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Administrative Committee
Chemical Financial Corporation 401 (k) Savings Plan
We have audited the accompanying statements of assets available for
plan benefits of the Chemical Financial Corporation 401 (k) Savings Plan
as of December 31, 1999 and 1998 and the related statements of changes
in assets available for plan benefits 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 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 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 available for plan benefits of the Plan at December 31, 1999 and 1998, and the changes in its assets available for plan benefits for the years then ended in conformity with accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes as of December 31, 1999 is 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 is not a required part of the financial statements. The fund information in the statements of assets available for plan benefits and the statements of changes in assets available for plan benefits is presented for purposes of additional analysis rather than to present the assets available for plan benefits and changes in assets available for plan benefits of each fund. The supplemental schedule and fund information have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
January 28, 2000
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| Intermediate
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International
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Total
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| ASSETS: | ||||||||||||
| Investments at fair value: |
||||||||||||
| Chemical Financial Corporation Common Stock |
$2,119,347
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$2,119,347
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| Federated Investors Mutual Funds: |
||||||||||||
| Short-Intermediate Government Trust |
$208,823
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208,823
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||||||||||
| Max-Cap Fund |
$2,537,046
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2,537,046
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||||||||||
| Mid-Cap Fund |
$14,782
|
14,782
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||||||||||
| Stock Trust |
$7,375
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7,375
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||||||||||
| Treasury Obligations Fund |
10,772
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$303,048
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313,820
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| Fidelity Investments-Mutual Funds: |
||||||||||||
| Puritan Fund |
$736,696
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736,696
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||||||||||
| Blue Chip Growth Fund |
$70,763
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70,763
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||||||||||
| Low-Priced Stock Fund |
$10,356
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10,356
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| Diversified International Fund |
$37,350
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37,350
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| Participant Loans |
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$46,335
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46,335
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| Total Investments |
208,823
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2,537,046
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736,696
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14,782
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7,375
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70,763
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10,356
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37,350
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2,130,119
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303,048
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46,335
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6,102,693
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| Employee contributions receivable |
(34)
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(384)
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(11)
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(12)
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(45)
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(486)
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| Cash and accrued income |
929
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73
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1,297
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|
2,299
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| Assets Available for Plan Benefits |
$209,718
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$2,536,662
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$736,685
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$14,782
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$7,375
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$70,763
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$10,356
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$37,350
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$2,130,180
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$304,300
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$46,335
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$6,104,506
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| See accompanying notes. | ||||||||||||
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| ASSETS: | |||||||
| Investments at fair value: | |||||||
| Chemical Financial Corporation Common Stock |
$2,040,820
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$2,040,820
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| Federated Investors Mutual Funds: |
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| Short-Intermediate Government Trust |
$171,343
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171,343
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| Max-Cap Fund |
$1,923,651
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1,923,651
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| Treasury Obligations
Fund |
1,866
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$239,862
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241,728
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| Fidelity Investments- Puritan Fund |
$707,512
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707,512
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| Participant loans | |
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$38,169
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38,169
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| Total Investments |
171,343
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1,923,651
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707,512
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2,042,686
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239,862
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38,169
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5,123,223
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| Employee contributions receivable |
1,479
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13,382
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5,097
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9,281
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1,534
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30,773
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| Cash and accrued income |
618
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35
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964
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486
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2,103
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| Assets Available for Plan | |||||||
| Benefits |
$173,440
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$1,937,033
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$712,609
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$2,052,002
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$242,360
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$38,655
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$5,156,099
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| See accompanying notes. | |||||||
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| Additions: | ||||||||||||
| Interest and dividend income and capital gain distributions |
$ 8,635
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$ 45,394
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$ 57,225
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$ 1,159
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$ 330
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$ 110
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$ 717
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$ 55,311
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$ 12,935
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$ 3,083
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$ 184,899
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| Employee | ||||||||||||
| contributions |
34,513
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363,097
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157,435
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2,365
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2,107
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$ 2,093
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970
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1,258
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244,734
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44,692
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853,264
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43,148
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408,491
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214,660
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3,524
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2,437
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2,093
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1,080
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1,975
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300,045
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57,627
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3,083
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1,038,183
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| Deductions: | ||||||||||||
| Participants' accounts distributed upon withdrawal |
(3,846)
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(83,176)
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(83,241)
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(42,666)
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(67,133)
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(280,062)
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| Net transfers between funds |
681
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(96,014)
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(72,051)
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10,824
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4,866
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57,331
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8,763
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30,999
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(21,442)
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71,446
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4,597
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| Net realized and unrealized appreciation in fair value of |
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| investments |
(3,705)
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370,328
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(35,292)
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434
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72
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11,339
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513
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4,376
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(157,759)
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190,306
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| Net increase |
36,278
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599,629
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24,076
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14,782
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7,375
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70,763
