Franklin Financial Services Corporation
Annual Report 2017

Plain-text annual report

A N N U A L R E P O R T M M X V I I P.O. Box 6010 | Chambersburg, PA 17201 888.264.6116 | Uncommon Independence “We need people who pay attention to the local areas, and F&M Trust certainly does that.” Jeremy Bowersox Grove-Bowersox Funeral Home, Inc. Table of Contents Shareholder Letter .........................................................................................................................................2 Stability Graphics .......................................................................................................................................5 Consolidated Financial Highlights ............................................................................................... 7 Snyder’s Gateway, Inc. ......................................................................................................................8 Board of Directors ...........................................................................................................................9 Public Library Systems ......................................................................................................... 10 2017 Community Highlights ...........................................................................................12 C&J Catering ........................................................................................................................13 Senior Management .................................................................................................... 14 Grove-Bowersox Funeral Home, Inc...............................................................15 Officers ..........................................................................................................................16 BWise Trailers .......................................................................................................19 Locations .............................................................................................................20 “I’m always impressed with F&M Trust’s generosity. Without them, we wouldn’t be able to offer the programs that we do.” Jamie Brambley Fulton County Library Cover: Snyder’s Gateway, Inc. Top to bottom: BWise Trailers; C&J Catering; Bosler Memorial Library; Grove-Bowersox Funeral Home, Inc. 3 Shareholder Letter DEAR FELLOW SHAREHOLDERS, Uncommon. When I think about 2017 it was an uncommon year positive manner without having to make changes to our for everyone. Whether you are talking about politics, weather, the successful operating strategies. stock market, taxes or the myriad of new social issues that we saw in 2017, it was an uncommon year. And, at Franklin Financial Services Corporation and F&M Trust, you can also find much that is “uncommon,” such as: • How the Company appreciates its wonderful customers, some who are featured in this annual report, who support their own employees, customers and communities by providing great products and services that benefit all of us in one way or another. It is an honor to be able to serve these customers and help them realize their goals and dreams. • The F&M Trust team of employees, who are responsible for the strong financial operating performance delivered for the Corporation’s shareholders and customers through the Bank’s Retail, Commercial and Investment and Trust services. These same employees, collectively and individually, also gave back willingly to the communities the Bank serves, through gifts of their time, talent and treasure, that enhance the areas we serve. • The price appreciation of the stock of Franklin Financial Services Corporation (FRAF), which, when combined with the dividend income, gave shareholders a 33.9% total return on their investment for the year 2017. In comparison, our shareholder’s total return eclipsed the total returns for the NASDAQ Composite, SNL Mid-Atlantic Bank and SNL Mid-Atlantic Bank ($1B–$2B) indexes. • The Corporation’s 2017 earnings were negatively affected by the passing of the Tax Cuts and Jobs Act, which required the Company to revalue its net deferred tax assets and take the write down of the assets in 2017. After absorbing the negative impact of the tax law change in 2017, the passing of the Act will have a positive effect on the Corporation going forward into 2018. It is also uncommon for me to report to you two sets of financial results, but I think it is important to share our results after the effect of the proposed class action settlement, the write down of the net deferred tax assets and, for analysis purposes, our financial results before the effect of the same two events. “These same employees...also gave back willingly to the communities...through gifts of their time, talent and treasure, that enhance the areas we serve.” For 2017, the Company had interest income of $39.9 million and net interest income of $37.4 million compared to $37.0 million and $34.7 million, respectively in 2016, an increase of 7.9% and 7.7%. The net interest margin (NIM) increased from 3.62% in 2016 to We also experienced the other side of “uncommon” as…. 