10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X]	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
	Act of 1934 for the fiscal year ended December 31, 2001
	or
[  ]	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
	Act of 1934 for the transition period from __________ to __________.

Commission File Number 0-8185

CHEMICAL FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Michigan (State or Other Jurisdiction of Incorporation or Organization)	38-2022454 (I.R.S. Employer Identification No.)
333 E. Main Street Midland, Michigan (Address of Principal Executive Offices)	48640 (Zip Code)

Registrant's Telephone Number, Including Area Code: (800) 292-1985

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, $1 Par Value
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    X     No ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K  ( )

The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 8, 2002, was $554,827,000.

The number of shares outstanding of the registrant's Common Stock, $1 par value, at March 8, 2002, was 22,536,549.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Annual Report to Shareholders for the year ended December 31, 2001, are incorporated by reference in Parts I and II (Items 1 and 5-8).
Portions of the registrant's definitive Proxy Statement for its April 15, 2002, annual shareholders' meeting are incorporated by reference in Part III (Items 10-13).

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about Chemical Financial Corporation itself. Words such as "anticipates," "believes," "estimates," "judgment," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, certain statements under the captions "Liquidity and Interest Sensitivity" and "Regulatory Matters" in Management's Discussion and Analysis are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Furthermore, Chemical Financial Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Risk factors include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances and issues; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national economy and the local and global effects of the terrorist acts of September 11, 2001 and the ongoing war on terrorism. These are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

PART I

Item 1.  Business.

Chemical Financial Corporation ("Chemical" or the "Corporation") is a multibank holding company registered under the Bank Holding Company Act of 1956, as amended, and incorporated in the State of Michigan. Chemical was organized under Michigan law in August 1973, and is headquartered in Midland, Michigan. Chemical was substantially inactive until June 30, 1974, when it acquired its lead subsidiary bank, Chemical Bank and Trust Company ("CB&T"), pursuant to a reorganization in which the former shareholders of CB&T became shareholders of Chemical.

In addition to the acquisition of CB&T, the Corporation acquired eighteen community banks and thirteen branch banking offices through December 31, 2001. The Corporation has consolidated these acquisitions into three commercial banking subsidiaries. At December 31, 2001, the Corporation's three regional subsidiary banks were as follows: CB&T, headquartered in Midland, Michigan; Chemical Bank Shoreline, headquartered in Benton Harbor, Michigan; and Chemical Bank West, headquartered in Cadillac, Michigan.

The Corporation directly owns three non-bank subsidiaries: CFC Data Corp, CFC Financial Services and CFC Title Services.

CFC Data Corp provides data processing services to two of the Corporation's subsidiary banks and to outside customers. The data processing services provided to the Corporation's subsidiaries represented 90% of total revenue of the data processing subsidiary in 2001, 89% in 2000 and 88% in 1999.

CFC Financial Services is an insurance company that operates under d/b/a Chemical Financial Insurance Agency (a property and casualty insurance agency) and d/b/a CFC Investment Centers (a provider of life insurance and annuity products to customers). CFC Title Services is an issuer of title insurance to buyers and sellers of residential and commercial mortgage properties, including those occurring due to loan refinancing.

At December 31, 2001, Chemical was the fourth largest bank holding company headquartered in Michigan, measured by total assets, and together with its subsidiaries employed a total of 1,427 full-time equivalent employees.

Chemical's business is concentrated in a single industry segment - commercial banking. Chemical's subsidiaries offer a full range of commercial banking and fiduciary services. These include accepting deposits, business and personal checking

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accounts, savings and individual retirement accounts, time deposit instruments, electronically accessed banking products, residential and commercial real estate financing, commercial lending, consumer financing, debit cards, safe deposit box services, automated teller machines, access to insurance and investment products, money transfer services, corporate and personal trust services and other banking services.

The principal markets for these financial services are the communities within Michigan in which Chemical's subsidiaries are located and the areas surrounding these communities. As of December 31, 2001, Chemical and its subsidiaries served these markets through 128 banking offices and 2 loan production offices in 86 communities located in 32 counties, all in the lower peninsula of Michigan. In addition to the full service banking offices, the subsidiary banks operated 159 automated teller machines, both on and off bank premises, as of December 31, 2001.

Chemical's largest and lead subsidiary bank is CB&T, headquartered in Midland, Michigan. CB&T represented 44% of total deposits and 36% of total loans of Chemical and its subsidiaries on a consolidated basis as of December 31, 2001. Chemical's banking subsidiaries' largest loan category is residential real estate mortgages. At December 31, 2001, residential real estate loans totaled $769 million, or 35.2% of consolidated total loans. Residential real estate loans declined $7.3 million, or just under 1%, during 2001 as historically low interest rates prompted customers to choose long-term fixed interest rate residential real estate products. During the three years ended December 31, 2001, Chemical's subsidiaries' generally sold residential real estate mortgages with fifteen year and greater original terms in the secondary market to reduce its interest rate risk. Chemical originated approximately $342 million of residential mortgage loans during 2001 which were sold in the secondary mortgage market, compared to $59 million and $98 million in residential mortgage loans originated and sold during 2000 and 1999, respectively. The significant increase in the origination of long-term fixed interest rate loans in 2001 was attributable to the significant decline in residential mortgage interest rates and the resultant increase in the refinancing of existing residential mortgages. The decline in the origination of long-term fixed interest rate loans in 2000 compared to 1999 resulted from the increase in interest rates during most of 2000. Historically, as interest rates increase, more customers choose balloon mortgage products.

The principal sources of revenues for Chemical are interest and fees on loans, which accounted for 64% of total revenues in 2001, 62% of total revenues in 2000, and 61% of total revenues in 1999. Interest on investment securities is also a significant source of revenue, accounting for 21% of total revenues in 2001, 24% in 2000 and 26% in 1999. Chemical has no foreign loans, assets or activities. No material part of the business of Chemical or its subsidiaries is dependent upon a single customer or very few customers, the loss of which would have a materially adverse effect on Chemical.

The business of banking is highly competitive. In addition to competition from other commercial banks, banks face significant competition from nonbank financial institutions. Savings associations and credit unions compete aggressively with commercial banks for deposits and loans, and credit unions and finance companies are particularly significant factors in the consumer loan market. Banks compete for deposits with a broad range of other types of investments, the most significant of which over the past few years have been mutual funds and annuities. Insurance companies and investment firms are also significant competitors for customer deposits. In response to this increased competition for customers' bank deposits, the Corporation's subsidiary banks, through CFC Investment Centers, offer a broad array of mutual funds, annuity products and market securities through alliances with BankMark and FutureShare Financial Services. The CFC Investment Centers offer customers a complete spectrum of investment produc ts and service capabilities. In addition, the Trust department of CB&T offers customers a variety of investment products and services. The principal methods of competition for financial services are price (interest rates paid on deposits, interest rates charged on borrowings and fees charged for services) and service (convenience and quality of services rendered to customers).

Banks and bank holding companies are extensively regulated. Chemical's subsidiary banks are all chartered by the State of Michigan and supervised and regulated by the Michigan Office of Financial and Insurance Services, Division of Financial Institutions. CB&T, the Corporation's lead subsidiary bank, is the only bank subsidiary of Chemical that is a member of the Federal Reserve System and also supervised, examined and regulated by the Federal Reserve System. The other two state non-member banks are also regulated by the Federal Deposit Insurance Corporation ("FDIC"). Deposits of Chemical's bank subsidiaries are insured by the FDIC to the extent provided by law.

State banks and bank holding companies are governed by both federal and state laws which significantly limit their business activities in a number of respects. Examples of such limitations include: (1) prior approval of the Board of Governors of the Federal Reserve System ("Federal Reserve Board"), and in some cases various other governing agencies, is required for

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bank holding companies to acquire control of any additional banks or branches, (2) the business activities of bank holding companies and their subsidiaries are limited to banking and to other activities which are determined by the Federal Reserve Board to be closely related to banking, and (3) transactions between bank holding company subsidiary banks are significantly restricted by banking laws and regulations.

Chemical is a legal entity separate and distinct from its subsidiary banks and non-bank subsidiaries. Chemical's primary source of revenues results from dividends paid to it by its subsidiaries. Federal and state banking laws and regulations limit both the extent to which Chemical's subsidiary banks can lend or otherwise supply funds to Chemical or certain of its affiliates and also place certain restrictions on the amount of dividends the subsidiary banks of Chemical may pay to Chemical.

Banks are subject to a number of federal and state laws and regulations which have a material impact on their business. These include, among others, minimum capital requirements, state usury laws, state laws relating to fiduciaries, the Truth in Lending Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Expedited Funds Availability Act, the Community Reinvestment Act, electronic funds transfer laws, redlining laws, antitrust laws, environmental laws and privacy laws. These laws and regulations can have a significant effect on the operating results of banks.

The Gramm-Leach-Bliley Act of 1999 ("1999 Act") resulted in sweeping reform of federal regulation of financial services. The 1999 Act largely removed the restrictions that previously prevented affiliations among banks, securities firms, and insurance companies and provides for a system of functional regulation of the financial services industry. Among other provisions, the 1999 Act:

• Repealed the restrictions on banks affiliating with securities firms contained in the depression-era Glass-Steagall Act.

• Created a new "financial holding company." A financial holding company may engage in a statutory list of financial activities, including insurance underwriting and agency activities, securities underwriting and brokerage activities, merchant banking, and insurance company *portfolio investment activities. Other activities that are "complementary" to financial activities, a category to be defined by regulation, are also authorized for financial holding companies.

• Provides a system of functional regulation under which, with certain exceptions, activities of banks and bank affiliates as securities brokers and investment advisors are subject to regulation and supervision by the Securities and Exchange Commission, eliminating an exemption banks previously enjoyed.

• Reaffirms the traditional authority of states to regulate insurance companies and insurance agencies, but prohibits discrimination against bank affiliates that conduct those activities.

• Required financial institutions to disclose their privacy policy to consumers by July 1, 2001 and provides protections to consumers against the transfer and use of nonpublic personal information by financial institutions.

• Requires that agreements between banks and non-governmental entities in connection with the Community Reinvestment Act be disclosed to the public, and that community groups that receive funds from banks in excess of defined thresholds disclose how those funds are used.

Although the 1999 Act repealed certain pre-existing statutory barriers to cross-industry affiliations and provides a structural framework for achieving the 1999 Act's purposes, certain details of implementing the changes authorized by the 1999 Act will be the subject of regulations to be adopted by the Board of Governors and the Federal Reserve System, the Securities and Exchange Commission, and other relevant federal agencies.

To recharacterize itself as a financial holding company and to avail itself of the broader powers permitted for financial holding companies, a bank holding company must meet certain regulatory standards for being "well capitalized," "well-managed" and "satisfactory" in its Community Reinvestment Act compliance. The Corporation became a financial holding company in 2000. The Corporation transferred the non-banking subsidiaries of its lead bank, CFC Financial Services, Inc.

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and CFC Title Services, Inc., to direct subsidiaries of the Corporation on December 31, 2001, as permissible under the 1999 Act.

Under Federal law, the FDIC has the authority to impose special assessments on insured depository institutions to repay FDIC borrowings from the United States Treasury or other sources, and to establish semi-annual assessment rates on Bank Insurance Fund ("BIF") member banks, so as to maintain the BIF at the designated reserve ratio defined by law. The semi-annual assessment rate of the FDIC is based upon a system of risk-based premiums for deposit insurance, pursuant to which the premiums paid by a depository institution are based on the probability that the BIF will incur a loss in respect of such institution.

The recapitalization of the Savings Association Insurance Fund ("SAIF") was accomplished through the enactment of The Deposit Insurance Funds Act of 1996 (the "Funds Act") on September 30, 1996. This legislation authorized the Financing Corporation ("FICO") to impose periodic assessments on depository institutions that are members of the BIF, in addition to institutions that are members of the SAIF. The purpose of these periodic assessments is to spread the cost of the interest payments on the outstanding FICO bonds over a larger number of institutions. Until the change in the law, only SAIF-member institutions bore the cost of funding these interest payments. FDIC premiums were $.5 million in 2001 and 2000, compared to $.3 million in 1999 and consisted almost exclusively of the FICO assessment in each of these years.

Federal law also contains a "cross-guarantee" provision that could result in insured depository institutions owned by Chemical being assessed for losses incurred by the FDIC in connection with assistance provided to, or the failure of, any other insured depository institution owned by Chemical. Under Federal Reserve Board policy, Chemical is expected to act as a source of financial strength to each subsidiary bank and to commit resources to support each subsidiary bank.

Banks are subject to the provisions of the Community Reinvestment Act of 1977 ("CRA"). Under the terms of the CRA, the appropriate federal bank regulatory agency is required, in connection with its examination of a bank, to assess such bank's record in meeting the credit needs of the community served by that bank, consistent with the safe and sound operation of the institution. The regulatory agency's assessment of the bank's record is made available to the public. Further, such assessment is required of any bank which has applied to: (1) obtain deposit insurance coverage for a newly chartered institution, (2) establish a new branch office that will accept deposits, (3) relocate an office, or (4) merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, the Federal Reserve Board will assess the CRA compliance record of each subsidiary bank of the applicant bank holding company, and such compliance records may be the basis for denying the application.

Bank holding companies may acquire banks located in any state in the United States without regard to geographic restrictions or reciprocity requirements imposed by state law. Banks may establish interstate branch networks through acquisitions of other banks. The establishment of de novo interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) is allowed only if specifically authorized by state law.

Michigan permits both U.S. and non-U.S. banks to establish branch offices in Michigan. The Michigan Banking Code permits, in appropriate circumstances and with the approval of the Michigan Office of Financial and Insurance Services, Division of Financial Institutions, (1) acquisition of Michigan banks by FDIC-insured banks, savings banks or savings and loan associations located in other states, (2) sale by a Michigan bank of branches to an FDIC-insured bank, savings bank or savings and loan association located in a state in which a Michigan bank could purchase branches of the purchasing entity, (3) consolidation of Michigan banks and FDIC-insured banks, savings banks or savings and loan associations located in other states having laws permitting such consolidation, (4) establishment of branches in Michigan by FDIC-insured banks located in other states, the District of Columbia or U.S. territories or protectorates having laws permitting a Michigan bank to establish a branch in such jurisdiction, and (5) es tablishment by foreign banks of branches located in Michigan.

During 2000, the Securities and Exchange Commission issued Regulation FD that established affirmative disclosure requirements on public corporations such that material nonpublic information must be widely, rather than selectively, disseminated. Regulation FD is based on the premise that full and fair disclosure is the cornerstone of an efficient market system. The Corporation is subject to Regulation FD. Through Regulation FD, the Securities and Exchange Commission seeks to encourage broad public disclosure in order to increase investor confidence in the integrity of the capital markets.

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Mergers and Acquisitions

The following is a summary of the mergers and acquisitions completed during the three-year period ended December 31, 2001.

On January 9, 2001, the Corporation completed its merger with Shoreline Financial Corporation ("Shoreline"), a one-bank holding company, headquartered in Benton Harbor, Michigan. The merger added approximately $1.1 billion in assets, $.8 billion in total deposits, $.8 billion in total loans, 30 banking offices, 2 loan production offices and 1,500 shareholders of record to the organization. The merger with Shoreline was accounted for as a pooling of interests; therefore, all of the information presented in this report has been restated to reflect the two companies as if they had always been together.

On July 13, 2001, the Corporation acquired four Fifth Third Bank/Old Kent Bank branch banking offices in Holland, Zeeland, Grand Haven and Fremont, Michigan ("four branches"). The four branches had total deposits of approximately $144 million and total loans of approximately $97 million at that date. These branches were merged into existing subsidiaries.

On September 14, 2001, the Corporation acquired Bank West Financial Corporation ("BWFC"). BWFC was the parent company of Bank West, a Michigan stock savings bank, with approximately $300 million in total assets, $232 million in total loans and $194 million in total deposits. Bank West, with six offices in Kent and Ottawa Counties in Michigan, was merged into an existing bank subsidiary, Chemical Bank West headquartered in Cadillac, Michigan.

On March 24, 2000, the Corporation completed the acquisition of two branch bank offices from Old Kent Bank located in Evart and Morrice, Michigan. The branches had total deposits of approximately $15 million and $10 million, respectively, as of the acquisition date. The offices became branch offices of existing bank subsidiaries.

On July 9, 1999, the Corporation acquired two branch bank offices, located in Standish and Linwood, Michigan, from National City Bank of Michigan/Illinois. The branch acquired in Standish was consolidated into an existing branch office in Standish and branch bank services were continued at the branch located in Linwood. The two branches acquired had total deposits of approximately $27 million as of the acquisition date.

The nature of the business of Chemical's subsidiaries is such that they hold title to numerous parcels of real property. These properties are primarily owned for branch offices; however, Chemical and its subsidiaries may hold properties for other business purposes, as well as on a temporary basis for properties taken in or in lieu of foreclosure to satisfy loans in default. Under current state and federal laws, present and past owners of real property may be exposed to liability for the cost of clean up of contamination on or originating from those properties, even if they are wholly innocent of the actions that caused the contamination. These liabilities can be material and can exceed the value of the contaminated property.

The information under the following captions in the registrant's Annual Report to Shareholders for the year ended December 31, 2001, further describes the business of Chemical and is here incorporated by reference (tables are included under the caption "Management's Discussion and Analysis"):

Caption	Pages
Table 2. Average Balances, Tax Equivalent Interest and
Effective Yields and Rates	7
Table 3. Volume and Rate Variance Analysis	9
Note D - Investment Securities	28-29
Table 8. Maturities and Yields of Investment Securities
at December 31, 2001	15
Table 9. Summary of Investment Securities	16
Table 4. Summary of Loans and Loan Loss Experience	9
Table 5. Comparison of Loan Maturities and Interest Sensitivity	11
Table 6. Nonperforming Assets	11
Note F - Loans	29-30

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Table 7. Allocation of the Allowance For Loan Losses	12
Management's Discussion and Analysis subheadings:
"Net Interest Income," "Loans," "Nonperforming
Assets," "Provision and Allowance For Loan Losses" and "Liquidity
and Interest Sensitivity"	6-17
Table 11. Maturity Distribution of Time Deposits of $100,000 or More	17
Five-Year Summary of Selected Financial Data	3

Item 2.  Properties.

The executive offices of Chemical, the main office of CB&T and Chemical's non-banking subsidiaries are located in a three story, approximately 74,000 square foot, office building in downtown Midland, which is 100% owned by CB&T.

Chemical's subsidiary banks conduct business from a total of 128 banking offices as of December 31, 2001. These offices are located in the lower peninsula of Michigan. Of the banking offices, 118 are owned by the subsidiary banks and 10 are leased from independent parties with remaining lease terms of one year and three months to thirteen years and five months. This leased property is considered insignificant.

Item 3.  Legal Proceedings.

Chemical's subsidiaries are parties, as plaintiff or defendant, to a number of legal proceedings, none of which is considered material, and all of which arose in the ordinary course of their operations.

Item 4.  Submission of Matters to a Vote of Security Holders.

None.

Supplemental Item. Executive Officers of the Registrant.

Biographical information concerning Chemical's executive officers who are not directors or nominated for election to the Board of Directors, as of December 31, 2001, is presented below. Executive officer appointments are made or reaffirmed annually at the organizational meeting of the board of directors. At its regular meetings, the board may also make other executive officer appointments.

Bruce M. Groom, age 60, is First Senior Vice President and Senior Trust Officer of CB&T. He joined CB&T on April 29, 1985 as Senior Vice President and was promoted to Senior Trust Officer in May 1986 and First Senior Vice President in January 2001. Mr. Groom served on the board of Chemical Bank Central (merged into Chemical Bank West), from February 1989 to December 2000. Mr. Groom is an attorney. Mr. Groom is a member of the Executive Management Committee of Chemical.

Lori A. Gwizdala, age 43, is Senior Vice President, Chief Financial Officer and Treasurer of Chemical. She joined Chemical as Controller on January 1, 1985 and was named Chief Financial Officer in May 1987, Senior Vice President in February 1991 and Treasurer in April 1994. Ms. Gwizdala has served as Secretary to the board of directors of CFC Data Corp since May 1986, a director of Chemical Bank Bay Area (merged into CB&T) from January 1993 to December 2000 and a director of Chemical Bank Thumb Area (merged into CB&T) from July 1996 to December 2000. Ms. Gwizdala is a certified public accountant. Ms. Gwizdala is a member of the Executive Management Committee of Chemical.

William C. Lauderbach, age 59, is First Senior Vice President and Investment Officer of CB&T. He joined CB&T as a Trust Officer on July 2, 1973, was promoted to Vice President and Trust Officer in March 1980, Investment Officer in January 1985, Senior Vice President in February 1991 and First Senior Vice President in January 2001. Mr. Lauderbach served on

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the board of directors of Chemical Bank South (merged into Chemical Bank Shoreline) from 1989 until October 2001. Mr. Lauderbach is a member of the Executive Management Committee of Chemical.

James R. Milroy, age 42, is President and Chief Executive Officer of Chemical Bank Shoreline, a Chemical subsidiary since January 2001. Mr. Milroy joined Shoreline Financial Corporation and Shoreline Bank in 1990 as Vice President and Comptroller. He was promoted to Senior Vice President and Comptroller in May 1993 and Executive Vice President and Comptroller in July 1997. Mr. Milroy was named President of Shoreline Financial Corporation in June 1999 and President and Chief Executive Officer of Chemical Bank Shoreline in January 2001. Mr. Milroy is a member of the Executive Management Committee of Chemical.

John A. Reisner, age 56, is President and Chief Executive Officer of Chemical Bank West. Mr. Reisner has served as President of Chemical Bank West for thirteen years. He joined CB&T as an Assistant Vice President and Loan Officer in 1979. Prior to his current position, Mr. Reisner also served as Executive Vice President of Chemical Bank Gladwin County, Beaverton (merged into CB&T), and President of Chemical Bank Montcalm, Stanton (merged into Chemical Bank West). Mr. Reisner is a member of the Executive Management Committee of Chemical.

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PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder Matters.

The information under the heading "Market for Chemical Financial Corporation Common Stock and Related Shareholder Matters" on page 39 of the registrant's Annual Report to Shareholders for the year ended December 31, 2001, is here incorporated by reference.

Item 6.  Selected Financial Data.

The information under the caption "Five-Year Summary of Selected Financial Data" on page 3 and the sub-heading "Financial Highlights" of "Management's Discussion and Analysis" on pages 4 through 6 (inclusive) of the registrant's Annual Report to Shareholders for the year ended December 31, 2001, is here incorporated by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

The information under the heading "Management's Discussion and Analysis" on pages 4 through 19 (inclusive) of the registrant's Annual Report to Shareholders for the year ended December 31, 2001, is here incorporated by reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

The information under the sub-heading "Liquidity and Interest Sensitivity" of "Management's Discussion and Analysis" on pages 15 through 17 (inclusive) of the registrant's Annual Report to Shareholders for the year ended December 31, 2001, is here incorporated by reference.

Item 8.  Financial Statements and Supplementary Data.

The financial statements, notes, and independent auditors' report on pages 20 through 38 (inclusive) of the registrant's Annual Report to Shareholders for the year ended December 31, 2001, is here incorporated by reference.

The information under the caption "Supplemental Quarterly Financial Information (Unaudited)" on page 39 of the registrant's Annual Report to Shareholders for the year ended December 31, 2001, is here incorporated by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

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PART III

Item 10.  Directors and Executive Officers of the Registrant.

The information set forth under the headings "Chemical Financial's Board of Directors and Nominees for Election as Directors" on pages 2 and 3 and "Section 16(a) Beneficial Ownership Reporting Compliance" on page 16 in the registrant's definitive Proxy Statement for its April 15, 2002 annual meeting of shareholders is here incorporated by reference.

Item 11.  Executive Compensation.

The information set forth under the heading "Executive Compensation" on pages 9 through 12 (inclusive) and the sub-heading "Compensation of Directors" on page 4 in the registrant's definitive Proxy Statement for its April 15, 2002 annual meeting of shareholders is here incorporated by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

The information set forth under the heading "Ownership of Chemical Financial Common Stock" on pages 6 and 7 in the registrant's definitive Proxy Statement for its April 15, 2002 annual meeting of shareholders is here incorporated by reference.

Item 13.  Certain Relationships and Related Transactions.

The information set forth under the caption "Certain Relationships and Related Transactions" on page 16 in the registrant's definitive Proxy Statement for its April 15, 2002 annual meeting of shareholders is here incorporated by reference.

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PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

          (a)          (1)          Financial Statements. The following financial statements and independent auditors' report of Chemical Financial Corporation and its subsidiaries are filed as part of this report:

Consolidated Statements of Financial Position-December 31, 2001 and 2000
Consolidated Statements of Income for each of the three years in the period ended December 31, 2001
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2001
Consolidated Statements of Changes in Shareholders' Equity for each of the three years in the period
   ended December 31, 2001
Notes to Consolidated Financial Statements
Report of Independent Auditors dated January 22, 2002

The financial statements, the notes to financial statements, and the independent auditors' report listed above are incorporated by reference in Item 8 of this report from the corresponding portions of the registrant's Annual Report to Shareholders for the year ended December 31, 2001.

                    (2)          Financial Statement Schedules. The following independent auditor's report of Shoreline Financial Corporation and its subsidiaries are filed as part of this report:

                                        Report of Independent Auditors dated January 31, 2001

                    (3)          Exhibits. The following exhibits are filed as part of this report:

Number	Exhibit
3.1	Restated Articles of Incorporation. Previously filed as Exhibit 4.1 to the registrant's Registration Statement on Form S-8 filed with the Commission on March 2, 2001. Here incorporated by reference.
3.2	Restated Bylaws.
4	Long-Term Debt. The registrant has outstanding long-term debt which at the time of this report does not exceed 10% of the registrant's total consolidated assets. The registrant agrees to furnish copies of the agreements defining the rights of holders of such long-term debt to the Securities and Exchange Commission upon request.
10.1	Chemical Financial Corporation Stock Incentive Plan of 1997.* Previously filed as Appendix A to the registrant's definitive Proxy Statement with respect to its annual meeting of shareholders held on April 21, 1997. Here incorporated by reference.
10.2	Amended Award and Stock Option Plan of 1987.*
10.3	Chemical Financial Corporation Deferred Compensation Plan for Directors.* Previously filed as Exhibit 10.3 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, filed with the Commission on March 26, 2001. Here incorporated by reference.

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Number	Exhibit
10.4	Chemical Financial Corporation Supplemental Pension Plan.* Previously filed as Exhibit 10.4 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, filed with the Commission on March 22, 1999. Here incorporated by reference.
10.5	Aloysius J. Oliver Retirement Agreement.*
10.6	Dan L. Smith Retirement Agreement.*
10.7	Chemical Financial Corporation Stock Option Plan for Holders of Shoreline Financial Corporation.* Previously filed as Exhibit 4.3 to the registrant's Registration Statement on Form S-8 filed with the Commission on March 2, 2001. Here incorporated by reference.
11	Computation of Per Share Earnings.
13	2001 Annual Report to Shareholders.
21	Subsidiaries.
23.1	Consent of Independent Auditors, Ernst & Young LLP.
23.2	Consent of Independent Auditors, Crowe, Chizek and Company LLP.
24	Powers of Attorney.
99.1	Chemical Financial Corporation 401(k) Savings Plan Financial Statements, Notes and Supplemental Schedule.
99.2	Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors Audited Financial Statements.
99.3	Shoreline Financial Corporation 401(k) Profit Sharing Plan Financial Statements, Notes and Supplemental Schedule.

_____________________

*  These agreements are management contracts or compensation plans or arrangements required to be filed as Exhibits to this Form 10-K.

Chemical will furnish a copy of any exhibit listed above to any shareholder of the registrant without charge upon written request to Ms. Lori A. Gwizdala, Chief Financial Officer, Chemical Financial Corporation, 333 East Main Street, Midland, Michigan 48640-0569.

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          (b)          Reports on Form 8-K. The following reports on Form 8-K were filed during the last quarter of the year covered by this Annual Report on Form 10-K.

Date	Items Reported	Financial Statements
October 18, 2001	7, 9	Unaudited consolidated statements of financial position at September 30, 2001 and September 30, 2000
		Unaudited consolidated statements of income for the three and nine months ended September 30, 2001 and September 30, 2000

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[CROWE CHIZEK LOGO]

REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
Shoreline Financial Corporation
Benton Harbor, Michigan

We have audited the accompanying consolidated balance sheets of Shoreline Financial Corporation as of December 31, 2000 and 1999 and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for the years ended December 31, 2000, 1999 and 1998. These financial statements are the responsibility of the Corporation'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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Shoreline Financial Corporation as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years ended December 31, 2000, 1999 and 1998 in conformity with generally accepted accounting principles.

	/s/ Crowe, Chizek and Company LLP Crowe, Chizek and Company LLP
South Bend, Indiana January 31, 2001

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHEMICAL FINANCIAL CORPORATION
March 22, 2002	s/ David B. Ramaker
	David B. Ramaker President and Chief Executive Officer (Principal Executive Officer)
March 22, 2002	s/ Lori A. Gwizdala
	Lori A. Gwizdala Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

March 22, 2002	s/ David B. Ramaker
	David B. Ramaker President and Chief Executive Officer and Director (Principal Executive Officer)
March 22, 2002	*s/ J. Daniel Bernson
	J. Daniel Bernson Director
March 22, 2002	*s/ James A. Currie
	James A. Currie Director
March 22, 2002	*s/ Michael L. Dow
	Michael L. Dow Director
March 22, 2002	s/ Lori A. Gwizdala
	Lori A. Gwizdala Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
March 22, 2002	*s/ L. Richard Marzke
	L. Richard Marzke Director
March 22, 2002	*s/ Terence F. Moore
	Terence F. Moore Director
March 22, 2002	s/ Aloysius J. Oliver
	Aloysius J. Oliver Chairman of the Board and Director
March 22, 2002	*s/ Alan W. Ott
	Alan W. Ott Director
March 22, 2002	*s/ Frank P. Popoff
	Frank P. Popoff Director

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March 22, 2002	*s/ Lawrence A. Reed
	Lawrence A. Reed Director
March 22, 2002	*s/ Dan L. Smith
	Dan L. Smith Director
March 22, 2002	*s/ William S. Stavropoulos
	William S. Stavropoulos Director

*By	s/Lori A. Gwizdala
	Lori A. Gwizdala Attorney-in-Fact

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EXHIBIT INDEX

Number	Exhibit
3.1	Restated Articles of Incorporation. Previously filed as Exhibit 4.1 to the registrant's Registration Statement on Form S-8 filed with the Commission on March 2, 2001. Here incorporated by reference.
3.2	Restated Bylaws.
4	Long-Term Debt. The registrant has outstanding long-term debt which at the time of this report does not exceed 10% of the registrant's total consolidated assets. The registrant agrees to furnish copies of the agreements defining the rights of holders of such long-term debt to the Securities and Exchange Commission upon request.
10.1	Chemical Financial Corporation Stock Incentive Plan of 1997.* Previously filed as Appendix A to the registrant's definitive Proxy Statement with respect to its annual meeting of shareholders held on April 21, 1997. Here incorporated by reference.
10.2	Amended Award and Stock Option Plan of 1987.*
10.3	Chemical Financial Corporation Deferred Compensation Plan for Directors.* Previously filed as Exhibit 10.3 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, filed with the Commission on March 26, 2001. Here incorporated by reference.
10.4	Chemical Financial Corporation Supplemental Pension Plan.* Previously filed as Exhibit 10.4 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, filed with the Commission on March 22, 1999. Here incorporated by reference.
10.5	Aloysius J. Oliver Retirement Agreement.*
10.6	Dan L. Smith Retirement Agreement.*
10.7	Chemical Financial Corporation Stock Option Plan for Holders of Shoreline Financial Corporation.* Previously filed as Exhibit 4.3 to the registrant's Registration Statement on Form S-8 filed with the Commission on March 2, 2001. Here incorporated by reference.
11	Computation of Per Share Earnings.
13	2001 Annual Report to Shareholders.
21	Subsidiaries.
23.1	Consent of Independent Auditors, Ernst & Young LLP.
23.2	Consent of Independent Auditors, Crowe, Chizek and Company LLP.
24	Powers of Attorney.
99.1	Chemical Financial Corporation 401(k) Savings Plan Financial Statements, Notes and Supplemental Schedule.
99.2	Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors Audited Financial Statements.

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99.3 Shoreline Financial Corporation 401(k) Profit Sharing Plan Financial Statements, Notes and Supplemental Schedule.

_____________________

* These agreements are management contracts or compensation or arrangements required to be filed as Exhibits to this Form 10-K.

