CASH 2018 Annual Report

61 We are dependent upon relationships with various third parties with respect to the operations of the Bank and its divisions, and our relationships with such third parties, some of which are material to us, including changes in such relationships, could adversely affect our business. The Bank has entered into numerous contracts with third parties with respect to the operations of its business. In some instances, the third parties provide services to the Bank and its divisions; in other instances, the Bank and its divisions provide products and services to such third parties. The Bank has also started offering consumer credit products to the national consumer credit market that are brokered or arranged by third parties. See "Risks Related to Marketing Program Agreements." If any such agreements are not renewed by the third party, if such agreements are renewed on terms less favorable to the Bank, or if such agreements are found to be illegal or in need of material restructuring to comply with applicable law or regulation, such actions could have a material adverse impact on the Bank, its divisions and, ultimately, the Company. For example, in July 2017, the Bank announced that it would not be providing interest-free Refund Advance loans for H&R Block tax preparation customers during the 2018 tax season. The Company’s relationship with H&R Block represented approximately $12.0 million in net earnings during fiscal year 2017. Given the loss of this relationship, the Company recognized a total impairment charge of $10.2 million, which was expensed during the 2017 fiscal fourth quarter. In addition, if any of our counterparties is unable to meet its obligations to us for any reason (including but not limited to bankruptcy, computer or other technological interruptions or failures, personnel loss, negative regulatory actions, or acts of God), we may need to seek alternative service providers, or discontinue certain products or programs in their entirety. We have experienced, and expect to continue to experience, situations where we have been held directly or indirectly responsible, or were otherwise subject to liability, for actions of our third party vendors undertaken on behalf of the Bank or for the inability of our vendors to perform services for our customers on a timely basis or at all. Any such responsibility or liability in the future may have a material adverse effect on our business, including the operations of the Bank and its divisions, and financial results. To the extent any agreement with a service provider is terminated, we may not be able to secure alternate service providers, and, even if we do, the terms with alternate providers may not be as favorable as those currently in place. In addition, were we to lose any of our significant third-party providers, it could cause a material disruption in our ability to service our customers, which also could have an adverse material impact on the Bank, its divisions and, ultimately, the Company. Moreover, significant disruptions in our ability to provide services could negatively affect the perception of our business, which could result in a loss of confidence and other adverse effects on our business. Further, our agreements with third-party vendors could come under scrutiny by our regulators. If a regulator should raise an issue with, or object to, any term or provision in such an agreement or any action taken by such third party vis- à-vis the Bank’s operations or customers, this could result in a material adverse effect to the Company including, but not limited to, the imposition of fines and/or penalties and the termination of such agreement. Moreover, if our regulators examine our third party service providers and find questionable or illegal acts or practices, our regulators could require us to restructure or terminate our agreements with such providers. We operate in an extremely competitive market, and our business will suffer if we are unable to compete effectively. We encounter significant competition in all of our market areas from other commercial banks, savings and loan associations, credit unions,mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds and other financial intermediaries. Many of our competitors have substantially greater resources and lending limits and may offer services that we do not or cannot provide. Our profitability depends upon our continued ability to compete successfully in our market areas. The Bank's divisions operate on a national scale against competitors with substantially greater resources. The success of the Bank's divisions depends upon our, the Bank’s and the divisions' ability to compete in their various business markets. Several banking institutions have adopted business strategies that are similar to ours, particularly with respect to the MPS division. As a consequence, we have encountered competition in this area and anticipate that we will continue to do so in the future. This competition may increase our costs, reduce our revenues or revenue growth, or make it difficult for us to compete effectively in obtaining additional customer relationships. With respect to the Crestmark division, we are also subject to additional competitive market factors. See “Risks Related to the Bank’s Divisions” for additional risks related to the Crestmark division.