EXHIBIT 99.1
NEWS RELEASE...NEWS RELEASE...NEWS RELEASE
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION, CONTACT:
Date: July 25, 2003 Kristy Williams 615-595-5531
David McCurrach 615-595-5531
FRANKLIN FINANCIAL
REPORTS SECOND
QUARTER RESULTS
FRANKLIN, TENNESSEE, JULY 25, 2003 - Franklin Financial Corporation (Nasdaq:
FNFN) reported second quarter financial results today. Total deposits grew 16.3%
over second quarter 2002 from $653 million at June 30, 2002 to $759 million at
June 30, 2003. For the same 12-month period, loans increased 10.3%, from $494
million at June 30, 2002 to $544 million at June 30, 2003; and shareholders
equity was up 30%, from $41 million at June 30, 2002 to $54 million at June 30,
2003. Total asset growth was 13.6% over second quarter 2002, from $785 million
at June 30, 2002 to $892 million at June 30, 2003.
Net income for the six months ended June 30, 2003 was $4 million or $0.44 per
diluted share as compared to $5.1 million or $0.58 per diluted share for the
same period last year. Net income for the quarter ended June 30, 2003 was $1.1
million or $0.12 per diluted share compared to $2.5 million or $0.28 per diluted
share for the same quarter 2002. During the second quarter 2003, earnings were
reduced by two pretax charges totaling $3.4 million. The first charge is a $2.5
million write down on equipment repossessed from a single borrower. The second
charge is a $937 thousand downward valuation adjustment in mortgage servicing
rights. As mortgage interest rates have declined, prepayment speeds on mortgages
have increased, resulting in a reduction in the value of the mortgage servicing
rights.
"The banking business is great, as is business for the vast majority of our
customers," commented Franklin Financial Corporation Chairman, President and CEO
Gordon E. Inman. "Unfortunately, that was not the case for one large borrower
who experienced a significant downturn in their industry that eventually led to
bankruptcy and an anticipated loss on the sale of the equipment that
collateralized their loans." Inman continued, "The mortgage servicing valuation
adjustment was the result of the high level of mortgage refinancings that have
reduced the value of mortgage servicing rights."
For the second quarter of 2003, Franklin Financial Corporation once again paid a
quarterly cash dividend of $.05775 per share. Corporate data may be found on the
Internet at FNFN.net. The common stock of Franklin Financial Corporation is
listed on the Nasdaq National Market under the symbol "FNFN".
Franklin Financial Corporation is a financial services holding company and the
parent company of Franklin National Bank. Franklin National Bank operates nine
retail branches in Williamson, Davidson, and Maury counties. The bank's Internet
site is FranklinNetBranch.com. In addition to Franklin National Bank, Franklin
Financial Corporation is the parent company of Franklin Financial Mortgage,
Franklin Financial Insurance Agency, and Franklin Financial Securities.
On July 24, 2002, Fifth Third Bancorp (Nasdaq: FITB-News) and Franklin Financial
Corporation announced the signing of a definitive agreement in which Fifth Third
will acquire Franklin Financial Corporation and its subsidiary, Franklin
National Bank, headquartered in Franklin, Tennessee. On March 27, 2003, the
definitive agreement was amended to extend the termination date to June 30, 2004
and to revise the exchange ratio.
THE STATEMENTS CONTAINED IN THIS RELEASE WHICH ARE NOT HISTORICAL FACTS ARE
FORWARD-LOOKING STATEMENTS MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS
DESCRIBING FRANKLIN FINANCIAL CORPORATION'S FUTURE PLANS, PROJECTIONS,
STRATEGIES AND EXPECTATIONS, ARE BASED ON ASSUMPTIONS AND INVOLVE A NUMBER OF
RISKS AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND FRANKLIN FINANCIAL
CORPORATION'S CONTROL. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED DUE TO CHANGES IN INTEREST RATES, COMPETITION IN THE INDUSTRY, CHANGES
IN LOCAL AND NATIONAL ECONOMIC CONDITIONS AND VARIOUS OTHER FACTORS. ADDITIONAL
INFORMATION CONCERNING SUCH FACTORS, WHICH COULD AFFECT FRANKLIN FINANCIAL
CORPORATION, IS CONTAINED IN FRANKLIN FINANCIAL CORPORATION'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION.
