UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 ------------------------------
 x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2023
 OR
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from __________ to _________
 ------------------------------
 Commission File Number 2-27985
 (Exact name of registrant as specified in its charter)

 Georgia
 58-0521233

 (State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

 135 East Tugalo Street
 Post Office Box 880
 Toccoa, Georgia

 30577

 (Address of principal executive offices)
 (Zip Code)

 Registrant's telephone number, including area code: ( 706) 886-7571
 Securities registered pursuant to Section 12(b) of the Act:
 None
 Securities registered pursuant to Section 12(g) of the Act:
 None
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
 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 o
 (Cover page 1 of 2 pages)
 Indicate by check mark whether registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
 Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer x
 Smaller Reporting Company o Emerging Growth Company o
 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of it internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes o No x

 If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

 Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant's most recently completed second fiscal quarter: $ 0.
 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

 Class
 Outstanding at April 1, 2024

 Common Stock, $100 Par Value

 1,700 Shares

 Non-Voting Common Stock, No Par Value

 168,300 Shares

 DOCUMENTS INCORPORATED BY REFERENCE:
 Portions of the Registrant's Annual Report to security holders for the fiscal year ended December 31, 2023, included as Exhibit 13 hereto, are incorporated by reference into Parts I, II and IV of this Form 10-K.

 (Cover page 2 of 2 pages)

 Page

 Item 1. Business

 Item 1A. Risk Factors

 Item 1B. Unresolved Staff Comments

 Item 1C. Cybersecurity

 Item 2. Properties

 Item 3. Legal Proceedings

 Item 4. Mine Safety Disclosures

 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6. [Reserved]

 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 Item 8. Financial Statements and Supplementary Data

 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure:

 Item 9A. Controls and Procedures

 Item 9B. Other Information

 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10. Directors, Executive Officers and Corporate Governance

 Item 11. Executive Compensation

 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13. Certain Relationships and Related Transactions, and Director Independence

 Item 14. Principal Accountant Fees and Services

 Item 15. Exhibits and Financial Statement Schedules

 Item 16. Form 10-K Summary

 Signatures

 Item 1. BUSINESS:
 The information under the headings "The Company", page 3 and "Business", pages 5-13, of the Company's Annual Report to security holders for the fiscal year ended December 31, 2023 (the "Annual Report") are incorporated herein by reference.

 Item 1A. RISK FACTORS:
 You should carefully consider the risks described below, as well as the other risks and information disclosed from time to time by 1st Franklin, before deciding whether to invest in the Company. Additional risks and uncertainties not described below, not presently known to us or that we currently do not consider to be material, could also adversely affect us. If any of the situations described in the following risk factors actually occur, our business, financial condition or results of operations could be materially adversely affected. In any of these events, an investor may lose part or all of his or her investment.
 Risks Related to Our Business
 Because we require a substantial amount of cash to service our debt, we may not be able to pay all of the obligations under our indebtedness.
 To service our indebtedness, including paying interest and principal on outstanding debt securities and any amounts due under our credit facility, we require a significant amount of cash. Our ability to generate cash depends on many factors, including our successful financial and operating performance. We cannot assure you that our business strategy will continue to be successful, or that we will achieve our anticipated or required financial results.
 If we do not achieve our anticipated or required results, we may not be able to generate sufficient cash flow from operations or obtain sufficient funding to satisfy all of our obligations. The failure to do this would result in a material adverse effect on our business.
 Because we depend on liquidity to operate our business, a decrease in the sale of our debt securities, an increase in requests for their redemption or the unavailability of borrowings under our credit facility may make it more difficult for us to operate our business and pay our obligations in a timely manner.
 Our liquidity depends on, and we fund our operations through, the sale of our debt securities, the collection of our receivables and the continued availability of borrowings under our credit facility. Numerous available investment alternatives have resulted in investors evaluating more critically their investment opportunities. We cannot assure you that our debt securities will offer interest rates and redemption terms which will generate sufficient sales to meet our liquidity requirements.
 Holders of our senior demand notes may request their redemption at any time without penalty. Our variable rate subordinated debentures also may request that we redeem debentures at the end of any interest rate adjustment period or within the 14-day grace period thereafter without penalty. As a result, it is possible that a significant number of redemption requests could adversely affect our liquidity.
 In addition, borrowings under our credit facility are subject to, among other things, a borrowing base. In the event we are not able to borrow amounts under our credit facility, whether as a result of having reached our maximum borrowing availability thereunder or otherwise or if our current or any future credit facility matures or is terminated without our entering into a replacement facility on acceptable terms, conditions and timing, or at all, we may not be able to fund loans to customers, redeem securities when required or invest in our operations as needed.
 - 2 -

 Our failure to be able to obtain or maintain sufficient liquidity could have a material adverse effect on our business, financial condition and results of operations.
 Adverse changes in the ability or willingness of our customers to meet their repayment obligations to the Company could adversely impact our liquidity, financial condition and results of operations.
 Our business consists mainly of making loans to salaried people or other wage earners who generally depend on their earnings to meet their repayment obligations, and our ability to collect on loans depends on the willingness and repayment ability of our customers. Adverse changes in the ability or willingness of a significant portion of our customers to repay their obligations to the Company, whether due to changes in general economic, political or social conditions, the cost of consumer goods, interest rates, natural disasters, acts of war or terrorism, prolonged public health crisis or a pandemic (such as COVID-19), or other causes, or events affecting our customers individually such as unemployment, major medical expenses, bankruptcy, divorce or death, could have a material effect on our liquidity, financial condition and results of operations.
 We maintain an allowance for credit losses in our financial statements at a level considered adequate by Management to absorb expected credit losses inherent in the loan portfolio as of the balance sheet date based on estimates and assumptions at that date. However, the amount of actual future credit losses we may incur is susceptible to changes in economic, operating and other conditions within our various local markets, which may be beyond our control, and such losses may exceed current estimates. Although Management believes that the Company's allowance for credit losses is adequate to absorb losses on any existing loans that may become uncollectible, we cannot estimate credit losses with certainty, and we cannot provide any assurances that our allowance for credit losses will prove sufficient to cover actual credit losses in the future. Credit losses in excess of our reserves may adversely affect our financial condition and results of operations.
 In any event, any reduced liquidity could negatively impact our ability to be able to fund loans, or to pay the principal and interest on any of our outstanding debt securities at any time, including when due.
 An increase in the interest we pay on our debt and borrowings could materially and adversely affect our net interest margin.
 Net interest margin represents the difference between the amount that we earn on loans and investments and the amount that we pay on debt securities and other borrowings. The loans we make in the ordinary course of our business are subject to interest rate and regulatory provisions of each applicable state's lending laws and are made at fixed rates which are not adjustable during the term of the loan. Since our loans are made at fixed interest rates and are made using the proceeds from the sale of our fixed and variable rate securities, we may experience a decrease in our net interest margin because increased interest costs cannot be passed on to our loan customers. A reduction in our net interest margin could adversely affect our liquidity, including our ability to make payments on our outstanding debt securities.
 We operate in a highly competitive environment.
 The consumer financing industry is highly competitive, and the barriers to entry for new competitors are relatively low in the markets in which we operate. We compete for customers, locations and other important aspects of our business with, among others, large national and regional finance companies, as well as a variety of local finance companies. Increased competition, or any failure on our part to compete successfully, could adversely affect our ability to attract and retain business and reduce the profits that would otherwise arise from operations.
 - 3 -

 We may not be able to make technological improvements as quickly as some of our competitors, which could harm our competitive ability and adversely affect our business, prospects, financial condition and results of operations.
 The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products, services and marketing channels. We rely on our branch offices as the primary point of contact with our active accounts. In order to serve consumers who want to reach us over the internet, we make available an online loan application on our consumer website, and we provide customers an online customer portal, giving them online access to their account information and an electronic payment option. Our future success will depend, in part, on our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demand for convenience, as well as to create additional efficiencies in our operations. We expect that new technologies and business processes applicable to the consumer finance industry will continue to emerge, and these new technologies and business processes may be more efficient than those that we currently use. We cannot ensure that we will be able to effectively implement new technology-driven products and services as quickly as some of our competitors or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could cause disruptions in our operations, harm our ability to compete with our competitors, and adversely affect our business, prospects, financial condition and results of operations.
 We are exposed to the risk of technology failures.

 Our daily operations depend heavily on our computer systems, data system networks and service providers to consistently provide efficient and reliable service. The Company has been, and in the future may be, subject to disruptions to its operating systems arising from events that are wholly or partially beyond its control, which in turn may give rise to disruption of service to our customers. If our systems were to become unreliable, fail, or experience a breach of security, our ability to maintain accurate financial records, maintain the security and availability of our data, or operate our business may be impaired. In addition, we could be required to spend significant additional amounts to maintain, repair, upgrade or replace our systems. Any such failures or expenditures could materially adversely impact our business operations and financial condition or harm our reputation.

 We could incur significant liability, and our business, financial condition, results of operations and reputation could be harmed, if our information systems are breached or we otherwise fail to protect customer, investor, employee or Company data or systems.

 In operating our business, we collect, use, store, transmit and otherwise process certain electronic information, including personal, confidential, proprietary and sensitive data about our customers, investors and employees. We also share and receive electronic information with our vendors and other third parties. This electronic information comprises sensitive and confidential data, including personally identifiable information ("PII") and Company data. We rely on the efficient, uninterrupted and secure operation of complex information technology systems and networks to operate our business and securely store, transmit and process electronic information. Our information technology systems, and those of our third-party service providers and vendors, are potentially vulnerable to unauthorized access, damage or interruption from a variety of threats, including cybersecurity breaches, computer viruses, malware, ransomware, theft, lost or misplaced data, scams, misappropriation of data and other types of data and systems-related modes of attack.

 We have been, and in the future may be, the target of cyberattacks, including social engineering attacks, phishing attacks and denial-of-service attacks, as well as ransomware cyberattacks where hackers have requested "ransom" payments in exchange for not disclosing stolen electronic information or for unlocking or not disabling our computer or other information systems. Any disruption to the safety, integrity or accessibility of such information or systems could impact our ability to operate our business.

 - 4 -

 In November 2022, we became aware of a cyberattack against certain systems within our network environment. The attack temporarily affected operations and caused delays in originating loans at some locations. During the incident, the attackers had access to the PII of certain Company employees, customers and investors. We contained the harm caused by the incident, quickly restored our business operations, and provided timely notifications to affected individuals, entities, and governmental agencies as required by law. The Company has also been named as a defendant in five (5) putative consumer class action lawsuits alleging harm from the cyberattack. The suits have been consolidated into one single case, which was administratively dismissed by the United States District Court for the Northern District of Georgia January 2024. The plaintiffs have asked the Court to reconsider its dismissal. See Part 1, Item 3, Legal Proceedings of this Annual Report on Form 10-K.

 Following the cyberattack, we undertook significant remediation efforts and other steps to enhance our cybersecurity and data security infrastructure. We continue to enhance our data security infrastructure to prevent unauthorized access to our systems and the data we maintain. Despite our efforts to ensure the integrity of our software, computers, systems and information, we may not be able to anticipate, detect or recognize all threats to our systems and assets, or to implement effective preventive measures against all cyber threats, especially because the techniques used by bad actors are increasingly sophisticated, change frequently, are complex, and are often not recognized until launched. Such cyberattacks have involved and in the future may involve, the dissemination, theft, destruction or other compromise of Company or confidential information, including PII. Efforts to resolve future cyberattacks may be unsuccessful, and these efforts involve costs that can be significant. Although we maintain insurance coverage relating to certain cybersecurity risks, our insurance may not be sufficient to provide adequate loss coverage in all circumstances (including if the insurer denies future claims) and may not continue to be available to us on economically reasonable terms, or at all.

 We could suffer significant financial losses or liabilities, loss of customers and business opportunities, reputational damage, litigation, regulatory fines, penalties or intervention, reimbursement or other compensatory costs, as a result of actual or alleged cyberattacks or data security breaches, and these attacks or breaches and their impacts are hard to predict. Further, we cannot ensure that any limitations of liability provisions in our agreements with customers, vendors and other third parties with which we do business would be enforceable or adequate to otherwise protect us from liabilities or damages with respect to a particular claim in connection with a cyberattack, breach or other information security incident.

 In addition, the legal and regulatory environment related to data privacy and cybersecurity is constantly changing. Privacy and cybersecurity are currently areas of considerable legislative and regulatory attention, with new or modified laws, regulations, rules and standards being frequently adopted and potentially subject to divergent interpretation or application in different states in a manner that may create inconsistent or conflicting requirements for businesses. The uncertainty and compliance risks created by these legislative and regulatory developments are compounded by the rapid pace of technology development that may affect the use or security of data, including PII. Privacy and cybersecurity laws and regulations often impose strict requirements on the collection, storage, handling, use, disclosure, transfer, security, and other processing of PII. An actual or perceived failure by us or our vendors or service providers to comply with privacy, data protection and information security laws, regulations, standards, policies and contractual obligations could result in legal liabilities, fines, regulatory action and reputational harm that could have a material adverse impact on our business, financial results and financial condition.
 Our business could be adversely affected by the loss of one or more key employees.
 We are heavily dependent upon our senior management and the loss of services of any of our senior executives could adversely affect our business. Our success has been, and will continue to be, dependent on our ability to retain the services of key employees. The loss of the services of key employees or senior management could adversely affect the quality and profitability of our business operations.
 - 5 -

 Risks Related to Our Debt Securities
 Our offers and sales of securities must comply with applicable securities laws, or we could be liable for damages, which could impact our ability to make payments on our outstanding debt securities.
 Offers and sales of all of our securities must comply with all applicable federal and state securities laws, including Section 5 of the Securities Act of 1933. If any of our offers, including those deemed made pursuant to newspaper or radio advertisements or on our website, or sales are found not to be in compliance with any of these laws, we could be liable to certain purchasers of the security, could be required to offer to repurchase the security, or could be liable for damages or other penalties. If we are required to repurchase any of our securities other than in the ordinary course of our business as a result of any such violation, or we are otherwise found to be liable for any damages or penalties as a result of any such violation, our financial condition could be materially adversely affected. Any such adverse affect on our financial condition could materially impair our ability to fund loans in the ordinary course of business or pay principal and interest on our outstanding debt securities.
 Neither the Company nor any of its debt securities are or will be rated by any nationally recognized statistical rating agency, and this may increase the risk of your investment.
 Neither 1st Franklin nor any of its debt securities are, or are expected to be, rated by any nationally recognized statistical rating organization. Typically, credit ratings assigned by such organizations are based upon an assessment of a company's creditworthiness and are often a measure used in establishing the interest rate that a company offers on debt securities it issues. Without any such rating, it is possible that fluctuations in general economic, or industry specific, business conditions, changes in results of operations, or other factors that affect the creditworthiness of a debt issuer may not be fully reflected in the interest rate on any outstanding indebtedness of that issuer. Investors in the Company's securities must depend solely on their own evaluation of the creditworthiness of 1st Franklin for the payment of principal and interest on those securities. In the absence of any third party credit rating, it is possible that the interest rates offered by the Company on its debt securities may not represent the credit risk that an investor assumes in purchasing any of these securities.
 General Risk Factors
 Uncertain economic conditions could negatively affect our results and profitability.
 Increases in unemployment levels or other factors indicative of recessionary economic cycles could affect our investors', customers', and potential investors' and customers' disposable income, confidence, and spending patterns and preferences, which in turn could negatively impact the making of loans, our cost of loans, our sales of investment securities and our customers' ability to repay their obligations to us.
 The effects of a pandemic, epidemic or other widespread public health emergency may adversely affect our business, financial condition and results of operations.
 Our business, financial condition and results of operations could be materially and adversely affected by the effects of a pandemic, epidemic or other widespread public health emergency. Widespread health emergencies can disrupt our operations through their impact on our employees, investors, customers and the communities in which we operate. Such impacts to our customers could result in increased risk of delinquencies, defaults and losses on our loans, negatively impact regional economic conditions, and result in a decline in loan demand and loan originations, which in turn may adversely affect out business, financial condition or results of operations.

 - 6 -

 Risks Related to Our Regulatory Environment
 Consumer finance companies and other companies that offer and sell securities to the public such as the Company are subject to an increasing number of laws and government regulations. Compliance with these regulations requires significant time and attention of management, and is costly. Further, if we fail to comply with these laws or regulations, our business may suffer and our ability to pay our obligations may be impaired.
 Our lending operations continue to be subject to significant focus by federal, state and local government authorities, and are subject to various laws and judicial and administrative decisions imposing various requirements and restrictions on certain lending practices by companies in the consumer finance industry; sometimes referred to as "predatory lending" practices. These requirements and restrictions, among other things:
 • require that we obtain and maintain certain licenses and qualifications;
 • limit the interest rates, fees and other charges that we are allowed to charge;
 • require specified disclosures to borrowers;
 • limit or prescribe other terms of our loans;
 • govern the sale and terms of insurance products that we offer and the insurers for which we act as agent; and
 • define our rights to repossess and sell collateral.
 The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") has significantly increased the regulation of financial institutions and the financial services industry in recent periods. The Dodd-Frank Act established the Bureau of Consumer Financial Protection (the CFPB) as an independent entity given the authority to promulgate additional consumer protection regulations applicable to all entities offering consumer financial services or products such as the Company. These and other applicable regulations have increased and are expected to further increase our cost of doing business and time spent by Management on regulatory matters which may have a material adverse effect on the Company's operations and results.
 In addition, other state and local laws, public policy and general principles of equity relating to the protection of consumers, unfair and deceptive practices and other debt collection practices may apply to the loans we make and our related services. There can be no assurance that a change in any of those laws, or in their interpretation, will not make our compliance therewith more difficult or expensive, further restrict our ability to originate loans or other financial services, further limit or restrict the amount of interest and other charges we earn under such loans or services, or otherwise adversely affect our financial condition or business operations. The burdens of complying with these laws and regulations, and the possible sanctions if we do not so comply, are significant, and may result in a downturn in our business or our inability to carry on our business in a manner similar to how we currently operate.
 If we experience unfavorable litigation or proceedings, our ability to timely meet our obligations may be impaired.
 As a consumer finance company, in addition to being subject to stringent regulatory requirements, we may, from time to time, be subject to various consumer claims and litigation seeking damages and statutory penalties. The damages and penalties claimed by consumers and others can often be substantial. The relief may vary but generally would be expected to include requests for compensatory, statutory and punitive damages. Unfavorable outcomes in any litigation or statutory proceedings could materially and adversely affect our results of operations, financial condition and cash flows and our ability to make payments on our outstanding obligations.
 While we would expect to vigorously defend ourselves against any of these proceedings, there is a chance that our results of operations, financial condition and cash flows in any period could be materially and adversely affected by unfavorable outcomes which, in turn, could affect our ability to fund loans or make payments on, or repay, our outstanding obligations, any of which could materially adversely effect our business, results of operations and financial condition.
 - 7 -

 Item 1B. UNRESOLVED STAFF COMMENTS:
 Not Applicable.

 Item 1C. CYBERSECURITY:

 RISK MANAGEMENT AND STRATEGY

 1st Franklin is committed to maintaining the confidentiality, integrity and availability of our data and information systems. We understand the risks presented by existing and emerging cybersecurity threats against our electronic infrastructure and the information it stores and processes, as well as against our customers and employees. We also recognize that there are cybersecurity risks associated with remote work environments which are utilized by some of 1st Franklin's employees, our use of cloud-based infrastructure and networks, and our use of third parties to support our operations.

 As a part of our overall risk management processes, we have implemented a comprehensive cybersecurity program designed to identify and manage cybersecurity risks. This program includes a robust risk assessment process designed to identify security vulnerabilities, incorporates regulatory requirements and also provides the foundation for the Information Security department's annually updated multi-year project roadmap, which is used to continually enhance 1st Franklin's cybersecurity program to respond to new threats and challenges.

 We employ a comprehensive set of cybersecurity policies and guidelines and a strong security training and awareness program to communicate policy directives and current threats to 1st Franklin employees. Additionally, we have a strong due diligence and risk assessment process to identify and manage risks associated with our use of third-party service providers.
 Some of the other features of our cybersecurity program include:
 • Monthly phishing simulations and additional training as required for incorrect identification of phishing attempts
 • Ongoing vulnerability scanning and annual penetration testing of our internal and external environments
 • IDS/IPS ( Intrusion Detection Device / Intrusion Prevention System)
 • Firewalls
 • Endpoint Detection and Response
 •24x7x365 Security Operations Center
 • Security Incident and Event Monitoring
 • Cloud alerting and monitoring
 • Disaster recovery and business continuity planning and backup strategy
 • Incident response process
 • Network segmentation
 • Data classification labeling and data loss prevention
 • Privileged access management
 • Secure builds
 • Multi-factor and adaptive authentication
 • Physical security
 • Internet filtering, email spam filtering and anti-phishing
 • Brand protection and phishing takedown service
 • Database security
 • Data transfer and encryption
 Additionally, we maintain cybersecurity insurance coverage to help mitigate risk in the event of a potential breach or attack. Although we maintain insurance coverage at levels we deem appropriate
 - 8 -

 for our business, it is possible that such coverage could be insufficient to cover all losses or types of claims that may arise.
 We have experienced targeted and non-targeted cybersecurity attacks in the past, and we could experience similar attacks in the future. As previously disclosed, we suffered a cyber-attack against certain systems within our network environment in November 2022. The attack temporarily affected operations and caused delays in originating loans at some locations. During the incident, the attackers had access to the PII of certain Company employees, customers and investors. We contained the harm caused by the incident, quickly restored our business operations, and provided timely notifications to affected individuals, entities, and governmental agencies as required by law. Following the cyber-attack, we began undertaking significant remediation efforts and other steps to enhance our cybersecurity and data security infrastructure. Five (5) putative class action lawsuits were filed in the United States District Court in the Northern District of Georgia against the Company alleging harm from the cyber-attack. The Court consolidated all cases into one, and after extensive motion practice, administratively dismissed the consolidated case in full in January 2024. The Plaintiffs have asked the Court to reconsider its dismissal. To date, the Company's cyber insurance policy has covered and paid all material costs and expenses related to the class action litigation.
 Other than as described above, we do not believe any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company or our business strategy, results of operations, or financial condition. We continue to enhance our data security infrastructure and take further steps to prevent unauthorized access to our systems and the data we maintain. For additional information regarding the risks from cybersecurity threats we face, see "Risks Related to Our Business – We could incur significant liability, and our business, financial condition, results of operations and reputation could be harmed, if our information systems are breached or we otherwise fail to protect customer, investor, employee or Company data or systems" under Part I, Item 1A. "Risk Factors" above.

 GOVERNANCE

 The Board of Directors maintains the ultimate responsibility for oversight of the Company's risks, including cybersecurity risks. The Board regularly receives presentations on matters of cybersecurity risk from management. Management discusses matters of particular importance or concern as they may be materially impacted by risk on an ongoing basis, and members of the Company's Executive Leadership Team ("ELT") are also available to members of the Board for discussion and review both during meetings of the Board of Directors and at other times.

 The Company's information security efforts are led by our Chief Information Security Officer ("CISO"). The CISO meets at least quarterly with each of the Board of Directors, the ELT, and the Senior Leadership Team ("SLT"), facilitating the Company's robust cybersecurity oversight and strategies that help us to assess, identify, and manage cybersecurity risks. This includes performing tabletop exercises at least annually with the Board and with the SLT to evaluate our incident response processes and keeping them informed of the evolving threat landscape and how 1st Franklin is managing such risks.

 Our current CISO is a veteran security professional with over 30 years of information technology and information security experience. Prior to joining 1st Franklin, she worked at one of the largest banks in Canada and the U.S., where she was initially the Head of Application Security and later the Head of Cyber Innovation and Emerging Technologies. Prior to that, she also worked for two multinational banks in New York City in information security and information technology roles. The CISO is supported by a team of highly technical and experienced security professionals who are responsible for implementing and maintaining the security program for 1st Franklin, including security engineers, a cybersecurity analyst and a VP of Information Security.

 Item 2. PROPERTIES:
 Paragraph 1 of "The Company", page 3; paragraph 1 (and the accompanying table) of Footnote 8 (Leases) of the Notes to Consolidated Financial Statements, pages 47-48; and the 1st Franklin Financial Corporation Branch Offices directory of branch offices, pages 64-65 of the Annual Report are incorporated herein by reference.
 - 9 -

 Item 3. LEGAL PROCEEDINGS:

 As previously discussed, five (5) putative class action lawsuits were filed against the Company in the United States District Court for the Northern District of Georgia in March 2023. All five (5) cases were consolidated into one, captioned: Moreland v. 1st Franklin Financial Corporation, in June 2023. The Plaintiffs generally assert claims of negligence, breach of implied contract and violations of the Georgia Deceptive Practices Act, on behalf of a putative class of individuals whose PII was accessed in the November 2022 cyber-attack on the Company. On January 11, 2024, the Court administratively dismissed the entire case. The Plaintiffs have asked the Court to reconsider its decision.

 In addition, from time to time, the Company is involved in various claims and lawsuits incidental to its business. In the opinion of Management based on currently available facts, the ultimate resolution of any such known claims and lawsuits is not expected to have a material adverse effect on the Company's financial position, liquidity, or results of operations.

 Item 4. MINE SAFETY DISCLOSURES:
 Not Applicable.

 Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES:
 "Sources of Funds and Common Stock Matters", page 14 of the Annual Report is incorporated herein by reference.

 Item 6. [Reserved]

 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
 "Management's Discussion and Analysis of Financial Condition and Results of Operations", pages 15-22 of the Annual Report is incorporated herein by reference. This section generally discusses 2023 and 2022 operating results and year-to-year comparisons between 2023 and 2022. Discussion of 2021 operating results and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on April 11, 2023.

 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:
 "Quantitative and Qualitative Disclosures About Market Risk", page 20-21 of the Annual Report is incorporated herein by reference.

 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
 "Report of Independent Registered Public Accounting Firm" and the Company's Consolidated Financial Statements and Notes thereto, pages 23-58 of the Annual Report are incorporated herein by reference.

 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:
 Not applicable.
 - 10 -

 Item 9A. CONTROLS AND PROCEDURES:
 EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
 We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 (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. Management recognizes that a control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
 An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Executive Vice President and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures as of December 31, 2023. Based on that evaluation, the CEO and CFO concluded that the Company's disclosure controls and procedures under Rule 15d-15(e) of the Exchange Act were effective at December 31, 2023.
 MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING:
 The Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. An internal control system over financial reporting has been designed to provide reasonable assurance regarding the reliability and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management recognizes that there are inherent limitations in the effectiveness of any internal control system. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
 Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2023 based upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on this evaluation, Management believes that the Company's internal control over financial reporting, as such term is defined in Exchange Act Rule 15d-15(f), was effective as of December 31, 2023.
 ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
 This Annual Report does not include an attestation report of the Company's registered public accounting firm regarding the effectiveness of internal controls over financial reporting. Management's report is not subject to attestation by the Company's registered public accounting firm pursuant to certain rules of the Securities and Exchange Commission that permit the Company to provide only Management's report in this Annual Report.
 CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
 - 11 -

 There have been no changes in the Company's internal control over financial reporting that occurred during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting

 Item 9B. OTHER INFORMATION:
 Not Applicable.

 Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS:
 Not Applicable.
 ------------------------------------------
 Forward Looking Statements:
 Certain statements contained or incorporated by reference herein, including under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" may constitute "forward-looking statements" within the meaning of the federal securities laws. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, those set out under the caption "Risk Factors", the ability to manage cash flow and working capital, the accuracy of Management's estimates and judgments, adverse developments in economic conditions including within the interest rate environment, unfavorable outcomes of litigation, ability to control credit losses, federal and state regulatory changes and other factors referenced elsewhere herein or incorporated herein by reference.
 - 12 -

 Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE:
 DIRECTORS

 Name of Director
 Age
 Director Since
 Position(s)
with Company

 Ben F. Cheek, III (3)(4)(5)
 1967
 Chairman Emeritus

 Ben F. Cheek, IV (3)(4)(5)
 2001
 Chairman of the Board

 David W. Cheek (4)(5)

 2024

 None

 Virginia C. Herring (3)(4)(5)
 2020

 A. Roger Guimond (2)(5)
 2004
 None

 Jerry J. Harrison, Jr. (3)(2)(5)

 2020
 Executive Vice President and Chief Strategy Officer

 Donata Ison (1)(2)(5)

 2023
 None

 John G. Sample, Jr. (1)(2)(5)
 2004
 None

 C. Dean Scarborough (1)(2)(5)
 2004
 None

 Sheryl Smith (1)(2)(5)

 2024

 None

 Keith D. Watson (1)(2)(5)
 2004
 None

 (1)Member of Audit Committee.
 (2)Mr. Guimond is the retired EVP and Chief Financial Officer of 1st Franklin Financial Corporation where he served for more than 45 years until his retirement in April 2021. Mr. Harrison, Jr. is presently employed by the Company as Executive Vice President and Chief Strategy Officer. Previously Mr. Harrison, Jr. was the Chief Operating Officer at Crider Foods, Inc. Ms. Donata Ison is the Vice President of Finance at Armhr; she has previous experience with an international public accounting firm. Mr. Sample is the retired Senior Vice President and Chief Financial Officer of Atlantic American Corporation, an insurance holding company, where he served from 2002 through July 31, 2017. Mr. Scarborough is a retired retail business owner. Ms. Smith's career spans over 40 years in banking, money transmission, and finance. She is an associate member of the Bar Association and holds a CRCM designation. She has also previously served on the Board of a global currency transmission organization. Mr. Watson is Chairman of the Board of Bowen & Watson, Inc., a general contracting company. Mr. Watson has been with Bowen & Watson since 1980.
 (3)Reference is made to "Executive Officers" for a discussion of business experience.
 (4)Messers. Ben F. Cheek, III, Ben F. Cheek, IV and David W. Cheek are father and sons. Mr. Ben F. Cheek, III and Ms. Virginia C. Herring and father and daughter. Messrs. Ben F. Cheek, IV, David W. Cheek, and Ms. Virginia C. Herring are brothers and sister.
 (5)The term of office of each director continues until the next meeting of shareholders of the Company. The board will consist of 7 to 11 directors. The departure of a director will not necessitate replacement, provided the Company meets the minimum number of required directors.
 There was no, nor is there presently any, arrangement or understanding between any director and any other person (except directors and officers of the registrant acting solely in their capacities as such) pursuant to which the director was selected.
 - 13 -

 1st Franklin Financial Corporation is a family controlled company, with Mr. Ben F. Cheek, III's family directly or indirectly owning all of the Company's stock. Mr. Cheek, III, who has significant knowledge of all aspects of the Company's business and operations, served as Chairman and Chief Executive Officer through 2014. Effective January 1, 2015, Mr. Cheek, III transitioned to the role of Vice Chairman and Ben F. Cheek, IV, who previously served as Vice Chairman and has been with the Company since 1988 in roles of increasing responsibility, was appointed Chairman of the Board. At that time, Mrs. Virginia C. Herring, the Company's President, took on the additional role of Chief Executive Officer. In light of the additional responsibilities assumed by Mr. Cheek, IV and Ms. Herring, and in order to allow them to each focus on the significant responsibilities contained within these new roles, the Board determined at that time that it was appropriate to separate the roles of Chairman and Chief Executive Officer. Given the separation of the Chairman and Chief Executive Officer roles, relatively low historical turnover of members of the Board of Directors and the strong working relationship between such members, the Board has determined there is not a need to appoint a lead independent director. The Board continues to believe that such determination is in the best interests of the Company. During 2020, Mr. Cheek, III transitioned to Chairman Emeritus.
 The day-to-day management of the Company, including identifying and evaluating current and potential risks within financial operations, compensation related and other processes and development is primarily the responsibility of the Company's Executive Leadership Team (the "ELT"). Individuals comprising the ELT are as follows: Ms. Herring, Ms. Baker, Messrs. Cheek, IV, Clevenger II, Gyomory, Harrison, McQuain, Scarpitti, and Shaw. The Board of Directors maintains the ultimate responsibility for oversight of the Company's risks. The Audit Committee has specific responsibility for oversight of risks associated with financial accounting, reporting and audits, as well as internal control over financial reporting. The Board regularly receives, evaluates and discusses presentations, at least quarterly, on the financial condition and operating results of the Company. Management discusses matters of particular importance or concern as they may be materially impacted by risk on an ongoing basis, and members of the ELT remain available to members of the Board for discussion and review both during meetings of the Board of Directors and at other times.
 Notwithstanding the fact that the Company's equity securities are not currently traded on any national securities exchange or with any national securities association, as a matter of good corporate governance, the Board of Directors has determined that it is important to have Board members who are independent from management represented on the Board of Directors. For this purpose, the Board has adopted and considers the independence requirements for companies whose securities are listed for trading on the NASDAQ Stock Market. The Board has determined that Ms. Ison, Ms. Smith, Messrs. Sample, Scarborough, and Watson, are "independent" (as such term is defined in the rules of the Securities and Exchange Commission (the "SEC") and the NASDAQ Listing Rules). In making this determination, the Board concluded that none of such persons have a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
 The Audit Committee is composed of Ms. Ison, Ms. Smith, Messrs. Sample, Scarborough, and Watson. In accordance with the provisions of the charter of the Audit Committee, the Board of Directors has determined that all of the members thereof are "independent" and that Ms. Ison, and Mr. Sample are an "audit committee financial expert" as defined by the SEC in Rule 407(d)(5) of Regulation S-K. In making such determination, the Board of Directors took into consideration, among other things, the express provision in Item 407(d)(5) of Regulation S-K that the designation of a person as an audit committee financial expert shall not impose any greater responsibility or liability on that person than the responsibility and liability imposed on that person as a member of the Audit Committee, nor shall it affect the duties or obligations of other Audit Committee members. A copy of the Company's Audit Committee charter is publicly available on the Company's website at:
 The Company is a family owned business. Because of the closely held nature of ownership, the Company does not have an official compensation committee (or other official committee of the Board of Directors performing equivalent functions) or a charter outlining the responsibilities thereof. The ELT establishes the bases for all executive compensation, which compensation is subject to approval by the shareholders in their capacities as such. Additional information concerning the processes and procedures for the consideration and determination of executive officer and director compensation is contained under the heading "Compensation Discussion and Analysis" below.
 - 14 -

 Because of the closely held nature of the ownership of the Company, the Board has determined that it is not necessary for the Company to have a formal process for shareholders to send communications to the Board.
 Director Qualifications:
 The members of the Board of Directors each have the qualifications we believe necessary and desirable to appropriately perform their duties. Each member has an exemplary record of professional integrity, a dedication to their respective professions and a strong work ethic.

 Summary of Qualifications

 Retired executive officer of the Company. Previously served as director of a Habersham Bancorp. Has legal background as an attorney. Has 63 years of experience with the Company. Has previously served as board member of various consumer industry associations. He has served as director of the Company for 56 years.

 Executive officer of the Company. Highly knowledgeable of the banking and consumer finance industry. Has been with the Company for 35 years. Currently serves on two of the industry's state association boards and has previously served as a board member of our industry's national association.

 Executive officer of the Company. Highly knowledgeable of the banking and consumer finance industry. Has been with the Company for 35 years.

 Over 20 years of experience and an extensive background in Commercial Real Estate development. Partner of CFL Properties, LLC.

 Retired executive officer of the Company. Highly knowledgeable of the banking and consumer finance industry. Had been with the Company for more than 45 years. Significant experience in finance and related areas.

 Executive Officer of the Company. Extensive experience in private equity and technology services industry. Has a law degree and significant financial and technology related experience.

 Independent director. Extensive knowledge of accounting and reporting standards and specialty finance industry. Prior experience at an international public accounting firm as well as management experience at middle market operating companies.

 Independent director. Extensive knowledge of accounting and reporting standards. Prior experience as an audit partner in an international public accounting firm. Experience and knowledge of the insurance industry through prior executive management positions at operating companies. Serves as board member and Chairman of the Audit Committee at Capital City Bank Group, Inc. (a Tallahassee, Florida bank holding company). Has served as director of the Company for 19 years and is the Company's Audit Committee Chairman.

 Independent director. Previously served on board of a community bank. Currently serves as a Commissioner for Stephens County, Georgia, where the Company maintains its headquarters. Has served as director of the Company for 19 years.

 - 15 -

 Summary of Qualifications

 Sheryl Smith

 Independent director. Extensive knowledge of compliance and regulatory standards with over 40 years of financial institution experience. Certified Regulatory and Compliance Manager and a member of the American Bar Association. Serves as a board member for Omega Intercontinental, Inc. and World First USA, Inc.

 Independent director. Previously served on board of a community bank. Has served as director of the Company for 19 years. Maintains executive position with significant oversight responsibility in self-owned corporation.

 EXECUTIVE OFFICERS

 Name, Age, Position(s)
and Family Relationships
 Business Experience

 Ben F. Cheek, IV, 62
 Chairman of Board
 Son of Ben F. Cheek, III, Brother of

 Joined the Company in 1988 working in Statistics and Planning, Became Vice Chairman in 2001 and Chairman of Board effective January 2015.

 Ben F. Cheek, III, 87
 Chairman Emeritus
 Father of Ben F. Cheek, IV and

 Joined the Company in 1961 as attorney and became Vice President in 1962, President in 1972 and Chairman of Board in 1989. Effective January 2015, assumed role of Vice Chairman of the Board. During 2020, Mr. Cheek, III transitioned to Chairman Emeritus.

 Virginia C. Herring, 60
 Daughter of Ben F. Cheek, III, Sister of

 Joined the Company on a full time basis in 1988 as Developmental Officer. Since then, she has worked throughout the Company in different departments on special assignments and consultant projects. Became President in 2001. Effective January 2015 promoted to Chief Executive Officer in addition to retaining her position as President.

 Julie I. Baker, 62
 Chief Information Security Officer

 Joined the company in September 2021 as the Chief Information Security Officer and became Executive Vice President and Chief Information Security Officer in March 2023. Prior thereto, was Head of Cyber Innovation at TD Bank, based out of Israel from 2017-2021 and Head of Application Security from 2015-2017. Prior thereto worked on Wall Street in New York City for Citigroup (2006-2014) as SVP, Information Security and Deutsche Bank (2001-2006) as Technical Information Security Officer and Infrastructure Architect. Prior to that was Director of IT for Pace University School of Law (1995-2001) and Manager of Network Services at NYU School of Law (1992-1995).

 Daniel E. Clevenger, II, 50
 Chief Administrative Officer

 Joined the Company in February 2015 as Executive Vice President - Compliance. Prior thereto, served as General Counsel and Chief Compliance Officer at Millennium Capital and Recovery Corporation, a collateral recovery company, from 2014 to 2015 and prior thereto provided legal services at Day Kettierer, LTD from 2006 to 2013. Served in private practice of law from 1998 to 2006.

 - 16 -

 EXECUTIVE OFFICERS (continued)

 Name, Age, Position(s)
and Family Relationships
 Business Experience

 Brian J. Gyomory, 56
 Executive Vice President and Chief
 Financial Officer

 Joined the Company in December 2019 as Senior Vice President of Finance. Became Executive Vice President and Chief Financial Officer in April 2021. Prior thereto, was Vice President of Finance at Global Lending Services, LLC beginning 2012.

 Jerry J. Harrison, Jr., 61
 Executive Vice President and Chief
 Strategy Officer

 Joined the Company in September 2022 as Project Engineer - Special Projects. Became Executive Vice President and Chief Strategy Officer in July 2023. Prior thereto, was Chief Operating Officer at Crider Foods, Inc.

 Gary L. McQuain, 58
 Chief Operating Officer

 Joined the Company in October 2019 as Senior Operations Vice President. Became Executive Vice President and Chief Operating Officer in May 2020. Prior thereto, was President and CEO of Southern Management Corporation, a financial services company, from October 2017 to August 2019. Prior to that, served as a financial services professional at MidCountry Financial Corp., a financial services holding company, from January 2016 to October 2017, and President of Pioneer Services, a financial services company from January 2016 to October 2017.

 Mark J. Scarpitti, 51
 General Counsel and Secretary / Treasurer

 Joined the Company in November 2015 as Vice President – Deputy General Counsel. Became Executive Vice President and General Counsel in August 2021.

 Joseph A. Shaw, 53
 Chief Information Officer

 Joined the Company in July 2017 as Chief Information Officer and became Executive Vice President and Chief Information Officer in January 2018. Prior thereto, he was a Technology Strategist for a Microsoft consulting firm he founded in 2007.

 The term of office of each executive officer expires when a successor is approved by the Chief Executive Officer. There was no, nor is there presently any, arrangement or understanding between any officer and any other person (except directors or officers acting solely in their capacities as such) pursuant to which the officer was elected.
 The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer and controller, or any persons performing similar functions, as well as to its directors and other employees. A copy of this code of ethics is publicly available on the Company's website at:  The Company will provide a copy of this code of ethics, free of charge, upon any written request. Requests should be directed to Mark Scarpitti, Secretary and Treasurer, 1st Franklin Financial Corporation, P.O. Box 880, Toccoa, Georgia 30577. If we enter into any amendment to this code of ethics, other than a technical, administrative, or non-substantive amendment, or we grant any waiver from a provision of the code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or any persons performing similar functions, we will disclose the nature of the amendment or waiver on our website. Also, we may elect to disclose the amendment or waiver in a report on Form 8-K filed with the SEC.
 The Company maintains an "Ethics Hotline" which enables employees to report any questionable ethics actions including, but not limited to, fraud or deliberate error in recording and/or maintaining accurate records, deficiencies or noncompliance with the Company's policies. The reporting is strictly confidential and is reviewed
 - 17 -

 by our Vice President of Human Resources and the Chairman of the Audit Committee. Ethics violations that are reported are promptly investigated and appropriate corrective action is taken as warranted by the results of the investigation.

 Item 11. EXECUTIVE COMPENSATION:
 Compensation Discussion and Analysis
 Overall Philosophy:
 The overall financial objective of the Company is to achieve or exceed specific annual and long-term strategic goals set by the Executive Leadership Team (described below, the "ELT"), from time to time, while maintaining a healthy and stable financial position. It is part of the overall responsibility of our executive officers to successfully manage the Company to reach this objective. Our compensation philosophy revolves around the motivation to achieve, and achievement of, these goals and is designed to attract and retain top executives, and to incentivize and reward the executive officers for their efforts and successes, while properly balancing the encouragement of risk-taking behavior.
 Role of Executive Officers in Compensation Decisions:
 The Company is a family-owned business. Because of the closely-held nature of ownership, the Company does not have an official compensation committee (or other official committee of the Board of Directors performing equivalent functions). The ELT, which consists of certain executive officers of the Company, establishes the bases for all executive officer compensation, which compensation is approved by Mr. Cheek IV, and Ms. Herring, who are shareholders of the Company and Mr. Cheek, III, retired executive officer. At December 31, 2023, the ELT consisted of Ms. Herring, Ms. Baker, Messrs. Cheek IV, Clevenger, Gyomory, Harrison, McQuain, Scarpitti, and Shaw. For the foregoing reasons the Company has not historically engaged any independent compensation consultant to advise on compensation related matters.
 Components of Compensation:
 The principal components of the Company's executive compensation program include base salary, discretionary bonus awards and non-equity incentive plan compensation. The Company also expects that earnings on non-qualified deferred compensation amounts and other compensation opportunities, including certain perquisites as detailed below, will meaningfully add to each executive officer's overall total compensation each year. Given the closely held nature of the Company, the Company does not have available for grant, and does not deem it appropriate to pay, any equity-based compensation. The ELT takes into account this fact annually when determining other components and amounts of compensation.
 Base Salary:
 The Company provides executive officers, and other employees, with a base salary intended to provide a level of financial security and appropriately compensate them for services rendered throughout the year. Salaries for all executive officers are established annually by Mr. Cheek, IV and Ms. Herring, based on the level of each executive officer's responsibility, tenure with the Company and certain publicly available market data with respect to salaries paid for like positions at comparable companies. In addition, base salaries are set at a level designed to take into account the fact that the Company does not provide equity-based compensation, as described elsewhere.
 Each executive officer has goals set annually which are reviewed with the officer by the President and Chief Executive Officer throughout the year. These goals typically vary depending on the nature of the executive's responsibilities but are set at a level that is expected to be challenging but achievable. A formal individual performance and development review is also held each year with each executive office, in which the level of achievement with respect to such goals is reviewed. Merit based adjustments to salaries are based on the assessment of each executive's performance review and overall Company performance.
 - 18 -

 Bonus Awards:
 Bonus amounts payable to the executive officers include discretionary bonuses and may include certain cash bonuses from time to time for special recognition, each determined at the discretion of the ELT and approved by Mr. Cheek IV and Ms. Herring, who are shareholders of the Company. The ELT considers, among other factors, the Company's inability to grant equity-based awards to its officers and employees, as described below, when determining whether and to what extent to make awards. As in prior years, in 2023 it was determined appropriate to award the executive officers a bonus of 4% of their respective base salaries, which was awarded and paid in November as a "holiday" bonus. In addition to this 4% bonus, Mr. Cheek, IV and Ms. Herring retain the discretion to award certain additional amounts.
 Non-Equity Incentive Compensation:
 As described elsewhere herein, the Company's stock is not traded or quoted on any national securities exchange or association, but is closely held by Ms. Virginia C. Herring and Messrs. Ben F. Cheek, IV, and Mr. David W. Cheek. As a result, the Company does not grant stock or other equity based awards. In consideration of this and other factors, and in order to establish quantitative financial targets, the achievement of which would trigger the payment of additional compensation, the ELT has, historically, adopted annual incentive compensation plans. Consistently therewith, in the first quarter of 2023 the ELT approved the Company's 2023 Executive Bonus Plan (the "2023 Bonus Plan"). Mr. Cheek, III voluntarily elected not to participate in the 2023 Bonus Plan.
 The 2023 Bonus Plan was a cash-based incentive plan designed to promote high performance and the achievement of various short-term corporate goals. Under the 2023 Bonus Plan, at inception, a minimum pre-tax income requirement of $14.4 million was established as a threshold goal required to be achieved in order for any payouts to be made under such plan. The minimum pre-tax income threshold was determined by reference to the average trailing three years' pre-tax income of the Company, plus the Company's projected accrued incentive bonus at December 31, 2022, multiplied by 50%. The ELT believed using a trailing three-year average metric would incent management to focus on long-term growth, and not be disproportionately focused on short-term results. The ELT determined that pre-tax income was an appropriate measure upon which to provide a threshold evaluation of our annual performance because the ELT believes pre-tax income represents an appropriate measure of profitability for the Company.
 If that threshold was met, payouts under the 2023 Bonus Plan were based on the achievement of personal and department goals and the performance evaluation. The bonus will be paid on an individual basis as a percentage of the participant's base salary. The plan allows for a bonus range of 0% to 65% of the participant's base salary.
 In 2023, the Company did not achieve the $14.4 million pre-tax income threshold goal; therefore, executive officers did not receive payouts under the 2023 Bonus Plan.
 Deferred Compensation:
 The Company offers all eligible employees, including executive officers, the opportunity to participate in a Company-sponsored deferred compensation plan in accordance with Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code"). The Company "matches" employee contributions of up to 6% of their salary, using the following formula: 100% of the first 1% and 70% of the next 5% of salary deferred. From August 1, 2023 to December 31, 2023 the Company paused their matches on employee contributions. The Company resumed matches on January 1, 2024 utilizing our previous methodology.
 As a result of certain federal limitations on the ability of management or highly compensated employees (within the respective meanings of Section 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of the Employee Retirement Income Security Act of 1974) to participate in such plans, the Company has established the Company's Executive Nonqualified Deferred Compensation Plan (the "Deferred Compensation Plan"). Pursuant to the Deferred Compensation Plan, the Company annually credits the account of each participant who received more than the Section 401(a)(17) salary limit (as described in the Code) with a discretionary amount that is usually, but not always, equal to the amount the participant would have received as a 401(k) Company matching contribution on the amount of their salary above the Section 401(a)(17) limit had they been allowed to defer 6%
 - 19 -

 of that amount into the qualified plan. The ELT determined that it was appropriate to offer the Deferred Compensation Plan, and the matching contribution consistent with the level provided by employees generally, to such persons as if they were eligible to participate in Company sponsored plans open to other employees.
 Perquisites and Other Compensation:
 The Company believes that providing its executive officers with certain reasonable perquisites and other compensation is appropriate and consistent with the Company's overall compensation philosophy designed to attract and retain top executives. The ELT periodically reviews the types and amounts of perquisites and other compensation provided to the Company's executive officers. In conducting this review, the ELT considers, among other things, the types and ranges of compensation provided at various similar sized or situated companies and, in 2023, determined that these amounts were appropriate.

 Select Company executive officers are provided the use of Company-owned automobiles. These amounts are included in the taxable income of the executive officers. In addition, the Company generally provides certain insurance benefits to its executive officers. This includes long-term disability and travel accident insurance (which pays a benefit upon the occurrence of certain specific events), as well as basic life and accidental death insurance coverage, which coverage is provided on a graduated scale based on seniority. In addition, in recognition of the commitment to the Company by those individuals with twenty or more years of service to the Company, the Company also pays the premiums for their personal medical benefits. In 2023, Messrs. Cheek, IV and Ms. Herring received this benefit. In addition, during 2023, Messrs. Cheek, III and Cheek, IV, and Ms. Herring, based on positions as shareholders and executive officers, were determined eligible to participate in the Company's medical expenses reimbursement program ("MERP"), which provides reimbursement for amounts not otherwise covered under policies for which these officers are eligible to participate in.
 These amounts for each named executive officer are reflected in the Summary Compensation Table and related notes below.
 Employment Agreements and Change in Control Arrangements:
 The Company does not enter into employment agreements with its executive officers. Given the nature of its business, and the fact that the Company is a family owned business whose stock is not publicly traded, the Company has not had significant turnover among its senior management, and has determined that it is not necessary to enter into such agreements with its executives.
 For similar reasons, due to the nature of compensation and the fact that a change in control of the Company is unlikely without significant input and approval from the ELT and the Company's closely-held ownership, the ELT has determined that it is not necessary to condition any payments upon, or make any amounts contractually payable upon, any change in control of the Company.
 Compensation Committee Report:
 In the absence of a standing compensation committee, the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Management and, based on such review and discussions, determined that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K.

 The Board of Directors:

 Ben F. Cheek. IV

 Sheryl Smith

 Jerry L. Harrison, Jr.

 - 20 -

 Summary Compensation Table

 Name and
Principal
Position
 Year
 Salary
 Bonus
 Non-Equity
Incentive
Plan
Compensation
 All
Other
Compensation
 Total

 (1)
 (2)
 (3)

 Chairman

 2023
 $
 234,167
 $
 91,859
 $
 —
 $
 78,576
 $
 404,602

 2022
 $
 328,564
 $
 95,816
 $
 —
 $
 93,344
 $
 517,724

 2021
 $
 321,384
 $
 95,301
 $
 208,899
 $
 59,603
 $
 685,187

 President and CEO

 2023
 $
 390,833
 $
 252,908
 $
 —
 $
 104,752
 $
 748,493

 2022
 $
 417,000
 $
 252,208
 $
 122,211
 $
 118,036
 $
 909,455

 2021
 $
 402,000
 $
 251,477
 $
 261,300
 $
 99,484
 $
 1,014,261

 Chief Financial Officer

 2023
 $
 324,000
 $
 13,440
 $
 —
 $
 13,694
 $
 351,134

 2022
 $
 300,500
 $
 12,500
 $
 91,585
 $
 23,441
 $
 428,026

 2021
 $
 265,500
 $
 11,053
 $
 172,575
 $
 3,609
 $
 452,737

 Chief Operating Officer

 2023
 $
 423,300
 $
 17,892
 $
 —
 $
 34,471
 $
 475,663

 2022
 $
 416,500
 $
 17,345
 $
 125,582
 $
 39,719
 $
 599,146

 2021
 $
 398,750
 $
 16,051
 $
 259,188
 $
 21,725
 $
 695,714

 Charles E. Vercelli, Jr.
 Chief Government and Regulatory Affairs Officer

 2023
 $
 271,944
 $
 16,158
 $
 —
 $
 136,886
 $
 424,988

 2022
 $
 269,980
 $
 15,599
 $
 114,292
 $
 136,341
 $
 536,212

 2021
 $
 315,500
 $
 15,020
 $
 244,075
 $
 71,333
 $
 645,928

 (1)For additional information on the payments of discretionary bonus awards, see "Compensation Discussion and Analysis – Bonus Awards" above.
 (2)For additional information on the payments of non-equity incentive plan compensation, see "Compensation Discussion and Analysis – Non-Equity Incentive Compensation" above.
 (3)All other compensation for the Company's named executive officers for 2023 is detailed as follows:

 All Other Compensation

 Name
 Personal
Use of
Company
Auto or Airplane
 Insurance
Premiums
 Director Fees
and/or
Deferred Salary (a)
 Company
Contribution
To Deferred
Compensation Plan
 Total

 $
 29,681
 $
 13,895
 $
 $
 —
 $
 78,576

 $
 57,346
 $
 8,965
 $
 $
 3,441
 $
 104,752

 $
 —
 $
 $
 12,000
 $
 $
 13,694

 $
 3,568
 $
 $
 24,000
 $
 6,084
 $
 34,471

 Charles E. Vercelli, Jr.
 $
 —
 $
 $
 132,000
 $
 4,055
 $
 136,886

 (a)Mr. Vercelli elected to defer $132,000 in salary. Mr. McQuain elected to defer $24,000 in salary. Mr. Gyomory elected to defer $12,000 in salary. See "Executive Nonqualified Deferred Compensation Plan" and "Director Compensation" below.
 - 21 -

 Grants of Plan-Based Awards
 In 2023, the named executive officers were eligible to receive non-equity incentive plan payouts under the Company's 2023 Bonus Plan. The following table sets forth certain information with respect to award eligibility and payments for the fiscal year ended December 31, 2023 to our named executive officers.

 Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1)

 Name
 Grant Date
 Threshold
$
 Target
$
 Maximum
$

 $
 —
 $
 106,783
 $
 213,567

 $
 —
 $
 135,525
 $
 271,050

 $
 —
 $
 101,563
 $
 203,125

 $
 —
 $
 139,263
 $
 278,525

 Charles E. Vercelli, Jr.(2)

 $
 —
 $
 126,744
 $
 253,487

 (1)Represented estimated possible payouts under the 2023 Bonus Plan. The "Threshold" column reflects the payout which would have occurred if each performance goal as set out in the 2023 Bonus Plan was met, and payouts were made at the minimum level (0%) of salary. The "Target" column reflects the payout which would have occurred if each performance goal as set out in the 2023 Bonus Plan was met, and payouts were made at the midpoint of bonus payout as a percent of salary (32.5%). The "Maximum" column reflects the payout which would have occurred if each performance goal as set out in the 2023 Bonus Plan was met, and payouts were made at the maximum level (65.0%) of salary.
 (2)Mr. Vercelli retired effective December 31, 2023.
 Compensation Committee Interlocks and Insider Participation
 The Company is a family owned business and because of the closely held nature of ownership, the Company does not have an official compensation committee (or other official committee of the Board of Directors performing equivalent functions) or a charter outlining the responsibilities thereof. The ELT establishes the bases for all executive compensation, which compensation is approved by shareholders Mr. Cheek, IV and Ms. Herring.
 During 2023, none of the Company's executive officers served as a member of the board of directors or compensation committee of any entity for which a member of our Board served as an executive officer.
 Executive Nonqualified Deferred Compensation Plan
 Any management or highly compensated employee who has been designated by the Administrative Committee for the Company's Deferred Compensation Plan as an eligible employee may participate in the Company's Executive Nonqualified Deferred Compensation Plan (the "Plan"). Non-employee directors are also eligible to defer their respective director fees into the Deferred Compensation Plan.
 The Plan does not require any contribution to be made by a participant therein.
 Interest is credited on the participant's account on the last day of each quarter at an interest rate equal to the average of the interest rate during such quarter paid on the Company's Variable Rate Subordinated Debentures with a one-year interest adjustment period.
 - 22 -

 Nonqualified Deferred Compensation Table

 Name
 Executive
Contributions
In Last
Fiscal Year(1)
 Registrant
Contributions
In Last
Fiscal Year(2)
 Aggregate
Earnings
In Last
Fiscal Year
 Aggregate
Withdrawals /
Distributions
 Aggregate
Balance
At Last
Fiscal Year
End

 $
 —
 $
 —
 $
 22,143
 $
 —
 $
 798,044

 $
 —
 $
 3,441
 $
 4,327
 $
 —
 $
 199,354

 $
 12,000
 $
 $
 $
 —
 $
 23,728

 $
 24,000
 $
 6,084
 $
 $
 —
 $
 47,600

 Charles E. Vercelli, Jr.
 $
 132,000
 $
 4,055
 $
 13,049
 $
 —
 $
 517,234

 (1)Mr. Vercelli elected to defer $132,000 in salary. Mr. McQuain elected to defer $24,000 in salary. Mr. Gyomory elected to defer $12,000 in salary. See the "All Other Compensation" portion of the "Summary Compensation Table" above, and "Director Compensation" below.
 (2)Company contributions are included in the "All Other Compensation" portion of the Summary Compensation Table above.
 Director Compensation
 Name
 Fees
Earned Or
Paid In
Cash
 All
Other
Compensation
 Total

 $
 —
 $
 —
 $
 —

 $
 $
 —
 $

 $
 $
 —
 $

 James H. Harris, III (1)

 $
 $
 —
 $

 $
 $
 —
 $

 $
 $
 —
 $

 $
 $
 —
 $

 $
 40,000
 $
 —
 $
 40,000

 $
 $
 —
 $

 $
 $
 —
 $

 (1) Mr. Harris retired from the Board effective December 31, 2023.
 In 2023, each member of the Board was entitled to receive $35,000 per year for service as a member of the Board of Directors, including service on any committee thereof. The Chairman of the Audit Committee was entitled to additional $5,000. Mr. Cheek IV elected to receive 2023 director fees as deferred compensation (see "Executive Nonqualified Deferred Compensation Plan" above).
 Chief Executive Officer Compensation Ratio
 For the 2023 fiscal year, the ratio of the annual total compensation of Ms. Virginia C. Herring, our Chief Executive Officer ("CEO Compensation"), to the median of the annual total compensation of all of our employees other than our Chief Executive Officer ("Median Annual Compensation") was 16.4 to 1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions summarized below. In this summary, we refer to the employee who received such Median Annual Compensation as the "Median Employee." For purposes of this disclosure, the date used to identify the Median Employee was December 31, 2023 (the "Determination Date").
 - 23 -

 CEO Compensation for purposes of this disclosure represents the total compensation reported for Ms. Virginia C. Herring for 2023 under the "Total" column of the "Summary Compensation Table" for the 2023 fiscal year. For purposes of this disclosure, Median Annual Compensation was $45,582, and was calculated by totaling for our Median Employee all applicable elements of compensation for the 2023 fiscal year in accordance with Item 402(c)(2)(x) of Regulation S-K.
 To identify the Median Employee, we first determined our employee population as of the Determination Date. We had 1,709 employees, representing all full-time and part-time employees. This number does not include any independent contractors, as permitted by the applicable SEC rules. We then measured compensation for the period beginning on January 1, 2023 and ending on December 31, 2023. This compensation measurement was calculated by totaling for each employee gross taxable earnings salary, bonus, sick pay, vacation pay and other compensation as shown in our payroll and human resources records for 2023.

 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS:
 (a)Security Ownership of Certain Beneficial Owners:
 Information listed below represents ownership in the Company with respect to any person (including any "group" as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) who is known to the Company to be the beneficial owner of more than five percent of any class of the Company's voting securities as of December 31, 2023. Each such person has sole "beneficial" ownership of such shares (as determined in accordance with applicable SEC rules relating to share ownership).

 Name and Address of
Beneficial Owner
 Title of Class
 Amount and Nature of
Beneficial Ownership
 Percent of
Class

 644 Shares - Direct
 37.88%

 135 East Tugalo Street

 Toccoa, Georgia 30577

 644 Shares - Direct
 37.88%

 135 East Tugalo Street

 Toccoa, Georgia 30577

 412 Shares - Direct
 24.24%

 4726 Quailwood Dr.

 Flowery Branch, GA 30542

 (b)Security Ownership of Management:
 Ownership listed below represents ownership in each class of equity securities of the Company as of December 31, 2023, by (i) Our directors and our executive officers of the Company named in the summary compensation table and (ii) all directors and executive officers of the Company as a group. Except as described below, each person has sole "beneficial" ownership of such shares.
 - 24 -

 Name
 Title of Class
 Amount and Nature of
Beneficial Ownership
 Percent of
Class

 None
 None

 None
 None

 644 Shares - Direct
 37.88%

 7,405 Shares - Direct
 4.40%

 38,089 Shares – Indirect (1)

 644 Shares - Direct
 37.88%

 7,911 Shares - Direct
 4.70%

 38,088 Shares – Indirect (1)

 412 Shares - Direct

 24.24%

 8,111 Shares - Direct

 4.76%

 38,089 Shares – Indirect (1)

 None
 None

 None
 None

 None
 None

 None
 None

 None
 None

 None
 None

 None
 None

 None
 None

 None
 None

 None
 None

 None
 None

 None
 None

 Sheryl Smith

 None
 None

 None
 None

 None
 None

 None
 None

 All directors and executive officers as a group (11 persons)

 1,700 Shares - Direct

 100.00%

 23,427 Shares - Direct
 13.86%

 114,266 Shares- Indirect (1)

 67.89%

 - 25 -

 (1)Various trusts have been established for the benefit of each of Ben F. Cheek, IV, Virginia C. Herring and David W. Cheek. The trustees of each of the trusts, who by virtue of dispositive power over the assets thereof are deemed to be the beneficial owners of shares of the Company's non-voting common stock contained therein, are the children of Ben F. Cheek, III named above who are not the named beneficiaries of each of the respective trusts.

 Trustees
 Trust for
Benefit of
 Number of
Shares
 %

 David W. Cheek and Virginia C. Herring
 38,089

 David W. Cheek and Ben F. Cheek, IV
 38,088

 Ben F. Cheek, IV and Virginia C. Herring
 38,089

 (c)The Company knows of no contractual arrangements which may at a subsequent date result in a change in control of the Company.

 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE:
 Related Party Transactions:
 The Company leases its home office buildings for a total of $96,000 per year from Franklin Enterprises, Inc. under leases which expire December 31, 2024. Effective July 1, 2022, the Company entered into a lease with Franklin Enterprises, Inc. for rental of office space for its training department at a cost of $9,600 per year. This lease expires June 30, 2027. Messrs. Cheek, III, Cheek, IV, and Ms. Herring, directors and executive officers of the Company own 66.67%, 11.11% and 11.11% of the shares of Franklin Enterprises, Inc., respectively. In Management's opinion, these leases are at rates and on terms which approximate those obtainable from independent third parties. The aggregate dollar amount of all remaining periodic payments due during these lease terms is $129,600.
 During 1998, the Company extended a loan to a real estate development partnership of which David W. Cheek, member of the board of directors and owner 24.24% of the Company's voting stock, is a partner. The loan was renewed effective July 20, 2023. The balance on this commercial loan (including principal and accrued interest) was $2.1 million at December 31, 2023, which was also the maximum amount outstanding during the year. There were no principal or interest payments applied against this loan during 2023. The loan is a variable-rate loan with the interest based on the prime rate plus 1%. Interest is currently computed at an annual rate of 9.50%. The interest rate adjusts whenever the prime rate changes.
 Effective September 23, 1995, the Company and Deborah A. Guimond, Trustee of the Guimond Trust (an irrevocable life insurance trust, the "Trust") entered into a Split-Dollar Life Insurance Agreement. The life insurance policy insures A. Roger Guimond, retired executive officer of the Company. As a result of certain changes in tax regulations relating to split-dollar life insurance policies, the agreement was amended, effectively making the premium payments a loan to the Trust. The interest on the loan is a variable rate adjusting monthly based on the federal mid-term Applicable Federal Rate. A payment of $18,808 for interest accrued during 2023 was applied to the loan on December 18, 2023. No principal payments on this loan were made in 2023. The balance on this loan at December 31, 2023 was $485,358. This was the maximum amount outstanding during the year.
 In accordance with the provisions of the written charter of the Audit Committee of the Board of Directors, the Audit Committee approves all related party transactions that are required to be disclosed pursuant to the rules and regulations of the SEC.
 Director Independence:
 See Part III, Item 10. Directors, Executive Officers and Corporate Governance, of this Annual Report on Form 10-K for a discussion on director independence matters, which discussion is incorporated herein by reference.

 - 26 -

 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES:
 The Company was billed for professional services provided during fiscal years 2023 and 2022 by Deloitte & Touche LLP, the Company's independent registered public accounting firm, in the amounts set out in the following table, all of which were pre-approved by the Audit Committee. Other than as set out below, the Company was not billed for any services provided by Deloitte & Touche LLP.
 The Audit Committee of the Board of Directors has considered the services rendered by Deloitte & Touche LLP for services other than the audit of the Company's financial statements and has determined that the provision of these services is compatible with maintaining the independence of Deloitte & Touche LLP.

 Services Provided:
 2023
 2022

 Audit Fees (1)
 $
 494,934
 $
 397,362

 Audit Related Fees (2)
 —
 151,295

 Tax Fees (3)
 169,724
 151,568

 Total
 $
 664,658
 $
 700,225

 (1)Fees in connection with the audit of the Company's annual financial statements for the fiscal years ended December 31, 2023 and 2022, and reviews of the financial statements included in the Company's quarterly reports on Form 10-Q during the 2023 and 2022 fiscal years.
 (2)Fees in connection with the audit of the Company's 401(k) retirement plan.
 (3)Fees billed by Deloitte Tax LLP for professional services rendered for tax compliance, tax advice and tax planning. The services included the preparation of the Company's and its subsidiaries' tax returns.
 All audit and non-audit services to be performed by the Company's independent registered public accounting firm must be approved in advance by the Audit Committee. Pursuant to the Audit Committee Pre-Approval Policy (the "Policy"), and as permitted by SEC rules, the Audit Committee may delegate pre-approval authority to any of its members, provided that any service approved in this manner is reported to the full Audit Committee at its next meeting. The Policy provides for a general pre-approval of certain specifically enumerated services that are to be provided within specified fee levels. With respect to requests to provide services not specifically pre-approved pursuant to the general grant, such requests must be submitted to the Audit Committee by the Company's independent registered public accounting firm and the Company's Chief Financial Officer and must include a joint statement as to whether, in their view, the request is consistent with SEC rules on auditor independence.
 - 27 -

 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES:

 (a)
 (1)
 The following Report of Independent Registered Public Accounting Firm and financial
statements are incorporated by reference herein from Exhibit 13 hereto:

 Report of Independent Registered Public Accounting Firm.

 Consolidated Statements of Financial Position at December 31, 2023 and 2022.

 Consolidated Statements of Income for the three years ended December 31, 2023, 2022, and 2021.

 Consolidated Statements of Comprehensive Income for the three years ended
 December 31, 2023, 2022, and 2021.

 Consolidated Statements of Stockholders' Equity for the three years ended
 December 31, 2023, 2022, and 2021.

 Consolidated Statements of Cash Flows for the three years ended December 31, 2023, 2022, and 2021.

 Notes to Consolidated Financial Statements.

 (2)
 Financial Statement Schedule:

 Report of Independent Registered Public Accounting Firm.

 Condensed Statements of Financial Position at December 31, 2023 and 2022.

 Condensed Statements of Income for the three years ended December 31, 2023, 2022.

 Condensed Statements of Comprehensive Income for the three years ended December 31, 2023, 2022, and 2021.

 Condensed Statements of Stockholders' Equity for the three years ended December 31, 2023, 2022, and 2021.

 Condensed Statements of Cash Flows for the three years ended December 31, 2023, 2022, and 2021.

 (3)Exhibits:

 3.
 (a)
 Restated Articles of Incorporation as amended January 26, 1996 (incorporated by reference to Exhibit 3(a) to Form 10-K for the year ended December 31, 1995).

 - 28 -

 (b)
 Bylaws (incorporated by reference to Exhibit 3(b) to Form 10-K for the year ended December 31, 1995).

 (c)

 Amended and Restated Articles of Incorporation as amended March 26, 2024 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed with the SEC on March 29, 2024).

 (d)

 Amended and Restated Articles of Incorporation as amended March 26, 2024 (incorporated by reference to Exhibit 3.2 to the Company's Form 8-K filed with the SEC on March 29, 2024).

 4.
 (a)
 Indenture dated October 31, 1984, between the Company and The First National Bank of Gainesville, Trustee (incorporated by reference to Exhibit 4(a) to Amendment No. 1 to the Registration Statement on Form S-2 dated April 24, 1998, File No. 333-47515).

 (b)
 Form of Series 1 Variable Rate Subordinated Debenture (incorporated by reference to Exhibit 4(b) to Amendment No. 3 to the Registration Statement on Form S-2 dated November 14, 2005, File No. 333-126589).

 (c)
 Agreement of Resignation, Appointment and Acceptance dated as of May 28, 1993 between the Company, The First National Bank of Gainesville, and Columbus Bank and Trust Company (incorporated by reference to Exhibit 4(c) to the Company's Post-Effective Amendment No. 1 to the Registration Statement on Form S-2 dated June 8, 1993, File No. 33-49151).

 (d)
 Modification of Indenture, dated March 30, 1995, by and among Columbus Bank and Trust Company, Synovus Trust Company and the Company (incorporated by reference to Exhibit 4(b) to the Company's Form 10-K for the year ended December 31, 1994).

 (e)
 Second Modification of Indenture dated December 2, 2004 by and among Synovus Trust Company and the Company (incorporated by reference to Exhibit 4(e) to the Registration Statement on Form S-2 dated July 14, 2005, File No. 333-126589).

 (f)
 Form of Indenture by and between the Company and U.S. Bank National Association (incorporated by reference to Exhibit 4(a) to the Company's Registration Statement on Form S-1 dated December 27, 2007, File No. 333-148331).

 (g)
 Third Modification of Indenture dated March 26, 2010 by and between U.S. Bank National Association and the Company (incorporated by reference to Exhibit 4(h) to the Company's Form 10-K for the year ended December 31, 2009).

 (h)
 Tri-party Agreement by and among the Company, Synovus Trust Company and U.S. Bank National Association (incorporated by reference to Exhibit 4(i) to the Company's Form 10-K for the year ended December 31, 2009).

 (i)
 Fourth Modification of Indenture dated March 26, 2010 by and between U.S. Bank National Association and the Company (incorporated by reference to Exhibit 4(j) to the Company's Form 10-K for the year ended December 31, 2009).

 - 29 -

 (j)
 Form of Series 1 Variable Rate Subordinated Debenture (incorporated by reference to Exhibit 4(b) to Pre-Effective Amendment No. 2 to Registration Statement on Form S-1, filed with the SEC on June 30, 2011, File No. 333-173684).

 (k)
 Form of Indenture by and between the Company and U.S. Bank National Association as of April 3, 2008 (incorporated by reference to Exhibit 4(a) to Pre-Effective Amendment No. 2 to Registration Statement on Form S-1, filed with the SEC on June 30, 2011, File No. 333-173685).

 (l)
 Form of Senior Demand Note (incorporated by reference to Exhibit 4(b) to Pre-Effective Amendment No. 2 to Registration Statement on Form S-1, filed with the SEC on June 30, 2011, File No. 333-173685).

 (m)
 Form of Overdraft Protection Agreement, Security Agreement and Assignment (incorporated by reference to Exhibit 4(c) to Pre-Effective Amendment No. 2 to Registration Statement on Form S-1, filed with the SEC on June 30, 2011, File No. 333-173685).

 (n)
 Form of Senior Demand Note Check Redemption Agreement (incorporated by reference to Exhibit 4(d) to Pre-Effective Amendment No. 2 to Registration Statement on Form S-1, filed with the SEC on June 30, 2011, File No. 333-173685).

 (o)
 Form of Check (incorporated by reference to Exhibit 4(e) to Pre-Effective Amendment No. 2 to Registration Statement on Form S-1, filed with the SEC on June 30, 2011, File No. 333-173685).

 10.
 (a)
 Amended and Restated Loan and Security Agreement, dated as of November 19, 2019, by and among the Company, Wells Fargo Bank, N.A., as Agent for the lenders, and other financial institutions from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the SEC on November 22, 2019).

 (b)
 First Amendment to Amended and Restated Loan and Security Agreement, dated as of August 17, 2020, by and among the Company, Wells Fargo Bank, N.A., as agent for the lenders, and other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the SEC on August 19, 2020).

 (c)
 Second Amendment to Amended and Restated Loan and Security Agreement, dated as of March 25, 2021, by and among the Company, Wells Fargo Bank, N.A., as Agent for the lenders, and other financial institutions from time to time party thereto (incorporated by reference to the Company's Form 10-K filed with the SEC on March 31, 2022).

 (d)
 Third Amendment to the Amended and Restated Loan and Security Agreement, dated as of November 17, 2021, by and among the Company, Wells Fargo Bank, N.A. as Agent for the lenders, and other financial institutions party thereto (incorporated by reference to Exhibit 10(d) to the Company's Form 8-K filed with the SEC on November 19, 2021). *

 - 30 -

 (e)
 Fourth Amendment to the Amended and Restated Loan and Security Agreement, dated as of November 7, 2022, by and among the Company, Wells Fargo Bank, N.A. as Agent for the lenders, and other financial institutions party thereto (incorporated by reference to Exhibit 10(d) to the Company's Form 8-K filed with the SEC on November 14, 2022). *

 (f)

 Fifth Amendment to the Amended and Restated Loan and Security Agreement, dated May 12, 2023, by and among the Company, Wells Fargo Bank, N.A. as Agent for the lenders, and other financial institutions party thereto (incorporated by reference to Exhibit 10(d) to the Company's Form 8-K filed with the SEC on May 16, 2023.

 (g)

 Sixth Amendment to the Amended and Restated Loan and Security Agreement, dated December 27, 2023, by and among the Company, Wells Fargo Bank, N.A. as Agent for the lenders, and other financial institutions party thereto (incorporated by reference to the Exhibit 10(d) to the Company's Form 8-K filed with the SEC on January 4, 2024.

 (h)

 Director Compensation Summary Term Sheet. *

 (i)

 Form of the Company's 2023 Executive Bonus Plan. *

 13.
 Annual Report.

 21.
 Subsidiaries of the Company (incorporated by reference to Exhibit 21 to the Company's Form 10-K for the year ended December 31, 2010).

 23.
 Consent of Independent Registered Public Accounting Firm.

 31.1
 Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934.

 31.2
 Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934.

 32.1
 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.

 32.2
 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

 - 31 -

 101.DEF

 *
 Management contract or compensatory plan or arrangement filed pursuant to Item 601(b)(10)(iii) of Regulation S-K.

 Item 16. FORM 10-K SUMMARY:
 NONE.
 - 32 -

 SIGNATURES
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:

 By: /s/ Virginia C. Herring

 Date

 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

 Signatures
 Title
 Date

 /s/ Ben F. Cheek, IV

 (Ben F. Cheek, IV)
 Chairman of Board

 /s/ Ben F. Cheek, III

 (Ben F. Cheek, III)
 Chairman Emeritus

 /s/ Virginia C. Herring

 (Virginia C. Herring)
 Director, President and Chief Executive Officer

 /s/ David W. Cheek

 (David W. Cheek)

 /s/ Brian J. Gyomory

 (Brian J. Gyomory)
 Executive Vice President and Chief Financial Officer

 /s/ A. Roger Guimond

 (A. Roger Guimond)

 /s/ Jerry J. Harrison, Jr.

 (Jerry J. Harrison, Jr.)

 /s/ Donata Ison

 (Donata Ison)

 /s/ John G. Sample, Jr.

 (John G. Sample, Jr.)

 /s/ C. Dean Scarborough

 (C. Dean Scarborough)

 /s/ Sheryl Smith

 (Sheryl Smith)

 /s/ Keith D. Watson

 (Keith D. Watson)

 - 33 -

 Supplemental Information to be Furnished with Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act.
 (a)Except to the extent that the materials enumerated in (1) and/or (2) below are specifically incorporated into this Form by reference, every registrant which files an annual report on this Form pursuant to Section 15(d) of the Act shall furnish to the Commission for its information, at the time of filing its report on this Form, four copies of the following:
 (1)Any annual report to security holders covering the registrant's last fiscal year; and
 (2)Every proxy statement, form of proxy or other proxy soliciting material sent to more than ten of the registrant's security holders with respect to any annual or other meeting of security holders.
 (b)The foregoing material shall not be deemed to be "filed" with the Commission or otherwise subject to the liabilities of Section 18 of the Act, except to the extent that the registrant specifically incorporates it in its annual report on this Form by reference.
 (c)This Annual Report on Form 10-K incorporates by reference portions of the Registrant's Annual Report to security holders for the fiscal year ended December 31, 2023, which is filed as Exhibit 13 hereto. The Registrant is a privately held corporation and therefore does not distribute proxy statements or information statements to its shareholders.
 - 34 -

 Schedule I
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Shareholders and Board of Directors of 1st Franklin Financial Corporation
 Opinion on the Financial Statement Schedule
 We have audited the consolidated financial statements of 1st Franklin Financial Corporation and subsidiaries (the "Company") as of December 31, 2023 and 2022, and for each of the three years in the period ended December 31, 2023, and have issued our report thereon dated April 1, 2024; such consolidated financial statements and report are included in your 2023 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedule of the Company listed in the Index at Item 15. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
 /s/ Deloitte & Touche LLP
 Atlanta, Georgia
 - 35 -

 STATEMENTS OF FINANCIAL POSITION
 DECEMBER 31, 2023 AND 2022
 ASSETS

 2023
 2022

 CASH AND CASH EQUIVALENTS
 $
 4,348,911
 $
 6,659,184

 RESTRICTED CASH
 627,628
 532,706

 LOANS:

 972,567,737
 911,821,593

 29,812,798
 37,323,155

 175,548,110
 146,507,130

 1,177,928,645
 1,095,651,878

 Less: Unearned Finance Charges
 174,043,203
 154,630,023

 Unearned Insurance Commissions
 27,944,898
 26,914,714

 Allowance for Credit Losses
 71,361,745
 75,210,063

 904,578,799
 838,897,078

 INVESTMENTS IN SUBSIDIARIES
 278,856,873
 248,545,940

 INVESTMENT SECURITIES:

 Available for Sale, at fair market value
 485,051
 380,316

 OTHER ASSETS:

 Land, Buildings, Equipment and Leasehold Improvements,

 Less accumulated depreciation and amortization of $ 55,304,631 and $ 50,116,238 in 2023 and 2022, respectively

 17,215,898
 13,111,394

 Operating Lease Right-of-Use Assets
 41,938,371
 38,153,238

 Miscellaneous
 23,228,957
 16,644,400

 82,383,226
 67,909,032

 TOTAL ASSETS
 $
 1,271,280,488
 $
 1,162,924,256

 - 36 -

 STATEMENTS OF FINANCIAL POSITION
 DECEMBER 31, 2023 AND 2022
 LIABILITIES AND STOCKHOLDERS' EQUITY

 2023
 2022

 SENIOR DEBT:

 $
 122,050,000
 $
 67,531,000

 Subsidiary Borrowings (Note 1)
 30,000,000
 —

 Senior Demand Notes, including accrued interest
 100,568,430
 112,325,674

 661,573,356
 624,585,553

 914,191,786
 804,442,227

 ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

 Operating Lease Liabilities
 43,034,942
 39,019,208

 Other Accounts Payable and Accrued Expenses
 20,936,706
 31,163,971

 63,971,648
 70,183,179

 SUBORDINATED DEBT
 28,533,940
 29,005,826

 Total Liabilities
 1,006,697,374
 903,631,232

 STOCKHOLDERS' EQUITY:

 Preferred Stock; $ 100 par value

 6,000 shares authorized; no shares issued or outstanding

 —
 —

 Common Stock:

 Voting Shares; $ 100 par value;

 2,000 shares authorized; 1,700 shares issued and outstanding as of December 31, 2023 and 2022

 Non-Voting Shares; no par value;

 198,000 shares authorized; 168,300 shares issued and outstanding as of December 31, 2023 and 2022

 —
 —

 Accumulated Other Comprehensive Income
 ( 18,955,725)
 ( 26,401,816)

 Retained Earnings
 283,368,839
 285,524,840

 Total Stockholders' Equity
 264,583,114
 259,293,024

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 $
 1,271,280,488
 $
 1,162,924,256

 - 37 -

 Senior Demand Notes, including accrued interest
 STATEMENTS OF INCOME

 2023
 2022
 2021

 INTEREST INCOME:

 Finance Charges
 $
 276,974,396
 $
 266,963,826
 $
 236,651,728

 Investment Income
 124,042
 ( 18,381)
 309,412

 277,098,438
 266,945,445
 236,961,140

 INTEREST EXPENSE:

 Senior Debt
 43,951,125
 27,483,876
 22,786,460

 Subordinated Debt
 1,099,749
 971,958
 977,093

 45,050,874
 28,455,834
 23,763,553

 NET INTEREST INCOME
 232,047,564
 238,489,611
 213,197,587

 PROVISION FOR CREDIT LOSSES
 87,387,765
 84,287,916
 42,183,163

 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
 144,659,799
 154,201,695
 171,014,424

 NET INSURANCE INCOME
 21,544,942
 21,957,943
 20,664,481

 OTHER REVENUE
 7,882,862
 6,939,179
 7,029,120

 OPERATING EXPENSES:

 Personnel Expense
 111,763,367
 113,732,789
 109,011,575

 Occupancy Expense
 20,705,383
 18,173,248
 17,382,787

 Other Expense
 65,182,973
 56,955,705
 47,765,457

 197,651,723
 188,861,742
 174,159,819

 (LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES
 ( 23,564,120)
 ( 5,762,925)
 24,548,206

 PROVISION FOR INCOME TAXES
 39,339
 655,722
 595,915

 EQUITY IN EARNINGS OF SUBSIDIARIES, Net of Tax
 24,133,548
 22,578,274
 17,908,716

 NET INCOME
 $
 $
 $

 - 38 -

 STATEMENTS OF COMPREHENSIVE INCOME

 2023
 2022
 2021

 Net Income
 $
 $
 $

 Other Comprehensive Loss:

 Net changes related to available-for-sale securities

 Unrealized gain (loss)
 9,743,321
 ( 45,165,474)
 ( 3,858,538)

 Income tax (provision) benefit
 ( 2,026,463)
 9,479,082
 816,053

 Net unrealized gain (loss)
 7,716,858
 ( 35,686,392)
 ( 3,042,485)

 Less reclassification of gain to net income
 270,767
 452,074
 487,791

 Total Other Comprehensive Income (Loss)
 7,446,091
 ( 36,138,467)
 ( 3,530,276)

 Total Comprehensive Income (Loss)
 $
 7,976,180
 $
 ( 19,978,840)
 $
 38,330,731

 - 39 -

 STATEMENTS OF STOCKHOLDERS' EQUITY

 Common Stock
 Retained
Earnings
 Accumulated
Other
Comprehensive
Income (Loss)
 Total

 Shares

 Balance at December 31, 2020
 265,002,401
 13,266,927
 278,439,328

 Comprehensive Income:

 Net Income for 2021
 —
 —
 —

 Other Comprehensive Loss
 —
 —
 —
 ( 3,530,276)

