CASH 2018 Special Proxy Statement

CRESTMARK BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 16 – FAIR VALUE (Continued) The methods and assumptions used to estimate fair value are described as follows: Carrying amount is the estimated fair value for cash and cash equivalents, accrued interest receivable and payable, federal funds purchased, and variable rate loans, leases and receivables and interest bearing deposits that reprice frequently and fully. For loans, leases and receivables and interest-bearing deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. The methods used to determine the fair value of loans, leases and receivables do not necessarily represent an exit price. Fair value of the Corporations subordinated debt approximates book value as a result of the variable interest rate paid which resets to a market rate on a regular basis. The fair value of non-recourse notes payable is based on current rates for similar financing. The fair value of off-balance-sheet items is not considered material. NOTE 17 - PREFERRED STOCK On August 9, 2011, the Corporation consummated a securities purchase agreement with the Secretary of the Treasury of the United States, as a participant in the Small Business Lending Fund (SBLF) program. The SBLF program provides Tier 1 capital to qualifying community banking organizations in an effort to increase small business lending. Pursuant to which the Corporation issued 8,250 shares of the Corporation’s non-cumulative perpetual preferred stock, having a liquidation amount of $1,000 per share, for an aggregate amount of $8,250,000. On March 15, 2017, the Corporation redeemed all of its shares of preferred stock with the SBLF, including accrued dividends, by drawing on the corporation’s line of credit in the amount of $8 million, as disclosed in Note 13. NOTE 18 – EARNINGS PER SHARE The factors used in the earnings per share computation follow: 2017 2016 2015 Basic income per common share: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,111,170 $15,544,829 $12,482,377 Preferred stock dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (152,625) (668,250) (83,646) Net income attributable to common shareholders . . . . . . . . . . . . 28,958,545 14,876,579 12,398,731 Weighted average common shares outstanding . . . . . . . . . . . . . 1,230,429 1,214,446 1,168,586 Basic income per common share . . . . . . . . . . . . . . . . . . . . . . . . . $ 23.54 $ 12.25 $ 10.61 Diluted income per common share: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,111,170 $15,544,829 $12,482,377 Preferred stock dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (152,625) (668,250) (83,646) Net income attributable to common share holders . . . . . . . . . . . 28,958,545 14,876,579 12,398,731 Weighted average common shares outstanding . . . . . . . . . . . . . 1,230,429 1,214,446 1,168,586 Diluted Outstanding options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,492 57,516 102,817 Weighted average diluted common shares outstanding . . . . . . . 1,285,921 1,271,962 1,271,403 Diluted income per common share . . . . . . . . . . . . . . . . . . . . . . . $ 22.52 $ 11.70 $ 9.75 NOTE 19 – SUBSEQUENT EVENTS On January 9, 2018, Crestmark entered into an Agreement and Plan of Merger with Meta Financial Group, Inc. and MetaBank (“MetaBank”), a federally chartered stock savings bank. Upon the terms and subject to the F-38