Regulatory Capital

9 Months Ended

Sep. 30, 2016

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 and Talmer Bank and Trust to the Corporation. As of September 30, 2016, substantially all of the assets of the banks were restricted from transfer to the Corporation in the form of loans or advances. Dividends from the banks are the principal source of funds for the Corporation. In addition to the statutory limits, the Corporation considers the overall financial and capital position of the banks prior to making any cash dividend decisions.

The Corporation and the banks are subject to various regulatory capital requirements administered by federal banking agencies. Under these capital requirements, the banks 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. Management believes as of September 30, 2016, the Corporation and the banks met all capital adequacy requirements to which they are subject.

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 $13.43 billion and $7.14 billion at September 30, 2016 and December 31, 2015, respectively.

Effective January 1, 2015, the Company adopted the new Basel III regulatory capital framework as approved by federal banking agencies, which are subject to a multi-year phase-in period.  The adoption of this new framework modified the calculation of the various capital ratios, added a new ratio, common equity tier 1, and revised the adequately and well capitalized thresholds. In addition, Basel III establishes 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. The capital conservation buffer for 2016 is .625%. The Corporation has elected to opt-out of including capital in accumulated other comprehensive income in common equity tier 1 capital.

At September 30, 2016 and December 31, 2015, the banks' 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. There are no conditions or events since that notification that management believes have changed the institutions' category.

The summary below compares the actual capital amounts and ratios with the quantitative measures established by regulation to ensure capital adequacy:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required for Capital Adequacy Purposes Plus Capital Conservation Buffer				Required to be Well Capitalized Under Prompt Corrective Action Regulations
(Dollars in thousands)	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
September 30, 2016
Total Capital to Risk-Weighted Assets
Corporation	$	1,491,389	11.1	%	$	1,074,506	8.0	%	$	1,155,093	8.6	%	N/A		N/A
Chemical Bank	825,504		10.8		614,281		8.0		660,352		8.6		$	767,851	10.0	%
Talmer Bank and Trust	719,213		12.7		453,090		8.0		487,071		8.6		566,362		10.0
Tier 1 Capital to Risk-Weighted Assets
Corporation	1,413,464		10.5		805,879		6.0		886,467		6.6		N/A		N/A
Chemical Bank	752,957		9.8		460,711		6.0		506,782		6.6		614,281		8.0
Talmer Bank and Trust	713,835		12.6		339,817		6.0		373,799		6.6		453,090		8.0
Common Equity Tier 1 Capital to Risk-Weighted Assets
Corporation	1,413,464		10.5		604,409		4.5		684,997		5.1		N/A		N/A
Chemical Bank	752,957		9.8		345,533		4.5		391,604		5.1		499,103		6.5
Talmer Bank and Trust	713,835		12.6		254,863		4.5		288,845		5.1		368,135		6.5
Leverage Ratio
Corporation	1,413,464		12.8		442,317		4.0		442,317		4.0		N/A		N/A
Chemical Bank	752,957		8.1		373,897		4.0		373,897		4.0		467,371		5.0
Talmer Bank and Trust	713,835		10.9		262,318		4.0		262,318		4.0		327,898		5.0
December 31, 2015
Total Capital to Risk-Weighted Assets
Corporation	$	841,257	11.8	%	$	571,509	8.0	%	N/A		N/A		N/A		N/A
Chemical Bank	830,294		11.7		570,073		8.0		N/A		N/A		$	712,591	10.0	%
Tier 1 Capital to Risk-Weighted Assets
Corporation	767,929		10.7		428,631		6.0		N/A		N/A		N/A		N/A
Chemical Bank	756,966		10.6		427,555		6.0		N/A		N/A		570,073		8.0
Common Equity Tier 1 Capital to Risk-Weighted Asset
Corporation	753,815		10.6		321,474		4.5		N/A		N/A		N/A		N/A
Chemical Bank	756,966		10.6		320,666		4.5		N/A		N/A		463,184		6.5
Leverage Ratio
Corporation	767,929		8.6		356,396		4.0		N/A		N/A		N/A		N/A
Chemical Bank	756,966		8.5		355,911		4.0		N/A		N/A		444,888		5.0