Franklin Financial (NASDAQ: FRAF) Q1 profit jumps as margins improve

Rhea-AI Filing Summary

Franklin Financial Services Corporation reported significantly stronger first quarter 2026 results. Net income for the three months ended March 31, 2026 was $6.637 million, up from $3.922 million a year earlier, with diluted earnings per share rising to $1.48 from $0.88.

Profitability ratios improved, as return on average assets reached 1.20% and return on average equity was 15.13%. Net interest margin expanded to 3.53%, while the efficiency ratio improved to 63.64%. The company declared a regular cash dividend of $0.33 per share and reported total assets of $2.298 billion and total deposits of $1.890 billion.

Positive

• Profitability strengthened materially: Q1 2026 net income rose to $6.637 million from $3.922 million a year earlier, with diluted EPS increasing to $1.48 from $0.88 and return on average equity reaching 15.13%.

Negative

• None.

Insights

Banking sector analyst

Franklin Financial delivered notably stronger Q1 2026 profitability with better margins and efficiency.

Franklin Financial grew Q1 2026 net income to $6.637M from $3.922M a year earlier, with diluted EPS rising to $1.48 from $0.88. Key profitability ratios strengthened, including return on average assets at 1.20% and return on average equity at 15.13%.

Core banking performance improved, as net interest margin widened to 3.53% from 3.05% in Q1 2025, while the efficiency ratio improved to 63.64% from 71.39%. Asset quality metrics remained conservative, with nonperforming loans at 0.54% of gross loans and allowance for credit losses at 1.32% of loans as of March 31, 2026.

Balance sheet growth was modest, with total assets of $2.298B versus $2.239B at year-end 2025 and total deposits of $1.890B. The regular dividend of $0.33 per share and a dividend payout ratio of 22.30% suggest earnings comfortably covered shareholder distributions in the quarter.

8-K Event Classification

2 items: 2.02, 9.01

2 items

Item 2.02 Results of Operations and Financial Condition Financial

Disclosure of earnings results, typically an earnings press release or preliminary financials.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, and exhibit attachments filed with this report.

Key Figures

Net income Q1 2026: $6.637M Net income Q1 2025: $3.922M Diluted EPS Q1 2026: $1.48 +5 more

8 metrics

Net income Q1 2026 $6.637M For the three months ended March 31, 2026

Net income Q1 2025 $3.922M For the three months ended March 31, 2025

Diluted EPS Q1 2026 $1.48 Three months ended March 31, 2026

Return on average assets 1.20% Q1 2026, annualized

Return on average equity 15.13% Q1 2026, annualized

Total assets $2.298B As of March 31, 2026

Total deposits $1.890B As of March 31, 2026

Regular cash dividend $0.33/share Q1 2026 dividend; payout ratio 22.30%

Key Terms

Net interest margin, Efficiency ratio, Nonperforming loans, Allowance for credit losses, +2 more

6 terms

Net interest margin financial

"Net interest margin* | | | 3.53% | | | 3.40% | | | 3.05%"

Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.

Efficiency ratio financial

"Efficiency ratio (1) | | | 63.64% | | | 66.05% | | | 71.39%"

A measure of how much a company spends to produce each dollar of revenue, usually shown as operating expenses divided by revenue and expressed as a percentage. Think of it as a household’s budget: a lower percentage means more of each dollar earned stays as profit, while a higher number means costs are eating into returns. Investors use it to judge cost control and compare how efficiently companies turn revenue into earnings, especially in banks and financial firms.

Nonperforming loans financial

"Nonperforming loans / gross loans | | | 0.54% | | | 0.55% | | | 0.02%"

Nonperforming loans are loans on which borrowers have stopped making the scheduled interest or principal payments for an extended period (commonly 90 days or more) or are otherwise in serious danger of default. Think of them as IOUs that aren’t being repaid: they tie up a lender’s money, reduce future interest income, and force the lender to hold extra reserves or take losses. For investors, a rising share of nonperforming loans signals weakening credit quality, higher potential losses, and greater risk to a bank’s profitability and capital.

Allowance for credit losses financial

"Allowance for credit losses / loans | | | 1.32% | | | 1.32% | | | 1.27%"

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

Tangible book value financial

"Tangible book value (1) | | $ | 37.78 | | $ | 37.10 | | $ | 31.97"

Tangible book value is the accounting measure of a company’s net worth after removing intangible items like goodwill, patents and trademarks, leaving only physical and financial assets minus liabilities. For investors it offers a clearer view of the company’s hard-asset backing per share—like estimating the cash you could get by selling the furniture, machinery and cash in a house—helping gauge downside risk and whether a stock may be cheaply valued.

