Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Shareholder Meeting (April 2018)
63 slides from Franklin Financial Services's shareholder meeting presentation, Apr 24, 2018
Slide 1: Annual Meeting April 24, 2018
Annual Meeting APRIL 24, 2018 Franklin Financial Services Corporation F&M Trust
Slide 2: Call to Order
Call to Order G. WARREN ELLIOTT Franklin Financial Services Corporation F&M Trust 2
Slide 3: Invocation
Invocation GREGORY A. DUFFEY Franklin Financial Services Corporation F&M Trust 3
Slide 4: Minutes of Last Meeting
Minutes of Last Meeting G. WARREN ELLIOTT Franklin Financial Services Corporation F&M Trust 4
Slide 5: Forward Looking Statements
Forward Looking Statements In order for you to better understand the business of the Company – where we all have been and where we want to go – our remarks today (those of the Company officers who will speak or respond to questions) will include forward looking statements related to anticipated fina
Slide 6: Introductions
Introductions G. WARREN ELLIOTT Franklin Financial Services Corporation F&M Trust 6
Slide 7: Board of Directors
Board of Directors G. Warren Elliott Chairman Timothy (Tim) G. Henry President & CEO Martin R. Brown Gregory A. Duffey Franklin Financial Services Corporation F&M Trust 7
Slide 8: Board of Directors
Board of Directors Daniel J. Fisher Donald A. Fry Allan E. Jennings, Jr. Richard E. Jordan III Franklin Financial Services Corporation F&M Trust 8
Slide 9: Board of Directors
Board of Directors Stanley J. Kerlin Patricia D. Lacy Donald H. Mowery Martha B. Walker Franklin Financial Services Corporation F&M Trust 9
Slide 10: Meeting advisors and guests
• Dean Dusinberre • David Cruz • Steve Morehart • Bob Kafafian Stevens & Lee Assistant Vice President, Computershare – Judge of Elections BDO USA, LLP President & CEO, The Kafafian Group, Inc. Franklin Financial Services Corporation F&M Trust 10
Slide 11: Chairman's Remarks
Chairman’s Remarks G. WARREN ELLIOTT Franklin Financial Services Corporation F&M Trust 11
Slide 12: Reflections on Family, Friends, Food, Fishing, and Forests
Reflections on Family, Friends, Food, Fishing, And Forests, When was the last time you laughed by a campfire with good friends? How long ago did you sit quietly by a lake waiting for the ‘big one” to bite? Have you lately taken a moment to remember the heart-pounding thrill you had watching- and hop
Slide 13: The History of F&M Trust
The History of F&M Trust
Slide 14: Chapter One: Establishing the Base
Chapter One Establishing the Base by Bob Zullinger
Slide 15: Chapter Two: Managing During Turmoil
Chapter Two Managing During Turmoil by Bill Snell
Slide 16: Chapter Three: Strategic Growth
Chapter Three Strategic Growth by Tim Henry
Slide 17: Help Support Advice Guidance
Help Support Advice Guidance
Slide 18: Shared Leadership, Strategic Growth
Shared Leadership Continued Evaluation Planning Take Action Strategic Growth
Slide 19: Messages Details
Messages Details I message Stay tuned
Slide 20: Election of Directors
Election of Directors G. WARREN ELLIOTT Franklin Financial Services Corporation F&M Trust 20
Slide 21: Director nominees
Daniel J. Fisher Retired, D.L. Martin Company Donald A. Fry President, Cumberland Valley and Towne Cleaners, ANDOCO, Inc. Richard E. Jordan, III President & CEO, Smith Land & Improvement Corporation Donald H. Mowery Managing Partner, RSM Associates, LP Franklin Financial Services Corporation F&M Tru
Slide 22: Say-On-Pay Vote
Say - On - Pay Vote G. WARREN ELLIOTT Franklin Financial Services Corporation F&M Trust 22
Slide 23: Selection of Auditors
Selection of Auditors G. WARREN ELLIOTT Franklin Financial Services Corporation F&M Trust 23
Slide 24: Polls Are Open
Polls Are Open Franklin Financial Services Corporation F&M Trust 24
Slide 25: Financial Overview
Financial Overview MARK R. HOLLAR, CFO Franklin Financial Services Corporation F&M Trust 25
