Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Investor Presentation (January 2020)
37 slides from Franklin Financial Services's investor presentation, Jan 28, 2020
Slide 1: Investor Presentation January 2020
Investor Presentation January 2020 Franklin Financial Services Corporation F&M Trust
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: Overview of Franklin Financial
Overview of Franklin Financial F&M Trust founded in 1906 Franklin Financial formed in 1983 Headquartered in Chambersburg, PA 22 offices throughout Cumberland, Franklin, Fulton and Huntingdon Counties, PA Total assets of the Company were $1.3 billion as of December 31, 2019 As of December 31, 2019 Fr
Slide 4: The Foundation for Success: Our Beliefs
The Foundation for Success: Our Beliefs Mission Statement Delivering the right financial solutions … from people you know and trust. Vision Statement We are committed to remaining independent by growing our bank to meet the increasing needs of our customers, communities and shareholders. We will be
Slide 5: Why Franklin Financial?
Why Franklin Financial? A market share leader in core deposit, loan and asset management segments in economically strong and growing markets Deep management team with extensive banking industry experience mixed with local market knowledge Consistently strong core operating fundamentals with a divers
Slide 6: A Market Share Leader
A Market Share Leader #1 Deposit Market Share in Chambersburg (48.2%) #1 Deposit Market Share in Franklin County (34.1%) #2 Deposit Market Share in Fulton County (34.6%) #1 in Funded Residential Loans for Fulton County #7 in Funded Residential Loans for Franklin County Franklin Financial Services Co
Slide 7: Economically Strong and Growing Markets
Economically Strong and Growing Markets Huntingdon County Median household income expected to grow 10.8% by 2024 Fulton County Median household income expected to grow 8.8% by 2024 Two of six branches in the entire county Franklin County Median household income expected to grow 8.8% by 2024 November
Slide 8: A Deep and Cohesive Management Team
A Deep and Cohesive Management Team Timothy G. Henry President & CEO Mark R. Hollar CFO & Treasurer Lorie Heckman Risk Management Steven D. Butz Commercial Services Susan L. Rosenberg Investment & Trust Services Patricia A. Hanks Retail Services Ronald L. Cekovich Information & Operations Karen K. C
Slide 9: With Extensive Industry & Local Knowledge
With Extensive Industry & Local Knowledge Years of Banking Experience Joined F&M Trust Prior Experience Timothy G. Henry President & Chief Executive Officer 38 2016 Fulton, Centra Bank, BlueRidge Bank, Susquehanna Bank, BB&T Mark R. Hollar Senior Vice President, Chief Financial Officer & Treasurer 3
Slide 10: Financial Performance Based On…
Financial Performance Based On… Balanced revenue business model Stable, low cost funding mix and strong liquidity position A well diversified loan portfolio with an increasing emphasis on small business relationships without reliance on participation loans Strong credit quality metrics Operating eff
Slide 11: YTD Review Through December 31, 2019
YTD Review Through December 31, 2019 Earnings for the three months ending December 31, 2019 were $4.4 million and $16.1 million for the year-to-date period ended December 31, 2019. Earnings for the fourth quarter and year-to-date period include a $597 thousand gain on the sale of a bank property and
Slide 12: YTD Review Through December 31, 2019
YTD Review Through December 31, 2019 The Company and Bank remained well-capitalized with a total risk-based capital ratio of approximately 16.0% as of December 31, 2019. Commenced listing of common stock on the Nasdaq Stock Market on May 1, 2019 and entered the Russell 2000 Index on July 1, 2019. Fr
Slide 13: Strategic Initiatives to Build Shareholder Value
Strategic Initiatives to Build Shareholder Value Strengthen Brand Recognition and Awareness Enhance Sales and Service Culture Extend Delivery Channels Deepen Customer Relationships Franklin Financial Services Corporation F&M Trust 13
