Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Q2 2022 Earnings Presentation
29 slides from Franklin Financial Services's earnings presentation, Sep 2, 2022
Slide 1: Investor Presentation Second Quarter 2022 Highlights
Investor Presentation Second 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 The value of being a diversified, community bank with strong customer relationships was evident in the second quarter as growing loan and deposit balances helped to improve net interest income, and fee income grew from Investment and Trust services compared to the prior quarter. Despite
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 the largest independent, locally owned and operated bank 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
Slide 6: A Market Share Leader
A Market Share Leader Huntingdon County Fulton County Franklin County Cumberland County F&M Trust Headquarters Harrisburg 21 offices throughout Cumberland, Franklin, Fulton and Huntingdon Counties, PA #1 Deposit Market Share in Chambersburg (52.0%) #1 Deposit Market Share in Franklin County (39.0%)
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 Corporation
Well-Established Corporation Market share leader in core deposit, loan, and asset-management segments in economically stable and historically growing local markets New executive team members with extensive banking industry experience and market knowledge Consistently strong core operating fundamenta
Slide 10: YTD Financial Updates
YTD Financial Updates Net interest income was $12.1 million, up 12.0% over the prior year, inclusive of $746 thousand of PPP interest and fees Continue to adjust deposit rates in response to market conditions Net interest margin was 2.90% compared to 2.82% for the same period in 2021 Provision for l
Slide 11: YTD Financial Updates
YTD Financial Updates Loan-to-deposit ratio of 62% enhances liquidity position and allows for quality lending opportunities as the economy reopens Fee income from new mortgages originated for sale in the secondary market decreased $829 thousand over the same period in 2021 Deposits increased 6.0% ov
Slide 12: Digital Transformation
Digital Transformation Registered Zelle® users increased 24.7% and mobile banking users increased 5.7% from the same period in 2021 as customers transition to digital banking channels Introduced MX Personal Finance and Credit Score powered by SavvyMoney® as online and mobile banking enhancements Tre
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: Establishing a new corporate headquarters in Chambersburg, PA Adopting Salesforce, a digital sales platform to be used throughout the bank Expa
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 Second Quarter Ended June 30, 2022
Financial Updates Second Quarter Ended June 30, 2022 F&M TRUST Franklin Financial Services Corporation 16
Slide 17: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) 6/30/2022 3/31/2022 12/31/2021 12/31/2020 Total Assets $1,832,296 $1,767,061 $1,773,806 $1,535,038 Cash and Cash Equiv. $198,269 $173,709 $175,149 $57,146 Investments $510,282 $511,969 $530,292 $397,331 Net Loans $1,019,608 $985,927 $983,746 $992
Slide 18: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) Quarter Ended 6/30/2022 Quarter Ended 3/31/2022 Quarter Ended 6/30/2021 Interest Income $12,875 $11,534 $11,543 Interest Expense $764 $726 $720 Provision for Losses -- -- ($1,100) Noninterest Income1 $4,106 $3,873 $4,360 Noninterest Expense $1
Slide 19: Key Performance Measures
Key Performance Measures Percent (%) Quarter Ended 6/30/2022 Quarter Ended 3/31/2022 Quarter Ended 6/30/2021 Return on Avg. Assets 0.79 0.69 1.27 Return on Avg. Equity 11.11 7.96 14.67 Efficiency Ratio1 72.61 75.50 65.04 Net Interest Margin 2.90 2.66 2.82 Noninterest Inc2 / Operating Revenue 25.32 2
Slide 20: Balance Sheet Strength
Balance Sheet Strength Percent (%) Quarter Ended 6/30/2022 Quarter Ended 3/31/2022 Quarter Ended 6/30/2021 Risk-Based Capital Ratio (Total) 17.36 18.09 18.52 Leverage Ratio (Tier 1) 8.53 8.59 8.53 Common Equity Ratio (Tier 1) 14.30 14.94 15.16 Tangible Common Equity Ratio 6.19 7.29 8.51 Nonperformin
Slide 21: Market Statistics
Market Statistics Per Share Measure / Market Valuation Quarter Ended 6/30/2022 Quarter Ended 3/31/2022 Quarter Ended 6/30/2021 Diluted Earnings Per Share $0.80 $0.67 $1.19 Cash Dividend Yield 4.24% 3.81% 3.88% Regular Cash Dividends Paid $0.32 $0.32 $0.31 Dividend Payout Ratio 39.88% 47.18% 26.05% M
Slide 22: Balanced Revenue Model
Balanced Revenue Model Annualized Noninterest Income Source as a percentage of Average Assets as of June 30, 2022 2022 Franklin Financial Median PA Banks Peer1 Trust 0.43% 0.02% Service Charges on Deposits 0.15% 0.09% Gain on Sale of Loans 0.06% 0.06% Other 0.22% 0.29% Total Noninterest Income2 0.94
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 0.00 0.64 0.28 0.13 0.12 2019 2020 2021 6/30/20221 Franklin Financial Deposit Mix ($000’s) Retail Time $63,081 4% Demand Deposits $302,220 18% NOW & Other Transaction $579,036 34% MMDAs & Savings $734,850 44% F&M TRUST
Slide 24: Diversified Loan Portfolio
Diversified Loan Portfolio Loans Outstanding1 ($000’s) $52,290 $21,742 $2,932 $215 $1,000,000 $41,140 $41,846 $40,726 $38,227 $800,000 $105,639 $111,232 $116,956 $124,481 $600,000 $145,279 $151,232 $134,937 $122,073 $400,000 $212,030 $208,615 $209,520 $212,635 $200,000 $73,049 $74,407 $94,442 $103,0
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 $0 $118,046 $946,975 $1,065,021 $100,457 $111,742 $920,631 $1,032,373 $39,231 $104,881 $838,852 $943,733 $59,572 Dec-21 Mar-22 Jun-22 Brookerage Trust Total New Asse
Slide 26: Strong Credit Quality
Strong Credit Quality Nonperforming Assets1 / Assets (%) 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% 0.57% 0.42% 0.42% 0.31% 1231/2020 12/31/2021 3/31/2022 6/30/2022 F&M TRUST Franklin Financial Services Corporation 26 1Nonperforming assets = nonaccrual loans, loans 90 days past due and other real est
Slide 27: Stock Symbol: FRAF (Nasdaq)
Stock Symbol: FRAF (Nasdaq) www.franklinfin.com www.fmtrust.bank F&M TRUST Franklin Financial Services Corporation 2 7
Slide 28: Appendix
Appendix F&M TRUST Franklin Financial Services Corporation 2 8
Slide 29: GAAP / Non-GAAP Reconciliation
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) Quarter Ended 6/30/2022 Quarter Ended 3/31/2022 Quarter Ended 6/30/2021 Shareholders’ equity $ 121,797 137,136 151,156 Less intangible assets (9,016) (9,016) (9,016) Shareholders’ equity (non-GAAP) 112,781 128,120 142,140 Shar
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