<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 0 - 20880
Filing Date: August 14, 1997
- --------------------------------------------------------------------------------
FRANKLIN BANCORPORATION, INC
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52 - 1632361
--------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer identification
incorporation or organization) Number)
1722 EYE STREET, N.W.
WASHINGTON, D.C. 20006 (202) 429 - 9888
--------------------------------- -------------------------------
(Address of principal executive (Registrant's telephone number,
offices) including area code)
- --------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES (X) NO ( )
The total number of shares outstanding of the Registrant's common stock, par
value $0.10 per share, as of August 8, 1997 was 6,487,794.
Page 1 of 16
<PAGE> 2
FRANKLIN BANCORPORATION, INC.
FORM 10-Q
June 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
(a) Consolidated Statements of Financial Condition....................3
(b) Consolidated Statements of Income.................................4
(c) Consolidated Statements of Cash Flows.............................5
Notes to Consolidated Financial Statements............................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..........................................9
PART II. OTHER INFORMATION............................................14
</TABLE>
Page 2 of 16
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
(a) Consolidated Statements of Financial Condition
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
UNAUDITED
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
- ------ ---------- -----------
<S> <C> <C>
Cash and due from banks $ 18,989 $ 22,468
Federal funds sold and securities purchased
under resale agreements 32,000 71,800
Securities available-for-sale 97,316 97,160
Securities held-to-maturity 80,374 66,956
--------- ---------
Securities 177,690 164,116
Loans, net of unearned income 242,249 232,581
Less: allowance for loan losses (3,857) (3,842)
--------- ---------
Loans, net 238,392 228,739
Accrued interest receivable 3,932 3,305
Premises and equipment, net 2,510 2,504
Goodwill, net 1,052 1,115
Other assets 3,899 3,770
--------- ---------
TOTAL ASSETS $478,464 $497,817
========= =========
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
LIABILITIES:
- ------------
Non-interest bearing deposits $102,597 $123,197
Interest bearing deposits 246,508 240,230
--------- ---------
Total deposits 349,105 363,427
Securities sold under repurchase agreements 90,925 99,093
Accrued interest payable 1,221 997
Other liabilities 2,568 2,407
--------- ---------
Total liabilities 443,819 465,924
--------- ---------
STOCKHOLDERS' EQUITY:
- ---------------------
Common Stock, $0.10 par value, 25,000,000
shares authorized; 6,487,694 and 6,485,944
shares issued and outstanding, respectively 649 649
Capital surplus 20,975 20,960
Retained earnings 13,292 10,488
Unrealized loss on securities available-for-sale (271) (204)
--------- ---------
Total stockholders' equity 34,645 31,893
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $478,464 $497,817
========= ========
</TABLE>
The accompanying condensed notes are an integral part of these financial
statements.
Page 3 of 16
<PAGE> 4
(b) Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
- ----------------
Interest and fees on loans $5,624 $4,409 $10,953 $ 8,838
Interest and dividends on securities 2,681 1,896 5,195 3,530
Interest on federal funds sold and securities
purchased under resale agreements 336 431 787 848
------- ------- -------- --------
Total interest income 8,641 6,736 16,935 13,216
------- ------- -------- --------
INTEREST EXPENSE:
- -----------------
Interest on deposits 2,493 2,020 4,807 4,120
Interest on securities sold under
repurchase agreements 1,002 500 1,911 847
------- ------- -------- --------
Total interest expense 3,495 2,520 6,718 4,967
------- ------- -------- --------
Net interest income 5,146 4,216 10,217 8,249
Provision for loan losses 55 0 185 27
------- ------- -------- --------
Net interest income after provision
for loan losses 5,091 4,216 10,032 8,222
------- ------- -------- --------
NON-INTEREST INCOME:
- --------------------
Service charges on deposits 339 250 671 491
Other fee income 242 144 436 257
Gains on sales of securities, net 0 31 0 31
------- ------- -------- --------
Total non-interest income 581 425 1,107 779
------- ------- -------- --------
NON-INTEREST EXPENSE:
- ---------------------
Compensation and employee benefits 1,737 1,532 3,499 3,060
Occupancy 483 402 952 782
Furniture and equipment 249 193 474 382
Goodwill amortization 31 46 63 92
Other 837 725 1,549 1,356
------- ------- -------- --------
Total non-interest expense 3,337 2,898 6,537 5,672
------- ------- -------- --------
Income before income tax expense 2,335 1,743 4,602 3,329
Income tax expense 914 691 1,798 1,313
------- ------- -------- --------
NET INCOME $1,421 $1,052 $ 2,804 $ 2,016
======= ======= ======== ========
PRIMARY EARNINGS PER SHARE:(1)
- ------------------------------
Net Income $ 0.21 $ 0.16 $ 0.41 $ 0.31
FULLY DILUTED EARNINGS PER SHARE:(1)
- ------------------------------------
Net Income $ 0.21 $ 0.16 $ 0.40 $ 0.31
</TABLE>
(1) See Exhibit 11 - Computation of Primary and Fully Diluted Earnings per
Share.
