PDF Version

Another of our subsidiaries, Franklin Capital Corporation (“FCC”), engages primarily in the purchase,securitization and servicing of retail installment sales contracts (“automobile contracts”) originated byindependent automobile dealerships. FCC is incorporated and headquartered in Utah and conducts itsbusiness primarily in the Western region of the United States. As of September 30, 2009, FCC’s total assetsincluded $31.5 million of outstanding automobile loan principal, $110.6 million of trading securities,representing retained interests in FCC securitizations, and $1.0 million in other fixed term assets. Duringfiscal year 2009, FCC had no automobile loan securitization transactions. As of September 30, 2009, FCCwas servicing $551.4 million of receivables that had been securitized to date. See Note 9 – Securitization ofLoans Held for Sale in the notes to the consolidated financial statements in Item 8 of Part II of this Form10-K.Our securitized automobile contracts business is subject to marketplace fluctuation and competes withbusinesses with significantly larger portfolios. Automobile loan portfolio losses can be influencedsignificantly by trends in the economy and credit markets, which reduce borrowers’ ability to repay loans. Amore detailed analysis of loan losses and delinquency rates in our consumer lending and dealer automobileloan business is contained in Note 9 – Securitization of Loans Held for Sale in the notes to the consolidatedfinancial statements in Item 8 of Part II of this Form 10-K. See also “Risk Factors” in Item 1A of Part I ofthis Form 10-K.Our subsidiary FTB&T, a chartered federal savings bank, with total assets of $327.2 million and totalexternal customer deposits of $171.1 million as of September 30, 2009, is insured by the FDIC. FTB&Tprovides general consumer loan products, such as credit card loans, unsecured loans, loans secured bymarketable securities, mortgage loans, debit card products and automobile loans, and a limited number ofcommercial real estate loans. FTB&T’s deposit products generally include demand, savings and timedeposits from the general public and brokered time deposits. FTB&T also provides Advisor DirectorTrust ® , a directed trust service.FINANCIAL INFORMATION ABOUT SEGMENTS AND GEOGRAPHIC AREASCertain financial information by business segment and geographic area is contained in Note 18 –Segment Information in the notes to consolidated financial statements in Item 8 of Part II of this Form 10-K,which is incorporated herein by reference.REGULATORY CONSIDERATIONSVirtually all aspects of our business are subject to various federal, state, and international regulationand supervision. In the U.S., we are subject to regulation and supervision by, among others, the SEC,FINRA, the Federal Reserve Board (the “FRB”), the FDIC, the Office of Thrift Supervision (“OTS”) andthe New York State Banking Department (“NYSBD”). To the extent our operations or trading in oursecurities take place outside the U.S., we are subject to regulation by non-U.S. regulations and regulators,and U.S. regulations and regulators such as the Department of Justice and the SEC with respect to theForeign Corrupt Practices Act of 1977. Globally, we are subject to regulation and supervision by, amongothers, the Australian Securities and Investment Commission; the Securities Commission of The Bahamas;the Comissão de Valores Mobiliários in Brazil; the Office of the Superintendent of Financial InstitutionsCanada as well as provincial and territorial regulators of financial services and securities in Canada and theMutual Fund Dealers Association of Canada; the Cayman Islands Regulatory Authority; the ChinaSecurities Regulatory Commission; the Autorité des Marchés Financiers in France; the Federal FinancialSupervisory Authority in Germany; the Securities and Futures Commission of Hong Kong; the Securitiesand Exchange Board of India; the Irish Financial Services Regulatory Authority; the CommissioneNazionale per le Società e la Borsa in Italy; the Financial Services Agency in Japan; the Korean Ministry ofFinance and Economy, the Financial Supervisory Commission and the Financial Supervisory Services in19