2013 Annual Report
W OF CONTENTS
A MESSAGE TO OUR SHAREHOLDERS . . . . . . . . . . . 1
SUMMARY OF SELECTED FINANCIAL DATA . . . . . 21
F&M TRUST SENIOR MANAGEMENT TEAM . . . . . 16
FFSC DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . 22
F&M TRUST OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . 17
FFSC SHAREHOLDERS’ INFORMATION . . . . . . . . . . 23
CONSOLIDATED FINANCIAL HIGHLIGHTS . . . . . . . 20
F&M TRUST COMMUNITY OFFICE LOCATIONS . . 24
01
A Message to Our Shareholders
William E. Snell, Jr. /President and Chief Executive Officer
Dear Shareholders,
Franklin Financial reported earnings of $6,232,000 in 2013, representing a 16.2% increase
over our 2012 earnings of $5,365,000. Diluted earnings per share increased from $1.32 per
share in 2012 to $1.51 per share in 2013.
As a shareholder, you received cash dividends of $0.68 per share in 2013, compared with
$0.78 per share in 2012. This decrease resulted from our decision to reduce the dividend
from $0.27 per share to $0.17 per share in the second quarter of 2012 in order to avoid the
need to raise substantial additional capital, thereby significantly diluting our shareholders.
This action, coupled with investments from existing and new shareholders, through our
enhanced Dividend Reinvestment and Stock Purchase Plan, has been successful in boosting
our capital ratios. Our current dividend payout represents a 4% return based upon the clos-
ing price of Franklin Financial Stock at December 31, 2013. Our dividend payout remains in
the upper end of our peer banking group range.
Franklin Financial reported earnings
of $6,232,000 in 2013, representing a
16.2% increase.
The market value of a share of Franklin Financial stock rebounded from a closing price of
$14.00 at December 31, 2012 to $17.10 at December 31, 2013.
Our Tax Equivalent Net Interest Income in 2013 declined by $675,000 or 2%, reflecting weak
loan demand, intense competition for quality loans, as well as the Federal Reserve’s con-
tinuing initiative to keep interest rates low in order to stimulate the economy. Non-Interest
Income increased by $426,000 or 4.5%, reflecting a solid 8.4% increase in Investment and
Trust Services Fee Income as well as a 56% reduction in write-downs on Other Real Estate
Owned (OREO).
02
Our Dividend Yield remains in the upper end of
our peer banking group range.
Non-Interest Expense increased by $493,000 or
year of a decline in Net Charge-Offs. Our Net
1.6% in 2013 as we held salary and benefit
Charge-Off ratio improved to .49% in 2013 as
expenses flat while FDIC Insurance Premiums
compared to .60% in 2012. At year end, our
declined by $114,000.
Allowance for Loan Losses as a percentage
of Total Loans stood at 1.34%.
In the fourth quarter of 2013, we recorded a
nonrecurring expense of $667,000 for a deferred
Non-Accruing Loans totaled $24,643,000 at
compensation plan assumed in our acquisition
year-end 2013, representing a 32% decline from
of Fulton Bancshares Corporation in 2006. At
the $36,394,000 total at year-end 2012. We con-
the time of the acquisition, information provided
tinue to work diligently to exit our problem
by the FDIC indicated that this payout was con-
credits and are optimistic that we will continue
sidered a non-permissible “golden parachute”
to make significant progress in 2014.
payment and; therefore, not accrued in prior
years. The FDIC’s ruling was challenged by the
Franklin Financial’s Total Assets declined from
beneficiary of the deferred compensation plan
$1,027,363,000 at year-end 2012 to $984,587,000
and, more than seven years later, the FDIC
at December 31, 2013, as we opted to let higher
reversed its decision, thereby permitting the
cost deposits roll off in light of sluggish loan
payment…which resulted in our decision to
demand. Net loans outstanding declined by 4%
fully accrue this liability in the fourth quarter.
on a year-over-year basis while average loan
Obviously, our Net Income increase in 2013
outstandings decreased by 3.5%.
would have been significantly higher without
this reversal in the FDIC’s position.
Commercial Loan demand was spotty and, cou-
Our Provision for Loan Losses decreased 44%
average outstandings in the commercial portfo-
from $5,225,000 in 2012 to $2,920,000 as Net
lio declined by $34,343,000 or 5.5%. Average
Charge-Offs decreased from $4.6 million to $3.6
consumer loan outstandings decreased by 12%
million. This marked the second consecutive
to $69,608,000 as consumers continued to be
pled with the exit of several problem loans,
03
Financial Highlights
Total Assets
As dollars in millions
Net Loans
As dollars in millions
Total Deposits and Repos
As dollars in millions
9
7
9
2
5
9
0
9
9
7
2
0
,
1
5
8
9
1
3
7
0
4
7
7
5
7
3
4
7
4
1
7
7
1
9
0
7
8
1
4
8
4
9
7
5
8
7
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
Net Income
As dollars in millions
Regular Cash Dividends Paid
As dollars per share
2
1
6
.
7
5
8
5
.
6
9
6
5
.
6
2
3
2
.
5 6
6
3
.
5
8
0
.
1
8
0
.
