CHAMBERSBURG, Pa., July 26,
2022 /PRNewswire/ -- Franklin Financial Services
Corporation (NASDAQ: FRAF), the bank holding company of F&M
Trust (the Bank), reported consolidated earnings of
$3.6 million ($0.80 per diluted share) for the second quarter
ended June 30, 2022. This result
represents a 19% increase compared to net income of $3.0 million ($0.67 per diluted share) for the first
quarter of 2022, and a 32% decrease compared to net income of
$5.3 million ($1.19 per diluted share) for the second quarter
ended June 30, 2021. Year-to-date
2022 net income was $6.6 million
($1.47 per diluted share) compared to
$10.1 million ($2.28 per diluted share) for the same six-month
period in 2021, a decrease of 35%.
A summary of operating results for the second quarter of 2022
and year-to-date 2022 are as follows:
- Net interest income was $12.1
million for the second quarter of 2022 compared to
$10.8 million for the second quarter
of 2021. The second quarter of 2021 included $746 thousand of PPP interest and fees compared
to only $4 thousand for the second
quarter of 2022. Year-to-date, net interest income was $22.9 million (including $388 thousand of PPP interest and fees) compared
to $21.7 million for the same period
in 2021 (including $1.6 million of
PPP interest and fees). The net interest margin increased to 2.90%
for the second quarter of 2022 from 2.82% for the same quarter of
the prior year. On a year-to-date comparison, the net interest
margin was 2.80% for 2022 compared to 2.92% in 2021. The yield on
earning assets increased in the second quarter 2022 versus 2021
comparison (up 0.08%), but decreased year-over-year (down 0.14%).
The increase in the second quarter yield on earning assets was
primarily the result of Federal Reserve rate increases that began
near the end of the first quarter of 2022 and continued through the
second quarter. The year-to-date cost of interest-bearing deposits
was 0.15% compared to 0.16% for 2021 while the cost of total
deposits decreased from 0.13% in 2021 to 0.12% in 2022.
- Earning assets for the second quarter of 2022 averaged
$1.7 billion compared to $1.6 billion for the same period in 2021, and
year-to-date average earnings assets increased 10% from
$1.5 billion to $1.7 billion. Year-to-date the average balance of
interest-earning cash increased $72.3
million, and the investment portfolio increased $82.2 million. The average balance of the loan
portfolio increased only $1.9 million
for the first six months of 2022 compared to 2021. The growth in
the year-to-date average balance of the loan portfolio was
negatively affected by a decrease of $53.8
million in the average balance of PPP loans over the
comparative periods. The average balance of deposits for the year
increased $179.9 million over the
same period in 2021 with every deposit category increasing except
for time deposits.
- There was no provision for loan loss expense for the second
quarter and year-to-date periods of 2022. In 2021, the provision
for loan loss expense was a reversal of $1.1
million for the second quarter and a reversal of
$1.9 million for the first six months
of 2021. During 2020, the allowance for loan loss was increased
through the provision expense due to increased economic uncertainty
stemming from the pandemic. As these risks lessened in 2021, loans
reserves were released via a reversal in the provision for loan
loss. With relatively unchanged net loan balances since year-end
2021 and stable credit quality indicators, it was determined no
additional provision expense was needed during the first half of
the year. The allowance for loan loss ratio was 1.45% of
gross loans as of June 30, 2022,
compared to 1.51% at December 31,
2021.
- Noninterest income totaled $4.1
million for the second quarter of 2022 compared to
$4.5 million in the second quarter of
2021. Year-to-date, noninterest income decreased $740 thousand (8.5%) to $8.0 million compared to $8.7 million the prior year. The largest
increases year-over-year were in Investment and Trust Services fees
(up $204 thousand) and deposit
service charges (up $319 thousand)
primarily from a new product introduced in the third quarter of
2021. These increases were more than offset by a decrease of
$828 thousand in gains on sale as
mortgage originations have slowed in 2022.
- Noninterest expense for the second quarter of 2022 was
$12.0 million compared to
$10.1 million for the second quarter
of 2021. Year-to-date, noninterest expense was $23.3 million compared to $20.3 million in 2021, an increase of 14.9%. The
categories contributing to this increase were: salaries and
benefits ($1.5 million), data
processing ($581 thousand) and other
expenses ($643 thousand). Salaries
and benefits increased primarily in employee compensation, the
increase in data processing is related to the implementation of a
Customer Relationship Management system and other expenses
increased comparatively due to a reversal of $636 thousand for an off-balance sheet liability
during the second quarter of 2021.
