Executive Summary

Q4 2024 headline EPS fell to $0.11 due to a one-time, after-tax $3.4M loss on investment securities sold as part of a balance sheet restructuring; excluding this loss, non-GAAP EPS would have been ~$0.87 ($3.858M net income) as underlying net interest income improved sequentially and credit remained clean .
Net interest income increased 3.0% QoQ to $15.10M as average earning assets expanded, but reported “net revenue” declined QoQ on the securities loss; NIM compressed modestly to 2.92% (Q3: 2.97%) .
Balance sheet growth remained strong: total assets +19.7% YoY to $2.20B; loans +11.2% YoY to $1.38B; deposits +18.1% YoY to $1.82B, with ~85% of deposits FDIC insured/collateralized at year-end .
Capital return: $0.32 dividend declared for Q1 2025 and a new authorization to repurchase up to 150,000 shares through Dec-31-2025; management expects the restructuring loss to be economically recovered in ~2.3 years via higher-yield reinvestment and a pay-fixed swap, with no book value impact at sale .

What Went Well and What Went Wrong

What Went Well

Continued core growth and credit stability: loans +$139.5M YoY (+11.2%), deposits +$277.7M YoY (+18.1%), nonperforming loans just 0.02% of gross loans, ACL/loans at 1.26% .
Sequential NII improvement and resilient fee trends ex-loss: net interest income rose to $15.10M (Q3: $14.65M), and excluding the securities loss, noninterest income would have declined only 6.1% QoQ and grown 11.5% YoY .
Strategic repositioning to lift future profitability: sold ~$46.7M of 1.26% USTs, reinvested into ~4.62% MBS/RMBS and layered a pay-fixed swap; management expects to recover the ~$3.4M after-tax loss in ~2.3 years, aiding NIM trajectory without book value hit at sale .
CEO tone constructive: “We have…maintain[ed] a strong balance sheet…invest[ed] in…systems…and restructur[ed] the balance sheet…to support improved profitability” .

What Went Wrong

Reported earnings compressed by realized securities loss: GAAP noninterest income fell to $0.29M (from $4.85M in Q3), driving EPS down to $0.11 (Q3: $0.95; Q4’23: $0.79) .
Margin pressure persisted: NIM declined to 2.92% from 2.97% in Q3 and 3.24% in Q4’23 amid higher funding costs and mix; full-year NIM was 2.95% vs. 3.31% in 2023 .
Expense pressure: noninterest expense rose to $14.3M (Q3: $13.9M; Q4’23: $13.1M), with higher salaries/benefits and FDIC premiums contributing to the full-year +11.8% increase .

Financial Results

Income Statement vs. Prior Quarter and Prior Year

Metric ($, except ratios)	Q4 2023	Q3 2024	Q4 2024
Net Interest Income	$13.90M	$14.65M	$15.10M
Noninterest Income (GAAP)	$4.09M	$4.85M	$0.29M
Total “Net Revenue” (NII + Noninterest)	$17.99M	$19.50M	$15.38M
Provision for Credit Losses (Total)	$0.79M	$0.49M	$0.50M
Noninterest Expense	$13.15M	$13.92M	$14.34M
Pre-tax Income	$4.05M	$5.10M	$0.55M
Income Tax	$0.58M	$0.89M	$0.06M
Net Income (GAAP)	$3.47M	$4.22M	$0.49M
Diluted EPS (GAAP)	$0.79	$0.95	$0.11
Net Interest Margin (NIM)	3.24%	2.97%	2.92%
ROA (annualized)	0.75%	0.80%	0.09%
ROE (annualized)	11.81%	11.86%	1.32%

Notes: Total “Net Revenue” is computed as Net Interest Income + Noninterest Income (GAAP) from the cited tables .

Key Balance Sheet and Credit KPIs

KPI	Q4 2023	Q3 2024	Q4 2024
Total Assets	$1.836B	$2.151B	$2.198B
Loans, Net	$1.241B	$1.348B	$1.380B
Deposits	$1.538B	$1.723B	$1.816B
Other Borrowings	$130.0M	$240.0M	$200.0M
Wealth Mgmt AUM (fair value)	$1.095B	$1.177B	$1.169B
Nonperforming Loans / Gross Loans	0.01%	0.03%	0.02%
Nonperforming Assets / Total Assets	0.01%	0.02%	0.01%
ACL / Loans	1.28%	1.28%	1.26%
Cost of Deposits (YTD avg)	1.23% (FY’23)	1.81% (YTD)	1.89% (FY’24)
% FDIC Insured/Collateralized	—	~88%	~85%

Segment breakdown: Not applicable; the company reports consolidated banking operations with notable fee income from wealth management .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal Revenue/EPS/Margin Guidance	FY 2025	None disclosed	None disclosed	Maintained “no formal guidance”
Dividend	Q1 2025	$0.32/quarter	$0.32/quarter declared	Maintained
Share Repurchase	Through 12/31/2025	Prior plan completed in 2024	New authorization up to 150,000 shares	Initiated
Balance Sheet Restructuring Economics	Post-10/9/24	N/A	Expect ~2.3-year recovery of ~$3.4M after-tax loss via higher yields + swap; no book value impact at sale	New disclosure

Earnings Call Themes & Trends

Note: No Q4 2024 earnings call transcript was available; themes reflect Q2–Q4 disclosures and press releases .