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EX-3

EXHIBIT 3.2

BYLAWS

OF

CHEMICAL FINANCIAL CORPORATION
(as amended through March 15, 2002)

ARTICLE I

OFFICES

          1.01           PRINCIPAL OFFICE. The principal office of the corporation shall be at such place within the state of Michigan as the Board of Directors shall determine from time to time.

          1.02          OTHER OFFICES. The corporation may also have offices at such other places as the Board of Directors from time to time determines or the business of the corporation requires.

ARTICLE II

SEAL

          2.01          SEAL. The corporation shall have a seal in such form as the Board of Directors may from time to time determine. The seal may be used by causing it or a facsimile to be impressed, affixed, reproduced or otherwise.

ARTICLE III

CAPITAL STOCK

          3.01          ISSUANCE OF SHARES. The shares of capital stock of the corporation shall be issued in such amounts, at such times, for such consideration and on such terms and conditions as the Board shall deem advisable, subject to the provisions of the Articles of Incorporation of the corporation and the further provisions of these Bylaws, and subject also to any requirements or restrictions imposed by the laws of the State of Michigan.

          3.02          CERTIFICATES FOR SHARES. The shares of the corporation may be represented by certificates signed by the Chairman of the Board, President or a Vice President and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. The signatures of the officers may be

facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or its employee. In case an officer who has signed or whose facsimile signature has been placed upon a certificate ceases to be such officer before the certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issuance. A certificate representing shares shall state upon its face that the corporation is formed under the laws of the State of Michigan; the name of the person to whom it is issued; the number and class of shares, and the designation of the series, if any, which the certificate represents; the par value of each share represented by the certificate, or a statement that the shares are without par value; and such other provisions as may be required by the laws of the State of Michigan. The Board of Directors may authorize the issuance of some or all of the shares of any class or series of stock of the corpo ration without certificates.

          3.03          TRANSFER OF SHARES. The shares of the capital stock of the corporation are transferable only on the books of the corporation and, if such shares are certificated, upon surrender of the certificate therefor, properly endorsed for transfer, and the presentation of such evidences of ownership and validity of the assignment as the corporation may require.

          3.04          REGISTERED SHAREHOLDERS. The corporation shall be entitled to treat the person in whose name any share of stock is registered as the owner thereof for purposes of dividends and other distributions in the course of business, or in the course of recapitalization, consolidation, merger, reorganization, sale of assets, liquidation or otherwise and for the purpose of votes, approvals and consents by shareholders, and for the purpose of notices to shareholders, and for all other purposes whatever, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the corporation shall have notice thereof, save as expressly required by the laws of the State of Michigan.

          3.05          LOST OR DESTROYED CERTIFICATES. Upon the presentation to the corporation of a proper affidavit attesting the loss, destruction or mutilation of any certificate or certificates for shares of stock of the corporation, the Board of Directors shall direct the issuance of a new certificate or certificates to replace the certificates so alleged to be lost, destroyed or mutilated. The Board of Directors may require as a condition precedent to the issuance of new certificates any or all of the following: (a) presentation of additional evidence or proof of the loss, destruction or mutilation claimed; (b) advertisement of loss in such manner as the Board of Directors may direct or approve; (c) a bond or agreement of indemnity, in such form and amount and with such sureties, or without sureties, as the Board of Directors may direct or approve; (d) the order or approval of a court or judge.

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ARTICLE IV

SHAREHOLDERS AND MEETINGS OF SHAREHOLDERS

          4.01          PLACE OF MEETINGS. All meetings of shareholders shall be held at the principal office of the corporation or at such other place as shall be determined by the Board of Directors and stated in the notice of meeting.

          4.02          ANNUAL MEETING. The annual meeting of the shareholders of the corporation shall be held on the third Monday of the fourth calendar month after the end of the corporation's fiscal year at 2 o'clock in the afternoon. Directors shall be elected at each annual meeting and such other business transacted as may come before the meeting.

          4.03          SPECIAL MEETINGS. Special meetings of shareholders may be called by the Board of Directors, the Chairman of the Board (if such office is filled) or the President and shall be called by the President or Secretary at the written request of shareholders holding a majority of the shares of stock of the corporation outstanding and entitled to vote. The request shall state the purpose or purposes for which the meeting is to be called.

          4.04          NOTICE OF MEETINGS. Except as otherwise provided by statute, written notice of the time, place and purposes of a meeting of shareholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each shareholder of record entitled to vote at the meeting, either personally or by mailing such notice to his last address as it appears on the books of the corporation. No notice need be given of an adjourned meeting of the shareholders provided the time and place to which such meeting is adjourned are announced at the meeting at which the adjournment is taken and at the adjourned meeting only such business is transacted as might have been transacted at the original meeting. However, if after the adjournment a new record date is fixed for the adjourned meeting a notice of the adjourned meeting shall be given to each shareholder of record on the new record date entitled to notice as provided in this Bylaw.

          4.05          RECORD DATES. The Board of Directors, the Chairman of the Board (if such office is filled) or the President may fix in advance a date as the record date for the purpose of determining shareholders entitled to notice of and to vote at a meeting of shareholders or an adjournment thereof, or to express consent or to dissent from a proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of a dividend or allotment of a right, or for the purpose of any other action. The date fixed shall not be more than 60 nor less than 10 days before the date of the meeting, nor more than 60 days before any other action. In such case only such shareholder as shall be shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting or adjournment therefor, or to express consent or to dissent from such proposal, or to receive payment of such dividend or to receive such allotment of rights, or to participate in any other action, as the case may be, notwithstanding any transfer of any stock on the books of the corporation, or otherwise, after any such record date. Nothing in this Bylaw shall affect the rights of a shareholder and his transferee or transferor as between themselves.

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          4.06          LIST OF SHAREHOLDERS. The Secretary of the corporation or the agent of the corporation having charge of the stock transfer records for shares of the corporation shall make and certify a complete list of the shareholders entitled to vote at a shareholders' meeting or any adjournment thereof. The list shall be arranged alphabetically within each class and series, with the address of, and the number of shares held by, each shareholder; be produced at the time and place of the meeting; be subject to inspection by any shareholder during the whole time of the meeting; and be prima facie evidence as to who are the shareholders entitled to examine the list or vote at the meeting.

          4.07          QUORUM. Unless a greater or lesser quorum is required in the Articles of Incorporation or by the laws of the State of Michigan, the shareholders present at a meeting in person or by proxy who, as of the record date for such meeting, were holders of a majority of the outstanding shares of the corporation entitled to vote at the meeting shall constitute a quorum at the meeting. Whether or not a quorum is present, a meeting of shareholders may be adjourned by a vote of the shares present in person or by proxy. When the holders of a class or series of shares are entitled to vote separately on an item of business, this Bylaw applies in determining the presence of a quorum of such class or series for transaction of such item of business.

          4.08          PROXIES. A shareholder entitled to vote at a meeting of shareholders or to express consent or dissent without a meeting may authorize other persons to act for him by proxy. A proxy shall be signed by the shareholder or his authorized agent or representative and shall not be valid after the expiration of three years from its date unless otherwise provided in the proxy. A proxy is revocable at the pleasure of the shareholder executing it except as otherwise provided by the laws of the State of Michigan.

          4.09          INSPECTORS OF ELECTION. The Board of Directors, in advance of a shareholders' meeting, may appoint one or more inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at the shareholders' meeting may, and on request of a shareholder entitled to vote thereat shall, appoint one or more inspectors. In case a person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the person presiding thereat. If appointed, the inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine challenges and questions arising in connection with the right to vote, count and tabulate votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting or a shareholder entitled to vote thereat, the inspectors shall make and execute a written report to the person presiding at the meeting of any of the facts found by them and matters determined by them. The report shall be prima facie evidence of the facts stated and of the vote as certified by the inspectors.

          4.10          VOTING. Each outstanding share is entitled to one vote on each matter submitted to a vote, unless otherwise provided in the Articles of Incorporation. Votes shall be cast in writing,

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signed by the shareholder or his proxy. When an action, other than the election of directors, is to be taken by a vote of the shareholders, it shall be authorized by a majority of the votes cast by the holders of shares entitled to vote thereon, unless a greater plurality is required by the Articles of Incorporation or by the laws of the State of Michigan. Except as otherwise provided by the Articles of Incorporation, directors shall be elected by a plurality of the votes cast at any election.

          4.11          SHAREHOLDER PROPOSALS. Except as otherwise provided by statute, the corporation's Articles of Incorporation or these Bylaws:

(a)

No matter may be presented for shareholder action at an annual or special meeting of shareholders unless such matter is: (i) specified in the notice of the meeting (or any supplement to the notice) given by or at the direction of the Board of Directors; (ii) otherwise presented at the meeting by or at the direction of the Board of Directors; (iii) properly presented for action at the meeting by a shareholder in accordance with the notice provisions set forth in this Section and any other applicable requirements; or (iv) a procedural matter presented, or accepted for presentation, by the Chairman in his sole discretion.

(b)

For a matter to be properly presented by a shareholder, the shareholder must have given timely notice of the matter in writing to the Secretary of the corporation. To be timely, the notice must be delivered to or mailed to and received at the principal executive offices of the corporation not less than 120 calendar days prior to the date corresponding to the date of the corporation's proxy statement or notice of meeting released to shareholders in connection with the last preceding annual meeting of shareholders in the case of an annual meeting (unless the corporation did not hold an annual meeting within the last year, or if the date of the upcoming annual meeting changed by more than thirty days from the date of the last preceding meeting, then the notice must be delivered or mailed and received not more than ten days after the earlier of the date of the notice of the meeting or public disclosure of the date of the meeting), and not more than ten days after the earlier of the date of the notice of the meeting or public disclosure of the date of the meeting in the case of a special meeting. The notice by the shareholder must set forth: (i) a brief description of the matter the shareholder desires to present for shareholder action; (ii) the name and record address of the shareholder proposing the matter for shareholder action; (iii) the class and number of shares of capital stock of the corporation that are beneficially owned by the shareholder; and (iv) any material interest of the shareholder in the matter proposed for shareholder action. For purposes of this Section, "public disclosure" means disclosure in a press release reported by the Dow Jones News Service, Associated Press or other comparable national financial news service or in a document publicly filed by the corporation with the Securities and Exchange

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	Commission pursuant to Section 13, 14 or 15 of the Securities Exchange Act of 1934, as amended.
(c)	Except to the extent that a shareholder proposal submitted pursuant to this Section is not made available at the time of mailing, the notice of the purposes of the meeting shall include the name and address of and the number of shares of the voting security held by the proponent of each shareholder proposal.
(d)	Notwithstanding the above, if the shareholder desires to require the corporation to include the shareholder's proposal in the corporation's proxy materials, matters and proposals submitted for inclusion in the corporation's proxy materials shall be governed by the solicitation rules and regulations of the Securities Exchange Act of 1934, as amended, including without limitation Rule 14a-8.

ARTICLE V

DIRECTORS

          5.01          NUMBER. The business and affairs of the corporation shall be managed by a Board of not less than five (5) nor more than twenty-five (25) directors as shall be fixed from time to time by the Board of Directors. The directors need not be residents of Michigan or shareholders of the corporation.

          5.02          ELECTION, RESIGNATION AND REMOVAL. Directors shall be elected at each annual meeting of the shareholders, each to hold office until the next annual meeting of shareholders and until his successor is elected and qualified, or until his resignation or removal. A director may resign by written notice to the corporation. The resignation is effective upon its receipt by the corporation or a subsequent time as set forth in the notice of resignation. A director or the entire Board of Directors may be removed, with or without cause, by vote of the holders of a majority of the shares entitled to vote at an election of directors.

          5.03          NOMINATIONS OF DIRECTOR CANDIDATES.

(a) Nominations of candidates for election to the Board of Directors of the corporation at any annual meeting of shareholders or at any special meeting of shareholders called for election of directors (an "Election Meeting") may be made by the Board of Directors or by a shareholder of record of shares of a class entitled to vote at such Election Meeting.

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(b)	Nominations made by the Board of Directors shall be made at a meeting of the Board of Directors, or by written consent of directors in lieu of a meeting, not less than ten days prior to the date of an Election Meeting; provided, that approval by the Board of Directors of the corporation's proxy statement with respect to an Election Meeting in which nominees for director are named shall constitute the nominations of the Board of Directors.
(c)	A shareholder of record of shares of a class entitled to vote at an Election Meeting may make a nomination at an Election Meeting if, and only if, such shareholder shall have first delivered, not less than 120 days prior to the date of the Election Meeting in the case of an annual meeting, and not more than seven days following the date of notice of the Election Meeting in the case of a special meeting, a notice to the Secretary of the corporation setting forth with respect to each proposed nominee: (i) the name, age, business address and residence address of such nominee; (ii) the principal occupation or employment of such nominee; (iii) the number of shares of capital stock of the corporation which are beneficially owned by such nominee; (iv) a statements that such nominee is willing to be nominated and to serve if elected; and (v) such other information concerning such nominee as would be required under the rules of the Securities and Exchange Commission to be provided in a proxy statement solicit ing proxies for the election of such nominee.
(d)	If the chairman of the Election Meeting determines that a nomination was not made in accordance with the foregoing procedures, such nomination shall be void and all votes cast in favor of election of a person so nominated shall be disregarded.

          5.04          VACANCIES. Vacancies in the Board of Directors occurring by reason of death, resignation, removal, increase in the number of directors or otherwise shall be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors, unless filled by proper action of the shareholders of the corporation. Each person so elected shall be a director for a term of office continuing only until the next election of directors by the shareholders.

          5.05          ANNUAL MEETING. The Board of Directors shall meet each year immediately after the annual meeting of the shareholders, or within three (3) days of such time excluding Sundays and legal holidays if such later time is deemed advisable, at the place where such meeting of the shareholders has been held or such other place as the Board may determine, for the purpose of election of officers and consideration of such business that may properly be brought before the

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meeting; provided, that if less than a majority of the directors appear for an annual meeting of the Board of Directors the holding of such annual meeting shall not be required and the matters which might have been taken up therein may be taken up at any later special or annual meeting, or by consent resolution.

          5.06          REGULAR AND SPECIAL MEETINGS. Regular meetings of the Board of Directors may be held at such times and places as the majority of the directors may from time to time determine at a prior meeting or as shall be directed or approved by the vote or written consent of all the directors. Special meetings of the Board may be called by the Chairman of the Board (if such office is filled) or the President and shall be called by the President or Secretary upon the written request of any two directors.

          5.07          NOTICES. No notice shall be required for annual or regular meetings of the Board or for adjourned meetings, whether regular or special. Three days' written notice shall be given for special meetings of the Board, and such notice shall state the time, place and purpose or purposes of the meeting.

          5.08          QUORUM. A majority of the Board of Directors then in office, or of the members of a committee thereof, constitutes a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which there is a quorum shall be the acts of the Board or of the committee, except as a larger vote may be required by the laws of the State of Michigan. A member of the Board or of a committee designated by the Board may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting in this manner constitutes presence in person at the meeting.

          5.09          EXECUTIVE AND OTHER COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint three or more members of the Board as an executive committee to exercise all powers and authorities of the Board in management of the business and affairs of the corporation, provided, however, that such committee shall not have power or authority to:

(a)	amend the Articles of Incorporation;
(b)	adopt an agreement of merger or consolidation;
(c)	recommend to shareholders the sale, lease or exchange of all or substantially all of the corporation's property and assets;
(d)	recommend to shareholders a dissolution of the corporation or revocation of a dissolution;
(e)	amend these Bylaws;

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(f)	fill vacancies in the Board;
(g)	fix the compensation of the directors for serving on the Board or on a committee; or
(h)	unless expressly authorized by the Board, declare a dividend or authorize the issuance of stock.

                    The Board of Directors from time to time may, by like resolution, appoint such other committees of one or more directors to have such authority as shall be specified by the Board in the resolution making such appointments. The Board of Directors may designate one or more directors as alternate members of any committee who may replace an absent or disqualified member at any meeting thereof.

          5.10          DISSENTS. A director who is present at a meeting of the Board of Directors, or a committee thereof of which he is a member, at which action on a corporate matter is taken is presumed to have concurred in that action unless his dissent is entered in the minutes of the meeting or unless he files his written dissent to the action with the person acting as secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation promptly after the adjournment of the meeting. Such right to dissent does not apply to a director who voted in favor of such action. A director who is absent from a meeting of the Board, or a committee thereof of which he is a member, at which any such action is taken is presumed to have concurred in the action unless he files his written dissent with the Secretary of the corporation within a reasonable time after he has knowledge of the actio n.

          5.11          COMPENSATION. The Board of Directors, by affirmative vote of a majority of directors in office and irrespective of any personal interest of any of them, may establish reasonable compensation of directors for services to the corporation as directors or officers.

ARTICLE VI

NOTICES, WAIVERS OF NOTICE AND MANNER OF ACTING

          6.01          NOTICES. All notices of meetings required to be given to shareholders, directors or any committee of directors may be given by mail, telegram, radiogram or cablegram to any shareholder, director or committee member at his last address as it appears on the books of the corporation. Such notice shall be deemed to be given at the time when the same shall be mailed or otherwise dispatched.

          6.02          WAIVER OF NOTICE. Notice of the time, place and purpose of any meeting of shareholders, directors or committee of directors may be waived by telegram, radiogram, cablegram or other writing, either before or after the meeting, or in such other manner as may be permitted by

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the laws of the State of Michigan. Attendance of a person at any meeting of shareholders, in person or by proxy, or at any meeting of directors or of a committee of directors, constitutes a waiver of notice of the meeting except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

          6.03          ACTION WITHOUT A MEETING. Any action required or permitted at any meeting of shareholders or directors or committee of directors may be taken without a meeting, without prior notice and without a vote, if all of the shareholders or directors or committee members entitled to vote thereon consent thereto in writing.

ARTICLE VII

OFFICERS

          7.01          NUMBER. The Board of Directors shall elect or appoint a Chairman of the Board, a President, a Secretary, a Treasurer, and one or more Vice Presidents, Assistant Secretaries and/or Assistant Treasurers. The President and Chairman of the Board, if any, shall be members of the Board of Directors. Any two of the above offices, except those of President and Vice President, may be held by the same person, but no officer shall execute, acknowledge or verify an instrument in more than one capacity.

          7.02          TERM OF OFFICE, RESIGNATION AND REMOVAL. An officer shall hold office for the term for which he is elected or appointed and until his successor is elected or appointed and qualified, or until his resignation or removal. An officer may resign by written notice to the corporation. The resignation is effective upon its receipt by the corporation or at a subsequent time specified in the notice of resignation. An officer may be removed by the Board with or without cause. The removal of an officer shall be without prejudice to his contract rights, if any. The election or appointment of an officer does not of itself create contract rights.

          7.03          VACANCIES. The Board of Directors may fill any vacancies in any office occurring for whatever reason.

          7.04          AUTHORITY. All officers, employees and agents of the corporation shall have such authority and perform such duties in the conduct and management of the business and affairs of the corporation as may be designated by the Board of Directors and these Bylaws.          

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ARTICLE VIII

DUTIES OF OFFICERS

          8.01          CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the chief executive officer of the corporation and shall preside at all meetings of the shareholders and of the Board of Directors at which he is present. He shall see that all orders and resolutions of the Board are carried into effect, and he shall have the general powers of supervision and management usually vested in the chief executive officer of a corporation, including the authority to vote all securities of other corporations and business organizations which are held by the corporation.

          8.02          PRESIDENT. The President shall be the chief operating officer of the corporation and shall have the general powers of supervision and management over the day-to-day operations of the corporation. In the absence or disability of the Chairman of the Board, he also shall perform the duties and execute the powers of the Chairman of the Board as set forth in these Bylaws.

          8.03          VICE PRESIDENTS. The Vice Presidents, in order of their seniority, shall, in the absence or disability of the President, perform his duties and exercise his powers and shall perform such other duties as the Board of Directors or the President may from time to time prescribe.

          8.04          SECRETARY. The Secretary shall attend all meetings of the Board of Directors and of shareholders and shall record all votes and minutes of all proceedings in a book to be kept for that purpose. He shall give or cause to be given notice of all meetings of the shareholders and of the Board of Directors. He shall keep in safe custody the seal of the corporation, and, when authorized by the Board, affix the same to any instrument requiring it, and when so affixed it shall be attested by his signature, or by the signature of the Treasurer or an Assistant Secretary. The Secretary may delegate any of his duties, powers and authorities to one or more Assistant Secretaries, unless such delegation is disapproved by the Board.

          8.05          TREASURER. The Treasurer shall have the custody of the corporate funds and securities; shall keep full and accurate accounts of receipts and disbursements in books of the corporation; and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall render to the President and directors, whenever they may require it, an account of his transactions as Treasurer and of the financial condition of the corporation. The Treasurer may delegate any of his duties, powers and authorities to one or more Assistant Treasurers unless such delegation be disapproved by the Board of Directors.

          8.06          ASSISTANT SECRETARIES AND TREASURERS. The Assistant Secretaries, in the order of their seniority, shall perform the duties and exercise the powers and authorities of the Secretary in case of his absence or disability. The Assistant Treasurers, in the order of their seniority,

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shall perform the duties and exercise the powers and authorities of the Treasurer in case of his absence or disability. The Assistant Secretaries and Assistant Treasurers shall also perform such duties as may be delegated to them by the Secretary and Treasurer, respectively, and also such duties as the Board of Directors may prescribe.

ARTICLE IX

SPECIAL CORPORATE ACTS

          9.01          ORDERS FOR PAYMENT OF MONEY. All checks, drafts, notes, bonds, bills of exchange and orders for payment of money of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

          9.02          CONTRACTS AND CONVEYANCES. The Board of Directors of the corporation may in any instance designate the officer and/or agent who shall have authority to execute any contract, conveyance, mortgage or other instrument on behalf of the corporation, or may ratify or confirm any execution. When the execution of any instrument has been authorized without specification of the executing officers or agents, the Chairman of the Board, the President or any Vice President, and the Secretary or Assistant Secretary or Treasurer or Assistant Treasurer, may execute the same in the name and on behalf of this corporation and may affix the corporate seal thereto.

ARTICLE X

BOOKS AND RECORDS

          10.01          MAINTENANCE OF BOOKS AND RECORDS. The proper officers and agents of the corporation shall keep and maintain such books, records and accounts of the corporation's business and affairs, minutes of the proceedings of its shareholders, Board and committees, if any, and such stock ledgers and lists of shareholders, as the Board of Directors shall deem advisable, and as shall be required by the laws of the State of Michigan and other states or jurisdictions empowered to impose such requirements. Books, records and minutes may be kept within or without the State of Michigan in a place which the Board shall determine.

          10.02          RELIANCE ON BOOKS AND RECORDS. In discharging his duties, a director or an officer of the corporation, when acting in good faith, may rely upon the opinion of counsel for the corporation, upon the report of an independent appraiser selected with reasonable care by the Board, or upon financial statements of the corporation represented to him to be correct by the President or the officer of the corporation having charge of its books of account, or stated in a written report by an independent public or certified public accountant or firm of such accountants fairly to reflect the financial condition of the corporation.

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ARTICLE XI

INDEMNIFICATION

          11.01          INDEMNIFICATION. The corporation shall provide indemnification to persons who serve or have served as directors, officers, employees or agents of the corporation, and to persons who serve or have served at the request of the corporation as directors, officers, employees, partners or agents of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, whether for profit or not, to the fullest extent permitted by the Michigan Business Corporation Act, as the same now exists or may hereafter be amended.

ARTICLE XII

AMENDMENTS

          12.01          AMENDMENTS. The Bylaws of the corporation may be amended, altered or repealed, in whole or in part, by the shareholders or by the Board of Directors at any meeting duly held in accordance with these Bylaws, provided that notice of the meeting includes notice of the proposed amendment, alternative or repeal.

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EX-10

EXHIBIT 10.2

CHEMICAL FINANCIAL CORPORATION

1987 Award and Stock Option Plan

1.          Establishment and Purpose of the Plan.

          Chemical Financial Corporation hereby establishes the Chemical Financial Corporation 1987 Award and Stock Option Plan upon the terms and conditions hereinafter stated. The purpose of the Plan is to attract and retain in the employ of the Corporation and its Subsidiaries people of ability, training and experience by providing such people, in consideration of services performed for the Corporation or a Subsidiary, an incentive for outstanding performance for the Corporation and its Subsidiaries, to the end of furthering the continued growth and profitability of the Corporation and encouraging such persons to own stock in the Corporation and to remain in the service of the Corporation and its Subsidiaries.

2.          Definition.

          Unless otherwise required by the context, the following terms when used in the Plan shall have the meanings set forth in this Section 2:

          2.01          Awardee: An Employee to whom an Option or Options, Stock Appreciation Rights or Deferred Stock are granted under the Plan.

          2.02          Board of Directors: The Board of Directors of the Corporation.

          2.03          Common Stock: The common stock of the Corporation, par value $10.00 per share, or such other class or kind of shares or other securities as may be applicable pursuant to the provisions of Section 9 of the Plan.

          2.04          Compensation Committee or Committee: The committee consisting of not less than three (3) members designated to administer the Plan pursuant to the provisions of Section 4 of the Plan.

          2.05          Corporation: Chemical Financial Corporation, a Michigan corporation, or any successor to substantially all its business.

          2.06          Deferred Stock: Common Stock awarded by the Compensation Committee pursuant to Section 6 of the Plan.

          2.07          Employee: A full-time managerial, administrative or professional employee of the Corporation or a Subsidiary, including an officer or director who is such an employee.

          2.08          Fair Market Value: As applied to a specific date, and unless otherwise determined by the Compensation Committee, shall be (a) the mean between the dealer "bid" and "ask" prices as quoted by a local brokerage office, if the Common Stock of the Corporation is

not included in the NASDAQ System; (b) if the Common Stock of the Corporation is included in the NASDAQ System, then either (i) the mean between "bid" and "ask" prices quoted on such system for such date, or (ii) the highest quotation reported on such system for such date, whichever is applicable. However, in the case of an Incentive Stock Option, if such method of determining Fair Market Value shall not be consistent with the regulations of the Secretary of the Treasury or his delegate at the time applicable to an Incentive Stock Option, Fair Market Value shall be determined in accordance with such regulations and shall mean the value as so determined.

          2.09          Incentive Stock Option: Any Option or Options intended to meet the requirements of an incentive stock option or options as defined in Section 422A of the Internal Revenue Code to 1986 as amended or any statutory provision that may replace such Section and designated an Incentive Stock Option by the Compensation Committee.

          2.10          Nonstatutory Option: Any Option or Options not intended to meet the requirements of an incentive stock option or options as defined in Section 422A of the Internal Revenue Code of 1986 as amended.

          2.11          Option or Options: Any option or options granted from time to time under the Plan, including both Nonstatutory Options and Incentive Stock Options.

          2.12          Plan: The Chemical Financial Corporation 1987 Award and Stock Option Plan herein set forth, as the same may from time to time be amended.

          2.13          Stock Appreciation Right: A right to receive a number of shares of Common Stock (and cash in lieu of a fractional share), based upon the increase in value of Common Stock, in respect of an Option granted under the Plan to the extent that such Option shall not have been exercised upon its expiration, as more particularly set forth in Section 8 of the Plan.

          2.14          Subsidiary: Any corporation, other than the Corporation, in an unbroken chain of such corporations beginning with the Corporation if at the time of granting of an award or option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of equity interests in one of the other corporations in such chain.

3.          Components of the Plan.

          The Corporation may from time to time during the period of ten years from the date of adoption of the Plan by its stockholders grant to Employees as a reward for services performed Deferred Stock, Nonstatutory Options or Incentive Stock Options or may grant Stock Appreciation Rights, or a combination of them, provided, however, that Stock Appreciation Rights may also be granted at any time prior to the expiration date of any Option.

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4.          Compensation Committee; Interpretation and Regulations.

          4.01          Constitution and Noneligibility for Awards: The Plan shall be administered by the Compensation Committee as from time to time constituted pursuant to the Bylaws of the Corporation. No person appointed to the Compensation Committee shall be eligible for an award of Deferred Stock, Options or Stock Appreciation Rights pursuant to the Plan, as prescribed in Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 as at such time in effect or any other provision that may replace such Rule and be in effect at such time, while serving on the Compensation Committee. No Deferred Stock, Options or Stock Appreciation Rights shall be granted to any Employee who owns, directly or indirectly, Common Stock possessing more than five percent (5%) of the total combined voting power of all classes of stock of the Corporation.

          4.02          Administrative Powers: The Compensation Committee shall have full power to interpret and administer the Plan and full authority to act in selecting the Employees to whom Deferred Stock, Options or Stock Appreciation Rights will be granted, in determining the number of shares subject to each grant of Deferred Stock or Options; in determining the amount of each grant of Stock Appreciation Rights; and in determining the terms and conditions of awards granted under the Plan (including requirements restricting the timing of exercise of Options or limiting the duration of Options). The Compensation Committee shall have the power to make regulations for carrying out the Plan and to make such changes in such regulations as from time to time the Compensation Committee deems proper. Any interpretation by the Compensation Committee of the terms and provisions of the Plan and the administration thereof, and all action taken by the Compensation Committee, shall be final, binding and conclusive on the Corporation, its stockholders, Subsidiaries, all Employees, their respective legal representatives, successors and assigns and upon all other persons claiming under or through any of them. Furthermore, the Compensation Committee shall have the authority to determine, in the Committee's sole discretion, which Options shall be intended to be Incentive Stock Options for the purposes of this Plan and to designate said Options as Incentive Stock Options in such manner as the Compensation Committee may deem appropriate.

          4.03          Limitation on Liability: Members of the Board of Directors and members of the Compensation Committee acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross negligence or willful misconduct in the performance of their duties.

          4.04          Effect of Prior Awards on Qualification to Act: The fact that a member of the Board of Directors shall at the time be, or shall theretofore have been or thereafter may be, a person who has received or is eligible to receive Deferred Stock, Options or Stock Appreciation Rights shall not disqualify such member from taking part in and voting at any time as a member of the Board of Directors in favor of or against any amendment or repeal of the Plan, provided that such action by the Board of Directors shall be only in accordance with the recommendations of the Compensation Committee as provided in Section 10 of the Plan.

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5.          Reservation of Shares.

          The maximum number of shares of Common Stock, that may be granted as Deferred Stock, purchased upon exercise of Options or that may be transferred in respect of Stock Appreciation Rights, and which are hereby reserved for those purposes of the Plan, shall be, in the aggregate, one hundred fifty thousand (150,000) shares of Common Stock, a number that shall be subject to adjustment as provided in Section 9 of the Plan. If an Option shall for any reason expire or terminate without having been exercised in full and if shares of Common Stock shall not have been transferred in respect of Stock Appreciation Rights relating to such Option, the unpurchased or unused shares of Common Stock theretofore subject to such Option shall be added to the shares of Common Stock otherwise available for Options that may thereafter be granted, and such unpurchased shares of Common Stock shall not be deemed to increase the aggregate number of shares of Common Stock for which Options may b e granted. Awards of Deferred Stock, Options and Stock Appreciation Rights may be made available, at the discretion of the Board of Directors, from authorized by unissued shares of Common Stock, from shares of Common Stock at any time held in the treasury of the Corporation or from shares of Common Stock acquired by the Corporation for the purposes of the Plan.

6.          Deferred Stock Rules and Conditions.

          The grant of Deferred Stock shall be upon the following rules and conditions:

          6.01          Deferred Stock Grants: Deferred Stock shall be evidenced by Deferred Stock agreements in such form or forms as the Compensation Committee shall from time to time approve. Such agreements shall conform to the requirements of the Plan and may contain such other provisions (including provisions for the protection of Deferred Stock in the event of mergers, consolidations, dissolutions, and liquidations, and provisions to the effect that the shares of Common Stock that may be issued subject to the Deferred Stock agreement shall be shares of Common Stock transferred subject to restrictions precluding a sale or other disposition for a period of time and requiring compliance with any other terms and conditions) as the Compensation Committee shall deem advisable.

          6.02          Crediting of Deferred Stock: Upon determination of the number of shares of Deferred Stock to be granted to an Awardee the Committee shall direct that the same be credited to the Awardee's account on the books of the Corporation but that issuance and delivery of the same shall be deferred until the date or dates provided in subsection 6.04 hereof. Prior to issuance and delivery hereunder the Awardee shall have no rights as a stockholder with respect to any shares of Deferred Stock credited to his or her account. The Awardee's right to future issuance and delivery of Deferred Stock may not be sold, pledged, assigned or otherwise transferred (except as hereinafter provided) and any attempt so to sell, pledge, assign or otherwise transfer (except as hereinafter provided) shall be void and the account of the Awardee shall be forfeited. The right of the Awardee to such future issuance and delivery shall, however, be transferable by will o r pursuant to the laws of descent and distribution and an Awardee who has been granted Deferred Stock may make a written designation of a beneficiary on forms prescribed by and filed with the Compensation Committee. Upon the death of an Awardee, such

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beneficiary, or, if no such designation of any beneficiary has been made, the legal representative of such Awardee, shall succeed to the rights of the Awardee.

