Shares of Franklin Financial Services Corporation (FRAF) 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, he ...

Total assets on December 31, 2025, were $2.239 billion up 1.9% from $2.198 billion on December 31, 2024. Changes in the balance sheet from December 31, 2024, to December 31, 2025, include: Net income: $6.0 million ($1.35 per diluted share) an increase of 12.9% compared to $5.4 million ($1.19 per diluted share) for the third quarter of 2025 and $487 thousand ($0.11 per diluted share) for the fourth quarter of 2024 which was negatively affected by a $3.4 million after tax loss on the sale of investment securi ...

Financial Performance - Net income for Q4 2025 was $6.0 million ($1.35 per diluted share), a 12.9% increase from $5.4 million ($1.19 per diluted share) in Q3 2025 and significantly higher than $487 thousand ($0.11 per diluted share) in Q4 2024[2] - Net income for Q4 2025 was $6,043,000, a significant increase of 91.2% from $487,000 in Q4 2024[16] - Diluted earnings per share rose to $1.35 in Q4 2025, compared to $0.11 in Q4 2024, marking an increase of 1,227.3%[16] - The return on average assets (ROA) for Q4 2025 was 1.05%, and return on average equity (ROE) was 14.20%, compared to ROA of 0.09% and ROE of 1.32% in Q4 2024[2] - The return on average assets improved to 1.05% for Q4 2025, compared to 0.09% in Q4 2024[16] Assets and Equity - Total assets reached $2.239 billion on December 31, 2025, reflecting a 1.9% increase from $2.198 billion at year-end 2024[4] - Total assets as of December 31, 2025, were $2,239,018,000, a slight increase from $2,197,841,000 a year earlier[16] - Shareholders' equity increased by $30.5 million (21.1%) from December 31, 2024, with retained earnings rising by $15.4 million net of dividends[5] - Shareholders' equity increased to $175,242,000 as of December 31, 2025, up from $144,716,000 in the previous year[16] Loans and Deposits - Net loans increased by $160.2 million (11.6%) year-over-year, totaling $1.541 billion on December 31, 2025, driven by growth in commercial real estate and residential loans[4] - Total deposits were $1.836 billion, up 1.1% from $1.816 billion at year-end 2024, despite a $65.0 million reduction in brokered deposits during Q4 2025[4] Income Sources - Interest income for Q4 2025 was $29,040,000, up 8.1% from $26,856,000 in Q4 2024[16] - Net interest income increased by 21.1% year-over-year, reaching $69,646,000 for the twelve months ended December 31, 2025[16] - Noninterest income for Q4 2025 totaled $4.7 million, a significant increase from $288 thousand in Q4 2024, driven by higher wealth management fees and gains on loan sales[7] - Noninterest income surged by 40.2% to $19,176,000 for the twelve months ended December 31, 2025, compared to $13,679,000 in the previous year[16] - Wealth management fees for Q4 2025 were $2.3 million, a 4.6% increase from $2.2 million in Q4 2024, with assets under management at $1.421 billion[2] Credit Quality - The provision for credit losses on loans was $326 thousand for Q4 2025, down from $451 thousand in Q4 2024, indicating improved credit quality[7] - Total provision for credit losses increased by 46.2% year-over-year to $2,899,000 for the twelve months ended December 31, 2025[16] Dividends - The Board of Directors declared a quarterly cash dividend of $0.33 per share for Q1 2026, representing a 3.1% increase over the Q1 2025 dividend[2] Market Performance - The market value per share reached $50.20, reflecting a 67.5% increase from $29.90 a year ago[16]

