Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Q4 2022 Earnings Presentation
31 slides from Franklin Financial Services's earnings presentation, Jan 31, 2023
Slide 1: Fourth Quarter 2022 Highlights
Investor Presentation Fourth Quarter 2022 Highlights F&M TRUST Franklin Financial Services Corporation
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements appearing herein which are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements refer to a future period or periods, reflecting management’s cu
Slide 3: CEO Comments
CEO Comments 2022 was a year of positioning Franklin Financial Services Corporation for the future. With several members of the senior management team retiring, we overlapped their successors to make for a smooth transition. Last year saw a move to a new corporate headquarters from facilities used s
Slide 4: Mission, Vision & Core Values
Mission, Vision & Core Values Mission Statement Delivering the right financial solutions from people you know and trust. Vision 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
Slide 5: Overview of Franklin Financial
Overview of Franklin Financial Franklin Financial, which was formed in 1983, is a holding company headquartered in Franklin County, PA Franklin Financial’s wholly-owned subsidiary, F&M Trust, was founded in Chambersburg, PA in 1906 Total assets of the Company were $1.70 billion as of December 31, 20
Slide 6: A Market Share Leader
A Market Share Leader 22 locations in Franklin, Cumberland, Fulton, and Huntingdon counties PA, and Washington County MD. #1 Deposit Market Share in Chambersburg (53.5%) #1 Deposit Market Share in Franklin County (40.5%) #2 Deposit Market Share in Fulton County (36.4%) Began operation in MD in June
Slide 7: Experienced and Cohesive Executive Team
Experienced and Cohesive Executive Team Executive Title Years of Banking Experience Joined F&M Trust Prior Experience Timothy G. Henry President & Chief Executive Officer 41 2016 Fulton, Centra Bank, BlueRidge Bank, Susquehanna Bank, BB&T Mark R. Hollar Executive Vice President, Chief Financial Offi
Slide 8: Experienced and Cohesive Executive Team
Experienced and Cohesive Executive Team Executive Title Years of Banking Experience Joined F&M Trust Prior Experience Louis J. Giustini Senior Vice President, Chief Retail Services Officer 35 2022 Hagerstown Trust, Columbia Bank, Fulton Bank Karen K. Carmack, DM Senior Vice President, Chief Human Re
Slide 9: Well-Established Company
Well-Established Company Market share leader in core deposit, loan, and asset-management segments in economically stable and historically growing markets Recently hired executive team members with extensive banking industry experience and market knowledge, adding to an experienced management team Co
Slide 10: 2022 Year-End Financial Updates
2022 Year-End Financial Updates Net interest income for 2022 was $51.6 million compared to $44.7 million in 2021 Continue to adjust deposit rates in response to market conditions Net interest margin was 3.58% for the fourth quarter compared to 2.79% for the same period in 2021 and 3.11% for 2022 com
Slide 11: 2022 Year-End Financial Updates
2022 Year-End Financial Updates Loan-to-deposit ratio of 67% is up slightly and allows for lending opportunities at higher interest rates Fee income from new mortgages originated for sale in the secondary market decreased $1.7 million compared to 2021 Deposits decreased 2.1% from year-end 2021 A new
Slide 12: Digital Transformation in 2022
Digital Transformation in 2022 Registered Zelle® users increased 21.0% and mobile banking users increased 5.0% from the same period in 2021 as customers continue to transition to digital banking channels Introduced MX Personal Finance and Credit Score powered by SavvyMoney® as online and mobile bank
Slide 13: Outlook for 2023
Outlook for 2023 Continue building for the future by making investments in our physical, technological, and sales infrastructure including: Further integration of Salesforce, a digital sales platform used throughout the bank Expanding our banking presence in Hagerstown, MD Enhancing our team of empl
Slide 14: Outlook for 2023
Outlook for 2023 Fee income generated by the Investment & Trust Services business line will be challenged due to the current downward trend in the equity and bond markets but will be offset by the origination of new customers and cost controls that are in place A focus on cross-selling between Comme
Slide 15: Outlook for 2023
Outlook for 2023 Improving efficiency ratio as addition of Salesforce and move to new headquarters building are fully absorbed and benefits start to be realized Growth from the Investment & Trust Services division as equity and bond markets stabilize from 2022 and the division continues its pace of