Non-GAAP financial measures financial

"GAAP versus non-GAAP Presentations – The Corporation supplements its traditional GAAP measurements with certain non-GAAP measurements"

Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.

Offering Details

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Offering

Offering Type earnings_snapshot

Understanding 8-K Material Events →

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United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report: April 23, 2026

FRANKLIN FINANCIAL SERVICES CORPORATION

(Exact name of registrant as specified in its new charter)

	Pennsylvania	001-38884	25-1440803
	(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

	1500 Nitterhouse Drive, Chambersburg, PA	17201
	(Address of principal executive office)	(Zip Code)
	Registrant's telephone number, including area code	(717) 264-6116

N/A

(Former name or former address, if changes since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨   Soliciting material pursuant to Rule 14a –12 under the Exchange Act (17 CFR 240.14a –12)

¨   Pre-commencement communications pursuant to Rule 14d – 2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨   Pre-commencement communications pursuant to Rule 13e – 4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:



Title of class	Symbol	Name of exchange on which registered
Common stock	FRAF	Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

‎

Item 2.02 Results of Operations

The news release of Franklin Financial Services Corporation, dated April 23, 2026 and attached as Exhibit 99.1, announces its earnings for the three months ended March 31, 2026 and is incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits. The following exhibits are filed herewith:

Number Description

99.1  News Release, dated April 23, 2026 of Franklin Financial Services Corporation   

104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FRANKLIN FINANCIAL SERVICES CORPORATION

By: /s/ Craig W. Best

Craig W. Best

President and Chief Executive Officer

Dated: April 23, 2026

Exhibit 99.1

April 23, 2026

Franklin Financial Reports First Quarter 2026 Results;
Declares Dividend

(CHAMBERSBURG, PA) Franklin Financial Services Corporation (the Corporation) (NASDAQ: FRAF), the bank holding company of F&M Trust (the Bank) headquartered in Chambersburg, PA, reported its first quarter 2026 results.

A summary of notable operating results as of or for the first quarter ended March 31, 2026 follows:

· Net income: $6.6 million ($1.48 per diluted share) for the first quarter of 2026. This is an increase of $594 thousand (9.8%) compared to $6.0 million ($1.35 per diluted share) for the fourth quarter of 2025 and an increase of $2.7 million (69.2%) compared to $3.9 million ($0.88 per diluted share) for the first quarter of 2025.

· Wealth Management: $2.3 million in fees for the first quarter of 2026, an increase of 4.1% from $2.2 million in the first quarter of 2025. Assets under management were $1.417 billion on March 31, 2026.

· Asset Growth: $2.298 billion in total assets on March 31,2026, an increase of 2.6% from $2.239 billion at year-end 2025.

· Loan Growth: Net loans totaled $1.552 billion on March 31, 2026, an increase of 0.7% from $1.541 billion on December 31, 2025.

· Deposit Growth: Total deposits of $1.890 billion, an increase of 2.9% from $1.836 billion on December 31, 2025.

· Quarterly Performance Metrics: Return on Average Assets (ROA) of 1.20%, Return on Average Equity (ROE) of 15.13%, and Net Interest Margin (NIM) of 3.53%, on an annualized basis for the first quarter of 2026, compared to an ROA of 0.72%, ROE of 10.80% and NIM of 3.05% for the first quarter of 2025.  

· On April 8, 2026, the Board of Directors declared $0.34 per share regular quarterly cash dividend for the second quarter of 2026 to be paid on May 27, 2026, to shareholders of record at the close of business on May 1, 2026.  This dividend represents a 3.0% increase over the second quarter 2025 dividend.

1

Balance Sheet Highlights

Total assets on March 31, 2026 were $2.298 billion an increase from $2.239 billion on December 31, 2025. Changes in the balance sheet from December 31, 2025, to March 31, 2026, include:

· Debt securities available for sale decreased $18.1 million (4.0%) due primarily to paydowns. On March 31, 2026, the net unrealized loss in the portfolio was $28.8 million compared to a net unrealized loss of $26.8 million at year-end 2025.

