1295879--3/1/2010--CommunitySouth_Financial

related topics

{condition, economic, financial}

{loan, real, estate}

{regulation, change, law}

{acquisition, growth, future}

{loss, insurance, financial}

{financial, litigation, operation}

{capital, credit, financial}

{interest, director, officer}

{debt, indebtedness, cash}

There is substantial doubt about our ability to continue as a going concern. We need to raise additional capital that may not be available to us. Liquidity needs at our Bank level could adversely affect our financial condition and results of operation. We have sustained losses from a decline in credit quality and may see further losses. We may have higher loan losses than we have allowed for in our allowance for loan losses. We have become subject to enforcement actions that will require us to take certain actions. Our Bank may become subject to a federal conservatorship or receivership if it cannot comply with the Consent Order, or if its condition continues to deteriorate. We may face damage to our reputation and business as a result of negative publicity, including an increase in deposit outflows. A significant portion of our loan portfolio is secured by real estate, and the recent weakening of the local real estate market could continue to hurt our business. We are unable to continue making interest payments on our subordinated debentures. We have only recently adopted our new business plan and may not be able to implement it effectively. Our historical results of operations may not be indicative of our future operating results. Recent negative developments in the financial industry and the domestic and international credit markets may adversely affect our operations and results. There can be no assurance that recently enacted legislation will help stabilize the U.S. financial system. Continuation of the economic downturn could reduce our customer base, our level of deposits, and demand for financial products such as loans. Our small- to medium-sized business target markets may have fewer financial resources to weather the current downturn in the economy. We are exposed to changes in the regulation of financial services companies. 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. Changes in prevailing interest rates may reduce our profitability. We are subject to extensive regulation that could limit or restrict our activities. We face strong competition for customers, which could prevent us from obtaining customers and the interest rate that we can pay to attract customers is subject to the national deposit rate cap restrictions The costs of being an SEC registered company are proportionately higher for smaller companies such as CommunitySouth Financial Corporation because of the requirements imposed by the Sarbanes-Oxley Act.

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1295879--3/1/2010--CommunitySouth_Financial_CORP