 Total Comprehensive Income
 —
 —
 —
 —
 38,330,731

 —
 —
 —

 Balance at December 31, 2021
 $
 $
 286,851,102
 $
 9,736,651
 $
 296,757,753

 Comprehensive Loss:

 Net Income for 2022
 —
 —
 —

 Other Comprehensive Loss
 —
 —
 —
 ( 36,138,467)

 Total Comprehensive Loss
 —
 —
 —
 —
 ( 19,978,840)

 —
 —
 —

 Balance at December 31, 2022
 $
 $
 285,524,840
 $
 ( 26,401,816)
 $
 259,293,024

 Comprehensive Loss:

 Net Income for 2023
 —
 —
 —

 Other Comprehensive Income
 —
 —
 —
 7,446,091

 Total Comprehensive Income
 —
 —
 —
 —
 7,976,180

 —
 —
 —

 Balance at December 31, 2023
 $
 $
 283,368,839
 $
 ( 18,955,725)
 $
 264,583,114

 - 40 -

 STATEMENTS OF CASH FLOWS

 2023
 2022
 2021

 CASH FLOWS FROM OPERATING ACTIVITIES:

 Net Income
 $
 $
 $

 Adjustments to reconcile net income to net cash provided by operating activities:

 Provision for credit losses
 87,387,765
 84,287,916
 42,183,163

 Depreciation and amortization
 6,606,132
 4,425,985
 4,629,756

 Equity in undistributed earnings of subsidiaries
 ( 24,133,548)
 ( 22,578,274)
 ( 17,908,716)

 Net (gains) losses due to called redemptions of marketable securities, gain on sales of equipment and amortization on securities
 ( 104,735)
 38,232
 ( 301,151)

 (Increase) in miscellaneous assets and other
 ( 5,737,477)
 ( 7,647,230)
 ( 893,761)

 Increase (Decrease) in other liabilities
 ( 8,792,129)
 ( 2,135,176)
 7,029,138

 Net Cash Provided
 55,756,097
 72,551,080
 76,599,436

 CASH FLOWS FROM INVESTING ACTIVITIES:

 Loans originated or purchased
 ( 642,891,708)
 ( 602,792,430)
 ( 588,636,277)

 Loan payments
 489,822,223
 471,094,166
 451,062,343

 Capital expenditures
 ( 11,493,546)
 ( 5,219,242)
 ( 3,339,606)

 Proceeds from sale of equipment
 —
 22,929
 35,088

 Net Cash Used
 ( 164,563,031)
 ( 136,894,577)
 ( 140,878,452)

 CASH FLOWS FROM FINANCING ACTIVITIES:

 Net increase in Senior Demand Notes
 ( 11,757,244)
 8,282,195
 17,420,976

 Advances on bank credit line
 239,172,362
 213,677,200
 164,964,653

 Payments on bank credit line
 ( 184,653,362)
 ( 206,446,200)
 ( 223,564,653)

 Advances on subsidiary credit line
 30,000,000
 —
 —

 Commercial paper issued
 146,377,614
 135,878,572
 161,768,917

 Commercial paper redeemed
 ( 109,389,811)
 ( 63,485,901)
 ( 41,849,573)

 Subordinated debt issued
 6,795,654
 5,759,655
 6,963,742

 Subordinated debt redeemed
 ( 7,267,540)
 ( 6,446,173)
 ( 7,346,797)

 Dividends / distributions paid

 Net Cash Provided
 106,591,583
 69,733,459
 58,344,959

 NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
 ( 2,215,351)
 5,389,962
 ( 5,934,057)

 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning
 7,191,890
 1,801,928
 7,735,985

 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ending
 4,976,539
 7,191,890
 1,801,928

 Supplemental Cash Flow Information:

 Cash paid during the period for:

 Interest paid
 41,752,170
 27,264,793
 23,000,475

 Income taxes paid
 39,000
 309,000
 219,000

 Non-Cash Transactions

 ROU assets and associated liabilities
 10,311,099
 9,553,566
 7,069,375

 - 41 -

 NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
 Basis of Presentation
 The parent company financial statements should be read in conjunction with the Company's consolidated financial statements and the accompanying notes thereto. For purposes of these condensed financial statements, the Company's wholly owned subsidiaries are recorded based on the subsidiaries' net assets (similar to presenting them on the equity method).
 Substantially all of the other comprehensive income included in these condensed financial statements is attributable to the Company's wholly owned subsidiaries.
 Guarantees
 Frandisco Life Insurance Company ("Guarantor") executed a guaranty in favor of Wells Fargo Bank, N.A. ("Agent") on November 19, 2019, in conjunction with 1st Franklin Financial Corporation executing an amended and restated loan and security agreement as described in the Company's consolidated financial statements and accompanying notes thereto. The Guarantor's liability shall be limited to an amount equal to the lesser of (a) one-half of one percent (0.50%) of Guarantor's admitted assets or (b) ten percent (10%) of surplus as regards policy holders as of December 31, 2018.
 Frandisco Property and Casualty Insurance Company ("Guarantor") executed a guaranty in favor of Wells Fargo Bank, N.A. ("Agent") on November 19, 2019, in conjunction with 1st Franklin Financial Corporation executing an amended and restated loan and security agreement as described in the Company's consolidated financial statements and accompanying notes thereto. The Guarantor's liability shall be limited to an amount equal to the lesser of (a) one-half of one percent (0.50%) of Guarantor's admitted assets or (b) ten percent (10%) of surplus as regards policy holders as of December 31, 2018.
 1. SENIOR DEBT
 Frandisco Property and Casualty Insurance Company advanced $30 million to the Company on its credit line in August 2023. Together with accrued interest the outstanding balance was $30.0 million as of December 31, 2023.
 - 42 -

 Exhibit 13
 ANNUAL REPORT
 DECEMBER 31, 2023

 - 1 -

 The Company

 Chairman's Letter

 Business

 Sources of Funds and Common Stock Matters

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)

 Consolidated Financial Statements

 Directors and Executive Officers

 Corporate Information

 Ben F. Cheek, Jr. Office of the Year

 - 2 -

 THE COMPANY
 1st Franklin Financial Corporation, a Georgia corporation, has been engaged in the consumer finance business since 1941, particularly in making direct cash loans and real estate loans. As of December 31, 2023, the business was operated through 118 branch offices in Georgia, 47 in Alabama, 43 in South Carolina, 40 in Mississippi, 39 in Tennessee, 37 in Louisiana, 20 in Texas, 13 in Kentucky, and 7 in Virginia. The Company had 1,709 employees as of December 31, 2023.
 As of December 31, 2023, the resources of the Company were invested principally in loans, which comprised 70% of the Company's assets. The majority of the Company's revenues are derived from finance charges earned on loans and sales finance contracts. Our remaining revenues are derived from earnings on investment securities, insurance income and other miscellaneous income.
 Our corporate website address is www.1FFC.com. The information posted on our website is not incorporated into this Annual Report.
 - 3 -

 To our Investors, Customers, Employees, Business partners and Friends-

 We are excited about this 2023 Annual Report and are pleased to have the opportunity to share with you some of the year's highlights. On the heels of the cyber-attack incident in 2022, 1st Franklin Financial rebounded with tenacity and renewed energy to not let that setback define who we are and what we do for the communities and customers we serve. Our theme for the year was 2023: Future Focused. It was created because every action and decision made at 1st Franklin must be made with the future in mind. The people we hire, the systems and processes we put in place and the organizational structure must position us for sustainability and success for the future. Not just for 2023 however, but for the next 5, 10, and 20 years and beyond.

 The year 2023 had many headwinds and challenges. We saw a rapid rise in interest rates nationally and proportionally a substantial increase in the cost of funds. Inflation is very real and impacts all levels of our business. Our employees' day to day living expenses, our customers cost of living and 1st Franklin's expenses all have increased and money is tight for everyone. Our regulatory environment continues to add pressure to our industry, and we feel it will only increase in the future. One of the most perplexing challenges we have identified is the change in customer borrowing habits and behavior. Competition from online and buy-now-pay-later lenders, many of whom do not report to the credit bureaus, has created a number of new difficulties for borrowers and well as some traditional lenders.

 Were we up to these challenges and headwinds? Yes! Let us look at some of our accomplishments from 2023.

 • We opened 24 new branches (8 in Texas, 7 in Kentucky, 6 in Virginia, 2 in Alabama, and 1 in Louisiana).

 • We implemented a centralized Law Firm Management program.

 • We had a 7.8% growth in receivables.

 • We continued our robust enhancement of our Fair Lending guidelines.

 • We completed and centralized employee/employment recruiting in ALL states.

 • We implemented a mature and fully functioning AML-BSA process which culminated with a successful first ever independent audit.

 • We made 40+ Information Security enhancements all while rebuilding and reimaging 2800+ workstations and servers.

 All these highlights would not have been possible without leadership and teamwork. Everyone was willing to help whenever and wherever needed, continuing to move us forward in service.

 2024 is exciting as we continue to grow and provide exceptional products and services for our customers and investors. Thank you for being a part of 1st Franklin Financial's success and for your continuing support of the "Friendly Franklin Folks". We make loans for living!

 Sincerely yours,

 /s/ Ben F. "Buddy" Cheek, IV

 Chairman of the Board

 - 4 -

 BUSINESS
 References in this Annual Report to "1st Franklin", the "Company", "we", "our" and "us" refer to 1st Franklin Financial Corporation and its subsidiaries.
 1st Franklin is engaged in the consumer finance business, primarily in making direct cash loans to individuals in relatively small amounts for relatively short periods of time, and in making first and second mortgage loans on real estate in larger amounts and for longer periods of time. We also purchase sales finance contracts from various retail dealers. At December 31, 2023, direct cash loans comprised 83%, real estate loans comprised 2% and sales finance contracts comprised 15% of our outstanding loans, respectively.
 In connection with our business, we also offer optional single premium credit insurance products to our customers when making a loan. Such products may include credit life insurance, credit accident and health insurance, credit involuntary unemployment insurance and/or credit property insurance. Customers may request credit life insurance coverage to help assure any outstanding loan balance is repaid if the customer dies before the loan is repaid or they may request accident and health insurance coverage to help continue loan payments if the customer becomes sick or disabled for an extended period of time. In certain states where offered, customers may choose involuntary unemployment insurance for payment protection in the form of loan payment assistance due to an unexpected job loss. Customers may also choose property insurance coverage to protect the value of loan collateral against damage, theft or destruction. We write these various insurance products as an agent for a non-affiliated insurance company. Under various agreements, our wholly-owned insurance subsidiaries, Frandisco Life Insurance Company and Frandisco Property and Casualty Insurance Company, reinsure the insurance coverage on our customers written by this non-affiliated insurance company.
 Finance charges account for the majority of our revenues. The following table shows the sources of our earned finance charges in each of the past five years (in thousands):

 2023
 2022
 2021
 2020
 2019

 $
 247,829
 $
 240,542
 $
 213,527
 $
 192,976
 $
 185,631

 5,769
 7,285
 7,245
 6,555
 5,859

 23,376
 19,137
 15,880
 13,556
 9,088

 Total Finance Charges
 $
 276,974
 $
 266,964
 $
 236,652
 $
 213,087
 $
 200,578

 Our business consists mainly of making loans to individuals (consumer loans) who depend primarily on their earnings to meet their repayment obligations. We make direct cash loans primarily to people who need money for some non-recurring or unforeseen expense, for debt consolidation, or to purchase household goods such as furniture and appliances. These loans are generally repayable in 6 to 60 monthly installments and generally do not exceed $15,000 in amount financed. We believe that the interest and fees we charge on these loans are in compliance with applicable federal and state laws.
 First and second mortgage loans secured by real estate are made to homeowners who typically use funds to improve their property or who wish to restructure their financial obligations. We generally make such loans in amounts from $3,000 to $75,000 and with maturities of 35 to 240 months. We believe that the interest and fees we charge on these loans are in compliance with applicable federal and state laws.
 Our decision making on loan originations is based on both a judgmental underwriting system which includes an analysis of the following factors (i) ability to pay, (ii) creditworthiness, (iii) income stability, (iv) willingness to pay and (v) as appropriate, collateral security, and a risk based underwriting system that evaluates (i) credit score, (ii) annual income, (iii) payment history to other creditors and (iv) debt to income ratios. As part of our loan decision making process, we review each customer's credit report to verify income and total indebtedness, debt payment history and overall credit related performance to other creditors. The Company uses this information to evaluate a potential borrower's debt-to-income ratios and, depending on the result of the overall credit evaluation process, may require internal review and senior supervisory approval prior to originating the potential borrower's loan.
 - 5 -

 Sales finance contracts are contracts purchased from retail dealers. These contracts have maturities that generally range from 3 to 60 months and generally do not individually exceed $25,000 in amount financed. We believe that the interest and fees we charge on these contracts are in compliance with applicable federal and state laws.
 1st Franklin competes with several national and regional finance companies, as well as a variety of local finance companies, in the communities we serve. Competition is based primarily on interest rates and terms offered and on customer service, as well as, to some extent, reputation. We believe that our emphasis on customer service helps us compete effectively in the markets we serve.
 Because of our reliance on the continued income stream of most of our loan customers, our ability to continue the profitable operation of our business depends to a large extent on the continued employment of our customers and their ability to meet their obligations as they become due. Therefore, economic uncertainty or downturns in economic conditions, increases in unemployment or continued increases in the number of personal bankruptcies within our typical customer base may have a material adverse effect on our collection ratios and profitability.
 The average annual yield on loans we make (the percentage of finance charges earned to average net outstanding balance) has been as follows:

 2023
 2022
 2021
 2020
 2019

 31.51
 %
 31.12
 %
 31.22
 %
 31.45
 %
 32.03
 %

 17.53
 17.48
 17.33
 17.16
 17.36

 19.16
 19.36
 19.66
 19.13
 18.86

 The following table contains certain information about our operations:

 2023
 2022
 2021
 2020
 2019

 Number of Branch Offices

 Number of Employees
 1,709
 1,575
 1,442
 1,476
 1,513

 Average Total Loans Outstanding Per Branch (in thousands)

 $
 3,227
 $
 3,177
 $
 3,176
 $
 2,860
 $
 2,647

 Average Number of Loans Outstanding Per Branch

 - 6 -

 DESCRIPTION OF LOANS

 2023
 2022
 2021
 2020
 2019

 DIRECT CASH LOANS:

 New Borrowers
 101,903
 83,061
 71,300
 49,942
 62,336

 Former Borrowers
 69,956
 96,435
 59,225
 55,088
 65,452

 Present Borrowers
 157,861
 129,337
 147,893
 147,228
 186,601

 Total Number of Loans Made
 329,720
 308,833
 278,418
 252,258
 314,389

 Volume of Loans Made (in thousands)
 $
 1,101,316
 $
 1,049,088
 $
 1,048,154
 $
 891,358
 $
 953,356

 Average Size of Loan Made
 $
 3,340
 $
 3,397
 $
 3,765
 $
 3,534
 $
 3,032

 Number of Loans Outstanding
 320,454
 299,418
 266,028
 249,880
 263,181

 Loans Outstanding (in thousands)
 $
 972,568
 $
 911,822
 $
 873,433
 $
 777,569
 $
 737,255

 Average Balance on Outstanding Loan
 $
 3,035
 $
 3,045
 $
 3,283
 $
 3,112
 $
 2,801

 Percent of Total Loans Outstanding
 %
 %
 %
 %
 %

 REAL ESTATE LOANS:

 Number of Loans Made

 Volume of Loans Made (in thousands)
 $
 $
 2,106
 $
 17,419
 $
 11,871
 $
 13,423

 Average Size of Loan Made
 $
 3,814
 $
 28,845
 $
 28,005
 $
 24,731
 $
 24,273

 Number of Loans Outstanding
 1,383
 1,690
 2,034
 1,880
 1,812

 Loans Outstanding (in thousands)
 $
 29,813
 $
 37,323
 $
 45,972
 $
 39,960
 $
 37,255

 Average Balance on Outstanding Loan
 $
 21,557
 $
 22,085
 $
 22,602
 $
 21,255
 $
 20,560

 Percent of Total Loans Outstanding
 %
 %
 %
 %
 %

 SALES FINANCE CONTRACTS:

 Number of Contracts Purchased
 17,062
 12,812
 11,515
 14,556
 18,081

 Volume of Contracts Purchased (in thousands)
 $
 126,187
 $
 106,620
 $
 86,448
 $
 97,371
 $
 69,373

 Average Size of Contract Purchased
 $
 7,396
 $
 8,322
 $
 7,507
 $
 6,689
 $
 3,837

 Number of Contracts Outstanding
 28,415
 22,705
 19,790
 19,961
 20,616

 Contracts Outstanding (in thousands)
 $
 175,548
 $
 146,507
 $
 118,960
 $
 103,258
 $
 70,019

 Average Balance on Outstanding Contract
 $
 6,178
 $
 6,453
 $
 6,011
 $
 5,173
 $
 3,396

 Percent of Total Loans Outstanding
 %
 %
 %
 %
 %

 - 7 -

 LOANS ORIGINATED, ACQUIRED, LIQUIDATED AND OUTSTANDING (in thousands)

 2023
 2022
 2021
 2020
 2019

 LOANS ORIGINATED OR ACQUIRED

 Other Consumer (Live Check and Premier) New Loans
 426,393
 $
 470,803
 $
 436,278
 $
 392,898
 $
 423,858

 Other Consumer (Live Check and Premier) Loan Renewals
 630,677
 567,392
 589,624
 485,948
 526,016

 —
 2,106
 17,345
 11,846
 13,423

 122,654
 106,620
 82,688
 96,003
 68,573

 Net Bulk Purchases
 47,802
 10,893
 26,086
 13,905
 4,282

 Total Loans Originated / Acquired
 $
 1,227,526
 $
 1,157,814
 $
 1,152,021
 $
 1,000,600
 $
 1,036,152

 LOANS LIQUIDATED *

 Other Consumer (Live Check and Premier) New Loans
 $
 449,910
 $
 483,042
 $
 398,846
 $
 382,952
 $
 403,655

 Other Consumer (Live Check and Premier) Loan Renewals
 605,703
 526,315
 553,444
 468,091
 463,531

 (7,510)
 10,694
 11,407
 9,166
 7,823

 97,146
 79,146
 70,746
 64,132
 50,048

 Total Loans Liquidated
 $
 1,145,249
 $
 1,099,197
 $
 1,034,443
 $
 924,341
 $
 925,057

 LOANS OUTSTANDING AT YEAR END

 $
 972,568
 $
 911,822
 $
 873,433
 $
 777,569
 $
 737,255

 29,813
 37,323
 45,972
 39,960
 37,255

 175,548
 146,507
 118,960
 103,258
 70,019

 Total Loans Outstanding
 $
 1,177,929
 $
 1,095,652
 $
 1,038,365
 $
 920,787
 $
 844,529

 UNEARNED FINANCE CHARGES

 $
 133,663
 $
 119,804
 $
 122,455
 $
 107,850
 $
 103,810

 —
 —
 —

 40,380
 34,826
 28,626
 24,847
 14,910

 Total Unearned Finance Charges
 $
 174,043
 $
 154,630
 $
 151,081
 $
 132,703
 $
 118,748

 COMPONENTS OF GROSS LOAN LIQUIDATIONS (in thousands)

 2023
 2022
 2021
 2020
 2019

 Customer Loan Payments
 $
 698,044
 $
 676,935
 $
 633,979
 $
 573,685
 $
 539,000

 Other Consumer (Live Check and Premier) Loan Renewals*
 318,660
 313,843
 332,292
 280,199
 313,726

 Gross Charge offs
 117,469
 90,826
 57,439
 57,981
 60,590

 Refunds on precomputed finance charges
 11,076
 17,594
 10,733
 12,477
 11,741

 Total Loans Liquidated
 $
 1,145,249
 $
 1,099,197
 $
 1,034,443
 $
 924,341
 $
 925,057

 *Liquidations include customer loan payments, refunds on precomputed finance charges, renewals and charge offs.

 - 8 -

 Components of net loss/charge offs include the loan's amortized cost basis based on ASC 326 Financial Instruments - Credit Losses. The following are included in the Company's amortized cost basis:
 • For pre-computed loans, the amortized cost basis includes the principal balance, fees, and accrued interest, less unearned finance charges and unearned insurance. As of December 31, 2023, the amount charged off related to the principal balance was $75.6 million.
 • For interest-bearing loans, the amortized cost basis includes the balance, fees, and accrued interest, net of unearned insurance. As of December 31, 2023, the amount charged off related to the principal balance was $41.9 million.
 DELINQUENCIES
 We classify 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, we classify the account as being 60-89 days past due; when four or more installments are past due, we classify the account as being 90 days or more past due. Once an account becomes greater than 149 days past due, our charge off policy governs when the account must be charged off. For more information on our charge off policy, see Note 2 "Loans" in the Notes to the Consolidated Financial Statements.
 In connection with some accounts that are secured by real estate, when the bankruptcy court confirms a repayment plan differing from the contractual obligation, the Company will change the delinquency rating of the account after receiving two consecutive full payments. Thereafter, the account falls under normal delinquency rating guidelines. For non-real estate secured accounts, delinquency categories are not altered unless the borrower had a pre-existing partial payment that exceeds any court-mandated new payment amount. In that case, the partial payment is applied at the new payment amount, which may advance the due date, thus causing the delinquency rating to change (lowering the delinquency rating). The following table shows the number of loans in bankruptcy on which the delinquency rating changed due to a court-initiated repayment plan.

 2023
 2022
 2021
 2020
 2019

 Number of Bankrupt Delinquency Resets

 The Company tracks the dollar amount of loans in bankruptcy on which the delinquency rating was changed. During 2023 and 2022, the delinquency rating changed as a result of court-initiated repayment plans $1.5 million and $1.1 million, respectively. This represented approximately 0.13% and 0.10% of the average principal loan portfolios outstanding during 2023 and 2022, respectively. The following table shows the amount of certain classifications of delinquencies and the ratio of such delinquencies to related outstanding loans (in thousands, except % data):
 - 9 -

 2023
 2022
 2021
 2020
 2019

 DIRECT CASH LOANS:

 60-89 Days Past Due
 $
 16,257
 $
 20,199
 $
 12,272
 $
 10,779
 $
 11,619

 1.68
 %
 2.22
 %
 1.41
 %
 1.39
 %
 1.58
 %

 90 Days or More Past Due
 $
 32,694
 $
 37,465
 $
 23,437
 $
 18,094
 $
 24,972

 3.38
 %
 4.12
 %
 2.69
 %
 2.33
 %
 3.39
 %

 REAL ESTATE LOANS:

 60-89 Days Past Due
 $
 $
 $
 $
 $

 1.14
 %
 1.19
 %
 0.97
 %
 0.57
 %
 0.93
 %

 90 Days or More Past Due
 $
 1,403
 $
 1,380
 $
 1,118
 $
 1,438
 $
 1,592

 4.79
 %
 3.77
 %
 2.47
 %
 3.66
 %
 4.35
 %

 SALES FINANCE CONTRACTS:

 60-89 Days Past Due
 $
 2,226
 $
 2,066
 $
 1,134
 $
 1,341
 $

 1.27
 %
 1.42
 %
 0.96
 %
 1.31
 %
 1.09
 %

 90 Days or More Past Due
 $
 4,142
 $
 3,316
 $
 2,385
 $
 2,261
 $
 1,755

 2.37
 %
 2.28
 %
 2.02
 %
 2.21
 %
 2.53
 %

 LOSS EXPERIENCE
 Net losses (charge-offs less recoveries) and the percent such net losses represent of average net loans (loans less unearned finance charges) and liquidations (loan payments, refunds on unearned finance charges, renewals and charge-offs of customers' loans) are shown in the following table (in thousands, except % data):

 2023
 2022
 2021
 2020
 2019

 DIRECT CASH LOANS

 Average Net Loans
 $
 792,724
 $
 782,093
 $
 691,635
 $
 577,978
 $
 586,765

 Liquidations
 $
 1,041,159
 $
 1,009,357
 $
 952,290
 $
 851,044
 $
 867,185

 Net Losses
 $
 82,905
 $
 70,567
 $
 37,635
 $
 42,143
 $
 47,228

 Net Losses as % of Average Net Loans
 10.46
 %
 9.02
 %
 5.44
 %
 7.29
 %
 8.05
 %

 Net Losses as % of Liquidations
 7.96
 %
 6.99
 %
 3.95
 %
 4.95
 %
 5.45
 %

 REAL ESTATE LOANS

 Average Net Loans
 $
 32,641
 $
 41,384
 $
 42,593
 $
 36,128
 $
 34,438

 Liquidations
 $
 (7,510)
 $
 10,694
 $
 11,407
 $
 9,166
 $
 7,823

 Net Losses
 $
 $
 $
 $
 $

 Net Losses as a % of Average Net Loans
 0.05
 %
 0.05
 %
 0.06
 %
 0.12
 %
 0.12
 %

 Net Losses as a % of Liquidations
 (0.20)
 %
 0.19
 %
 0.23
 %
 0.46
 %
 0.51
 %

 SALES FINANCE CONTRACTS

 Average Net Loans
 $
 123,476
 $
 100,244
 $
 82,192
 $
 66,681
 $
 49,001

 Liquidations
 $
 97,146
 $
 79,285
 $
 70,746
 $
 64,132
 $
 50,048

 Net Losses
 $
 8,317
 $
 5,802
 $
 3,539
 $
 3,335
 $
 2,428

 Net Losses as % of Average Net Loans
 6.74
 %
 5.79
 %
 4.31
 %
 5.00
 %
 4.96
 %

