CHAMBERSBURG, Pa., April 23,
2024 /PRNewswire/ -- Franklin Financial Services
Corporation (the Corporation) (NASDAQ: FRAF), the bank holding
company of F&M Trust (the Bank) headquartered in Chambersburg, PA, reported its first quarter
2024 financial results. A summary of operating results as of
or for the quarter ended March 31,
2024 follows:
- Net income for the first quarter of 2024 was $3.4 million compared to $3.5 million for the fourth quarter of 2023 (a
decrease of 3.2%) and $3.3 million
for the first quarter of 2023 (an increase of 2.1%). Diluted
earnings per share were $0.77,
$0.79, and $0.75, for the respective periods.
- For the first quarter of 2024, the provision for credit losses
was $452 thousand compared to
$788 thousand for the fourth quarter
of 2023 and $529 thousand for the
first quarter of 2023.
- Total assets were $2.011 billion,
exceeding $2.0 billion for the first
time on a quarterly report.
- Total net loans increased 1.6% from December 31, 2023.
- Total deposits increased 1.4% from the end of 2023. At
March 31, 2024, borrowings from the
Federal Reserve and Federal Home Loan Bank of Pittsburgh (FHLB) totaled $280.0 million.
- Return on Average Assets (ROA) was 0.67%, Return on Average
Equity (ROE) was 10.21% and the Net Interest Margin (NIM) was
2.88%; compared to an ROA of 0.80%, ROE of 11.33%, and NIM of 3.41%
for the same period in 2023.
- On April 11, 2024, the Board of
Directors declared a $0.32 per share
regular quarterly cash dividend for the second quarter of 2024 to
be paid on May 22, 2024, to
shareholders of record at the close of business on May 2, 2024.
Balance Sheet Highlights
Total assets at March 31, 2024
were $2.011 billion, up 9.5% from
$1.836 billion at December 31, 2023. Changes in the balance sheet
from December 31, 2023 to
March 31, 2024 include:
- Debt securities available for sale decreased $9.6 million (2.0%) due to paydowns.
- Net loans increased $20.1 million
(1.6%) over the year-end 2023 balance, primarily from an increase
of $17.6 million in commercial real
estate loans. At March 31, 2024,
commercial real estate loans totaled $721.3
million, with the largest collateral segments being:
apartment buildings ($127.7 million),
office buildings ($87.7 million), and
hotels and motels ($87.1 million)
primarily in the Bank's market area of south-central Pennsylvania.
- Total deposits increased $21.3
million (1.4%) from year-end 2023. Time deposits and money
management accounts and noninterest checking increased $75.4 million in total, but this increase was
partially offset by a decrease in interest-bearing checking and
savings accounts. Time deposits increased in part due to a net
increase of $14.0 million in brokered
time deposits. For the first quarter of 2024, the cost of total
deposits was 1.70%, compared to 0.92% for the same period in 2023.
On March 31, 2024, the Bank estimated
that approximately 90% of its deposits were FDIC insured or
collateralized.
- On March 31, 2024, the Bank had
borrowings of $280.0 million
comprised of $40.0 million from the
Federal Reserve Bank Term Funding Program (BTFP) and $240.0 million from the Federal Home Loan Bank of
Pittsburgh (FHLB). During the
first quarter of 2024, the Bank borrowed $200.0 million on a three-year term loan from
FHLB and has $40.0 million maturing
at FHLB in 2024. The Bank paid-off $50.0
million in BTFP funding during the first quarter of 2024 and
the outstanding balance is due in 2025. No new advances can be
taken from the BTFP. The Bank has additional funding capacity with
the Federal Reserve, FHLB and correspondent banks.
- Shareholders' equity increased $2.1
million to $134.2 million at
March 31, 2024 from year-end 2023.
Retained earnings increased $2.0
million, net of dividends of $1.4
million. The accumulated other comprehensive loss (AOCI)
increased $294 thousand during the
first quarter to $41.2 million. On
March 31, 2024, the book value of the
Corporation's common stock was $30.55
per share and tangible book value was $28.50 per share (1). In December 2023, an open market repurchase plan was
approved to repurchase 150,000 shares over a one-year period. No
shares have been repurchased thus far in 2024 under the approved
plan. The Bank is considered to be well-capitalized under
regulatory guidance as of March 31,
2024.