          6.03          Payment Equivalent to Dividends: During the period that shares of Deferred Stock remain credited to the account of an Awardee and before their issuance and delivery, the Compensation Committee may determine that the Awardee shall receive as additional compensation on each date for the payment of dividends on Common Stock a sum of money equal to the amount the Awardee would have received if the shares of Deferred Stock credited to the Awardee's account had been issued and delivered to the Awardee.

          6.04          Delivery: Subject to the terms and conditions described below, the shares of Deferred Stock credited to the account of an Awardee shall be issued and delivered to the Awardee in one or more installments beginning with such date as the Compensation Committee may determine. In each year prior to such delivery the Awardee shall make arrangements satisfactory to the Compensation Committee for the payment of any taxes required to be withheld in connection with his or her right to Deferred Stock under the applicable laws or other regulations of any governmental authority, whether Federal, state or local and whether domestic or foreign. The Compensation Committee may, in its sole discretion, modify or accelerate the delivery of any shares of Deferred Stock after consulting with the Awardee or his or her successors in the event of (i) death, (ii) hardship after termination of employment, or (iii) any change in tax or other ap plicable laws, decisions, regulations, or rulings that might have a substantial adverse effect on either such Awardee (or his or her successors) or the Corporation.

          6.05          Forfeiture: Shares of Deferred Stock may be forfeited if the Awardee terminates his or her employment with the Corporation or its Subsidiaries for any reason other than death or retirement, except that the Compensation Committee shall have the authority to provide for the continuation of such Deferred Stock in whole or in part whenever the Compensation Committee is in its judgment shall determine that such continuation is in the best interests of the Corporation. Shares of Deferred Stock may furthermore be forfeited by an Awardee if the Compensation Committee determines that the Awardee has at any time engaged in any activity harmful to the interest of or in competition with the Corporation or its Subsidiaries or accepts employment with a competitor.

7.          Option Rules and Conditions.

          The grant of Options shall be upon the following rules and conditions:

          7.01          Option Grants: Options shall be evidenced by Option agreements in such form or forms as the Compensation Committee shall from time to time approve. Such agreements shall conform to the requirements of the Plan, and may contain such other provisions (including restrictions upon the exercise of the Option, provisions for the protection of Options in the event of mergers, consolidations, dissolutions, and liquidations, and provisions to the effect that the shares subject to the Option shall be shares of Common Stock transferred subject to restrictions precluding a sale or other disposition for a period of time and requiring compliance with any other terms and conditions) as the Compensation Committee shall deem advisable.

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          7.02          Option Price: The price at which Common Stock may be purchased upon exercise of an Option shall be determined by the Compensation Committee, but shall in no event be less than the greater of the Fair Market Value of such shares on the date the Option is granted or the par value of such Common Stock.

          7.03          Terms of Options: Each Option shall be exercisable during such period of time as the Compensation Committee shall determine. Each such Option shall in all events, however, and notwithstanding any other provision of the Plan, not be exercised after the expiration of ten years from the date on which the Option shall have been granted, in the case of Incentive Stock Options, or after expiration of ten years and one day from the date on which the Option shall have been granted, in the case of Nonstatutory Options. Except in the case of death, disability or retirement, each Option shall, however, terminate upon termination of employment of the Awardee with the Corporation and its Subsidiaries, notwithstanding the fact that the stated term of such Option may not have expired. In the event of retirement, any Nonstatutory Option shall terminate not later than one year after retirement and any Incentive Stock Option not later than three mont hs after retirement, provided, however, that the expiration date for Options granted as Incentive Stock Options may be extended by the Compensation Committee to a date that is not more than one year after the date of an Awardee's retirement (such Options being Nonstatutory Options after the original expiration date). In the case of death or disability of the Awardee while employed by the Corporation or a Subsidiary, each Option shall terminate on such date as shall be provided in the Option Agreement or one year from the date of the Awardee's death or disability, in the case of both Nonstatutory Options and Incentive Stock Options, whichever shall be the earlier. In cases of the sale of a Subsidiary or other unit of the Corporation, the expiration dates for Options held by Awardees who are transferred to the purchaser in connection with such a sale may be extended by the Compensation Committee to a date that is not more than three years after the date of the sale, but not beyond the original expiration date of the Option. The Compensation Committee shall have the sole power to determine under the circumstances of each case whether or not a leave of absence or entering military service shall constitute cessation of employment, but with respect to an Incentive Stock Option such leaves of absence not constituting cessation of employment shall be limited to those permitted under the laws and regulations governing incentive stock options.

          7.04          Incentive Stock Option: Each provision of the Plan and of each Option agreement relating to an Incentive Stock Option shall be construed so that each Incentive Stock Option shall be an incentive stock option as defined in Section 422A of the Internal Revenue Code of 1986 as amended or any statutory provision that may replace such Section, and any provisions thereof that cannot be so construed shall be disregarded. The total number of shares of Common Stock that may be purchased upon exercise of Incentive Stock Options shall not exceed the total specified in Section 5 of the Plan. Incentive Stock Options shall, in addition to complying with the other provisions of the Plan relating to Options generally, be subject to the following conditions:

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          (i)          Each Incentive Stock Option shall in all events not be exercisable after the expiration of ten years from the date on which such Incentive Stock Option shall have been granted.

          (ii)          The aggregate Fair Market Value (determined as of the time the Incentive Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Awardee during any calendar year (under all such plans of the Corporation) shall not exceed $100,000.

          (iii)          Any other terms and conditions that the Compensation Committee determines, upon advice of counsel, must be imposed for the Option to be an Incentive Stock Option.

          7.05          Multiple Nonstatutory Option/Incentive Stock Option Grants: An Employee may be granted both Nonstatutory Options and Incentive Stock Options, either concurrently or separately, subject to such limitations as may be imposed on the aggregate number of shares of Common Stock that may be purchased under either or both types of grants.

          7.06          Exercise of Option: An Option may be exercised by the Awardee to whom it is granted after the expiration of such period of time immediately following the date on which the Option is granted as shall be recommended by the Compensation Committee and prescribed in the Option Agreement. In no event shall the required period of time be less than one year. After the expiration of the required period of time, the Option may be exercised according to its terms during the balance of the term of the Option. The purchase price of the shares of Common Stock for which an Option shall be exercised shall be paid in full in cash at the time of the exercise or, with the consent of the Compensation Committee, in whole or in part in Common Stock valued at Fair Market Value. An awardee shall have no rights of a stockholder with respect to any shares of Common Stock subject to an Option unless and until a stock certificate for such shares shall have bee n issued to him or her.

          7.07          Assignment: During the lifetime of an Awardee, no Option may be exercised by any person other than the Awardee. An Option may not be pledged, assigned or transferred except by will, under the laws of descent and distribution or as otherwise provided in subsection 7.08 hereof, nor may any Stock Appreciation Rights be pledged, assigned or transferred except by will, under the laws of descent and distribution or as otherwise provided in subsection 7.08 hereof.

          7.08          Beneficiary Upon an Awardee's Death: An Awardee holding an Option or Stock Appreciation Rights may make a written designation of beneficiary on forms prescribed by and filed with the Compensation Committee. Upon the death of an Awardee, such beneficiary, or, if no such designation of any beneficiary has been made, the legal representative of such Awardee may exercise any unterminated and unexpired Option or any Stock Appreciation Rights granted to such Awardee and otherwise succeed to the rights of such Awardee.

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          7.09          Forfeiture: Options shall be forfeited by an Awardee if the Compensation Committee determines that the Awardee has at any time engaged in any activity harmful to the interests of or in competition with the Corporation or its Subsidiaries or accepts employment with a competitor.

8.          Stock Appreciation Rights, Rules and Conditions.

          The Compensation Committee may, in its discretion, grant Stock Appreciation Rights to the holder of an Option upon the following rules and conditions:

          8.01          Stock Appreciation Rights Grants: Stock Appreciation Rights shall be evidenced by Stock Appreciation Rights agreements in such form or forms as the Compensation Committee shall from time to time approve. Such agreements shall conform to the requirements of the Plan and may contain such other provisions (including provisions deferring the issuance and delivery of any Common Stock that may be granted to an Awardee pursuant to his or her Stock Appreciation Rights, as well as providing for payments equivalent to dividends during the period the issuance and delivery of such Common Stock is deferred, and requiring compliance with any other terms and conditions) as the Compensation Committee shall deem advisable. A Stock Appreciation Rights agreement relating to an Option may be made a part of the related Option agreement or may be granted pursuant to a separate Stock Appreciation Rights agreement at any time prior to the expiration of suc h Option.

          8.02          Nature of Stock Appreciation Rights: Stock Appreciation Rights shall entitle the Awardee (or, in the event of his or her death, the person or persons to whom the related Option shall have been transferred by will, the laws of descent and distribution or as provided in Section 7.08 above) upon expiration of the related Option during the Awardee's employment as a result of the lapse of time or following the termination of the Awardee's employment as a result of his or her retirement or death, but not otherwise, to receive the number of shares of Common Stock determined under subsection 8.03 hereof, without payment to the Corporation.

          8.03          Limit on Size of Stock Appreciation Rights: The number of shares of Common Stock that shall be transferred in respect of Stock Appreciation Rights shall be determined by dividing:

          (i)          the total number of shares of Common Stock that could have been, but were not, purchased by exercise of the Option to which it relates (as adjusted pursuant to Section 9 of the Plan) on the last day such Option could have been exercised, multiplied by the amount by which the Fair Market Value of the share of Common Stock on such last day of exercise exceeds the option price of the Option, by

          (ii)          the Fair Market Value of a share of Common Stock on such last day of exercise.

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No fractional shares shall be issued under this subsection, but, in lieu thereof, an adjustment shall be made in cash equal to the same fraction of the Fair Market Value of a share of Common Stock on such date of expiration.

          8.04          Form of Award: As an alternative to transferring Common Stock in respect of Stock Appreciation Rights, the Compensation Committee may determine that the value of such Stock Appreciation Rights be awarded, in whole or in part, in cash, either in a lump sum or over a period of time.

          8.05          Awardee's Rights as a Stockholder: An Awardee shall have no rights as a stockholder with respect to any shares of Common Stock subject to Stock Appreciation Rights unless and until a stock certificate for such shares shall have been issued to him or her.

          8.06          Transferability: Stock Appreciation Rights shall be transferable only to the extent provided in Sections 7.07 and 7.08 of this Plan.

9.          Adjustments Upon Changes in Capitalization.

          In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation or any other change in the corporate structure of the Corporation affecting Common Stock, or a sale by the Corporation of all or part of its assets, or any distribution to stockholders other than a cash dividend, the Board of Directors shall make appropriate adjustment in the number and kind of shares authorized by the Plan, and in the number and kind of shares subject to awards of Deferred Stock and to unexercised Options and Stock Appreciation Rights theretofore granted and in the option price of such shares. No fractional shares of Common Stock shall be issued pursuant to such an adjustment, however, and the Fair Market Value of any fractional shares resulting from adjustments pursuant to this section shall be paid in cash to the Awardee.

10.          Termination and Amendment.

          The Board of Directors shall have the power to terminate the Plan at any time, and from time to time may make such changes in and additions to the Plan as it may deem proper and in the best interests of the Corporation, without further action on the part of the stockholders of the Corporation, but only if, as and when the Compensation Committee shall recommend, but not otherwise; provided, however, (subject to the provisions of Sections 5 and 9 hereof) that no such termination, change or addition shall:

          10.01          Without the consent of the affected Awardee, impair any Option or the terms of any other award theretofore granted under the Plan or, except as otherwise provided in the Plan, deprive any Awardee of any shares of Common Stock that he or she may have acquired through or as a result of the Plan;

          10.02          Increase the total number of shares of Common Stock reserved to be awarded under the Plan, either in the aggregate or with respect to any one Awardee;

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          10.03          Decrease the purchase price of any Option below the Fair Market Value on the date of grant;

          10.04          Extend the period during which Deferred Stock, Options or Stock Appreciation Rights may be awarded, or the period during which Options may be exercised;

          10.05          Abolish the Compensation Committee, change eligibility for membership on the Compensation Committee (except as may from time to time be required by law) or permit the grant of Deferred Stock, Options or Stock Appreciation Rights to members of the Compensation Committee; or

          10.06          Change the provisions of this Section 10.

11.          General Provisions.

          11.01          Nothing contained in the Plan, or in any award granted pursuant to the Plan, shall confer upon any Employee any right with respect to continuance of employment by the Corporation or a Subsidiary, nor interfere in any way with the right of the Corporation or a Subsidiary to terminate the employment of any such Employee at any time with or without assigning any reason therefore.

          11.02          Appropriate provision shall be made for all taxes required to be withheld in connection with any award, the exercise thereof and the transfer of shares of Common Stock, or in connection with Stock Appreciation Rights, under the applicable laws of any governmental authority, whether Federal, state or local.

          11.03          An Awardee may elect in writing that the Compensation Committee permit him or her to satisfy, in whole or in part, the obligation for taxes referred to in Section 11.02 above, by having the Corporation withhold shares of Common Stock having a Fair Market Value equal to the amount required to be withheld. Any such election shall be subject to the following requirements:

          (a)          Such election must be made no less than sixty (60) days prior to the date that the amount of tax to be withheld is determined;

          (b)          Such election shall be subject to the disapproval of the Compensation Committee at any time after such election is made; and

          (c)          Such election, once made, shall be irrevocable by the Awardee.

          In addition, if the Awardee is an officer of the Corporation within the meaning of Section 16 of the Securities Exchange Act of 1934, or any future amendment or replacement thereof, the following additional requirements shall apply to any such election:

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          (d)          The election may not be made within six (6) months of the grant or award (except that this limitation will not apply in the event that the death or disability of the officer-Awardee occurs prior to the expiration of such six (6) month period); and

          (e)          Such election must be made either six (6) months prior to the date that the amount of tax to be withheld is determined, or during the ten (10) day period specified in Rule 16b-3(e)(3)(iii), beginning on the third day following the release of the Corporation's quarterly or annual statement of income and earnings.

          11.04          If any day on or before which action under the Plan must be taken falls on a Saturday, Sunday or legal holiday, such action may be taken on the next succeeding day not a Saturday, Sunday or legal holiday.

          11.05          For purposes of this Plan, transfer of employment from the Corporation to a Subsidiary, from a Subsidiary to the Corporation, or from one Subsidiary to another Subsidiary shall not be deemed termination of employment.

          11.06          To the extent that Federal laws (such as the Securities Exchange Act of 1934 or the Employee Retirement Income Security Act of 1974) do not otherwise control, this Plan and all determinations made and actions taken pursuant hereto shall be governed by the law of the State of Michigan.

- -11-

Amendment to Chemical Financial Corporation
1987 Award and Stock Option Plan

On April 20, 1992 the shareholders of Chemical Financial Corporation approved an increase of 100,000 shares to the Chemical Financial Corporation 1987 Award and Stock Option Plan.

EX-10

EXHIBIT 10.5

RETIREMENT AGREEMENT

                    THIS AGREEMENT is made this 19th day of November, 2001, between ALOYSIUS J. OLIVER ("Mr. Oliver") and CHEMICAL FINANCIAL CORPORATION ("Chemical"), and joined in by its subsidiary, CHEMICAL BANK AND TRUST COMPANY ("Chemical Bank");

                    WHEREAS, Chemical is a financial holding company and a Michigan corporation; and

                    WHEREAS, Chemical believes that its ability to conduct its business successfully is dependent upon retaining key management employees until such time as they retire; and

                    WHEREAS, Mr. Oliver has been employed in an important management and chief executive position with in Chemical for over 44 years, and the parties desire to continue to maintain a relationship upon the terms and conditions set forth herein; and

                    WHEREAS, Mr. Oliver has determined to retire from the active management of Chemical, but has agreed to provide assistance and advice to Chemical.

                    IT IS, THEREFORE, AGREED AS FOLLOWS:

                    1.          Retirement. Effective the close of business December 31, 2001, Mr. Oliver resigned and retired from his position as President and Chief Executive Officer of Chemical Financial Corporation. Mr. Oliver shall continue to serve on the Boards of Chemical and Chemical Bank and will become Chemical's non-executive Chairman effective January 1, 2002, from January 1, 2002 through December 31, 2002, without compensation for Directors' meetings. Mr. Oliver may thereafter continue his service to Chemical for such time and in such role as Chemical and he deem appropriate.

                    2.          Compensation and Benefits. Chemical agrees to pay to Mr. Oliver an annual compensation of Fifty Thousand Dollars ($50,000.00), commencing on the first day of January, 2002, for a period of one year or until his death, if earlier. Payments to Mr. Oliver will be made on the first business day of each month during the term of this Agreement.

          Mr. Oliver shall be provided group health benefits in accordance with the terms of Chemical's Retiree Medical and Dental Plan. If at any time Chemical terminates any such insurance plan for its retirees, Chemical may also terminate such plan for Mr. Oliver; if Chemical substitutes medical and hospitalization insurance plans for its retirees or provides additional medical or hospitalization insurance coverage for its retirees, then such substituted and/or additional insurance coverage shall be made available to Mr. Oliver.

                    3.          Covenant Not To Compete. Mr. Oliver agrees that during the period that payments are being made to him hereunder, he shall not enter into employment or any form of equity ownership of any business which is competitive with the businesses related to, affiliated with, or managed by Chemical; provided, however, that the parties agree that this provision will be limited to a geographic area consisting of a fifty (50) mile radius from each existing business location of Chemical or any business related to, affiliated with, or managed by Chemical. In the event the Board of Directors of Chemical determines that Mr. Oliver is in violation of this covenant not to compete, it shall give written notice to him. Mr. Oliver shall have a period of ninety (90) days from the date of such notice to cease his competitive activity, and the payments hereunder shall continue during such period. If the competitive act ivity is not terminated within the ninety (90) day period, further payments hereunder shall cease. In the

event of a dispute hereunder, the parties agree to submit their disagreement to arbitration. Nothing in this Section 3 shall be construed to prevent Mr. Oliver from acquiring or holding, directly or indirectly, securities of any corporation or other entity the securities of which are listed for trading on any national or regional securities exchange or quoted on any automated quotation system sponsored by the National Association of Securities Dealers, Inc. as long as Mr. Oliver's total beneficial ownership in any such corporation or entity does not exceed five percent (5%) of the total securities outstanding of such corporation or entity.

                    4.          No Assignment. This Agreement is personal to each party to this Agreement and no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the others.

                    5.          Modification. This Agreement supersedes all prior agreements with respect to the matters covered hereby, and no modification of this Agreement shall be valid unless it is in writing and signed by Chemical and by Mr. Oliver.

                    6.          Construction. This Agreement shall be governed and construed in accordance with the laws of the State of Michigan.

                    7.          Headings. The paragraph headings in this Agreement are for convenient reference only, and shall not modify or amend the express terms hereof.

                    8.          Successors and Assigns. This Agreement shall be binding upon, and shall insure to the benefit of, the parties hereto and their respective heirs, personal representatives, successors and assigns.

DATED: December 3, 2001	/s/ Aloysius J. Oliver Aloysius J. Oliver
DATED: December 3, 2001	CHEMICAL FINANCIAL CORPORATION By /s/ Alan W. Ott      Alan W. Ott      Its Chairman
DATED: December 3, 2001	CHEMICAL BANK AND TRUST COMPANY By /s/ David B. Ramaker      David B. Ramaker      Its President & Chief Executive Officer

EX-10

EXHIBIT 10.6

RETIREMENT AGREEMENT

                    THIS AGREEMENT is made as of January 8, 2001, between DAN L. SMITH ("Mr. Smith") and CHEMICAL FINANCIAL CORPORATION ("Chemical"), and joined in by its subsidiary, SHORLINE BANK (the name of which will be changed to "Chemical Bank - Shoreline", in this agreement referred to as "Shoreline Bank");

                    WHEREAS, Chemical believes that its ability to conduct its business successfully is dependent upon retaining key management employees until such time as they retire; and

                    WHEREAS, Mr. Smith has been employed in an important management and chief executive position with Shoreline Bank for many years, and the parties desire to continue to maintain a relationship upon the terms and conditions set forth herein; and

                    WHEREAS, Mr. Smith has determined to retire from the active management of Shoreline Bank, but has agreed to provide assistance and advice to Chemical and Shoreline Bank;

                    IT IS, THEREFORE, AGREED AS FOLLOWS:

                    1.          Retirement. Effective the close of business January 31, 2001, Mr. Smith will resign and retire from his position as Chief Executive Officer of Shoreline Bank. Mr. Smith shall continue to serve as a Director of Chemical and Shoreline Bank and Chairman of the Board of Shoreline Bank, through January 31, 2003, without compensation for Directors' meetings. Mr. Smith may thereafter continue his service to Chemical and Shoreline Bank for such time and in such role as Chemical and he deem appropriate.

                    2.          Compensation and Benefits. Chemical agrees to pay to Mr. Smith compensation at an annual rate of Fifty Thousand Dollars ($50,000.00), commencing on the first day of February, 2001, for a period of two years or until his death, if earlier. Payments to Mr. Smith will be made on the first business day of each month during the term of this Agreement.

          Mr. Smith shall be provided group health benefits in accordance with the terms of Chemical's Retiree Medical and Dental Plan. If at any time Chemical terminates any such insurance plan for its retirees, Chemical may also terminate such plan for Mr. Smith; if Chemical substitutes medical and hospitalization insurance plans for its retirees or provides additional medical or hospitalization insurance coverage for its retirees, then such substituted and/or additional insurance coverage shall be made available to Mr. Smith.

                    3.          Covenant Not To Compete. Mr. Smith agrees that during the period that payments are being made to him hereunder, he shall not enter into employment or any form of equity ownership of any business which is competitive with the businesses related to, affiliated with, or managed by Chemical; provided, however, that the parties agree that this provision will be limited to a geographic area consisting of a fifty (50) mile radius from each existing business location of Chemical or any business related to, affiliated with, or managed by Chemical. In the event the Board of Directors of Chemical determines that Mr. Smith is in violation of this covenant not to compete, it shall give written notice to him. Mr. Smith shall have a period of ninety (90) days from the date of such notice to cease his competitive activity, and the payments hereunder shall continue during such period. If the competitive activ ity is not terminated within the ninety (90) day period, further payments hereunder shall cease. In the event of a dispute hereunder, the parties agree to submit their disagreement to arbitration. Nothing in this

Section 3 shall be construed to prevent Mr. Smith from acquiring or holding, directly or indirectly, securities of any corporation or other entity the securities of which are listed for trading on any national or regional securities exchange or quoted on any automated quotation system sponsored by the National Association of Securities Dealers, Inc. as long as Mr. Smith's total beneficial ownership in any such corporation or entity does not exceed five percent (5%) of the total securities outstanding of such corporation or entity.

                    4.          No Assignment. This Agreement is personal to each party to this Agreement and no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the others.

                    5.          Modification. This Agreement supersedes all prior agreements with respect to the matters covered hereby, and no modification of this Agreement shall be valid unless it is in writing and signed by Chemical and by Mr. Smith.

                    6.          Construction. This Agreement shall be governed and construed in accordance with the laws of the State of Michigan.

                    7.          Headings. The paragraph headings in this Agreement are for convenient reference only, and shall not modify or amend the express terms hereof.

                    8.          Successors and Assigns. This Agreement shall be binding upon, and shall insure to the benefit of, the parties hereto and their respective heirs, personal representatives, successors and assigns.

DATED: January 8, 2001	/s/ Dan L. Smith Dan L. Smith
DATED: January 2, 2001	CHEMICAL FINANCIAL CORPORATION By /s/ Alan W. Ott      Alan W. Ott      Its Chairman
DATED: January 8, 2001	SHORELINE BANK By /s/ James R. Milroy      James R. Milroy      Its President

EX-11

EXHIBIT 10.5

RETIREMENT AGREEMENT

                    THIS AGREEMENT is made this 19th day of November, 2001, between ALOYSIUS J. OLIVER ("Mr. Oliver") and CHEMICAL FINANCIAL CORPORATION ("Chemical"), and joined in by its subsidiary, CHEMICAL BANK AND TRUST COMPANY ("Chemical Bank");

                    WHEREAS, Chemical is a financial holding company and a Michigan corporation; and

                    WHEREAS, Chemical believes that its ability to conduct its business successfully is dependent upon retaining key management employees until such time as they retire; and

                    WHEREAS, Mr. Oliver has been employed in an important management and chief executive position with in Chemical for over 44 years, and the parties desire to continue to maintain a relationship upon the terms and conditions set forth herein; and

                    WHEREAS, Mr. Oliver has determined to retire from the active management of Chemical, but has agreed to provide assistance and advice to Chemical.

                    IT IS, THEREFORE, AGREED AS FOLLOWS:

                    1.          Retirement. Effective the close of business December 31, 2001, Mr. Oliver resigned and retired from his position as President and Chief Executive Officer of Chemical Financial Corporation. Mr. Oliver shall continue to serve on the Boards of Chemical and Chemical Bank and will become Chemical's non-executive Chairman effective January 1, 2002, from January 1, 2002 through December 31, 2002, without compensation for Directors' meetings. Mr. Oliver may thereafter continue his service to Chemical for such time and in such role as Chemical and he deem appropriate.

                    2.          Compensation and Benefits. Chemical agrees to pay to Mr. Oliver an annual compensation of Fifty Thousand Dollars ($50,000.00), commencing on the first day of January, 2002, for a period of one year or until his death, if earlier. Payments to Mr. Oliver will be made on the first business day of each month during the term of this Agreement.

          Mr. Oliver shall be provided group health benefits in accordance with the terms of Chemical's Retiree Medical and Dental Plan. If at any time Chemical terminates any such insurance plan for its retirees, Chemical may also terminate such plan for Mr. Oliver; if Chemical substitutes medical and hospitalization insurance plans for its retirees or provides additional medical or hospitalization insurance coverage for its retirees, then such substituted and/or additional insurance coverage shall be made available to Mr. Oliver.

                    3.          Covenant Not To Compete. Mr. Oliver agrees that during the period that payments are being made to him hereunder, he shall not enter into employment or any form of equity ownership of any business which is competitive with the businesses related to, affiliated with, or managed by Chemical; provided, however, that the parties agree that this provision will be limited to a geographic area consisting of a fifty (50) mile radius from each existing business location of Chemical or any business related to, affiliated with, or managed by Chemical. In the event the Board of Directors of Chemical determines that Mr. Oliver is in violation of this covenant not to compete, it shall give written notice to him. Mr. Oliver shall have a period of ninety (90) days from the date of such notice to cease his competitive activity, and the payments hereunder shall continue during such period. If the competitive act ivity is not terminated within the ninety (90) day period, further payments hereunder shall cease. In the

event of a dispute hereunder, the parties agree to submit their disagreement to arbitration. Nothing in this Section 3 shall be construed to prevent Mr. Oliver from acquiring or holding, directly or indirectly, securities of any corporation or other entity the securities of which are listed for trading on any national or regional securities exchange or quoted on any automated quotation system sponsored by the National Association of Securities Dealers, Inc. as long as Mr. Oliver's total beneficial ownership in any such corporation or entity does not exceed five percent (5%) of the total securities outstanding of such corporation or entity.

                    4.          No Assignment. This Agreement is personal to each party to this Agreement and no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the others.

                    5.          Modification. This Agreement supersedes all prior agreements with respect to the matters covered hereby, and no modification of this Agreement shall be valid unless it is in writing and signed by Chemical and by Mr. Oliver.

                    6.          Construction. This Agreement shall be governed and construed in accordance with the laws of the State of Michigan.

                    7.          Headings. The paragraph headings in this Agreement are for convenient reference only, and shall not modify or amend the express terms hereof.

                    8.          Successors and Assigns. This Agreement shall be binding upon, and shall insure to the benefit of, the parties hereto and their respective heirs, personal representatives, successors and assigns.

DATED: December 3, 2001	/s/ Aloysius J. Oliver Aloysius J. Oliver
DATED: December 3, 2001	CHEMICAL FINANCIAL CORPORATION By /s/ Alan W. Ott      Alan W. Ott      Its Chairman
DATED: December 3, 2001	CHEMICAL BANK AND TRUST COMPANY By /s/ David B. Ramaker      David B. Ramaker      Its President & Chief Executive Officer

EX-13

EXHIBIT No. 13

CHEMICAL
FINANCIAL CORPORATION_SM

2001
Annual Report
to Shareholders

C H E M I C A L   F I N A N C I A L   C O R P O R A T I O N

2001 ANNUAL REPORT TO SHAREHOLDERS
Contents	Page
Chemical Financial Corporation	1
A Message to Our Shareholders	2
Five-Year Summary of Selected Financial Data	3
Management's Discussion and Analysis	4
Consolidated Financial Statements	20
Notes to Consolidated Financial Statements	24
Report of Independent Auditors	38
Supplemental Quarterly Financial Information (Unaudited)	39
Market for Chemical Financial Corporation
Common Stock and Related Shareholder Matters	39
Chemical Financial Corporation Directors and Executive Officers	40

C H E M I C A L   F I N A N C I A L   C O R P O R A T I O N

Chemical Financial Corporation ("Chemical" or "Corporation") is a diversified financial services company providing a full range of commercial, consumer, mortgage, trust, insurance and financial planning services. Chemical served a broad customer base through 128 banking offices and 2 loan production offices across 32 counties in the lower peninsula of Michigan as of December 31, 2001. The Corporation completed the merger with Shoreline Financial Corporation ("Shoreline") on January 9, 2001. Shoreline was a one-bank holding company headquartered in Benton Harbor, Michigan. The merger added $1.1 billion in assets to the organization. The merger with Shoreline was accounted for as a pooling of interests; therefore, all of the information presented in this report has been restated to reflect the two companies as if they had always been together. In conjunction with the merger with Shoreline and internal consolidations, the Corporation recognized $9.2 million ($7.1 million on an after-tax basis) of merger and restructuring expenses during the first quarter of 2001. The term "net operating income" utilized in this report was defined as net income less the after-tax impact of the $7.1 million of merger and restructuring expenses. On July 13, 2001, the Corporation acquired four branch banking offices in Holland, Zeeland, Grand Haven and Fremont, Michigan ("four branches") from Fifth Third Bank/Old Kent Bank. The four branches had total deposits of approximately $144 million and total loans of approximately $97 million at that date. The Corporation completed the acquisition of Bank West Financial Corporation ("BWFC") on September 14, 2001. BWFC was the parent company of Bank West, a Michigan stock savings bank, with approximately $300 million in total assets. The acquisitions of the four branches and BWFC were accounted for by the purchase method; therefore, the financial results of these operations are included from their respective acquisition dates, with no restatement of prior period amounts. All references in this report to shares outstanding, share prices and per share amounts have been retroactively restated for the 5% stock dividend paid on December 21, 2001. The Corporation is headquartered in Midland, Michigan, and had total assets of $3.49 billion at December 31, 2001. In addition to its banking offices, the Corporation had 159 ATM locations, with 44 located off bank premises. At year-end, the Corporation had 1,427 employees on a full-time equivalent basis and its shareholders totaled approximately 10,000, of which approximately 5,400 were shareholders of record.

1

A   M E S S A G E   T O   O U R   S H A R E H O L D E R S

This is Chemical Financial Corporation's 2001 Annual Report to Shareholders. It contains audited financial statements and a detailed financial review. Although attached to our proxy statement, this report is not part of our proxy statement, is not deemed to be soliciting material, and is not deemed to be filed with the Securities and Exchange Commission (the "SEC") except to the extent that it is expressly incorporated by reference in a document filed with the SEC. The 2001 Summary Annual Report accompanies this proxy statement. That report presents information concerning the business and financial results of Chemical Financial Corporation in a format and level of detail that we believe our shareholders will find useful and informative. Shareholders who would like to receive even more detailed information than that contained in this 2001 Annual Report to Shareholders are invited to request our Annual Report on Form 10-K. Our 2001 Annual Report on Form 10-K, as filed with the SEC, including financial statements and financial statement schedules will be provided to any shareholder, without charge, upon written request to Chemical Financial Corporation, Attn: Lori A. Gwizdala, Chief Financial Officer, 333 E. Main Street, Midland, Michigan 48640. Important Notice Regarding Delivery of Shareholder Documents: As permitted by SEC rules, only one copy of Chemical's Proxy Statement and the 2001 Annual Report to Shareholders is being delivered to multiple shareholders sharing the same address unless Chemical has received contrary instructions from one or more of the shareholders who share the same address. Chemical will deliver on a one-time basis, promptly upon written or verbal request from a shareholder at a shared address, a separate copy of Chemical's Proxy Statement and the 2001 Annual Report to Shareholders. Request should be made to Chemical Financial Corporation, Attn: Lori A. Gwizdala, Chief Financial Officer, 333 E. Main Street, Midland, Michigan 48640, telephone (989) 839-5350. Shareholders sharing an address who are currently receiving multiple copies of the Proxy Statement and Annual Report to Shareholders may instruct Chemical to deliver a single copy of such documents on an ongoing basis. Such instructions must be in writing, must be signed by each shareholder who is currently receiving a separate copy of the documents, must be addressed to Chemical Financial Corporation, Attn: Lori A. Gwizdala, Chief Financial Officer, 333 E. Main Street, Midland, Michigan 48640, telephone (989) 839-5350, and will continue in effect unless and until Chemical receives contrary instructions as provided below. Any shareholder sharing an address may request to receive and instruct Chemical to send separate copies of the Proxy Statement and Annual Report to Shareholders on an ongoing basis by written or verbal request to Chemical Financial Corporation, Attn: Lori A. Gwizdala, Chief Financial Officer, 333 E. Main Street, Midland, Michigan 48640, telephone (989) 839-5350. Chemical will begin sending separate copies of such documents within thirty days of receipt of such instructions.