 Net Losses as % of Liquidations
 8.56
 %
 7.32
 %
 5.00
 %
 5.20
 %
 4.85
 %

 - 10 -

 ALLOWANCE FOR CREDIT LOSSES
 For the period ending December 31, 2023 we utilized a Probability of Default ("PD") / Loss Given Default ("LGD") technique to estimate the allowance for credit losses, in which the estimated loss is equal to the product of PD and LGD. We engaged a major rating service provider to assist with estimating the instances of loss (PDs) and the average severity of losses (LGDs) using the characteristics of our loan portfolio, along with incorporating a reasonable and supportable forecast which is utilized to support the adjustments to historical loss experience of loans with similar credit risk. Key segmentation in the technique is origination vintage, remaining contractual term, risk score and state of origination. The technique produces a variety of alternative economic scenarios. We consider how macroeconomic and/or other factors might impact expected credit losses over the remaining maturity of the portfolio and determine which scenario(s) and specific scenario weights are applied within the estimation. The allowance for credit losses recorded in the balance sheet reflects Management's best estimate of expected credit losses, see Note 2 "Loans" in the Notes to the Consolidated Financial Statements.
 SEGMENT FINANCIAL INFORMATION
 For additional financial information about our segments and the divisions of our operations, see Note 13 "Segment Financial Information" in the Notes to Consolidated Financial Statements.
 CREDIT INSURANCE
 On consumer loans (excluding real estate and sales finance contracts), we offer optional single premium credit insurance products to our customers when making a loan. Such products may include credit life insurance, credit accident and health insurance, credit unemployment insurance and/or credit property insurance. Customers may request credit life insurance coverage to help assure any outstanding loan balance is repaid if the customer dies before the loan is repaid or they may request credit accident and health insurance coverage to help continue loan payments if the customer becomes sick or disabled for an extended period of time. In certain states where offered, Customers may request credit involuntary unemployment insurance for payment protection in the form of loan payment assistance due to an unexpected job loss. Customers may also choose property insurance coverage to protect the value of loan collateral against damage, theft or destruction. We write these various insurance products as an agent for a non-affiliated insurance company. Under various agreements, our wholly-owned insurance subsidiaries, 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.
 REGULATION AND SUPERVISION
 The Company is subject to regulation under numerous state and federal laws and regulations as enforced and interpreted by various state and federal governmental agencies. State laws require each of our loan branch offices to be licensed by the state and to conduct business according to the applicable statutes and regulations. The granting of a license depends on the financial responsibility, character and fitness of the applicant. As a condition to obtaining such license, the applicant must consent to state regulation and examination and to the make periodic reports to the appropriate governing agencies. Licenses are revocable for cause, and their continuance depends upon an applicant's continued compliance with applicable laws. We are also subject to state regulations governing insurance agents in the states in which we sell credit insurance. State insurance regulations require, among other things, that insurance agents be licensed and, in some cases, limit the premiums that insurance agents can charge. The Company has never had any of its licenses revoked and has never been subject to an enforcement order or regulatory settlement.
 We conduct our lending operations under the provisions of various federal laws and implementing regulations. These laws and regulations are interpreted, implemented, and enforced by the Bureau of Consumer Financial Protection (the "CFPB"). Chief among these federal laws with which the Company must comply are the Federal Truth-in-Lending Act ("TILA"), the Equal Credit Opportunity Act ("ECOA"), the Fair Credit Reporting Act ("FCRA") and the Federal Real Estate Settlement Procedures Act ("RESPA"). The TILA requires us, among other things, to disclose to our customers the finance charge, the annual percentage rate, the total number and amount of payments, the total cost of credit, and other material information on all loans. A Federal Trade Commission regulation prevents consumer lenders such as the Company from using certain household
 - 11 -

 goods as collateral on direct cash loans. As a result, we generally seek to secure such loans with non-prohibited household goods such as automobiles, boats and other exempt items of personal property. We continually monitor our compliance with these regulatory requirements.
 Changes in the current regulatory environment, or in the interpretation or application of current regulations, could impact our business. Significant additional regulation or costs of compliance could materially adversely affect our business and financial condition.
 HUMAN CAPITAL RESOURCES
 As of December 31, 2023, the Company had 1,709 employees, located in Alabama, Georgia, Kentucky, Louisiana, Mississippi, South Carolina, Tennessee, Texas, and Virginia. The development, attraction and retention of employees is a strong focus of the Company, as is fostering and maintaining a strong, healthy corporate culture.
 Our employees play an important role in the success of the Company. We are committed to attracting, retaining and promoting high quality talent regardless of sex, race, color, national origin, age or religion. The Company is dedicated to providing a place of work for employees that is supportive, free from discrimination and harassment, and rewarding for employees. Benefit programs offered to employees include competitive salaries, incentive awards and 401(k) retirement savings plans with company match. Various health insurance plans are also available for employees.
 We are committed to advancing a safe work environment for our employees. We adhere, and expect all of our employees to adhere, to our Code of Business Conduct and Ethics, which, among other things, sets forth numerous policies designed to provide for a safe, ethical, respectful and compliant work environment. We expect our employees to follow our core values listed below:

 Team:
 Be Trustworthy

 Impact:
 Be Intentional

 People:
 Be Exceptional

 Service:
 Be Humble

 SOURCES OF FUNDS AND COMMON STOCK MATTERS
 The Company is dependent upon the availability of funds from various sources in order to meet its ongoing financial obligations and to make new loans as a part of its business. Our various sources of funds as a percent of total liabilities and stockholders' equity and the number of persons investing in the Company's debt securities were as follows:

 2023
 2022
 2021
 2020
 2019

 9.84
 %
 5.81
 %
 5.39
 %
 11.73
 %
 11.86
 %

 Senior Debt
 61.45
 %
 63.37
 %
 58.69
 %
 51.19
 %
 51.08
 %

 Subordinated Debt
 2.30
 %
 2.49
 %
 2.66
 %
 2.97
 %
 3.09
 %

 Other Liabilities
 5.08
 %
 6.03
 %
 6.73
 %
 6.64
 %
 6.13
 %

 Stockholders' Equity
 21.33
 %
 22.30
 %
 26.53
 %
 27.47
 %
 27.84
 %

 Total
 %
 %
 %
 %
 %

 Number of Investors
 4,681
 4,809
 4,713
 4,543
 4,555

 - 12 -

 The average interest rates we pay on borrowings, computed by dividing the interest paid by the average indebtedness outstanding, have been as follows:

 2023
 2022
 2021
 2020
 2019

 Senior Borrowings
 5.08%
 3.50%
 3.39%
 3.42%
 3.48%

 Subordinated Borrowings
 3.63%
 3.16%
 3.12%
 3.01%
 2.81%

 All Borrowings
 5.02%
 3.49%
 3.38%
 3.40%
 3.44%

 Certain financial ratios relating to our debt have been as follows:

 2023
 2022
 2021
 2020
 2019

 Total Liabilities to Stockholders' Equity

 3.69
 3.48
 2.77
 2.64
 2.59

 Unsubordinated Debt to Subordinated Debt Plus Stockholders' Equity

 3.23
 2.79
 2.43
 2.29
 2.23

 As of April 1, 2024, all of our voting common stock was closely held by three related individuals and all of our non-voting common stock was held by thirteen related shareholders. None of our common stock was listed on any securities exchange or traded on any established public trading market. The Company does not maintain any equity compensation plans, and did not repurchase any of its equity securities during any period represented. Cash distributions of $15.80 and $102.86 per share were paid to shareholders in 2023 and 2022, respectively, primarily in amounts to enable the Company's shareholders to pay their related income tax obligations which arise as a result of the Company's status as an S Corporation. No other distributions were paid during the applicable periods. For the foreseeable future, the Company expects to pay annual cash distributions equal to an amount sufficient to enable the Company's shareholders to pay their respective income tax obligations as a result of the Company's status as an S Corporation.

 - 13 -

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Management's Discussion and Analysis provides a narrative of the Company's financial condition and performance during 2023 and 2022. The narrative reviews the Company's results of operations, liquidity and capital resources, critical accounting policies and estimates, and certain other matters. It includes Management's interpretation of our financial results, the factors affecting these results and the significant factors that we currently believe may materially affect our future financial condition, operating results and liquidity. This discussion should be read in conjunction with the Company's consolidated financial statements and notes thereto contained elsewhere in this Annual Report. Discussion of 2021 results and year-to-year comparisons between 2022 and 2021 can be found in the Company's 2022 Annual Report filed as Exhibit 13 to the Company's Annual Report on Form 10-K which was filed with the SEC on April 11, 2023.
 Our significant accounting policies are disclosed in Note 1 "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements. Certain information in this discussion and other statements contained in this Annual Report which are not historical facts are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties. 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 our actual future results to differ from any expectations expressed or implied by any forward-looking statements, or otherwise, include, but are not limited to, changes in our ability to manage liquidity and cash flow, the accuracy of Management's estimates and judgments, adverse developments in economic conditions including the interest rate environment, unforeseen changes in our net interest margin, federal and state regulatory changes, unfavorable outcomes of litigation and other factors referenced in the "Risk Factors" section of the Company's Annual Report and elsewhere herein, or otherwise contained in our filings with the Securities and Exchange Commission from time to time.

 General:
 The Company is a privately-held corporation that has been engaged in the consumer finance industry since 1941. Our operations focus primarily on making installment 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. The Company de-prioritized mortgage originations while advanced systems for origination and servicing are being developed. All of our loans are at fixed rates, and contain fixed terms and fixed payments. We operate branch offices in nine southeastern states and had a total of 364 branch locations at December 31, 2023. The Company and its operations are guided by a strategic plan which includes planned growth through strategic expansion of our branch office network. The majority of our revenues are derived from finance charges earned on loans outstanding. Additional revenues are derived from earnings on investment securities, insurance income and other miscellaneous income.
 During the year ended December 31, 2022, the Company suffered a cyber-attack against certain systems within the Company's network environment on or about November 17, 2022. The attack temporarily affected operations and caused delays in originating and servicing loans at some locations. During the incident, the attackers had access to personally identifiable information of certain Company employees, customers, and investors. The incident, which only affected systems, was contained to the Company's onsite file directory system, but did not impact its off-site core operating system. Full lending and investing operations were restored within days of the incident, and the Company provided notifications to all potentially-affected individuals, entities, and required governmental agencies. As of March 27, 2024, the Company is named as a Defendant in a consolidated putative consumer class action lawsuit alleging harm from the cyber-attack. The suit was administratively dismissed in January 2024, and the Plaintiffs have asked the Court to reconsider its decision. The Company maintained a cyber insurance policy that is expected to mitigate most of the costs of investigation, remediation, business interruption, and costs pertaining to the breach.
 - 14 -

 Financial Condition:
 The Company's total assets increased $77.4 million as of December 31, 2023 while remaining consistent at $1.2 billion year-over-year. The increase in assets was primarily due to growth in the Company's net loan portfolio and increases in other assets.
 Cash and cash equivalents decreased $26.9 million at December 31, 2023 compared to December 31, 2022
 The Company maintains an amount of funds in restricted accounts at its 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 December 31, 2023, restricted cash was $12.1 million compared to $15.8 million at December 31, 2022. See Note 3, "Investment Securities" in the accompanying "Notes to Consolidated Financial Statements" for further discussion of amounts held in trust.
 Gross loan originations increased $69.7 million (6%) during 2023 compared to 2022. Our net loan portfolio increased $62.5 million (8%) at December 31, 2023 compared to 2022. The percent of the loan portfolio greater than 30 days delinquent is 7.48% at December 31, 2023 compared to 9.44% at December 31, 2022. The ratio of bankrupt accounts to the net principal balance was 1.43% and 1.25% at December 31, 2023 and December 31, 2022, respectively. Our allowance for credit losses reflects Management's estimate of expected credit losses in the loan portfolio as of the date of the statement of financial position. See Note 2, "Allowance for Credit Losses," in the accompanying "Notes to Consolidated Financial Statements" for further discussion of the Company's allowance for credit losses. Management believes the current allowance for credit losses is adequate to cover expected losses in our existing portfolio as of December 31, 2023; however, changes in trends or deterioration in economic conditions could result in additional changes in the allowance or an increase in actual losses. Any increase could have a material adverse impact on our results of operation or financial condition in the future.
 Our investment securities portfolio increased $30.1 million (14%) to $250.1 million at December 31, 2023 compared to $220.0 million at December 31, 2022. The portfolio consists primarily of invested surplus funds generated by the Company's insurance subsidiaries. Management maintains what it believes to be a conservative approach when formulating its investment strategy. The Company does not participate in hedging programs, interest rate swaps or other similar activities. This investment portfolio consists mainly of U.S. Treasury bonds, government agency bonds, and various municipal bonds. Investment securities have been designated as "available for sale" at December 31, 2023 with any unrealized gain or loss accounted for in the equity section of the Company's consolidated statement of financial position, net of deferred income taxes for those investments held by the insurance subsidiaries as well as the statement of comprehensive income.
 Other assets increased $15.4 million (20%) to $92.6 million at December 31, 2023 compared to $77.2 million at December 31, 2022. Increases in loan purchase intangibles, prepaid expenses, and operating lease right-of-use assets were main factors contributing to the increase in other assets.
 Our senior debt is comprised of a bank line of credit, the Company's senior demand notes and commercial paper debt securities. Our subordinated debt is comprised of the variable rate subordinated debentures sold by the Company. The aggregate amount of senior and subordinated debt outstanding at December 31, 2023 increased $79.3 million (10%) to $912.7 million compared to $833.4 million outstanding at December 31, 2022. Higher usage of the line of credit and sales of the Company's debt securities were the primary factors contributing to the increase. The line of credit usage increased $54.5 million to $122.1 million at December 31, 2023 and the Company's debt securities increased $24.8 million to $790.7 million at December 31, 2023. Increases in the credit line and debt securities funded the Company's growth in our loan portfolio, supported the loss in revenue due to the cyber incident, and allowed for additional expenditures developing our systems.
 - 15 -

 Accounts payables and accrued expenses decreased $7.2 million (10%) at December 31, 2023 compared to the prior year. The Company's incentive bonus accrual was the primary factor causing the decrease in accrued expenses and other liabilities.

 Results of Operations:
 Total revenues, which include finance charge income, investment income, insurance income and miscellaneous other revenue, were $351.4 million and $339.0 million for 2023 and 2022, respectively. The aforementioned growth in our loan portfolio resulted in higher revenue across all categories.
 The provision for credit losses increased $3.1 million (4%) during 2023 compared to 2022 due to higher net charge offs.
 Higher revenues were offset by increases in interest expense, information technology, postage, and travel related expenses which resulted in a decrease in net income for the Company during the year just ended. Net income decreased $15.6 million (97%) to $0.5 million during 2023 compared to $16.2 million during 2022.
 Net Interest Income:
 Net interest income is a principal component of the Company's operating performance and resulting net income. It represents the difference between income on earning assets and the cost of funds on interest bearing liabilities. Debt securities represent a majority of our interest bearing liabilities. Factors affecting our net interest income include the level of average net receivables and the interest income associated therewith, capitalized loan origination costs and our average outstanding debt, as well as the general interest rate environment. Volatility in interest rates generally has more impact on the income earned on investments and the Company's borrowing costs than on interest income earned on loans. Management does not normally change the rates charged on loans originated solely as a result of changes in the interest rate environment.
 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. Net interest income decreased $3.5 million compared to the same period in 2022. Our average daily net loan balance increased $27.8 million (3%) during the twelve months just ended compared to the same period a year ago.
 Daily average Gross Loans Outstanding less unearned finance charges was $941.3 million at December 31, 2023, compared to $913.5 million at December 31, 2022. Net interest income was $243.8 million during 2023, compared to $247.3 million in 2022.
 As previously mentioned, higher sales of the Company's debt securities and an increase in borrowings on the Company's credit line resulted in an increase in senior debt. The increase resulted in higher interest cost. Average borrowings were $828.4 million during 2023 compared to $795.9 million during 2022. Interest expense increased $15.3 million (55%) during 2023 compared to 2022.
 Net Insurance Income:
 The Company offers certain optional credit insurance products to loan customers when closing a loan. Net insurance income (insurance revenues less claims and expenses) was $40.4 million during 2023 and $39.8 million during 2022. Net insurance premium revenue decreased 1% while claims and expenses decreased 6% during 2023.
 Other Revenue:
 Other revenue was $7.8 million and $6.8 million during 2023 and 2022, respectively. A significant component of other revenue is earnings from the sale of auto club memberships. The Company, as an agent for a third party, offers auto club memberships to loan customers during the closing of a loan. An increase in sales of auto club memberships was the primary factor driving the growth in other revenue for the period just ended.
 - 16 -

 Provision for Credit Losses:
 The Company's provision for credit losses is a charge against earnings to maintain the allowance for credit losses at a level that Management estimates is adequate to cover expected losses as of the date of the statement of financial position. See Note 2. "Allowance for Credit Losses," in the accompanying "Notes to Consolidated Financial Statements" for further discussion of the Company's provision for credit losses.
 The allowance for credit losses decreased $3.8 million (5%) during 2023 compared to 2022 due to an improved macroeconomic outlook. Net charge offs impacting the provision for credit losses were $91.2 million for 2023 and $76.4 million for 2022, respectively.
 Determining a proper allowance for credit 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, delinquency levels, bankruptcy trends and overall general and industry specific economic conditions.
 During the year ended December 31, 2023, the Company engaged a major rating service provider to assist with estimating the instances of loss (PDs) and the average severity of losses (LGDs) using the characteristics of our loan portfolio, along with incorporating a reasonable and supportable forecast which is utilized to support the adjustments to historical loss experience of loans with similar credit risk. Key segmentation in the technique is origination vintage, remaining contractual term, risk score and state of origination. The technique produces a variety of alternative economic scenarios. We consider how macroeconomic and/or other factors might impact expected credit losses over the remaining maturity of the portfolio and determine which scenario(s) and specific scenario weights are applied within the estimation. The allowance for credit losses recorded in the balance sheet reflects Management's best estimate of expected credit losses. For further information regarding the change in technique, refer to the Critical Accounting Policies section below. In addition, please see Note 2, "Loans" in the accompanying "Notes to Unaudited Condensed Consolidated Financial Statements" for further discussion of estimated credit losses. Management may determine it is appropriate to increase or decrease the allowance for expected credit losses in future period, or actual losses in any period, either of which events could have a material impact on our results of operations in the future.
 Operating Expenses:
 Other operating expenses of the Company were $199.2 million during 2023 compared to $189.1 million during 2022. Other operating expenses encompass personnel expense, occupancy expense and miscellaneous other expenses.
 Personnel expense decreased $2.0 million (2%) during 2023 compared to 2022. Lower bonus accrual and capitalization of employee salaries attributable to software development were offset by inflation-based salary adjustments for certain team members and an increases in the number of employees.
 Occupancy expenses increased $2.5 million (14%) during 2023 compared to 2022. Increases in monthly rent expenses, depreciation, and new branch openings attributed to the increase in occupancy expenses.
 Other expenses increased $9.6 million (17%) during 2023 compared to 2022. Higher information technology expenses, postage fees for marketing, and the amortization of loans purchased at a premium were the primary factors driving the increase in miscellaneous other operating expenses during 2023 compared to 2022.
 Income Taxes:
 The Company has elected to be treated as an S corporation for income tax reporting purposes. The taxable income or loss of an S corporation is treated as income of and is reportable in the individual tax returns of the shareholders of the Company in an appropriate allocation. Accordingly, deferred income tax assets and liabilities have been eliminated and no provisions for current and deferred income taxes were made by the Company except for amounts attributable to state income taxes for certain states, which do not recognize S corporation status for income tax reporting purposes. Deferred income tax assets and liabilities will continue to be recognized and provisions for current and deferred income taxes will be made by the Company's subsidiaries as they are not permitted to be treated as S Corporations.
 - 17 -

 Effective income tax rates for the years ended December 31, 2023 and 2022 were 90.1% and 21.5%, respectively. The effective income tax rate differs from the statutory rate due to changes in the proportion of income earned by the Company's insurance subsidiaries.

 Quantitative and Qualitative Disclosures About Market Risk:
 Volatility in market interest rates can impact the Company's investment portfolio and the interest rates paid on its bank borrowings and debt securities. Changes in interest rates have more impact on the income earned on investments and the Company's borrowing costs than on interest income earned on loans, as Management does not normally change the rates charged on loans originated solely as a result of changes in the interest rate environment. These exposures are monitored and managed by the Company as an integral part of its overall cash management program. It is Management's goal to minimize any adverse effect that movements in interest rates may have on the financial condition and operations of the Company. The information in the table below summarizes the Company's risk associated with marketable debt securities and debt obligations as of December 31, 2023. Rates associated with the investment securities represent weighted averages based on the tax effected yield to maturity of each individual security. No adjustment has been made to yield, even though many of the investments are tax-exempt and, as a result, actual yield will be higher than that disclosed. For debt obligations, the table presents principal cash flows and related weighted average interest rates by contractual maturity dates. The Company's subordinated debt securities are sold with various interest adjustment periods, which is the time from sale until the interest rate adjusts, and which allows the holder to redeem that security prior to the contractual maturity without penalty. It is expected that actual maturities on a portion of the Company's subordinated debentures will occur prior to the contractual maturity as a result of interest rate adjustments. Management estimates the carrying value of senior and subordinated debt approximates their fair values when compared to instruments of similar type, terms and maturity.
 Loans originated by the Company are excluded from the table (in millions, except for %) below since interest rates charged on loans are based on rates allowable in compliance with any applicable regulatory guidelines. Management does not believe that changes in market interest rates will significantly impact rates charged on loans. The Company has no exposure to foreign currency risk.

 Expected Year of Maturity

 2024
 2025
 2026
 2027
 2028
 2029 & Beyond
 Total
 Fair Value

 Assets:

 Investment Securities
 $
 0.5
 $
 0.3
 $
 0.3
 $
 0.7
 $
 1.9
 $
 246.5
 $
 250.1
 $
 250.1

 —
 %
 3.3
 %
 3.5
 %
 3.3
 %
 3.2
 %
 3.4
 %
 3.2
 %

 Liabilities:

 Senior Debt

 Note Payable to Bank
 $
 —
 $
 122.1
 $
 —
 $
 —
 $
 —
 $
 —
 $
 122.1
 $
 122.1

 —
 %
 8.05
 %
 —
 %
 —
 %
 —
 %
 —
 %
 8.05
 %

 Senior Demand Notes
 $
 100.6
 $
 —
 $
 —
 $
 —
 $
 —
 $
 —
 $
 100.6
 $
 100.6

 1.91
 %
 —
 %
 —
 %
 —
 %
 —
 %
 —
 %
 1.91
 %

 $
 661.6
 $
 —
 $
 —
 $
 —
 $
 —
 $
 —
 $
 661.6
 $
 661.6

 5.92
 %
 —
 %
 —
 %
 —
 %
 —
 %
 —
 %
 5.92
 %

 Subordinated
 Debentures
 $
 17.9
 $
 8.1
 $
 1.6
 $
 1.0
 $
 —
 $
 —
 $
 28.5
 $
 28.5

 4.30
 %
 4.43
 %
 3.70
 %
 4.27
 %
 —
 %
 —
 %
 4.30
 %

 Liquidity and Capital Resources:
 Liquidity is the ability of the Company to meet its ongoing financial obligations, either through the collection of receivables or by generating additional funds through liability management. The Company's liquidity is therefore dependent on the collection of its receivables, the sale of debt securities and the continued availability of funds under the Company's revolving credit agreement.
 - 18 -

 We continue to monitor and review current economic conditions and the related potential implications on us, including with respect to, among other things, changes in credit losses, liquidity, compliance with our debt covenants, and relationships with our customers.
 As of December 31, 2023 and December 31, 2022, the Company had $22.8 million and $49.7 million, respectively, invested in cash and short-term investments readily convertible into cash with original maturities of three months or less. The Company uses cash reserves to fund its operations, including providing funds for any increase in redemptions of debt securities by investors which may occur.
 The Company's investment securities can be converted into cash, if necessary. As of December 31, 2023 and 2022, 99% and 97%, respectively, of the Company's cash and cash equivalents and investment securities were maintained in Frandisco Property and Casualty Insurance Company and Frandisco Life Insurance Company, the Company's insurance subsidiaries. Georgia state insurance regulations limit the use an insurance company can make of its assets. Ordinary dividend payments to the Company by its wholly owned life insurance subsidiary are subject to annual limitations and are restricted to the lesser of 10% of policyholder's statutory surplus or the net statutory gain from operations before recognizing realized investment gains of the individual insurance subsidiary during the prior year. Dividend payments to a parent company by its wholly-owned property and casualty subsidiary are subject to annual limitations and are restricted to the lessor of 10% of policyholder's surplus or the net statutory income before recognizing realized investment gains of the individual insurance subsidiary during the prior two years. Any dividends above these state limitations are termed "extraordinary dividends" and must be approved in advance by the Georgia Insurance Commissioner. The maximum aggregate amount of dividends these subsidiaries could have paid to the Company during 2023, without prior approval of the Georgia Insurance Commissioner, was approximately $40.8 million.
 At December 31, 2022, Frandisco Property and Casualty Insurance Company and Frandisco Life Insurance Company had a statutory surplus of $147.5 million and $103.0 million, respectively. The maximum aggregate amount of dividends these subsidiaries can pay to the Company in 2023 without prior approval of the Georgia Insurance Commissioner is approximately $40.8 million. On November 30, 2022, Management submitted a request for approval of two separate transactions involving dividends and/or lines of credit with maximum amounts of $75.0 million from Frandisco Life Insurance Company and $105.0 million from Frandisco Property and Casualty Insurance Company. The request was approved by the Georgia Insurance Department on January 20, 2023 for transactions on or before December 31, 2023. Effective March 31,2023, Frandisco Property and Casualty Insurance Company and Frandisco Life Insurance Company amended previous unsecured revolving line of credits available to the Company extending the terms to December 31, 2026 and defining the interest rate as the rate of interest on outstanding balances as the prime rate of interest as published in the Wall Street Journal. Frandisco Property and Casualty Insurance Company advanced $30 million to the Company on its credit line in August 2023.
 At December 31, 2023, Frandisco Property and Casualty Insurance Company and Frandisco Life Insurance Company had a statutory surplus of $129.9 million and $111.0 million, respectively. The maximum aggregate amount of dividends these subsidiaries can pay to the Company during 2024, without prior approval of the Georgia Insurance Commissioner, is approximately $49.7 million. On November 28, 2023, Management submitted a request for approval of two separate transactions involving dividends and/or lines of credit with maximum amounts of $90.0 million from Frandisco Life Insurance Company and $105.0 million from Frandisco Property and Casualty Insurance Company. The Commissioner of the Insurance Department did not deny such requests with the 30 days allotted by law, thereby granting approval for transactions on or before December 31, 2024. Effective February 1, 2024, Frandisco Life Insurance Company and Frandisco Property and Casualty Insurance Company amended previous unsecured revolving lines of credit available to the Company by extending the term to December 31, 2027.
 Most of the Company's loan portfolio is financed through sales of its various debt securities, which, because of certain redemption features contained therein, have shorter average maturities than the loan portfolio as a whole. The difference in maturities may adversely affect liquidity if the Company is not able to continue to sell debt securities at interest rates and on terms that are responsive to the demands of the marketplace or maintain sufficient borrowing availability under our credit facility.
 The Company's continued liquidity is therefore also 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
 - 19 -

 securities sales, the Company has an external source of funds available under a revolving credit facility with Wells Fargo Bank, N.A. This credit agreement (as amended, the "credit agreement") provides for borrowings or re-borrowings of up to $230.0 million or 70% of the Company's net finance receivables (as defined in the credit agreement), whichever is less, subject to certain limitations, and all borrowings are secured by the finance receivables of the Company. At December 31, 2023 and 2022, $122.1 million and $67.5 million, respectively, were outstanding under the credit line. The credit agreement has a commitment termination date of February 28, 2025. Management believes the current credit facility, when considered with funds expected to be available from operations, should provide sufficient liquidity for the Company.
 Available but unborrowed amounts under the credit agreement are subject to a periodic unused line fee of 0.50% The interest rate under the credit agreement is equivalent to the greater of (a) 0.75% per annum plus the Applicable Margin or (b) the one month secured overnight financing rate (the "SOFR Rate") plus the term SOFR adjustment (the "Adjusted Term SOFR Rate") plus the Applicable Margin. The Adjusted Term SOFR Rate is adjusted on the first day of each calendar month based upon the SOFR Rate as of the last day of the preceding calendar month. The Applicable Margin is 2.75%. The interest rate on the credit agreement at December 31, 2023 and 2022 was 8.19% and 6.97%, respectively.
 The credit agreement requires the Company to comply with certain covenants customary for financing transactions of this nature, including, among others, maintaining a minimum interest coverage ratio, a minimum loss reserve ratio, a minimum ratio of earnings to interest, taxes and depreciation and amortization to interest expense, a minimum asset quality ratio, a minimum consolidated tangible net worth ratio, and a maximum debt to tangible net worth ratio, each as defined. The Company must also comply with certain restrictions on its activities consistent with credit facilities of this type, including limitations on: (a) restricted payments; (b) additional debt obligations (other than specified debt obligations); (c) investments (other than specified investments); (d) mergers, acquisitions, or a liquidation or winding up; (e) modifying its organizational documents or changing lines of business; (f) modifying certain contracts; (g) certain affiliate transactions; (h) sale-leaseback, synthetic lease, or similar transactions; (i) guaranteeing additional indebtedness (other than specified indebtedness); (j) capital expenditures; or (k) speculative transactions. The credit agreement also restricts the Company or any of its subsidiaries from creating or allowing certain liens on their assets, entering into agreements that restrict their ability to grant liens (other than specified agreements), or creating or allowing restrictions on any of their ability to make dividends, distributions, inter-company loans or guaranties, or other inter-company payments, or inter-company asset transfers.
 Any increase in the Company's allowance for credit losses would not directly affect the Company's liquidity, as any adjustment to the allowance has no impact on cash; however, an increase in the actual loss rate may have a material adverse effect on the Company's liquidity. The inability to collect loans could materially impact the Company's liquidity in the future.
 The Company anticipates that its cash and cash equivalents, cash flows from operations, available lines of credit, and borrowings from time to time under the credit agreement will be sufficient to fund its liquidity needs for the next 12 months and thereafter for the foreseeable future.

