In This Article:
Shares of Franklin Financial Services Corporation FRAF have declined 1.5% since releasing first-quarter 2025 results, underperforming the S&P 500 index’s 0.6% rise. However, over the past month, the stock has shown notable resilience, gaining 8.7% against the S&P 500’s 1.6% drop, reflecting renewed investor confidence, possibly driven by solid quarterly results.
Earnings & Revenue Estimates
Franklin Financial reported a first-quarter 2025 net income of $3.9 million, or 88 cents per diluted share, representing a 16.7% increase from $3.4 million, or 77 cents per share, in the first quarter of 2024.
Total revenue performance was bolstered by a 15.2% increase in net interest income to $15.6 million from $13.6 million in the year-ago period. Non-interest income improved 8.9% year over year to $4.6 million, driven primarily by higher wealth management fees. The company’s net interest margin expanded to 3.05% from 2.88%, reflecting improved loan yields and prudent balance sheet management.
Franklin Financial Services Corp. Price, Consensus and EPS Surprise
Franklin Financial Services Corp. price-consensus-eps-surprise-chart | Franklin Financial Services Corp. Quote
Loan & Deposit Growth Supports Balance Sheet Expansion
The company’s total assets rose 12.2% year over year to $2.26 billion as of March 31, 2025. Net loans increased 14% to $1.44 billion, with commercial real estate loans (particularly in apartment buildings, hotels and office buildings) playing a pivotal role in this growth.
Deposit balances expanded 19.8% year over year to $1.87 billion, with notable growth in money management and non-interest-bearing checking accounts. Costs of total deposits for the quarter were 2.02%, marginally higher than 1.70% in the year-ago quarter but down from the prior quarter’s 2.06%.
Management Commentary Reflects Strategic Progress
Outgoing CEO Tim Henry attributed the improved performance to the groundwork laid in previous years, citing infrastructure development, disciplined balance sheet management, and growth in loans and deposits.
“We are pleased to be able to post strong first quarter results as we continue to work to improve our efficiency and profitability across all areas of the Bank,” Henry noted. His impending retirement on May 2 will mark the end of his tenure, with Craig Best, the current president, slated to succeed him as CEO.
Drivers Behind Performance Improvement
Several factors contributed to the earnings improvement. Loan growth of $57.3 million from the end of 2024, driven by commercial real estate, necessitated a provision for credit losses of $779,000, up from $452,000 in the first quarter of 2024. While this reflects a more cautious lending posture, the increase is consistent with the rise in loan balances. The yield on interest-earning assets improved to 5.25% from 5.03%, while the cost of interest-bearing liabilities moved up to 2.64%, modestly compressing spreads.