CHFC 2017 Annual Report

Years Ended December 31, 2017 2016 2015 (Dollars in thousands) Average Balance Interest (FTE) Effective Yield/ Rate (1) Average Balance Interest (FTE) Effective Yield/ Rate (1) Average Balance Interest (FTE) Effective Yield/ Rate (1) Assets Interest-earning assets: Loans (2) $13,607,683 $576,429 4.24% $ 9,304,573 $386,575 4.15% $6,594,507 $274,341 4.16% Taxable investment securities 1,431,167 31,496 2.20 706,567 10,989 1.56 683,612 8,786 1.29 Tax-exempt investment securities 905,831 28,120 3.10 595,677 18,929 3.18 415,092 13,956 3.36 Other interest-earning assets 157,738 4,924 3.12 55,341 1,973 3.57 34,188 1,648 4.82 Interest-bearing deposits with FRB and other banks and federal funds sold 298,006 4,244 1.42 194,637 1,555 0.80 123,735 510 0.41 Total interest-earning assets 16,400,425 645,213 3.93% 10,856,795 420,021 3.87% 7,851,134 299,241 3.81% Less: Allowance for loan losses (82,644) (73,136) (75,378) Other assets: Cash and cash due from banks 235,621 186,706 155,109 Premises and equipment 144,114 118,080 105,904 Interest receivable and other assets 1,767,640 948,710 444,459 Total assets $18,465,156 $12,037,155 $8,481,228 Liabilities and shareholders' equity Interest-bearing liabilities: Interest-bearing demand deposits $ 2,753,294 $ 4,870 0.18% $ 2,143,064 $ 3,277 0.15% $1,661,592 $ 1,465 0.09% Savings deposits 3,940,499 13,049 0.33 2,534,038 2,877 0.11 1,947,659 1,512 0.08 Time deposits 3,014,302 28,808 0.96 2,154,118 16,867 0.78 1,557,425 12,429 0.80 Short-term borrowings 1,978,951 20,321 1.03 571,510 1,660 0.29 420,529 453 0.11 Long-term borrowings 455,246 7,509 1.67 418,636 4,617 1.10 117,000 1,922 1.64 Total interest-bearing liabilities 12,142,292 74,557 0.61 7,821,366 29,298 0.37 5,704,205 17,781 0.31 Noninterest-bearing deposits 3,547,271 — — 2,566,342 — — 1,791,991 — — Total deposits and borrowed funds 15,689,563 74,557 0.48 10,387,708 29,298 0.28 7,496,196 17,781 0.24 Interest payable and other liabilities 147,731 102,726 65,704 Shareholders' equity 2,627,862 1,546,721 919,328 Total liabilities and shareholders' equity $18,465,156 $12,037,155 $8,481,228 Net Interest Spread (average yield earned minus average rate paid) 3.32% 3.50% 3.50% Net Interest Income (FTE) $570,656 $390,723 $281,460 Net Interest Margin (Net interest income (FTE) divided by total average interest-earning assets) 3.48% 3.60% 3.58% Reconciliation to Reported Net Interest Income Net interest income, fully taxable equivalent (non-GAAP) $570,656 $390,723 $281,460 Adjustments for taxable equivalent interest (1) : Loans (3,301) (3,030) (2,569) Tax-exempt investment securities (9,777) (6,612) (4,883) Total taxable equivalent interest adjustments (13,078) (9,642) (7,452) Net interest income (GAAP) $557,578 $381,081 $274,008 Net interest margin (GAAP) 3.40% 3.51% 3.49% (1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry. Please refer to the section entitled "Non-GAAP Financial Measures." (2) Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees. 67