Franklin Financial Reports Second Quarter and Year-to-Date 2026 Results; Declares Dividend

Franklin Financial Reports Second Quarter and Year-to-Date 2026 Results; Declares Dividend 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.

A summary of notable operating results as of or for the second quarter ended June 30, 2026 follows:

A summary of notable operating results for the six months ended June 30, 2026 follows:

Balance Sheet Highlights

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:

Income Statement Highlights – Second Quarter Comparison 2026 v. 2025

Income Statement Highlights – Year-to-date Comparison 2026 v. 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 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 I995. 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 (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

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

(69)

(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

—

(7)

-100.0 %

Other

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

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

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

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

0.67

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)

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

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 %

SOURCE Franklin Financial Services Corporation