Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Investor Presentation (December 2017)
33 slides from Franklin Financial Services's investor presentation, Dec 8, 2017
Slide 1: Investor Presentation
Investor Presentation December 5, 2017
Slide 2: Forward Looking Statements
Forward Looking Statements I n order for you to better understand the business of the Company – where we have been and where we want to go – our remarks today (those of the Company officers who will speak or respo nd to questions) will include forward looking statements related to anticipated financ
Slide 3: F&M Trust company overview
F&M Trus t founded in 1906 Fran klin Financial formed in 1983 Head quartered in Chambersburg, PA 22 offices throughout Cumberland, Franklin, F ulton and Huntingdon Counties $1.166 billion in ass ets at September 30, 2017 $815.9 million in bro kerage and trust assets under management 3
Slide 4: Total Return Performance
Total Return Performance $300 $250 $200 $150 $100 $50 2012 2013 2014 2015 2016 FRAF Nasdaq Composite SNL Mid-Atlantic Bank S NL Mid-Atlantic Bank $1B - $2B 4
Slide 5: Market Share
Market * #1 Deposit Market Share in Chambersburg (47.6%) Share ¢ #1 Deposit Market Share in Franklin County (32.1%) ¢ #1 Deposit Market Share in Fulton County (35.0%) ¢ #7 Deposit Market Share in Carlisle (6.2%) * #10 Deposit Market Share in Cumberland County (3.2%) ‘ABA Foundation Cee BESTS9 x feca
Slide 6: Deposit Market Share
#1 Deposit Market Share in Chambersburg (47.6%) Share #1 Dep osit Market Share in Franklin County (32.1%) #1 Deposit Market Share in Fulton County (35.0%) #7 Deposit Ma rket Share in Carlisle (6.2%) #10 Depos it Market Share in Cumberland County (3.2%) 2016 Honorable Mention Source: SNL Financial; 2
Slide 7: Growth Market
Growth Market Franklin County seonomy poised for growth and Opn eanalonn CENTRAL PENN Cumberland County outpacing peers with 4.6 TPN B ‘I ESS Jou RNAL percent population growth lereeerde Economic boom happening in Franklin County =... oeao Prime job market could boost wages in Franklin County area p
Slide 8: Management Team
Management Team Timothy G. Henry Mark R. Hollar Lorie Heckman Steven D. Butz Lise M. Shehan President & CEO CFO & Treasurer Risk Management Commercial Services Investment & Trust Services Patricia A. Hanks Ronald L. Cekovich Karen K. Carmack Matthew D. Weaver Retail Services Technology Services Huma
Slide 9: Management Team
Management Team Years of Banking Experience Joined F&M Trust Prior Experience Timothy G. Henry 35 2016 Fulton, Centra Bank, BlueRidge Bank, President and CEO Susquehanna Bank, BB&T Mark R. Hollar 29 1994 ValleyBank & Trust CFO and Treasurer Lorie Heckman 31 1986 _ Risk Management Steven D. Butz 32 2
Slide 10: 2017 Strategic Initiatives
2017 • F ocus on Remaining Independent Strategic • Strategic Loan Growth Initiatives • Protection of Net Interest Margin • Ex pansion of Investment & Trust Services • Emphasis on Development and Uti lization of Delivery Channels • Enhancing Our Sales and Service Culture • Development of Marketing In
Slide 11: Loan Portfolio
Loan Portfolio • Focus on the Cumberland County and Capital Region markets • Strengthening of our commercial loan pipeline since April 2015 • Rotation out of loan participations • New additions to local commercial services team Source: The Central Penn Business Journal, February 2016 11
Slide 12: Loan Growth
Loan Growth Loan Outstandings ($000’s) $1,000,000 $911,503 $893,000 $900,000 $800,000 $782,000 $723,000 $727,000 $700,000 $600,000 Other Loans $500,0 00 Commercial Loans $400,000 $300,000 $200,000 $100,000 $- 2013 2014 2015 2016 9/30/2017 12
Slide 13: Loan Growth % Portfolio Composition
Loan Growth % Portfolio Composition 30.00% 25.00% 20.00 15.00% 10.00% 5.00% 0.00% 2013 2014 2015 2016 9/30/2017 Residential & Construction Income Owner Commercial & Municipalities Other Home Equity and Producing Occupied Industrial Development 13
Slide 14: Net Interest Margin
Net Interest Margin • Implementing strategies to improve deposit growth • Creation of Business Banking team with focus on core deposits • Restructured Treasury Management function to include additional resources in Cumberland County / Capital Region • Loan pricing discipline in a rising rate environ
Slide 15: Investment & Trust Services
Investment & Trust Services • Trust powers since our incorporation in 1906 • Fully integrated trust, investment, insurance and brokerage services, focused exclusively on client needs • Over 300 years of combined financial services experience among our professional staff members • Additional resource
Slide 16: Delivery Channels
Delivery Channels • Focus on evolution of online and mobile platforms as primary channel for engagement • Improvement of social networks through enhanced focus on the bank’s website, Facebook and Twitter presence • Growth in online engagement across generational lines (including Generations X, Y & Z
