Supplemental Prospectus (Form 424B3)

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-295692

Prospectus Supplement

Dated November 12, 2026 (to Prospectus dated May 14, 2026)

1st Franklin Financial Corporation

This Prospectus Supplement is part of, and should be read in conjunction with, the Prospectus dated May 14, 2026.

This Prospectus Supplement consists of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, filed with the Securities and Exchange Commission on November 12, 2026.

1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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

For the Quarterly Period Ended September 30, 2026

OR

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

For the transition period from ______________ to _____________

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Commission File Number 2-27985

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1st FRANKLIN FINANCIAL CORPORATION

A Georgia Corporation			I.R.S. Employer Identification No. 58-0521233

135 East Tugalo Street

Post Office Box 880

Toccoa, Georgia 30577

(706) 886-7571

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Securities registered pursuant to Section 12(b) of the Act: None

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

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

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

Class						Outstanding November 12, 2026
Voting Common Stock, par value $100 per share						1,700 Shares
Non-Voting Common Stock, no par value						168,318 Shares

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements:

1st FRANKLIN FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands, except share data)

			(Unaudited)
			September 30, 2026						December 31, 2025
Assets
Cash and cash equivalents			$ 38,061						$ 18,171
Restricted cash			41,396						28,194
Loans:
Direct cash loans			1,353,815						1,308,075
Real estate loans			13,340						18,859
Sales finance contracts			104,830						120,669
			1,471,985						1,447,603
Less: Unearned finance charges			245,552						237,338
Unearned insurance premiums and commissions			92,691						86,025
Allowance for credit losses			78,753						76,279
Loans, net			1,054,989						1,047,961
Investment securities available-for-sale			237,541						275,341
Other assets:
Operating lease right-of-use assets			41,876						40,257
Other assets			56,667						50,879
			98,543						91,136
Total assets			$ 1,470,530						$ 1,460,803
Liabilities and stockholders' equity
Senior debt			$ 1,094,747						$ 1,076,008
Subordinated debt			29,917						32,793
Operating lease liabilities			43,355						41,728
Accrued expenses and other liabilities			37,259						39,520
Total liabilities			1,205,278						1,190,049
Stockholders' equity:
Preferred stock
$100 par value, 6,000 shares authorized; 0 shares outstanding			-						-
Common stock
Voting shares; $100 par value; 2,000 shares authorized; 1,700 shares outstanding			170						170
Non-voting shares; no par value; 198,000 shares authorized; 168,318 shares outstanding			-						-
Accumulated other comprehensive loss			(45,720)						(21,848)
Retained earnings			310,802						292,432
Total stockholders' equity			265,252						270,754
Total liabilities and stockholders' equity			$ 1,470,530						$ 1,460,803

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See Notes to Condensed Consolidated Financial Statements

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1st FRANKLIN FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except share and per share data)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2026						2025						2026						2025
Interest income			$ 96,623						$ 90,505						$ 285,729						$ 263,253
Interest expense			16,528						14,979						45,886						43,077
Net interest income			80,095						75,526						239,843						220,176
Provision for credit losses			27,168						21,982						81,319						74,604
Net interest income after provision for credit losses			52,927						53,544						158,524						145,572
Insurance income
Premiums and commissions			18,415						18,890						54,467						50,764
Insurance claims and expenses			4,910						4,400						14,265						11,950
Total net insurance income			13,505						14,490						40,202						38,814
Other revenue			2,370						2,430						6,784						6,228
Other operating expenses
Personnel expense			37,243						37,556						112,185						107,041
Occupancy expense			6,420						6,042						19,721						17,297
Other expense			15,859						19,097						49,326						49,718
Total			59,522						62,695						181,232						174,056
Income before income taxes			9,280						7,769						24,278						16,558
Provision for income taxes			1,717						1,584						5,175						4,469
Net income			$ 7,563						$ 6,185						$ 19,103						$ 12,089
Basic and diluted earnings per share
170,018 shares outstanding for all periods (1,700 voting, 168,318 non-voting)			$ 44.48						$ 36.38						$ 112.36						$ 71.11

See Notes to Condensed Consolidated Financial Statements

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1st FRANKLIN FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2026						2025						2026						2025
Net income			$ 7,563						$ 6,185						$ 19,103						$ 12,089
Other comprehensive (loss) income:
Net changes related to available-for-sale securities
Unrealized (losses) gains			(32,157)						10,873						(30,180)						1,105
Income tax benefit (expense)			6,753						(2,283)						6,338						(232)
Net unrealized (losses) gains			(25,404)						8,590						(23,842)						873
Less reclassification of gain to net income			3						-						30						2
Total other comprehensive (loss) income			(25,407)						8,590						(23,872)						871
Total comprehensive (loss) income			$ (17,844)						$ 14,775						$ (4,769)						$ 12,960

See Notes to Condensed Consolidated Financial Statements

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1st FRANKLIN FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(in thousands)

			Common Stock												Retained Earnings						Accumulated Other Comprehensive (Loss)						Total
			Shares						Amount
Three Months Ended September 30, 2026:
Balance at June 30, 2026			170						$ 170						$ 303,239						$ (20,313)						$ 283,096
Comprehensive income:
Net income			-						-						7,563						-
Other comprehensive loss			-						-						-						(25,407)
Total comprehensive loss			-						-						-						-						(17,844)
Balance at September 30, 2026			170						$ 170						$ 310,802						$ (45,720)						$ 265,252
Three Months Ended September 30, 2025:
Balance at June 30, 2025			170						$ 170						$ 283,667						$ (34,941)						$ 248,896
Comprehensive income:
Net income			-						-						6,185						-
Other comprehensive income			-						-						-						8,590
Total comprehensive income			-						-						-						-						14,775
Balance at September 30, 2025			170						$ 170						$ 289,852						$ (26,351)						$ 263,671
Nine Months Ended September 30, 2026:
Balance at December 31, 2025			170						$ 170						$ 292,432						$ (21,848)						$ 270,754
Comprehensive income:
Net income			-						-						19,103						-
Other comprehensive loss			-						-						-						(23,872)
Total comprehensive loss			-						-						-						-						(4,769)
Cash distributions paid			-						-						(733)						-						(733)
Balance at September 30, 2026			170						$ 170						$ 310,802						$ (45,720)						$ 265,252
Nine Months Ended September 30, 2025:
Balance at December 31, 2024			170						$ 170						$ 277,763						$ (27,222)						$ 250,711
Comprehensive income:
Net income			-						-						12,089						-
Other comprehensive income			-						-						-						871
Total comprehensive income			-						-						-						-						12,960
Balance at September 30, 2025			170						$ 170						$ 289,852						$ (26,351)						$ 263,671

See Notes to Condensed Consolidated Financial Statements

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1ST FRANKLIN FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

