Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Investor Presentation (February 2016)
51 slides from Franklin Financial Services's investor presentation, Feb 4, 2016
Slide 1: Franklin Financial Services Corporation
FRANKLIN FINANCIAL SERVICES CORPORATION February 4, 2016 > Franklin, Servi
Slide 2: Forward Looking Statements
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 financial performanc
Slide 3: Company Highlights
Slide 4: Company Profile
COMPANY PROFILE •F&M Trust founded in 1906 •Franklin Financial formed in 1984 •Headquartered in Chambersburg, PA •22 offices throughout Cumberland, Franklin, Fulton and Huntingdon Counties •$1.035 billion in assets at December 31, 2015 •$709 million in brokerage and trust assets under management FRA
Slide 5: Market Share
MARKET SHARE •#1 Deposit Market Share in Chambersburg (49.0%) •#1 Deposit Market Share in Franklin County (31.3%) •#1 Deposit Market Share in Fulton County (34.8%) •#7 Deposit Market Share in Carlisle (5.2%) •#9 Deposit Market Share in Cumberland County (3.3%) Source: SNL Financial; bank deposits as
Slide 6: Market Area
FULTON FRANKLIN CUMBERLAND HUNTINGDON MARKET AREA FRANKLIN FINANCIAL AND F&M TRUST 6
Slide 7: Improving Employment
IMPROVING EMPLOYMENT December 2013 December 2014 December 2015 Cumberland Co* 5.3% 3.4% 3.5% Franklin Co* 5.7% 4.3% 4.7% Fulton Co* 8.0% 5.7% 6.1% Pennsylvania 6.8% 5.0% 4.8% US 6.7% 5.6% 5.0% Unemployment Rate, seasonally adjusted Source: PA Department of Labor and Industry Center for Workforce Inf
Slide 8: Unemployment Rates
UNEMPLOYMENT RATES Source: PA Center for Workforce Information & Analysis; June 2015 8
Slide 9: Growth Market
GROWTH MARKET Sources: Central Penn Business Journal; March 2015 Chambersburg Public Opinion; July 2015 9
Slide 10: Management Team
MANAGEMENT TEAM FRANKLIN FINANCIAL AND F&M TRUST Pictured from left to right: Lorie Heckman, Lise Shehan, Mark Hollar, Karen Carmack, Ronald Cekovich, Steven Butz, William Snell, Jr., Matthew Weaver and Patricia Hanks 10
Slide 11: Management Team
MANAGEMENT TEAM FRANKLIN FINANCIAL AND F&M TRUST Years of Banking Experience Joined F&M Trust Prior Experience William E. Snell, Jr CEO 44 1995 Meridian Bank, Commonwealth Bank Timothy G. Henry President 33 2016 BB&T, Susquehanna Bank, BlueRidge Bank, Centra Bank, Fulton Mark R. Hollar CFO and Treas
Slide 12: Strategic Plan Focus
STRATEGIC PLAN FOCUS FRANKLIN FINANCIAL AND F&M TRUST •Quality Loan Growth •Increasing Fee-Based Lines of Business •Further Development of Sales Culture •Expense Control •Board and Management Succession Plans •Continue to Improve Overall Loan Quality 12
Slide 13: Quality Loan Growth
Slide 14: Loan Growth
LOAN GROWTH FRANKLIN FINANCIAL AND F&M TRUST •Focus on the Cumberland County market •Strengthening of our commercial loan pipeline since April 2015 •Market disruptions from M&A activity creating opportunities 14
Slide 15: Commercial Loan Growth
COMMERCIAL LOAN GROWTH FRANKLIN FINANCIAL AND F&M TRUST $575,604,000 $627,677,000 $0$100,000,000$200,000,000$300,000,000$400,000,000$500,000,000$600,000,000$700,000,000Commercial Loan Outstandings* 20142015*Year-End at 12/3115
Slide 16: Loan Portfolio
LOAN PORTFOLIO FRANKLIN FINANCIAL AND F&M TRUST 0.00%5.00%10.00%15.00%20.00%25.00%30.00%Residential &Home EquityConstruction andDevelopmentIncomeProducingOwner OccupiedCommercial &IndustrialMunicipalitiesOther% Portfolio Composition* 20112012201320142015*Year-End at 12/31 16
Slide 17: Increasing Fee-Based Lines of Business
Slide 18: Fee-Based Lines of Business
