CASH 2018 Special Proxy Statement

CRESTMARK BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 – STOCK OPTIONS (Continued) The following table shows the activity of options and share awards granted, exercised or forfeited under the Corporation’s option plans during the year ended December 31, 2017: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Average Intrinsic Value Options outstanding, December 31, 2016 . . . . . . . . . . . . . . . 119,500 $ 57.06 Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 127.00 Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,000) 57.82 Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Options outstanding, December 31, 2017 . . . . . . . . . . . . . . . 104,000 $ 57.80 5.2 $19,035,560 Options exercisable at end of year . . . . . . . . . . . . . . . . . . . . . 82,400 $ 45.05 4.2 $16,169,086 Intrinsic values presented above are based upon the value resulting from the proposed Meta Bank merger as discussed in Notes 9 and 19 assuming the Meta Bank share price was $91.35 per share. Nonvested options at the beginning and end of the year were 29,400 and 21,600, respectively and all options are expected to vest. All options will be fully vested on the closing date of the merger discussed in Note 19. Information related to the stock option plans during each year follows: 2017 2016 2015 Intrinsic value of options exercised . . . . . . . . . . . . $1,297,350 $5,270,450 $124,925 Cash received from option exercises . . . . . . . . . . . 1,098,650 922,550 55,324 Compensation expense recognized in 2017, 2016 and 2015 was $300,000. At year-end 2017, there was $248,198 of unrecognized compensation cost related to nonvested stock options under the Plan. The costs are expected to be recognized over a weighted-average period of 2.2 years. NOTE 15 – REGULATORY MATTERS Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practice. Capital amounts and classifications are also subject to qualitative judgements by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Bank on January 1, 2015 with full compliance with all of the requirements including a capital conservation buffer being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The capital conservation buffer is being phased in from 0.00% in 2015 to 2.50% by 2019. The net unrealized gain or loss on securities available for sale is not included in computing regulatory capital. Management believes as of December 31, 2017, the Corporation and Bank meet all capital adequacy requirements to which they are subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used F-32