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Franklin Financial Q4 Earnings Rise Y/Y on Loan Growth, Higher Margins
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Shares of Franklin Financial Services Corporation (FRAF - Free Report) have shown a mixed performance following the release of its fourth-quarter 2025 earnings. Shares of Franklin Financial have gained 2% since reporting results for the fourth quarter of 2025. This compares to the S&P 500 index’s 0.4% return over the same time frame. Over the past month, the stock has declined 2.2% against the S&P 500’s 1.4% rise.
Franklin Financial reported solid improvements in its core financial results compared with the prior year, helped by stronger net interest income and the absence of large securities-related losses that weighed on earlier periods. For the fourth quarter of 2025, net income rose to $6 million, or $1.35 per diluted share, from $487 thousand, or 11 cents per diluted share, in the year-ago quarter. The prior-year period was significantly impacted by a $3.4-million after-tax loss on the sale of investment securities tied to a portfolio restructuring.
On a full-year basis, net income increased 91.2% year over year to $21.2 million, or $4.74 per diluted share, from $11.1 million, or $2.51 per diluted share, in 2024. Net interest income for the fourth quarter climbed 23.3% to $18.6 million, reflecting higher interest income from loan growth, while full-year net interest income rose 21.1% to $69.6 million.
Franklin Financial Services Corp. Price, Consensus and EPS Surprise
Balance sheet trends in the year pointed to steady asset expansion and notable loan growth. Total assets stood at $2.239 billion at Dec. 31, 2025, up 1.9% from a year earlier. Net loans increased 11.6% year over year to $1.541 billion, driven largely by growth in commercial real estate and one-to-four-family residential real estate lending. Total deposits grew 1.1% to $1.836 billion, with growth tempered by the payoff of $65 million in brokered deposits in the fourth quarter.
Performance ratios also improved materially from the prior year, with fourth-quarter return on average assets rising to 1.05% from 0.09% and return on average equity increasing to 14.20% from 1.32%, both of which were distorted in the prior-year quarter by securities losses. Net interest margin for the quarter expanded to 3.4% from 2.92% a year earlier.
Management Commentary
Management highlighted the strength of core earnings and balance sheet positioning, emphasizing loan growth and improved margins as key drivers of results. The company noted that earnings comparisons benefited from the absence of securities portfolio restructuring losses that affected 2024 results, allowing underlying operating trends to be more visible. Wealth management remained a stable contributor, with quarterly fees of $2.3 million, up 4.6% from the fourth quarter of 2024, and assets under management totaling $1.421 billion at the year end. Management also underscored the company’s capital position, noting that the bank remained “well-capitalized” under regulatory guidelines as of Dec. 31, 2025.
Factors Influencing the Headline Numbers
Several factors shaped the reported results. Higher net interest income was supported by an increase in average earning assets and improved asset yields, with the yield on earning assets rising to 5.31% for 2025 from 5.16% in 2024. Non-interest income increased sharply year over year, primarily because the prior-year period included a sizable pre-tax securities loss; excluding that loss, non-interest income growth was more modest and driven by higher wealth management fees and gains on loan sales.
On the expense side, non-interest expenses rose 8.4% in the fourth quarter and 6.7% for the full year, reflecting higher salaries and benefits, advertising, and FDIC insurance premiums. Credit quality metrics showed some deterioration from very low prior-year levels, with nonaccrual loans rising to 0.55% of total gross loans at year end, though management indicated that specific reserves had been established and that collateral coverage was considered adequate.
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The company addressed forward-looking statements by noting that results could be influenced by factors such as interest rate fluctuations, economic conditions, funding costs, regulatory changes, and competitive pressures. As a result, investors were left to evaluate future performance based on current operating trends rather than explicit numerical guidance.
Other Developments
During the year 2025, Franklin Financial undertook several balance sheet and capital-related actions. In September 2025, the company redeemed $9 million of its $15 million fixed-to-floating subordinated notes due in 2030, using excess cash. Shareholders’ equity increased 21.1% year over year, aided by higher retained earnings and a reduction in accumulated other comprehensive loss as unrealized losses in the securities portfolio narrowed. The company also continued its share repurchase activity, buying back shares under an existing plan and approving a new authorization in December 2025 to repurchase up to 150,000 shares through December 31, 2026, alongside declaring a quarterly cash dividend that represented a 3.1% increase over the prior year’s comparable dividend.
