Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Shareholder Meeting (April 2023)
68 slides from Franklin Financial Services's shareholder meeting presentation, Apr 25, 2023
Slide 1: Annual Meeting April 25, 2023
Annual Meeting April 25, 2023 F&M TRUST Franklin Financial Services Corporation
Slide 2: Call to Order
Call to Order G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 3: Invocation
Invocation Pam Johns F&M TRUST Franklin Financial Services Corporation
Slide 4: Minutes of Last Meeting
Minutes of Last Meeting G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 5: Forward Looking Statements
Forward Looking Statements In order to help you to better understand the business of the Company – where we have been and where we want to go – my remarks today (and those of other Company officers who will speak or respond to questions) will include forward looking statements relating to anticipate
Slide 6: Introduction
Introduction G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 7: Board of Directors
Board of Directors G. Warren Elliott Chairman of the Board Timothy (Tim) G. Henry President & CEO F&M TRUST Franklin Financial Services Corporation
Slide 8: Board of Directors
Board of Directors Martin R. Brown Kevin W. Craig Gregory A. Duffey F&M TRUST Franklin Financial Services Corporation
Slide 9: Board of Directors
Board of Directors Daniel J. Fisher Allan E. Jennings, Jr. Stanley J. Kerlin F&M TRUST Franklin Financial Services Corporation
Slide 10: Board of Directors
Board of Directors Donald H. Mowery Kimberly M. Rzomp Gregory I. Snook F&M TRUST Franklin Financial Services Corporation
Slide 11: Corporate Secretary, Counsel, Auditor and Chief Investment Officer
Nick Bybel Partner, Bybel Rutledge LLP Zoe Clayton Assistant Corporate Secretary – Judge of Elections Ian Kandray CPA, Crowe Warren Hurt Vice President and Chief Investment Officer F&M TRUST Franklin Financial Services Corporation
Slide 12: Chairman Comments
Chairman Comments G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 13: John M. Hull Memorial
John M. Hull Feb. 12, 1928-January 4, 2023 F&M TRUST Franklin Financial Services Corporation
Slide 14: G. Warren Elliott Chairman of the Board
G. Warren Elliott Chairman of the Board F&M TRUST Franklin Financial Services Corporation
Slide 15: F&M TRUST Franklin Financial Services Corporation
F&M TRUST Franklin Financial Services Corporation
Slide 16: G. Warren Elliott Chairman of the Board
G. Warren Elliott Chairman of the Board F&M TRUST Franklin Financial Services Corporation
Slide 17: F&M TRUST Franklin Financial Services Corporation
F&M TRUST Franklin Financial Services Corporation
Slide 18: G. Warren Elliott Chairman of the Board
G. Warren Elliott Chairman of the Board F&M TRUST Franklin Financial Services Corporation
Slide 19: How Pennsylvania banks compare to Silicon Valley Bank
FINANCE > How Pennsylvania banks compare to Silicon Valley Bank KDKA NEWS BY SETH KAPLAN UPDATED ON: MARCH 13. 2023 / 6:09 PM / CBS PITTSBURGH Nat'l rank by total deposits Bank name Location in Percentage of domestic Pennsylvania deposits FDIC insured 506 Ephrata National Bank Ephrata 77% 534 FNCB B
Slide 20: G. Warren Elliott Chairman of the Board
G. Warren Elliott Chairman of the Board F&M TRUST Franklin Financial Services Corporation
Slide 21: Shareholder invitation event
Franklin Financial Services Corporation F&M TRUST As a valued shareholder of Franklin Financial Services Corporation, you are cordially invited to join the Board of Directors and Senior Leadership for an opportunity to exchange information and learn more about the company’s vision for the future. Li
Slide 22: F&M TRUST Franklin Financial Services Corporation
F&M TRUST Franklin Financial Services Corporation
Slide 23: F&M TRUST Franklin Financial Services Corporation
F&M TRUST Franklin Financial Services Corporation
Slide 24: G. Warren Elliott Chairman of the Board
G. Warren Elliott Chairman of the Board F&M TRUST Franklin Financial Services Corporation
Slide 25: F&M TRUST Franklin Financial Services Corporation
F&M TRUST Franklin Financial Services Corporation
Slide 26: Election of Directors
Election of Directors G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 27: Director nominees
G. Warren Elliott Timothy G. Henry Stanley J. Kerlin Kimberly M. Rzomp F&M TRUST Franklin Financial Services Corporation
Slide 28: Say-On-Pay Vote
Say-On-Pay Vote G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 29: Say-On-Frequency Vote
Say-On-Frequency Vote G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 30: Ratification of Auditors
