Chemical Financial Corporation 2000 Summary Annual Report

the time the transactions closed.

At the Corporation's Annual Shareholders' Meeting last April, we noted the retirement of several directors in accordance with the provisions of our Directors' Retirement Policy. Robert Beacom, formerly the president and chief executive officer of Chemical Bank Michigan, retired from that bank's board. Joseph Johnston, a long-time business and civic leader in Clare, also retired from the Chemical Bank Michigan board after 23 years of service. Rose Duley-Gleason had been a director of Northern National Bank at the time our Corporation acquired it and remained on the Chemical Bank North board until this past year. Finally, William P. Howe, a civil engineer who joined the board of Chemical Bank Key State in 1986 when it was known as Key State Bank, also reached retirement age. We also noted the retirement of Douglas McKim from the St. Louis Advisory Board of Chemical Bank and Trust Company following 24 years of service. We thank these five individuals for their many contributions to the advancement of the Corporation and its banks and we wish them the very best in retirement.

It has always been the policy of our board of directors to ensure that our shareholders receive tangible benefits from the progress we have made. In keeping with this policy, a 5 percent stock dividend approved by the board in December, 1999, was distributed to shareholders in January, 2000. The combination of the 5 percent stock dividend and an increase in the cash dividend to $.22 per share resulted in a 10 percent increase in the first quarter 2000 cash dividend compared to the prior year. Then, subsequent to our

merger with Shoreline Financial Corporation, the board voted to increase the regular quarterly cash dividend on our common stock by 9.1 percent to $.24 per share. This new, higher dividend is payable to shareholders in March, 2001.

In January, 2001, the Federal Reserve System lowered short-term interest rates by a full percentage point. At this point, it is difficult to forecast the future course of the economy, or to anticipate additional Federal Reserve moves. It is our intention, however, to stay the steady course that we have successfully followed for many years. To the extent that we can manage the changes that will occur in the coming year, we will do so. To the extent that we cannot control them, we will do our best to turn developments to our advantage. Over the long term, we remain optimistic about our Corporation's prospects for success in the months and years ahead.

Sincerely,

DEFA14A 1 new2000ar.htm Chemical Financial Corporation 2000 Summary Annual Report

W e' r e h e r e t o h e l p y o u


		2 0 0 0 H i g h l i g h t s

		This is Chemical Financial Corporation's Summary Annual Report. This report presents information concerning the business and financial results of Chemical Financial Corporation in a format that we believe our shareholders will find useful and informative. The year 2000 marked the 26th consecutive year of both increased operating earnings and cash dividends. • Net income in 2000 was $29.01 million, up 4.7% over 1999 net income of $27.71 million. • Earnings per share in 2000 were $2.06, up 6.2% over 1999 earnings per share of $1.94. • Return on average assets was 1.49% in 2000, compared to 1.47% in 1999. • Cash dividends per share in 2000 were $.88, up 10% over 1999 cash dividends per share of $.80. The Corporation's financial position remained strong at December 31, 2000. • Total assets increased $83 million, or 4.4%, during 2000 to $1.97 billion as of December 31, 2000. • Total loans increased $76.9 million, or 7.6%, and total deposits increased $44.5 million, or 2.9%, during 2000. • Shareholders' equity increased $19.1 million, or 7.7%, during 2000 to $268.7 million as of December 31, 2000, and represented 13.6% of total assets. • The allowance for loan losses was $18.2 million, or 1.68% of total loans.
		The Corporation completed its merger with Shoreline Financial Corporation, a one-bank holding company headquartered in Benton Harbor, Michigan, on January 9, 2001. The information contained in this Summary Annual Report does not include amounts of Shoreline Financial Corporation, unless specifically otherwise noted.



	Chemical Financial Corporation

	Chemical Financial Corporation is a diversified financial services company providing a full range of commercial, consumer, mortgage, trust, insurance and financial planning services. We served a broad customer base through 88 banking offices across 24 counties in the lower peninsula of Michigan as of December 31, 2000. The Corporation's philosophy focuses on a "family" of community banks, with directors, community bank directors, officers and employees who live, work and are involved within the communities the Corporation serves. We believe that we have a vested interest in the success of our customers and our hometown communities. The Corporation is headquartered in Midland, Michigan, and had total assets of $1.97 billion at December 31, 2000. In addition to its banking offices, the Corporation had 95 ATM locations, with 29 located off bank premises. At year-end, the Corporation had 943 employees on a full-time equivalent basis and its shareholders totaled approximately 6500, of which approximately 4300 were shareholders of record. On December 31, 2000, the Corporation completed the consolidation of nine of its ten community bank charters into two: Chemical Bank and Trust Company, headquartered in Midland, and Chemical Bank West, headquartered in Cadillac. The internal consolidation will provide us with back-room operating efficiencies. The Corporation completed its merger with Shoreline Financial Corporation, a one-bank holding company, headquartered in Benton Harbor, Michigan, on January 9, 2001. The merger added approximately $1.1 billion in assets, 30 banking offices, 2 loan production offices and 1500 new shareholders to the organization. Shoreline Financial Corporation originated more than 100 years ago as Benton Harbor State Bank. It will continue to provide financial services to communities in southwest Michigan through a separate subsidiary of the Corporation. We look forward to the future as a larger financial institution with greater resources to better serve our customers and shareholders. Our commitment to our shareholders, employees and communities will remain intact and our emphasis will continue to be to develop and sustain personal, long-term relationships with our customers.

