Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Corporate Update (April 2020)
33 slides from Franklin Financial Services's corporate update, Apr 27, 2020
Slide 1: COVID-19 Response & 2020 Financial Updates
COVID-19 Response & 2020 Financial Updates F&M TRUST Franklin Financial Services Corporation 1
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 On April 28, 2020 at 9:00 AM the Franklin Financial Services Corporation will hold its annual shareholders meeting. Unlike any previous year this meeting will be held virtually as the Company’s response to the COVID-19 pandemic and in compliance with the laws and regulations of the Comm
Slide 4: CEO Comments
CEO Comments We must all recognize that this is not a typical year. The real value of our performance in 2019 and at the beginning of this year was to further financially strengthen your Company so we can face the probable economic challenges the pandemic is bringing with an ability to support our c
Slide 5: Response to COVID-19 Pandemic
Response to COVID-19 Pandemic Operational Response Customer Assistance Communication and Marketing Community Support F&M TRUST Franklin Financial Services Corporation 5
Slide 6: Operational Response
Operational Response Closed lobby access to all F&M Trust Community Offices effective March 20, 2020 to ensure the safety of all employees and customers Community Office drive-up services and access to banking services that require an appointment remain available Modified operations at the bank’s Ca
Slide 7: Operational Response: COVID-19 Response Team
Operational Response Established COVID-19 Response Team consisting of the following senior leaders: Timothy G. Henry – President and Chief Executive Officer Lorie Heckman – Senior Vice President, Chief Risk Officer Karen K. Carmack, DM – Senior Vice President, Chief Human Resources Officer The bank’
Slide 8: Customer Assistance
Customer Assistance Directed customers to the bank’s convenience services including online banking, the F&M Trust mobile banking app, Freedom Access Center (telephone banking) and call center Introduced an Emergency Personal Line of Credit for existing and non-customers who are experiencing a financ
Slide 9: Customer Assistance: Paycheck Protection Program
Customer Assistance Participated in the Paycheck Protection Program (PPP), under the Coronavirus Aid, Relief and Economic Security (CARES) Act, to offer economic relief for local businesses Allocated bank-wide resources to support the program and processed 512 PPP applications resulting in $50.2 mil
Slide 10: Communication and Marketing
Communication and Marketing Published content on the bank’s website, fmtrust. bank, with updates and resources related to COVID-19, the Paycheck Protection Program and the CARES Act federal stimulus payments Provided timely and valuable information to customers through multiple channels including em
Slide 11: Community Support
Community Support F&M Trust committed a $100,000 public investment to be distributed across the bank’s marketplace for COVID-19 relief efforts The funds for this effort were reallocated from budgeted business development activities, bank events and sponsorships that were cancelled due to COVID-19 Or
Slide 12: YTD Financial Updates
YTD Financial Updates Reduced deposit rates in February and March in response to market conditions Recorded a provision for loan loss expense of $3 million for the first quarter of 2020 due to changing Qualitative Factors related to the COVID-19 pandemic Provided payment modifications on 206 loans t
Slide 13: YTD Financial Updates
YTD Financial Updates Profitability from 2019 and the first quarter of 2020 positioned the company to increase the allowance for loan losses and strengthen capital levels as the company heads into a time of economic uncertainty Loan-to-deposit ratio of 84% enhances liquidity position and allows for
Slide 14: Loan Modifications by Industry
Loan Modifications by Industry*Dollars in Thousands (000’s) Balance Percent of Gross Loans Real Estate Non-Real Estate Accommodation and Food Services$79,394 8% $79,266 $128 Retail Trade$36,826 4% $36,115 $711 Real Estate and Rental and Leasing$26,433 3% $26,382 $51 Health Care and Social Assistance
Slide 15: Pandemic Risk by Industry and Collateral
Pandemic Risk by Industry and Collateral Dollars in Thousands (000’s) Medium Risk Real Estate Secured Non-Real Estate Secured Retail – Consumer Loans – Non-Real Estate $5,744 $0 $5,744 Construction $71,260 $61,228 $10,032 Real Estate and Rental and Leasing $282,358 $265,772 $16,586 Total $359,362 $3
Slide 16: Liquidity Available at March 31, 2020
Liquidity Available at March 31, 2020 Dollars in Thousands (000’s) Liquidity Source Capacity Outstanding Available Federal Home Loan Bank $377,600 $– $377,600 Federal Reserve Bank Discount Window $21,000 $– $21,000 Correspondent Banks $21,000 $– $21,000 Total $419,600 $– $419,600 F&M TRUST Franklin
Slide 17: Outlook for 2020
Outlook for 2020 Additional provision for loan losses expected for the second quarter of 202 0 Anticipating a challenging environment and slow economic recovery in the second half of 2020 and into 202 1 Lower interest rate environment will continue to put pressure on net interest margin Moderate loa