Slide 16: Summary
Summary The Company continues to be well capitalized and positioned to successfully develop new commercial and investment and trust relationships The bank is positioned to fund growth though the resulting NIM will likely contract Asset quality is good, and the Company is well provisioned for losses
Slide 17: Financial Updates Fourth Quarter Ended December 31, 2022
Financial Updates Fourth Quarter Ended December 31, 2022 F&M TRUST Franklin Financial Services Corporation 17
Slide 18: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) 12/31/2022 9/30/2022 12/31/2021 12/31/2020 Total Assets $1,699,579 $1,847,162 $1,773,806 $1,535,038 Cash and Cash Equiv. $64,899 $210,156 $175,149 $57,146 Investments $487,247 $492,467 $530,292 $397,331 Net Loans $1,036,866 $1,033,518 $983,746 $9
Slide 19: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) Quarter Ended 12/31/2022 Quarter Ended 9/30/2022 Quarter Ended 12/31/2021 Interest Income $16,997 $15,043 $12,133 Interest Expense $2,392 $980 $723 Provision for Losses 650 -- (200) Noninterest Income1 $3,690 $3,739 $4,544 Noninterest Expense
Slide 20: Key Performance Measures
Key Performance Measures Percent (%) Quarter Ended 12/31/2022 Quarter Ended 9/30/2022 Quarter Ended 12/31/2021 Return on Avg. Assets 0.84 1.00 0.84 Return on Avg. Equity 13.58 14.86 9.56 Efficiency Ratio1 70.42 67.23 73.40 Net Interest Margin 3.58 3.28 2.79 Noninterest Inc2 / Operating Revenue 20.17
Slide 21: Balance Sheet Strength
Balance Sheet Strength Percent (%) Quarter Ended 12/31/2022 Quarter Ended 9/30/2022 Quarter Ended 12/31/2021 Risk-Based Capital Ratio (Total) 17.21 17.34 18.41 Leverage Ratio (Tier 1) 8.95 8.59 8.52 Common Equity Ratio (Tier 1) 14.22 14.29 15.20 Tangible Common Equity Ratio 6.22 5.39 8.39 Nonperform
Slide 22: Market Statistics
Market Statistics Per Share Measure / Market Valuation Quarter Ended 12/31/2022 Quarter Ended 9/30/2022 Quarter Ended 12/31/2021 Diluted Earnings Per Share $0.84 $1.05 $0.82 Cash Dividend Yield 3.55% 4.06% 3.87% Regular Cash Dividends Paid $0.32 $0.32 $0.32 Dividend Payout Ratio 37.77% 30.36% 38.83%
Slide 23: Balanced Revenue Model
Balanced Revenue Model Annualized Noninterest Income Source as a percentage of Average Assets as of December 31, 2022 2022 Franklin Financial Median PA Banks Peer1 Trust 0.41% 0.01% Service Charges on Deposits 0.15% 0.09% Gain on Sale of Loans 0.05% 0.03% Other 0.22% 0.27% Total Noninterest Income2
Slide 24: Deposit Mix
Deposit Mix Cost of Deposits (%) 0.64 0.28 0.12 0.23 Franklin Financial Deposit Mix ($000’s) Retail Time $57,390 4% Demand Deposits $299,231 19% NOW & Other Transaction $496,533 32% MMDAs & Savings $698,294 45% F&M TRUST Franklin Financial Services Corporation 24
Slide 25: Liquidity Available at December 31, 2022
Liquidity Available at December 31, 2022 Dollars in Thousands (000’s) Liquidity Source Capacity Outstanding Available Federal Home Loan Bank $379,133 $ – $379,133 Federal Reserve Bank Discount Window $60,218 $ – $60,218 Correspondent Banks $56,000 $ – $56,000 Total $495,351 $ – $495,351 F&M TRUST Fr
Slide 26: Diversified Loan Portfolio
Diversified Loan Portfolio $52,290 $21,742 $205 $179 $41,140 $41,846 $37,913 $37,486 $105,639 $111,232 $132,530 $113,629 $145,279 $150,232 $120,039 $118,443 $212,030 $208,615 $216,003 $218,468 $73,049 $74,407 $103,005 $106,921 $389,723 $406,956 $441,161 $456,198 Commercial Real Estate State/Muni Loa
Slide 27: Investment and Trust Services Assets Under Management
Investment and Trust Services Total and New Assets Under Management ($000’s) $104,881 $838,852 $943,733 $62,022 $104,127 $810,970 $915,097 $82,169 $116,398 $904,323 $1,020,722 $147,454 Brokerage Trust Total New Assets Under Management (YTD) F&M TRUST Franklin Financial Services Corporation 27
Slide 28: Strong Credit Quality
Strong Credit Quality Nonperforming Assets1 / Assets (%) 0.57% 0.42% 0.30% 0.01% F&M TRUST Franklin Financial Services Corporation 28 1Nonperforming assets = nonaccrual loans, loans 90 days past due and other real estate owned
Slide 29: Stock Symbol: FRAF (Nasdaq)
Stock Symbol: FRAF (Nasdaq) www.franklinfin.com www.fmtrust.bank F&M TRUST Franklin Financial Services Corporation 29
Slide 30: Appendix
Appendix F&M TRUST Franklin Financial Services Corporation 30
Slide 31: GAAP / Non-GAAP Reconciliation
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) Quarter Ended 12/31/2022 Quarter Ended 9/30/2022 Quarter Ended 12/31/2021 Shareholders’ equity $114,197 $108,151 $157,065 Less intangible assets (9,016) (9,016) (9,016) Shareholders’ equity (non-GAAP) 105,181 99,135 148,049 Sh
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