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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-12126
FRANKLIN FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its
charter)
PENNSYLVANIA 25-1440803
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
20 South Main Street, PO Box T, Chambersburg, PA 17201-0819
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(717) 264-6116
Securities registered pursuant to Section 12(b) of
the Act:
Names of each exchange on
Title of each class which registered
NONE
Securities registered pursuant to Section 12(g) of
the Act:
Common Stock $1.00 par value per share
(Title of class)
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 periods 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
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained,
to the best of registrant's knowledge, in
definitive proxy or information statements
incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
The aggregate market value of the 2,275,931 shares
of the Registrant's common stock held by
nonaffiliates of the Registrant as of February 15,
1999, based on the average of the bid and asked
price for such shares, was $66,286,490.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN
BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS;
Indicate by check mark whether the registrant
has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed
by a court. Yes No
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate by the number of shares outstanding
of each of the registrant's classes of common
stock as of the latest practicable date. There
were 2,806,600 outstanding shares of the
Registrant's common stock as of February 15, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the annual report to
stockholders for the year ended December 31, 1998,
are incorporated by reference into Part I and Part
II.
(2) Portions of the definitive annual proxy
statement to be filed, pursuant to Reg. 14A within
120 days after December 31, 1998, are incorporated
into Part III.
FRANKLIN FINANCIAL SERVICES CORPORATION
FORM 10-K
INDEX
Part I Page
Item 1. Business . . . . . . . . . . . . . .2
Item 2. Properties . . . . . . . . . . . . .9
Item 3. Legal Proceedings. . . . . . . . . .9
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . .9
Part II
Item 5. Market for Registrant's Common
Equity and Related Stockholder
Matters . . . . . . . . . .. . . . .9
Item 6. Selected Financial Data. . . . . . .9
Item 7. Management's Discussion and Analysis
of Financial Condition and
Results of Operations .. . . . . . .9
Item 7a. Quantitative and Qualitative
Discussion About Market Risk . . . 10
Item 8. Financial Statements and
Supplementary Data . . . . . . . . 10
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure. . . . . . . 10
Part III
Item 10. Directors and Executive Officers of
the Registrant . .. . . . . . . . 10
Item 11. Executive Compensation. . . . . . 10
Item 12. Security Ownership of Certain
Beneficial Owners and Management. 10
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . 11
Part IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K . . . . . . . 11
Signatures. . . . . . . . . . . . . . . . . 13
Index of Exhibits . . . . . . . . . . . . . 16
Part I
Item 1. Business
General
Franklin Financial Services Corporation (the "Corporation") was
organized as a Pennsylvania business corporation on June 1, 1983 and is a
registered bank holding company under the Bank Holding Company Act of
1956, as amended (the "BHCA"). On January 16, 1984, pursuant to a plan
of reorganization approved by the shareholders of Farmers and Merchants
Trust Company of Chambersburg ("F&M Trust" or "the Bank") and the
appropriate regulatory agencies, the Corporation acquired all the shares of
F&M Trust and issued its own shares to former F&M Trust shareholders on
a share-for-share basis.
On May 1, 1995, the Mont Alto State Bank, also a commercial bank
and a subsidiary of the Corporation, was merged into Farmers and
Merchants Trust Company. In addition, on December 29, 1995, Franklin
Founders Life Insurance Company, a credit life reinsurance company and a
subsidiary of the Corporation, was liquidated.
The Corporation conducts all of its business through its only direct
subsidiary, F&M Trust, which is wholly-owned. F&M Trust, established in
1906, is a full-service, Pennsylvania-chartered commercial bank and trust
company which is not a member of the Federal Reserve System. F&M
Trust, which operates 12 full service offices in Franklin and Cumberland
Counties, Pennsylvania, engages in general commercial, retail banking and
trust services normally associated with community banks and its deposits
are insured (up to applicable limits) by the Federal Deposit Insurance
Corporation (the "FDIC"). A wide variety of banking services are offered
by F&M Trust to businesses, individuals, and governmental entities. These
services include, but are not necessarily limited to, accepting and
maintaining checking, savings, and time deposit accounts, providing
investment and trust services, making loans and providing safe deposit
facilities.
