1177070--3/31/2010--MOUNTAIN_NATIONAL_BANCSHARES

related topics

{condition, economic, financial}

{loan, real, estate}

{regulation, change, law}

{tax, income, asset}

{cost, contract, operation}

{loss, insurance, financial}

{capital, credit, financial}

{stock, price, share}

{personnel, key, retain}

{competitive, industry, competition}

{product, market, service}

{regulation, government, change}

Our business is subject to local real estate market and other local economic conditions. We are geographically concentrated in Sevier County and Blount County, Tennessee, and changes in local economic conditions impact our profitability. We could sustain losses if our asset quality declines. If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings will decrease. We have increased levels of other real estate owned, primarily as a result of foreclosures, and we anticipate higher levels of foreclosed real estate expense. Competition with other banking institutions could adversely affect our profitability. Fluctuations in interest rates could reduce our profitability. Liquidity needs could adversely affect our results of operations and financial condition. Our ability to maintain required capital levels and adequate sources of funding and liquidity could be impacted by changes in the capital markets and deteriorating economic and market conditions. Our common stock is currently traded on the over-the-counter, or OTC, bulletin board and has substantially less liquidity than the average stock quoted on a national securities exchange. Loss of our senior executive officers or other key employees could impair our relationship with our customers and adversely affect our business. Our business is dependent on technology, and an inability to invest in technological improvements may adversely affect our results of operations and financial condition. We are subject to various statutes and regulations that may limit our ability to take certain actions. National or state legislation or regulation may increase our expenses and reduce earnings. Legislative and regulatory initiatives that were enacted in response to the financial crisis are beginning to wind down. Although we have initiated efforts to reduce our reliance on noncore funding, this type of funding still represents a significant component of our funding base. If the federal funds rate remains at current extremely low levels, our net interest margin, and consequently our net earnings, may be negatively impacted We have a significant deferred tax asset and cannot give any assurance that it will be fully realized.

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1177070--3/31/2010--MOUNTAIN_NATIONAL_BANCSHARES_INC