News Release - January 28, 2014

Franklin Financial Services Corporation

Kenneth C. Ditzler (717) 261-3665

Franklin Financial reports 16.2% increase in 2013 earnings

(Chambersburg, PA) Franklin Financial Services Corporation, the bank holding company of F&M Trust, reported earnings of $6,232,000 for 2013 compared to 2012 earnings of $5,365,000, an increase of 16.2%. Net income for the quarter ended December 31, 2013 was $1,141,000 compared to 2012 fourth quarter earnings of $344,000.

On a per share basis, diluted earnings were $0.27 and $1.51 for the quarter and twelve months ended December 31, 2013 compared to $0.08 and $1.32 for the same periods in 2012.
"Earnings in the fourth quarter were significantly better this year than they were in 2012 when increased other expenses including additional provision expense, legal expenses and prepayment penalties on high interest rate FHLB debt during the quarter resulted in a substantial drag on revenue for the year," commented William E. Snell, Jr., president and CEO.
"Locally, we are seeing a slight improvement in the economy. However, there is still economic uncertainty among consumers and businesses in south central Pennsylvania coupled with concerns relative to the effects of ObamaCare. These issues have adversely impacted borrowing by both consumers and small business owners despite favorable interest rates. For F&M Trust, this translated to a reduction in average loan outstandings and average commercial loan outstandings, which declined 3.5% and 5.5%, respectively, from a year ago."
Total assets on December 31, 2013 were $984.6 million, a 4.2% decrease from assets at December 31, 2012. At year-end, total deposits and repurchase agreements fell 5.1% to $869.6 million, while net loans were down 4.0% to $713.7 million. In addition, the market value of trust assets under management increased by 10.4% to $574.7 million at December 31, 2013.
Franklin Financial is an independent, locally owned and operated bank holding company headquartered in Chambersburg, Pennsylvania. Its wholly-owned subsidiary, F&M Trust, has twenty-five community banking offices throughout Cumberland, Franklin, Fulton and Huntingdon counties located in Boiling Springs, Camp Hill, Carlisle, Chambersburg, Greencastle, Hustontown, McConnellsburg, Mechanicsburg, Mont Alto, Marion, Newville, Orbisonia, Shippensburg, St. Thomas, Warfordsburg and Waynesboro. Franklin Financial stock is quoted on the OTCQB Market Tier of the OTC Markets under the symbol 'FRAF'.

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, 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.

Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company's consolidated financial statements when filed with the Securities and Exchange Commission ("SEC"). Accordingly, the financial information in this announcement is subject to change.

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