CHAMBERSBURG, Pa., July 24, 2026 /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 second quarter and year-to-date 2026 financial results.
Asummary of notable operating resultsasof orfor the second quarter ended June 30, 2026 follows:
- Net Income: $6.6 million ($1.47 per diluted share) for the second quarter of 2026 compared to $5.9 million ($1.32 per diluted share) for the second quarter of 2025, an increase of 11.9%.
- Wealth Management: Fees were $2.6 million, an increase of 6.1% from $2.4 million in the second quarter of 2025. Assets under management were $1.5 billion on June 30, 2026.
- Asset Growth: $2.335 billion in assets on June 30, 2026, compared to $2.239 billion at year-end 2025, an increase of 4.3% (8.6% annualized).
- Loan Growth: Total net loans of $1.589 billion on June 30, 2026, an increase of 3.1% (6.2% annualized) from December 31, 2025.
- Deposit Growth: Total deposits of $1.925 billion on June 30, 2026, an increase of 4.8% (9.6% annualized) from December 31, 2025.
- Quarterly Performance Metrics: Return on Average Assets (ROA) 1.14%, Return on Average Equity (ROE) 14.80%, and Net Interest Margin (NIM) of 3.50% on an annualized basis, compared to a ROA of 1.04%, ROE of 15.64%, and NIM of 3.21% for the second quarter of 2025.
- On July 16, 2026, the Board of Directors declared a $0.34 per share regular quarterly cash dividend for the third quarter of 2026 to be paid on August 26, 2026, to shareholders of record at the close of business on August 7, 2026.
A summary of notable operating results for the six months ended June 30, 2026 follows:
- Net Income: $13.2 million ($2.94 per diluted share) compared to $9.8 million ($2.20 per diluted share) for the six months ended June 30, 2025, an increase of 34.8%.
- Wealth Management: Fees were $4.9 million, an increase of 5.2% from $4.6 million for the first six months of 2025.
- Year-to-Date Performance Metrics: Return on Average Assets (ROA) 1.17%, Return on Average Equity (ROE) 14.96%, and Net Interest Margin (NIM) of 3.52% on an annualized basis, compared to a ROA of 0.89%, ROE of 13.27%, and NIM of 3.13% for the comparable period in 2025.
BalanceSheetHighlights
Total assets on June 30, 2026 were $2.335 billion, an increase of 4.3% from $2.239 billion on December 31, 2025. Significant changes in the balance sheet from December 31, 2025 to June 30, 2026 include:
- Debt Securities Available for Sale: Decreased $2.2 million, or (0.5%), net of purchases, due primarily to paydowns. On June 30, 2026, the net unrealized loss in the portfolio was $29.1 million compared to $26.8 million at year-end 2025.
- Net Loans: Increased $48.2 million or 3.1% (6.2% annualized) over the year-end 2025 balance, primarily from an increase of $45.8 million in commercial real estate (CRE) loans and $24.7 million in residential 1-4 family loans, which was partially offset by a decrease of $19.6 million in commercial (C&I) loans. As of June 30, 2026, CRE loans totaled $949.4 million with the largest collateral segments being: apartment buildings ($161.9 million), hotels and motels ($105.8 million), and office buildings ($100.1 million), primarily in the Bank's market area of south-central Pennsylvania. The Bank's CRE non-owner occupied concentration ratio was 348.2% of risk-based capital as of June 30, 2026, down from 349.9% on December 31, 2025.
- Deposits: Increased $88.8 million or 4.8% (9.6% annualized)) from year-end 2025. The majority of the growth occurred in noninterest-bearing checking accounts and money management accounts, which was partially offset by a decrease in interest-bearing checking and savings accounts. At June 30, 2026, 17.7% of total deposits were in noninterest checking accounts, compared to 16.9% at year-end 2025. For the first six months of 2026, the cost of total deposits was 1.51%, a decrease from 1.85% for the full year of 2025. On June 30, 2026, the Bank estimated that approximately 90% of its deposits were FDIC insured or collateralized.
