Franklin Financial Services Corp (FRAF)FRAF

Franklin Financial Services Corp. (FRAN): A Comprehensive Overview

Company Profile:

History and Background:

• Founded in 1981 in Franklin, Tennessee, as Franklin National Bank.
• Expanded through acquisitions and organic growth to become Franklin Financial Network, Inc. in 1998.
• Adopted the current name, Franklin Financial Services Corp., in 2013.
• Listed on the NASDAQ Stock Market under the ticker symbol FRAN.

Core Business Areas:

• Community Banking: Providing a range of financial services to individuals and businesses through its network of branches in Tennessee and Alabama.
• Mortgage Banking: Originating and selling residential mortgages through its wholesale and retail channels.
• Wealth Management: Offering investment, retirement planning, and trust services to affluent individuals and families.

Leadership and Corporate Structure:

• CEO: R. Michael Gentry Jr.
• President and COO: W. Thomas Dillard Jr.
• Board of Directors: A diverse group of individuals with expertise in finance, banking, and community affairs.
• Corporate Structure: A holding company with subsidiaries focused on community banking, mortgage banking, and wealth management.

Top Products and Market Share:

Top Products:

• Checking and savings accounts: Offered with various features and benefits to meet diverse customer needs.
• Residential mortgages: Fixed-rate and adjustable-rate mortgages, government-backed loans, and jumbo mortgages.
• Wealth management services: Portfolio management, retirement planning, estate planning, and trust services.

Market Share:

• Community Banking: Operates in a fragmented market with numerous regional and community banks.
• Mortgage Banking: Holds a small market share in the national mortgage market, but has a stronger presence in its local markets.
• Wealth Management: Competes with large national firms and independent wealth managers.

Product Performance and Market Reception:

• Community Banking: Generally positive customer reviews and ratings, highlighting the bank's friendly service and local focus.
• Mortgage Banking: Performance varies depending on market conditions and competition. Facing increased competition from online lenders and large banks.
• Wealth Management: Offers competitive investment options and personalized services, aiming to differentiate from larger competitors.

Total Addressable Market (TAM):

Community Banking: Approximately $2 trillion in total deposits held by community banks in the US.

Mortgage Banking: The US mortgage market is estimated at over $11 trillion.

Wealth Management: The global wealth management market is valued at over $100 trillion.

Financial Performance:

Recent Financial Statements:

• Revenue: Increasing steadily over the past five years, reaching $214 million in 2022.
• Net Income: Fluctuating due to market conditions and strategic investments, reaching $42.6 million in 2022.
• Profit Margins: Stable between 20-25% over the past five years.
• Earnings per Share (EPS): Following a similar trend as net income, reaching $3.54 in 2022.

Year-over-Year Comparison:

• Revenue and earnings showing steady growth over the past five years, indicating a positive financial trajectory.
• Profit margins and EPS exhibiting stability and profitability.

Cash Flow and Balance Sheet Health:

• Strong cash flow generation, allowing for investments in growth initiatives and shareholder returns.
• Healthy balance sheet with manageable debt levels and sufficient reserves.

Dividends and Shareholder Returns:

Dividend History:

• Consistent dividend payout history with a current annual dividend yield of approximately 2.5%.
• Payout ratio remaining within a sustainable range of 30-40%.

Shareholder Returns:

• Total shareholder returns exceeding the S&P 500 over the past 5 and 10 years, demonstrating above-average performance.

Growth Trajectory:

Historical Growth:

• Revenue and earnings have grown consistently over the past 5-10 years, reflecting successful organic and acquisitive growth strategies.

Future Growth Projections:

• Continued expansion through acquisitions and organic growth in existing markets.
• Exploring new business lines and partnerships to diversify revenue streams.

Recent Growth Initiatives:

• Expansion into new markets through branch acquisitions and partnerships.
• Enhan