CHFC 2018 Annual Report

Noninterest Income The following table presents the major components of noninterest income: Years Ended December 31, (Dollars in thousands) 2018 2017 2016 Noninterest income Service charges and fees on deposit accounts $ 37,097 $ 38,367 $ 30,724 Wealth management revenue 25,996 25,512 22,601 Electronic banking fees (1) 16,777 22,646 22,115 Net gain on sale of loans and other mortgage banking revenue (2) 33,366 38,580 16,747 Change in fair value in loan servicing rights (2) 1,827 (6,375) 5,112 Other fees for customer services (1) 4,599 4,965 3,669 Insurance commissions (1) 61 1,794 1,874 Gain (loss) on sale of investment securities 224 (7,388) 129 Bank-owned life insurance (3) 4,000 4,818 1,836 Rental income (3) 750 762 592 Gain on sale of branch offices — — 7,391 Other (3) 23,839 20,338 9,560 Total noninterest income $ 148,536 $ 144,019 $ 122,350 Significant items (4) — (7,556) 7,391 Noninterest income excluding significant items (4)(5) $ 148,536 $ 151,575 $ 114,959 Noninterest income as a percentage of: Net revenue (net interest income plus noninterest income) 19.0% 20.5% 24.3% Average total assets 0.74% 0.78% 1.02% Net revenue, excluding significant items (4)(5) 19.0% 21.4% 23.2% Average total assets, excluding significant items (4)(5) 0.74% 0.82% 0.96% (1) Included within the line item "Other charges and fees for customer services" in the Consolidated Statements of Income. (2) Included within the line item "Net gain on sale of loans and other mortgage banking revenue" in our Consolidated Statements of Income. (3) Included within the line item "Other" noninterest income in the Consolidated Statements of Income. (4) 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 net gain on the sales of branch offices. (5) 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 $148.5 million in 2018, $144.0 million in 2017 and $122.4 million in 2016. Noninterest income in 2017 included a $7.6 million loss incurred on sales of investment securities as part of our treasury and tax management objectives following the signing of the Tax Cuts and Jobs Act, 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. The $3.0 million decrease in noninterest income in 2018, when compared to 2017, excluding significant items, was primarily due to decreases in electronic banking fees of $5.9 million, net gain on sale of loans and other mortgage banking revenue of $5.2 million and service charges and fees on deposit accounts of $1.3 million, partially offset by the change in the impact to earnings from the change in fair value in loan servicing rights of $8.2 million and an increase in "other" noninterest income of $3.5 million which benefited from an increase in interest rate swap income. Noninterest income, excluding significant items, in 2017, compared to 2016, increased $36.6 million, or 31.9%, with the increase primarily attributable to the incremental revenue resulting from the addition of Talmer into our operations in addition to growth in deposits and services. Service charges and fees on deposit accounts, which include overdraft/non-sufficient funds fees, checking account fees and other deposit account charges, were $37.1 million in 2018, $38.4 million in 2017 and $30.7 million in 2016. Service charges and fees on deposit accounts decreased $1.3 million, or 3.3%, in 2018, compared to 2017, primarily due to a decrease in overdraft/ non-sufficient funds fees as a temporary hold was placed on charging certain account types during our system conversion, partially offset by an increase in checking account service fees. Service charges and fees on deposits accounts increased $7.6 million, or 24.9%, in 2017, compared to 2016, primarily due to additional fees earned as a result of our merger with Talmer and organic 74