856751--12/18/2009--FIRST_KEYSTONE_FINANCIAL

related topics

{cost, operation, labor}

{loss, insurance, financial}

{interest, director, officer}

{tax, income, asset}

{loan, real, estate}

{investment, property, distribution}

{regulation, change, law}

{stock, price, operating}

{condition, economic, financial}

{acquisition, growth, future}

{competitive, industry, competition}

{cost, contract, operation}

Risk Factors Relating to the Proposed Merger Between the Company and BMBC The Company Shareholders cannot be certain of the amount of merger consideration they will receive as it is subject to downward adjustment in the event that FKF Delinquencies exceed $10.5 million. Because the market price of BMBC common stock will fluctuate, the Company shareholders cannot be sure of the market value of the Merger consideration they will receive. The Company will be subject to business uncertainties and contractual restrictions while the Merger is pending. The opinion obtained by the Company from its financial advisor will not reflect changes in circumstances between signing the Merger Agreement and completion of the merger. Combining the two companies may be more difficult, costly or time-consuming than we expect. Regulatory approvals may not be received, may take longer than expected or impose conditions that are not presently anticipated. The Merger Agreement limits the Company s ability to pursue alternatives to the Merger. If the Merger is not consummated by July 31, 2010, either BMBC or the Company may choose not to proceed with the Merger. Termination of the Merger Agreement could negatively impact the Company. The market price of BMBC common stock after the Merger may be affected by factors different from those affecting the Company common stock or BMBC common stock currently. BMBC may fail to realize the cost savings estimated for the Merger. The Company shareholders will have a reduced ownership and voting interest after the Merger and will exercise less influence over management. A continuation of recent turmoil in the financial markets could have an adverse effect on the financial position or results of operations of BMBC, the Company and/or the combined company. Impairments in the value of BMBC and the Company s respective securities portfolios or other assets could further affect each of their results of operations or the results of operations of the combined company. The Merger may fail to qualify as a tax-free reorganization under the Internal Revenue Code. The Company shareholders will recognize gain with respect to the cash portion of the Merger consideration. Risk Factors Related to the Operations of the Company s Operations on a Stand-Alone Basis If the Merger with BMBC is not completed, the Company will continue to face certain risk factors related to its on-going operations. If the Merger is not completed, the Company will have incurred substantial expenses without realizing the expected benefits of the Merger. If the Merger is not completed, we may have to revise our business strategy. The operating restrictions imposed by the OTS in the supervisory agreements impose many restrictions on our operations, which may adversely affect our ability to successfully develop and implement a business strategy. We are subject to lending risk and could suffer losses in our loan portfolio despite our underwriting practices. Our loan portfolio includes commercial and multi-family real estate, commercial business and construction loans which have a generally higher risk of loss than single-family residential loans. Adverse economic and business conditions in our primary market area could cause an increase in loan delinquencies and non-performing assets which could adversely affect our financial condition and results of operations. Our allowance for losses on loans may be insufficient to cover actual losses on loans. Our operations are subject to interest rate risk and variations in interest rates may negatively affect financial performance. The fair value of our investment securities held to maturity may be less than the carrying value of such securities. We operate in a highly competitive industry and market area with other financial institutions offering products and services similar to those we offer. We are subject to extensive government regulation and supervision which could adversely affect our operations. Any future Federal Deposit Insurance Corporation insurance premiums or special assessments will adversely impact our earnings. Proposed regulatory reform may have a material impact on our operations.

Full 10-K form ▸

856751--12/18/2009--FIRST_KEYSTONE_FINANCIAL_INC