Regulatory Capital

9 Months Ended

Sep. 30, 2012

Banking and Thrift [Abstract]

Regulatory Capital

Regulatory Capital

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. As of September 30, 2012, 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. As of September 30, 2012, Chemical Bank could pay dividends of up to $13.2 million, based on net income less dividends for the current and prior two calendar years, without regulatory approval.

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 totaled $4.03 billion, $3.88 billion and $3.78 billion at September 30, 2012, December 31, 2011 and September 30, 2011, respectively.

At September 30, 2012, December 31, 2011 and September 30, 2011, 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.

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:

	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)
September 30, 2012
Total Capital to Risk-Weighted Assets:
Corporation	$	549,388	13.6	%	$	322,212	8.0	%	N/A		N/A
Chemical Bank	537,467		13.4		321,585		8.0		$	401,982	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	498,618		12.4		161,106		4.0		N/A		N/A
Chemical Bank	486,794		12.1		160,793		4.0		241,189		6.0
Leverage Ratio:
Corporation	498,618		9.4		211,670		4.0		N/A		N/A
Chemical Bank	486,794		9.2		211,452		4.0		264,315		5.0
December 31, 2011
Total Capital to Risk-Weighted Assets:
Corporation	$	517,547	13.3	%	$	310,316	8.0	%	N/A		N/A
Chemical Bank	510,290		13.2		310,119		8.0		$	387,649	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	468,565		12.1		155,158		4.0		N/A		N/A
Chemical Bank	461,338		11.9		155,060		4.0		232,589		6.0
Leverage Ratio:
Corporation	468,565		9.0		208,013		4.0		N/A		N/A
Chemical Bank	461,338		8.9		208,033		4.0		260,042		5.0
September 30, 2011
Total Capital to Risk-Weighted Assets:
Corporation	$	493,976	13.1	%	$	302,360	8.0	%	N/A		N/A
Chemical Bank	486,207		12.9		302,149		8.0		$	377,686	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	446,217		11.8		151,180		4.0		N/A		N/A
Chemical Bank	438,480		11.6		151,074		4.0		226,612		6.0
Leverage Ratio:
Corporation	446,217		8.6		206,656		4.0		N/A		N/A
Chemical Bank	438,480		8.5		206,613		4.0		258,266		5.0