F i v e - Y e a r S u m m a r y o f S e l e c t e d F i n a n c i a l D a t a

		Years Ended December 31
	2000	1999	1998	1997	1996
Operating Results (In thousands)
Net interest income	$77,050	$74,632	$71,946	$69,040	$67,090
Provision for loan losses	487	483	964	1,002	1,128
Noninterest income	17,364	16,217	16,151	13,122	12,198
Operating expenses	50,860	48,986	48,307	45,718	45,124
Net income	29,006	27,709	26,046	23,889	22,003
Per Share Data*
Net income
Basic	$ 2.07	$ 1.96	$ 1.84	$ 1.69	$ 1.56
Diluted	2.06	1.94	1.82	1.67	1.54
Cash dividends declared and paid	.88	.80	.73	.64	.55
Book value end-of-period	19.19	17.71	17.07	15.87	14.73
Market value end-of-period	23.25	29.52	31.90	34.10	28.66
Shares outstanding end-of-period (In thousands)*	14,004	14,095	14,171	14,113	14,070
At Year End (In thousands)
Assets	$1,973,424	$1,890,376	$1,872,626	$1,765,100	$1,698,774
Loans	1,085,876	1,009,017	898,293	845,600	807,653
Deposits	1,606,217	1,561,702	1,554,271	1,475,841	1,429,915
Long-term debt	185	200	8,000	9,000	10,000
Shareholders' equity	268,729	249,581	241,839	223,925	207,269
Average Balances (In thousands)
Assets	$1,944,271	$1,888,169	$1,804,022	$1,726,960	$1,688,214
Earning assets	1,826,733	1,767,621	1,693,780	1,619,387	1,581,778
Loans	1,037,753	962,104	879,886	820,451	792,209
Deposits	1,597,173	1,562,580	1,506,700	1,453,110	1,429,176
Long-term debt	190	8,023	8,994	9,236	10,976
Shareholders' equity	257,818	245,364	230,045	215,957	201,425
Financial Ratios
Return on average assets	1.49%	1.47%	1.44%	1.38%	1.30%
Return on average shareholders' equity	11.3	11.3	11.3	11.1	10.9
Net interest margin	4.30	4.30	4.33	4.35	4.33
Efficiency ratio	53.0	53.1	54.0	54.7	56.0
Average shareholders' equity to average assets	13.3	13.0	12.8	12.5	11.9
Cash dividends paid per share to diluted net income per share	42.7	41.2	40.3	38.2	36.0
Tangible equity to assets	13.3	12.9	12.7	12.5	12.0
Total risk-based capital	26.6	28.1	28.8	31.8	30.7
Credit Quality Statistics
Allowance for loan losses to total loans	1.68%	1.80%	2.01%	2.05%	2.06%
Nonperforming loans as a percent of total loans	.17	.33	.35	.36	.23
Nonperforming assets as a percent of total assets	.10	.19	.18	.18	.12
Net loans charged-off as a percent of average loans	.04	.04	.03	.03	.05

*Adjusted for stock dividends and stock splits



		M e s s a g e t o S h a r e h o l d e r s

	ALAN W. OTT Chairman of the Board		To Our Shareholders: The year of 2000 proved to be a very significant year in the history of Chemical Financial Corporation. We had record earnings from operations for the 26^th consecutive year. Our agreement to merge with Shore- line Financial Corporation was announced in August. And finally, we completed a major reorganization of nine of our ten Chemical Bank affiliates as the year ended. Turning first to the financial performance of Chemical Financial Corporation as it was structured throughout 2000, net income for the year was $29,006,000, an increase of 4.7 percent over 1999 net income of $27,709,000. Net income per share was $2.06, up 6.2 percent over 1999 earnings per share of $1.94. The Corporation's return on average assets was 1.49 percent in 2000, compared with 1.47 percent in the previous year. Total assets at year-end 2000 were $1.97 billion, 4.4 percent higher than total assets of $1.89 billion reported one year earlier. Total deposits at December 31, 2000 were $1.61 billion, as compared to $1.56 billion in deposits at the end of 1999. Total loans increased $76.9 million, or 7.6 percent, during 2000, to a new high of $1.09 billion at year-end. Our merger with Shoreline Financial Corporation was completed on January 9, 2001. On a pro forma basis, had Shoreline been included in our December 31, 2000 balance sheet and income statement, com bined net income of our two companies would have been $40.8 million and total year-end assets would have


4




been $3.05 billion. Pro forma combined total deposits would have stood at $2.44 billion and total loans would have been $1.85 billion. The combined pro forma shareholders' equity would have been approximately $358 million, representing nearly 12 percent of total assets. A comparison of these pro forma combined totals with the actual totals of Chemical Financial Corporation prior to the merger illustrates the magnitude of the Shoreline transaction and the importance of the merger to the shareholders of both companies. The Corporation's merger with Shoreline Financial Corporation brings together two banking organizations to create one of the largest bank holding companies headquartered in Michigan.	Bank Shoreline early in the second quarter of 2001. Our plan for the future is to operate in Michigan with three bank subsidiaries: Chemical Bank and Trust Company, headquartered in Midland; Chemical Bank West, with its main office in Cadillac; and Chemical Bank Shoreline, with headquarters located in Benton Harbor. In implementing the plan to restructure the Corporation into three bank subsidiaries, Chemical Bank Bay Area, Bay City; Chemical Bank Key State, Owosso; Chemical Bank Michigan, Clare; and Chemical Bank Thumb Area, Caro, were merged into Chemical Bank and Trust Company effective December 31, 2000. On the same date, Chemical Bank Central, Big Rapids; Chemical Bank Montcalm, Stanton; and Chemical Bank North, Grayling, were merged into Chemical Bank West. David Ramaker continues to serve as president and chief executive officer of Chemical Bank and Trust Company, while John Reisner retains his post as president and chief
Together, Chemical and Shoreline operate 118 full service banking offices and two loan production offices spread across 30 counties in Michigan's lower peninsula.		executive officer of Chemical Bank West. In January of 2001, James R. Milroy became president and chief
Beyond increasing financial totals, the merger will result in various synergies that are expected to be of long-term benefit. For example, three new directors joined the Corporation's board of directors at its January, 2001 meeting. Dan L. Smith, Shoreline's long-time chairman, former president and chief executive officer, brings 44 years of community banking experience to the board's deliberations. J. Daniel Bernson is a prominent business executive in southwest Michigan and L. Richard Marzke is a successful entrepreneur who has been a community bank director for 23 years. Shoreline Financial Corporation's subsidiary bank, Shoreline Bank, will change its name to Chemical	executive officer of Shoreline Bank. Further, it has been determined that Chemical Bank South, Marshall, will continue to operate under its own charter for a period of time but could ultimately be consolidated into Chemical Bank Shoreline. In our desire to maintain a "community bank" operation, the boards of directors of the Corporation's
	--continued on next page
			5



		M e s s a g e t o S h a r e h o l d e r s --continued

	ALOYSIUS J. OLIVER President and Chief Executive Officer		seven subsidiaries that were merged into the two surviving institutions will continue to function as community bank advisory boards and the presidents of the consolidating banks will continue in their present positions as community bank presidents. Each community bank board will have representative membership on the main board of the subsidiary bank. We want to emphasize that this consolidation does not reflect any deviation from our long-term strategy of being a community banking organization. We fully intend to remain an institution that allows local people to make most of the decisions that affect our customers. Thanks to our electronic data processing capabilities and enhanced internal communications systems, few of our customers will ever be aware of the changes that we have made. They will still be doing business with the same Chemical Bank employees in the same Chemical Bank locations where they have always done business. As a consequence of the merger and the consolidations, we anticipate special charges of approximately $10 million to $12 million for merger transaction costs, restructuring expenses and other nonrecurring outlays. It is anticipated that the majority of these special charges will be recorded in the first quarter of 2001. In March of 2000, we acquired the Morrice and Evart (Michigan) offices of Old Kent Bank. The Morrice office was consolidated into Chemical Bank Key State and the Evart office was consolidated into Chemical Bank Central. Together, both of these offices, which are located in contiguous markets to our existing locations, had approximately $25 million in deposits at


