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Creating a Premier Midwest
Community Bank
David T. Provost
Chief Executive Officer
Thomas C. Shafer
Vice Chairman, Chief Executive
Officer of Chemical Bank
Dennis Klaeser
Chief Financial Officer
November 2017 Conferences
This presentation and the accompanying presentation by management contains forward-looking statements that are based on management's beliefs, assumptions, current expectations,
estimates and projections about the financial services industry, the economy and Chemical Financial Corporation ("Chemical"). Words and phrases such as "anticipates," "believes,"
“focus,” "continue," "estimates," "expects," "forecasts," "future," "intends," "is likely," "opinion," "opportunity," "plans," "potential," "predicts," "probable," "projects," "should,"
"strategic," "trend," "will," and variations of such words and phrases or similar expressions are intended to identify such forward-looking statements. These statements include, among
others, statements related to loan pipeline and portfolio projections, expectations around future growth, including organic and acquisitive growth plans, and plans to hire additional
commercial lenders, bankers and other support staff, the impact of our restructuring efforts, including the expected pre-tax charges and annualized cost savings related to such efforts,
our focus on realizing operating and business synergies related to our merger with Talmer, and our focus, in 2018, on increasing our proportion of loans sold to enhance the run rate on
mortgage banking fee income. All statements referencing future time periods are forward-looking. Management's determination of the provision and allowance for loan losses; the
carrying value of acquired loans, goodwill and mortgage servicing rights; the fair value of investment securities (including whether any impairment on any investment security is
temporary or other-than-temporary and the amount of any impairment); and management's assumptions concerning pension and other postretirement benefit plans involve judgments
that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate
sensitivity is forward-looking. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on
Chemical, specifically, are also inherently uncertain.
Forward-looking statements are based upon current beliefs and expectations and involve substantial risks and uncertainties that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements. Accordingly, such statements are not guarantees of future performance and involve certain risks, uncertainties and
assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ
from what may be expressed or forecasted in such forward-looking statements. Chemical undertakes no obligation to update, amend or clarify forward-looking statements, whether as
a result of new information, future events or otherwise. Risk factors including, without limitation:
• Chemical’s ability to attract and retain new commercial lenders and other bankers as well as key operations staff in light of competition for experienced employees in the banking
industry;
• Chemical’s ability to grow its deposits while reducing the number of physical branches that it operates;
• Negative reactions to the branch closures by Chemical Bank’s customers, employees and other counterparties;
• Economic conditions (both generally and in Chemical’s markets) may be less favorable than expected, which could result in, among other things, a deterioration in credit quality, a
reduction in demand for credit and a decline in real estate values;
• A general decline in the real estate and lending markets, particularly in Chemical’s market areas, could negatively affect Chemical’s financial results;
• Increased cybersecurity risk, including potential network breaches, business disruptions, or financial losses;
• Restrictions or conditions imposed by Chemical’s or Chemical Bank’s regulators on Chemical’s or Chemical Bank’s operations may make it more difficult for Chemical to
achieve its goals;
• Legislative or regulatory changes, including changes in accounting standards and compliance requirements, may adversely affect Chemical;
• Changes in the interest rate environment may reduce margins or the volumes or values of the loans Chemical makes or has acquired; and
• Economic, governmental, or other factors may prevent the projected population, residential, and commercial growth in the markets in which Chemical operates.
In addition, risk factors include, but are not limited to, the risk factors described in Item 1A of Chemical’s Annual Report on Form 10-K for the year ended December 31, 2016. These
and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.
Forward-Looking Statements
2
Non-GAAP Financial Measures
This presentation and the accompanying presentation by management contain certain non-GAAP financial disclosures that are not in accordance with U.S. generally accepted
accounting principles ("GAAP"). Such non-GAAP financial measures include Chemical’s tangible shareholders' equity to tangible assets ratio, tangible book value per share,
presentation of net interest income and net interest margin on a fully taxable equivalent basis, operating expenses-core (which excludes merger and restructuring expenses and
impairment of income tax credits), operating expenses-efficiency ratio (which excludes merger and restructuring expenses, impairment of income tax credits and amortization of
intangibles), the adjusted efficiency ratio (which excludes significant items, impairment of income tax credits, amortization of intangibles, net interest income FTE adjustments, gains
from sale of investment securities and closed branch locations) and other information presented excluding significant items, including net income, diluted earnings per share, return on
average assets, return on average shareholders' equity and return on average tangible shareholders’ equity. Chemical uses non-GAAP financial measures to provide meaningful,
supplemental information regarding its operational results and to enhance investors’ overall understanding of Chemical’s financial performance. The limitations associated with non-
GAAP financial measures include the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these
measures differently. These disclosures should not be considered an alternative to Chemical’s GAAP results. See the Appendix included with this presentation for a reconciliation of
the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Non-GAAP Financial Measures
2
Emphasize our strategy of
being the Premier Midwest
Community Bank
4
1
Demonstrated track record of
organic growth2
Strong performance metrics and
profitability should drive upside3
Realizing our ever greater potential
The largest banking company headquartered in Michigan
Scalable core strategies and disciplines
Proven organic growth initiatives
Leadership in EPS growth among peers (1)
Total Return out-performance (peers and indices) (1)
ROAA(2) 1.2%, ROAE(2) 8.6%, ROATCE(2)14.7%, low efficiency ratio
Delivering on projected merger benefits
Consistent EPS growth performance
Market share growth
Revenue enhancements
Concentrate on achieving cost savings and exploiting business synergy opportunities
Continue to build out and enhance risk management practices
(1) Source: SNL Geographic Intelligence
(2) ROAA, ROAE and ROATCE, excluding significant items, are non-GAAP financial measure. “Significant items” are defined as merger expenses, restructuring
expenses and the change in fair value of loan servicing rights. Please refer to slides 32 - 35 for a reconciliation of non-GAAP financial measures.