1
8
0
.
1
8
7
.
0
8
6
.
0
ROA/ROE
As percentage values
ROE
Tangible ROE
9
7
.
0
1
9
6
.
8
7
2
.
1
1
4
3
.
9
5.5
0
3
.
9
8
6
.
7
8
6
.
7
2
2
7
7
.
.
6
6
1.5
4
1
.
7
0
0
.
6
4
7
.
0
9
6
.
0
2
8
.
0
8
7
.
0
0
7
.
0
6
6
.
0
4
6
.
0
1
6
.
0
5
5
.
0
1
5
.
0
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
Tangible ROA
ROA
04
hesitant to add debt and focused on increasing
grew by 10.4% to $574,700,000 at December 31,
liquidity. Average residential mortgage loan
2013, reflecting the addition of new client rela-
outstandings increased by 29% as we retained
tionships and higher market valuations. Assets
more originations in the portfolio.
Under Management as reported do not include
approximately $130,000,000 in assets held at
Total Deposits and Repurchase Agreements as
third party brokers at year-end. Investment and
measured at December 31, 2013 decreased by
Trust Service fee income, including revenue
5.1% while average Deposits and Repurchase
generated through our brokerage offerings,
Agreements increased by 1.9%. Average Core
increased 8.4% to $4,429,000 in 2013.
Deposits (i.e. checking, savings, and interest-
bearing checking) increased by $60,310,000
Our financial condition remains strong as evi-
or 20.9%. Average balances in our Money
denced by a Total Risk Based Capital Ratio of
Management Account product increased by
14.24% and a Leverage Capital Ratio of 9.14%.
$20,750,000 or 5.7%.
These ratios remain above the levels that fed-
eral regulators require for an institution to be
The market value of Assets Under Management by
considered “well-capitalized.” Franklin Financial’s
our Investment and Trust Services Department
Tangible Common Equity Ratio also improved
from 8.01% to 8.79% at year-end 2013.
Shareholder services team: Lee Ann Novak, Joyce Riley, Cathy Angle
05
AVERAGE CORE DEPOSITS INCREASED BY
OVER $60 MILLION OR 20.9%
During 2013, we made two significant additions
experience to F&M Trust, most recently having
to our Management Group. Jane Tompkins
served as President of the Capital Region of
joined us in May as Senior Vice President and
Susquehanna Bank where he had responsibility
Risk Management Officer. Jane has an extensive
for all commercial banking and retail operations
background in commercial lending and credit
in a region that included 13 branches.
management during her 39 years in banking. As
Risk Management Officer, she is responsible for
At F&M Trust, Steve is responsible for managing
ensuring that we maintain adequate policies to
our Commercial Services Department, including
control credit, operational, compliance and other
cash management, merchant services, commercial
risks. Her duties also include managing our
lending, and the credit department. We are
enterprise risk management program, ensuring
delighted to have both Jane and Steve aboard.
the overall quality of the Bank’s loss portfolio
and acting as a liaison with our internal audit
We continued to enhance banking convenience
and loan review firms.
for our customers through advancements in
technology throughout 2013. In March, we intro-
Steve Butz joined us in November as Senior Vice
duced Online Account Creation, giving custom-
President and Commercial Services Market
ers the ability to open accounts online. We
Manager. Steve brings almost 30 years of
added Mobile Xpress Deposit in July, enabling
06
INVESTMENT & TRUST SERVICES FEE INCOME
INCREASED 8.4% IN 2013
retail customers to deposit checks from home,
advisor and wealth management platforms are
work, or nearly anywhere, simply by taking a
key components in our strategy of deepening
photo of the items with their smart phone and
customer relationships by creating customized
electronically presenting them for deposit.
financial plans to enable customers to meet
Mobile Xpress Deposit for Small Businesses
their defined goals.
was added in December. We also provided
customers with the ability to create their own
We also embarked on a comprehensive study of
customized Freedom Cards (MasterCard Debit
our current community offices network as well
Card) by selecting an image from their PC,
as “self-service” delivery channels, including
Facebook, Twitter, Flicker, or Picasa, customize
ATMs, Mobile Banking and Internet Banking,
the image, and create the card.
with the objective of increasing market penetra-
tion and profitability. This initiative will result in
In September, our Investment and Trust Services
a five-year plan for the development of new or
Department converted its non-trust brokerage
transformed community offices, more fully inte-
to Cetera Investment Services, LLC and is now
grated with our “self-service” delivery channels,
operating under the private label of “F&M
incorporating measurable financial objectives.
Investment Services.” Cetera Investment
We may also conclude that certain offices may
Services, LLC provides customized investment
not have the potential to achieve the desired
and insurance solutions solely to financial insti-
level of profitability…one example was our
tutions. The key factors in the selection of our
Hanover Street Office, which we closed in
new broker dealer was Cetera’s self-clearing
January of this year.
status and its innovative technology. Cetera’s
07
During 2014, we will be upgrading our PCs
January and has been working with Cathy to
and servers with a more current version of the
ensure a smooth transition in this position.
