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Franklin Financial Earnings Surge 95% Y/Y in Q2, Stock Slips
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Shares of Franklin Financial Services Corporation (FRAF - Free Report) have declined 6.2% since reporting results for the second quarter of 2025 on July 22. In contrast, the S&P 500 index has risen 0.9% over the same period. Despite this post-earnings dip, FRAF has seen a significant rally of 23.7% over the past month compared with 3.9% growth in the S&P 500.
Robust Y/Y Financial Performance
Franklin Financial delivered strong second-quarter results, with net income surging 94.8% year over year to $5.9 million, or $1.32 per diluted share, from $3 million, or 66 cents per diluted share, in the prior-year period. Revenue growth was driven largely by a 21.3% increase in net interest income to $17.2 million from $14.2 million a year earlier. The gains were primarily attributed to higher interest income from the expanding loan portfolio.
For the first half of 2025, net income rose 53.7% to $9.8 million ($2.20 per diluted share) from the $6.4 million ($1.43 per diluted share) registered in the first six months of 2024. Net interest income for the six months rose 18.3% to $32.8 million, underpinned by a 13.2% increase in commercial real estate loans.
Franklin Financial Services Corp. Price, Consensus and EPS Surprise
Key Business Metrics: Strong Growth Across Core Segments
Franklin Financial's balance sheet reflected healthy expansion. Total assets climbed 4.1% from the end of 2024 to $2.29 billion as of June 30, 2025. Loan growth was particularly strong, with total net loans rising 8.7% over the six months to $1.5 billion. The loan expansion was led by a $68.9-million increase in commercial real estate loans, which now total $872.2 million. Notably, 41% of the CRE portfolio is owner-occupied.
Deposits increased 4.3% from Dec. 31, 2024, to $1.89 billion at quarter-end. The rise was mainly driven by money management accounts, partially offset by declines in interest-bearing checking and savings balances. Approximately 89% of deposits were either FDIC-insured or collateralized. Shareholders’ equity grew by $12.6 million to $157.4 million, aided by retained earnings of $6.9 million (net) of $2.9 million in dividends.
Management emphasized disciplined growth and asset quality management in its commentary. While the company experienced a marked increase in non-performing loans from $266 thousand at the end of 2024 to $10.8 million at the end of the second quarter, this deterioration was largely concentrated in two loans — a $7.4-million construction loan (current on payments) and a $2.9-million hotel loan slated for auction in July. Despite this uptick, the allowance for credit losses held steady at 1.26% of loans.
Executives reiterated the bank’s conservative risk approach and highlighted progress in commercial real estate lending and wealth management. Assets under management grew 6.9% year over year to $1.36 billion.
Drivers of Performance: Loan & Deposit Momentum Boost Margins
The primary driver of the company’s performance was loan portfolio growth, particularly in commercial real estate, which led to a 15.4% year-over-year increase in average loan balances. The yield on interest-earning assets improved to 5.30% in the second quarter from 5.10% in the prior-year period.
Meanwhile, deposit costs rose year over year from 1.74% to 1.95% but moderated slightly to 1.90% in the second quarter, suggesting stabilizing funding costs. This helped lift the net interest margin to 3.21% from 2.99% in the same quarter last year.
Non-interest income also supported the overall performance, climbing 17.3% to $5.1 million for the quarter, boosted by higher wealth management fees, loan-related charges and a one-time refund on state sales taxes. Operating expenses increased just 0.4% year over year to $14.4 million, indicating cost discipline despite inflationary pressures.
View: No Specific Outlook Issued
Management’s discussion suggests a continued focus on expanding commercial lending and managing credit quality, particularly in response to recent non-performing loan developments.
Other Developments
In January 2025, Franklin Financial authorized an open market share repurchase plan for up to 150,000 shares over one year. As of June 30, 6,700 shares had been repurchased under the plan, primarily to fund the dividend reinvestment program. Additionally, the board declared a third-quarter dividend of 33 cents per share, consistent with the second quarter but representing a 3.1% increase over the dividend declared for the third quarter of 2024.
