	$ 328,781	$ 328,781	$ --	$ --
Obligations of states and political subdivisions	143,533,384	--	143,533,384	--
Total	$ 143,862,165	$ 328,781	$ 143,533,384	$ --

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Note 5 - Equity Method Investment

6 Months Ended

Jun. 30, 2016

Notes

Note 5 - Equity Method Investment

Note 5 – Equity Method Investment

The Company has one investment in Meritage Capital, Centennial Absolute Return Fund, L.P. (the "Fund") accounted for using the equity method of accounting.  The carrying value of this investment was $25.1 million and $25.0 million as of June 30, 2016 and December 31, 2015, respectively.  The Company earned $.4 million and $.1 million from this investment during the three- and six-month periods ended June 30, 2016, respectively, compared to $.1 million and $.2 million during the same comparable periods a year ago.  The income was recorded in Other Revenue on the Company's Unaudited Condensed Consolidated Statements of Income and Retained Earnings.  With at least 60 days notice, the Company has the ability to redeem its investment in the Fund at the end of any calendar quarter.  The Company has no investment commitments to the Fund.

Condensed financial statement information of the equity method investment is as follows:

	June 30, 2016	December 31, 2015
Company's equity method investment	$ 25,130,891	$ 24,989,505
Partnership assets	$ 102,705,603	$ 97,456,613
Partnership liabilities	$ 171,316	$ 148,566
Partnership net income (loss)	$ 945,301(a)	$ (3,344,462)(b)

               Note  (a)  Represents 6 months of net income.

                        (b)  Represents 12 months of net loss.

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Note 6 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Notes

Note 6 - Commitments and Contingencies

Note 6 – Commitments and Contingencies

The Company is, and expects in the future to be, involved in various legal proceedings incidental to its business from time to time.  Management makes provisions in its financial statements for legal, regulatory, and other contingencies when, in the opinion of Management, a loss is probable and reasonably estimable.  At June 30, 2016, no such known proceedings or amounts, individually or in the aggregate, were expected to have a material impact on the Company or its financial condition or results of operations.

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Note 7 - Income Taxes

6 Months Ended

Jun. 30, 2016

Notes

Note 7 - Income Taxes

Note 7 – Income Taxes

Effective income tax rates were 29% and 23% during the three- and six-month periods ended June 30, 2016, respectively compared to 10% and 11% and during each of the same periods during 2015.  The Company has elected to be, and is, treated as an S corporation for income tax reporting purposes.  Taxable income or loss of an S corporation is passed through to, and included in the individual tax returns, of the shareholders of the Company, rather than being taxed at the corporate level.  Notwithstanding this election, income taxes are reported for, and paid by, the Company's insurance subsidiaries, as they are not allowed by law to be treated as S corporations, as well as for the Company in Louisiana, which does not recognize S corporation status.  The tax rates of the Company’s insurance subsidiaries are below statutory rates due to investments in tax exempt bonds held by the Company’s insurance subsidiaries.  Tax rates increased during the current year periods due to a higher earnings in the insurance subsidiaries.

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Note 8 - Credit Agreement

6 Months Ended

Jun. 30, 2016

Notes

Note 8 - Credit Agreement

Note 8 – Credit Agreement

Effective September 11, 2009, the Company entered into a credit facility with Wells Fargo Preferred Capital, Inc.  The credit agreement provides for borrowings of up to $100.0 million or 70% of the Company's net finance receivables (as defined in the Credit Agreement), whichever is less and has a maturity date of September 11, 2018.  Available borrowings under the credit agreement were $100.0 million at June 30, 2016 and December 31, 2015, at an interest rate of 3.75%.  The credit agreement contains covenants customary for financing transactions of this type.  At June 30, 2016, the Company was in compliance with all covenants.

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Note 9 - Related Party Transactions

6 Months Ended

Jun. 30, 2016

Notes

Note 9 - Related Party Transactions

Note 9 – Related Party Transactions

The Company engages from time to time in transactions with related parties.  Please refer to the disclosure contained in Note 10 “Related Party Transactions” in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015 for additional information on such transactions.

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Note 10 - Segment Financial Information

6 Months Ended

Jun. 30, 2016

Notes

Note 10 - Segment Financial Information

Note 10 – Segment Financial Information

The Company discloses segment information in accordance with FASB ASC 280.  FASB ASC 280 requires companies to determine segments based on how management makes decisions about allocating resources to segments and measuring their performance.  The Company operates in five operating divisions that comprise one reportable business segment.