Slide 18: Financial Updates First Quarter Ended March 31, 2020
Financial Updates First Quarter Ended March 31, 2020 F&M TRUST Franklin Financial Services Corporation 18
Slide 19: A Balanced Revenue Model
A Balanced Revenue Model Noninterest Income Source as a percentage of Average Assets for the quarter ended March 31, 2020 2020 Franklin Financial Median PA Banks Peer 1 Trust 0.43% 0.06% BOLI 0.04% 0.05% Insurance / Investment Banking / Brokerage 0.02% 0.05% Loan Fees & Charges 0.09% 0.02% Service C
Slide 20: Stable, Low Cost Funding
Stable, Low Cost Funding Cost of Funds (%) 0.00 0.20 0.40 0.60 0.80 0.80 1.00 1.20 2016 0.23 2017 0.25 2018 0.40 2019 3/31/2020 Franklin Financial Deposit Mix ($000’s) MMDAs & Savings $515.30 46.1% NOW & Other Transaction $319.90 28.6% F&M TRUST Franklin Financial Services Corporation 20
Slide 21: A Growing and Diversified Loan Portfolio
A Growing and Diversified Loan Portfolio Loans Outstanding 1 ($000’s) $ $200,000 $400,000 $600,000 $800,00 $1,000,000 2016Y $279,350 $108,797 $219,323 $153,158 $84,572 $49,213 $133,302 2017Y $312,048 $101,704 $209,247 $176,384 $95,695 $49,064 $115,331 2018Y $381,104 $93,871 $196,238 $168,352 $88,586
Slide 22: Investment and Trust Services: YTD New Assets Under Management
Investment and Trust Services YTD New Assets Under Management ($000’s) $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 January February March April May June July August September October November December 2017 2018 2019 3/31/2020 F&M TRUST Franklin Financial Servi
Slide 23: Investment and Trust Services: Total Number of Accounts
Investment and Trust Services Total Number of Accounts 1,650 1,675 1,700 1,725 1,750 1,775 1,800 1,825 12/31/2017 12/31/2018 12/31/2019 3/31/2020 F&M TRUST Franklin Financial Services Corporation 23
Slide 24: Investment and Trust Services: Total Assets Under Management
Investment and Trust Services Total Assets Under Management ($000’s) $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 December 2019 $127,976 $790,951 $918,927 January 2020 $126,690 $786,557 $913,247 $122,143 $755,989 $878,132 March 2020 $109,144 $674,198
Slide 25: Strong Core Credit Quality
Strong Core Credit Quality Nonperforming Assets 1 / Assets (%) 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 2016Y 0.92% 2017Y 0.45% 2018Y 0.44% 2019 0.31% 3/31/2020 0.29% 1Nonperforming assets = nonaccrual loans, loans 90 days past due and other real estate owned F&M TRUST Frank
Slide 26: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) 2016Y 2017Y 2018Y 2019Y 3/31/2020 Total Assets $1,127,443 $1,179,813 $1,209,587 $1,270,923 $1,262,126 Cash and Cash Equiv. $36,665 $58,603 $52,957 $83,828 $53,350 Investments $145,925 $127,336 $131,846 $197,084 $218,818 Net Loans $883,338 $932,35
Slide 27: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) Quarter Ended 3/31/2019 Quarter Ended 12/31/2019 Quarter Ended 3/31/2020 Interest Income $11,989 $12,130 $11,665 Interest Expense $1,660 $1,734 $1,413 Provision for Losses $399 $0 $3,000 Noninterest Income 1 $3,162 $5,027 $3,337 Noninterest Ex
Slide 28: Key Performance Measures
Key Performance Measures Percent (%) Quarter Ended 3/31/2019 Quarter Ended 12/31/2019 Quarter Ended 3/31/2020 Return on Avg. Assets 1.08 1.37 0.54 Return on Avg. Equity 10.90 13.96 5.31 Efficiency Ratio 67.93 65.36 65.94 Net Interest Margin 3.86 3.50 3.53 Noninterest Inc / Operating Revenue 20.87 29
Slide 29: Well-Positioned to Manage Uncertain Times
Well-Positioned to Manage Uncertain Times Percent (%) Quarter Ended 3/31/2019 Quarter Ended 12/31/2019 Quarter Ended 3/31/2020 Risk-Based Capital Ratio (Total) 15.04 16.08 15.80 Leverage Ratio (Tier 1) 9.88 9.72 9.45 Common Equity Ratio (Tier 1) 13.78 14.82 14.53 Tangible Common Equity Ratio 8.98 9.
Slide 30: Strong Dividend Yield Per Share Measure / Market Valuation
Strong Dividend Yield Per Share Measure / Market Valuation Quarter Ended 3/31/2019 Quarter Ended 12/31/2019 Quarter Ended 3/31/2020 Diluted Earnings Per Share $0.73 $1.01 $0.39 Cash Dividend Yield 3.00% 3.10% 4.37% Regular Cash Dividends Paid $0.27 $0.30 $0.30 Market Value (Per Share) $36.00 $38.69
Slide 31: GAAP / Non-GAAP Reconciliation
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) 3/31/2019 12/31/2019 3/31/2020 Shareholders’ equity 121,491 127,528 $ 129,005 Less intangible assets (9,016) (9,016) (9,016) Shareholders’ equity (non-GAAP) 112,475 118,512 119,989 Shares outstanding (in thousands) 4,411 4,353
Slide 32: Summary
Summary The Company is well capitalized which provides the ability to assist customers and communities through a challenging time Asset quality is good due to significantly lower dependence on participation loans Seasoned and experienced senior management team has previously worked through difficult
Slide 33: Thank You
Thank You Stock Symbol: FRAF (Nasdaq) www.franklinfin.com www.fmtrust.bank F&M TRUST Franklin Financial Services Corporation 33
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