FRAF

Franklin Financial had a strong operating year and the numbers are real: net income jumped to $21.2M (+91.2%) and diluted EPS to $4.74 (+88.8%), driven by net interest margin expanding from 2.95% to 3.25%, net interest income rising to $69.6M from $57.5M, and the efficiency ratio improving sharply to 66.48% from 73.36%. Return on average equity recovered to 13.55% and loans grew ~12% to $1.54B, with a $1.42B wealth-management book adding fee income. This is a durable, deposit-funded franchise (leverage of 11.78x liabilities/equity is normal for a bank), and equity grew 21.1% to $175M with a conservative 27.5% dividend payout. On headline P/E of 13.4x, it doesn't look expensive.

But context tempers the enthusiasm. The 91% earnings jump is partly a rebound off a depressed 2024 ($11.1M): the five-year net-income path runs $19.6M → $14.9M → $13.6M → $11.1M → $21.2M, so 2025 essentially returns to 2021's level rather than breaking new ground — 2025 looks closer to a cyclical peak (helped by NIM and efficiency tailwinds) than the start of a step-change. Meanwhile the stock has already run from a $50.20 year-end 2025 close to $63.62 (+27%), pushing the multiple above its own 10–12x history and to roughly 1.7x tangible book value of $37.10 — a full price for a ~13.5% ROE bank.