706874--3/16/2007--PALMETTO_BANCSHARES

related topics

{regulation, change, law}

{loan, real, estate}

{condition, economic, financial}

{personnel, key, retain}

{system, service, information}

{debt, indebtedness, cash}

{loss, insurance, financial}

{financial, litigation, operation}

{acquisition, growth, future}

{control, financial, internal}

{competitive, industry, competition}

{stock, price, share}

Changes in economic conditions particularly in Upstate South Carolina could negatively impact the Company s business. Changes in Federal Reserve policies could negatively impact the Company s business. The Company s growth and expansion may strain its ability to manage its operations and financial resources. The Company is dependent on key personnel and the loss of one or more of those key personnel may materially and adversely impact the Company s prospects. The Company s business is subject to interest rate risk and variations in interest rates may negatively impact its financial performance. The Company s increased emphasis on commercial and construction lending may lead to increased lending risks. The Company s asset growth potential may be restricted by minimum capital ratio standards. A downturn in real estate markets could impact the Company s business through its loan portfolio. An increase in loan prepayments and on prepayment of loans underlying mortgage-backed securities may adversely impact the Company s profitability. If the Company cannot attract deposits, its growth may be inhibited. The allowance for loan and lease losses may not be adequate to cover actual losses. The Company relies on communications, information, operating, and financial control systems technology from third party service providers, and an interruption in those systems may result in lost business if the Company is not be able to obtain substitute providers on terms that are as favorable if relationships with existing service providers are interrupted. The Company s accounting policies and methods are fundamental to how the Company records and reports its financial condition and results of operations. Incorrect application of such policies and methods may result in inaccurate financial results and / or reporting. The Company relies on information furnished by or on behalf of customers and counterparties when making decisions to extend credit that could prove to be unrealizable and, therefore, negatively impact the Company s business. The Company faces strong competition from financial service companies and other companies that offer banking services that could negatively impact the Company s business. The Company s future ability to pay dividends is subject to restrictions. If the Company fails to maintain effective systems of internal and disclosure control, it may not be able to accurately report financial results or prevent fraud. As a result ,investors could lose confidence in the Company s financial reporting, which could negatively impact the Company s business. The holding company and the Bank are subject to extensive government regulation. These regulations may restrict the ability to increase assets and earnings. A breach of information security could negatively impact the Company s earnings. The Company is subject to heightened regulatory scrutiny with respect to Bank secrecy and anti-money laundering statutes and regulations.

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706874--3/16/2007--PALMETTO_BANCSHARES_INC