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Franklin Financial Q4 Earnings Rise Y/Y on Loan Growth, Higher Margins
Shares of Franklin Financial Services Corporation (FRAF - Free Report) have shown a mixed performance following the release of its fourth-quarter 2025 earnings. Shares of Franklin Financial have gained 2% since reporting results for the fourth quarter of 2025. This compares to the S&P 500 index’s 0.4% return over the same time frame. Over the past month, the stock has declined 2.2% against the S&P 500’s 1.4% rise.
Franklin Financial reported solid improvements in its core financial results compared with the prior year, helped by stronger net interest income and the absence of large securities-related losses that weighed on earlier periods. For the fourth quarter of 2025, net income rose to $6 million, or $1.35 per diluted share, from $487 thousand, or 11 cents per diluted share, in the year-ago quarter. The prior-year period was significantly impacted by a $3.4-million after-tax loss on the sale of investment securities tied to a portfolio restructuring.
On a full-year basis, net income increased 91.2% year over year to $21.2 million, or $4.74 per diluted share, from $11.1 million, or $2.51 per diluted share, in 2024. Net interest income for the fourth quarter climbed 23.3% to $18.6 million, reflecting higher interest income from loan growth, while full-year net interest income rose 21.1% to $69.6 million.
Franklin Financial Services Corp. Price, Consensus and EPS Surprise
Franklin Financial Services Corp. price-consensus-eps-surprise-chart | Franklin Financial Services Corp. Quote
Other Key Business Metrics
Balance sheet trends in the year pointed to steady asset expansion and notable loan growth. Total assets stood at $2.239 billion at Dec. 31, 2025, up 1.9% from a year earlier. Net loans increased 11.6% year over year to $1.541 billion, driven largely by growth in commercial real estate and one-to-four-family residential real estate lending. Total deposits grew 1.1% to $1.836 billion, with growth tempered by the payoff of $65 million in brokered deposits in the fourth quarter.
Performance ratios also improved materially from the prior year, with fourth-quarter return on average assets rising to 1.05% from 0.09% and return on average equity increasing to 14.20% from 1.32%, both of which were distorted in the prior-year quarter by securities losses. Net interest margin for the quarter expanded to 3.4% from 2.92% a year earlier.
Management Commentary
Management highlighted the strength of core earnings and balance sheet positioning, emphasizing loan growth and improved margins as key drivers of results. The company noted that earnings comparisons benefited from the absence of securities portfolio restructuring losses that affected 2024 results, allowing underlying operating trends to be more visible. Wealth management remained a stable contributor, with quarterly fees of $2.3 million, up 4.6% from the fourth quarter of 2024, and assets under management totaling $1.421 billion at the year end. Management also underscored the company’s capital position, noting that the bank remained “well-capitalized” under regulatory guidelines as of Dec. 31, 2025.
Factors Influencing the Headline Numbers
Several factors shaped the reported results. Higher net interest income was supported by an increase in average earning assets and improved asset yields, with the yield on earning assets rising to 5.31% for 2025 from 5.16% in 2024. Non-interest income increased sharply year over year, primarily because the prior-year period included a sizable pre-tax securities loss; excluding that loss, non-interest income growth was more modest and driven by higher wealth management fees and gains on loan sales.
On the expense side, non-interest expenses rose 8.4% in the fourth quarter and 6.7% for the full year, reflecting higher salaries and benefits, advertising, and FDIC insurance premiums. Credit quality metrics showed some deterioration from very low prior-year levels, with nonaccrual loans rising to 0.55% of total gross loans at year end, though management indicated that specific reserves had been established and that collateral coverage was considered adequate.
View
The company addressed forward-looking statements by noting that results could be influenced by factors such as interest rate fluctuations, economic conditions, funding costs, regulatory changes, and competitive pressures. As a result, investors were left to evaluate future performance based on current operating trends rather than explicit numerical guidance.
Other Developments
During the year 2025, Franklin Financial undertook several balance sheet and capital-related actions. In September 2025, the company redeemed $9 million of its $15 million fixed-to-floating subordinated notes due in 2030, using excess cash. Shareholders’ equity increased 21.1% year over year, aided by higher retained earnings and a reduction in accumulated other comprehensive loss as unrealized losses in the securities portfolio narrowed. The company also continued its share repurchase activity, buying back shares under an existing plan and approving a new authorization in December 2025 to repurchase up to 150,000 shares through December 31, 2026, alongside declaring a quarterly cash dividend that represented a 3.1% increase over the prior year’s comparable dividend.