Slide 26: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands ($000’s) 2013 2014 2015 2016 2017 Total Assets $984,587 $1,001,488 $1,035,295 $1,127,443 $1,179,813 Investments $159,674 $171,751 $159,473 $143,875 $127,336 Net Loans $713,711 $717,420 $771,930 $882,798 $931,908 Deposits $845,724 $881,181 $918,512 $982,1
Slide 27: Financial Highlights
Financial Highlights Dollars in Thousands ($000’s) 2013 2014 2015 2016 2017 2017 Adjusted* Net Interest Income $31,664 $31,614 $32,244 $34,734 $37,394 $37,394 Provision $2,920 $764 $1,285 $3,775 $670 $670 Noninterest Income $10,033 $11,131 $12,652 $11,605 $12,189 $12,189 Noninterest Expense $31,250
Slide 28: Performance Measures
Performance Measures 2013 2014 2015 2016 2017 2017 Adjusted* Return on Avg. Assets 0.61% 0.83% 1.00% 0.74% 0.19% 1.09% Return on Avg. Equity 6.75% 8.44% 9.52% 7.04% 1.80% 10.22% Efficiency Ratio 72.11% 71.01% 67.39% 68.26% 82.59% 63.46% Net Interest Margin 3.47% 3.56% 3.59% 3.62% 3.72% NC 28 *See GA
Slide 29: Safety & Soundness
Safety & Soundness 2013 2014 2015 2016 2017 Risk - based capital ratio (Total) 14.24% 15.49% 16.03% 15.67% 15.31% Leverage ratio (Tier 1) 9.14% 9.69% 10.38% 10.11% 9.73% Nonperforming assets/total assets 3.04% 1.63% 1.18% 0.92% 0.45% Allowance for Loan Loss as a % of loans 1.34% 1.25% 1.29% 1.24% 1.
Slide 30: First Quarter 2018 Earnings
First Quarter 2018 Earnings 30 $3,502 $3,020 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 Thousands 2018 2017 15.9% Franklin Financial Services Corporation F&M Trust 30
Slide 31: GAAP versus Non-GAAP Reconciliation
GAAP/Non - GAAP GAAP versus Non - GAAP Reconciliation Twelve Months Ended 12/31/2017 Net Income Net Income (GAAP) $2,176 Plus: Legal Reserve, Net of Tax $7,900 Plus: DTA Remeasurement $2,291 Net Income (Non - GAAP) $12,367 Return on Average Assets (Non - GAAP) Net Income (Non - GAAP) $12,367 Average
Slide 32: President & CEO's Remarks
President & CEO’s Remarks TIMOTHY (TIM) G. HENRY Franklin Financial Services Corporation F&M Trust 32
Slide 33: Video
Click to play button Franklin Financial Services Corporation F&M Trust 33
Slide 34: Mission Statement
Mission Statement Delivering the right financial solutions … from the people you know and trust. Franklin Financial Services Corporation F&M Trust 34
Slide 35: Mission and Vision Statement
Mission Statement Delivering the right financial solutions … from the people you know and trust. Vision Statement We are committed to remaining independent by growing our bank to meet the increasing needs of our customers, communities and shareholders. We will be the financial services leader in the
Slide 36: Mission, Vision and Core Values
Mission Statement Delivering the right financial solutions … from the people you know and trust. Vision Statement We are committed to remaining independent by growing our bank to meet the increasing needs of our customers, communities and shareholders. We will be the financial services leader in the
Slide 37: Polls Are Closed
Polls Are Closed Franklin Financial Services Corporation F&M Trust 37
Slide 38: Financial Advisory presentation, The Kafafian Group
The Kafafian Group helping banks perform better Franklin Financial Services Corporation Performance Measurement Strategic Management Profit & Process Improvement Board & Management Advisory Services Financial Advisory April 24, 2018 Effect of the Trump Bump on Banking Franklin Financial Services Cor
Slide 39: Financial Industry Overview Headwinds
Effect of the Trump Bump on Banking . Economic Environment . Interest Rate Environment . Regulatory Environment . Political Environment . Competitive Environment . Risk Management . Technology/Cyber Security . Capital Requirements . Shareholder Expectations Financial Industry Overview Headwinds The
Slide 40: Historical Recessionary Periods: Real GDP