Overview
4
“Local” community bank
Strong belief in the community banking concept
23 identified centers of influence
Community-driven leadership, rapid local response
Emphasis on building relationships
We know our markets, what works, and what does not work
Strong credit culture
Diversification
In-depth knowledge of our customers and markets
Underwriting discipline
Low cost, stable, core funding – starts at relationship level
Expense management and control
Clean balance sheet, solid capital ratios and intense focus on effective capital deployment
Identify, hire, motivate and retain talented individuals to carry out our relationship strategies
Sustain long-term growth through combination of organic and acquisitive growth
Higher lending limits provide enhanced middle market lending growth opportunities
Opportunities for fee income growth from Wealth Management and Mortgage Banking synergies
Enhancing preparedness for future acquisitive growth opportunities in Michigan, Ohio, and Indiana
Scalable Core Strategies & Disciplines
Core Values
5
▪ Company-wide focus on efficient allocation of capital, enhancing
efficiency, improving customer service and driving revenue
growth
* 7.5 percent reduction in total employees in 3Q17
* 4Q17 planned consolidation of 25 branches, in addition to the 13 branches
consolidated in 3Q17
* Planned exiting of title insurance services and reducing resources allocated to auto
lending
* 3Q17 resulted in a pre-tax charge of $18.8 million as a result of retirement costs,
severance and charges associated with disposition of branch facilities
* Annualized cost savings expected to be about $20 million
▪ A portion of cost savings will be spent hiring commercial lenders,
other bankers and support staff with a goal of building market
share and further enhancing revenue growth
Restructuring Announced Sept. 12, 2017
6
$293
$480 $566 $476
$837
$283 $394 $166
$44
$475
$1,108
$4,882
7.6%
11.5%
12.2%
8.4%
11.5%
8.7%
11.9%
5.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
$0
$500
$1,000
$1,500
$2,000
$2,500
2012 2013 2014 2015 2016 1Q'17 2Q'17 3Q'17
Annual
Organic
Loan
Gr
o
w
th
(
%
)
$
i
n
M
i
l
l
i
o
n
s
Organic Acquired Annual Organic Loan Growth
7
Breakdown of CHFC’s Loan Growth
Source: Company Documents, SNL Financial
* Annualized organic loan growth
$1,041
$1,583
$5,720
g g ( )
’12 -’16 Year Loan Growth CAGR: 103%
’12 – ’16 Organic Loan Growth CAGR: 42%
Av . Annual Or anic Growth ’12-’16 : 10.2%
Loans @ Year
End ($B) $4.2 $4.6 $5.7 $7.3 $13.0
Improving Organic Loan Growth
$13.3
*
$13.7
6,0
*
*
$13.8
8
EPS Growth Translates to Outsized Shareholder Return
Source: CHFC data per Company Documents, Peer data per SNL Financial; Market data as of 11/9/2017
(1) Diluted EPS, excluding significant items, is a non-GAAP financial measure. Peer Income excludes extraordinary items, non-recurring items and gains/losses on sale of securities. Please refer to
slides 32 – 35 for a reconciliation of non-GAAP financial measures for CHFC calculations.
