1178409--2/26/2010--TIDELANDS_BANCSHARES

related topics

{stock, price, share}

{loan, real, estate}

{loss, insurance, financial}

{personnel, key, retain}

{condition, economic, financial}

{regulation, change, law}

{acquisition, growth, future}

{capital, credit, financial}

{product, market, service}

{competitive, industry, competition}

{investment, property, distribution}

{operation, natural, condition}

Difficult market conditions in our coastal markets and economic trends have adversely affected our industry and our business and may continue to do so. A significant portion of our loan portfolio is secured by real estate, and events that negatively affect the real estate market could hurt our business. We are exposed to higher credit risk by commercial real estate, commercial and industrial and construction lending. We have entered into an informal Memorandum of Understanding under which our regulators will require us to take certain actions. If our allowance for loan losses is not sufficient to cover actual loan losses, or if credit delinquencies increase, our losses could increase. Institution-specific and/or broader industry-wide events may trigger a reduction in the availability of funding needed for day-to-day operations, resulting in a liquidity crisis. legislative and regulatory initiatives to address the current difficult market and economic conditions may not achieve the desired effect. Regulatory reform of the U.S. banking system may adversely affect us. Because of our participation in the Treasury Department s Capital Purchase Program, we are subject to several restrictions including restrictions on compensation paid to our executives and other employees. Legislation or regulatory changes could cause us to seek to repurchase the preferred stock and warrant that we sold to the U.S. Treasury under the Capital Purchase Program. Our continued operations and future growth may require us to raise additional capital in the future, but that capital may not be available when we need it. A large percentage of the loans in our portfolio currently include exceptions to our loan policies and supervisory guidelines. Our net interest income could be negatively affected by the lower level of short-term interest rates, recent developments in the credit and real estate markets and competition in our primary market area. Higher FDIC Deposit Insurance premiums and assessments that we are required to pay could have an adverse effect on our earnings and our ability to pay our liabilities as they come due. We depend on key individuals, and o ur continued success depends on our ability to identify and retain individuals with experience and relationships in our markets. T he loss of one or more of these key individuals could curtail our growth and adversely affect our prospects. We face strong competition for customers, which could prevent us from obtaining customers or may cause us to pay higher interest rates to attract customer deposits We may not be able to compete with our larger competitors for larger customers because our lending limits are lower than theirs. The costs of being an SEC registered company are proportionately higher for smaller companies like Tidelands Bancshares because of the requirements imposed by the Sarbanes-Oxley Act. We will face risks with respect to future expansion and acquisitions or mergers. The accuracy of our financial statements and related disclosures could be affected because we are exposed to conditions or assumptions different from the judgments, assumptions or estimates used in our critical accounting policies. We are exposed to the possibility that customers may prepay theirs loans to pay down loan balances, which could reduce our interest income and profitability. Given the geographic concentration of our operations, we could be significantly affected by any hurricane that affects coastal South Carolina We must respond to rapid technological changes, which may be more difficult or expensive than anticipated. Our ability to pay dividends on and repurchase our common stock is restricted. The warrant we issued to the Treasury may be dilutive to holders of our common stock. The holders of our junior subordinated debentures have rights that are senior to those of our common shareholders.

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1178409--2/26/2010--TIDELANDS_BANCSHARES_INC