EXHIBIT 99(a)
FINANCIAL STATEMENTS AND SCHEDULES
CHEMICAL FINANCIAL CORPORATION
401 (K) SAVINGS PLAN
YEARS ENDED DECEMBER 31, 1996 AND
DECEMBER 31, 1995 WITH
REPORT OF INDEPENDENT AUDITORS
REPORT OF INDEPENDENT AUDITORS
Administrative Committee of the
Chemical Financial Corporation 401 (k) Savings Plan
We have audited the accompanying statements of assets and
participants' equity of the Chemical Financial Corporation 401 (k) Savings
Plan as of December 31, 1996 and 1995 and the related statements of changes
in participants' equity for the years then ended. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the assets and participants' equity of
the Plan at December 31, 1996 and 1995, and the changes in such
participants' equity for the years then ended in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental
schedules of assets held for investment and reportable transactions as of
and for the year ended December 31, 1996 are presented for purposes of
complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974, and are not a required part of the financial statements. The
supplemental schedules have been subjected to the auditing procedures
applied in our audit of the 1996 financial statements and, in our opinion,
are fairly stated in all material respects in relation to the 1996
financial statements taken as a whole.
S/ ERNST & YOUNG LLP
February 12, 1997
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STATEMENT OF ASSETS AND PARTICIPANTS' EQUITY
CHEMICAL FINANCIAL CORPORATION 401 (K) SAVINGS PLAN
DECEMBER 31, 1996
CHEMICAL CASH
STOCK FINANCIAL AND
INTERMEDIATE AND CORPORATION MONEY PARTICIPANT
BOND INDEX BOND STOCK MARKET LOAN
FUND FUND FUND FUND FUND FUND TOTAL
------------ ------ -------- ------------ ------- ----------- ---------
ASSETS:
Investments at fair value:
Chemical Financial Corporation
Common Stock $1,400,236 $1,400,236
Federated Investors Mutual Funds:
Federated Short-Intermediate
Government Trust $123,197 123,197
Max-Cap Fund $703,917 703,917
Treasury Obligations Fund 153 136 $ 137 678 $240,835 $ 2,253 244,192
Fidelity Investments-Puritan Fund 294,387 294,387
Participation loans 22,401 22,401
-------- -------- -------- ---------- -------- ------- ----------
123,350 704,053 294,524 1,400,914 240,835 24,654 2,788,330
Employee contributions receivable 1,049 5,005 2,810 9,871 1,808 0 20,543
Cash and accrued income 562 15 5 67 1,071 9 1,729
-------- -------- -------- ---------- -------- ------- ----------
Total Assets (equal to participant's
equity) $124,961 $709,073 $297,339 $1,410,852 $243,714 $24,663 $2,810,602
======== ======== ======== ========== ======== ======= ==========
See accompanying notes.
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STATEMENT OF ASSETS AND PARTICIPANTS' EQUITY
CHEMICAL FINANCIAL CORPORATION 401 (K) SAVINGS PLAN
DECEMBER 31, 1995
CHEMICAL CASH
STOCK FINANCIAL AND
INTERMEDIATE AND CORPORATION MONEY PARTICIPANT
BOND INDEX BOND STOCK MARKET LOAN
FUND FUND FUND FUND FUND FUND TOTAL
------------ ------ -------- ------------ ------- ----------- ---------
ASSETS:
Investments at fair value:
Chemical Financial Corporation
Common Stock $1,081,080 $1,081,080
Federated Investors Mutual Funds:
Federated Short-Intermediate
Government Trust $127,111 127,111
Max-Cap Fund $460,200 460,200
Treasury Obligations Fund 1,302 5,043 $ 3,018 10,145 $138,647 $ 1,183 159,338
Fidelity Investments-Puritan Fund 219,730 219,730
Participation loans 13,135 13,135
-------- -------- -------- ---------- -------- ------- ----------
128,413 465,243 222,748 1,091,225 138,647 14,318 2,060,594
Employee contributions receivable 1,262 3,671 3,053 8,298 1,504 17,788
Cash and accrued income 593 48 9 69 656 59 1,434
-------- -------- -------- ---------- -------- ------- ----------
Total Assets (equal to participant's
equity) $130,268 $468,962 $225,810 $1,099,592 $140,807 $14,377 $2,079,816
======== ======== ======== ========== ======== ======= ==========
See accompanying notes.
