CASH 2018 Annual Report

53 Risks Related to Our Industry and Business Our growth has been robust, and failure to generate sufficient capital to support anticipated growth could cause us difficulty in maintaining regulatory capital compliance and adversely affect our earnings and prospects. We have continued to experience considerable growth recently, having increased our assets from $5.23 billion at September 30, 2017 to $5.84 billion at September 30, 2018. This increase was primarily the result of the Crestmark Acquisition, as well as continued loan and lease growth. Asset growth and diversification of our lending business, primarily driven by the Crestmark Acquisition, has required and, if continued as expected, will continue to generate a need for higher levels of capital which management believes may not be met through earnings retention alone. Additionally, our asset mix has materially changed since September 30, 2017 and is expected to continue to change, as we expand and diversify our financial product offerings in the market, especially in our commercial lending and financing business and in our tax-related financial solutions divisions. These lending activities carry risk weights far in excess of traditional one- to four- family loans, and as a result it will be more difficult to maintain regulatory capital compliance. There can be no assurance that we will be able to access sources of capital, private or public, to satisfy capital requirements in the future. Failure to remain well-capitalized, or to attain potentially even higher levels of capitalization that may be required in the future under regulatory initiatives mandated by Congress, our regulatory agencies, or under the Basel accords, could adversely affect the Company’s earnings and prospects. We may have difficulty continuing to grow, and even if we do grow, our growth may strain our resources and limit our ability to expand our operations successfully. As described above, we have experienced significant growth in our assets, including in connection with the Crestmark Acquisition and as a result of organic growth; this is also the case with the level of our deposits, which have continued to grow. Our future profitability will depend in part on our continued ability to grow our business, including through acquisitions and other strategic transactions. Our growth will also depend on our ability to successfully integrate the operations of acquired businesses, including as a result of the Crestmark Acquisition. See also “Acquisitions could disrupt our business and may not be successful.” We may not, however, be able to sustain our historical growth rate or be able to grow at all. In addition, we believe that our future success will depend on competitive factors and on the ability of our senior management to continue to maintain a robust system of internal controls and procedures and manage a growing number of customer relationships. See “--The Company operates in an extremely competitive market, and the Company’s business will suffer if it is unable to compete effectively.” We may not be able to implement changes or improvements to these internal controls and procedures in an efficient or timely manner and may discover deficiencies in existing systems and controls. Consequently, continued growth, if achieved, may place a strain on our operational infrastructure, which could have a material adverse effect on our financial condition and results of operations. We incur significant costs and demands upon management and accounting and finance resources as a result of complying with the laws and regulations affecting public companies; if we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business and our reputation. As a SEC reporting company, we are required to, among other things, maintain a system of effective internal control over financial reporting, which requires annual management and independent registered public accounting firm assessments of the effectiveness of our internal controls. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. We have historically dedicated a significant amount of time and resources to implement our internal financial and accounting controls and procedures. Substantial work may continue to be required to further implement, document, assess, test, and, if necessary, remediate our system of internal controls. We may also need to retain additional finance and accounting personnel in the future.