The accompanying condensed notes are an integral part of these financial
statements.
Page 4 of 16
<PAGE> 5
(c) Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net income $ 2,804 $ 2,016
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 185 27
Depreciation and amortization 365 449
Gains on sales of securities, net ------ (31)
Change in accrued interest receivable and
other assets (533) 227
Change in accrued interest payable and other
liabilities 385 582
--------- --------
Net cash provided by operating activities 3,206 3,270
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Purchases of securities available-for-sale (10,387) (49,691)
Proceeds from sales of securities available-for-sale ------- 7,018
Proceeds from maturities/principal paydowns of
securities available-for-sale 10,207 9,805
Purchases of securities held-to-maturity (15,165) (3,980)
Proceeds from maturities/principal paydowns
of securities held-to-maturity 1,775 4,979
Net increase in loans receivable (10,014) (12,530)
Additions to premises and equipment, net (426) (580)
---------- ---------
Net cash used in investing activities (24,010) (44,979)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Net change in deposits (14,322) 4,333
Net change in securities sold under
repurchase agreements (8,168) 15,103
Proceeds from issuance of common stock 15 214
--------- ---------
Net cash (used in)/provided by financing activities (22,475) 19,650
--------- ---------
Net decrease in cash and cash equivalents (43,279) (22,059)
Cash and cash equivalents at beginning
of period 94,268 69,686
--------- --------
Cash and cash equivalents at end of period $ 50,989 $ 47,627
========= ========
</TABLE>
The accompanying condensed notes are an integral part of these financial
statements.
Page 5 of 16
<PAGE> 6
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT JUNE 30, 1997
(unaudited) (in thousands)
1. Basis of Financial Statement Presentation.
The interim financial statements of Franklin Bancorporation, Inc. ("Franklin")
have been prepared pursuant to the requirements for reporting on Form 10-Q and
reflect all adjustments (consisting only of normal recurring adjustments) which
were, in the opinion of management, necessary for a fair statement of the
results of the periods presented. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. Accordingly,
these unaudited statements should be read in conjunction with the audited
financial statements and related notes in Franklin's most current annual
report. The current period's results of operations are not necessarily
indicative of results which ultimately may be achieved for the year.
2. Securities.
The amortized cost and market value of securities are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------- -----------------
