1434743--3/27/2009--1st_Financial_Services

related topics

{condition, economic, financial}

{stock, price, share}

{acquisition, growth, future}

{loan, real, estate}

{capital, credit, financial}

{competitive, industry, competition}

{stock, price, operating}

{loss, insurance, financial}

{personnel, key, retain}

{regulation, change, law}

Difficult market conditions and economic trends have adversely affected our industry and our business. Recent legislative and regulatory initiatives to address difficult market and economic conditions may not stabilize the U.S. banking system. Current levels of market volatility are unprecedented. Our allowance for loan losses may prove to be insufficient to absorb probable losses in our loan portfolio. A large percentage of our loans are secured by real estate. Adverse conditions in the real estate market in our banking markets might adversely affect on our loan portfolio. Our business strategy includes the continuation of our growth plans, and our financial condition and operating results could be negatively affected if we fail to grow or fail to manage our growth effectively. Our business depends on the condition of the local and regional economies where we operate. The Treasury Department s Investment in 1 st Financial imposes restrictions and obligations limiting 1 st Financial s ability to access equity markets, repurchase common stock, or increase dividends. Building market share through our de novo branching strategy could cause our expenses to increase faster than revenues. Our increasing volume of loans makes loan quality more difficult to control. Increased loan losses could affect the value of our common stock. Higher loan to value ratios on a portion of the Bank s loan portfolio may increase loan portfolio risk and could adversely impact loan portfolio performance and the profitability and the value of our common stock. Our recent results may not be indicative of our future results. We may need to raise additional capital in the future in order to continue to grow, but that capital may not be available when it is needed. If we are unable to redeem our Series A Preferred Stock after five years, the cost of this capital to us will increase substantially. Our profitability is subject to interest rate risk. Changes in interest rates could have an adverse effect on our operating results. Our reliance on time deposits, including out-of-market certificates of deposit, as a source of funds for loans and our other liquidity needs could impair our ability to fund operations and jeopardize our financial condition. Competition from financial institutions and other financial service providers may adversely affect our profitability. We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings. We depend on the services of our current management team. We may need to invest in new technology to compete effectively, and that could have a negative effect on our operating results and the value of our common stock. The trading volume in our common stock has been relatively low, and the sale of a substantial number of shares in the public market could depress the price of our stock and make it difficult for you to sell your shares. Our ability to pay dividends is limited and we may be unable to pay future dividends. Our management beneficially owns a substantial percentage of our common stock, so our directors and executive officers can significantly affect voting results on matters voted on by our stockholders.

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1434743--3/27/2009--1st_Financial_Services_CORP