CHFC 2017 Annual Report

Noninterest Income The following table presents the major components of noninterest income: Years Ended December 31, (Dollars in thousands) 2017 2016 2015 Noninterest income Service charges and fees on deposit accounts $ 35,001 $ 28,136 $ 25,481 Wealth management revenue 25,512 22,601 20,552 Electronic banking fees 24,247 23,433 19,119 Net gain on sale of loans and other mortgage 38,580 16,747 6,133 Change in fair value in loan servicing rights (1) (6,375) 5,112 — Other fees for customer services 6,730 4,939 4,428 Insurance commissions 1,794 1,874 1,966 (Loss) gain on sale of investment securities (7,388) 129 630 Bank-owned life insurance 4,818 1,836 646 Rental income 762 592 466 Gain on sale of branch offices — 7,391 — Gain on sale of closed branch offices and other assets — — 266 Other 20,338 9,560 529 Total noninterest income $ 144,019 $ 122,350 $ 80,216 Significant items (2) (7,556) 7,391 — Noninterest income excluding significant items (2)(3) $ 151,575 $ 114,959 $ 80,216 Noninterest income as a percentage of: Net revenue (net interest income plus noninterest income) 20.5% 24.3% 22.6% Average total assets 0.78% 1.02% 0.95% Net revenue, excluding significant items (2)(3) 21.37% 23.18% 22.65% Average total assets, excluding significant items (2)(3) 0.82% 0.96% 0.95% (1) Included within the line item "Net gain on sale of loans and other mortgage banking revenue" in our Consolidated Statements of Income. (2) For 2017, "significant items" include the fourth quarter of 2017 losses on sales of investment securities taken as part of our treasury and tax management objectives following the signing of the Tax Cuts and Jobs Act. For 2016, "significant items" include merger expenses and net gain on the sales of branch offices. (3) Noninterest income, excluding significant items, as a percentage of net revenue and average total assets, are non-GAAP financial measures. See the section entitled "Non-GAAP Financial Measures." Noninterest income was $144.0 million in 2017, $122.4 million in 2016 and $80.2 million in 2015. Noninterest income in 2017 included a $7.6 million loss incurred on sales of investment securities in the fourth quarter as part of our treasury and tax management objectives following the signing of the Tax Cuts and JobsAct, noted as a significant item for 2017, and 2016 included $7.4 million of net gain on the sales of branches, noted as a significant item for 2016. Excluding these significant items in each applicable period, noninterest income increased $36.6 million, or 31.9%, in 2017, compared to 2016, with the increase primarily attributable to the incremental revenue resulting from the addition of Talmer into our operations in addition to organic growth in deposits and services. Noninterest income, excluding the gain on the sales of branch offices in 2016 increased $34.7 million, or 43.3%, in 2016, compared to 2015, with the increase primarily attributable to the incremental revenue resulting fromour transactions with Talmer, Lake Michigan and Monarch. Service charges and fees on deposit accounts, which include overdraft/non-sufficient funds fees, checking account fees and other deposit account charges, were $35.0 million in 2017, $28.1 million in 2016 and $25.5 million in 2015. Service charges and fees on deposit accounts increased $6.9 million, or 24.4%, in 2017, compared to 2016, and $2.7 million, or 10.4%, in 2016, compared to 2015, due primarily to additional fees earned as a result of our merger with Talmer and organic growth in customer deposit accounts. Overdraft/non-sufficient funds fees included in service charges and fees on deposit accounts were $25.1 million in 2017, compared to $21.0 million in 2016 and $18.7 million in 2015. Wealth management revenue is comprised of investment fees that are generally based on the market value of assets within a trust account, custodial account fees and fees from the sale of investment products. Volatility in the equity and bond markets 70