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10,356
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37,350
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78,178
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61,940
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7,680
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948,407
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| Assets available for plan benefits at |
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| beginning of year |
173,440
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1,937,033
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712,609
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2,052,002
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242,360
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38,655
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5,156,099
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| Assets available for plan benefits at |
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| end of year |
$209,718
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$2,536,662
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$736,685
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$14,782
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$ 7,375
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$70,763
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$10,356
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$ 37,350
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$2,130,180
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$304,300
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$46,335
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$6,104,506
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| Additions: | |||||||
| Interest and dividend income and capital gain distributions |
$ 7,472
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$ 38,287
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$ 72,496
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$ 44,156
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$ 10,722
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$ 4,576
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$ 177,709
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| Employee contributions |
29,760
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318,881
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134,072
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232,139
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29,822
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|
744,674
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37,232
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357,168
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206,568
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276,295
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40,544
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4,576
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922,383
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| Deductions: | |||||||
| Participants' accounts distributed
upon withdrawal |
(1,115)
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(24,405)
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(38,275)
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(41,646)
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(70,704)
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(1,356)
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(177,501)
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| Net transfers between funds |
(3,236)
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(27,593)
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(33,158)
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20,054
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52,042
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(8,109)
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| Net realized and unrealized appreciation | |||||||
| (depreciation) in fair value of investments |
1,781
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367,217
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23,335
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(118,703)
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|
273,630
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| Net increase (decrease) |
34,662
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672,387
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158,470
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136,000
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21,882
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(4,889)
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1,018,512
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| Assets available for plan benefits at | |||||||
| beginning of year |
138,778
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1,264,646
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554,139
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1,916,002
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220,478
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43,544
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4,137,587
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| Assets available for plan benefits at | |||||||
| end of year |
$173,440
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$1,937,033
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$712,609
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$2,052,002
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$242,360
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$38,655
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$5,156,099
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| See accompanying notes. | |||||||
NOTE A - - DESCRIPTION OF THE PLAN
The Chemical Financial Corporation 401 (k) Savings Plan (the Plan) is a voluntary, defined-contribution plan covering all eligible employees of Chemical Financial Corporation (the Corporation or employer) 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, 1999 there were 495 participants in the Plan. Participants may be eligible to contribute up to 15% of their annual compensation, up to a maximum of $10,000 in both 1999 and 1998. The employer made no contributions to the Plan during 1999 or 1998.
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 and beginning January 1, 1999, a middle capitalization stock fund, a value stock fund, a growth stock fund, a low-priced stock fund and an international stock fund. Participants may select any combination of these funds, and may elect to change the percentage directed to each fund daily. 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, 1999 the Plan had thirteen participant loans outstanding at interest rates ranging from 7.33%-11.45%.
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.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared under the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
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. Mutual funds are stated at the net asset value thereof on the last business day of the Plan year.
Expenses incurred in connection
with the operation of the Plan are borne by the Corporation.
NOTE C - - INVESTMENTS
During the years ended December 31, 1999 and December 31, 1998 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:
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| Intermediate Bond Fund |
$ (3,705
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) |
$ 1,781
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| Index Fund |
370,328
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367,217
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| Stock and Bond Fund |
(35,292
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) |
23,335
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| Chemical Financial Corporation Common Stock Fund |
(157,759
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) |
(118,703
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) |
| Middle Capitalization Stock Fund |
434
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0
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| Value Stock Fund |
72
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0
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| Growth Stock Fund |
11,339
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0
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| Low-Priced Stock Fund |
513
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0
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| International Stock Fund |
4,376
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0
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$ 190,306
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$ 273,630
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The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows:
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| Federated Investors Mutual Funds: | ||||
| Max-Cap Fund |
$2,537,046
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$1,923,651
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| Treasury Obligations Fund |
313,820
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241,728
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| Fidelity Investments-Puritan Fund |
736,696
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707,512
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| Chemical Financial Common Stock |
2,119,347
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2,040,820
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NOTE D - - TRANSACTIONS WITH PARTIES-IN-INTEREST
The following is a summary of transactions (at cost) with parties-in-interest:
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| Balance at January 1, 1998 |
$1,234,153
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| Purchases in 1998 |
379,041
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| Sales in 1998 |
(62,840)
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| Distributions in 1998 |
(25,846)
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| Balance at December 31, 1998 |
1,524,508
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| Purchases in 1999 |
418,904
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| Sales in 1999 |
(116,728)
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| Distributions in 1999 |
(28,091)
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| Balance at December 31, 1999 |
$1,798,593
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NOTE E - - INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service dated August 23,1994, stating that the Plan is qualified under section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt.
NOTE F - - YEAR 2000 READINESS DISCLOSURE (unaudited)
The Corporation experienced
no Year 2000 difficulties and, based on its knowledge as of the date of
this report, does not expect any unforeseen Year 2000 problems.
| Identity of Issue,
Borrower, Lessor or
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| *Chemical Financial Corporation Common Stock |
Common Stock - 68,366 shares |
$ 2,119,347
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| Federated Investors Mutual Funds: | |||
| Short-Intermediate
Government Trust |
Intermediate Bond Fund - 20,231 shares |
208,823
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| Max-Cap Fund | Index Fund - 84,639 shares |
2,537,046
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| Mid-Cap Fund | Middle Capitalization Stock Fund - 855 shares |
14,782
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| Stock Trust | Value Fund - 204 shares |
7,375
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| Treasury Obligations Fund | Money Market Fund - 313,764 shares |
313,820
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| Fidelity Investments: | |||
| Puritan Fund | Stock and Bond Fund - 38,711 |
736,696
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| Diversified International | International Stock Fund - 1,457 shares |
37,350
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| Low-Priced Stock | Low-Priced Stock Fund - 457 shares |
10,356
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| Blue Chip Growth | Growth Stock Fund - 1,177 shares |
70,763
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| Total Mutual Funds |
3,937,011
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| Participant Loans | Thirteen loans at interest rates
ranging from 7.33%-11.45% and maturing 2/29/00-9/30/04 |
46,335
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| TOTAL INVESTMENTS |
$6,102,693
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| *Indicates party-in-interest to the Plan
There were no investment assets reportable as acquired and disposed of during the year. |
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