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Balance Sheet Repositioning	No realized losses in 2024 YTD; improving AOCI; BTFP used in Q2, repaid in Oct; disclosed plan and then executed sale in Oct (after-tax loss ~ $3.4M) .	Realized pre-tax $4.3M loss in Q4; reinvested into ~4.62% RMBS; expect ~2.3-year recovery with swap; no book value impact at sale .	Restructure executed; future NIM tailwind expected.
NIM and Funding Costs	NIM 2.99% (Q2), 2.97% (Q3); cost of deposits rising (Q3 quarterly 1.96%) .	NIM 2.92%; full-year cost of deposits 1.89% vs 1.23% in 2023 .	Slight compression; structural actions aim to improve.
Loan & Deposit Growth	Loans +$60M (Q2), +$108M YTD (Q3); deposits +$49M (Q2), +$186M YTD (Q3) .	Loans +$140M YoY; deposits +$278M YoY; ~85% insured/collateralized .	Strong, broad-based growth sustained.
Credit Quality	Low NPLs; ACL/loans ~1.29% (Q2, Q3) .	NPLs 0.02%; ACL/loans 1.26%; provisions mainly for growth .	Stable/benign.
Fee Income/Wealth Mgmt	Steady growth; AUM up through Q3 .	Q4 GAAP noninterest income depressed by securities loss; ex-loss, underlying fees resilient .	Underlying healthy; one-time distortion.
Capital/Returns	Dividend maintained; buyback completed in 2024 .	Dividend maintained for Q1’25; new 150k share buyback authorized .	Continuing capital return.

Management Commentary

“We have just finished our second straight year of outstanding loan and deposit growth…[and] restructuring the balance sheet…that will support improved profitability.” – Tim Henry, CEO .
On restructuring economics: sale of ~$46.7M book value of 1.26% USTs; proceeds reinvested in ~4.62% RMBS/private-label RMBS; expect recovery of ~$3.4M after-tax loss in ~2.3 years with a pay-fixed swap; no impact on book value at sale .

Q&A Highlights

No Q4 2024 earnings call transcript available; no Q&A to report [ListDocuments returned none for earnings-call-transcript 12/1/2024–3/31/2025].

Estimates Context

S&P Global (Capital IQ) consensus for Q4 2024 EPS and revenue was unavailable at this time; therefore, estimate vs. actual comparisons cannot be presented. We attempted to retrieve “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q4 2024 but were rate-limited (S&P Global API) [GetEstimates error]. As a result, no beat/miss determination vs. Wall Street consensus is provided.

Key Takeaways for Investors

Core earnings power remains intact; the Q4 GAAP shortfall was driven by a deliberate securities loss to reposition the book. Management expects the loss to be economically recouped in ~2.3 years, implying a constructive NIM trajectory into 2025–2026 as higher-yield securities season and swaps accrue .
Balance sheet momentum is notable for a community bank: double-digit loan and deposit growth with high insured/collateralized deposit mix and low NPAs/NPLs, supporting a lower risk profile into a shifting rate environment .
Funding costs and expense inflation remain headwinds; however, sequential NII growth suggests asset repricing and balance sheet actions are helping offset deposit cost pressure over time .
Capital return is supportive: steady $0.32 dividend and a new 150k share buyback authorization provide flexibility to enhance per-share metrics while tangible book improved YoY; the sale had no immediate book value impact .
Without consensus estimates, trading setups hinge on the narrative: near-term, the realized loss depressed GAAP optics; medium term, the restructuring and ongoing growth could catalyze multiple and earnings normalization as the yield uplift flows through .

Appendix: Additional Data Points

GAAP vs. non-GAAP (Q4 2024): Reported net income $0.49M ($0.11 EPS); adding back securities loss net of tax, non-GAAP net income $3.86M; ROA/ROE ex-loss 0.71%/10.50% vs. reported 0.09%/1.32% .
Period-end capital and valuation: Book value per share $32.69; tangible book $30.65; market price per share $29.90; well-capitalized under regulatory guidelines .

Sources: Q4 2024 8-K 2.02 and Exhibit 99.1 earnings release ; Q4 2024 press release ; Q3 2024 press release ; Q2 2024 press release ; October 18, 2024 restructuring 8-K ; January 21, 2025 dividend/buyback 8-K .

FRANKLIN FINANCIAL SERVICES CORP /PA/ (FRAF)·Q4 2024 Earnings Summary