Ratification of Auditors G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 31: Polls Open
Polls Open G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 32: Economic Review & Outlook
Economic Review & Outlook Warren Hurt, Chief Investment Officer F&M TRUST Franklin Financial Services Corporation
Slide 33: 2022 – A Uniquely Challenging Year
Economic Review and Outlook Headlines: 2022 – A Uniquely Challenging Year Investment and Trust Services Chambersburg & Harrisburg - 1.888.264.6116 F&M TRUST Franklin Financial Services Corporation
Slide 34: 2022 Economic Review: Inflation
Economic Review and Outlook 2022 Economic Review: Inflation – Highest in 40 years FRED^ Q Consumer Price Index for All Urban Consumers: All Items in U.S. City Average Consumer Price Index for All Urban Consumers: All Items Less Food and Energy in U.S. City Average _ _ _ _ . June Peak= 9.1% Year End
Slide 35: 2022 Economic Review: Employment
Economic Review and Outlook 2022 Economic Review: Employment – Out of Balance Number of unemployed persons per job opening July 2009: 6.5 U.S. BUREAU OF LABOR STATISTICS Feb. 2023:0.6 F&M TRUST Franklin Financial Services Corporation
Slide 36: 2022 Economic Review: Fed Policy
Economic Review and Outlook 2022 Economic Review: Fed Policy – Record Tightening Current cycle 1994 1999 2004 1986 2015 1986 1994 1999 2004 2015 Current cycle Fed projections F&M TRUST Franklin Financial Services Corporation
Slide 37: 2022 Economic Review: Equity Markets
Economic Review and Outlook 2022 Economic Review: Equity Markets 2022 STOCK MARKET RETURNS DIA: -7.0% SPY: -18.1% RUT: -20.5% NASDAQ: -32.5% F&M TRUST Franklin Financial Services Corporation
Slide 38: 2022 Economic Review: Bond Markets
Economic Review and Outlook 2022 Economic Review: Bond Markets – Worst Year Ever? F&M TRUST Franklin Financial Services Corporation
Slide 39: 2022 Economic Review: Bond Market – How Bad Was it?
Economic Review and Outlook 2022 Economic Review: Bond Market – How Bad Was it? Bloomberg U.S. Aggregate intra-year declines vs. calendar year returns Despite average intra-year drops of 3.3%. annual returns positive in 42 of 47 years 16 3 1 2 3 6 33 8 15 22 15 3 8 15 9 16 7 10 -3 19 4 10 9 -1 12 8
Slide 40: 2022 Economic Review: Crypto Currency
Economic Review and Outlook 2022 Economic Review: Crypto Currency 0.0% ETH: -45.6% BTC: -53.2% DOGE -75.4% F&M TRUST Franklin Financial Services Corporation
Slide 41: Review: Vacation – Day 1
Economic Review and Outlook 2022 Review: Vacation – ”Let’s go to Yellowstone” - Day 1 F&M TRUST Franklin Financial Services Corporation
Slide 42: Review: Vacation – Day 3
Economic Review and Outlook 2022 Review: Vacation – ”Let’s go to Yellowstone” - Day 3 WEATHER Yellowstone-area floods strand visitors and residents, prompt evacuations June 14, 2022 4:14 PM ET F&M TRUST Franklin Financial Services Corporation
Slide 43: Economic Summary and Review
Economic Review and Outlook 2022 Review: Economic Summary and Review Economic Measure 2022 Result Inflation +9.1% Peak (Worst in 40 Years) GDP -1.6% to 3.2% (Two Consecutive Negative Quarters) S&P 500 -18% (Worst since 2008 Financial Crisis) Nasdaq -32.5% (2nd Worst since 2001 Tech Wreck) US Bond Pe
Slide 44: 2023 Outlook: Progress but More Work Ahead
Economic Review and Outlook 2023 Outlook: Progress but More Work Ahead F&M TRUST Franklin Financial Services Corporation
Slide 45: Banking Industry Update: The Seeds Were Planted Three Years Ago
Banking Industry Update The Seeds Were Planted Three Years Ago 2020 – Massive fiscal stimulus pumped into the economy (PPP, IRS checks, expanded unemployment, student debt suspension) Most of these funds land in bank deposit accounts Fed also drops borrowing rates to 0% and starts $95 billion/month
Slide 46: Banking Industry Update: 2022 Aggressive Fed Policy
Banking Industry Update How We Got Here: 2022 – Aggressive Fed Policy Stresses the Economy $7 trillion in new liquidity delivered into a supply constrained economy delivers predictable inflation Fed calls it “transitory” – their reaction is too late and too timid (25bp first hike) Behind the curve,
Slide 47: How We Got Here: Silicon Valley Bank
Banking Industry Update How We Got Here: Silicon Valley Bank (SVB) – Built to Fail 94% of SVB deposits were uninsured by FDIC insurance Attempted to raise $2.25 billion in preferred and common equity capital but failed. Lack of capital spooked uninsured depositors, triggering mass withdraws Only 2.1
Slide 48: F&M Trust in the Media