6

		At Chemical Financial Corporation, we have learned that two characteristics make each of our Chemical Bank offices real community banks. First, the decisions that are most important to our customers, including lending decisions, are made locally. We have senior officers
		and directors in the communities	C O M M U N I T Y B A N K I N G
		where Chemical Banks operate. They live and work among the people with whom they do business. They have the authority to make decisions that benefit each community and they can see the positive results of those everyday decisions. Chemical Bank office managers are professional bankers. They take loan applications and work with their customers to get them approved. Their goal is to send every customer away after the first visit, confident that their needs have been met. When it is appropriate, a specialist such as a commercial lender or a trust officer visits customers at their locations, rather than asking customers to travel to see our specialists. Second, our people know their customers and their customers know them. We encourage our employees to live in the communities in which they work. When people come into a Chemical Bank, we want them to feel that they are among friends. Those friendships are built not only at the bank but, over time, at local stores, schools, churches, civic organizations and service clubs. These relationships, in turn, help us give first-rate customer service. Local decision-making and personal relationships. Put them together and you have a real community bank -- a Chemical Bank.


		In the fast-changing world of financial services, Chemical Financial Corporation banks have placed a high priority on developing new services to complement those that commercial banks have featured for many decades.

		Traditional banking services, of course, remain at the core of our business. We offer checking accounts for consumers and corporations. We strive to pay competitive interest rates on our wide range of savings accounts and certificates of deposit in order to satisfy and meet the requirements of most savers. Loans of all types have long been the other staple of our business. We make unsecured installment loans and finance cars, trucks, recreational vehicles and boats. We make commercial loans of all sorts and both residential and commercial mortgage loans are significant parts of our business. Deposits and loans, however, are only part of our business. Trust services are of significant importance to our profitability. We administer trusts of all types. Our ChemVest Advantage service allows our customers to invest in a diversified portfolio of mutual funds tailored to each client's situation and risk profile. And, among many other things, we offer a full range of retirement services, ranging from IRAs for individuals to 401(k) and pension plans for corporations. Title insurance sales have become a companion service to our mortgage lending activity. Another line of business complementing our traditional banking products is our financial planning service which offers alternative investments such as the sale of mutual funds and annuities. Our full-line insurance agency enhances our complete package of financial services for our customers. Taking deposits and making loans will always be an important part of our business. But Chemical Financial Corporation subsidiary banks are thinking and acting well beyond the traditional parameters as they strive to become even more supportive of their customers in the 21st century.

	Using technology to provide superior customer service is a fundamental business strategy at Chemical Financial Corporation. But we have never substituted technology for the personal service that has always been the hallmark of a Chemical Bank.
	The heart of our data processing	T E C H N O L O G Y
	operations is an IBM mainframe computer, operating Kirchman Corporation's Dimension banking system. This system makes our internal operations more efficient and gives us the ability to improve customer service and expand our product offerings. It provides our front-line employees with the information they need to better serve our customers. Also, the Dimension system provides our customer service representatives the needed information to allow them to make many decisions that previously had to be referred to a supervisor or to another department within the bank. We offer services like ChemConnect home banking that allows our customers to check account balances, transfer funds between accounts and make loan payments online. When the enhanced ChemConnect II debuts in early 2001, customers will be able to access their accounts via the Internet to pay bills online, make transfers and download account information to their personal computers. Increasing numbers of commercial customers are using our Cash Management service that links a checking account, a revolving line of credit and an overnight investment account and automatically moves funds among them within predetermined limits. We operate 95 ChemKey automated teller machines (ATMs) at many Chemical Bank offices and at off-premises locations. These machines handle approximately four million transactions each year. In addition, our customers benefit from the use of a ChemKey debit card, which functions either as an electronic check at the point of sale, or as an ATM card. ChemKey debit cards can be used to pay for goods and services electronically at thousands of retail establishments around the world. Shoreline Bank, which became part of Chemical Financial Corporation in January 2001, operates an additional 31 ATMs in their respective markets. As a community banking organization, we are firmly committed to offering our customers the benefits that proven technology can provide.

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	At Chemical Financial Corporation, we have always understood that our organization will grow and prosper only if the communities we serve grow and prosper as well.
		O u r R e p u t a t i o n
	We believe that people must know and trust you before they will want to do business with you. There are a number of reasons why we are known, and trusted. One of the most important is our physical presence. We have 118 banking offices, including 30 branch offices of Shoreline Bank, which were acquired in January 2001. In some cases, we are the only bank in town. Even more significant, however, is the fact that most of our employees live in the communities where they work. They shop in town. They send their children to local schools. Often, they fill leadership roles in civic and business organizations and contribute to the quality of life in the community. We build on our physical presence and the activities of our employees by bringing the best aspects of a true community bank to Main Street. Our lenders help people see their dreams become realities, whether those dreams involve a new home or a business expansion or any other goal. In short, we strive every day to prove that we truly mean it when we say, "We're here to help you." Finally, we endeavor to operate in a manner that demonstrates that Chemical Banks are strong banks and good financial partners for individuals, families and businesses, large and small. It is our desire, then, that Chemical Bank customers not only remain Chemical Bank customers, but also recommend "their" bank to relatives, friends, business associates and newcomers to the community. We have worked long and hard to earn a reputation of being a first rate community bank and we intend to work just as hard to maintain it in the years ahead.

