1207070--3/14/2006--FRANKLIN_BANK

related topics

{loan, real, estate}

{stock, price, share}

{system, service, information}

{loss, insurance, financial}

{acquisition, growth, future}

{capital, credit, financial}

{condition, economic, financial}

{competitive, industry, competition}

{personnel, key, retain}

{control, financial, internal}

{regulation, change, law}

We have a limited operating history, which makes it difficult to predict our future prospects and financial performance. We rely, in part, on external financing to fund our operations and the unavailability of such funds in the future could adversely affect our growth strategy and prospects. Our reliance on brokered deposits to fund our growth may substantially increase our funding costs. In addition, regulatory constraints may limit our ability to acquire these deposits. Our small business, commercial real estate and consumer loan portfolios have significant geographic concentration and an economic slowdown or depressed real estate market in our primary markets could be detrimental to our financial condition. Our loan portfolio may be significantly affected by the economy of California. If we are unable to continue to purchase single family loans in bulk from the entities with which we currently have correspondent relationships, or other entities, our business and financial results may suffer. The majority of our single family loan portfolio consists of newly originated loans which may cause our loan portfolio to experience increased losses as the loans season. We are subject to losses resulting from fraudulent and negligent acts on the part of loan applicants, mortgage brokers, correspondents or other third parties. We are subject to losses resulting from the nature of our mortgage banker finance borrowers. Our business is subject to interest rate risk and variations in interest rates may adversely affect our financial performance. Our mortgage origination activities are subject to interest rate risk that may adversely affect our earnings. We face strong competition from other financial institutions and financial service companies offering services similar to those offered by us, which could hurt our business. We are subject to extensive regulation and supervision that could materially and adversely affect our financial performance. We are dependent on key individuals and on our continued ability to attract qualified and experienced personnel. The loss of one or more of these key individuals, or our inability to continue to attract such personnel, could curtail our growth and materially and adversely affect our prospects. Our allowance for credit losses may be insufficient to cover actual losses, which could materially and adversely affect our financial performance. An interruption in or breach of our information systems may result in lost business. We rely on information system technology from third party service providers, and we may not be able to obtain substitute providers on terms that are as favorable if our relationships with our existing service providers are interrupted. We are exposed to environmental liabilities with respect to properties to which we take title. Risks Associated with an Investment in Our Common Stock The market price and trading volume of our common stock may be volatile. We currently do not intend to pay any dividends on our common stock. In addition, our future ability to pay dividends is subject to restrictions. As a result, capital appreciation, if any, of our common stock will be your sole source of gains for the foreseeable future.

Full 10-K form ▸

1207070--3/14/2006--FRANKLIN_BANK_CORP