			Nine Months Ended September 30,
			2026						2025
Cash flows from operating activities:
Net income			$ 19,103						$ 12,089
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			81,319						74,604
Depreciation and amortization			6,215						6,754
Deferred tax provision			637						513
Net gains due to called redemptions of marketable securities and amortization on securities			(408)						(350)
(Increase) / decrease in other assets			(3,370)						5,290
(Decrease) / increase in other liabilities			(2,260)						1,624
Net cash provided by operating activities			101,236						100,524
Cash flows from investing activities:
Loans originated or purchased			(580,392)						(615,071)
Loan payments			492,045						457,544
Purchases of securities, available-for-sale			-						(12,673)
Redemptions of securities, available-for-sale			7,990						290
Capital expenditures			(2,897)						(3,739)
Proceeds from sale of fixed assets			-						-
Net cash (used in) investing activities			(83,254)						(173,649)
Cash flows from financing activities:
(Decrease) in senior demand notes			(6,711)						(4,752)
Advances on credit line			175,192						203,753
Payments on credit line			(173,492)						(153,922)
Commercial paper issued			80,866						85,898
Commercial paper redeemed			(57,136)						(48,080)
Subordinated debt securities issued			4,766						5,666
Subordinated debt securities redeemed			(7,642)						(4,849)
Dividends / distributions			(733)						-
Net cash provided by financing activities			15,110						83,714
Change in cash, cash equivalents, and restricted cash			$ 33,092						$ 10,589
Cash, cash equivalents and restricted cash, beginning			46,365						44,715
Cash, cash equivalents and restricted cash, ending			$ 79,457						$ 55,304
Cash paid during the year for -
Interest paid			$ 46,079						$ 42,831
Federal income taxes paid, net of refunds			5,700						3,850
Non-cash transactions for -
ROU assets and associated liabilities			7,546						4,246
Loan renewals			602,264						553,416

See Notes to Condensed Consolidated Financial Statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of 1st Franklin Financial Corporation and its subsidiaries ("1st Franklin", "1FFC", the "Company", "our" or "we") should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto as of December 31, 2025 and for the year then ended included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the "SEC"). Inter-company accounts and transactions have been eliminated from the accompanying unaudited condensed consolidated financial statements.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the Company's consolidated financial position as of September 30, 2026 and December 31, 2025, its consolidated results of operations and comprehensive income for the three and nine months ended September 30, 2026 and 2025 and its consolidated cash flows for the nine months ended September 30, 2026 and 2025. While certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the SEC, the Company believes that the disclosures herein are adequate to make the information presented not misleading.

The Company's financial condition and results of operations as of and for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the full fiscal year or any other future period. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at and as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Earnings per share is net income available to shareholders divided by the weighted average number of shares of common stock outstanding during the period. The Company has no dilutive securities outstanding.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Statements of Cash Flows:

			September 30, 2026						December 31, 2025
Cash and Cash Equivalents			$ 38,061						$ 18,171
Restricted Cash			41,396						28,194
Total Cash, Cash Equivalents and Restricted Cash			$ 79,457						$ 46,365

Interest income is recognized using the effective interest method, whereby the Company recognizes interest revenue equitably over the term of the loan. Unearned finance charges on pre-compute loans are rebated utilizing statutory methods, which often is the Rule of 78's method. The difference between income recognized under the effective interest and Rule of 78's method is recognized at the time of rebate as an adjustment to interest income.

Premiums on property and casualty credit, credit life and accident and health insurance policies are deferred and earned over the insurance coverage term using either the pro-rata method or the effective yield method. Rebates are computed using statutory methods. The difference between income recognized under the effective interest and statutory method is recognized at the time of rebate as an adjustment to income.

Policy acquisition costs of the Frandisco insurance subsidiaries are deferred and amortized to expense over the life of the policies on the same methods used to recognize premium income.

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The Company sells auto club memberships as an agent for a third 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. Commissions received from the sale of auto club memberships are earned at the time the membership is sold.

During the three months ended September 30, 2026 and 2025, the Company recognized interest revenue of $96.6 million and $90.5 million, respectively, insurance revenue of $18.4 million and $18.9 million, respectively, and other revenues of $2.4 million for each period. During the nine months ended September 30, 2026, and 2025, the Company recognized interest revenue of $285.7 million and $263.3 million, respectively, insurance revenue of $54.5 million and $50.8 million, respectively, and other revenues of $6.8 million and $6.2 million, respectively.

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Operating Segments:

Operating segments are components of a business about which separate financial information is available and evaluated regularly in deciding how to allocate resources and assessing performance as prescribed under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280 - Segment Reporting ("ASC 280"). ASC 280 requires entities to report certain financial information about operating segments in interim and annual financial statements.

Management has determined that 1FFC has one reportable segment that encompasses its core consumer finance activities. As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, this reflects a change in the Company's reportable segment in prior reporting periods as decisions to allocate resources were historically primarily driven on a geographical basis in two reportable segments. The impact of the change in reportable segments is not material to the consolidated results of the Company and did not have a material impact on the decision making process to allocate resources.

The Company's operations are divided among geographic regions through its branch network. Those regions have similar economic characteristics and products. The segment provides one primary product to our customer base which is delivered through a variety of channels including the Company's branch network, live checks, and the internet. Due to the nature of 1FFC's loan product offerings, there are no individually significant customers. The Company allocates resources and assesses operational and financial performance on a consolidated basis because its product offerings require similar marketing strategies, and do not significantly differ on the basis of geographic areas and/or related regulatory environments. The Company's Chief Operating Officer is the Chief Operating Decision Maker ("CODM") and is responsible for allocating resources and assessing financial performance.

The CODM uses the net income results to assess performance and enable decision making when allocating resources. Total assets as presented on the Consolidated Statements of Financial Position is used to measure segment assets. The CODM reviews significant expense categories that align with those presented in the Consolidated Statements of Income. Net income is also used to monitor budget versus actual results, assess internal forecasts, and benchmark performance.

Recent Accounting Pronouncements:

In November 2024, the FASB issued Accounting Standards Update ("ASU") 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), further clarified by ASU 2025-01. The update requires disclosure of specified information about certain expenses, including: employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. The update also requires disclosure of certain other expenses, gains and losses that are already required to be disclosed in the same disclosure as other disaggregation requirements. This guidance is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. 1FFC is currently evaluating the impact of this update on its consolidated financial statements.

In November 2025, the FASB issued ASU 2025-08, Financial Instruments-Credit Losses (Topic 326): Purchased Loans. The update expands the population of acquired financial assets subject to the gross-up approach in Topic 326 to include acquired seasoned loans without credit deterioration (excluding credit cards). This guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods with early adoption permitted. The amendments in this update are to be applied prospectively to loans that are acquired on or after the initial application date. The Company is currently evaluating the impact of this update on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The update provides a comprehensive list of interim disclosures that are required by GAAP to

<PAGE> 9

provide clarity about the current requirements. The update also includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update can be applied prospectively or retrospectively. 1FFC does not expect the new guidance to have a material impact on its consolidated financial statements.

Note 2 - LOANS AND ALLOWANCE FOR CREDIT LOSSES

The Company primarily makes consumer loans to individuals for personal or family needs, in relatively small amounts with maturities of approximately 2 years. The Company historically extended real estate loans. Beginning in 2024, 1FFC discontinued the origination of real estate loans, and the portfolio is currently in runoff. The Company also purchases sales finance contracts from various dealers.

Loans and sales finance contracts are held for investment and recorded on the Condensed Consolidated Statements of Financial Position on an amortized cost basis. Discounts and premiums on purchased loans are accreted or amortized to interest income over the estimated life of the loans using methods that approximate the effective interest method. Insurance reserves and unearned premiums applicable to credit risks on consumer receivables are treated as a reduction of loans in the consolidated balance sheets as the payments on such policies are generally used to reduce outstanding balances.

Interest income on loans is recognized as revenue on an accrual basis using the effective interest method. The net amount of nonrefundable origination fees, and certain direct costs associated with the lending process are deferred and amortized to interest income over the contractual life of the loan using methods that approximate the effective interest method. If a loan liquidates before amortization is complete, the Company applies any unamortized fees and origination costs to interest income at the date of liquidation. The Company recognizes late charges and prepayment penalties as revenue when received.

