Regulatory Capital

6 Months Ended

Jun. 30, 2014

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 June 30, 2014, 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 June 30, 2014, 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 of the Corporation totaled $4.90 billion, $4.64 billion and $4.36 billion at June 30, 2014, December 31, 2013 and June 30, 2013, respectively.

At June 30, 2014, December 31, 2013 and June 30, 2013, 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)
June 30, 2014
Total Capital to Risk-Weighted Assets:
Corporation	$	748,332	15.3	%	$	391,911	8.0	%	N/A		N/A
Chemical Bank	601,561		12.3		391,305		8.0		$	489,131	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	686,892		14.0		195,955		4.0		N/A		N/A
Chemical Bank	540,214		11.0		195,653		4.0		293,479		6.0
Leverage Ratio:
Corporation	686,892		11.2		244,757		4.0		N/A		N/A
Chemical Bank	540,214		8.8		244,604		4.0		305,755		5.0
December 31, 2013
Total Capital to Risk-Weighted Assets:
Corporation	$	649,836	14.0	%	$	371,465	8.0	%	N/A		N/A
Chemical Bank	579,494		12.5		370,881		8.0		$	463,601	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	591,535		12.7		185,732		4.0		N/A		N/A
Chemical Bank	521,283		11.2		185,440		4.0		278,160		6.0
Leverage Ratio:
Corporation	591,535		9.9		239,010		4.0		N/A		N/A
Chemical Bank	521,283		8.7		238,884		4.0		298,605		5.0
June 30, 2013
Total Capital to Risk-Weighted Assets:
Corporation	$	572,503	13.1	%	$	348,442	8.0	%	N/A		N/A
Chemical Bank	556,536		12.8		347,865		8.0		$	434,831	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	517,716		11.9		174,221		4.0		N/A		N/A
Chemical Bank	501,839		11.5		173,932		4.0		260,899		6.0
Leverage Ratio:
Corporation	517,716		9.1		228,436		4.0		N/A		N/A
Chemical Bank	501,839		8.8		228,126		4.0		285,157		5.0