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C o n d e n s e d C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s

Condensed Consolidated Statement of Income
		Years Ended December 31
	2000	1999	1998

		(In thousands, except per share data)

Interest income	$131,085	$121,703	$121,092
Interest expense	54,035	47,071	49,146
Net Interest Income	77,050	74,632	71,946
Provision for loan losses	487	483	964
Net interest income after provision for loan losses	76,563	74,149	70,982
Noninterest Income
Trust services revenue	4,263	3,878	3,554
Service charges on deposit accounts	6,616	5,885	5,487
Other charges and fees for customer services	5,422	4,764	4,515
Gains on sales of loans	303	738	1,536
Other	760	952	1,059
Total noninterest income	17,364	16,217	16,151
Operating Expenses
Salaries, wages and employee benefits	30,425	29,730	28,895
Occupancy	4,551	4,437	4,372
Equipment	3,747	3,411	2,988
Other	12,137	11,408	12,052
Total operating expenses	50,860	48,986	48,307
Income before income taxes	43,067	41,380	38,826
Federal income taxes	14,061	13,671	12,780
Net Income	$ 29,006	$ 27,709	$ 26,046
Net Income per Share
Basic	$2.07	$1.96	$1.84
Diluted	2.06	1.94	1.82
Cash Dividends per Share	.88	.80	.73

Condensed Consolidated Statement of Changes in Shareholders' Equity
			December 31
	2000		1999

Shareholders' Equity at Beginning of Year	$249,581		$241,839
Net income	29,006		27,709
Cash dividends paid	(12,342	)	(11,315	)
Shares issued upon exercise of employee stock options (including related tax benefit)	237		264
Shares issued from stock purchase plan	282		299
Repurchase of shares (125,964 in 2000 and 130,950 in 1999)	(3,263	)	(4,155	)
Net change in unrealized gains (losses) on securities available for sale	5,228		(5,060	)
Shareholders' Equity at End of Year	$268,729		$249,581



Condensed Consolidated Statement of Financial Position
		December 31

	2000	1999

		(In thousands)
Assets
Cash and due from banks	$ 95,047	$ 98,827
Federal funds sold	102,700	73,960
Interest-bearing deposits with unaffiliated banks	5,058	11
Investment securities:
Available for sale	433,289	428,040
Held to maturity	213,165	243,413
Total investment securities	646,454	671,453
Loans:
Commercial	156,953	157,721
Real estate construction	46,559	34,510
Real estate commercial	144,182	120,990
Real estate residential	495,229	457,018
Consumer	242,953	238,778
Total loans	1,085,876	1,009,017
Less: Allowance for loan losses	18,240	18,190
Premises and equipment	21,969	21,570
Accrued income and other assets	34,560	33,728
Total Assets	$1,973,424	$1,890,376

Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing	$ 286,889	$ 258,061
Interest-bearing	1,319,328	1,303,641
Total deposits	1,606,217	1,561,702
Short-term borrowings	78,186	61,893
Interest payable and other liabilities	20,292	17,200
Total liabilities	1,704,695	1,640,795
Shareholders' equity	268,729	249,581
Total Liabilities and Shareholders' Equity	$1,973,424	$1,890,376

Report of Ernst & Young LLP, Independent Auditors

To the Shareholders and Board of Directors of Chemical Financial Corporation

We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated statement of financial position of Chemical Financial Corporation and subsidiaries at December 31, 2000 and 1999 and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2000 (not presented separately herein) and in our report dated January 16, 2001, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly stated in all material respects in relation to the consolidated financial statements from which it has been derived.

Detroit, Michigan
January 16, 2001

S u m m a r y A n n u a l R e p o r t F i n a n c i a l R e v i e w

Net Income
Net income for 2000 was $29 million, up 4.7% from 1999 net income of $27.7 million. Diluted earnings per share were $2.06, up 6.2% above 1999. The increases in net income and earnings per share were attributable to increases in both net interest income and noninterest income.

Net Interest Income
Net interest income, on a fully taxable equivalent (FTE) basis, is the difference between interest income and interest expense and reflects adjustments made to the yields on tax-exempt assets in order to analyze tax-exempt income and fully taxable income on a comparable basis. The single most important component in analyzing the results of the Corporation's operations is net interest income. Net interest income (FTE) comprised 81.9% of net revenues in 2000, compared to 82.4% in 1999.

For 2000, net interest income on a fully taxable equivalent basis was $78.6 million, an increase of $2.6 million, or 3.4%, over 1999 net interest income of $76.1 million. The increase was primarily attributable to growth in average loans, interest-bearing and noninterest-bearing deposits and shareholders' equity. Average loans increased $75.6 million, or 7.9%, average interest-bearing deposits increased $23.8 million, or 1.8%, average noninterest-bearing deposits increased $10.8 million, or 4.1%, and average shareholders' equity increased $12.5 million, or 5.1%, during 2000.

Although interest rates were anything but stable over the 24-month period ended December 31, 2000, the Corporation's net interest margin remained constant, at 4.30% in both 2000 and 1999. The net interest margin remained stable and net interest income increased, even though the Corporation realized a slight reduction of 14 basis points in the net interest spread during 2000, as compared to 1999. The net interest spread is the difference between the average yield on earning assets and the average cost of interest-bearing liabilities. The net interest spread was 3.37% and 3.51% in 2000 and 1999, respectively.

Noninterest Income
Noninterest income increased $1.15 million, or 7.1%, during 2000 over the prior year. The Corporation realized significant increases in four categories of noninterest income. Service charges on deposit accounts increased $.73 million, or 12.4%, trust services revenue grew $.39 million, or 9.9%, fees for customer services increased $.70 million, or 41.9%, and ATM fees increased $.15 million, or 9.4%. These increases were partially offset by a decline in gains and fees realized on the sale of residential mortgage loans in the secondary market of $.56 million, or 41.5%, and other noninterest income declines of $.26 million.

Operating Expenses
Operating expenses increased 3.8% in 2000 over 1999. The increase was attributable to the following:

Personnel costs, including employee benefits, were up just 2.3%. As of December 31, 2000, the Corporation had 943 employees on a full-time equivalent basis, which was a 3.6% reduction in employees from the prior year-end.

Occupancy and equipment expenses increased $.45 million, or 5.7%, with the increased depreciation expense associated with branch acquisitions and an increase in information technology expenses accounting for the majority of this increase.

Other operating expenses increased $.7 million, or 6.4%. The majority of this increase was attributable to costs associated with the acquisitions of two branch banking offices, in Evart and Morrice (Michigan) with total deposits of approximately $25 million, and increased FDIC premiums.

Asset Quality
The management of credit risk is a fundamental component of the Corporation's business. The Corporation maintains a conservative loan policy and strict credit underwriting standards, as well as strong administrative, reporting and loan review controls. These fundamentals are strengthened by the Corporation's practice to generally make loans only in those markets served by its subsidiary community banks. These practices have resulted in the Corporation maintaining strong asset quality, historically above average, based on industry norms. As of December 31, 2000, the composition of the Corporation's loan portfolio was 50.3% residential real estate and home equity loans, 32% commercial and commercial real estate loans and 17.7% consumer loans.

As of December 31, 2000, total nonperforming assets were $2.1 million, or .10% of total assets, a reduction from last year's ratio of .19%.

Capital
Capital provides the foundation for future growth and expansion. The major component of capital is shareholders' equity.