Loan Renewals

Loan renewals are an important part of 1FFC's business and are accounted for in accordance with the applicable guidance in ASC Topic 310-20 - Nonrefundable Fees and Other Costs. Our customers use renewals to extend and expand their lending relationships. The Company generally offers loan renewals to existing customers who have demonstrated an ability and willingness to repay amounts owed to us. Renewals typically refinance one or more of a customer's loans into a single new loan, which in some cases will be for a larger principal balance than the customer's original loan, though 1FFC permits renewals of existing loans at or below the original loan amount. In evaluating a loan for renewal, in addition to standard underwriting requirements, the Company will take into consideration the customer's prior payment performance, which 1FFC believes to be an indicator of the customer's future credit performance.

When a renewal is generated, the original loan(s) are extinguished along with the associated unearned finance charges. 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.

Cash, unearned finance charges, origination fees, discounts, premiums, deferred fees, and, in the instance of a loan renewal, the net payoff of the renewed loan are included in the loan origination amount. The cash component of the loan origination is included in the Condensed Consolidated Statements of Cash Flows from Investing Activities as Loans Originated or Purchased, while the non-cash component is presented as a non-cash investing activity.

Loan Portfolio Performance

<PAGE> 10

The Company monitors and classifies delinquent accounts at the end of each month according to the number of installment payments past due.

Loans are generally placed on non-accrual status after two missed payments. For loans placed on non-accrual status, the Company ceases accruing interest and finance charges and previously accrued interest is reversed against interest income. Finance charges are only recognized to the extent there is a loan payment received or when the account qualifies for return to accrual status. Loans generally return to accrual status when the outstanding balance is less than 2 payments (or less than 60 days) past due.

The Company's balances on non-accrual loans by loan class are as follows (in thousands):

Loan Class						September 30, 2026						December 31, 2025
Direct Cash Loans						$ 65,096						$ 58,802
Real Estate Loans						2,371						1,407
Sales Finance Contracts						5,162						4,863
Total						$ 72,629						$ 65,072

1FFC generally charges off a loan when a full contractual payment has not been received in the preceding 180 days. There are limited exception situations where a loan may be more than 180 days past due and not charged off - specifically pending insurance transactions and bankruptcy status. The amount charged off is the unpaid balance less the unearned finance charges and the unearned insurance premiums, if applicable.

The allowance for credit losses is evaluated and pooled based on similar risk characteristics, pricing, and term, among other factors. 1FFC also evaluates credit quality based on the aging status of the loan and by payment activity. Accounts are classified in delinquency categories of 30-59 days (1 installment), 60-89 days (2 installments), or 90 or more days (3+ installments) past due. The Company categorizes its loans into risk categories based on relevant information about the ability of borrowers to service their debt. 1FFC analyzes the loan portfolio by credit risk and updates the rating periodically based on current credit information. These risk ratings serve as the Company's primary credit-quality indicator under ASC 326 - Financial Instruments - Credit Losses. The following are definitions for the loan portfolio risk ratings:

Performing - Loans in this category are current or less than 60 days past due and are considered to have a low probability of default.

Non-performing - Loans in this category meet the Company's non-accrual policy based on grade delinquency rules. A loan is generally considered to be non-accrual when two payments remain unpaid.

An age analysis of balances past due, segregated by loan class is as follows (in thousands):

						September 30, 2026
Loan Class						30-59 Days Past Due						60-89 Days Past Due						90 Days or More Past Due						Total Past Due Loans
Direct Cash Loans						$ 33,262						$ 21,938						$ 37,997						$ 93,197
Real Estate Loans						1,094						595						810						2,499
Sales Finance Contracts						2,820						1,580						2,854						7,254
Total						$ 37,176						$ 24,113						$ 41,661						$ 102,950

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						December 31, 2025
Loan Class						30-59 Days Past Due						60-89 Days Past Due						90 Days or More Past Due						Total Past Due Loans
Direct Cash Loans						$ 32,184						$ 20,223						$ 38,601						$ 91,008
Real Estate Loans						707						406						1,001						2,114
Sales Finance Contracts						3,322						1,964						2,900						8,186
Total						$ 36,213						$ 22,593						$ 42,502						$ 101,308

While delinquency rating analysis is a primary credit quality indicator, 1FFC also considers 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 was 1.41% at September 30, 2026, compared to 1.30% at December 31, 2025.

The following tables present the balance in each segment in the portfolio for the period indicated based on payment performance by year of origination (in thousands):

			Payment Performance - Balance by Origination Year as of September 30, 2026
			2026(1)						2025						2024						2023						2022						Prior						Total Balance
Direct Cash Loans
Performing			$ 842,186						$ 354,673						$ 63,682						$ 19,223						$ 6,309						$ 2,646						$ 1,288,719
Nonperforming			26,955						29,226						5,461						1,919						996						539						65,096
			$ 869,141						$ 383,899						$ 69,143						$ 21,142						$ 7,305						$ 3,185						$ 1,353,815
Real Estate Loans:
Performing			$ -						$ -						$ -						$ -						$ 683						$ 10,286						$ 10,969
Nonperforming			-						-						-						-						146						2,225						2,371
			$ -						$ -						$ -						$ -						$ 829						$ 12,511						$ 13,340
Sales Finance Contracts:
Performing			$ 34,999						$ 28,274						$ 18,334						$ 12,611						$ 4,421						$ 1,029						$ 99,668
Nonperforming			792						1,534						1,166						853						583						234						5,162
			$ 35,791						$ 29,808						$ 19,500						$ 13,464						$ 5,004						$ 1,263						$ 104,830

(1)Includes loans originated during the nine months ended September 30, 2026.

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			Payment Performance - Balance by Origination Year as of December 31, 2025
			2025						2024						2023						2022						2021						Prior						Total Balance
Direct Cash Loans
Performing			$ 1,009,416						$ 171,538						$ 46,258						$ 15,694						$ 5,108						$ 1,259						$ 1,249,273
Nonperforming			39,164						13,514						3,603						1,584						701						236						58,802
			$ 1,048,580						$ 185,052						$ 49,861						$ 17,278						$ 5,809						$ 1,495						$ 1,308,075
Real Estate Loans:
Performing			$ -						$ 2,454						$ -						$ 854						$ 6,494						$ 7,650						$ 17,452
Nonperforming			-						-						-						97						607						703						1,407
			$ -						$ 2,454						$ -						$ 951						$ 7,101						$ 8,353						$ 18,859
Sales Finance Contracts:
Performing			$ 46,711						$ 31,957						$ 23,268						$ 10,618						$ 2,807						$ 445						$ 115,806
Nonperforming			1,131						1,553						1,044						697						364						74						4,863
			$ 47,842						$ 33,510						$ 24,312						$ 11,315						$ 3,171						$ 519						$ 120,669

Allowance for Credit Losses

The allowance for credit losses calculation is evaluated and pooled based upon the consistent risk characteristics inherent in the portfolio. The Company utilizes a Probability of Default ("PD") / Loss Given Default ("LGD") model to estimate the allowance for credit losses whereby estimated loss is equal to the product of PD and LGD. The allowance for credit losses model estimates instances of loss and the average severity of losses using the characteristics of the 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.

Management's periodic evaluation of the adequacy of the allowance for credit losses takes into consideration the Company's probable inherent risks in the homogeneous loan portfolio and current economic conditions, including the geographic regions where the Company has a concentration.

Key segmentation in the calculation is origination vintage, remaining contractual term, risk score and state of origination. The allowance for credit loss methodology produces a variety of alternative economic scenarios. The Company considers 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 Condensed Consolidated Statements of Financial Position reflects the Company's best estimate of expected credit losses.