Total assets at June 30, 2022 were
$1.832 billion compared $1.774 billion at December
31, 2021. Significant balance sheet changes since
December 31, 2021, include:
- Short-term interest-earning deposits in other banks increased
$15.2 million. The amortized cost
basis of the investment portfolio increased $28.6 million, however, the fair value of the
portfolio decreased by $20.0 million
due to higher interest rates.
- The net loan portfolio increased $35.9
million during 2022 over the year-end 2021 balance. The
largest increase occurred in the commercial real estate portfolio
($40.0 million) which was partially
offset by a decrease of $8.3 million
in non-real estate commercial loans. The Bank held $215 thousand in PPP loans at June 30, 2022, a decrease of $7.6 million since year-end 2021, and all PPP
fees have been recognized.
- Deposits increased $94.8 million
(6.0%) over year-end 2021, with all deposit products showing an
increase except time deposits. Interest-bearing checking accounts
showed the largest increase ($67.1
million or 13.1%), primarily in commercial and municipal
accounts.
- Shareholders' equity decreased $35.3
million since the end of 2021. Retained earnings increased
$3.7 million, net of $2.8 million in dividend payments. Accumulated
other comprehensive income (AOCI) decreased by $38.4 million as the fair value of the investment
portfolio declined during the year due to higher interest rates. At
June 30, 2022, the book value of the
Corporation's common stock was $27.54
per share and the tangible book value was $25.50 per share. In December 2021, an open market repurchase plan was
approved to repurchase 150,000 shares over a one-year period and
47,450 shares have been repurchased under the plan as of
June 30, 2022.
"The value of being a diversified, community bank with strong
customer relationships showed through 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 the headwinds of a volatile
stock market and the talk of recession, we remain focused on
building shareholder value through the growth of the franchise and
our capabilities," said Timothy G.
Henry, President and CEO of Franklin Financial Services
Corporation and F&M Trust. "On July
1 we opened our first Maryland office in Hagerstown. Later in the third quarter we
anticipate implementing the Salesforce customer relationship
management system throughout the bank. In order to accommodate
future growth and improve operating efficiencies we will also be
completing the consolidation of the executive, commercial,
investment and trust, and operations teams, that had been spread
across two separate buildings, into one new location in
Chambersburg, PA. Through the
balance of the year, we will continue to position ourselves to be
able to ride through any broad economic issues that may arise while
maintaining the ability to support our customers and take advantage
of opportunities to enhance shareholder value as they become
apparent to us."
On July 14, 2022, the Board of Directors of Franklin
Financial Services Corporation declared a $0.32 per share regular quarterly cash
dividend for the third quarter of 2022. This compares to
a $0.32 per share regular cash
dividend for the second quarter of 2022. The regular quarterly cash
dividend for the third quarter of 2022 will be paid
on August 24, 2022, to shareholders of record at the close of
business on August 5, 2022.
Additional information
on the Corporation is available on our website at:
www.franklinfin.com/Presentations.
Franklin Financial is the largest independent,
locally owned and operated bank holding company
headquartered in Franklin County
with assets of more than $1.8 billion. Its wholly-owned
subsidiary, F&M Trust, has twenty-two community banking
locations in Franklin,
Cumberland, Fulton and
Huntingdon Counties PA, and
Washington County MD. Franklin
Financial stock is trading on the Nasdaq Stock Market under the
symbol FRAF. Please visit our website for more
information, www.franklinfin.com.
Management considers subsequent events occurring after the
balance sheet date for matters which may require adjustment to, or
disclosure in, the consolidated financial statements. The
review period for subsequent events extends up to and including the
filing date of a public company's consolidated financial statements
when filed with the Securities and Exchange Commission ("SEC").
Accordingly, the financial information in this announcement is
subject to change.
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 current views as to likely future
developments, and use words "may," "will," "expect," "believe,"
"estimate," "anticipate," or similar terms. Because
forward-looking statements involve certain risks, uncertainties and
other factors over which Franklin Financial Services Corporation
has no direct control, actual results could differ materially from
those contemplated in such statements. These factors include
(but are not limited to) the following: general economic conditions
particularly with regard to the negative impact of severe,
wide-ranging and continuing disruptions caused by the spread of the
coronavirus COVID-19 pandemic and responses thereto, changes in
interest rates, changes in the Corporation's cost of funds, changes
in government monetary policy, changes in government
regulation and taxation of financial institutions, impact of and
changes in the rate of inflation, changes in technology, the
intensification of competition within the Corporation's market
area, and other similar factors.