FEE-BASED LINES OF BUSINESS FRANKLIN FINANCIAL AND F&M TRUST •Investment and Trust Services •Cash Management Services •Merchant Card Services •Debit Card Overdraft Opt-In •StartFresh™ Banking 18
Slide 19: 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 •Fee income increased by 10.1% for 2015 •Designated Regional Market Managers focused on growth in the West Shore region
Slide 20: Investment & Trust Services
INVESTMENT & TRUST SERVICES •Over 300 years of combined financial services experience among our professional staff members •Professional designations include: FRANKLIN FINANCIAL AND F&M TRUST –CFPs (Certified Financial Planner) –CFA (Chartered Financial Analyst) –JD (Juris Doctor) –CTFA (Certified T
Slide 21: Further Development of Sales Culture
Slide 22: Sales Culture
SALES CULTURE FRANKLIN FINANCIAL AND F&M TRUST •Partnership with the Anthony Cole Training Group •Utilize the Sales Person Skills Assessment tool for existing sales personnel and leadership •Evaluate new personnel for front-line sales positions during hiring process •Implement the Sales Managed Envi
Slide 23: Expense Control
Slide 24: Expense Control
EXPENSE CONTROL FRANKLIN FINANCIAL AND F&M TRUST •Completed a comprehensive delivery channel study –Analyzed community office network and self-service delivery channels –Objective to increase market penetration and profitability –Closed three community offices in January 2015; reduction of $500,000
Slide 25: Closed Offices
CLOSED OFFICES FRANKLIN FINANCIAL AND F&M TRUST 25
Slide 26: Delivery Channels
DELIVERY CHANNELS FRANKLIN FINANCIAL AND F&M TRUST 26
Slide 27: Board and Management Succession Plans
Slide 28: Succession Planning
SUCCESSION PLANNING FRANKLIN FINANCIAL AND F&M TRUST Tricia Lacey •New members of the Board of Directors –Tricia Lacey – President and Director, The Beistle Company –Greg Duffey – Partner, Craig, Friedly, Potter & Moore Insurance Agency –Appointed to the Board of Directors in February 2015 •New Pres
Slide 29: Succession Planning
SUCCESSION PLANNING FRANKLIN FINANCIAL AND F&M TRUST •Timothy (Tim) Henry announced as new President of Franklin Financial Services Corp. and F&M Trust •More than 33 years of banking experience •Extensive knowledge of commercial lending, loan workout, retail management, private banking, trust and in
Slide 30: Continue to Improve Overall Loan Quality
Slide 31: Loan Quality
LOAN QUALITY FRANKLIN FINANCIAL AND F&M TRUST 0.00%1.00%2.00%3.00%4.00%5.00%6.00%20112012201320142015Delinquency* (% of Gross Loans) TotalNon-Accrual30 - 89 Days*Year-End at 12/31 31
Slide 32: Loan Quality
LOAN QUALITY FRANKLIN FINANCIAL AND F&M TRUST $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,00020112012201320142015Non-Performing Assets* ($000’s) Non-AccrualOREOOther 90+ Past Due*Year-End at 12/31; excludes restructured loans performing in accordance with the modified terms. 32
Slide 33: Loan Quality
LOAN QUALITY FRANKLIN FINANCIAL AND F&M TRUST $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,00020112012201320142015Net Charge-offs and Provision* ($000’s) Net Charge-offsProvision*Year-End at 12/31 33
Slide 34: Allowance
ALLOWANCE FRANKLIN FINANCIAL AND F&M TRUST $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,00020112012201320142015ALLL* ($000’s) ALLLSpecific*Year-End at 12/31 34
Slide 35: Allowance
ALLOWANCE FRANKLIN FINANCIAL AND F&M TRUST 0.00%20.00%40.00%60.00%80.00%100.00%120.00%140.00%160.00%180.00%20112012201320142015ALLL / Non-Performing Loans* ALLL / Non-Perf. Loans*Year-End at 12/31 35
Slide 36: New Products
Slide 37: New Products
