TIMOTHY G. HENRY
CEO
SHAREHOLDER
LETTER
2024
This letter, like my remaining time at
the company (I retire on April 29th of this
year), will be relatively short. From our
most recent Annual Report on Form 10-K,
and other financial releases throughout
2024, you will know that your company
marked 2024 with exceptional growth of
both deposits and loans. You will know
that the company’s assets grew by 19.7%
to nearly $2.2 billion while assets under
management of our Wealth Management
division grew 6.4% to $1.3 billion.
And you will know that we continue to expand
geographically, with the opening of a new retail
community office in Dauphin County and by
providing banking services to customers in Berks,
Lancaster and York counties.
It is equally important for you to know that the
company is growing from a strong financial base.
In 2024 shareholder equity grew by 9.5% to
$145 million. We continue to be considered
“well capitalized” by our regulators. This strong
financial position allows us to make decisions that
will lead to long-term improvement. As an example,
I can reference our decision, in the fourth quarter
of 2024, to sell low earning assets, acquired in the
low-interest rate environment of the pandemic, and
replace them with higher earning assets that will
enhance profitability in future years. This created
a one-time loss to earnings in 2024 but will
enhance our earnings going forward.
Going forward is the key. We believe the future
of our company has great potential and because
of that we continue to reinvest in the company.
Our investments include the addition of new,
talented people and the continued training of
existing staff. It includes investments in software
and systems that help us protect our customers
and their data from fraud, as well as providing
valuable information quickly to our employees.
This leads to better decision making and better,
more efficient, service for our customers. These
investments are necessary to keep your company
relevant, viable, and growing in the communities
we serve. The services required by our customers
are constantly evolving and we must do the same
to continue to meet their needs.
Our positive impact on the communities and
customers we serve is felt in many ways.
First and foremost, we serve more customers
today (over 90,000) than we did
a year ago. The charitable
contributions of time and
talent by our employees
to the communities we
serve, and the financial
donations we make, help
our communities thrive,
which, in the end, is also a
benefit to our organization.
Our company plays
an important
DEAR SHAREHOLDERS,
Continued on
next page >
role in the communities we serve, and we take
that responsibility seriously.
I noted at the beginning of this letter that I will
be retiring on April 29th of this year. I am currently
in my 10th year at our company, and I think
it is important to bring new ideas into the
CEO/President role for the company to continue
to evolve and grow. I am excited to announce
that Craig Best will be taking on the role of CEO
and President. Craig was most recently the
CEO at Peoples Security Bank & Trust, where
he helped grow a $400 million asset organization
to over $5 billion in assets. His knowledge
and experience will surely be valuable to your
company as we continue to move forward into
the future as an independent community bank.
In closing, I’d like to thank the Board of Directors
who have worked diligently to represent you, our
shareholders, by providing valuable guidance
and direction to the management team. It has
been a pleasure to work with them as both the
management team and the board share the
same goals of bringing value to our shareholders.
Thank you for your past and ongoing support
of our company.
> Continued from previous page
TOTAL RETURN PERFORMANCE
Sincerely yours,
Timothy G. Henry
CEO
Franklin Financial Services Corporation
and F&M Trust
NASDAQ Composite Index
S&P US BMI Banks - Mid-Atlantic Region
Peer Group
Frankin Financial Services Corp.
LEGEND
$94.90
INDEX VALUE
12/31/19
$250
$200
$150
$100
$50
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
SHAREHOLDER
LETTER
2024
Boys & Girls Club of Washington County
Joseph T. Simpson Library
Tim Henry, CEO & Craig Best, President
A few images from the year – a strong leadership connection, our newest community office opening, plus some of the many volunteer and financial contributions we’ve made in the communities we serve.
Fulton County Family Partnership
Linglestown Ribbon Cutting
Linglestown Office Interior
Linglestown Exterior Detail
Linglestown Office Exterior
Greg Carter, Linglestown Manager
CONSOLIDATED
FINANCIAL HIGHLIGHTS
2024
(Dollars in thousands, except per share)
2024
2023
PERFORMANCE MEASUREMENTS
Net income
$
11,099
$
13,598
Return on average assets
0.54%
0.78%
Return on average equity
8.05%
11.39%
Net interest margin, fully tax equivalent
2.95%
3.31%
SHAREHOLDERS’ VALUE (Per common share)
Diluted earnings per share
$
2.51
$
3.10
Basic earnings per share
2.52
3.11
Regular cash dividends paid
1.28
1.28
Book value
32.69
30.23
Market value*
29.90
31.55
Market value/book value ratio
91.47%
104.37%
Price/earnings multiple year-to-date
11.91
10.18
Current quarter dividend yield**
4.28%
4.06%
Dividend payout ratio
50.72%
41.15%
BALANCE SHEET HIGHLIGHTS
Total assets
$
2,197,841
$
1,836,039
Investment and equity securities
508,604
472,503
Loans, net
1,380,424
1,240,933
Deposits
1,815,647
1,537,978
Shareholders’ equity
144,716
132,136
SAFETY AND SOUNDNESS
Risk-based capital ratio (Total)
13.85%
14.45%
Leverage ratio (Tier 1)
7.92%
9.01%
Common equity ratio (Tier 1)
11.31%
11.82%
Nonperforming loans/gross loans
0.02%
0.01%
Nonperforming assets/total assets
0.01%
0.01%
Allowance for loan loss/loans
1.26%
1.28%
Net loan (charge-offs) recoveries/average loans
(0.03)%
(0.02)%
ASSETS UNDER MANAGEMENT
Wealth Management Services (Fair value)
$
1,169,282
$
1,094,747
Held at third-party brokers (Fair value)
139,872
135,423
*Based on the closing price of FRAF as quoted on the Nasdaq Capital Market
**Annualized