Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Community Bank Forum (August 2015)
53 slides from Franklin Financial Services's conference presentation, Aug 13, 2015
Slide 1: Community Bank Forum
COMMUNITY BANK FORUM
Slide 2: 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 financial performance, future o
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 •$1.028 billion in assets at June 30, 2015 •$736 million in brokerage and trust assets under management FRANKLI
Slide 5: Market Share
MARKET SHARE •#1 Deposit Market Share in Chambersburg (47.6%) •#1 Deposit Market Share in Franklin County (30.7%) •#1 Deposit Market Share in Fulton County (36.6%) •#7 Deposit Market Share in Carlisle (5.6%) •#9 Deposit Market Share in Cumberland County (3.4%) 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 7 June 2013 Dec 2013 June 2014 Dec 2014 June 2015 Cumberland Co 6.3% 5.3% 4.4% 3.4% 4.0% Franklin Co 6.3% 5.7% 4.6% 4.3% 4.8% Fulton Co 8.7% 8.0% 6.2% 5.7% 6.0% Pennsylvania 7.5% 6.8% 5.6% 5.0% 5.4% US 7.5% 6.7% 6.1% 5.6% 5.3% Unemployment Rate, seasonally adjusted Source: PA De
Slide 8: Unemployment Rates
UNEMPLOYMENT RATES 8
Slide 9: Growth Market
GROWTH MARKET Franklin County products grow on the world stage ‘Sooke publicphntonnews com GJintolPOOn Titer Census: Cumberland County fastest-growing county since 2010 WASHINGTON, D.C. >> Esyors fom Franklin ‘Conntyare growing at eaey 0 perent a ear sccording tthe most een ta roms the US, Departmen
Slide 10: Management Team
InteriorSlide-Franklin-logo-green-01.pngInterior-slide-FM-logo-blue.pngMANAGEMENT TEAM FRANKLIN FINANCIAL AND F&M TRUST 10 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
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 President & CEO 44 1995 Meridian Bank, Commonwealth Bank Mark R. Hollar CFO and Treasurer 27 1994 ValleyBank & Trust Lorie Heckman Risk Management 29 1986 _ Steven D. B
Slide 12: Strategic Plan Focus
STRATEGIC PLAN FOCUS FRANKLIN FINANCIAL AND F&M TRUST 12 •Expense Control •Increasing Fee-Based Lines of Business •Continue to Improve Overall Loan Quality •Board and Management Succession Plans •Further Development of Sales Culture •Quality Loan Growth
Slide 13: Expense Control
EXPENSE CONTROL
Slide 14: Expense Control
InteriorSlide-Franklin-logo-green-01.pngInterior-slide-FM-logo-blue.pngEXPENSE CONTROL FRANKLIN FINANCIAL AND F&M TRUST 14 •Completed a comprehensive delivery channel study •Analyzed community office network and self-service delivery channels •Objective to increase market penetration and profitabili
Slide 15: Closed Offices
CLOSED OFFICES FRANKLIN FINANCIAL AND F&M TRUST 15
Slide 16: Delivery Channels
DELIVERY CHANNELS FRANKLIN FINANCIAL AND F&M TRUST 16
Slide 17: Increasing Fee-Based Lines of Business
INCREASING FEE-BASED LINES OF BUSINESS
Slide 18: Fee-Based Lines of Business
FEE-BASED LINES OF BUSINESS FRANKLIN FINANCIAL AND F&M TRUST 18 •Cash Management Services •Merchant Card Services •Debit Card Overdraft Opt-In •StartFresh™ Banking •Investment and Trust Services
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 •Operating profitability ratio of 31.7%* •Fee income increased by 20.9% for the first six months of 2015 •Strategic foc
Slide 20: Investment & Trust Services
InteriorSlide-Franklin-logo-green-01.pngInterior-slide-FM-logo-blue.pngINVESTMENT & TRUST SERVICES •Over 300 years of combined financial services experience among our professional staff members •Professional designations include: FRANKLIN FINANCIAL AND F&M TRUST 20 –CFPs (Certified Financial Planner
Slide 21: Slide 21
Slide 22: Loan Quality
LOAN QUALITY FRANKLIN FINANCIAL AND F&M TRUST 0.00%1.00%2.00%3.00%4.00%5.00%6.00%20112012201320146/30/2015Delinquency (% of Gross Loans) TotalNon-Accrual30 - 89 Days22 CONTINUE TO IMPROVE OVERALL LOAN QUALITY
Slide 23: Loan Quality
LOAN QUALITY FRANKLIN FINANCIAL AND F&M TRUST $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,00020112012201320146/30/2015Non-Performing Assets* ($000’s) Non-AccrualOREOOther 90+ Past Due23 *Excludes restructured loans performing in accordance with the modified terms.