Shareholders' equity was $268.7 million as of December 31, 2000, up $19.1 million, or 7.7%, from the prior year-end. The majority of the increase was attributable to retained net income. During 2000, the Corporation repurchased 125,964 shares of its common stock at an average price of $25.88 per share. As of December 31, 2000, shareholders' equity represented 13.6% of total assets and the Corporation's total risk-based capital ratio was 26.6%.

D I R E C T O R S A N D O F F I C E R S O F A F F I L I A T E S

CHEMICAL BANK AND TRUST COMPANY			CFC DATA CORP

DIRECTORS LAWRENCE E. BURKS Retired Chemical Bank and Trust Co. JAMES A. CURRIE Investor DALE T. DEAN Retired 4-D Builders Supply, Inc. MICHAEL L. DOW Investor DR. DAVID E. FRY President Northwood University RICHARD A. HAZLETON Chairman Dow Corning Corporation KATHLEEN FUCE-HOBOHM President SPACE, Inc. JAMES R. JENKINS Senior Vice President and General Counsel Deere and Company TERENCE F. MOORE President and Chief Executive Officer MidMichigan Health ALOYSIUS J. OLIVER President and Chief Executive Officer Chemical Financial Corporation ALAN W. OTT Chairman Chemical Financial Corporation FRANK P. POPOFF Retired Chairman, President and Chief Executive Officer The Dow Chemical Company DAVID B. RAMAKER President and Chief Executive Officer LAWRENCE A. REED Retired President and Chief Executive Officer Dow Corning Corporation GARY S. SMITH, M.D. Midland Family Physicians, P.C. WILLIAM S. STAVROPOULOS Chairman The Dow Chemical Company DIRK D. WALTZ Dirk Waltz Buick-Olds-Jeep, Inc. LAWRENCE J. WASHINGTON, JR. Vice President Environment, Health & Safety, Human Resources and Public Affairs The Dow Chemical Company	HONORARY DIRECTOR DIRK B. WALTZ Retired Dirk Waltz Buick-Olds-Jeep, Inc. ST. LOUIS OFFICE ADVISORY BOARD DANIEL L. DOEPKER Mid-West Building Distributors, Inc. DOUGLAS F. McKIM Retired Lodewyk, Nesen & McKim, Inc. LARRY M. NOBLE Senior Vice President DUANE OXENDALE Retired Michigan Livestock Exchange DAVID B. RAMAKER President and Chief Executive Officer WILLIAM C. THIEMKEY, D.O. Physician BRADLY E. VIBBER Senior Vice President JAMES F. WAGAR Vice Chairman Playbuoy Pontoon Manufacturing, Inc. OFFICERS ALAN W. OTT Chairman DAVID B. RAMAKER President and Chief Executive Officer BRUCE M. GROOM Senior Vice President and Senior Trust Officer WILLIAM C. LAUDERBACH Senior Vice President and Investment Officer Senior Vice Presidents TARI E. DETZLER CHARLES F. KINNEY LARRY M. NOBLE MARK D. RUHLE BRADLY E. VIBBER Senior Vice Presidents and Trust Officers JUDE T. PATNAUDE GLENN W. PIETENPOL Vice Presidents CARL R. AHEARN JOANN M. BURGESS ROBERT O. BURGESS, JR. ROBERT W. BURNS KIMBERLEE R. BUTCHER ALAN C. CHRISTENSEN G. THOMAS CIMBALIK	CHARLOTTE A. ELMORE LAWRENCE LAGROW JANET M. McGUIRE ROGER D. NEMETH ROBERT S. RATHBUN DARLENE R. SLATER TINA A. WALLACE Vice Presidents and Trust Officers KIRK W. FISHER DANIEL P. McKUNE GUY D. MERRIAM PATRICIA ZIMMERMAN Assistant Vice Presidents CHARLES L. BROWN JON D. CATLIN DEBORAH L. DEWALD MARY G. GREEN STEPHEN M. HALLEAD SHERRY A. MIZER PATRICIA A. NELLIS SELENA NOBLE TAMALA RANGER MONICA A. SANGER VICTOR L. SCHULTZ RONALD D. SCHWEIGERT BARBARA E. SLAGEL TAMARA J. SWINSON PEGGY L. TUCKER ROBERT J. WALTERS CAROL WIERMAN Assistant Vice Presidents and Trust Officers SHELLY L. CAUFIELD HERBERT E. HARDY NORMA KENDALL Trust Officers PENNY DEVERS RUDOLPH R. RADOSA, JR. DEBORA RITTENBURG MARK SOVEREEN Assistant Trust Officers JAN E. GORDON DAWN MARQUISS Assistant Cashiers BETH E. BRICK PAMELA J. CARRIER SANDRA K. CUMMINS MARY ANN KNAPP CHERYL K. MEYERS MARK J. STEINKE SANDRA TURK KATHY M. WENZEL KEITH A. WENZEL SHARON YODER Building and Maintenance Officer RICK ARCHER	DIRECTORS JAMES A. CURRIE Investor DOMINIC MONASTIERE President and Chief Executive Officer Chemical Bank Bay Area TERENCE F. MOORE President and Chief Executive Officer MidMichigan Health ALOYSIUS J. OLIVER President and Chief Executive Officer Chemical Financial Corporation THOMAS H. PETERSEN Executive Vice President and General Manager DAVID B. RAMAKER President and Chief Executive Officer Chemical Bank and Trust Co. DAVID R. WAKELAND President Wakeland Oil Company OFFICERS ALOYSIUS J. OLIVER President and Treasurer THOMAS H. PETERSEN Executive Vice President and General Manager W. BRIAN BEALL Vice President and Assistant General Manager DAVID D. COBB Vice President Systems Technology LORI A. GWIZDALA Secretary



