706465--3/30/2010--HENRY_COUNTY_BANCSHARES

related topics

{condition, economic, financial}

{loss, insurance, financial}

{debt, indebtedness, cash}

{loan, real, estate}

{regulation, change, law}

{stock, price, share}

{personnel, key, retain}

{competitive, industry, competition}

{acquisition, growth, future}

We will be entering into a written agreement with our regulators that require us to take specified actions. We will need to raise additional capital in the future that is likely to be dilutive to existing stockholders, but that capital may not be available when we need it. Difficult market conditions and economic trends have adversely affected our industry and our business and may continue to do so. Due to our high concentration of loans secured by real estate, deteriorating conditions in the Metro Atlanta markets have adversely affected us and may continue to do so, leading to higher loan charge-offs or an increase in our provision for loan losses. If our allowance for loan losses is not sufficient to cover actual loan losses, earnings would decrease. As of December 31, 2009, we are not considered well capitalized by our banking regulators. As a result, we are unable to access brokered deposits, which may adversely affect our liquidity and our ability to meet our obligations, including the payout of deposit accounts. Our net interest income could be negatively affected by the lower level of short-term interest rates, recent developments in the credit and real estate markets and competition in our primary market area. Diminished access to alternative sources of liquidity could adversely affect our net income, net interest margin and overall liquidity. We face strong competition from other financial services providers. We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings. Recent legislative and regulatory initiatives to address the current difficult market and economic conditions may not achieve the desired effect or may be allowed to expire. Regulatory reform of the U.S. banking system may adversely affect us. Departures of our key personnel may harm our ability to operate successfully. Higher FDIC deposit insurance premiums and assessments could adversely affect our financial condition. We suspended payment of dividends during the fourth quarter of 2008 and currently are not permitted to declare or pay any dividend without the prior written approval of our regulators. As a result, capital appreciation, if any, of our common stock may be the sole opportunity for gains on investment for the foreseeable future.

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706465--3/30/2010--HENRY_COUNTY_BANCSHARES_INC