The allowance for credit losses increased by $2.5 million to $78.8 million as of September 30, 2026, compared to $76.3 million as of December 31, 2025.

Gross charge offs by origination year are as follows (in thousands):

						Three Months Ended September 30, 2026
						2026						2025						2024						2023						2022						Prior						Total
Direct Cash Loans						$ 5,854						$ 21,824						$ 3,340						$ 966						$ 329						$ 229						$ 32,542
Real Estate Loans						-						-						-						-						-						-						-
Sales Finance Contracts						148						576						509						360						157						90						1,840
Total						$ 6,002						$ 22,400						$ 3,849						$ 1,326						$ 486						$ 319						$ 34,382

<PAGE> 13

						Three Months Ended September 30, 2025
						2025						2024						2023						2022						2021						Prior						Total
Direct Cash Loans						$ 6,617						$ 17,497						$ 3,075						$ 1,240						$ 510						$ 239						$ 29,178
Real Estate Loans						-						-						-						-						7						-						7
Sales Finance Contracts						95						657						693						387						156						57						2,045
Total						$ 6,712						$ 18,154						$ 3,768						$ 1,627						$ 673						$ 296						$ 31,230

						Nine Months Ended September 30, 2026
						2026						2025						2024						2023						2022						Prior						Total
Direct Cash Loans						$ 6,129						$ 72,347						$ 16,094						$ 3,731						$ 1,541						$ 972						$ 100,814
Real Estate Loans						-						-						-						2						-						-						2
Sales Finance Contracts						177						1,878						1,743						1,393						679						322						6,192
Total						$ 6,306						$ 74,225						$ 17,837						$ 5,126						$ 2,220						$ 1,294						$ 107,008

						Nine Months Ended September 30, 2025
						2025						2024						2023						2022						2021						Prior						Total
Direct Cash Loans						$ 6,836						$ 59,315						$ 15,908						$ 4,995						$ 2,066						$ 926						90,046
Real Estate Loans						-						12						-						-						7						-						19
Sales Finance Contracts						95						2,422						2,800						1,759						695						278						8,049
Total						$ 6,931						$ 61,749						$ 18,708						$ 6,754						$ 2,768						$ 1,204						$ 98,114

The following tables represent the rollforward of the allowance for credit losses for the periods presented (in thousands):

						Three Months Ended September 30, 2026
						Direct Cash Loans						Real Estate Loans						Sales Finance Contracts						Total
Ending Balance 6/30/2026						$ 70,459						$ 1,028						$ 5,634						$ 77,121
Provision for Credit Losses						26,399						(113)						882						27,168
Charge-offs						(32,542)						-						(1,840)						(34,382)
Recoveries						8,186						2						658						8,846
Ending Balance 9/30/2026						$ 72,502						$ 917						$ 5,334						$ 78,753

						Three Months Ended September 30, 2025
						Direct Cash Loans						Real Estate Loans						Sales Finance Contracts						Total
Ending Balance 6/30/2025						$ 64,662						$ 1,442						$ 7,601						$ 73,705
Provision for Credit Losses						21,226						(97)						853						21,982
Charge-offs						(29,178)						(7)						(2,045)						(31,230)
Recoveries						10,417						1						614						11,032
Ending Balance 9/30/2025						$ 67,127						$ 1,339						$ 7,023						$ 75,489

<PAGE> 14

						Nine Months Ended September 30, 2026
						Direct Cash Loans						Real Estate Loans						Sales Finance Contracts						Total
Balance as of 12/31/2025						$ 68,669						$ 1,235						$ 6,375						$ 76,279
Provision for Credit Losses						78,623						(319)						3,015						$ 81,319
Charge-offs						(100,814)						(2)						(6,192)						$ (107,008)
Recoveries						26,024						3						2,136						$ 28,163
Ending Balance 9/30/2026						$ 72,502						$ 917						$ 5,334						$ 78,753

						Nine Months Ended September 30, 2025
						Direct Cash Loans						Real Estate Loans						Sales Finance Contracts						Total
Balance as of 12/31/2024						$ 63,371						$ 1,616						$ 8,379						$ 73,366
Provision for Credit Losses						70,170						(261)						4,695						$ 74,604
Charge-offs						(90,046)						(19)						(8,049)						$ (98,114)
Recoveries						23,632						3						1,998						$ 25,633
Ending Balance 9/30/2025						$ 67,127						$ 1,339						$ 7,023						$ 75,489

Loan Modifications to Borrowers Experiencing Financial Difficulty

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 those who have declared bankruptcy. In most cases, loans eligible for restructuring are between 90 and 180 days past due. The Company does not allow the amount of the new loan to exceed the original amount of the existing loan. Refinancing also provides a resolution to temporary financial setbacks for these borrowers and sustains 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 loans is based on the original contractual rate. 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 Company's restructurings relate to term and interest rate concessions. The Company only lowers the principal balance in the event of a court order.

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

<PAGE> 15

						Three Months Ended September 30, 2026
Loan Class						Interest Rate Reduction												Term Extension												Principal Forgiveness												Combination - Term Extension and Principal Forgiveness												Combination - Term Extension and Interest Rate Reduction
Direct Cash Loans						$ 2,793						0.8 %						$ 5,170						1.5 %						$ 465						0.1 %						$ -						- %						$ 12,259						3.6 %
Real Estate Loans						-						- %						-						- %						-						- %						-						- %						-						- %
Sales Finance Contracts						-						- %						-						- %						40						- %						-						- %						-						- %
Total						$ 2,793						0.8 %						$ 5,170						1.4 %						$ 505						- %						$ -						- %						$ 12,259						3.3 %

						Three Months Ended September 30, 2025
Loan Class						Interest Rate Reduction												Term Extension												Principal Forgiveness												Combination - Term Extension and Principal Forgiveness												Combination - Term Extension and Interest Rate Reduction
Direct Cash Loans						$ 11,362						3.7 %						$ 14,508						4.8 %						$ 356						0.1 %						$ 3						- %						$ 8,800						2.9 %
Real Estate Loans						-						- %						-						- %						-						- %						-						- %						-						- %
Sales Finance Contracts						233						0.7 %						375						1.2 %						78						0.2 %						-						- %						223						0.7 %
Total						$ 11,595						3.4 %						$ 14,883						4.4 %						$ 434						0.1 %						$ 3						- %						$ 9,023						2.7 %

						Nine Months Ended September 30, 2026
Loan Class						Interest Rate Reduction												Term Extension												Principal Forgiveness												Combination - Term Extension and Principal Forgiveness												Combination - Term Extension and Interest Rate Reduction
Direct Cash Loans						$ 7,714						0.8 %						$ 14,450						1.4 %						$ 1,192						0.1 %						$ -						- %						$ 31,888						3.1 %
Real Estate Loans						-						- %						-						- %						-						- %						-						- %						-						- %
Sales Finance Contracts						8						- %						47						0.1 %						106						0.1 %						-						- %						35						- %
Total						$ 7,722						0.7 %						$ 14,497						1.3 %						$ 1,298						0.1 %						$ -						- %						$ 31,923						2.9 %

						Nine Months Ended September 30, 2025
Loan Class						Interest Rate Reduction												Term Extension												Principal Forgiveness												Combination - Term Extension and Principal Forgiveness												Combination - Term Extension and Interest Rate Reduction
Direct Cash Loans						$ 23,389						2.6 %						$ 37,357						4.1 %						$ 1,413						0.2 %						$ 31						- %						$ 17,075						1.9 %
Real Estate Loans						-						- %						-						- %						-						- %						-						- %						-						- %
Sales Finance Contracts						1,277						1.3 %						1,920						2.0 %						275						0.3 %						-						- %						863						0.9 %
Total						$ 24,666						2.4 %						$ 39,277						3.9 %						$ 1,688						0.2 %						$ 31						- %						$ 17,938						1.8 %