NEW PRODUCTS FRANKLIN FINANCIAL AND F&M TRUST EquityAdvantage Card http://mobileidworld.com/assets/Apple-Pay-1.jpgApply Pay and Samsung Pay EMV “Chip” Debit Cards People Pay 37
Slide 38: Investor Relations
Slide 39: Investor Relations
INVESTOR RELATIONS FRANKLIN FINANCIAL AND F&M TRUST •Dividend Reinvestment and Stock Purchase Plan (DRIP) –Over $6,000,000 invested since September 2010 •OTCQX –Started trading on the OTCQX marketplace in October 2014 –Selected a 2015 OTCQX® Best 50 performing company –Increased trading volume •Inve
Slide 40: Financial Performance
Slide 41: Deposit Growth
DEPOSIT GROWTH FRANKLIN FINANCIAL AND F&M TRUST Source: SNL Financial as of 12/31/2014 or most recently reported data for Pennsylvania banks of $850 million to $1.5 billion in assets 0.00%1.00%2.00%3.00%4.00%5.00%2014 Franklin Financial2014 Peer Median2015 Franklin Financial41
Slide 42: Cost of Deposits
COST OF DEPOSITS FRANKLIN FINANCIAL AND F&M TRUST 0.00%0.10%0.20%0.30%0.40%0.50%0.60%2014 Franklin Financial2014 Peer Median2015 Franklin FinancialSource: UBPR as of 12/31/2015 for Pennsylvania banks of $850 million to $1.5 billion in assets 42
Slide 43: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS FRANKLIN FINANCIAL AND F&M TRUST Dollars in Thousands ($000’s) Year-End at 12/31 2011 2012 2013 2014 2015 Total Assets $990,248 $1,027,363 $984,587 $1,001,488 $1,035,295 Investments $125,301 $133,328 $159,674 $171,751 $159,473 Net Loans $756,687 $743,200 $713,711 $717,420 $7
Slide 44: Financial Highlights
FINANCIAL HIGHLIGHTS FRANKLIN FINANCIAL AND F&M TRUST Dollars in Thousands ($000’s) Year-End at 12/31 2011 2012 2013 2014 2015 Net Interest Income $32,637 $32,252 $31,664 $31,614 $32,244 Provision $7,524 $5,225 $2,920 $764 $1,285 Noninterest Income $10,200 $9,451 $9,877 $10,861 $12,652 Noninterest E
Slide 45: Non-Interest Income
NON-INTEREST INCOME FRANKLIN FINANCIAL AND F&M TRUST Non-Interest Income as a % of Average Assets; Year-End at 12/31 2011 2012 2013 2014 2015 F&M Trust 1.11% 0.81% 0.89% 0.97% 1.08% Peer Group* 0.75% 0.68% 0.69% 0.68% 0.64% *Peer Group data is derived from the Uniform Bank Performance Report for ban
Slide 46: 2015 Nonrecurring Income
2015 NONRECURRING INCOME FRANKLIN FINANCIAL AND F&M TRUST Dollars in Thousands ($000’s) Year-End at 12/31 2015 Reported Net Income $10,204 Less Nonrecurring Noninterest Income (Tax Adjusted) ($593) Less Deferred Tax Valuation Reduction ($250) Adjusted Net Income $9,361 46
Slide 47: Performance Measures
PERFORMANCE MEASURES FRANKLIN FINANCIAL AND F&M TRUST Year-End at 12/31 2011 2012 2013 2014 2015 Return on Avg. Assets 0.66% 0.51% 0.61% 0.83% 1.00% Return on Avg. Equity 7.68% 6.00% 6.72% 8.44% 9.52% Efficiency Ratio* 63.46% 70.44% 72.01% 70.83% 67.39% Net Interest Margin 3.73% 3.50% 3.47% 3.56% 3.
Slide 48: Shareholder Value
SHAREHOLDER VALUE FRANKLIN FINANCIAL AND F&M TRUST Year-End at 12/31 2011 2012 2013 2014 2015 Diluted earnings per share $1.66 $1.32 $1.51 $2.00 $2.40 Market value per share $12.35 $14.00 $17.10 $22.00 $23.50 Current dividend yield 8.74% 4.86% 3.98% 3.09% 3.23% Regular cash dividends paid $1.08 $0.7
Slide 49: Safety & Soundness
SAFETY & SOUNDNESS FRANKLIN FINANCIAL AND F&M TRUST Year-End at 12/31 2011 2012 2013 2014 2015 Risk-based capital ratio (Total) 12.14% 12.60% 14.24% 15.49% 16.34% Leverage ratio (Tier 1) 8.40% 8.29% 9.14% 9.69% 10.59% Tangible common equity ratio* 7.82% 8.01% 8.79% 9.51% 9.97% Nonperforming assets/t
Slide 50: Thank You!
Slide 51: Stock Symbol: FRAF (OTCQX)
Stock Symbol: FRAF (OTCQX) www.franklinfin.com www.fmtrustonline.com 51
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