2

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⁽¹⁾

	Years Ended December 31
	2001		2000		1999		1998		1997
Operating Results (In thousands)
Net interest income	$130,068		$114,908		$111,504		$105,971		$101,233
Provision for loan losses	2,004		1,587		963		1,564		1,602
Noninterest income	31,873		25,495		24,220		23,739		18,835
Operating expenses	94,597		78,294		74,546		71,730		67,239
Net operating income(2)	49,800		40,801		40,459		38,160		34,900
Net income	42,723		40,801		40,459		38,160		34,900
Per Share Data(3)
Net income
Basic	$       1.90		$       1.82		$       1.78		$       1.67		$       1.55
Diluted	1.89		1.81		1.77		1.66		1.53
Net operating income(2)
Basic	2.21		1.82		1.78		1.67		1.55
Diluted	2.21		1.81		1.77		1.66		1.53
Cash dividends declared and paid	.91		.84		.76		.70		.61
Book value at end of period	17.30		15.93		14.61		14.39		13.28
Market value at end of period	30.10		22.14		28.04		30.31		32.40
Shares outstanding at end of period   (In thousands)(3)	22,514		22,469		22,552		22,868		22,653
At Year End (In thousands)
Assets	$3,488,306		$3,047,388		$2,903,612		$2,827,890		$2,622,943
Loans	2,182,541		1,848,630		1,711,570		1,533,452		1,465,236
Deposits	2,789,524		2,443,155		2,354,656		2,350,113		2,198,505
Federal Home Loan Bank borrowings	167,893		116,806		111,025		57,478		54,176
Shareholders' equity	389,456		357,910		329,398		329,050		300,807
Average Balances (In thousands)
Assets	$3,213,561		$3,000,505		$2,868,323		$2,712,472		$2,530,206
Interest-earning assets	3,026,296		2,813,073		2,675,669		2,538,041		2,369,021
Loans	1,996,803		1,771,306		1,618,566		1,500,631		1,387,979
Deposits	2,582,480		2,431,954		2,355,876		2,261,033		2,135,680
Federal Home Loan Bank borrowings	132,103		107,215		84,993		59,866		43,904
Shareholders' equity	369,829		340,181		329,244		313,806		288,988
Financial Ratios
Return on average assets - net income	1.33	%	1.36	%	1.41	%	1.41	%	1.38	%
Return on average assets - net operating   income(2)	1.55		1.36		1.41		1.41		1.38
Return on average equity - net income	11.6		12.0		12.3		12.2		12.1
Return on average equity - net operating   income(2)	13.5		12.0		12.3		12.2		12.1
Net interest margin	4.38		4.18		4.27		4.28		4.39
Efficiency ratio(4)	52.0		54.7		53.9		54.2		54.8
Average shareholders' equity to average   assets	11.5		11.3		11.5		11.6		11.4
Cash dividends paid per share to   diluted net income per share	48.1		46.4		42.9		42.2		39.9
Tangible equity to assets	10.1		11.1		10.7		11.0		10.9
Total risk-based capital	17.4		21.1		22.0		22.6		23.8
Credit Quality Statistics
Allowance for loan losses to total loans	1.42	%	1.45	%	1.53	%	1.69	%	1.72	%
Nonperforming loans as a percent of   total loans	.60		.47		.30		.30		.36
Nonperforming assets as a percent of   total assets	.40		.31		.19		.19		.22
Net loans charged-off as a percent of   average loans	.08		.05		.05		.05		.05

(1)	All years were retroactively adjusted to include Shoreline as if it had been part of the organization for each full year presented. Financial results for 2001 include the operations of the branch purchases and BWFC from and after their respective acquisition dates.
(2)	Excludes merger and restructuring expenses of $7.1 million, or $.32 diluted earnings per share on an after-tax basis.
(3)	Adjusted for stock dividends and stock splits.
(4)	Total operating expenses, excluding merger and restructuring expenses of $9.2 million in 2001, divided by the sum of net interest income (fully taxable equivalent) and noninterest income.

3

M A N A G E M E N T ' S   D I S C U S S I O N   A N D   A N A L Y S I S

F I N A N C I A L   H I G H L I G H T S

The following discussion and analysis is intended to cover the significant factors affecting Chemical Financial Corporation's ("Corporation") consolidated statements of financial position and income, included herein. It is designed to provide shareholders with a more comprehensive review of the consolidated operating results and financial position of the Corporation than could be obtained from an examination of the financial statements alone. On December 21, 2001, the Corporation paid a 5% stock dividend to shareholders of record on December 7, 2001. All per share amounts, and shares outstanding where appropriate, have been adjusted for this stock dividend. Mergers and Acquisitions The Corporation's primary method of expansion into new banking markets has been through acquisitions of other financial institutions and bank branches. The following is a summary of the Corporation's merger and acquisition activity during the three-year period ended December 31, 2001. On July 9, 1999, the Corporation acquired two branch banking offices located in Standish and Linwood, Michigan from National City Bank of Michigan/Illinois. The Standish branch had total deposits of approximately $10 million as of that date and was consolidated into an existing branch of an affiliate in Standish. The Linwood branch had total deposits of approximately $17 million as of that date and is operating as a branch of an affiliate. On March 24, 2000, the Corporation acquired two branch banking offices in Evart and Morrice, Michigan from Old Kent Bank. The Evart branch had total deposits of approximately $15 million and the Morrice branch had total deposits of approximately $10 million as of that date. Both offices are being operated as branches of affiliates. On January 9, 2001, the Corporation completed its merger with Shoreline Financial Corporation ("Shoreline"), a one-bank holding company, headquartered in Benton Harbor, Michigan. The merger added approximately $1.1 billion in assets, 30 banking offices, 2 loan production offices and 1,500 shareholders of record to the organization. The merger with Shoreline was accounted for as a pooling of interests; therefore, all of the information presented in this report has been restated to reflect the two companies as if they had always been together. On July 13, 2001, the Corporation acquired four Fifth Third Bank/Old Kent Bank branch banking offices in Holland, Zeeland, Grand Haven and Fremont, Michigan ("four branches"). The four branches had total deposits of approximately $144 million and total loans of approximately $97 million at that date. These branches were merged into existing subsidiaries.

On September 14, 2001, the Corporation acquired Bank West Financial Corporation ("BWFC"). BWFC was the parent company of Bank West, a Michigan stock savings bank, with approximately $300 million in total assets, $232 million in total loans and $194 million in total deposits. Bank West, with six offices in Kent and Ottawa Counties in Michigan, was merged into an existing bank subsidiary, Chemical Bank West headquartered in Cadillac, Michigan. The acquisitions of the branches and BWFC in 2001 were accounted for by the purchase method; therefore, the financial results of these operations are included from their respective acquisition dates, with no restatement of prior period amounts. Net Income Net income in 2001 was $42.7 million, or $1.89 per diluted share, compared to net income of $40.8 million, or $1.81 per diluted share, in 2000. Net income in 2001 represented a 4.7% increase over 2000 net income, while 2001 net income per share represented a 4.4% increase over 2000 net income per share. The Corporation incurred pre-tax merger and restructuring expenses of $9.2 million ($7.1 million after-tax) in 2001. The expenses were recorded in connection with the completion of the merger between the Corporation and Shoreline and the consolidation of nine of the Corporation's subsidiary banks into two. The Corporation defined net operating income in 2001 as net income less the merger and restructuring expenses of $7.1 million on an after-tax basis. Net operating income in 2001 was $49.8 million, or $2.21 per diluted share, resulting in a 22.1% increase over net income of $40.8 million, or $1.81 per diluted share, in 2000. Net operating income has increased at an average annual compound rate of 9.5% during the five-year period ended December 31, 2001. The Corporation's return on average assets, based on net operating income, was 1.55% in 2001, 1.36% in 2000 and 1.41% in 1999. The Corporation's return on average shareholders' equity, based on net operating income, was 13.5% in 2001, 12.0% in 2000 and 12.3% in 1999. Deposits The Corporation's average deposit balances and average rates paid on deposits for the past three years are included in Table 2. Average total deposits were $151 million, or 6.2%, higher in 2001 as compared to 2000. Average total deposits were $76.1 million, or 3.2% higher in 2000 as compared to 1999. The growth in deposits during 2001 was generally spread across all of the Corporation's deposit products. The growth in deposits

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TABLE 1. FIVE-YEAR INCOME STATEMENT - TAX EQUIVALENT BASIS* - AS A PERCENTAGE OF AVERAGE TOTAL ASSETS

	Years Ended December 31
	2001		2000		1999		1998		1997
INTEREST INCOME
Interest and fees on loans	5.05	%	4.93	%	4.62	%	4.72	%	4.77	%
Interest on investment securities	1.69		1.93		2.01		2.09		2.20
Interest on short-term investments	.16		.26		.17		.26		.25
TOTAL INTEREST INCOME	6.90		7.12		6.80		7.07		7.22
INTEREST EXPENSE
Interest on deposits	2.47		2.84		2.57		2.86		2.94
Interest on FHLB borrowings	.23		.22		.16		.13		.10
Interest on other borrowings - short-term	.08		.14		.09		.08		.07
TOTAL INTEREST EXPENSE	2.78		3.20		2.82		3.07		3.11
NET INTEREST INCOME	4.12		3.92		3.98		4.00		4.11
Provision for loan losses	.06		.05		.03		.06		.06
NONINTEREST INCOME
Service charges and fees	.55		.54		.50		.45		.43
Trust services revenue	.20		.23		.22		.20		.19
Mortgage banking revenue	.20		.06		.08		.12		.03
Other	.04		.02		.04		.10		.09
TOTAL NONINTEREST INCOME	.99		.85		.84		.87		.74
OPERATING EXPENSES
Salaries, wages and benefits	1.50		1.52		1.50		1.52		1.53
Occupancy	.21		.21		.22		.22		.23
Equipment	.24		.21		.20		.19		.21
Merger and restructuring expenses	.29		-		-		-		-
Other	.70		.67		.68		.71		.69
TOTAL OPERATING EXPENSES	2.94		2.61		2.60		2.64		2.66
INCOME BEFORE INCOME TAXES	2.11		2.11		2.19		2.17		2.13
Federal income taxes	.70		.66		.69		.67		.64
Tax equivalent adjustment	.08		.09		.09		.09		.11
NET INCOME	1.33	%	1.36	%	1.41	%	1.41	%	1.38	%
NET OPERATING INCOME**	1.55	%	1.36	%	1.41	%	1.41	%	1.38	%
AVERAGE TOTAL ASSETS - In thousands	$3,213,561		$3,000,505		$2,868,323		$2,712,472		$2,530,206

*Taxable equivalent basis using a federal income tax rate of 35%.
**Excludes merger and restructuring expenses of $7.1 million on an after-tax basis during 2001.

during both 2001 and 2000 was achieved through a combination of acquisitions and enhanced cross-selling efforts by employees. It is the Corporation's strategy to develop customer relationships that will drive steady core deposit growth and stability. The Corporation gathers deposits from the local markets of its banking subsidiaries. The Corporation had $23 million of brokered deposits as of December 31, 2001, which were obtained as part of the 2001 acquisitions. The Corporation does not intend to seek additional brokered deposits as part of its deposit gathering strategy. The growth of the Corporation's deposits is impacted by competition from other investment products, such as brokerage accounts, mutual funds and various annuity products. These investment products are sold by a wide spectrum of organizations, such as brokerage and insurance companies, as well as by financial institutions.

The Corporation's subsidiary banks, through "CFC Investment Centers," offer a wide array of mutual funds, annuity products and market securities through alliances with BankMark and FutureShare Financial Services. CFC Investment Centers offer customers a broad spectrum of investment products and service capabilities, backed by strong financial planning capabilities. During 2001, customers purchased $21.5 million of annuity and mutual fund investments through CFC Investment Centers. In addition, the Trust department of Chemical Bank and Trust Company offers customers a number of investment products and services. Two of these products are "ChemVest Advantage," which provides customers with professional assistance in allocating their funds among a variety of institutional mutual funds, and "ChemSelect-IRA," which allows customers to choose their own asset allocation and risk tolerance among a variety of mutual funds, without any sales charges or transaction fees. At December 31, 2001, these two T rust department investment products had balances totaling approximately $33.9 million.

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FINANCIAL HIGHLIGHTS - CONTINUED
Assets Average assets were $3.21 billion during 2001, an increase of $213 million, or 7.1%, over average assets during 2000 of $3 billion. Average assets increased $132 million, or 4.6%, during 2000 over average assets of $2.87 billion in 1999. Cash Dividends During 2001, cash dividends per share were $.91, a 9.1% increase over cash dividends per share in 2000 of $.84. The Corporation has paid regular cash dividends every quarter since it was organized as a bank holding company in 1973. The Corporation's annual cash dividends per share over the past five years, adjusted for all stock dividends and stock splits, were as follows:						surrounding these communities. As of December 31, 2001, the Corporation operated three regional subsidiary banks: Chemical Bank and Trust Company, headquartered in Midland, Michigan; Chemical Bank Shoreline, headquartered in Benton Harbor, Michigan; and Chemical Bank West, headquartered in Cadillac, Michigan. Together, they serve 86 communities through 128 banking offices and 2 loan origination offices located in 32 counties across Michigan's lower peninsula. In addition to its banking offices, the Corporation operated 159 automated teller machines, both on and off bank premises. The principal sources of revenues for the Corporation are interest and fees on loans, which accounted for 64% of total revenues in 2001, 62% of total revenues in 2000 and 61% of total revenues in 1999. Interest on investment securities is also a significant source of revenue, accounting for 21% of total revenues in 2001, 24% of total revenues in 2000 and 26% of total revenues in 1999. Chemical Bank and Trust Company, the Corporation's largest subsidiary and lead bank headquartered in Midland, Michigan, represented 36% of total loans and 44% of total deposits of the Corporation at December 31, 2001.
	2001	2000	1999	1998	1997
Annual Dividend	$.91	$.84	$.76	$.70	$.61
Cash dividends per share in 2000 represented a 10.5% increase over cash dividends per share in 1999. The compound annual growth rate of the Corporation's cash dividends per share over the past five and ten-year periods ended December 31, 2001 was 11.7% and 12.2%, respectively. The earnings of the Corporation's subsidiaries are the principal source of funds to pay cash dividends to shareholders. Cash dividends are dependent upon the earnings of the Corporation's subsidiaries, as well as capital requirements, regulatory restraints and other factors affecting each of the Corporation's subsidiary banks. Business of the Corporation The Corporation is a financial holding company with its business concentrated in a single industry segment - commercial banking. The Corporation, through its bank subsidiaries, offers a full range of commercial banking services. These banking services include accepting deposits, business and personal checking accounts, savings and individual retirement accounts, time deposit instruments, electronically accessed banking products, residential and commercial real estate financing, commercial lending, consumer financing, debit cards, safe deposit box services, money transfer services, automated teller machines, access to insurance products and corporate and personal trust services. The Corporation also has a data processing subsidiary. This subsidiary provides data processing services to the majority of the Corporation's subsidiary banks and to outside customers. The data processing services provided to the Corporation's subsidiaries represented 90% of total revenue of the data processing subsidiary in 2001, 89% in 2000 and 88% in 1999. The principal markets for the Corporation's commercial banking services are communities within Michigan in which the Corporation's subsidiaries are located and the areas immediately						NET INTEREST INCOME Interest income is the total amount earned on funds invested in loans, investment securities and money market instruments, such as federal funds sold. Interest expense is the amount of interest paid on interest-bearing checking accounts and savings and time deposits, as well as on other borrowings - short-term and Federal Home Loan Bank borrowings. Net interest income, on a fully taxable equivalent (FTE) basis, is the difference between interest income and interest expense adjusted for the tax benefit received on tax-exempt commercial loans and investment securities. Net interest margin is calculated by dividing net interest income (FTE) by average interest-earning assets. Net interest spread is the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. Net interest income is influenced by a variety of factors, including changes in the volume of interest-earning assets, changes in the mix of interest-earning assets and interest-bearing liabilities, the proportion of interest-earning assets that are funded by noninterest-bearing liabilities (demand deposits) and equity capital, market rates of interest which are impacted by the national economy, monetary policies of the Federal Reserve Board, and variations in interest sensitivity between interest-earning assets and interest-bearing liabilities. Some of these factors are controlled to a certain extent by management policies and actions. However, conditions beyond management's control also have an impact on changes in net interest income.

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TABLE 2. AVERAGE BALANCES, TAX EQUIVALENT INTEREST AND EFFECTIVE YIELDS AND RATES* (Dollars in thousands)

	Years Ended December 31
	2001				2000				1999
	Average Balance	Tax Equivalent Interest	Effective Yield/ Rate		Average Balance	Tax Equivalent Interest	Effective Yield/ Rate		Average Balance	Tax Equivalent Interest	Effective Yield/ Rate
ASSETS
Interest-  Earning  Assets:
Loans**	$1,996,803	$162,201	8.12	%	$1,771,306	$147,811	8.34	%	$1,618,566	$132,438	8.18	%
Taxable   investment   securities	828,726	49,184	5.93		853,346	52,667	6.17		892,771	52,255	5.85
Non-taxable   investment   securities	61,825	4,993	8.08		65,272	5,277	8.08		64,314	5,321	8.27
Federal funds   sold	116,176	4,604	3.96		113,256	7,092	6.26		79,920	3,987	4.99
Interest-   bearing   deposits   with   unaffiliated   banks	22,766	681	2.99		9,893	623	6.30		20,098	979	4.87
Total interest    income/total    interest-    earning    assets	3,026,296	221,663	7.32		2,813,073	213,470	7.59		2,675,669	194,980	7.29
Less: Allow-  ance for loan  losses	28,644				26,393				26,102
Other Assets:
Cash and due   from banks	118,312				112,142				126,100
Premises and   equipment	39,003				37,494				34,517
Accrued   income and   other assets	58,594				64,189				58,139
Total Assets	$3,213,561				$3,000,505				$2,868,323
LIABILITIES AND  SHAREHOLDERS'  EQUITY
Interest-  Bearing  Liabilities:
Interest-   bearing   demand   deposits	$  466,320	$  9,685	2.08	%	$  430,743	$  12,453	2.89	%	$  405,930	$  9,636	2.37	%
Savings   deposits	686,511	16,729	2.44		660,098	19,027	2.88		688,667	18,728	2.72
Time deposits	1,023,808	52,813	5.16		962,992	53,723	5.58		900,277	45,379	5.04
Federal   Home Loan   Bank   borrowings	132,103	7,285	5.51		107,215	6,526	6.09		84,993	4,630	5.45
Other   borrowings   - short term	101,834	2,670	2.62		88,933	4,227	4.75		72,277	2,488	3.44
Total     interest     expense/     total     interest-     bearing     liabilities	2,410,576	89,182	3.70		2,249,981	95,956	4.27		2,152,144	80,861	3.76
Noninterest-  bearing  deposits	405,841				378,121				361,002
Total deposits   and borrow-   ed funds	2,816,417				2,628,102				2,513,146
Accrued  expenses and  other  liabilities	27,315				32,222				25,933
Shareholders'  equity	369,829				340,181				329,244
Total  Liabilities  and Share-  holders'  Equity	$3,213,561				$3,000,505				$2,868,323
Net Interest  Spread  (Average  yield earned  minus  average rate  paid)			3.62	%			3.32	%			3.53	%
Net Interest  Income  (FTE)		$132,481				$117,514				$114,119
Net Interest  Margin
(Net interest   income   (FTE)/total   average   interest-   earning   assets)			4.38	%			4.18	%			4.27	%

*Taxable equivalent basis using a federal income tax rate of 35%.
**Nonaccrual loans are included in average balances reported and are used to calculate yields.

These conditions include changes in market interest rates, the strength of credit demand by customers, competition from other financial institutions, the growth of deposit accounts at non-bank financial competitors and the continued growth in equity, mutual fund and annuity investments. Management monitors the Corporation's consolidated statement of financial position to reduce the potential adverse impact on net interest income caused by significant swings in interest rates. The Corporation's policies in this regard are further discussed in the section titled "Liquidity and Interest Sensitivity." Table 2 presents, for 2001, 2000 and 1999, average daily balances of the Corporation's major categories of assets and liabilities, interest income and expense on a fully taxable equivalent (FTE) basis, average interest rates earned and paid on the assets and liabilities, net interest income, net interest spread and net interest margin.

During 2001, average interest-earning assets increased $213 million, or 7.6%, to $3.03 billion while average interest-bearing liabilities increased $161 million, or 7.1%, to $2.41 billion. Net interest income (FTE) in 2001 was $132.5 million, up $15 million, or 12.7%, over 2000 net interest income (FTE) of $117.5 million. The significant increase over the prior year was primarily the result of the acquisitions during the last half of 2001, the reduction in overall market interest rates throughout the year, and a slight shift in the mix of the Corporation's deposits. Average loans increased $225 million, or 12.7%, mostly due to acquisitions. Average interest-bearing deposits increased $123 million, or 6.0%, resulting from both the acquisitions and internal growth.

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NET INTEREST INCOME - CONTINUED
During 2001, the Federal Reserve Board's Open Market Committee lowered interest rates eleven times, thereby affecting the yields earned on loans and investment securities and the rates paid on deposits and other borrowings. During 2001, the Discount and Federal Funds rates were lowered 475 basis points. The prime rate declined from 9.50% on January 1, 2001 to 4.75% on December 31, 2001. The net effect of the increase in average interest-earning assets and the lower interest rate environment was to increase net interest margin. Net interest margin for 2001 was 4.38%, compared to 4.18% in 2000. Net interest spread also improved to 3.62% for 2001 from 3.32% for 2000. The Corporation is slightly interest liability sensitive, which means that the Corporation's interest-bearing liabilities (deposits and other borrowings) react more quickly to changes in interest rates than interest-earning assets. During 2001, rates paid on interest-bearing liabilities declined 57 basis points, while the yield on i nterest-earning assets declined only 27 basis points. Net interest income (FTE) in 2000 was $117.5 million, up $3.4 million, or 3.0%, over 1999 net interest income (FTE) of $114.1 million. The increase in net interest income during 2000 was primarily attributable to increases in average loans, interest-bearing and noninterest-bearing deposits and shareholders' equity. During 2000, average loans increased $153 million, or 9.4%, average interest-bearing deposits increased $59 million, or 3.0%, average noninterest-bearing deposits increased $17 million, or 4.7%, and average shareholders' equity increased $11 million, or 3.3%. During 2000, the average yield on interest-earning assets increased to 7.59% from 7.29% in 1999, while the average cost of interest-bearing liabilities in 2000 increased to 4.27% from 3.76% in 1999. The higher yield earned on interest-earning assets did not offset the increased rates paid on interest-bearing liabilities. The net effect was a reduction in net interest margin during 2000 to 4.18% from 4.27% in 1999. Table 3 allocates the dollar change in net interest income (FTE) between the portion attributable to changes in the average volume of interest-earning assets and interest-bearing liabilities, including changes in the mix of assets and liabilities, and changes in average interest rates earned and paid. During 2001, the increase in volume and change within the mix of interest-earning assets and interest-bearing liabilities resulted in a $9.9 million increase to net interest income (FTE) compared to $6.7 million in 2000. This increase was primarily attributable to the acquisitions in 2001. In addition, the rates paid on interest-bearing liabilities declined 57 basis points, while the yield on interest-earning assets declined only 27 basis points, which resulted in the $5.1 million increase to net interest income.	During 2000, the increase in volume and the change within the mix of interest-earning assets and interest-bearing liabilities resulted in a $6.7 million increase in net interest income (FTE); however, changes in interest rates earned on assets and paid on liabilities reduced net interest income (FTE) by $3.3 million. The increase due to changes in the volume and mix of interest-earning assets and interest-bearing liabilities was primarily attributable to increases in average loans, deposits and shareholders' equity. The decrease due to changes in interest rates was due to the fact that the rates paid on interest-bearing liabilities increased 51 basis points, while the yield earned on interest-earning assets increased only 30 basis points. L O A N S The Corporation's bank subsidiaries are full service community banks and, therefore, the acceptance and management of credit risk is an integral part of the Corporation's business. The Corporation maintains a conservative loan policy and strict credit underwriting standards. These standards include the granting of loans generally only within the Corporation's market areas. The Corporation's lending markets generally consist of small communities across the middle to southern and western sections of Michigan. The Corporation has no foreign loans or any loans to finance highly leveraged transactions. The Corporation's lending philosophy is implemented through strong administrative and reporting controls at the subsidiary bank level, with additional oversight at the holding company level. The Corporation maintains a centralized independent loan review function at the holding company level, which monitors asset quality at each of the Corporation's subsidiary banks. The Corporation experiences competition for commercial loans primarily from larger regional banks located both within and outside of the Corporation's market areas, and from other community banks located within the Corporation's lending markets. The Corporation's competition for residential real estate loans primarily includes community banks, larger regional banks, savings associations, credit unions and mortgage companies. The competition for residential real estate loans has increased over the last few years as mortgage lending companies have expanded their sales and marketing efforts. The Corporation experiences competition for consumer loans mostly from larger regional banks, community banks, local credit unions and finance companies. The Corporation's loan portfolio is generally diversified geographically, as well as along industry lines and, therefore, the Corporation believes that its loan portfolio is reasonably sheltered from material adverse local economic impact.
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TABLE 3. VOLUME AND RATE VARIANCE ANALYSIS* (In thousands)

	2001 Compared to 2000						2000 Compared to 1999
	Increase (decrease) due to changes in				Combined		Increase (decrease) due to changes in				Combined
	Average Volume		Average Yield/Rate		Increase (Decrease)		Average Volume		Average Yield/Rate		Increase (Decrease)
CHANGES IN INTEREST INCOME ON   INTEREST-EARNING ASSETS:
Loans	$18,575		$(4,185	)	$14,390		$12,703		$2,670		$15,373
Taxable investment securities	(1,592	)	(1,891	)	(3,483	)	(2,364	)	2,776		412
Non-taxable investment securities	(286	)	2		(284	)	79		(123	)	(44	)
Federal funds sold	178		(2,666	)	(2,488	)	1,926		1,179		3,105
Interest-bearing deposits with unaffiliated banks	494		(436	)	58		(589	)	233		(356	)
Total change in interest income on         interest-earning assets	17,369		(9,176	)	8,193		11,755		6,735		18,490
CHANGES IN INTEREST EXPENSE ON
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits	1,536		(4,304	)	(2,768	)	617		2,200		2,817
Savings deposits	804		(3,102	)	(2,298	)	(796	)	1,095		299
Time deposits	3,166		(4,076	)	(910	)	3,294		5,050		8,344
Federal Home Loan Bank borrowings	1,401		(642	)	759		1,309		587		1,896
Other borrowings-short term	545		(2,102	)	(1,557	)	656		1,083		1,739
Total change in interest expense on
interest-bearing liabilities	7,452		(14,226	)	(6,774	)	5,080		10,015		15,095
TOTAL INCREASE (DECREASE) IN
NET INTEREST INCOME (FTE)	$  9,917		$  5,050		$14,967		$  6,675		$(3,280	)	$  3,395

*Taxable equivalent basis using a federal income tax rate of 35%.
The changes in net interest income (FTE) due to both volume and rate have been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

TABLE 4. SUMMARY OF LOANS AND LOAN LOSS EXPERIENCE (Dollars in thousands)

	Years Ended December 31
	2001		2000		1999		1998		1997
Distribution of Loans:
Commercial and agricultural	$   332,055		$   287,971		$   289,108		$   401,827		$   351,034
Real estate construction	137,500		87,419		74,372		51,784		45,908
Real estate commercial	432,747		313,245		283,966		215,371		184,826
Real estate residential	769,272		776,545		691,830		537,441		625,353
Consumer	510,967		383,450		372,294		327,029		258,115
Total loans	$2,182,541		$1,848,630		$1,711,570		$1,533,452		$1,465,236
Summary of Changes in the Allowance for Loan Losses:
Allowance for loan losses at beginning of year	$26,883		$26,174		$25,954		$25,136		$23,501
Loans charged-off:
Commercial and agricultural	(544	)	(326	)	(260	)	(232	)	(493	)
Real estate construction	-		-		-		-		-
Real estate commercial	(55	)	(5	)	-		-		-
Real estate residential	(108	)	(155	)	(120	)	(67	)	(561	)
Consumer	(1,427	)	(1,024	)	(903	)	(1,040	)	(524	)
Total loan charge-offs	(2,134	)	(1,510	)	(1,283	)	(1,339	)	(1,578	)
Recoveries of loans previously charged off:
Commercial and agricultural	195		234		145		151		495
Real estate construction	-		-		-		-		-
Real estate commercial	10		10		10		10		10
Real estate residential	23		21		27		65		184
Consumer	251		367		358		367		192
Total loan recoveries	479		632		540		593		881
Net loan charge-offs	(1,655	)	(878	)	(743	)	(746	)	(697	)
Provision for loan losses	2,004		1,587		963		1,564		1,602
Allowance of banks/branches acquired	3,762		-		-		-		730
Allowance for loan losses at year-end	$30,994		$26,883		$26,174		$25,954		$25,136
Ratio of net charge-offs during the year
to average loans outstanding	.08	%	.05	%	.05	%	.05	%	.05	%
Ratio of allowance for loan losses at year-end
to total loans outstanding at year-end	1.42	%	1.45	%	1.53	%	1.69	%	1.72	%

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L O A N S - C O N T I N U E D

Total loans at December 31, 2001 were $2.18 billion, an increase of $334 million, or 18.1%, over total loans of $1.85 billion at December 31, 2000. The growth in the loan portfolio was mainly due to the purchases of four branches in July and Bank West Financial Corporation in September. The dollar amount of loans generated by the purchased entities at December 31, 2001 was $317 million. The numbers set forth in the following discussion include the loans generated by the purchased entities unless otherwise stated. The Corporation achieved an increase in all loan categories during 2001, except residential real estate, which decreased slightly from the prior year as customers took advantage of the lower interest rate environment to convert their shorter-term fixed rate home loans (balloon type loans) to long-term fixed rate loans that the Corporation generally sells in the secondary market. Commercial loans totaled $332 million at December 31, 2001, an increase of $44 million, or 15.3%, from total commercial loans at December 31, 2000 of $288 million. Commercial loans decreased $1.1 million, or .4%, for 2000 compared with 1999. Commercial loans represented 15.2%, 15.6% and 16.9% of total loans outstanding at December 31, 2001, 2000 and 1999, respectively. Real estate loans include real estate construction loans, commercial real estate loans and residential real estate loans. At December 31, 2001 and 2000, real estate loans totaled $1.34 billion and $1.18 billion, respectively. Real estate loans increased $.16 million, or 13.8%, in 2001. The Corporation achieved increases in the construction and commercial real estate loan categories, while experiencing a slight decrease in residential real estate loans during 2001 due to the change in customer preferences mentioned above. In 2000, the Corporation achieved an increase in all categories of real estate loans. Real estate loans as a percentage of total loans at December 31, 2001, 2000 and 1999 were 61.4%, 63.7% and 61.3%, respectively. Real estate construction loans are originated for both business and residential properties. These loans often convert to a real estate mortgage loan at the completion of the construction period. Real estate construction loans have increased slightly over the past three years as a percentage of total loans. At December 31, 2001, they represented 6.3% of the portfolio, compared to 4.8% and 4.3% of total loans at December 31, 2000 and 1999, respectively. Commercial real estate loans increased $120 million, or 38.1%, during 2001 to $433 million at December 31, 2001. A large portion of this increase was the direct result of acquisitions, which added $69.5 million. At December 31, 2001, 2000 and 1999, commercial real estate loans as a percentage of total loans were 19.9%, 16.9% and 16.6%, respectively.