The Corporation's subsidiary is not dependent upon a single
customer or a few customers for a material part of their business. Thus, the
loss of any customer or identifiable group of customers would not
materially affect the business of the Corporation or F&M Trust in an
adverse manner. Also, none of the Corporation's business is seasonal.
The Bank's lending activities consist primarily of commercial,
agricultural and industrial loans, installment and revolving loans to
consumers, residential mortgage loans, and construction loans. Secured and
unsecured commercial and industrial loans, including accounts receivable,
inventory financing and commercial equipment financing, are made to small
and medium-sized businesses, individuals, governmental entities, and non-profit
organizations. F&M Trust also participates in the Pennsylvania
Higher Education Assistance Act student loan program and the
Pennsylvania Housing Finance Agency program.
Installment loans involve both direct loans to consumers and the
purchase of consumer obligations from dealers and others who have sold or
financed the purchase of merchandise, including automobiles and mobile
homes, to their customers on time. The Bank's mortgage loans include
long-term loans to individuals and to businesses secured by mortgages on
the borrower's real property. Construction loans are made to finance the
purchase of land and the construction of buildings thereon, and are secured
by short-term mortgages on real estate. In certain situations, the Bank
acquires properties through foreclosure on delinquent loans. The Bank
holds these properties until such time as they are in a marketable condition
and a buyer can be obtained.
F&M Trust's Investment and Trust Services Department offers all of
the personal and corporate trust services normally associated with trust
departments of area banks, including estate planning and administration,
corporate and personal trust fund management, pension, profit sharing and
other employee benefits funds management, custodial services, and trustee
services for publicly issued debentures.
Competition
The Corporation and its subsidiary operate in a competitive
environment that has intensified in the past few years as they have been
compelled to share their market with institutions that are not subject to the
regulatory restrictions on domestic banks and bank holding companies.
Profit margins in the traditional banking business of lending and deposit
gathering have declined as deregulation has allowed nonbanking institutions
to offer alternative services to many of F&M Trust's customers.
The principal market of F&M Trust is in Franklin County and
western Cumberland County, Pennsylvania. Ten commercial bank
competitors of F&M Trust have offices in this region, in addition to credit
unions, savings and loan associations, mortgage banks, brokerage firms and
other competitors. F&M Trust is the largest locally owned financial
institution in Franklin County and had total assets of approximately
$425,000,000 at December 31, 1998.
All of the local commercial bank competitors of the Corporation are
subsidiaries of bank holding companies. The Corporation ranks seventh in
size of the eleven bank holding companies having offices in its primary
market.
Staff
As of December 31, 1998, the Corporation and its subsidiary had
198 full-time equivalent employees. Most employees participate in
pension, profit sharing/bonus, and employee stock purchase plans and are
provided with group life, health and major medical insurance. Management
considers employee relations to be excellent.
Supervision and Regulation
Various requirements and restrictions under the laws of the United
States and under Pennsylvania law affect the Corporation and its
subsidiaries.
General
The Corporation is registered as a bank holding company subject to
supervision and regulation by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") under the BHCA, as
amended. As a bank holding company, the Corporation's activities and
those of its banking and nonbanking subsidiaries are limited to the business
of banking and activities closely related or incidental to banking. Bank
holding companies are required to file periodic reports with and are subject
to examination by the Federal Reserve Board. The Federal Reserve Board
has issued regulations under the BHCA that require a bank holding
company to serve as a source of financial and managerial strength to its
subsidiary banks. As a result, the Federal Reserve Board, pursuant to such
regulations may require the Corporation to stand ready to use its resources
to provide adequate capital funds to its banking subsidiaries during periods
of financial stress or adversity.
