Regulatory Capital and Reserve Requirements

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Regulatory Capital and Reserve Requirements

REGULATORY CAPITAL AND RESERVE REQUIREMENTS

Banking regulations require that banks maintain cash reserve balances in vault cash, with the FRB, or with certain other qualifying banks. The aggregate average amount of the regulatory balances required to be maintained by Chemical Bank was $65.3 million during 2015 and $46.3 million during 2014. During 2015, Chemical Bank satisfied its regulatory reserve requirements by maintaining a combination of vault cash balances and cash held with the FRB in excess of regulatory reserve requirements. Chemical Bank was not required to maintain compensating balances with correspondent banks during 2015 or 2014.

Federal and state banking regulations place certain restrictions on the transfer of assets, in the form of dividends, loans or advances, from Chemical Bank to the Corporation. At December 31, 2015, substantially all of the assets of Chemical Bank were restricted from transfer to the Corporation in the form of loans or advances. Dividends from Chemical Bank are the principal source of funds for the Corporation. During 2015, 2014 and 2013, Chemical Bank paid dividends to the Corporation totaling $56.9 million, $64.5 million and $24.5 million, respectively. At December 31, 2015, Chemical Bank was "well-capitalized" as defined by federal banking regulations. In addition to the statutory limits, the Corporation considers the overall financial and capital position of Chemical Bank prior to making any cash dividend decisions.

The Corporation and Chemical Bank are subject to various regulatory capital requirements administered by federal banking agencies. Under these capital requirements, Chemical Bank must meet specific capital guidelines that involve quantitative measures of assets and certain off-balance sheet items as calculated under regulatory accounting practices. In addition, capital amounts and classifications are subject to qualitative judgments by regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation's consolidated financial statements.

Quantitative measures established by regulation to ensure capital adequacy require minimum ratios of Tier 1 capital to average assets (Leverage Ratio) and Tier 1 and Total capital to risk-weighted assets. These capital guidelines assign risk weights to on- and off- balance sheet items in arriving at total risk-weighted assets. Minimum capital levels are based upon the perceived risk of various asset categories and certain off-balance sheet instruments. Risk-weighted assets for the Corporation and Chemical Bank totaled $7.14 billion and $7.13 billion, respectively, at December 31, 2015, compared to $5.70 billion for both the Corporation and Chemical Bank at December 31, 2014.

In July 2013, the Federal Reserve Board and Federal Deposit Insurance Corporation (FDIC) approved final rules implementing the Basel Committee on Banking Supervision's (BCBS) capital guidelines for U.S. banks (commonly referred to as Basel III). Beginning January 1, 2015, the Basel III capital rules include a new minimum common equity Tier 1 capital to risk-weighted assets (CET) ratio of 4.5%, in addition to raising the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% and requiring a minimum leverage ratio of 4.0%. The Basel III capital rules also establish a new capital conservation buffer of 2.5% of risk-weighted assets, which is phased-in over a four-year period beginning January 1, 2016.

At December 31, 2015 and 2014, Chemical Bank's capital ratios exceeded the quantitative capital ratios required for an institution to be considered "well-capitalized." Significant factors that may affect capital adequacy include, but are not limited to, a disproportionate growth in assets versus capital and a change in the mix or credit quality of assets.

The summary below compares the Corporation's and Chemical Bank's actual capital amounts and ratios with the quantitative measures established by regulation to ensure capital adequacy. Amounts as of December 31, 2015 were based on the Basel III capital rules, which became effective January 1, 2015. Amounts as of December 31, 2014 were based on the regulatory capital rules in effect as of that date.

	Actual				Minimum Required for Capital Adequacy Purposes				Required to be Well Capitalized Under Prompt Corrective Action Regulations
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
	(Dollars in thousands)
December 31, 2015
Total Capital to Risk-Weighted Assets:
Corporation	$	841,257	11.8	%	$	571,509	8.0	%	N/A		N/A
Chemical Bank	830,294		11.7		570,073		8.0		$	712,591	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	767,929		10.7		428,631		6.0		N/A		N/A
Chemical Bank	756,966		10.6		427,555		6.0		570,073		8.0
Common Equity Tier 1 Capital to Risk-Weighted Assets:
Corporation	753,815		10.6		321,474		4.5		N/A		N/A
Chemical Bank	756,966		10.6		320,666		4.5		463,184		6.5	%
Leverage Ratio:
Corporation	767,929		8.6		356,396		4.0		N/A		N/A
Chemical Bank	756,966		8.5		355,911		4.0		444,888		5.0
December 31, 2014
Total Capital to Risk-Weighted Assets:
Corporation	$	705,130	12.4	%	$	456,302	8.0	%	N/A		N/A
Chemical Bank	654,031		11.5		455,633		8.0		$	569,541	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	633,779		11.1		228,151		4.0		N/A		N/A
Chemical Bank	582,783		10.2		227,816		4.0		341,725		6.0
Leverage Ratio:
Corporation	633,779		9.3		273,226		4.0		N/A		N/A
Chemical Bank	582,783		8.5		273,048		4.0		341,310		5.0