It's like a community-focused version of a regional bank such as Truist or M&T Bank, but serving a much more concentrated area in Pennsylvania.

Think of it as a traditional, full-service community bank for specific counties in Pennsylvania, similar to how a much larger institution like Wells Fargo operates, but on a hyper-local scale.

• Deposit Accounts: Offers various checking, savings, money management, and time deposit accounts for individuals and businesses.
• Loan Services: Provides a comprehensive range of commercial, residential mortgage, agricultural, and consumer installment and revolving loans.
• Trust and Wealth Management: Manages estates, corporate and personal trusts, pension and employee benefit funds, and offers custodial services.
• Investment Products: Sells mutual funds, annuities, and insurance products to clients.
• Venture Capital Investments: Makes venture capital investments through its non-bank subsidiary, Franklin Future Fund Inc.

Franklin Financial Services (FRAF) serves a diverse customer base, primarily providing commercial, retail banking, and trust services. Given the nature of its business as a community bank and financial services provider, it does not have a few major customer companies in the traditional sense. Instead, its services are offered to a broad range of clients, which can be categorized as follows:

• Small and Medium-Sized Businesses: The company provides a comprehensive suite of commercial banking services, including commercial real estate, construction and land development, agricultural, and commercial and industrial loans. It also offers deposit products, accounts receivable and inventory financing, and commercial equipment financing.
• Individuals (Consumers): FRAF offers retail banking products such as checking, savings, money management, and time deposit accounts. Additionally, it provides residential mortgage loans, installment and revolving consumer loans, estate planning and administration, personal trust fund management, and sells mutual funds, annuities, and insurance products.
• Governmental and Non-Profit Organizations: The company caters to these entities by providing banking, trust, and investment services tailored to their specific operational and financial management needs, including corporate trust fund management, pension and profit sharing, and other employee benefit funds management services.

Craig W. Best, President and Chief Executive Officer

Mr. Best was appointed President of Franklin Financial Services Corporation and F&M Trust on January 14, 2025, and subsequently became Chief Executive Officer on April 29, 2025. He brings over 40 years of banking experience, specializing in merger and acquisition, corporate banking, retail banking, and credit administration. Before joining F&M Trust, he served as President and Chief Executive Officer of Peoples Security Bank and Trust Company and its bank holding company, Peoples Financial Corp. Previously, he was the President and CEO of Penseco Financial Services Corporation and its subsidiary until their merger with Peoples Financial Services Corp. His career also includes a tenure as Chief Operating Officer of First Commonwealth Bank.

Mark R. Hollar, Executive Vice President, Treasurer and Chief Financial Officer

Mr. Hollar has served as Chief Financial Officer and Treasurer of Franklin Financial Services and F&M Trust since 2005 (or 2006, according to some sources), having joined F&M Trust in 1994. He holds a bachelor's degree in business administration from Shippensburg University of Pennsylvania and an MBA from Frostburg University. Mr. Hollar also attended the Graduate School of Banking at the University of Wisconsin – Madison and served as an officer in the United States Marine Corps.

Charles Benner Carroll, Executive Vice President and Chief Operating Officer of F&M Trust

Mr. Carroll serves as Executive Vice President and Chief Operating Officer of F&M Trust, the bank subsidiary of Franklin Financial Services Corporation, focusing on the day-to-day operations of the core banking subsidiary.

Key Business Risks for Franklin Financial Services (FRAF)

1. Credit Risk and Regional Economic Downturn: As a community bank primarily engaged in lending activities across Franklin, Cumberland, Fulton, and Huntingdon counties in Pennsylvania, Franklin Financial Services is significantly exposed to credit risk. A downturn in the regional economy, impacting local businesses (small and medium-sized businesses, agricultural operations) and individuals, could lead to increased loan defaults across its diverse portfolio, including commercial real estate, construction and land development, agricultural, commercial and industrial, and residential mortgage loans. Such an event would directly result in higher loan losses and reduced demand for banking services, adversely affecting the company's financial performance.
2. Interest Rate Risk: Franklin Financial Services' profitability, like that of other financial institutions, is highly sensitive to fluctuations in interest rates. Changes in market interest rates can affect the interest earned on its loan portfolio and investments, as well as the interest paid on deposits and borrowed funds. A mismatch in the repricing characteristics of its assets and liabilities could lead to a compression of its net interest margin, thereby reducing profitability.
3. Regulatory and Compliance Risk: The banking industry is subject to extensive and complex federal and state laws, regulations, and supervisory oversight. Changes in these regulatory requirements, or the interpretation and enforcement thereof, could necessitate significant investments in compliance infrastructure, alter business practices, limit certain revenue-generating activities, or impose higher capital requirements. Failure to comply with applicable regulations could also result in penalties, fines, or reputational damage, all of which could negatively impact the company's operations and financial condition.

The emergence and rapid growth of digital-first fintech companies and challenger banks that offer banking services with superior digital convenience, lower overhead, and often better user experiences. These entities directly compete with traditional branch-based community banks like Franklin Financial Services for deposits, payments, and lending, threatening to erode their customer base, particularly among individuals and small businesses prioritizing digital interactions and convenience.

Franklin Financial Services (NASDAQ: FRAF) is expected to drive future revenue growth over the next two to three years through several key strategies:

1. Continued Commercial and Residential Mortgage Loan Growth: The company has demonstrated robust loan growth, particularly in commercial real estate and 1-4 family residential mortgages, which has been a primary contributor to increased interest income. Management emphasizes continued focus on expanding commercial lending.
2. Expansion of Wealth Management Services: Growth in wealth management fees and assets under management has consistently boosted non-interest income. Assets under management reached $1.421 billion by the end of 2025, supporting recurring asset management fees and referral income.
3. Strategic Expansion of Residential Mortgages into the Secondary Market: Franklin Financial Services is actively increasing loan originations and expanding the sale of residential mortgages into the secondary market. This initiative is expected to generate additional fee income for the company.
4. Strategic Deposit Growth and Efficient Funding Management: The company has experienced growth in total deposits, and effective management of deposit costs is crucial for net interest margin expansion. This approach supports net interest income, a primary component of revenue.

Share Repurchases

• Franklin Financial Services Corporation's board of directors authorized the repurchase of up to 150,000 shares of common stock, effective from January 1, 2026, through December 31, 2026.
• In January 2025, an open market repurchase plan was approved to repurchase 150,000 shares of common stock over a one-year period.
• Under an approved plan, 19,300 shares of common stock were repurchased in 2025 to fund the quarterly dividend reinvestment plan and Employee Stock Purchase Plan.

Share Issuance

• In March 2026, restricted stock units (RSUs) were granted to executives, including the SVP and Chief HR Officer, which are scheduled to vest in installments over several years.

Capital Expenditures

• Franklin Financial Services Corp's Capital Expenditures to Operating Cash Flow (CapEx/OCF) was 4.78% for the latest trailing twelve months.
• The highest CapEx/OCF recorded by Franklin Financial Services Corp over the past five years was 58.9% on June 30, 2022.
• The lowest CapEx/OCF recorded by Franklin Financial Services Corp over the past five years was 1.88% on December 31, 2023.