Microsoft Operating System, as well as our doc-
ument imaging system. We also plan to upgrade
We anticipate that 2014 will be yet another chal-
our Business Remote Deposit Capture system
lenging year for financial institutions with a
and offer loan billing statements online by
continuation of the low interest rate environ-
mid-year.
ment, soft loan demand and additional regula-
tions for financial institutions. Your continued
Finally, I’d like to recognize and thank Cathy Angle,
support as Franklin Financial shareholders is
who will be retiring in May after 11 years of ser-
very much appreciated.
vice as Corporate Secretary of Franklin Financial
and F&M Trust, as well as my Executive
Sincerely,
Assistant, for her professionalism, dedication,
and many contributions. It has been my plea-
sure to work with Cathy and she will be missed.
William E. Snell, Jr.
I am delighted that Lee Ann Novak joined us in
President & CEO
08
Zoe’s Chocolates
Waynesboro
In 2007, siblings Zoë, Petros and Pantelis
Today, Zoë’s Chocolate Co. serves more than
Tsoukatos established Zoë’s Chocolate Co.
100 retailers nationally. The company’s superior
to begin a third generation of passionate choco-
quality has earned it the honor of providing
latiers. What started in the early 1900s with
chocolates for the 2013 Oscars, 2013 White
Zoë’s Great Aunt Mary and Uncle Jim who left
House Correspondents’ Dinner, and 2011
Greece and started a pushcart confectionery
Emmy Awards.
business, evolved into a permanent storefront
in Waynesboro, with Zoe’s grandfather Petros
With a nicely growing business, the Tsoukatoses
joining them. George Tsoukatos came to visit
look to Natasha Koons—Waynesboro Community
America, fell in love with Petros’ daughter, and
Office manager and her staff for responsive
joined the business—becoming a master choco-
service and fast, local answers.
latier and father of three children who now run
the business.
Zoë, Petros and Pantelis Tsoukatos of Zoë’s Chocolates with Natasha Koons
09
The Butcher Shoppe
Chambersburg
The Butcher Shoppe in Chambersburg evolved
The Butcher Shoppe and its attached Big
from “Kennie’s Market,” a 1957 partnership
Oak Cafe offer “market style” customer shop-
between Kenneth Foust and Glenn Koons. In
ping and dining experiences. The Keaths like
1964, it was renamed Scotland Road Market.
the 100% local attention they get from Shaun
A second location on Stouffer Avenue opened
Young—Norland Avenue Office Manager and
in 1977 and houses the current operation well
Phil Pantano—Commercial Services Officer to
known as The Butcher Shoppe. In 2006, Mary
meet their financial needs for borrowing, cash
Sue and Frank Keath, Glenn and Lorraine Koons’
management, payroll, and more.
daughter and son-in-law purchased the company
and now run it with their children, Adam, Ann,
and Kyle.
Shaun Young, Frank Keath of the Butcher Shoppe, and Phil Pantano
10
Thomas E. Brown Auto Body Werks
Mechanicsburg
Since 1960, the Mechanicsburg community has
Lance’s relationship with Matt Harshbarger—
relied on the Thomas E. Brown Auto Body Werks
Commercial Services Officer, started when the
business to provide exceptional body work on cars
expanding business constructed their new build-
and trucks—no matter the year, make, or model.
ing. Lance noted, “I like Matt and F&M Trust
Today, second-generation owner Lance Bonsall
work. They get the job done. I really appreciate
continues the tradition of superior quality and
the bank’s commitment to its customers.”
because of their honesty, integrity, and hard
service—relying on well-trained employees,
industry-certified technicians, and a 12,000-
square-foot state-of-the-art workshop.
Lance Bonsall of Thomas E. Brown Auto Body Werks and Matt Harshbarger
11
Cumberland Valley Tree Service
Chambersburg
Cumberland Valley Tree Service and Landscaping
Franklin counties in Pennsylvania, as well as in
is a family-owned business that provides land-
Frederick and Washington counties in Maryland.
scaping artistry, holistic plant health care,
and comprehensive tree care by ISA Certified
For the past decade, they have been working
Arborists.
with Ron Froeschle, Vice President—Employee
Benefits Specialist, and the F&M Trust team
Established in 1978 by George & Nancy Pogue,
for retirement planning, business banking and
Sr., today the company’s day-to-day operations
lines of credit. With more than 40 years of
are run by their son, George Pogue, Jr. and his
financial experience, Ron helps clients like the
wife Lisa. And Cumberland Valley Tree Service
Pogues with their financial needs and goals.
has branched out into Cumberland, Adams and
Ron Froeschle with Lisa and George Pogue, Jr, and Kelly Schooley and Cumberland Valley Tree Service
12
Carlisle Evangelical Free Church
Carlisle
Carlisle Evangelical Free Church was established
When the church was looking to expand two
in 1985 when a small group of parishioners from
years ago and needed financing assistance,
the West Shore saw a need for a local church in
they chose F&M Trust and moved all of their
Carlisle. Today, average weekly attendance is
banking accounts. They liked the competitive-
nearly 1,000 worshipers. Since the church doesn’t
ness of the bank’s products, its community
set any geographic boundaries for attending,
focus, and local decision making process. And
people gather from a large surrounding area,
they find Dave Zimmerman, Vice President—
from Mechanicsburg to near Chambersburg.
