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) April 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:
o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o |
Soliciting material pursuant to Rule 14a –12 under the Exchange Act (17 CFR 240.14a –12) |
o |
Pre-commencement communications pursuant to Rule 14d – 2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o |
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 April 25, 2017 and attached as Exhibit 99.1, announces its earnings for the three months ended March 31, 2017 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 April 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: April 25, 2017
EXHIBIT INDEX
Exhibit Number Description
99.1News release, dated April 25, 2017 of Franklin Financial Services Corporation
April 25, 2017
Franklin Financial Reports Record Q1 2017 Earnings;
Declares Q2 Dividend Increase
(Chambersburg, PA) Franklin Financial Services Corporation, the bank holding company of F&M Trust, reported earnings of $3.0 million for the first quarter ended March 31, 2017. This represents a 10.8% increase when compared to first quarter 2016 earnings of $2.7 million and a 75.3% increase when compared to fourth quarter 2016 earnings of $1.7 million.
Compared to the first quarter of 2016, net interest income increased $412 thousand, while noninterest income was flat. Noninterest expense increased $162 thousand, but was offset by a $180 thousand decline in the provision for loan losses.
Net interest income was unchanged at $9.0 million for both the current quarter and the fourth quarter of 2016, but noninterest expense decreased by $1.7 million. As previously reported, earnings for the fourth quarter of 2016 were affected by a $1.2 million write down of a property held as other real estate (ORE). The property was sold during the first quarter of 2017.
On a per share basis, diluted earnings were $0.70 for the first three months of 2017 compared to $0.64 for the same period in 2016 and $0.40 for the quarter ended December 31, 2016.
“The Corporation’s first quarter performance is reflective of favorable market conditions and our commitment to expanding customer relationships throughout our markets.” said Timothy G. Henry, President and CEO. “As we move forward in 2017, we remain focused on sustainable financial performance and optimizing areas that drive profitability. We will also continue to improve our online and mobile platforms as primary channels for engagement to meet the evolving needs of customers.”
Total assets at March 31, 2017 were $1.1 billion, a 5.7% increase when compared with total assets at March 31, 2016. Net loans increased 12.6% to $892.3 million, and total deposits increased 5.8% to $1.0 billion for the first quarter of 2017 over the same period last year. Additionally, the market value of assets under management and held at third-party brokers increased 11.4% to $786.0 million.
The Board of Directors of Franklin Financial Services Corporation also declared a $0.24 per share regular cash dividend for the second quarter of 2017. This compares to a $0.21 per share regular cash dividend for the second quarter of 2016, representing a 14.3% increase. Total cash dividends paid during the first two quarters of 2017 will be $0.45 per share compared to $0.40 per share in 2016, an increase of 12.5%.
The regular quarterly cash dividend will be paid on May 24, 2017 to shareholders of record at the close of business on May 5, 2017.
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.
FRANKLIN FINANCIAL SERVICES CORPORATION |
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Financial Highlights (Unaudited) |
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Three Months Ended March 31 |
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(Dollars in thousands, except per share data) |
2016 |
2015 |
% Change |
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Earnings Performance |
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Interest income |
$ |
9,546 |
$ |
9,098 | 4.9 | |||||
Interest expense |
581 | 545 | 6.6 | |||||||
Net interest income |
8,965 | 8,553 | 4.8 | |||||||
Provision for loan losses |
120 | 300 | (60.0) | |||||||
Noninterest income |
2,925 | 2,953 | (0.9) | |||||||
Noninterest expense |
7,957 | 7,795 | 2.1 | |||||||
Income before income taxes |
3,813 | 3,411 | 11.8 | |||||||
Income taxes |
793 | 685 | 15.8 | |||||||
Net income |
$ |
3,020 |
$ |
2,726 | 10.8 | |||||
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Diluted earnings per share |
$ |
0.70 |
$ |
0.64 | 9.4 | |||||
Regular cash dividends paid |
$ |
0.21 |
$ |
0.19 | 10.5 | |||||
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At March 31 |
At December 31 |
At March 31 |
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2017 |
2016 |
2016 |
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Balance Sheet Highlights |
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Total assets |
$ |
1,131,134 |
$ |
1,127,443 |
$ |
1,069,936 | ||||
Investment securities |
137,182 | 143,875 | 154,691 | |||||||
Loans, net |
892,251 | 882,798 | 792,226 | |||||||
Deposits |
1,006,594 | 982,120 | 950,968 | |||||||
Shareholders' equity |
119,178 | 116,493 | 114,313 | |||||||
Trust assets under management (fair value) |
639,110 | 622,630 | 588,136 | |||||||
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At March 31 |
At December 31 |
At March 31 |
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2017 |
2016 |
2016 |
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Shareholders' Value |
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Return on average assets |
1.08% | 0.74% | 1.04% | |||||||
Return on average equity |
10.33% | 7.04% | 9.75% | |||||||
Book value, per share |
$ |
27.55 |
$ |
26.99 |
$ |
26.65 | ||||
Market value, per share |
$ |
30.45 |
$ |
28.60 |
$ |
22.00 | ||||
Market value/book value ratio |
110.53% | 105.97% | 82.55% | |||||||
Price/earnings multiple |
10.88 | 15.21 | 8.59 | |||||||
Current dividend yield |
2.76% | 2.94% | 3.45% | |||||||
Dividend payout ratio |
30.03% | 43.56% | 29.82% | |||||||
Net interest margin |
3.69% | 3.62% | 3.70% | |||||||
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Safety and Soundness |
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Nonperforming loans / gross loans |
0.58% | 0.61% | 1.29% | |||||||
Nonperforming assets / total assets |
0.74% | 0.92% | 1.56% | |||||||
Allowance for loan loss / loans |
1.25% | 1.24% | 1.29% | |||||||
Net loans charged-off/average loans |
-0.04% |
0.33% | 0.02% |