Amortized Market Amortized Market
SECURITIES AVAILABLE-FOR-SALE Cost Value Cost Value
- ----------------------------- --------- ------- --------- -------
<S> <C> <C> <C> <C>
U.S. treasury securities $18,744 $18,827 $19,712 $19,907
U.S. government agencies 65,415 65,079 67,393 67,070
Step-up and structured notes 5,938 5,737 5,928 5,717
Mortgage-backed securities 2,433 2,400 2,643 2,588
States and political subdivisions 3,080 3,071 ------ ------
Equity securities 2,202 2,202 1,878 1,878
-------- -------- -------- --------
Total $97,812 $97,316 $97,554 $97,160
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------- -----------------
Amortized Market Amortized Market
SECURITIES HELD-TO-MATURITY Cost Value Cost Value
- --------------------------- --------- ------- --------- -------
<S> <C> <C> <C> <C>
U.S. treasury securities $15,950 $15,843 $12,975 $12,840
U.S. government agencies 11,419 11,383 4,983 4,921
Mortgage-backed securities 35,485 34,180 37,248 36,014
States and political subdivisions 17,520 17,479 11,750 11,672
-------- -------- -------- --------
Total $80,374 $78,885 $66,956 $65,447
======== ======== ======== ========
</TABLE>
Page 6 of 16
<PAGE> 7
3. Loans.
Major categories of loans are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- -----------
<S> <C> <C>
Real Estate
Commercial $ 44,375 $ 44,136
Construction and development 15,981 15,243
Residential mortgage 27,547 18,768
--------- ---------
Total Real Estate 87,903 78,147
Commercial and Industrial 138,530 140,544
Consumer
Consumer 11,432 9,800
Home equity 4,825 4,526
--------- ---------
Total Consumer 16,257 14,326
Total 242,690 233,017
--------- ---------
Unearned income (441) (436)
--------- ---------
Loans, net of unearned income $242,249 $232,581
========= =========
</TABLE>
At June 30, 1997, impaired loans totaled $637,000 with a corresponding
valuation allowance of $144,000. Primarily all of the loans deemed to be
impaired are commercial loans.
For the six months ended June 30, 1997, the average recorded investment in
impaired loans was approximately $750,000. Had all of these loans performed in
accordance with their original terms, interest income of approximately $48,000
would have been recorded during the first six months of 1997. Franklin did not
recognize any interest on impaired loans during the first six months of 1997.
At June 30, 1997, Franklin had no other loans on non-accrual other than those
deemed to be impaired loans. There were no loans 90 days or more past due
which were still accruing interest.
Page 7 of 16
<PAGE> 8
Changes in the allowance for loan losses for the six months ended June 30, 1997
are as follows:
<TABLE>
<S> <C>
Balance, January 1 $3,842
Charge-offs:
Real Estate -----
Commercial (294)
Consumer (11)
--------
Total (305)
--------
Recoveries:
Real Estate 56
Commercial 73
Consumer 6
--------
Total 135
--------
Net charge-offs (170)
Provision for loan losses 185
Balance, June 30 $3,857
========
Net charge-offs to average loans 0.07%
</TABLE>
Franklin National Bank, in the normal course of business, makes loans to
executive officers, directors and stockholders, as well as to companies and
individuals affiliated with those officers and directors. In the opinion of
management, these loans are consistent with sound banking practices, are within
regulatory lending limits and do not involve more than normal risk of
collectibility.
Activity in such loans is summarized as follows:
<TABLE>
<S> <C>
Balance, January 1, 1997 $ 5,427
New loans 7,975
Repayments (3,006)
--------
Balance, June 30, 1997 $10,396
========
</TABLE>
There were no loans to directors, officers or related parties that were
impaired as of June 30, 1997.
Page 8 of 16
<PAGE> 9
4. Time deposits, including IRA's, are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- -----------
<S> <C> <C>
Certificates less than $100,000 $ 14,136 $14,673
Certificates of $100,000 or more 103,185 64,757
</TABLE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
FINANCIAL SUMMARY
Net income for the six months ended June 30, 1997 increased by 39% to $2.8
million or $0.41 per share compared to $2.02 million or $0.31 per share for the
same period in 1996. Returns on average assets and average equity for the
first six months of 1997 were 1.21% and 17.25%, respectively, compared to 1.12%
and 14.93% for the same period in 1996.
Net income for the quarter ended June 30, 1997 increased by 35% to $1.42
million or $0.21 per share compared to $1.05 million or $0.16 per share for the
second quarter of 1996. Returns on average assets and average equity for the
second quarter of 1997 were 1.22% and 17.19%, respectively, compared to 1.14%
and 15.46% for the same period in 1996.
Contributing to the increase in earnings for the first six months of 1997 were
improvements in net interest income and growth in service charges and other
fees. The earnings improvement was partially offset by increases in loan loss
provisions and in compensation and occupancy expenses as Franklin expanded its
branch network into Bethesda, Maryland. Earnings for the second quarter of
1997 increased to a lesser extent when compared to the second quarter of 1996
primarily due to increasing deposit costs.
