CASH 2018 Annual Report

54 If our internal control over financial reporting is not effective, we may be unable to issue our financial statements in a timely manner, we may be unable to obtain the required audit or review of our financial statements by our independent registered public accounting firm in a timely manner, or we may otherwise be unable to comply with the periodic reporting requirements of the SEC. Additionally, our common stock listing on the NASDAQ Global Select Market could be suspended or terminated and our stock price could materially suffer. In addition, we or members of our management team could be subject to investigation and sanction by the SEC or other regulatory authorities and to claims by stockholders, which could impose significant additional costs on us and divert our management's attention. See also " Item 9A. Controls and Procedures-Management’s Annual Report on Internal Control over Financial Reporting " for inherent limitations in a control system. As a savings and loan holding company, we are required to serve as a “source of strength” for the Bank. Federal banking law codifies a requirement that savings and loan holding companies (like the Company) act as a financial “source of strength” for its FDIC-insured depository institution subsidiaries (like the Bank). The term “source of financial strength” is defined in the relevant statute as the ability of a company to provide financial assistance to such insured depository institution in the event of the financial distress of such insured depository institution. The statute permits the OCC, as the Bank’s primary federal regulator, to request reports from the Company to assess its ability to serve as a source of strength and to enforce compliance with these statutory requirements. To date, no regulations have been proposed in connection with this statutory requirement, although it is widely assumed that the Federal Reserve would enforce its prior guidance regarding this doctrine as applied to bank holding companies when applying the rule to savings and loan holding companies like the Company. Given the power provided to the federal banking agencies in this provision, it is possible that we could be required to serve as a source of strength for the Bank when we might not otherwise voluntarily choose to do so. Specifically, the imposition of such financial requirements might require us to raise additional capital to support the Bank at a time when it is not otherwise prudent for us to do so; for example, such raise could be on terms that are not favorable or typical in the existing market. If we were unable to raise necessary capital, we could become subject to negative or burdensome regulatory conditions that could negatively impact our growth. Further, any capital provided by us to the Bank would be subordinate to others with interest in the Bank, including the Bank's depositors. In addition, in the event of the bankruptcy of the Company at a time when it had a commitment to one of the Bank’s regulators to maintain the capital of the Bank, the regulators’ claims against the Company may be entitled to priority status over other obligations. Our loan portfolio has grown substantially, and our underwriting practices may not prevent future losses in our loan portfolio. Our loan portfolio has grown substantially over the last several years, primarily due to the Crestmark Acquisition and organic growth in loan originations. Our underwriting practices are designed to mitigate risk by adhering to specific loan and financing parameters. Components of our underwriting program include, where appropriate, an analysis of the borrower and their creditworthiness, a financial statement review, a business plan review, and, if applicable, cash flow projections and a valuation of collateral. Other lending programs, particularly in the Bank's divisions, rely on management experience and quantitative data. We may incur losses in our loan portfolio, especially the portion acquired in the Crestmark Acquisition for which integration efforts continue, if our underwriting practices or criteria fail to adequately identify, price, and mitigate credit risks. It is also possible that losses will exceed the amounts the Bank has set aside for loss reserves and result in reduced interest income and increased provision for loan losses, which could have an adverse effect on our financial condition and results of operations. Deterioration in our loan portfolio could also cause a decrease in our capital, which would make it more difficult to maintain regulatory capital compliance.