<PAGE> 16

The financial effects of the modifications to borrowers experiencing financial difficulty for the period indicated are:

As of and for the three months ended September 30, 2026
Loan Modification			Loan Class			Financial Effect
Principal Forgiveness			Direct Cash Loans			Reduced the gross balance of the loans $0.4 million
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Reduced the gross balance of the loans < $0.1 million
Interest Rate Reduction			Direct Cash Loans			Reduced the weighted-average contractual interest rate from 30.7% to 21.2%
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			No Financial Effect
Term Extension			Direct Cash Loans			Added a weighted average 14 months to the term
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			No Financial Effect

As of and for the three months ended September 30, 2025
Loan Modification			Loan Class			Financial Effect
Principal Forgiveness			Direct Cash Loans			Reduced the gross balance of the loans $0.3 million
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Reduced the gross balance of the loans < $0.1 million
Interest Rate Reduction			Direct Cash Loans			Reduced the weighted-average contractual interest rate from 29.8% to 21.7%
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Reduced the weighted-average contractual interest rate from 22.6% to 18.2%
Term Extension			Direct Cash Loans			Added a weighted average 14 months to the term
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Added a weighted average 15 months to the term

As of and for the nine months ended September 30, 2026
Loan Modification			Loan Class			Financial Effect
Principal Forgiveness			Direct Cash Loans			Reduced the gross balance of the loans $1.1 million
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Reduced the gross balance of the loans < $0.1 million
Interest Rate Reduction			Direct Cash Loans			Reduced the weighted-average contractual interest rate from 30.7% to 21.3%
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Reduced the weighted-average contractual interest rate from 20.1% to 15.8%
Term Extension			Direct Cash Loans			Added a weighted average 14 months to the term
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Added a weighted average 21 months to the term

<PAGE> 17

As of and for the nine months ended September 30, 2025
Loan Modification			Loan Class			Financial Effect
Principal Forgiveness			Direct Cash Loans			Reduced the gross balance of the loans $0.9 million
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Reduced the gross balance of the loans $0.1 million
Interest Rate Reduction			Direct Cash Loans			Reduced the weighted-average contractual interest rate from 29.6% to 20.4%
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Reduced the weighted-average contractual interest rate from 21.1% to 12.5%
Term Extension			Direct Cash Loans			Added a weighted average 11 months to the term
			Real Estate Loans			No Financial Effect
			Sales Finance Contracts			Added a weighted average 15 months to the term

Aging of loans modified for borrowers experiencing financial difficulty in the past 12 months are as follows (in thousands):

						September 30, 2026
Loan Class						Current						30 - 89 Past Due						90+ Past Due						Total
Direct Cash Loans						$ 49,325						$ 6,353						$ 4,456						$ 60,134
Real Estate Loans						-						-						-						-
Sales Finance Contracts						340						53						77						470
Total						$ 49,665						$ 6,406						$ 4,533						$ 60,604

						September 30, 2025
Loan Class						Current						30 - 89 Past Due						90+ Past Due						Total
Direct Cash Loans						$ 37,402						$ 5,028						$ 4,341						$ 46,771
Real Estate Loans						-						-						-						-
Sales Finance Contracts						2,112						436						469						3,017
Total						$ 39,514						$ 5,464						$ 4,810						$ 49,788

Loans modified for borrowers experiencing financial difficulty during the prior 12 months that subsequently charged off (in thousands):

						Three Months Ended September 30, 2026
Loan Class						Interest Rate Reduction						Term Extension						Principal Forgiveness						Combination - Term Extension and Principal Forgiveness						Combination - Term Extension and Interest Rate Reduction
Direct Cash Loans						$ 293						$ 1,045						$ 84						$ -						$ 1,920
Real Estate Loans						-						-						-						-						-
Sales Finance Contracts						-						-						-						-						-
Total						$ 293						$ 1,045						$ 84						$ -						$ 1,920

<PAGE> 18

						Three Months Ended September 30, 2025
Loan Class						Interest Rate Reduction						Term Extension						Principal Forgiveness						Combination - Term Extension and Principal Forgiveness						Combination - Term Extension and Interest Rate Reduction
Direct Cash Loans						$ 189						$ 537						$ 212						$ -						$ 37
Real Estate Loans						-						-						-						-						-
Sales Finance Contracts						18						55						13						-						-
Total						$ 207						$ 592						$ 225						$ -						$ 37

						Nine Months Ended September 30, 2026
Loan Class						Interest Rate Reduction						Term Extension						Principal Forgiveness						Combination- Term Extension and Principal Forgiveness						Combination - Term Extension and Interest Rate Reduction
Direct Cash Loans						$ 556						$ 1,561						$ 197						$ -						$ 2,816
Real Estate Loans						-						-						-						-						-
Sales Finance Contracts						13						1						9						-						-
Total						$ 569						$ 1,562						$ 206						$ -						$ 2,816

						Nine Months Ended September 30, 2025
Loan Class						Interest Rate Reduction						Term Extension						Principal Forgiveness						Combination - Term Extension and Principal Forgiveness						Combination - Term Extension and Interest Rate Reduction
Direct Cash Loans						$ 1,461						$ 1,537						$ 768						$ 1,628						$ 976
Real Estate Loans						-						-						-						-						-
Sales Finance Contracts						116						98						80						162						37
Total						$ 1,577						$ 1,635						$ 848						$ 1,790						$ 1,013

Note 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 Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
September 30, 2026:
Obligations of states and political subdivisions						$ 295,415						$ 3						$ (57,877)						$ 237,541
December 31, 2025:
Obligations of states and political subdivisions						$ 302,996						$ 1,993						$ (29,648)						$ 275,341

<PAGE> 19

The amortized cost and estimated fair values of investment securities at September 30, 2026, 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			5,194						5,054
Due after five years through ten years			44,760						41,008
Due after ten years			245,461						191,479
Total			$ 295,415						$ 237,541

The following table provides an analysis of investment securities in an unrealized loss position for which an allowance for credit losses is unnecessary as of September 30, 2026 and December 31, 2025 (in thousands):

September 30, 2026

Less than 12 Months

12 Months or Longer

Total

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Available-for-Sale:

Obligations of states and political subdivisions

$ 120,775

$ (13,237)

$ 116,276

$ (44,640)

$ 237,051

$ (57,877)

December 31, 2025

Less than 12 Months

12 Months or Longer

Total

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Available-for-Sale:

Obligations of states and political subdivisions

$ 7,537

$ (121)

$ 167,845

$ (29,527)

$ 175,382

$ (29,648)

The previous two tables represent 278 and 179 investments held by the Company at September 30, 2026 and December 31, 2025, respectively, the majority of which are rated "A" or higher by Moody's and/or Standard & Poor's. The unrealized losses on the Company's investments listed in the above table were primarily the result of interest rate and market fluctuations. Based on the credit ratings of these investments, along with the consideration of whether the Company has the intent to sell or will be more likely than not required to sell the applicable investment before recovery of amortized cost basis, no-other-than-temporary impairment was determined to be necessary as of September 30, 2026 and December 31, 2025.

There were no investment securities sold during the nine-month period ended September 30, 2026. Proceeds from redemption of investments due to the exercise of call provisions by the issuers thereof and regularly scheduled maturities totaled $8.0 million with no net gains as of September 30, 2026.

