The beat on EPS is modest (+2.8%) and the credit quality deterioration is material — nonperforming loans more than doubled to 1.10% of gross loans with specific reserves increasing. Watch for further updates on the two large CRE nonaccrual loans ($17.4M total) in the Q3 2026 filing; if additional charge-offs or provisioning emerge, the stock could pull back from its recent $62.60 level. The improving efficiency ratio (59.07%) and strong NIM (3.50%) provide a floor, but credit trends are now the dominant variable.
Price Chart
Executive Summary
Franklin Financial reported Q2 2026 EPS of $1.47, beating the $1.44 consensus by 2.8%, with net income of $6.6M (+11.9% YoY). Net interest income grew 12.2% YoY to $19.3M, driven by lower deposit costs, but credit quality deteriorated sharply with nonperforming loans surging to 1.10% of gross loans from 0.55% at year-end 2025, driven by two large CRE nonaccrual loans totaling $17.4M. The elevated provision for credit losses ($1.6M vs $704K in Q2 2025) partially offsets the otherwise solid operating momentum, creating a mixed picture for the stock near its 52-week high of $62.60.
Key Financial Metrics
Key Facts
- Q2 2026 diluted EPS of $1.47 beat consensus of $1.44 by 2.8%
- Net income of $6.6M was up 11.9% from $5.9M in Q2 2025
- Net interest income grew 12.2% YoY to $19.3M, driven by lower deposit costs (1.50% vs 1.95% in H1 2025)
- Nonperforming loans surged to $17.7M (1.10% of gross loans) from $8.5M (0.55%) at year-end 2025, due to two large CRE nonaccrual loans
- Provision for credit losses on loans was $1.6M in Q2 2026, up from $704K in Q2 2025, driven by specific reserves on nonaccrual loans
- Total assets grew 4.3% from year-end 2025 to $2.335 billion; net loans up 3.1%
- Efficiency ratio improved to 59.07% from 63.71% a year ago
- Book value per share rose to $40.91; tangible book value $38.90
- Quarterly dividend maintained at $0.34 per share
Financial Impact
Q2 2026 net income $6.6M, up 11.9% YoY; EPS $1.47 vs $1.32 YoY. Net interest income $19.3M (+12.2% YoY). Provision for credit losses $1.6M vs $704K in Q2 2025. Nonperforming loans $17.7M (1.10% of gross loans) vs $8.5M (0.55%) at year-end 2025.
Risk Factors
- Further deterioration in the two large CRE nonaccrual loans ($17.4M total) could require additional provisioning
- CRE non-owner occupied concentration remains high at 348.2% of risk-based capital
- Net charge-offs increased to -0.12% annualized in Q2 2026 from -0.03% in Q1 2026
- AOCI loss widened to $23.5M from $21.6M at year-end 2025, pressuring book value
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0000723646-26-000063 |
| Document: fraf-20260724x8k.htm | 0000723646-26-000063 |
| Document: 0000723646-26-000063-index-headers.html | 0000723646-26-000063 |
| Document: 0000723646-26-000063-index.html | 0000723646-26-000063 |
| Document: 0000723646-26-000063.txt | 0000723646-26-000063 |
| 8-K Data (Synthetic) | 0000723646-26-000063 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 27, 2026 today | Press Release | $64.00 | awaiting T+60 | — | $64.95 (+1.48%) |
Oct 27, 2026 today | 8-K | $64.95 | awaiting T+60 | — | $64.95 (−0.00%) |
Oct 16, 2026 11d ago | 8-K | $62.34 | awaiting T+60 | — | $64.95 (+4.19%) |
Jul 24, 2026 13w ago | Press Release | $62.28 $62.34 | ▲ +0.10% | ▼ −3.63% | $64.95 (+4.29%) |
Jul 24, 2026 13w ago | 8-K | $62.28 $62.34 | ▲ +0.10% | ▼ −3.63% | $64.95 (+4.29%) |
Jul 24, 2026 13w ago | 8-K | $62.28 $62.34 | ▲ +0.10% | ▼ −3.63% | $64.95 (+4.29%) |
Jun 1, 2026 21w ago | Insider Cluster | $57.02 $62.10 | ▲ +8.91% | ▲ +7.68% | $64.95 (+13.91%) |
Jun 1, 2026 21w ago | Insider Cluster | $57.02 $62.10 | ▲ +8.91% | ▲ +7.68% | $64.95 (+13.91%) |
May 1, 2026 25w ago | 8-K | $56.12 $64.08 | ▲ +14.18% | ▲ +12.33% | $64.95 (+15.73%) |
Apr 23, 2026 26w ago | 8-K | $55.69 $63.50 | ▲ +14.02% | ▲ +8.94% | $64.95 (+16.62%) |
US Market Status
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