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- Nonperforming Loans Doubled to $17.7m (1.1% of Gross Loans) From $8.5m (0.55%) At Year-end, Driven By an $8.8m Cre Loan Placed On Nonaccrual (new) — Sharp deterioration in asset quality concentrated in two CRE credits, with specific reserves totaling $1.9M.
- Provision For Credit Losses More Than Doubled to $1.6m From $704k In Q2 2025 (new) — Elevated credit costs driven by specific reserves on nonaccrual CRE loans signal heightened credit risk.
Franklin Financial reports Q2 net income up 11.9% to $6.6M; nonperforming loans double
Filed July 24, 2026 · Period ending July 24, 2026 · ~2 min read
Key Changes
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Nonperforming loans doubled to $17.7M (1.1% of gross loans) from $8.5M (0.55%) at year-end, driven by an $8.8M CRE loan placed on nonaccrual in Q2. Two CRE loans comprise $17.4M of the total.
Exhibit 99.1 view on EDGAR → -
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Provision for credit losses more than doubled to $1.6M from $704K in Q2 2025, driven by increased specific reserves on two nonaccrual CRE loans. Allowance for credit losses rose to 1.36% of loans from 1.32% at year-end.
Exhibit 99.1 view on EDGAR → -
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Q2 2026 net income of $6.6M ($1.47/share) increased 11.9% from $5.9M ($1.32/share) in Q2 2025, driven by a $2.1M (12.2%) increase in net interest income to $19.3M, partially offset by higher credit provisions.
Exhibit 99.1 view on EDGAR → -
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Net loans grew $48.2M (3.1%, or 6.2% annualized) from year-end, led by $45.8M in CRE and $24.7M in residential loans. Deposits increased $88.8M (4.8%, or 9.6% annualized).
Exhibit 99.1 view on EDGAR → -
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Board declared a $0.34 per share quarterly dividend for Q3 2026, payable August 26 to shareholders of record August 7, up from $0.33 in Q2 2026.
Exhibit 99.1 view on EDGAR →
Summary
Franklin Financial reported second-quarter 2026 net income of $6.6 million ($1.47 per share), up 11.9% from $5.9 million ($1.32 per share) in the prior-year quarter, driven by a 12.2% increase in net interest income to $19.3 million.
However, the earnings improvement was tempered by a sharp deterioration in asset quality: nonperforming loans doubled to $17.7 million (1.1% of gross loans) from $8.5 million (0.55%) at year-end 2025, driven by an $8.8 million CRE loan placed on nonaccrual during the quarter.
Two CRE credits—a $7.0 million matured construction loan on a mixed-use project and an $8.8 million participation loan secured by six office buildings—comprise $17.4 million of the nonperforming total and carry combined specific reserves of $1.9 million. The provision for credit losses more than doubled to $1.6 million from $704 thousand in Q2 2025, reflecting the increased reserves on these troubled credits. The balance sheet grew modestly, with net loans up $48.2 million (3.1%, or 6.2% annualized) from year-end, led by $45.8 million in CRE and $24.7 million in residential loans, and deposits up $88.8 million (4.8%, or 9.6% annualized). The Board declared a $0.34 per share quarterly dividend for Q3 2026, a modest increase from $0.33 in Q2. For retail holders, the key concern is the concentrated CRE credit deterioration: the two troubled loans represent over 1% of the loan book, and their resolution—whether through workout, foreclosure, or further reserve builds—will materially affect near-term earnings and capital. Watch for updates on these credits in the Q2 10-Q and management's commentary on CRE portfolio health.
Section-by-Section Diff
Event · Item 2.02 — Results of Operations and Financial Condition
Franklin Financial Services Corporation disclosed Q2 2026 earnings results via press release.
Added in current filing · verify on EDGAR →
The news release of Franklin Financial Services Corporation, dated July 24, 2026 and attached as Exhibit 99.1, announces its earnings for the three and six months ended June 30, 2026
The company announced its financial results for the second quarter and first half of 2026. The specific earnings figures, revenue, and other financial metrics are contained in the attached press release (Exhibit 99.1), which is not included in the 8-K body text provided.
Event · Exhibit 99.1
Franklin Financial reported Q2 2026 net income of $6.6M ($1.47/share), up 11.9% YoY, and declared a $0.34 quarterly dividend.
Added in current filing · view on EDGAR →
Nonperforming loans (nonaccrual loans and loans 90 days past due and still accruing) totaled $17.7 million on June 30, 2026, compared to $8.5 million on December 31, 2025, an increase of $9.2 million due to the addition of an $8.8 million CRE loan to nonaccrual status during the second quarter of 2026. Nonperforming loans were 1.1% of total gross loans on June 30, 2026 compared to 0.55% on December 31, 2025. The nonperforming loans are comprised primarily of two (2) CRE loans to unrelated borrowers totaling $17.4 million.
Nonperforming loans doubled to $17.7 million (1.1% of gross loans) from $8.5 million (0.55%) at year-end 2025, driven by an $8.8 million CRE loan placed on nonaccrual during Q2 2026. The two largest nonperforming CRE loans total $17.4 million: a $7.0 million matured construction loan on a mixed-use project (with $1.2 million specific reserve) and an $8.8 million participation loan secured by six office buildings (with $734 thousand specific reserve).
Added in current filing · view on EDGAR →
Total assets on June 30, 2026 were $2.335 billion an increase of 4.3% from $2.239 billion on December 31, 2025. ... Net Loans: Increased $48.2 million or 3.1% (6.2% annualized) over the year-end 2025 balance, primarily from an increase of $45.8 million in commercial real estate (CRE) loans and $24.7 million in residential 1-4 family loans, which was partially offset by a decrease of $19.6 million in commercial (C&I) loans. ... Deposits: Increased $88.8 million or 4.8% (9.6% annualized)) from year-end 2025.
Total assets grew 4.3% to $2.335 billion from year-end 2025, driven by net loan growth of $48.2 million (3.1%, or 6.2% annualized) — primarily $45.8 million in CRE and $24.7 million in residential loans — and deposit growth of $88.8 million (4.8%, or 9.6% annualized). Noninterest-bearing checking accounts increased to 17.7% of total deposits from 16.9% at year-end.
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Figures/quotes linked to EDGAR · Narrative written by AI · Jul 27, 2026 · How we verify