Franklin's total assets decreased to $478.5 million at June 30, 1997 compared
to $497.8 million at December 31, 1996, a decrease of $19.3 million or 4%.
This decline in assets is primarily due to a decline in federal funds sold and
securities purchased under resale agreements to meet the withdrawals of large,
short-term customer deposits which had been received at year-end 1996. As
compared to June 30, 1996, total assets increased 23% from $388.6 million to
$478.5 million.
Page 9 of 16
<PAGE> 10
Cash, federal funds sold and securities purchased under resale agreements
decreased by approximately $43 million, or 46%, from $94 million at December
31, 1996 to $51 million at June 30, 1997. This decline had been anticipated at
year-end as Franklin's deposits increased by $69 million in December, 1996. Of
that decline, approximately $22 million funded depositors' withdrawals, $9
million was added to the loan portfolio and $13 million was added to the
securities portfolio.
Loan demand continued to improve as loans, net of unearned income, increased by
$9.6 million to $242.2 million at June 30, 1997 compared to $232.6 million at
year-end 1996. Franklin's loan to deposit ratio, a key measure of liquidity,
remains conservative at 69% as compared to 64% on December 31, 1996, which
management believes will provide Franklin the ability to continue to meet the
borrowing needs of its customers.
Total securities were $177.7 million as of June 30, 1997, an increase of $13.6
million, or 8%, over total securities of $164.1 million at December 31, 1996.
Additions were made primarily in the held-to-maturity securities portfolio.
Total deposits and customer repurchase agreements were $440 million at June 30,
1997 compared to $462.5 million at December 31, 1996, a decrease of 5%.
Franklin's deposit mix at June 30,1997 included $102.6 million in non-interest
bearing deposits, representing 29% of total deposits compared to 34% at
December 31, 1996.
Stockholders' equity at June 30, 1997 totaled $34.6 million compared to $31.9
million at December 31, 1996. Book value per share of common stock on June 30,
1997 was $5.34 per share compared to $4.92 per share at December 31, 1996. The
increase in equity was primarily attributable to the retention of earnings.
EARNINGS ANALYSIS
Net interest income
Net interest income is Franklin's primary source of earnings and represents the
difference between interest and fees earned on earning assets and the interest
paid on deposits and other interest bearing liabilities. Net interest income
totaled $10.2 million for the first six months of 1997 compared to $8.2 million
for the same period of 1996, an increase of 24%. The improvements in net
interest income were primarily attributable to a higher volume of earning
assets. Average earning assets increased 30% to $438 million for the six
months ended June 30,
Page 10 of 16
<PAGE> 11
1997 as compared to $338 million for the six months ended June 30, 1996. Of
that growth, 50% occurred in Franklin's loan portfolio, its highest yielding
asset and 50% occurred in the securities portfolio.
Total interest income increased $3.7 million, or 28%, to $16.9 million for the
first six months of 1997 as compared to $13.2 million for the same period of
1996, with 57%, or $2.1 million, of that increase occurring in interest and
fees on loans. Interest expense increased $1.8 million, or 37%, to $6.7
million for the first six months of 1997 as compared to $4.9 million for the
same period of 1996. The increase is primarily due to volume increases in
average interest-bearing liabilities which grew 33% to $332.1 million for the
six months ended June 30, 1997, as compared to $249.8 million for the same
period in 1996.
As a result of competitive market pressures on loan and deposit rates,
Franklin's net interest margin declined to 4.78% for the six months ended June
30, 1997 as compared to 4.92% for the same period one year ago. While
Franklin's average earning assets for the first six months of 1997 increased
30% over its earning assets for the same period in 1996, interest bearing
liabilities increased 33% over the same period. At the same time, the cost of
those liabilities increased due to competitive market pressure and a customer
shift to higher yielding deposit products, such as certificates of deposit and
securities sold under repurchase agreements. For the first six months of 1997,
Franklin's average earning assets consisted of 53% loans, 40% securities and 7%
short-term investments as compared to 55% loans, 36% securities and 9%
short-term investments during the first six months of 1996. Management intends
to continue to seek opportunities to increase the volume of Franklin's highest
yielding assets, loans, to sustain and improve its margin.
