1295879--3/30/2009--CommunitySouth_Financial

related topics

{condition, economic, financial}

{capital, credit, financial}

{loss, insurance, financial}

{regulation, change, law}

{loan, real, estate}

{personnel, key, retain}

{acquisition, growth, future}

{system, service, information}

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 a 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. We may need to raise additional capital in the future, but that capital may not be available when it is needed. We depend heavily on out of market deposits as a source of funding. We are exposed to the possibility of technology failure. We are dependent on key individuals and the loss of one or more of these key individuals could adversely affect our operations. The success of our maintaining our upstate franchise depends on our ability to identify and retain individuals with experience and relationships in the markets in which we intend to operate. Our decisions regarding credit risk and allowances for loan losses may materially and adversely affect our business. 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. We may have higher loan losses than we have allowed for in our allowance for loan losses. Lack of seasoning of our loan portfolio may increase the risk of credit defaults in the future. 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 may cause us to pay higher interest rates to attract customers We will face risks with respect to future expansion and acquisitions or mergers. 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--3/30/2009--CommunitySouth_Financial_CORP