There were no investment securities sold during the year ended December 31, 2025. Proceeds from redemption of investments due to the exercise of call provisions by the issuers thereof and regularly scheduled maturities totaled $0.6 million with no net gains as of December 31, 2025.

The Company's insurance subsidiaries, Frandisco Property and Casualty Insurance Company and Frandisco Life Insurance Company (collectively, "the Frandiscos"), internally designate certain investments as restricted to

<PAGE> 20

cover policy reserves and loss reserves. Funds are held in separate trusts for the benefit of each insurance subsidiary at U.S. Bank National Association ("US Bank"). US Bank serves as trustee under trust agreements with Frandisco Property and Casualty Insurance Company. These trusts held $67.6 million and $63.9 million in available-for-sale investment securities at market value at September 30, 2026 and December 31, 2025, respectively. US Bank also serves as trustee under trust agreements with Frandisco Life Insurance Company. At both September 30, 2026 and December 31, 2025, these trusts held $39.9 million in available-for-sale investment securities at market value. The amounts required to be held in each trust change as required reserves change. All earnings on assets in the trusts are remitted to the Company's insurance subsidiaries.

Note 4 - FAIR VALUE

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability as outlined in FASB ASC Topic 820 - Fair Value Measurement. As a basis for considering market participant assumptions in fair value measurements, 1FFC uses a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The Company has processes in place to review the significant valuation inputs and to reassess how the instruments are classified in the valuation framework.

Fair Value Hierarchy

Level 1 - Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that 1FFC has the ability to access.

Level 2 - Valuation is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; as well as inputs that are observable for the asset or liabilities (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

Level 3 - Valuation is generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any related market activity.

The Company is responsible for the valuation process and as part of this analysis may use data from outside sources to establish fair value. The Company performs due diligence to understand the inputs or how the data was calculated or derived.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Investment Securities: The fair values of investment securities available for sale are generally based on quoted market prices or observable market prices for similar instruments. Management utilizes a third-party pricing service to assist with determining the fair value of our securities portfolio. The pricing service uses observable inputs when available including benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids and offers. These values consider recent market activity as well as other market observable data such as interest rate, spread and prepayment information. When market observable data is not available, which generally occurs due to the lack of liquidity for certain securities, the valuation of the security is subjective and may involve substantial judgment by management. 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

<PAGE> 21

including, but not limited to, comparison to other pricing services or corroboration of pricing by reference to independent market data. There was no change in this methodology during any period reported.

Assets measured at fair value as of September 30, 2026 and December 31, 2025 were available-for-sale investment securities which are summarized below (in thousands):

						Fair Value Measurements at Reporting Date Using
September 30, 2026						Quoted Prices In Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Obligations of states and political subdivisions						$ -						$ 237,541						$ -						$ 237,541
Available-for-sale investment securities						$ -						$ 237,541						$ -						$ 237,541
December 31, 2025
Obligations of states and political subdivisions						$ -						$ 275,341						$ -						$ 275,341
Available-for-sale investment securities						$ -						$ 275,341						$ -						$ 275,341

Cash and restricted cash: 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 consumer 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 approximates the carrying value as the interest rates charged by the Company are fixed. Loans are classified as a Level 3 financial asset.

Senior Debt: Senior debt is comprised of senior demand notes, commercial paper and bank borrowings. The carrying value of the Company's senior demand notes and commercial paper approximates fair value due to the relatively short period of time between the origination of the instruments and their expected repayment term. The carrying value of bank borrowings approximates fair value due to the short term duration of borrowings and repayment. Senior debt is 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.

<PAGE> 22

Note 5 - LEASES

The Company is party to operating lease agreements, which are recorded as operating lease right-of-use ("ROU") assets and operating lease liabilities. Lease payments during the three and nine months ended September 30, 2026 were $2.4 million and $7.3 million, respectively, compared to $2.4 million and $7.1 million, respectively, for the same periods in the prior year.

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 date 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 the ASC Topic 842, Leases, adoption date. 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 Condensed Consolidated Statements 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. Operating leases with a term of 12 months or less are not recorded on the Condensed Consolidated Statements of Financial Position and the related lease expense is recognized on a straight-line basis over the lease term.

Operating lease ROU assets and operating lease liabilities were $41.9 million and $43.4 million at September 30, 2026, respectively, and $39.9 million and $41.4 million at September 30, 2025, respectively. At December 31, 2025 the operating lease ROU assets and operating lease liabilities were $40.3 million and $41.7 million, respectively.

The Company's lease maturities as of September 30, 2026 and September 30, 2025 are presented in the tables that follow. The tables below summarize lease expense and other information related to the Company's operating leases with respect to ASC Topic 842 (dollars in thousands):

			Three Months Ended September 30, 2026						Nine Months Ended September 30, 2026
Operating lease expense			$ 2,461						$ 7,341
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			2,447						7,304
Weighted-average remaining lease term - operating leases			7.15 years
Weighted-average discount rate - operating leases			6.65 %
Maturity analysis of lease liabilities:			Amount
Remainder of 2026			$ 2,455
2027			9,374
2028			8,434
2029			7,030
2030			6,209
2031 and beyond			21,240
Total			54,742
Less: Discount			(11,387)
Present Value of Lease Liability			$ 43,355

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			Three Months Ended September 30, 2025						Nine Months Ended September 30, 2025
Operating lease expense			$ 2,417						$ 7,113
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			2,384						7,069
Weighted-average remaining lease term - operating leases			6.67 years
Weighted-average discount rate - operating leases			6.23 %
Maturity analysis of lease liabilities:			Amount
Remainder of 2025			$ 2,410
2026			9,113
2027			8,235
2028			7,346
2029			5,982
2030 and beyond			17,629
Total			50,715
Less: Discount			(9,357)
Present Value of Lease Liability			$ 41,358

Note 6 - COMMITMENTS AND CONTINGENCIES

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. Management does not believe there are such matters that will have a material effect on the financial statements.

There are no contingencies, off-balance sheet items, or legal matters, individually or in the aggregate, expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company as of September 30, 2026.

Note 7 - INCOME TAXES

The Company is an S corporation for income tax reporting purposes. The taxable income or loss of an S corporation is passed through to the shareholders of the Company. 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 are 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.

The Company uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences.

The effective income tax rate was 19% and 21% during the three and nine months ended September 30, 2026, respectively, compared to 20% and 27% during the same periods ended September 30, 2025. 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.

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Note 8 - DEBT

Senior Debt

Effective December 6, 2024, the Company entered into a credit agreement (the "Credit Agreement") with BMO Bank, N.A. As amended to date, the Credit Agreement provides for borrowings up to $430.0 million or 85% of the Company's net loans, whichever is less, subject to certain limitations. All borrowings under the Credit Agreement are secured by loans of the Company. Available borrowings under the Credit Agreement were $207.6 million and $79.3 million at September 30, 2026 and December 31, 2025, at interest rates of 6.68% and 6.87%, respectively. Outstanding borrowings on the Credit Agreement were $222.4 million and $220.7 million at September 30, 2026 and December 31, 2025, respectively. The Credit Agreement contains covenants customary for financing transactions of this type. The Company is required, under the Credit Agreement, to report on its performance as it relates to the covenants contained therein. The Credit Agreement has a commitment termination date of August 27, 2029.

Available but unborrowed amounts under the Credit Agreement are subject to an unused line fee of 0.25% or 0.50% per annum, based on the Company's utilization of the credit facility. Borrowings under the Credit Agreement bear interest at a variable rate based on the one-month Term Secured Overnight Financing Rate (the "Term SOFR") plus an Applicable Margin of 3.00%. The interest rate on the Credit Agreement at September 30, 2026 and December 31, 2025 was 6.68% and 6.87%, respectively.

