Franklin Financial Services (FRAF) - 2024 Q2 - Quarterly Report

Financial Performance - Total assets increased to $2,039,126 thousand as of June 30, 2024, up from$ 1,836,039 thousand at December 31, 2023, representing an increase of 11.1%[6] - Net income for the second quarter of 2024 was $3,033 thousand, compared to$ 2,976 thousand in the same quarter of 2023, indicating a growth of 1.9%[7] - Basic earnings per share for the second quarter of 2024 were $0.67, slightly down from$ 0.68 in the same quarter of 2023[7] - Net income for the first half of 2024 was $6,394,000, a 2% increase from$ 6,268,000 in the same period of 2023[10] - Total comprehensive income for the first half of 2024 was $6,453,000, down 32.4% from$ 9,594,000 in the same period of 2023[8] Income and Expenses - Total interest income for the six months ended June 30, 2024, was $48,541 thousand, a 38.5% increase compared to$ 35,094 thousand for the same period in 2023[7] - Net interest income after credit loss expense was $26,767 thousand for the six months ended June 30, 2024, compared to$ 24,971 thousand for the same period in 2023, reflecting a growth of 7.2%[7] - Noninterest income totaled $8,538 thousand for the six months ended June 30, 2024, up from$ 6,754 thousand in the same period of 2023, marking a 26.3% increase[7] - Total noninterest expense for the six months ended June 30, 2024, was $27,642 thousand, compared to$ 24,667 thousand for the same period in 2023, representing an increase of 11.9%[7] Loans and Credit Quality - Net loans reached $1,301,302 thousand, an increase of 4.9% from$ 1,240,933 thousand at the end of 2023[6] - The allowance for credit losses was $17,018 thousand, compared to$ 16,052 thousand previously, indicating a slight increase in risk management provisions[34] - The provision for credit losses on loans was $560 thousand for the second quarter of 2024, compared to$ 524 thousand in the same quarter of 2023, reflecting a slight increase[7] - The corporation's provision for credit losses was $998,000, down from$ 1,061,000, indicating a decrease of approximately 6%[11] - The bank categorizes loans into risk categories, with ongoing monitoring of cash flow and financial performance indicators occurring at least annually[35] Shareholder Equity and Dividends - Cash dividends declared were $0.32 per share in Q2 2024, totaling$ 1,407,000[8] - The total number of shares outstanding increased to 4,412,374 by June 30, 2024, from 4,393,873 at the end of Q1 2024[8] - Retained earnings rose to $137,581,000 by June 30, 2024, up from$ 135,955,000 at the end of Q1 2024[9] - The company repurchased 14,684 shares of treasury stock in Q2 2024, costing $400,000[8] Cash Flow and Liquidity - Net cash provided by operating activities decreased to$ 9,736,000 from $13,385,000, a decline of approximately 27%[11] - Total cash and cash equivalents at the end of the period increased to$ 179,727,000 from $64,832,000, a significant increase of 177%[11] - Net cash used in investing activities was$ (49,553,000), compared to $(40,767,000) in the previous year, indicating a 21% increase in cash outflow[11] - Net cash provided by financing activities rose to$ 196,404,000 from $27,315,000, an increase of 620%[11] Asset Quality and Valuation - The fair value of the Corporation's equity investment decreased to$ 352 thousand as of June 30, 2024, from $427 thousand at the end of 2023, indicating a decline of approximately 17.6%[27] - The total fair value of Available for Sale (AFS) securities is$ 454.465 million, down from $472.503 million on December 31, 2023, reflecting a decrease of approximately 3.1%[18] - The fair value of debt securities pledged to secure public funds, trust deposits, and FHLB loan commitments increased to$ 231.0 million as of June 30, 2024, compared to $207.4 million at the end of 2023, representing an increase of about 11.5%[18] - The total unrealized losses on AFS securities as of June 30, 2024, amounted to$ 49.563 million, compared to $49.554 million at the end of 2023, showing a marginal increase[24] Capital and Regulatory Ratios - The Bank's Common Equity Tier 1 (CET1) Risk-based Capital Ratio was 12.01% as of June 30, 2024, up from 11.82% at December 31, 2023[68] - The Bank's capital conservation buffer was 5.52% as of June 30, 2024, exceeding the regulatory minimum of 2.5%[66] - The Bank's Tier 1 Leverage Ratio was 8.38% as of June 30, 2024, down from 9.01% at December 31, 2023[68] - The Bank's Total Risk-based Capital Ratio was 14.66% as of June 30, 2024, slightly up from 14.45% at December 31, 2023[68] Future Outlook and Strategy - The company plans to focus on expanding its commercial real estate lending, particularly in agricultural and business asset sectors, to enhance its portfolio[42] - Future guidance indicates a cautious optimism for growth in both residential and commercial loan segments, with a focus on maintaining asset quality[42]