ANNUAL REPORT 2018 Banking Done Your Way ANNUAL REPORT 2016 2 Banking Done Your Way It’s how we approach service to you and to every community we serve. Our team is here for one reason: to serve all your financial needs exactly the way you prefer. TABLE OF CONTENTS 8 10 12 Shareholder Letter ...................................................................................................2 2018 Financials .........................................................................................................5 Consolidated Financial Highlights ...................................................................... 7 Carlisle Events ...........................................................................................................8 Board of Directors ....................................................................................................9 Franklin Logistics .................................................................................................... 10 Transition to .BANK Domain .................................................................................11 Penn National Community & Golf Club ............................................................12 2018 Community ......................................................................................................13 Our Management Team ........................................................................................14 Grant Street Loft ......................................................................................................15 Officers ...................................................................................................................... 16 Wakeen Enterprises ............................................................................................. 20 Locations ....................................................................................................................21 15 Pictured on the cover: Penn National Community & Golf Club. Pictured above, top left: Carlisle Events (featured on page 8); top middle: Franklin Logistics (featured on page 10); top right: Penn National Community & Golf Club (featured on page 12); bottom right: Grant Street Loft (featured on page 15). TABLE OF CONTENTS 1 INSIGHTS FROM OUR PRESIDENT Dear Fellow Shareholder, Franklin Financial Services Corporation ended 2018 with four quarters of strong core operating performance and begins 2019 in a strong financial position. This has not come easily as 2018 was negatively impacted by an $11.1 million loss we reported on May 31, 2018 related to a participation loan in which it is believed that one or more officers and/or employees of the borrower committed fraud. Nevertheless, the corporation was able to finish the year with net income of $6.125 million and capital ratios that exceeded the benchmarks to be considered well-capitalized. Due to both strong core operations and a strong capital position, we were able to pay annual dividends to our shareholders of $1.05 per share, an increase of 12.9% when compared to 2017. For the year ended December 31, 2018 the average total commercial loan portfolio balance increased by 7.6% when compared to the previous year. We feel good about our portfolio growth, as we used 2018 to continue to rotate out of participation loans and invest more of our assets into commercial loans that we originate and manage. Over the last two years, we have reduced our exposure to participation loans in our commercial loan portfolio from 18% to 11.2% with the goal of bringing the percentage to or below 10%. We believe this is a prudent step to take – one which will result in better loan quality and returns for our company in the long-term. Had we not chosen to rotate out of our dependence on participation loans, our average commercial loan growth in 2018 would have been 12.5%. This tells me that our team of commercial relationship managers is effective in building strong customer relationships. Our residential mortgage and retail lending balances saw decreases in 2018 as customers paid down their home equity loan balances and we began selling the majority of the residential mortgages that we originated. This change in our residential mortgage philosophy will allow us to generate more fee income in the future while reducing interest rate risk to the bank. This strategy also allows us to provide a greater variety of residential mortgage products to our customers, creating more opportunities for people to own their own home. Timothy (Tim) G. Henry, President and CEO 2 ANNUAL REPORT 2018 Overall deposit growth was up 3.4% for the year as interest- bearing checking and money market accounts grew by 8.8% and 5.2% respectively, offset primarily by a decrease in certificate of deposit balances. Our move in 2017 to increase staffing in our Treasury department has meant that we have had more relationship managers working with our community office teams to focus on our deposit customers, resulting in successful growth in balances while controlling interest costs in a rising rate environment. The positive result of these efforts is that our Net Interest Margin (NIM) increased six basis points, from 3.72% to 3.78%, in 2018. An important driver to the bank’s earnings is our Investment and Trust Services department that ended 2018 with total assets under management (AUM) of $807.0 million. While earnings can be affected from time to time by market fluctuations, when measured at cost the department grew its year-over-year AUM by 6.9%. Fee income increased by 5.6% to $5.7 million. During the year we added new talented people to the department and solidified our team working in the Greater