The Company has two lines of credit available from its subsidiaries. Frandisco Property and Casualty Insurance Company advanced $30.0 million to 1FFC on its credit line in August 2023 and advanced an additional $15.0 million in October 2025. Frandisco Life Insurance Company advanced $5.0 million to the Company on its credit line in October 2025. The outstanding balance on the lines of credit, including accrued interest, was $55.3 million with Frandisco Property and Casualty Insurance Company and $5.8 million with Frandisco Life Insurance Company as of September 30, 2026, respectively. Outstanding balances related to credit lines with the Frandiscos are eliminated upon consolidation.

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 the Company believes are competitive in the marketplace. Additional data related to the Company's senior debt is as follows (in thousands, except % data):

As of September 30, 2026						Weighted Average Interest Rate						Average Amount Outstanding During Period
Bank Borrowings						6.67 %						$ 206,426
Senior Demand Notes						1.89						90,521
Commercial Paper						5.47						767,366

As of December 31, 2025						Weighted Average Interest Rate						Average Amount Outstanding During Year
Bank Borrowings						7.32 %						$ 162,651
Senior Demand Notes						1.90						91,240
Commercial Paper						5.70						742,787

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Subordinated Debt

The payment of the principal and interest on the Company's subordinated debt is subordinate and junior to all unsubordinated indebtedness of the Company.

Subordinated debt consists of variable rate subordinated debentures issued by the Company, which mature four years after the 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 with 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 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.

Additional data related to the Company's subordinated debt is as follows (in thousands, except % data):

						Weighted Average Interest Rate						Average Amount Outstanding During Period
As of September 30, 2026						4.90 %						$ 34,552
As of December 31, 2025						4.99						33,759

Note 9 - RELATED PARTY TRANSACTIONS

1FFC engages from time to time in transactions with related parties. Please refer to the disclosure contained in Note 12, Related Party Transactions, in the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, for additional information on related party transactions.

The Company leases a portion of its properties from certain officers or stockholders (see Note 5, Leases). The remaining payments under the leases were $0.3 million at September 30, 2026.

The Company had 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 loan was a variable-rate loan with interest based on the prime rate plus 1%, and the interest rate adjusted whenever the prime rate changed. On September 24, 2026, the outstanding balance on this commercial loan was paid in full, including principal and accrued interest of $1.1 million.

Certain directors, officers and stockholders have funds personally invested in the Company's debt securities. As of September 30, 2026, total related party debt was approximately $50.4 million. Of the $50.4 million of related party debt, an aggregate principal amount of $18.7 million of subordinated notes were issued on December 23, 2025 to certain stockholders through a private placement. The remaining related party debt of $31.7 million carries terms and interest rates that are consistent with the market and those offered to non-affiliates.

The Company sponsors a non-qualified deferred compensation plan for executive officers and certain other key employees and members of the Board. The deferred compensation plan provides for the pre-tax deferral of compensation, fees and other specified benefits. Specifically, the deferred compensation plan permits each employee participant to elect to defer a portion of base salary or bonus and permits each eligible director

<PAGE> 26

participant to elect to defer all or a portion of director's fees. The deferred compensation plan is an unfunded obligation of 1FFC with participants of the plan being general unsecured creditors of the Company.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:

The following narrative is management's discussion and analysis of the foremost factors that influenced 1st Franklin Financial Corporation's and its consolidated subsidiaries' (the "Company", "1FFC", "our" or "we") financial condition and operating results as of and for the three and nine months ended September 30, 2026 and 2025. This discussion and analysis and the accompanying unaudited condensed consolidated financial information should be read in conjunction with the Company's audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Results achieved in any interim period are not necessarily indicative of the results to be expected for the full year period or any other interim period.

FORWARD-LOOKING STATEMENTS:

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are all statements other than those of historical fact. Forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "possible," "potential," "predict," "project," "seek," "should," "will," "would" or comparable terminology. These forward-looking statements include, but are not limited to, statements about our strategies, future operations, future financial position, future revenues, projected costs, expectations regarding demand and acceptance for our financial products, growth opportunities and trends in the market in which we operate, and our prospects, plans and objectives of management. The Company's actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein, which involve known and unknown risks and uncertainties. Possible factors that could cause actual future results to differ from expectations include, but are not limited to: our ability to manage cash flow and working capital; the accuracy of management's estimates and judgments; adverse general economic conditions, including changes in employment rates or in the interest rate environment; adverse changes in the ability or willingness of our customers to meet their loan repayment obligations to the Company; unexpected reductions in the size or collectability of our loan portfolio; unexpected increases in our allowance for credit losses; reduced sales or increased redemptions of our securities; unavailability of borrowings under our credit facility; federal and state regulatory changes affecting consumer finance companies; unfavorable outcomes in legal proceedings; our ability to remediate the previously disclosed material weaknesses in our internal control over financial reporting; and those risks and uncertainties described under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, as well as other factors referenced elsewhere in our subsequent filings with the Securities and Exchange Commission from time to time. As a result, you should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements, except as required by law.

OVERVIEW:

The Company is a privately-held Georgia corporation headquartered in Toccoa, Georgia. 1FFC has been engaged in the consumer finance business since 1941. Our operations focus primarily on making consumer loans to individuals for personal or family needs, in relatively small amounts with maturities of approximately 2 years. The Company historically extended real estate loans. Beginning in 2024, 1FFC discontinued the origination of real estate loans, and the portfolio is currently in runoff. The Company also purchases sales finance contracts from various dealers.

All of 1FFC's loans are at fixed rates and contain fixed terms and fixed payments. The Company operates branch offices in ten southern states and had a total of 362 branch locations as of September 30, 2026,

<PAGE> 27

including 100 branch offices in Georgia, 48 in Alabama, 43 in South Carolina, 40 in Mississippi, 39 in Tennessee, 36 in Louisiana, 25 in Texas, 19 in Kentucky, 7 in Virginia, and 5 in Florida. 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 interest and finance charges earned on loans outstanding. Additional revenues are derived from earnings on investment securities, insurance income and other miscellaneous income.

In connection with our business, we also offer optional single premium credit insurance products to our customers when making a consumer 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.

1FFC writes these various insurance products as an agent for a non-affiliated insurance company specializing in such insurance. However, under various agreements, 1st Franklin's two wholly-owned insurance subsidiaries, Frandisco Life Insurance Company and Frandisco Property and Casualty Insurance Company (collectively, "the Frandiscos"), reinsure the credit insurance policies written on behalf of the Company's customer base. These subsidiaries are licensed insurance companies and are subject to regulation and supervision by the Georgia Commissioner of Insurance and Safety Fire, including statutory capital and surplus requirements, restrictions of dividends and other distributions, and oversight of related-party transactions.

FACTORS IMPACTING RESULTS OF OPERATIONS:

1FFC's results of operations are affected by various factors that influence our revenues and costs, including the following:

Seasonality:

The Company's loan volume follows seasonal trends. The highest loan demand generally occurs during the second, third and fourth quarters, which we believe is primarily due to customers borrowing money for vacations and holiday spending. Loan demand is generally lowest and loan repayment highest during the first quarter, which we believe is primarily driven by the timing of income tax refunds.

