Franklin Financial Network, Inc. Reports Continued Profit, Loan and Deposit Growth in First Quarter 2013

Franklin, TN - April 23, 2013 - Franklin Financial Network, Inc., the parent of Franklin Synergy Bank, reported consolidated net income of $ 965 thousand for the first quarter of 2013, a 23.6 percent increase compared with $ 781 thousand for the first quarter of 2012. Basic earnings per common share for the quarter ending March 31, 2013, totaled $0.26 versus $0.19 for the same period in 2012, an increase of 36.8 percent.

“This is our seventeenth consecutive profitable quarter at Franklin Synergy Bank,” noted Richard Herrington, Franklin Financial Network president. “We have built a critical mass of banking relationships and continue to grow our core earnings capacity.”

Highlights of Franklin Financial Network, Inc. Performance

  • Loans at March 31, 2013 totaled $325 million, compared to $260 million at March 31, 2012, for an annualized increase of 25.0 percent. Residential and construction loans accounted for over half of the increase from March 2012. Loans at December 31, 2012 were $315 million.
  • Deposits posted impressive gains, increasing to $536 million for the first quarter 2013, 19.1 percent over first quarter 2012 deposits of $450 million. Deposit growth was driven by the addition of a branch in the Westhaven community. December 2012 deposits totaled $515 million.
  • Assets at March 31, 2013 totaled $609 million, compared to $509 million at March 31, 2012, an annual growth rate of 19.7 percent. Assets at December 31, 2012 totaled $578 million.
  • Nonperforming assets decreased by just over $1 million from March 31, 2012, ending the first quarter of 2013 at $4.6 million. Nonperforming assets also declined from December 31, 2012 levels of $4.8 million. Both non-accrual loans and other real estate declined in the first quarter.

  • Net Interest income increased to $4.4 million for the quarter ended March 31, 2013, up from $3.8 million for the same period in 2012, a 15.8 percent increase. Earning asset growth drove the increase in net interest income. The net interest margin for the quarter ended March 31, 2012 was 3.18 percent as compared to 3.13 percent for the quarter ended March 31, 2013.
  • Noninterest income for the quarter ended March 31, 2013, was $1.96 million, compared to $1.41 million for the quarter ended March 31, 2012, a growth rate of 39.0 percent.
  • Mortgage banking income was $1.4 million during the first quarter of 2013, compared to $779 thousand during the first quarter of 2012. The bank had a record-setting $209 million in mortgage loan originations in 2012; this trend continued during the first quarter of 2013.
  • Gain on sale of securities declined for the quarter to $50.3 thousand, compared to $181.1 thousand for the first quarter of 2012.
  • Non-Interest Expense increased to $4.8 million March 31, 2013 from $3.7 million March 31, 2012. Three personnel expense factors impacted non-interest expense during the quarter:

    • Increased mortgage commissions due to the continuation of higher mortgage origination activity.
    • The addition of a new branch in the Westhaven community.
    • The addition of bankers and support personnel.

  • Provision for loan and lease losses declined as asset quality strengthened. For the quarter ended March 31, 2013, provision for loan and lease losses was $50 thousand, as compared to $410 thousand for the quarter ended March 31, 2012, a decrease of 87.8 percent. Provision for loan and lease losses for the quarter ended December 31,

    2012 was $232 thousand. During the first quarter of 2013, the bank realized loan loss recoveries on previously charged-off loans. In addition, the bank has experienced no net quarterly charge-offs since the second quarter of 2012.

“Our credit quality remains strong,” Herrington said. “Controlling expenses as we build our infrastructure to meet local banking needs is a significant factor contributing to our performance. We continue to produce meaningful loan and deposit growth which we believe to be the primary basis for sustainable growth and profitability. In addition, mortgage production continues to be a revenue builder for Franklin Synergy as well as for the banking industry as whole.”