CASH 2018 Special Proxy Statement

CRESTMARK BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 16 – FAIR VALUE (Continued) The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2). The Corporation did not have any Level 3 fair value measurements for securities available for sale at December 31, 2017 or 2016. The fair value of impaired loans, leases and receivables with specific allocations of the allowance for credit losses are generally based on the estimated fair value of the underlying collateral. The value of the underlying collateral, generally accounts receivable, is adjusted to consider the probability of collection and expense to be incurred during the collection process. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Appraisals for collateral-dependent impaired loans, leases, and receivables are generally performed by certified general appraisers (for commercial real estate properties and equipment) whose qualifications and licenses have been reviewed and verified by the Corporation. Values of certain types of equipment are determined by reference to trade publications. Management reviews the assumptions and approaches utilized in the appraisal and will discount a property’s or equipment’s appraised or estimated values to account for a number of factors including but not limited to the cost of liquidating the collateral, the age of the appraisal, observable deterioration since the appraisal, or other factors unique to the property or equipment. Assets and Liabilities Measured on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis at December 31, 2017 and 2016 were securities available for sale. The fair value of securities available for sale are level 1 for other securities and level 2 for all others. The values by class of security are presented in Note 3. F-34