Harrisburg/Capital Region --setting the stage for a good future for the bank’s Investment & Trust Services department. Taken as a whole, the bank’s non-interest income grew by 3.6% due primarily to growth in the previously mentioned Investment and Trust Services department and debit card income. This growth comes despite decreases in deposit service charges and fees -- in particular the usage of the bank’s overdraft protection program -- perhaps a sign of a stronger economy and better financial management by our customers. Non-interest expense decreased in 2018 when compared with 2017, but that decrease was heavily influenced by the $10 million reserve that was taken in 2017 in anticipation of settling a potential class action lawsuit. Salaries and benefits were up 6.2% when compared to 2017 as we added key people to our team. Marketing expenses increased by $359 thousand over 2017 as we continue our efforts to develop a strong presence in the Greater Harrisburg/Capital Region and the rest of our market footprint. The bank made many advances in 2018 that will continue to support our growth into future years. Many of these changes are designed to bring the bank to our customers rather than asking them to come to us. As examples: • We initiated our “Bank@Work” program which allows our staff to go to where our customers are and open deposit accounts electronically. • We redesigned our website to provide more useful information and to make it easier for our customers to access and to transact business with the bank. • We changed our bank’s website domain from “.com” to “.bank” to enhance our customer’s online safety. Our website can now be reached at fmtrust.bank . • We launched our 24/7 call center (888-264-6116) to provide daytime and after hours support to our customers when our community offices are closed. • We developed a new mobile checking product that provides a higher rate of return with the ease and convenience of mobile banking. • We’ve improved our mobile banking app making it easier for customers to access the features they want including mobile deposits and person-to-person (P2P) transfer of funds through People Pay. • Due to the success of our “branch of the future” concept, we are continuing to renovate community offices by introducing teller pods that create a physical environment that improves customer communication. In 2018, we completed renovations at our Greencastle, Philadelphia Avenue and Norland Avenue offices, and we have begun renovations at our Shippensburg office. All of these initiatives tie into our new tagline “Banking Done Your Way” and the mindset we have to bring the bank to the customer where, when and how they want to interact with us. It excites us to develop these new programs and services that bring convenience and value to our customers. LETTER TO SHAREHOLDERS 3 INSIGHTS FROM OUR PRESIDENT cont. We are taking care of our communities in other ways too. During 2018, we provided monetary donations to 225 organizations in our service area and participated in 65 events with 194 volunteers from the bank giving over 2,250 hours of volunteer service. from our successful listing on the Nasdaq. And I see the bank continuing to play an integral role in the communities we serve through donations, volunteer service and loans that support both the companies and individuals who create jobs and wealth for our communities. I believe that we are doing a good job helping our customers and communities achieve their goals and that we are successfully contributing to the economic strength of South Central Pennsylvania. Beyond improving the performance of the corporation, we are active in taking other steps to enhance the investment you, our shareholder, has made in the corporation. Last year I talked about our stock being “thinly traded” and explained that we were focusing on increasing the liquidity of our stock through investor presentations. While we continued our investor presentations in 2018, we indicated in our Current Report on Form 8-K filed on December 21, 2018 that we were applying to trade on the Nasdaq. I am pleased to report that our application was approved and that we anticipate beginning to trade on Nasdaq on, or about, May 1, 2019. Trading on the Nasdaq exchange will give our company greater visibility, and over time, we believe it will improve the liquidity of the stock. ALL OF THESE INITIATIVES TIE INTO OUR NEW TAGLINE “BANKING DONE YOUR WAY” AND THE MINDSET WE HAVE TO BRING THE BANK TO THE CUSTOMER WHERE, WHEN AND HOW THEY WANT TO INTERACT WITH US I continue to be appreciative of the opportunity to be the CEO and President of this great organization. We all know that one person cannot make the bank successful by their own actions. I am fortunate to be surrounded by an outstanding Board of Directors, Senior Management team and employees who are focused on the shareholder, the customer and our communities. I leave you with a glimpse of the foundation for our success -- our beliefs as expressed in our Mission Statement, Vision Statement and Core Values. MISSION STATEMENT Delivering the right financial solutions … from people you know and trust. VISION STATEMENT We are committed to remaining independent by growing our bank to meet the increasing needs of our customers, communities and shareholders. We will be the financial services leader in the markets we serve. CORE VALUES We, the employees, officers and directors, are committed to the core values of integrity, teamwork, excellence, accountability, and a concern for our customers and the communities we serve. Thank you for your support. I look forward to writing this letter to you again next year and