- Shareholders' Equity: Increased $8.6 million to $183.8 million on June 30, 2026 from year-end 2025, and retained earnings increased $10.2 million, net of dividends of $3.0 million, over the same period. The accumulated other comprehensive loss (AOCI) increased $1.9 million during the first six months of 2026 to $23.5 million. On June 30, 2026, the book value of the Corporation's common stock was $40.91 per share and tangible book value (1) increased $1.81 per share from December 31, 2025 to $38.90 per share. In December 2025, an open market repurchase plan was approved to repurchase 150,000 shares over a one-year period and 10,950 shares were repurchased in the first six months of 2026 under the approved plan to fund the dividend reinvestment plan. The Bank is considered to be well-capitalized under regulatory guidance as of June 30, 2026.
- Average Assets: Average interest-earning assets for the first six months of 2026 were $2.198 billion, compared to $2.146 billion for the same period in 2025, an increase of 2.5%. This increase occurred primarily in the loan portfolio which increased 8.8%, driven by a $82.2 million (9.9%) increase in commercial real estate loans and a $44.0 million (17.6%) increase in first lien 1-4 residential real estate loans. The yield on earning assets decreased from 5.28% for the first six months of 2025 to 5.25% for the first six months of 2026. The yield on the loan portfolio increased by 9 basis points, but this increase was partially offset as higher yielding investments continued to paydown and the yield on interest-earning deposits in other banks declined. The yield on earning assets was 5.22% for the second quarter of 2026. Total deposits averaged $1.878 billion for the first six months of 2026, an increase of $26.7 million (1.4%) over the average balance for the same period in 2025. The cost of total deposits decreased from 1.95% for the first six months of 2025 to 1.51% for the first six months of 2026 and decreased to 1.50% for the second quarter of 2026.
- Nonperforming Assets: Nonperforming loans (nonaccrual loans and loans 90 days past due and still accruing) totaled $17.7 million on June 30, 2026, compared to $8.5 million on December 31, 2025, an increase of $9.2 million due to the addition of an $8.8 million CRE loan to nonaccrual during the second quarter of 2026. Nonperforming loans were 1.1% of total gross loans on June 30, 2026 compared to 0.55% on December 31, 2025. The nonperforming loans are comprised primarily of two (2) CRE loans to unrelated borrowers totaling $17.4 million. Of these two CRE loans, one is for a matured $7.0 million construction loan on a mixed-use commercial project. During the second quarter, the Bank committed to provide additional funding of up to $2.5 million (with $1.6 million advanced as of June 30, 2026) to fully enclose the property and protect the collateral, and to pay all past due construction costs. As part of this funding commitment, a forbearance agreement was signed by the developer that ceased all construction until funding from new sources was acquired, established specific performance criteria for the developer, and established specific remedies for the Bank in the event of non-compliance with the forbearance agreement. Based on a discounted "as-is" appraisal received in the first quarter of 2026 and the additional funding committed, the Bank increased its specific reserve from $1.0 million on March 31, 2026, to $1.2 million on June 30, 2026. The second CRE loan totals $8.8 million and is secured by six (6) commercial office buildings. This loan is a purchased participation loan where the Bank is not the lead lender. The loan was placed on nonaccrual during the second quarter of 2026, and as of June 30, 2026, the Bank has a specific reserve of $734 thousand based on a recent appraisal.
- Allowance for Credit Losses (ACL): The ACL to loans ratio was 1.36% on June 30, 2026, compared to 1.32% on December 31, 2025. The increase is driven by the increase in the specific reserves previously discussed above. The allowance for credit losses (ACL) for unfunded commitments was $2.0 million on June 30, 2026, and $1.9 million on December 31, 2025.
IncomeStatementHighlights - Second Quarter Comparison 2026 v. 2025
- Net Income: Net income for the second quarter of 2026 was $6.6 million ($1.47 per diluted share) compared to $5.90 million ($1.32 per diluted share) for the second quarter of 2025, an increase of 11.9%.
- NetInterestIncome: $19.3 million for the second quarter of 2026 compared to $17.2 million for the second quarter of 2025, an increase of $2.1 million, or 12.2%. The improvement was driven primarily by a decrease in interest expense, as the increase in interest from loans was partially offset by a decrease in interest from the investment portfolio.
- Provision for Credit Losses: For the second quarter of 2026, the provision for credit losses on loans was $1.6 million compared to $704 thousand for the same quarter of 2025. The increased provision for credit losses on loans was due primarily to an increase in the specific reserve on the two nonaccrual loans discussed above. The provision for credit losses on unfunded commitments was $39 thousand for the second quarter of 2026 compared to a reversal of $69 thousand for the second quarter of 2025.