Slide 24: Loan Quality
LOAN QUALITY FRANKLIN FINANCIAL AND F&M TRUST $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,00020112012201320146/30/2015Net Charge-offs and Provision ($000’s) Net Charge-offsProvision24
Slide 25: 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 $11,00020112012201320146/30/2015ALLL ($000’s) ALLLSpecific25
Slide 26: Allowance
ALLOWANCE FRANKLIN FINANCIAL AND F&M TRUST 0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%100.00%20112012201320146/30/2015ALLL / Non-Performing Loans ALLL / Non-Perf. Loans26
Slide 27: Board and Management Succession Plans
BOARD AND MANAGEMENT SUCCESSION PLANS
Slide 28: Succession Planning
SUCCESSION PLANNING FRANKLIN FINANCIAL AND F&M TRUST 28 Tricia Lacey Greg Duffey •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
Slide 29: Further Development of Sales Culture
FURTHER DEVELOPMENT OF SALES CULTURE
Slide 30: Sales Culture
SALES CULTURE FRANKLIN FINANCIAL AND F&M TRUST 30 •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 E
Slide 31: Quality Loan Growth
QUALITY LOAN GROWTH
Slide 32: Loan Growth
LOAN GROWTH FRANKLIN FINANCIAL AND F&M TRUST 32 •Focus on the Cumberland County market •Strengthening of our commercial loan pipeline since April 2015 •Market disruptions from M&A activity creating opportunities
Slide 33: New Products
NEW PRODUCTS
Slide 34: New Products
http://uploads.webflow.com/54d241baa59e05340ae1f500/552e7ce78f4602c87dfca1ab_Samsung.pngNEW PRODUCTS FRANKLIN FINANCIAL AND F&M TRUST 34 EquityAdvantage Card http://mobileidworld.com/assets/Apple-Pay-1.jpgApply Pay, Samsung Pay and People Pay
Slide 35: Investor Relations
INVESTOR RELATIONS
Slide 36: Investor Relations
INVESTOR RELATIONS FRANKLIN FINANCIAL AND F&M TRUST 36 •Dividend Reinvestment and Stock Purchase Plan (DRIP) –$5,000,000 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 –2016 V
Slide 37: Interview with William E. Snell, Jr., President and CEO
37 Get to Know Your Community: Interview with William E. Snell, Jr., President and CEO, Franklin Financial Services Corp. This month, we speak with the President and CEO of Franklin Financial Services Corp (OTCQX: FRAF), William E. Snell, Jr. The Pennsylvania bank, which has more than $1 billion in
Slide 38: Interview continued
38 Continued from previous page OTCM: Franklin Financial upgraded its stock to trade on the OTCQX market last October. What caused you to make that move and what do you see are the benefits of trading on a premium market with high financial and disclosure standards? Mr. Snell: We believe OTCQX will
Slide 39: Interview continued
39 Continued from previous page Additionally, we are in the process of developing an outreach program that will specifically target local investors through a number of channels. The program will include participation in investor forums, in-person presentations, public relations and shareholder commu
Slide 40: Financial Performance
FINANCIAL PERFORMANCE
Slide 41: Deposit Growth
DEPOSIT GROWTH FRANKLIN FINANCIAL AND F&M TRUST 41 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%Franklin FinancialPeer Median
Slide 42: Cost of Deposits
COST OF DEPOSITS FRANKLIN FINANCIAL AND F&M TRUST 42 0.00%0.25%0.50%0.75%1.00%Franklin FinancialPeer MedianSource: SNL Financial as of 12/31/2014 or most recently reported data for Pennsylvania banks of $850 million to $1.5 billion in assets