Commercial Services, is good to work with
because he genuinely understand their needs
Church staff currently includes four pastors, two
and goals.
directors, and seven part-time support staff.
David Zimmerman and Steve Wilmert, Kristine Barner, and Trevor Steele of Carlisle Evangelical Free Church
13
M&C Lumber
Needmore
In 1988, Mark and Connie Mellott purchased
Facing the financial challenges that most small
the Needmore lumber products business from
business owners deal with on a daily basis—
Mark’s father, starting an impressive 3rd
operational expenses, payroll, benefits and
generation of family ownership. Today, M&C
more, Mark and Connie turned to Don Trego—
Lumber Co. Inc. continues to provide quality
Small Business Relationship Manager and
wood products to businesses throughout their
Gerri Fischer—Warfordsburg Community Office
multi-state service region.
Manager for personalized service and custom-
ized banking solutions.
Don Trego, Mark and Connie Mellott of M&C Lumber and Gerri Fischer
14
Community Activism
Ed Bidelspach
F&M Trust employees, like Ed Bidelspach—
County. Safe Harbour operates an emergency
Ritner Highway Office Manager are active in the
shelter for families and single females who
community, serving on a variety of committees
are in desperate need of a secure place to live
and board, as well as volunteering at commu-
and an environment to begin getting their lives
nity events.
under control, temporary and permanent hous-
ing plus other fundamental services.
While it would be simple to write a check for a
worthy cause, F&M Trust believes that giving
That’s just one of the many organizations Ed
something more valuable can produce far greater
supports. He also provides time and talent to the
results—time and experience.
Salvation Army, Downtown Carlisle Association,
First Friday Committee, and others. He also has
Ed has been an active volunteer with Safe
been an active volunteer at the United Way Day
Harbour, Inc.’s Board of Directors for the past
of Caring, Toys for Tots parade, YMCA fund-raiser,
five years. As chairman, he offers his time
and West Pennsboro Fire Company car show.
and professional knowledge to help guide Safe
Harbour initiatives to provide a continuum of
It’s another part of what makes F&M Trust a
housing services for the homeless of Cumberland
true local, community bank.
15
Borough of Chambersburg
Chambersburg
Established in 1803, the Borough of Chambersburg
to be at the forefront in meeting important
offers a variety of services to residents and
Chesapeake Bay watershed quality standards
businesses. When it comes to services, it is
and add capacity to their sewer service network
very unique among Pennsylvania municipalities.
to allow for future growth with a waste water
It is the only municipality in the state to own
sewer upgrade in 2012. F&M Trust financed the
both electric and natural gas systems. The
project to improve and expand the Borough’s
electric system is the largest municipal elec-
waste water treatment facility, and to make
tric system in the state—by twice the size—
improvements to its electrical transmission
and the Borough is the sole municipality in the
system.
state that owns and operates electric generat-
ing plants.
After considering all bids, F&M Trust was selected
as the best overall choice providing superior
The Borough also has a regional water system,
bottom-line value, local convenience, and well-
as well as a regional sewer system including a
designed financial tools. Working with Mike
wastewater treatment facility. The sewer sys-
Metz, Vice President—Commercial Services,
tem provides treatment for Borough residents
Dianne Cornman—Cash Management Specialist,
and businesses as well as customers of the
and the bank’s staff, the borough officials have
Greene, Guilford and Hamilton Sewer Authorities.
been thrilled with the level of personalized ser-
In addition they provide public works, police,
vice received from their 100% local banking team.
fire and ambulance, and other services.
For many years they have relied on F&M Trust
for their banking deposit and cash management
services. The municipality saw an opportunity
Mike Metz with officials from the Borough of Chambersburg: Jason Cohen—Director of Finance/Treasurer,
Darren Brown—Mayor, Jeff Stonehill—Borough Manager/Director of Utilities,
and Allen Coffman, President of Council
16
Senior Management Team
From left to right:
Mark R. Hollar—Senior Vice President, Chief Financial Officer and Treasurer
Jane B. Tompkins—Senior Vice President, Risk Management Officer
Patricia A. Hanks—Senior Vice President, Retail Services Market Manager