· Net loans increased $11.1 million (0.7%) over the year-end 2025 balance, primarily from increases in commercial real estate loans of $5.5 million, and 1-4 family residential real estate loans of $13.4 million, but were partially offset by a decrease of $11.5 million in commercial loans.  On March 31, 2026, commercial real estate loans totaled $909.1 million (57.8% of total gross loans), with the largest collateral segments being: apartment buildings ($175.5 million), hotels and motels ($103.8 million), land development ($102.0 million), office buildings ($94.0 million) and shopping centers ($92.2 million) which are located primarily in south-central Pennsylvania. 

· Total deposits increased $53.9 million (2.9%) to $1.890 billion from year-end 2025. Noninterest-bearing deposits (17.6% of total deposits) grew 6.9% ($21.4 million) and money management deposits grew 3.9% ($30.4 million) from year-end 2025. Time deposits increased 6.3% ($14.2 million) over the same period. On March 31, 2026, the Bank estimated that 89% of its deposits were FDIC insured or collateralized. 

· On March 31, 2026, the Bank had borrowings of $200.0 million from the Federal Home Loan Bank of Pittsburgh (FHLB). The Bank has additional funding capacity with the Federal Reserve, FHLB and correspondent banks.

· Shareholders’ equity increased $3.5 million (2.0%) from December 31, 2025. Retained earnings increased $5.2 million, net of dividends of $1.5 million paid to shareholders during 2026. The accumulated other comprehensive loss (AOCL) increased from $21.6 million at year-end 2025 to $23.3 million due to an increase in the unrealized loss in the investment portfolio. On March 31, 2026, the book value of the Corporation’s common stock was $39.78 per share and tangible book value (1) was $37.78 per share. In December 2025, an open market repurchase plan to repurchase 150,000 shares through December 31, 2026, was approved.  The Bank is considered to be “well-capitalized” under regulatory guidelines as of March 31, 2026.

· Average 2026 year-to-date earning assets were $2.153 billion compared to $2.108 billion for the same period in 2025, an increase of $45.3 million (2.1%). The increase occurred primarily in the commercial real estate portfolio ($92.6 million) and the residential 1-4 family real estate portfolio ($60.7 million). 2  

The yield on earning assets increased from 5.25% for the first quarter of 2025 to 5.28% for the first quarter of 2026. Total deposits averaged $1.833 billion, an increase of 0.9% over the first quarter 2025 average of $1.816 billion. The cost of total deposits for the first quarter of 2026 was 1.52% compared to 2.02% for the same period 2025. 

· Nonaccrual loans totaled $8.5 million on March 31, 2026, materially unchanged from December 31, 2025. Nonaccrual loans were 0.54% of total gross loans on March 31, 2026, compared to 0.55% on December 31, 2025. The nonaccrual loans are comprised primarily of commercial real estate (CRE) loans totaling $7.7 million between four different loans to unrelated borrowers, and one commercial (C&I) loan for $621 thousand.  The largest of the four nonaccrual CRE loans is for a $7.0 million construction loan on a mixed-use commercial project which was past due in the 30-59 day aging bucket as of March 31, 2026.  The Bank is in continual communication with the developer regarding the funding required to complete the project, the source of funds, as well as other options available to the Bank to protect its interest. The Bank is currently working with the developer on a plan to jointly fund the completion of enclosing the property to protect the collateral. A discounted “as-is” appraisal was received in the first quarter of 2026 and as a result the Bank increased its specific reserve to $1.0 million on March 31, 2026, from $892 thousand on December 31, 2025. As of March 31, 2026, the Bank created a specific reserve of $557 thousand for the previously mentioned nonaccrual C&I loan, based on the valuation of business assets held as collateral.  The allowance for credit loss to loans ratio was 1.32% on March 31, 2026, unchanged from December 31, 2025.  The allowance for credit losses (ACL) for unfunded commitments was $1.9 million on March 31, 2026, unchanged from December 31, 2025.

Income Statement Highlights – First Quarter 2026 v. 2025

· Net income for the first quarter of 2026 was $6.6 million ($1.485 per diluted share) an increase of $2.7 million (69.2%) from $3.9 million ($0.88 per diluted share) for the first quarter of 2025.

· Net interest income was $18.5 million for the first quarter of 2026, an increase of 18.7% compared to $15.6 million for the first quarter of 2025. A 13.6% increase in interest from the loan portfolio and a decrease of 19.2% in interest expense quarter over quarter contributed to the increase in net interest income. 