Core Insights - Wall Street's sentiment is shifting from OpenAI to Alphabet Inc., with OpenAI facing profitability concerns while Alphabet is seen as a strong competitor in AI [1][2][3] Company Performance - OpenAI's stock is under heavy selling pressure, affecting associated companies like Oracle, CoreWeave, and AMD, while Alphabet's stock is rising, benefiting companies like Broadcom and Lumentum [2][9] - OpenAI's associated companies saw a 74% gain in 2025, but Alphabet-exposed stocks surged by 146% [4] Market Dynamics - The rapid change in sentiment towards OpenAI has significant implications for the AI sector, which has been a major driver of the stock market's rally [3][10] - Alphabet's market capitalization is among the highest in the S&P 500, with substantial cash reserves and a diverse business portfolio, enhancing its competitive position [6][7] Competitive Landscape - There is a growing belief that Alphabet is positioned to become the leading AI model builder, a title that was previously attributed to OpenAI [7] - OpenAI's recent struggles, including mixed reactions to its GPT-5 and the success of Alphabet's Gemini AI, have raised doubts about its future [5][10] Financial Concerns - OpenAI's ambitious spending plans, estimated to exceed $207 billion by 2033, have led to skepticism about its ability to generate sufficient revenue [13][14] - Analysts suggest that OpenAI needs to improve revenue, manage costs better, or seek additional capital to close the financial gap [14] Investment Sentiment - Investors are becoming more cautious, shifting from a bullish outlook on tech to skepticism, particularly regarding companies associated with OpenAI [11][12] - Despite the current weakness in stocks tied to OpenAI, some analysts see potential buying opportunities as these stocks trade at a discount compared to those linked to Alphabet [15] Future Outlook - There is optimism about untapped demand across industries, which could support growth for companies involved in AI, as long as they focus on monetization [16]

Financial Performance - Net income for Q3 2025 was $5.4 million ($1.19 per diluted share), a 26.9% increase from $4.2 million ($0.95 per diluted share) in Q3 2024, but a 9.4% decrease from $5.9 million ($1.32 per diluted share) in Q2 2025 [122]. - For the nine months ended September 30, 2025, net income was $15.2 million ($3.39 per diluted share), representing a 43.1% increase compared to $10.6 million ($2.41 per diluted share) for the same period in 2024 [122]. - The return on average assets (ROA) for Q3 2025 was 0.93%, up from 0.80% in Q3 2024, while the return on average equity (ROE) improved to 13.39% from 11.86% [122]. - A quarterly cash dividend of $0.33 per share was declared for Q4 2025, representing a 3.1% increase over the Q4 2024 dividend [123]. - The effective tax rate for Q3 2025 was 19.6%, up from 17.3% in Q3 2024, with total income tax amounting to $1.3 million [138]. - The effective tax rate for the first nine months of 2025 was 19.2%, compared to 16.9% for the same period in 2024, with total income tax amounting to $3.6 million [150]. - The Corporation's dividend payout ratio was 28.76% for the first nine months of 2025, down from 39.74% for the same period in 2024 [192]. Asset and Loan Growth - Total assets grew to $2.297 billion as of September 30, 2025, up 4.5% from $2.198 billion at year-end 2024 [122]. - Total net loans reached $1.544 billion on September 30, 2025, marking an 11.8% increase from December 31, 2024 [122]. - Total deposits increased to $1.903 billion on September 30, 2025, a 4.8% rise from December 31, 2024 [122]. - Total loans increased to $1.56 billion at September 30, 2025, up $165.8 million or 11.9% from $1.40 billion at year-end 2024 [157]. - Consumer first lien loans rose by $35.9 million or 19.7% to $217.7 million, while commercial first lien loans decreased by $673 thousand or 1.1% [157]. - Residential real estate loans increased by $44.8 million or 13.9% over year-end 2024, with $95.3 million in mortgages originated in the first nine months of 2025 [158]. - Commercial real estate loans grew to $904.6 million, an increase of $101.3 million or 12.6% from $803.4 million at the end of 2024 [161]. Income and Expenses - Noninterest income for the nine months ended September 30, 2025, was $14.475 million, compared to $13.392 million for the same period in 2024 [124]. - Noninterest income before securities transactions rose by $261 thousand to $4.811 million in Q3 2025, driven by an increase in wealth management fees by 8.0% to $2.264 million [133][134]. - Total noninterest expense increased by $1.2 million to $15.148 million in Q3 2025, with salaries and benefits rising by 13.0% to $9.133 million [135][137]. - Total noninterest expense for the first nine months of 2025 was $44.114 million, up from $41.561 million in 2024, marking a 6.1% increase [148][149]. Credit Losses and Allowances - The provision for credit losses on loans increased to $1.3 million in Q3 2025 from $474 thousand in Q3 2024, primarily due to a specific reserve of $894 thousand for a collateral-dependent loan [131]. - The provision for credit losses on loans increased to $2.7 million in 2025 from $1.5 million in 2024, with an ACL ratio for loans at 1.30% as of September 30, 2025, up from 1.26% at the end of 2024 [144]. - The Bank's allowance for credit losses increased by $2.7 million or 15.3% to $20.4 million as of September 30, 2025 [157]. - The Allowance for Credit Losses (ACL) for pooled loans was $19.5 million, with approximately 70% derived from the qualitative component [182]. Capital and Equity - Total shareholders' equity increased by $21.6 million to $166.3 million as of September 30, 2025, from December 31, 2024 [192]. - Retained earnings rose by $10.8 million in 2025, with net income of $15.2 million partially offset by cash dividends of $4.4 million [192]. - Common Equity Tier 1 Risk-based Capital Ratio for Franklin Financial Services Corporation was 11.05% as of September 30, 2025, down from 11.31% in 2024 [197]. - Total Risk-based Capital Ratio for Farmers & Merchants Trust Company was 12.88% as of September 30, 2025, compared to the regulatory minimum of 10.00% [197]. Deposits and Borrowings - The Bank's total borrowings from the Federal Home Loan Bank of Pittsburgh stood at $200.0 million, with a fixed rate of 4.32% due January 12, 2027 [190]. - Total deposits increased by $87.2 million to $1.903 billion during the first nine months of 2025, with noninterest checking rising by $21.6 million [186]. - The Bank's total time deposits decreased by $29.8 million to $286.1 million, reflecting the maturity of a one-year time deposit account [189]. - Approximately 88% of the Bank's deposits were FDIC insured or collateralized as of September 30, 2025, up from 85% at December 31, 2024 [188]. Market and Risk Exposure - The Bank's exposure to purchased participations in commercial loans was $109.7 million, or 9.0% of commercial purpose loans, compared to $107.2 million at year-end 2024 [163]. - There were no material changes in the Corporation's exposure to market risk during the nine months ended September 30, 2025 [209].