The Company has five operating divisions which comprise it operations:  Division I through Division V.  Each division consists of a number of branch offices that are aggregated based on vice president responsibility and geographic location.  Division I consists of offices located in South Carolina.  Offices in North Georgia comprise Division II, Division III consists of offices in South Georgia.  Division IV represents our Alabama and Tennessee offices, and our offices in Louisiana and Mississippi encompass Division V.

Accounting policies of each of the divisions are the same as those for the Company as a whole.  Performance is measured based on objectives set at the beginning of each year and include various factors such as division profit, growth in earning assets and delinquency and loan loss management.  All division revenues result from transactions with third parties.  The Company does not allocate income taxes or corporate headquarter expenses to the divisions.

The following table summarizes revenues, profit and assets by each of the Company's divisions.  Also in accordance therewith, a reconciliation to consolidated net income is provided.

	Division	Division	Division	Division	Division
	I	II	III	IV	V	Total
	(in thousands)
Division Revenues:
3 Months ended 6/30/2016	$ 6,695	$ 11,376	$ 10,693	$ 10,162	$ 8,346	$ 47,272
3 Months ended 6/30/2015	$ 6,525	$ 11,221	$ 10,162	$ 9,563	$ 8,438	$ 45,909
6 Months ended 6/30/2016	$ 13,937	$ 23,612	$ 22,035	$ 20,778	$ 17,526	$ 97,888
6 Months ended 6/30/2015	$ 13,414	$ 23,060	$ 20,885	$ 19,415	$ 17,236	$ 94,010
Division Profit:
3 Months ended 6/30/2016	$ 1,454	$ 4,554	$ 4,470	$ 3,272	$ 1,924	$ 15,674
3 Months ended 6/30/2015	$ 2,243	$ 5,192	$ 4,428	$ 3,573	$ 2,981	$ 18,417
6 Months ended 6/30/2016	$ 3,416	$ 9,813	$ 9,359	$ 7,146	$ 4,485	$ 34,219
6 Months ended 6/30/2015	$ 4,807	$ 11,270	$ 9,556	$ 7,548	$ 6,304	$ 39,485

Division Assets:
6/30/2016	$ 57,964	$ 103,059	$ 96,969	$ 104,809	$ 73,485	$ 436,286
12/31/2015	65,026	110,524	103,027	109,469	81,984	470,030

	3 Months Ended 6/30/2016	3 Months Ended 6/30/2015	6 Months Ended 6/30/2016	6 Months Ended 6/30/2015
	(in thousands)
Reconciliation of Profit:
Profit per division	$ 15,674	$ 18,417	$ 34,219	$ 39,485
Corporate earnings not allocated	3,399	4,662	6,373	7,701
Corporate expenses not allocated	(14,650)	(13,479)	(28,728)	(27,917)
Income taxes not allocated	(1,275)	(972)	(2,746)	(2,085)
Net income	$ 3,148	$ 8,628	$ 9,118	$ 17,184

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Note 1 - Basis of Presentation: Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2016

Policies

Recent Accounting Pronouncements:

Recent Accounting Pronouncements:

There have been no updates to recent accounting pronouncements reported in our 2015 annual report and no new pronouncements effective this year that Management believes would have a material impact on the Company.

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Note 2 - Allowance For Loan Losses: Loans Receivable, Nonaccrual status policy (Policies)

6 Months Ended

Jun. 30, 2016

Policies

Loans Receivable, Nonaccrual status policy

When a loan becomes 60 days or more past due based on its original terms, it is placed in nonaccrual status.  At such time, the accrual of any additional finance charges is discontinued.  Finance charges are then only recognized to the extent there is a loan payment received or when the account qualifies for return to accrual status.  Nonaccrual loans return to accrual status when the loan becomes less than 60 days past due.