sharing with you what great things happened in 2019. I am excited about the prospects for our shareholders and the bank in 2019. I see us continuing to build loan and deposit market share in all of our markets through the effective use of technology, marketing and the abilities of our talented bankers to bring solutions to our customers. I also see our Investment and Trust Services department growing as we provide both individual and corporate trust services, including 401(k) programs, to our valued individual and commercial customers. Additionally, I see our shareholders benefiting in multiple ways Sincerely, Timothy G. Henry 4 ANNUAL REPORT 2018 2018 FINANCIALS TOTAL RETURN PERFORMANCE (as dollars) Franklin Financial Services Corporation NASDAQ Composite Index SNL Mid-Atlantic Bank Index Peer Group Peer Group consists of Mid Atlantic Banks with Assets between $1B-$2B as of 9/30/2018 $300 $250 $200 $150 $100 $50 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 Source: S&P Global Market Intelligence ©2019 NET INCOME (as dollars in millions) 10.2 8.4 8.1 6.1 2.2 REGULAR CASH DIVIDENDS PAID (as dollars per share) 0.82 0.74 0.68 1.05 0.93 ‘14 ‘15 ‘16 ‘17 ‘18 ‘14 ‘15 ‘16 ‘17 ‘18 FINANCIALS 5 2018 FINANCIALS cont. TOTAL DEPOSITS (as dollars in millions) 1,083 1,047 982 881 919 NET LOANS (as dollars in millions) 772 717 961 932 883 ‘14 ‘15 ‘16 ‘17 ‘18 ‘14 ‘15 ‘16 ‘17 ‘18 TOTAL ASSETS (as dollars in millions) 1,180 1,210 1,001 1,035 1,127 RETURN ON AVERAGE ASSETS (as percentage values) 1.00 0.83 0.74 0.52 0.19 ‘14 ‘15 ‘16 ‘17 ‘18 ‘14 ‘15 ‘16 ‘17 ‘18 6 ANNUAL REPORT 2018 Consolidated FINANCIAL Highlights (dollars in thousands, except per share) 2018 PERFORMANCE MEASUREMENTS Net income ........................................................................................................................................................ $6,125 Return on average assets ..............................................................................................................................0.52% Return on average equity ...............................................................................................................................5.34% Net interest margin ........................................................................................................................................... 3.78% SHAREHOLDERS’ VALUE (per common share) Diluted earnings per share ............................................................................................................................ $1.39 Basic earnings per share .................................................................................................................................... 1.40 Regular cash dividends paid .............................................................................................................................1.05 Book value .......................................................................................................................................................... 26.85 Market value ........................................................................................................................................................ 31.50 Market value/book value ratio ....................................................................................................................117.32% Price/earnings multiple .................................................................................................................................... 22.66 Current dividend yield ..................................................................................................................................... 3.43% Dividend payout ratio ................................................................................................................................... 75.07% BALANCE SHEET HIGHLIGHTS Total assets ............................................................................................................................................... $1,209,587 Investment securities .................................................................................................................................. $131,846 Loans, net .......................................................................................................................................................960,960 Deposits ....................................................................................................................................................... 1,082,629 Shareholders’ equity ......................................................................................................................................118,396 SAFETY AND SOUNDNESS Risk-based capital ratio (Tier 1) ..................................................................................................................... 15.21% Leverage ratio (Tier 1) ....................................................................................................................................... 9.78% Common equity ratio (Tier 1) ........................................................................................................................ 13.96% Nonperforming loans/gross loans ...............................................................................................................0.27% Nonperforming assets/total assets ..............................................................................................................0.44% Allowance for loan loss/loans ........................................................................................................................1.28% Net loans charged-off (recovered)/average loans .................................................................................0.97% TRUST ASSETS UNDER MANAGEMENT Trust and Investment Services (fair value) ........................................................................................ $684,825 Held at third-party brokers (fair value) .................................................................................................... 122,213 2017 $2,176 0.19% 1.80% 3.72% $ 0.50 0.50 0.93 26.44 37.36 141.30% 74.72 2.49% 185.25% $1,179,813 127,336 931,908 1,047,181 115,144 15.31% 9.73% 14.06% 0.28% 0.45% 1.25% -0.01% $686,941 158,145 FINANCIAL HIGHLIGHTS 7 CLIENT PROFILE SOLUTIONS DONE YOUR WAY THEIR MISSION TO BE A RESPONSIBLE MEMBER OF THE COMMUNITIES IN WHICH THEY OPERATE AND TO PURSUE NEW BUSINESS OPPORTUNITIES, ENSURING THE GROWTH OF THE COMPANY. CARLISLE EVENTS Carlisle, PA When Chip and Bill Miller hosted their first car show at the Carlisle Fairgrounds in 1974, they never could have envisioned the success that would be Carlisle Events. Today, Carlisle is home to the largest car and truck collector events in the nation. More than half a million guests from around the world visit shows promoted by Carlisle Events annually. And now, Carlisle Events is giving car lovers another reason to visit the area. The car show producer is redeveloping a 48-acre, vacant lot where a massive manufacturing facility previously stood. The mixed-use project will include a hotel; restaurants; retail and office spaces; a three-acre, public park with trails; and car condominiums. Car condominiums will have multiple-car garages as well as living spaces including bedrooms, kitchens and living rooms. “Working with F&M Trust has been great. They looked at our business model, pursued it and were aggressive in saying, ‘We believe in this project, and we will lend the money to make this happen,’” said Harold Brandt, Chief Financial Officer of Carlisle Events. “THEY WERE AGGRESSIVE IN SAYING, ‘WE BELIEVE IN THIS PROJECT, AND WE WILL LEND THE MONEY TO MAKE THIS HAPPEN.’” HAROLD BRANDT Chief Financial Officer, Carlisle Events Partners since the project’s inception, Brandt, has enjoyed a strong relationship with F&M Trust and Dave Zimmerman, Senior Commercial Services Relationship Manager of F&M Trust. “The whole financing deal has definitely gone beyond what anyone could hope for. It’s a construction project, so there’s something that always pops up. If the project is delayed because of the weather, Dave is easy to talk to. He completely understands the constraints of construction,” said Brandt. As the company continues to grow, F&M Trust will continue tailoring financial solutions to meet Carlisle Event’s unique needs – that’s banking done your way. Upper right: Bill Miller, Jr. Co-Owner/Founder, Carlisle Events; Dave Zimmerman, Senior Commercial Services Relationship Manager; Harold Brandt, Chief Financial Officer, Carlisle Events; Lance Miller, Co-Owner, Carlisle Events. 8 ANNUAL REPORT 2018 OUR BOARD OF DIRECTORS Front row left to right Patricia D. Lacy, President & Director - Beistle Company; Timothy G. Henry, President & CEO; G. Warren Elliott, Chairman of the Board, President - Cardinal Crossings, Inc., Former Franklin County Commissioner; Martha B. Walker, Partner - Walker, Connor & Spang, LLC; Allan E. Jennings Jr., President & COO - Jennings Chevrolet, Buick, GMC, Inc. Back row left to right Donald A. Fry, Chairman of the Board - Cumberland Valley Rental and Towne Cleaners, ANDOCO, Inc.; Donald H. Mowery, Partner - RSM Associates, LP; Stanley J. Kerlin, Law Office of Stanley J. Kerlin, LLC; Daniel J. Fisher, Retired - D. L. Martin Company; Martin R. Brown, President - M. R. Brown Funeral Home, Inc.; Gregory A. Duffey, President - CFP&M Insurance a division of KSI Insurance; Richard E. Jordan III, President & CEO - Smith Land & Improvement Corporation. Franklin Financial Services Corporation Officers G. WARREN ELLIOTT Chairman of the Board MARK R. HOLLAR Treasurer and Chief Financial Officer JOYCE A. RILEY Assistant Corporate Secretary TIMOTHY (TIM) G. HENRY President and Chief Executive Officer AMANDA M. DUCEY Corporate Secretary We thank the lasting legacy of our former directors. JERYL MILLER CHARLES SIOBERG CHARLES DILLER CHARLES BENDER HUBER MCCLEARY JOHN HULL STEVE PATTERSON WILLIAM SNELL DENNIS GOOD JAY BENEDICT BOARD OF DIRECTORS 9 CLIENT PROFILE FLEXIBILITY DONE YOUR WAY THEIR MISSION TO ACQUIRE, DEVELOP, BUILD AND LEASE FACILITIES IN SOUTH CENTRAL PENNSYLVANIA. FRANKLIN LOGISTICS AND DEVELOPMENT Chambersburg, PA with. He understands what we’re doing, and that goes a long way,” said Nitterhouse. Working in logistics, plans can change at any moment. And Franklin Logistics and Development needs a bank that can keep up. That’s why they bank with F&M Trust. “The flexibility that you have with F&M Trust is unmatched by its competitors,” said Colby Nitterhouse, president of the Chambersburg- based logistics company. Halfway through construction on a large warehouse, Franklin Logistics and Development was approached by a company that wanted to lease half of the building, resulting in a drastic last minute change to construction plans The full-service, third-party logistics company provides a full range of warehousing, transportation and supply chain solutions for a growing number of domestic and international customers. Nitterhouse’s company, like F&M Trust, is willing to accommodate, and that, Nitterhouse said, is what sets both apart from their competitors. “With F&M Trust, we can present something to Steve, and maybe a larger bank would look at it pretty cut and dry, but F&M Trust still has that local touch and is