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(Cover page 1 of 2 pages)

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Portions of the Registrant's Annual Report to security holders for the fiscal year ended December 31, 2001 are incorporated by reference into Parts I, II and IV of this Form 10-K.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  (X)

(Cover page 2 of 2 pages)

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PART I

Item 1.

BUSINESS:

The Company, Page 1; Business, Pages 5-12; and Financial Statements, Pages 21-37 of Registrant's Annual Report to security holders for the fiscal year ended December 31, 2001, the (“Annual Report”), are incorporated herein by reference.

Item 2.

PROPERTIES:

Map on inside back cover page; paragraph 1 of The Company, Page 1; and Footnote 7 (Commitments and Contingencies) of the Notes to Consolidated Financial Statements, Page 34 of Registrant's Annual Report are incorporated herein by reference.

Item 3.

LEGAL PROCEEDINGS:

Management previously reported (in the Company’s Form 10-K dated December 31, 1999) a legal proceeding pending against the Company in the state of Alabama.  The suit alleged that the Company’s practice of inserting dispute resolution provisions into its consumer lending documents and requiring consumers to abide by such provisions violates the Equal Credit Opportunity Act.  Plaintiffs sought declaratory relief that they could not be compelled to forfeit their statutorily granted rights under the Truth-in-Lending Act and other consumer protection laws.  Effective July 18, 2001, the Court dismissed the legal proceeding favoring the Company.

Item 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

No matters were submitted to a vote of security holders during the quarter ended December 31, 2001.

PART II

Item 5.

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED

STOCKHOLDER MATTERS:

Source of Funds, Page 12 of the Company’s Annual Report is incorporated herein by reference.

Item 6.

SELECTED FINANCIAL DATA:

Selected Consolidated Financial Information, Page 4 of Company’s Annual Report is incorporated herein by reference.

Item 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS:

Management's Discussion of Operations, Pages 13-20 of Company’s Annual Report is incorporated herein by reference.

Item 7A.

QUANTITATIVE AND  QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

Management’s Discussion of Operations, Market Risk sub-heading, Page 18 of Company’s Annual Report is incorporated herein by reference.

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

Pages 21-37 of Company’s Annual Report are incorporated herein by reference.

Item 9.

DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:

The Company has neither had any disagreements on accounting or financial disclosures with its accountants nor changed such accountants.

Forward Looking Statements:

Certain statements contained or incorporated by reference herein under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Market for Registrant’s Common Stock and Related Stockholder Matters” and elsewhere in this Annual Report on Form 10-K may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  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 materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements.  Such factors include, among other things, the ability t o manage cash flow and working capital, adverse economic conditions including the interest rate environment, federal and state regulatory changes and other factors referenced elsewhere herein.

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Item 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

(1)

Member of Audit Committee.

(2)

Mrs. Cheek is an honorary member of the Board of Trustees of Tallulah Falls School; Dr. Thompson is a physician at Toccoa Clinic; and Mr. Stovall is President of Stovall Building Supplies, Inc.  These positions have been held by each respective Director for more than five years.

(3)

Reference is made to “Executive Officers” for a discussion of business experience.

(4)

Member of Executive Committee.

(1)

Son of Lorene M. Cheek.

(6)

Mother of Ben F. Cheek, III

(7)

Son of Ben F. Cheek, III.

The term of office of each Executive Officer expires when a successor is elected and qualified.  There was no, nor is there presently any, arrangement or understanding between any officer and any other person (except directors or officers of the registrant acting solely in their capacities as such) pursuant to which the officer was selected.

No event such as a bankruptcy, criminal or securities violation proceeding has occurred within the past 5 years with regard to any Director or Executive Officer of the Company.

Item 11.

EXECUTIVE COMPENSATION:

(b) Summary Compensation Table:

*

Represents Company contributions to profit-sharing plan and reported compensation from premiums on life insurance policies for the benefit of Ben F. Cheek, III in the amount of $13,782 for 2001, $4,902 for 2000 and $7,393 for 1999.  Includes benefit package and Company contribution to profit-sharing plan for the benefit of T. Bruce Childs.  Represents Company contributions to profit-sharing plan for the benefits of Ben F. Cheek, IV, Virginia C. Herring, A. Roger Guimond, A.Jarrell Coffee, Phoebe P. Martin and Lynn E. Cox.

(g)

Compensation of Directors:

Directors who are not employees of the Company receive $2,500 per year for attending scheduled board meetings.

(k)

Board Compensation Committee Report on Executive Compensation:

The Company has no official executive compensation committee.  Ben F. Cheek, III (Chairman of the Company) establishes the bases for all executive compensation.  The Company is a family owned business with Ben F. Cheek, III being the majority stockholder.

Item 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

(a)

Security Ownership of Certain Beneficial Owners as of February 28, 2001:

Ownership 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 Exchange Act) 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.