- Noninterest Income: Noninterest income totaled $5.1 million for the second quarter of 2026 compared to $5.1 million for the same quarter of 2025. As compared to the prior year quarter, wealth management fees and the gain on sale of loans increased, but the increase was nearly offset by a state sales tax refund recorded in the second quarter of 2025.
- NoninterestExpense: For the second quarter of 2026 was $14.6 million compared to $14.4 million for the second quarter of 2025 (an increase of 1.5%). The increase in salary expense was more than offset by a decrease in health insurance expense during the quarter, and other operating expense increased $230 thousand.
- Income Tax: The effective income tax rate was 19.9% for the second quarter of 2026 and 19.3% for the same period in 2025.
IncomeStatementHighlights - Year-to-date Comparison 2026 v. 2025
- Net Income: Net income for the first six months of 2026 was $13.2 million ($2.94 per diluted share) compared to $9.8 million ($2.20 per diluted share) for the same period in 2025, an increase of 34.8%.
- NetInterestIncome: $37.9 million for the first six months of 2026 compared to $32.8 million for the same period in 2025, an increase of $5.0 million or 15.3%. The improvement was driven primarily by a decrease in interest expense, as the increase in interest from loans was partially offset by a decrease in interest from the investment portfolio.
- Provision for Credit Losses: For the first six months of 2026, the provision for credit losses on loans was $1.8 million compared to $1.5 million for the same period of 2025. The provision for credit losses on unfunded commitments was $58 thousand for the first six months of 2026 compared to a reversal of $40 thousand for the same period of 2025.
- Noninterest Income: Noninterest income totaled $10.5 million for the first six months of 2026 compared to $9.7 million for the same period of 2025, an increase of 8.7%. The increase was spread across nearly all fee income categories with the largest increases in wealth management fees and gains on loan sales and deposit fees.
- NoninterestExpense: For the first six months of 2026, noninterest expense was $30.0 million compared to $29.0 million for the same period of 2025 (an increase of 3.4%). The increases occurred primarily in salaries, professional fees, and Pennsylvania shares tax, and were partially offset by a decrease in FDIC insurance premiums.
- Income Tax: The effective income tax rate was 20.0% for the first six months of 2026 and 19.0% for the same period in 2025.
(1) Non-GAAP measure. See GAAP versus Non-GAAP Reconciliation Presentations that follows.
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 $2.3 billion. Its wholly-owned subsidiary, F&M Trust, has twenty-two community banking locations in Franklin, Cumberland, Dauphin, 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 occurringafter thebalance sheetdateformatterswhichmayrequireadjustment to,or disclosurein,theconsolidatedfinancialstatements.Thereviewperiodforsubsequentevents extendsuptoandincluding thefiling dateofa publiccompany'sconsolidated financial statementswhenfiled with theSecurities and Exchange Commission ("SEC''). Accordingly,thefinancialinformation in this announcementis subject to change.
Certain statements appearingherein which arenot historical in natureare forward-lookingstatementswithinthe meaningofthe Private Securities LitigationReform Actof I995.Such forward-lookingstatements referto afuture period or periods,reflecting management's current views as to likely future developments, and use words "may," "will," "expect," "believe,""estimate," "anticipate,"orsimilar 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 contemplatedinsuchstatements.Thesefactorsinclude (butarenotlimited to)thefollowing:changes ininterest rates,changesin the rate of inflation,general economic conditions and their effect on the Corporation and our customers, changes in the Corporation's costof funds,changes in government monetarypolicy, changes in government regulationand taxation of financial institutions, changes in technology, the intensification of competitionwithin the Corporation's market area, and other similar factors.
Wecautionreadersnot toplace undue reliance on theseforward-looking statements.Theyonly reflectmanagement's analysisas of this date. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review theriskfactorsdescribed in otherdocuments theCorporation files fromtime totime with the SEC,includingthe AnnualReports on Form 10-K,Quarterly Reports on Form 10-Q,andanyCurrent Reportson Form 8-K.
