EXHIBIT No. 99.3
Audited Financial Statements
Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors
December 31, 1999
Report of Independent Auditors
Plan Administrator
Chemical Financial Corporation
1998 Stock Purchase Plan for Subsidiary Directors
We have audited the accompanying
consolidated statement of financial condition of the Chemical Financial Corporation
1998 Stock Purchase Plan for Subsidiary Directors as of December 31, 1999
and the related statement of income and changes in plan equity for the
year ended December 31, 1999. These financial statements are the responsibility
of the Plan's administrator. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in
accordance with auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the Plan
Administrator, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial
statements referred to above present fairly, in all material respects,
the financial position of the Chemical Financial Corporation 1998 Stock
Purchase Plan for Subsidiary Directors at December 31, 1999 and the results
of its operations and changes in its plan equity for the year ended December
31, 1999 in conformity with accounting principles generally accepted in
the United States.
/s/ Ernst & Young LLP
January 21, 2000
2
Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors
Statement of Financial Condition
| Assets |
|
|
| Cash |
$ 715
|
|
Common stock receivable of Chemical
Financial Corporation, at market value - (9,183 shares |
|
|
| at a cost of $282,331) |
271,082
|
|
| Total Assets |
$271,797
|
|
| |
|
|
| Plan Equity |
|
|
| Plan equity (47 participants) |
$271,797
|
|
See accompanying notes.
3
Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors
Statement of Income and Changes in Plan Equity
|
Additions |
Year Ended December 31
1999
|
| Participant contributions |
$278,375
|
|
| Dividend equivalents |
3,915
|
|
| Transfer from prior plan (Note 1) |
45,747
|
|
| |
328,037
|
|
| |
|
|
| Deductions |
|
|
| Plan distributions |
44,991
|
|
| |
283,046
|
|
| Net realized depreciation in fair |
|
|
| value of investments |
(11,249
|
) |
| Net increase |
271,797
|
|
| Plan equity at beginning of year |
|
|
| Plan equity at end of year |
$271,797
|
|
| |
|
|
| See accompanying notes. |
|
|
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Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors
Notes to Financial Statements
December 31, 1999
Note 1 - Description of the Plan
The Chemical Financial Corporation
1998 Stock Purchase Plan for Subsidiary Directors (Plan) was implemented
by Chemical Financial Corporation (Corporation) on December 14, 1998. The
Plan is designed to provide non-employee directors and advisory directors
of the Corporation's subsidiaries, who are neither directors or employees
of the Corporation, with a convenient method of acquiring Corporation stock.
The Plan provides for a maximum of 25,000 shares of the Corporation's common
stock, $1.00 par value (Common Stock), subject to adjustments for certain
changes in the capital structure of the Corporation as defined in the Plan,
to be available under the Plan.
Subsidiary directors and
advisory directors, who elect to participate in the Plan, may elect to
contribute to the Plan fifty percent or one hundred percent of their Board
of Director fees and/or fifty percent or one hundred percent of their director
committee fees, earned as directors or advisory directors of the Corporation's
subsidiaries. Participant contributions to the Plan are made by the Corporation's
subsidiaries on behalf of each electing participant. As of the last day
of each month, each participant's cash account is debited for the purchase
of whole shares of the Corporation's stock that is credited to a separate
participant stock account. The stock purchased under the Plan during the
calendar year is issued by the Corporation directly to the participants
in the following calendar year, in January. The Plan provides for dividend
equivalents to be credited to each participant's cash account, as of the
dividend record date of the Corporation's common stock. Dividend equivalents
are calculated by multiplying the Corporation's dividend rate by the number
of shares of common stock in each participant's stock account, as of the
Corporation's dividend record date. The Plan also provides for an appropriate
credit to each participant's stock account for stock dividends, stock splits
or other distributions of the Corporation's common stock by the Corporation.
Fractional shares calculated as a result of the above adjustments are converted
to cash based on the market price of the Corporation's common stock, and
are credited to each participant's cash account. Plan participants may
terminate their participation in the Plan, at any time, by written notice
of withdrawal to the Corporation. Participants will cease to be eligible
to participate in the Plan when they cease to serve as directors or advisory
directors of subsidiaries of the Corporation. Upon withdrawal from the
Plan, each participant will receive the shares of common stock of the Corporation
in their participant stock account and the cash in their participant cash
account.
5
Note 1 - Description of the Plan (continued)
On January 1, 1999, a common
stock receivable for 1,344 shares of the Corporation, with a market value
of $44,991 and a cost basis of $44,293, and cash of $756 of the 1992 Stock
Purchase Plan for Subsidiary Directors were transferred to the Plan. The
1992 Stock Purchase Plan for Subsidiary Directors had the same terms and
provisions as the Plan. As of December 31, 1999, the Plan had 24,840 shares
of the Corporation available for future issuance, adjusted for the 5% stock
dividend declared by the Corporation in December 1999 and paid on January
21, 2000.
The Corporation reserves
the right to terminate or amend the Plan at any time, provided, however,
that no termination or amendment shall affect or diminish any participant's
right to the benefit of contributions made by him/her prior to the date
of such amendment or termination.
The Plan provides that all
expenses of the Plan and its administration shall be paid by the Corporation.
The Plan is not qualified
under Sections 401(a) or 501(a) of the Internal Revenue Code of 1986, as
amended. The Plan does not provide for income taxes because any income
is taxable to the participants. Participants in the Plan must treat as
taxable income the contributions made to the Plan by the Corporation's
subsidiaries on their behalf. Dividend equivalents and any other cash credited
to the participants' cash accounts are taxable to the participants for
Federal and state income tax purposes in the year such dividend equivalent
or cash is credited to the participant cash account. Upon disposition of
the common stock of the Corporation purchased under the Plan, participants
must treat any gain or loss as long-term or short-term capital gain or
loss depending upon when such disposition occurs.
6
Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors
Notes to Financial Statements
December 31, 1999
Note 2 - Summary of Accounting Policies
Valuation of Common Stock Receivable
Common stock receivable of
the Corporation is recorded at the market value per share of the Corporation
multiplied by the number of shares receivable at the valuation date. Market
value is based on the closing bid price of the Corporation's stock at year
end ($29.52 per share at December 31, 1999.) The number of shares receivable
and the closing bid price were adjusted for the 5 percent stock dividend
on the Corporation's common stock declared in December 1999 and paid on
January 21, 2000.
Income
Dividend equivalents and
fractional share interests are accrued on the Corporation's dividend or
other record date.
Contributions
Contributions are accounted
for on the accrual basis.
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Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors
Notes to Financial Statements
December 31, 1999
Note 3 - Contributions
Contributions for participants
by the participating companies were as follows:
|
Participating Company |
Year Ended December 31
1999
|
| Chemical Bank and Trust Co. |
$ 45,650
|
|
| Chemical Bank Bay Area |
29,100
|
|
| Chemical Bank Central |
48,050
|
|
| Chemical Bank Thumb Area |
31,550
|
|
| Chemical Bank Michigan |
25,650
|
|
| Chemical Bank Montcalm |
21,900
|
|
| Chemical Bank North |
6,350
|
|
| Chemical Bank South |
25,325
|
|
| Chemical Bank West |
13,600
|
|
| Chemical Bank Key State |
28,800
|
|
| CFC Data Corp |
2,400
|
|
| |
|
|
|
Total Contributions |
$278,375
|
|
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