· The provision for credit losses on loans was $202 thousand for the first quarter of 2026 compared to $750 thousand for the first quarter of 2025. The provision for credit losses on unfunded commitments was $19 thousand for the first quarter of 2026 compared to $29 thousand for the first quarter of 2025.

3

· Noninterest income totaled $5.4 million for the first quarter of 2026 compared to $4.6 million for the first quarter of 2025, an increase of $798 thousand (17.5%). Compared to the first quarter of 2025, wealth management fees increased $91 thousand to $2.3 million, the gain on sale of loans increased $209 thousand and the Bank recorded a gain of $351 thousand from life insurance proceeds. 

· Noninterest expense for the first quarter of 2026 was $15.4 million compared to $14.6 million for the first quarter of 2025, an increase of $776 thousand (5.3%). The largest increase ($458 thousand) quarter over quarter occurred in employee benefits, primarily health insurance expense which increased $252 thousand.  Salaries, capital shares tax, and card processing fees also increased quarter over quarter. 

· The effective income tax rate was 20.1% for the first quarter of 2026 compared to  18.5% for the same period in 2025.  

(1) Non-GAAP measure.  See GAAP versus Non-GAAP Reconciliation that follows.  

Additional information on the Corporation is available on our website at: www.franklinfin.com/Presentations. 

Franklin Financial is the largest independent, locally owned and operated bank holding company headquartered in Franklin County with assets of more than $2.2 billion. Its wholly-owned subsidiary, F&M Trust, has twenty-three community banking locations in Franklin, Cumberland, Dauphin, Fulton and Huntingdon Counties PA, and Washington County MD. Franklin Financial stock is trading on the Nasdaq Stock Market under the symbol FRAF. Please visit our website for more  information, www.franklinfin.com. 

Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company's consolidated financial statements when filed with the Securities and Exchange Commission ("SEC''). Accordingly, the financial information in this announcement is subject to change.



Certain statements appearing herein which are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of I995. Such forward-looking statements refer to a future period or periods, reflecting management's current views as to likely future developments, and use words "may," "will," "expect," "believe," "estimate," "anticipate," or similar terms. Because forward-looking statements involve certain risks, uncertainties and other factors over which Franklin Financial Services Corporation has no direct control, actual results could differ materially from those contemplated in such statements. These factors include (but are not limited to) the following: changes in interest rates, changes in the rate of inflation, general economic conditions and their effect on the Corporation and our customers, changes in the Corporation's cost of funds, changes in government monetary policy, changes in government regulation and taxation of financial institutions, changes in technology,  the intensification of competition within the Corporation's market area, and other similar factors.



We caution readers not to place undue reliance on these forward-looking statements. They only reflect management's analysis as of this date.  The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in other documents the Corporation files from time to time with the SEC, including the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and any Current Reports on Form 8-K.



4

GAAP versus non-GAAP Presentations – The Corporation supplements its traditional GAAP measurements with certain non-GAAP measurements to evaluate its performance and to eliminate the effect of intangible assets.  By eliminating intangible assets (Goodwill), the Corporation believes it presents a measurement that is comparable to companies that have no intangible assets or to companies that have eliminated intangible assets in similar calculations. However, not all companies may use the same calculation method for each measurement. The non-GAAP measurements are not intended to be used as a substitute for the related GAAP measurements. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.  In the event of such a disclosure or release, the Securities and Exchange Commission’s Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. The following table shows the calculation of the non-GAAP measurements.







FRANKLIN FINANCIAL SERVICES CORPORATION (unaudited)

Income Statement		For the Three Months Ended
(Dollars in thousands, except per share data)		3/31/2026			12/31/2025			3/31/2025