(2) Peers include nationwide banks with $10 to $25 billion in total assets
(3) Includes cash dividends paid on common shares
Diluted EPS, excluding significant items,
Growth(1)
Total Shareholder Return (%)(3)
(2)
E
P
S
(
$
)
D
iluted E
P
S
, excluding significant item
s, Y
oY
G
row
th (%
)
T
o
t
a
l
S
h
a
r
e
h
o
l
d
e
r
R
e
t
u
r
n
(
%
)
(2)
CHFC ’12-’16 Diluted EPS CAGR:
11.0%
(1)
(1)
’12-Nov’17 Total Return CAGR:
CHFC: 19.7%
Peers: 15.9%
$1.97
$2.39
$2.17
$2.61
$1.85
$2.00
$2.11
$2.54
$2.81
$2.99
11.5%
8.1%
5.5%
20.4%
10.6%
8.4%
3.6%
8.7%
7.1%
9.0%
0%
15%
30%
45%
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2012 2013 2014 2015 2016 3Q YTD'17
Ann.CHFC GAAP EPS
CHFC Diluted EPS, excluding significant items
CHFC Diluted EPS, excluding significant items, YoY Growth
Peer Median Adjusted Diluted EPS YoY Growth
$19.4 billion in assets
Largest banking company headquartered and
operating branches in Michigan
Operates 236 banking offices primarily in Michigan,
Northeast Ohio and Northern Indiana
Local market knowledge and business development
opportunities led by 23 community-based advisory
boards
One of the largest trust and wealth management
operations of a Michigan-headquartered bank with
$4.9 billion in assets under management or custody
and another $1.4 billion in assets within the Chemical
Financial Advisors Program
Focused on realizing operating and business synergies
from Chemical/Talmer merger, enhancing organic growth
potential and growing market share in key urban
markets
$3.7 billion Market Capitalization(1)
(1) Based upon CHFC shares outstanding of 71.2 million and the CHFC stock price of $51.75 on November 7, 2017.
9
About Chemical Financial Corporation
62.7%
64.2%
65.3%
63.2%
67.2%
61.5%
60.8%
63.1%
61.6%
58.7%
54.4% 53.5%
59.5%
63.0%
61.2%
59.4%
57.5%
55.7%
50.0%
53.0%
56.0%
59.0%
62.0%
65.0%
68.0%
2012 2013 2014 2015 2016 YTD'17 Ann.
CHFC, GAAP CHFC, adjusted Peer Median
11.2%
11.4%
10.3%
12.8%
12.2%
12.8%
11.2%
11.4% 11.2%
13.7% 13.6%
14.7%
10.9%
11.8% 11.5% 11.5% 11.4%
13.0%
8.00%
10.00%
12.00%
14.00%
16.00%
2012 2013 2014 2015 2016 YTD'17 Ann.
CHFC CHFC, adjusted Peer Median
0.9% 1.0%
1.0%
1.0%
0.9%
1.0%
0.9% 0.9%
1.0%
1.1%
1.2% 1.2%
0.9%
1.1% 1.1% 1.1%
1.1%
1.1%
0.7%
0.8%
0.9%
1.0%
1.1%
1.2%
1.3%
2012 2013 2014 2015 2016 YTD'17 Ann.
CHFC, GAAP CHFC, adjusted Peer Median
10
ROAA(3)(%)
CHFC’s Performance Metrics
Source: SNL Financial and Company Documents; CHFC GAAP from SNL Financial
(1) CHFC Income excludes merger and acquisition expenses, restructuring expenses, loan servicing rights changes in fair value and gains on sales of branches. Peer income excludes extraordinary
items, non-recurring items and gains/losses on sale of securities. Please refer to slides 32 - 35 for a reconciliation of non-GAAP financial measures.
(2) Peers include nationwide banks with $10 to $25 billion in total assets; ratios are presented on an “adjusted” basis, see footnote 1.
(3) ROAA, ROATCE and the efficiency ratio, excluding significant items, are non-GAAP financial measures. Please refer to slides 32 – 35 for a reconciliation of non-GAAP financial measures.
ROATCE(3)(%)
Efficiency Ratio, non-GAAP(3)(%)
(2) (2)
(2)
Dividends per Share ($)
(1) (1)
$0.82
$0.87
$0.94
$1.00
$1.06
$1.10
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
2012 2013 2014 2015 2016 YTD'17 Ann.
(1)
11
Delivering on Projected Merger Benefits
Source: Company Documents
(1) Taken from presentation dated 2/1/2016; presentation filed with the SEC and was utilized by CHFC’s Senior Mgmt. team during analyst / institutional investor meetings to discuss the merger. CHFC
12/31/15 figures have been adjusted to reflect the current non-GAAP methodology utilized; the variance between the non-GAAP calculations are immaterial.
(2) Includes nationwide banks with total assets between $10 and $25 billion
(3) Denotes a non-GAAP financial measure. Refer to pages 32 – 35 for reconciliations of non-GAAP financial measures.
(4) Market data as of 1/29/2016
(5) Market Data as of 11/9/2017
(6) EPS estimates in the 12/31/2015 CHFC column were consensus “Street” estimates just prior to announcement of the merger; estimates in the Pro Forma CHFC / TLMR column were the pro forma
estimates provided by CHFC; estimates in the Today column are the current consensus “Street” estimates per Bloomberg
(7) Difference between Peer Median and Top Quartile multiples and CHFC Today, divided by CHFC Today. This is forward-looking, provided for information purposes only and not a guarantee of
performance.