3.72% in 2017. The improvements were due primarily to the Company being able to continue to build its commercial loan portfolio while • The Bank entered into a term sheet to settle a potential class also growing its low cost core deposit base to fund the loans. action suit related to a 2008 acquisition and described in our Current Reports on Form 8-K filed on January 2, 2018. While the Total non-interest income grew 5% in 2017, from $11.6 million proposed settlement did significantly affect the 2017 reported to $12.2 million, due primarily to the continued growth in the net income of the Corporation, because of our strong capital Investment and Trust business lines where assets under position, we will be able to continue to move forward in a management and held at third-party brokers grew by 10.4% 4 M M X V I I Shareholder Letter 2017 ANNUAL REPORT and fee income was up by 8.1%. Other sources of non-interest consultative approach to customer interactions. We expect similar income, including Treasury Management services and results in Greencastle, and we are already working on plans for our mortgage sales, also added to the growth in revenues. next Community Office renovation, which will be completed in 2018. Non-interest expense in 2017, before the proposed settlement, We have committed additional resources to our Treasury was essentially flat at $33.2 million compared to 2016’s $33.2 Management functions in order to better service our corporate million, demonstrating good cost control. However, the previously and municipal deposit customers. By adding services and qualified mentioned proposed settlement increased total non-interest personnel to our team, we continue to enhance our value to our expense to $43.2 million, reducing the income before taxes to deposit customers by bringing sophisticated services and the $5.7 million compared to $9.4 million in 2016. personal touch to their complex world. While the Tax Cuts and Jobs Act passed in December of 2017 In 2017, we saw a significant improvement to the loan quality metrics will have a positive effect on the future tax expense, the effect of our commercial loan portfolio. We also took the opportunity, of the Act in 2017 was an additional tax expense to the Company during a period of strong loan growth, to rotate out of $28 million of $2.3 million, due to the remeasurement of net deferred tax assets. in participation loans we had been holding on our books. While As a result of the proposed settlement and additional tax expense, this move dampened our year-over-year loan growth numbers, we net income, after taxes, decreased from $8.1 million in 2016 to believe it has the effect of strengthening our loan portfolio and better $2.1 million in 2017. Had the proposed settlement and additional positioning us to manage through any future shocks to our economy. tax expense not occurred, the net income, after tax, would have Without the rotation out of some participation loans, our year-over- been $12.4 million, an increase of 52.9% over 2016’s results. year loan growth in 2017 would have been 11.2%, which stands up well against our peers. Total assets grew 4.6% in 2017 to $1.2 billion, with net loans growing 5.5%. Deposits grew by 6.6% to $931.9 million. Shareholder equity fell from $116.4 million as of December 31, 2016, to $115.1 million as total dividends paid exceeded net income. Yet, capital ratios remain strong as total risk-based capital stood at 15.31%, and our tier 1 leverage ratio was 9.73%. The Corporation continues to be “well-capitalized” by regulatory definitions. While the reality of our 2017 net income and the effect on the Company’s equity position cannot be ignored, the positive trajectory of our operating results is encouraging and gives me confidence in our ability to compete and bring value to both our shareholders and our customers. Steps taken in 2017 will carry over into 2018 and will help us continue to build on our successes of the past year. Our Community Office service platform continues to develop. In 2018, we will be adding a call center so we can provide a personal contact, 24/7, to meet the needs of our customers. We will also continue our rollout of the “Branch of the Future” concept that we started at our Waynesboro office. In 2017, we completed renovations at our Boiling Springs office, and similar renovations will be completed in March 2018 at our Greencastle office. The sales results at both completed Community Offices, subsequent to the renovations, have been very good and can be attributed, in part, to the improved physical layout and to the staffing concepts employed at those offices, which relies on a more We continue to see great growth opportunities in the Cumberland increase over the December 31, 2015 price. Our year end stock County/Harrisburg Capital Region. We have added Retail, price in 2017 was $37.36, a 30.6% increase. Dividends paid Commercial, Treasury Management and Investment & Trust increased by 13.4%. The factors behind this increase are many personnel and made improvements to three of our seven and include the often-talked-about “Trump effect” that has buoyed physical locations to better serve this quickly growing market. confidence in equities, the recognition by the investing public of “It is an honor to be able to serve these customers and help them realize their goals and dreams.” our positive operating results and the fact that, compared to peers, many investors believed we were undervalued. While we have enjoyed the appreciation in stock value, we also recognize that we are relatively “thinly traded,” and we are focused on increasing the liquidity of our stock through investor presentations to increase the awareness of and interest in our shares. I will note that our investor presentations begin with the statement that the Board and Senior Management of your company continue to believe that, at We recognize that our customers want to