CASH 2018 Special Proxy Statement

CRESTMARK BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 15 – REGULATORY MATTERS (Continued) 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 year-end 2017 and 2016, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category. Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the holding company or by the holding company to shareholders. The Bank’s actual and required capital amounts including the phase-in of the capital conservation buffer (in thousands) and ratios were as follows for year-end 2017 and 2016: Actual Minimum Required for Capital Adequacy Purposes Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations Amount Ratio Amount Ratio Amount Ratio 2017 Total risk-based 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% Tier 1 capital (to average assets) . . . . . . . . . . . . . . 116,569 10.2% 45,463 4.0% 56,829 5.0% Common equity tier 1 (to risk-weighted assets) . . . 114,012 10.5% 62,308 5.8% 75,853 7.0% 2016 Total risk-based 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% Tier 1 capital (to average assets) . . . . . . . . . . . . . . 83,398 9.6% 34,750 4.0% 43,437 5.0% Common equity tier 1 (to risk-weighted assets) . . . 80,481 9.5% 43,648 5.1% 59,617 7.0% At December 31, 2017, the Corporation is not subject to regulatory capital requirements issued by the Federal Reserve Bank. NOTE 16 – FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that an entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. F-33