CASH 2018 Special Proxy Statement

reflected in the unaudited pro forma condensed combined financial information is based on preliminary estimates and currently available information, some of which assumptions cannot be finalized until the consummation of the merger. Adjustments may include, but not limited to, changes in (i) Crestmark’s balance sheet through the effective time of the merger; (ii) total merger related expenses if consummation and/or implementation costs vary from currently estimated amounts; and (iii) the underlying values of assets and liabilities if market conditions differ from current assumptions. Note 3—Estimated Merger and Integration Costs In connection with the merger, the plan to integrate Meta’s and Crestmark’s operations is still being developed. Over the next several months, the specific details of these plans will continue to be refined. Meta and Crestmark are currently in the process of the two companies’ personnel, benefit plans, premises, equipment, computer systems, and service contracts to determine where they may take advantage of redundancies or where it will be beneficial or necessary to convert to one system. Certain decisions arising from these assessments may involve changing information systems, canceling contracts between Crestmark and certain service providers and selling or otherwise disposing of certain premises, furniture and equipment owned by Crestmark. Additionally, as part of the parties’ formulation of the integration plan, certain actions regarding existing Meta information systems, premises, equipment, and supplier contracts may be taken. Meta expects to incur merger-related expenses including system conversion costs, employee retention agreements, communications to customers, and others. To the extent there are costs associated with these actions, the costs will be recorded based on the nature and timing of these integration actions. Most acquisition and restructuring costs are recognized separately from a business combination and generally will be expensed as incurred. Meta estimates the merger-related costs to be approximately $18.0 million pre-tax and expect they will be incurred in fiscal years 2018 and 2019. These merger-related costs are not reflected in the accompanying pro forma financial information. Note 4—Pro Forma Merger Adjustments The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All taxable adjustments were calculated using a 28% tax rate to arrive at deferred tax asset or liability adjustments. All adjustments are based on current assumptions and valuations, which are subject to change. Management has evaluated the estimated effects resulting from accreting or amortizing the purchase accounting adjustments reflected in the pro forma combined financial information on pre-tax income over the appropriate period for each pro forma adjustment following the acquisition and has concluded that the impact is not significant for these periods. Balance Sheet As of December 31, 2017 (Dollars in Thousands) A: Adjustment to cash and cash equivalents To reflect payment of cash consideration (in-the-money stock options) . . . . . . . . . . . . . . . $ (18,533) B: Adjustments to total loans, leases and receivables To reflect expected credit losses in Crestmark’s portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . $ (15,536) To reflect the interest rate mark on the loan portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 $ (15,282) C: Adjustment to allowance for loan and lease losses Elimination of Crestmark’s existing allowance for loan and lease losses . . . . . . . . . . . . . . $ 10,377 D: Adjustment to premises, furniture, and equipment To reflect estimated fair value of Crestmark’s premises at merger closing date . . . . . . . . . $ (2,024) E: Adjustments to goodwill Elimination of Crestmark’s existing goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (10,619) To record goodwill created by the transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,826 $188,207 101