FRANKLIN FINANCIAL SERVICES CORPORATION (unaudited)
Income Statement
For the Three Months Ended
For the Six Months Ended
(Dollars in thousands, except per share data) 6/30/2026 3/31/2026 6/30/2025 6/30/2026 6/30/2025 % Change
Interest income
Loans, including fees $
23,159 $
22,567 $
21,425 $
45,727 $
41,289 10.7 %
Interest and dividends on investments:
Taxable interest 3,480 3,616 4,524 7,096 9,349 -24.1 %
Tax exempt interest 265 266 269 530 540 -1.9 %
Dividend income 201 202 189 404 379 6.6 %
Interest-earning deposits in other banks 1,826 1,119 2,193 2,944 4,101 -28.2 %
Total interest income 28,931 27,770 28,600 56,701 55,658 1.9 %
Interest expense
Deposits 7,202 6,887 8,918 14,089 17,948 -21.5 %
FHLB overnight borrowings and advances 2,181 2,157 2,181 4,339 4,339 0.0 %
Subordinate notes 201 205 263 406 528 -23.1 %
Total interest expense 9,584 9,249 11,362 18,834 22,815 -17.4 %
Net interest income 19,347 18,521 17,238 37,867 32,843 15.3 %
Provision for credit losses - loans 1,600 202 704 1,802 1,454 23.9 %
Provision for credit losses - unfunded commitments 39 19 (69) 58 (40) -245.0 %
Total provision for credit losses 1,639 221 635 1,860 1,414 31.5 %
Net interest income after credit loss expense 17,708 18,300 16,603 36,007 31,429 14.6 %
Noninterest income
Wealth management fees 2,567 2,306 2,419 4,873 4,633 5.2 %
Loan service charges 289 238 294 527 503 4.8 %
Gain on sale of loans 227 318 132 545 241 126.1 %
Deposit service charges and fees 694 647 613 1,341 1,218 10.1 %
Other service charges and fees 521 482 480 1,002 963 4.0 %
Debit card income 632 618 608 1,251 1,167 7.2 %
Increase in cash surrender value of life insurance 135 132 116 267 230 16.1 %
Change in fair value of equity securities 0 (7) -100.0 %
Other 84 619 441 703 716 -1.8 %
Total noninterest income 5,149 5,360 5,103 10,509 9,664 8.7 %
Noninterest Expense
Salaries 6,453 6,237 6,210 12,690 12,386 2.5 %
Employee benefits 2,162 2,788 2,654 4,949 4,984 -0.7 %
Net occupancy 1,178 1,241 1,146 2,419 2,371 2.0 %
Marketing and advertising 362 426 353 788 786 0.3 %
Legal and professional 556 695 537 1,251 1,064 17.6 %
Data processing 1,578 1,540 1,514 3,119 3,071 1.6 %
Pennsylvania bank shares tax 236 254 137 490 297 65.0 %
FDIC Insurance 367 483 409 850 954 -10.9 %
ATM/debit card processing 383 377 344 760 683 11.3 %
Telecommunications 128 135 109 262 216 21.3 %
Other 1,206 1,177 976 2,382 2,153 10.6 %
Total noninterest expense 14,609 15,353 14,389 29,960 28,965 3.4 %
Income before income taxes 8,248 8,307 7,317 16,556 12,128 36.5 %
Income tax expense 1,637 1,670 1,409 3,308 2,299 43.9 %
Net income $
6,611 $
6,637 $
5,908 $
13,248 $
9,829 34.8 %
Per share
Basic earnings per share $
1.47 $
1.48 $
1.32 $
2.95 $
2.21
Diluted earnings per share $
1.47 $
1.48 $
1.32 $
2.94 $
2.20
Consolidated Balance Sheet (as of) 6/30/2026 3/31/2026 6/30/2025
(Dollars in thousands, except per share data)
Assets
Cash and due from banks $
25,560 $
23,976 $
27,426
Short-term interest-earning deposits in other banks 169,471 186,801 180,364
Total cash and cash equivalents 195,031 210,777 207,790
Long-term interest-earning deposits in other banks 750 750 999
Debt securities available for sale, at fair value 452,345 436,483 481,259
Restricted stock 8,985 8,897 8,894
Loans held for sale 2,797 1,850 1,486
Loans 1,610,619 1,572,426 1,519,157
Allowance for credit losses (21,864) (20,729) (19,122)
Net Loans 1,588,755 1,551,697 1,500,035
Other assets 86,518 87,064 86,282
Total assets 2,335,181 2,297,518 2,286,745
Liabilities
Deposits
Noninterest-bearing checking 341,103 331,658 294,034
Money management, savings, and interest checking 1,354,833 1,319,494 1,279,602