Slide 14: Strengthen Brand Recognition and Awareness
Strengthen Brand Recognition and Awareness Advance “Banking Done Your Way” concept and messaging Feature the bank’s diverse financial services and tools that allow customers to do their banking wherever and whenever they want Build on the awareness of the F&M Trust brand created in Cumberland County
Slide 15: Enhance Sales and Service Culture
Enhance Sales and Service Culture Integrated process to continue building sales and service culture Assessment of sales training program showing quantifiable results Continuation of in-house “Reach for M.O.R.E.” initiative to improve service levels with external and internal customers Execution of e
Slide 16: Extend Delivery Channels
Extend Delivery Channels Launched a new website, fmtrust.bank in the fourth quarter of 2018, that features streamlined menus, simplified navigation and more information on the bank’s products and services The first bank in South Central Pennsylvania to transition to .bank which is a standardized, ve
Slide 17: Deepen Customer Relationships
Deepen Customer Relationships Additional resources across all markets to focus on client support and relationship expansion Introduction of Deposit Product Officer position reporting to President / CEO intended to coordinate and drive efforts to grow low-cost core deposits across all business lines
Slide 18: Results Through December 31, 2019
Results Through December 31, 2019 Total deposits increased 4.0% over 2018 to $1.1 billion 241 new mortgage originations for $43.9 million, an increase of 115.3% from 2018 Investment & Trust Services revenue increased 8.3% to $6.1 million 1,316 new Mobile Checking accounts with $1,716,142 in deposits
Slide 19: Outlook for 2020
Outlook for 2020 Anticipating a challenging environment for deposits as the market adjusts to changing rate environment; the Bank will remain focused on core deposit growth Moderate loan demand through 2020 and strong competition to meet that demand Growth in non-interest income driven by increased
Slide 20: Outlook for 2020
Outlook for 2020 Continued investment in infrastructure and people to grow the franchise – new positions include: Commercial Services Market Manager for the Cumberland County / Capital Region Commercial Loan Review Officer Deposit Product Officer Retirement Plan Services Relationship Manager Mortgag
Slide 21: A Balanced Revenue Model
A Balanced Revenue Model Noninterest Income Source as a percentage of Average Assets 2019 Franklin Financial Median PA Banks Peer1 Trust 0.47% 0.06% BOLI 0.04% 0.05% Insurance / Investment Banking / Brokerage 0.02% 0.04% Loan Fees & Charges 0.08% 0.02% Service Charges on Deposits 0.24% 0.17% Other2
Slide 22: Stable, Low Cost Funding
Stable, Low Cost Funding Cost of Funds (%) 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2015 0.26 2016 0.23 2017 0.25 2018 0.40 2019 0.64 Franklin Financial PA Banks (Median) Franklin Financial Deposit Mix ($000’s) MMDAs & Savings $512.10 45.5% Retail Time $89.30 7.9% Demand Deposits $192.10 17.1% NOW & Other
Slide 23: A Growing and Diversified Loan Portfolio
A Growing and Diversified Loan Portfolio Loans Outstanding ($000’s) $1,000,000 $800,000 $600,000 $400,000 $200,000 $ 2015Y $242,656 $100,260 $212,852 $107,101 $70,113 $49,495 2016Y $279,350 $108,797 $219,323 $153,158 $84,572 $49,213 2017Y $312,048 $101,704 $209,247 $176,384 $95,695 $49,064 2018Y $38
Slide 24: Investment and Trust Services: New Assets Under Management
Investment and Trust Services YTD New Assets Under Management ($000’s) $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 January February March April May June July August September October November December 2017 2018 2019 Franklin Financial Services Corporation F&M
Slide 25: Investment and Trust Services: Total Number of Accounts
