Franklin Financial Services Corporation · NASDAQ:FRAF
Franklin Financial Services — Q4 2021 Earnings Presentation
29 slides from Franklin Financial Services's earnings presentation, Mar 24, 2022
Slide 1: Investor Presentation Fourth Quarter 2021 Highlights
Investor Presentation Fourth Quarter 2021 Highlights
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 For Franklin Financial, the fourth quarter was a transitional quarter in many ways as we start to leave behind the immediate effects of the pandemic and continue to prepare ourselves for the future. Earnings in the fourth quarter were good and capped a record year of earnings for the co
Slide 4: CEO Comments (continued)
CEO Comments (continued) 2022 will be a year for repositioning the bank for future growth. Along with moving into a new headquarters building, we are expanding into Maryland by establishing a full-service community office in Hagerstown. We are renovating outdated community offices in both the Chambe
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 Cumberladn Country 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 Executive team has extensive banking industry experience mixed with local market knowledge Consistently strong core operating fundamenta
Slide 10: YTD Financial Updates
YTD Financial Updates Net interest income was $44.7 million, up 6.5% over the prior year, inclusive of $3.3 million interest and fees from PPP Continue to adjust deposit rates in response to market conditions Net interest margin was 2.88% compared to 3.21% for the same period in 2020 As pandemic-rel
Slide 11: YTD Financial Updates
YTD Financial Updates Maintained the dividend of $0.32 per share for the first quarter of 2022 Loan-to-deposit ratio of 63% enhances liquidity position and allows for quality lending opportunities as the economy reopens New mortgage originations totaled $127.6 million, an increase of 2.4% from 2020,
Slide 12: YTD Financial Updates
YTD Financial Updates Deposits increased 17.0% over the same period in 2020, with money management accounts and interest-bearing checking products showing the largest increases Introduced new retail checking account lineup that will generate additional fee income and provide valuable benefits and in
Slide 13: Outlook for the Remainder of 2022
Outlook for the Remainder of 2022 Adapting to the challenges and changes brought on by the pandemic over the past two years Building for the future by making investments in our physical, technological, and sales infrastructure including: Establishing a new corporate headquarters in Chambersburg, PA
Slide 14: Outlook for the Remainder of 2022
Outlook for the Remainder of 2022 Increased competition for quality credit in the market will challenge loan demand Continued pressure on net interest margin as low interest rate environment continues Residential mortgage business will continue to grow though likely at a slower rate than 2021 as opp
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 Fourth Quarter Ended December 31, 2021
Financial Updates Fourth Quarter Ended December 31, 2021 16 F&M TRUST Franklin Financial Services Corporation
Slide 17: Balance Sheet Highlights
Balance Sheet Highlights Dollars in Thousands (000’s) 12/31/2021 9/30/2021 12/31/2020 12/31/2019 Total Assets $1,773,806 $1,732,441 $1,535,038 $1,269,157 Cash and Cash Equiv. $175,149 $98,893 $57,146 $83,828 Investments $530,292 $546,261 $397,331 $187,873 Net Loans $983,746 $1,002,802 $992,915 $922,
Slide 18: Income Statement Highlights