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Note 2 - Allowance For Loan Losses: Schedule of Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of Allowance for Loan Losses

Loan Class	June 30,  2016	December 31,  2015
Consumer Loans	$ 24,876,649	$ 25,070,209
Real Estate Loans	1,219,505	846,894
Sales Finance Contracts	1,013,562	1,009,475
Total	$ 27,109,716	$ 26,925,578

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Note 2 - Allowance For Loan Losses: Past Due Financing Receivables (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Past Due Financing Receivables

June 30, 2016	30-59 Days Past Due	60-89 Days Past Due	90 Days or More Past Due	Total Past Due Loans
Consumer Loans	$ 14,967,358	$ 8,624,553	$ 16,355,155	$ 39,947,066
Real Estate Loans	461,593	207,729	877,829	1,547,151
Sales Finance Contracts	582,184	338,546	642,961	1,563,691
Total	$ 16,011,135	$ 9,170,828	$ 17,875,945	$ 43,057,908

December 31, 2015	30-59 Days Past Due	60-89 Days Past Due	90 Days or More Past Due	Total Past Due Loans
Consumer Loans	$ 13,836,033	$ 8,073,384	$ 15,895,050	$ 37,804,467
Real Estate Loans	321,249	161,974	480,929	964,152
Sales Finance Contracts	498,374	346,930	584,919	1,430,223
Total	$ 14,655,656	$ 8,582,288	$ 16,960,898	$ 40,198,842

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Note 2 - Allowance For Loan Losses: Schedule of Loans and Financing Receivable (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of Loans and Financing Receivable

June 30, 2016	Principal Balance	% Portfolio	6 Months Net Charge Off (Recoveries)	% Net Charge Offs
Consumer Loans	$ 447,818,672	89.4 %	$ 19,114,687	96.8
Real Estate Loans	22,360,620	4.4	(5,480)	-
Sales Finance Contracts.	30,982,347	6.2	642,473	3.2
Total	$ 501,161,639	100.0 %	$ 19,751,680	100.0 %

June 30, 2015	Principal Balance	% Portfolio	6 Months Net Charge Offs	% Net Charge Offs
Consumer Loans	$ 442,293,400	90.1 %	$ 12,470,695	97.8
Real Estate Loans	21,268,492	4.3	(2,747)	-
Sales Finance Contracts	27,592,288	5.6	283,081	2.2
Total	$ 491,154,180	100.0 %	$ 12,751,029	100.0 %

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Note 2 - Allowance For Loan Losses: Allowance for Credit Losses on Financing Receivables (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Allowance for Credit Losses on Financing Receivables

	Three Months Ended		Six Months Ended
	June 30, 2016	June 30, 2015	June 30, 2016	June 30, 2015
Allowance for Credit Losses:
Beginning Balance	$ 34,500,000	$ 28,620,000	$ 33,500,000	$ 28,620,000
Provision for Loan Losses	11,272,680	6,528,953	22,451,680	12,751,029
Charge-offs	(12,325,334)	(8,940,284)	(25,428,484)	(17,800,005)
Recoveries	2,752,654	2,411,331	5,676,804	5,048,976
Ending Balance	$ 36,200,000	$ 28,620,000	$ 36,200,000	$ 28,620,000
Ending Balance; collectively evaluated for impairment	$ 36,200,000	$ 28,620,000	$ 36,200,000	$ 28,620,000
Finance receivables:
Ending Balance	$ 501,161,639	$ 491,154,180	$ 501,161,639	$ 491,154,180
Ending Balance; collectively evaluated for impairment	$ 501,161,639	$ 491,154,180	$ 501,161,639	$ 491,154,180

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Note 2 - Allowance For Loan Losses: Troubled Debt Restructurings on Financing Receivables (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Troubled Debt Restructurings on Financing Receivables

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	2,797	$ 5,669,352	$ 5,443,901
Real Estate Loans	4	37,071	37,071
Sales Finance Contracts	86	196,502	179,493
Total	2,887	$ 5,902,925	$ 5,660,465

The following table presents a summary of loans that were restructured during the three months ended June 30, 2015.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	2,031	$ 4,362,336	$ 4,111,093
Real Estate Loans	12	101,501	95,640
Sales Finance Contracts	67	123,912	112,384
Total	2,110	$ 4,587,749	$ 4,319,117

The following table presents a summary of loans that were restructured during the six months ended June 30, 2016.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	5,254	$ 10,486,236	$ 9,976,972
Real Estate Loans	15	156,745	156,746
Sales Finance Contracts	186	396,701	366,078
Total	5,455	$ 11,039,682	$ 10,499,796

The following table presents a summary of loans that were restructured during the six months ended June 30, 2015.

