Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Q2 2024 Earnings Presentation
33 slides from Franklin Financial Services's earnings presentation, Aug 20, 2024
Slide 1: Second Quarter 2024 Highlights
Investor Presentation Second Quarter 2024 Highlights
Slide 2: Forward Looking Statements
Forward Looking StatementsCertain 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 cur
Slide 3: CEO Comments
CEO Comments For the first six months of 2024, I am pleased that we continued to grow the Company despite the ongoing challenge of an inverted yield curve and the level of uncertainty that pervaded the first two quarters with respect to inflation, the direction of interest rates, national and local
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 Financials wholly-owned subsidiary, F&M Trust, was founded in Chambersburg, PA in 1906 Total assets of the Company were $2.04 billion as of June 30, 2024 As
Slide 6: Trade Area Expansion
Trade Area Expansion22locations serving south central PA and Washington country MD Primary Trade Area Expanded Trade Area Offering Wealth Management, commercial Financing ,and Residential Lending Services
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 Officer42 2016 Fulton, Centra Bank, Blue Ridge 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 36 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 +11.1% $2.039 Billion as of 6/30/2024 $1.836 Billion as of 12/31/2023 Net Loans +4.9% $1.301 Billion as of 6/30/2024 $1.241 Billion as of 12/31/2023 Assets Under Management +3.3% $1.271 Billion as of 6/30/2024 $1.230
Slide 10: Non-Interest Income
Non-Interest Income (000’s) Q2 2024 20% 13% 13% 3% 51% $4.4MM Q2 2024 Q2 2023 Change Wealth Management Fees 2,242 1,959 283 Gain on Sale of Loans116 45 71 Deposit Service Fees 572 616 (44) Debit Card Income 571 547 24 Other 883 887 (4) Total 1 4 ,384 4,054 330 1 Excludes net securities gains/losses
Slide 11: Net Interest Income Growth
Net Interest Income Growth Net interest income for the quarter ended 6/30/24 was $14.2 million compared to $13.2 million for the same period in 2023 Net interest margin was 2.99% for the quarter ended 6/30/24 compared to 3.30% for the same period in 2023 Net Interest Income ($000’s) $13.2MM 6/30/202
Slide 12: Outlook for 2024
Outlook for 2024The Company is continuing to grow by leveraging our past investments in human capital as well as our physical, technological, and sales infrastructure including: Integration of Salesforce into sales, operations, and marketing Expanding our presence in the Pennsylvania and Maryland ma
Slide 13: Outlook for 2024
Outlook for 2024Commercial loan growth will continue due to the integration of new commercial relationship managers, improved underwriting processes, and growth into new regional markets for the bank Deposit balances should continue to grow through the third quarter subject to the bank’s efforts to
Slide 14: Outlook for 2024
Outlook for 2024 Fee income from the Wealth Management division should continue to grow due to focus on the addition of new clients and gathering new assets from existing clients. Overall growth should only be moderated by the general performance of both the bond and equity markets Along with drivin
Slide 15: 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 16: Financial Updates Second Quarter Ended June 30, 2024
Financial Updates Second Quarter Ended June 30, 2024
Slide 17: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) Quarter Ended 6/30/2024 Quarter Ended 3/31/2024 Year Ended 12/31/2023 Year Ended 12/31/2022 Total Assets $2,039,126 $2,011,614 $1,836,039 $1,699,579 Cash and Cash Equiv. $179,727 $182,570 $23,140 $64,899 Investments AFS $454,465 $462,951 $472,503
Slide 18: Investment AFS Portfolio
Investment AFS Portfolio $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 $65,950 $150,935 $24,239 $155,455 $90,257 12/31/2022 $104,005 $132,491 $23,198 $138,618 $74,091 12/31/2023 $100,607 $128,326 $23,452 $137,456 $73,110 3/31/2024 $99,273 $123,783 $23,688 $134,701 $73,020 6/30/2024 $(61,4
Slide 19: Diversified Loan Portfolio