Time 228,652 238,558 319,835
Total deposits 1,924,588 1,889,710 1,893,471
Federal Home Loan Bank advances 200,000 200,000 200,000
Subordinate notes 10,855 10,850 19,719
Other liabilities 15,893 18,214 16,191
Total liabilities 2,151,336 2,118,774 2,129,381
Shareholders' equity
Common Stock 4,711 4,711 4,711
Additional paid-in capital 44,135 43,776 43,763
Retained earnings 165,085 160,001 146,403
Accumulated other comprehensive loss (23,458) (23,265) (30,784)
Treasury stock (6,628) (6,479) (6,729)
Total shareholders' equity 183,845 178,744 157,364
Total liabilities and shareholders' equity $
2,335,181 $
2,297,518 $
2,286,745
Assets Under Management as of (fair value) 6/30/2026 3/31/2026 6/30/2025
Wealth Management $
1,326,643 $
1,271,068 $
1,221,333
Held at third party brokers 154,826 145,477 138,763
Total assets under management $
1,481,469 $
1,416,545 $
1,360,096
Key performance ratios as of or for the period ended as shown:
As of or for the Three Months Ended As of or for the Six Months
Ended
Performance Measurements 6/30/2026 3/31/2026 6/30/2025 6/30/2026 6/30/2025
Return on average assets* 1.14 % 1.20 % 1.04 % 1.17 % 0.89 %
Return on average equity* 14.80 % 15.13 % 15.64 % 14.96 % 13.27 %
Efficiency ratio (1) 59.07 % 63.64 % 63.71 % 61.33 % 67.37 %
Net interest margin* 3.50 % 3.53 % 3.21 % 3.52 % 3.13 %
Shareholders' Value (per common share)
Diluted earnings per share $
1.47 $
1.48 $
1.32 $
2.94 $
2.20
Regular cash dividend paid $
0.34 $
0.33 $
0.33 $
0.67 $
0.65
Dividend payout ratio 23.10 % 22.30 % 24.92 % 22.70 % 29.39 %
Book value, per share $
40.91 $
39.78 $
35.22
Tangible book value (1) $
38.90 $
37.78 $
33.20
Market value, per share $
62.60 $
51.08 $
34.63
Market value/book value ratio 153.02 % 128.40 % 98.31 %
Market value/tangible book value ratio 160.91 % 135.22 % 104.28 %
Price/earnings multiple* 10.65 8.63 6.56
Current quarter dividend yield* 2.17 % 2.58 % 3.81 %
Safety and Soundness
Net loans recovered (charged-off)/average loans* -0.12 % -0.03 % 0.00 % -0.07 % 0.00 %
Nonperforming loans / gross loans 1.10 % 0.54 % 0.71 %
Nonperforming assets / total assets 0.76 % 0.37 % 0.47 %
Allowance for credit losses / loans 1.36 % 1.32 % 1.26 %
* Annualized
(1) Non-GAAP measurement. See GAAP versus Non-GAAP disclosure reconciliation
GAAP versus non-GAAP Reconciliation 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, 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
6/30/2026 3/31/2026 6/30/2025
Tangible Book Value (per share) (non-GAAP)
Shareholders' equity $
183,845 $
178,744 $
157,364
Less intangible assets (9,016) (9,016) (9,016)
Tangible book value 174,829 169,728 148,348
Shares outstanding (in thousands) 4,494 4,493 4,468
Tangible book value per share $
38.90 $
37.78 $
33.20
For the three months ended For the Year to date period
ended
Efficiency Ratio (non-GAAP) 6/30/2026 3/31/2026 6/30/2025 6/30/2026 6/30/2025
Noninterest expense $
14,609 $
15,353 $
14,389 $
29,960 $
28,965
Net interest income 19,347 18,521 17,238 37,867 32,843
Plus tax equivalent adjustment to net interest income 237 245 245 474 490
Plus noninterest income, net of securities gains/losses 5,149 5,360 5,103 10,509 9,664
Total revenue $
24,733 $
24,126 $
22,586 $
48,850 $
42,997
Efficiency ratio: noninterest expense /total revenue 59.07 % 63.64 % 63.71 % 61.33 % 67.37 %
View original content to download multimedia:https://www.prnewswire.com/news-releases/franklin-financial-reports-second-quarter-and-year-to-date-2026-results-declares-dividend-302833582.html
SOURCE Franklin Financial Services Corporation
Matthew D. Weaver (717) 261-3665