Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Q3 2022 Earnings Presentation
29 slides from Franklin Financial Services's earnings presentation, Nov 17, 2022
Slide 1: Third Quarter 2022 Highlights
Investor Presentation Third 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 We were pleased to see growth in both loans outstanding and our net interest margin (NIM) during the third quarter which resulted in an increase in net income when comparing linked quarters. Deposit balances continued to grow, though we do expect to see the growth in deposits level off
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 $1.85 billion as of September 30, 2
Slide 6: A Market Share Leader
A Market Share Leader Huntington County Fulton County Franklin County Cumberland County Washington County F&M Trust Headquarters Harrisburn 22 locations in Franklin, Cumberland, Fulton, and Huntingdon counties PA, and Washington County MD. #1 Deposit Market Share in Chambersburg (53.5%) #1 Deposit M
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 40 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 Karen K. Carmack, DM Senior Vice President, Chief Human Resources Officer 27 2000 ACNB Matthew D. Weaver Senior Vice President, Chief Marketing Officer 22 2014 Susquehanna Bank, Clif
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 New executive team members with extensive banking industry experience and market knowledge, adding to an experienced management team Consistently
Slide 10: YTD Financial Updates
YTD Financial Updates Net interest income was $37.0 million compared to $33.3 million for the year-to-date period in 2021 Continue to adjust deposit rates in response to market conditions Net interest margin was 3.28% for the third quarter compared to 2.89% for the same period in 2021 and 2.96% year
Slide 11: YTD Financial Updates
YTD Financial Updates Loan-to-deposit ratio of 63% is up slightly and enhances liquidity position and allows for lending opportunities at higher interest rates Fee income from new mortgages originated for sale in the secondary market decreased $1.2 million over the same period in 2021 Deposits incre
Slide 12: Digital Transformation
Digital Transformation Registered Zelle® users increased 23.0% and mobile banking users increased 4.5% 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 banking enha
Slide 13: Outlook for the Remainder of 2022
Outlook for the Remainder of 2022 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
Slide 14: Outlook for the Remainder of 2022
Outlook for the Remainder of 2022 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-sell
Slide 15: Summary
Summary The Company is well capitalized and positioned to successfully work through the current complex social and economic conditions to the benefit of our customers and shareholders Liquidity remains strong with additional resources available if needed Asset quality is good with continued improvem
Slide 16: Financial Updates Third Quarter Ended September 30, 2022
Financial Updates Third Quarter Ended September 30, 2022 16 F&M Trust Franklin Financial Services Corporation
Slide 17: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) 9/30/2022 6/30/2022 12/31/2021 12/31/2020 Total Assets $1,847,162 $1,832,296 $1,773,806 $1,535,038 Cash and Cash Equiv. $210,156 $198,269 $175,149 $57,146 Investments $492,467 $510,282 $530,292 $397,331 Net Loans $1,033,518 $1,019,608 $983,746 $9
Slide 18: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) Quarter Ended 9/30/2022 Quarter Ended 6/30/2022 Quarter Ended 9/30/2021 Interest Income $15,043 $12,875 $12,304 Interest Expense $980 $764 $710 Provision for Losses -- -- -- Noninterest Income1 $3,739 $4,106 $4,397 Noninterest Expense $12,200
Slide 19: Key Performance Measures
Key Performance Measures Percent (%) Quarter Ended 9/30/2022 Quarter Ended 6/30/2022 Quarter Ended 9/30/2021 Return on Avg. Assets 1.00 0.79 1.37 Return on Avg. Equity 14.86 11.11 15.20 Efficiency Ratio1 67.23 72.61 67.17 Net Interest Margin 3.28 2.90 2.89 Noninterest Inc2 / Operating Revenue 21.00
Slide 20: Balance Sheet Strength
Balance Sheet Strength Percent (%) Quarter Ended 9/30/2022 Quarter Ended 6/30/2022 Quarter Ended 9/30/2021 Risk-Based Capital Ratio (Total) 17.34 17.36 18.16 Leverage Ratio (Tier 1) 8.59 8.53 8.53 Common Equity Ratio (Tier 1) 14.29 14.30 14.91 Tangible Common Equity Ratio 5.39 6.19 8.35 Nonperformin
Slide 21: Market Statistics
Market Statistics Per Share Measure / Market Valuation Quarter Ended 9/30/2022 Quarter Ended 6/30/2022 Quarter Ended 9/30/2021 Diluted Earnings Per Share $1.05 $0.80 $1.31 Cash Dividend Yield 4.06% 4.24% 3.90% Regular Cash Dividends Paid $0.32 $0.32 $0.32 Dividend Payout Ratio 30.36% 39.88% 24.12% M
Slide 22: Balanced Revenue Model
Balanced Revenue Model Annualized Noninterest Income Source as a percentage of Average Assets as of September 30, 2022 2022 Franklin Financial Median PA Banks Peer1 Trust 0.41% 0.02% Service Charges on Deposits 0.15% 0.10% Gain on Sale of Loans 0.05% 0.04% Other 0.22% 0.27% Total Noninterest Income2
Slide 23: Stable, Low-Cost Core Deposits
Stable, Low-Cost Core Deposits Cost of Deposits (%) 1.20 1.00 0.80 0.60 0.40 0.20 0.64 0.32 0.13 0.14 0.00 2019 2020 2021 9/30/20221 Franklin Financial Deposit Mix ($000’s) Retail Time $59,858 4% Demand Deposits $317,719 19% NOW & Other Transaction $592,636 35% MMDAs & Savings $734,770 43% F&M Trust
Slide 24: Diversified Loan Portfolio
Diversified Loan Portfolio Loans Outstanding1 ($000’s) $52,290 $21,742 $215 $205 $1,000,000 $41,140 $41,846 $38,227 $37,913 $800,000 $105,639 $111,232 $124,481 $132,530 $600,000 $145,279 $150,232 $122,073 $12,039 $400,000 $212,030 $208,615 $212,635 $216,003 $200,000 $73,049 $74,407 $103,093 $103,005
Slide 25: Investment and Trust Services
Investment and Trust Services Total and New Assets Under Management ($000’s) $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- 111742 920631 1032373 39231 104881 838852 943733 62022 104127 810970 915097 8216 March 2022 June 2022 September 2022 Brookerage Trust Total New Assest Under Manag
Slide 26: Strong Credit Quality
Strong Credit Quality Nonperforming Assets1 / Assets (%) 0.60% 0.50% 0.40% 0.30% 0.20% 1.00% 0.00% 0.57% 0.42% 0.31% 0.30% 12/31/2020 12/31/2021 6/30/2022 9/30/2022 F&M Trust Franklin Financial Services Corporation 26 1Nonperforming assets = nonaccrual loans, loans 90 days past due and other real es
Slide 27: Stock Symbol: FRAF (Nasdaq)
Stock Symbol: FRAF (Nasdaq) www.franklinfin.com www.fmtrust.bank F&M Trust Franklin Financial Services Corporation 27
Slide 28: Appendix
Appendix 28 F&M Trust Franklin Financial Services Corporation
Slide 29: GAAP / Non-GAAP Reconciliation
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) Quarter Ended 9/30/2022 Quarter Ended 6/30/2022 Quarter Ended 9/30/2021 Shareholders’ equity $108,151 $121,797 $152,838 Less intangible assets (9,016) (9,016) (9,016) Shareholders’ equity (non-GAAP) 99,135 112,781 143,822 Shar
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