- Average interest-earning assets for 2024 were $1.920 billion compared to $1.565 billion for the first quarter of 2023, an
increase of 22.7%. In 2024, the average balance of interest-earning
cash balances increased $132.6
million (303.5%) due to an increase in borrowings during the
first quarter that has not been fully invested into loans. The
average balance of the investment portfolio increased $6.2 million (1.3%), while the average balance of
the loan portfolio increased $216.5
million (20.6%), over the prior year averages. Within the
loan portfolio, average commercial loan balances (including
commercial real estate) increased $156.9
million during the year and the average balance of
first-lien residential mortgages increased $56.5 million. Total deposits averaged
$1.537 billion for 2024, an increase
of $32.7 million (2.2%) from the
average balance for the first quarter of 2023. On a year-to-date
comparison, the yield on earning assets increased from 4.38% in
2023 to 5.03% for 2024, while the cost of interest-bearing
liabilities increased from 1.22% to 2.59% over the same
period.
Income Statement Highlights
- Net interest income was $13.6
million for the first quarter of 2024 compared to
$13.9 million for the fourth quarter
of 2023 and $12.8 million for the
first quarter of 2023. The net interest margin (NIM) was 2.88% for
the first quarter of 2024 compared to 3.24% in the prior quarter
and 3.41% for the first quarter of 2023. The compression in NIM is
the result of higher funding costs and excess cash balances not yet
fully invested.
- For the first quarter of 2024, the provision for credit losses
on loans was $490 thousand compared
to $732 for the fourth quarter of
2023 and $467 thousand for the first
quarter of 2023. The provision for loan loss was necessary due to
growth in the loan portfolio. The ACL ratio for loans was 1.29% on
March 31, 2024, compared to 1.28% on
December 31, 2023. For the first
quarter of 2024, the provision for credit losses on unfunded
commitments was a reversal of $38
thousand compared to $56
thousand for the fourth quarter of 2023 and $62 thousand for the first quarter of 2023. The
ACL for unfunded commitments was $2.0
million on March 31, 2024,
compared to $2.0 million on
December 31, 2023.
- Noninterest income totaled $4.2
million for the first quarter of 2024 compared to
$4.1 million in the fourth quarter of
2023 (an increase of 2.5%), and $3.2
million for the first quarter of 2023 (an increase of
29.9%). The increase over the first quarter of 2023 was due
primarily to an increase of $192
thousand in wealth management fees and $602 thousand loss on the sale of securities in
the first quarter of 2023 that did not occur in 2024. Excluding the
effect of the securities loss in 2023, the increase in noninterest
income in 2024 would have been 9.3%.
- Noninterest expense for the first quarter of 2024 was
$13.3 million compared to
$13.1 million for the fourth quarter
of 2023 (an increase of 1.2%) and $12.0
million (an increase of 10.7%) for the first quarter of
2023. Contributing to the year-over-year increase was an increase
of $791 thousand in salaries and
benefits (primarily salaries due to a highly competitive labor
market, and wage increases), and an increase of $363 thousand in data processing expenses
primarily from increased software expense.
- The effective federal income tax rate was 15.7% for 2024 and
6.3% for the first quarter of 2023. The 2023 rate reflects the
benefit of $280 thousand in tax
credits recorded in the first quarter of 2023. Without the tax
credits, the 2023 rate would have been 14.3%.
"In the first quarter of 2024, we took several steps to ensure
our ability to grow the company over the course of the year. Some
of these steps, such as our FHLB borrowing, will have an initial
negative effect on earnings but provide us additional support from
which to continue our growth", said Tim
Henry, President and CEO. "During the quarter, we saw
company assets go over the $2 billion
threshold, grew both loans and deposits, maintained stellar loan
quality, and saw growth in non-interest income. We also announced a
new community office in Dauphin
County that should go live by the end of the year.
All-in-all, I am pleased with the first quarter of 2024 and how we
are set up for the rest of the year."