Residential real estate loans decreased $7 million, or 0.9%, during 2001 to $769 million. At December 31, 2001, 2000 and 1999, residential real estate loans as a percentage of total loans were 35.2%, 42.0% and 40.4%, respectively. The Corporation's general practice is to sell residential real estate loan originations with maturities of fifteen years and longer in the secondary market. The Corporation sold $342 million of these long-term fixed-rate residential real estate loans during 2001. This compares with $59 million of residential real estate loans sold during 2000. The increase in loans sold was attributable to the lower overall interest rate environment that prevailed throughout 2001. At December 31, 2001, the Corporation was servicing $433 million of residential mortgage loans that had been originated by the Corporation in its market areas and subsequently sold in the secondary mortgage market. At December 31, 2000, the Corporation serviced for others approximately $291 million of residential mortgages. Consumer loans totaled $511 million at December 31, 2001, compared to $383 million at December 31, 2000 and $372 million at December 31, 1999. Consumer loans increased by $128 million, or 33.3%, during 2001 and by $11 million, or 3.0%, during 2000. The increase in 2001 was attributable to the purchases of four branches and BWFC and consumer loan promotions. These promotions were limited time offers of consumer loans at special interest rates to qualifying borrowers. The loan promotions generated new consumer loans of $92 million and $49 million during 2001 and 2000, respectively. The Corporation generally utilizes loan promotions to generate new consumer loans each year. Consumer loans represented 23.4%, 20.7% and 21.8% of total loans outstanding at December 31, 2001, 2000 and 1999, respectively. Table 5 presents the maturity distribution of commercial and agricultural loans, real estate construction and real estate commercial loans. These loans represented approximately 41.3% of total loans at December 31, 2001 and 37.3% of total loans at December 31, 2000. The percentage of these loans maturing within one year was 35% at December 31, 2001, compared with 42% at December 31, 2000. The percentage of these loans maturing beyond five years remained low at 7% at December 31, 2001, compared to 9% at December 31, 2000. Of those loans with maturities beyond one year, the percentage of loans with variable interest rates was 4% at December 31, 2001, compared to 14% at December 31, 2000, as customers continued to convert to fixed interest rate loans during 2001.

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TABLE 5. COMPARISON OF LOAN MATURITIES AND INTEREST SENSITIVITY (Dollars in thousands)

	December 31, 2001 Due In								December 31, 2000 Due In
	1 Year or Less		1 to 5 Years		Over 5 Years		Total		1 Year or Less		1 to 5 Years		Over 5 Years		Total
Loan Maturities:
Commercial and agricultural	$167,664		$150,478		$13,913		$332,055		$155,367		$105,100		$27,504		$287,971
Real estate construction	77,150		51,745		8,605		137,500		44,222		32,854		10,343		87,419
Real estate commercial	73,784		323,923		35,040		432,747		90,604		201,169		21,472		313,245
Total	$318,598		$526,146		$57,558		$902,302		$290,193		$339,123		$59,319		$688,635
Percent of Total	35	%	58	%	7	%	100	%	42	%	49	%	9	%	100	%
					December 31, 2001						December 31, 2000
Interest Sensitivity:
Above loans maturing after one year   which have:
Fixed interest rates					$561,973		96	%			$341,087		86	%
Variable interest rates					21,731		4				57,355		14
Total					$583,704		100	%			$398,442		100	%

The continued low percentage of loans maturing within one year is due to the growth in both commercial loans secured by business equipment and real estate commercial loans. Commercial loans secured by business equipment generally have fixed terms of up to five years, while real estate commercial loans are generally written as balloon mortgages at fixed interest rates for balloon time periods ranging from three to eight years. NONPERFORMING ASSETS A five-year history of nonperforming assets is presented in Table 6. Nonperforming assets are comprised of loans accounted for on a nonaccrual basis, accruing loans contractually past due 90 days or more as to interest or principal payments, other loans whose terms have been restructured to provide for a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower and repossessed assets and other real estate. The Corporation's practice is to immediately charge to the allowance for loan losses specifically identified credit losses. This determination is made for each loan at the time of transfer to nonperforming status, after giving consideration to collateral value and the borrower's ability to repay the loan principal. Nonaccrual loans were $6.90 million at December 31, 2001, compared to $7.27 million at December 31, 2000 and $3.08 million at December 31, 1999. Nonaccrual loans as a percentage of total loans were .32% at December 31, 2001, .39% at December 31, 2000 and .18% at December 31, 1999. Accruing loans past due 90 days or more were $6.18 million at December 31, 2001, compared to $1.41 million at December 31, 2000 and $1.21 million at December 31, 1999. The $4.77 million increase in these loans during 2001 was primarily attributable to the addition of three commercial loans. There were no restructured loans at December 31, 2001. Restructured loans were $.02 million at December 31, 2000 and $.82 million at December 31, 1999. Total nonperforming loans were $13.08 million, or .60% of total loans, at December 31, 2001, compared to $8.69 million, or .47% of total loans, at December 31, 2000 and $5.11 million, or .30% of total loans, at December 31, 1999. The level and composition of nonperforming loans are affected by economic conditions in the Corporation's local markets.

TABLE 6. NONPERFORMING ASSETS (Dollars in thousands)

	December 31
	2001		2000		1999		1998		1997
Nonaccrual loans*	$  6,897		$7,268		$3,078		$2,865		$3,084
Accruing loans contractually past due 90 days or
more as to interest or principal payments	6,181		1,406		1,207		1,743		1,993
Restructured loans	-		17		821		-		139
Total nonperforming loans	13,078		8,691		5,106		4,608		5,216
Repossessed assets and other real estate	728		831		328		707		550
Total nonperforming assets	$13,806		$9,522		$5,434		$5,315		$5,766
Nonperforming loans as a percent of total loans	.60	%	.47	%	.30	%	.30	%	.36	%
Nonperforming assets as a percent of total assets	.40	%	.31	%	.19	%	.19	%	.22	%

*	Interest income totaling $165,000 was recorded on the nonaccrual loans in 2001. Additional interest income of $790,000 would have been recorded during 2001 on these loans had they been current in accordance with their original terms.
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TABLE 7. ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES (Dollars in thousands)

	December 31
	2001		2000		1999		1998		1997
Loan Type	Allowance Amount	Percent of Loans in Each Category to Total Loans	Allowance Amount	Percent of Loans in Each Category to Total Loans	Allowance Amount	Percent of Loans in Each Category to Total Loans	Allowance Amount	Percent of Loans in Each Category to Total Loans	Allowance Amount	Percent of Loans in Each Category to Total Loans
Commercial  and  agricultural	$  9,562	15.2%	$  9,320	15.6%	$  8,423	16.9%	$  6,819	26.2%	$  6,369	23.9%
Real estate  construction	1,031	6.3	769	4.8	585	4.3	736	3.3	753	3.1
Real estate  commercial	5,817	19.9	3,381	16.9	3,047	16.6	2,564	14.1	2,673	12.7
Real estate  residential	4,026	35.2	4,882	42.0	4,511	40.4	4,263	35.1	4,641	42.7
Consumer	6,827	23.4	6,196	20.7	7,056	21.8	6,155	21.3	5,746	17.6
Not allocated	3,731		2,335		2,552		5,417		4,954
Total	$30,994	100%	$26,883	100%	$26,174	100%	$25,954	100%	$25,136	100%

NONPERFORMING ASSETS - CONTINUED

The Corporation's policy and related disclosures for impaired loans is as follows. A loan is considered impaired when management determines it is probable that all of the principal and interest due under the contractual terms of the loan will not be collected. In most instances, impairment is measured based on the fair value of the underlying collateral. Impairment may also be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate. Impairment losses are included in the provision for loan losses. The Corporation measures impairment on all nonaccrual commercial and real estate commercial loans. Consequently, all commercial and real estate commercial loans identified as impaired are included in the nonaccrual loan category. At December 31, 2001, the Corporation held four loans that were considered impaired totaling $4.2 million, of which three loans totaling $4.0 million had an impairment allowance of $1.1 million. At December 31, 2000, the Corporation held one impaired loan with a balance of $4.7 million, with an impairment allowance of $1.2 million. At December 31, 1999, the Corporation held three loans that were considered impaired totaling $7.7 million, of which two loans totaling $7.3 million had an impairment allowance of $1.1 million. PROVISION AND ALLOWANCE FOR LOAN LOSSES The provision for loan losses ("provision") is the amount added to the allowance for loan losses ("allowance") to absorb loan losses ("charge-offs") in the loan portfolio. The allowance is maintained at a level considered by management to be adequate to absorb loan losses inherent in the loan portfolio. Management continuously evaluates the allowance to ensure the level is adequate to absorb losses inherent in the loan portfolio. This evaluation is based on a continuous review of the loan portfolio, both individually and by category, and includes

consideration of changes in the mix and volume of the loan portfolio, actual loan loss experience, the financial condition of the borrowers, industry and geographical exposures within the portfolio, economic conditions and employment levels of the Corporation's local markets, and special factors affecting business sectors. A formal evaluation of the allowance is prepared quarterly to assess the risk in the loan portfolio and to determine the adequacy of the allowance. The Corporation's loan review personnel, who are independent of the loan origination function, review this evaluation. The allowance provides for probable losses that have been identified with specific customer relationships and for probable losses believed to be inherent in the remainder of the loan portfolio but that have not been specifically identified. The allowance for loan losses is comprised of specific allowances (assessed for loans that have known credit weaknesses), general allowances based on assigned risk ratings and an unallocated allowance for imprecision in the subjective nature of the specific and general allowance methodology. The Corporation's loan review personnel perform a detailed credit quality review quarterly on large commercial loans which have deteriorated below certain levels of credit risk. A specific portion of the allowance may be allocated to such loans based upon this review. Factors contributing to the determination of specific reserves include the financial condition of the borrower, changes in the value of pledged collateral and general economic conditions. The Corporation establishes the general allowance by the application of projected risk percentages to graded commercial and real estate commercial loans by grade categories. In addition, a portion of the general allowance is allocated to all other loans by loan category, based on a defined methodology which has been in use without material change, for several years. Allocations to loan categories are developed based on historical loss and past due trends, management's

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judgment concerning those trends and other relevant factors, including delinquency, default, and loss rates, as well as general economic conditions.

The underlying credit quality of the Corporation's residential real estate and consumer loan portfolios is dependent primarily on each borrower's ability to continue to make required loan payments and, in the event a borrower is unable to continue to do so, the value of the collateral, if any, securing the loan. A borrower's ability to pay typically is dependent primarily on employment and other sources of income, which in turn is impacted by general economic conditions, although other factors may also impact a borrower's ability to pay. The evaluation of the appropriate level of the unallocated allowance considers current risk factors that may not be reflected in historical factors used to determine the specific and general allowances. These factors include the volatility of economic conditions. The unallocated reserve is judgmentally determined and generally serves to compensate for the uncertainty in estimating losses, particularly in times of changing economic conditions, and considers the possibility of improper risk ratings and possible over or under-allocation of specific reserves. The unallocated reserve also considers the lagging impact of historical charge-off ratios in periods where future charge-offs are expected to increase or decrease significantly. In addition, the unallocated reserve considers trends in delinquencies and nonaccrual loans, the changing portfolio mix in terms of collateral, average loan balance, loan growth, the degree of seasoning in the various loan portfolios and loans recently acquired through mergers and acquisitions.

The provision was $2.0 million in 2001, $1.6 million in 2000, and $1.0 million in 1999. The Corporation experienced net loan charge-offs of $1.66 million in 2001, $.88 million in 2000 and $.74 million in 1999. The Corporation's allowance was $31 million at December 31, 2001 and represented 1.42% of total loans, compared to 1.45% at December 31, 2000 and 1.53% at December 31, 1999.

The allocation of the allowance in Table 7 is based upon ranges of estimates and is not intended to imply either limitations on the usage of the allowance or exactness of the specific amounts. The entire allowance is available to absorb any future loan charge-offs without regard to the categories in which the loan losses are classified. During 2001, there were no significant changes in loan quality or mix. Accordingly, the allocation of the allowance was consistent on a percentage basis with prior years.

NONINTEREST INCOME

Noninterest income totaled $31.9 million in 2001, $25.5 million in 2000 and $24.2 million in 1999. Noninterest income increased $6.4 million, or 25.0%, in 2001 and $1.3 million, or 5.2%, in 2000 over the prior year. Noninterest income as a percentage of net revenue was 19.4% in 2001, compared to 17.8% in 2000.

The following schedule includes the major components of noninterest income during the past three years.

Noninterest Income (In thousands)

	Years Ended December 31
	2001	2000		1999
Service charges on deposit accounts	$10,838	$10,133		$  8,600
Trust services revenue	6,544	6,865		6,236
Other fees for customer services	2,291	2,437		2,318
ATM network user fees	2,458	2,184		1,987
Investment fees and insurance   commissions	2,198	1,715		1,571
Mortgage loan sales and   servicing income	6,370	1,704		2,275
Investment securities gains (losses)	530	(58	)	320
Other	644	515		913
Total Noninterest Income	$31,873	$25,495		$24,220

The Corporation realized increases in six categories of noninterest income, with the increase in mortgage banking revenue accounting for the majority of the increase. Mortgage banking revenue was up $4.7 million, or 274%, to $6.4 million, as customers took advantage of the lower interest rate environment on long-term fixed rate mortgages to either refinance their existing mortgages or purchase new homes.

The Corporation generally sells the majority of its long-term fixed interest rate residential real estate loan originations in the secondary mortgage market, as part of its interest rate risk management strategy. During 2001, the Corporation sold $342 million of residential real estate loans in the secondary market, compared to $59 million in 2000. The increase in sold loans in 2001 was mainly due to the declining interest rate environment. During 2001, the prime interest rate declined from 9.50% on January 1, 2001 to 4.75% on December 31, 2001. In comparison, the higher mortgage rates of 2000 prompted customers to select balloon mortgage products, which mature in three to eight year increments as selected by the customer. As balloon mortgages are generally not sold in the secondary market, mortgage loan sales and servicing income was significantly lower in 2000.

Noninterest income from service charges on deposit accounts was $10.8 million in 2001, $10.1 million in 2000 and $8.6 million in 1999. The increases of $.7 million, or 7.0%, in 2001 and $1.5 million, or 17.8%, in 2000 were primarily attributable to increases in fees assessed for services provided.

Trust services revenue was $6.5 million in 2001, $6.9 million in 2000 and $6.2 million in 1999. Trust revenue decreased $.4 million, or 4.7%, in 2001, as the slowing economy impacted the assets under management valuations, on which the calculations of management fees are based. The increase in 2000 reflects an expanded customer base and growth in assets under management.

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NONINTEREST INCOME - CONTINUED

Noninterest income from all other sources, which includes other fees for customer services, ATM network user fees, investment fees and insurance commissions, net investment securities gains and losses and other was $8.1 million in 2001, $6.8 million in 2000 and $7.1 million in 1999. The increase of $1.3 million, or 19.5%, in 2001 was primarily attributable to both an increase in the fees assessed and an increase in the volume of services provided.

OPERATING EXPENSES

Total operating expenses were $94.6 million in 2001, $78.3 million in 2000, and $74.5 million in 1999.

The following schedule includes the major categories of operating expenses during the past three years.

Operating Expenses (Dollars in thousands)

	Years Ended December 31
	2001		2000		1999
Salaries	$38,956		$36,156		$34,838
Employee benefits	9,302		9,316		8,371
Occupancy	6,898		6,414		6,184
Equipment	7,722		6,405		5,744
Postage and courier	2,154		2,034		1,960
Stationery and supplies	1,800		1,846		1,953
Professional fees	3,886		3,995		3,460
Michigan single business tax	2,036		1,425		1,693
Advertising, marketing, and   public relations	1,865		1,522		1,919
Intangible asset amortization	3,325		2,162		1,939
Telephone	1,718		1,562		1,424
Merger and restructuring expenses	9,167		-		-
Federal Deposit Insurance   Corporation (FDIC) premiums	485		493		310
Other	5,283		4,964		4,751
Total Operating Expenses	$94,597		$78,294		$74,546
Full-time equivalent staff   (at December 31)	1,427		1,278		1,311
Efficiency ratio(1)	52	%	55	%	54	%

(1) Total operating expenses, excluding merger and restructuring expenses of $9.2 million in 2001, divided by the sum of net interest income (FTE) and noninterest income.

The Corporation's efficiency ratio, defined as total operating expenses, excluding merger and restructuring expenses of $9.2 million in 2001, divided by the sum of net interest income (FTE) and noninterest income, was 52% in 2001, 55% in 2000 and 54% in 1999. The Corporation's efficiency ratio ranked favorably when compared to its Federal Reserve Bank peer group for each of the past three years.

Total operating expense as a percentage of total average assets was 2.94% in 2001, compared to 2.61% in 2000. Excluding the $9.2 million of merger and restructuring expenses, total operating expense as a percentage of total average assets was 2.65% in 2001.

Salaries, wages and employee benefits remain the largest component of operating expenses. These expenses totaled $48.3 million in 2001, $45.5 million in 2000 and $43.2 million in 1999. The 6.1% increase in total personnel costs for 2001 over 2000 was due in part to the staff added as a result of the purchase of four branches in July and the purchase of BWFC in September. Personnel expenses as a percentage of total operating expenses were 51.0% in 2001 (56.5%, excluding the $9.2 million of merger and restructuring expenses from total operating expenses), 58.1% in 2000 and 58.0% in 1999.

Occupancy and equipment expenses totaled $14.6 million in 2001, $12.8 million in 2000 and $11.9 million in 1999. The increase in occupancy and equipment expenses of $1.8 million, or 14.0%, was primarily due to increased costs associated with the branch and bank purchases made during 2001.

Other categories of operating expenses include a wide array of expenses, including postage, supplies, professional fees, Michigan single business tax, advertising and marketing expenses, intangible asset amortization, telephone costs, FDIC premiums and miscellaneous other expenses. These other operating expenses, excluding the $9.2 million of merger and restructuring expenses, were $22.5 million in 2001, $20.0 million in 2000 and $19.4 million in 1999. The increase in these expenses in 2001 was partially attributable to increased costs due to the branch and bank purchases.

INCOME TAXES

The Corporation's effective federal income tax rate was 34.6% in 2001, 32.6% in 2000 and 32.8% in 1999. The changes in the Corporation's effective federal income tax rate reflect the changes each year in the proportion of interest income exempt from federal taxation, nondeductible interest expense and other nondeductible expenses relative to pretax income. The increase in the effective rate in 2001, as compared to 2000, was primarily due to the nondeductible portion of the $9.2 million of merger and restructuring expense incurred during 2001.

Tax-exempt income (FTE), net of related nondeductible interest expense, totaled $7.4 million for 2001 and $8.1 million for 2000 and 1999. Tax-exempt income (FTE) as a percentage of total interest income (FTE) was 3.3%, 3.8% and 3.9% in 2001, 2000 and 1999, respectively.

Income before income taxes (FTE) was $67.75 million in 2001, $63.13 million in 2000 and $62.83 million in 1999.

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TABLE 8. MATURITIES AND YIELDS* OF INVESTMENT SECURITIES AT DECEMBER 31, 2001 (Dollars in thousands)

	Maturity**
	Within One Year			After One but Within Five Years			After Five but Within Ten Years
	Amount	Yield		Amount	Yield		Amount	Yield
Available for Sale:
U.S. Treasury and agencies	$145,106	6.25	%	$392,709	4.90	%	$  4,090	6.77	%
States of the U.S. and
political subdivisions	260	4.61		9,589	6.01		7,770	5.44
Mortgage-backed securities	-	-		16,093	5.26		9,881	5.95
Other debt securities	4,559	5.06		46,859	5.90		-	-
Equity securities	-	-		-	-		-	-
Total Investment Securities
Available for Sale	149,925	6.21		465,250	5.03		21,741	5.92
Held to Maturity:
U.S. Treasury and agencies	67,271	6.36		58,189	4.78		-	-
States of the U.S. and
political subdivisions	6,638	6.57		21,084	7.23		12,269	8.37
Mortgage-backed securities	8	6.75		247	8.26		980	8.97
Other debt securities	5,978	7.17		12,212	7.07		2,054	7.25
Total Investment Securities
Held to Maturity	79,895	6.44		91,732	5.66		15,303	8.26
Total Investment Securities	$229,820	6.29	%	$556,982	5.14	%	$37,044	6.89	%

	After Ten Years			Total Carrying Value			Total Market Value
	Amount	Yield		Amount	Yield
Available for Sale:
U.S. Treasury and agencies	-	-		$541,905	5.27	%	$541,905
States of the U.S. and
political subdivisions	$    5,692	5.40	%	23,311	5.66		23,311
Mortgage-backed securities	71,181	6.09		97,155	5.94		97,155
Other debt securities	-	-		51,418	5.83		51,418
Equity securities	17,594	5.71		17,594	5.71		17,594
Total Investment Securities
Available for Sale	94,467	5.98		731,383	5.42		731,383
Held to Maturity:
U.S. Treasury and agencies	-	-		125,460	5.63		128,375
States of the U.S. and
political subdivisions	2,888	7.84		42,879	7.49		43,921
Mortgage-backed securities	9,939	7.55		11,174	7.69		11,763
Other debt securities	1,135	7.25		21,379	7.12		22,153
Total Investment Securities
Held to Maturity	13,962	7.59		200,892	6.30		206,212
Total Investment Securities	$108,429	6.19	%	$932,275	5.61	%	$937,595

*Yields are weighted by amount and time to contractual maturity, are on a taxable equivalent basis using a 35% federal income tax rate and are based on amortized cost.
**Based on final contractual maturity.

LIQUIDITY AND INTEREST SENSITIVITY
The Corporation manages its liquidity to ensure that it has the ability to meet the cash withdrawal needs of its depositors, provide funds for borrowers and at the same time ensure that the Corporation's own cash requirements are met. The Corporation accomplishes these goals through the management of liquidity at two levels - the parent company and the bank subsidiaries. During the three-year period ended December 31, 2001, the parent company's primary source of funds was subsidiary dividends. The parent company manages its liquidity position to provide the cash necessary to pay dividends to shareholders, invest in subsidiaries, enter new banking markets, pursue investment opportunities and satisfy other operating requirements. Federal and state banking laws place certain restrictions on the amount of dividends that a bank may pay to its parent company. Such restrictions have not had, and are not expected to have, any material effect on the Corporation's ability to meet its cash obligations or impede its ability to manage its liquidity needs. As of January 1, 2002, the Corporation's bank subsidiaries could pay dividends totaling $36.4 million to the parent company and remain "well capitalized" under the regulatory "risk-based" capital guidelines, without obtaining regulatory approval. In addition to the funds available from subsidiaries, the parent company had $37.8 million in invested cash at December 31, 2001.	The subsidiary banks manage liquidity to ensure adequate funds are available to meet the cash flow needs of depositors and borrowers. The subsidiary banks' most readily available sources of liquidity are federal funds sold, investment securities classified as available for sale and investment securities classified as held to maturity maturing within one year. These sources of liquidity are supplemented by new deposits and by loan payments received from customers. At December 31, 2001, the Corporation held $86.8 million in federal funds sold, $731.4 million in investment securities available for sale and $79.9 million in other investment securities maturing within one year. These short-term assets represented approximately 32.2% of total deposits at December 31, 2001. The Corporation's investment portfolio has historically been composed primarily of U.S. Treasury and Agency securities, comprising 72%, 72% and 77% of the investment portfolio at December 31, 2001, 2000 and 1999, respectively. The Corporation's investment securities portfolio historically has been very short-term in nature. At December 31, 2001, $229.8 million, or 24.7%, of the Corporation's investment securities portfolio will mature during 2002, and another $207.7 million, or 22.2%, of the investment securities portfolio will mature during 2003. The combination of the 2002 and 2003 scheduled maturities results in 46.9% of the Corporation's investment securities portfolio maturing within two years as of December 31, 2001. Information about the Corporation's investment securities portfolio is summarized in Tables 8, 9 and 10.
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TABLE 9. SUMMARY OF INVESTMENT SECURITIES (In thousands)

	December 31
	2001	2000	1999
Available for Sale:
U.S. Treasury and agencies	$541,905	$476,915	$484,338
States of the U.S. and
political subdivisions	23,311	21,849	20,455
Mortgage-backed securities	97,155	97,874	86,788
Other debt securities	51,418	32,413	27,528
Equity securities	17,594	12,422	10,802
Total Available for Sale	731,383	641,473	629,911
Held to Maturity:
U.S. Treasury and agencies	125,460	152,519	201,279
States of the U.S. and
political subdivisions	42,879	46,509	43,157
Mortgage-backed securities	11,174	15,352	11,690
Other debt securities	21,379	19,629	5,003
Total Held to Maturity	200,892	234,009	261,129
Total Investment Securities	$932,275	$875,482	$891,040

TABLE 10. MATURITY ANALYSIS OF INVESTMENT SECURITIES
(as a % of total portfolio)

	December 31
	2001		2000		1999
Maturity:
Under 1 year	24.7	%	23.9	%	37.6	%
1-5 years	59.7		54.8		43.2
5-10 years	4.0		10.0		9.7
Over 10 years	11.6		11.3		9.5
Total	100	%	100	%	100	%

LIQUIDITY AND INTEREST SENSITIVITY - CONTINUED

Table 11 presents the maturity distribution of time deposits of $100,000 or more at the end of each of the last three years. Time deposits of $100,000 or more and the percentage of these deposits to total deposits have remained relatively stable during the past three years. These deposits decreased slightly during 2001 to $208.6 million at December 31, 2001, from $216.0 million at December 31, 2000. These deposits represented 7.5%, 8.8% and 8.6% of total deposits at December 31, 2001, 2000 and 1999, respectively. The percentage of time deposits of $100,000 or more with a maturity of less than three months was 46% at December 31, 2001, 59% at December 31, 2000 and 52% at December 31, 1999. The decrease in short-term time deposits and the increase in those maturing after 12 months was partially attributable to brokered deposits acquired through the acquisition of BWFC. BWFC utilized brokered time deposits for funding purposes. The Corporation has not historically utilized these deposits as a source of liqui dity, and therefore it is able to invest the funds generated from these deposits in investments of similar maturity.

The management of net interest income must address two objectives. It must consider the liquidity needs of the Corporation and interest rate risk. One of the Corporation's market risk exposures is interest rate risk. Interest rate risk is the exposure to adverse changes in net interest income due to changes in interest rates. Consistency of the Corporation's net interest income is largely dependent upon the effective management of interest rate risk. Interest rate risk arises in the normal course of the Corporation's business due to differences in the repricing and maturity characteristics of interest rate sensitive assets and liabilities. Sensitivity of earnings to interest rate changes arises when yields on assets change differently from the interest costs on liabilities.

Interest rate sensitivity is determined by the amount of interest-earning assets and interest-bearing liabilities repricing within a specific time period and the magnitude by which interest rates change on the various types of interest-earning assets and interest-bearing liabilities. The management of interest rate sensitivity includes monitoring the maturities and repricing opportunities of interest-earning assets and interest-bearing liabilities. Interest rate sensitivity management aims at achieving reasonable stability in both net interest income and the net interest margin through periods of changing interest rates. The Corporation's goal is to avoid a significant decrease in net interest income and thus an adverse impact on the profitability of the Corporation in periods of changing interest rates. It is necessary to analyze projections of net interest income based upon the repricing characteristics of the Corporation's interest-earning assets and interest-bearing liabilities and the varying magnitu de by which interest rates may change on loans, investment securities and interest-bearing deposit accounts. The Corporation's interest rate sensitivity is managed through policies and risk limits approved by the boards of directors of the Corporation and its subsidiary banks, and an Asset and Liability Committee (ALCO). The ALCO, which is comprised of executive management from various areas of the Corporation, including finance, lending, investments and deposit gathering, meets regularly to execute asset and liability management strategies. The ALCO establishes and monitors guidelines on the sensitivity of earnings to changes in interest rates. The goal of the ALCO process is to maintain the Corporation's interest rate risk at prudent levels to provide the maximum level of net interest income and minimal impact on earnings from major interest rate changes. The Corporation has not used interest rate swaps or other derivative financial instruments in the management of interest rate risk, other than mandatory forward commitments utilized to partially offset the interest rate risk of interest rate lock commitments on unfunded residential mortgage loans. The Corporation did not have a trading portfolio as of December 31, 2001.

The primary technique utilized by the Corporation to measure its interest rate risk is simulation analysis. Simulation analysis forecasts the effects on the balance sheet structure and net interest income under a variety of scenarios that incorporate changes in interest rates, changes in the shape of the Treasury yield curve, changes in interest rate relationships, changes in asset and liability mix and loan prepayments.

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TABLE 11. MATURITY DISTRIBUTION OF TIME DEPOSITS OF $100,000 OR MORE (Dollars in thousands)

	December 31
	2001			2000			1999
	Amount	Percent		Amount	Percent		Amount	Percent
Maturity:
Within 3 months	$  96,319	46	%	$128,343	59	%	$106,659	52	%
After 3 but within 6 months	32,726	16		47,637	22		42,937	21
After 6 but within 12 months	32,971	16		27,008	13		32,312	16
After 12 months	46,546	22		13,056	6		21,519	11
Total	$208,562	100	%	$216,044	100	%	$203,427	100	%

These forecasts are compared against net interest income projected in a stable interest rate environment. While many assets and liabilities reprice either at maturity or in accordance with their contractual terms, several balance sheet components demonstrate characteristics that require an evaluation to more accurately reflect their repricing behavior. Key assumptions in the simulation analysis include prepayments on loans, changes in market conditions, loan volumes and loan pricing, deposit sensitivity, and customer preferences. These assumptions are inherently uncertain, subject to fluctuation and revision in a dynamic environment. As a result, the simulation analysis cannot precisely forecast the impact of rising and falling interest rates on net interest income. Actual results will differ from simulated results due to many factors such as changes in balance sheet components, interest rate changes, changes in market conditions and management strategies.

Management performed various simulation analyses throughout 2001. The Corporation's interest rate sensitivity is estimated by first forecasting the next twelve months of net interest income under an assumed environment of constant market interest rates. The Corporation then compares various simulation analysis results to the constant interest rate forecast. As of December 31, 2001 and 2000, the Corporation projected the change in net interest income during the next twelve months assuming all market interest rates were to uniformly and gradually increase or decrease by up to 200 basis points over the same time period. These projections were based on the Corporation's assets and liabilities remaining static over the next twelve months, while factoring in residential mortgage loan and certain consumer loan prepayments. Mortgage loan prepayment assumptions were developed from industry averages of prepayment speeds, adjusted for the historical prepayment performance of the Corporation's own loans. The Corporat ion's forecasted net interest income sensitivity is monitored by the ALCO within established limits as defined in the interest rate risk limit policy. Throughout 2001, the forecasted interest rate risk exposure was within the Corporation's established policy limits.

Summary information about the interest rate risk measures, as described above, at December 31, 2001 and December 31, 2000 is presented below:

Year-End 2001 Twelve Month Projection

Interest Rate Change   Projection (in basis points)	- -200	- -100	0	+100	+200
Percent change in net   interest income vs.   constant rates	4.8%	2.5%	- -	(1.7)%	(2.9)%
Year-End 2000 Twelve Month Projection
Interest Rate Change   Projection (in basis points)	- -200	- -100	0	+100	+200
Percent change in net   interest income vs.   constant rates	2.7%	1.3%	- -	(1.3)%	(2.4)%

In the normal course of its mortgage loan origination activity, the Corporation issues mortgage commitments with an interest rate lock. The Corporation limits its interest rate risk on the unfunded mortgage commitments through the use of mandatory forward commitments to sell these loans.

The Corporation's exposure to market risk for these unfunded commitments and related mandatory forward derivative instruments is not significant. The impact on net income for the year ended December 31, 2001 for these derivative instruments was not material.

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CAPITAL

Capital provides the foundation for future growth and expansion. Shareholders' equity was $389.5 million at December 31, 2001, an increase of $31.5 million, or 8.8%, from total shareholders' equity at December 31, 2000. The increase in 2001 was derived primarily from earnings retention of $22.1 million and a positive change in the unrealized gain, net of taxes, on investment securities available for sale of $8.4 million.

The ratio of shareholders' equity to total assets was 11.2% at December 31, 2001, compared to 11.7% at December 31, 2000 and 11.3% at December 31, 1999. The Corporation's tangible equity ratio was 10.1%, 11.1% and 10.7% at December 31, 2001, 2000 and 1999, respectively. The slight decline in these ratios during 2001 was due to the branch and bank purchases.