willing to be creative,” said Nitterhouse. No matter how many times plans change for Franklin Logistics and Development in the future, F&M Trust will continue to keep up. Steve Butz, F&M Trust’s Commercial Services Market Manager, adjusted Franklin Logistics and Development’s financing, enabling them to customize the warehouse for their new tenant. “THE FLEXIBILITY THAT YOU HAVE WITH F&M TRUST IS UNMATCHED BY ITS COMPETITORS” “By partnering with a solid bank that gives us the flexibility to grow, we can provide better service to our customers. Steve is good to work COLBY NITTERHOUSE President, Franklin Logistics and Development Upper left: Steve Butz, Chief Commercial Services Officer, F&M Trust; Colby Nitterhouse, President, Franklin Logisitics and Development; Tim Henry, President & CEO, F&M Trust 10 ANNUAL REPORT 2018 F&M TRUST TRANSITIONS TO NEW .BANK DOMAIN This year, F&M Trust introduced a new way to keep our customers a little safer. With the launch of our new website in early October, we made the transition from a traditional .com domain to a .bank domain — a move that adds another layer of security for our online users and helps increase brand awareness. Of the 4,805 banks in the U.S., F&M Trust is one of 450 that are using the domain, which offers added protection against breaches and phishing attacks. The extension, which became widely available to banks in 2015, serves as a visual cue to customers and employees, signaling to them that the F&M Trust website is legitimate. The adoption of the easily identifiable .bank domain shows our commitment to meet the evolving needs of our customers while continuing to optimize our digital offerings. The switch helps set F&M Trust apart from our competitors. We are the first bank in South Central Pennsylvania to make the transition. F&M TRUST. A COMMUNITY BANK WITH A PASSION FOR OFFERING THE RIGHT FINANCIAL SOLUTIONS. THAT’S BANKING DONE YOUR WAY. As it stands now, online scammers can create fake websites to attempt to steal information and money from consumers. By using numbers and misspellings, the websites can sometimes appear to be authentic. When consumers see the .bank domain, they can be certain the website is valid and secure. Unlike the .com domain, only verified members of the banking community can be awarded a .bank domain. Every application for the domain undergoes a rigorous verification process before it can be approved. The .bank domain is operated by fTLD — a coalition of banks, insurance companies and financial services trade associations from around the world — which helps to authenticate financial institutions. Similar to the .gov domain for government entities or .edu for educational institutions, the .bank domain is a standardized, verified domain for financial institutions. We are constantly looking for ways to protect our customers, and this transition is another step we have taken to keep our customers secure. .BANK TRANSITION 11 CLIENT PROFILE FAMILY DONE YOUR WAY THEIR VALUES THEIR COMMITMENT TO THE COMMUNITY AND THEIR RESIDENTS IS PERSONAL, BECAUSE PENN NATIONAL IS THEIR HOME TOO. PENN NATIONAL COMMUNITY & GOLF CLUB Fayetteville, PA If you ask Patti Nitterhouse, she’ll tell you that her business, Penn National Community & Golf Club, is more popular nationally than it is locally. And that may be true – for now. The company — which includes the Penn Homes real estate development; a 48-room inn; a restaurant; and two public, 18-hole golf courses — has been recognized by several national publications for its hiking trails, golf courses and popularity among retirees. But the addition of the Black Oak Bar to its restaurant is quickly making it a local favorite. Its name honors the 173-year-old black oak tree that grew on their property until it fell in 2017. And F&M Trust, which financed the addition, couldn’t be more excited about Penn National Community & Golf Club’s growth. “The people who we work with at the bank have become some of our biggest fans,” said Dennis Zimmerman, President of Penn National Community & Golf Club. “That’s such a great thing – to work with a bank that is really pulling for you.” “OUR BUSINESS HAS A LOT OF MOVING PARTS, AND F&M TRUST REALLY TOOK THE TIME TO UNDERSTAND THESE DIFFERENT BUSINESSES.” DENNIS ZIMMERMAN President, Penn National Community & Golf Club Founded in 1968 by Patti Nitterhouse’s father, T.K. Nitterhouse, Patti Nitterhouse and her husband, Dennis Zimmerman, took over the company in 1995. Since then, their son, Ted Zimmerman and daughter, Honor Zimmerman, have also joined the ranks. And they view Phil Pantano, Commercial Services Market Manager for Franklin, Fulton and Huntingdon counties at F&M Trust, as an integral part of their business team. “We absolutely love Phil. He is there every step of the way, and it almost feels like he’s part of our team,” said Ted Zimmerman. In addition to the close relationship F&M Trust and the Zimmerman family enjoy, something else sticks out to Dennis Zimmerman. “Our business has a lot of moving parts,” he said. “And F&M Trust really took the time to understand these different businesses.” Upper left: Renee Preso, Vice President, Southern Franklin, Fulton, and Huntingdon County Market Manager, F&M Trust; Ted Zimmerman, Real Estate Developer, Penn National Community and Golf Club; Dennis Zimmerman, President, Penn National Community and Golf Club; Patti Nitterhouse, Vice President, Penn National Community and Golf Club; Honor Zimmerman, Real Estate Sales, Penn National Community and Golf Club; Phil Pantano, Vice President, Commercial Services, Franklin, Fulton, and Huntingdon County Market Manager 12 ANNUAL REPORT 2018 2018 COMMUNITY HIGHLIGHTS COMMUNITY DONATIONS Franklin Financial Services and F&M Trust employees are devoted to serving the communities in which they live and work. Each year, our employees assist hundreds of nonprofit organizations by volunteering their time at community events or by serving as members of a board of directors. 