CHFC is Largest MI‐Headquartered Banking Company
CHFC Operating Markets
Source: SNL Financial. Deposit data as of 6/30/2017.
Note: CHFC’s two branches in Northern Indiana are excluded from the Southwest Michigan region.
(1) Local is defined as banks headquartered in Michigan
Northern Michigan Southeast Michigan
Southwest Michigan
Central Michigan
Northern Ohio
The Premier Midwest Community Bank
12
Overlapping Michigan Markets New Michigan & Ohio MarketsOther Markets
Southwest MI Central MI Southeast MI Northern OHNorthern MI
(1) Source: USDOC’s Bureau of Economic Analysis. Considered the largest Metropolitan Statistical Area for each region. The Northern Michigan region does not have a Metropolitan Statistical Area as defined by
the Bureau of Economic Analysis
(2) State Deposits are in billions per SNL Financial and as of 6/30/17
(3) Source: SNL Geographic Intelligence
All Major MI Markets & OH Growth Opportunity
96% of businesses / 96% of population is within MI footprint(3)
Southeast Michigan represents more than 50% of Michigan GDP – a significant opportunity with recent market disruption
CHFC Footprint By State & Regional Market
MI OH
Southwest
MI
Central
MI
Northern
MI
Southeast
MI
Northern
OH
Michigan
Penetration
TotalDeposits ($B) $11.8 $1.4 $3.5 $3.5 $2.3 $2.5 $1.4
Market Share Rank 7 21 2 1 1 10 12
Deposit Market Share (%) 5.6% 0.4% 9.0% 22.8% 18.0% 1.8% 1.3%
Market Information (as a % of):
% of State ($B) GDP (1) 12% 2% ‐ 52% 21%
% of State Deposits (2) 18% 7% 6% 66% 32% 98%
% of State Businesses (3) 25% 13% 11% 47% 39% 96%
% of State Population (3) 25% 13% 9% 50% 37% 97%
13
Increase in in-house lending limit and new Middle Market Loan Committee creates new
opportunities to further penetrate the middle-market space
Recruiting Efforts
3 key hires with deep C&I experience joining our SE MI and Grand Rapids Commercial teams will lift
referrals to Middle Market
5 C&I candidates in the talent pipeline
Opportunity (Companies $50 - $500 million in sales revenue):
West Michigan – 150 companies; present penetration <15
Southeast Michigan – 400 companies; present penetration <10
Ohio – 250 companies; present penetration <10
Portfolio Projections: $350 million at year-end 2017
Realizing our ever greater potential
14
October 2017
Southeast
Michigan Ohio
West
Michigan Other Total
Current Loans (#) 8 10 7 9 34
Current Loans ($) $61 million $123 million $53 million $86 million $323 million
New originations
next 30 days
$15 million $0 million $5 million $10 million $30 million
Through 9/30/2017, hired 36 mortgage loan officers (net 14), 3 producing sales managers (net minus
1) and 2 non-producing sales managers
Anticipate hiring 20 – 25 additional MLO’s in 2017 and 2018 (have added 5 MLO’s since 9/30/17, including
3 CRA lenders)
Opportunity & Focus: Grand Rapids, Southeast Michigan and Cleveland
Michigan Market Penetration:
4Q2016 (average): 2.05%
1Q2017 (average): 2.47%
2Q2017 (average): 4.30% (now ranked #3 in Michigan)
Origination Volume:
4Q2016: $490.5 million – 60% purchase / 40% refinance; 54% sale / 46% portfolio
1Q 2017: $313.3 million – 65% purchase / 35% refinance; 46% sale / 54% portfolio
2Q 2017: $463.2 million – 76% purchase / 24% refinance; 45% sale / 55% portfolio
3Q 2017: $482.5 million – 73% purchase / 27% refinance; 47% sale / 53% portfolio
YTD 2017: $1.26 billion – 72% purchase / 28% refinance; 46% sale / 54% portfolio
Key strategic focus in 2018 is to increase proportion of loans originated for sale in order to enhance
the run rate of mortgage banking fee income
Adjust the ARM index from CMT to LIBOR in order to sell ARM loans into the secondary market
Increase margin on portfolio products
Additional MLO training on conforming products
Realizing our ever greater potential
15
Opportunity, Enhancement, Growth (October 2016 through September 2017)
Emphasize our strategy of being the Premier Midwest Community Bank
Focus on what will build shareholder value
• Organic revenue growth and cost discipline
• Concentrate on achieving cost savings
• Expand our market presence and product lines where additional value
can be created
• Rationalization of branch locations
Closing Comments
16
Supplemental Information
David T. Provost
Chief Executive Officer
Thomas C. Shafer
Vice Chairman, Chief Executive
Office of Chemical Bank
Dennis Klaeser
Chief Financial Officer
Q3 2017 Highlights
Diluted earnings per share of $0.56, compared to $0.73 in the 2nd qtr. 2017 and $0.23 in the 3rd qtr. 2016
Diluted earnings per share, excluding significant items,(1)(2) of $0.79; up 5% from both 2nd qtr. 2017 and 3rd qtr.