For the quarter ended June 30, 1997, net interest income totaled $5.1 million
as compared to $4.2 million for the second quarter of 1996, an increase of 21%.
The rate of increase has slowed in the second quarter due to the growth in
Franklin's higher yielding interest bearing liabilities. Total interest income
increased $1.9 million, or 28%, to $8.6 million for the second quarter of 1997
as compared to $6.7 million for the second quarter of 1996. Interest and fees
on loans represented $1.2 million, or 63% of that increase. Interest expense
for the second quarter of 1997 increased by 40%, or $1 million, from $2.5
million for the quarter ended June 30, 1996 to $3.5 million for the current
quarter.
Page 11 of 16
<PAGE> 12
Non-interest income
Non-interest income, excluding securities gains, increased $359,000, or 48%,
from $748,000 for the six months ending June 30, 1996 to $1.1 million for the
same period ending June 30, 1997. For the second quarter of 1997, non-interest
income, excluding securities gains, increased 47% to $581,000 from $394,000 for
the second quarter of 1996. The increases are a result of Franklin's growing
customer base as well as the continued expansion of commercial deposit product
offerings, such as cash management and payroll processing services, and foreign
currency exchange and ATM services.
Non-interest expense
Total non-interest expense of $6.5 million for the six months ended June 30,
1997 increased $865,000, or 15%, compared to $5.7 million for the same period
in 1996. The components of this increase were as follows: compensation and
employee benefits $439,000, or 51% of the increase, occupancy expense $170,000,
or 20%, and other operating expense $256,000, or 29%. The increase in
personnel expense is due to Franklin's expansion into Maryland with the opening
of the Bethesda branch as well as overall increases in personnel made to
effectively manage Franklin's asset growth. The increase in other operating
expense is primary due to equipment and other technology improvements made to
enhance customer service and accommodate asset growth. For the second quarter
of 1997, non-interest expense also increased 15% over second quarter 1996 from
$2.9 million to $3.3 million.
ASSET QUALITY
Asset quality continues to be strong, however, due to the growth of the loan
portfolio and the reductions in loan recoveries, Franklin has deemed it prudent
to increase provisions for loan losses to $185 thousand for the six months
ended June 30, 1997 as compared to $27 thousand for the same period one year
ago. For the six months ended June 30, 1997, Franklin recognized net loan
charge-offs of $170 thousand, as Franklin charged-off loans of $305,000 while
receiving recoveries of $135,000 on loans charged-off in prior years. This
compares to first half 1996 net loan recoveries of $302 thousand. At June 30,
1997, the allowance for loan losses represented 1.59% of total loans as
compared to 1.65% at December 31, 1996.
Non-performing assets increased to $813,000 at June 30, 1997 from $565,000 at
June 30, 1996, representing 0.34% of total loans on June 30, 1997 as compared
to 0.29% of total loans on June 30, 1996. The allowance for loan losses as a
percentage of non-performing assets increased from 423% on December 31, 1996 to
Page 12 of 16
<PAGE> 13
474% on June 30, 1997. Management believes that all major loan portfolio
deficiencies have been identified and adequate reserves have been established.
RECENT ACCOUNTING DEVELOPMENTS
In June, 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards, No. 130, "Reporting Comprehensive Income."
The statement establishes requirements for the disclosure and presentation of
comprehensive income and its components in full sets of financial statements.
Comprehensive income is defined as transactions and other occurrences which are
the result of nonowner changes in equity. Nonowner equity changes, such as
unrealized gains or losses on debt securities for example, will be accumulated
with net income in determining comprehensive income. This statement will not
impact the historical financial results of Franklin's operations. This
statement is effective for years beginning after December 15, 1997 and
reclassification of financial statements for earlier periods provided for
comparative purposes is required.
