CASH 2018 Special Proxy Statement

CRESTMARK BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 – LOANS, LEASES AND RECEIVABLES (Continued) Based on the most recent analysis performed, the risk category of loans, leases, and receivables by portfolio segment is as follows at December 31 year-end: Pass Special Mention Substandard Doubtful Total 2017 Commercial loans . . . . . . . . . . . . . $264,974,970 $ 60,485,560 $ 8,537,876 $— $333,998,406 Leases . . . . . . . . . . . . . . . . . . . . . . 110,553,105 85,338,944 5,508,231 201,400,280 Factoring receivables . . . . . . . . . . . 376,196,564 47,457,746 5,024,505 — 428,678,815 Total . . . . . . . . . . . . . . . . . . . . . . . . $751,724,639 $193,282,250 $19,070,612 $— $964,077,501 2016 Commercial loans . . . . . . . . . . . . . $200,951,252 $ 47,800,491 $14,120,683 $— $262,872,426 Leases . . . . . . . . . . . . . . . . . . . . . . 86,255,429 28,924,433 3,982,321 461 119,162,644 Factoring receivables . . . . . . . . . . . 344,402,805 30,968,110 6,842,593 — 382,213,508 Total . . . . . . . . . . . . . . . . . . . . . . . . $631,609,486 $107,693,034 $24,945,597 $461 $764,248,578 CEF, which originates most of the Corporations leasing transactions and some of its commercial loans, uses the Special Mention category to identify credit qualified middle market customers. As noted in Note 1, CEF switched its emphasis from leases and loans for technology equipment to Fortune 1,000 and other higher investment grade companies to leases and loans for capital equipment and durable goods to qualified middle market companies. The Special Mention category is used to identify and assist management in monitoring these customers and does not identify any specific weakness in most of the transactions. Such accounts are underwritten to standards that would generally result in a Pass classification in the Corporation’s non-leasing portfolio. Performance is monitored and measured by the same qualifying Pass standards. Consumer loans are not risk rated but are monitored based on performance, as previously presented in the aging of the recorded investment in past due loans, leases and receivables table. NOTE 5 – NET INVESTMENT IN DIRECT FINANCING AND SALES-TYPE LEASES The net investment in direct financing and sales-type leases is comprised of the following at year-end 2017 and 2016: 2017 2016 Minimum lease payment receivable . . . . . . . . . . . . . . . . . . . . . . . . . . $215,023,842 $123,217,304 Unamortized initial direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,641,372 3,237,322 Estimated residual values of leased equipment . . . . . . . . . . . . . . . . . . 11,877,829 10,109,603 Premium on acquired leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,703 138,670 Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,175,466) (17,540,255) Net investment in direct financing and sales-type leasing . . . . . . . . . $201,400,280 $119,162,644 F-23