Interest income
Loans, including fees		$	22,567		$	23,014		$	19,864
Interest and dividends on investments:
Taxable interest			3,616			3,964			4,825
Tax exempt interest			266			267			270
Dividend income			202			202			191
Interest-earning deposits in other banks			1,119			1,593			1,908
Total interest income			27,770			29,040			27,058
Interest expense
Deposits			6,887			8,010			9,030
FHLB overnight borrowings and advances			2,157			2,206			2,158
Subordinate notes			205			212			264
Total interest expense			9,249			10,428			11,452
Net interest income			18,521			18,612			15,606
Provision for credit losses - loans			202			326			750
Provision for credit losses - unfunded commitments			19			(37)			29
Total provision for credit losses			221			289			779
Net interest income after credit loss expense			18,300			18,323			14,827
Noninterest income
Wealth management fees			2,306			2,272			2,215
Loan service charges			238			238			209
Gain on sale of loans			318			260			109
Deposit service charges and fees			647			655			605
Other service charges and fees			482			484			483
Debit card income			618			597			558
Increase in cash surrender value of life insurance			132			124			115
Change in fair value of equity securities			—			—			(7)
Other			619			70			275
Total noninterest income			5,360			4,700			4,562
Noninterest Expense
Salaries			6,237			6,550			6,176
Employee benefits			2,788			2,277			2,330
Net occupancy			1,241			1,179			1,225
Marketing and advertising			426			502			433
Legal and professional			695			780			527
Data processing			1,540			1,578			1,557
Pennsylvania bank shares tax			254			137			160
FDIC Insurance			483			531			545
ATM/debit card processing			377			357			340
Telecommunications			135			131			106
Other			1,177			1,521			1,178
Total noninterest expense			15,353			15,543			14,577
Income before income taxes			8,307			7,480			4,812
Income tax expense			1,670			1,437			890
Net income		$	6,637		$	6,043		$	3,922
Per share
Basic earnings per share		$	1.48		$	1.36		$	0.88
Diluted earnings per share		$	1.48		$	1.35		$	0.88







5





Consolidated Balance Sheet (as of)			3/31/2026			12/31/2025			3/31/2025
(Dollars in thousands, except per share data)
Assets
Cash and due from banks		$	23,976		$	22,446		$	23,277
Short-term interest-earning deposits in other banks			186,801			105,275			201,679
Total cash and cash equivalents			210,777			127,721			224,956
Long-term interest-earning deposits in other banks			750			999			1,249
Debt securities available for sale, at fair value			436,483			454,586			495,487
Restricted stock			8,897			8,897			8,765
Loans held for sale			1,850			18,929			1,791
Loans			1,572,426			1,561,238			1,456,191
Allowance for credit losses			(20,729)			(20,655)			(18,444)
Net Loans			1,551,697			1,540,583			1,437,747
Other assets			87,064			87,303			87,483
Total assets			2,297,518			2,239,018			2,257,478

Liabilities
Deposits
Noninterest-bearing checking			331,658			310,251			298,945
Money management, savings, and interest checking			1,319,494			1,301,198			1,257,102
Time			238,558			224,323			311,530
Total deposits			1,889,710			1,835,772			1,867,577
Federal Home Loan Bank advances			200,000			200,000			200,000
Subordinate notes			10,850			10,845			19,710
Other liabilities			18,214			17,159			18,800
Total liabilities			2,118,774			2,063,776			2,106,087
Shareholders' equity
Common Stock			4,711			4,711			4,711
Additional paid-in capital			43,776			43,932			43,607
Retained earnings			160,001			154,844			141,967
Accumulated other comprehensive loss			(23,265)			(21,589)			(31,856)
Treasury stock			(6,479)			(6,656)			(7,038)
Total shareholders' equity			178,744			175,242			151,391
Total liabilities and shareholders' equity		$	2,297,518		$	2,239,018		$	2,257,478

Assets Under Management as of (fair value)		3/31/2026			12/31/2025			3/31/2025
Wealth Management		$	1,271,068		$	1,273,421		$	1,183,180
Held at third party brokers			145,477			147,880			139,918
Total assets under management		$	1,416,545		$	1,421,301		$	1,323,098



6



Key performance ratios as of or for the period ended as shown:		As of or for the Three Months Ended
Performance Measurements		3/31/2026			12/31/2025			3/31/2025
Return on average assets*			1.20%			1.05%			0.72%
Return on average equity*			15.13%			14.20%			10.80%
Efficiency ratio (1)			63.64%			66.05%			71.39%
Net interest margin*			3.53%			3.40%			3.05%