	Number Of Loans	Pre-Modification Recorded Investment	Post-Modification Recorded Investment
Consumer Loans	3,055	$ 7,022,140	$ 6,628,457
Real Estate Loans	21	177,574	171,663
Sales Finance Contracts	114	217,208	202,764
Total	3,190	$ 7,416,922	$ 7,002,884

TDRs that occurred during the previous twelve months and subsequently defaulted during the three months ended June 30, 2016 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	1,186	$ 1,635,616
Real Estate Loans	1	1,358
Sales Finance Contracts	39	73,366
Total	1,226	$ 1,710,340

TDRs that occurred during the twelve months ended June 30, 2015 and subsequently defaulted during the three months ended June 30, 2015 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	560	$ 798,237
Real Estate Loans	-	-
Sales Finance Contracts	25	28,184
Total	585	$ 826,421

TDRs that occurred during the previous twelve months and subsequently defaulted during the six months ended June 30, 2016 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	1,911	$ 2,728,640
Real Estate Loans	1	1,358
Sales Finance Contracts	75	125,229
Total	1,987	$ 2,855,227

TDRs that occurred during the twelve months ended June 30, 2015 and subsequently defaulted during the six months ended June 30, 2015 are listed below.

	Number Of Loans	Pre-Modification Recorded Investment
Consumer Loans	728	$ 1,089,968
Real Estate Loans	1	1,000
Sales Finance Contracts	31	33,522
Total	760	$ 1,124,490

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Note 3 - Investment Securities: Schedule of amortized cost and estimated fair values of debt securities (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of amortized cost and estimated fair values of debt securities

	As of June 30, 2016		As of December 31, 2015
	Amortized Cost	Estimated Fair Value	Amortized Cost	Estimated Fair Value
Available-for-Sale:
Obligations of states and political subdivisions	$ 154,204,218	$ 165,062,835	$ 138,123,137	$ 143,533,384
Corporate securities	130,316	300,029	130,316	328,781
	$ 154,334,534	$ 165,362,864	$ 138,253,453	$ 143,862,165
Held to Maturity:
Obligations of states andpolitical subdivisions	$ 14,308,129	$ 14,311,281	$ 17,058,181	$ 17,171,053

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Note 3 - Investment Securities: Schedule of Investment Securities Amortized Cost And Estimated Fair Value (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of Investment Securities Amortized Cost And Estimated Fair Value

	Less than 12 Months		12 Months or Longer		Total
June 30, 2016	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$ 897,966	$ (10,873)	$ -	$ -	$ 897,966	$ (10,873)
Held to Maturity:
Obligations of states and political subdivisions	4,149,804	(69,901)	2,555,452	(129,351)	6,705,256	(199,252)
Overall Total	$ 5,047,770	$ (80,774)	$ 2,555,452	$ (129,351)	$ 7,603,222	$ (210,125)

	Less than 12 Months		12 Months or Longer		Total
December 31, 2015	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$ 7,154,930	$ (75,054)	$ 4,287,447	$ (137,308)	$ 11,442,377	$ (212,362)
Held to Maturity:
Obligations of states and political subdivisions	4,471,673	(61,813)	1,406,089	(68,692)	5,877,762	(130,505)
Overall Total	$ 11,626,603	$ (125,024)	$ 5,693,536	$ (206,000)	$ 17,320,139	$ (342,867)

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Note 4 - Fair Value: Fair Value Measurements, by Fair Value hierarchy (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Fair Value Measurements, by Fair Value hierarchy

	Fair Value Measurements at Reporting Date Using
		Quoted Prices
		In Active	Significant
		Markets for	Other	Significant
		Identical	Observable	Unobservable
	June 30,	Assets	Inputs	Inputs
Description	2016	(Level 1)	(Level 2)	(Level 3)
Corporate securities	$ 300,029	$ 300,029	$ --	$ --
Obligations of states and political subdivisions	165,062,835	--	165,062,835	--
Total	$ 165,362,864	$ 300,029	$ 165,062,835	$ --