Steven D. Butz—Senior Vice President, Commercial Services Market Manager
William E. Snell, Jr.—President and Chief Executive Officer
Lise M. Shehan, Esq.—Senior Vice President, Investment and Trust Services Manager
Kenneth C. Ditzler—Senior Vice President, Marketing and Corporate Communications Manager
Ronald L. Cekovich—Senior Vice President, Technology Services Manager
Karen K. Carmack, SPHR—Senior Vice President, Human Resources Manager, Affirmative Action and
HIPAA Privacy Officer
Senior Management Team—from Left to Right: Mark R. Hollar, Jane B. Tompkins, Patricia A. Hanks,
Steven D. Butz, William E. Snell, Jr., Lise M. Shehan, Esq., Kenneth C. Ditzler, Ronald L. Cekovich,
Karen K. Carmack, SPHR
17
Officers
Relationship Management
Division
Maria S. Seabra
Credit Analyst
Commercial Services
Dianne L. Cornman, CTP
Vice President—Cash Management
Specialist
William D. Feist IV
Vice President
Michael S. Metz
Vice President
Philip A. Pantano
Vice President
Katherine M. Powley
Vice President
David P. Zimmerman
Vice President
Kathleen M. Bloss
Assistant Vice President
Senior Credit Analyst
Mary S. Cordell
Assistant Vice President
Matthew D. Harshbarger
Assistant Vice President
Brian C. Reidell
Assistant Vice President
Merchant Services Specialist
Kelly J. Bricker
Credit Analyst
Jeramy D. Culler
Small Business Credit Analyst
Eric J. Fleming
Credit Department Manager
Jennifer D. Kaiser
Commercial Services Support
Specialist
Danielle J. Meredith
Credit Analyst
Retail Services
L. Kay Estep
Assistant Vice President
GO Club Coordinator
Chambersburg Market Offices:
Lincoln Way East Office
Lisa A. Hogue
Financial Services Officer and Manager
Tina M. Bricker
Assistant Financial Services Officer
and Assistant Manager
Memorial Square Office
Philadelphia Avenue Office
Eric L. Alleman
Financial Services Officer and
Manager
Norland Avenue Office
Shaun M. Young
Assistant Vice President and Manager
St. Thomas Office
Dana L. Kaiser
Financial Services Officer and
Manager
West Side Office
N. Joy Weller
Vice President and Manager
Southern Franklin County
Market Offices:
Renee L. Preso
Assistant Vice President
Southern Franklin County Market
Manager
Summer Franzoni
Assistant Vice President and Manager
Lynn A. Waite
Assistant Vice President
Kimberly S. McKenrick
Assistant Vice President
Michele A. Williams
Assistant Financial Services Officer
and Assistant Manager
Orchard Park Office
Antonia L. Diffenderfer
Assistant Vice President and Manager
Penn Hall and Menno Village Offices
Barbara A. Seylar
Financial Services Officer and
Manager
Greencastle Office
Kimberly M. Smith
Financial Services Officer and
Manager
Marion Office
Vicky L. Carson
Assistant Financial Services Officer
and Assistant Manager
Mont Alto Office
Sarah S. Stansfield
Financial Services Officer and
Manager
Don Trego, Mark and Connie Mellott of M&C Lumber and Gerri Fischer
18
OFFICERS
Waynesboro Office
Natasha J. Koons
Financial Services Officer and
Manager
Chastity L. Wantz
Assistant Financial Services Officer
and Assistant Manager
Cumberland County
Market Offices:
Robert D. Weed
Vice President
Cumberland County Market Manager
Christopher J. Fitting
Small Business Relationship Manager
Boiling Springs Office
Kevin M. Stoner
Financial Services Officer and
Manager
Carlisle Crossing Office
David R. Winters
Assistant Vice President and Manager
Mechanicsburg Office
Cydnie Kelly
Financial Services Officer and
Manager
Newville Office
Ellen L. Ile
Financial Services Officer and
Manager
Ritner Highway Office
I. Edward Bidelspach
Assistant Vice President and Manager
Shippensburg Office
Barbara A. Hoover
Financial Services Officer and
Manager
Fulton & Huntingdon County
Market Offices:
Joyce E. Ritchey
Vice President
Fulton & Huntingdon County
Market Manager
Investment & Trust Services
Marissa Pinto Burt
Investment & Trust Services Market
Manager
Warren M. Hurt
Vice President
Senior Investment Portfolio Manager
David Y. Luo, CFA
Investment Portfolio Manager
Donald L. Trego
Assistant Vice President
Small Business Relationship Manager
Carole L. Crist
Vice President
Investment & Trust Services
Hustontown Office
Bertha A. Peffer
Financial Services Officer and
Manager
McConnellsburg Office
Mary E. Wright
Financial Services Officer and
Manager
Warfordsburg Office
Geraldine A. Fischer
Financial Services Officer and
Manager
Consumer Lending Services
Kristen G. Appleby
Consumer Lending Manager
Mark E. Bitting
Mortgage Production Manager
Ronald R. Froeschle, QPA, QKA
Vice President
Employee Benefits Officer
David C. Gority
Vice President
Investment & Trust Services
James P. Probst
Vice President
Investment & Trust Services
