Regulatory Capital

3 Months Ended

Mar. 31, 2015

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, 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. At March 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 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 of the Corporation totaled $5.58 billion, $5.70 billion and $4.76 billion at March 31, 2015, December 31, 2014 and March 31, 2014, respectively.

In July 2013, the Federal Reserve Board and FDIC approved final rules implementing the Basel Committee on Banking Supervision's (BCBS) capital guidelines for U.S. banks. The final rules, which are subject to a multi-year phase-in period, began for the Corporation and Chemical Bank on January 1, 2015. The final 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 final 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 March 31, 2015, December 31, 2014 and March 31, 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 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, 2015
Total Capital to Risk-Weighted Assets:
Corporation	$	727,090	13.0	%	$	446,173	8.0	%	N/A		N/A
Chemical Bank	676,488		12.1		445,471		8.0		$	556,838	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	657,307		11.8		334,630		6.0		N/A		N/A
Chemical Bank	606,813		10.9		334,103		6.0		445,471		8.0
Common Equity Tier 1 Capital to Risk-Weighted Assets:
Corporation	657,307		11.8		250,972		4.5		N/A		N/A
Chemical Bank	606,813		10.9		250,577		4.5		361,945		6.5
Leverage Ratio:
Corporation	657,307		9.1		289,948		4.0		N/A		N/A
Chemical Bank	606,813		8.4		289,840		4.0		362,300		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
March 31, 2014
Total Capital to Risk-Weighted Assets:
Corporation	$	659,644	13.8	%	$	381,146	8.0	%	N/A		N/A
Chemical Bank	589,254		12.4		380,542		8.0		$	475,678	10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation	599,856		12.6		190,573		4.0		N/A		N/A
Chemical Bank	529,560		11.1		190,271		4.0		285,407		6.0
Leverage Ratio:
Corporation	599,856		9.9		243,070		4.0		N/A		N/A
Chemical Bank	529,560		8.7		242,939		4.0		303,673		5.0