Under the regulatory "risk-based" capital guidelines in effect for both banks and bank holding companies, minimum capital levels are based upon perceived risk in the Corporation's various asset categories. These guidelines assign risk weights to on- and off-balance sheet items in arriving at total risk-adjusted assets. Regulatory capital is divided by the computed total of risk-adjusted assets to arrive at the risk-based capital ratios.

The Corporation's capital ratios exceeded the minimum levels prescribed by the Federal Reserve Board at December 31, 2001, as shown in the following table.

	Leverage	Risk-Based Capital Ratios
	Ratio	Tier 1	Total
Chemical Financial     Corporation's capital ratios	10%	16%	17%
Regulatory capital ratios -     "well capitalized" definition	5	6	10
Regulatory capital ratios -     minimum requirements	3	4	8

The Corporation's Tier 1 and Total regulatory capital ratios are significantly above the regulatory minimum and "well capitalized" levels due to the Corporation holding $326 million of investment securities and other assets which are assigned a 0% risk rating, $790 million of investment securities and other assets which are assigned a 20% risk rating, and $888 million of loans secured by first liens on residential real estate properties and other assets which are assigned a 50% risk rating. These three categories of assets represented 57% of the Corporation's total assets at December 31, 2001.

At December 31, 2001, all of the Corporation's bank subsidiaries exceeded the minimum capital ratios required of a "well-capitalized" institution, as defined by the Federal Deposit Insurance Corporation Improvement Act of 1991.

OUTLOOK

The Corporation's philosophy is that it intends to be a "family" of community banks, which operate under the direction of a Corporate board of directors, a holding company management team, and regional bank and community advisory boards of directors. The Corporation is committed to the community banking philosophy. The consolidation of its subsidiary banks into three during 2001 did not change the Corporation's strategy of operating with local decision makers who are community minded. The Corporation remains committed to the communities it serves. Community bank advisory boards of directors have been established in the eleven communities where the legal bank charter was merged into a regional subsidiary bank. The purpose of these internal consolidations was to provide the Corporation with operating efficiencies.

The Corporation strives to remain a quality sales and service organization and is dedicated to sustained profitability through the preservation of the community banking concept in an ever-changing and increasingly competitive environment.

The Corporation believes it has designed its policies regarding asset/liability management, liquidity, lending, investment strategy and expense control to provide for the safety and soundness of the organization, continued earnings growth and the avoidance of wide fluctuations in earnings from one year to the next. This strategy resulted in an increase in net operating income per share of 22.1% over the prior year and a return on assets (based on net operating income) of 1.55% during 2001.

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REGULATORY MATTERS

OTHER MATTERS

The Gramm-Leach-Bliley Act of 1999 ("Act") eliminated many Federal and state law barriers to affiliations among banks, securities firms, insurance companies, and other financial service providers. Companies engaged primarily in insurance activities or securities activities are permitted to acquire banks and bank holding companies such as the Corporation and vice versa. The Act provides for a more efficient means for financial institutions to offer products and services by creating a "financial holding company," or "FHC." Banks, securities firms, and insurance companies can affiliate within the FHC structure to offer a broad range of financial products and services. The Corporation became an FHC during 2000. The legislation is expected, in time, to alter the competitive landscape of the product markets served by the Corporation and may, in the future, also increase the Corporation's competition to include larger, more diversified financial companies. The Act requires financial institutions to annually disclose their privacy policy to all customers and provides protections to customers against the transfer and use of nonpublic personal information by financial institutions.

This discussion and analysis of financial condition and results of operations, and other sections of this Annual Report, contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about the Corporation itself. Words such as "anticipates," "believes," "estimates," "judgment," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, certain statements under the captions "Liquidity and Interest Sensitivity" and "Regulatory Matters" are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outco mes may materially differ from what may be expressed or forecasted in such forward-looking statements. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise. Risk factors include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations including implementation of the Act and its effects; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances and issues; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national economy and the local and global effects of the terrorist acts of September 11, 2001 and the ongoing war on terrorism. These are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

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CONSOLIDATED STATEMENTS OF INCOME

	Years Ended December 31
	2001	2000	1999
	(In thousands, except per share data)
INTEREST INCOME
Interest and fees on loans	$161,422	$146,910	$131,596
Interest on investment securities:
Taxable	49,184	52,667	52,255
Tax-exempt	3,359	3,572	3,548
Total interest on securities	52,543	56,239	55,803
Interest on federal funds sold	4,604	7,092	3,987
Interest on deposits with unaffiliated banks	681	623	979
TOTAL INTEREST INCOME	219,250	210,864	192,365
INTEREST EXPENSE
Interest on deposits	79,227	85,203	73,743
Interest on Federal Home Loan Bank borrowings	7,285	6,526	4,630
Interest on other borrowings - short term	2,670	4,227	2,488
TOTAL INTEREST EXPENSE	89,182	95,956	80,861
NET INTEREST INCOME	130,068	114,908	111,504
Provision for loan losses	2,004	1,587	963
NET INTEREST INCOME after provision for loan losses	128,064	113,321	110,541
NONINTEREST INCOME
Service charges on deposit accounts	10,838	10,133	8,600
Trust services revenue	6,544	6,865	6,236
Other charges and fees for customer services	6,947	6,336	5,876
Mortgage banking revenue	6,370	1,704	2,275
Other	1,174	457	1,233
TOTAL NONINTEREST INCOME	31,873	25,495	24,220
OPERATING EXPENSES
Salaries, wages and employee benefits	48,258	45,472	43,209
Occupancy	6,898	6,414	6,184
Equipment	7,722	6,405	5,744
Merger and restructuring expenses	9,167	-	-
Other	22,552	20,003	19,409
TOTAL OPERATING EXPENSES	94,597	78,294	74,546
INCOME BEFORE INCOME TAXES	65,340	60,522	60,215
Federal income taxes	22,617	19,721	19,756
NET INCOME	$  42,723	$  40,801	$  40,459
NET INCOME PER SHARE
Basic	$1.90	$1.82	$1.78
Diluted	1.89	1.81	1.77
CASH DIVIDENDS PER SHARE	.91	.84	.76

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (In thousands)

	December 31
	2001	2000
ASSETS
Cash and demand deposits due from banks	$   150,546	$   139,205
Federal funds sold	86,800	108,325
Interest-bearing deposits with unaffiliated banks	40,591	5,083
Investment securities:
Available for sale (at estimated market value)	731,383	641,473
Held to maturity (estimated market value - $206,212 in 2001 and
$236,960 in 2000)	200,892	234,009
Total investment securities	932,275	875,482
Loans	2,182,541	1,848,630
Less: Allowance for loan losses	30,994	26,883
Net loans	2,151,547	1,821,747
Premises and equipment	42,397	37,219
Intangible assets	42,615	21,482
Accrued income and other assets	41,535	38,845
TOTAL ASSETS	$3,488,306	$3,047,388
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$   460,619	$   401,938
Interest-bearing	2,328,905	2,041,217
Total deposits	2,789,524	2,443,155
Interest payable and other liabilities	22,849	25,066
Federal Home Loan Bank borrowings	167,893	116,806
Other borrowings - short term	118,584	104,451
Total liabilities	3,098,850	2,689,478
Shareholders' equity:
Common stock, $1 par value
Authorized - 30,000 shares
Issued and outstanding - 22,514 shares at December 31, 2001
and 21,399 shares at December 31, 2000	22,514	21,399
Surplus	290,656	258,371
Unearned stock incentive plan	-	(515	)
Retained earnings	64,792	75,524
Accumulated other comprehensive income	11,494	3,131
Total shareholders' equity	389,456	357,910
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$3,488,306	$3,047,388

See notes to consolidated financial statements.

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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

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31
	2001		2000		1999
	(In thousands)
OPERATING ACTIVITIES
Net income	$  42,723		$  40,801		$  40,459
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for loan losses	2,004		1,587		963
Stock incentive expense	515		208		206
Gains on sales of loans	(4,973	)	(887	)	(1,489	)
Proceeds from loan sales	347,083		60,305		98,992
Loans originated for sale	(389,153	)	(59,292	)	(93,945	)
Investment securities (gains) losses	(530	)	58		(320	)
Provision for depreciation and amortization	8,460		6,775		6,213
Gain on sale of branch office land	-		-		(236	)
Net amortization of investment securities	1,583		339		2,712
Net increase in accrued income and other assets	(3,254	)	(4,461	)	(5,202	)
Net increase (decrease) in interest payable and other liabilities	(2,095	)	(821	)	5,975
NET CASH PROVIDED BY OPERATING ACTIVITIES	2,363		44,612		54,328
INVESTING ACTIVITIES
Cash and cash equivalents resulting from acquisitions	(27,775	)	-		-
Securities available for sale:
Proceeds from maturities, calls and principal reductions	234,199		248,879		342,763
Proceeds from sales	68,254		34,118		18,486
Purchases	(386,101	)	(274,910	)	(329,034	)
Securities held to maturity:
Proceeds from maturities, calls and principal reductions	84,099		133,277		108,031
Purchases	(46,474	)	(111,485	)	(103,998	)
Net increase in loans	(284,340	)	(139,202	)	(183,486	)
Proceeds from sale of branch office land	-		-		276
Purchases of premises and equipment	(10,313	)	(5,715	)	(7,070	)
NET CASH USED IN INVESTING ACTIVITIES	(368,451	)	(115,038	)	(154,032	)
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits,
NOW accounts and savings accounts	261,944		16,283		(13,157	)
Net increase in certificates of deposit and other time deposits	84,425		72,216		17,700
Proceeds of Federal Home Loan Bank (FHLB) borrowings	96,725		70,000		67,700
Repayment of FHLB borrowings	(45,638	)	(64,219	)	(14,153	)
Net increase in other borrowings - short term	14,133		21,679		11,331
Cash dividends paid	(20,577	)	(19,053	)	(17,871	)
Proceeds from directors' stock purchase plan	187		303		278
Proceeds from exercise of stock options	484		1,484		1,627
Repurchases of common stock	(271	)	(4,179	)	(13,749	)
NET CASH PROVIDED BY FINANCING ACTIVITIES	391,412		94,514		39,706
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	25,324		24,088		(59,998	)
Cash and cash equivalents at beginning of year	252,613		228,525		288,523
CASH AND CASH EQUIVALENTS AT END OF YEAR	$277,937		$252,613		$228,525
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid on deposits, FHLB borrowings
and other borrowings - short term	$  93,471		$  94,875		$  80,981
Federal income taxes paid	25,232		21,788		16,620

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

	Years Ended December 31, 2001, 2000 and 1999
	Common Stock		Surplus		Unearned Stock Incentive Plan		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
BALANCES AT JANUARY 1, 1999	$20,891		$246,748		$(903	)	$57,529		$  4,785		$329,050
Comprehensive income:
Net income for 1999	-		-		-		40,459		-		-
Net change in unrealized gains
(losses) on securities available
for sale, net of tax of $(3,718)	-		-		-		-		(10,623	)	-
Comprehensive income	-		-		-		-		-		29,836
Cash dividends paid of $.76 per share	-		-		-		(17,871	)	-		(17,871	)
Shares issued - stock options	50		317		-		-		-		367
Shares issued - directors' stock
purchase plan	9		290		-		-		-		299
Shares earned under stock incentive
plan	-		-		180		-		-		180
Shares issued - dividend reinvestment
plan	-		1,286		-		-		-		1,286
Repurchase of shares	(131	)	(13,618	)	-		-		-		(13,749	)
BALANCES AT DECEMBER 31, 1999	20,819		235,023		(723	)	80,117		(5,838	)	329,398
Stock dividend - 5%	671		25,670		-		(26,341	)	-		-
Comprehensive income:
Net income for 2000	-		-		-		40,801		-		-
Net change in unrealized gains
(losses) on securities available
for sale, net of tax of $3,139	-		-		-		-		8,969		-
Comprehensive income	-		-		-		-		-		49,770
Cash dividends paid of $.84 per share	-		-		-		(19,053	)	-		(19,053	)
Shares issued - stock options	26		242		-		-		-		268
Shares issued - directors' stock
purchase plan	9		273		-		-		-		282
Shares earned under stock incentive
plan	-		-		208		-		-		208
Shares issued - dividend reinvestment
plan	-		1,216		-		-		-		1,216
Repurchase of shares	(126	)	(4,053	)	-		-		-		(4,179	)
BALANCES AT DECEMBER 31, 2000	21,399		258,371		(515	)	75,524		3,131		357,910
Stock dividend - 5%	1,072		31,806		-		(32,878	)	-		-
Comprehensive income:
Net income for 2001	-		-		-		42,723		-		-
Net change in unrealized gains
(losses) on securities available
for sale, net of tax of $2,927	-		-		-		-		8,363		-
Comprehensive income	-		-		-		-		-		51,086
Cash dividends paid of $.91 per share	-		-		-		(20,577	)	-		(20,577	)
Shares issued - stock options	41		443		-		-		-		484
Shares issued - directors' stock
purchase plan	13		296		-		-		-		309
Shares earned under stock incentive
plan	-		-		515		-		-		515
Repurchase of shares	(11	)	(260	)	-		-		-		(271	)
BALANCES AT DECEMBER 31, 2001	$22,514		$290,656		$         -		$64,792		$11,494		$389,456

See notes to consolidated financial statements.

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of Chemical Financial Corporation ("Corporation") and its subsidiaries conform to accounting principles generally accepted in the United States and prevailing practices within the banking industry. Management makes estimates and assumptions that affect the amounts reported in the financial statements and accompanying footnotes. Actual results could differ from these estimates. Significant accounting policies of the Corporation and its subsidiaries are described below: Basis of Presentation and Principles of Consolidation: The consolidated financial statements of the Corporation include the accounts of the parent company and its subsidiaries, all of which are wholly-owned. All significant income and expenses are recorded on the accrual basis. Intercompany accounts and transactions have been eliminated in preparing the consolidated statements. Cash and Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from unaffiliated banks and federal funds sold. Generally, federal funds are sold for one-day periods. Investment Securities Available for Sale: Investment securities available for sale include those securities which might be sold as part of the Corporation's management of interest rate and prepayment risk, in response to changes in interest rates or in response to a desire to increase liquidity. Investment securities available for sale are stated at estimated market value, with the aggregate unrealized gains and losses, net of income taxes, classified as a component of accumulated other comprehensive income. Realized gains and losses from the sale of investment securities available for sale are determined using the specific identification method and are classified as noninterest income in the consolidated statement of income. Premiums and discounts on securities available for sale, as well as on securities held to maturity, are amortized over the estimated lives of the related securities. Investment Securities Held to Maturity: Designation as an investment security held to maturity is made at the time of acquisition and is based on the Corporation's intent and ability to hold the security to maturity. Securities held to maturity are stated at cost adjusted for the amortization of premium and accretion of discount to maturity. Loans: Loans are stated at their principal amount outstanding. Loan fees related to loans outstanding are deferred. The amount

deferred is reported as part of loans and is recognized as interest income over the term of the loan using the level yield method. Loan performance is reviewed regularly by loan review personnel, loan officers and senior management. Loan interest income is recognized on the accrual basis. A loan is placed in the nonaccrual category when principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection, or earlier, when in the opinion of management, there is sufficient reason to doubt the collectibility of future principal or interest. Interest previously accrued, but not collected, is reversed and charged against interest income at the time the loan is placed in nonaccrual status. The subsequent recognition of interest income on a nonaccrual loan is then recognized only to the extent cash is received and where future collection of principal is probable. Loans are returned to accrual status when principal and interest payments are brought current and collectibility is no longer in doubt. Interest income on restructured loans is recognized according to the terms of the restructure, subject to the above described nonaccrual policy. Nonperforming loans are comprised of those loans accounted for on a nonaccrual basis, accruing loans contractually past due 90 days or more as to interest or principal payments, and other loans for which the terms have been restructured to provide for a reduction or deferral of interest or principal because of a deterioration in the financial position of the borrower. Management identifies and devotes appropriate attention to loans that may not be performing as well as expected. A loan is considered to be impaired when it is probable that payment of principal and interest will not be made in accordance with the contractual terms of the loan agreement. Commercial loans and commercial real estate loans are evaluated individually for impairment. Impaired loans are carried at the present value of expected cash flows discounted at the loan's effective interest rate or at the fair value of the collateral, if the loan is collateral dependent. A portion of the allowance for loan losses may be allocated to impaired loans. Allowance for Loan Losses: The allowance for loan losses is maintained at a level that, in management's judgment, is considered to be adequate to provide for possible loan losses inherent in the loan portfolio. The Corporation maintains formal policies and procedures to monitor and control credit risk. Management's evaluation of the adequacy of the allowance is based on a continuing review of the loan portfolio, actual loan loss experience, risk characteristics of the loan portfolio, the level and composition of nonperforming loans, the financial condition of the borrowers, balance of the loan portfolio, loan growth, economic conditions and employment levels of the Corporation's local markets, and special factors affecting specific business sectors.

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This evaluation involves a high degree of uncertainty. Loans that are considered uncollectible are charged-off and deducted from the allowance. The provision for loan losses and recoveries on loans previously charged-off are added to the allowance. While the Corporation allocates portions of the allowance for specific problem loans and to specific loan categories, the entire allowance is available for any loan losses that occur.

Mortgage Banking Operations:
The origination of mortgage loans is an integral component of the business of the Corporation. The Corporation generally sells its originations of longer-term fixed interest rate residential mortgage loans in the secondary market. Gains and losses on the sales of loans are determined using the specific identification method. These longer-term fixed interest rate residential mortgage loans are generally held for thirty days or less, and book value approximates market value. The Corporation sells mortgage loans in the secondary market on either a servicing retained or released basis. Loans held for sale are carried at the lower of cost or market on an individual basis.

The Corporation accounts for mortgage servicing rights in accordance with Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS 140). SFAS 140 requires that an asset be recognized for the rights to service mortgage loans, including those rights that are created by the origination of mortgage loans which are sold with the servicing rights retained by the originator. The recognition of the asset results in an increase in the gains recognized upon the sale of the mortgage loans sold. The Corporation amortizes mortgage servicing rights in proportion to, and over the life of, the estimated net future servicing income and performs a periodic evaluation of the fair market value of the mortgage servicing rights. Any impairment of mortgage servicing rights is recognized as a valuation allowance. Servicing income is recognized in noninterest income when received and expenses are recognized when incurred.

Premises and Equipment:
Premises and equipment are stated at cost less accumulated depreciation. Premises and equipment are depreciated over the estimated useful lives of the assets. Depreciation is computed on the straight-line method. The estimated useful lives are generally 25 to 35 years for buildings and 3 to 7 years for equipment.

A summary of premises and equipment at December 31 follows:

	2001	2000
	(In thousands)
Bank premises	$55,695	$49,574
Equipment	30,712	28,100
	86,407	77,674
Less: Accumulated depreciation	44,010	40,455
Total	$42,397	$37,219

Intangible Assets:
Intangible assets consist of goodwill, core deposit intangibles and mortgage servicing rights. Goodwill, which represents the excess of cost over the fair value of identifiable tangible and intangible assets, originated through purchase acquisitions, consummated prior to July 1, 2001, is amortized on a straight-line basis over periods between fifteen and twenty years. Core deposit intangibles are being amortized over periods between five and fifteen years.

Goodwill was $28.0 million and $12.0 million and core deposit intangibles were $11.8 million and $7.9 million at December 31, 2001 and 2000, respectively. The increase in goodwill during 2001 was related to the purchase acquisitions of BWFC and four branches. See Note B for additional information.

Stock Options:
The Corporation periodically grants stock options for a fixed number of shares with an exercise price equal to the market value of the shares on the date of grant. In accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), the Corporation accounts for stock option grants under the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). Under APB 25, because the exercise price of the Corporation's employee stock options equals the market price of the underlying stock at the date of grant, no compensation expense is recognized at the date of grant.

Other Borrowings - Short Term:
Other borrowings - short term consist primarily of securities sold under agreements to repurchase which represent amounts advanced by customers, and are secured by investment securities owned, as they are not covered by FDIC insurance.

Income Taxes:
The Corporation files a consolidated federal income tax return and is responsible for the payment of any tax liability of the consolidated organization. Income tax expense is based on income and expenses, as reported in the financial statements. When income and expenses are recognized in different periods for tax purposes than for book purposes, applicable deferred taxes are provided for in the financial statements.

Earnings Per Share:
Basic and diluted earnings per share are calculated in accordance with Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). All earnings per share amounts for all periods presented conform to the requirements of SFAS 128. Basic earnings per share for the Corporation is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share for the Corporation is computed by

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NOTE A - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - CONTINUED

dividing net income by the sum of the weighted average number of common shares outstanding and the dilutive effect of common stock equivalents outstanding during the period.

The Corporation's common stock equivalents consist of common stock issuable under the assumed exercise of stock options granted under the Corporation's stock option plans, using the treasury stock method. The following table summarizes the number of shares used in the denominator of the basic and diluted earnings per share computations for the years ended December 31:

	2001	2000	1999
Denominator for
basic earnings per share	22,501,108	22,447,364	22,679,783
Denominator for
diluted earnings per share	22,563,521	22,514,984	22,831,819

Comprehensive Income:
Comprehensive income of the Corporation includes net income and an adjustment to equity for unrealized gains and losses on investment securities available for sale, net of income taxes, as required under Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). The Corporation displays comprehensive income as a component in the consolidated statements of changes in shareholders' equity.

Operating Segment:
It is management's opinion that the Corporation operates in a single operating segment - commercial banking. The Corporation is a financial holding company that operates three commercial banks, a data processing company, a property and casualty insurance company and a title insurance company, each as a separate direct subsidiary of the Corporation. The Corporation's commercial bank subsidiaries operate as community banks and offer a full range of commercial banking and fiduciary products and services to the residents and business customers in their geographical market areas. The products and services offered by the commercial bank subsidiaries are generally consistent throughout the Corporation, as generally is the pricing of these products and services. These services include personal and business checking accounts, savings and individual retirement accounts, time deposit instruments, electronically accessed banking products, residential and commercial real estate financing, commercial lending, consumer fin ancing, debit cards, safe deposit services, automated teller machines, access to insurance and investment products, money transfer services, corporate and personal trust services and other banking services. Each of the Corporation's commercial bank subsidiaries operates within the state of Michigan. The marketing of products and services by the Corporation's subsidiary banks is generally uniform, as some of the markets served by the subsidiaries overlap. The distribution of products and services is uniform throughout the Corporation's commercial bank subsidiaries and is achieved primarily through retail branch banking offices, automated teller machines and electronically accessed banking products. The commercial bank subsidiaries are state chartered commercial banks and operate under the same banking regulations. The data processing subsidiary primarily performs data processing functions for the Corporation's commercial bank subsidiaries.

The Corporation's primary sources of revenues are from its loan products and investment securities. The following table summarizes the Corporation's revenue from its specific loan products for the years ended December 31:

	2001	2000	1999
	(In thousands)
Interest income and fee revenue:
Commercial and agricultural	$  24,922	$  23,228	$  22,969
Real estate construction	8,095	6,018	4,204
Real estate commercial	30,946	28,009	22,921
Real estate residential	60,224	58,844	53,602
Consumer	37,235	30,811	27,900
Total	$161,422	$146,910	$131,596

Common Stock:
On December 21, 2001, the Corporation paid a 5% stock dividend. All per share data and share amounts, where applicable, included in the consolidated financial statements and in the related notes thereto have been retroactively adjusted to reflect the stock dividend.

Business Combinations:
For acquisitions accounted for as pooling of interests combinations, the historical consolidated financial statements are restated to include the accounts and results of operations as though the entity had always been a subsidiary of the Corporation. In compliance with Statement of Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141) issued June 2001, the pooling of interests method will no longer be used for acquisitions initiated after June 30, 2001. For acquisitions prior to June 30, 2001, where the purchase method of accounting has been utilized, the assets acquired and liabilities assumed are adjusted to fair market values at the date of acquisition, and the resulting net discount or premium is accreted or amortized into income for the remaining lives of the relevant assets and liabilities. Goodwill representing the excess cost over the net book value of identifiable assets acquired is amortized on a straight-line basis over periods ranging from 15 to 20 years.

For acquisitions after June 30, 2001, as required by SFAS 141 and SFAS 142, goodwill and intangible assets with indefinite

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lives are capitalized and no amortization is recorded. Beginning January 1, 2002, for purchase transactions, as required by Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142), issued June 2001, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with SFAS 142. Other intangible assets will continue to be amortized over their useful lives. Core deposit intangible assets are amortized over periods ranging from 5 to 10 years and are amortized on either a straight-line or accelerated basis dependent upon the estimated useful lives of those assets. Reclassification:
Certain amounts in the 2000 and 1999 financial statements have been reclassified to conform with the 2001 presentation. NOTE B - ACQUISITIONS AND
CONSOLIDATIONS During the three years ended December 31, 2001, the Corporation made the following acquisitions and consolidations: On July 9, 1999, the Corporation acquired two branch banking offices located in Standish and Linwood, Michigan, from National City Bank of Michigan/Illinois. The branch acquired in Standish was consolidated with an existing branch office in Standish. The branch in Linwood became a branch of an existing bank subsidiary. The branches acquired had total deposits of approximately $10 million and $17 million, respectively, as of that date, for which the Corporation paid a premium of $2.4 million. The transaction was accounted for by the purchase method of accounting. On March 24, 2000, the Corporation completed the acquisition of two branch banking offices from Old Kent Bank located in Evart and Morrice, Michigan. The branches had total deposits of approximately $15 million and $10 million, respectively, as of that date, for which the Corporation paid a premium of approximately $1.7 million. The offices became branch offices of existing banking subsidiaries. The transactions were accounted for by the purchase method of accounting. On December 31, 2000, the Corporation merged nine of its then ten subsidiary banks into two; Chemical Bank and Trust Company, headquartered in Midland, Michigan and Chemical Bank West, headquartered in Cadillac, Michigan. Chemical Bank South, headquartered in Marshall, Michigan remained a separate subsidiary until October 26, 2001 when it was consolidated into Chemical Bank Shoreline. On January 9, 2001, the Corporation merged with Shoreline Financial Corporation ("Shoreline"), a one-bank holding company headquartered in Benton Harbor, Michigan. As of the effective date of the transaction, Shoreline had total assets of approximately $1.1 billion, total deposits of approximately $.8 billion and total loans of approximately $.8 billion. The Corporation is operating Shoreline through a separate subsidiary of the Corporation, Chemical Bank Shoreline, with its headquarters remaining in Benton Harbor. The Corporation issued approximately 7.8 million shares for all of the outstanding stock of Shoreline. The transaction was accounted for as a pooling of interests business combination and, therefore, all prior period amounts included herein have been restated to include Shoreline as if it had always been a subsidiary of the Corporation. On July 13, 2001, the Corporation completed the acquisition of four branch bank offices from Fifth Third Bank and Old Kent Bank in Holland, Zeeland, Grand Haven and Fremont, Michigan. The purchase of the four branch bank offices added total deposits of approximately $144 million and total loans of $97 million as of the date of acquisition, for which the Corporation paid a premium of $15.3 million. The offices in Holland, Zeeland and Grand Haven are being operated as branches of Chemical Bank Shoreline and Chemical Bank West is operating the office in Fremont. The transaction was accounted for by the purchase method of accounting. Accordingly, the financial statements include their results of operations only since the acquisition date. On September 14, 2001, the Corporation completed the acquisition of Bank West Financial Corporation ("BWFC"). BWFC was the parent company of Bank West, a Michigan stock savings bank with six offices in Kent and Ottawa counties in Michigan. The purchase added approximately $300 million in total assets, $232 million in total loans and $194 million in total deposits as of the date of acquisition, for which the Corporation paid a premium of $7.3 million. Bank West was merged into the Corporation's existing subsidiary, Chemical Bank West. The Corporation exchanged $29.8 million in cash for all of the outstanding stock of BWFC. The transaction was accounted for by the purchase method of accounting. Accordingly, the financial statements include its results of operations only since the acquisition date.

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NOTE C - MERGER AND RESTRUCTURING EXPENSES

The Corporation incurred pre-tax merger and consolidation related restructuring expenses of $9.2 million ($7.1 million after-tax) in the first quarter of 2001. The expenses were recorded in connection with the completion of the merger between the Corporation and Shoreline on January 9, 2001 and the consolidation of nine of the Corporation's subsidiary banks into two, effective December 31, 2000. As of December 31, 2001, all merger and consolidation related restructuring expenses had been incurred.

The merger and restructuring expenses consisted of two components: employee related and other expenses. Employee related expenses primarily included costs incurred related to employment contracts, a voluntary early retirement program and severance awards. Severance awards were granted to 51 employees whose positions were eliminated during 2001 in the internal bank consolidation project and who elected not to accept another position within the Corporation. The severance awards comprised approximately 3% of the total merger and restructuring expenses.

Other expenses primarily included banking fees and other professional expenses incurred to complete the merger with Shoreline and the internal bank consolidations.

The following table provides detail of the pre-tax merger and consolidation related restructuring expenses recorded and incurred in 2001 (in thousands):

	Employee Related		Other		Total
Balances at January 1, 2001	$         -		$         -		$         -
Merger and restructuring expenses	3,277		5,890		9,167
Amount utilized	(3,277	)	(5,890	)	(9,167	)
Balances at December 31, 2001	$         -		$         -		$         -

NOTE D - INVESTMENT SECURITIES

The following is a summary of the amortized cost and estimated market value of investment securities available for sale and investment securities held to maturity at December 31, 2001 and 2000 (in thousands):

Investment Securities Available for Sale:

December 31, 2001	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Market Value
U.S. Treasury
and agency securities	$528,737	$13,678	$    510	$541,905
States of the U.S.
and political subdivisions	22,699	635	23	23,311
Mortgage-backed securities	95,492	1,790	127	97,155
Other debt securities	49,900	1,579	61	51,418
Total debt securities	696,828	17,682	721	713,789
Equity securities	16,873	1,015	294	17,594
Total	$713,701	$18,697	$1,015	$731,383
December 31, 2000
U.S. Treasury
and agency securities	$473,644	$4,672	$1,401	$476,915
States of the U.S.
and political subdivisions	21,136	721	8	21,849
Mortgage-backed securities	97,979	591	696	97,874
Other debt securities	32,233	212	32	32,413
Total debt securities	624,992	6,196	2,137	629,051
Equity securities	11,662	1,057	297	12,422
Total	$636,654	$7,253	$2,434	$641,473

Investment Securities Held to Maturity:

December 31, 2001	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Market Value
U.S. Treasury
and agency securities	$125,460	$2,942	$  27	$128,375
States of the U.S.
and political subdivisions	42,879	1,221	179	43,921
Mortgage-backed securities	11,174	601	12	11,763
Other debt securities	21,379	774	-	22,153
Total	$200,892	$5,538	$218	$206,212
December 31, 2000
U.S. Treasury
and agency securities	$152,519	$1,409	$184	$153,744
States of the U.S.
and political subdivisions	46,509	1,100	66	47,543
Mortgage-backed securities	15,352	468	84	15,736
Other debt securities	19,629	311	3	19,937
Total	$234,009	$3,288	$337	$236,960

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The amortized cost and estimated market value of debt and equity securities at December 31, 2001, by contractual maturity for both available for sale and held to maturity investment securities follows:

Investment Securities Available for Sale:

	Amortized Cost	Estimated Market Value
	(In thousands)
Due in one year or less	$146,422	$149,925
Due after one year through five years	437,809	449,157
Due after five years through ten years	11,576	11,860
Due after ten years	5,529	5,692
Mortgage-backed securities	95,492	97,155
Equity securities	16,873	17,594
Total	$713,701	$731,383

Investment Securities Held to Maturity:

	Amortized Cost	Estimated Market Value
	(In thousands)
Due in one year or less	$  79,887	$  81,485
Due after one year through five years	91,485	94,126
Due after five years through ten years	14,323	14,787
Due after ten years	4,023	$4,051
Mortgage-backed securities	11,174	$11,763
Total	$200,892	$206,212

Investment securities with a book value of $366.9 million at December 31, 2001 were pledged to collateralize public fund deposits and for other purposes as required by law; at December 31, 2000, the corresponding amount was $334.0 million.

Recognized gains on investment securities were $530,000 and $320,000 in 2001 and 1999, respectively, while a loss of $58,000 was recognized in 2000.

NOTE E - SECONDARY MARKET MORTGAGE ACTIVITY

For the three years ended December 31, 2001, activity for capitalized mortgage servicing rights was as follows

	2001		2000		1999
Mortgage Servicing Rights:
Beginning of year	$1,591		$1,658		$1,434
Additions	1,857		214		457
Amortization	(424	)	(281	)	(233	)
Valuation reserve	(180	)	-		-
End of year	$2,844		$1,591		$1,658

Additions of mortgage servicing rights were up significantly in 2001, compared to 2000 and 1999, primarily due to declining interest rates. The lower interest rate environment of 2001 created an incentive for customers to refinance their mortgages and purchase new homes. The lower interest rate environment prompted customers to choose long-term fixed rate mortgages over other mortgage products. The Corporation generally sells its long-term fixed rate mortgages into the secondary market either on a servicing retained or servicing released basis. Mortgage loans serviced for others, which are not reported as assets on the balance sheet, were up 49% and totaled approximately $433 million at December 31, 2001, compared to approximately $291 million at December 31, 2000. The fair value of mortgage servicing rights approximated its carrying value at each of the three years ended December 31, 2001.

