United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 25, 2017
FRANKLIN FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 0-12126 25-1440803
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Indent. No.)
20 South Main Street, Chambersburg, PA 17201
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (717) 264-6116
N/A
(Former name or former address, if changes since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a –12 under the Exchange Act (17 CFR 240.14a –12) |
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Pre-commencement communications pursuant to Rule 14d – 2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e – 4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
The news release of Franklin Financial Services Corporation, dated January 25, 2017 and attached as Exhibit 99.1, announces its earnings for the three and twelve months ended December 31, 2016 and is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits. The following exhibits are filed herewith:
Number Description
99.1 News Release, dated January 25, 2017
of Franklin Financial Services Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FRANKLIN FINANCIAL SERVICES CORPORATION
By: /s/ Timothy G. Henry
Timothy G. Henry, President and Chief Executive Officer
Dated: January 25, 2017
EXHIBIT INDEX
Exhibit Number Description
99.1News release, dated January 25, 2017 of Franklin Financial Services Corporation
January 25, 2017
Franklin Financial Reports 2016 Earnings
(Chambersburg, PA) Franklin Financial Services Corporation, the bank holding company of F&M Trust, reported earnings of $1.7 million for the fourth quarter ended December 31, 2016. This represents a 24.0% decrease when compared to fourth quarter 2015 earnings of $2.3 million and a 17.0% decrease when compared to third quarter 2016 earnings of $2.1 million. Earnings for the fourth quarter of 2016 were affected by a $1.2 million write down of a property, which was held as other real estate (ORE) in participation with another bank. Net interest income for the fourth quarter of 2016 was $9.0 million, compared to $8.8 million in the third quarter, and $8.2 million for the fourth quarter of 2015.
Net income for the year was $8.1 million compared with $10.2 million in 2015, a decrease of 20.7%. Contributing to the decline in earnings was an increase in the provision for loan losses expense of $2.5 million and the $1.2 million ORE write down. In addition, 2015 included two nonrecurring events that increased noninterest income by $899 thousand and a reversal of $250 thousand of the valuation allowance on the deferred tax asset. Net interest income was $34.7 million for the year representing an increase of 7.7%, when compared to 2015, driven primarily by growth in the commercial loan portfolio of 17.9%.
On a per share basis, diluted earnings were $0.40 for the quarter ended December 31, 2016 and $1.88 for the year, compared to $0.53 and $2.40 for the same periods in 2015.
“In a transition year for the bank, we closed 2016 with very strong core performance and we are encouraged by the opportunities that lie ahead.” said Timothy G. Henry, President and CEO of F&M Trust. “We continued our growth in commercial loans and noninterest-bearing deposits and we expect new relationships to develop with aggressive marketing of our Investment and Trust Services team.”
Total assets at December 31, 2016 were $1.1 billion, an 8.9% increase when compared with total assets at December 31, 2015. Net loans increased 14.4% to $882.8 million and total deposits increased 6.9% to $982.1 million, both of which were driven by the expansion of new and existing customer relationships. The market value of trust assets under management increased 6.1% to $622.6 million.
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.
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FRANKLIN FINANCIAL SERVICES CORPORATION |
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Financial Highlights (Unaudited) |
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Twelve Months Ended December 31 |
Three Months Ended December 31 |
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(Dollars in thousands, except per share data) |
2016 |
2015 |
% Change |
2016 |
2015 |
% Change |
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Earnings Performance |
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Interest income |
$ |
36,979 |
$ |
34,615 | 6.8 |
$ |
9,544 |
$ |
8,790 | 8.6 | ||||||
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Interest expense |
2,245 | 2,371 | (5.3) | 589 | 556 | 5.9 | ||||||||||
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Net interest income |
34,734 | 32,244 | 7.7 | 8,955 | 8,234 | 8.8 | ||||||||||
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Provision for loan losses |
3,775 | 1,285 | 193.8 | 450 | 250 | 80.0 | ||||||||||
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Noninterest income |
11,605 | 12,652 | (8.3) | 2,992 | 3,150 | (5.0) | ||||||||||
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Noninterest expense |
33,175 | 31,136 | 6.5 | 9,670 | 8,374 | 15.5 | ||||||||||
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Income before income taxes |
9,389 | 12,475 | (24.7) | 1,827 | 2,760 | (33.8) | ||||||||||
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Income taxes |
1,302 | 2,271 | (42.7) | 104 | 493 | (78.9) | ||||||||||
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Net income |
$ |
8,087 |
$ |
10,204 | (20.7) |
$ |
1,723 |
$ |
2,267 | (24.0) | ||||||
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Diluted earnings per share |
$ |
1.88 |
$ |
2.40 | (21.7) |
$ |
0.40 |
$ |
0.53 | (24.5) | ||||||
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Regular cash dividends paid |
$ |
0.82 |
$ |
0.74 | 10.8 |
$ |
0.21 |
$ |
0.19 | 10.5 | ||||||
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At December 31 |
At December 31 |
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2016 |
2015 |
% Change |
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Balance Sheet Highlights |
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Total assets |
$ |
1,127,443 |
$ |
1,035,295 | 8.9 | |||||||||||
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Investment securities |
143,875 | 159,473 | (9.8) | |||||||||||||
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Loans, net |
882,798 | 771,930 | 14.4 | |||||||||||||
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Deposits |
982,120 | 918,512 | 6.9 | |||||||||||||
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Shareholders equity |
116,493 | 111,376 | 4.6 | |||||||||||||
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Trust assets under management (fair value) |
622,630 | 586,664 | 6.1 | |||||||||||||
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At December 31 |
At December 31 |
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2016 |
2015 |
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Shareholders' Value |
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Return on average assets |
0.74% | 1.00% | ||||||||||||||
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Return on average equity |
7.04% | 9.52% | ||||||||||||||
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Book value, per share |
$ |
26.99 |
$ |
26.05 | ||||||||||||
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Market value, per share |
$ |
28.60 |
$ |
23.50 | ||||||||||||
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Market value/book value ratio |
105.97% | 90.21% | ||||||||||||||
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Price/earnings multiple |
15.21 | 9.79 | ||||||||||||||
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Current dividend yield |
2.94% | 3.23% | ||||||||||||||
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Dividend payout ratio |
43.56% | 30.76% | ||||||||||||||
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Net interest margin |
3.62% | 3.59% | ||||||||||||||
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Safety and Soundness |
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Nonperforming loans / gross loans |
0.61% | 0.73% | ||||||||||||||
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Nonperforming assets / total assets |
0.92% | 1.18% | ||||||||||||||
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Allowance for loan loss / loans |
1.24% | 1.29% | ||||||||||||||
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Net loans charged-off/average loans |
0.33% | 0.04% | ||||||||||||||