CHFC 2017 Annual Report

Short-term Borrowings Short-term borrowings were $2.0 billion and $0.8 billion at December 31, 2017 and 2016, respectively. Short-term borrowings increased $1.2 billion, or 142.4%, during 2017, primarily due to the addition of short-term FHLB advances utilized to fund short-term liquidity needs resulting from loan growth and an increase in investment securities. FHLB advances are borrowings from the Federal Home Loan Bank are generally used to fund loans and are secured by both a blanket security agreement of residential mortgage first lien and other real estate loans with an aggregate book value equal to at least 140%of the advances and FHLB capital stock owned by Chemical Bank. The carrying value of loans eligible as collateral under the blanket security agreement was $7.36 billion at December 31, 2017. The average daily balance, average interest rate during the period and maximum month-end balance of short-term FHLB advances during the year ended December 31, 2017 was $1.6 billion, 1.18%, and $2.0 billion, respectively. The average daily balance, average interest rate during the period and maximum month-end balance of short-term FHLB advances during years ended December 31, 2016 and 2015 were $277.4 million, 0.49%, and $825.0 million and $89.2 million, 0.23% and $280.0 million, respectively. We rely on short-term FHLB advances to cover short-term liquidity needs. Long-term Borrowings Long-term borrowings were $372.9 million and $597.8 million at December 31, 2017 and 2016, respectively. Long-term borrowings decreased $225.0 million, or 37.6%, during 2017, primarily due to our decision to pay down the remaining balance on the non-revolving line-of-credit that was added in conjunction with our merger with Talmer. A summary of the composition of long-term borrowings follows: December 31, (Dollars in thousands) 2017 2016 Long-term borrowings: Long-term FHLB advances $ 337,204 $ 438,538 Securities sold under agreement to repurchase — 19,144 Non-revolving line-of-credit 19,963 124,625 Subordinated debt obligations 15,715 15,540 Total long-term borrowings $ 372,882 $ 597,847 In conjunction with our merger with Talmer, we entered into a credit agreement of $145.0 million consisting of a $125.0 million term line-of credit and a $20.0 million revolving line-of-credit. The $20.0 million revolving line-of-credit and $105.0 million of the term line of credit was available for use at December 31, 2017. Securities sold under agreements to repurchase with an unaffiliated third-party financial institution represent financing arrangements that are secured by available-for-sale investment securities. These borrowings were obtained as part of our Lake Michigan acquisition and our merger with Talmer and were repaid during the year ended December 31, 2017. 63 Contractual Obligations and Credit-Related Commitments We have various financial obligations, including contractual obligations and commitments, which may require future cash payments. Refer toNotes 1, 13, 14 and 15 to our Consolidated Financial Statements for a further discussion of these contractual obligations.