Franklin Financial Network Reports Continued Growth in Third Quarter 2013

Franklin, TN - October 22, 2013 - Franklin Financial Network, Inc., (OTCPK:FRFN) the parent of Franklin Synergy Bank, reported year-to-date consolidated net income for Franklin Financial Network of $3.2 million, an increase of 20.5 percent over the same period in 2012. On a per share basis, year-to-date was $0.84 in 2013, compared to $0.67 in 2012, an increase of 25.4 percent.

Consolidated net income was $1.0 million for the third quarter of 2013, matching the third quarter of 2012 net income of $1.0 million. Basic earnings per common share for the quarter ended September 30, 2013 totaled $0.27 versus $0.26 for the same period in 2012, an increase of 3.8 percent.

“Additional capital, raised through an offering still in progress, leaves us well positioned for even greater growth,” noted Richard Herrington, Franklin Financial Network president. “This is our nineteenth consecutive profitable quarter at Franklin Synergy Bank. Our results indicate that we are continuing to grow the core earnings capacity of our bank.”

Highlights of Franklin Financial Network, Inc. Performance

Franklin Financial Network Loan, Deposit, and Asset Growth

  • Loans at September 30, 2013, totaled $387.4 million, compared to $303.4 million at September 30, 2012, an annual increase of 27.7 percent. Loan growth during the quarter was $40.4 million, compared to $22.2 million last quarter and $21.2 million for the same quarter last year. “Loan growth in the third quarter exceeded our expectations and we remain well positioned in the residential and construction loan market,” Herrington noted. “In addition, SBA loans and business loans continued an upward trajectory.”
  • Credit quality remains strong; year to date, net charge-offs were less than $9 thousand.
  • Deposits decreased slightly to $523 versus $536 million at June 30, 2013, but ended the third quarter up 18.4 percent over deposits of $442 million for the same quarter in 2012. Recent FDIC market share data shows Franklin Synergy as the third largest bank in the Williamson County market, up from fifth last year, and number one in city of Franklin market share.
  • Assets at September 30, 2013 totaled $658 million, compared to $517 million at September 30, 2012, an annual growth rate of 27.3 percent. Results were driven by loan growth, as well as increases in the investment portfolio. Assets at June 30, 2013, totaled $619 million.
  • Non-performing assets decreased $1.187 million, or 26.0 percent, from the June 30, 2013 total. Non-performing assets as a percent of total assets at September 30, 2013, was 0.51%.

    As compared to September 30, 2012, non-performing assets decreased approximately $1.593 million, or 32.0 percent. As a percent of total assets, non-performing assets was 0.96 percent at September 30, 2012.

Franklin Financial Network Income Statement Highlights

  • Net Interest income totaled $5.4 million for the quarter ended September 30, 2013, up from $4.0 million for the same period in 2012, a 35.8 percent annual increase. Earning asset growth and improving interest margins drove the increase in net interest income.

    Net interest income for the nine month period was $14.7 million, a 25.6 increase from the same period in 2012.

    The net interest margin for the quarter ended September 30, 2013 increased to 3.48 percent, up from 3.30 percent at June 30, 2013 and from 3.09 percent for the quarter ended September 30, 2012.

  • Noninterest income for the quarter ended September 30, 2013, was $1.3 million, compared to $2.1 million for the second quarter of 2013 and $2.3 million for the same quarter last year.

    • Mortgage revenues decreased during the third quarter due to rising interest rates and a seasonal pull-back, coupled with economic uncertainty.
    • The bank had a record-setting $209 million in mortgage loan originations in 2012.
    • Income from Franklin Synergy Investment Management grew 107% during the quarter.

      Noninterest income for the nine month period was $5.4 million, compared to $5.7 million for the same period in 2012.

  • Noninterest Expense for the third quarter increased to $4.9 million from $4.3 million for the same period in 2012. Two personnel expense factors impacted non-interest expense during the quarter:

    • Start-up costs associated with a new branch in Berry Farms in Franklin.
    • The addition of compliance and operations support staff to fuel future growth.

    Year-to-date noninterest expense was $14.5 million, compared to $12.0 million for the same period in 2012.

  • Provision for loan and lease losses for the quarter ended September 30, 2013, was $225 thousand, compared to $307 thousand for the quarter ended September 30, 2012, a decrease of 26.7 percent. Provision for loan and lease losses for the quarter ended June 30, 2013 was $182 thousand.

    Year-to-date provision for loan and lease losses decreased 65.3%.

“We continue to experience extraordinary loan growth and our credit quality remains strong,” Herrington said. “Deposit growth remains a challenge for the banking industry but we remain optimistic that we will continue to grow deposits in our market.”

This media release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Such statements include, but are not limited to, projected sales, gross margin and net income figures, the availability of capital resources, and plans concerning products and market acceptance. Forward-looking statements are inherently subject to risks and uncertainties, many of which can not be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein.

Future operating results of the corporation are impossible to predict, and no representation or warranty of any kind can be made respecting the present or future accuracy of such forward-looking statements or the ability of the corporation to meet its obligations, and no such representation or warranty is to be inferred.

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