907471--12/13/2010--META_FINANCIAL_GROUP

related topics

{loan, real, estate}

{regulation, government, change}

{system, service, information}

{stock, price, share}

{regulation, change, law}

{loss, insurance, financial}

{condition, economic, financial}

{competitive, industry, competition}

{tax, income, asset}

{personnel, key, retain}

{customer, product, revenue}

{property, intellectual, protect}

{product, market, service}

{control, financial, internal}

{provision, law, control}

Risks Related to Our Industry and Business Difficult economic and market conditions have adversely affected our industry. The full impact of the recently enacted Dodd-Frank Act is currently unknown given that much of the details and substance of the new laws will be determined through agency rulemaking. The elimination of the OTS and transfer of the OTS s supervisory and rulemaking functions to various federal banking agencies will change the way that we are regulated. The BCFP may reshape the consumer financial laws through rulemaking and enforcement of unfair, deceptive or abusive practices, which may directly impact the business operations of depository institutions offering consumer financial products or services including the Bank. Legislative and regulatory initiatives taken to date may not achieve their intended objectives; proposed and future initiatives may substantially increase compliance burdens and further impact our financial condition or results of operations. We have a concentration of our assets in mortgage-backed securities. We recorded other-than-temporary impairment ( OTTI ) charges in our trust preferred securities ( TRUPS ) portfolio in the fourth quarter of fiscal 2010, and we could record additional losses in the future. Risks Related to the Banking Industry Our reputation and business could be damaged by negative publicity. We are subject to certain operational risks, including, but not limited to, data processing system failures and errors and customer or employee fraud, identity theft, and unauthorized intrusion. Changes in economic and political conditions could adversely affect the Company s earnings, as the Company s borrowers ability to repay loans and the value of the collateral securing the Company s loans decline. Recessionary environment may adversely impact the Company s earnings and new governmental initiatives may not prove effective. Changes in interest rates could adversely affect the Company s results of operations and financial condition. The Company operates in a highly regulated environment, and changes in laws and regulations to which we are subject may adversely affect the Company s results of operations. Changes in technology could be costly. The recently enacted Dodd-Frank Act may have unpredictable effects on the Company and adversely impact the Company s results of operations, financial condition or liquidity. Risks Related to the Company s Business The Company operates in an extremely competitive market, and the Company s business will suffer if it is unable to compete effectively. Existing insurance policies may not adequately protect the Company and its subsidiaries. The loss of key members of the Company s senior management team could adversely affect the Company s business. The Company s loan portfolio includes loans with a higher risk of loss. If the Company s actual loan losses exceed the Company s allowance for loan losses, the Company s net income will decrease. If the Company forecloses on and takes ownership of real estate collateral property, it may be subject to the increased costs associated with the ownership of real property, resulting in reduced revenues. Environmental liability associated with commercial lending could have a material adverse effect on the Company s business, financial condition and results of operations. If the Company fails to maintain an effective system of internal control over financial reporting, it may not be able to accurately report the Company s financial results or prevent fraud, and, as a result, investors and depositors could lose confidence in the Company s financial reporting, which could adversely affect the Company s business, the trading price of the Company s stock and the Company s ability to attract additional deposits. A breach of information security or compliance breach by one of the Company s agents or vendors could negatively affect the Company s reputation and business. Risks Related to the Company s Stock The price of the Company s common stock may be volatile, which may result in losses for investors. The Company s common stock is thinly traded, and thus your ability to sell shares or purchase additional shares of the Company s common stock will be limited, and the market price at any time may not reflect true value. Future sales or additional issuances of the Company s capital stock may depress prices of shares of the Company s common stock or otherwise dilute the book value of shares then outstanding. Federal regulations may inhibit a takeover, prevent a transaction you may favor or limit the Company s growth opportunities, which could cause the market price of the Company s common stock to decline. The Company may not be able to pay dividends in the future in accordance with past practice. Our agricultural loans are subject to factors beyond the Bank s control. Risks Related to Meta Payment Systems , a division of the Bank MPS products and services are highly regulated financial products subject to extensive supervision and regulation. While some proposed legislation would benefit MPS, it is possible that new legislation or more stringent focus by banking agencies could further restrict MPS current operations or change the regulatory environment in which the division s customers operate. MPS, through the Bank, owns or is seeking a number of patents, trademarks and other forms of intellectual property with respect to the operation of its business and the protection of such intellectual property may in the future require material expenditures. , some of which are material to the Company , may not be renewed, may be renegotiated on terms that are not as favorable to MPS, may not be fulfilled or could be subject to cancellation by regulatory authorities Costs of conforming products and services to the Payment Card Industry Data Security Standards (the PCI DSS ) are costly and could continue to affect the operations of MPS. The potential for fraud in the card payment industry is significant. Part of our business depends on sales agents who do not sell our products exclusively Products and services offered by MPS involve many business parties and the possibility of collusion exists. Competition in the card industry is significant. In order to maintain an edge to its products and offerings, MPS must invest significantly in technology and research and development. Discover, MasterCard, and Visa, as well as other electronic funds networks in which MPS operates, could change their rules. Our business is heavily dependent upon the Internet and any negative disruptions to its operation could negatively impact our business. Our ability to process transactions requires functioning communication and electricity lines. Data encryption technology has not been perfected and vigilance in MPS information technology systems is costly. Unclaimed funds represented by unused value on the cards presents compliance and other risks. MPS operates in a highly competitive environment and the ability to attract and retain qualified personnel may be difficult.

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907471--12/13/2010--META_FINANCIAL_GROUP_INC