We caution readers not to place undue reliance on these
forward-looking statements. They only reflect management's analysis
as of this date. The Corporation does not revise or update these
forward-looking statements to reflect events or changed
circumstances. Please carefully review the risk factors described
in other documents the Corporation files from time to time with the
SEC, including the Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, and any Current Reports on Form 8-K.
FRANKLIN FINANCIAL
SERVICES CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
Summary
|
|
|
For the Three Months
Ended
|
|
|
For the Six Months
Ended
|
(Dollars in
thousands, except per share data)
|
|
6/30/2022
|
|
3/31/2022
|
|
6/30/2021
|
|
6/30/2022
|
|
6/30/2021
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
12,875
|
|
$
|
11,534
|
|
$
|
11,543
|
|
$
|
24,409
|
|
$
|
23,135
|
|
5.5 %
|
Interest
expense
|
|
|
764
|
|
|
726
|
|
|
720
|
|
|
1,490
|
|
|
1,468
|
|
1.5 %
|
Net interest
income
|
|
|
12,111
|
|
|
10,808
|
|
|
10,823
|
|
|
22,919
|
|
|
21,667
|
|
5.8 %
|
Provision for loan
losses
|
|
|
-
|
|
|
-
|
|
|
(1,100)
|
|
|
-
|
|
|
(1,900)
|
|
-100.0 %
|
Noninterest
income
|
|
|
4,091
|
|
|
3,884
|
|
|
4,489
|
|
|
7,976
|
|
|
8,716
|
|
-8.5 %
|
Noninterest
expense
|
|
|
12,029
|
|
|
11,266
|
|
|
10,111
|
|
|
23,296
|
|
|
20,277
|
|
14.9 %
|
Income before income
taxes
|
|
|
4,173
|
|
|
3,426
|
|
|
6,301
|
|
|
7,599
|
|
|
12,006
|
|
-36.7 %
|
Income taxes
|
|
|
595
|
|
|
414
|
|
|
1,030
|
|
|
1,009
|
|
|
1,905
|
|
-47.0 %
|
Net income
|
|
$
|
3,578
|
|
$
|
3,012
|
|
$
|
5,271
|
|
$
|
6,590
|
|
$
|
10,101
|
|
-34.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
0.80
|
|
$
|
0.67
|
|
$
|
1.19
|
|
$
|
1.47
|
|
$
|
2.28
|
|
-35.5 %
|
Regular cash dividends
declared
|
|
$
|
0.32
|
|
$
|
0.32
|
|
$
|
0.32
|
|
$
|
0.64
|
|
$
|
0.61
|
|
4.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Highlights (as of )
|
|
6/30/2022
|
|
3/31/2022
|
|
6/30/2021
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,832,296
|
|
$
|
1,767,061
|
|
$
|
1,678,308
|
|
|
|
|
|
|
|
|
Investment and equity
securities
|
|
|
510,282
|
|
|
511,969
|
|
|
512,729
|
|
|
|
|
|
|
|
|
Loans, net
|
|
|
1,019,608
|
|
|
985,927
|
|
|
983,980
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
1,679,187
|
|
|
1,596,386
|
|
|
1,491,208
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
121,797
|
|
|
137,136
|
|
|
151,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under
Management (fair value)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and Trust
Services
|
|
|
838,830
|
|
|
920,597
|
|
|
912,651
|
|
|
|
|
|
|
|
|
Held at third party
brokers
|
|
|
104,881
|
|
|
111,742
|
|
|
118,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Three
Months Ended
|
|
|
As of or for the Six
Months Ended
|
|
|
Performance
Ratios
|
|
6/30/2022
|
|
3/31/2022
|
|
6/30/2021
|
|
6/30/2022
|
|
6/30/2021
|
|
|
Return on average
assets*
|
|
|
0.79 %
|
|
|
0.69 %
|
|
|
1.27 %
|
|
|
0.74 %
|
|
|
1.25 %
|
|
|
Return on average
equity*
|
|
|
11.11 %
|
|
|
7.96 %
|
|
|
14.67 %
|
|
|
9.36 %
|
|
|
14.07 %
|
|
|
Dividend payout
ratio
|
|
|
39.88 %
|
|
|
47.18 %
|
|
|
26.05 %
|
|
|
43.22 %
|
|
|
26.64 %
|
|
|
Net interest
margin*
|
|
|
2.90 %
|
|
|
2.66 %
|
|
|
2.82 %
|
|
|
2.80 %
|
|
|
2.92 %
|
|
