Part I - Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Franklin Financial's Q2 2023 unaudited financials show total assets at $1.736 billion, net income of $6.3 million year-to-date, and CECL adoption [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $1.736 billion by June 30, 2023, driven by a $93.7 million increase in net loans, while deposits decreased Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$1,736,165** | **$1,699,579** | | Total cash and cash equivalents | $64,832 | $64,899 | | Debt securities available for sale | $439,471 | $486,836 | | Net Loans | $1,130,547 | $1,036,866 | | **Total Liabilities** | **$1,616,395** | **$1,585,382** | | Total deposits | $1,513,135 | $1,551,448 | | Short-term borrowings | $70,000 | $0 | | **Total shareholders' equity** | **$119,770** | **$114,197** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2023 net income was $3.0 million, with year-to-date net income at $6.3 million, impacted by higher interest expense and securities losses Income Statement Summary (in thousands, except per share data) | Metric | Q2 2023 (in thousands) | Q2 2022 (in thousands) | YTD 2023 (in thousands) | YTD 2022 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $13,195 | $12,111 | $26,032 | $22,919 | | Provision for credit losses | $532 | $0 | $1,061 | $0 | | Total noninterest income | $3,529 | $4,091 | $6,754 | $7,976 | | Total noninterest expense | $12,648 | $12,029 | $24,667 | $23,296 | | **Net income** | **$2,976** | **$3,578** | **$6,268** | **$6,590** | | **Diluted EPS** | **$0.68** | **$0.80** | **$1.42** | **$1.47** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail CECL adoption, investment portfolio unrealized losses, loan portfolio growth to $1.145 billion, and well-capitalized status - The company adopted ASU 2016-13 (CECL) on January 1, 2023, resulting in a **$536 thousand decrease** to the allowance for credit loss (ACL) for loans, a **$412 thousand increase** to the ACL for unfunded commitments, and a **$98 thousand increase** to retained earnings[24](index=24&type=chunk) - The available-for-sale debt securities portfolio had a fair value of **$439.5 million** and gross unrealized losses of **$57.3 million** as of June 30, 2023. Management determined these impairments were not credit-related and therefore no allowance for credit loss was recorded for these investments[29](index=29&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - The total loan portfolio increased to **$1.145 billion** at June 30, 2023, from **$1.051 billion** at year-end 2022, with commercial real estate being the largest segment at **$638.1 million**[49](index=49&type=chunk) - The Allowance for Credit Losses (ACL) for loans stood at **$14.6 million**, or **1.28%** of total loans, as of June 30, 2023[65](index=65&type=chunk) - The company borrowed **$70.0 million** from the Federal Reserve's Bank Term Funding Program (BTFP) during the first half of 2023 to support its liquidity position[93](index=93&type=chunk) - As of June 30, 2023, both the Corporation and its subsidiary bank, Farmers & Merchants Trust Company, were considered 'well capitalized' under all regulatory capital ratios[95](index=95&type=chunk)[98](index=98&type=chunk) [Management's Discussion and Analysis of Results of Operations and Financial Condition](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Results%20of%20Operations%20and%20Financial%20Condition) Management discusses a year-to-date net income decrease to $6.3 million, loan portfolio growth, deposit decline, and bolstered liquidity with strong loan quality [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Year-to-date net income decreased to $6.3 million due to securities losses and lease termination expenses, despite a rise in net interest income YTD Performance Summary (in thousands) | Metric | YTD 2023 (in thousands) | YTD 2022 (in thousands) | | :--- | :--- | :--- | | Net Income | $6,268 | $6,590 | | Diluted EPS | $1.42 | $1.47 | | Net Interest Income | $26,032 | $22,919 | | Provision for Credit Losses | $1,061 | $0 | | Noninterest Income | $6,754 | $7,976 | | Noninterest Expense | $24,667 | $23,296 | - Year-to-date net income was negatively impacted by a **$1.1 million loss** on securities sales from a portfolio restructuring and a **$495 thousand lease termination expense**[138](index=138&type=chunk) - Tax-equivalent net interest income for the first half of 2023 increased by **$3.0 million** year-over-year, primarily due to a **$3.4 million** positive impact from changing interest rates[155](index=155&type=chunk) [Financial Condition](index=42&type=section&id=Financial%20Condition) Total assets reached $1.736 billion, net loans grew by 9.0% to $1.131 billion, deposits decreased, and loan quality remained strong - Net loans increased by **$93.7 million (9.0%)** to **$1.131 billion** since December 31, 2022[138](index=138&type=chunk)[183](index=183&type=chunk) - Total deposits decreased by **$38.3 million (2.5%)** to **$1.513 billion**, with