CHFC 2018 Annual Report

FELLOW SHAREHOLDERS The past year has been one of action and accomplishments. We were laser focused on our strategic plan and completed many of our high priority items, including meeting our production goals. Most importantly, we did not lose focus on our customers, and our day-to-day operations. This is a true testament to the caliber of our team members. 2018 RESULTS We are very proud of our strong performance during 2018 including: • $284.0 million of net income; • Diluted earnings per share of $3.94, increased 89% over 2017 diluted earnings per share of $2.08, and increased 29% over 2017 diluted earnings per share, excluding significant items, of $3.06 (non-GAAP). Significant items in 2017 were the charge to income tax expense from the revaluation of our net deferred tax assets as a result of the Tax Cuts and Jobs Act, merger and restructuring expenses and fourth quarter losses on sales of investment securities as part of our treasury and tax management objectives. (We had no significant items in 2018.); • Improvement in our efficiency ratio to 54.3%, and in our adjusted efficiency ratio to 51.5% (non-GAAP); • High-quality loan growth of $1.1 billion, an 8% increase from 2017, while improving our net interest margin; • An increase in our deposit base of $2.0 billion, a 14% increase year over year; • Completion of our core operating system conversion, designed to increase efficiency, improve our customer experience and support our growth trajectory; • Recruitment and retention of high-quality talent, while strengthening our efforts to expand the diversity of our team; and • Introduction of our Chemical Bank Culture Initiative. In addition, this past summer we earned the City of Detroit’s banking relationship, the single largest deposit account relationship in our bank’s history. Being awarded the City of Detroit’s banking relationship made it the right time for us to announce our headquarters move from Midland to Detroit. We are excited about moving into our new building at the corner of Elizabeth and Woodward, in the future. Detroit is the financial hub for advanced manufacturing and mobility and with our legacy markets as our foundation, our continued expansion into the Detroit market establishes us as a leading financial institution in the Midwest. We continued to show our strong commitment to the City of Detroit when we were awarded the naming rights to Cobo Center, one of the nation’s leading convention centers. We look forward to contributing to make this Center a vibrant destination for the City and the region for many years to come. And while we are all excited about the tremendous progress we’ve made, we are even more excited about what lies ahead for our great organization.