	Fair Value Measurements at Reporting Date Using
		Quoted Prices
		In Active	Significant
		Markets for	Other	Significant
		Identical	Observable	Unobservable
	December 31,	Assets	Inputs	Inputs
Description	2015	(Level 1)	(Level 2)	(Level 3)
Corporate securities	$ 328,781	$ 328,781	$ --	$ --
Obligations of states and political subdivisions	143,533,384	--	143,533,384	--
Total	$ 143,862,165	$ 328,781	$ 143,533,384	$ --

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Note 5 - Equity Method Investment: Equity Method Investments (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Equity Method Investments

	June 30, 2016	December 31, 2015
Company's equity method investment	$ 25,130,891	$ 24,989,505
Partnership assets	$ 102,705,603	$ 97,456,613
Partnership liabilities	$ 171,316	$ 148,566
Partnership net income (loss)	$ 945,301(a)	$ (3,344,462)(b)

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Note 10 - Segment Financial Information: Schedule of Segment Reporting Information, by Segment (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of Segment Reporting Information, by Segment

	Division	Division	Division	Division	Division
	I	II	III	IV	V	Total
	(in thousands)
Division Revenues:
3 Months ended 6/30/2016	$ 6,695	$ 11,376	$ 10,693	$ 10,162	$ 8,346	$ 47,272
3 Months ended 6/30/2015	$ 6,525	$ 11,221	$ 10,162	$ 9,563	$ 8,438	$ 45,909
6 Months ended 6/30/2016	$ 13,937	$ 23,612	$ 22,035	$ 20,778	$ 17,526	$ 97,888
6 Months ended 6/30/2015	$ 13,414	$ 23,060	$ 20,885	$ 19,415	$ 17,236	$ 94,010
Division Profit:
3 Months ended 6/30/2016	$ 1,454	$ 4,554	$ 4,470	$ 3,272	$ 1,924	$ 15,674
3 Months ended 6/30/2015	$ 2,243	$ 5,192	$ 4,428	$ 3,573	$ 2,981	$ 18,417
6 Months ended 6/30/2016	$ 3,416	$ 9,813	$ 9,359	$ 7,146	$ 4,485	$ 34,219
6 Months ended 6/30/2015	$ 4,807	$ 11,270	$ 9,556	$ 7,548	$ 6,304	$ 39,485

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Note 10 - Segment Financial Information: Reconciliation of Operating Profit (Loss) from Segments to Consolidated (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

Division Assets:
6/30/2016	$ 57,964	$ 103,059	$ 96,969	$ 104,809	$ 73,485	$ 436,286
12/31/2015	65,026	110,524	103,027	109,469	81,984	470,030

	3 Months Ended 6/30/2016	3 Months Ended 6/30/2015	6 Months Ended 6/30/2016	6 Months Ended 6/30/2015
	(in thousands)
Reconciliation of Profit:
Profit per division	$ 15,674	$ 18,417	$ 34,219	$ 39,485
Corporate earnings not allocated	3,399	4,662	6,373	7,701
Corporate expenses not allocated	(14,650)	(13,479)	(28,728)	(27,917)
Income taxes not allocated	(1,275)	(972)	(2,746)	(2,085)
Net income	$ 3,148	$ 8,628	$ 9,118	$ 17,184

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Note 2 - Allowance For Loan Losses (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Details
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	$ 0	$ 0
Ratio of bankrupt accounts to total principal loan balances	2.66%	2.40%

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Note 2 - Allowance For Loan Losses: Schedule of Allowance for Loan Losses (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 27,109,716	$ 26,925,578
Cosumer Loans
Financing Receivable, Recorded Investment, Nonaccrual Status	24,876,649	25,070,209
Real Estate Loans
Financing Receivable, Recorded Investment, Nonaccrual Status	1,219,505	846,894
Sales Finance Contracts
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 1,013,562	$ 1,009,475