Diana L. Sponseller, CISP
Vice President
Investment & Trust Services
Dennis L. Wilson, CTFA
Vice President
Investment & Trust Services
Matthew T. Brennan
Assistant Vice President
Investment & Trust Services
19
OFFICERS
Avis M. Graham, CFP®, RFC, CASL
Assistant Vice President
Investment & Trust Services
Human Resources
Levi L. Crouse
Human Resources Officer
Andrew M. Otto
Investment & Trust Services
Relationship Manager
Matthew W. Berger
Investment & Trust Services
Assistant Relationship Manager
Heather C. Hershey
Estate Administration Officer
Robin L. Murray
Trust Operations Manager
Marketing
Samantha J. Burke
Marketing Officer
Melissa D. Miller
Marketing Officer
Facilities
Barry L. Shetter
Assistant Vice President
Facilities Manager
Finance & Control
Kim A. Brant
Asset-Liability Analyst
Amy B. Herrold
Controller
Christina L. Yoder
Training & Development Officer
Corporate
Catherine C. Angle
Corporate Secretary
Lee Ann Novak
Corporate Secretary
Joyce A. Riley
Assistant Corporate Secretary
Risk Management Division
Olaf R. Hasse
Vice President
Loan Portfolio Risk
Management Officer
Eric M. Follin
Documentation Review Officer
Matthew R. Shank
Assistant Documentation Review Officer
Janet E. Stamper
Assistant Documentation Review Officer
Compliance
Lorie M. Heckman, CRCM
Vice President
Rainbow D. Hopkins
Security Officer
Mary F. Cramer
Bank Secrecy Act and OFAC Analyst
David W. Smith
Bank Secrecy Act and OFAC Analyst
Sheryl R. Snider
Assistant Compliance Officer
Credit Administration
William A. Pryor
Vice President
Credit Recovery Manager
Robert K. Day
Commercial Credit Recovery Officer
Steven R. Gormont
Credit Recovery Officer
Technology Services Division
Matthew C. Clark
Assistant Vice President
Technology Services Officer
Pamela A. Johns
Assistant Vice President
Loan Servicing Manager
Patricia R. Ganoe
Deposit Operations Manager
Joshua S. Davis
Assistant Technology Services Manager
Carol L. Morris
Assistant Loan Servicing Manager
Stacey A. Stenger
Data Operations Manager
20
2013 CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share)
Performance Measurements
Net income
Return on average assets
Return on average equity
Return on average tangible assets(1)
Return on average tangible equity(1)
Efficiency ratio(2)
Net interest margin
Current dividend yield
Dividend payout ratio
Shareholders’ Value (per common share)
Diluted earnings per share
Basic earnings per share
Regular cash dividends paid
Book value
Tangible book value(3)
Market value
Market value/book value ratio
Price/earnings multiple
Balance Sheet Highlights
Total assets
Investment securities
Loans, net
Deposits and customer repurchase agreements
Shareholders’ equity
Safety and Soundness
Risk-based capital ratio (Total)
Leverage ratio (Tier 1)
Common equity ratio
Tangible common equity ratio(4)
Nonperforming loans/gross loans
Nonperforming assets/total assets
Allowance for loan losses as a % of loans
Net charge-offs/average loans
Average equity to average asset ratio
Trust assets under management (fair value)
2013
2012
% increase
(decrease)
$ 6,232
$
5,365
16
0.61%
6.72%
0.64%
7.86%
72.01%
3.47%
3.98%%
45.09%
1.51
1.51
0.68
22.88
20.55
17.10
72.01%
11.32
$
0.51%
6.00%
0.55%
7.14%
70.44%
3.50%
4.86%
59.09%
1.32
1.32
0.78
22.31
19.84
14.00
62.75%
10.61
$
$984,587
$1,027,363
159,674
713,711
869,558
95,388
133,328
743,200
916,649
91,634
14.24%
12.60%
9.14%
9.69%
8.79%
3.49%
3.04%
1.34%
0.49%
9.01%
8.29%
8.92%
8.01%
4.90%
4.10%
1.38%
0.60%
8.60%
14
14
(13)
3
4
22
(4)
20
(4)
(5)
4
$ 574,680
$ 520,434
10
(1) Excludes goodwill, intangibles and intangible amortization expense, net of tax
(2) Noninterest expense/tax equivalent net interest income plus noninterest income less net securities gains
(3) Total shareholders’ equity less goodwill and intangibles/shares outstanding
(4) Total shareholders’ equity less goodwill and intangibles/total assets less goodwill and intangibles
21
SUMMARY OF SELECTED FINANCIAL DATA
(Dollars in thousands, except per share)
Summary of Operations
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest income
Noninterest expense
Income before income taxes
Income tax
Net income
Performance Measurements
Return on average assets
Return on average equity
Return on average tangible assets(1)
Return on average tangible equity(1)
Efficiency ratio(2)
Net interest margin
Current dividend yield
Dividend payout ratio
Shareholders’ Value (per common share)
Diluted earnings per share
Basic earnings per share
Regular cash dividends paid
Book value
Tangible book value(3)
Market value
Market value/book value ratio
Price/earnings multiple
Balance Sheet Highlights
Total assets
