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President's Letter

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By Peter L. Judkins
President & Chief Executive Officer

(From the 2015 Annual Report)

It is an understatement to say that these past seven years have been economically challenging for many of our customers, our communities, and the bank. At Franklin Savings Bank and Western Mountain Financial Services we’ve faced and, I'm pleased to say, met some significant challenges over that time. A new year brings new and different challenges and opportunities, but we feel very confident in the continued strength of our company.

In December of 2008, the Federal Open Market Committee dropped the fed funds rate to a target range of 0 to 0.25%, influencing the Prime Rate to drop to 3.25%, where it remained for the next seven years as our economy struggled to recover from the damage brought on by the mortgage crisis. The Fed’s year-end decision to increase the fed funds rate by 0.25% signals the start of a new era for our economy. We will start to see increases in interest rates moving into 2016 and if the economy improves as expected, the Fed will continue a gradual increase of the fed funds rate over the next few years.

These increases in the fed funds rate will ultimately lead to increases in loan and deposit rates offered to consumers. These rate increases will be welcomed by our depositors who will ultimately realize a greater return on their invested funds. With these increasing rates, our greatest challenge to maintaining the bank’s strong financial performance will be to increase the yield on our loan portfolio to keep up with increasing deposit rates, all while keeping the best interest of our borrowers in mind.

The bank is well positioned for continued success in a rising rate environment but we will continue to be faced with new challenges. The expense to operate continues to increase with increasing regulatory requirements, technology advances, and other operating expenses required to serve our growing customer base.

In 2015, we introduced Biz2Bank remote deposit capture, a service that enables commercial customers to make deposits electronically. We also introduced Franklin eBranch On The Go! mobile banking, which was an instant hit with our customers. In 2016, we plan to upgrade our bill pay and mobile banking services as well as implement a new consumer mortgage processing system. These new services and systems will make it easier for our growing customer base to “BANK with FRANK.”

In 2015, we also became the first bank in Maine to upgrade our webpage to the "dot-bank" domain, which means our web address is now FranklinSavings.Bank. The dot-bank domain is exclusive to the banking industry and may only be obtained by qualified, verified financial institutions and certain industry partners, making our webpage more secure.

Our theme in this 2015 Annual Report is "Giving Back," which we clearly do. Franklin Savings Bank, Western Mountain Financial Services and our Community Development Foundation contributed $162,770 to various non-profit, economic development and educational efforts in 2015. In addition to the financial support, our employees continue to be very active participants in many community activities and organizations. Collectively, they volunteered 1,620 hours to community service and raised $60,975 for community causes, independent of the bank’s contributions. We strive to help make our communities a great place to live, work, and play. Franklin Savings Bank and Western Mountain Financial Services care about our customers and our communities and make every effort to meet all their lending, deposit, and investment needs.

Financial Highlights


In 2015, we closed 361 consumer mortgages and home equity loans for a total of $43 million. We also closed 435 commercial loans, totaling $45 million and 929 non-mortgage consumer loans totaling $9 million. These lending efforts resulted in an increase in loan balances over 2014 levels of $21.5 million. Deposits totaled $247 million at year-end, representing a 1.28% increase from year-end 2014.

I am pleased to report that we closed the books on 2015, reporting net income of $3.1 million on total assets of $353 million. The Bank’s Tier 1 Capital Ratio is 28% of total assets, ranking us at the top of our industry and supporting a position of strength and long-term viability for the Bank. We were once again ranked as the strongest bank in Maine by Weiss Ratings, as we have been every year since 1999. We also continue to receive top rankings from BankRate.com and Bauer Financial. Getting top marks helps us easily set ourselves apart from our competitors and gives our customers confidence in the safety of their accounts.
Western Mountain Financial Services had a very productive year while serving the investment needs of their many clients; they grew the number of clients served by 7% with a resulting 2.15% increase in assets under management over 2014 year-end numbers.

It is a pleasure to be able to present a very favorable report on the bank’s performance. Thanks go out to our employees, our Corporators, and our Board of Directors for their tremendous support and to our many customers who allow us to serve them with their financial needs.
We look forward to being here for our customers and our communities for many years to come!