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STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
CHEMICAL FINANCIAL CORPORATION 401(K) SAVINGS PLAN
YEAR ENDED DECEMBER 31, 1996
CHEMICAL CASH
STOCK FINANCIAL AND
INTERMEDIATE AND CORPORATION MONEY PARTICIPANT
BOND INDEX BOND STOCK MARKET LOAN
FUND FUND FUND FUND FUND FUND TOTAL
----------- -------- -------- ------------ --------- --------- ----------
Additions:
Interest and dividend income $ 6,807 $ 22,751 $ 35,579 $ 25,293 $ 9,677 $ 1,822 $ 101,929
Employee contributions 28,389 111,616 82,127 224,957 40,591 487,680
-------- -------- -------- ---------- -------- ------- ----------
35,196 134,367 117,706 250,250 50,268 1,822 589,609
Deductions:
Participants' accounts distributed upon
withdrawal (6,783) (6,198) (1,453) (38,185) (3,745) (56,364)
Net transfers between funds (32,721) 14,862 (47,096) 107 56,384 8,464 0
Net realized and unrealized appreciation
(depreciation) in fair value of investments:
Realized (352) 1,374 2,527 15,970 19,519
Unrealized (647) 95,706 (155) 83,118 178,022
-------- -------- -------- ---------- -------- ------- ----------
Net increase (decrease) (5,307) 240,111 71,529 311,260 102,907 10,286 730,786
Participants' equity at beginning of year 130,268 468,962 225,810 1,099,592 140,807 14,377 2,079,816
-------- -------- -------- ---------- -------- ------- ----------
Participants' equity at end of year $124,961 $709,073 $297,339 $1,410,852 $243,714 $24,663 $2,810,602
======== ======== ======== ========== ======== ======= ==========
See accompanying notes.
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STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
CHEMICAL FINANCIAL CORPORATION 401(K) SAVINGS PLAN
YEAR ENDED DECEMBER 31, 1996
CHEMICAL CASH
STOCK FINANCIAL AND
INTERMEDIATE AND CORPORATION MONEY PARTICIPANT
BOND INDEX BOND STOCK MARKET LOAN
FUND FUND FUND FUND FUND FUND TOTAL
---------- --------- -------- ----------- ---------- -------- ----------
Additions:
Interest and dividend income $ 6,902 $ 70,850 $ 11,177 $ 18,443 $ 7,253 $ 1,223 $ 115,848
Employee contributions 30,587 88,305 68,760 211,717 38,340 437,709
-------- -------- -------- ---------- -------- ------- ----------
37,489 159,155 79,937 230,160 45,593 1,223 553,557
Deductions:
Participants' accounts distributed upon
withdrawal (3,783) (13,846) (6,437) (23,290) (7,500) (54,856)
Net transfers between funds (23,196) (45,047) 52,580 12,215 (6,419) 9,867 - - -
Net realized and unrealized appreciation
(depreciation) in fair value of investments:
Realized (319) 1,360 (100) 4,664 5,605
Unrealized 3,683 41,459 21,588 286,849 353,579
-------- -------- -------- ---------- -------- ------- ----------
Net increase 13,874 143,081 147,568 510,598 31,674 11,090 857,885
Participants' equity at beginning of year 116,394 325,881 78,242 588,994 109,133 3,287 1,221,931
-------- -------- -------- ---------- -------- ------- ----------
Participants' equity at end of year $130,268 $468,962 $225,810 $1,099,592 $140,807 $14,377 $2,079,816
======== ======== ======== ========== ======== ======= ==========
See accompanying notes.
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NOTES TO FINANCIAL STATEMENTS
CHEMICAL FINANCIAL CORPORATION 401 (K) SAVINGS PLAN
DECEMBER 31, 1996
NOTE A - - SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared under the accrual
basis of accounting in accordance with generally accepted accounting
principles. As a result, the financial statements include accrual
amounts for investment income and contributions which are not reported
on the Annual Return/Report of Employee Benefit Plan (Form 5500) filed
with the Department of Labor.
Investments are stated at aggregate fair value. Securities
traded on a national securities exchange are valued at the last
reported sales price on the last business day of the Plan year.
Investments traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued at
the last reported bid price.
Unrealized appreciation (depreciation) in the aggregate fair
value of investments represents the change in the difference between
aggregate fair value and the cost of investments. The realized gain
or loss on sale of investments is the difference between the proceeds
received and the cost of the specific investments sold. Realized
gains and losses are different than the related amounts reported on
Form 5500 which are computed as the difference between the proceeds
received and the fair value at the beginning of the year as prescribed
by the Department of Labor regulations.
Expenses incurred in connection with the operation of the Plan
are borne by Chemical Financial Corporation.
NOTE B - - DESCRIPTION OF THE PLAN
The Plan is a voluntary, defined-contribution plan covering all
eligible employees of the Corporation and subsidiaries.
The Plan provides for the deferral of salaries, wages and bonuses
in accordance with Section 401 (k) of the Internal Revenue Code.
Employees of the Corporation or any of its subsidiaries are eligible
for participation upon attaining age 21 and completing one year of
service. At December 31, 1996 there were 460 participants in the
Plan. Participants may be eligible to contribute up to 10% of their
annual compensation, up to a maximum of $9,500 in 1996 and $9,240 in
7
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1995. The employer made no contributions to the Plan during 1996 or
1995.
Participants may direct their contributions into an intermediate
bond fund, a stock index fund, a stock and bond fund, a money market
fund, a Chemical Financial Corporation common stock fund or a
combination of these funds, and may elect to change the percentage
directed to each fund quarterly. All participant contributions are
fully vested. Participant loans are permitted under the Plan. These
loans are subject to a strict set of rules established by laws and
regulations. As of December 31, 1996 the Plan had seven participant
loans outstanding at interest rates ranging from 9.50%-11.75%.
