1172678--3/14/2007--TEMECULA_VALLEY_BANCORP

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{stock, price, share}

{loan, real, estate}

{acquisition, growth, future}

{condition, economic, financial}

{product, market, service}

{stock, price, operating}

{capital, credit, financial}

{loss, insurance, financial}

{debt, indebtedness, cash}

{regulation, change, law}

{personnel, key, retain}

{regulation, government, change}

{operation, natural, condition}

Risks Related to Our Business and Operations Our success has been built upon significant and profitable growth and we may not be able to sustain our profitable growth or our rate of growth or be able to support our growth, any of which events will adversely affect our profits and results of operations. Our recent operating results may not be indicative of our future operating results. Our dependence on loans secured by real estate subjects us to risks relating to fluctuations in the real estate market and related interest rates, environmental risks, and legislation that could result in significant additional costs and capital requirements that could adversely affect our assets and results of operations. Our bank's concentration in real estate construction loans subjects it to risks such as inadequate security for repayment of those loans and fluctuations in the demand for those loans based on changes in the housing market. Our earnings are highly dependent on our continued ability to originate, sell and service SBA loans. Our new SBA purchase program is subject to governmental and management changes that could affect its success and operations. We may incur additional costs and experience impaired operating results if we are unable to retain our key management or we are unable to attract and retain additional successful bankers in order to grow our business. If our bank is unable to pay our holding company cash dividends to meet its cash obligations, our business, financial condition, results of operations and prospects will be adversely affected. Our allowance for loan losses may prove to be insufficient to absorb losses inherent in our loan portfolio. Our bank's business, financial condition and results of operations are sensitive to and may be adversely affected by interest rate and prepayment changes. Increasing levels of competition in banking and financial services businesses may reduce our market share or cause the prices we charge for services to fall, which may decrease our profits. Our success depends, in part, upon our ability to effectively use rapid-changing technology in providing and marketing products and services to our customers. Both our holding company and our bank are subject to government regulation that limits and restricts their activities and operations. Our policies and procedures for minimizing loan losses may not fully protect us, particularly when the economy is weak. Our business, financial condition and results of operations may be adversely affected if we are unable to insure against or control our operations risks. Our geographic concentration may adversely affect our results of operations if business conditions in our market area decline. Our growth may require us to raise additional capital in the future, but that capital may not be available when needed. Our business is subject to liquidity risk, and changes in our source of funds may adversely affect our performance and financial condition by increasing our cost of funds. Risks Related to an Investment in Our Common Stock We may issue additional shares of common stock or derivative securities that will dilute the percentage ownership interest of existing shareholders and may dilute the book value per share of our common stock and adversely affect the terms on which we may obtain additional capital. Future sales of our stock by our shareholders or the perception that those sales could occur may cause our stock price to decline. Volatility of our stock price may result in losses to our investors and litigation against us. The existence of outstanding stock options issued to our directors, executive officers and employees may result in dilution of your ownership and adversely affect the terms on which we can obtain additional capital. Our ability to pay cash dividends is limited, and we may be unable to pay future dividends even if we desire to do so. Our common stock is not an insured deposit and therefore is subject to risk of loss.

Full 10-K form ▸

1172678--3/14/2007--TEMECULA_VALLEY_BANCORP_INC