|
Net loans (charged-off)
recovered/average loans*
|
|
|
-0.01 %
|
|
|
-0.01 %
|
|
|
0.00 %
|
|
|
-0.01 %
|
|
|
0.03 %
|
|
|
Nonaccrual loans /
gross loans
|
|
|
0.55 %
|
|
|
0.74 %
|
|
|
0.88 %
|
|
|
|
|
|
|
|
|
Nonperforming assets /
total assets
|
|
|
0.31 %
|
|
|
0.42 %
|
|
|
0.53 %
|
|
|
|
|
|
|
|
|
Allowance for loan loss
/ loans
|
|
|
1.45 %
|
|
|
1.50 %
|
|
|
1.51 %
|
|
|
|
|
|
|
|
|
Book value, per
share
|
|
$
|
27.54
|
|
$
|
30.77
|
|
$
|
34.16
|
|
|
|
|
|
|
|
|
Tangible book value
(1)
|
|
$
|
25.50
|
|
$
|
28.75
|
|
$
|
32.12
|
|
|
|
|
|
|
|
|
Market value, per
share
|
|
$
|
30.16
|
|
$
|
33.58
|
|
$
|
31.94
|
|
|
|
|
|
|
|
|
Market value/book value
ratio
|
|
|
109.51 %
|
|
|
109.13 %
|
|
|
93.50 %
|
|
|
|
|
|
|
|
|
Market value/tangible
book value ratio
|
|
|
118.25 %
|
|
|
116.82 %
|
|
|
99.43 %
|
|
|
|
|
|
|
|
|
Price/earnings
multiple*
|
|
|
9.43
|
|
|
12.53
|
|
|
6.71
|
|
|
10.26
|
|
|
7.00
|
|
|
Current quarter
dividend yield*
|
|
|
4.24 %
|
|
|
3.81 %
|
|
|
3.88 %
|
|
|
|
|
|
|
|
|
*
Annualized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) NonGAAP
measurement. See GAAP versus NonGAAP
disclosure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP versus non-GAAP Presentations – The Corporation
supplements its traditional GAAP measurements with certain non-GAAP
measurements to evaluate its performance and to eliminate the
effect of intangible assets. By eliminating intangible assets
(Goodwill), the Corporation believes it presents a measurement that
is comparable to companies that have no intangible assets or to
companies that have eliminated intangible assets in similar
calculations. However, not all companies may use the same
calculation method for each measurement. The non-GAAP measurements
are not intended to be used as a substitute for the related GAAP
measurements. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, our reported results
prepared in accordance with GAAP. In the event of such a
disclosure or release, the Securities and Exchange Commission's
Regulation G requires: (i) the presentation of the most directly
comparable financial measure calculated and presented in accordance
with GAAP and (ii) a reconciliation of the differences between the
non-GAAP financial measure presented and the most directly
comparable financial measure calculated and presented in accordance
with GAAP. The following table shows the calculation of the
non-GAAP measurements.
NonGAAP
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands, except per share)
|
|
As of
|
|
As of
|
|
As of
|
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
Tangible Book Value
(per share) (non-GAAP)
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
$
|
121,797
|
|
$
|
137,136
|
|
$
|
151,156
|
Less intangible
assets
|
|
|
(9,016)
|
|
|
(9,016)
|
|
|
(9,016)
|
Tangible book value
(non-GAAP)
|
|
|
112,781
|
|
|
128,120
|
|
|
142,140
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding (in
thousands)
|
|
|
4,422
|
|
|
4,457
|
|
|
4,425
|
|
|
|
|
|
|
|
|
|
|
Tangible book
value per share (non-GAAP)
|
25.50
|
|
|
28.75
|
|
|
32.12
|
|
|
|
|
|
|
|
|
|
|
View original
content:https://www.prnewswire.com/news-releases/franklin-financial-reports-2022-q2-earnings-declares-dividend-301593771.html
SOURCE Franklin Financial Services Corporation