Investment and Trust Services Total Number of Accounts 1,800 1,775 1,750 1,725 1,700 1,675 1,650 January February March April May June July August September October November December 2017 2018 2019 Franklin Financial Services Corporation F&M Trust 25
Slide 26: Investment and Trust Services: Trust & Brokerage AUM
Investment and Trust Services Trust & Brokerage Assets Under Management ($000’s) $940,000 $920,000 $900,000 $880,000 $860,000 $840,000 $820,000 $800,000 $780,000 $760,000 $740,000 January February March April May June July August September October November December 2017 2018 2019 Franklin Financial
Slide 27: Investment and Trust Services: Total Assets Under Management
Investment and Trust Services Total Assets Under Management ($000’s) $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $200,000 $100,000 $0 $837,398 $873,781 $880,616 $886,915 $862,379 $888,933 $890,559 $882,847 $884,764 $891,411 $891,411 $918,927 January February March April May June
Slide 28: Strong Core Credit Quality
Strong Core Credit Quality Nonperforming Assets1 / Assets (%) 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 1.18% 0.92% 0.45% 0.44% 0.31% 2015Y 2016Y 2017Y 2018Y 2019Y Franklin Financial Services Corporation F&M Trust 28 1 Nonperforming assets = nonaccrual loans, loans 90 days past due and other r
Slide 29: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) 2015Y 2016Y 2017Y 2018Y 2019Y FRAF CAGR1 Total Assets $1,035,295 $1,127,443 $1,179,813 $1,209,587 $1,270,923 5.26% Cash and Cash Equiv. $39,166 $36,665 $58,603 $52,957 $83,828 20.95% Investments $160,545 $145,925 $127,336 $131,846 $197,084 5.26%
Slide 30: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) 2015Y 2016Y 2017Y 2018Y 2019Y FRAF CAGR1 Interest Income $34,615 $36,979 $39,885 $44,868 $49,235 9.21% Interest Expense $2,371 $2,245 $2,491 $4,214 $7,113 31.61% Noninterest Income2 $11,630 $11,578 $12,212 $12,564 $15,102 6.75% Noninterest Exp
Slide 31: Key Performance Measures
Key Performance Measures Percent (%) 2015Y 2016Y 2017Y 2018Y 2019Y Median 2019Y PA Banks Peer2 Return on Avg. Assets 1.00 0.74 0.19 0.52 1.29 1.00 Return on Avg. Equity 9.52 7.04 1.80 5.34 13.17 9.29 Efficiency Ratio1 66.44 65.58 82.26 68.27 65.36 64.44 Net Interest Margin 3.59 3.62 3.72 3.78 3.68 3
Slide 32: Well-Positioned For Growth
Well-Positioned For Growth Percent (%) 2015Y 2016Y 2017Y 2018Y 2019Y Median 2019Y PA Banks Peer1 Risk-Based Capital Ratio (Total) 16.02 15.55 15.19 15.06 16.20 13.62 Leverage Ratio (Tier 1) 10.37 10.02 9.64 9.68 9.72 9.79 Common Equity Ratio (Tier 1) 14.76 14.29 13.93 13.80 14.95 11.91 Nonperforming
Slide 33: Consistent Performance in Total Return
Consistent Performance in Total Return $250 $200 $150 $100 $50 12/31/2014 12/31/2015 12/31/2016 12/ 31/2017 12/31/2018 12/31/2019 Franklin Financial Services Corporation NASDAQ Composite Index SNL Mid Atlantic Bank Index Peer Group Franklin Financial Services Corporation F&M Trust 33 Source: S&P Glo
Slide 34: Balanced Return and Shareholder Value
Balanced Return and Shareholder Value Per Share Measure 2015Y 2016Y 2017Y 2018Y 2019Y Market Value Per Share1 $23.50 $28.60 $37.36 $31.50 $38.69 Diluted Earnings Per Share $2.40 $1.88 $0.50 $1.39 $3.67 Cash Dividend Yield2 3.15% 2.87% 2.49% 3.33% 3.10% Regular Cash Dividends Paid $0.74 $0.82 $0.93 $
Slide 35: Improving Value Proposition
Improving Value Proposition Market Valuation 12/31/2018 12/31/2019 Median PA Bank Peers1 Market Value (Per Share) $31.50 $38.69 $26.20 Market Cap ($M) $138.7 $168.40 $170.8 Price / Book (%) 117.3% 132.1% 113.0% Price / Tangible Book (%) 127.0% 142.1% 129.2% Price / LTM EPS (X) 22.66 10.54 13.50 Tang
Slide 36: GAAP / Non-GAAP Reconciliation
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 Shareholders’ equity 111,376 116,493 115,144 118,396 $ 127,528 Less intangible assets (9,016) (9,016) (9,016) (9,016) (9,016) Shareholders’ equity (non-GAAP) 102,360 107,4
Slide 37: Thank You
Thank You Stock Symbol: FRAF (Nasdaq) www.franklinfin.com www.fmtrust.bank Franklin Financial Services Corporation F&M Trust 37
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