 Critical Accounting Policies:
 The accounting and reporting policies of 1st Franklin and its subsidiaries are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the financial services industry. The more critical accounting and reporting policies include the allowance for credit losses, revenue recognition and insurance claims reserves.
 Allowance for Credit Losses:
 Provisions for credit losses are charged to operations in amounts sufficient to maintain the allowance for credit losses at a level considered adequate to cover expected credit losses in our loan portfolio. The allowance for credit losses is established based on the determination of the amount of expected losses inherent in the loan portfolio as of the reporting date. When the Company implemented ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") we implemented an open pool method. The method evaluated loans outstanding with similar risk characteristics collectively in pools, whereby a historical loss rate is calculated and applied to the balance of loans outstanding in the portfolio at each reporting period. This historical loss rate was then adjusted by a
 - 20 -

 macroeconomic forecast and other qualitative factors, as appropriate, to fully reflect the expected losses in the loan portfolio.
 For the period ending December 31, 2023, we utilized a Probability of Default ("PD") / Loss Given Default ("LGD") technique to estimate the allowance for credit losses, in which the estimated loss is equal to the product of PD and LGD. Historical net finance receivables are tracked over the term of the loan pools to identify the instances of loss (PDs) and the average severity of losses (LGDs). We engaged a major rating service provider to assist with incorporating a reasonable and supportable forecast which is utilized to support the adjustments to historical loss experience of loans with similar credit risk. Key segmentation in the technique is origination vintage, remaining contractual term, risk score and state of origination. The technique produces a variety of alternative economic scenarios. We consider how macroeconomic or other factors might impact expected credit losses over the remaining maturity of the portfolio and determine which scenario(s) and specific scenario weights to be applied within the estimation. The allowance for credit losses recorded in the balance sheet reflects our best estimate of expected credit losses. There was not a material impact on the Company's expected credit losses as a result of the change. The output of both models was within the range of acceptable values.
 Revenue Recognition:
 Accounting principles generally accepted in the United States of America 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 on-going 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 which have precomputed charges are paid off or renewed prior to maturity, the result is that most of the 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 a loan that is more than 60 days past due.
 Loan fees and origination costs are deferred and recognized as an adjustment 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 an unrelated insurance company, are reinsured by the Company's property and casualty insurance subsidiary. The premiums 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 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 consolidated statements of financial position are reserves for incurred but unpaid credit insurance claims for policies written by the Company and reinsured by the Company's wholly-owned insurance subsidiaries. These reserves are established based on 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 these policies could result in material changes in the Company's consolidated financial position or consolidated results of operations.
 - 21 -

 New Accounting Pronouncements:
 See Note 1, "Summary of Significant Accounting Policies - Recent Accounting Pronouncements," in the accompanying "Notes to Consolidated Financial Statements" for a discussion of new 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 Notes to the Company's Consolidated Financial Statements included elsewhere in this Annual Report.
 - 22 -

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Shareholders and Board of Directors of 1st Franklin Financial Corporation:

 Opinion on the Consolidated Financial Statements
 We have audited the accompanying consolidated statements of financial position of 1st Franklin Financial Corporation and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
 Basis of Opinion
 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
 Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
 Critical Audit Matter
 The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
 Allowance for Credit Losses – Refer to Note 2 to the consolidated financial statements
 Critical Audit Matter Description
 The allowance for credit losses is based on Management's evaluation of the inherent risks and changes in the composition of the Company's loan portfolio. For the period ended December 31, 2023, the Company selected a Probability of Default ("PD") / Loss Given Default ("LGD") technique to estimate the allowance for credit losses, in which the estimated loss is equal to the product of PD and LGD. The Company engaged a major rating service provider to assist with estimating the instances of loss (PDs) and the average severity of losses (LGDs) using the characteristics of the Company's loan portfolio, along with incorporating a reasonable and
 - 23 -

 supportable forecast which is utilized to support the adjustments to historical loss experience of loans with similar credit risk. Key segmentation in the technique is origination vintage, remaining contractual term, risk score and state of origination. The technique produces a variety of alternative economic scenarios. The Company considers how macroeconomic and other factors might impact expected credit losses over the remaining maturity of the portfolio and determines which scenario(s) and specific scenario weights are applied within the estimation.
 We identified the allowance for credit losses estimate as a critical audit matter because of the significant amount of complexity and judgment required by management to select and weight the macroeconomic forecast scenarios that are applied to the estimate. Performing audit procedures to evaluate the appropriateness of this model and whether adjustments are necessary required a high degree of auditor judgment, the use of specialists, and an increased extent of effort, specifically due to the effect of uncertainty in consumer payment patterns and general economic conditions on the estimate.
 How the Critical Audit Matter Was Addressed in the Audit
 Our audit procedures related to the allowance for credit losses included the following, among others:
 • We used credit specialists to assist us in (i) evaluating the reasonableness of the PD/LGD model and relevant assumptions, and (ii) evaluating the reasonableness of design, theory, and logic of the model for estimating expected credit losses.
 • We tested the completeness and accuracy of data utilized as inputs within the PD/LGD model and the reasonableness of the technique's calculation of probability of default and loss given default.
 • We evaluated the reasonableness of management's judgments related to the selection and weighting of macroeconomic forecast scenarios by comparing the forecast data to other independent sources.
 • We compared the output of the estimated allowance for credit losses to the consolidated financial statements and assessed the reasonableness of the related disclosures.

 /s/ Deloitte & Touche LLP
 Atlanta, Georgia
 We have served as the Company's auditor since 2002.
 - 24 -

 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 DECEMBER 31, 2023 AND 2022
 ASSETS

 2023
 2022

 CASH AND CASH EQUIVALENTS (Note 1)
 $
 22,775,852
 $
 49,652,729

 RESTRICTED CASH (Note 1)
 12,059,022
 15,781,499

 LOANS (Note 2):

 972,567,737
 911,821,593

 29,812,798
 37,323,155

 175,548,110
 146,507,130

 1,177,928,645
 1,095,651,878

 Less: Unearned Finance Charges
 174,043,203
 154,630,023

 Unearned Insurance Premiums
 69,748,304
 65,536,077

 Allowance for Credit Losses
 71,361,745
 75,210,063

 862,775,393
 800,275,715

 INVESTMENT SECURITIES (Note 3):

 Available for Sale, at fair value
 250,085,804
 220,028,343

 OTHER ASSETS:

 Land, Buildings, Equipment and Leasehold Improvements, less accumulated depreciation and amortization of $ 55,304,631 and $ 50,116,238 in 2023 and 2022, respectively

 17,215,898
 13,111,394

 Operating Lease Right-of-Use Assets (Note 8)
 41,938,371
 38,153,238

 Deferred Acquisition Costs
 4,149,171
 3,768,290

 Due from Non-affiliated Insurance Company
 2,365,339
 —

 Other Miscellaneous
 26,931,910
 22,153,048

 92,600,689
 77,185,970

 TOTAL ASSETS
 $
 1,240,296,760
 $
 1,162,924,256

 - 25 -

 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 DECEMBER 31, 2023 AND 2022
 LIABILITIES AND STOCKHOLDERS' EQUITY

 2023
 2022

 SENIOR DEBT (Note 6):

 $
 122,050,000
 $
 67,531,000

 Senior Demand Notes, including accrued interest
 100,568,430
 112,325,674

 661,573,356
 624,585,553

 884,191,786
 804,442,227

 ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

 Operating Lease Liabilities (Note 8)
 43,034,942
 39,019,208

 Other Accounts Payable and Accrued Expenses
 19,952,978
 31,163,971

 62,987,920
 70,183,179

 SUBORDINATED DEBT (Note 7)
 28,533,940
 29,005,826

 Total Liabilities
 975,713,646
 903,631,232

 COMMITMENTS AND CONTINGENCIES (Note 9)

 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 as of December 31, 2023 and 2022

 Non-Voting Shares; no par value; 198,000 shares authorized; 168,300 shares outstanding as of December 31, 2023 and 2022

 —
 —

 Accumulated Other Comprehensive (Loss) Income
 ( 18,955,725)
 ( 26,401,816)

 Retained Earnings
 283,368,839
 285,524,840

 Total Stockholders' Equity
 264,583,114
 259,293,024

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 $
 1,240,296,760
 $
 1,162,924,256

 - 26 -

 CONSOLIDATED STATEMENTS OF INCOME

 2023
 2022
 2021

 INTEREST INCOME:

 Finance Charges
 $
 276,974,396
 $
 266,963,826
 $
 236,651,728

 Net Investment Income
 10,038,606
 8,177,846
 7,457,734

 287,013,002
 275,141,672
 244,109,462

 INTEREST EXPENSE:

 Senior Debt
 42,093,613
 26,875,546
 22,213,128

 Subordinated Debt
 1,099,749
 971,958
 977,093

 43,193,362
 27,847,504
 23,190,221

 NET INTEREST INCOME
 243,819,640
 247,294,168
 220,919,241

 PROVISION FOR CREDIT LOSSES (Note 2)
 87,387,765
 84,287,916
 42,183,163

 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
 156,431,875
 163,006,252
 178,736,078

 NET INSURANCE INCOME:

 Premiums
 56,570,776
 56,984,335
 53,231,581

 Insurance Claims and Expense
 ( 16,203,800)
 ( 17,164,735)
 ( 17,516,066)

 40,366,976
 39,819,600
 35,715,515

 OTHER REVENUE
 7,774,862
 6,831,179
 6,921,120

 OPERATING EXPENSES:

 Personnel Expense
 111,763,367
 113,732,789
 109,011,575

 Occupancy Expense
 20,705,383
 18,173,248
 17,382,787

 Other Expense
 66,754,481
 57,173,463
 49,173,951

 199,223,231
 189,079,500
 175,568,313

 INCOME BEFORE INCOME TAXES
 5,350,482
 20,577,531
 45,804,400

 PROVISION FOR INCOME TAXES (Note 12)
 4,820,393
 4,417,904
 3,943,393

 NET INCOME
 $
 $
 $

 BASIC EARNINGS PER SHARE:

 170,000 Shares Outstanding for All Periods ( 1,700 voting, 168,300 non-voting)

 $
 3.12
 $
 95.06
 $
 246.24

 - 27 -

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 2023
 2022
 2021

 Net Income
 $
 $
 $

 Other Comprehensive Income / (Loss):

 Net changes related to available-for-sale Securities:

 Unrealized gains (losses)
 9,743,321
 ( 45,165,474)
 ( 3,858,538)

 Income tax (provision) benefit
 ( 2,026,463)
 9,479,082
 816,053

 Net unrealized gains (losses)
 7,716,858
 ( 35,686,392)
 ( 3,042,485)

 Less reclassification of gains to net income
 270,767
 452,074
 487,791

 Total Other Comprehensive Income (Loss)
 7,446,091
 ( 36,138,467)
 ( 3,530,276)

 Total Comprehensive Income (Loss)
 $
 7,976,180
 $
 ( 19,978,840)
 $
 38,330,731

 - 28 -

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 FOR THE YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021

 Common Stock
 Retained
Earnings
 Accumulated
Other
Comprehensive
Income (Loss)
 Total

 Shares

 Balance at December 31, 2020

 265,002,401
 13,266,927
 278,439,328

 Comprehensive Income:

 Net Income for 2021
 —
 —
 —

 Other Comprehensive Loss
 —
 —
 —
 ( 3,530,276)

 Total Comprehensive Income
 —
 —
 —
 —
 38,330,731

 —
 —
 —

 Balance at December 31, 2021

 286,851,102
 9,736,651
 296,757,753

 Comprehensive Income:

 Net Income for 2022
 —
 —
 —

 Other Comprehensive Loss
 —
 —
 —
 ( 36,138,467)

 Total Comprehensive Loss
 —
 —
 —
 —
 ( 19,978,840)

 —
 —
 —

 Balance at December 31, 2022

 $
 $
 285,524,840
 $
 ( 26,401,816)
 $
 259,293,024

 Comprehensive Income:

 Net Income for 2023
 —
 —
 —

 Other Comprehensive Income
 —
 —
 —
 7,446,091

 Total Comprehensive Income
 —
 —
 —
 —
 7,976,180

 —
 —
 —

 Balance at December 31, 2023

 $
 $
 283,368,839
 $
 ( 18,955,725)
 $
 264,583,114

 - 29 -

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 2023
 2022
 2021

 CASH FLOWS FROM OPERATING ACTIVITIES:

 Net Income
 $
 $
 $

 Adjustments to reconcile net income to net cash provided by operating activities:

 Provision for credit losses
 87,387,765
 84,287,916
 42,183,163

 Depreciation and amortization
 6,606,132
 4,425,985
 4,629,756

 Deferred tax expense (benefit)
 392,024
 ( 151,474)
 487,481

 Net (gains) due to called redemptions of marketable securities, gain on sales of equipment and amortization on securities
 ( 661,315)
 ( 830,011)
 ( 763,017)

 Increase in other assets
 ( 8,882,938)
 ( 7,430,995)
 ( 1,634,447)

 (Decrease) Increase in other liabilities
 ( 11,210,993)
 1,125,774
 6,995,269

 Net Cash Provided
 74,160,764
 97,586,822
 93,759,212

 CASH FLOWS FROM INVESTING ACTIVITIES:

 Loans originated or purchased
 ( 642,891,708)
 ( 602,792,430)
 ( 588,636,277)

 Loan payments
 493,004,266
 469,077,122
 456,342,806

 Purchases of securities, available for sale
 ( 38,010,713)
 ( 30,156,252)
 ( 59,722,784)

 Redemptions of securities, available for sale
 18,040,000
 26,815,000
 15,905,000

 Capital expenditures
 ( 11,493,546)
 ( 5,219,242)
 ( 3,339,606)

 Proceeds from Sale of Fixed Assets
 —
 22,929
 35,088

 Net Cash Used
 ( 181,351,701)
 ( 142,252,873)
 ( 179,415,773)

 CASH FLOWS FROM FINANCING ACTIVITIES:

 Net (decrease) / increase in Senior Demand Notes
 ( 11,757,244)
 8,282,195
 17,420,976

 Advances on credit line
 239,172,362
 213,677,200
 164,964,653

 Payments on credit line
 ( 184,653,362)
 ( 206,446,200)
 ( 223,564,653)

 Commercial paper issued
 146,377,614
 135,878,572
 161,768,917

 Commercial paper redeemed
 ( 109,389,811)
 ( 63,485,901)
 ( 41,849,573)

 Subordinated debt securities issued
 6,795,654
 5,759,655
 6,963,742

 Subordinated debt securities redeemed
 ( 7,267,540)
 ( 6,446,173)
 ( 7,346,797)

 Dividends / distributions paid

 Net Cash Provided
 76,591,583
 69,733,459
 58,344,959

 NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
 ( 30,599,354)
 25,067,408
 ( 27,311,602)

 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning
 65,434,228
 40,366,820
 67,678,422

 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ending
 $
 34,834,874
 $
 65,434,228
 $
 40,366,820

 Cash paid during the year for -

 Interest Paid
 $
 41,752,170
 $
 27,264,793
 $
 23,018,333

 Income Taxes Paid
 $
 4,763,842
 $
 4,156,000
 3,050,638

 Non-Cash Transactions for -

 ROU assets and associated liabilities
 10,311,099
 9,553,566
 7,069,375

 - 30 -

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business:
 1st Franklin Financial Corporation (the "Company") is a consumer finance company which originates and services direct cash loans, real estate loans and sales finance contracts through 364 branch offices located throughout the southeastern United States. In addition to this business, the Company writes credit insurance when requested by its loan customers as an agent for a non-affiliated insurance company specializing in such insurance. Two of the Company's wholly owned subsidiaries, Frandisco Life Insurance Company and Frandisco Property and Casualty Insurance Company, reinsure the credit life, the credit accident and health, the credit unemployment and the credit property insurance so written.
 Basis of Consolidation:
 The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Inter-company accounts and transactions have been eliminated.
 Fair Values of Financial Instruments:
 The following methods and assumptions are used by the Company in estimating fair values for 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 the origination of the instruments and their expected realization. Cash and cash equivalents are classified as a Level 1 financial asset.
 Loans. The fair value of the Company's direct cash loans and sales finance contracts approximate the carrying 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 as the interest rate charged by the Company is at statutory maximums, which approximates market rates as there have been no material changes to statutory maximums since origination. Loans are classified as a Level 3 financial asset.
 Investment Securities. The fair value of investment securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using market prices for similar securities. See additional information below regarding fair value under Accounting Standards Codification ("ASC") No. 820, Fair Value Measurements. See Note 4 for fair value measurement of available-for-sale investment securities and for information related to how these securities are valued.
 Senior Debt. 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 payment. Senior debt securities are classified as a Level 2 financial liability.
 Subordinated Debt. The carrying value of the Company's subordinated debt securities approximates fair value due to the re-pricing frequency of the securities. Subordinated debt securities are classified as a Level 2 financial liability.
 Use of Estimates:
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
 - 31 -

 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could vary materially from these estimates.
 Income Recognition:
 The Company categorizes it primary sources of revenue into three categories: (1) interest related revenues, (2) insurance related revenue, and (3) revenue from contracts with customers.
 (1)Interest related revenues are specifically excluded from the scope of ASC 606 and accounted for under ASC Topic 310, "Receivables".
 (2)Insurance related revenues are subject to industry-specific guidance within the scope of ASC Topic 944, "Financial Services - Insurance".
 (3)Other revenues primarily relate to commissions earned by the Company on sales of auto club memberships. Auto club commissions are revenue from contracts with customers and are accounted for in accordance with the guidance set forth in ASC 606.
 Accounting principles generally accepted in the United States of America 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 on-going 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 which have precomputed charges are paid off or renewed prior to maturity, the result is that most of the 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 a loan that is more than 60 days past due.
 Loan fees and origination costs are deferred and recognized as an adjustment 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 an unrelated insurance company, are reinsured by the Company's property and casualty insurance subsidiary. The premiums 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 policies written by the Company, as agent for an unrelated insurance company, are reinsured by the Company's life insurance subsidiary. The premiums are deferred and earned using the pro-rata method for level-term life policies and the effective yield method for decreasing-term life policies. Premiums on accident and health policies are earned based on an average of the pro-rata method and the effective yield method.
 Claims of the insurance subsidiaries are expensed as incurred and reserves are established for incurred but not reported claims. Reserves for claims totaled $ 7.0 million and $ 6.5 million at December 31, 2023 and 2022, respectively, and are included in unearned insurance premiums on the consolidated statements of financial position.
 Policy acquisition costs of the insurance subsidiaries are deferred and amortized to expense over the life of the policies on the same methods used to recognize premium income.
 The primary revenue category included in other revenue relates to commissions earned by the Company on sales of auto club memberships. Commissions received from the sale of auto club memberships are earned at the time the membership is sold. The Company sells the memberships as an agent for a third
 - 32 -

 party. The Company has no further obligations after the date of sale as all claims for benefits are paid and administered by the third party.
 Depreciation and Amortization:
 Office machines, equipment and Company automobiles are recorded at cost and depreciated on a straight-line basis over a period of three to ten years. Leasehold improvements are amortized on a straight-line basis over five years or less depending on the term of the applicable lease. Depreciation and amortization expense for each of the three years ended December 31, 2023, 2022, and 2021 was $ 6.6 million, $ 4.4 million and $ 4.6 million, respectively.
 Restricted Cash:
 Restricted cash consists of funds maintained in restricted accounts 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 real estate mortgage customers.

 Year Ended December 31,
 (In thousands)

 2023
 2022
 2021

 Cash and cash equivalents
 $
 22,776
 $
 49,653
 $
 33,061

 Restricted cash
 12,059
 15,781
 7,306

 Total cash, cash equivalents and restricted cash
 $
 34,835
 $
 65,434
 $
 40,367

 Impairment of Long-Lived Assets:
 The Company annually evaluates whether events and circumstances have occurred or triggering events have occurred that indicate the carrying amount of property and equipment may warrant revision or may not be recoverable. When factors indicate that these long-lived assets should be evaluated for possible impairment, the Company assesses the recoverability by determining whether the carrying value of such long-lived assets will be recovered through the future undiscounted cash flows expected from use of the asset and its eventual disposition. Based on Management's evaluation, there was no impairment of the carrying value of the long-lived assets, including property and equipment at December 31, 2023 or 2022.
 Income Taxes:
 The Financial Accounting Standards Board ("FASB") issued ASC 740-10. FASB ASC 740-10 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized. FASB ASC 740-10 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At December 31, 2023 and 2022, the Company had no uncertain tax positions.
 The Company's insurance subsidiaries are treated as taxable entities and income taxes are provided for where applicable (Note 12). No provision for income taxes has been made by the Company since it has elected to be treated as an S Corporation for income tax reporting purposes. However, certain states do not recognize S Corporation status, and the Company has accrued amounts necessary to pay the required income taxes in such states.
 Collateral Held for Resale:
 When the Company takes possession of collateral which secures a loan, the collateral is recorded at the lower of its estimated resale value or the loan balance. Any losses incurred at that time are charged against the Allowance for Credit Losses.
 - 33 -

 Marketable Debt Securities:
 Management has designated the Company's investment securities held in the Company's investment portfolio at December 31, 2023 and 2022 as being available-for-sale. This portion of the investment portfolio is reported at fair value with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss) included in the consolidated statements of comprehensive income (loss). Gains and losses on sales of securities designated as available-for-sale are determined based on the specific identification method.
 Earnings per Share Information:
 The Company has no contingently issuable common shares, thus basic and diluted earnings per share amounts are the same.
 Recent Accounting Pronouncements:
 In March 2022 the Financial Accounting Standards Board ("FASB") issued an accounting update ("ASU No. 2022-02") eliminating the accounting for troubled debt restructurings (each, a "TDR") by creditors while enhancing the disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendment also requires disclosure of gross credit losses by year of origination for finance receivables. The amendments in this update are effective for annual and interim period beginning after December 15, 2022. The elimination of TDR guidance may be adopted prospectively for loan modifications after adoption or on a modified retrospective basis, which would also apply to loans previously modified, resulting in a cumulative effect adjustment to retained earnings in the period of adoption for changes in the allowance for credit losses.
 The Company adopted the new standard on January 1, 2023, and elected to apply the new measurement prospectively. Adoption did not have a material impact, except for changes in disclosure required by the standard, in the footnotes to the Company's consolidated financial statements.
 In November 2023, the FASB issued ASU 2023-07, improving the disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. These enhanced disclosures require reporting of incremental segment information on an annual and interim basis for all public entities, including public entities with only one reportable segment, to enable investors to develop more decision-useful financial analyses. The amendments in this update are effective for annual periods beginning after December 15, 2023 and interim periods within annual periods beginning after December 15, 2024, and early adoption is permitted. The segment reporting guidance should be applied retrospectively to all prior periods presented in the financial statements, and upon transition, the expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the potential impact of this update on its consolidated financial statements.
 In December 2023, the FASB issued ASU 2023-09, enhancing the transparency and decision usefulness of income tax disclosures. The amendment, among other things, improves transparency of income tax disclosures by requiring more consistent categories and greater disaggregation of information in rate reconciliations, and disaggregation of income taxes paid by jurisdiction. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The income tax guidance should be applied on a prospective basis, however, retrospective application is permitted. The Company is currently evaluating the potential impact of this update on its consolidated financial statements.

 2. LOANS
 The Company's consumer loans are made to individuals in relatively small amounts for relatively short periods of time. First and second mortgage loans on real estate are made in larger amounts and for longer periods of time. The Company also purchases sales finance contracts from various dealers. All loans and sales contracts are held for investment.

 - 34 -

 Loan Renewals:
 Loan renewals are accounted for in accordance with the applicable guidance in ASC Topic 310-20 Nonrefundable Fees and Other Costs. Loan renewals are a product the Company offers to existing customers that allows them to borrow additional funds from the Company. In evaluating a loan for renewal, in addition to our standard underwriting requirements, we may take into consideration the customer's prior payment performance with us, which we believe to be an indicator of the customer's future credit performance. If the terms of the new loan resulting from a loan renewal (other than a troubled debt restructuring) are at least as favorable to us as the terms for comparable loans to other customers with similar collection risks who are not renewing a loan, the renewal is accounted for as a new loan. The criteria is met if the new loan's effective yield is at least equal to the effective yield for such comparable loans and the modification of the original loan is more than minor. A modification of a loan is more than minor if the present value of the cash flows under the terms of the renewal is at least 10 percent different from the present value of the remaining cash flows under the terms of the original loan. Accordingly, when a renewal is generated, the original loan(s) are extinguished along with the associated unearned finance charges and a new loan is originated. Substantially all renewals include a non-cash component that represents the exchange of the original principal balance for the new principal balance and a cash component for the net proceeds distributed to the customer for the additional amount borrowed. The cash component is presented as outflows from investing activities and the non-cash component is presented as a non-cash investing activity.
 Cash, unearned finance charges, origination fees, discounts, premiums, deferred fees, and, in the instance of a loan renewal, the net payoff of the of the renewed loan are included in the loan origination amount. The cash component of the loan origination is included in the Statement of Cash Flows in the Cash Flows from Investing Activities as Loans Originated or Purchased.
 Reconciliation of Gross Loans Originated / Acquired to Loans Originated or Purchased in Consolidated Statements of Cash Flows (in millions):

 2023
 2022
 2021

 Loans Originated/acquired per Business Section
 $
 1,228
 $
 1,158
 $
 1,152

 Non-Cash Reconciling items:

 Other Consumer (Live Check and Premier) Renewed Loans Payoff

 Other non-cash activity: unearned finance charges, origination fees, discounts, premiums, and deferred fees

 Loans originated or purchased per Consolidated Statements of Cash Flows
 $
 $
 $

 Contractual Maturities of Loans:
 An estimate of contractual maturities stated as a percentage of the loan balances based upon an analysis of the Company's portfolio as of December 31, 2023 is as follows:

 Due In
Calendar Year
 Direct
Cash
Loans
 Real
Estate
Loans
 Sales
Finance
Contracts

 2024
 %
 %
 %

 2025

 2026

 2027

 2028
 —

 2029 & beyond
 —

 %
 %
 %

 - 35 -

 Historically, a majority of the Company's loans have been renewed many months prior to their final contractual maturity dates, and the Company expects this trend to continue in the future. Accordingly, the above contractual maturities should not be regarded as a forecast of future cash collections.
 Allowance for Credit Losses:
 The allowance for credit losses is based on Management's evaluation of the inherent risks and changes in the composition of the Company's loan portfolio. When the Company implemented ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") loans outstanding with similar risk characteristics were collectively evaluated in pools utilizing an open pool method, whereby a historical loss rate was calculated and applied to the balance of loans outstanding in the portfolio at each reporting period. This historical loss rate was then adjusted by a macroeconomic forecast and other qualitative factors, as appropriate, to fully reflect the expected losses in the loan portfolio.
 For the period ending December 31, 2023 we utilized a Probability of Default ("PD") / Loss Given Default ("LGD") technique to estimate the allowance for credit losses, in which the estimated loss is equal to the product of PD and LGD. We engaged a major rating service provider to assist with estimating the instances of loss (PDs) and the average severity of losses (LGDs) using the characteristics of our loan portfolio, along with incorporating a reasonable and supportable forecast which is utilized to support the adjustments to historical loss experience of loans with similar credit risk. Key segmentation in the technique is origination vintage, remaining contractual term, risk score and state of origination. The technique produces a variety of alternative economic scenarios. We consider how macroeconomic and/or other factors might impact expected credit losses over the remaining maturity of the portfolio and determine which scenario(s) and specific scenario weights are applied within the estimation. The allowance for credit losses recorded in the balance sheet reflects Management's best estimate of expected credit losses. There was not a material impact on the Company's expected credit losses as a result of the change. The output of both models was within the range of acceptable values.
 The Company classifies delinquent accounts at the end of each month according to the Company's graded delinquency rules which includes the number of installments past due at that time, based on the then-existing terms of the contract. Accounts are classified in delinquency categories of 30-59 days past due, 60-89 days past due, or 90 or more days past due based on the Company's graded delinquency policy. When a loan meets the Company's charge-off policy, the loan 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. The amount charged off is the unpaid balance less the unearned finance charges and the unearned insurance premiums, if applicable.
 Management ceases accruing finance charges on loans that meet the Company's non-accrual policy based on grade delinquency rules, generally when two payments remain unpaid on precomputed loans or when the interest paid-to-date on an interest-bearing loan is 60 days or more past due. 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. Accounts qualify for return to accrual status when the graded delinquency on a precomputed loan is less than two payments and on when the interest paid-to-date on an interest-bearing loan is less than 60 days past due. There were no loans that met the non-accrual policy still accruing interest at December 31, 2023 or December 31, 2022.
 The allowance for credit losses decreased by $ 3.8 million ( 5 %) to $ 71.4 million as of December 31, 2023, compared to $ 75.2 million at December 31, 2022.
 Management believes that the allowance for credit losses, as calculated in accordance with the Company's current expected credit loss ("CECL") methodology, is appropriate to cover expected credit losses on loans at December 31, 2023; however, because the allowance for credit losses is based on estimates, there can be no assurance that the ultimate charge-off amount will match such estimates. Management may determine it is appropriate to increase or decrease the allowance for expected credit losses in future periods, or actual losses in any period, either of which events could have a material impact on our results of operations in the future.
 - 36 -

 The Company's principal balances on non-accrual loans by loan class at December 31, 2023 and 2022 are as follows (in thousands):

 December 31, 2023
 December 31, 2022

 $
 10,888
 $
 13,527

 2,526
 4,738

 33,194
 41,240

 1,383
 1,870

 6,655
 5,656

 Total
 $
 54,647
 $
 67,031

 An age analysis of principal balances past due, segregated by loan class, as of December 31, 2023 and 2022 is as follows (in thousands):

 December 31, 2023

 30-59 Days
 60-89 Days
 90 Days or
More
 Total
Loans

 $
 4,555
 $
 4,228
 $
 6,548
 $
 15,331

 1,142
 1,713
 3,644

 19,975
 11,240
 24,433
 55,648

 1,403
 2,513

 4,228
 2,226
 4,142
 10,596

 Total
 $
 30,676
 $
 18,817
 $
 38,239
 $
 87,732

 December 31, 2022
 30-59 Days
 60-89 Days
 90 Days or
More
 Total
Loans

 $
 6,217
 $
 4,524
 $
 8,232
 $
 18,973

 2,164
 1,302
 2,416
 5,882

 24,681
 14,373
 26,818
 65,872

 1,380
 2,710

 4,257
 2,066
 3,315
 9,639

 Total
 $
 38,214
 $
 22,702
 $
 42,161
 $
 103,077

 While delinquency rating analysis is the primary credit quality indicator, we also consider the ratio of bankrupt accounts to the total loan portfolio in evaluating whether any qualitative adjustments were necessary to the allowance for credit losses. The ratio of bankrupt accounts to total principal loan balances outstanding at December 31, 2023 and December 31, 2022 was 1.43 % and 1.25 % respectively.
 The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. For each segment in the portfolio, the Company also evaluates credit quality based on the aging status of the loan and by payment activity.
 - 37 -

 The following table presents the net balance (gross balance less unearned finance charges and unearned insurance in thousands) in each segment in the portfolio as of December 31, 2023 based on year of origination.

