Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Q4 2023 Earnings Presentation
32 slides from Franklin Financial Services's earnings presentation, Mar 27, 2024
Slide 1: Fourth Quarter 2023 Highlights
Investor Presentation Fourth Quarter 2023 Highlights F&M TRUST Frankling 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 2023 was a challenging year for financial institutions across the country, but we operated profitably, paid a solid dividend to our shareholders, and made investments that will support the future growth and continued success of Franklin Financial Services Corporation. Some key changes d
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 employees, customers, communities, and shareholders. We strive to be a fin
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 $1.84 billion as of December 31, 20
Slide 6: Trade Area Expansion
Trade Area Expansion 22 Locations Serving South Central PA and Washington County MD Primary Trade Area Expanded Trade are Offering Wealth Management, Commercial Financing, and Residential Lending Services F&M TRUST Franklin Financial Services Corporation 6
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: A Year of Growth
A Year of Growth SELECTED HIGHLIGHTS Growth Percentage KEY STATISTICS Total Assets +8% $1.836 Billion as of 12/31/2023 $1.700 Billion as of 12/31/2022 Net Loans +19.7% $1.240 Billion as of 12/31/2023 $1.036 Billion as of 12/31/2022 Assets Under Management +20.6% $1.230 Billion as of 12/31/2023 $1.02
Slide 10: Non-Interest Income
Non-Interest Income (Dollars in thousands) 2023 23% 47% 1% 16% 13% $16.0 MM 2023 2022 Change Wealth Management Fees 7,512 7,152 360 Gain on Sale of Loans 199 770 (571) Deposit Service Charges/Fees 2,492 2,527 (35) Debit Card Income 2,157 1,868 289 Other 3,610 3,024 586 Total 15,9701 15,3412 629 1 Do
Slide 11: Net Interest Margin Expansion
Net Interest Margin Expansion Net interest income for 2023 was $53.6 million compared to $51.6 million in 2022 Net interest margin was 3.31% for 2023 compared to 3.11% in 2022 Net interest margin was 3.24% for the fourth quarter compared to 3.58% for the same period in 2022 Net Interest Margin 3.50%
Slide 12: Outlook for 2024
Outlook for 2024 The Company will continue building for the future by leveraging our investments in human capital as well as our physical, technological, and sales infrastructure including: Further integration of Salesforce into sales, operations, and marketing Expanding our presence in the Pennsylv
Slide 13: Outlook for 2024
Outlook for 2024 Deposit balances will moderate due to the tension between rising rates and the bank’s efforts to control interest costs and manage liquidity needs Market pressure on deposit rates and competition for high-quality lending relationships may have an adverse effect on NIM The negative e
Slide 14: Summary
Summary The Company continues to be well capitalized and sufficiently liquid to successfully develop new Commercial relationships Asset quality is good, and the Company is well provisioned for losses should they occur in future quarters due to economic factors The Company is actively working to brin
Slide 15: Financial Updates Fourth Quarter Ended December 31, 2023
Financial Updates Fourth Quarter Ended December 31, 2023 F&M TRUST Franklin Financial Services Corporation 15
Slide 16: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) 12/31/2023 9/30/2023 12/31/2022 9/30/2022 Total Assets $1,836, 039 $1,827,910 $1,699,579 $1,847,162 Cash and Cash Equiv. $23,140 $73,953 $64,899 $210,156 Investments $475,305 $458,662 $487,247 $492,467 Net Loans $1,240,933 $1,191,322 $1,036,866 $
Slide 17: Investment Portfolio
Investment Portfolio $20,000 $10,000 $0 $12,571 $4,094 ($61,497) ($49,416) -$10,000 $600,000 $8,453 $30,674 $65,950 $104,005 -$20,000 $500,000 $108,571 $117,685 $150,935 $132,591 -$30,000 $400,000 $20,288 $24,934 $24,239 $23,198 -$40,000 $300,000 $247,054 $212,227 $155,455 $138,618 -$50,000 $200,000
Slide 18: Diversified Loan Portfolio
Diversified Loan Portfolio Loans Outstanding1 ($000’s) 10% 9% 8% $1,400,000 $52,290 $21,742 $37,486 $35,373 7% $1,200,000 $41,140 $41,846 $113,629 $160,612 6% $1,000,000 $105,639 $111,232 $118,443 $115,018 5% $800,000 $145,279 $150,232 $218,468 $275,216 4% $600,000 $212,030 $208,615 $106,921 $119,63
