TFS Financial (TFSL) risk factors, FY2025 10-K

Risks Related to Economic Conditions

1. 01A worsening of economic conditions could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could have an adverse effect on our results of operations
2. 02Significant changes to the size, structure, powers and operations of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial conditionNew
3. 03Further, the perception of the potential for additional significant changes in federal regulatory or economic policy has also increased uncertainty and may exacerbate declines in investor and consumer confidence, which in turn may adversely impact financial markets and the broader economy of the U.SNew
4. 04Inflation can have an adverse impact on our business and on our customers

Risks Related to Market Interest Rates

1. 05Future changes in interest rates could reduce our net income
2. 06Hedging against interest rate risk exposure may adversely affect our earnings

Risks Related to Laws and Regulations

1. 07Changes in laws and regulations and the cost of compliance with new laws and regulations may adversely affect our operations and our income
2. 08We are subject to stringent capital requirements, which may adversely impact our return on equity, require us to raise additional capital, or limit our ability to pay dividends or repurchase shares
3. 09The FRS may require the Company to commit capital resources to support the Association, and we may not have sufficient access to such capital resources
4. 10Monetary policies and regulations of the FRS could adversely affect our business, financial condition and results of operations
5. 11We may be required to raise additional capital in the future, but that capital may not be available when it is needed, or it may only be available on unfavorable terms, which could adversely affect our financial condition and results of operations
6. 12We may become subject to enforcement actions even though noncompliance was inadvertent or unintentional

Risks Related to our Lending Activities

1. 13Our lending activities provide lower interest rate returns than financial institutions that originate more commercial loans
2. 14Our business may be adversely affected by credit risk associated with residential property
3. 15Secondary mortgage market conditions could have a material impact on our financial condition and results of operations
4. 16If we are required to repurchase mortgage loans that we have previously sold, it would negatively affect our earnings
5. 17If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings would decrease
6. 18The foreclosure process may adversely impact our recoveries on non-performing loans

Risks Related to Competitive Matters

1. 19Strong competition within our market areas may limit our growth and profitability
2. 20We continually encounter technological change, and may have fewer resources than many of our larger competitors to continue to invest in technological improvements

Risks Related to Our Operations

1. 21Cyber-attacks, other security breaches or failure or interruption of information systems could adversely affect our operations, net income or reputation
2. 22If this confidential or proprietary information were to be mishandled, misused or lost, we could be exposed to significant regulatory consequences, reputational damage, civil litigation and financial loss
3. 23Customer or associate fraud subjects us to additional operational risks
4. 24If our enterprise risk management framework is not effective at mitigating risk and loss to us, we could suffer unexpected losses and our results of operations could be materially adversely affected
5. 25Our operations rely on numerous external vendors
6. 26Our board of directors relies to a large degree on management and outside consultants in overseeing cybersecurity risk management
7. 27Our funding sources may prove insufficient to replace deposits at maturity and support our future growth. A lack of liquidity could adversely affect our financial condition and results of operations and result in regulatory limits being placed on us
8. 28funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates
9. 29Potential complications with the implementation of our new core banking system could have an adverse effect on our business and operationsNew
10. 30Recently we have held larger levels of certificates of deposit, which has increased our cost of funds and could continue to do so in the future31% rewritten
11. 31The soundness of other financial institutions could adversely affect us

Risk Related to Our Corporate Structure

1. 32Our sources of funds are limited because of our holding company structure
2. 33Restrictions on our ability to pay dividends to stockholders could adversely affect the value of our common stock
3. 34Public stockholders own a minority of the outstanding shares of our common stock and are not able to exercise voting control over most matters put to a vote of stockholders

Risks Related to Accounting Matters

1. 35Changes in management’s estimates and assumptions may have a material impact on our consolidated financial statements and on our financial condition and/or operating results
2. 36Changes in accounting standards could affect reported earnings
3. 37Hurricanes or other adverse weather events could negatively affect the economy in our Florida market area or cause disruptions to our branch office locations, which could have an adverse effect on our business or results of operations
4. 38We are subject to environmental liability risk associated with lending activities or properties we own
5. 39Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers
6. 40Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance61% rewritten
7. 41A protracted government shutdown may result in reduced loan originations and related gains on sales and could negatively affect our financial condition and results of operations
8. 42Fraud by merchants or others could have a material adverse effect on our business and financial conditionNew
9. 43The potential for fraud in the card payment industry is significant and could adversely affect our business and results of operationsNew
10. 44The grant of bank charters and special purpose fintech charters by the OCC to fintech companies could present financial risk and market risk to us generally and the payments processing business specificallyNew
11. 45We face funds transfer and payments-related risksNew