CHFC 2018 Annual Report

Commercial, commercial real estate, real estate construction and land development loans are referred to as the Corporation's commercial loan portfolio, while residential mortgage, consumer installment and home equity loans are referred to as the Corporation's consumer loan portfolio. A summary of the Corporation's loans follows: (Dollars in thousands) Originated Acquired (1) Total loans December 31, 2018 Commercial loan portfolio: Commercial $ 3,287,087 $ 715,481 $ 4,002,568 Commercial real estate: Owner-occupied 1,513,532 546,025 2,059,557 Non-owner occupied 1,966,330 818,690 2,785,020 Vacant land 40,295 27,215 67,510 Total commercial real estate 3,520,157 1,391,930 4,912,087 Real estate construction and land development 566,726 30,486 597,212 Subtotal 7,373,970 2,137,897 9,511,867 Consumer loan portfolio: Residential mortgage 2,407,305 1,051,361 3,458,666 Consumer installment 1,451,352 69,722 1,521,074 Home equity 612,129 166,043 778,172 Subtotal 4,470,786 1,287,126 5,757,912 Total loans (2) $ 11,844,756 $ 3,425,023 $ 15,269,779 December 31, 2017 Commercial loan portfolio: Commercial $ 2,407,606 $ 978,036 $ 3,385,642 Commercial real estate: Owner-occupied 1,185,614 627,948 1,813,562 Non-owner occupied 1,518,787 1,087,974 2,606,761 Vacant land 47,024 33,323 80,347 Total commercial real estate 2,751,425 1,749,245 4,500,670 Real estate construction and land development 498,155 76,060 574,215 Subtotal 5,657,186 2,803,341 8,460,527 Consumer loan portfolio: Residential mortgage 1,967,857 1,284,630 3,252,487 Consumer installment 1,510,540 102,468 1,613,008 Home equity 611,846 217,399 829,245 Subtotal 4,090,243 1,604,497 5,694,740 Total loans (2) $ 9,747,429 $ 4,407,838 $ 14,155,267 (1) Loans acquired in the Talmer, Lake Michigan, Monarch, Northwestern and OAK acquisitions were elected to be accounted for under ASC 310-30, Loans andDebt SecuritiesAcquiredwith Deteriorated Credit Quality (ASC 310-30), by analogy. See Note 1, Summary of Significant Accounting Policies for further information. (2) Reported net of deferred costs totaling $19.7 million and $26.1 million at December 31, 2018 and 2017, respectively. The Corporation acquired loans at fair value as of the acquisition date, which includes loans acquired in the acquisitions of Talmer, Lake Michigan, Monarch, Northwestern and OAK. Loans acquired in each of these transactions ("Acquired Loans) were elected to be accounted for under ASC 310-30, by analogy, which recognizes the expected shortfall of expected future cash flows, as compared to the contractual amount due, as nonaccretable difference. Any excess of the net present value of expected future cash flows over the acquisition date fair value is recognized as the accretable discount, or accretable yield. The accretable discount is recognized over the expected remaining life of the acquired loans on a pool basis. In the event an acquired loan is renewed or extended, the loan continues to be accounted for as an acquired loan on a pool basis in accordance with ASC 310-30. Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2018 117