Investment securities
Loans, net
Deposits and customer repurchase agreements
Shareholders’ equity
Safety and Soundness
Risk-based capital ratio (Total)
Leverage ratio (Tier 1)
Common equity ratio
Tangible common equity ratio(4)
Nonperforming loans/gross loans
Nonperforming assets/total assets
Allowance for loan losses as a % of loans
Net charge-offs/average loans
Average equity to average asset ratio
Trust assets under management
For the Year Ended December 31
2013
2012
2011
2010
2009
$ 36,042
4,378
31,664
2,920
28,744
9,877
31,094
7,527
1,295
$ 6,232
0.61%
6.72%
0.64%
7.86%
72.01%
3.47%
3.98%
45.09%
1.51
1.51
0.68
22.88
20.55
17.10
74.74%
11.32
$
$
$
$
39,142
6,890
32,252
5,225
27,027
9,451
30,601
5,877
512
5,365
0.51%
6.00%
0.55%
7.14%
70.44%
3.50%
4.86%
59.09%
1.32
1.32
0.78
22.31
19.84
14.00
62.75%
10.61
$ 41,791
9,154
32,637
7,524
25,113
10,200
28,333
6,980
411
$ 6,569
0.66%
7.68%
0.70%
9.30%
63.46%
3.73%
8.74%
65.05%
1.66
1.66
1.08
21.67
19.44
12.35
56.99%
7.44
$
$ 43,284
12,443
30,841
3,235
27,606
9,366
26,423
10,549
2,937
$ 7,612
0.78%
9.34%
0.82%
11.27%
63.43%
3.53%
5.92%
55.10%
1.96
1.96
1.08
21.09
18.38
18.25
86.53%
9.31
$
$ 43,757
14,674
29,083
3,438
25,645
8,880
25,929
8,596
2,011
$ 6,585
0.69%
8.69%
0.74%
10.79%
65.35%
3.44%
6.61%
62.95%
1.71
1.71
1.08
20.39
17.43
16.33
80.09%
9.55
$
$984,587
159,674
713,711
869,558
95,388
$1,027,363
133,328
743,200
916,649
91,634
$ 990,248
125,301
756,687
841,089
87,182
$ 951,889
117,616
739,841
785,495
82,639
$ 979,373
143,288
730,626
794,220
78,766
14.24%
9.14%
9.69%
8.79%
3.49%
3.04%
1.34%
0.49%
9.01%
12.60%
8.29%
8.92%
8.01%
4.90%
4.10%
1.38%
0.60%
8.60%
12.14%
8.40%
8.80%
7.82%
2.94%
2.60%
1.27%
0.86%
8.63%
11.73%
8.16%
8.68%
7.61%
3.68%
2.96%
1.18%
0.45%
8.36%
10.89%
7.50%
8.04%
6.94%
2.47%
1.93%
1.21%
0.26%
7.98%
(fair value)
$574,680
$ 520,434
$ 481,536
$ 490,420
$ 460,233
(1) Excludes goodwill, intangibles and intangible amortization expense, net of tax
(2) Noninterest expense/tax equivalent net interest income plus noninterest income less net securities gains
(3) Total shareholders’ equity less goodwill and intangibles/shares outstanding
(4) Total shareholders’ equity less goodwill and intangibles/total assets less goodwill and intangibles
22
Directors and Officers
FFSC Board of Directors
G. Warren Elliott
President, Cardinal Crossing, Inc.,
Former Franklin County Commissioner
William E. Snell, Jr.
President and Chief Executive Officer,
F&M Trust
Charles S. Bender II
Retired, F&M Trust Executive Vice
President
FFSC Officers
G. Warren Elliott
Chairman of the Board
Catherine C. Angle
Corporate Secretary
Martin R. Brown
President, M.R. Brown Funder Home, Inc.
Richard E. Jordan III
Vice President,
Smith Land & Improvement Corp.
Daniel J. Fisher
President and Chief Executive Officer,
D.L. Martin Company
Donald A. Fry
President, Cumberland Valley Rental
and Towne Cleaners, ANDOCO, Inc.
Allan E. Jennings, Jr.
President, Jennings Chevrolet,
Buick, GMC, Inc.
Stanley J. Kerlin, Esq.
Attorney,
Law Offices of Stanley J. Kerlin, LLC
Donald H. Mowery
President, R.S. Mowery & Sons, Inc.
Stephen E. Patterson, Esq.
Principal, Salzmann Hughes P.C.
Martha B. Walker, Esq.
Partner, Walker, Connor & Spang, LLC
William E. Snell, Jr.
President and Chief Executive Officer
Mark R. Hollar
Treasurer and Chief Financial Officer
Lee Ann Novak
Corporate Secretary
Joyce A. Riley
Assistant Corporate Secretary
Franklin Financial Service Corporation Board of Directors, front row (left to right): Donald A. Fry,
Charles S. Bender II, G. Warren Elliott, William E. Snell Jr, Martha B. Walker, and Daniel J. Fisher:
back row (left to right): Richard E. Jordan III, Donald H. Mowery, Allen E. Jennings Jr, Martin R. Brown,
Stephen E. Patterson, and Stanley J. Kerlin
23
Shareholder Information
Dividend Reinvestment Plan:
Franklin Financial Services Corporation offers a div-
Stock Information:
The following brokers are registered as market
idend reinvestment program whereby shareholders
makers of Franklin Financial Services Corporation’s
with stock registered in their own names may rein-
common stock:
vest their dividends in additional shares of the
Corporation. Information concerning this optional
program is available by contacting the Corporate
Secretary at 20 South Main Street, PO Box 6010,
Chambersburg, PA 17201-6010, telephone
717-264-6116.
Dividend Direct Deposit Program:
Franklin Financial Services Corporation offers a div-
idend direct deposit program whereby shareholders
Boenning & Scattergood, Inc.
4 Tower Bridge, 200 Bar Harbor Dr., Suite 300
West Conshohocken, PA 19428
800-883-1212
Raymond James Financial, Inc.
