CASH 2018 Special Proxy Statement

The decline in the effective tax rate in 2016 as compared to 2015 was also due to a $1.6 million deduction related to stock compensation. Net Interest Income Crestmark’s net interest income can be influenced by a variety of factors, including overall loan demand, economic conditions, credit risk, the amount of interest and the mix of interest-earning and non-interest earning assets held by Crestmark, the amounts of and rates at which assets and liabilities reprice, variance of prepayments, and general declines or rises in interest rates. Net interest income is the amount by which interest income on earning assets exceeds the interest expenses on interest bearing liabilities. Net interest income, which includes loan fees, is influenced by changes in the balance and mix of assets and liabilities and market interest rates. Crestmark exerts some control over these factors; however, Federal Reserve Bank monetary policy and competition have a significant impact. The following tables present the total dollar amount of interest income from average interest-earning assets and the related yields, as well as the interest expense on average interest-bearing liabilities, and the related costs, expressed both in dollars and rates for the years set forth below. For the purpose of these tables, changes in interest due to volume and rate were determined as follows: Volume—change in volume multiplied by the previous period’s rate. Rate—change in the rate multiplied by the previous period’s volume. 112