Franklin Financial Services Marks 120 Years as Shareholders Approve Directors, Pay, Auditor

Key Points

• Shareholders re-elected four board nominees (Craig W. Best, G. Warren Elliott, Stanley J. Kerlin and Kimberly M. Zomp), approved the advisory "say-on-pay" and ratified Crowe as the company's independent auditor.
• Financial performance strengthened materially as 2025 net income nearly doubled to $21.2 million (from $11.1M), tangible book value per share rose 21% to $37.10, loans grew 11.6%, assets under management reached $1.4 billion, and Q1 2026 earnings were $6.6 million with a $0.34 quarterly dividend declared (up 3%).
• The bank celebrated its 120th anniversary, promoted Chad Carroll to president, and reiterated strategic priorities of boosting shareholder value, driving organic growth, enhancing digital banking and expanding its service footprint.

Franklin Financial Services NASDAQ: FRAF held its annual meeting of shareholders on April 28, 2026, with Chairman of the Board G. Warren Elliott presiding. Elliott said proper notice had been given and that a quorum was present, allowing the meeting to proceed with the election of directors, an advisory “say-on-pay” vote, and ratification of the company’s independent auditor.

Board elections, executive compensation vote, and auditor ratification

Shareholders voted on four nominees to serve as Class A directors for three-year terms. The board nominated Craig W. Best, Elliott, Stanley J. Kerlin, and Kimberly M. Zomp. Elliott noted that, under the bylaws, nominations from the floor would be out of order because no advance notice had been provided.

Shareholders also cast a non-binding advisory vote on executive compensation as required by the Dodd-Frank Act. Elliott said the board believes the company’s executive compensation programs align with its compensation philosophy and provide an appropriate balance between risk and reward.

In addition, shareholders voted on ratification of the audit committee’s selection of Crowe as the company’s independent registered public accounting firm for 2026.

Assistant Corporate Secretary Zoe Clayton, serving as judge of elections, reported that all three proposals passed. Clayton said the four nominees received the highest number of votes and were elected, executive compensation was approved by a majority of votes cast, and Crowe’s selection was ratified by a majority of votes cast.

Chairman highlights 120-year history and strategic priorities

In prepared remarks, Elliott marked what he called “a monumental milestone” for the bank, noting that F&M Trust has operated since 1906 and is celebrating 120 years of financial service. He pointed to the institution’s longevity through multiple economic and banking disruptions and said the company’s recent performance reflects “the strength and stability of our organization.”

Looking forward, Elliott said the company’s strategic focus remains on:

• Increasing shareholder value
• Creating strong organic growth
• Enhancing digital banking capabilities
• Expanding its service footprint to meet evolving customer needs

Elliott also announced that the company promoted Chad Carroll to president, citing Carroll’s work as chief operating officer and his role in what Elliott described as a record earnings year. Elliott additionally thanked President and CEO Craig Best after her first full year with the company, and he acknowledged employees and the board for their efforts.

Financial performance: net income nearly doubles in 2025

Chief Financial Officer and Treasurer Mark R. Hollar told shareholders that 2025 was “a very good year,” with net income rising to $21.2 million from $11.1 million in 2024. Hollar said performance metrics including return on assets and return on equity improved year over year.

Hollar attributed results to higher net interest income driven by increased asset yields, a decrease in the cost of deposits, growth in non-interest income, and a slower increase in non-interest expense compared to prior years. He said tangible book value per share increased 21% in 2025 to $37.10 per share.

Hollar reported that net loans grew 11.6% compared to year-end 2024, primarily reflecting increases in commercial real estate loans and one- to four-family residential mortgages. He said loans and collateral are located primarily in the company’s South Central Pennsylvania markets and that the portfolio remains well-diversified. Hollar added that 2025 marked the fourth consecutive year of increased loan portfolio yield.

At Dec. 31, 2025, Hollar said the allowance for credit losses was 1.32% of gross loans, compared with 2.6% at the end of 2024, and management believes the reserve is adequate for the portfolio’s risk profile.

On deposits, Hollar said balances increased 1.1% in 2025 compared to 14% growth in 2024, noting that 2025 growth was negatively affected by the bank’s decision to pay off $65 million of higher-rate brokered CDs in the fourth quarter. Excluding that payoff, he said deposit growth would have been 4.7%. Hollar said the average cost of deposits was 1.85% in 2025, down slightly from 2024, and that about 18% of deposits were non-interest-bearing at year-end, up from 16% the prior year.

Wealth Management and early 2026 results

Hollar said non-interest income represented about 22% of total revenue in 2025, with fee income exceeding 21% of revenue in each of the last six years. He highlighted Wealth Management services as a key contributor, with revenue totaling $9.2 million in 2025, up 7.4% from the prior year. He said assets under management ended the year at $1.4 billion.

Hollar also reviewed shareholder returns, saying the company earned $4.74 per share in 2025, paid a cash dividend of $1.31 per share, and increased tangible book value per share by $6.45.

For 2026, Hollar said the company reported first-quarter earnings of $6.6 million, or $1.48 per share, which he said was up 9.8% from fourth-quarter 2025 and up 69.2% from the first quarter of 2025. He also said the board declared a $0.34 per share cash dividend for the second quarter of 2026, payable May 27 to shareholders of record as of May 1, representing a 3% increase over the dividend for the second quarter of 2025.

In remarks delivered during the meeting, CEO Craig Best described 2025 net income of $21.2 million as the highest in the bank’s 120-year history and attributed performance to employee efforts and investments in infrastructure and technology. Best said total assets surpassed $2.2 billion and that Wealth Management assets under management increased 8.6% to $1.4 billion.

Best also provided an update on a community office in Dauphin County, saying it held over $54 million in deposits, originated more than $6 million in consumer loans, and opened 474 new deposit accounts as of Dec. 31, 2025. She said the company now offers Wealth Management, commercial financing, and residential lending in Maryland, West Virginia, and neighboring Pennsylvania counties. Best said first-quarter 2026 performance was supported by margin expansion, expense control, and Wealth Management growth, and she reiterated the company’s leadership change promoting Chad Carroll to president.

No shareholder questions were submitted during the meeting, according to management, and the meeting was adjourned after the vote results were announced.

About Franklin Financial Services NASDAQ: FRAF

Franklin Financial Services, Inc NASDAQ: FRAF is a U.S.‐listed specialty finance company that makes and acquires secured loans, with a focus on asset-based lending and mortgage warehouse financing. Through its wholly owned subsidiary, FFS Investment Company, a Maryland corporation regulated as a business development company under the Investment Company Act of 1940, Franklin Financial provides revolving lines of credit, term loans and other credit facilities secured primarily by residential and commercial mortgage loans, receivables and inventory.

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