FNFN Franklin Financial (MM)

Franklin Financial Reports 14% First Quarter Net Income Growth FRANKLIN, Tenn., May 5 /PRNewswire-FirstCall/ -- Franklin Financial Corporation (FFC) reported first quarter financial results today. Net income of $3.3 million, or $0.36 per diluted share, for the first quarter of 2004 represents an increase of 14.3% from net income of $2.9 million, or $0.33 per diluted share, for the first quarter of 2003. An increase in net interest income of 3.7% and a decrease in the provision for loan loss expense contributed to the positive earnings results. For the three months ended March 31, 2004, Franklin Financial achieved an annualized 22.14% return on average equity and an annualized 1.41% return on average assets. From March 31, 2003 to March 31, 2004, deposits grew 9.0%, from $735 million to $801 million; loans increased 5.6%, from $553 million to $584 million; and shareholders' equity increased 19.6%, from $52 million to $62 million. "Everyone can be proud of these exceptional results as we near the final stages of our merger with Fifth Third," commented FFC Chairman, President and CEO Gordon E. Inman. "This level of performance speaks volumes to the loyalty of our customers as well as the dedication and hard work of our employees. Both groups are to be commended." "The milestones Franklin Financial has achieved set the pace for our ongoing success," Inman went on to say. "New products, more locations and Fifth Third's reputation for superior customer service should allow us to take those achievements to a whole new level as we continue to set the standard for banking excellence in Middle Tennessee." The common stock of Franklin Financial Corporation began trading on the Nasdaq National Market under the symbol "FNFN" on May 1, 2001. Corporate data may be found on the Internet at http://www.fnfn.net/ . Franklin Financial Corporation is the parent company of Franklin National Bank, Franklin Financial Mortgage and Franklin Financial Securities. Franklin National Bank operates nine retail branches with ATM's in Williamson, Davidson, and Maury counties. The bank's Internet site is FranklinNetBranch.com. 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. 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 merger is expected to be completed in the second quarter of 2004 and is subject to regulatory approval. 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) (unaudited) Three Months Ended March 31, 2004 2003 Average Balances Loans $570,767 $546,675 Securities 315,037 262,174 Earning Assets 893,132 830,447 Total Assets 936,728 869,126 Demand deposits 71,290 78,716 Interest-Bearing Deposits 723,280 659,248 Total Deposits 794,570 737,964 Shareholders' Equity 59,668 50,312 Key Performance Ratios Return on Average Assets (Annualized) 1.41% 1.33% Return on Average Equity (Annualized) 22.14 22.98 Net Interest Margin 3.68 3.76 Efficiency Ratio 47.22 49.40 Asset Quality Data Nonperforming Assets $4,278 $7,226 Allowance for Loan and Lease Losses 5,958 5,935 Net Charge-Offs 71 745 Nonperforming Assets to Total Loans 0.73% 1.31% Allowance for Loan and Lease Losses to Period-End Loans 1.02 1.07 Net Charge-Offs to Average Loans 0.01 0.14 Franklin Financial Corporation (all dollars in thousands) (unaudited) Income Statement Three Months Ended March 31, Percent 2004 2003 Change Interest income $11,811 $11,874 (0.5) Interest expense 3,709 4,060 (8.6) Net interest income 8,102 7,814 3.7 Provision for loan losses 202 920 (78.0) Non-interest income 2,000 3,067 (34.8) Non-interest expense 4,932 5,463 (9.7) Income before income taxes 4,968 4,498 10.4 Income taxes 1,665 1,608 3.5 Net income $3,303 $2,890 14.3 Per Share Data Basic $0.39 $0.35 11.4 Diluted 0.36 0.33 9.1 Cash Dividends 0.0625 0.05775 8.2 Common book value per share 7.37 6.29 17.1 Weighted average shares outstanding Basic 8,401 8,143 3.2 Diluted 9,131 8,845 3.2 Balance Sheet Summary March 31, Percent 2004 2003 Change Assets Cash and cash equivalents $25,734 $33,924 (24.1) Federal funds sold 0 0 0.0 Securities 320,284 283,110 13.1 Loans 583,790 552,700 5.6 Allowance for loan losses (5,958) (5,935) 0.4 Net loans 577,832 546,765 5.7 Other assets 23,742 23,564 0.8 Total assets $947,592 $887,363 6.8 Liabilities and stockholders' equity Deposits $801,205 $735,031 9.0 Other borrowings 80,153 94,455 (15.1) Other liabilities 3,934 5,803 (32.2) Total liabilities 885,292 835,289 6.0 Total stockholders' equity 62,300 52,074 19.6 Total liabilities and stockholders' equity $947,592 $887,363 6.8 DATASOURCE: Franklin Financial Corporation CONTACT: Kristy Williams, +1-615-595-5531, or David McCurrach, +1-615-591-1059, both of Franklin Financial Corporation Web site: http://www.franklinnetbranch.com/

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