(b)

Security Ownership of Management as of February 28, 2001:

Ownership listed below represents ownership in the Company, of (i) Directors and named Executive Officers of the Company and (ii) all Directors and Executive Officers of the Company as a group:

(1)

Effective January 1, 1997, the Company elected S Corporation status for income tax reporting purposes.  Because partnerships are ineligible to be S Corporation shareholders, Cheek Investments, L.P. distributed its shares of the Company to its eight partners (six trusts, Ben F. Cheek, III and Elizabeth Cheek, wife of Ben F. Cheek, III).  Ben F. Cheek, III and Elizabeth Cheek are grantors of the trusts.  Below is a table of ownership of non-voting common stock attributable to Ben F. Cheek, III:

(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:

The Company leases its Home Office building and print shop for a total of $12,600 per month from Franklin Enterprises, Inc. under leases which expire December 31, 2004. Franklin Enterprises, Inc. is 66.67% owned by Ben F. Cheek, III, a Director and Executive Officer of the Company. In Management's opinion, these leases are at rates which approximate those obtainable from independent third parties.

The Company leases its Hartwell branch office for a total of $300 per month from John R. Cheek.  John R. Cheek (brother of Ben F. Cheek, III) owns 25.94% of the Company’s voting shares of common stock.  Rent is also paid to Cheek Investments, Inc. in the amount of $350 per month for the Clarkesville branch office. Cheek Investments is owned by Ben F. Cheek, III.  In Management’s opinion, these leases are at rates which approximate those obtainable from independent third parties.

Beneficial owners of the Company are also beneficial owners of Liberty Bank & Trust ("Liberty"). The Company and Liberty have certain management and data processing agreements whereby the Company provides certain administrative and data processing services to Liberty for a fee. Annual income recorded by the Company in 2001, 2000 and 1999 related to these agreements was $73,700, $70,800 and $67,800, respectively. Management believes these amounts approximate the Company's actual cost of these services.

Liberty leases its office space and equipment from the Company for $63,100 annually, which in Management's opinion is at a rate which approximates that obtainable from independent third parties.

At December 31, 2001, the Company maintained $2,000,000 of certificates of deposit with Liberty at market rates and terms. The Company also had $3,040,311 in demand deposits with Liberty at December 31, 2001.

During 1999, a loan was extended to a real estate development partnership of which one of the Company’s beneficial owners (David Cheek) is a partner.  David Cheek (son of Ben F. Cheek, III) owns less than 5% of the Company’s voting stock.  The balance on this commercial loan (including accrued interest) was $1,598,889 at December 31, 2001.

 PART IV

Item 14.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:

(a)

(1)

Financial Statements:

Incorporated by reference from Registrant's Annual Report to security holders for the fiscal year ended December 31, 2001:

Report of Independent Public Accountants.

Consolidated Statements of Financial Position at December 31, 2001 and 2000.

Consolidated Statements of Income for the three years ended December 31, 2001.

Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2001.

Consolidated Statements of Cash Flows for the three years ended December 31, 2001.

Notes to Consolidated Financial Statements.

(2)

Financial Statement Schedules:

None - Financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto.

(3)

Exhibits:

2.

(a)

Articles of Merger of 1st Franklin Corporation with and into 1st Franklin Financial Corporation dated December 31, 1994 (incorporated herein by reference to Exhibit 3(2)(a) from Form 10-K for the fiscal year ended December 31, 1994).

3.

(a)

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

(b)

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

4.

(a)

Executed copy of Indenture dated October 31, 1984,  covering the Variable Rate Subordinated Debentures -  Series 1 (incorporated herein by reference from  Registration Statement No. 2-94191, Exhibit 4a).

(b)

Modification of Indenture dated March 29, 1995 (incorporated herein by reference to Exhibit 3(4)(b) from Form 10-K for the fiscal year ended December 31, 1994).

1.

Not applicable.

10.

(a)

Credit Agreement dated May, 1993 between the registrant and SouthTrust Bank of Georgia, N.A..  (Incorporated herein by reference from Form 10-K for the fiscal year ended December 31, 1993.)

(b)

Credit agreement dated September 25, 2001 between the registrant and SouthTrust Bank of Georgia, N.A..  (Incorporated herein by reference from Form 10-Q for the quarter ended September 30, 2001.)

11.

Computation of Earnings per Share is self-evident from the Consolidated Statement of Income and Retained Earnings in the Registrant's Annual Report to Security Holders for the fiscal year ended December 31, 2001, incorporated by reference herein.

12.

Ratio of Earnings to Fixed Charges.

13.

Registrant's Annual Report to security holders for fiscal year ended December 31, 2001.

18.

Not applicable.

19.

Not applicable.

21.

Subsidiaries of Registrant.

22.

Not applicable.

23.

Consent of Independent Public Accountants.

24.

Not applicable.

27.

Not applicable.

28.

Not applicable.

99.

Representation letter to the Securities and Exchange Commission regarding the quality of Arthur Andersen LLP's audit.

(b) Reports on Form 8-K:

No reports on Form 8-K were filed by the Registrant during the quarter ended December 31, 2001.

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:

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 capacity and on the dates indicated:

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 (in which case see Rule 12b-23b), 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, 2000, which is filed as Exhibit 13 hereto. The Registrant is a privately held corporation and therefore does not distribute proxy statements or information statements.