CHEMICAL BANK BAY AREA		CHEMICAL BANK SOUTH	CHEMICAL BANK MONTCALM

DIRECTORS GARY E. ANDERSON President and Chief Executive Officer Dow Corning Corporation LORI A. GWIZDALA Senior Vice President, Chief Financial Officer and Treasurer Chemical Financial Corporation THERON P. HOLLAND Retired Holland's IGA DOMINIC MONASTIERE President and Chief Executive Officer DONALD L. PIETZ President PICO, Inc. DAVID B. RAMAKER President and Chief Executive Officer Chemical Bank and Trust Co. DAVID S. RAMSAY Lee/Ramsay Funeral Home ROBERT D. SAROW Attorney at Law Learman, Peters, Sarow & McQuillan GARY D. STEADMAN Retired Gary D. Steadman, Inc. THOMAS H. TABOR President Herman Hiss & Co. DONALD L. WILTSE Wiltse Chevrolet, Oldsmobile, Buick, Inc. HURON ADVISORY BOARD HOWARD M. BARRIGER Teacher Standish Sterling High School President Barriger Builders KARL N. EDMONDS President Au-Tow, Inc. THERON P. HOLLAND Retired Holland's IGA OTIS L. McKINLEY, D.D.S. Dentist DOMINIC MONASTIERE President and Chief Executive Officer DAVID S. RAMSAY Lee/Ramsay Funeral Home DONALD L. WILTSE Wiltse Chevrolet, Oldmobile, Buick, Inc.	OFFICERS DAVID B. RAMAKER Chairman DOMINIC MONASTIERE President and Chief Executive Officer Senior Vice Presidents DAVID H. BLOSSEY RODNEY R. LOOMIS Vice Presidents CRAIG A. BISHOP DUANA R. McCULLOCH GALE L. MIELENS MARY JO TOPORSKI THOMAS R. WILCOX Assistant Vice Presidents TINA E. BERGERON HOLLY J. BICKHAM LYNN M. HANSEN SANDRA A. METZGER DEBORAH K. MORGAN SUZANNE E. NEERING JEAN M. SAXON SANDRA A. WACKERLE Assistant Cashiers CHARLOTTE L. ANSPAUGH MARIA FRANEK CYNTHIA J. GRAVLIN CLEOFELYNN A. HUGO JUDITH A. MARCINIAK KATHLEEN C. MARQUARDT BRENDA A. MICHO KAREN M. SCHAFFER HARRIET L. STOPYAK WILLIAM R. TILLEN Auditor RONALD D. ERNDT	DIRECTORS JUDITH A. BOROWITZ President and Chief Executive Officer RONALD J. DeGRAW Attorney Schroeder, DeGraw, Kendall, Mayhall, DeGraw & Dickerson EUGENE D. HAMAKER Retired/Consultant Metalab WILLIAM C. LAUDERBACH Senior Vice President and Investment Officer Chemical Bank and Trust Co. PETER T. MITCHELL President Albion College ARLIN E. NESS President Starr Commonwealth Schools DAVID B. RAMAKER President and Chief Executive Officer Chemical Bank and Trust Co. JOYCE J. SPICER Human Resources Manager Albion Division Harvard Industries, Inc. WILLIAM K. STOFFER Chairman and Chief Executive Officer Albion Machine and Tool Co. JEOFFREY A. THORREZ President Concord Manufacturing Co. JACK H. TOWNSEND Chairman and Chief Executive Officer Michigan Kitchen Distributors OFFICERS EUGENE D. HAMAKER Chairman JUDITH A. BOROWITZ President and Chief Executive Officer Vice Presidents TERI E. FOGEL CAROL R. HAYDEN MARVIN N. ITTNER REBECCA L. VETTEL Assistant Vice President DIANE M. RAMIREZ Assistant Cashiers MELISSA J. HOATH BARBARA A. KEITH DAVID A. SMITH JULIE L. WILHELM Auditor ELIZABETH A. WONUS	DIRECTORS JOHN BOOKWALTER Bookwalter Motor Sales, Inc. DONALD BURNS President Montcalm Community College GARY COPP Secretary/Manager Carson City Lumber Co. C. NORMAN CROOKS Farmer SUSAN D. DRAPER Office Manager Lakeview Dental Associates, P.C. THOMAS W. KOHN President and Chief Executive Officer LARRY M. NOBLE Senior Vice President Chemical Bank and Trust Co. ALOYSIUS J. OLIVER President and Chief Executive Officer Chemical Financial Corporation OFFICERS ALOYSIUS J. OLIVER Chairman THOMAS W. KOHN President and Chief Executive Officer Senior Vice President LLOYD D. SCOBY Cashier DARLA R. BARTLETT Vice Presidents DAVID BARKER DIANE BEACH BRUCE COLE JEAN SOUTHWARD Assistant Vice Presidents AMY S. ANDERSEN KAY MEISTER DONNA STRATTON LINDA WOLVERTON Assistant Cashiers CONNIE COLLAR SUE ELLEN PABST KIMBERLY SIBURT DIANE VAN PATTEN KAREN YAW

D I R E C T O R S A N D O F F I C E R S O F A F F I L I A T E S

CHEMICAL BANK CENTRAL	CHEMICAL BANK MICHIGAN		CHEMICAL BANK NORTH

DIRECTORS JACK R. BENEDICT President The Benedict Manufacturing Co. JOHN CURRIE Currie's Amoco BRUCE M. GROOM Senior Vice President and Senior Trust Officer Chemical Bank and Trust Co. KARL W. LINEBAUGH President and Chief Executive Officer RONALD MOHNKE President Mohnke Funeral Home, Inc. LINDA L. H. MYERS Assistant Superintendent Mecosta-Osceola Intermediate School District ALOYSIUS J. OLIVER President and Chief Executive Officer Chemical Financial Corporation DAVID L. PORTEOUS Attorney at Law Porteous Law Office P.C. WILLIAM R. PRUITT Pruitt-Livingston Funeral Home FRANKLIN C. WHEATLAKE Chairman Wheatlake Enterprises JOSEPH M. WOLSCHLEGER, M.D. Internal Medicine OFFICERS ALOYSIUS J. OLIVER Chairman KARL W. LINEBAUGH President and Chief Executive Officer PHILIP R. KEATING Executive Vice President Vice Presidents DAVID J. LANGWORTHY MARY WITHERS BRIAN YOUNGS Assistant Vice Presidents JAMES GARRETT JEAN A. MISENAR MARJORIE A. RATHBURN Assistant Cashiers TERESA ALLEN KENDA DIESON JUDY GARNER KRISTA MARTINY JANET ROWLAND MARY K. SUCKOW Auditor ROBERT D. GAMMONS	DIRECTORS JOHN M. BICKNELL Retired Retailer DAVID D. CLARKE Crop Farmer VINCENT L. DEMASI Owner Clare Hardware RICHARD DEAN DOHERTY A.J. Doherty Motor Inns, Inc. WAYNE FRUCHEY Retired Fruchey Foods, Inc. CHARLES F. KINNEY Senior Vice President Chemical Bank and Trust Co. DENNIS J. LAFLEUR President and Chief Executive Officer MARK D. MANN President Mann Construction, Inc. CLAY MAXWELL Maxwell Seed Farms RICHARD M. MOSER Owner Woods Household Furniture & Appliances BETTY M. MUSSELL Community Volunteer JOSEPH F. MYERS Myers for Tires WILLIAM C. ODYKIRK Ody Enterprises DAVID B. RAMAKER President and Chief Executive Officer Chemical Bank and Trust Co. ALBERT F. WENTWORTH Dairy Farmer OFFICERS DAVID B. RAMAKER Chairman DENNIS J. LAFLEUR President and Chief Executive Officer Senior Vice Presidents JAMES A. ALLEN RODERICK F. BEAMISH RONNIE L. POWELL JAMES P. RAFFENAUD	Vice Presidents JANET GILLARD STEVEN J. KINGSBURY RICHARD L. LAUER TAMMY L. MILLER Comptroller BRENDA J. HAVENS Assistant Vice Presidents CHARLES AMBLE STEPHANIE COOPER ELAINE DUNKLE ROBIN R. GROVE LINDA C. HALL CHRISTINE J. LAWSON VERA M. MARSHALL DAVID T. PRAWDZIK SUSAN D. SPEARY LORI STOUT STANLEY L. WARNER Assistant Cashiers THEOLA CLEVELAND HILDA FLETCHER JUDITH A. GROVE TINA M. LEHMANN SUE E. WHITE Auditor JENNIFER ABRAMS	DIRECTORS WILLIAM L. CAREY Attorney at Law JERRY M. DeWITT Developer RICHARD D. HACKER Owner Hacker's Yamaha & Honda ROBERT JANSEN Owner Jansen Plumbing & Heating PAUL B. LERG Assistant Superintendent Crawford AuSable Schools ALOYSIUS J. OLIVER President and Chief Executive Officer Chemical Financial Corporation MARK D. RUHLE Senior Vice President Chemical Bank and Trust Co. G. JOE SWAIN President and Chief Executive Officer JERRY WALKER Retired Jack Millikin, Inc. OFFICERS ALOYSIUS J. OLIVER Chairman G. JOE SWAIN President and Chief Executive Officer Senior Vice President RANDALL A. SEYMOUR Vice Presidents MARK W. FURST SHARON NIEBRZYDOWSKI J. ELAINE SWEENEY Assistant Vice Presidents TAMARA L. KENT SHELBY J. NORMAN JANE A. RANDALL ANDREA M. WEISS Assistant Cashiers JAY T. DUKE SANDRA L. EGBERS CONNIE MINNICK CAROL D. WHITE Auditor TRACY NICHOLS