a shift from noninterest-bearing and low-yield accounts to time deposits, which grew by **56.4%**[139](index=139&type=chunk)[202](index=202&type=chunk)[206](index=206&type=chunk) - Loan quality remains strong, with nonaccrual loans at **$102 thousand**, representing just **0.01%** of total loans[190](index=190&type=chunk) - The company repurchased **74,306 shares** during the second quarter of 2023 under its authorized repurchase plan[211](index=211&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The Corporation maintains $537.5 million in available liquidity, including $70.0 million from BTFP, to meet anticipated demands Available Liquidity as of June 30, 2023 (in thousands) | Liquidity Source | Capacity (in thousands) | Outstanding (in thousands) | Available (in thousands) | | :--- | :--- | :--- | :--- | | Federal Home Loan Bank | $420,487 | $0 | $420,487 | | Federal Reserve Bank Discount Window | $56,941 | $0 | $56,941 | | Fed Bank Term Funding Program | $74,121 | $70,000 | $4,121 | | Correspondent Banks | $56,000 | $0 | $56,000 | | **Total** | **$607,549** | **$70,000** | **$537,549** | - Unfunded loan commitments increased to **$456.9 million** from **$374.2 million** at year-end 2022, while standby letters of credit decreased slightly[225](index=225&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes in market risk exposure were reported for the first six months of 2023 - There were no material changes in the Corporation's exposure to market risk during the first six months of 2023[227](index=227&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Based on an evaluation, the CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective as of June 30, 2023[228](index=228&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[228](index=228&type=chunk) Part II - Other Information [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) Management believes no pending legal proceedings will materially adversely affect the Corporation's financial condition or operations - In management's opinion, no pending legal proceedings are expected to be material to the Corporation's financial condition or results of operations[233](index=233&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) New risk factors highlight recent bank failures, potentially impacting deposit volatility, liquidity, and FDIC insurance premiums - A new risk factor highlights that recent bank failures (Silicon Valley Bank, Signature Bank, First Republic Bank) have eroded customer confidence and may adversely affect the Corporation[235](index=235&type=chunk) - Potential impacts include deposit volatility, increased liquidity demand, interest rate volatility, and possible increases in FDIC deposit insurance premiums or special assessments[235](index=235&type=chunk)[239](index=239&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Corporation repurchased 74,306 shares for approximately $2.1 million in Q2 2023 under its 2022 repurchase plan Share Repurchase Activity - Q2 2023 | Period | Number of Shares Purchased | Weighted Average Price Paid per Share | Total Dollar Amount | | :--- | :--- | :--- | :--- | | April 2023 | 21,367 | $29.75 | $635,626 | | May 2023 | 17,348 | $26.15 | $453,642 | | June 2023 | 35,591 | $28.30 | $988,534 | | **Total Q2** | **74,306** | **-** | **$2,077,802** | - The share repurchase plan was authorized on December 15, 2022, for up to **150,000 shares** and expires on December 21, 2023[237](index=237&type=chunk) [Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including corporate documents and certifications

Commission file number 001-38884 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ (717) 264-6116 (Registrant's telephone number, including area code) Not Applicable (Former name, former address ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ Commission file number 001-38884 FRANKLIN FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 25-1440803 ( ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ Commission file number 001-38884 FRANKLIN FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ Commission file number 001-38884 FRANKLIN FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 25-14 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ Commission file number 001-38884 FRANKLIN FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 25-1 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ Commission file number 001-38884 FRANKLIN FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 25-1440803 ( ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ Commission file number 001-38884 FRANKLIN FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 25- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ Commission file number 001-38884 FRANKLIN FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 25-14408 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to___________ Commission file number 001-38884 FRANKLIN FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 25-1440 ...