CHAMBERSBURG, Pa., April 23, 2026 /PRNewswire/ — 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:
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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.
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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.
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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.
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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.
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Deposit Growth: Total deposits of $1.890 billion, an increase of 2.9% from $1.836 billion on December 31, 2025.
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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.
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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.
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:
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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.
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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.
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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.
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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.
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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.
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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). 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.
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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.