65 bank-sponsored events and other activities In 2018, Franklin Financial Services and 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. $349,619 in community investments 225 organizations supported 194 volunteers 2,252 volunteer hours COMMUNITY 13 SENIOR MANAGEMENT Timothy (Tim) G. Henry President and CEO Mark R. Hollar Senior Vice President CFO and Treasurer Steven D. Butz Senior Vice President Chief Commercial Services Officer Karen K. Carmack, DM, SPHR, SHRM-SCP Senior Vice President Chief Human Resources Officer Ronald L. Cekovich Senior Vice President Chief Information and Operations Officer Patricia A. Hanks Senior Vice President Chief Retail Services Officer Lorie M. Heckman, CRCM Senior Vice President Chief Risk Officer Susan L. Rosenberg, JD Senior Vice President Chief Investment & Trust Officer Matthew D. Weaver Senior Vice President Chief Marketing Officer 14 ANNUAL REPORT 2018 CLIENT PROFILE GROWTH DONE YOUR WAY THEIR VALUES WE KNOW WE WOULD BE NOTHING WITHOUT THE COMMUNITY THAT SURROUNDS US. THE GRANT STREET LOFT Chambersburg, PA It started with a simple goal: grow their small-scale café kiosks throughout Chambersburg. Third generation owners of The Butcher Shoppe – a community grocery store – Anne and Leo Schoenhofen, needed a commercial kitchen to support the kiosks, also known as micro-markets. So, they purchased a 7,200-square-foot, two-story, brick warehouse with the intention of converting it into a kitchen. But when they saw the second floor, they knew they had to do something more with the space, noting that in the past, community members had asked Anne Schoenhofen to cater their weddings. That’s when the couple dreamed up The Grant Street Loft – a new special event venue in Chambersburg. Financed by F&M Trust, the project involved renovating the building into a commercial kitchen on the first floor, a chic event center on the second level, and a trendy rooftop deck. “F&M Trust was excited about our growth. They were like, ‘Yeah, let’s do this. Let’s make this work.’ Not every bank does that. F&M Trust wanted to see what was next,” Anne Schoenhofen said. “They understood our vision,” added Leo Schoenhofen. “And in the future, when we go to them and say, ‘Hey we have our next best idea,’ we know they will give it their full attention. And they will know that we’re going to get it done.” Though they haven’t come up with their next idea yet, the Schoenhofens plan to pursue other business ventures in the future. Whatever they decide, one thing is certain: F&M Trust will be there to support them. “F&M TRUST WAS EXCITED ABOUT OUR GROWTH. THEY WERE LIKE, ‘YEAH, LET’S DO THIS. LET’S MAKE THIS WORK.’ NOT EVERY BANK DOES THAT. F&M TRUST WANTED TO SEE WHAT WAS NEXT.” ANNE SCHOENHOFEN Owner, The Grant Street Loft Upper left: Phil Pantano, Vice President, Commerrcial Services, Franklin, Fulton, and Huntingdon County Market Manager; Leo Schoenhofen, Co-Owner, The Grant Street Loft; Anne Schoenhofen, Co-Owner, The Grant Street Loft; Brian Reidell, Vice President, Commercial Services, Treasury Manager PROFILE 15 OUR OFFICERS COMMERCIAL SERVICES STEVEN D. BUTZ Senior Vice President Chief Commercial Services Officer PHILIP A. PANTANO Vice President Commercial Services Franklin, Fulton, and Huntingdon County Market Manager DAVID P. ZIMMERMAN Vice President Senior Commercial Services Relationship Manager MARY S. CORDELL Vice President Commercial Services Relationship Manager KRISTI A. DORSEY Vice President Commercial Services Relationship Manager MATTHEW D. HARSHBARGER Vice President Commercial Services Relationship Manager MICHAEL S. METZ Vice President Commercial Services Relationship Manager KATHERINE M. POWLEY Vice President Commercial Services Loan Portfolio Manager DALLAS J. ZULLI Vice President Commercial Services Relationship Manager KATHLEEN M. BLOSS Assistant Vice President Commercial Services Loan Portfolio Manager 16 ANNUAL REPORT 2018 CHAD R. RYDBOM Assistant Vice President Commercial Services Relationship Manager BRIAN C. REIDELL Vice President Commercial Services Treasury Manager JENNIFER E. BISHOP Treasury Relationship Manager JERAMY D. CULLER Assistant Vice President Business Banking Manager DANA L. KAISER-BRECHBIEL Assistant Vice President Business Banker PATRICIA M. MURRAY Assistant Vice President Business Banker BENJAMIN S. DEBELL Business Banker NATASHA J. KOONS Business Banker ADAM B. SMITH Business Banker LANCE R. BERNECKER Credit Analyst MICHAEL R. COOK Credit Analyst KOFI E. ODOOM Credit Analyst EXECUTIVE TIMOTHY (TIM) G. HENRY President & Chief Executive Officer AMANDA M. DUCEY Corporate Secretary JOYCE A. RILEY Assistant Corporate Secretary FACILITIES TEX E. MILLER, JR. Facilities Manager CRYSTAL M. SUNDERLAND Business Banker FINANCE ERIC J. FLEMING Vice President Credit Department Manager LORRAINE ACUNA Senior Credit Analyst MARIA S. SEABRA Senior Credit Analyst JULIE L. POWELL Senior Credit Analyst MARK R. HOLLAR Senior Vice President Chief Financial Officer & Treasurer AMY B. HERROLD Controller KIM A. BRANT Asset-Liability Analyst HUMAN RESOURCES KAREN K. CARMACK, DM, SPHR, SHRM-SCP Senior Vice President Chief Human Resources Officer LEVI L. CROUSE MBA, SHRM-CP Assistant Vice President Human Resources Officer MICHELE A. WILLIAMS Training & Development Manager BRIAN R. CARROLL Talent Acquisition Officer JENNIFER L. JOHNSON Training & Development