 Payment Performance – Principal Balance by Origination Year

 2023
 2022
 2021
 2020
 2019
 Prior
 Total
Net
Balance

 Direct Cash Loans: Live Checks

 $
 127,733
 $
 14,842
 $
 2,455
 $
 $
 $
 $
 145,427

 8,686
 1,840
 —
 —
 10,764

 $
 136,419
 $
 16,682
 $
 2,661
 $
 $
 $
 $
 156,191

 $
 11,728
 $
 26,440
 $
 10,233
 $
 2,026
 $
 $
 $
 51,059

 1,521
 2,505

 $
 11,890
 $
 27,961
 $
 10,878
 $
 2,160
 $
 $
 $
 53,564

 $
 563,939
 $
 113,604
 $
 37,981
 $
 7,303
 $
 2,280
 $
 $
 725,873

 18,550
 9,673
 3,450
 32,758

 $
 582,489
 $
 123,277
 $
 41,431
 $
 8,044
 $
 2,536
 $
 $
 758,631

 Real Estate Loans:

 $
 2,069
 $
 1,344
 $
 10,204
 $
 4,481
 $
 3,890
 $
 5,941
 $
 27,929

 1,375

 $
 2,075
 $
 1,365
 $
 10,877
 $
 4,649
 $
 4,118
 $
 6,220
 $
 29,304

 Sales Finance Contracts:

 $
 96,227
 $
 45,339
 $
 17,777
 $
 7,662
 $
 1,042
 $
 $
 168,144

 2,157
 2,513
 1,158
 6,560

 $
 98,384
 $
 47,852
 $
 18,935
 $
 8,279
 $
 1,142
 $
 $
 174,704

 Segmentation of the portfolio began with the adoption of ASC 326 on January 1, 2020. The following table provides additional information on our allowance for credit losses based on a collective evaluation in thousands).

 2023

 Live Checks
 Other
Consumer
Loans
 Real Estate
Loans
 Sales Finance
Contracts
 Total

 Allowance for Credit Losses:

 Balance at January 1, 2023
 $
 14,896
 $
 6,108
 $
 46,412
 $
 $
 7,651
 $
 75,210

 Provision for Credit Losses
 20,807
 2,592
 51,726
 2,360
 9,903
 87,388

 Charge-offs
 ( 31,397)
 ( 7,685)
 ( 68,011)
 ( 22)
 ( 10,354)
 ( 117,469)

 Recoveries
 5,526
 1,495
 17,155
 2,050
 26,233

 Ending Balance
 $
 9,832
 $
 2,510
 $
 47,282
 $
 2,488
 $
 9,250
 $
 71,362

 - 38 -

 2022

 Live Checks
 Other
Consumer
Loans
 Real Estate
Loans
 Sales Finance
Contracts
 Total

 Allowance for Credit Losses:

 Balance at January 1, 2022
 $
 10,649
 $
 6,216
 $
 44,646
 $
 $
 5,535
 $
 67,311

 Provision for Credit Losses
 24,044
 4,452
 47,976
 ( 102)
 7,918
 84,288

 Charge-offs
 ( 23,207)
 ( 5,630)
 ( 61,787)
 ( 28)
 ( 7,353)
 ( 98,005)

 Recoveries
 3,410
 1,070
 15,577
 1,551
 21,616

 Ending Balance
 $
 14,896
 $
 6,108
 $
 46,412
 $
 $
 7,651
 $
 75,210

 Troubled Debt Restructurings (TDRs)

 In March 2022 the Financial Accounting Standards Board ("FASB") issued an accounting update ("ASU No. 2022-02") eliminating the accounting for troubled debt restructurings (each, a "TDR") by creditors while enhancing the disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendment also requires disclosure of gross credit losses by year of origination for finance receivables. The amendments in this update are effective for annual and interim periods beginning after December 15, 2022. The elimination of TDR guidance and enhanced disclosure requirements were adopted prospectively for loan modifications after adoption. These enhanced disclosures are presented herein for periods since adoption.

 TDRs represent loans on which the original terms 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 customer. We do not consider TDRs as new loans because the restructuring is part of our ongoing effort to recover its investment in the original loan. The Company allows refinancing of delinquent loans on a case-by-case basis for those who satisfy certain eligibility requirements. The eligible customers can include those experiencing temporary hardships, lawsuits, or customers who have declared bankruptcy. In most cases, the loans that eligible for restructuring are between 90 and 180 days past due. We do not allow the amount of the new loan to exceed the original amount of the existing loan and we believe that refinancing the delinquent loans for certain customers provides the Company with an opportunity to increase its average loans outstanding and its interest, fees, and other income without experiencing a significant increase in loan losses. These refinancings also provide a resolution to temporary financial setbacks for these borrowers and sustain their credit rating.

 Legal fees and other direct costs incurred by the Company during a restructuring are expensed when incurred. The effective interest rate for restructured loan is based on the original contractual rate, not the rate specified in the restructuring agreement. The modified loans are adjusted to be recorded at the value of expected cash flows to be received in the future. Modifications that lower the principal balance experience a direct charge off for the difference of the original and modified principal amount. Substantially all of the restructurings relate to fee and interest rate concessions. The Company only lowers the principal balance in the event of a court order.

 - 39 -

 The information relating to modifications made to borrowers experiencing financial difficulty (in thousands, except for %) for the period indicated are as follows:

 Year ended December 31, 2023

 Interest Rate Reduction
 Term Extension
 Principal Forgiveness
 Combination - Term Extension and Principal Forgiveness
 Combination - Term Extension and Interest Rate Reduction

 $
 5,244
 36.9
 %
 $
 2,350
 16.5
 %
 $
 2,557
 18.0
 %
 $
 2,784
 19.6
 %
 $
 1,277
 9.0
 %

 1,218
 18.0
 %
 1,735
 25.6
 %
 11.0
 %
 1,784
 26.3
 %
 1,289
 19.0
 %

 15,617
 17.1
 %
 16,482
 18.1
 %
 10,009
 11.0
 %
 30,706
 33.6
 %
 18,453
 20.2
 %

 75.6
 %
 12.9
 %
 6.8
 %
 —
 —
 %
 4.7
 %

 6.2
 %
 8.7
 %
 1,865
 16.7
 %
 7,008
 62.6
 %
 5.8
 %

 Total
 $
 23,056
 18.6
 %
 $
 21,591
 17.4
 %
 $
 15,206
 12.3
 %
 $
 42,282
 34.1
 %
 $
 21,679
 17.5
 %

 The financial effects of the modifications made to borrowers experiencing financial difficulty in the year ended December 31, 2023 are as follows:

 Loan Modification
 Financial Effect

 Interest Rate Reduction
 Live Check Loans
 Reduced the weighted-weighted average contractual interest rate from 27.0 % to 16.5 %

 Reduced the weighted-weighted average contractual interest rate from 20.2 % to 15.5 %

 Other Consumer Loans
 Reduced the weighted-weighted average contractual interest rate from 29.2 % to 19.4 %

 Reduced the weighted-weighted average contractual interest rate from 18.3 % to 6.6 %

 Reduced the weighted-weighted average contractual interest rate from 21.9 % to 15.7 %

 Term Extension
 Live Check Loans
 Added a weighted average 13 months to the term

 Added a weighted average 23 months to the term

 Other Consumer Loans
 Added a weighted average 16 months to the term

 Added a weighted average 28 months to the term

 Added a weighted average 17 months to the term

 Principal Forgiveness
 Live Check Loans
 Reduced the gross balance of the loans $ 2.6 million

 Reduced the gross balance of the loans $ 0.7 million

 Other Consumer Loans
 Reduced the gross balance of the loans $ 10.0 million

 No Financial Effect

 Reduced the gross balance of the loans $ 1.9 million

 - 40 -

 Loans modified for borrowers experiencing financial difficulty during the prior 12 months that subsequently charged off during the year ended December 31, 2023 (in thousands):

 Interest Rate Reduction
 Term Extension
 Principal Forgiveness
 Combination- Term Extension and Principal Forgiveness
 Combination - Term Extension and Interest Rate Reduction

 $
 2,679
 $
 $
 1,206
 $
 $

 4,880
 1,004
 3,207
 2,264
 1,994

 —
 —
 —
 —

 Total
 $
 8,239
 $
 1,481
 $
 5,197
 $
 3,101
 $
 2,583

 The aging for loans that were modified to borrowers experiencing financial difficulty in the past 12 months (in thousands):
 December 31, 2023

 Current
 30 - 89 Past Due
 90+ Past Due
 Total

 $
 4,023
 $
 1,096
 $
 1,629
 $
 6,747

 3,212
 4,495

 46,154
 7,640
 8,900
 62,694

 6,361
 1,202
 1,107
 8,670

 Total
 $
 59,933
 $
 10,534
 $
 12,519
 $
 82,986

 Prior to January 1, 2023, the Company classified a receivable as a TDR when the Company modified a loan's contractual terms for economic or other reasons related to the borrower's financial difficulties and granted a concession that would not have otherwise been considered.
 The following table presents a summary of loans that were restructured during the year ended December 31, 2022 in (in thousands, except number of loans):
 Number
of
Loans
 Pre-Modification
 Post-Modification

 6,238
 $
 11,026
 $
 10,869

 6,521
 6,367

 21,599
 85,663
 83,162

 1,165
 8,922
 8,664

 Total
 30,027
 $
 112,370
 $
 109,298

 - 41 -

 TDRs that subsequently defaulted during the year ended December 31, 2022 are listed below (in thousands, except number of loans):

 Number
of
Loans
 Pre-Modification

 2,252
 $
 3,883

 1,066

 5,196
 13,212

 1,061

 Total
 7,815
 $
 19,227

 The following table presents a summary of loans that were restructured during the year ended December 31, 2021 (in thousands, except number of loans):

 Number
of
Loans
 Pre-Modification
 Post-Modification

 2,303
 $
 4,357
 $
 4,266

 2,951
 2,850

 12,752
 46,993
 45,056

 4,800
 4,633

 Total
 16,304
 $
 59,449
 $
 57,152

 TDRs that subsequently defaulted during the year ended December 31, 2021 are listed below (in thousands, except number of loans):

 Number
of
Loans
 Pre-Modification

 $
 1,568

 3,094
 7,082

 —

 Total
 4,179
 $
 9,781

 - 42 -

 3. INVESTMENT SECURITIES
 Investment securities available for sale are carried at estimated fair market value. The amortized cost and estimated fair values of these investment securities are as follows (in thousands):

 Amortized
Cost
 Gross
Gains
 Gross
 Estimated
Fair
Value

 December 31, 2023:

 $
 273,595
 $
 2,443
 $
 ( 26,437)
 $
 249,601

 Corporate securities
 —
 —

 Total
 $
 274,080
 $
 2,443
 $
 ( 26,437)
 $
 250,086

 December 31, 2022:

 $
 253,068
 $
 1,034
 $
 ( 34,454)
 $
 219,648

 Corporate securities
 —
 —

 Total
 $
 253,448
 $
 1,034
 $
 ( 34,454)
 $
 220,028

 The amortized cost and estimated fair values of investment securities at December 31, 2023, by contractual maturity, are shown below (in thousands):

 Amortized
Cost
 Estimated
Fair
Value

 Due in one year or less
 $
 $

 Due after one year through five years
 3,101
 3,084

 Due after five years through ten years
 23,288
 23,677

 Due after ten years
 247,206
 222,840

 Total
 $
 274,080
 $
 250,086

 The following table provides an analysis of available for sale investment securities in an unrealized loss position (in thousands).

 Less than 12 Months
 12 Months or Longer
 Total

 December 31, 2023
 Fair
Value
 Fair
Value
 Fair
Value

 $
 33,724
 $
 ( 421)
 $
 112,931
 $
 ( 26,017)
 $
 146,655
 $
 ( 26,438)

 Less than 12 Months
 12 Months or Longer
 Total

 December 31, 2022
 Fair
Value
 Fair
Value
 Fair
Value

 $
 118,495
 $
 ( 9,237)
 $
 42,314
 $
 ( 25,126)
 $
 160,809
 $
 ( 34,363)

 The previous two tables represent 158 investments and 184 investment held by the Company at December 31, 2023 and 2022, respectively, the majority of which were rated "A" or higher. The unrealized losses on the Company's investments were 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 Management concluded that an allowance for credit losses was not required at December 31, 2023 or at December 31, 2022.
 - 43 -

 There were no sales of securities during 2023. Proceeds from redemption of investments due to the exercise of call provisions by the issuers thereof and regularly scheduled maturities during 2023 were $ 18.0 million Gross and net gains of $ 0.2 million were realized on these redemptions.
 There were no sales of securities during 2022. Proceeds from redemption of investments due to the exercise of call provisions by the issuers thereof and regularly scheduled maturities during 2022 were $ 26.8 million Gross and net gains of $ 0.6 million were realized on these redemptions.

 4. FAIR VALUE
 FASB ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on 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 asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
 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 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 or 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. The fair values of common stocks and mutual funds are based on unadjusted quoted market prices in active markets. 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 December 31, 2023 and 2022 are available-for-sale investment securities which are summarized below (in thousands):

 Fair Value Measurements at Reporting Date Using

 Description
 December 31,
2023
 Quoted Prices
In Active
Markets for
Identical
Assets
(Level 1)
 Significant
Other
Observable
Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)

 Corporate securities
 $
 $
 $
 —
 $
 —

 249,601
 —
 249,601
 —

 Available-for-sale investment securities
 $
 250,086
 $
 $
 249,601
 $
 —

 - 44 -

 Fair Value Measurements at Reporting Date Using

 Description
 December 31,
2022
 Quoted Prices
In Active
Markets for
Identical
Assets
(Level 1)
 Significant
Other
Observable
Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)

 Corporate securities
 $
 $
 $
 —
 $
 —

 219,648
 —
 219,648
 —

 Available-for-sale investment securities
 $
 220,028
 $
 $
 219,648
 $
 —

 5. INSURANCE SUBSIDIARY RESTRICTIONS
 As of December 31, 2023 and 2022, 99 % and 97 %, respectively, of the Company's cash and cash equivalents and investment securities were maintained in the Company's insurance subsidiaries. State insurance regulations limit the types of investments an insurance company may hold in its portfolio. These limitations specify types of eligible investments, quality of investments and the percentage a particular investment may constitute of an insurance company's portfolio.
 Dividend payments to the Company by its wholly owned life insurance subsidiary are subject to annual limitations and are restricted to the lesser of 10% of policyholders' surplus or the net statutory gain from operations before recognizing realized investment gains of the individual insurance subsidiary during the prior year. Dividend payments to the Company by its wholly-owned property and casualty insurance subsidiary are also subject to annual limitations and are restricted to the greater of 10% of policyholders' surplus or the net statutory income before recognizing realized investment gains of the individual insurance subsidiary during the prior three years. At December 31, 2022, Frandisco Property and Casualty Insurance Company and Frandisco Life Insurance Company had a statutory surplus of $ 147.5 million and $ 103.0 million, respectively. The maximum aggregate amount of dividends these subsidiaries can pay to the Company in 2023 without prior approval of the Georgia Insurance Commissioner is approximately $ 40.8 million. On November 30, 2022, Management submitted a request for approval of two separate transactions involving dividends and/or lines of credit with maximum amounts of $ 75.0 million from Frandisco Life Insurance Company and $ 105.0 million from Frandisco Property and Casualty Insurance Company. The request was approved by the Georgia Insurance Department on January 20, 2023 for transactions on or before December 31, 2023. Effective March 31,2023, Frandisco Property and Casualty Insurance Company and Frandisco Life Insurance Company amended previous unsecured revolving line of credits available to the Company extending the terms to December 31, 2026 and defining the interest rate as the rate of interest on outstanding balances as the prime rate of interest as published in the Wall Street Journal. Frandisco Property and Casualty Insurance Company advanced $ 30.0 million to the Company on its credit line in August 2023.
 At December 31, 2023, Frandisco Property and Casualty Insurance Company and Frandisco Life Insurance Company had a statutory surplus of $ 129.9 million and $ 111.0 million, respectively. The maximum aggregate amount of dividends these subsidiaries can pay to the Company during 2023, without prior approval of the Georgia Insurance Commissioner, is approximately $ 49.7 million. On November 28, 2023, Management submitted a request for approval of two separate transactions involving dividends and/or lines of credit with maximum amounts of $ 90.0 million from Frandisco Life Insurance Company and $ 105.0 million from Frandisco Property and Casualty Insurance Company. The request was approved by the Georgia Insurance Department for transactions on or before December 31, 2024. Effective February 1, 2024, Frandisco Life Insurance Company and Frandisco Property and Casualty Insurance Company amended previous unsecured revolving lines of credit available to the Company by extending the term to December 31, 2027.

 6. SENIOR DEBT
 Effective September 11, 2009, the Company entered into a credit facility with Wells Fargo Preferred Capital, Inc. As amended to date, the credit agreement provides for borrowings and reborrowing's of up to $ 230.0 million, subject to certain limitations, and all borrowings are secured by the finance receivables of the
 - 45 -

 Company. Available borrowings under the credit agreement were $ 108.0 million and $ 162.5 million at December 31, 2023 and 2022, at an interest rate of 8.19 % and 6.97 %, respectively. At December 31, 2023, the Company had borrowings of $ 122.1 million under the credit agreement. The Company had borrowings of $ 67.5 million under the credit agreement at December 31, 2022.
 Available but unborrowed amounts under the credit agreement are subject to a periodic unused line fee of 0.50 % The interest rate under the credit agreement is equivalent to the greater of (a) 0.75 % per annum plus the Applicable Margin or (b) the one month secured overnight financing rate (the "SOFR Rate") plus the term SOFR adjustment (the "Adjusted Term SOFR Rate") plus the Applicable Margin. The Adjusted Term SOFR Rate is adjusted on the first day of each calendar month based upon the SOFR Rate as of the last day of the preceding calendar month. The Applicable Margin is 2.75 %. The interest rate on the credit agreement at December 31, 2023 and 2022 was 8.19 % and 6.97 %, respectively.
 The credit agreement has a commitment termination date of February 28, 2025. Any then- outstanding balance under the Credit Agreement would be due and payable on such date. The lender also may terminate the agreement upon the violation of any of the financial ratio requirements or covenants contained in the credit agreement or if the financial condition of the Company becomes unsatisfactory to the lender, according to standards set forth in the credit agreement. Such financial ratio requirements include a minimum equity requirement, a minimum EBITDA ratio and a minimum debt to equity ratio, among others.
 The Company's Senior Demand Notes are unsecured obligations which are payable on demand. The interest rate payable on any Senior Demand Note is a variable rate, compounded daily, established from time to time by the Company.
 Commercial paper is issued by the Company only to qualified investors, in amounts in excess of $ 50,000, with maturities of less than 260 days and at interest rates that the Company believes are competitive in its market. Additional data related to the Company's senior debt is as follows (in thousands, except % data):

 Year Ended
December 31
 Weighted
Average
Interest
Rate at End
of Year
 Maximum
Outstanding
During Year
 Average
Outstanding
During Year
 Weighted
Average
Interest Rate
During Year (1)

 2023

 8.19
 %
 $
 125,250
 $
 92,381
 8.05
 %

 Senior Demand Notes
 1.91
 115,527
 102,967
 1.90

 5.93
 658,942
 633,086
 5.02

 2022

 6.97
 %
 $
 81,942
 $
 47,083
 7.07
 %

 Senior Demand Notes
 1.92
 122,860
 113,151
 1.92

 3.94
 633,534
 604,980
 3.54

 2021

 3.50
 %
 $
 119,304
 $
 68,080
 4.83
 %

 Senior Demand Notes
 1.91
 103,979
 95,143
 1.90

 3.46
 550,929
 491,431
 3.48

 (1)Includes unused line fee and administrative fee.

 7. SUBORDINATED DEBT
 The payment of the principal and interest on the Company's subordinated debt is subordinate and junior in right of payment to all unsubordinated indebtedness of the Company.
 - 46 -

 Subordinated debt consists of Variable Rate Subordinated Debentures issued from time to time by the Company, and which mature four years after their date of issue The maturity date is automatically extended for an additional four year term unless the holder or the Company redeems the debenture on its original maturity date or within any applicable grace period thereafter The debentures are offered and sold in various minimum purchase amounts with varying interest rates as established from time to time by the Company and interest adjustment periods for each respective minimum purchase amount. Interest rates on the debentures automatically adjust at the end of each adjustment period. The debentures may also be redeemed by the holder at the applicable interest adjustment date or within any applicable grace period thereafter without penalty. Redemptions at any other time are at the discretion of the Company and are subject to a penalty. The Company may redeem the debentures for a price equal to 100 % of the principal plus accrued but unpaid interest upon 30 days' notice to the holder.
 Interest rate information on the Company's subordinated debt at December 31 is as follows:

 Weighted Average Interest Rate as of End of Year
 Weighted Average Interest Rate During Year

 2023
 2022
 2021
 2023
 2022
 2021

 4.30 %
 3.29 %
 3.16 %
 3.68 %
 3.16 %
 3.12 %

 Maturity and redemption information relating to the Company's subordinated debt at December 31, 2023 in (thousands) is as follows:

 Amount Maturing or
Redeemable at Option of Holder

 Based on Maturity
Date
 Based on Interest
Adjustment Period

 2024
 $
 5,486
 $
 17,933

 2025
 6,196
 8,063

 2026
 6,263
 1,566

 2027
 10,589

 Total

 $
 28,534
 $
 28,534

 8. LEASES
 The Company's operations are carried on in locations which are occupied under operating lease agreements. These lease agreements are recorded as operating lease right-of-use ("ROU") assets and operating lease liabilities. Total operating lease expense was $ 10.1 million, $ 9.2 million, and $ 8.7 for the years ended December 31, 2023, 2022 and 2021, respectively. The Company's minimum aggregate future lease commitments at December 31, 2023 and 2022 are presented in the tables that follows.
 ROU assets represent the Company's right to use an underlying asset during the lease term and the operating lease liabilities represent the Company's obligations for lease payments in accordance with the lease. Recognition of ROU assets and liabilities are recognized at the lease commitment based on the present value of the remaining lease payments using a discount rate that represents the Company's incremental borrowing rate at the lease commitment date or adoption. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term and is recorded in occupancy expense in the consolidated statement of income.
 Remaining lease terms range from 1 to 10 years and typically include extension options. The Company's leases are not complex and do not contain residual value guarantees, variable lease payments, or significant assumptions or judgments made in applying the requirements of Topic 842. Operating leases with a term of 12 months or less are not recorded on the statement of financial condition and the related lease expense is recognized on a straight-line basis over the lease term.
 - 47 -

 The tables below summarize our lease expense and other information related to the Company's operating leases (dollars in thousands):

 Twelve Months
 Ended
 Dec 31, 2023

 Operating lease expense
 $
 8,038

 Cash paid for amounts included in the measurement of lease liabilities:

 Operating cash flows from operating leases
 7,890

 Weighted-average remaining lease term – operating leases (in years)
 7.01

 Weighted-average discount rate – operating leases
 5.45
 %

 Lease Maturity Schedule as of December 31, 2023:

 2024
 8,612

 2025
 8,227

 2026
 7,677

 2027
 6,801

 2028
 5,849

 2028 and beyond
 14,768

 Total
 51,933

 Less: Discount
 ( 8,898)

 Present Value of Lease Liability
 $
 43,035

 Present Value of Lease Asset
 $
 41,938

 Twelve Months
 Ended
 Dec 31, 2022

 Operating lease expense
 $
 7,843

 Cash paid for amounts included in the measurement of lease liabilities:

 Operating cash flows from operating leases
 7,707

 Weighted-average remaining lease term – operating leases (in years)
 7.09

 Weighted-average discount rate – operating leases
 4.84
 %

 Lease Maturity Schedule as of December 31, 2022:

 2023
 7,785

 2024
 7,004

 2025
 6,642

 2026
 6,086

 2027
 5,297

 2027 and beyond
 13,309

 Total
 46,123

 Less: Discount
 ( 7,104)

 Present Value of Lease Liability
 $
 39,019

 Present Value of Lease Asset
 $
 38,153

 - 48 -

 9. COMMITMENTS AND CONTINGENCIES
 We conduct our lending operations under the provisions of various federal and state laws, implementing regulations, and insurance regulations. Changes in the current regulatory environment, or the interpretation or application of current regulations, could impact our business.
 The Company is subject to various legal proceedings, claims and administrative proceedings arising in the ordinary course of its business, some of which are expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable, the peril or claim is uninsured or under insured, and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the uninsured or under insured loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the uninsured or under insured loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated uninsured or under insured loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. The Company does not disclose information with respect to litigation where an unfavorable outcome is considered to be remote or where the estimated loss (whether on the merits or by virtue of the existence of collectible insurance) would not be material.
 The five ( 5) putative class action lawsuits filed against the Company in the United States District Court for the Northern District of Georgia in March 2023. All five ( 5) cases were consolidated into one, known as: Moreland v. 1st Franklin Financial Corporation, The Plaintiffs generally assert claims of negligence, breach of implied contract and violations of the Georgia Deceptive Practices Act, on behalf of a putative class of individuals whose PII was accessed in the November 2022 cyber-attack on the Company. The Company has successfully defended the consolidated case and on January 11, 2024, the Court administratively dismissed the entire case. The Plaintiffs have asked the Court to reconsider its decision. The ultimate outcome of these matters can not be determined at this time.
 Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company.