interact with us in this time, our shareholders and stakeholders are best served by the different ways than in years past. In recognition of these changes, Corporation remaining independent, and our present strategies are we have made significant enhancements to our online and mobile focused on the goal of retaining that independence. platforms, with additional services and capabilities coming online in 2018 that will provide our customers with the opportunity to bank with us when, where and how they want. I look to the future with great optimism. Part of what fuels my enthusiasm is the new employees that are joining our company. While the number of F&M Trust retirees grows, our ranks are being As more of our customers bank with us online or through their filled with intelligent, caring, motivated young people who are already mobile devices, we realize fewer customers are coming into our making a substantial and positive impact on the Corporation. They offices. To meet the challenge of interfacing with our customers represent our future, and I could not be more pleased. 2017 was an uncommon year in many ways. Perhaps 2018 will be equally as uncommon — without the negatives. I look forward to the year ahead and to reporting back to you in this letter next year. Sincerely, Timothy G. Henry President and CEO across all divisions, we have stepped up our social presence on Facebook, Twitter and online in an effort to meet our customers where they want to meet. The success of our efforts to attract and retain the attention of our customers and prospects, particularly those between the ages of 25 and 45, has been very good, and we continue learn and build on those results. Over the course of the year, we have initiated two important in-house programs, one being an internal and external customer service program, and the other being an employee engagement program. Importantly, both of these programs have been employee- driven with the development, execution and support being driven not just by Senior Management, but across a wide base of employees from all different areas of the bank. To me, it shows the care, concern and pride our employees have in the bank and the important role it plays for you, our shareholder, and for the communities we serve. I’m personally honored and proud to be a part of this team of professionals who are striving to be their best every day. On December 31, 2016, our stock price closed at $28.60, a 21.7% 6 M M X V I I Shareholder Letter 2017 ANNUAL REPORT Stability Graphics T O T A L R E T U R N P E R F O R M A N C E ( A S D O L L A R S ) e u l a V x e d n I 350 300 250 200 150 100 50 $317 12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 L E G E N D Franklin Financial Services Corp. NASDAQ Composite Index SNL Mid-Atlantic Bank Index Peer Group N E T I N C O M E ( A S D O L L A R S I N M I L L I O N S) R E G U L A R C A S H D I V I D E N D S P A I D ( A S D O L L A R S P E R S H A R E) 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 2.20 8.09 10.20 8.40 6.23 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 0.93 0.82 0.74 0.68 0.68 M M X V I I Stability Graphics 7 N E T L O A N S ( A S D O L L A R S I N M I L L I O N S) R E T U R N O N A V E R A G E A S S E T S ( A S P E R C E N T A G E V A L U E S) 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 932 883 772 717 714 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 0.19 0.74 1.00 0.83 0.61 T O T A L A S S E T S ( A S D O L L A R S I N M I L L I O N S) T O T A L D E P O S I T S ( A S D O L L A R S I N M I L L I O N S) 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 1,180 1,127 1,035 1,001 985 8 M M X V I I Stability Graphics 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 1,047 982 919 881 846 2017 ANNUAL REPORT Consolidated Financial Highlights ( DO L L A R S I N T H O U S A N D S , E X C E P T P E R S H A R E ) 2 0 1 7 2 0 1 6 P E R F O R M A N C E M E A S U R E M E N T Net income Return on average assets Return on average equity Net interest margin S H A R E H O L D E R S ’ V A L U E ( P E R C O M M O N S H A R E ) Diluted earnings per share Basic earnings per share Regular cash dividends paid Book value Market value Market value/book value ratio Price/earnings multiple Current dividend yield Dividend payment ratio B A L A N C E S H E E T H I G H L I G H T S Total assets Investment securities Loans, net Deposits Shareholders’ equity S A F E T Y A N D S O U N D N E S S Risk-based capital ratio (Tier 1) Leverage ratio (Tier 1) Common equity ratio (Tier 1) Nonperforming loans/gross loans Nonperforming assets/total assets Allowance for loan loss/loans Net (recoveries) loans charged off/average loans A S S E T S U N D E R M A N A G E M E N T $ 2 , 1 7 6 $ 0 . 1 9 % 1 . 8 0 % 3 . 7 2 % 0 . 5 0 0 . 5 0 0 . 9 3 2 6 . 4 4 3 7 . 3 6 1 4 1 . 3 0 % 7 4 . 7 2 2 . 4 9 % 1 8 5 . 2 5 % $ $ $ 8 , 0 8 7 0 . 7 4 % 7 . 0 4 % 3 . 6 2 % 1 . 8 8 1 . 8 8 0 . 8 2 2 6 . 9 9 2 8 . 6 0 1 0 5 . 9 7 % 1 5 . 2 1 2 . 9 4 % 4 3 . 5 6 % $ 1 , 1 7 9 , 8 1 3 $ 1 , 1 2 7 , 4 4 3 1 2 7 , 3 3 6 9 3 1 , 9 0 8 1 , 0 4 7 , 1 8 1 1 1 5 , 1 4 4 1 5 . 3 1 % 9 . 7 3 % 1 4 . 0 6 % 0 . 2 8 % 0 . 4 5 % 1 . 2 5 % - 0 . 0 1 % 1 4 3 , 8 7 5 8 8 2 , 7 9 8 9 8 2 , 1 2 0 1 1 6 , 4 9 3 1 5 . 6 7 % 1 0 . 1 1 % 1 4 . 4 1 % 0 . 6 1 % 0 . 9 2 % 1 . 2 4 % 0 . 