Changes in quarterly growth or liquidation could result in larger allowance for credit loss releases in periods of portfolio liquidation, and larger provisions for credit losses in periods of portfolio growth. Consequently, 1FFC experiences seasonal fluctuations in our operating results. However, due to 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, changes in macroeconomic factors, including inflation, higher interest rates, and increases in unemployment, may have a material adverse effect on our profitability and may impact our typical seasonal trends for loan volume.

Growth in Loan Portfolio:

The Company's financial performance continues to be dependent in large part upon the growth in its loan portfolio. Portfolio growth has been driven by expanding 1FFC's geographic footprint and growing our loan portfolios within existing branches. In addition, an increased focus on mailing convenience checks has also contributed to portfolio growth in recent years.

Almost all loans, regardless of origination channel, are serviced through our branches, which allows us to build and maintain relationships with our customers throughout the life of each loan. We believe this relationship-driven model provides greater visibility into potential payment challenges, helps mitigate credit risk, and allows

<PAGE> 27

us to better understand and respond to our customers' evolving borrowing needs. 1FFC intends to continue capitalizing on opportunities in the marketplace to drive growth in the loan portfolio, increase revenue, and enhance the profitability of existing branches. Additionally, the Company plans to open new branches within our current geographic footprint and strategically expand operations into new states that we believe align well with our products, services, and operating model.

Allowance for Credit Losses:

Operating results are significantly influenced by the credit quality of the loan portfolio. The Company utilizes a Probability of Default ("PD") / Loss Given Default ("LGD") model to estimate the allowance for credit losses whereby estimated loss is equal to the product of PD and LGD. The allowance for credit losses model estimates instances of loss and the average severity of losses using the characteristics of the 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.

The allowance for credit losses recorded in the balance sheet reflects the Company's best estimate of expected credit losses. See Note 2, Loans and Allowance for Credit Losses, in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements for further discussion.

Interest Rates:

1FFC's cost of funds is influenced by changes in interest rates, as certain of our liabilities bear interest at variable rates. Volatility in interest rates generally has more impact on income earned from investments and the Company's borrowing costs than on interest income earned on loans. All of 1FFC's loans are at fixed rates and, therefore, are not impacted by changes in the interest rate environment.

Operating Expenses:

The Company's financial results are significantly impacted by the costs associated with our operations and corporate office functions. These expenses include personnel-related costs as well as the infrastructure and administrative support necessary to manage our branch network, service the loan portfolio, oversee compliance and risk management, and support corporate governance and strategic initiatives.

COMPONENTS OF RESULTS OF OPERATIONS:

Interest Income:

Interest income is a principal component of the Company's operating performance and resulting net income. It primarily represents income on earning assets and is affected by the size and mix of the loan and investment portfolios, as well as the related interest and finance charges.

Interest income on loans is recognized as revenue on an accrual basis using the effective interest method. Loans are generally placed on non-accrual status after two missed payments. For loans placed on non-accrual status, the Company ceases accruing interest and finance charges and previously accrued interest is reversed against interest income. 1FFC generally charges off a loan when a full contractual payment has not been received in the preceding 180 days.

Most states permit certain fees in connection with lending activities, such as loan origination fees and maintenance fees. Loan fees are deferred and amortized to interest income over the contractual life of the loan using methods that approximate the effective interest method. Depending on applicable state law, such fees may or may not be refundable to the customer in the event of an early payoff. If a loan liquidates before amortization is complete, the Company applies any unamortized fees and origination costs to interest income at the date of liquidation. The Company recognizes late charges and prepayment penalties as revenue when received.

Interest Expense:

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Interest expense represents the cost of funds associated with interest-bearing liabilities, with debt securities comprising the majority of these obligations. Key factors affecting our interest expense include 1FFC's average outstanding debt as well as the general interest rate environment.

Provision for Credit Losses:

The Company's provision for credit losses is a charge against earnings in amounts sufficient to maintain the allowance for credit losses at a level considered adequate to cover expected losses in our loan portfolio.

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, delinquency levels, bankruptcy trends and overall general and industry specific economic conditions. Changes in the provision are intended to ensure that the allowance for credit losses reported on the Condensed Consolidated Statements of Financial Position appropriately reflects expected credit losses over the remaining maturity of the portfolio.

While management believes its approach for determining the allowance for credit losses adequately considers the potential factors that could potentially result in credit losses, to the extent actual outcomes are worse than management's estimates, additional provision for credit losses could be required which could adversely affect our earnings or financial position in future periods. See Note 2, Loans and Allowance for Credit Losses, in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements for further discussion.

Net Insurance Income:

The Company offers certain optional credit insurance products to customers when closing a loan. Net insurance income primarily represents earned premiums from these products, net of related insurance claims and associated expenses. In addition, net insurance income includes earned premiums and direct costs related to non-file insurance that 1FFC purchases to protect us from credit losses, where following an event of default, we are unable to take possession of personal property collateral because our security interest is not perfected.

Other Revenue:

Other revenue consists mainly of earnings from the sale of auto club memberships and fees charged to customers for non-sufficient funds.

Operating Expenses:

The cost of operations impacts 1FFC's financial results, which are comprised of personnel expenses, occupancy expenses, and other expenses.

Personnel expenses represent the largest component of our operating costs and consist largely of salaries and wages, overtime, contract labor, incentives, benefits, medical claims, and related payroll taxes associated with all of our operations.

Occupancy expenses primarily include the cost of leasing our facilities, as well as related expenses such as utilities, maintenance, and depreciation and amortization expenses.

Other expenses primarily include advertising and marketing costs, legal and audit fees, consulting, postage, computer and IT expenses, collection costs and credit bureau dues, conversion expenses, training and development, bank service charges, and the amortization of loans purchased at a premium.

Income Taxes:

The Company is an S corporation for income tax reporting purposes. Taxable income or loss of an S corporation is passed through to the shareholders of the Company. 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 are recognized and provisions for current and deferred income taxes continue to be recorded by the Company's subsidiaries as they

<PAGE> 29

are not permitted to be treated as S Corporations. The Company uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences.

RESULTS OF OPERATIONS:

Net loans are carried on an amortized cost basis which includes the remaining principal balance, accrued interest, and net unamortized deferred fees and costs. The following table summarizes our results of operations, both in dollars and as a percentage of average net loans (in thousands):

			Nine Months Ended September 30, 2026
			2026												2025
			Amount						% of Average Net Loans						Amount						% of Average Net Loans
Interest income			$ 285,729						27.7 %						$ 263,253						28.1 %
Interest expense			45,886						4.5						43,077						4.6
Provision for credit losses			81,319						7.9						74,604						8.0
Net insurance income			40,202						3.9						38,814						4.1
Other revenue			6,784						0.7						6,228						0.7
Personnel			112,185						10.9						107,041						11.4
Occupancy			19,721						1.9						17,297						1.8
Other			49,326						4.8						49,718						5.3
Total operating expenses			181,232						17.6						174,056						18.6
Income before income taxes			24,278						2.4						16,558						1.8
Income taxes			5,175						0.5						4,469						0.5
Net income			$ 19,103						1.9 %						$ 12,089						1.3 %

Information explaining the changes in our results of operations from year-to-year is provided in the following pages.

Comparison of September 30, 2026 versus December 31, 2025

The following table describes the changes in loans by loan class (in thousands, except for %):

			Loans Outstanding
			September 30, 2026						December 31, 2025						$ Change						% Change
Direct cash loans			$ 1,353,815						$ 1,308,075						$ 45,740						3 %
Real estate loans			13,340						18,859						(5,519)						(29)
Sales finance contracts			104,830						120,669						(15,839)						(13)
Total loans outstanding			$ 1,471,985						$ 1,447,603						$ 24,382						2 %