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Note 2 - Allowance For Loan Losses: Past Due Financing Receivables (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due	$ 43,057,908	$ 40,198,842
Cosumer Loans
Financing Receivable, Recorded Investment, Past Due	39,947,066	37,804,467
Real Estate Loans
Financing Receivable, Recorded Investment, Past Due	1,547,151	964,152
Sales Finance Contracts
Financing Receivable, Recorded Investment, Past Due	1,563,691	1,430,223
Financing Receivables, 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due	16,011,135	14,655,656
Financing Receivables, 30 to 59 Days Past Due | Cosumer Loans
Financing Receivable, Recorded Investment, Past Due	14,967,358	13,836,033
Financing Receivables, 30 to 59 Days Past Due | Real Estate Loans
Financing Receivable, Recorded Investment, Past Due	461,593	321,249
Financing Receivables, 30 to 59 Days Past Due | Sales Finance Contracts
Financing Receivable, Recorded Investment, Past Due	582,184	498,374
Financing Receivables, 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due	9,170,828	8,582,288
Financing Receivables, 60 to 89 Days Past Due | Cosumer Loans
Financing Receivable, Recorded Investment, Past Due	8,624,553	8,073,384
Financing Receivables, 60 to 89 Days Past Due | Real Estate Loans
Financing Receivable, Recorded Investment, Past Due	207,729	161,974
Financing Receivables, 60 to 89 Days Past Due | Sales Finance Contracts
Financing Receivable, Recorded Investment, Past Due	338,546	346,930
Financing Receivables, Equal to Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Past Due	17,875,945	16,960,898
Financing Receivables, Equal to Greater than 90 Days Past Due | Cosumer Loans
Financing Receivable, Recorded Investment, Past Due	16,355,155	15,895,050
Financing Receivables, Equal to Greater than 90 Days Past Due | Real Estate Loans
Financing Receivable, Recorded Investment, Past Due	877,829	480,929
Financing Receivables, Equal to Greater than 90 Days Past Due | Sales Finance Contracts
Financing Receivable, Recorded Investment, Past Due	$ 642,961	$ 584,919

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Note 2 - Allowance For Loan Losses: Schedule of Loans and Financing Receivable (Details) - USD ($)	Jun. 30, 2016	Jun. 30, 2015
Financing Receivable, Gross	$ 501,161,639	$ 491,154,180
Financing Receivable, percent of portfolio	100.00%	100.00%
Financing Receivable, 3-months net charge-offs	$ 19,751,680	$ 12,751,029
Financing Receivable, percent net charge-offs	100.00%	100.00%
Cosumer Loans
Financing Receivable, Gross	$ 447,818,672	$ 442,293,400
Financing Receivable, percent of portfolio	89.40%	90.10%
Financing Receivable, 3-months net charge-offs	$ 19,114,687	$ 12,470,695
Financing Receivable, percent net charge-offs	96.80%	97.80%
Real Estate Loans
Financing Receivable, Gross	$ 22,360,620	$ 21,268,492
Financing Receivable, percent of portfolio	4.40%	4.30%
Financing Receivable, 3-months net charge-offs	$ (5,480)	$ (2,747)
Sales Finance Contracts
Financing Receivable, Gross	$ 30,982,347	$ 27,592,288
Financing Receivable, percent of portfolio	6.20%	5.60%
Financing Receivable, 3-months net charge-offs	$ 642,473	$ 283,081
Financing Receivable, percent net charge-offs	3.20%	2.20%

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Note 2 - Allowance For Loan Losses: Allowance for Credit Losses on Financing Receivables (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Details
Loans and Leases Receivable, Allowance, Beginning Balance	$ 34,500,000	$ 28,620,000	$ 33,500,000	$ 28,620,000
Provision for Loan, Lease, and Other Losses	11,272,680	6,528,953	22,451,680	12,751,029
Financing Receivable, Allowance for Credit Losses, Write-downs	(12,325,334)	(8,940,284)	(25,428,484)	(17,800,005)
Financing Receivable, Allowance for Credit Losses, Recovery	2,752,654	2,411,331	5,676,804	5,048,976
Loans and Leases Receivable, Allowance, Ending Balance	36,200,000	28,620,000	36,200,000	28,620,000
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	36,200,000	28,620,000	36,200,000	28,620,000
Impaired Financing Receivable, Related Allowance	501,161,639	491,154,180	501,161,639	491,154,180
Financing Receivable, Collectively Evaluated for Impairment	$ 501,161,639	$ 491,154,180	$ 501,161,639	$ 491,154,180

