1027324--3/16/2007--MID-STATE

related topics

{loan, real, estate}

{regulation, change, law}

{stock, price, share}

{competitive, industry, competition}

{condition, economic, financial}

{debt, indebtedness, cash}

{personnel, key, retain}

{control, financial, internal}

{regulation, government, change}

Risks Associated with our Business. We are highly dependent on real estate and a downturn in the real estate market could hurt our business. We also have a concentration in commercial real estate loans. Our real estate lending also exposes us to the risk of environmental liabilities. Insufficient loan demand could have an adverse impact on our business. Our business is subject to interest rate risk and changes in interest rates may adversely affect our performance and financial condition. Economic conditions on the California Central Coast could adversely affect our operations and/or cause us to sustain losses. We face strong competition from financial service companies and other companies that offer banking services that could hurt our business. We may not be able to attract and retain skilled people. Our internal operations are subject to a number of risks. We depend on cash dividends from our subsidiary bank to meet our cash obligations. Risks Associated with our Industry. We are subject to government regulation that could limit or restrict our activities, which in turn could adversely impact our operations. New legislative and regulatory proposals may affect our operations and growth. Risks Associated with our Stock. Our current Common Stock value is heavily influenced by the acquisition price to be paid by Rabobank. If the acquisition is not consummated, the price of the Company s Common Stock is likely to fall. Risks Relating to the Proposed Merger

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1027324--3/16/2007--MID-STATE_BANCSHARES