What dominates the section
- 83% of loans, or $1.159 billion, are secured by real estate, and 79%, or $1.111 billion, are commercial loans.
- Commercial real estate volatility, especially office-sector changes, could increase nonperforming loans and weaken results.
- Liquidity depends heavily on Federal Home Loan Bank of Pittsburgh funding and deposits sensitive to market interest rates.
The risks most specific to Franklin Financial Services
Real estate related loans are a significant portion of our loan portfolio
Real estate secures approximately 83% of loans, exposing the Bank to collateral values and borrower repayment problems.
Commercial loans are a significant portion of our loan portfolio
Commercial loans comprise 79% of the portfolio, concentrating exposure to business borrowers and commercial conditions.
The Bank is subject to commercial real estate volatility that may result in increases in non-performing loans that could have an adverse impact on our financial condition and results of operations
Commercial real estate volatility, including ongoing office-sector changes after the pandemic, could increase nonperforming loans.
The allowance for credit losses may prove to be insufficient to absorb inherent losses in our loan portfolio
The allowance for credit losses may not cover inherent losses in the Bank’s loan portfolio.
The Bank’s lending limit is smaller than many of our competitors, which affects the size of the loans it can offer customers
The $29.6 million lending limit restricts loan sizes and may prevent relationships with larger businesses.
A large percentage of deposits may be highly sensitive to changes in interest rates
Money management deposits total $694.9 million, or 38% of deposits, and could rapidly increase interest expense when rates rise.
Liquidity contingency funding is highly concentrated
Liquidity contingency funding is concentrated in Federal Home Loan Bank of Pittsburgh access.
Unrealized losses in the Bank’s investment portfolio could affect liquidity
Unrealized investment losses could reduce liquidity by limiting asset sales, capital ratios, funding capacity, or regulatory flexibility.
All 22 risk factors
Headings as the filing states them, in filing order.
Other
- 01Real estate related loans are a significant portion of our loan portfolio
- 02Commercial loans are a significant portion of our loan portfolio
- 03The Bank is subject to commercial real estate volatility that may result in increases in non-performing loans that could have an adverse impact on our financial condition and results of operations
- 04The allowance for credit losses may prove to be insufficient to absorb inherent losses in our loan portfolio
- 05The Bank’s lending limit is smaller than many of our competitors, which affects the size of the loans it can offer customers
- 06There is strong competition in the Bank’s primary market areas and its geographic diversification is limited
- 07Changes in interest rates could have an adverse impact upon our results of operations
- 08Our operational or security systems may experience interruption or breach in security, including cyber-attacks
- 09A large component of fee income is dependent on stock market values
- 10A large component of fee income is dependent on two deposit services
- 11A large percentage of deposits may be highly sensitive to changes in interest rates
- 12Liquidity contingency funding is highly concentrated
- 13Unrealized losses in the Bank’s investment portfolio could affect liquidity
- 14The Corporation is subject to claims and litigation pertaining to fiduciary responsibility which may result in financial liability or reputation damage
- 15Our business and financial results could be impacted materially by adverse results in legal proceedings
- 16An epidemic or pandemic (such as COVID-19) may cause prolonged global, national, or regional recessionary economic conditions or longer lasting effects on economic conditions than currently exist, which could have a material adverse effect on our business, results of operations and financial condition
- 17The Corporation’s operations could be affected by climate change
- 18Severe weather, natural disasters, acts of war or terrorism, and other external events could negatively impact the Corporation’s business
- 19Negative developments affecting the banking industry, including bank failures or concerns regarding liquidity may have a material adverse effect on the Corporation
- 20The stock market can be volatile, and fluctuations in our operating results and other factors could cause our stock price to decline
- 21The Bank's ability to pay dividends to the Corporation is subject to regulatory limitations that may affect the Corporation’s ability to pay dividends to its shareholders
- 22Pennsylvania Business Corporation Law and various anti-takeover provisions under the Corporation’s articles of incorporation and bylaws could impede the takeover of the Corporation
Other Franklin Financial Services 10-Ks
- 2026 10-K risk factors
24 risks, 3 new, 1 dropped, 1 reworded since the prior year. AI is now identified as a risk in both operations and cybersecurity, including faulty or biased third-party AI outputs.
Filed Mar 13, 2026
About this page
Item 1A of the 10-K on EDGAR was split into its risk factors and, where the company's previous 10-K is on file, each heading was matched to last year's and the text compared word for word. The headings are the filing's own. The one-line readings and the overview were written by a language model from the text of the new, dropped, and rewritten risks; they refer to risks by position and cannot misquote a heading.