FNFN Franklin Financial (MM)

Franklin Financial Reports Third Quarter Results FRANKLIN, Tenn., Oct. 30 /PRNewswire-FirstCall/ -- Franklin Financial Corporation today reported its financial results for the third quarter 2003. Quarterly net income increased 4.3%, compared to the third quarter 2002. Franklin Financial Corporation is the parent company of Franklin National Bank. For the quarter ending September 30, 2003, Franklin Financial Corporation reported net income of $3.4 million representing a 4.3% increase in net income over the same period in 2002. On a per share basis, net income for the third quarter of 2003 was $.41 per share, equaling the per share basis for the third quarter 2002. For the nine months ended September 30, 2003, net income was $7.4 million, or $.89 per share. Per share net income for the comparable period in 2002 was $1.06. Total assets grew to $879.6 million on September 30, 2003, a $58.5 million increase and a 7.1% increase compared to September 30, 2002. Compared to September 30, 2002, loans grew .9%, investment securities increased by 23.2% while deposits grew 9.2%. Total shareholders' equity increased by 18.3%, from $46.4 million at September 30, 2002 to $54.8 million at September 30, 2003. For the nine-month period ending September 30, 2003, the return on average equity was 18.79% compared to 27.97% for the same period in 2002. "Our company has reported another sound quarter," commented Gordon E. Inman, Chairman, President and CEO of Franklin Financial Corporation. "Asset quality remains strong. At quarter end, non-performing assets were $5.5 million, or 1.01% of total loans, compared to $5.8 million at September 30, 2002, or 1.07% of total loans. In addition, we are very pleased with our ability to earn a return on average equity of 18.79%, and to grow assets by 7.1%." For the third quarter of 2003, Franklin Financial Corporation once again paid a quarterly cash dividend of $.05775 per share. The bank's Internet site is FranklinNetBranch.com. 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. 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) 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 Nine Months Ended September 30, Percent September 30, Percent 2003 2002 Change 2003 2002 Change Income Statement Interest income $ 11,317 $ 12,749 (11.2) $ 34,919 $ 37,946 (8.0) Interest expense 3,667 4,464 (17.9) 11,656 13,554 (14.0) Net interest income 7,650 8,285 (7.7) 23,263 24,392 (4.6) Provision for loan losses 470 760 (38.2) 1,875 2,210 (15.2) Non-interest income 3,644 3,237 12.6 8,919 7,150 24.7 Non-interest expense 5,589 5,663 (1.3) 18,999 16,433 15.6 Income before income taxes 5,235 5,099 2.7 11,308 12,899 (12.3) Income taxes 1,830 1,833 (0.2) 3,932 4,517 (13.0) Net income $ 3,405 $ 3,266 4.3 $ 7,376 $ 8,382 (12.0) Per Share Data Basic $ 0.41 $ 0.41 (1.4) $ 0.89 $ 1.06 (16.1) Diluted 0.37 0.37 0.0 0.82 0.95 (13.7) Cash Dividends 0.05775 0.055 5.0 0.17325 0.1575 10.0 Common book value per share 6.56 5.86 11.9 6.56 5.86 11.9 Weighted average shares outstanding Basic 8,358 7,908 5.7 8,278 7,891 4.9 Diluted 9,130 8,844 3.2 9,014 8,785 2.6 Balance Sheet Summary September 30, Assets 2003 2002 Cash and cash equivalents $ 21,668 $ 27,117 (20.1) Federal funds sold 0 1,636 (100.0) Securities 296,456 240,623 23.2 Loans 541,721 536,841 0.9 Allowance for loan losses (5,478) (5,407) 1.3 Net loans 536,243 531,434 0.9 Other assets 25,224 20,328 24.1 Total assets $879,591 $821,138 7.1 Liabilities and stockholders' equity Deposits $744,653 $682,030 9.2 Other borrowings 78,240 87,485 (10.6) Other liabilities 1,866 5,263 (64.5) Total liabilities 824,759 774,778 6.5 Total stockholders' equity 54,832 46,360 18.3 Total liabilities and stockholders' equity $879,591 $821,138 7.1 Franklin Financial Corporation (all dollars in thousands) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 Average Balances Loans $ 542,023 $ 509,748 $ 545,145 $ 479,419 Securities 292,097 246,797 279,337 252,593 Earning Assets 835,791 763,475 833,937 735,997 Total Assets 879,020 800,088 875,178 773,071 Demand deposits 80,927 57,054 81,800 53,285 Interest-Bearing Deposits 664,026 614,341 657,158 591,618 Total Deposits 744,953 671,395 738,958 644,903 Shareholders' Equity 54,317 43,928 52,347 39,962 Key Performance Ratios Return on Average Assets (Annualized) 1.55% 1.63% 1.12% 1.45% Return on Average Equity (Annualized) 25.07 29.74 18.79 27.97 Net Interest Margin 3.66 4.34 3.72 4.42 Efficiency Ratio 48.39 48.46 57.91 51.33 Asset Quality Data Nonperforming Assets $ 5,495 $ 5,769 $ 5,495 $ 5,769 Allowance for Loan and Lease Losses 5,478 5,407 5,478 5,407 Net Charge-Offs/ (Recoveries) 1,115 325 2,175 1,072 Nonperforming Assets to Total Loans 1.01% 1.07% 1.01% 1.07% Allowance for Loan and Lease Losses to Period-End Loans 1.01 1.01 1.01 1.01 Net Charge-Offs/ (Recoveries) to Average Loans 0.21 0.06 0.40 0.22 DATASOURCE: Franklin Financial Corporation CONTACT: Kristy Williams, +1-615-595-5531, or David McCurrach, +1-615-595-5531, both of Franklin Financial Corporation Web site: http://www.franklinnetbanch.com/

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