3 3 % Trust and investment services (fair value) $ 6 8 6 , 9 4 1 $ 6 2 2 , 6 3 0 Held at third party brokers (fair value) 1 5 8 , 1 4 5 1 4 2 , 6 7 6 M M X V I I Consolidated Financial Highlights 9 Client Profile Phil Pantano, Vice President, Commercial Services, Franklin and Fulton/ Huntingdon County, Market Manager; John Bittner, Vice President Snyder’s Gateway, Inc.; Tim Henry, President and Chief Executive Officer Snyder’s Gateway, Inc. Breezewood, PA UNCOMMON HOSPITALITY Any road-weary traveler will tell you that a good rest stop is worth Beyond its personal touch, Bittner also appreciates F&M Trust’s its weight in gold. Since 1941, Snyder’s Gateway (The Gateway ease of connectivity. “We’re not working with an account manager; Travel Plaza) has been giving Pennsylvania Turnpike drivers the we’re working with the President on down. That kind of relationship golden standard of hospitality: the family-owned, personal touch. means a lot to us.” “This is our family’s bread and butter. We’re here every day,” said John Bittner, Vice President of Snyder’s Gateway, Inc. and great- nephew of its founders, Merle and Marion Snyder. Today, the travel plaza includes food and retail shops, a refueling station, a conference center and lodging. The small-town charm and family-focused operation hasn’t gone unnoticed by travelers — Snyder’s Gateway has had to expand many times. The Gateway Travel Plaza is currently undergoing enhancements to its facilities, as well as a full-scale food court expansion. “They have shown faith in us as individuals and as business operators to continually reinvest in our ventures — which, in business, is never a given.” - John Bittner, Vice President It’s a relationship that’s been going strong since 1999, even without In an age where independently owned and operated travel plazas an F&M Trust community office near the Snyder’s Gateway location are uncommon, Bittner and his relatives prefer a bank that mirrors in Breezewood, PA. “Again, it comes back to that personal touch. their independent status. “F&M Trust recognizes the aspects of We don’t feel the need to be across the street because we know being family-owned and -operated. They have shown faith in us where and who they are and the level of service and commitment as individuals and as business operators to continually reinvest that they provide,” said Bittner. It’s a partnership that allows a in our ventures — which, in business, is never a given.” travel plaza owner to rest easy. 2017 ANNUAL REPORT Board of Directors G. Warren Elliott President, Cardinal Crossings, Inc., Former Franklin County Commissioner Timothy (Tim) G. Henry President and Chief Executive Officer Martin R. Brown President, M. R. Brown Funeral Home, Inc. Gregory A. Duffey President, CFPM Division of Keller Stonebraker Insurance Daniel J. Fisher Retired, 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. Richard E. Jordan III President and CEO, Smith Land & Improvement Corporation Stanley J. Kerlin Attorney, Law Office of Stanley J. Kerlin, LLC Patricia D. Lacy President and Director, Beistle Company Donald H. Mowery Managing Partner, RSM Associates, LP Martha B. Walker Partner, Walker, Connor & Spang, LLC FFSC Officers G. Warren Elliott Chairman of the Board Timothy (Tim) G. Henry President and CEO Mark R. Hollar Treasurer and CFO Amanda M. Ducey Corporate Secretary Joyce A. Riley Assistant Corporate Secretary M M X V I I Board of Directors 11 Client Profile Public Library Systems Cumberland, Franklin and Fulton County, PA UNCOMMON DEDICATION A common perception of public libraries is that they’re archaic places received.” The expansion doubled the Coyle Free Library’s size and filled with books. Do libraries have books? Yes. But archaic? Quite the added unique amenities, like a creation station studio, a cultural arts opposite. “Libraries are community institutions that empower and theater and a skylight atrium. engage people in lifelong learning,” said Jeff Swope, Executive Director of Bosler Memorial Library in Carlisle, PA. “We see ourselves as the In January 2017, F&M Trust guided Fulton County’s McConnellsburg community core,” Bernice Crouse, Executive Director of the Franklin Library through the process of quadrupling the size of its children’s County Library System, confidently stated. And she’s not wrong. center. The expansion included more public computers, a children’s Libraries are public meeting spaces, educational resources, community program creators, technology suppliers — the list goes on. Yet, for a public resource so valuable and versatile, libraries struggle to receive the appropriate amount of funding. “In Fulton County, there isn’t a library tax,” said Fulton County Library Director Jamie Brambley. “We really depend on local businesses for funding.” And here lies the silver lining: Even with so much adversity, libraries are continuing to grow, thanks in part to local businesses, like F&M Trust, that are stepping up to the challenge. Franklin County’s Coyle Free Library just finished a $5.5 million expansion in December 2017. “We couldn’t have done it without librarian’s office and a dedicated room for community programs. “We bring in speech therapists and community nurses, introduce kids to everything from robot programming to art, and have weekly story times,” Brambley explained. “Before, we were so cramped that all of our programs had to be held in the basement. I’m always impressed with F&M Trust’s generosity. Without them, we wouldn’t be able to offer the programs that we do.” F&M Trust also assisted Bosler Memorial Library with a $6.5 million expansion and renovation in 2013. Today, F&M Trust is helping Bosler Memorial make good on its investment. “F&M Trust is helping to ensure that our library can last in perpetuity. Not only are they F&M Trust’s support,” said Crouse. “Not only did they offer us a being good stewards of our long-term investments, but they also reasonable line of credit, but they also pledged their own money support what we do today by investing their own funds, which help to the project, which was the largest business pledge that we to support our programs, collections and services,” said Swope. 