The BHCA prohibits the Corporation from acquiring direct or
indirect control of more than 5% of the outstanding shares of any class of
voting stock or substantially all of the assets of any bank or merging or
consolidating with another bank holding company without prior approval of
the Federal Reserve Board. Similar restrictions currently apply to
acquisition of control of shares of stock of the Corporation or its banking
subsidiaries by other bank holding companies. Additionally, the BHCA
prohibits the Corporation from engaging in or from acquiring ownership or
control of more than 5% of the outstanding shares of any class of voting
stock of any company engaged in a nonbanking business, unless such
business is determined by the Federal Reserve Board to be so closely related
to banking as to be a proper incident thereto.
F&M Trust is not a member of the Federal Reserve System.
Accordingly, its operations are subject to regulation and examination by the
FDIC and by the Pennsylvania Department of Banking (PDOB). F&M
Trust is subject to requirements and restrictions under federal and state law,
including requirements to maintain reserves against deposits, restrictions on
the types and amount of loans that may be granted and the interest that may
be charged thereon, and limitations on the types of investments that may be
made and the types of services that may be offered. Various consumer laws
and regulations also affect the operations of the Bank. In addition to the
impact of regulation, commercial banks are affected significantly by the
actions of the Federal Reserve Board as it attempts to control the money
supply and credit availability in order to influence the economy.
Capital Adequacy Guidelines
Bank holding companies are required to comply with the Federal
Reserve Board's risk-based capital guidelines. The required minimum ratio
of total capital to risk-weighted assets (including certain off-balance sheet
activities, such as standby letters of credit) is 8%. At least half of the
total capital is required to be "Tier 1 capital," consisting principally of
common shareholders' equity, less certain intangible assets. The remainder
("Tier 2 capital") may consist of certain preferred stock, a limited amount of
subordinated debt, certain hybrid capital instruments and other debt
securities, and a limited amount of the general loan loss allowance. The
risk-based capital guidelines are required to take adequate account of
interest rate risk, concentration of credit risk, and risks of nontraditional
activities.
In addition to the risk-based capital guidelines, the Federal Reserve
Board requires a bank holding company to maintain a leverage ratio of a
minimum level of Tier 1 capital (as determined under the risk-based capital
guidelines) equal to 3% of average total consolidated assets for those bank
holding companies which have the highest regulatory examination ratings
and are not contemplating or experiencing significant growth or expansion.
All other bank holding companies are required to maintain a ratio of at least
1% to 2% above the stated minimum. The Bank is subject to almost
identical capital requirements adopted by the FDIC.
The Bank is also subject to PDOB capital guidelines. Although not
adopted in regulation form, the PDOB utilizes capital standards requiring a
minimum of 6% leverage capital and 10% risk-based capital. The
components of leverage and risk-based capital are substantially the same as
those defined by the FDIC.
Prompt Corrective Action Rules
The Federal Deposit Insurance Act (the "FDIA") requires each
Federal banking agency to specify by regulation the levels at which an
insured institution would be considered "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized." The applicable federal bank regulator for a
depository institution can, under certain circumstances, reclassify a "well
capitalized" institution as "adequately capitalized" or require an "adequately
capitalized" or "undercapitalized" institution to comply with supervisory
actions as if it were in the next lower category. Such a reclassification
could be made if the regulatory agency determines that the institution is in
an unsafe or unsound condition (which could include unsatisfactory
examination ratings). F&M Trust meets the criteria to be "well capitalized"
within the meaning of applicable regulations.
Regulatory Restrictions on Dividends
Dividend payments by the Bank to the Corporation are subject to
the Pennsylvania Banking Code of 1965 (the "Banking Code"), the FDIA,
and FDIC regulations. Under the Banking Code, no dividends may be paid
except from "accumulated net earnings" (generally retained earnings). The
Federal Reserve Board and the FDIC have formal and informal policies
which provide that insured banks and bank holding companies should
generally pay dividends only out of current operating earnings, with some
exceptions. Under the FDIA, no dividends may be paid by an insured bank
if the bank is in arrears in the payment of any insurance assessment due to
the FDIC. The Prompt Corrective Action rules also limit the payment of
dividends by banks which are not classified as well capitalized or adequately
capitalized.
