Ariana Research
Long/short equity, deep value, special situations

Franklin Financial: Thrift Shopping Among Community Banks

Franklin Financial Corporation (NASDAQ: FRNK)

Executive Summary

I recommend purchasing the common shares of Franklin Financial Corporation ("Franklin," "FRNK" or the "Company"), a Richmond, VA financial institution which completed its mutual conversion in 2011. The Company has a market cap of $218.5MM and assets of $1.05B as of 6/30/13, respectively.

As discussed in other articles, thrift conversions and community banks, well known to value investors are often underfollowed by market. Despite a pristine balance sheet and a shareholder friendly Management team, it is evident that the market is dramatically undervaluing Franklin and its future prospects. The first question any value investor must ask, why does this opportunity exist?

  • ROA/ROE metrics at first glance appear to be suboptimal for community
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