 10. EMPLOYEE BENEFIT PLANS
 The Company maintains a 401(k) plan, which is qualified under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986 (the "Code"), as amended, to cover employees of the Company.
 Any employee who is 18 years of age or older is eligible to participate in the 401(k) plan on the first day of the month following the completion of one complete calendar month of continuous employment and the Company begins matching employee contributions of up to 6 % of their salary, using the following formula: 100 % of the first 1 % and 70 % of the next 5 % of salary deferred. From August 1, 2023 to December 31, 2023 the Company paused their matches on employee contributions. The Company resumed matches on January 1, 2024 utilizing our previous methodology. During 2023, 2022 and 2021, the Company contributed $ 1.9 million, $ 2.9 million and $ 2.6 million, respectively, in matching funds for employee 401(k) deferred accounts.
 The Company also maintains a non-qualified deferred compensation plan for employees who receive compensation in excess of the amount provided in Section 401(a)(17) of the Code, as such amount may be adjusted from time to time in accordance with the Code.

 11. RELATED PARTY TRANSACTIONS
 The Company leased a portion of its properties (see Note 8) for an aggregate of $ 160,800 per year from certain officers or stockholders.
 - 49 -

 The Company has an outstanding loan to a real estate development partnership of which David Cheek (son of Ben F. Cheek, III) who beneficially owns 24.24 % of the Company's voting stock, is a partner. The balance on this commercial loan (including principal and accrued interest) was $ 2.1 million at December 31, 2023. The loan is a variable-rate loan with the interest based on the prime rate plus 1 %. The interest rate adjusts whenever the prime rate changes.
 Certain directors, officers and stockholders have funds personally invested in the Company's debt securities. The rates on these debt securities are the same rates provided to other customers.
 Effective September 23, 1995, the Company entered into a Split-Dollar Life Insurance Agreement with the Trustee of a now retired executive officer's irrevocable life insurance trust. The life insurance policy insures one of the Company's executive officers. As a result of certain changes in tax regulations relating to split-dollar life insurance policies, the agreement was amended effectively making the premium payments a loan to the Trust. The interest on the loan is a variable rate adjusting monthly based on the federal mid-term Applicable Federal Rate. A payment of $ 18.8 thousand for interest accrued during 2023 was applied to the loan on December 31, 2023. No principal payments on this loan were made in 2023. The balance on this loan at December 31, 2023 was $ 485.4 thousand. This was the maximum loan amount outstanding during the year.

 12. INCOME TAXES
 The Company has elected to be treated as an S corporation for income tax reporting purposes. The taxable income or loss of an S corporation is treated as income of and is reportable in the individual tax returns of the shareholders of the Company in an appropriate allocation. Accordingly, deferred income tax assets and liabilities have been eliminated and no provisions for current and deferred income taxes were made by the Company except for amounts attributable to state income taxes for certain states, which do not recognize S corporation status for income tax reporting purposes. Deferred income tax assets and liabilities will continue to be recognized and provisions for current and deferred income taxes will be made by the Company's subsidiaries as they are not permitted to be treated as S Corporations.
 We account for income taxes under the asset and liability method, which requires the recognition of Deferred Tax Assets, "DTAs", and Deferred Tax Liabilities, "DTLs", for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date.
 We recognize DTAs to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If we determine that we would be able to realize our DTAs in the future in excess of their net recorded amount, we would make an adjustment to the DTA valuation allowance, which would reduce the provision for income taxes.
 We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
 We recognize interest and penalties related to unrecognized tax benefits, "UTBs", on the interest expense line and other expense line, respectively, in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related liability lines in the consolidated balance sheet.
 - 50 -

 The provision for income taxes for the years ended December 31, 2023, 2022 and 2021 is made up of the following components:

 2023
 2022
 2021

 Current – Federal
 $
 4,389,030
 $
 4,280,033
 $
 2,859,997

 Current – State
 39,339
 289,345
 595,915

 Total Current
 4,428,369
 4,569,378
 3,455,912

 Deferred tax expense (benefit)
 392,024
 ( 151,474)
 487,481

 Total Provision
 $
 4,820,393
 $
 4,417,904
 $
 3,943,393

 Temporary differences create deferred federal tax assets and liabilities, which are detailed below as of December 31, 2023 and 2022. These amounts are included in accounts payable and accrued expenses in the accompanying consolidated statements of financial position.

 As Of December 31,

 2023
 2022

 Deferred Tax Assets:

 Unearned Premium Reserves
 $
 2,132,375
 $
 2,042,304

 Unrealized Loss (Gain) on

 Marketable Debt Securities
 5,038,864
 7,018,205

 SPAE Capitalization
 33,195
 31,643

 STAT & Tax Reserve
 690,797
 643,782

 Total Deferred Tax Assets
 $
 7,895,231
 $
 9,735,934

 Deferred Tax Liabilities:

 Insurance Commissions
 ( 5,270,518)
 ( 4,774,456)

 Deferred Acquisition Cost Amortization
 ( 1,589,701)
 ( 1,554,166)

 GAAP/STAT Premium Tax
 ( 229,493)
 ( 198,450)

 Unrealized Loss (Gain) on

 Marketable Debt Securities
 —
 —

 Other
 ( 37,155)
 ( 66,235)

 Total Deferred Tax Liabilities
 ( 7,126,867)
 ( 6,593,307)

 Net Deferred Tax Asset (Liability)
 $
 768,364
 $
 3,142,627

 The Company's effective tax rate for the years ended December 31, 2023, 2022 and 2021 is analyzed as follows.

 2023
 2022
 2021

 Statutory Federal income tax rate
 21.0
 %
 21.0
 %
 21.0
 %

 Tax effect of S corporation status
 92.5
 5.0
 ( 11.3)

 Tax exempt income
 ( 24.1)
 ( 5.9)
 ( 2.4)

 State income taxes
 0.7
 1.4
 1.3

 Effective Tax Rate
 90.1
 %
 21.5
 %
 8.6
 %

 - 51 -

 13. 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 has ten divisions which comprise its operations. Each division consists of branch offices that are aggregated based on vice president responsibility and geographic location. Each state has one vice president of operations, with the exception of Georgia. Georgia is now split into three divisions, North Georgia ("NGA"), Middle Georgia ("MGA"), and South Georgia ("SGA"). Tennessee and Kentucky ("TN & KY") branches share a vice president and are segmented as one division. Prior to 2022, Division I consisted of offices located in South Carolina, offices in North Georgia comprised Division II, Division III consisted of offices in South Georgia, Division IX consisted of offices in West Georgia, Division IV represented our Alabama offices, Division V represented our Mississippi offices, Division VI represented our Virginia offices, Division VII represented our Kentucky and Tennessee offices and Division VIII represented our Louisiana and Texas offices. The following division financial data has been retrospectively presented to give effect to the structure of that period. The change in the Georgia reporting structure had no impact on the previously reported consolidated results.
 Accounting policies of the divisions are the same as those of the Company described in the summary of significant accounting policies. Performance of each division 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 credit loss management. All division revenues result from transactions with third parties. The Company does not allocate income taxes or corporate headquarter expenses to the any division.
 Below is a performance recap of each of the Company's divisions for the year ended December 31, 2023 followed by a reconciliation to consolidated Company data.

 Year 2023
 SC
 MGA
 SGA
 AL
 MS
 VA
 TN & KY
 LA
 TX
 NGA
 Total

 Finance Charges Earned
 $
 $
 $
 $
 $
 $
 $
 $
 $
 $
 $

 Insurance Income
 —

 Other
 —
 —
 —

 Expenses:

 Interest Cost
 —

 Provision for Loan Losses
 —

 Depreciation
 —
 —
 —
 —
 —
 —
 —

 Other

 Division Profit
 $
 $
 $
 $
 $
 $
 —
 $
 $
 $
 ( 2)
 $
 $

 Division Assets:

 Net Receivables
 $
 $
 $
 $
 $
 $
 $
 $
 $
 $

 Cash
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —

 Net Fixed Assets
 —

 Other Assets

 Total Division Assets
 $
 $
 $
 $
 $
 $
 $
 $
 $
 $
 $
 1,020

 - 52 -

 RECONCILIATION:
 2023

 Total revenues from reportable divisions
 $
 334.4

 Corporate finance charges earned not allocated to divisions
 0.3

 Corporate investment income earned not allocated to divisions
 10.0

 Timing difference of insurance income allocation to divisions
 6.6

 Other revenues not allocated to divisions
 $
 0.1

 Consolidated Revenues (1)
 $
 351.4

 Net Income:

 Total profit or loss for reportable divisions
 $
 70.0

 Corporate earnings not allocated
 17.0

 Corporate expenses not allocated
 ( 81.6)

 Consolidated Income
 $
 5.4

 Assets:

 Total assets for reportable divisions
 $
 1,020.6

 Loans held at corporate level
 2.1

 Unearned insurance at corporate level
 ( 40.1)

 Allowance for loan losses at corporate level
 ( 71.4)

 Cash and cash equivalents held at corporate level
 38.1

 Investment securities at corporate level
 250.1

 Fixed assets at corporate level
 7.2

 Other assets at corporate level
 33.6

 Consolidated Assets
 $
 1,240.3

 Note 1: Includes Finance Charge Income, Investment Income, Insurance Premium Revenues and Other Revenue.
 - 53 -

 Below is a performance recap of each of the Company's divisions for the year ended December 31, 2022 followed by a reconciliation to consolidated Company data.

 Year 2022
 SC
 MGA
 SGA
 AL
 MS
 VA
 TN & KY
 LA
 TX
 NGA
 Total

 Finance Charges Earned
 $
 $
 $
 $
 $
 $
 —
 $
 $
 $
 —
 $
 $

 Insurance Income
 —
 —

 Other
 —
 —
 —
 —

 —
 —

 Expenses:

 Interest Cost
 —
 —

 Provision for Loan Losses
 —
 —

 Depreciation
 —
 —
 —
 —
 —
 —
 —
 —

 Other
 —
 —

 —
 —

 Division Profit
 $
 $
 $
 $
 $
 $
 —
 $
 $
 $
 —
 $
 $

 Division Assets:

 Net Receivables
 $
 $
 $
 $
 $
 $
 —
 $
 $

 $
 $

 Cash
 —

 Net Fixed Assets
 —

 Other Assets
 —
 ( 1)

 Total Division Assets
 $
 $
 $
 $
 $
 $
 —
 $
 $
 $
 —
 $
 $

 - 54 -

 RECONCILIATION:
 2022

 Total revenues from reportable divisions
 $

 Corporate finance charges earned not allocated to divisions
 —

 Corporate investment income earned not allocated to divisions

 Timing difference of insurance income allocation to divisions

 Other revenues not allocated to divisions
 $
 —

 Consolidated Revenues (1)
 $

 Net Income:

 Total profit or loss for reportable divisions
 $

 Corporate earnings not allocated

 Corporate expenses not allocated
 ( 103)

 Consolidated Income Before Income Taxes
 $

 Assets:

 Total assets for reportable divisions
 $

 Loans held at corporate level

 Unearned insurance at corporate level
 ( 37)

 Allowance for loan losses at corporate level
 ( 75)

 Cash and cash equivalents held at corporate level

 Investment securities at corporate level

 Fixed assets at corporate level

 Other assets at corporate level

 Consolidated Assets
 $
 1,163

 Note 1: Includes Finance Charge Income, Investment Income, Insurance Premium Revenues and Other Revenue.
 - 55 -

 Below is a performance recap of each of the Company's divisions for the year ended December 31, 2021 followed by a reconciliation to consolidated Company data.

 Year 2021

I
II
III
IV
V
VII
VIII
IX
 Total

 Finance Charges Earned
 $
 35.0
 $
 32.0
 $
 33.0
 $
 38.0
 $
 25.0
 $
 25.0
 $
 20.0
 $
 29.0
 $
 237.0

 Insurance Income
 5.0
 7.0
 8.0
 5.0
 4.0
 3.0
 5.0
 6.0
 43.0

 Other
 —
 1.0
 1.0
 1.0
 1.0
 1.0
 1.0
 1.0
 7.0

 40.0
 40.0
 42.0
 44.0
 30.0
 29.0
 26.0
 36.0
 287.0

 Expenses:

 Interest Cost
 3.0
 3.0
 3.0
 4.0
 2.0
 2.0
 2.0
 3.0
 22.0

 Provision for Loan Losses
 8.0
 4.0
 5.0
 6.0
 5.0
 5.0
 5.0
 5.0
 43.0

 Depreciation
 —
 —
 —
 1.0
 1.0
 —
 —
 —
 2.0

 Other
 14.0
 13.0
 13.0
 14.0
 11.0
 11.0
 13.0
 13.0
 102.0

 25.0
 20.0
 21.0
 25.0
 19.0
 18.0
 20.0
 21.0
 169.0

 Division Profit
 $
 15.0
 $
 20.0
 $
 21.0
 $
 19.0
 $
 11.0
 $
 11.0
 $
 6.0
 $
 15.0
 $
 118.0

 Division Assets:

 Net Receivables
 $
 111.0
 $
 118.0
 $
 120.0
 $
 145.0
 $
 86.0
 $
 87.0
 $
 85.0
 $
 104.0
 $
 856.0

 Cash
 1.0
 1.0
 1.0
 1.0
 1.0
 —
 —
 —
 5.0

 Net Fixed Assets
 1.0
 1.0
 1.0
 1.0
 1.0
 1.0
 1.0
 1.0
 8.0

 Other Assets
 3.0
 5.0
 5.0
 6.0
 4.0
 4.0
 4.0
 5.0
 36.0

 Total Division Assets
 $
 116.0
 $
 125.0
 $
 127.0
 $
 153.0
 $
 92.0
 $
 92.0
 $
 90.0
 $
 110.0
 $
 905.0

 - 56 -

 RECONCILIATION:
 2021

 Total revenues from reportable divisions
 $
 287.0

 Corporate finance charges earned not allocated to divisions
 —

 Corporate investment income earned not allocated to divisions
 8.0

 Timing difference of insurance income allocation to divisions
 9.0

 Other revenues not allocated to divisions
 0.2

 Consolidated Revenues (1)
 $
 304.2

 Net Income:

 Total profit or loss for reportable divisions
 $
 118.0

 Corporate earnings not allocated
 20.0

 Corporate expenses not allocated
 ( 92.0)

 Consolidated Income Before Income Taxes
 $
 45.8

 Assets:

 Total assets for reportable divisions
 $
 905.0

 Loans held at corporate level
 2.0

 Unearned insurance at corporate level
 ( 39.0)

 Allowance for loan losses at corporate level
 ( 67.0)

 Cash and cash equivalents held at corporate level
 36.0

 Investment securities at corporate level
 262.0

 Fixed assets at corporate level
 5.0

 Other assets at corporate level
 14.0

 Consolidated Assets
 $
 1,118.0

 Note 1:Includes Finance Charge Income, Investment Income, Insurance Premium Revenues and Other Revenue.
 - 57 -

 DIRECTORS AND EXECUTIVE OFFICERS

 Directors

 Name
 Principal Occupation,
Title and Company
 Director Since

 Chairman of Board,

 2001

 Chairman Emeritus,

 1967

 David W, Cheek

 Shareholder

 2024

 2020

 Retired Executive Vice President and
 Chief Financial Officer,

 2004

 Chief Strategy Officer
 2020

 Vice President of Finance
 Armhr

 2023

 CPA
 2004

 Retired Retail Business Owner
 2004

 Sheryl Smith

 Retired Chief Operating, Risk and Compliance Officer
 Omni Financial

 2024

 Chairman
 Bowen & Watson, Inc.

 2004

 Executive Officers

 Name
 Position with Company
 Position Since

 Chairman of Board
 2015

 2015

 Julie I. Baker

 Executive Vice President and Chief Information Security Officer

 2021

 Daniel E. Clevenger, II
 Executive Vice President and Chief Administrative Officer

 2015

 Executive Vice President and Chief Financial Officer

 2021

 Executive Vice President and Chief Strategy Officer

 2023

 Executive Vice President and Chief Operations Officer

 2020

 Mark J. Scarpitti
 Executive Vice President and General Counsel

 2021

 Joseph A. Shaw
 Executive Vice President and Chief Information Officer

 2018

 - 58 -

 CORPORATE INFORMATION

 Corporate Offices
 Legal Counsel
 Independent Registered Public Accounting Firm

 P.O. Box 880
 Jones Day

 135 East Tugalo Street
 Atlanta, Georgia
 Deloitte & Touche LLP

 Toccoa, Georgia 30577
 Atlanta, Georgia

 (706) 886-7571

 Requests for Additional Information
 Informational inquiries, including requests for a copy of the Company's most recent annual report on Form 10-K, and any subsequent quarterly reports on Form 10-Q, as filed with the Securities and Exchange Commission, should be addressed to the Company's Secretary at the corporate offices listed above.

 BRANCH OPERATIONS

 SOUTH CAROLINA AND VIRGINIA

 MIDDLE GEORGIA

 M. Summer Clevenger
 Jennifer C. Purser

 Nicholas D. Blevins
 Gerald D. Rhoden
 Janet R. Brownlee
 James A. Mahaffey

 Lonnie Boston III
 Gregory A. Shealy
 Ronald E. Byerly
 Deloris O'Neal

 Jenna L. Henderson
 Louise S. Stokes

 Kathryn D. Landry
 Harriet H. Welch

 Tammy T. Lee

 SOUTH GEORGIA

 NORTH GEORGIA

 Michael E. Shankles
 Becki B. Lawhon

 Stacy M. Courson
 Wanda Parham
 James D. Blalock
 Christian J. Murray

 Jeffrey C. Lee
 David B. Surrett

 Kevin M. Gray
 April E. Pelphrey

 Sylvia J. McClung
 Robert D. Whitlock
 Nokie Moore
 F. Cliff Snyder

 ALABAMA

 MISSISSIPPI

 Jerry W. Hughes
 Marty B. Miskelly

 M. Peyton Givens
 Johnny M. Olive
 Maurice J. Bize, Jr.
 Teresa A. Grantham

 Tomerria S. Iser
 Tanya M. Slaten
 Carla A. Eldridge
 Rebecca L. Holloway

 Jonathan M. Kendrick
 Michael L. Spriggs
 Jimmy R. Fairbanks, Jr.

 William J. Pridmore

 KENTUCKY and TENNESSEE

 LOUISIANA

 Josh Nickerson
 John B. Gray

 Chad H. Frederick
 Assistant Vice President

 Jerry D. Cline
 J. Steven Knotts
 Sonya L. Acosta
 Tabatha A. Green

 Zackary S. Coker

 Angelia M. Stafford

 Bryan W. Cook
 Anthony B. Seney

 Brian M. Hill
 Melissa D. Storck
 L. Christopher Deakle

 Tammy R. Hood
 Gary A. Zortman

 - 59 -

 TEXAS

 VIRGINIA

 Lori A. Sanchez

 M. Summer Clevenger

 Lauren M. Munoz

 Chadd D. Stewart

 Ryan L. Seveke

 Brittany L. Rubio

 HOME OFFICE ADMINISTRATION

 Billy Fuller

 Senior Vice President – Branch Operations
 James P. Smith
 Senior Vice President – Branch Operations

 Virginia K Palmer
 Senior Vice President – Operations Administration

 Mary Zimmerman

 Senior Vice President - Human Resources

 Kelly Abernathy

 Vice President - Fair & Responsible Lending

 Pat Kenny

 Vice President – Branch Operations Support

 Richard J. Brandt
 Vice President – Internal Audit
 Brian D. Lingle
 Vice President – Controller

 Angela C. Brock
 Vice President –Credit Reporting & Compliance Monitoring

 Timothy E. Ott
 Vice President – Information Technology Applications

 Richard C. Chapman

 Vice President – Financial Planning and Analysis

 Kenneth B. Proctor
 Vice President – State Regulatory Compliance

 Brian K. Davis
 Vice President – Marketing
 Joe Schubert

 Vice President – Governmental and Regulatory Affairs

 Stacey Estes

 Vice President – Real Estate and Property Management

 Edmund V. Tanner
 Vice President – Real Estate Compliance

 Shelby Gober

 Vice President - Employee Development

 Valerie B. Younts
 Vice President – Regulatory Counsel

 John-Mark Jones

 Vice President - information Security

 Justin Wiles

 Vice President - Project Management

 - 60 -

 ___________________
 2023 BEN F. CHEEK, JR. "OFFICE OF THE YEAR"
 *********************
 ** PICTURE OF EMPLOYEES **
 *********************
 This award is presented annually in recognition of the office that represents the highest overall performance within the Company. Congratulations to the entire Sylvania, Georgia staff for this significant achievement. The Friendly Franklin Folks salute you!
 - 61 -

 (Graphic showing state maps of Alabama, Georgia, Kentucky, Louisiana, Mississippi, South Carolina, Tennessee, Texas, and Virginia which is regional operating territory of Company and listing of branch offices)

 1st FRANKLIN FINANCIAL CORPORATION BRANCH OFFICES

 ALABAMA

 Adamsville
 Brewton
 Fort Payne
 Moulton
 Prattville
 Talladega

 Albertville
 Clanton
 Gadsden
 Muscle Shoals
 Robertsdale
 Tallassee

 Alexander City
 Cullman
 Hamilton
 Oneonta

 Russellville (2)
 Troy

 Andalusia
 Decatur
 Huntsville (2)
 Opelika
 Saraland
 Trussville

 Arab
 Dothan

 Jackson
 Oxford
 Scottsboro
 Tuscaloosa

 Athens
 Enterprise
 Jasper
 Ozark
 Selma
 Wetumpka

 Bay Minette
 Fayette
 Mobile
 Pelham
 Sylacauga

 Bessemer
 Florence
 Moody
 Pell City

 GEORGIA

 Acworth
 Canton
 Dalton
 Greensboro
 Manchester
 Swainsboro

 Adel
 Carrollton
 Dawson
 Griffin
 McDonough
 Sylvania

 Albany (2)
 Cartersville
 Douglas (2)
 Hartwell
 Milledgeville
 Sylvester

 Alma
 Cedartown
 Douglasville
 Hawkinsville
 Monroe
 Thomaston

 Americus
 Chatsworth
 Dublin
 Hazlehurst
 Montezuma
 Thomasville

 Athens (2)
 Clarkesville
 East Ellijay
 Helena
 Monticello
 Thomson

 Augusta
 Claxton
 Eastman
 Hinesville (2)
 Moultrie
 Tifton

 Bainbridge
 Clayton
 Eatonton
 Hiram
 Nashville
 Toccoa

 Barnesville
 Cleveland
 Elberton
 Hogansville
 Newnan
 Tucker

 Baxley
 Cochran
 Fayetteville
 Jackson
 Perry
 Valdosta

 Blairsville
 Colquitt
 Fitzgerald
 Jasper
 Pooler
 Vidalia

 Blakely
 Columbus (2)
 Flowery Branch
 Jefferson
 Richmond Hill
 Villa Rica

 Blue Ridge
 Commerce
 Forest Park
 Jesup
 Rome
 Warner Robins (2)

 Bremen
 Conyers
 Forsyth
 Kennesaw
 Royston
 Washington

 Brunswick
 Cordele
 Fort Valley
 LaGrange
 Sandersville
 Waycross

 Buford
 Cornelia
 Fort Oglethorpe
 Lavonia
 Savannah
 Waynesboro

 Butler
 Covington
 Gainesville
 Lawrenceville
 Statesboro
 Winder

 Cairo
 Cumming
 Garden City
 Macon (2)
 Stockbridge

 Calhoun
 Dahlonega
 Georgetown
 Madison

 KENTUCKY

 Cadiz

 Hopkinsville
 Louisville
 Morehead
 Richmond

 Shepherdsville

 Elizabethtown
 Jackson
 Madisonville
 Paducah

 Shelbyville
 Somerset

 Harlan

 LOUISIANA

 Abbeville
 Crowley
 Jena
 Marksville
 New Iberia
 Shreveport

 Alexandria
 Denham Springs
 Kenner
 Marrero
 Opelousas
 Sulphur

 Baker
 DeRidder
 Lafayette
 Minden
 Pineville
 Thibodaux

 Bastrop
 Eunice
 Lake Charles
 Monroe
 Prairieville
 West Monroe

 Baton Rouge
 Franklin
 LaPlace

 Morgan City
 Ruston
 Winnsboro

 Bossier City
 Hammond

 Leesville

 Natchitoches
 Slidell

 Covington
 Houma

 MISSISSIPPI

 Amory
 Columbia
 Gulfport
 Laurel
 Olive Branch
 Ridgeland

 - 62 -

 1st FRANKLIN FINANCIAL CORPORATION BRANCH OFFICES (Continued)

 Batesville
 Columbus
 Hattiesburg
 Louisville
 Oxford
 Ripley

 Bay St. Louis
 Corinth
 Hazlehurst
 Magee
 Pearl
 Senatobia

 Booneville
 D'Iberville
 Hernando
 McComb
 Philadelphia
 Starkville

 Brookhaven
 Forest
 Houston
 Meridian
 Picayune
 Tupelo

 Carthage
 Greenwood
 Iuka
 New Albany
 Pontotoc
 Winona

 Clinton
 Grenada
 Kosciusko
 Newton

 SOUTH CAROLINA

 Aiken
 Cheraw
 Georgetown
 Laurens
 North Charleston
 Summerville

 Anderson
 Chester
 Greenwood
 Lexington
 North Greenville
 Sumter

 Batesburg-Leesville
 Columbia
 Greer
 Manning
 Orangeburg
 Union

 Beaufort
 Conway
 Hartsville
 Marion
 Rock Hill
 Walterboro

 Boiling Springs
 Dillon
 Irmo
 Moncks Corner
 Seneca
 Winnsboro

 Camden
 Easley
 Lake City
 Myrtle Beach
 Simpsonville
 York

 Cayce
 Florence
 Lancaster
 Newberry
 Spartanburg

 Charleston
 Gaffney

 TENNESSEE

 Athens
 Crossville
 Greeneville
 Lebanon
 Morristown
 Sevierville

 Bristol
 Dayton
 Hixson
 Lenoir City
 Murfreesboro
 Springfield

 Clarksville
 Dickson
 Jackson
 Lexington
 Newport
 Smyrna

 Cleveland
 Dyersburg
 Johnson City
 Madisonville
 Powell
 Tazewell

 Columbia
 Elizabethton
 Kingsport
 Maryville
 Pulaski
 Tullahoma

 Cookeville
 Fayetteville
 Lafayette
 Millington
 Savannah
 Winchester

 Cordova
 Gallatin
 LaFollette

 TEXAS

 Austin (2)
 Corpus Christi
 Longview
 New Braunfels
 Rosenburg
 Texarkana

 Bastrop
 Hunstville

 Lufkin
 Pasadena
 San Antonio (3)
 Victoria

 Conroe

 Katy

 Missouri City

 Pearland

 Temple

 VIRGINIA

 Abingdon
 Chesapeake (2)

 Colonial Heights

 Danville

 Mechanicsville

 Yorktown

 - 63 -

 MISSION STATEMENT:
 "Serving communities by offering opportunities to individuals and families through financial services."
 CORE VALUES:
 Team: Be Trustworthy
 Impact: Be Intentional
 People: Be Exceptional
 Service: Be Humble
 - 64 -