2016
Return on average assets and return on average shareholders' equity of 0.86% and 6.1%, respectively, in 3rd qtr.
2017 (1.21% and 8.6%, respectively, excluding significant items(1)(2))
Return on average tangible shareholders' equity of 10.9% in 3rd qtr. 2017 (15.3%, excluding significant
items(1)(2))
Loan Growth
▪ $166 million in 3rd qtr. 2017 (quarterly organic loan growth: 12.3% commercial real estate construction,
4.0% consumer installment and 3.1% residential mortgage loans)
Asset quality ratios
▪ Nonperforming loans/total loans of 0.39% at September 30, 2017; increased from 0.37% at June 30,
2017, and from 0.32% at September 30, 2016
▪ Net loan charge-offs/average loans of 0.10%
(1)"Significant items" include merger and restructuring expenses and the change in fair value in loan servicing rights.
(2)Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
18
2017 2017 2016
(in thousands except per share data) 3rd Qtr. 2nd Qtr. 3rd Qtr.
Net interest income $ 143,628 $ 137,948 $ 96,809
Provision for loan losses 5,499 6,229 4,103
Noninterest income 32,122 41,568 27,770
Operating expenses 119,539 98,237 106,144
Operating expenses, excl. merger and restructuring
expenses and impairment of income tax credits(1) 95,241 97,772 68,674
Merger expenses 2,379 465 37,470
Restructuring expenses 18,824 — —
Impairment of income tax credits 3,095 — —
Net income 40,459 52,014 11,484
Net income, excl. significant items(1) 56,868 53,488 37,405
Diluted EPS 0.56 0.73 0.23
Diluted EPS, excl. significant items(1) 0.79 0.75 0.75
Return on Avg. Assets 0.86% 1.14% 0.37%
Return on Avg. Shareholders’ Equity 6.1% 8.0% 2.9%
Efficiency Ratio 68.0% 54.7% 85.2%
Efficiency Ratio - Adjusted(1) 51.2% 52.2% 52.7%
Equity/Total Assets 13.8% 14.1% 14.7%
Tangible Shareholders' Equity/Tangible Assets(1) 8.3% 8.4% 8.7%
Book Value/Share $ 37.57 $ 37.11 $ 36.37
Tangible Book Value/Share(1) $ 21.36 $ 20.89 $ 19.99
Prior Quarter Comparison
▪ Higher net interest income in Q3 compared
to Q2, due to organic loan growth, higher
average balance of investment securities and
an improvement in loan yields−partially
offset by higher average balances of
deposits and short-term borrowings
▪ Operating expenses increased primarily due
to restructuring expenses, consisting
primarily of severance and retirement
related expenses
▪ Decrease in noninterest income primarily
due to decreases in mortgage servicing
revenue and other charges and fees for
customer services
▪ Decrease in provision for loan losses, lower
net organic loan growth
Prior-Year Quarter Comparison
▪ Merger-related expenses incurred in Q3
2016
▪ Increase in net interest income, attributable
to increase in investment securities and
organic growth in total loans during the
twelve months ended September 30, 2017
and impact of the Talmer merger(1)Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
Financial Highlights
Income Statement Highlights
19
Financial Highlights
2015 Total: $86.8(1); $92.3(2)(3) 2016 Total: $108.0(1); $140.4(2)(3) 2017
(1)Net Income
(2)Net Income, excluding significant items.
(3)Denotes a non-GAAP financial measure. Please refer to the Appendix for a reconciliation of non-GAAP financial measures.
$56.9(2)(3)
Net Income Trending Upward ($ Millions, except EPS data)
Net Income
$0.57(3)
Net Income Trending Upward ($ Millions, except EPS data)
2015 2016 2017
$53.5(2)(3)
20
$37.4(2)(3)
Significant items (after-tax)
Net Income
__ Diluted EPS, excluding significant items (non-GAAP) (3)
$0.79(3)
Loan Portfolio Composition ($ Millions)
$1,117
21
September 30, 2016 $12,716 September 30, 2017 $13,833
Total Loan Growth -
Commercial CRE/C&D Residential Consumer
Loan Growth - Twelve Months Ended
September 30, 2017
2015 - $476 2016 - $837 2017 - $843
$15
$224
$181
$280
$56
$843 $837
$96
$186
Quarterly Loan Growth Trends
Loan Growth* ($ Millions)
$275
*Excludes the impact of the $4.88 billion of loans acquired in the Talmer merger.