FDIC Insurance Assessments
The FDIC has implemented a risk-related premium schedule for all
insured depository institutions that results in the assessment of premiums
based on capital and supervisory measures. Under the risk-related premium
schedule, the FDIC assigns, on a semiannual basis, each depository
institution to one of three capital groups (well-capitalized, adequately
capitalized or undercapitalized) and further assigns such institution to one of
three subgroups within a capital group. The institution's subgroup
assignment is based upon the FDIC's judgment of the institution's strength
in light of supervisory evaluations, including examination reports, statistical
analyses and other information relevant to measuring the risk posed by the
institution. Only institutions with a total capital to risk-adjusted assets
ratio of 10% or greater, a Tier 1 capital to risk-based assets ratio of 6% or
greater, and a Tier 1 leverage ratio of 5% or greater, are assigned to the
well-capitalized group. As of December 31, 1998, the Bank was well
capitalized for purposes of calculating insurance assessments.
The Bank Insurance Fund ("BIF") is presently fully funded at more
than the minimum amount required by law. Accordingly, the 1999 BIF
assessment rates range from zero for those institutions with the least risk, to
$0.27 for every $100 of insured deposits for institutions deemed to have the
highest risk. The Bank is in the category of institutions that presently pay
nothing for deposit insurance. The FDIC adjusts the rates every six months.
While the Bank presently pays no premiums for deposit insurance, it
is subject to assessments to pay the interest on Financing Corporation
("FICO") bonds. FICO was created by Congress in 1989 to issue bonds to
finance the resolution of failed thrift institutions. Prior to 1997, only
thrift institutions were subject to assessments to raise funds to pay the FICO
bonds. On September 30, 1996, as part of the Omnibus Budget Act,
Congress enacted the Deposit Insurance Funds Act of 1996, which
recapitalized the Savings Association Insurance Fund ("SAIF") and
provided that BIF deposits would be subject to 1/5 of the assessment to
which SAIF deposits are subject for FICO bond payments through 1999.
Beginning in 2000, BIF deposits and SAIF deposits will be subject to the
same assessment for FICO bonds. The FICO assessment for 1999 for all
depository institutions is expected to be $.0122 for each $100 of BIF
deposits and $.063 for each $100 of SAIF deposits. The FDIC sets the
FICO assessment rate every six months.
New Legislation
Proposed legislation is introduced in almost every legislative session
that would dramatically affect the regulation of the banking industry.
Whether or not such legislation will ever be enacted and what effect it may
have on the Corporation and the Bank cannot be estimated at this time.
.
Selected Statistical Information
Certain statistical information is included in the Corporation's 1998
Annual Report and is incorporated herein by reference
Description of Statistical Information Annual
Incorporated by Reference from the Report
1998 Annual Report Page
Net Interest Income 36
Analysis of Net Interest Income 38
Deposits by Major Classification 38
Rate-Volume Analysis of Net Interest Income 39
Investment Securities at Amortized Cost 43
Time Certificates of Deposit of $100,000 or More 43
Short-Term Borrowings 46
Loan Portfolio 47
Allocation of the Allowance for Possible Loan Losses 48
Non-Performing Assets 48
Allowance for Possible Loan Losses 49
Interest Rate Sensitivity 51
Sensitivity to Change in Market Interest Rates 52
Maturity Distribution of Investment Portfolio 52
Maturities and Interest Rate Terms of Loans 53
Capital Ratios 53
Item 2. Properties
The Corporation's headquarters is located in the main office of F&M
Trust at 20 South Main Street, Chambersburg, Pennsylvania. The
Corporation owns two properties in Franklin County, Pennsylvania.
In addition to its main office, F&M Trust owns eleven and leases
one property, all of which are used for banking offices and operations.