Core View - Franklin Financial Services Corporation reported a net income of $5.4 million for Q3 2025, reflecting a 26.9% increase year-over-year, driven by higher interest income from loan growth [2][3] Financial Performance - For the nine months ended September 30, 2025, net income rose 43.1% to $15.2 million, with net interest income for Q3 increasing 24.2% to $18.2 million [3] - Non-interest income for the quarter was $4.8 million, down 0.9% from the previous year, with wealth management fees increasing 8% to $2.3 million [4] - Non-interest expenses increased 8.8% year-over-year to $15.1 million, while the effective tax rate rose to 19.6% from 17.3% [5] Key Business Metrics - Return on average assets (ROA) improved to 0.93% from 0.80%, and return on average equity (ROE) increased to 13.39% from 11.86% [5] - Total net loans increased 11.8% to $1.54 billion, with assets rising 4.5% to $2.30 billion and deposits increasing 4.8% to $1.90 billion [8] Management Commentary - Management highlighted the strength of the core banking franchise and disciplined balance sheet growth, with sustained loan expansion contributing to improved earnings [6] - The decision to redeem $9 million of subordinated notes was seen as a sign of confidence in the capital position, despite a modest impact on quarterly net income [7] Future Outlook - Management expressed confidence in loan demand and expects net interest margin stability, although non-interest expenses may remain elevated due to wage pressures [12] - The company repurchased 12,800 shares in the first nine months of 2025 and declared a quarterly dividend of 33 cents per share, a 3.1% increase from the previous year [13][14]