Slide 43: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS FRANKLIN FINANCIAL AND F&M TRUST 43 Dollars in Thousands ($000’s) 2011* 2012* 2013* 2014* 6/30/2015 Total Assets $990,248 $1,027,363 $984,587 $1,001,488 $1,028,539 Investments $125,301 $133,328 $159,674 $171,751 $176,424 Net Loans $756,687 $743,200 $713,711 $717,420 $723,762
Slide 44: Financial Highlights
FINANCIAL HIGHLIGHTS FRANKLIN FINANCIAL AND F&M TRUST 44 Dollars in Thousands ($000’s) 2011 2012 2013 2014 6/30/2015 Net Interest Income $32,637 $32,252 $31,664 $31,614 $15,845 Provision $7,524 $5,225 $2,920 $764 $635 Noninterest Income $10,200 $9,451 $9,877 $10,861 $6,770 Noninterest Expense $28,33
Slide 45: Performance Measures
PERFORMANCE MEASURES FRANKLIN FINANCIAL AND F&M TRUST 45 2011 2012 2013 2014 6/30/2015 Return on Avg. Assets 0.66% 0.51% 0.61% 0.83% 1.07% Return on Avg. Equity 7.68% 6.00% 6.72% 8.44% 10.28% Efficiency Ratio1 63.46% 70.44% 72.01% 70.83% 66.11% Net Interest Margin 3.73% 3.50% 3.47% 3.56% 3.60% 1Non-
Slide 46: Shareholder Value
SHAREHOLDER VALUE FRANKLIN FINANCIAL AND F&M TRUST 46 2011 2012 2013 2014 6/30/2015 Diluted earnings per share $1.66 $1.32 $1.51 $2.00 $1.26 Market value per share $12.35 $14.00 $17.10 $22.00 $24.55 Current dividend yield 8.74% 4.86% 3.98% 3.09% 3.10% Regular cash dividends paid $1.08 $0.78 $0.68 $0
Slide 47: Safety & Soundness
SAFETY & SOUNDNESS FRANKLIN FINANCIAL AND F&M TRUST 47 2011 2012 2013 2014 6/30/2015 Risk-based capital ratio (Total) 12.14% 12.60% 14.24% 15.49% 15.73% Leverage ratio (Tier 1) 8.40% 8.29% 9.14% 9.69% 10.17% Tangible common equity ratio2 7.82% 8.01% 8.79% 9.51% 9.63% Nonperforming assets/total asset
Slide 48: 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 EquityConstructionandDevelopmentIncomeProducingOwnerOccupiedCommercial &IndustrialMunicipalitiesOther% Portfolio Composition 6/30/2015201420132012201148
Slide 49: Balance Sheet Growth
BALANCE SHEET GROWTH FRANKLIN FINANCIAL AND F&M TRUST 49 Dollars in Thousands ($000’s) 6/30/2015 6/30/2014 +/-% Total Assets $1,028,539 $1,022,551 +0.6% Investment Securities $176,424 $175,419 +0.6% Net Loans $723,762 $723,200 _ Deposits and Repos $916,059 $902,968 +1.5% Shareholders’ Equity $107,17
Slide 50: Net Income Growth
NET INCOME GROWTH FRANKLIN FINANCIAL AND F&M TRUST 50 Dollars in Thousands ($000’s) 6/30/2015 6/30/2014 +/-% Net Interest Income $15,845 $15,688 +0.9% Provision For Loan Losses $635 $464 +36.9% Noninterest Income $6,770 $5,243 +29.1% Noninterest Expense $15,150 $15,304 -1.0% Income Tax $1,472 $1,018
Slide 51: Non-Interest Income
NON-INTEREST INCOME FRANKLIN FINANCIAL AND F&M TRUST 51 Non-Interest Income as a % of Average Assets 2011 2012 2013 2014 6/30/2015 F&M Trust 1.11% 0.81% 0.89% 0.97% 1.12% Peer Group3 0.75% 0.68% 0.69% 0.68% 0.64% 3Peer Group data is derived from the Uniform Bank Performance Report for banks headquar
Slide 52: Thank You!
THANK YOU!
Slide 53: Stock Symbol: FRAF (OTCQX)
53 F:\Marketing\Logos and Graphics\FFSC Logo\Franklin Financial logo.jpgStock Symbol: FRAF (OTCQX) www.franklinfin.com www.fmtrustonline.com
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