CHEMICAL BANK WEST	CHEMICAL BANK KEY STATE	CHEMICAL BANK THUMB AREA

DIRECTORS NANCY BOWMAN Certified Public Accountant HAROLD CNOSSEN Prosperous Farms WAYNE EVERETT Whitetail Realty JOHN GERNAAT Gernaat Family Farms JAMES B. HINKAMP, II Executive Vice President ALOYSIUS J. OLIVER President and Chief Executive Officer Chemical Financial Corporation JOHN A. REISNER President and Chief Executive Officer MARK D. RUHLE Senior Vice President Chemical Bank and Trust Co. WILLIAM RZEPKA Cadillac Credit Bureau OFFICERS ALOYSIUS J. OLIVER Chairman JOHN A. REISNER President and Chief Executive Officer JAMES B. HINKAMP, II Executive Vice President Senior Vice President KRISTINE E. BOWEN Vice President BARBARA HANCOCK Assistant Vice Presidents LORIE MORIARTY ROXANNE PRINCE SUSAN SCHWAGER Assistant Cashiers DELLA BEDNARICK SHARILYN BOOMS DARYL HESSELINK JUDY MULDER MARY JO SHIVLIE Auditor NORMA DUVALL	DIRECTORS WADE V. ALDERMAN President Alderman's Inc. MARGARET S. GULICK President and Chief Executive Officer Memorial Healthcare Center JOHN F. HARRISON President and Chief Executive Officer MICHAEL G. MAJZEL, JR. Retired Crop Farmer M&M Farms ALOYSIUS J. OLIVER President and Chief Executive Officer Chemical Financial Corporation HERBERT F. PENHORWOOD Retired Industrialist HagneTek DAVID B. RAMAKER President and Chief Executive Officer Chemical Bank and Trust Co. DAVID R. WAKELAND President Wakeland Oil Company THOMAS R. WRIGHT President and Chief Executive Officer Williams Gun Sight Co. OFFICERS ALOYSIUS J. OLIVER Chairman JOHN F. HARRISON President and Chief Executive Officer Senior Vice President ROBERT L. HARDY Vice Presidents LORI L. EDINGTON NITA L. JONES DONNA S. McAVOY Assistant Vice Presidents P. JOSEPH DALY MICHELLE M. HOLDEN RANDY L. HORTON DONALD D. LEVI Assistant Cashiers BARBARA M. BUCSI JAMES D. JONES JANA L. MOORE CAROL A. ROWELL LINDA K. SOVIS Auditor SANDRA A. DUBARNS	DIRECTORS RICHARD C. BIDDINGER Owner Riverside Sales and Engineering Corp. GARY J. CREWS Attorney Ransford and Crews LORI A. GWIZDALA Senior Vice President, Chief Financial Officer and Treasurer Chemical Financial Corporation DOUGLAS H. HERRINGSHAW President and Chief Executive Officer CARL O. HOLMES Chairman of the Board Chemical Bank Thumb Area MARVIN J. KOCIBA Farm Owner and Operator MICHAEL T. LAETHEM President Laethem Equipment Company KENNETH G. McLAREN Retired Sheridan McLaren Insurance Agency GERALDINE F. PRIESKORN Retired Prieskorn Variety Stores, Inc. DAVID B. RAMAKER President and Chief Executive Officer Chemical Bank and Trust Co. RICHARD B. RANSFORD President Ransford Funeral Home, Inc. CASS CITY/HARBOR BEACH/ BAD AXE ADVISORY BOARD DOUGLAS H. HERRINGSHAW President and Chief Executive Officer MARVIN J. KOCIBA Farm Owner and Operator DEBBIE LEITCH President Chippi Enterprises, Inc. GERALDINE F. PRIESKORN Retired Prieskorn Variety Stores, Inc. PATRICIA J. ROGGENBUCK Secretary Helena Valley Farms GLEN H. TOWNLEY Owner Harbor Beach Insurance Agency	K. MICHAEL WEAVER Pharmacist ROBERT V. WISCHMEYER Retired Farm Product Sales OFFICERS CARL O. HOLMES Chairman DOUGLAS H. HERRINGSHAW President and Chief Executive Officer Senior Vice Presidents JAMES E. BOLTON DENNIS P. GILKEY ROBERT M. WOLAK Vice Presidents MICHAEL F. BOICE FELICIA M. CARR BEVERLY J. PERRY Business Development Officer Richard Ypma Assistant Vice Presidents ORVIL A. BEECHER MARSHA K. MOORE LYNN C. PAVLICHEK ROSE M. PUTNAM SHERRYL M. SEELEY LINDA K. SMITH JANET D. THANE CHERYL D. WILDER CAROLYN M. WYMORE Assistant Cashiers BETTE M. BURTON BEVERLY COPELAND SUSAN M. MILLER SUSAN L. PRYOR KAREN L. WOOD Auditor ROSE M. STRUNZ Executive Secretary MONALEE McCREA