The valuation reserve for impairment of mortgage servicing rights was $.18 million at December 31, 2001. A valuation reserve for mortgage servicing rights was not necessary at December 31, 2000 or 1999.

Loans held for sale were approximately $47.4 million at December 31, 2001 and $1.9 million at December 31, 2000. The increase in loans held for sale was primarily due to the significant increase in refinancing activity explained above.

NOTE F - LOANS

The following summarizes loans as of December 31:

	2001	2000
	(In thousands)
Commercial and agricultural	$   332,055	$   287,971
Real estate construction	137,500	87,419
Real estate commercial	432,747	313,245
Real estate residential	769,272	776,545
Consumer	510,967	383,450
Total loans	$2,182,541	$1,848,630

The Corporation's subsidiary banks have extended loans to its directors, officers and their affiliations. The loans were made in the ordinary course of business at normal terms, including interest rates and collateralization, prevailing at the time, and did not involve more than the normal risk of repayment by the borrower. The aggregate loans outstanding to the directors, officers and their affiliations totaled approximately $28.5 million at December 31, 2001 and $22.7 million at December 31, 2000. During 2001, there were approximately $37 million of new loans and other additions, while repayments and other reductions totaled approximately $31.2 million.

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NOTE F - LOANS - CONTINUED

Changes in the allowance for loan losses were as follows for the years ended December 31:

	2001		2000		1999
	(In thousands)
Balance at beginning of year	$26,883		$26,174		$25,954
Provision for loan losses	2,004		1,587		963
Loan charge-offs	(2,134	)	(1,510	)	(1,283	)
Loan recoveries	479		632		540
Net loan charge-offs	(1,655	)	(878	)	(743	)
Allowance of
banks/branches acquired	3,762		-		-
Balance at end of year	$30,994		$26,883		$26,174

Nonaccrual and restructured loans aggregated $6.9 million, $7.3 million and $3.9 million at December 31, 2001, 2000 and 1999, respectively.

The Corporation had four impaired loans totaling $4.2 million as of December 31, 2001, of which three loans totaling $4.0 million had an impairment allowance of $1.1 million. The Corporation had one impaired loan totaling $4.7 million as of December 31, 2000 with an impairment allowance of $1.2 million. The Corporation had three impaired loans totaling $7.7 million as of December 31, 1999, of which two loans totaling $7.3 million had an impairment allowance of $1.1 million. No interest income was recorded during 2001, 2000 or 1999 on either the cash or accrual basis related to impaired loans.

NOTE G - FEDERAL INCOME TAXES

The provision for federal income taxes is less than that computed by applying the federal statutory income tax rate of 35%, primarily due to tax-exempt interest on investments and loans, partially offset by non-deductible merger and restructuring expenses, as shown in the following analysis for the years ended December 31:

	2001		2000		1999
	(In thousands)
Tax at statutory rate	$22,869		$21,182		$21,075
Changes resulting from:
Tax-exempt income	(1,741	)	(1,768	)	(1,686	)
Non-deductible merger and
restructuring expenses	1,118		-		-
Other	371		307		367
Total federal income tax expense	$22,617		$19,721		$19,756

The provision for federal income taxes consisted of the following for the years ended December 31:

	2001		2000		1999
	(In thousands)
Current	$25,632		$22,223		$17,628
Deferred taxes (benefit)	(3,015	)	(2,502	)	2,128
Total	$22,617		$19,721		$19,756

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant temporary differences which comprise the deferred tax assets and liabilities of the Corporation were as follows as of December 31:

	2001	2000
	(In thousands)
Deferred tax assets:
Allowance for loan losses	$10,308	$8,836
Employee benefit plans	2,519	2,446
Investment securities mark to market	1,136	-
Expense accruals not yet tax deductible	1,491	1,387
Other	1,004	993
Total deferred tax assets	16,458	13,662
Deferred tax liabilities:
Investment securities available for sale	6,189	1,689
Investment securities mark to market	-	53
Other	2,501	2,715
Total deferred tax liabilities	8,690	4,457
Net deferred tax assets	$7,768	$9,205

Federal income tax expense (benefit) applicable to gains on investment securities transactions was $186,000 in 2001, ($20,000) in 2000 and $112,000 in 1999, and is included in federal income taxes on the consolidated statements of income.

NOTE H - PENSION AND
POSTRETIREMENT BENEFITS

The Corporation had two noncontributory defined benefit pension plans ("Plans") covering the majority of its employees through December 31, 2001, as a result of the merger with Shoreline Financial Corporation on January 9, 2001. Normal retirement benefits were based on years of service and the employee's average annual pay for the five highest consecutive years during the ten years preceding retirement under the Plans during 2001. Effective January 1, 2002, the Plans were merged into a single noncontributory defined benefit pension plan ("New Plan"). The New Plan continues to cover the majority of employees of the merged institution. Like the predecessor Plans, benefits in the New Plan are based on years of service, age at retirement and the employee's compensation during the five highest consecutive years of earnings within the last ten years of employment. The benefits under the New Plan are substantially the same as the Corporation's plan prior to the merger with Shoreline Financial Corporation. Contri butions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future.

The Plans' assets consist primarily of listed stocks, U.S. government securities and 234,785 shares of the Corporation's common stock. The market value of the 234,785 shares was $7.1 million at December 31, 2001.

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The following table sets forth the changes in the benefit obligation and plan assets of the Plans:

	2001		2000
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$45,537		$39,783
Service cost	2,172		2,175
Interest cost	3,121		3,045
Amendments	(336	)	-
Net actuarial loss	1,696		2,134
Curtailment	(1,088	)	-
Special separation program benefits	1,336		-
Settlement	(2,183	)	-
Benefits paid	(2,397	)	(1,600	)
Benefit obligation at end of year	$47,858		$45,537
Change in the Plans' assets:
Fair value of the Plans' assets
at beginning of year	$53,496		$54,892
Actual return on Plans' assets	923		(272	)
Contributions by the Corporation	996		476
Settlement	(1,281	)	-
Benefits paid	(3,353	)	(1,600	)
Fair value of the Plans' assets at end of year	$50,781		$53,496
Overfunded status of the Plans	$2,923		$7,959
Unrecognized net actuarial gain	(1,382	)	(6,679	)
Unrecognized net transition (asset) obligation	54		(90	)
Unrecognized prior service cost (credit)	(302	)	(36	)
Prepaid benefit cost	$1,293		$1,154

Net periodic pension cost of the Plans consisted of the following for the years ended December 31:

	2001		2000		1999
	(In thousands)
Service cost	$2,172		$2,175		$2,155
Interest cost	3,121		3,045		2,750
Curtailment	(1,083	)	-		-
Settlement	131		-		-
Special separation
program benefits	1,336		-		-
Expected return on Plans' assets	(4,291	)	(4,158	)	(3,844	)
Amortization of transition amount	(95	)	(180	)	(184	)
Amortization of prior service cost	(23	)	(136	)	(19	)
Amortization of unrecognized
net (gain) loss	(410	)	125		35
Pension expense	$   858		$   871		$   893

Weighted-average assumptions as of December 31:

	2001	2000	1999
Discount rate used in determining
projected benefit obligation	7%	7.0-7.5%	7.0-7.5%
Expected return on assets	8%	8%	8%
Rate of compensation increase	5%	4.5-5%	4.5-5%

Other Employee Benefit Plans: One of the Corporation's subsidiary banks maintained a profit-sharing plan for qualified employees with at least one year of service through December 31, 2001. This plan was terminated as of December 31, 2001. Contributions to the profit-sharing plan were discretionary and were determined by the board of directors of the subsidiary bank. Under this plan, $224,000, $290,000 and $475,000 was expensed in 2001, 2000 and 1999, respectively.

One of the Corporation's subsidiary banks maintained a 401(k) salary reduction plan with an employer match through December 31, 2001. Participants in this 401(k) salary reduction plan were eligible to make deferrals up to 15% of compensation. The subsidiary matched 50% of participants' elective deferrals on the first 4% of the participants' compensation. Expense under this plan was $163,000, $205,000 and $155,000 in 2001, 2000 and 1999, respectively. Effective January 1, 2002, this plan was merged into the Corporation's 401(k) salary reduction plan ("New 401(k) Plan"). Prior to January 1, 2002, the Corporation also had a 401(k) plan that did not include an employer match. Effective January 1, 2002, the New 401(k) Plan will provide participants a 50% match of their elective deferrals on the first 4% of the participants' compensation, subject to qualified plan limits.

In addition to the Corporation's defined benefit pension plan, the Corporation provides postretirement medical and dental benefits (to age 65) to the majority of its employees. Through December 31, 2001, eligibility for such benefits was age 55 with at least ten years of service with the Corporation. Retirees are required to make contributions toward the cost of their benefits based on their years of credited service and age at retirement. Retiree contributions are adjusted annually. Effective January 1, 2002, the Corporation adopted a revised retiree medical program ("Retiree Plan") which substantially reduced the future obligation of the Corporation for retiree medical costs. The Retiree Plan will generally provide employees access to retiree medical benefits for themselves and their dependents to those employees who retire at age 55 or thereafter with at least fifteen years of service. There will generally be no employer subsidy for these benefits. Retirees as of December 31, 2001 were grandfathered un der the predecessor plan. There continues to be no employer subsidy for dependent benefits included in the grandfathered plan. The accounting for these postretirement benefits anticipates changes in future cost-sharing features such as retiree contributions (applicable to grandfathered participants), deductibles, copayments and coinsurance. The Corporation reserves the right to amend, modify or terminate these benefits at any time.

continued on next page

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NOTE H - PENSION AND POSTRETIREMENT
BENEFITS - CONTINUED

The following table sets forth changes in the Corporation's postretirement benefit obligation:

	2001		2000
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$5,161		$4,506
Service cost	210		226
Interest cost	502		355
Net actuarial loss	1,893		175
Amendments	(3,486	)	154
Curtailment	(24	)	-
Special separation program benefits	220		-
Benefits paid, net of retiree contributions	(211	)	(255	)
Benefit obligation at end of year	$4,265		$5,161
Unfunded status of the plan	$4,265		$5,161
Unrecognized net actuarial loss	(1,795	)	(33	)
Unrecognized prior service (cost) credit	3,544		144
Accrued postretirement benefit cost	$6,014		$5,272

Net periodic postretirement benefit cost consisted of the following for the years ended December 31:

	2001		2000		1999
	(In thousands)
Service cost	$210		$226		$208
Interest cost	502		355		305
Amortization of prior service cost	26		(18	)	(17	)
Curtailment	(7	)	-		-
Special separation program benefits	220		-		-
Net periodic
postretirement benefit cost	$951		$563		$496

The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.00% at December 31, 2001 and 7.5% at December 31, 2000 and 1999.

For measurement purposes, the annual rates of increase in the per capita cost of covered health care benefits and dental benefits for 2002 were assumed at 6.02% and 5.67%, respectively. These rates were assumed to decrease gradually to 5% in 2003 and remain at that level thereafter.

The assumed health care and dental cost trend rates have a significant effect on the amounts reported. A one-percentage-point change in these rates would have the following effects:

	1-Percentage- Point Increase	1-Percentage- Point Decrease
	(In thousands)
Effect on total of service
and interest cost
components in 2001	$104	$  (84)
Effect on postretirement
benefit obligation as of
December 31, 2001	$480	$(412)

NOTE I - FEDERAL HOME LOAN BANK
BORROWINGS

Borrowings from the Federal Home Loan Bank (FHLB) of Indianapolis consisted of the following:

	December 31
	2001	2000
	(In thousands)
Fixed-rate advances; with maturities
from January 2002 through May 2009,
rates ranging from 4.79% - 6.40% and
a weighted average rate of 5.34% at
December 31, 2001	$  38,893	$      806
Convertible fixed-rate advances; with
maturities from January 2002 through
November 2011, rates ranging from
4.49% - 6.75% and a weighted average
rate of 5.54% at December 31, 2001	119,000	71,000
Variable-rate advance; with a maturity
of July 2002 and a rate of 2.52% at
December 31, 2001.	10,000	45,000
Total	$167,893	$116,806

For the convertible fixed-rate advances, the FHLB has the option to convert the advance to a variable-rate beginning one, two or five years after the origination date depending on the advance, and quarterly thereafter. Prepayments of advances are subject to prepayment penalties under the provisions and conditions of the credit policy of the FHLB. The Corporation did not incur any prepayment penalties for 2001, 2000 and 1999. The FHLB borrowings are collateralized by a blanket lien on qualified 1-to-4 family whole mortgage loans. The carrying value of these loans was $468.3 million, which represents a total borrowing capacity of $323.0 million. Therefore, the Corporation's additional borrowing availability through the FHLB at December 31, 2001 was $155.1 million.

At year-end 2001, scheduled principal reductions on these advances are as follows (in thousands):

2002	$  10,500
2003	9,020
2004	20,377
2005	16,232
2006	28,692
Thereafter	83,072
Total	$167,893

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NOTE J - RESTRICTED ASSETS AND DIVIDEND LIMITATIONS OF SUBSIDIARY BANKS

NOTE K - CAPITAL

Banking regulations require that banks maintain cash reserve balances in vault cash with the Federal Reserve Bank or with certain other qualifying banks. The aggregate average amount of such legal balances required to be maintained by the Corporation's subsidiary banks was $39 million for the year ended December 31, 2001. During 2001, the Corporation's subsidiary banks satisfied their legal reserve requirements almost exclusively by maintaining average vault cash balances in excess of their legal reserve requirements. Federal and state banking regulations place certain restrictions on the transfer of assets in the form of dividends, loans or advances from the bank subsidiaries to the Corporation. At December 31, 2001, substantially all of the assets of the bank subsidiaries were restricted from transfer to the Corporation in the form of loans or advances. Dividends from its bank subsidiaries are the principal source of funds for the Corporation. Under the most restrictive of these regulations, the aggregate amount of dividends that can be paid by the Corporation's bank subsidiaries to the parent company, without obtaining prior approval from bank regulatory agencies, was $36.4 million as of January 1, 2002. Dividends paid to the Corporation by its banking subsidiaries totaled $51.1 million in 2001, $34.8 million in 2000 and $61.1 million in 1999. In addition to the statutory limits, the Corporation also considers the overall financial and capital position of each subsidiary prior to making any cash dividend decisions.< /FONT>

The Corporation and its subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Under these capital requirements, the subsidiary banks must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. In addition, capital amounts and classifications are subject to qualitative judgments by the regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation's financial statements. Quantitative measures established by regulation to ensure capital adequacy require minimum ratios of Tier 1 capital to average assets (Leverage Ratio), and of Tier 1 and Total capital to risk-weighted assets. These capital guidelines assign risk weights to on- and off-balance sheet items in arriving at total risk-weighted assets. Minimum capital levels are based upon perceived risk of various asset categories and certain off-balance sheet instruments. At December 31, 2001 and 2000, the Corporation's and each of its bank subsidiaries' capital ratios exceeded the quantitative capital ratios required for an institution to be considered "well-capitalized." Significant factors that may affect capital adequacy include, but are not limited to, a disproportionate growth in assets versus capital.

The table below compares the Corporation's and each of its significant subsidiaries' actual capital amounts and ratios with the quantitative measures established by regulation to ensure capital adequacy at December 31, 2001.

Capital Analysis				Risk-Based Capital
	Leverage			Tier l			Total
	Amount	Ratio		Amount	Ratio		Amount	Ratio
	(Dollars in millions)
Corporation's capital	$339	10	%	$339	16	%	$366	17	%
Required capital - minimum	102	3		84	4		168	8
Required capital - "well capitalized" definition	170	5		126	6		210	10
Chemical Bank and Trust Company's capital	148	10		148	19		158	20
Required capital - minimum	44	3		32	4		63	8
Required capital - "well capitalized" definition	73	5		47	6		79	10
Chemical Bank Shoreline's capital	89	7		89	10		99	12
Required capital - minimum	37	3		33	4		66	8
Required capital - "well capitalized" definition	62	5		50	6		83	10
Chemical Bank West's capital	63	9		63	13		70	14
Required capital - minimum	22	3		20	4		39	8
Required capital - "well capitalized" definition	37	5		30	6		49	10

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NOTE L - STOCK OPTIONS

The Corporation's stock option plans provide for grants of stock options, incentive stock options, stock appreciation rights, or a combination thereof. At December 31, 2001, there were a total of 455,039 shares available for future awards under the Corporation's 1997 plan. The plan provides that the option price shall not be less than the fair market value of common stock at the date of grant, options become exercisable as specified in the option agreement governing the option as determined by the Compensation Committee of the board of directors, all awards expire no later than ten years and one day after the date of grant, and options granted may be designated nonstatutory options or incentive stock options. The Corporation does not record expense as a result of the grant or exercise of stock options.

Options granted may include a stock appreciation right that entitles the grantee to receive cash or a number of shares of common stock without payment to the Corporation, calculated by dividing the difference between the option price and the market price of the total number of shares in the option at the time of exercise of the stock appreciation right, by the market price of a single share. As of December 31, 2001, there were no outstanding options with stock appreciation rights.

The activity in the Corporation's stock option plans during the three years ended December 31, 2001, was as follows:

	Number of Shares		Weighted Average Exercise Price
Outstanding - January 1, 1999	600,551		$20.16
Activity during 1999:
Granted	27,893		28.86
Exercised	(82,242	)	11.35
Cancelled	(7,725	)	24.67
Outstanding - December 31, 1999	538,477		21.89
Activity during 2000:
Granted	6,585		25.51
Exercised	(44,550	)	9.07
Cancelled	(2,421	)	27.68
Outstanding - December 31, 2000	498,091		23.05
Activity during 2001:
Granted	50,400		26.05
Exercised	(46,103	)	13.81
Cancelled	(5,577	)	27.53
Outstanding - December 31, 2001	496,811		$24.16

The following table summarizes information about stock options outstanding at December 31, 2001:

	Options Outstanding			Options Exercisable
Number Outstanding	Weighted Average Exercise Price	Average Life (a)	Range of Exercise Prices	Number Exercisable	Weighted Average Exercise Price
32,199	$11.14	0.17	$         11.14	32,199	$11.14
11.748	14.92	4.89	14.92	11,748	14.92
98,519	19.15	2.06	17.66-20.24	98,519	19.15
185,612	24.50	6.30	23.86-26.05	131,034	23.87
168,733	29.84	6.98	28.25-30.33	148,885	29.88
496,811	$24.16	5.26	$11.14-30.33	422,385	$23.67

(a)  Weighted average remaining contractual life in years

The Corporation does not recognize compensation cost in accounting for awards of options under its stock option plans. If the Corporation had elected to recognize compensation cost for options granted in 2001, 2000 and 1999, based on the fair value of the options granted at the grant date, net income and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share amounts):

	2001	2000	1999
Net income - as reported	$42,723	$40,801	$40,459
Net income - pro forma	42,595	40,626	39,973
Basic earnings per share - as reported	1.90	1.82	1.78
Basic earnings per share - pro forma	1.89	1.81	1.76
Diluted earnings per share - as reported	1.89	1.81	1.77
Diluted earnings per share - pro forma	1.89	1.80	1.75

The weighted average fair values of options granted during 2001, 2000 and 1999 were $7.22, $7.49 and $7.58 per share, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	2001		2000		1999
Expected dividend yield	3.2	%	3.0	%	2.7	%
Expected stock volatility	31.3	%	22.7	%	21.4	%
Risk-free interest rate	4.69	%	6.70	%	6.55	%
Expected life of options - in years	5.7		8.0		6.5

Because of the unpredictability of the assumptions required, the Black-Scholes model, or any other valuation model, is incapable of accurately predicting the Corporation's stock price or of placing an accurate present value on options to purchase its stock. In spite of any theoretical value which may be placed on a stock option grant, no increase of the stock option's value is possible without an increase in the market value of the underlying stock.

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NOTE M - COMMITMENTS AND OTHER MATTERS

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the loan contract. Commitments generally have fixed expiration dates or other termination clauses. Historically, the majority of the commitments of the Corporation have not been drawn upon and, therefore, may not represent future cash requirements. Standby letters of credit are conditional commitments issued generally by the Corporation to guarantee the performance of a customer to a third party. Both arrangements have credit risk essentially the same as that involved in making loans to customers and are subject to the Corporation's normal credit policies. Collateral obtained upon exercise of commitments is determined using management's credit evaluation of the borrowers and may include real estate, business assets, deposits and other items. The Corporation at any point in time also has approved but undisbursed loans. The majority of these undisbursed loans will c onvert to a booked loan within a three-month period. Loan commitments, standby letters of credit and undisbursed loans were $303 million, $15 million and $179 million, respectively, at December 31, 2001 and $204 million, $15 million and $67 million, respectively, at December 31, 2000. The majority of the loan commitments and standby letters of credit outstanding as of December 31, 2001 expire one year from their contract date, except for $39 million which extend for more than five years. The Corporation's loan commitments and standby letters of credit have been estimated to have no realizable fair value, as historically the majority of the loan commitments have not been drawn upon and generally the Corporation does not receive fees in connection with these agreements. The Corporation has leases and other non-cancelable commitments on buildings, equipment and certain computer software that will require annual payments through 2015. These commitments total approximately $1.4 million in 2002, $.8 million in 2003, $.5 million in 2004, $.5 million in 2005, $.4 million in 2006, $.3 million in 2007, $.3 million in 2008, $.2 million in 2009, and $45,000 in the years 2010 through 2015. Total expense recorded under lease and other non-cancelable commitments in 2001, 2000 and 1999 was $1.4 million, $1.2 million and $1.0 million, respectively. The Corporation and its subsidary banks are subject to certain legal actions arising in the ordinary course of business. In the opinion of management, after consulting with legal counsel, the ultimate disposition of these matters is not expected to have a material adverse effect on the consolidated income and financial position of the Corporation.

Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), as amended, became effective for the Corporation on January 1, 2001. SFAS 133 standardizes the accounting for derivative instruments by requiring the recognition of those items as assets or liabilities in the consolidated statement of financial position and measuring them at fair value. SFAS 133 requires that changes in a derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Corporation implemented SFAS 133, as amended, effective January 1, 2001. The Corporation's limited use of interest rate lock commitments on residential mortgage loans and related mandatory forward commitments resulted in no cumulative effect of the adoption of SFAS 133, and the impact on net income for the year ended December 31, 2001 was not material. Statements of Financial Accounting Standards No.141, "Business Combinations" (SFAS 141), and No. 142, "Goodwill and Other Intangible Assets" (SFAS 142), were issued in June 2001. Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS 141 also includes guidance on the initial recognition and measurement of goodwill and other intangible assets arising from business combinations completed after June 30, 2001. SFAS 142 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. SFAS 142 requires that these assets be reviewed for impairment at least annually. Intangible assets with finite lives will continue to be amortized over their estimated useful lives. Additionally, SFAS 142 requires that goodwill included in the carrying value of equity method investments no longer be amortized. The Corporation will apply SFAS 142 beginning in the first quarter of 2002. Application of the nonamortization provisions of SFAS 142 is expected to result in an increase in net income of approximately $1 million ($.04 per share) in 2002. The Corporation will test goodwill for impairment using the two-step process prescribed in SFAS 142. The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any. The Corporation expects to perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002 in the first quarter of 2002. Any impairment charge resulting from these transitional impairment tests will be reflected as the cumulative effect of a change in accounting principle in the first quarter of 2002. The Corporation has not yet determined what the effect of these tests will be on the consolidated income and financial position of the Corporation.

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NOTE N - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments" (SFAS 107), requires disclosures about the estimated fair values of the Corporation's financial instruments. The Corporation utilized quoted market prices, where available, to compute the fair values of its financial instruments. In cases where quoted market prices were not available, the Corporation used present value methods to estimate the fair values of its financial instruments. These estimates of fair value are significantly affected by the assumptions made and, accordingly, do not necessarily indicate amounts that could be realized in a current market exchange. It is also the Corporation's general practice and intent to hold the majority of its financial instruments until maturity and, therefore, the Corporation does not expect to realize the estimated amounts disclosed. The following methods and assumptions were used by the Corporation in estimating its fair value disclosures for financial instruments: Cash and cash equivalents: The carrying amounts reported in the consolidated statements of financial position for cash, demand deposits due from banks and federal funds sold approximate their fair values. Interest-bearing deposits with unaffiliated banks: The carrying amounts reported in the consolidated statements of financial position for interest-bearing deposits with unaffiliated banks approximate their fair values. Investment securities: Fair values for investment securities are based on quoted market prices. Loans: For variable interest rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. The fair values for fixed interest rate loans are estimated using discounted cash flow analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The resulting amounts are adjusted to estimate the effect of declines in the credit quality of borrowers since the loans were originated. Deposit liabilities: The fair values of deposit accounts without defined maturities, such as interest- and noninterest-bearing checking, savings and money market accounts are equal to the amounts payable on demand. At December 31, 2001 and December 31, 2000, the Corporation had total deposits without defined maturities totaling $1.72 billion and $1.46 billion, respectively, for which SFAS 107 defined their fair values to be equal to their carrying

amounts. Fair values for fixed interest rate certificates of deposit and other time deposits are based on the discounted value of contractual cash flows, using interest rates currently being offered for deposits of similar maturities. The fair values for variable interest rate certificates of deposit approximate their carrying amounts. Federal Home Loan Bank borrowings: Fair value is estimated based on the present value of future estimated cash flows using current rates offered to the Corporation for debt with similar terms. Other borrowings - short term: The carrying amounts of other borrowings - short term, which consist primarily of repurchase agreements, approximate their fair values. Commitments to extend credit, standby letters of credit and undisbursed loans: The Corporation's loan commitments, standby letters of credit and undisbursed loans have no carrying amount and have been estimated to have no realizable fair value. Historically, a majority of the loan commitments have not been drawn upon and, generally, the Corporation does not receive fees in connection with these commitments. Estimates of fair values have not been made for items which are not defined by SFAS 107 as financial instruments, including such items as the Corporation's core deposit intangibles and the value of its trust department. The Corporation believes it is impractical to estimate a representative fair value for these types of assets, even though management believes they add significant value to the Corporation. The following is a summary of previously described financial instruments reported in the consolidated statement of financial position for which fair values differ from carrying amounts at December 31:

	2001		2000
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
	(In thousands)
Assets:
Investment securities	$  932,275	$  937,595	$  875,482	$  878,433
Loans	2,151,547	2,186,188	1,821,747	1,804,081
Liabilities:
Time deposits	1,069,485	1,087,030	985,060	982,620
FHLB borrowings	167,893	177,170	116,806	119,019

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NOTE O - PARENT COMPANY ONLY FINANCIAL INFORMATION

Condensed financial statements of Chemical Financial Corporation (parent company) follow:

	December 31
Condensed Statements of Financial Position	2001	2000
Assets:	(In thousands)
Cash on deposit at subsidiary bank	$  37,788		$  51,782
Investment securities available for sale	4,979		5,122
Investments in bank subsidiaries	350,367		303,591
Investment in non-bank subsidiary	2,959		2,638
Goodwill	1,093		1,398
Other assets	1,868		3,829
Total Assets	$399,054		$368,360
Liabilities and Shareholders' Equity
Other liabilities	$    9,598		$  10,450
Total Liabilities	9,598		10,450
Shareholders' equity	389,456		357,910
Total Liabilities and Shareholders' Equity	$399,054		$368,360

	Years Ended December 31
Condensed Statements of Income	2001		2000	1999
Income:	(In thousands)
Cash dividends from bank subsidiaries	$51,075		$34,758	$61,062
Cash dividends from non-bank subsidiary	335		282	610
Interest income from bank subsidiary	2,631		2,102	593
Other interest income and dividends	104		261	117
Total Income	54,145		37,403	62,382
Expenses:
Interest on long-term debt	-		-	421
Operating expenses	2,878		2,390	2,285
Amortization of goodwill	305		305	305
Merger and restructuring expenses	7,069		-	-
Total Expenses	10,252		2,695	3,011
Income Before Income Taxes and Equity in
Undistributed Net Income of Subsidiaries	43,893		34,708	59,371
Federal income tax benefit	1,663		14	695
Equity in undistributed (excess distributed) net income of:
Bank subsidiaries	(3,154	)	5,608	(19,795	)
Non-bank subsidiary	321		471	188
Net Income	$42,723		$40,801	$40,459

	Years Ended December 31
Condensed Statements of Cash Flows	2001		2000		1999
Operating Activities:	(In thousands)
Net income	$42,723		$40,801		$40,459
Stock incentive expense	515		208		206
Equity in (undistributed) excess distributed net income of subsidiaries	2,833		(6,079	)	19,607
Other	1,245		(912	)	722
Net Cash Provided by Operating Activities	47,316		34,018		60,994
Investing Activities:
Capital infusion into subsidiary bank	(12,000	)	-		-
Net cash used in acquisitions	(29,221	)	-		-
Purchases of investment securities available for sale	(1,447	)	(1,389	)	(1,563	)
Proceeds from sales and maturities of investment securities available for sale	1,535		1,046		756
Net Cash Used in Investing Activities	(41,133	)	(343	)	(807	)
Financing Activities:
Principal payments on long-term debt	-		-		(8,000	)
Repurchases of common stock	(271	)	(4,179	)	(134,749	)
Proceeds from directors' stock purchase plan	187		303		278
Proceeds from exercise of stock options	484		1,484		1,627
Cash dividends paid	(20,577	)	(19,053	)	(17,871	)
Net Cash Used in Financing Activities	(20,177	)	(21,445	)	(37,715	)
Increase (decrease) in Cash	(13,994	)	12,230		22,472
Cash at beginning of year	51,782		39,552		17,080
Cash at End of Year	$37,788		$51,782		$39,552

37

R E P O R T   O F   I N D E P E N D E N T   A U D I T O R S

To the Board of Directors

Chemical Financial Corporation

We have audited the accompanying consolidated statement of financial position of Chemical Financial Corporation and subsidiaries as of December 31, 2001 and the related consolidated statements of income, changes in shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Chemical Financial Corporation and subsidiaries at December 31, 2001 and the consolidated results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.

We previously audited and reported on the consolidated statement of financial position of Chemical Financial Corporation and subsidiaries as of December 31, 2000 and the related consolidated statements of income, changes in shareholders' equity, and cash flows for the years ended December 31, 2000 and 1999, prior to their restatement for the 2001 pooling of interests as described in Note B. The contribution of Chemical Financial Corporation to total assets, revenues, and net income represented 65%, 63%, and 71% of the respective 2000 restated totals and the contribution to revenue and net income represented 64% and 68% of the respective 1999 restated totals. Financial statements of the other pooled company included in the 2000 and 1999 restated consolidated statements were audited and reported on separately by other auditors. We also have audited, as to combination only, the accompanying consolidated statement of financial position as of December 31, 2000 and the related consolidated statements of income, shareholders' equity, and cash flows for the years ended December 31, 2000 and 1999, after restatement for the 2001 pooling of interests; in our opinion, such consolidated financial statements have been properly combined on the basis described in Note B to the consolidated financial statements.

/s/ Ernst & Young LLP

Detroit, Michigan

January 22, 2002

38

SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION* (UNAUDITED)

(In thousands, except per share data)

	2001					2000
	First Quarter		Second Quarter	Third Quarter	Fourth Quarter	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Interest income	$53,552		$53,300	$55,391	$57,007	$50,220	$52,045	$53,970	$54,629
Interest expense	24,073		22,099	21,969	21,041	22,035	23,186	25,142	25,593
Net interest income	29,479		31,201	33,422	35,966	28,185	28,859	28,828	29,036
Provision for loan losses	405		437	432	730	216	224	290	857
Investment securities gains (losses)	140		152	122	116	24	51	17	(150	)
Income before income taxes	7,148	**	18,174	19,491	20,527	14,156	15,536	15,570	15,260
Net income	3,889	**	12,081	12,976	13,777	9,628	10,473	10,519	10,181
Net income per share
Basic	.17	**	.53	.58	.62	.43	.47	.47	.45
Diluted	.17	**	.53	.58	.61	.43	.46	.47	.45

*	All amounts were retroactively adjusted to include Shoreline as if it had been part of the organization for each full year presented. Financial results for 2001 include the operations of the branch purchases and BWFC from and after their respective dates of acquisition.
**	Includes merger and restructuring expenses of $9.2 million ($7.1 million on an after-tax basis) incurred to complete the merger with Shoreline and the internal consolidations.

