CASH 2018 Special Proxy Statement
Non-Interest Expense Years Ended December 31, Increase/ Decrease Percentage Change Non-Interest Expense (dollars in thousands): 2017 2016 Salaries and employee benefits . . . . . . . . . . . . . . . . . . $ 45,191 $40,245 $ 4,946 12.3% Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . 3,609 3,162 447 14.1% Depreciation on equipment on operating leases . . . . . 37,187 29,322 7,865 26.8% Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,999 2,018 (19) -0.9% Advertising and marketing . . . . . . . . . . . . . . . . . . . . . 928 800 128 16.0% Software maintenance . . . . . . . . . . . . . . . . . . . . . . . . . 1,528 1,199 329 27.4% Servicing fee paid to minority partner . . . . . . . . . . . . 3,814 1,770 2,044 115.5% General and administrative . . . . . . . . . . . . . . . . . . . . . 9,308 7,464 1,844 24.7% Total non-interest expense . . . . . . . . . . . . . . . . . $103,564 $85,980 $17,584 20.5% Non-interest expense increased $17.6 million, or 20.5%, for the year ended December 31, 2017 compared to the year ended December 31, 2016. The primary contributor to the change in non-interest expense relates to a $7.9 million, or 26.8%, increase in depreciation on equipment on operating leases that directly relates to the increase in demand and lease contracts entered into by Crestmark and its customers during the year ended December 31, 2017. As noted above in the non-interest income discussion, average balances of leases outstanding increased approximately 26.5% for 2017 as compared to 2016, which directly correlates to the increase in depreciation expense on operating leases. The second largest contributor to the increase in non-interest expense relates to a $4.9 million, or 12.3%, increase in salaries and employee benefits as the number of full-time equivalent employees increased to 333 at December 31, 2017 from 299 at December 31, 2016. Lastly, servicing fee paid to minority partner increased by approximately $2.0 million, or 115.5% for 2017 as compared to 2016. This fee represents amounts paid to joint venture partners that service loans and leases on behalf of Crestmark whereby the minority partner is paid a servicing fee based on either balances outstanding or revenue generated throughout the year. Years Ended December 31, Increase/ Decrease Percentage Change Non-Interest Expense (dollars in thousands): 2016 2015 Salaries and employee benefits . . . . . . . . . . . . . . . . . . . $40,245 $38,986 $ 1,259 3.2% Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . 3,162 3,174 (12) -0.4% Depreciation on equipment on operating leases . . . . . . 29,322 16,360 12,962 79.2% Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,018 2,112 (94) -4.5% Advertising and marketing . . . . . . . . . . . . . . . . . . . . . . 800 813 (13) -1.6% Software maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . 1,199 901 298 33.1% Servicing fee paid to minority partner . . . . . . . . . . . . . 1,770 518 1,252 241.7% General and administrative . . . . . . . . . . . . . . . . . . . . . . 7,464 6,812 652 9.6% Total non-interest expense . . . . . . . . . . . . . . . . . . $85,980 $69,676 $16,304 23.4% Non-interest expense increased $16.3 million, or 23.4%, for the year ended December 31, 2016 compared to the year ended December 31, 2015. The primary contributor to the change in non-interest expense relates to a $13.0 million, or 79.2%, increase in depreciation on equipment on operating leases that directly relates to the increase in demand and lease contracts entered into by Crestmark and its customers during the year ended December 31, 2016. As noted above in the non-interest income section, average balances of leases outstanding increased 105.9% which in turn, correlates to the increase in depreciation expense on equipment on operating leases above. Additionally, salaries and employee benefits increased $1.3 million, or 3.2%, as the number of full- time equivalent employees increased to 299 at December 31, 2016 from 284 at December 31, 2015. Lastly, servicing fee paid to minority partner increased by $1.3 million, or 241.7%, for 2016 as compared to 2015. 116
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