Information about the plan agreement and the vesting and benefit
provisions is contained in the Summary Plan Description contained in
the Chemical Financial Corporation Employee Handbook and is available
along with information regarding investment alternatives from the Plan
Administrator and Personnel Departments.
The Corporation, acting through its Board of Directors, has the
right to amend or terminate the Plan at any time.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE C - - INVESTMENTS
During the years ended December 31, 1996 and December 31, 1995
the Plan's net appreciation (depreciation) in the fair value of
investments (including investments bought, sold, as well as held
during the year) is summarized as follows:
1996 1995
-------- --------
Chemical Financial Corporation Common Stock Fund $ 99,088 $291,513
Intermediate Bond Fund (999) 3,364
Index Fund 97,080 42,819
Stock and Bond Fund 2,372 21,488
-------- --------
$197,541 $359,184
======== ========
The fair value of individual investments that represent 5% or more of
the Plan's net assets are as follows:
DECEMBER 31
-------------------------
1996 1995
---------- ----------
Chemical Financial Corporation Common Stock $1,400,236 $1,081,080
Federated Investors Mutual Funds:
Federated Short-Intermediate Government Trust 127,111
Max-Cap Fund 703,917 460,200
Treasury Obligations Fund 244,192 159,338
Fidelity Investments-Puritan Fund 294,387 219,730
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE D - - TRANSACTIONS WITH PARTIES-IN-INTEREST
THE FOLLOWING IS A SUMMARY OF TRANSACTIONS (AT COST) WITH PARTIES-IN-INTEREST:
CHEMICAL
FINANCIAL
CORP. COMMON
STOCK FUND
------------
Balance at December 31, 1994 $533,388
Purchases in 1995 268,711
Sales in 1995 (25,115)
Distributions in 1995 (18,845)
--------
Balance at December 31, 1995 $758,139
Purchases in 1996 312,505
Sales in 1996 (42,724)
Distributions in 1996 (33,743)
--------
Balance at December 31, 1996 $994,177
========
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE E - - INCOME TAX STATUS
The Internal Revenue Service has ruled that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and therefore,
is not subject to tax under present tax laws. Once qualified, the
Plan is required to operate in conformity with the IRC in order to
maintain its qualification. The Plan Sponsor is not aware of any
course of action or series of events that would adversely affect the
Plan's qualified status.
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SCHEDULE OF ASSETS HELD FOR INVESTMENT
CHEMICAL FINANCIAL CORPORATION 401 (K) SAVINGS PLAN
DECEMBER 31, 1996 AND FOR THE YEAR THEN ENDED
DESCRIPTION OF INVESTMENT INCLUDING
IDENTITY OF ISSUE, BORROWER, LESSOR OR MATURITY DATE, RATE OF INTEREST,
SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE COST FAIR VALUE
-------------------------------------- ----------------------------------- ---------- ----------
Chemical Financial Corporation Common Stock - 35,449 shares
Common Stock at $39.50/share current value $ 994,177 $1,400,236
Federated Investors Mutual Funds:
Federated Short-Intermediate
Government Trust Intermediate Bond Fund - 11,903 units 124,249 123,197
Max-Cap Fund Index Fund - 44,077 units 570,479 703,917
Treasury Obligations Fund Money Market Fund - 244,192 units,
$1.00/unit current value 244,192 244,192
Fidelity Investments-Puritan Fund Stock and Bond Fund - 17,075 units 275,516 294,387
---------- ----------
Total Mutual Funds 1,214,436 1,365,693
---------- ----------
Participant Loans Seven loans at interest rates ranging
from 9.50%-11.75% and maturing
3/13/97 - 7/15/2001 22,401 22,401
---------- ----------
TOTAL INVESTMENTS $2,231,014 $2,788,330
========== ==========
There were no investment assets reportable as acquired and disposed of
during the year.
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SCHEDULE OF REPORTABLE TRANSACTIONS
CHEMICAL FINANCIAL CORPORATION
401(K) SAVINGS PLAN
YEAR ENDED DECEMBER 31, 1996
CURRENT
DESCRIPTION OF ASSET EXPENSE VALUE ON
IDENTITY OF PARTY INTEREST RATE AND MATURITY IN PURCHASE SELLING LEASE INCURRED WITH COST TRANSACTION NET GAIN
INVOLVED CASE OF A LOAN) PRICE PRICE RENTAL TRANSACTION OF ASSET DATE (LOSS)
- --------------------- ----------------------------- -------- ------- ------ ------------- -------- ----------- --------
Category iii) A series
of transactions
involving securities
of the same issue
which, when aggregated,
involve an amount in
excess of 5% of the
current value of
plan assets:
Chemical Financial
Corporation Common Stock:
41 purchases $312,505 $312,505
22 sales 42,724 58,694 $15,970
Federated Investors Index Fund:
28 purchases 158,251 158,251
7 sales 10,240 11,614 1,374
Money Market Fund:
210 purchases 700,600 700,600
157 sales 615,746 615,746 - - -
Fidelity Investments Stock and Bond Fund:
25 purchases 126,736 126,736
6 sales 51,924 54,451 2,527
There were no category i), ii) or iv) reportable transactions.
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