CASH 2018 Special Proxy Statement

CRESTMARK BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 – INCOME TAXES (Continued) Net deferred tax liabilities at year-end 2017 and 2016 are as follows: 2017 2016 Deferred tax assets: Allowance for loan losses . . . . . . . . . . . . . . . $ 2,449,465 $ 3,766,399 Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,984,988 4,407,891 Deferred compensation . . . . . . . . . . . . . . . . . 509,003 491,966 Business credits . . . . . . . . . . . . . . . . . . . . . . 1,434,038 3,998,581 Net operating loss . . . . . . . . . . . . . . . . . . . . . 120,886 4,510,232 Deferred loan fees . . . . . . . . . . . . . . . . . . . . . 406,894 589,205 Stock option expense . . . . . . . . . . . . . . . . . . 242,458 564,359 Unrealized losses . . . . . . . . . . . . . . . . . . . . . 342,128 755,558 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577,441 3,634,619 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,067,301 22,718,810 Deferred tax liability: Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (19,656,223) (27,777,948) Section 197 intangible . . . . . . . . . . . . . . . . . (806,385) (1,039,211) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (759,372) (4,518,558) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,221,980) (33,335,717) Net deferred tax liability . . . . . . . . . . . . . . . . . . . . $ (7,154,679) $(10,616,907) At December 31, 2017, the Corporation has a pre-tax general business credit carryforward of approximately $1,400,000, which will begin to expire in 2036 if not used. A valuation allowance related to deferred tax assets is required when it is considered more likely than not that all or part of the benefit related to such assets will not be realized. In the opinion of management, it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. Management has determined that no valuation allowance is required at year-end 2017 and 2016. There were no unrecognized tax benefits at December 31, 2017, and the Corporation does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months. There were no tax penalties or interest recorded in 2017, 2016 or 2015. The Corporation is no longer subject to examination by the Internal Revenue Service for the years before 2014. The Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on December 22, 2017. The Tax Act has a significant impact on the U.S. corporate income tax regime by lowering the U.S. corporate tax rate from 35 percent to 21 percent effective for taxable years beginning on or after January 1, 2018 in addition to implementing numerous other changes. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. As a result of the Tax Act, the Company remeasured its deferred tax assets and deferred tax liabilities during year end December 31, 2017, resulting in an income tax benefit of $5.7 million. In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance regarding how a company is to reflect provisional amounts when necessary F-28

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