Officer INVESTMENT & TRUST SERVICES SUSAN L. ROSENBERG, JD Senior Vice President Chief Investment & Trust Officer WARREN M. HURT Vice President Chief Investment Officer MATTHEW W. BERGER Vice President Investment & Trust Services Franklin, Fulton, and Huntingdon County Market Manager CHRISTIAN C. MERRITT, III Vice President Investment & Trust Services Cumberland County/Capital Region Market Manager CAROLE L. CRIST Vice President Investment & Trust Services Relationship Manager KAREN L. DEGENHART Vice President Employee Benefits Officer RONALD R. FROESCHLE Vice President Employee Benefits Officer JOSEPH G. MAXWELL Vice President Investment & Trust Services Relationship Manager JAMES C. MCELHENIE Vice President Investment & Trust Services Relationship Manager JAMES P. PROBST Vice President Investment & Trust Services Relationship Manager DIANA L. SPONSELLER Vice President Investment & Trust Services Relationship Manager DENNIS L. WILSON Vice President Investment & Trust Services Relationship Manager HEATHER C. HELM Assistant Vice President Estate & Tax Administration Officer DAVID Y. LUO Assistant Vice President Investment Portfolio Manager ALYSSA M. PROCTOR Assistant Vice President Investment & Trust Services Relationship Manager D. MICHELL FRIESE Investment & Trust Services Support Manager Brokerage Liaison ROBIN L. MURRAY Trust Operations Manager ADAM J. HOLLINGER Investment & Trust Services Relationship Manager JEFFREY A. PETERSON Investment & Trust Services Relationship Manager HANNAH S. REBUCK Investment & Trust Services Assistant Relationship Manager MARKETING MATTHEW D. WEAVER Senior Vice President Chief Marketing Officer MELISSA D. MILLER Assistant Vice President Marketing Manager JILL M. REDDECLIFF Marketing Operations Officer SHELBY M. WHITE Corporate Communications Officer RETAIL SERVICES PATRICIA A. HANKS Senior Vice President Chief Retail Services Officer JORDAN M. PEFFER Retail Services Operations Manager RESIDENTIAL MORTGAGE & CONSUMER LENDING DAVID E. BIMLER Assistant Vice President Residential Mortgage & Consumer Lending Sales Manager JARED M. LEONARD Assistant Vice President Retail Lending Officer AMANDA A. KEGERREIS Residential Mortgage & Consumer Lending Processing Manager CATHY S. GOODHART Residential Mortgage Lending Officer OFFICERS 17 OUR OFFICERS cont. TIMOTHY A. RARICK Consumer Lending Officer DAVID R. WINTERS Consumer Lending Officer DAVID E. BEITZEL Mortgage Originator GALE E. GALLO Mortgage Originator TIN L. LY Mortgage Orginator RHETTA B. MARTIN Mortgage Originator CHAMBERSBURG MARKET SUMMER FRANZONI Assistant Vice President Chambersburg Market Manager Lincoln Way East & Philadelphia Avenue LISA A. HOGUE Financial Services Officer Community Office Manager Lincoln Way East ASHLEY L. RUSSO Assistant Financial Services Officer Assistant Community Office Manager Philadelphia Avenue KAYLA A. HECK Assistant Financial Services Officer Assistant Community Office Manager Memorial Square MARISOL FELICIANO Financial Services Officer Community Office Manager 18 ANNUAL REPORT 2018 SHELBY A. YINGER Assistant Financial Services Officer Assistant Community Office Manager Norland Avenue DANIELLE R. RITTER Financial Services Officer Community Office Manager JENNIFER L. FULFER Assistant Financial Services Officer Assistant Community Office Manager Brookview & Chambers Pointe RACHEL M. BOWERS Financial Services Officer Community Office Manager Orchard Park GIOVANNA C. CARANNATE Assistant Financial Services Officer Assistant Community Office Manager West Side MEGHAN N. HEEBNER Financial Services Officer Community Office Manager MEGAN N. BRINDLE Assistant Financial Services Officer Assistant Community Office Manager CUMBERLAND COUNTY MARKET PAULO M. OLIVEIRA Vice President Cumberland County/Capital Region Market Manager Carlisle Crossing ALICIA M. BEECHER Assistant Financial Services Officer Assistant Community Office Manager Boiling Springs BARB M. MINNIER Assistant Financial Services Officer Assistant Community Office Manager Mechanicsburg & Camp Hill MIRIAM DEFEHR Financial Services Officer Community Office Manager HEATHER E. YODER Assistant Financial Services Officer Assistant Community Office Manager Shippensburg & Newville ELLEN L. ILE Financial Services Officer Community Office Manager ANGELA M. BARMONT Assistant Financial Services Officer Assistant Community Office Manager Ritner Highway MELISSA J. MCGOWAN Financial Services Officer Community Office Manager ANNETTI J. TINGLE Assistant Financial Services Officer Assistant Community Office Manager SOUTHERN FRANKLIN COUNTY MARKET RENEE L. PRESO Vice President Southern Franklin, Fulton, and Huntingdon County Market Manager Greencastle RISK MANAGEMENT TECHNOLOGY SERVICES RONALD L. CEKOVICH Senior Vice President Chief Information & Operations Officer PAMELA A. JOHNS Vice President Loan Servicing Manager JOSEPH C. LIEB Vice President Assistant Technology Services Manager WILL M. BARNUM Assistant Technology Services Manager KRISTIN P. BEEGLE Deposit Operations Manager DIXIE C. BURKHOLDER Assistant Deposit Operations Manager STEPHANIE A. GEARHART Assistant Loan Servicing Manager PENNY L. KOSER Assistant Financial Services Officer Assistant Community Office Manager Mont Alto SARAH S. STANSFIELD Financial Services Officer Community Office Manager Waynesboro CHASTITY L. WANTZ Assistant Vice President Financial Services Officer Community Office Manager JILIAN M. BIRELY Assistant Financial Services Officer Assistant Community Office Manager FULTON/HUNTINGDON COUNTY MARKET RENEE L. PRESO Vice President Southern Franklin, Fulton, and Huntingdon County Market Manager Hustontown & McConnellsburg MARY E. WRIGHT Financial Services Officer