Regulatory Capital and Reserve Requirements

3 Months Ended

Mar. 31, 2019

Banking and Thrift [Abstract]

Regulatory Capital and Reserve Requirements

Regulatory Capital and Reserve Requirements

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, 2019, 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. 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 Consolidated Financial Statements. Management believes as of March 31, 2019, the Corporation and Chemical Bank 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 for the Corporation and Chemical Bank totaled $16.18 billion and $16.15 billion at March 31, 2019, respectively, compared to $16.10 billion and $16.07 billion at December 31, 2018, respectively.

Effective January 1, 2015, the Corporation adopted the Basel III regulatory capital framework as approved by federal banking agencies, which was 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 was phased-in over a multi-year period beginning January 1, 2016. The capital conservation buffer for 2019 is 2.5%, which is now fully phased-in, and was 1.875% for 2018. The Corporation has elected to opt-out of including accumulated other comprehensive income in common equity tier 1 capital.

At March 31, 2019 and December 31, 2018, 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. 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 Including 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
March 31, 2019
Total Capital to Risk-Weighted Assets
Corporation	$	1,896,830	11.7	%	$	1,698,868	10.5	%	N/A		N/A
Chemical Bank	1,872,628		11.6		1,695,932		10.5		$	1,615,173	10.0	%
Tier 1 Capital to Risk-Weighted Assets
Corporation	1,763,626		10.9		1,375,274		8.5		N/A		N/A
Chemical Bank	1,755,372		10.9		1,372,897		8.5		1,292,138		8.0
Common Equity Tier 1 Capital to Risk-Weighted Assets
Corporation	1,763,626		10.9		1,132,579		7.0		N/A		N/A
Chemical Bank	1,755,372		10.9		1,130,621		7.0		1,049,862		6.5
Leverage Ratio
Corporation	1,763,626		8.7		814,944		4.0		N/A		N/A
Chemical Bank	1,755,372		8.6		813,893		4.0		1,017,366		5.0
December 31, 2018
Total Capital to Risk-Weighted Assets
Corporation	$	1,855,922	11.5	%	$	1,590,323	9.9	%	N/A		N/A
Chemical Bank	1,825,742		11.4		1,586,719		9.9		$	1,606,804	10.0	%
Tier 1 Capital to Risk-Weighted Assets
Corporation	1,723,004		10.7		1,268,232		7.9		N/A		N/A
Chemical Bank	1,708,724		10.6		1,265,358		7.9		1,285,444		8.0
Common Equity Tier 1 Capital to Risk-Weighted Asset
Corporation	1,723,004		10.7		1,026,664		6.4		N/A		N/A
Chemical Bank	1,708,724		10.6		1,024,338		6.4		1,044,423		6.5
Leverage Ratio
Corporation	1,723,004		8.7		793,669		4.0		N/A		N/A
Chemical Bank	1,708,724		8.6		792,184		4.0		990,230		5.0

On April 23, 2019, the Corporation declared a cash dividend on its common stock of $0.34 per share. The dividend will be paid on June 21, 2019 to shareholders of record as of June 7, 2019.