Regulatory Capital and Reserve Requirements

12 Months Ended

Dec. 31, 2016

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 Federal Reserve Bank, or with certain other qualifying banks. The aggregate average amount of the regulatory balances required to be maintained by Chemical Bank during 2016 and 2015 were $52.3 million and $65.3 million, respectively. During 2016, 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 2016or 2015.

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 common equity tier 1, 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 $13.42 billion and $13.36 billion, respectively, at December 31, 2016, compared to $7.14 billion and $7.13 billion at December 31, 2015, respectively.

Effective January 1, 2015, the Corporation adopted the Basel III regulatory capital framework as approved by federal banking agencies, which is subject to a multi-year phase-in period.  The adoption of this new framework modified the calculation of the various capital ratios, added a new ratio, common equity tier 1, and revised the adequately and well capitalized thresholds. In addition, Basel III establishes 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. The capital conservation buffer for 2016 is .625%. The Corporation has elected to opt-out of including capital in accumulated other comprehensive income in common equity tier 1 capital.

At December 31, 2016 and 2015, 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 mix or credit quality of assets. There are no conditions or events since that notification that management believes have changed the institutions' category.

The summary below compares the actual capital amounts and ratios with the quantitative measures established by regulation to ensure capital adequacy:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required for Capital Adequacy Purposes Plus Capital Conservation Buffer				Required to be Well Capitalized Under Prompt Corrective  Action Regulations
(Dollars in thousands)	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
December 31, 2016
Total Capital to Risk-Weighted Assets
Corporation	$	1,543,018	11.5	%	$	1,073,431	8.0	%	$	1,157,293	8.6	%	N/A		N/A
Chemical Bank	1,608,980		12.0		1,068,560		8.0		1,152,041		8.6		$	1,335,700	10.0	%
Tier 1 Capital to Risk-Weighted Assets
Corporation	1,441,209		10.7		805,073		6.0		888,935		6.6		N/A		N/A
Chemical Bank	1,522,711		11.4		801,420		6.0		884,901		6.6		1,068,560		8.0
Common Equity Tier 1 Capital to Risk-Weighted Assets
Corporation	1,441,209		10.7		603,805		4.5		687,667		5.1		N/A		N/A
Chemical Bank	1,522,711		11.4		601,065		4.5		684,546		5.1		868,205		6.5
Leverage Ratio
Corporation	1,441,209		9.0		643,603		4.0		643,603		4.0		N/A		N/A
Chemical Bank	1,522,711		9.5		641,457		4.0		641,457		4.0		801,822		5.0
December 31, 2015
Total Capital to Risk-Weighted Assets
Corporation	$	841,257	11.8	%	$	571,509	8.0	%	N/A		N/A		N/A		N/A
Chemical Bank	830,294		11.7		570,073		8.0		N/A		N/A		$	712,591	10.0	%
Tier 1 Capital to Risk-Weighted Assets
Corporation	767,929		10.7		428,631		6.0		N/A		N/A		N/A		N/A
Chemical Bank	756,966		10.6		427,555		6.0		N/A		N/A		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		N/A		N/A
Chemical Bank	756,966		10.6		320,666		4.5		N/A		N/A		463,184		6.5
Leverage Ratio
Corporation	767,929		8.6		356,396		4.0		N/A		N/A		N/A		N/A
Chemical Bank	756,966		8.5		355,911		4.0		N/A		N/A		444,888		5.0

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, 2016, 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. 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.

During the years ended December 31, 2016 and 2015, Chemical Bank paid dividends to the Corporation totaling $110.5 million and $56.9 million, respectively.

On February 20, 2017, a cash dividend on the Corporation's common stock of $0.27 per share was declared. The dividend will be paid on March 17, 2017 to shareholders of record as of March 3, 2017.