CHFC 2018 Annual Report

Years Ended December 31, 2018 2017 2016 (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 (1)(2) $14,605,963 $678,911 4.65% $13,607,683 $576,429 4.24% $ 9,304,573 $386,575 4.15% Taxable investment securities 2,098,894 62,231 2.96 1,431,167 31,496 2.20 706,567 10,989 1.56 Tax-exempt investment securities (1) 1,036,269 30,708 2.96 905,831 28,120 3.10 595,677 18,929 3.18 Other interest-earning assets 189,153 7,877 4.16 157,738 4,924 3.12 55,341 1,973 3.57 Interest-bearing deposits with FRB and other banks and federal funds sold 263,210 5,727 2.18 298,006 4,244 1.42 194,637 1,555 0.80 Total interest-earning assets 18,193,489 785,454 4.32% 16,400,425 645,213 3.93% 10,856,795 420,021 3.87% Less: Allowance for loan losses (99,152) (82,644) (73,136) Other assets: Cash and cash due from banks 215,284 235,621 186,706 Premises and equipment 125,606 144,114 118,080 Interest receivable and other assets 1,765,303 1,767,640 948,710 Total assets $20,200,530 $18,465,156 $12,037,155 Liabilities and shareholders' equity Interest-bearing liabilities: Interest-bearing demand deposits $ 2,786,138 $ 10,029 0.36% $ 2,753,294 $ 4,870 0.18% $ 2,143,064 $ 3,277 0.15% Savings deposits 4,246,063 29,636 0.70 3,940,499 13,049 0.33 2,534,038 2,877 0.11 Time deposits 3,654,470 57,315 1.57 3,014,302 28,808 0.96 2,154,118 16,867 0.78 Collateralized customer deposits 391,703 2,607 0.67 366,828 1,269 0.35 294,101 303 0.10 Short-term borrowings 1,970,009 37,510 1.90 1,612,123 19,052 1.18 277,409 1,357 0.49 Long-term borrowings 369,910 6,566 1.77 455,246 7,509 1.67 418,636 4,617 1.10 Total interest-bearing liabilities 13,418,293 143,663 1.07 12,142,292 74,557 0.61 7,821,366 29,298 0.37 Noninterest-bearing deposits 3,845,773 — — 3,547,271 — — 2,566,342 — — Total deposits and borrowed funds 17,264,066 143,663 0.83 15,689,563 74,557 0.48 10,387,708 29,298 0.28 Interest payable and other liabilities 196,065 147,731 102,726 Shareholders' equity 2,740,399 2,627,862 1,546,721 Total liabilities and shareholders' equity $20,200,530 $18,465,156 $12,037,155 Net Interest Spread (average yield earned minus average rate paid) 3.25% 3.32% 3.50% Net Interest Income (FTE) $641,791 $570,656 $390,723 Net Interest Margin (Net interest income (FTE) divided by total average interest-earning assets) 3.53% 3.48% 3.60% Reconciliation to Reported Net Interest Income Net interest income, fully taxable equivalent (non-GAAP) $641,791 $570,656 $390,723 Adjustments for taxable equivalent interest (1) : Loans (3,036) (3,301) (3,030) Tax-exempt investment securities (6,422) (9,777) (6,612) Total taxable equivalent interest adjustments (9,458) (13,078) (9,642) Net interest income (GAAP) $632,333 $557,578 $381,081 Net interest margin (GAAP) 3.48% 3.40% 3.51% (1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 21% for 2018 and 35% for 2017 and 2016. 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-GAAPFinancial 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. 71