Here we highlight 2 regional banks with different catalysts for EPS growth.
C&F Financial Corporation (CFFI) is a bank holding company headquartered in Toano, Virginia, with more than 30 branches across the state. The bank expanded into Southwest Virginia with a new loan production office in Roanoke in July 2025 and is targeting the key markets of Roanoke, Lynchburg, Martinsville, and Blacksburg.
The expansion appears to be yielding results as first-quarter 2026 community banking loans grew by 9.4%, while deposits increased by 8.1% year-over-year. And loan originations in the mortgage segment grew 57.9% YOY to $179.6 million.
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Also of note, the bank is de-risking by winding down marine and RV lending within its consumer finance segment. Consumer finance, in general, is more sensitive to the macro economy and financial state of the consumer.
Q1 EPS grew 25% YOY to $2.08.
The valuation looks attractive here as the stock is currently trading at 0.90X trailing 12-month P/B TTM, which compares to 1.77X for the Zacks sub-industry, 4.38X for the Zacks sector and 7.89X for the S&P 500 index.
Over the past five years, the stock has traded as high as 1.24X and as low as 0.54X, with a 5-year median of 0.91X.
The stock is currently trading at 8.30X trailing 12-month P/E TTM, which compares to 11.60X for the Zacks sub-industry, 17.29X for the Zacks sector and 26.67X for the S&P 500 index.
Over the past five years, the stock has traded as high as 14.38X and as low as 5.71X, with a 5-year median of 7.64X.
Whereas the CFFI profitability story is focused on expansion and loan growth, the story for Franklin Financial Services Corp. (FRAF) is centered on NIM (net interest margin) expansion, in particular a materially lower cost of funding.
Franklin Financial Services Corporation (FRAF) is a bank holding company that conducts substantially all of its operations through its wholly owned subsidiary, Farmers and Merchants Trust Company (F&M Trust). The bank primarily serves south-central Pennsylvania and parts of Maryland.
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Q1 EPS grew 69.2% to $1.48 as NIM expanded YOY to 3.53% from 3.05%. Importantly, the cost of deposits decreased YOY from 2.02% to 1.52%. Please note that this improvement in funding costs looks sustainable in the near term. In Q2 and Q3 of 2025, funding costs were 1.95% and 1.83% respectively, so YOY comps for the next 2 quarters should be favorable.
Also noteworthy, non-interest income in the form of wealth management services as well as expense discipline further enhance the story. The efficiency ratio, non-interest expenses as a percentage of revenue, improved to 63.6% vs. 71.4% in the prior year.
The stock is currently trading at 1.43X trailing 12-month P/B TTM, which compares to 1.18X for the Zacks sub-industry, 4.38X for the Zacks sector and 7.89X for the S&P 500 index.
Over the past five years, the stock has traded as high as 1.52X and as low as 0.84X, with a 5-year median of 0.84X.
The stock is currently trading at 10.45X trailing 12-month P/E TTM, which compares to 11.68X for the Zacks sub-industry, 17.29X for the Zacks sector and 26.67X for the S&P 500 index.
Over the past five years, the stock has traded as high as 16.15X and as low as 6.84X, with a 5-year median of 9.36X.
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Franklin Financial Services Corp. (FRAF): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