Income Statement Highlights Dollars in Thousands (000’s) Quarter Ended 12/31/2021 Quarter Ended 9/30/2021 Quarter Ended 12/31/2020 Interest Income $12,133 $12,304 $11,871 Interest Expense $723 $710 $878 Provision for Losses ($200) -- ($725) Noninterest Income1 $4,544 $4,397 $4,037 Noninterest Expens
Slide 19: Key Performance Measures
Key Performance Measures Percent (%) Quarter Ended 12/31/2021 Quarter Ended 9/30/2021 Quarter Ended 12/31/2020 Return on Avg. Assets 0.84 1.37 1.18 Return on Avg. Equity 9.56 15.20 12.94 Efficiency Ratio1 73.40 67.17 67.17 Net Interest Margin 2.79 2.89 3.08 Noninterest Inc2 / Operating Revenue 28.48
Slide 20: Balance Sheet Strength
Balance Sheet Strength Percent (%) Quarter Ended 12/31/2021 Quarter Ended 9/30/2021 Quarter Ended 12/31/2020 Risk-Based Capital Ratio (Total) 18.41 18.16 17.69 Leverage Ratio (Tier 1) 8.52 8.53 8.69 Common Equity Ratio (Tier 1) 15.20 14.91 14.32 Tangible Common Equity Ratio 8.39 8.35 8.92 Nonperform
Slide 21: Market Statistics
Market Statistics Per Share Measure / Market Valuation Quarter Ended 12/31/2021 Quarter Ended 9/30/2021 Quarter Ended 12/31/2020 Diluted Earnings Per Share $0.82 $1.31 $1.04 Cash Dividend Yield 3.87% 3.90% 4.44% Regular Cash Dividends Paid $0.32 $0.32 $0.30 Dividend Payout Ratio 38.83% 24.12% 28.89%
Slide 22: Balanced Revenue Model
Balanced Revenue Model Annualized Noninterest Income Source as a percentage of Average Assets as of December 31, 2021 2021 Franklin Financial Median PA Banks Peer1 Trust 0.42% 0.02% Service Charges on Deposits 0.14% 0.09% Gain on Sale of Loans 0.15% 0.12% Other 0.26% 0.27% Total Noninterest Income2
Slide 23: Stable, Low-Cost Core Deposits
Stable, Low-Cost Core Deposits Cost of Deposits 1 (%) 1.20 1.00 0.80 0.60 0.40 0.20 0.00 0.64 0.28 0.13 0.12 2019 2020 9/30/2021 12/31/2021 Franklin Financial Deposit Mix ($000’s) Retail Time Demand Deposits NOW & Other Transactions MMDAs & Savings $74,253 $298,403 $511,969 $699,734 5% 19% 32% 44% F
Slide 24: Diversified Loan Portfolio
Diversified Loan Portfolio Loans Outstanding 1 ($000’s) $52,290 $21,742 $7,755 $1,000,000 $46,350 $41,140 $41,846 $40,674 $800,000 $106,014 $105,639 $111,232 $113,213 $600,000 $140,784 $145,279 $150,232 $140,669 $400,000 $192,583 $212,030 $208,615 $207,254 $200,000 $78,712 $73,049 $74,407 $85,118 $-
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 $118,469 $912,674 $1,031,143 $49,440 $115,120 $907,481 $1,022,601 $61,176 $118,046 $946,975 $1,065,021 $100,457 Jun-21 Sep-21 Dec-21 Brokerage Trust Total New Ass
Slide 26: Strong Credit Quality
Strong Credit Quality Nonperforming Assets 1 / Assets (%) 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.31% 0.57% 0.50% 0.42% 12/31/2019 12/31/2020 9/30/2021 12/31/2021 F&M TRUST Franklin Financial Services Corporation 26 1 Nonperforming assets = nonaccrual loans, loans 90 days past due and other real estat
Slide 27: Stock Symbol: FRAF (Nasdaq)
Stock Symbol: FRAF ( Nasdaq ) www.franklinfin.com www.fmtrust.bank F&M TRUST Franklin Financial Services Corporation 27
Slide 28: Appendix
Appendix 28 F&M TRUST Franklin Financial Services Corporation
Slide 29: GAAP / Non-GAAP Reconciliation
GAAP / Non-GAAP Reconciliation Tangible Book Value (per share) (non-GAAP) Quarter Ended 12/31/2021 Quarter Ended 9/30/2021 Quarter Ended 12/31/2020 Shareholders’ equity $ 157,065 152,838 145,176 Less intangible assets (9,016) (9,016) (9,016) Shareholders’ equity (non-GAAP) 148,049 143,822 136,160 Sh
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