$283
22
Commercial
CRE/C&D
Residential
Consumer
Quarterly Loan Growth Trends
Loan Growth - 2016 Total* Loan Growth - 2017 YTD
$166
$394
Quarterly Loan Growth Trends
Q3 2017 Q2 2017 Q1 2017 2016 Total*
Originated Loan Portfolio
Commercial $ 71 $ 195 $ 88 $ 380
CRE/C&D 139 313 239 594
Residential 197 89 119 258
Consumer 89 103 56 418
Total Originated Loan Portfolio Growth $ 496 $ 700 $ 502 $ 1,650
Acquired Loan Portfolio
Commercial $ (111) $ (88) $ (52) $ (292)
CRE/C&D (92) (94) (64) (317)
Residential (102) (97) (72) (133)
Consumer (25) (27) (31) (71)
Total Acquired Loan Portfolio Run-off $ (330) $ (306) $ (219) $ (813)
Total Loan Portfolio
Commercial $ (40) $ 107 $ 36 $ 88
CRE/C&D 47 219 175 277
Residential 95 (8) 47 125
Consumer 64 76 25 347
Total Loan Portfolio Growth $ 166 $ 394 $ 283 $ 837
Loan Growth (Run-off) ($ Millions)
Loan Growth* – Originated v. Acquired
*Excludes the impact of the $4.88 billion of loans acquired in the Talmer merger. 23
Loan Growth (Run-off) ($ Millions)
(1)Comprised of $874 million of growth in customer deposits offset by a $342 million decrease in brokered deposits.
(2)Cost of deposits based on period averages.
Total Deposits – September 30, 2016
$13.3
Total Deposits – September 30, 2017
$13.8
Organic
$0.5, 4.0%(1)
Total Deposits ($ Billions)
Deposit Composition
(2)
2016 2017
24
Total Deposits ($ Billions)
Average Deposits ($ Millions) & Cost of Deposits(2) (%)
Noninterest-bearing Demand Deposits Interest-bearing Demand Deposits Savings Deposits Time Deposits Brokered Deposits
$(0.4)
$(0.3)
Average Cost of Funds Q3 2017 – 0.53% Average Cost of Funds Q2 2017 – 0.44%
$16.0 billion $16.6 billion
Average cost of wholesale
borrowings – 1.35%
Average cost of wholesale
borrowings – 1.14%
Funding Breakdown ($ Billions)
25
June 30, 2017 September 30, 2017
Deposits:
Time Deposits
Customer Repurchase
Agreements
Wholesale borrowings (at
September 30, 2017: brokered
deposits - $0.1 billion, short
and long term borrowings -
$2.3 billion)
Interest and
noninterest-
bearing, demand,
savings, money
market
ALL
NPLs
2015 2016 2017
Originated Loans ($ billions) $3.3 $3.8 $4.3 $5.0 $5.8 $7.5 $9.2
Acquired Loans ($ billions) 0.5 0.4 0.3 0.7 1.5 5.5 4.7
Total Loans ($ billions) $3.8 $4.2 $4.6 $5.7 $7.3 $13.0 $13.9
Originated ALL $88 $84 $79 $76 $73 $78 $85
Acquired ALL — — — — — — 1
Total ALL $88 $84 $79 $76 $73 $78 $86
Originated ALL/ Originated Loans 2.60% 2.22% 1.81% 1.51% 1.26% 1.05% 0.93%
NPLs/ Total Loans 2.05% 1.71% 1.33% 0.89% 0.86% 0.34% 0.39%
Credit Mark as a % of Unpaid
Principal on Acquired Loans 6.6% 6.0% 7.8% 5.4% 4.4% 3.1% 2.7%
Provision for Loan Losses vs. Net Loan Losses
Credit Quality ($ Millions, unless otherwise noted)
Provision for Loan Losses vs. Net Loan Losses (Originated loan portfolio)
Nonperforming Loans (NPLs) and Allowance for Loan Losses (ALL)
26
Net Interest Margin(1) and Loan Yields
Net Interest Margin(1)
Purchase Accounting Accretion on Loans
Loan Yields
Net Interest Income
(Quarterly Trend)
Net Interest Income, Net Interest Margin
and Loan Yields
(1)Computed on a fully taxable equivalent basis (non-GAAP) using a federal income tax rate of 35%. Please refer to the Appendix for a
reconciliation of non-GAAP financial measures.
