Regulatory Capital

3 Months Ended

Mar. 31, 2013

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 March 31, 2013, 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. At March 31, 2013, Chemical Bank could pay dividends of up to $57.2 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 $4.22 billion, $4.18 billion and $3.87 billion at March 31, 2013, December 31, 2012 and March 31, 2012, respectively.

At March 31, 2013, December 31, 2012 and March 31, 2012, 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)
March 31, 2013
Total Capital to Risk-Weighted Assets:
Corporation	$	561,092	13.3	%	$	337,508	8.0	%	N/A		N/A
Chemical Bank	545,361		13.0		336,576		8.0		$	420,720	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	507,985		12.0		168,754		4.0		N/A		N/A
Chemical Bank	492,398		11.7		168,288		4.0		252,432		6.0
Leverage Ratio:
Corporation	507,985		8.8		230,992		4.0		N/A		N/A
Chemical Bank	492,398		8.5		230,544		4.0		288,179		5.0
December 31, 2012
Total Capital to Risk-Weighted Assets:
Corporation	$	552,171	13.2	%	$	334,140	8.0	%	N/A		N/A
Chemical Bank	536,223		12.9		333,195		8.0		$	416,494	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	499,563		12.0		167,070		4.0		N/A		N/A
Chemical Bank	483,761		11.6		166,598		4.0		249,896		6.0
Leverage Ratio:
Corporation	499,563		9.2		217,145		4.0		N/A		N/A
Chemical Bank	483,761		8.9		216,784		4.0		270,980		5.0
March 31, 2012
Total Capital to Risk-Weighted Assets:
Corporation	$	528,910	13.7	%	$	309,209	8.0	%	N/A		N/A
Chemical Bank	522,775		13.5		309,024		8.0		$	386,280	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	480,109		12.4		154,605		4.0		N/A		N/A
Chemical Bank	474,002		12.3		154,512		4.0		231,768		6.0
Leverage Ratio:
Corporation	481,109		9.1		210,126		4.0		N/A		N/A
Chemical Bank	474,002		9.0		210,055		4.0		262,569		5.0