Slide 19: Largest Commercial Real Estate Concentrations
Largest Commercial Real Estate Concentrations CRE Concentrations ($000’s) $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $31,357 $31,259 $33,410 $48,370 $200,000 $60,343 $49,160 $43,812 $62,439 $150,000 $35,556 $30,938 $55,428 $68,478 $100,000 $54,153 $50,105 $58,382 $87,137 $50,000 $72,079 $
Slide 20: Strong Credit Quality
Strong Credit Quality Nonperforming Assets1 / Assets (%) 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% 0.30% 0.01% 0.01% 0.01% 9/30/2022 12/31/2022 9/30/2023 12/31/2023 1Nonperforming assets = nonaccrual loans, loans 90 days past due and other real estate owned F&M TRUST Franklin Financial Service
Slide 21: Deposits by Category
Deposits by Category Deposits by Category ($000’s) $1,600,000 $1,400,000 $1,200,000 $1,000,000 $59,858 $57,390 $89,742 $132,446 $800,000 $592,636 $496,553 $445,003 $454,517 $600,000 $734,771 $698,294 $691,005 $677,965 $400,000 7.7% 8.5% 8.7% 8.9% $200,000 $317,719 $299,231 $287,385 $273,050 9/30/202
Slide 22: Deposit Mix
Deposit Mix Cost of Deposits (%) 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 0.28 0.12 0.23 1.23 2020 2021 2022 2023 Franklin Financial Deposit Mix ($000’s) 1 Retail Time $132,446 9% Demand Deposits $273,050 18% Interest Bearing Checking $454,517 29% MMDAs & Savings $677,965 44% 1As of 12/31/2023 F&M TR
Slide 23: Liquidity Available at December 31, 2023
Liquidity Available at December 31, 2023 Dollars in Thousands (000’s) Liquidity Source Capacity Outstanding Available Federal Home Loan Bank1 $484,163 $ 40,000 $444,163 Federal Reserve Bank Discount Window $55,496 $ – $55,496 Fed Bank Term Funding Program $91,733 $90,000 $1,733 Correspondent Banks $
Slide 24: Wealth Management Total and New Assets Under Management
Wealth Management Total and New Assets Under Management ($000’s) $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $127,807 $997,471 $1,105,279 $82,167 $126,394 $963,828 $1,090,222 $123,055 $135,423 $1,094,779 $1,230,202 $217,891 6/30/2023 9/30/2023 12/31/2023 Brokerage Trust Tota
Slide 25: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) Quarter Ended 12/31/2023 Quarter Ended 9/30/2023 Quarter Ended 12/31/2022 Interest Income $21,516 $20,154 $16,997 Interest Expense $7,616 $6,447 $2,392 Provision for Losses $788 $866 650 Noninterest Income1 $4,044 $4,006 $3,690 Noninterest Exp
Slide 26: Key Performance Measures
Key Performance Measures Percent (%) Quarter Ended 12/31/2023 Quarter Ended 9/30/2023 Quarter Ended 12/31/2022 Return on Avg. Assets 0.75 0.86 0.84 Return on Avg. Equity 11.81 12.73 13.58 Efficiency Ratio1 72.22 67.86 70.42 Net Interest Margin 3.24 3.29 3.58 Noninterest Inc2 / Operating Revenue 22.5
Slide 27: Balance Sheet Strength
Balance Sheet Strength Percent (%) Quarter Ended 12/31/2023 Quarter Ended 9/30/2023 Quarter Ended 12/31/2022 Risk-Based Capital Ratio (Total) 14.45 15.16 17.21 Leverage Ratio (Tier 1) 9.01 9.10 8.95 Common Equity Ratio (Tier 1) 11.82 12.43 14.22 Tangible Common Equity Ratio1 6.74 5.81 6.22 Tangible
Slide 28: Market Statistics
Market Statistics Per Share Measure / Market Valuation Quarter Ended 12/31/2023 Quarter Ended 9/30/2023 Quarter Ended 12/31/2022 Diluted Earnings Per Share $0.79 $0.88 $0.84 Cash Dividend Yield 4.06% 4.49% 3.55% Regular Cash Dividends Paid $0.32 $0.32 $0.32 Dividend Payout Ratio 40.23% 36.07% 37.77%
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: Tangible Book Value
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) Quarter Ended 12/31/2023 Quarter Ended 9/30/2023 Quarter Ended 12/31/2022 Shareholders’ equity $132,136 $114,769 $114,197 Less intangible assets (9,016) (9,016) (9,016) Tangible Shareholders’ equity (non-GAAP) 123,120 105,753
Slide 32: GAAP / Non-GAAP Reconciliation: Efficiency Ratio
GAAP / Non-GAAP Reconciliation Efficiency Ratio Quarter Ended 12/31/2023 Quarter Ended 9/30/2023 Quarter Ended 12/31/2022 Noninterest expense $13,148 $12,198 $13,196 Net interest income 13,900 13,707 14,605 Plus tax equivalent adjustment to net interest income 261 262 445 Plus noninterest income, ne
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