Franklin Financial Services : FRAF Investor Presentation - June 2022

Investor Presentation

First Quarter 2022 Highlights

Forward Looking Statements

Certain statements appearing herein which are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements refer to a future period or periods, reflecting management's current views as to likely future developments, and use words "may," "will," "expect," "believe," "estimate," "anticipate," or similar terms. Because forward-looking statements involve certain risks, uncertainties and other factors over which Franklin Financial Services Corporation has no direct control, actual results could differ materially from those contemplated in such statements. These factors include (but are not limited to) the following: general economic conditions particularly with regard to the negative impact of severe, wide-ranging and continuing disruptions caused by the spread of the coronavirus COVID-19 pandemic and responses thereto, changes in interest rates, changes in the Corporation's cost of funds, changes in government monetary policy, changes in government regulation and taxation of financial institutions, changes in the rate of inflation, changes in technology, the intensification of competition within the Corporation's market area, and other similar factors.

We caution readers not to place undue reliance on these forward-looking statements. They only reflect management's analysis as of this date. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in other documents the Corporation files from time to time with the SEC, including the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and any Current Reports on Form 8-K.

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CEO Comments

2022 certainly began much differently than the previous two years. While we have, for the most part, been able to put the pandemic in the rearview mirror, its effects and our national response to them are still being realized. Rising interest rates, supply chain disruptions, and world conflicts are but a few of the macro changes that are affecting the economy as a whole and, as a result, our customers and our company.

At times like these, I appreciate that we are a well-diversified company with sources of income from both commercial and consumer markets. Clearly our residential mortgage business, and the fee income we derive from it, has dropped off from the comparative period last year as mortgage refinancing has dried up in the face of rising rates. While we are still doing well in the purchase mortgage line of business, we expect this will be tempered over the course of the year by rising rates.

Our Investment and Trust business has gotten off to a good start as we continue to add clients and bring in new assets. While ahead of last year's results for the same period, we expect some pressure on earnings if the equity and bond markets continue to lose value.

The pipeline for commercial lending looks good and rising rates are lifting the income we generate from our floating-rate assets. If rates continue to rise, I anticipate our net interest margin also improving throughout the year. Deposits continue to grow, and our cost of deposits has remained steady at 12 basis points. The growth of deposits demonstrates the depth of customer relationships, which continue to be extremely important to us.

We continue to work to establish a full-service community office in Hagerstown, which will be our first in Maryland. We have received all necessary approvals and are renovating a downtown office and hiring retail, commercial, and trust employees. We expect to open the office July 1.

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CEO Comments (continued)

We also have two community office renovations underway and will move into our new headquarters on Nitterhouse Drive in July. We also will be going live with Salesforce in July as we start using the software to improve customer service, increase sales, and create efficiencies within the bank.

The bank's senior management team has evolved as several members have retired or will retire this year. We have onboarded Chief Operations Officer Steve Poynot, Chief Retail Services Officer Louis Giustini, and Chief Technology Officer David Long, and each is making valuable contributions to the company. I am very thankful that we have been able to add these leaders to our team.

2022 is setting up to be a challenging year, one that will require us to adapt to a changing economic environment. Our first quarter results were good, and we will look to build upon them throughout the year. Our sights are set on the future and taking the steps now that will help us succeed not just in 2022 but in the years that follow.

The following investor presentation, being released on Form 8-K, is a supplement to our quarterly earnings release. We appreciate the support of our shareholders and the interest of potential shareholders, and I am available at any time to listen to your concerns, thoughts, and ideas, and to answer your questions to the best of my ability.

Sincerely,

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Overview of Franklin Financial

• Franklin Financial, which was formed in 1983, is the largest independent, locally owned and operated bank holding company headquartered in Franklin County, PA
• Franklin Financial's wholly-owned subsidiary, F&M Trust, was founded in Chambersburg, PA in 1906
• Total assets of the Company were $1.77 billion as of March 31, 2022
• As of March 31, 2022, Franklin Financial reported $976.5 million in brokerage and trust assets under management
• Franklin Financial stock is trading on the Nasdaq Stock Market (NASDAQ: FRAF)

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