Community Financial System (CBU) risk factors, FY2024 10-K

Risks Related to the Company’s Business

1. 01Changes in interest rates affect the Company’s profitability, assets and liabilities
2. 02The Company must maintain adequate sources of funding and liquidity to meet regulatory expectations, support its operations and fund outstanding liabilities
3. 03The Company depends on dividends from the Bank and BPAS for cash revenues to support common dividend payments and other uses, but those dividends are subject to restrictions
4. 04The allowance for credit losses may be insufficient
5. 05Mortgage banking income may experience significant volatility
6. 06Conditions in the commercial real estate market could adversely affect the Company’s business

Legal, Regulatory, and Compliance Risk

1. 07The Company is or may become involved in lawsuits, legal proceedings, information-gathering requests, investigations, and proceedings by governmental agencies or other parties that may lead to adverse consequences
2. 08The Company operates in a highly regulated environment and may be adversely affected by changes in laws and regulations or the interpretation and examination of existing laws and regulations
3. 09Federal banking agencies periodically conduct examinations of the Company’s business, including compliance with laws and regulations; the failure to comply with any supervisory actions to which the Company becomes subject to as a result of such examinations could adversely affect the Company
4. 10The Company is subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and the failure to comply with these laws could lead to a wide variety of sanctions
5. 11The Company faces a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations
6. 12Basel III capital rules generally require insured depository institutions and their holding companies to hold more capital, which could limit the Company’s ability to pay dividends, engage in share repurchases and pay discretionary bonuses
7. 13Changes in stakeholder expectations related to corporate responsibility matters could negatively affect the Company’s operating results

Operational Risk

1. 14The Company continually encounters technological change and the failure to understand and adapt to these changes could have a negative impact on the business
2. 15The Company is exposed to fraud in many aspects of the services and products that it provides
3. 16The Company is subject to a variety of operational risks, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, which may adversely affect the Company’s business and results of operations
4. 17The Company’s information systems may experience an interruption or security breach and expose the Company to additional operational, compliance, cybersecurity and legal risks
5. 18Evolving data security and privacy requirements could increase the Company’s costs and expose it to additional operational, compliance, and legal risks
6. 19The Company relies on third-party service providers, which could expose the Company to additional cybersecurity risks
7. 20The Company’s ability to attract and retain qualified employees is critical to the success of its business, and failure to do so may have a materially adverse effect on the Company’s performance
8. 21Regional economic factors may have an adverse impact on the Company’s business
9. 22The financial services industry is highly competitive and creates competitive pressures that could adversely affect the Company’s revenue and profitability
10. 23The Company may be adversely affected by the soundness of other financial institutions
11. 24Conditions in the insurance market could adversely affect the Company’s earnings
12. 25Changes in the equity markets could materially affect the level of assets under management and the demand for other fee-based services and could adversely affect the Company’s earnings
13. 26Financial services companies depend on the accuracy and completeness of information about customers and counterparties
14. 27The Company may be required to record impairment charges related to goodwill, other intangible assets and the investment portfolio
15. 28The Company’s financial statements are based, in part, on assumptions and estimates, which, if incorrect or conditions change, could cause unexpected losses in the future
16. 29The Company’s business and results of operations may be adversely affected by the U.S. and global financial markets, fiscal, monetary, and regulatory policies, and economic conditions generally
17. 30The Company’s consumer businesses can be negatively affected by adverse economic conditions and governmental policies
18. 31Pandemics, epidemics, disease outbreaks and other public health crises have disrupted the Company’s business and operations in the past, and future outbreaks could materially adversely impact the Company’s business, financial condition, liquidity and results of operations
19. 32Recent negative developments affecting the banking industry have eroded customer confidence in the banking system and may have adverse impacts on the Company’s business
20. 33Adverse regulatory findings or new regulatory requirements arising from the recent bank failures could increase the Company’s expenses, reduce the Company’s revenues and affect the Company’s operations

Risk Related to Acquisition and De Novo Expansion Activity

1. 34Acquisition and de novo expansion activity could adversely affect the Company’s financial condition and result of operations
2. 35A portion of the Company’s loan portfolio was acquired primarily through whole-bank acquisitions and was not underwritten by the Company at origination

General Risks

1. 36Trading activity in the Company’s common stock could result in material price fluctuations