FRANKLIN FINANCIAL CORPORATION
(ALL DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- Percent ------------------------ Percent
2003 2002 Change 2003 2002 Change
--------- --------- ------- --------- --------- -------
Income Statement
Interest income $ 11,730 $ 12,719 (7.8) $ 23,603 $ 25,197 (6.3)
Interest expense 3,928 4,485 (12.4) 7,988 9,090 (12.1)
--------- --------- --------- ---------
Net interest income 7,802 8,234 (5.2) 15,615 16,107 (3.1)
Provision for loan losses 485 800 (39.4) 1,405 1,450 (3.1)
Non-interest income 3,394 1,964 72.8 6,462 3,913 65.1
Non-interest expense 9,135 5,592 63.4 14,598 10,770 35.5
--------- --------- --------- ---------
Income before income taxes 1,576 3,806 (58.6) 6,074 7,800 (22.1)
Income taxes 494 1,299 (62.0) 2,102 2,684 (21.7)
--------- --------- --------- ---------
Net income $ 1,082 $ 2,507 (56.8) $ 3,972 $ 5,116 (22.4)
--------- --------- --------- ---------
Per Share Data
Basic $ 0.13 $ 0.32 (59.0) $ 0.48 $ 0.65 (26.0)
Diluted 0.12 0.28 (57.1) 0.44 0.58 (24.1)
Cash Dividends 0.05775 0.055 5.0 0.1155 0.11 5.0
Common book value per share 6.46 5.25 23.0 6.46 5.25 23.0
Weighted average shares outstanding
Basic 8,329 7,906 5.4 8,237 7,883 4.5
Diluted 9,098 8,858 2.7 8,959 8,754 2.3
Balance Sheet Summary June 30,
-------------------------
Assets 2003 2002
--------- ---------
Cash and cash equivalents $ 35,431 $ 22,811 55.3
Federal funds sold 1,270 1,386 (8.4)
Securities 294,621 250,675 17.5
Loans 544,334 493,621 10.3
Allowance for loan losses (6,106) (4,972) 22.8
--------- ---------
Net loans 538,228 488,649 10.1
Other assets 22,719 21,978 3.4
Total assets $ 892,269 $ 785,499 13.6
--------- ---------
Liabilities and stockholders' equity
Deposits $ 759,109 $ 652,530 16.3
Other borrowings 75,100 88,439 (15.1)
Other liabilities 4,127 3,034 36.0
--------- ---------
Total liabilities 838,336 744,003 12.7
Total stockholders' equity 53,933 41,496 30.0
--------- ---------
Total liabilities and stockholders' equity $ 892,269 $ 785,499 13.6
--------- ---------
FRANKLIN FINANCIAL CORPORATION
(ALL DOLLARS IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
2003 2002 2003 2002
-------- -------- -------- --------
AVERAGE BALANCES
Loans $546,789 $479,173 546,731 $463,970
Securities 283,411 254,001 272,851 255,631
Earning Assets 835,511 734,121 832,991 722,092
Total Assets 876,842 771,721 873,224 759,417
Demand deposits 85,690 51,369 82,222 51,368
Interest-Bearing Deposits 648,051 587,698 653,619 580,012
Total Deposits 733,741 639,067 735,841 631,380
Shareholders' Equity 53,033 39,419 51,519 38,082
KEY PERFORMANCE RATIOS
Return on Average Assets (Annualized) 0.49% 1.30% 0.91% 1.35%
Return on Average Equity (Annualized) 8.16 25.43 15.42 26.87
Net Interest Margin 3.74 4.49 3.75 4.46
Efficiency Ratio 81.13 53.97 65.04 52.99
ASSET QUALITY DATA
Nonperforming Assets $ 4,506 $ 2,312 4,506 $ 2,312
Allowance for Loan and Lease Losses 6,106 4,972 6,106 4,972
Net Charge-Offs/ (Recoveries) 314 421 1060 747
Nonperforming Assets to Total Loans 0.83% 0.47% 0.83% 0.47%
Allowance for Loan and Lease Losses to
Period-End Loans 1.12 1.01 1.12 1.01
Net Charge-Offs/ (Recoveries) to
Average Loans 0.06 0.09 0.19 0.16