1178409--3/30/2009--TIDELANDS_BANCSHARES

related topics

{condition, economic, financial}

{stock, price, share}

{loan, real, estate}

{regulation, change, law}

{loss, insurance, financial}

{acquisition, growth, future}

{capital, credit, financial}

{personnel, key, retain}

{competitive, industry, competition}

{system, service, information}

{operation, natural, condition}

The lack of seasoning of our loan portfolio makes it difficult to assess the adequacy of our loan loss reserves accurately and we may have higher credit losses than we have reserved for in our allowance for loan losses. We are exposed to higher credit risk by commercial real estate, commercial and industrial, and construction lending. A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business. Our decisions regarding credit risk and reserves for loan losses may materially and adversely affect our business. Recent negative developments in the financial industry and the domestic and international credit markets may adversely affect our operations and results. Recent legislative and regulatory initiatives to address difficult market and economic conditions may not stabilize the U.S. banking system. The securities purchase agreement between us and the Treasury limits our ability to pay dividends on and repurchase our common stock. The warrant we issued to the Treasury may be dilutive to holders of our common stock. 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. Legislation or regulatory changes could cause us to seek to repurchase the preferred stock and warrants that we sold to the U.S. Treasury pursuant to 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 it is needed. A prolonged economic downturn, especially one affecting coastal South Carolina, could reduce our customer base, our level of deposits and demand for financial products such as loans. A large percentage of the loans in our portfolio currently include exceptions to our loan policies and supervisory guidelines. Changes in interest rates may reduce our profitability. We have grown rapidly and do not expect to sustain this rate of growth for future periods. We are dependent on key individuals and o ur continued success depends on our ability to identify and retain individuals with experience and relationships in our markets. The 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. We are subject to extensive regulation that could limit or restrict our activities. This regulation is for the protection of the bank s depositors and not for its shareholders. We are exposed to changes in the regulation of financial services companies. 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 more prepayments may be made by customers to pay down loan balances, which could reduce our interest income and profitability. Efforts to comply with Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with the Sarbanes-Oxley Act may adversely affect us. 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 and our ability to pay our liabilities as they come due. Given the geographic concentration of our operations, we could be significantly affected by any hurricane that affects coastal South Carolina We are exposed to the possibility of technology failure.

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1178409--3/30/2009--TIDELANDS_BANCSHARES_INC