2017 ANNUAL REPORT LEFT: Kathy Powley, Vice President, Commercial Services, Portfolio Manager; Denice Bigham, Senior Director of Library Services and Technology - Franklin County Library System; Jim Probst, Vice President, Investment and Trust Services, Relationship Manager; Jill Yaich, Director - Coyle Free Library; Bernice Crouse, Executive Director - Franklin County Library System; Mark Story, Senior Director of Advancement and Publicity - Franklin County Library System; Amy Wertz, Director of Finance and Human Resources - Franklin County Library System MIDDLE: Renee Preso, Vice President, Fulton/Huntingdon County Market, Market Manager; Jamie Brambley, Fulton County Library Director; Mary Wright, Financial Services Officer, McConnellsburg & Hustontown Community Office Manager RIGHT: Bruce Smith, Investment and Trust Services, Cumberland County, Market Manager; Paulo Oliveira, Cumberland County/Capital Region, Market Manager; Molly Shane, Development Officer, Bosler Memorial Library; Jeffrey Swope, Executive Director, Bosler Memorial Library; Tim Henry, President and Chief Executive Officer F&M Trust’s unwavering dedication to public libraries allows these about 10 years ago, they let us have all of our children’s programs community institutions to continue their goal of facilitating old and at the Fulton Theatre, which is attached to one of their community new ideas. “Our creation station studio is a place where patrons offices, for almost a year.” can write, record and develop original works,” Crouse explained. “It’s allowing people to become sources of information, art and literature themselves.” “Not only did they offer us a reasonable line of credit, but they also pledged their own money to the project, which was the largest business pledge that we received.” - Bernice Crouse, Executive Director There is value in supporting such community centers — one that is beyond dollars. “F&M Trust is community-minded through and through,” said Crouse. “They’re actually interested in what we’re up to,” Swope echoed. Jamie Brambley recalled a time that F&M Trust was especially generous. “When we were doing major construction Beyond the company as a whole, these executive directors were quick to compliment F&M Trust’s employees. “Kathy Powley (VP, Commercial Services Portfolio Manager) was particularly excellent. She made [Coyle Free Library’s renovation project] so easy for us,” said Crouse. “I can pick up the phone and call the people who are actually handling our investments — who are coming over to volunteer when we have programs going on,” added Swope. Public libraries may be an uncommon investment, but it’s one that’s crucial to F&M Trust’s local communities. “F&M Trust is investing in a public institution. They deserve some credit, because not everybody sees the relevance in libraries,” Swope pointed out. “I know there are bigger projects out there,” Crouse admitted, “but F&M Trust has time and time again proven that they care about our community.” That’s why, for these public libraries, as Crouse put it, “It’s F&M Trust. No one else.” M E L B O U R N E “ M E L ” 2017 Community Highlights Community Franklin Financial Services Corporation and F&M Trust employees are devoted to serving the communities they live and work in. Each year, our employees assist numerous nonprofit organizations by volunteering their time at community events or by serving as members of a board of directors. 60 EVENTS | 521 VOLUNTEERS | 1,456 VOLUNTEER HOURS Donations In 2017, F&M Trust continued investing in each of the regions we serve by contributing to organizations that are dedicated to improving the quality of life for those communities. $322,245 IN COMMUNITY INVESTMENTS 300+ ORGANIZATIONS SUPPORTED 2017 ANNUAL REPORT Client Profile Andrew Zimmerman, Chief Business Development Officer, C&J Catering, Partner, Spring Garden, LLC; Sherry Zerbe, Chief Human Resource Officer, C&J Catering; Jamie Berger, Founder & CEO, C&J Catering, Partner, Spring Garden, LLC; Dallas Zulli, Assistant Vice President, Commercial Services, Relationship Manager C&J Catering Harrisburg, PA CATERING TO THE UNCOMMON In 2004, Jamie Berger had just graduated college and was eyeing “My business isn’t easy. It requires a lot of capital backing in the up law school. Little did she know that, 13 years later, her clients beginning. F&M Trust has been very good to me every time I’ve had wouldn’t be plaintiffs; rather, fiancés, pharmaceutical reps and a hair-brained idea about starting another business line. They’ve anyone else in need of a catered event. come right alongside me to help accomplish my vision,” said Berger. “The company started a little bit by accident,” said Berger, Berger credits F&M Trust’s ease of banking to her strong relationship C&J Catering Founder and CEO. “I did something for my church, with Dallas Zulli (AVP, Commercial Services). “He’s been with me and that led to something else, and all of a sudden, there I was since, literally, day one,” Berger explained. “I have him on speed dial. with this business.” He probably understands my business better than anyone else.” C&J Catering has been steadily