222 South Riverside Plaza, 7th Floor
Chicago, IL 60606
312-655-2975
with stock registered in their own names may choose
RBC Wealth Management
to have their dividends deposited directly into the
2101 Oregon Pike
bank account of their choice on the dividend payment
Lancaster, PA 17601
date. Information concerning this optional program
800-456-9234
is available by contacting the Corporate Secretary at
20 South Main Street, PO Box 6010, Chambersburg,
PA 17201-6010, telephone 717-264-6116.
Annual Meeting:
The Annual Shareholders’ Meeting will be held
Tuesday, April 29, 2014 at the Orchards Restaurant in
Chambersburg. The Business Meeting will begin at
9:00 a.m. and will be preceded by a breakfast buffet.
If interested in attending, please complete and
return the reservation form reply card by April 15th.
Market and
Dividend Information
Stifel, Nicolaus & Co.
20 Ash Street, Suite 400
Conshohocken, PA 19428
800-223-6807
Registrar and Transfer Agent:
The registrar and transfer agent for Franklin Financial
Services Corporation is Registrar & Transfer Company,
10 Commerce Drive, Cranford, NJ 07016-3572,
telephone 800-368-5948, email: info@rtco.com
Web site:
www.franklinfin.com
The Corporation’s common stock is not actively
Services Corporation common stock as listed above
traded in the over-the-counter market. The
under Stock Information.
Corporation’s stock is quoted on the OTCQB Market
Tier of the OTC Markets under the symbol “FRAF.”
Current price information is available from account
executives at most brokerage firms as well as the
registered market makers of Franklin Financial
There were 1,984 shareholders of record as of
December 31, 2013. The range of high and low bid
prices is shown below for the years 2013 and 2012.
Also shown are the regular quarterly cash dividends
paid for the same years.
2013
Per Share
High
Low
First quarter
$17.05
13.81
Second quarter
Third quarter
Fourth quarter
16.25
16.60
17.10
15.75
15.85
15.95
Cash
Dividends
Paid
$0.17
0.17
0.17
0.17
2012
Per Share
High
Low
First quarter
$15.85
12.30
Second quarter
Third quarter
Fourth quarter
15.75
14.29
14.75
12.86
13.10
13.65
Cash
Dividends
Paid
$0.27
0.17
0.17
0.17
24
Community Office/ATM Locations
Chambersburg Area
Lincoln Way East
1712 Lincoln Way East,
Chambersburg
264-9414
Memorial Square
20 South Main Street,
Chambersburg
264-6116
Menno Village
2075 Scotland Avenue,
Chambersburg
261-3697
Norland Avenue
870 Norland Avenue,
Chambersburg
262-2085
Orchard Park
841 Wayne Avenue,
Chambersburg
263-1801
Penn Hall
1425 Philadelphia Avenue,
Chambersburg
261-3660
Philadelphia Avenue
2405 Philadelphia Avenue,
Chambersburg
264-5122
St. Thomas
6962 Lincoln Way West,
St. Thomas
369-3240
West Side
1100 Lincoln Way West,
Chambersburg
263-9168
Southern Franklin
County
Greencastle
518 N. Antrim Way,
Greencastle
597-2384
Marion
5293 Main Street,
Marion
375-2200
Mont Alto
8 Park Street,
Mont Alto
749-3161
Waynesboro
200 East Main Street,
Waynesboro
762-2188
Cumberland County
Boiling Springs
3 East First Street,
Boiling Springs
241-4131
Camp Hill
3907 Market Street,
Camp Hill
731-9604
Carlisle Crossing
214A Westminster Drive,
Carlisle
243-2215
Carlisle Plaza Drive-Up
700 East High Street,
Carlisle
243-0416
Mechanicsburg Office
6375 Carlisle Pike,
Mechanicsburg
697-0444
Newville
51 South High Street,
Newville
776-2240
Ritner Highway
1901 Ritner Highway,
Carlisle
960-1400
Shippensburg
13 Shippensburg,
Shopping Center
530-2100
Fulton & Huntingdon
County
Hustontown
7781 Waterfall Road,
Hustontown
987-3193
McConnellsburg
100 Lincoln Way East,
McConnellsburg
485-3144
Orbisonia
18810 Sandy Ridge Station,
Orbisonia
814/447-3104
Penns Village
182 Buchanan Trail,
McConnellsburg
485-3167
Warfordsburg
560 Great Cove Road,
Warfordsburg
294-3288
Additional ATM
Locations
Fayetteville
4025 Lincoln Way East,
Fayetteville
Northgate Commons
1500 Northfield Drive,
Chambersburg
Quincy Village
6596 Orphanage Road,
Quincy
Penn National Clubhouse
3720 Club House Drive,
Fayetteville
Waynesboro Market Place
11123 Buchanan Trail East,
Waynesboro
Zullinger
4884 Buchanan Trail East,
Zullinger
Shippensburg West End
9966 Molly Pitcher Highway,
Shippensburg
Ayr Town Center
368 South 2nd Street,
McConnellsburg
Riverview Business Center
11734 Lenape Drive,
Mount Union
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P. O. Box 6010
Chambersburg, PA 17201
888.264.6116
www.franklinfin.com