CASH 2018 Special Proxy Statement

Crestmark management believes that, as of December 31, 2017, Crestmark Bank met all capital adequacy requirements to which they are subject. There are no significant regulatory constraints placed on Crestmark Bank’s capital. The following sets forth the actual and required capital amounts and ratios (dollars in thousands): Actual Required for Capital Adequacy Purposes Required to Be Well Capitalized Under Prompt Corrective Action Provisions As of December 31, 2017 Amount Ratio Amount Ratio Amount Ratio Total capital (to risk weighted assets) . . . . . . . . . . . . . . $127,503 11.8% $100,234 9.3% $113,779 10.5% Tier 1 capital (to risk weighted assets) . . . . . . . . . . . . . 116,569 10.8% 78,562 7.3% 92,107 8.5% Common equity Tier 1 capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,012 10.5% 62,308 5.8% 75,853 7.0% Tier 1 leverage (to average assets) . . . . . . . . . . . . . . . . . 116,569 10.2% 45,463 4.0% 56,829 5.0% Actual Required for Capital Adequacy Purposes Required to Be Well Capitalized Under Prompt Corrective Action Provisions As of December 31, 2016 Amount Ratio Amount Ratio Amount Ratio Total capital (to risk weighted assets) . . . . . . . . . . . . . . $ 94,157 11.1% $ 73,457 8.6% $ 89,426 10.5% Tier 1 capital (to risk weighted assets) . . . . . . . . . . . . . 83,398 9.8% 56,423 6.6% 72,392 8.5% Common equity Tier 1 capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,481 9.5% 43,648 5.1% 59,617 7.0% Tier 1 leverage (to average assets) . . . . . . . . . . . . . . . . . 83,398 9.6% 34,750 4.0% 43,437 5.0% Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2017 and December 31, 2016, the most recent regulatory notifications categorized Crestmark Bank as well capitalized under the regulatory framework for prompt corrective action. For additional information regarding Crestmark Bank’s Regulatory Matters, see Note 15 of the “Notes to Consolidated Financial Statements” included in this joint proxy statement/prospectus. Quantitative and Qualitative Market Risk Disclosures Crestmark’s primary market risks are interest rate risk and liquidity risk. There is limited foreign exchange risk within Crestmark’s loan portfolio. Any changes in foreign exchange rates or commodity prices would not have a significant impact on Crestmark’s interest income or cash flows. Crestmark, like other financial institutions, is subject to direct and indirect market risk. Direct market risk exists from changes in interest rates. Crestmark’s net income is significantly dependent on its net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest-earning assets. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net income. Interest rate risk (“IRR”) is the fundamental method by which financial institutions earn income and create shareholder value. Excessive exposure to IRR could pose a significant risk to Crestmark Bank’s earnings and capital. 126