27
Quarterly Tre
2016 2017
2016 2017
$20.9
$32.1*
Quarterly
Non-Interest Income
* Significant items: Changes in fair value in loan servicing rights were a $4.0 million detriment in Q3 2017, a $1.8 million detriment in
Q2 2017, a $0.5 million detriment in Q1 2017, a $6.3 million benefit in Q4 2016 and a $1.2 million detriment in Q3 2016. Q4 2016 also
included a $7.4 million gain on sales of branch offices.
$41.6*
$27.8*
$54.3*
28
Quarterly
2016 2017
$38.0*
$19.4
$68.6(1)
$106.1
$56.0(1)
$59.1
$96.3(1)
$114.3
Quarterly
Operating Expenses
$98.2
$100.0(1)
29
Quarterly
2016 2017
$104.2
$97.7(1)
$95.2(1)
$119.5
(1) Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
$56.3(1)
$58.9
Peer Average
12/31/2016(1)
CHFC
12/31/2016
CHFC
6/30/2017
CHFC
9/30/2017
Tangible Book Value / Share(2) NA $20.20 $20.89 $21.36
Tangible Common Equity / Tangible Assets(2) 8.1% 8.8% 8.4% 8.3%
Tier 1 Capital 10.8% 10.7% 10.4% 10.5%
Total Risk-Based Capital 12.6% 11.5% 11.1% 11.2%
Capital
(1)Source SNL Financial – ASB, WTFC, CBSH, TCB, UMBF, PVTB, MBFI, ONB, FMBI and FFBC (ordered by asset size).
(2)Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
Tangible Book Value and Capital Ratios
Tangible Book Value per Share(2) (TBV) Roll Forward
30
Analyst
Consensus
Consistent growth and performance for shareholders through economic cycles
Merger creates the opportunity to strengthen the foundation for delivering
sustainable, strong EPS growth into the future
Consensus EPS Consensus Dividend
SNL Core EPS Common Dividend
31
Consistent EPS Growth Performance
Source: SNL Financial; analyst consensus estimates as of 11/9/2017
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
$
P
e
r
S
h
a
r
e
Performance & Expectations
Full Year
Q3 2017 Q2 2017 Q3 2016 2016 2015
Shareholders’ equity $ 2,673,089 $ 2,639,442 $ 2,563,666
Goodwill, CDI and non-compete agreements, net of tax (1,153,576) (1,153,595) (1,154,121)
Tangible shareholders’ equity $ 1,519,513 $ 1,485,847 $ 1,409,545
Common shares outstanding 71,152 71,131 70,497
Tangible book value per share $ 21.36 $ 20.89 $ 19.99
Total assets $ 19,354,308 $ 18,781,405 $ 17,383,637
Goodwill, CDI and non-compete agreements, net of tax (1,153,576) (1,153,595) (1,154,121)
Tangible assets $ 18,200,732 $ 17,627,810 $ 16,229,516
Tangible shareholders’ equity to tangible assets 8.3% 8.4% 8.7%
Net income $ 40,459 $ 52,014 $ 11,484 $ 108,032 $ 86,830
Significant items, net of tax 16,409 1,474 25,921 32,373 5,484
Net income, excl. significant items $ 56,868 $ 53,488 $ 37,405 $ 140,405 $ 92,314
Diluted earnings per share $ 0.56 $ 0.73 $ 0.23
Effect of significant items, net of tax 0.23 0.02 0.52
Diluted earnings per share, excl. significant items $ 0.79 $ 0.75 $ 0.75
Average assets $ 18,858,148 $ 18,264,699 $ 12,250,730
Return on average assets 0.86% 1.14% 0.37%
Effect of significant items, net of tax 0.35% 0.03% 0.85%
Return on average assets, excl. significant items 1.21% 1.17% 1.22%
Average shareholders’ equity $ 2,643,233 $ 2,606,517 $ 1,559,668
Return on average shareholders’ equity 6.1% 8.0% 2.9%
Effect of significant items, net of tax 2.5% 0.2% 6.7%
Return on average shareholders’ equity, excl. significant items 8.6% 8.2% 9.6%
(Dollars in thousands, except per share data)
Appendix: Non-GAAP Reconciliation
32
lars in thousands, exce t per share data)
Q3 2017 Q2 2017 Q3 2016
Efficiency Ratio:
Total revenue – GAAP $ 175,750 $ 179,516 $ 124,579
Net interest income FTE adjustment 3,260 3,169 2,426
Significant items 4,040 1,725 935
Total revenue – Non-GAAP $ 183,050 $ 184,410 $ 127,940
Operating expenses – GAAP $ 119,539 $ 98,237 $ 106,144
Merger and restructuring expenses (21,203) (465) (37,470)
Impairment of income tax credits (3,095) — —