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Note 2 - Allowance For Loan Losses: Troubled Debt Restructurings on Financing Receivables (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)
Current 12 months
Financing Receivable, Modifications, Number of Contracts	2,887	2,110	5,455	3,190
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 5,902,925	$ 4,587,749	$ 11,039,682	$ 7,416,922
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 5,660,465	$ 4,319,117	$ 10,499,796	$ 7,002,884
Current 12 months | Cosumer Loans
Financing Receivable, Modifications, Number of Contracts	2,797	2,031	5,254	3,055
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 5,669,352	$ 4,362,336	$ 10,486,236	$ 7,022,140
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 5,443,901	$ 4,111,093	$ 9,976,972	$ 6,628,457
Current 12 months | Real Estate Loans
Financing Receivable, Modifications, Number of Contracts	4	12	15	21
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 37,071	$ 101,501	$ 156,745	$ 177,574
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 37,071	$ 95,640	$ 156,746	$ 171,663
Current 12 months | Sales Finance Contracts
Financing Receivable, Modifications, Number of Contracts	86	67	186	114
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 196,502	$ 123,912	$ 396,701	$ 217,208
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 179,493	$ 112,384	$ 366,078	$ 202,764
Previous 12 months
Financing Receivable, Modifications, Number of Contracts	1,226	585	1,987	760
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 1,710,340	$ 826,421	$ 2,855,227	$ 1,124,490
Previous 12 months | Cosumer Loans
Financing Receivable, Modifications, Number of Contracts	1,186	560	1,911	728
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 1,635,616	$ 798,237	$ 2,728,640	$ 1,089,968
Previous 12 months | Real Estate Loans
Financing Receivable, Modifications, Number of Contracts	1		1	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 1,358		$ 1,358	$ 1,000
Previous 12 months | Sales Finance Contracts
Financing Receivable, Modifications, Number of Contracts	39	25	75	31
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 73,366	$ 28,184	$ 125,229	$ 33,522

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Note 3 - Investment Securities (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Details
Available-for-sale Securities, Basis for Valuation, Other than Equity Securities	Debt securities available-for-sale are carried at estimated fair value. Debt securities designated as 'Held to Maturity' are carried at amortized cost based on Management's intent and ability to hold such securities to maturity
Gross unrealized losses on investment securities	$ 210,125	$ 342,867

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Note 3 - Investment Securities: Schedule of amortized cost and estimated fair values of debt securities (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Available-for-sale Securities, Amortized Cost Basis	$ 154,334,534	$ 138,253,453
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	165,362,864	143,862,165
Held to Maturity, at amortized cost	14,308,129	17,058,181
US States and Political Subdivisions Debt Securities
Available-for-sale Securities, Amortized Cost Basis	154,204,218	138,123,137
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	165,062,835	143,533,384
Held to Maturity, at amortized cost	14,308,129	17,058,181
Held-to-maturity Securities, Fair Value	14,311,281	17,171,053
Corporate Debt Securities
Available-for-sale Securities, Amortized Cost Basis	130,316	130,316
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	$ 300,029	$ 328,781

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Note 3 - Investment Securities: Schedule of Investment Securities Amortized Cost And Estimated Fair Value (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Details
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 897,966	$ 7,154,930
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Loss	(10,873)	(75,054)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		4,287,447
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss		(137,308)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	897,966	11,442,377
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss	(10,873)	(212,362)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	4,149,804	4,471,673
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Loss	(69,901)	(61,813)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	2,555,452	1,406,089
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	(129,351)	(68,692)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	6,705,256	5,877,762
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Loss	(199,252)	(130,505)
Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	5,047,770	11,626,603
Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(80,774)	(125,024)
Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	2,555,452	5,693,536
Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(129,351)	(206,000)
Securities, Continuous Unrealized Loss Position, Fair Value	7,603,222	17,320,139
Continuous Unrealized Loss Position, Aggregate Losses	$ (210,125)	$ (342,867)

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Note 4 - Fair Value: Fair Value Measurements, by Fair Value hierarchy (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Investments, Fair Value Disclosure	$ 165,362,864	$ 143,862,165
Corporate Debt Securities
Investments, Fair Value Disclosure	300,029	328,781
US States and Political Subdivisions Debt Securities
Investments, Fair Value Disclosure	165,062,835	143,533,384
Fair Value, Inputs, Level 1
Investments, Fair Value Disclosure	300,029	328,781
Fair Value, Inputs, Level 1 | Corporate Debt Securities
Investments, Fair Value Disclosure	300,029	328,781
Fair Value, Inputs, Level 2
Investments, Fair Value Disclosure	165,062,835	143,533,384
Fair Value, Inputs, Level 2 | US States and Political Subdivisions Debt Securities
Investments, Fair Value Disclosure	$ 165,062,835	$ 143,533,384