Banking Industry Update F&M Trust in the Media 1X News Talk 103.7 FM March 13 at 1:17 PM 0 • •• So how did we get to the point that one of the biggest banks in the United States collapses seemingly out of nowhere? Well it wasn't out of nowhere says F&M Trust Chief Investment Officer Warren Hurt. A f
Slide 49: 2023 Outlook: Dependent on Two Major Factors
Economic Review and Outlook 2023 Outlook: Dependent on Two Major Factors Fed Policy Decisions THE RATE HIKES WILL CONTINUE UNTIL JOBS HAVE BEEN DESTORYED Employment Equilibrium – Workers/Jobs U.S. BUREAU OF LABOR STATISTICS F&M TRUST Franklin Financial Services Corporation
Slide 50: 2023 Economic Outlook: Fed Policy
Economic Review and Outlook 2023 Economic Outlook: Fed Policy CHANGE IN US TREASURY YIELD CURVE F&M TRUST Franklin Financial Services Corporation
Slide 51: 2023 Economic Outlook: Inverted Yield Curve
Economic Review and Outlook 2023 Economic Outlook: Fed Policy MOST INVERTED YIELD CURVE IN FORTY YEARS FRED^ — 10-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity April 2023: -1.6% F&M TRUST Franklin Financial Services Corporation
Slide 52: 2023 Forecasting Challenge
Economic Review and Outlook 2023 Economic Outlook: 2023 Forecasting Challenge The Bull Case: Significant progress has been made in the inflation fight. Fed tightening cycle appears to be reaching a conclusion. Banking sector stability concerns appear to be behind us. Recent stress could lead to tigh
Slide 53: Financial Overview
Financial Overview Mark R. Hollar, Chief Financial Officer F&M TRUST Franklin Financial Services Corporation
Slide 54: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands ($000’s) 2022 2021 Change in $ Change in % Total Assets $1,699,579 $1,773,806 ($74,227) -4.2% Investments $487,247 $530,292 (43,045) -8.1% Net Loans1 $1,036,866 $983,746 $53,120 5.4% Deposits $1,551,448 $1,584,359 ($32,911) -2.1% Shareholders’ Equity $11
Slide 55: Financial Highlights
Financial Highlights Dollars in Thousands ($000’s) 2022 2021 Change in $ Change in % Net Interest Income $51,586 $44,671 $6,915 15.5% Provision for Loan Losses $650 ($2,100) $2,750 -131.0% Noninterest Income $15,250 $19,488 ($4,238) -21.7% Noninterest Expense $48,691 $43,245 $5,446 12.6% Net Income
Slide 56: Performance Measures
Performance Measures 2022 2021 Return on Avg. Assets 0.83% 1.17% Return on Avg. Equity 11.64% 13.20% Efficiency Ratio1 71.21% 66.12% Net Interest Margin 3.11% 2.88% F&M TRUST Franklin Financial Services Corporation Source: Franklin Financial Services Corporation Annual Report on Form 10-K filed with
Slide 57: Safety & Soundness
Safety & Soundness 2022 2021 Risk-Based Capital Ratio (Total) 17.21% 18.41% Leverage Ratio (Tier 1) 8.95% 8.52% Nonperforming Assets / Total Assets 0.01% 0.42% Allowance for Loan Loss as a % of Loans 1.35% 1.51% Net Recoveries (Charged-Off) Loans / Average Loans -0.15% 0.04% F&M TRUST Franklin Finan
Slide 58: Shareholder Value
Shareholder Value Per Share Measure / Market Valuation 2022 2021 Diluted Earnings Per Share $3.36 $4.42 Cash Dividend Yield1 3.55% 3.87% Regular Cash Dividends Paid $1.28 $1.25 Market Value Per Share $36.10 $33.10 Book Value Per Share $26.01 $35.36 Tangible Book Value Per Share2 $23.96 $33.34 Market
Slide 59: Quarterly Earnings Performance
Quarterly Earnings Performance Q1 Q2 Q3 Q4 Earnings per Sahre $3,012 $3,578 $4,631 $3,717 $3,292 $0.67 $0.80 $1.05 $0.84 $0.75 2022 2023 F&M TRUST Franklin Financial Services Corporation Dollars in thousands ($000’s), except per share.
Slide 60: President & CEO Comments
President & CEO Comments Timothy (Tim) G. Henry F&M TRUST Franklin Financial Services Corporation
Slide 61: Timothy G. Henry President & CEO
Timothy (Tim) G. Henry President & CEO F&M TRUST Franklin Financial Services Corporation
Slide 62: Questions
Questions Timothy (Tim) G. Henry F&M TRUST Franklin Financial Services Corporation
Slide 63: Polls Closed
Polls Closed G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 64: Report by Judge of Election
Report by Judge of Election Zoe R. Clayton F&M TRUST Franklin Financial Services Corporation
Slide 65: Announcement
Announcement G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 66: Thank You
Thank You G. Warren Elliott F&M TRUST Franklin Financial Services Corporation
Slide 67: Meeting Adjourned
Meeting Adjourned F&M TRUST Franklin Financial Services Corporation
Slide 68: GAAP / Non-GAAP Reconciliation
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) 2022 2021 Shareholders’ equity $ 114,197 $ 157,065 Less intangible assets (9,016) (9,016) Shareholders’ equity (non-GAAP) 105,181 148,049 Shares outstanding (in thousands) 4,390 4,441 Tangible book value (non-GAAP) 23.96 33.34
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