Shareholders' Value (per common share)
Diluted earnings per share		$	1.48		$	1.35		$	0.88
Regular cash dividend paid		$	0.33		$	0.33		$	0.32
Dividend payout ratio			22.30%			27.54%			36.16%
Book value, per share		$	39.78		$	39.11		$	33.99
Tangible book value (1)		$	37.78		$	37.10		$	31.97
Market value, per share		$	51.08		$	50.20		$	35.45
Market value/book value ratio			128.40%			128.36%			104.30%
Market value/tangible book value ratio			135.22%			135.33%			110.90%
Price/earnings multiple*			8.63			9.30			10.07
Current quarter dividend yield*			2.58%			2.63%			3.61%

Safety and Soundness
Net loans recovered (charged-off)/average loans*			-0.03%			0.00%			0.01%
Nonperforming loans / gross loans			0.54%			0.55%			0.02%
Nonperforming assets / total assets			0.37%			0.38%			0.01%
Allowance for credit losses / loans			1.32%			1.32%			1.27%

* Annualized
(1) Non-GAAP measurement.  See GAAP versus Non-GAAP disclosure reconciliation



GAAP versus non-GAAP Presentations – The Corporation supplements its traditional GAAP measurements with certain non-GAAP measurements to evaluate its performance and to eliminate the effect of intangible assets.  By eliminating intangible assets (Goodwill), the Corporation believes it presents a measurement that is comparable to companies that have no intangible assets or to companies that have eliminated intangible assets in similar calculations. However, not all companies may use the same calculation method for each measurement. The non-GAAP measurements are not intended to be used as a substitute for the related GAAP measurements. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.  In the event of such a disclosure or release, the Securities and Exchange Commission’s Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. The following table shows the calculation of the non-GAAP measurements.


Non-GAAP
(Dollars in thousands, except per share)		As of
		3/31/2026			12/31/2025			3/31/2025
Tangible Book Value (per share) (non-GAAP)
Shareholders' equity		$	178,744		$	175,242		$	151,391
Less intangible assets			(9,016)			(9,016)			(9,016)
Tangible book value (non-GAAP)			169,728			166,226			142,375

Shares outstanding (in thousands)			4,493			4,481			4,454

Tangible book value per share (non-GAAP)		$	37.78		$	37.10		$	31.97


			For the three months ended
Efficiency Ratio (non-GAAP)		3/31/2026			12/31/2025			3/31/2025
Noninterest expense		$	15,353		$	15,543		$	14,577

Net interest income			18,521			18,612			15,606
Plus tax equivalent adjustment to net interest income			245			221			251
Plus noninterest income, net of securities gains/losses			5,360			4,700			4,562
Total revenue		$	24,126		$	23,533		$	20,419

Efficiency ratio: noninterest expense /total revenue (non-GAAP)			63.64%			66.05%			71.39%



7

FAQ

How did Franklin Financial (FRAF) perform in Q1 2026 compared to Q1 2025?

Franklin Financial’s Q1 2026 net income was $6.637 million versus $3.922 million a year earlier. Diluted EPS increased to $1.48 from $0.88, reflecting stronger profitability and improved core banking performance over the prior-year quarter.

What were Franklin Financial (FRAF) key profitability ratios for Q1 2026?

In Q1 2026, Franklin Financial reported return on average assets of 1.20% and return on average equity of 15.13%. The efficiency ratio improved to 63.64% and net interest margin expanded to 3.53%, indicating better use of capital and improved operating efficiency.

What were Franklin Financial (FRAF) total assets and deposits at March 31, 2026?

As of March 31, 2026, Franklin Financial reported total assets of $2.297 billion and total deposits of $1.890 billion. This represents modest balance sheet growth from December 31, 2025, when assets were $2.239 billion and deposits were $1.836 billion.

What dividend did Franklin Financial (FRAF) declare for Q1 2026?

For Q1 2026, Franklin Financial declared a regular cash dividend of $0.33 per common share. The dividend payout ratio was 22.30%, indicating that the company paid out a little over one-fifth of its quarterly earnings to shareholders as cash dividends.

How strong are Franklin Financial (FRAF) asset quality and reserves?

As of March 31, 2026, nonperforming loans were 0.54% of gross loans and nonperforming assets were 0.37% of total assets. The allowance for credit losses stood at 1.32% of loans, indicating a conservative reserve level relative to reported credit issues.

What were Franklin Financial (FRAF) market and book value metrics in Q1 2026?

At March 31, 2026, book value per share was $39.78 and tangible book value per share was $37.78. The market value per share was $51.08, implying a market value to book value ratio of 128.40% and to tangible book value of 135.22%.

Filing Exhibits & Attachments

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