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Note 5 - Equity Method Investment: Equity Method Investments (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Details
EQUITY METHOD INVESTMENTS	$ 25,130,891	$ 24,989,505
Equity Method Investment, Summarized Financial Information, Assets	102,705,603	97,456,613
Equity Method Investment, Summarized Financial Information, Liabilities	171,316	148,566
Equity Method Investment, Summarized Financial Information, Net Income (Loss)	$ 945,301	$ (3,344,462)

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Note 7 - Income Taxes (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Details
Effective Income Tax Rate Reconciliation, Percent	29.00%	10.00%	23.00%	11.00%

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Note 8 - Credit Agreement (Details) - Wells Fargo Preferred Capital, Inc. - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Line of Credit Facility, Initiation Date	Sep. 11, 2009
Line of Credit Facility, Description	the Company entered into a credit facility with Wells Fargo Preferred Capital, Inc. The credit agreement provides for borrowings of up to $100.0 million or 70% of the Company's net finance receivables (as defined in the Credit Agreement), whichever is less
Line of Credit Facility, Borrowing Capacity, Description	The credit agreement provides for borrowings of up to $100.0 million or 70% of the Company's net finance receivables (as defined in the Credit Agreement), whichever is less
Line of Credit Facility, Commitment maturity date	Sep. 11, 2018
Line of Credit Facility, Current Borrowing Capacity	$ 100.0	$ 100.0
Line of Credit Facility, Interest Rate Description	3.75%

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Note 10 - Segment Financial Information (Details)	6 Months Ended
	Jun. 30, 2016
Details
Number of Operating Segments	5
Segment Reporting, Factors Used to Identify Entity's Reportable Segments	Each division consists of a number of branch offices that are aggregated based on vice president responsibility and geographic location. Division I consists of offices located in South Carolina. Offices in North Georgia comprise Division II, Division III consists of offices in South Georgia. Division IV represents our Alabama and Tennessee offices, and our offices in Louisiana and Mississippi encompass Division V.

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Note 10 - Segment Financial Information: Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting Information, Revenue for Reportable Segment	$ 47,272	$ 45,909	$ 97,888	$ 94,010
Profit (Loss)	15,674	18,417	34,219	39,485
Division I
Segment Reporting Information, Revenue for Reportable Segment	6,695	6,525	13,937	13,414
Profit (Loss)	1,454	2,243	3,416	4,807
Division II
Segment Reporting Information, Revenue for Reportable Segment	11,376	11,221	23,612	23,060
Profit (Loss)	4,554	5,192	9,813	11,270
Division III
Segment Reporting Information, Revenue for Reportable Segment	10,693	10,162	22,035	20,885
Profit (Loss)	4,470	4,428	9,359	9,556
Division IV
Segment Reporting Information, Revenue for Reportable Segment	10,162	9,563	20,778	19,415
Profit (Loss)	3,272	3,573	7,146	7,548
Division V
Segment Reporting Information, Revenue for Reportable Segment	8,346	8,438	17,526	17,236
Profit (Loss)	$ 1,924	$ 2,981	$ 4,485	$ 6,304

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Note 10 - Segment Financial Information: Reconciliation of Operating Profit (Loss) from Segments to Consolidated (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Segment Reporting Information, Net Assets	$ 436,286		$ 436,286		$ 470,030
Profit per segment	15,674	$ 18,417	34,219	$ 39,485
Corporate earnings not allocated	3,399	4,662	6,373	7,701
Corporate expenses not allocated	(14,650)	(13,479)	(28,728)	(27,917)
Income taxes not allocated	(1,275)	(972)	(2,746)	(2,085)
Net income per segments	3,148	$ 8,628	9,118	$ 17,184
Division I
Segment Reporting Information, Net Assets	57,964		57,964		65,026
Division II
Segment Reporting Information, Net Assets	103,059		103,059		110,524
Division III
Segment Reporting Information, Net Assets	96,969		96,969		103,027
Division IV
Segment Reporting Information, Net Assets	104,809		104,809		109,469
Division V
Segment Reporting Information, Net Assets	$ 73,485		$ 73,485		$ 81,984