CHFC 2018 Annual Report

As of and for the years ended December 31, (Dollars in thousands, except per share data) 2018 2017 2016 2015 2014 Balance Sheet Data Total assets $21,498,341 $ 19,280,873 $ 17,355,179 $ 9,188,797 $ 7,322,143 Investment securities 3,645,931 2,640,639 1,858,391 1,063,702 1,065,277 Loans 15,269,779 14,155,267 12,990,779 7,271,147 5,688,230 Deposits 15,593,282 13,642,803 12,873,122 7,456,767 6,078,971 Liabilities 18,662,081 16,612,124 14,773,653 8,172,823 6,525,010 Shareholders' equity 2,836,260 2,668,749 2,581,526 1,015,974 797,133 Tangible shareholders' equity (non-GAAP) (1) 1,682,383 1,510,011 1,425,998 714,901 606,419 Performance Ratios Net interest margin 3.48% 3.40% 3.51% 3.49% 3.49% Net interest margin(fully taxable equivalent)(Non- GAAP) (1)(2) 3.53% 3.48% 3.60% 3.58% 3.59% Return on average assets 1.41% 0.81% 0.90% 1.02% 0.96% Return on average shareholders' equity 10.4% 5.7% 7.0% 9.4% 8.2% Return on average tangible shareholders' equity (Non- GAAP) (1) 17.9% 10.2% 11.2% 12.9% 10.4% Average shareholders' equity as a percentage of average assets 13.6% 14.2% 12.8% 10.8% 11.7% Efficiency ratio (GAAP) 54.3% 60.1% 67.2% 63.2% 65.3% Efficiency ratio adjusted (non-GAAP) (1) 51.5% 51.9% 54.4% 58.7% 60.9% Dividend payout ratio 31.5% 52.9% 48.8% 41.8% 47.7% Consolidated Capital Ratios Shareholders' equity as a percentage of total assets 13.2% 13.8% 14.9% 11.1% 10.9% Tangible shareholders' equity as a percentage of tangible assets (non-GAAP) (1) 8.3% 8.3% 8.8% 8.0% 8.5% Common equity tier 1 capital (3) 10.7% 10.2% 10.7% 10.6% N/A Tier 1 leverage ratio (3) 8.7% 8.3% 9.0% 8.6% 9.3% Tier 1 risk-based capital ratio (3) 10.7% 10.2% 10.7% 10.7% 11.1% Total risk-based capital ratio (3) 11.5% 11.0% 11.5% 11.8% 12.4% Asset Quality Net loan charge-offs $ 12,653 $ 9,681 $ 9,935 $ 8,855 $ 9,489 Net loan charge-offs as a percentage of average loans 0.09% 0.07% 0.11% 0.13% 0.19% Year end balances: Allowance for loan losses — originated loans $ 109,564 $ 91,887 $ 78,268 $ 73,328 $ 75,183 Allowance for loan losses — acquired loans 420 — — — 500 Total nonaccrual loans 85,433 63,095 44,334 62,225 50,644 Total nonperforming assets 91,689 71,902 61,521 72,160 64,849 Allowance for originated loan losses as a percentage of total originated loans 0.93% 0.94% 1.05% 1.26% 1.51% Allowance for originated loan losses as a percentage of nonaccrual loans 128.2% 145.6% 176.5% 117.8% 148.5% Nonaccrual loans as a percentage of total loans 0.56% 0.45% 0.34% 0.86% 0.89% Nonperforming assets as a percentage of total assets 0.43% 0.37% 0.35% 0.79% 0.89% (1) Denotes a non-GAAP Financial Measure. Please refer to section entitled " Non-GAAP Financial Measures " included within "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a reconciliation to the most directly comparable GAAP financial measure. (2) Presented on a tax equivalent basis using a 21% tax rate for 2018 and a 35% tax rate for all prior periods presented. (3) The years ended December 31, 2018, 2017, 2016 and 2015 are under Basel III framework and the year ended December 31, 2014 is under the Basel I framework. The Common Equity Tier 1 (CET1) capital ratio is a new ratio introduced under the Basel III framework. 38