What the changes say
- AI is now identified as a risk in both operations and cybersecurity, including faulty or biased third-party AI outputs.
- Trade tariffs are linked specifically to customer stress, higher loan delinquencies, credit losses, and weaker local banking activity.
- Pandemic risk was removed, while cyber insurance limitations were added as a separate exposure.
What changed since the prior 10-K
New
- New
While the Corporation maintains insurance coverage that may, subject to policy terms and conditions including significant self-insured deductibles, cover or ameliorate certain financial aspects of cyber risks, such insurance coverage may be insufficient to cover all losses
Cyber insurance may not cover all losses from information-system failures, interruptions, or breaches because of policy limits and significant deductibles.
- New
The Corporation may use artificial intelligence (AI) in its business, and challenges with properly managing its use could result in disruption of its internal operations, reputational harm, competitive harm, legal liability and adversely affect its results of operations and stock price
Deficient, inaccurate, biased, or hallucinated AI used in customer platforms could cause operational disruption, legal liability, reputational damage, and lost competitiveness.
- New
Changes to trade policies and tariffs can have an adverse impact on our business and our customers
Tariffs and trade tensions could hurt agricultural, manufacturing, and retail customers, increasing loan delinquencies and credit losses while reducing loan demand, deposits, and fee income.
Dropped
- Dropped
An 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
Reworded
- 51% rewritten
Our operational or security systems may experience interruption or breach in security, including cyber-attacks
The cybersecurity risk now expressly includes artificial intelligence among the new technologies increasing threats to communications and information systems.
All 24 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-attacks51% rewritten
- 09While the Corporation maintains insurance coverage that may, subject to policy terms and conditions including significant self-insured deductibles, cover or ameliorate certain financial aspects of cyber risks, such insurance coverage may be insufficient to cover all lossesnew
- 10The Corporation may use artificial intelligence (AI) in its business, and challenges with properly managing its use could result in disruption of its internal operations, reputational harm, competitive harm, legal liability and adversely affect its results of operations and stock pricenew
- 11A large component of fee income is dependent on stock market values
- 12A large component of fee income is dependent on two deposit services
- 13A large percentage of deposits may be highly sensitive to changes in interest rates
- 14Liquidity contingency funding is highly concentrated
- 15Unrealized losses in the Bank’s investment portfolio could affect liquidity
- 16The Corporation is subject to claims and litigation pertaining to fiduciary responsibility which may result in financial liability or reputation damage
- 17Our business and financial results could be impacted materially by adverse results in legal proceedings
- 18The Corporation’s operations could be affected by climate change
- 19Severe weather, natural disasters, acts of war or terrorism, public health crises, and other external events could negatively impact the Corporation’s business
- 20Negative developments affecting the banking industry, including bank failures or concerns regarding liquidity may have a material adverse effect on the Corporation
- 21Changes to trade policies and tariffs can have an adverse impact on our business and our customersnew
- 22The stock market can be volatile, and fluctuations in our operating results and other factors could cause our stock price to decline
- 23The 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
- 24Pennsylvania 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
- 2025 10-K risk factors
22 risks. 83% of loans, or $1.159 billion, are secured by real estate, and 79%, or $1.111 billion, are commercial loans.
Filed Mar 14, 2025
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.