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 $2.0 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: changes in interest rates,
changes in the rate of inflation, general economic conditions and
their effect on the Corporation and our customers, changes in the
Corporation's cost of funds, changes in government monetary policy,
changes in government regulation and taxation of financial
institutions, 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
|
(Dollars in
thousands, except per share data)
|
|
3/31/2024
|
|
12/31/2023
|
|
3/31/2023
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
23,809
|
|
$
|
21,516
|
|
$
|
16,583
|
Interest
expense
|
|
|
10,256
|
|
|
7,616
|
|
|
3,746
|
Net interest
income
|
|
|
13,553
|
|
|
13,900
|
|
|
12,837
|
Provision for credit
losses - loans
|
|
|
490
|
|
|
732
|
|
|
467
|
Provision for credit
losses - unfunded commitments
|
|
|
(38)
|
|
|
56
|
|
|
62
|
Total provision for credit
losses
|
|
|
452
|
|
|
788
|
|
|
529
|
Noninterest
income
|
|
|
4,188
|
|
|
4,085
|
|
|
3,225
|
Noninterest
expense
|
|
|
13,304
|
|
|
13,148
|
|
|
12,019
|
Income before income
taxes
|
|
|
3,985
|
|
|
4,049
|
|
|
3,514
|
Income taxes
|
|
|
624
|
|
|
578
|
|
|
222
|
Net income
|
|
$
|
3,361
|
|
$
|
3,471
|
|
$
|
3,292
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
0.77
|
|
$
|
0.79
|
|
$
|
0.75
|
Regular cash dividends
declared
|
|
$
|
0.32
|
|
$
|
0.32
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Highlights (as of )
|
|
3/31/2024
|
|
12/31/2023
|
|
3/31/2023
|
Total assets
|
|
$
|
2,011,614
|
|
$
|
1,836,039
|
|
$
|
1,711,285
|
Debt securities
available for sale
|
|
|
462,951
|
|
|
472,503
|
|
|
458,154
|
Loans, net
|
|
|
1,261,062
|
|
|
1,240,933
|
|
|
1,063,337
|
Other
borrowings
|
|
|
280,000
|
|
|
130,000
|
|
|
-
|
Deposits
|
|
|
1,559,312
|
|
|
1,537,978
|
|
|
1,502,110
|
Shareholders'
equity
|
|
|
134,237
|
|
|
132,136
|
|
|
123,583
|
|
|
|
|
|
|
|
|
|
|
Assets Under
Management (fair value)
|
|
|
|
|
|
|
|
|
|
Wealth
Management
|
|
|
1,107,611
|
|
|
1,094,747
|
|
|
942,025
|
Held at third party
brokers
|
|
|
151,465
|
|
|
135,423
|
|
|
124,483
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the Three
Months Ended
|
Performance
Ratios
|
|
3/31/2024
|
|
12/31/2023
|
|
3/31/2023
|
Return on average
assets*
|
|
|
0.67 %
|
|
|
0.75 %
|
|
|
0.80 %
|
Return on average
equity*
|
|
|
10.21 %
|
|
|
11.81 %
|
|
|
11.33 %
|
Dividend payout
ratio
|
|
|
41.62 %
|
|
|
40.23 %
|
|
|
42.68 %
|
Net interest
margin*
|
|
|
2.88 %
|
|
|
3.24 %
|
|
|
3.41 %
|
Net loans (charged-off)
recovered/average loans*
|
|
|
0.00 %
|
|
|
-0.07 %
|
|
|
0.00 %
|
Nonperforming loans /
gross loans
|
|
|
0.04 %
|
|
|
0.01 %
|
|
|
0.02 %
|
Nonperforming assets /
total assets
|
|
|
0.02 %
|
|
|
0.01 %
|
|
|
0.01 %
|
Allowance for credit
losses / loans
|
|
|
1.29 %
|
|
|
1.28 %
|
|
|
1.31 %
|
Book value, per
share
|
|
$
|
30.55
|
|
$
|
30.23
|
|
$
|
28.07
|
Tangible book value
(1)
|
|
$
|
28.50
|
|
$
|
28.17
|
|
$
|
26.02
|
Market value, per
share
|
|
$
|
26.20
|
|
$
|
31.55
|
|
$
|
29.64
|
Market value/book value
ratio
|
|
|
85.76 %
|
|
|
104.37 %
|
|
|
105.59 %
|
Market value/tangible
book value ratio
|
|
|
91.94 %
|
|
|
112.01 %
|
|
|
113.91 %
|
Price/earnings
multiple*
|
|
|
8.51
|
|
|
9.98
|
|
|
9.88
|
Current quarter
dividend yield*
|
|
|
4.89 %
|
|
|
4.06 %
|
|
|
4.32 %
|
*
Annualized
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP
measurement. See GAAP versus Non-GAAP
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.
Non-GAAP
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands, except per share)
|
|
As of
|
|
As of
|
|
As of
|
|
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Tangible Book Value
(per share) (non-GAAP)
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
$
|
134,237
|
|
$
|
132,136
|
|
$
|
123,583
|
Less intangible
assets
|
|
|
(9,016)
|
|
|
(9,016)
|
|
|
(9,016)
|
Tangible book value
(non-GAAP)
|
|
|
125,221
|
|
|
123,120
|
|
|
114,567
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding (in
thousands)
|
|
|
4,394
|
|
|
4,371
|
|
|
4,403
|
|
|
|
|
|
|
|
|
|
|
Tangible book
value per share (non-GAAP)
|
|
$
|
28.50
|
|
$
|
28.17
|
|
$
|
26.02
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/franklin-financial-reports-first-quarter-2024-results-declares-dividend-302124601.html
SOURCE Franklin Financial Services Corporation