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Franklin Financial Reports Q1 2018 Earnings; Declares Q2 Dividend Increase

Company Release - 4/23/2018 3:21 PM ET

CHAMBERSBURG, Pa., April 23, 2018 /PRNewswire/ -- Franklin Financial Services Corporation, the bank holding company of F&M Trust, reported earnings of $3.5 million for the first quarter ended March 31, 2018, as compared to a net loss of $7.3 million for the fourth quarter 2017 and first quarter 2017 earnings of $3.0 million. As previously reported, results for the fourth quarter ended December 31, 2017 were affected by a $10 million pre-tax expense related to the accrual for a legal settlement and additional tax expense of $2.3 million due to the remeasurement of net deferred tax assets (DTA). The first quarter earnings were positively affected by approximately $300 thousand as a result of a reduction in the corporate tax rate from the passage of the Tax Cuts and Jobs Act of 2017.

Compared to the first quarter of 2017, net interest income increased 8.1% to $9.7 million and the net interest margin increased to 3.72% from 3.69%. Noninterest income increased 7.6% to $3.1 million with fees from Investment and Trust services increasing by $102 thousand (7.8%). Noninterest expense increased by 8.7% with the largest increase occurring in the salary and benefits category. The provision for loan loss expense was $200 thousand for the first quarter of 2018, which was an $80 thousand increase over the first quarter of 2017.

On a per share basis, diluted earnings were $0.80 for the first three months of 2018 compared to $0.70 for the same period in 2017 and a loss of $1.67 for the quarter ended December 31, 2017.

Total assets at March 31, 2018 were $1.2 billion, a 3.3% increase when compared with total assets at March 31, 2017. Net loans increased 4.3% to $930.7 million, and total deposits increased 2.8% for the first quarter of 2018 over the same period last year. Additionally, the market value of assets under management and held at third-party brokers increased 6.4% to $837.4 million ($684.7 million and $152.7 million, respectively).

"The growth of our balance sheet is supported by our strong capital position and continued improvement of our asset quality," said Timothy G. Henry, President and CEO. "As we grow, we are making strategic investments in people, the communities we serve, and enhanced products and services for our customers. Our commitment to building the bank for long-term success will drive increased profitability and returns for our shareholders."

On April 5, 2018, the Board of Directors of Franklin Financial Services Corporation declared a $0.27 per share regular cash dividend for the second quarter of 2018. This compares to a $0.24 per share regular cash dividend for the second quarter of 2017, representing a 12.5% increase.

The regular quarterly cash dividend will be paid on May 23, 2018 to shareholders of record at the close of business on May 4, 2018.

Franklin Financial is the largest independent, locally owned and operated bank holding company headquartered in Franklin County with assets of more than $1 billion. Its wholly-owned subsidiary, F&M Trust, has twenty-two community banking offices located in Boiling Springs, Camp Hill, Carlisle, Chambersburg, Greencastle, Hustontown, McConnellsburg, Mechanicsburg, Mont Alto, Marion, Newville, Orbisonia, Shippensburg and Waynesboro. Franklin Financial stock is trading on the OTCQX® marketplace of the OTC Markets 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, 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, changes in the rate of inflation, changes in technology, the intensification of competition within the Corporation's market area, and other similar factors.

FRANKLIN FINANCIAL SERVICES CORPORATION







Financial Highlights (Unaudited)




















Earnings Summary













For the Three Months Ended

(Dollars in thousands, except per share data)


3/31/2018


12/31/2017


9/30/2017


6/30/2017


3/31/2017












Interest income


$10,488


$10,339


$10,063


$9,938


$9,546

Interest expense


795


691


629


590


581

     Net interest income


9,693


9,648


9,434


9,348


8,965

Provision for loan losses


200


250


250


50


120

Noninterest income


3,148


3,137


2,971


3,155


2,925

Noninterest expense


8,648


18,750


8,305


8,161


7,957

     Income (loss) before income taxes


3,993


(6,215)


3,850


4,292


3,813

Income taxes


491


1,048


774


950


793

Net income (loss)


$3,502


($7,263)


$3,076


$3,342


$3,020












Diluted earnings (loss) per share


$0.80


($1.67)


$0.70


$0.77


$0.70

Regular cash dividends paid


$0.24


$0.24


$0.24


$0.24


$0.21























Balance Sheet Highlights (as of )


3/31/2018


12/31/2017


9/30/2017


6/30/2017


3/31/2017












Total assets


$1,168,542


$1,179,813


$1,165,549


$1,134,655


$1,131,134

Investment securities


133,732


127,336


132,322


136,036


137,182

Loans, net


930,664


931,908


899,960


890,107


892,251

Deposits


1,034,461


1,047,181


1,033,148


1,007,378


1,006,594

Shareholders' equity


117,124


115,144


124,580


122,360


119,178












Trust assets under management (fair value)


684,648


686,941


662,733


652,862


639,110

Investments held at third party brokers


152,728


158,145


153,200


150,800


147,676














As of or for the year-to-date period ended

Performance Ratios (as of)


3/31/2018


12/31/2017


9/30/2017


6/30/2017


3/31/2017












Return on average assets*


1.21%


(0.19%)


1.11%


1.13%


1.08%

Return on average equity*


12.17%


(1.80%)


10.50%


10.75%


10.33%

Book value, per share


$26.83


$26.44


$28.66


$28.19


$27.55

Market value, per share


$36.54


$37.36


$35.05


$32.00


$30.45

Market value/book value ratio


136.19%


141.30%


122.30%


113.52%


110.53%

Price/earnings multiple*


11.42


74.72


12.13


10.88


10.88

Current dividend yield*


2.63%


2.49%


2.74%


3.00%


2.76%

Dividend payout ratio


29.84%


-14.36%


31.66%


30.57%


30.03%

Net interest margin


3.72%


3.72%


3.71%


3.72%


3.69%

Nonperforming loans / gross loans


0.29%


0.28%


0.34%


0.35%


0.58%

Nonperforming assets / total assets


0.46%


0.45%


0.49%


0.55%


0.74%

Allowance for loan loss / loans


1.27%


1.25%


1.27%


1.25%


1.25%

Net (recoveries) loans charged-off/average loans*


0.00%


-0.01%


-0.01%


-0.01%


-0.04%












* Annualized






















 

 

 


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SOURCE Franklin Financial Services Corporation