UPDATE: Franklin Financial Services, Chambersburg, PA (FRAF)

I'd like to plant a new seed for this money tree.

Since my August 2012 review, Franklin Financial has grown in value just as I had predicted.

Although not the screaming bargain it was back then, given another three years, FRAF should trade at 150% of its estimated book value of $31 or $47 per share.

Were Management to list FRAF on the NASDAQ, the stock would be eligible for inclusion in the Russell Index and trade more in line with its peers. (The average NASDAQ bank stock trades for 186% of book value and 21x earnings.)

Disclosure: As of this posting, I own shares of FRAF and may subsequently either dispose of them or purchase more.

Prospective Buyers

F&M Trust's low 23 bps of funding costs, #1 marketshare position in Franklin County, and #2 position in Fulton County make the bank a very attractive franchise for acquisitive neighbors like these:

F.N.B. Corporation, Pittsburgh, PA (FNB)
Fulton Financial Corporation, Lancaster, PA (FULT)
Northwest Bancshares Inc., Warren, PA (NWBI)

Financial Snapshot
as of 03/31/2017

Total assets:
Tangible book value per share:   
NPAs to assets:
Price to book:
Market cap:
Dividend yield:
Trailing 12-month ROA:
Trailing 12-month ROE:

The Crew

G. Warren Elliott, Chairman
Timothy G. Henry, President and CEO
Mark R. Hollar,  Senior VP, Treasurer and CFO

The Skinny

If the crew at Franklin Financial Services takes me up on my suggestion to list FRAF on NASDAQ, and FRAF starts to trade in line with its peers, the stock could trade for $44 pretty quickly.

Improvements at Franklin Financial since my 2012 review
  • Transaction accounts now make up 43% of F&M Trust's deposits, versus 29% five years ago
  • NPAs are down to 1.6% and still declining 
  • Dividend yield is pretty high at 3.1%, and now rising
Other things to like about this deeply rooted Pennsylvania money tree
  • The bank's markets have grown, and its share of those markets has, too
  • Merger activity has lessened the competition making FRAF more valuable
  • FRAF does not get the credit it deserves for its solid and growing trust business, which has $725M in assets
  • Going forward I expect FRAF will consistently earn over 1% on assets and 10% on equity


  • Confidential interviews with shareholders and analysts


  1. Not sure how to contact you directly. Do you ever look at the few publicly traded community banks left in Oregon? There's one in particular that the market seems to have mis-priced.

    1. This comment has been removed by the author.

    2. Thanks Axster! I do follow and own a few Oregon Banks ($ORBN $PCBK- from merger with $CPBO) I'd love to hear your idea. My email is phil (at) timyanbankalert (dot) com -- Best, Phil

  2. Great call on FRAF and looks like more to come. Ever take a look at SGB ? Strong performing bank in rural Georgia at attractive valuation. I think it checks all your boxes.

    1. Thank You Investor! Southwest Georgia Financial is indeed a very nice bank that checks my boxes! There are quite a few sweet little banks in GA that I own and like. $CCFH, $CBAN $EXCH, $SCSG, $SEBC, $STBZ- from the merger with $SBFC, and $TMAK.
      Good Luck!

  3. Hi Mr. Timyan
    My big concern is to know when to sell
    A lot of people agree that Price to book is a good metric to look for value in the bank stocks (of course we need to add other valutations)
    Can be a % of book value (for instance 150% or 200%) a good triger to sell?
    Best regards and a lot of greeting from Spain (Europe)
    Miquel Angel Riera

    1. Thanks for reading and commenting Miquel!
      I think price to book can be a sell trigger. Price to earnings can as well. For instance, if FRAF gets to 2 x book I'm sure I will start selling it.