Effect of the Trump Bump on Banking Historical Recessionary Periods Real GDP Historical Trends Source: fred.stlouisfed.org, updated on April 10, 2018 Shaded areas indicate U.S recessions Source: U.S Bureau of Economic Analysis fred.stlouisfed.org FRED Real Gross Domestic Product Percent Change from
Slide 41: Historical Recessionary Periods: Federal Funds Rate
Effect of the Trump Bump on Banking Historical Recessionary Periods Source: fred.stlouisfed.org, updated on April 10, 2018 Effective Federal Funds Rate Federal Funds Target* 6 Moves Since 12/16/15 Dec. 16, 2015: 0.50% Dec. 14, 2016: 0.75% Mar. 15, 2017: 1.00% Jun. 14, 2017: 1.25% Dec. 13, 2017: 1.50
Slide 42: Trends in Number of Institutions
Source : S&P Global Market Intelligence and FDIC Effect of the Trump Bump on Banking Trends in Number of Institutions Institutions, New Charters, & Mergers Institutions, New Charters, & Mergers Commercial Banks Savings Banks Total Number of Institutions Count New Charters Mergers Count New Charters
Slide 43: Pennsylvania Deposit Market Share
Effect of the Trump Bump on Banking Pennsylvania Deposit Market Share Source: S&P Global Market Intelligence per bank level filings Percent of Deposits Market Parent in Market Share Deposits Rank Institution Type($000)(%)(%) 1 Wachovia Corporation (NC)Bank HC 27,016,428 15.89 20.19 2 Mellon Financia
Slide 44: Pennsylvania Deposit Market Share (continued)
Source: S&P Global Market Intelligence per bank level filings Effect of the Trump Bump on Banking Pennsylvania Deposit Market Share (continued) Average Percent of Deposits Deposits Market Parent Branch in Market per Branch Share Deposits Rank Institution Type Count($000)($000)(%)(%) 1 PNC Financial
Slide 45: Changes in U.S. Branches by Year
Effect of the Trump Bump on Banking . Branch decline over past several years is predominantly driven by acquisitions and subsequent branch footprint consolidations of large financial institutions. . Future branch consolidations may result from changing demographic trends and technology utilization.
Slide 46: Changes in Branches by Year: Pennsylvania
Effect of the Trump Bump on Banking Source: FDIC Changes in Branches by Year: PENNSYLVANIA Trends in Number of Institutions and Branches 6% Decrease in Number of Branches Number of institutions declined 43% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201
Slide 47: Bank Stocks Outperforming Total Return
Effect of the Trump Bump on Banking Bank Stocks Outperforming Total Return Source: TKG analysis and S&P Global Market Intelligence data (as of April 10, 2018) -10 0 10 20 30 40 50 60 70 80 90 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul
Slide 48: Bank Stocks Outperforming: Pre vs Post Election
Effect of the Trump Bump on Banking Bank Stocks Outperforming Total Return Comparison Pre vs Post Election Source: TKG analysis and S&P Global Market Intelligence data Total return 6 - months prior to election (5/9/2016 through 11/8/2016) Total return election day 11/8/16 to 4/6/17 Total return 4/6/
Slide 49: Valuation Range for the Banking Industry
Effect of the Trump Bump on Banking Shareholders Return – Valuation Range for the Banking Industry Selected Valuation Metrics (SEC registrants, median values) Source: TKG analysis of S&P Global Market Intelligence data Sector (sorted by industry and asset size) Aggregate Market Capitalization ($ Mil
Slide 50: Valuation Comparison to Peers
Effect of the Trump Bump on Banking Valuation Comparison to Peers Valuation Metrics and Range of Imputed Values for FRAF (pricing data as of April 11, 2018) Market Valuation (median values) Proxy Peer Pennsylvania Relational Peer Competitors of Interest Peer Proxy Peer Pennsylvania Relational Peer C
Slide 51: Promises to the People