growing ever since. Today, Berger’s company employs over 155 people, is one of Pennsylvania’s only PA Preferred caterers and offers a multitude of services beyond food — creating a one-stop shop for total event production. “Our mission is to provide something for everyone. We treat every customer independently; they don’t fall into a box. My business is the same way. Everything is a little bit different,” explained Berger. “F&M Trust understands that C&J Catering isn’t a traditional company.” This uncommon and unrestricted business model has led Berger “F&M Trust understands that C&J Catering isn’t a traditional company.” - Jamie Berger, Founder and CEO Where will Berger’s insatiable pursuit for excellence in customer service take her next? F&M Trust doesn’t know. But it does know that it will be there to continue making Berger’s business dreams to opening her own venue, the 903, in Middletown, PA — a project a reality. backed by F&M Trust. Senior Management Timothy (Tim) G. Henry President and Chief Executive Officer Mark R. Hollar Senior Vice President, Chief Financial Officer and Treasurer Patricia A. Hanks Senior Vice President, Retail Services Market Manager Lise M. Shehan, ESQ., CFIRS Senior Vice President, Investment & Trust Services Manager Steven D. Butz Senior Vice President, Commercial Services Market Manager Lorie M. Heckman, CRCM Senior Vice President, Risk Management Officer 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 Matthew D. Weaver Senior Vice President, Marketing and Corporate Communications Manager 16 M M X V I I Senior Management 2017 ANNUAL REPORT Client Profile Matt Berger, Investment and Trust Services, Franklin And Fulton/ Huntingdon County, Market Manager; Chastity L. Wantz, Financial Services Officer, Waynesboro Community Office Manager; Andrea Bowersox, Owner, Grove-Bowersox Funeral Home, Inc.; Jeremy Bowersox, Supervisor/ Owner, Grove-Bowersox Funeral Home, Inc.; Mary Cordell, Vice President, Commercial Services, Relationship Manager Grove-Bowersox Funeral Home, Inc. Waynesboro, PA UNCOMMON COMPASSION Since 1829 and 1887, respectively, Greencastle, PA, and “The more we do ourselves, the more peace of mind our customers Waynesboro, PA, communities have found reassurance in the can have,” Bowersox explained. “It’s important that people in the locally owned and operated Grove-Bowersox Funeral Home, Inc. community know who we are and that they have access to us. and its branch location, Miller-Bowersox Funeral Home. That’s also important to us when we work with other businesses.” It’s how Bowersox’s relationship with F&M Trust began in 2014. As a second-generation owner, Jeremy Bowersox knows the importance of keeping his company an independent, community- “Some businesses need a bank with a branch in 46 states. We do focused business. “Both funeral homes have been in their not. We need people who pay attention to the local areas, and F&M communities for over a century. We like keeping that small- Trust certainly does that,” said Bowersox. town touch,” he said. “A lot of F&M Trust’s employees have become close personal friends.” - Jeremy Bowersox, Supervisor/Owner For a business that deals with such a delicate time in families’ lives, providing comfort, compassion and confidence in quality is everything. “We do quality work. We do caring work. Their loved F&M Trust handles Grove-Bowersox Funeral Home’s day-to-day banking and long-term investments and also guided Bowersox and his wife through the process of purchasing the Grove-Bowersox funeral home building from his parents. Because both F&M Trust and Grove-Bowersox Funeral Home strongly believe in community-focused business practices, Bowersox sees F&M Trust employees alongside him on community boards and volunteer projects, and even in his free time. “A lot of F&M Trust’s employees have become close personal friends. They are really great,” said Bowersox. ones never leave our small block,” said Bowersox. Grove-Bowersox While this business relationship continues to grow, it is one that Funeral Home proudly offers both an on-site crematorium and feels uncommonly comfortable. full-service monument shop. Officers COMMERICAL SERVICES Steven D. Butz Senior Vice President Commercial Services Manager Philip A. Pantano Vice President Commercial Services Franklin and Fulton/ Huntingdon County Market Manager Mary S. Cordell Vice President Commercial Services Relationship Manager Matthew D. Harshbarger Vice President Commercial Services Relationship Manager Michael S. Metz Vice President Commercial Services Relationship Manager Kathleen M. Bloss Assistant Vice President Commercial Services Portfolio Manager Katherine M. Powley Vice President Commercial Services Portfolio Manager Kristi A. Dorsey Vice President Commercial Services Relationship Manager Brian C. Reidell Vice President Commercial Services Treasury Management Manager 18 M M X V I I Officers Cydnie Kelly Treasury Management Relationship Manager David P. Zimmerman Vice President Commercial Services Relationship Manager Dallas J. Zulli, MBA Assistant Vice President Commercial Services Relationship Manager Jeramy D. Culler Assistant Vice President Business Banking Manager Patricia M. Murray Assistant Vice President Business Banker Benjamin S. Debell Business Banker Michael N. Scudder Business Banker Crystal M. Sunderland Business Banker Eric J. Fleming Vice President, Credit Department Manager Julie A. Powell Senior Credit Analyst Maria S. Seabra Senior Credit Analyst Michael R. Cook Credit Analyst Kofi E. Odoom Credit