1019883--4/3/2009--APPALACHIAN_BANCSHARES

related topics

{loan, real, estate}

{capital, credit, financial}

{tax, income, asset}

{loss, insurance, financial}

{regulation, change, law}

{acquisition, growth, future}

{condition, economic, financial}

{financial, litigation, operation}

{system, service, information}

{stock, price, operating}

{competitive, industry, competition}

{stock, price, share}

We could suffer additional loan losses from a continued decline in credit quality. Declines in real estate values have adversely affected our credit quality and profitability. We make and hold in our portfolio a significant number of land acquisition and development and construction loans, which pose more credit risk than other types of loans typically made by financial institutions. Ongoing deterioration in the housing market and the homebuilding industry may lead to increased losses and further worsening of delinquencies and non-performing assets in our loan portfolios. Consequently, our results of operations may be adversely impacted. Weakness in residential property values and mortgage loan markets could adversely affect us. The amount of other real estate owned ( OREO ) may increase significantly, resulting in additional losses, and costs and expenses that will negatively affect our operations Recent negative developments in the financial industry, and the domestic and international credit markets may adversely affect our operations and results. The deterioration in the residential mortgage market may continue to spread to commercial credits, which may result in greater losses and non-performing assets, adversely affecting our business operations. The FDIC Deposit Insurance assessments that we are required to pay may materially increase in the future, which would have an adverse effect on our earnings. Future impairment losses could be required on various investment securities, which may materially reduce the Company s and the Bank s regulatory capital levels. A reduction in the fair value attributable to recently acquired units of our business may result in the Company having to recognize a non-cash goodwill impairment charge, which would negatively impact our earnings and, consequently, our ability to pay dividends. If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings could decrease. Weakness in the economy and in the real estate market, including specific weakness within our geographic footprint, has adversely affected us and may continue to adversely affect us. Our net interest income could be negatively affected by the Federal Reserve s recent interest rate adjustments, as well as by competition in our market area. Our access to additional short term funding to meet our liquidity needs is limited. Our business strategy includes stabilizing growth, preserving market presence and raising capital, and as a result, our financial condition and results of operations could be negatively affected if we fail to effectively stabilize our growth, preserve our market presence or raise capital. Adverse market conditions and future losses may require us to raise additional capital to support our operations, but that capital may not be available when it is needed, which could adversely affect our financial condition and results of operations. Our ability to raise capital could be limited and could be dilutive to existing shareholders. Our directors and executive officers own a significant portion of our common stock and can influence stockholder decisions. We face intense competition in all of our markets. Negative publicity about financial institutions, generally, or about the Company or Bank, specifically, could damage the Company s reputation and adversely impact its business operations and financial results. We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business, which limitations or restrictions could adversely affect our profitability. The Emergency Economic Stabilization Act of 2008 ( EESA ) or other governmental actions may not stabilize the financial services industry. Changes in monetary policies may have an adverse effect on our business, financial condition, and results of operations. Confidential customer information transmitted through the Bank s online banking service is vulnerable to security breaches and computer viruses, which could expose the Bank to litigation and adversely affect its reputation and ability to generate deposits.

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1019883--4/3/2009--APPALACHIAN_BANCSHARES_INC