The FASB also issued Statement of Financial Accounting Standards No. 131 ("SFAS
No. 131"), "Disclosures about Segments of an Enterprise and Related Information
in June 1997. This statement provides standards for reporting information on
the operating segments of public businesses in their annual and interim reports
to shareholders. SFAS No. 131 requires that selected financial information be
provided for segments meeting specific criteria. The statement will not have
an impact on the results of operations of Franklin but may expand present
disclosures. This statement becomes effective for all periods beginning after
December 15, 1997. Currently, management has not yet determined the core
segments for SFAS No. 131 reporting purposes.
Page 13 of 16
<PAGE> 14
PART II - OTHER INFORMATION
Item 1 - Pending Legal Proceedings
At the present time, there are no material legal proceedings to which Franklin
is a party or to which any of Franklin's property is subject. In addition, to
the best of Franklin's knowledge, no such proceedings are contemplated by
government authorities.
Item 2 - Changes in Securities
There were no changes in the rights of Franklin shareholders during the last
quarter.
Item 3 - Defaults Upon Senior Securities
There were no reportable occurrences during the last quarter.
Item 4 - Submission of Matters to a Vote of Security Holders
There were no reportable occurrences during the last quarter.
Item 5 - Other Information
No other reportable information.
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits:
See Exhibit 11, "Computation of Primary and Fully Diluted Earnings per
Share."
b. Reports on Form 8-K
There were no reportable occurrences during the quarter.
Page 14 of 16
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRANKLIN BANCORPORATION, INC.
August 7, 1997 Robert P. Pincus
- ----------------- -------------------------------------
Date Robert P. Pincus
President and Chief Executive Officer
August 7, 1997 Diane M. Begg
- ----------------- -------------------------------------
Date Diane M. Begg
Executive Vice President and Chief
Financial Officer
Page 15 of 16
<PAGE> 1
FRANKLIN BANCORPORATION, INC.
EXHIBIT 11
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE:
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30, ENDED JUNE 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net earnings $ 1,421 $ 1,052 $ 2,804 $ 2,016
Primary earnings (A) 1,421 1,052 2,804 2,016
Fully diluted earnings (B) 1,421 1,052 2,804 2,016
Weighted average shares outstanding 6,487,694 6,326,039 6,487,636 6,321,966
Dilutive common stock equivalents for primary
earnings per share 403,602 274,189 401,764 275,341
---------- ---------- --------- ----------
Weighted average shares and common equivalent
shares for primary earnings per share (C) 6,891,296 6,600,228 6,889,400 6,597,307
Equivalent shares assuming full dilution 440,803 279,329 439,760 278,773
---------- ---------- --------- ----------
Weighted average shares and common equivalent
shares for fully diluted earnings per share (D) 6,928,497 6,605,368 6,927,396 6,600,739
Earnings per share
Primary (A)/(C) $ 0.21 $ 0.16 $ 0.41 $ 0.31
Fully diluted (B)/(D) $ 0.21 $ 0.16 $ 0.40 $ 0.31
</TABLE>
Page 16 of 16
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 18,635
<INT-BEARING-DEPOSITS> 345
<FED-FUNDS-SOLD> 32,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 97,316
<INVESTMENTS-CARRYING> 80,374
<INVESTMENTS-MARKET> 78,885
<LOANS> 242,249
<ALLOWANCE> (3,857)
<TOTAL-ASSETS> 478,464
<DEPOSITS> 349,105
<SHORT-TERM> 90,925
<LIABILITIES-OTHER> 3,789
<LONG-TERM> 0
0
0
<COMMON> 649
<OTHER-SE> 33,996
<TOTAL-LIABILITIES-AND-EQUITY> 478,464
<INTEREST-LOAN> 10,953
<INTEREST-INVEST> 5,195
<INTEREST-OTHER> 787
<INTEREST-TOTAL> 16,935
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<INCOME-PRE-EXTRAORDINARY> 2,804
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<EPS-PRIMARY> 0.41
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<YIELD-ACTUAL> 7.97
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<ALLOWANCE-CLOSE> 3,857
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<ALLOWANCE-UNALLOCATED> 576
</TABLE>