Effect of the Trump Bump on Banking Promises to the People What Happens when Trump Speaks…Tweets…Etc., Source: Twitter, FoxNews.com, cnn.com . Nov. 10, 2016: Trump transition team vows to “dismantle” Dodd - Frank . Jan. 30, 2017 @ real Donald Trump : "Dodd - Frank is a disaster. We’re going to be do
Slide 52: Promises to the People (continued)
Effect of the Trump Bump on Banking Promises to the People (continued) What Happens when Trump Speaks…Tweets…Etc., Source: Twitter, whitehouse.gov, The New York Times . May 2017: Gary Cohn makes remarks alluding to a two - tier regulatory system for small banks and large banks . November 25, 2017 @
Slide 53: Bills and Resolutions
Effect of the Trump Bump on Banking Bills and Resolutions Key Recently Introduced Bills and Regulations Source: govtrack.us H.R. 5076: Small Bank Exam Cycle Improvement Act of 2018 (introduced Feb. 20, 2018) . The “18 - month rule” extending the examination period from 12 to 18 months may be applied
Slide 54: Bills and Resolutions (continued)
Effect of the Trump Bump on Banking Bills and Resolutions (continued) Key Recently Introduced Bills and Regulations Source: govtrack.us H.R. 4725: Community Bank Reporting Relief Act (passed House March 6, 2018) . Requires the federal banking agencies to issue regulations that allow for reduced quar
Slide 55: Approval and Performance
Effect of the Trump Bump on Banking Approval and Performance Source: Gallup, Inc. & S&P Global Intelligence data as of 4/10/2018 % Approve * Disapprove 3/12/2017 5/7/2017 7/2/2017 8/27/2017 10/22/2017 12/17/2017 2/11/2018 4/8/2018 30% 40% 50% 60% 70%Gallup Poll Approval Ratings vs. Total Returns SNL
Slide 56: Looking Forward: Forward Looking Indicators
Effect of the Trump Bump on Banking Looking forward Forward Looking Indicators Index What it Means October 2016 Presented April 2017 Current % Change from Oct. 2016 University of Michigan Consumer Sentiment Index Growth in this index is an indicator of increased consumer spending, the largest compon
Slide 57: Looking Forward: Conference Board Leading Economic Index
Effect of the Trump Bump on Banking Looking forward Forward Looking Indicators: The Conference Board Leading Economic Index The Conference Board Leading Economic Index (“LEI”) is widely considered one of the best indicators of recession. As the graph below indicates, the LEI has indicated a recessio
Slide 58: Current Performance Review
Effect of the Trump Bump on Banking Current Performance Review Yahoo Finance Trumponomics Report Card (released April 9, 2018) About this report card Yahoo Finance is tracking the performance of the economy under President Donald Trump, compared with six prior presidents going back to Jimmy Carter.
Slide 59: Year in Office: Performance Review
Effect of the Trump Bump on Banking 1 - Year in Office: Performance Review Historical Market Performance by President Source: Analysis of S&P Global Market Intelligence Data and marketwatch.com Donald J. Trump Barack Obama George W. Bush William Clinton George H.W. Bush President Term Inauguration*
Slide 60: Conclusions
Effect of the Trump Bump on Banking Conclusions The initial implications of a Trump Presidency have been positive for the overall U.S. economy, and banking industry, and potentially for community banks. . However, the Jury is still out on Trump’s ultimate long - term success or failure. . The Countr
Slide 61: The Kafafian Group contact details
Performance Measurement Strategic Management Profit & Process Improvement Board & Management Advisory Services Financial Advisory Robert E. Kafafian President & C.E.O. Office - (973) 299 - 0300 Ext. 106 Fax – (973) 299 - 1002 rkafafian@kafafiangroup.com www.kafafiangroup.com The Kafafian Group helpi
Slide 62: Report by Judge of Election
Report by Judge of Election DAVID CRUZ Franklin Financial Services Corporation F&M Trust 62
Slide 63: Thank You
Thank You Franklin Financial Services Corporation F&M Trust
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