Slide 17: Delivery Channels
Delivery Channels “The office transformation not only provides a better experience for our consumer and business customers, but it also breaks down the barriers of traditional banking.” Boiling Springs Community Office and Waynesboro Community Office 17
Slide 18: Sales and Service Culture
Sales and Service Culture • Integrated process to continue building sales and service culture • Assessment of sales training program showing quantifiable results • Focus on initiative to improve service experience with external and internal customers • Working across organizational boundaries and br
Slide 19: Appendix
Appendix
Slide 20: Loan Quality: Delinquency
Loan Quality Delinquency (% of Gross Loans) Total Non-Accrual 30 - 89 Days 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 4.03% 3.40% 0.54% 2.07% 1.69% 0.34% 1.64% 0.69% 0.90% 0.99% 0.53% 0.38% 0.66% 0.33% 0.30% 20 2013 2014 2015 2016 9/30/2017
Slide 21: Loan Quality: Non-Performing Assets
Loan Quality Non-Performing Assets ($000’s) $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- $24,643 $4,708 $604 $12,291 $ 3,666 $322 $5,370 $6,451 $368 $4,776 $4,915 $665 $3,022 $2,629 $103 2013 2014 2015 2016 9/30/2017 21
Slide 22: Loan Quality: Net Charge-offs and Provision
Loan Quality Net Charge-offs and Provision ($000’s) Net Charge-offs (recoveries) Provision $4,000 $3,000 $2,000 $1,000 $- $(1,000) $3,597 $2,920 $1,355 $764 $310 $1,285 $2,786 $3,775 $(48) $420 2013 2014 2015 2016 9/30/2017 2016 includes one charge-off for $2.7 million 22
Slide 23: Allowance for Loan Losses
Allowance for Loan Losses ALL ($000’s) $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- $9,702 $9,111 $10,086 $11,075 $11,543 2013 2014 2015 2016 9/30/2017 23
Slide 24: Deposit Composition
Deposit composition 2017 Deposits* ($000’s) $427,151 41.3% Money Management $268,992 26.0% Interest-bearing Checking $183,297 17.7% Non-interest bearing Checking $78,370 7.6% Savings $75,338 7.3% Time Deposits 24
Slide 25: Cost of Funds
Cost of Funds 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 0.47% 0.35% 0.26% 0.23% 0.25% 0.61% 0.53% 0.49% .64% 2013 2014 2015 2016 9/30/2017 Franklin Financial Peer Median Source: SNL Financial for Pennsylvania commercial banks of $750 million to $2 billion in assets 25
Slide 26: Balance Sheet Highlights
Balance Sheet Highlights Dollars in 2013* 2014* 2015* 2016* 9/30/17 Thousands ($000’s) Year-End at 12/31* Total Assets $984,587 $1,001,488 $1,035,295 $1,127,443 $1,165,549 Investments $159,674 $171,751 $159,473 $143,875 $132,322 Net Loans $713,711 $717,420 $771,930 $882,798 $899,960 Deposits $845,72
Slide 27: Financial Highlights
Financial Highlights Dollars in Thousands 2013* 2014* 2015* 2016* 9/30/17 ($000’s) Year-End at 12/31* Net Interest Income $31,664 $31,614 $32,244 $34,734 $27,747 Provision $2,920 $764 $1,285 $3,775 $420 Noninterest Income $10,033 $11,131 $12,652 $11,605 $9,052 Noninterest Expense $31,250 $31,573 $31
Slide 28: Non-Interest Income
Non-Interest Income Non-Interest 2013* 2014* 2015* 2016* 9/30/17 Income as a % of Average Assets; Year-End at 12/31* F&M Trust 0.89% 0.97% 1.08% 0.94% 1.03% Peer Group 0.69% 0.68% 0.64% 0.62% 0.62% Peer Group data is derived from the Uniform Bank Performance Report for banks headquartered in Pennsyl
Slide 29: Performance Measures
Performance Measures Year-End at 12/31* 2013* 2014* 2015* 2016* 9/30/171 Return on Avg. Assets 0.61% 0.83% 1.00% 0.74% 1.11% Return on Avg. Equity 6.72% 8.44% 9.52% 7.04% 10.50% Efficiency Ratio2 72.11% 71.01% 67.39% 68.26% 63.00% Net Interest Margin 3.47% 3.56% 3.59% 3.62% 3.71% Annualized; Non-GAA
Slide 30: Shareholder Value
Shareholder Value Year-End at 12/31* 2013* 2014* 2015* 2016* 9/30/17 Market value per share $17.10 $22.00 $23.50 $28.60 $35.05 Diluted earnings per share $1.51 $2.00 $2.40 $1.88 $2.17 Current dividend yield 3.98% 3.09% 3.23% 2.94% 2.74% Regular cash dividends paid $0.68 $0.68 $0.74 $0.82 $0.69 Tangi
Slide 31: Safety & Soundness
Safety & Soundness Year-End at 12/31* 2013* 2014* 2015* 2016* 9/30/17 Risk-based capital ratio (Total) 14.24% 15.49% 16.03% 15.67% 16.89% Leverage ratio (Tier 1) 9.14% 9.69% 10.38% 10.11% 10.39% Common equity ratio (Tier 1) 12.97% 14.19% 14.77% 14.41% 15.62% Nonperforming assets/total assets 3.04% 1
Slide 32: Liquidity
Liquidity • Federal Home Loan Bank – Excess Borrowing $310,000,000 • Federal Reserve Bank – Discount Window $20,000,000 • Correspondent Bank – Line of Credit $6,000,000 32
Slide 33: Stock Symbol: FRAF (OTCQX)
Stock Symbol: FRAF (OTCQX) www.franklinfin.com www.fmtrustonline.com 33
Franklin Financial Services — Investor Presentation (December 2017) on 6ix