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Franklin Financial Earnings Surge 95% Y/Y in Q2, Stock Slips
Shares of Franklin Financial Services Corporation (FRAF - Free Report) have declined 6.2% since reporting results for the second quarter of 2025 on July 22. In contrast, the S&P 500 index has risen 0.9% over the same period. Despite this post-earnings dip, FRAF has seen a significant rally of 23.7% over the past month compared with 3.9% growth in the S&P 500.
Robust Y/Y Financial Performance
Franklin Financial delivered strong second-quarter results, with net income surging 94.8% year over year to $5.9 million, or $1.32 per diluted share, from $3 million, or 66 cents per diluted share, in the prior-year period. Revenue growth was driven largely by a 21.3% increase in net interest income to $17.2 million from $14.2 million a year earlier. The gains were primarily attributed to higher interest income from the expanding loan portfolio.
For the first half of 2025, net income rose 53.7% to $9.8 million ($2.20 per diluted share) from the $6.4 million ($1.43 per diluted share) registered in the first six months of 2024. Net interest income for the six months rose 18.3% to $32.8 million, underpinned by a 13.2% increase in commercial real estate loans.
Franklin Financial Services Corp. Price, Consensus and EPS Surprise
Franklin Financial Services Corp. price-consensus-eps-surprise-chart | Franklin Financial Services Corp. Quote
Key Business Metrics: Strong Growth Across Core Segments
Franklin Financial's balance sheet reflected healthy expansion. Total assets climbed 4.1% from the end of 2024 to $2.29 billion as of June 30, 2025. Loan growth was particularly strong, with total net loans rising 8.7% over the six months to $1.5 billion. The loan expansion was led by a $68.9-million increase in commercial real estate loans, which now total $872.2 million. Notably, 41% of the CRE portfolio is owner-occupied.
Deposits increased 4.3% from Dec. 31, 2024, to $1.89 billion at quarter-end. The rise was mainly driven by money management accounts, partially offset by declines in interest-bearing checking and savings balances. Approximately 89% of deposits were either FDIC-insured or collateralized. Shareholders’ equity grew by $12.6 million to $157.4 million, aided by retained earnings of $6.9 million (net) of $2.9 million in dividends.
Management Commentary: Focused Expansion & Conservative Risk Posture
Management emphasized disciplined growth and asset quality management in its commentary. While the company experienced a marked increase in non-performing loans from $266 thousand at the end of 2024 to $10.8 million at the end of the second quarter, this deterioration was largely concentrated in two loans — a $7.4-million construction loan (current on payments) and a $2.9-million hotel loan slated for auction in July. Despite this uptick, the allowance for credit losses held steady at 1.26% of loans.
Executives reiterated the bank’s conservative risk approach and highlighted progress in commercial real estate lending and wealth management. Assets under management grew 6.9% year over year to $1.36 billion.
Drivers of Performance: Loan & Deposit Momentum Boost Margins
The primary driver of the company’s performance was loan portfolio growth, particularly in commercial real estate, which led to a 15.4% year-over-year increase in average loan balances. The yield on interest-earning assets improved to 5.30% in the second quarter from 5.10% in the prior-year period.
Meanwhile, deposit costs rose year over year from 1.74% to 1.95% but moderated slightly to 1.90% in the second quarter, suggesting stabilizing funding costs. This helped lift the net interest margin to 3.21% from 2.99% in the same quarter last year.
Non-interest income also supported the overall performance, climbing 17.3% to $5.1 million for the quarter, boosted by higher wealth management fees, loan-related charges and a one-time refund on state sales taxes. Operating expenses increased just 0.4% year over year to $14.4 million, indicating cost discipline despite inflationary pressures.
View: No Specific Outlook Issued
Management’s discussion suggests a continued focus on expanding commercial lending and managing credit quality, particularly in response to recent non-performing loan developments.
Other Developments
In January 2025, Franklin Financial authorized an open market share repurchase plan for up to 150,000 shares over one year. As of June 30, 6,700 shares had been repurchased under the plan, primarily to fund the dividend reinvestment program. Additionally, the board declared a third-quarter dividend of 33 cents per share, consistent with the second quarter but representing a 3.1% increase over the dividend declared for the third quarter of 2024.