|
|
|
|
|
|
|
|
|
Plan Administrator
Chemical Financial Corporation
1992 Stock Purchase Plan for Subsidiary Directors
We have audited the accompanying consolidated statement of financial condition of the Chemical Financial Corporation 1992 Stock Purchase Plan for Subsidiary Directors as of December 31, 1999 and 1998 and the related statements of income and changes in plan equity for each of the three years in the period 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 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 the Plan Administrator, 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 financial position of the Chemical Financial Corporation 1992 Stock Purchase Plan for Subsidiary Directors at December 31, 1999 and 1998, and the results of its operations and changes in its plan equity for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
January 21, 2000
|
|
|
|
1999
|
1998
|
|
| Assets | |||
| Cash |
$ 0
|
$ 963
|
|
| Common stock receivable of Chemical Financial Corporation, at market value - (9,076 shares at a cost of $299,115 at December 31, 1998) |
-
|
304,046
|
|
| Total Assets |
$ 0
|
$305,009
|
|
| Plan Equity | |||
| Plan equity (51 participants at December 31, 1998) |
$ 0
|
$305,009
|
See accompanying notes.
|
|
|
|
|
|
||||
| Additions | ||||||
| Participant contributions |
$
0
|
$294,650
|
$258,775
|
|||
| Dividend equivalents |
-
|
3,669
|
3,501
|
|||
| Other income |
-
|
704
|
1,055
|
|||
|
0
|
299,023
|
263,331
|
||||
| Deductions | ||||||
| Plan distributions |
259,262
|
329,354
|
291,431
|
|||
| Transfer to new plan |
45,747
|
|
|
|||
|
(305,009
|
) |
(30,331
|
) |
(28,100
|
) | |
| Net realized appreciation in | ||||||
| fair value of investment |
|
4,931
|
65,402
|
|||
| Net increase (decrease) |
(305,009
|
) |
(25,400
|
) |
37,302
|
|
| Plan equity at beginning of year |
305,009
|
330,409
|
293,107
|
|||
| Plan equity at end of year |
$
0
|
$305,009
|
$330,409
|
See accompanying notes.
Note 1 - Description of the Plan
The Chemical Financial Corporation 1992 Stock Purchase Plan for Subsidiary Directors (the Plan) was implemented by Chemical Financial Corporation (the Corporation) on April 30, 1992. 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.
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. Amounts remitted to
the Plan are credited to a separate cash account for each 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.
Note 1 - Description of the Plan (continued)
As of December 31, 1998, the Plan had 7,733 remaining shares of the Corporation that it was authorized to issue. These shares were issued on January 1, 1999 in satisfaction of a portion of the common stock receivable outstanding as of December 31, 1998. The 1998 Stock Purchase Plan for Subsidiary Directors ("new plan") was approved by the Board of Directors of the Corporation on December 14, 1998, with the same terms and provisions as the Plan. The remaining common stock receivable outstanding as of December 31, 1998 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 Plan were transferred to the new plan on January 1, 1999.
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 Chemical Financial 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.
Valuation of Common Stock Receivable
Common stock receivable of Chemical Financial Corporation is recorded at the fair market value of the number of shares receivable at the end of the period. Market value is based on the closing bid price of the Corporation's stock at year end ($33.50 per share at December 31, 1998). The number of shares receivable and closing bid price were adjusted for the 5 for 4 stock split paid on Chemical Financial Corporation common stock on December 16, 1998.
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.
Contributions for participants
by the participating companies were as follows:
|
|
||
| Participating Company |
|
|
| Chemical Bank and Trust Co. |
$ 55,000
|
$70,700
|
||
| Chemical Bank Bay Area |
34,800
|
33,100
|
||
| Chemical Bank Central |
37,150
|
26,400
|
||
| Chemical Bank Thumb Area |
34,100
|
26,650
|
||
| Chemical Bank Michigan |
32,700
|
29,750
|
||
| Chemical Bank Montcalm |
16,200
|
15,000
|
||
| Chemical Bank North |
13,575
|
3,150
|
||
| Chemical Bank South |
23,425
|
19,125
|
||
| Chemical Bank West |
11,700
|
8,900
|
||
| Chemical Bank Key State |
33,000
|
20,000
|
||
| CFC Data Corp |
3,000
|
6,000
|
||
| Total Contributions |
$294,650
|
$258,775
|
|
|