Regulatory Capital

6 Months Ended

Jun. 30, 2011

Regulatory Capital [Abstract]

Regulatory Capital

Note 7: Regulatory Capital

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.

At June 30, 2011, December 31, 2010 and June 30, 2010, 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:

											Required to be
						Minimum					Well Capitalized
						Required for					Under Prompt
						Capital Adequacy					Corrective Action
	Actual					Purposes					Regulations
	Capital					Capital					Capital
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(In thousands)
June 30, 2011
Total Capital to Risk-Weighted Assets:
Corporation	$	486,917		13.0	%	$	300,744		8.0	%		N/A		N/A
Chemical Bank		478,734		12.7			300,517		8.0		$	375,646		10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation		439,394		11.7			150,372		4.0			N/A		N/A
Chemical Bank		431,247		11.5			150,258		4.0			225,388		6.0
Leverage Ratio:
Corporation		439,394		8.6			203,915		4.0			N/A		N/A
Chemical Bank		431,247		8.5			203,878		4.0			254,847		5.0
December 31, 2010
Total Capital to Risk-Weighted Assets:
Corporation	$	473,471		12.9	%	$	293,856		8.0	%		N/A		N/A
Chemical Bank		465,709		12.7			293,573		8.0		$	366,966		10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation		427,014		11.6			146,928		4.0			N/A		N/A
Chemical Bank		419,296		11.4			146,786		4.0			220,179		6.0
Leverage Ratio:
Corporation		427,014		8.4			204,426		4.0			N/A		N/A
Chemical Bank		419,296		8.2			204,291		4.0			255,363		5.0
June 30, 2010
Total Capital to Risk-Weighted Assets:
Corporation	$	497,838		13.6	%	$	293,818		8.0	%		N/A		N/A
Chemical Bank(1)		485,947		13.2			293,819		8.0		$	367,273		10.0	%
Tier 1 Capital to Risk-Weighted Assets:
Corporation		451,387		12.3			146,909		4.0			N/A		N/A
Chemical Bank(1)		439,496		12.0			146,909		4.0			220,364		6.0
Leverage Ratio:
Corporation		451,387		9.6			188,515		4.0			N/A		N/A
Chemical Bank(1)		439,496		9.3			188,498		4.0			235,623		5.0

⁽¹⁾ Includes combined capital amounts and ratios of Chemical Bank and Byron Bank at June 30, 2010 as Byron Bank was merged with and into Chemical Bank on July 23, 2010.