F&M Trust also owns two properties which are held for expansion. All of
these properties are located in Franklin and Cumberland Counties,
Pennsylvania.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The information related to this item is incorporated by reference to
the information appearing under the heading "Market and Dividend
Information" on Page 12 and Shareholders' Information on Page 61 of the
Corporation's 1998 Annual Report to Shareholders.
Item 6. Selected Financial Data
The information related to this item is incorporated by reference to
the information appearing under the heading " Summary of Selected
Financial Data" on Page 3 of the Corporation's 1998 Annual Report to
Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information related to this item is incorporated by reference to
the information appearing under the heading " Management's Discussion
and Analysis" on Pages 36 through 55 of the Corporation's 1998 Annual
Report to Shareholders.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
The information related to this item is incorporated by reference to
the information appearing under Table 12 of Management's Discussion and
Analysis on Page 52 of the Corporation's 1998 Annual Report to
Shareholders.
Item 8. Financial Statements and Supplementary Data
The information related to this item is incorporated by reference to
the information appearing under the heading "Financial Statements and
Notes to Consolidated Financial Statements", including the Report of
Independent Public Accountants, on Pages 12 through 35 of the
Corporation's 1998 Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Part III
Item 10. Directors and Executive Officers of the Registrant
The information related to this item is incorporated by reference to
the material set forth under the headings "Information about Nominees and
Continuing Directors" on Pages 5 through 7, and "Executive Officers" on
Page 8 of the Corporation's Proxy Statement for the 1999 Annual Meeting
of Shareholders.
Item 11. Executive Compensation
The information related to this item is incorporated by reference to
the material set forth under the headings "Compensation of Directors" on
Page 8 and "Executive Compensation and Related Matters" on Pages 9
through 13 of the Corporation's Proxy Statement for the 1999 Annual
Meeting of Shareholders, except that information appearing under the
headings "Committee Report on Executive Compensation" and "Stock
Performance Graph" on Pages 11 through 13 is not incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information related to this item is incorporated by reference to
the material set forth under the headings "Voting of Shares and Principal
Holders Thereof" on Page 2 and 3, and "Information about Nominees and
Continuing Directors" on Pages 4 through 6 of the Corporation's Proxy
Statement for the 1999 Annual Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions
The information related to this item is incorporated by reference to
the material set forth under the heading "Transactions with Directors and
Executive Officers" on Page 14 of the Corporation's Proxy Statement for
the 1999 Annual Meeting of Shareholders.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) The following Consolidated Financial Statements of the
Corporation are incorporated by reference to the 1998
Annual Report to Shareholders:
Report of Independent Public Accountants;
Consolidated Balance Sheets - December 31, 1998
and 1997;
Consolidated Statement of Income - Years ended
December 31, 1998, 1997, and 1996;
Consolidated Statements of Changes in Shareholders'
Equity - Years ended December 31, 1998, 1997, and
1996;
Notes to Consolidated Financial Statements.
(2) All financial statement schedules for which provision is made
in the applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and have therefore been
omitted.
(3) The following exhibits are being filed as part of this report:
3.1 Articles of Incorporation of the Corporation.
Filed as Exhibit 4 to Registration Statement
on Form S-8 (No.33-36509) and
incorporated herein by reference.
3.2 Bylaws of the Corporation.
Filed as Exhibit 4 to Registration Statement
on Form S-8 (No.33-36509) and
incorporated herein by reference.
10.1 Deferred Compensation Agreements with
Bank Directors. Filed as Exhibit 10.1 to the
1995 Form 10-K -- Annual Report of the
Corporation and incorporated herein by
reference.
10.2 Director's Deferred Compensation Plan. Filed
as Exhibit 10.2 to the 1995 Form 10-K --
Annual Report of the Corporation and
incorporated herein by reference.
10.3 Long-Term Incentive Plan of 1990. Filed as
Exhibit 10.3 to the 1995 Form 10-K --
Annual Report of the Corporation and
incorporated herein by reference.