EXECUTIVE MANAGEMENT COMMITTEE

(from left to right) DAVID B. RAMAKER,
WILLIAM C. LAUDERBACH, ALOYSIUS J. OLIVER,
BRUCE M. GROOM and LORI A. GWIZDALA

EXECUTIVE OFFICERS

ALAN W. OTT
Chairman

ALOYSIUS J. OLIVER
President and
Chief Executive Officer

DAVID B. RAMAKER
Executive Vice President and Secretary

BRUCE M. GROOM
Senior Vice President and
Senior Trust Officer
Chemical Bank and Trust Company

LORI A. GWIZDALA
Senior Vice President, Chief Financial Officer and Treasurer

WILLIAM C. LAUDERBACH
Senior Vice President and
Investment Officer
Chemical Bank and Trust Company

OFFICERS

GLENN SWEENEY
Vice President and
Corporate Auditor

JOSEPH W. TORRENCE
Vice President and Corporate
Human Resources Officer

DAVID P. VERMILYE
Vice President

THEODORE J. GROENING
Assistant Vice President and
Assistant Financial Officer

SANDRA BARGERON
Assistant Vice President and
Auditor

MARIANNE C. BIRD
Director of Marketing

JONATHAN P. BUSHEY
Corporate Loan Review Officer

ROBERT E. SUTTON
Corporate Compliance Officer

CHERYL HASSEN
SWARTHOUT
Corporate Training Officer

C O R P O R A T E I; N; F O R M A T I O N

THE COMPANY

Chemical Financial Corporation is a registered bank holding company headquartered in Midland, Michigan, that operated ten bank affiliates with eighty-eight banking offices in twenty-four counties located generally across the midsection of Michigan's lower peninsula throughout 2000. Because the Corporation is a bank holding company, its principal operations are conducted by its subsidiaries. All of the Corporation's subsidiary banks are state banks and offer the full range of services normally associated with commercial banking. The Corporation's lead bank is Chemical Bank and Trust Company, headquartered in Midland, Michigan. Trust services are provided by the lead bank directly to customers of the Corpo-ration's other subsidiary banks through service agreements with each bank.

On December 31, 2000, the Corporation merged nine of its subsidiary banks into two, Chemical Bank and Trust Company, headquartered in Midland, and Chemical Bank West, headquartered in Cadillac. On January 9, 2001, the Corporation completed its merger with Shoreline Financial Corporation, a one-bank holding company, headquartered in Benton Harbor, Michigan.

The Corporation owns a bank-related company, CFC Data Corp, which provides data processing services primarily to the Corporation's subsidiary banks.

The Corporation operates a property and casualty insurance agency and a title services company through subsidiaries of its lead bank.

The Corporation serves as controlling shareholder and maintains systems of financial, operational and administrative controls that permit centralized evaluation of subsidiary operations. The Corporation also provides assistance to its subsidiaries in selected functional areas including accounting, operations, marketing, investments, central purchasing, financial planning, internal auditing, loan quality control, training, compliance with regulatory requirements and personnel.

STOCK INFORMATION

Chemical Financial Corporation common stock trades on The Nasdaq Stock Market® under the symbol CHFC. As of December 31, 2000, there were eight registered market makers of Chemical Financial Corporation common stock: A.G. Edwards & Sons, Inc.; Herzog, Heine, Geduld, Inc.; Keefe, Bruyette & Woods, Inc.; Raymond, James & Associates; Schwab Capital Markets; Sherwood Securities Corp.; Spear, Leeds & Kellogg; and Stifel, Nicolaus & Company. The approximate number of shareholders of record at December 31, 2000 was 4300. Analysts, investors, shareholders, and others seeking financial or general information about the Corporation are invited to contact Aloysius J. Oliver, President and Chief
Executive Officer, or Lori A. Gwizdala, Senior Vice President and Chief Financial Officer. Telephone (517) 839-5350.

SHAREHOLDER ASSISTANCE

Inquiries related to shareholder records, change of name, address or ownership of stock, and lost or stolen certificates

can be directed to either of the following transfer agents and registrars:

     Computershare Investor Services, LLC
     2 N. LaSalle Street
     P.O. Box A3504
     Chicago, Illinois 60602-3504
     Telephone: 1-800-942-5909

     Chemical Bank and Trust Company
     Attention: Co-Transfer Agent
     333 East Main Street
     Midland, Michigan 48640
     Telephone: (517) 839-5236

DIVIDEND REINVESTMENT

The Corporation offers a dividend reinvestment program through Computershare Investor Services, LLC, whereby shareholders may reinvest their Chemical Financial Corporation dividends in additional shares of the Corporation's stock. Participating shareholders also may invest up to $3,000 in additional funds each quarter for the purchase of additional shares. Information concerning this optional program is available from either of the transfer agents shown above or the Corporate Office of Chemical Financial Corporation, P.O. Box 569, Midland, Michigan 48640-0569. Telephone (517) 839-5350.

DIVIDEND DIRECT DEPOSIT

Shareholders of the Corporation may have their dividends deposited into their savings or checking account at any bank that is a member of the National Automated Clearing House system. Information describing this service and an authorization form can be requested from either of the transfer agents shown above or the Corporate Office of Chemical Financial Corporation, P.O. Box 569, Midland, Michigan 48640-0569. Telephone (517) 839-5350.

ANNUAL MEETING

The annual meeting of the shareholders will be held at the Midland Center for the Arts, 1801 W. St. Andrews Drive, Midland, Michigan, on Monday, April 16, 2001, at 2:00 P.M.

CORPORATE INFORMATION

     Chemical Financial Corporation
     333 East Main Street
     P.O. Box 569
     Midland, Michigan 48640-0569
     Telephone: (517) 839-5350
     Fax: (517) 839-5255
     Internet: www.chemicalbankmi.com

EQUAL OPPORTUNITY EMPLOYER

Chemical Financial Corporation and its subsidiaries are equal opportunity employers.

FORM 10-K

A copy of the Corporation's Annual Report on Form 10-K, including the financial statements and financial statement schedules, as filed with the Securities and Exchange Commission, may be obtained without charge upon written request to Lori A. Gwizdala, Chief Financial Officer of the Corporation, at P.O. Box 569, Midland, Michigan 48640-0569.