Analyst EXECUTIVE Timothy (Tim) G. Henry President and Chief Executive Officer Amanda M. Ducey Corporate Secretary Joyce A. Riley Assistant Corporate Secretary FACILITIES Tex E. Miller, Jr. Facilities Manager FINANCE Mark R. Hollar Senior Vice President Chief Financial Officer And Treasurer Kim A. Brant Asset-Liability Analyst Amy B. Herrold Controller HUMAN RESOURCES Karen K. Carmack, SHRM-SCP, SPHR Senior Vice President Human Resources Manager Affirmative Action and HIPAA Privacy Officer Levi L. Crouse, MBA, SHRM-CP Human Resources Officer Michele A. Williams Training & Development Officer CTA Certified Coach INVESTMENT & TRUST SERVICES Lise M. Shehan, Esq., CFIRS Senior Vice President Investment and Trust Services Manager Warren M. Hurt Vice President Chief Investment Officer Michell Friese Investment and Trust Service Support Specialist Avis M. Graham Assistant Vice President Investment and Trust Services Compliance Officer Heather C. Hershey Estate Administration Officer David Y. Luo Investment Portfolio Manager Robin L. Murray Trust Operations Manager Matthew W. Berger Assistant Vice President Investment and Trust Services Franklin and Fulton/ Huntingdon County Market Manager Carole L. Crist Vice President Investment and Trust Services Relationship Manager Karen L. Degenhart Vice President Employee Benefits Officer Ronald R. Froeschle Vice President Employee Benefits Officer 2017 ANNUAL REPORT James P. Probst Vice President Investment and Trust Services Relationship Manager Diana L. Sponseller Vice President Investment and Trust Services Relationship Manager Dennis L. Wilson Vice President Investment and Trust Services Relationship Manager Hammond Urner Vice President Investment and Trust Services Relationship Manager Jeffrey A. Peterson Investment and Trust Services Relationship Manager Bruce A. Smith Vice President Investment and Trust Services Cumberland County Market Manager Joseph G. Maxwell Vice President Investment and Trust Services Relationship Manager James C. McElhenie Vice President Investment and Trust Services Relationship Manager Andrew M. Otto Assistant Vice President Investment and Trust Services Relationship Manager MARKETING Matthew D. Weaver Senior Vice President Marketing and Corporate Communications Manager Melissa D. Miller Assistant Vice President Marketing Officer Jill M. Reddecliff Marketing Analyst RETAIL SERVICES Patricia A. Hanks Senior Vice President Retail Services Market Manager Jordan M. Peffer Retail Services Operations Officer CONSUMER LENDING Jared M. Leonard Assistant Vice President Consumer and Residential Mortgage Lending Manager Cathy S. Goodhart Residential Mortgage Lending Officer Timothy A. Rarick Consumer Lending Officer David R. Winters Consumer Lending Officer CHAMBERSBURG MARKET Summer Franzoni Assistant Vice President Chambersburg Market Manager Memorial Square Marisol Feliciano Financial Services Officer Manager Norland Avenue Danielle R. Ritter Financial Services Officer Manager Chambers Pointe & Brookview Barbara A. Seylar Financial Services Officer Manager Lincoln Way East & Philadelphia Avenue Lisa A. Hogue Financial Services Officer Manager Orchard Park Dana L. Kaiser-Brechbiel Assistant Vice President Financial Services Officer Manager West Side Meghan N. Heebner Financial Services Officer Manager CUMBERLAND COUNTY MARKET Paulo M. Oliveira Vice President Cumberland County/ Capital Region Market Manager Camp Hill & Mechanicsburg Miriam Defehr Financial Services Officer Manager Heather E. Yoder Assistant Financial Services Officer Carlisle Crossing & Boiling Springs Bree C. Vance Financial Services Officer Manager Boiling Springs Barb M. Minnier Assistant Financial Services Officer Shippensburg & Newville Ellen L. Ile Financial Services Officer Manager Ritner Highway Adam B. Smith Financial Services Officer Manager SOUTHERN FRANKLIN COUNTY MARKET Renee L. Preso Vice President Southern Franklin County Market Manager Greencastle & Marion Cynthia E. Marconi Assistant Vice President Financial Services Officer Manager Mont Alto Sarah S. Stansfield Financial Services Officer Manager Waynesboro Chastity L. Wantz Financial Services Officer Rachel Bowers Assistant Financial Services Officer M M X V I I Officers 19 Olaf R. Hasse Vice President Loan Portfolio Risk Management Officer Sheryl R. Snider Compliance Officer and CRA Officer Rainbow D. Hopkins BSA/OFAC Officer TECHNOLOGY SERVICES Ronald L. Cekovich Senior Vice President Technology Services Manager Joseph C. Lieb Assistant Technology Services Manager Matthew C. Clark Assistant Vice President Technology Services Officer Patricia R. Ganoe Assistant Vice President Deposit/Data Operations Manager Pamela A. Johns Assistant Vice President Loan Servicing Manager Stephanie Gearhart Assistant Loan Servicing Manager FULTON/HUNTINGDON COUNTY MARKET Renee L. Preso Vice President Fulton/Huntingdon County Market Market Manager McConnellsburg & Hustontown Mary E. Wright Financial Services Officer Manager Orbisonia Bertha A. Peffer Financial Services Officer Manager RISK MANAGEMENT Lorie M. Heckman, CRCM Senior Vice President Risk Management Officer William A. Pryor Vice President Chief Credit Officer Steven R. Gormont Consumer Credit Recovery Officer Frank M. Severa Commercial Credit Recovery Officer Eric M. Follin Documentation Review Officer Matthew R. Shank Assistant Documentation Review Officer Janet E. Stamper Consumer Documentation Review Officer 20 M M X V I I Officers 2017 ANNUAL REPORT Client Profile Steve Butz, Senior Vice President, Commercial