Community Office Manager SAMANTHA D. WAGNER Assistant Financial Services Officer Assistant Community Office Manager LORIE M. HECKMAN Senior Vice President Chief Risk Officer WILLIAM A. PRYOR Vice President Chief Credit Officer OLAF R. HASSE Vice President Loan Portfolio Risk Management Officer AVIS M. GRAHAM Assistant Vice President Investment & Trust Services Compliance Officer RAINBOW D. HOPKINS Assistant Vice President BSA/OFAC Officer ERIC M. FOLLIN Documentation Review Officer STEVEN R. GORMONT Consumer Credit Recovery Officer FRANK M. SEVERA Commercial Credit Recovery Officer SHERYL R. SNIDER Compliance Officer & CRA Officer RAYMOND W. WILLS Security Officer MATTHEW R. SHANK Assistant Documentation Review Officer JANET E. STAMPER Consumer Documentation Review Officer SEAN A. ZABRUCKY BSA/OFAC Analyst OFFICERS 19 CLIENT PROFILE VISION DONE YOUR WAY THEIR MISSION COMMITTED TO HELPING PEOPLE BE INTENTIONAL IN THEIR LIFE, WORK AND DEVELOPMENT. WAKEEN ENTERPRISE Harrisburg, PA Jeff Wakeen never thought he would relocate his Mechanicsburg- based business, Wakeen Enterprise, to Harrisburg. In fact, he had told his realtor not to even bother showing him his current Harrisburg office, which is located just a few blocks away from the State Capitol. That changed when he saw the space. “All of a sudden I thought, this is actually where we belong in our next level of growth,” said Wakeen. Wakeen Enterprise encompasses several businesses including a marketing firm, a strategic print placement firm, a female fitness club, a strategic consulting firm and a nonprofit. When he first partnered with F&M Trust, Wakeen said he had an idea of what financial solutions he needed for his business. But F&M Trust steered him in a different direction. “It was a better solution because they’re the finance people. For them to have vision and understand number one, what we’re trying “THEY’RE A PARTNER. THEY’RE NOT JUST A BANK.” JEFFREY WAKEEN Founder/CEO, Wakeen Enterprise (Wakeen & Company, Connection Mission, Wakeen Media Group, Wakeen Pages, Momentum Female Health & Fitness Club) to accomplish and two, to be alongside us in our vision, is a very nice feeling which you don’t typically get out of banks. With F&M Trust, I feel a sense of family,” said Wakeen. He noted that F&M Trust has been a trusted partner as his company has evolved over the past few years — both in terms of offering financial solutions and in helping him understand where the business is financially. And the business will continue to evolve. As F&M Trust also continues its expansion into the capital region, the bank will be there growing alongside Wakeen and supporting his vision. “They’re excited about our vision. They can’t wait to see us succeed, and they can’t wait to be there for our next step,” Wakeen said. “They’re a partner. They’re not just a bank.” Upper left: Jolene Pickens, Chief Culture Officer, Wakeen Enterprise; Kevin Wert, Chief Marketing Officer, Wakeen Enterprise; Jeffrey Wakeen, Founder/CEO, Wakeen Enterprise; Joanna Drexel-Blevins, Chief Operating Officer, Wakeen Enterprise 20 ANNUAL REPORT 2018 LOCATIONS Chambersburg Area LINCOLN WAY EAST OFFICE 1712 Lincoln Way East, Chambersburg PHONE: (717) 264-9414 MEMORIAL SQUARE OFFICE 20 South Main Street, Chambersburg PHONE: (717) 264-6116 WAYNESBORO OFFICE 200 East Main Street, Waynesboro PHONE: (717) 762-2188 Cumberland County BOILING SPRINGS OFFICE 3 East First Street, Boiling Springs PHONE: (717) 241-4131 BROOKVIEW OFFICE 2075 Scotland Avenue, Chambersburg PHONE: (717) 261-3697 CAMP HILL OFFICE 3907 Market Street, Camp Hill PHONE: (717) 731-9604 NORLAND AVENUE OFFICE 870 Norland Avenue, Chambersburg PHONE: (717) 262-2085 ORCHARD PARK OFFICE 841 Wayne Avenue, Chambersburg PHONE: (717) 263-1801 CARLISLE CROSSING OFFICE 214A Westminster Drive, Carlisle PHONE: (717) 243-2215 CARLISLE PLAZA DRIVE-UP 700 East High Street, Carlisle PHONE: (717) 243-0416 CHAMBERS POINTE OFFICE 1425 Philadelphia Avenue, Chambersburg PHONE: (717) 261-3660 MECHANICSBURG OFFICE 6375 Carlisle Pike, Mechanicsburg PHONE: (717) 697-0444 PHILADELPHIA AVENUE OFFICE 2405 Philadelphia Avenue, Chambersburg PHONE: (717) 264-5122 NEWVILLE OFFICE 51 South High Street, Newville PHONE: (717) 776-2242 WEST SIDE OFFICE 1100 Lincoln Way West, Chambersburg PHONE: (717) 263-9168 RITNER HIGHWAY OFFICE 1901 Ritner Highway, Carlisle PHONE: (717) 960-1400 Southern Franklin County GREENCASTLE OFFICE 518 North Antrim Way, Greencastle PHONE: (717) 597- 2384 MARION OFFICE 5293 Main Street, Marion PHONE: (717) 375-2210 MONT ALTO OFFICE 8 Park Street, Mont Alto PHONE: (717) 749-3161 SHIPPENSBURG OFFICE 13 Shippensburg Shopping Center, Shippensburg PHONE: (717) 530-2100 Fulton & Huntingdon Counties HUSTONTOWN OFFICE 7781 Waterfall Road, Hustontown PHONE: (717) 987-3193 MCCONNELLSBURG OFFICE 100 Lincoln Way East, McConnellsburg PHONE: (717) 485-3144 ORBISONIA OFFICE 18810 Sandy Ridge Station, Orbisonia PHONE: (814) 447-3104 Additional ATM Locations AYR TOWN CENTER 368 South 2nd Street, McConnellsburg FAYETTEVILLE POST OFFICE 4025 Lincoln Way East, Fayetteville BROOKVIEW CAMPUS - NORTHFIELD Northgate Commons and Apartments 1500 Northfield Drive, Chambersburg PENN NATIONAL GOLF CLUBHOUSE 3720 Clubhouse Drive, Fayetteville PENNS VILLAGE 182 Buchanan Trail, McConnellsburg QUINCY VILLAGE - COLESTOCK CENTER 6596 Orphanage Road, Quincy RIVERVIEW BUSINESS CENTER 11734 Lenape Drive, Mount Union SHIPPENSBURG WEST END 9966 Molly Pitcher Highway, Shippensburg WAYNESBORO MARKETPLACE 11123 Buchanan Trail East, Waynesboro ZULLINGER 4884 Buchanan Trail East, Zullinger LOCATIONS 21 P.O. Box 6010 | Chambersburg, PA 17201 888.264.6116 | www.franklinfin.com