Regulatory Capital and Reserve Requirements

12 Months Ended

Dec. 31, 2011

Deposits, Federal Home Loan Bank Advances and Regulatory Capital and Reserve Requirements [Abstract]

REGULATORY CAPITAL AND RESERVE REQUIREMENTS

NOTE 21 — REGULATORY CAPITAL AND RESERVE REQUIREMENTS

Banking regulations require that banks maintain cash reserve balances in vault cash with the FRB, or with certain other qualifying banks. The aggregate average amount of the regulatory balances required to be maintained by Chemical Bank was $28.6 million during 2011 and $23.3 million during 2010. During 2011, Chemical Bank satisfied its regulatory reserve requirements by maintaining vault cash balances in excess of regulatory reserve requirements. Chemical Bank was not required to maintain compensating balances with correspondent banks during 2011 or 2010.

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. At December 31, 2011, 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. During 2011 and 2010, Chemical Bank paid dividends to the Corporation totaling $22.0 million and $21.3 million, respectively. Chemical Bank did not pay dividends to the Corporation in 2009. At December 31, 2011, Chemical Bank could pay dividends totaling $28.8 million to the Corporation without regulatory approval. At December 31, 2011, 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 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 $3.88 billion and $3.67 billion at December 31, 2011 and 2010, respectively, for both the Corporation and Chemical Bank.

At December 31, 2011 and 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 the 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)
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
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