Operating expenses, core - Non-GAAP 95,241 97,772 68,674
Amortization of intangibles (1,526) (1,525) (1,292)
Operating expenses, efficiency ratio -excluding merger & restructuring
expenses, impairment of income tax credits and amortization of
intangibles - Non-GAAP $ 93,715 $ 96,247 $ 67,382
Efficiency ratio – GAAP 68.0% 54.7% 85.2%
Efficiency ratio – adjusted 51.2% 52.2% 52.7%
Net Interest Margin:
Net interest income – GAAP $ 143,628 $ 137,948 $ 96,809
Adjustments for tax equivalent interest:
Loans 824 814 777
Investment securities 2,436 2,355 1,649
Total taxable equivalent adjustments 3,260 3,169 2,426
Net interest income (on a tax equivalent basis) $ 146,888 $ 141,117 $ 99,235
Average interest-earning assets $ 16,815,240 $ 16,228,996 $ 11,058,143
Net interest margin – GAAP 3.40% 3.41% 3.49%
Net interest margin (on a tax-equivalent basis) 3.48% 3.48% 3.58%
(Dollars in thousands, except per share data)
Appendix: Non-GAAP Reconciliation
33
lars in thousands, exce t per share data)
YTD 9/30
2017
2016 2015 2014 2013 2012
Net income $140,077 $108,032 $86,830 $62,121 $56,808 $51,008
Significant items, net of tax 20,929 32,373 5,484 4,555 0 0
Net income, excluding significant items $161,006 $140,405 $92,314 $66,676 $56,808 $51,008
Diluted earnings per share $1.95 $2.17 $2.39 $1.97 $2.00 $1.85
Effect of significant items, net of tax 0.29 0.64 0.15 0.14 0.00 0.00
Diluted earnings per share, excluding significant
items
$2.24 $2.81 $2.54 $2.11 $2.00 $1.85
Diluted earnings per share, excluding significant
items (Annualized)(1)
$2.99
Average assets $18,204,024 $12,037,155 $8,481,228 $6,473,144 $5,964,592$5,442,079
Return on average assets(1) 1.03% 0.90% 1.02% 0.96% 0.95% 0.94%
Effect of significant items, net of tax 0.15% 0.27% 0.07% 0.07% 0.00% 0.00%
Return on average assets, excluding significant
items(1)
1.18% 1.17% 1.09% 1.03% 0.95% 0.94%
Efficiency Ratio:
Total revenue – GAAP $ 523,373 $ 503,431 $ 354,224 $ 275,646 $ 257,056 $242,229
Net interest income FTE adjustment 9,498 9,642 7,452 5,975 5,355 5,037
Significant items 6,194 (13,172) (779) 0 0 0
Total revenue – Non-GAAP $539,065 $499,901 $360,897 $281,621 $ 262,411 $247,266
Operating expenses – GAAP $321,972 $338,418 $223,894 $179,925 $ 164,948 $151,921
Merger, acquisition and restructuring expenses (25,835) (61,134) (7,804) (6,388) 0 0
Impairment of income tax credits (3,095) 0 0 0 0 0
Amortization of intangibles (4,564) (5,524) (4,389) (2,029) (1,909) (1,569)
Operating expenses – Non-GAAP $288,478 $271,760 $211,701 $171,508 $163,039 $150,352
Efficiency ratio – GAAP 61.5% 67.2% 63.2% 65.3% 64.2% 62.7%
Efficiency ratio – adjusted 53.5% 54.4% 58.7% 60.9% 62.1% 60.8%
34
Non-GAAP Reconciliation
(Dollars in thousands, except per share data)
(1) YTD 9/30/17 has been annualized for comparison.
35
YTD 9/30
2017
2016 2015 2014 2013 2012
Average Tangible Common
Equity
Average common equity $2,611,630 $ 1,546,721 $ 919,328 $ 754,211 $ 626,555 $ 587,451
Average goodwill, CDI and
noncompete agreements, net of
tax (1,154,243) (514,634) (245,894) (157,634) (127,363) (130,173)
Average tangible common equity $1,457,387 $ 1,032,087 $ 673,434 $ 596,577 $ 499,192 $ 457,278
Return on Average Tangible
Shareholders’ Equity
Net Income $140,077 $108,032 $86,830 $62,121 $56,808 $51,008
Net income, excluding significant
items $161,006 $140,405 $92,314 $66,676 $56,808 $51,008
Average tangible shareholders’
equity $1,457,387 $1,032,087 $ 673,434 $ 596,577 $ 499,192 $ 457,278
Return on average tangible
shareholders’ equity(1) 12.8% 12.2% 12.8% 10.3% 11.4% 11.2%
Return on average tangible
shareholders’ equity, excluding
significant items(1) 14.7% 13.6% 13.7% 11.2% 11.4% 11.2%
Non-GAAP Reconciliation
(Dollars in thousands)
(1) YTD 9/30/17 has been annualized for comparison.
