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borrowers to make variable-rate loan payments. Accordingly, changes in market interest rates could have a material
adverse effect on the Company’s asset quality, loan origination volume, financial condition, results of operations, and
cash flows. This interest rate risk can arise from Federal Reserve Board monetary policies, as well as other economic,
regulatory and competitive factors that are beyond our control.
We depend on our executive officers and key personnel to implement our business strategy, and could be harmed
by the loss of their services.
We believe that our continued growth and success depends in large part upon the skills
of our management team and other key personnel. The competition for qualified personnel in the financial services
industry is intense, and the loss of key personnel or an inability to attract, retain or motivate key personnel could
adversely affect our business. If we are not able to retain our existing key personnel or attract additional qualified
personnel, our business operations would be hurt. None of our executive officers have employment agreements.
The value of the securities in our investment portfolio may be negatively affected by disruptions in securities
markets
. The market for some of the investment securities held in our portfolio has experienced volatility and
disruption in recent years. Market conditions may have a detrimental effect on the value of our securities, such as
reduced valuations because of the heightened credit risks or illiquid markets, or the perception of such. There can be
no assurance that any declines in market value associated with these disruptions will not result in other-than-temporary
impairments of these investments, which would lead to accounting charges that could have a material adverse effect on
our results of operations and capital levels.
We are exposed to the risk of environmental liabilities with respect to properties to which we obtain title
.
Approximately 69% of our loan portfolio at December 31, 2015 consisted of real estate loans. In the normal course of
business we may foreclose and take title to real estate collateral, and could be subject to environmental liabilities with
respect to those properties. We may be held liable to a governmental entity or to third parties for property damage,
personal injury, investigation and clean-up costs incurred by these parties in connection with environmental
contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a
property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are
the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on
damages and costs resulting from environmental contamination emanating from the property. These costs and claims
could adversely affect our business and prospects.
Risks Related to our Common Stock
You may not be able to sell your shares at the times and in the amounts you want if the price of our stock
fluctuates significantly or the trading market for our stock is not active.
The trading price of our common stock
could be impacted by a number of factors, many of which are outside our control. Although our stock has been listed
on NASDAQ for many years, trading in our stock does not consistently occur in high volumes and the market for our
stock cannot always be characterized as active. Thin trading in our stock may exaggerate fluctuations in the stock’s
value, leading to price volatility in excess of that which would occur in a more active trading market. In addition, the
stock market in general is subject to fluctuations that affect the share prices and trading volumes of many companies,
and these broad market fluctuations could adversely affect the market price of our common stock. Factors that could
affect our common stock price in the future include but are not necessarily limited to the following:
•
actual or anticipated fluctuations in our operating results and financial condition;
•
changes in revenue or earnings estimates or publication of research reports and recommendations by
financial analysts;
•
failure to meet analysts’ revenue or earnings estimates;
•
speculation in the press or investment community;
•
strategic actions by us or our competitors, such as acquisitions or restructurings;
•
actions by shareholders;
•
sales of our equity or equity-related securities, or the perception that such sales may occur;
•
fluctuations in the trading volume of our common stock;
•
fluctuations in the stock prices, trading volumes, and operating results of our competitors;
•
general market conditions and, in particular, market conditions for the financial services industry;
•
proposed or adopted regulatory changes or developments;
•
regulatory action against us;