10.4 Senior Management Incentive Program, as
amended, October 15, 1992. Filed as Exhibit
10.5 to the 1993 Form 10-K -- Annual report
of the Corporation and incorporated herein by
reference.
13 The 1998 Annual Report to Shareholders of
the Corporation.
21 Subsidiaries of the Corporation.
23 Consent of Arthur Andersen LLP
27 Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K for the quarter
ended December 31, 1998.
(c) The exhibits required to be filed as part of this report are
submitted as a separate section of this report.
(d) Financial Statement Schedules: None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FRANKLIN FINANCIAL SERVICES
CORPORATION
/s/ William E. Snell, Jr.
By: ______________________________
William E. Snell, Jr.
President and Chief Executive
Officer
Date: March 4, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/Jay L Benedict, Jr.
______________________________ Chairman of the Board March 4, 1999
Jay L. Benedict, Jr. and Director
/s/ Robert G. Zullinger
______________________________ Vice Chairman March 4, 1999
Robert G. Zullinger and Director
/s/William E. Snell, Jr.
______________________________ President and Chief Executive March 4, 1999
William E. Snell, Jr. Officer and Director
/s/ Charles S. Bender II
______________________________ Executive Vice March 4, 1999
Charles S. Bender II President and Director
/s/ Elaine G. Meyers
______________________________ Treasurer and Chief March 4, 1999
Elaine G. Meyers Financial Officer
(Principal Financial and
Accounting Officer)
/s/ G. Warren Elliott
______________________________ Director March 4, 1999
G. Warren Elliott
/s/ Omer L. Eshleman
______________________________ Director March 4, 1999
Omer L. Eshleman
/s/ Doanld A. Fry
______________________________ Director March 4, 1999
Donald A. Fry
/s/ Dennis W. Good, Jr.
______________________________ Director March 4, 1999
Dennis W. Good, Jr.
/s/ H. Huber McCleary
______________________________ Director March 4, 1999
H. Huber McCleary
/s/ Jeryl C. Miller
______________________________ Director March 4, 1999
Jeryl C. Miller
/s/ Stephen E. Patterson
______________________________ Director March 4, 1999
Stephen E. Patterson
/s/ Charles M. Sioberg
______________________________ Director March 4, 1999
Charles M. Sioberg
/s/ Martha B. Walker
______________________________ Director March 4, 1999
Martha B. Walker
Exhibit Index for the Year
Ended December 31, 1998
Item Description
3.1 Articles of Incorporation of the Corporation.
Filed as Exhibit 4 Registration on Form S-8
(No. 33-36509) and incorporated
herein by reference.
3.2 Bylaws of the Corporation.
Filed as Exhibit 4 Registration on Form S-8
(No. 33-36509) and incorporated
herein by reference.
10.1 Deferred Compensation Agreements with Bank Directors.
Filed as Exhibit 10.1 to the 1995 Form 10-K -- Annual Report
of the Corporation and incorporated herein by reference.
10.2 Director's Deferred Compensation Plan.
Filed as Exhibit 10.2 to the 1995 Form 10-K -- Annual Report
of the Corporation and incorporated herein by reference.
10.3 Long-Term Incentive Plan of 1990.
Filed as Exhibit 10.3 to the 1995 Form 10-K -- Annual Report
of the Corporation and incorporated herein by reference.
10.4 Senior Management Incentive Program, as amended,
October 15, 1992. Filed as Exhibit 10.5 to the 1993
Form 10-K -- Annual Report of the Corporation and
incorporated herein by reference.
13 The 1998 Annual Report to Shareholders of the Corporation
21 Subsidiaries of Corporation
23 Consent of Arthur Andersen LLP
27 Financial Data Schedule
Exhibit 21
Subsidiaries of
Franklin Financial Services Corporation
Farmers and Merchants Trust Company of Chambersburg - Direct
(A Pennsylvania Bank and Trust Company)