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Core Insights - The company reported a net income of $5.4 million for Q3 2025, representing a 26.9% increase from $4.2 million in Q3 2024, but a 9.4% decrease from $5.9 million in Q2 2025 [3][11] - Total assets reached $2.297 billion as of September 30, 2025, marking a 4.5% increase from $2.198 billion at year-end 2024 [2][3] - The company declared a quarterly cash dividend of $0.33 per share for Q4 2025, a 3.1% increase over the previous year's dividend [3] Balance Sheet Highlights - Total assets on September 30, 2025, were $2.297 billion, up 4.5% from $2.198 billion on December 31, 2024 [2] - Debt securities available for sale decreased by $39.3 million (7.7%) primarily due to paydowns [2] - Net loans increased by $163.1 million (11.8%) over the year-end 2024 balance, with commercial real estate loans contributing significantly [2] Income Statement Highlights - Net interest income for Q3 2025 was $18.2 million, an increase of 24.2% from $14.7 million in Q3 2024, driven by higher interest income on loans [11] - Noninterest income totaled $4.8 million for Q3 2025, a slight decrease of 0.9% from $4.9 million in Q3 2024 [11] - Noninterest expense for Q3 2025 was $15.1 million, an increase of 8.8% from $13.9 million in Q3 2024, primarily due to higher salaries and employee benefits [11] Performance Metrics - Return on Average Assets (ROA) was 0.93% for Q3 2025, up from 0.80% in Q3 2024 [3][13] - Return on Average Equity (ROE) was 13.39% for Q3 2025, compared to 11.86% in Q3 2024 [3][13] - Net Interest Margin (NIM) improved to 3.32% for Q3 2025 from 2.97% in Q3 2024 [3][13] Wealth Management - Wealth management fees were $2.3 million for Q3 2025, an increase of 8.0% from $2.1 million in Q3 2024 [3] - Assets under management reached $1.4 billion as of September 30, 2025 [3] Shareholder Equity - Shareholders' equity increased by $21.6 million during the first nine months of 2025 to $166.3 million as of September 30, 2025 [4] - The tangible book value of the Corporation's common stock was $35.13 per share, an increase of $4.48 from December 31, 2024 [4][14]

Financial Performance - Net income for Q3 2025 was $5.4 million ($1.19 per diluted share), a 26.9% increase from $4.2 million ($0.95 per diluted share) in Q3 2024, but a 9.4% decrease from $5.9 million ($1.32 per diluted share) in Q2 2025 [2]. - Net income for Q3 2025 was $5,354,000, a 43.1% increase from $4,218,000 in Q3 2024 [15]. - Diluted earnings per share for Q3 2025 was $1.19, up 25.3% from $0.95 in Q3 2024 [15]. - The effective federal income tax rate was 19.6% for Q3 2025, up from 17.3% for the same period in 2024 [8]. - The dividend payout ratio for Q3 2025 was 27.61%, a decrease from 33.45% in Q3 2024 [15]. Assets and Loans - Total assets reached $2.297 billion on September 30, 2025, reflecting a 4.5% increase from $2.198 billion at year-end 2024 [4]. - Total net loans increased to $1.544 billion, an 11.8% rise from December 31, 2024, driven by a $101.3 million increase in commercial real estate loans [4]. - Loans, net increased to $1,543,515,000 as of September 30, 2025, compared to $1,348,386,000 a year prior [15]. Deposits and Equity - Total deposits amounted to $1.903 billion, a 4.8% increase from December 31, 2024, with noninterest-bearing accounts comprising 16.4% of total deposits [4]. - Shareholders' equity increased by $21.6 million to $166.3 million as of September 30, 2025, with retained earnings rising by $10.8 million [4]. - Shareholders' equity rose to $166,343,000 as of September 30, 2025, from $149,928,000 a year earlier [15]. Income and Fees - Wealth management fees for Q3 2025 were $2.3 million, an 8.0% increase from $2.1 million in Q3 2024, with assets under management totaling $1.4 billion [2]. - Net interest income for Q3 2025 was $18.2 million, a 24.2% increase from $14.7 million in Q3 2024, primarily due to higher interest income from the loan portfolio [8]. - Interest income for Q3 2025 reached $29,675,000, up 14.4% from $26,053,000 in Q3 2024 [15]. - Net interest income increased by 20.3% to $51,036,000 for the nine months ended September 30, 2025, compared to $42,418,000 for the same period in 2024 [15]. - Noninterest income for the first nine months of 2025 totaled $14.5 million, an 8.1% increase from $13.4 million in the same period of 2024 [14]. Credit Losses - The provision for credit losses on loans was $1.3 million for Q3 2025, compared to $474 thousand for Q3 2024, reflecting a specific reserve of $894 thousand [8]. - Total provision for credit losses rose by 76.1% to $2,611,000 for the nine months ended September 30, 2025, from $1,483,000 in the prior year [15]. Market Performance - The market value per share increased to $46.00, reflecting a 52.5% rise from $30.13 in Q3 2024 [15].