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

Franklin Financial Services Corporation (the Corporation) (NASDAQ: FRAF ), the bank holding company of F&M Trust (the Bank) headquartered in Chambersburg, PA, reported its second quarter and year-to-date 2026 financial results.

Net Income : $6.6 million ($1.47 per diluted share) for the second quarter of 2026 compared to $5.9 million ($1.32 per diluted share) for the second quarter of 2025, an increase of 11.9%.

Wealth Management : Fees were $2.6 million, an increase of 6.1% from $2.4 million in the second quarter of 2025. Assets under management were $1.5 billion on June 30, 2026.

Asset Growth: $2.335 billion in assets on June 30, 2026, compared to $2.239 billion at year-end 2025, an increase of 4.3% (8.6% annualized).

Loan Growth: Total net loans of $1.589 billion on June 30, 2026, an increase of 3.1% (6.2% annualized) from December 31, 2025.

Deposit Growth: Total deposits of $1.925 billion on June 30, 2026, an increase of 4.8% (9.6% annualized) from December 31, 2025.

Quarterly Performance Metrics: Return on Average Assets (ROA) 1.14%, Return on Average Equity (ROE) 14.80%, and Net Interest Margin (NIM) of 3.50% on an annualized basis, compared to a ROA of 1.04%, ROE of 15.64%, and NIM of 3.21% for the second quarter of 2025.

On July 16, 2026, the Board of Directors declared a $0.34 per share regular quarterly cash dividend for the third quarter of 2026 to be paid on August 26, 2026, to shareholders of record at the close of business on August 7, 2026.

A summary of notable operating results for the six months ended June 30, 2026 follows: Net Income: $13.2 million ($2.94 per diluted share) compared to $9.8 million ($2.20 per diluted share) for the six months ended June 30, 2025, an increase of 34.8%.

Wealth Management: Fees were $4.9 million, an increase of 5.2% from $4.6 million for the first six months of 2025.

Year-to-Date Performance Metrics: Return on Average Assets (ROA) 1.17%, Return on Average Equity (ROE) 14.96%, and Net Interest Margin (NIM) of 3.52% on an annualized basis, compared to a ROA of 0.89%, ROE of 13.27%, and NIM of 3.13% for the comparable period in 2025.

Balance Sheet Highlights Total assets on June 30, 2026 were $2.335 billion, an increase of 4.3% from $2.239 billion on December 31, 2025.

Significant changes in the balance sheet from December 31, 2025 to June 30, 2026 include: Debt Securities Available for Sale: Decreased $2.2 million, or (0.5%), net of purchases, due primarily to paydowns. On June 30, 2026, the net unrealized loss in the portfolio was $29.1 million compared to $26.8 million at year-end 2025.

Net L oans: Increased $48.2 million or 3.1% (6.2% annualized) over the year-end 2025 balance, primarily from an increase of $45.8 million in commercial real estate (CRE) loans and $24.7 million in residential 1-4 family loans, which was partially offset by a decrease of $19.6 million in commercial (C&I) loans.

As of June 30, 2026, CRE loans totaled $949.4 million with the largest collateral segments being: apartment buildings ($161.9 million), hotels and motels ($105.8 million), and office buildings ($100.1 million), primarily in the Bank's market area of south-central Pennsylvania.

The Bank's CRE non-owner occupied concentration ratio was 348.2% of risk-based capital as of June 30, 2026, down from 349.9% on December 31, 2025.

Deposits: Increased $88.8 million or 4.8% (9.6% annualized)) from year-end 2025. The majority of the growth occurred in noninterest-bearing checking accounts and money management accounts, which was partially offset by a decrease in interest-bearing checking and savings accounts.

At June 30, 2026, 17.7% of total deposits were in noninterest checking accounts, compared to 16.9% at year-end 2025. For the first six months of 2026, the cost of total deposits was 1.51%, a decrease from 1.85% for the full year of 2025.