Diversified Loan Portfolio Loans Outstanding1 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000$0 $37,486 $113,629 $118,443 $218,468 $106,921 $456,198 $70,609 $35,373 $160,612 $115,018 $275,216 $119,365 $551,287 $97,811 $34,507 $180,555 $114,052 $278,023 $117,587 $553,116 $35,637
Slide 20: Largest Commercial Real Estate Concentrations
Largest Commercial Real Estate Concentrations CRE Concentrations$600,000$500,000 $400,000$300,000$200,000 $100,000 $0 $33,410 $43,812 $55,428 $58,382 $81,283 $96,515 12/31/2022 $48,370 $62,439 $68,478 $87,137 $80,670 $120,180 12/31/2023 $50,189 $63,036 $76,714 $87,709 $87,091 $127,740 3/31/2024 $50,
Slide 21: Strong Credit Quality
Strong Credit Quality Nonperforming Assets1 / Assets (%) 0.20% 0.15% 0.10% 0.05% 0.00% 0.01% 12/31/2022 0.01% 12/31/2023 0.02% 3/31/2024 0.04% 6/30/2024
Slide 22: Deposits by Category
Deposits by Category Deposits by Category $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,00 $400,00 $200,000 $0 $57,390 $496,533 $698,294 $299,231 12/31/2022 8.5% $132,446 $454,517 $677,965 $273,050 8.9% 12/31/2023 $171,909 $402,978 $692,532 $291,893 10.3% $183,680 $ 401,174 $718,640 $282
Slide 23: Deposit Mix
Deposit Mix Cost of Deposits (%)Franklin Financial Deposit Mix ($000’s) 11.8 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2021 0.12 2022 0.23 2023 1.23 6/30/2024 1.74 MMDAs & Savings $718,640 45% Retail Time $183,680 12% Demand Deposits $ 282,964 18% Interest Bearing Checking $401,174 25%
Slide 24: Liquidity Available at June 30, 2024
Liquidity Available at June 30, 2024 Dollars in Thousands (000’s) Liquidity Source Capacity Outstanding Available Federal Home Loan Bank $538,487 $ 240,000 $298,487 Federal Reserve Bank Discount Window $54,048 $ – $54,048 Correspondent Banks $76,000 $ –$76,000 Total$668,535 $240,000 $428,535
Slide 25: 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$0 $135,423 $1,094,779 $1,230,202 $217,891 12/31/2023 $151,465 $1,107,650 $1,259,115 $24,086 3/31/2024 $143,736 $1,131,730 $1,275,472 $60,914 6/30/2024 Brokerage Trust
Slide 26: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) Quarter Ended 6/30/2024 Quarter Ended 3/31/2024 Quarter Ended 6/30/2023 Interest Income $24,732 $23,809 $18,511 Interest Expense$10,521 $10,256 $5,316 Provision for Credit Losses $546 $452 $532 Noninterest Income1 $4,384$4,229 $4,054 Nonintere
Slide 27: Key Performance Measures
Key Performance Measures Percent (%) Quarter Ended 6/30/2024Quarter Ended 3/31/2024 Quarter Ended 6/30/2023 Return on Avg. Assets 0.590.670.70 Return on Avg. Equity 9.1210.21 9.82 Efficiency Ratio176.03 73.76 72.17 Net Interest Margin 2.99 2.883.30 Noninterest Inc2 / Operating Revenue23.58 23.78 23.
Slide 28: Balance Sheet Strength
Balance Sheet Strength Percent (%) Quarter Ended 6/30/2024 Quarter Ended 3/31/2024 Quarter Ended 6/30/2023 Risk-Based Capital Ratio (Total) 14.66 14.53 16.84 Leverage Ratio (Tier 1) 8.38 8.329.39 Common Equity Ratio (Tier 1) 12.01 11.91 13.88 Tangible Common Equity Ratio 6.29 6.25 6.41Tangible Commo
Slide 29: Market Statistics
Market Statistics Per Share Measure / Market Valuation Quarter Ended 6/30/2024 Quarter Ended 3/31/2024 Quarter Ended 6/30/2023 Diluted Earnings Per Share $0.66 $0.77 $0.68 Cash Dividend Yield 4.53% 4.89% 4.61% Regular Cash Dividends Paid $0.32 $0.32 $0.32 Dividend Payout Ratio 46.39% 41.62%47.08% Ma
Slide 30: Stock Symbol: FRAF (Nasdaq)
Stock Symbol: FRAF (Nasdaq) www.franklinfin.com www.fmtrust.bank
Slide 31: Appendix
Appendix FEM f
Slide 32: GAAP / Non-GAAP Reconciliation Tangible Book Value
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) Quarter Ended 6/30/2024 Quarter Ended 3/31/2024 Quarter Ended 6/30/202 Shareholders’ equity $136,809 $134,237 $119,770 Less intangible assets (9,016) (9,016) (9,016) Shareholders’ equity (non-GAAP) 127,793 125,221110,754 Less
Slide 33: GAAP / Non-GAAP Reconciliation Efficiency Ratio
GAAP / Non-GAAP Reconciliation Efficiency Ratio Quarter Ended 6/30/2024Quarter Ended 3/31/2024Quarter Ended 6/30/2023Noninterest expense$14,336$13,304$12,648 Net interest income14,21113,55313,195Plus tax equivalent adjustment to net interest income 261254276Plus noninterest income, net of securities
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