Services, Manager; Tim Henry, President And Chief Executive Officer; Brian Wise, Owner, Bwise Manufacturing, LLC; Phil Pantano, Vice President, Commercial Services, Franklin And Fulton/Huntingdon County, Market Manager; Scott Mentzer, CFO, Bwise Manufacturing, LLC BWise Trailers Chambersburg, PA UNCOMMON INNOVATION Just off Interstate 81 in Chambersburg, PA, lives the future of F&M Trust also helped BWise Trailers purchase an automated the trailer industry. “We don’t like being the follower. We like being painting system that furthered the company’s efficiency. “They the leader,” said BWise Founder and President Brian Wise. “We stepped up to the plate in the last year to help us with two major do things to our trailers that are standard features that most projects,” said Wise. F&M Trust was supportive for good reason: competitors don’t even offer — and if they do, it costs extra.” Brian Wise has been a loyal client since 2008. BWise Trailer’s mission is to build trailers of the highest quality and to offer the best service to customers at a competitive price. It’s why BWise Trailers doesn’t assemble its trailers from outsourced parts. “A large percentage of parts that we use are “They stepped up to the plate in the last year to help us with two major projects.” made in-house. It gives us the ability to machine parts for the - Brian Wise, Founder and President trailers that fit perfectly, giving us a fit and finish that our competitors can’t achieve,” explained Wise, who has an extensive background in metal machining. This business philosophy of quality and innovation has shown repeat growth. “At the start, we rented 120,000 square feet of our current building. Just last year, we purchased the entire 414,000 With its newly acquired space and state-of-the-art painting system, this independent company is going places — but only figuratively. “We have a great facility and a very good workforce here. We have all the pieces in place to experience a lot of growth,” said Wise. square-foot building,” said Wise. It was a large and somewhat In the future, expect more uncommonly innovative trailer designs, aggressive purchase, but both BWise Trailers and F&M Trust saw a larger body of sales and an even stronger relationship between opportunity. “We went to F&M Trust, not thinking that they would F&M Trust and Brian Wise. “They’ve been very good to work with,” be able to pull this off, but they did. We’re very thankful for that. It said Wise. “Phil Pantano (VP and Commercial Services Market enabled us to make changes to the building that have improved Manager) has been nothing but excellent for us. He understands our manufacturing process,” said Wise. our business — and that’s what really matters.” Community Office/ATM Locations CHAMBERSBURG AREA Lincoln Way East Office 1712 Lincoln Way East, Chambersburg, PA Phone: (717) 264-9414 Memorial Square Office 20 South Main Street, Chambersburg, PA Phone: (717) 264-6116 Brookview Office 2075 Scotland Avenue, Chambersburg, PA Phone: (717) 261-3697 Norland Avenue Office 870 Norland Avenue, Chambersburg, PA Phone: (717) 262-2085 Orchard Park Office 841 Wayne Avenue, Chambersburg, PA Phone: (717) 263-1801 Chambers Pointe Office 1425 Philadelphia Avenue, Chambersburg, PA Phone: (717) 261-3660 Philadelphia Avenue Office 2405 Philadelphia Avenue, Chambersburg, PA Phone: (717) 264-5122 West Side Office 1100 Lincoln Way West, Chambersburg, PA Phone: (717) 263-9168 SOUTHERN FRANKLIN COUNTY Greencastle Office 518 North Antrim Way, Greencastle, PA Phone: (717) 597-2384 Marion Office 5293 Main Street, Marion, PA Phone: (717) 375-2210 Mont Alto Office 8 Park Street, Mont Alto, PA Phone: (717) 749-3161 Waynesboro 200 East Main Street, Waynesboro, PA Phone: (717) 762-2188 CUMBERLAND COUNTY Boiling Springs Office 3 East First Street, Boiling Springs, PA Phone: (717) 241-4131 Camp Hill Office 3907 Market Street, Camp Hill, PA Phone: (717) 731-9604 Carlisle Crossing Office 214A Westminster Drive, Carlisle, PA Phone: (717) 243-2215 Carlisle Plaza Drive-Up 700 East High Street, Carlisle, PA Phone: (717) 243-0416 Mechanicsburg Office 6375 Carlisle Pike Mechanicsburg, PA Phone: (717) 697-0444 Newville Office 51 South High Street, Newville, PA Phone: (717) 776-2240 Ritner Highway Office 1901 Ritner Highway Carlisle, PA Phone: (717) 960-1400 Shippensburg Office 13 Shippensburg Shopping Center, Shippensburg, PA Phone: (717) 530-2100 FULTON & HUNTINGDON COUNTIES Hustontown Office 7781 Waterfall Road, Hustontown, PA Phone: (717) 987-3193 McConnellsburg Office 100 Lincoln Way East, McConnellsburg, PA Phone: (717) 485-3144 Orbisonia Office 18810 Sandy Ridge Station, Orbisonia, PA Phone: (814) 447-3104 ADDITIONAL ATM LOCATIONS Ayr Town Center ATM 368 S. 2nd Street, McConnellsburg, PA Fayetteville Post Office 4025 Lincoln Way East, Fayetteville, PA Brookview Campus - Northfield Northgate Commons and Apartments 1500 Northfield Drive, Chambersburg, PA Penn National Golf Clubhouse 3720 Clubhouse Drive, Fayetteville, PA Penns Village ATM 182 Buchanan Trail, McConnellsburg, PA Quincy Village - Colestock Center 6596 Orphanage Road, Quincy, PA Riverview Business Center ATM 11734 Lenape Drive, Mount Union, PA Shippensburg West End 9966 Molly Pitcher Hwy, Shippensburg, PA Waynesboro Marketplace 11123 Buchanan Trail East, Waynesboro, PA Zullinger 4884 Buchanan Trail East, Zullinger, PA 2017 ANNUAL REPORT A N N U A L R E P O R T M M X V I I P.O. Box 6010 | Chambersburg, PA 17201 888.264.6116 | Uncommon Independence 

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