M A R K E T   F O R   C H E M I C A L   F I N A N C I A L
C O R P O R A T I O N   C O M M O N   S T O C K   A N D   R E L A T E D
S H A R E H O L D E R   M A T T E R S

Chemical Financial Corporation common stock is traded on The Nasdaq Stock Market® under the symbol CHFC. As of December 31, 2001, there were 22,514,140 shares of Chemical Financial Corporation common stock issued and outstanding, held by approximately 5,400 shareholders of record. The table below sets forth the range of high and low bid prices for Chemical Financial Corporation common stock for the periods indicated. These quotations reflect inter-dealer prices, without retail markup, markdown, or commission, and may not necessarily represent actual transactions.

	2001		2000
	High	Low	High	Low
First quarter	$26.06	$19.31	$28.11	$19.89
Second quarter	29.12	21.38	27.09	20.84
Third quarter	29.12	24.36	26.08	19.82
Fourth quarter	31.50	25.55	22.38	18.63

The earnings of the Corporation's subsidiary banks are the principal source of funds to pay cash dividends. Consequently, cash dividends are dependent upon the earnings, capital needs, regulatory constraints, and other factors affecting each individual subsidiary bank. See Note J to the Consolidated Financial Statements for a discussion of such limitations. The Corporation has paid regular cash dividends every quarter since it was organized as a bank holding company in 1973. The following table summarizes the quarterly cash dividends paid to shareholders over the past five years, adjusted for stock dividends and a stock split paid during this time period. Management expects the Corporation to declare and pay comparable regular quarterly cash dividends on its common shares in 2002.

	Years Ended December 31
	2001	2000	1999	1998	1997
First quarter	$.228	$.209	$.190	$.174	$.144
Second quarter	.228	.209	.190	.174	.144
Third quarter	.228	.209	.190	.174	.159
Fourth quarter	.228	.209	.190	.174	.159
Total	$.912	$.836	$.760	$.696	$.606

39

CHEMICAL FINANCIAL CORPORATION DIRECTORS AND EXECUTIVE OFFICERS

At December 31, 2001
Board of Directors	J. Daniel Bernson - President, The Hanson Group      (a holding company with interests in diversified businesses in Southwest Michigan)
	James A. Currie - Investor
	Michael L. Dow - Investor
	L. Richard Marzke - President and CEO, Pri-Mar Petroleum, Inc.      (wholesale and retail distributor of gasoline and petroleum products      and convenience store operator)
	Terence F. Moore - President and Chief Executive Officer, MidMichigan Health      (a health care organization)
	Aloysius J. Oliver - President and Chief Executive Officer, Chemical      Financial Corporation
	Alan W. Ott - Chairman, Retired, Chemical Financial Corporation
	Frank P. Popoff - Retired, Former Chairman, President and CEO of The Dow      Chemical Company (a diversified science and technology company that      manufactures chemical, plastic and agricultural products)
	David B. Ramaker - Executive Vice President and Secretary, Chemical Financial      Corporation
	Lawrence A. Reed - Retired, Former President and CEO of Dow Corning      Corporation (a diversified company specializing in the development,      manufacture and marketing of silicones and related silicon-based products)
	Dan L. Smith - Retired, Former Chairman and CEO of Shoreline      Financial Corporation (bank holding company)
	William S. Stavropoulos - Chairman, The Dow Chemical Company      (a diversified science and technology company that manufactures chemical,      plastic and agricultural products)
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 - First Senior Vice President and Investment Officer,      Chemical Bank and Trust Company
	James R. Milroy - President and Chief Executive Officer,      Chemical Bank Shoreline

40

EX-21

EXHIBIT NO. 21

Subsidiaries

Name of Subsidiary	State or Other Jurisdiction of Incorporation
Banking subsidiaries:
Chemical Bank and Trust Company	Michigan
Chemical Bank Shoreline	Michigan
Chemical Bank West	Michigan
Non-banking subsidiaries:
CFC Data Corp	Michigan
CFC Financial Services, Inc.
-  also operates under d/b/a Chemical Financial Insurance Agency and
d/b/a CFC Investment Centers	Michigan
CFC Title Services, Inc.	Michigan

EX-23

EXHIBIT NO. 23.1

[ERNST & YOUNG LOGO]

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in (1) the Registration Statement (Form S-8, Number 33-15064, dated June 17, 1987, pertaining to the Chemical Financial Corporation 1987 Award and Stock Option Plan, (2) the Registration Statement (Form S-8, Number 33-40792, dated May 21, 1991) pertaining to the Chemical Financial Corporation 401(k) Savings Plan and in the related Prospectus, (3) the Registration Statement (Form S-8, Number 333-38511, dated October 22, 1997) pertaining to the Chemical Financial Corporation 1997 Stock Incentive Plan, (4) the Registration Statement (Form S-8, Number 333-70225 dated January 7, 1999) pertaining to the Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors, and (5) the Registration Statement (Form S-8, Number 333-56482, dated March 2, 2001) pertaining to the Chemical Financial Corporation Stock Option Plan for Holders of Shoreline Financial Corporation of our report dated January 22, 2002 with respect to the consolidated financial statement s of Chemical Financial Corporation incorporated by reference in the Annual Report (Form 10-K) for the year ended December 31, 2001.

We consent to the incorporation by reference in (1) the Registration Statement (Form S-8, Number 33-40792, dated May 21, 1991) pertaining to the Chemical Financial Corporation 401(k) Savings Plan and in the related Prospectus of our report dated February 27, 2002, with respect to the financial statements and schedules of the Chemical Financial Corporation 401(k) Savings Plan included in the Annual Report (Form 10-K) for the year ended December 31, 2001 and (2) the Registration Statement (Form S-8, Number 333-70225, dated January 7, 1999) pertaining to the Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors and in the related Prospectus of our report dated February 27, 2002 with respect to the financial statements of the Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors included in the Annual Report (Form 10-K) for the year ended December 31, 2001.

March 22, 2002
Detroit, Michigan /s/ Ernst & Young LLP

EX-23

EXHIBIT 23.2

[CROWE CHIZEK LOGO]

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in (1) the Registration Statement (Form S-8, Number 33-15064, dated June 17, 1987, pertaining to the Chemical Financial Corporation 1987 Award and Stock Option Plan, (2) the Registration Statement (Form S-8, Number 33-40792, dated May 21, 1991) pertaining to the Chemical Financial Corporation 401(k) Savings Plan and in the related Prospectus, (3) the Registration Statement (Form S-8, Number 333-38511, dated October 22, 1997) pertaining to the Chemical Financial Corporation 1997 Stock Incentive Plan, (4) the Registration Statement (Form S-8, Number 333-70225), dated January 7, 1999, pertaining to the Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors and (5) the Registration Statement (Form S-8, Number 333-56482, dated March 2, 2001) pertaining to the Chemical Financial Corporation Stock Option Plan for Holders of Shoreline Financial Corporation, of our report dated January 31, 2001 with respect to the consolidated balance sheet of Shoreline Financial Corporation as of December 31, 2000, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for the years ended December 31, 2000 and 1999.

We consent to the incorporation by reference in the Registration Statement (Form S-8, Number 33-40792, dated May 21, 1991) pertaining to the Chemical Financial Corporation 401(k) Savings Plan and in the related Prospectus of our report dated January 25, 2002, with respect to the financial statements and schedules of the Shoreline Financial Corporation 401(k)/Profit Sharing Plan included in the Annual Report (Form 10-K) of Chemical Financial Corporation for the year ended December 31, 2001.

March 19, 2002
Grand Rapids, Michigan /s/ Crowe Chizek and Company LLP
Crowe Chizek and Company LLP

EX-24

EXHIBIT NO. 23.1

[ERNST & YOUNG LOGO]

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in (1) the Registration Statement (Form S-8, Number 33-15064, dated June 17, 1987, pertaining to the Chemical Financial Corporation 1987 Award and Stock Option Plan, (2) the Registration Statement (Form S-8, Number 33-40792, dated May 21, 1991) pertaining to the Chemical Financial Corporation 401(k) Savings Plan and in the related Prospectus, (3) the Registration Statement (Form S-8, Number 333-38511, dated October 22, 1997) pertaining to the Chemical Financial Corporation 1997 Stock Incentive Plan, (4) the Registration Statement (Form S-8, Number 333-70225 dated January 7, 1999) pertaining to the Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors, and (5) the Registration Statement (Form S-8, Number 333-56482, dated March 2, 2001) pertaining to the Chemical Financial Corporation Stock Option Plan for Holders of Shoreline Financial Corporation of our report dated January 22, 2002 with respect to the consolidated financial statement s of Chemical Financial Corporation incorporated by reference in the Annual Report (Form 10-K) for the year ended December 31, 2001.

We consent to the incorporation by reference in (1) the Registration Statement (Form S-8, Number 33-40792, dated May 21, 1991) pertaining to the Chemical Financial Corporation 401(k) Savings Plan and in the related Prospectus of our report dated February 27, 2002, with respect to the financial statements and schedules of the Chemical Financial Corporation 401(k) Savings Plan included in the Annual Report (Form 10-K) for the year ended December 31, 2001 and (2) the Registration Statement (Form S-8, Number 333-70225, dated January 7, 1999) pertaining to the Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors and in the related Prospectus of our report dated February 27, 2002 with respect to the financial statements of the Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors included in the Annual Report (Form 10-K) for the year ended December 31, 2001.

March 22, 2002
Detroit, Michigan /s/ Ernst & Young LLP

EX-99

EXHIBIT 99.1

FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE

Chemical Financial Corporation 401(k) Savings Plan

Years ended December 31, 2001 and 2000

Chemical Financial Corporation
401(k) Savings Plan

Financial Statements and Supplemental Schedule

Years ended December 31, 2001 and 2000

Contents

Report of Independent Auditors	1
Financial Statements
Statements of Assets Available for Benefits	2
Statement of Changes in Assets Available for Benefits	3
Notes to Financial Statements	4
Supplemental Schedule
Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes at End of Year	8

Report of Independent Auditors

Administrative Committee
Chemical Financial Corporation 401(k) Savings Plan

We have audited the accompanying statements of assets available for benefits of the Chemical Financial Corporation 401(k) Savings Plan as of December 31, 2001 and 2000, and the related statement of changes in assets available for benefits for the year ended December 31, 2001. 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 benefits of the Plan at December 31, 2001 and 2000, and the changes in its assets available for benefits for the year ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

Our audits were performed 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, 2001 is presented for purpose of additional analysis and is not a required part of the financial statements but is supplemental information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

s/ Ernst & Young LLP
Detroit, Michigan

February 27, 2002

1

Chemical Financial Corporation 401(k) Savings Plan

Statements of Assets Available for Benefits

	December 31
	2001		2000
Assets
Investments, at fair value:
Chemical Financial Corporation common stock	$	2,556,604	$	1,739,077
Mutual funds		4,838,131		4,454,543
Loans to participants		56,681		59,543
Total investments		7,451,416		6,253,163
Receivables:
Participant contributions				33,885
Accrued income		1,853		3,172
Assets available for benefits	$	7,453,269	$	6,290,220

See accompanying notes.

2

Chemical Financial Corporation 401(k) Savings Plan

Statement of Changes in Assets Available for Benefits

Year ended December 31, 2001

Additions
Interest and dividend income	$	163,431
Participant contributions		968,120
Total Additions		1,131,551
Deductions
Benefit payments		251,972
Total deductions		251,972
Net realized and unrealized appreciation in
fair value of investments		283,470
Net increase in assets available for benefits		1,163,049
Assets available for benefits:
Beginning of year		6,290,220
End of year	$	7,453,269

See accompanying notes.

3

Chemical Financial Corporation
401(k) Savings Plan

Notes to Financial Statements

December 31, 2001 and 2000

1. Description of the Plan

The following description of the Chemical Financial Corporation (the "Company") 401(k) Savings Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement for a complete description of the Plan's provisions.

General

The Plan is a defined contribution plan covering all employees who have completed one year of service and have attained age 21. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Vesting

Participants are 100% vested in their contributions and earnings thereon. Only whole years of service with the Company will be counted to compute years of service for eligibility purposes.

Contributions

Each year, participants may contribute up to 25% of pretax annual compensation, as defined in the Plan.

Participant Accounts

Each participant's account is credited with the participant's contributions and Plan earnings. Participants direct the investment of their accounts among the investment funds offered by the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account.

4

Chemical Financial Corporation
401(k) Savings Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Participant Loans

Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms range from 1-5 years. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates as determined monthly by the plan administrator. Principal and interest are paid ratably through semi-monthly payroll deductions.

Payment of Benefits

On termination of service or upon death, disability or retirement, a participant may request benefit payment. Benefit payments are distributed in lump-sum amount equal to the vested value of the participant's account. Payment of benefits may not be deferred by participants beyond their attainment of age 70-1/2, unless the participant remains employed by the Company.

2. Summary of Accounting Policies

Investment Valuation

The Plan's investments are stated at 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. Mutual funds are stated at the quoted market prices which represent the net asset values of shares held by the Plan at year-end. The participant loans are valued at their outstanding balances, which approximate fair value.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

5

Chemical Financial Corporation
401(k) Savings Plan

Notes to Financial Statements (continued)

2. Summary of Accounting Policies (continued)

Plan Termination

Although it has not expressed the intention to do so, the Company has reserved the right to terminate the Plan at any time by resolution of its Board of Directors subject to the provisions of ERISA. In the event of Plan termination, participants will continue to be 100 percent vested in their accounts. The value of the participant accounts will be determined as of the effective date of the termination and distributed as provided by the Plan.

Administration

The Company has elected to pay all significant administrative costs of the Plan.

3. Investments

During the year ended December 31, 2001 the Plan's net appreciation in the fair value of investments (including investments bought, sold as well as held during the year) is summarized as follows:

Mutual Funds	$	(377,070	)
Chemical Financial Corporation    common stock		660,540
	$	283,470

6

Chemical Financial Corporation
401(k) Savings Plan

Notes to Financial Statements (continued)

3. Investments (continued)

Investments that represent 5% or more of the Plan's assets are as follows:

	Fair Value at December 31
	2001		2000
Federated Investors Index Fund	$	2,202,555	$	2,392,880
Fidelity Investments Stock and Bond    Fund		799,638		767,475
Chemical Financial Corporation    Common Stock		2,556,604		1,739,077
Federated Investors Money Market    Fund		489,612		344,382

4. 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. Subsequent to the issuance of the determination letter, the Plan was restated in its entirety. 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, as amended, is qualified and the related trust is tax exempt.

5. Subsequent Event

Effective January 2, 2002, the Shoreline Financial Corporation 401(k) Plan with plan assets of $12,907,178 at December 31, 2001 was merged into the Plan. All eligible participants of the Shoreline Financial Corporation 401(k) Plan became eligible participants of the Plan.

7

Supplemental Schedule

Chemical Financial Corporation 401(k) Savings Plan
Employer ID # 38-2022454
Plan # 002

Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes at End of Year

December 31, 2001

Identity of Issue, Borrower, Lessor or Similar Party	Description of Investment Including Maturity Date, Rate of Interest Collateral, Par or Maturity Value	Cost	Current Value
*Chemical Financial Corp	Common Stock		$	2,556,604
Federated Investors Mutual Funds	Intermediate Bond Fund			344,339
	Index Fund			2,202,555
	Middle Cap Stock Fund			251,880
	Value Fund			131,707
	Money Market Fund			489,612
Fidelity Investments	Stock and Bond Fund			799,638
	International Stock Fund			121,267
	Low-Priced Stock Fund			216,606
	Growth Stock Fund			280,527
*Participant Loans	Interest rate range: 7.41% to 9.75%; with
	various maturity dates			56,681
			$	7,451,416

*Party-in-interest.

Note: Historical cost information is not disclosed since all investments are participant directed

8

EX-99

EXHIBIT No. 99.2

Audited Financial Statements
With Report of Independent Auditors

Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors

December 31, 2001

1

Report of Independent Auditors

Plan Administrator
Chemical Financial Corporation
1998 Stock Purchase Plan for Subsidiary Directors

          We have audited the accompanying statements of financial condition of the Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors as of December 31, 2001 and 2000 and the related statements of income and changes in plan equity for the years ended December 31, 2001, 2000, and 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 1998 Stock Purchase Plan for Subsidiary Directors at December 31, 2001 and December 31, 2000 and the results of its operations and changes in its plan equity for the years ended December 31, 2001, 2000, and 1999 in conformity with accounting principles generally accepted in the United States.

s/ Ernst & Young LLP
Detroit, Michigan

February 27, 2002

2

Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors

Statements of Financial Condition

		December 31
		2001		2000
Assets
Cash	$	729	$	590
Common stock receivable of Chemical
Financial Corporation, at market value - (7,405 shares at a cost
of $190,631 at December 31, 2001 and 13,651 shares at a cost of
$309,182 at December 31, 2000)		222,891		302,273
Total Assets	$	223,620	$	302,863
Plan Equity
Plan equity (42 participants at December 31, 2001 and 46
participants at December 31, 2000)	$	223,620	$	302,863

See accompanying notes.

3

Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors

Statements of Income and Changes in Plan Equity

	Years Ended December 31
Additions		2001			2000			1999
Participant contributions	$	187,275		$	302,625		$	278,375
Dividend equivalents and
fractional share interests		3,529			6,574			3,915
Transfer from prior plan (Note 1)		--			--			45,747
		190,804			309,199			328,037
Deductions
Plan distributions		309,218			271,224			44,991
		(118,414	)		37,975			283,046
Net realized and unrealized appreciation (depreciation)
in fair value of common stock receivable		39,171			(6,909	)		(11,249	)
Net increase (decrease)		(79,243	)		31,066			271,797
Plan equity at beginning of year		302,863			271,797			--
Plan equity at end of year	$	223,620		$	302,863		$	271,797

See accompanying notes.

4

Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors

Notes to Financial Statements
December 31, 2001

Note 1 - Description of the Plan

          The Chemical Financial Corporation 1998 Stock Purchase Plan for Subsidiary Directors (Plan) was implemented by Chemical Financial Corporation (Corporation) on December 14, 1998. The Plan is designed to provide non-employee directors and community bank advisory directors of the Corporation's subsidiaries, who are neither directors or employees of the Corporation, with a convenient method of acquiring Corporation stock. The Plan provides for a maximum of 25,000 shares of the Corporation's common stock, $1.00 par value (Common Stock), subject to adjustments for certain changes in the capital structure of the Corporation as defined in the Plan, to be available under the Plan.

          Subsidiary directors and community bank 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 community bank advisory directors of the Corporation's subsidiaries. Participant contributions to the Plan are made by the Corporation's subsidiaries on behalf of each electing participant. As of the last day of each month, each participant's cash account is debited for the purchase of whole shares of the Corporation's stock that is credited to a separate participant stock account. The stock purchased under the Plan during the calendar year is issued by the Corporation directly to the participants in the following calendar year. 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 community bank advisory directors of subsidiaries of the Corporation. Upon withdrawal from the Plan, each participant will receive the shares of common stock of the Cor poration in their participant stock account and the cash in their participant cash account.

5

Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors

Notes to Financial Statements (continued)
December 31, 2001

Note 1 - Description of the Plan (continued)

          On January 1, 1999, a common stock receivable for 1,344 shares of the Corporation, with a market value of $44,991 and a cost basis of $44,293, and cash of $756 of the 1992 Stock Purchase Plan for Subsidiary Directors were transferred to the Plan. The 1992 Stock Purchase Plan for Subsidiary Directors had the same terms and provisions as the Plan. The Plan had 2,789 shares and 16,440 shares, as of December 31, 2001 and 2000, respectively, of the Corporation's common stock available for future issuance, adjusted for the 5% stock dividend paid by the Corporation on December 21, 2001.

          The Corporation reserves the right to terminate or amend the Plan at any time, provided, however, that no termination or amendment shall affect or diminish any participant's right to the benefit of contributions made by him/her prior to the date of such amendment or termination.

          The Plan provides that all expenses of the Plan and its administration shall be paid by the Corporation.

          The Plan is not qualified under Sections 401(a) or 501(a) of the Internal Revenue Code of 1986, as amended. The Plan does not provide for income taxes because any income is taxable to the participants. Participants in the Plan must treat as taxable income the contributions made to the Plan by the Corporation's subsidiaries on their behalf. Dividend equivalents and any other cash credited to the participants' cash accounts are taxable to the participants for Federal and state income tax purposes in the year such dividend equivalent or cash is credited to the participant cash account. Upon disposition of the common stock of the Corporation purchased under the Plan, participants must treat any gain or loss as long-term or short-term capital gain or loss depending upon when such disposition occurs.

6

Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors

Notes to Financial Statements (continued)
December 31, 2001

Note 2 - Summary of Accounting Policies

Valuation of Common Stock Receivable

          Common stock receivable of the Corporation is recorded at the market value per share of the Corporation's common stock multiplied by the number of shares receivable at the valuation date. Market value is based on the closing bid price of the Corporation's common stock at year end ($30.10 per share at December 31, 2001 and $22.14 per share at December 31, 2000.) The number of shares receivable and the closing bid price as of December 31, 2000 were adjusted for the 5% stock dividend on the Corporation's common stock paid on December 21, 2001.

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.

7

Chemical Financial Corporation
1998 Stock Purchase Plan
for Subsidiary Directors

Notes to Financial Statements (continued)
December 31, 2001

Note 3 - Contributions

          Contributions for participants by the participating companies were as follows:

		Year Ended December 31
Participating Company		2001		2000		1999
Chemical Bank and Trust Co.	$	84,850	$	167,300	$	160,750
Chemical Bank Shoreline		34,925		32,475		-
Chemical Bank West		64,700		102,150		115,225
CFC Data Corp		2,800		700		2,400
Total Participant Contributions	$	187,275	$	302,625	$	278,375

8

EX-99

EXHIBIT 99.3

SHORELINE FINANCIAL CORPORATION
401(k)/PROFIT SHARING PLAN

FINANCIAL STATEMENTS
December 31, 2001 and 2000

SHORELINE FINANCIAL CORPORATION
401(k)/PROFIT SHARING PLAN
Benton Harbor, Michigan

FINANCIAL STATEMENTS
December 31, 2001 and 2000

CONTENTS

REPORT OF INDEPENDENT AUDITORS	1
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS	2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS	3
NOTES TO FINANCIAL STATEMENTS	4
SUPPLEMENTAL SCHEDULE
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)	9

[CROWE CHIZEK LOGO]

REPORT OF INDEPENDENT AUDITORS

Administrative Committee
Chemical Financial Corporation
Benton Harbor, Michigan

RE:  SHORELINE FINANCIAL CORPORATION 401(k)/PROFIT SHARING PLAN

We have audited the accompanying statements of net assets available for benefits of Shoreline Financial Corporation 401(k)/Profit Sharing Plan as of December 31, 2001 and 2000, and the related statement of changes in net assets available for benefits for the year ended December 31, 2001. 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 of America. 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 net assets available for benefits of the Plan as of December 31, 2001 and 2000, and the changes in net assets available for benefits for the year ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

	/s/ Crowe, Chizek and Company LLP Crowe, Chizek and Company LLP
Grand Rapids, Michigan January 25, 2002

1

SHORELINE FINANCIAL CORPORATION 401(k)/PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2001 and 2000

	2001		2000
ASSETS
Investments
Common stock	$	4,510,425	$	4,362,179
Shares of registered investment companies		8,164,469		6,764,428
Loans to Plan participants		227,508		300,566
		12,902,402		11,427,173
Cash		4,776		331,380
NET ASSETS AVAILABLE FOR BENEFITS	$	12,907,178	$	11,758,553

See accompanying notes to financial statements.

2

SHORELINE FINANCIAL CORPORATION 401(k)/PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2001

Additions to net assets attributed to:
Investment income
Net appreciation in fair value of investments	$	1,420,564
Interest		22,945
Dividends		312,369
		1,755,878
Contributions
Employer		384,220
Participants		704,224
Rollovers		122,570
		1,211,014
Total additions		2,966,892
Deductions from net assets attributed to:
Benefits paid to participants		1,799,967
Administrative expenses		18,300
Total deductions		1,818,267
Net increase		1,148,625
Net assets available for benefits		11,758,553
Beginning of year
End of year	$	12,907,178

See accompanying notes to financial statements.

3

SHORELINE FINANCIAL CORPORATION
401(k)/PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000

NOTE 1 - DESCRIPTION OF PLAN

The following description of the Shoreline Financial Corporation 401(k)/Profit Sharing Plan (Plan) provides only general information. Participants should refer to the Plan agreement or Summary Plan Description for a more complete description of the Plan's provisions.

General: The Plan is a profit sharing plan and provides for employee contributions under Section 401(k) of the Internal Revenue Code. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Employees with at least one hour of service are entitled to defer a portion of their salary to the plan. After one year of service a participant is entitled to receive an employer match. One year of service is required before a participant can take part in the profit sharing features of the Plan. A participant is credited with a year of service after completion of 1,000 hours of service during an eligibility period. A participant must also be at least 18 years of age to become eligible.

Contributions: Employer profit sharing contributions are made at the discretion of the Board of Directors of Shoreline Financial Corporation (the Company; Employer). For 2001, the profit sharing contribution totaled approximately $224,000. In addition, the employer matched 50% of employees' voluntary salary deferrals up to 4% of compensation. Employee voluntary salary deferrals may not exceed 15% of gross compensation.

Participant Accounts: Each participant's account is credited with the participant's contribution, an allocation of the Company's contribution, if eligible, and plan earnings net of administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account.

Vesting: Participants are 100% vested in employee contributions and income thereon, at all times. Participants are 100% vested in employer contributions after two years.

Payment of Benefits: On termination of service due to death, disability or retirement, a participant may elect to receive an amount equal to the value of the participant's vested interest in his or her account in a lump-sum amount. For termination of service due to other reasons, a participant may transfer the value of the vested interest in his or her account to the trustee or custodian of another qualified retirement plan or receive a lump-sum distribution.

4

SHORELINE FINANCIAL CORPORATION
401(k)/PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000

NOTE 1 - DESCRIPTION OF PLAN (Continued)

Plan Termination: Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA and its related regulations. In the event of Plan termination, participants would become 100 percent vested in their employer contributions.

Investment Options: Upon enrollment in the Plan, a participant may direct employee and employer contributions to any of eleven investment options. Participants are allowed to change their investment options at any time.

Participant Loans: Participants may borrow from their fund accounts up to a maximum equal to the lesser of $50,000 or 50 percent of their vested account balance. Loan transactions are treated as a transfer to (from) the investment fund from (to) the Loan Fund. The term of the loan shall not exceed five years and shall have a stated maturity date not later than the date of the first expected distribution to the participant. The loan shall bear a reasonable rate of interest which shall be the prevailing rate charged by lenders for a loan of a similar type.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The policies and principles which significantly affect the determination of net assets and results of operations are summarized below.

Accounting Method: The Plan's financial statements are prepared on a basis of accounting in conformity with generally accepted accounting principles.

Investment Valuation: The Plan's investments are stated at fair value. Quoted market prices are used to value investments. Shares of registered investment companies are valued at the net asset value of shares held by the Plan at year-end. Loans to Plan participants are stated at cost which approximates fair value.

Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures, and actual results may differ from these estimates. It is at least reasonably possible that a significant change may occur in the near term for investment valuation.

5

SHORELINE FINANCIAL CORPORATION
401(k)/PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000

NOTE 3 - INVESTMENTS

The following presents investments that represent 5% or more of the Plan's net assets.

	December 31, 2001
	Units	Fair Value
Shares of Registered Investment Companies
Federated Investors Money Market	899,615	$	899,615
Federated Max-Cap Index fund	32,255		750,901
Federated Mid-Cap Index fund	76,511		1,294,568
Fidelity Magellan fund	18,065		1,882,691
Fidelity Blue Chip Growth fund	33,968		1,458,579
Chemical Financial Corporation common stock	149,848		4,510,425

	December 31, 2000
	Units	Fair Value
Shares of Registered Investment Companies
Fidelity Institutional Cash Portfolio fund	1,246,541	$	1,246,541
Fidelity Magellan fund	17,291		2,062,432
Fidelity Growth & Income fund	49,803		2,096,255
Fidelity Growth Opportunities fund	23,695		811,470
Shoreline Financial Corporation common stock	290,300		4,362,179

During 2001, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $1,420,564 as follows:

Shares of Registered Investment Companies	$	278,430
Chemical Financial Corporation common stock		1,142,134
	$	1,420,564

6

SHORELINE FINANCIAL CORPORATION
401(k)/PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000

NOTE 4 - TAX STATUS

The Shoreline Financial Corporation 401(k)/Profit Sharing Plan is a prototype plan, and uses a standardized Plan document sponsored by Chemical Bank & Trust Company (Chemical). The Internal Revenue Service has determined and informed Chemical by letter dated February 8, 1993, that the prototype plan is designed in accordance with the applicable sections of the Internal Revenue Code (IRC) for tax exempt status. The Plan Administrator believes the Plan is being operated in accordance with the terms of the Plan document

NOTE 5 - MERGER

On January 9, 2001, Shoreline Financial Corporation (Shoreline) merged with Chemical Financial Corporation (Chemical), a bank holding company headquartered in Midland, Michigan. The transaction was accounted for as a pooling-of-interest business combination in which each share of Shoreline common stock was exchanged for .64 share of Chemical common stock on a tax-free basis. As a result of this business combination, the Plan switched both the record keeping and custodian functions to Chemical Bank and Trust Company. The Shoreline 401(k)/Profit Sharing Plan was maintained separately during 2001. All plan assets were transferred to Chemical Bank and Trust Company on January 2, 2001.

Effective January 1, 2002, all assets of the Plan were merged into the Chemical Financial Corporation 401(k) Savings Plan. For compliance purposes, this was treated as a trustee-to-trustee transfer.

NOTE 6 - PARTY-IN-INTEREST TRANSACTIONS

Parties-in-interest are defined under Department of Labor Regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer and certain others. Professional fees for the administration and audit of the Plan were paid by the Company.

Upon completion of the merger, the Plan received 187,319 shares of Chemical common stock in exchange for Shoreline common stock. During 2001, the Plan, under employee direction, purchased 29,475 shares of Chemical common stock for a total purchase price of approximately $715,000 and sold 73,998 shares of Chemical common stock for approximately $2,427,430. In addition, Chemical issued a 5% stock dividend which resulted in 7,052 additional shares in 2001.

The Plan held the following party-in-interest investments (at fair value):

	December 31,
	2001		2000
Shoreline Financial Corporation - Common Stock			$	4,362,179
Chemical Financial Corporation - Common Stock	$	4,510,425

7

SHORELINE FINANCIAL CORPORATION
401(k)/PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000

NOTE 7 - PLAN AMENDMENTS

Effective January 1, 2001, the Plan was amended for the following changes. The trustee of the plan was changed to Chemical Bank and Trust Company. The entry date for new plan participants was changed from quarterly to monthly for employee contributions, and from semi-annually to quarterly for employer contributions. Normal retirement age was changed from 65 years to 60 years. Additionally, forfeitures will be used to reduce employer contributions to the Plan, instead of offsetting administrative expenses.

8

SUPPLEMENTAL SCHEDULE

SHORELINE FINANCIAL CORPORATION
401(k)/PROFIT SHARING PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2001

Attachment to Form 5500, Schedule H, Part IV, Line 4i
Name of plan sponsor:	Chemical Financial Corporation
Employer identification number:	38-0415896
Three-digit plan number:	002

(a)	(b) Identity of Issue or Borrower	(c) Description of Investment (Share or Par Value)	(d) Cost	(e) Current Value
Federated	Money Market fund	899,615 shares		$	899,615
Investors	Max-Cap Index fund	32,255 shares			750,901
Mutual	U.S. Government Securities    fund	33,685 shares			373,564
Funds	Mid-Cap Index fund	76,511 shares			1,294,568
	Stock Trust fund	7,105 shares			241,134
Fidelity	Puritan fund	27,464 shares			485,298
Investments	Low-Priced Stock fund	15,784 shares			432,810
Mutual	Blue Chip Growth fund	33,968 shares			1,458,579
Funds	Investment Trust Diversified    International fund	18,098 shares			345,309
	Magellan fund	18,065 shares			1,882,691
*Chemical   Financial   Corporation	Common stock	149,848 shares			4,510,425
Participant loans		Highest interest rate - 10.5%			227,508
		Lowest interest rate - 7.25%
				$	12,902,402

Due to all Plan investment elections being participant directed, disclosure of historical cost of certain Plan assets held by the Plan trustee is not required under the Employee Retirement Income Security Act of 1974.

*	Denotes party-in-interest
(d)	All investments are participant directed, therefore, historical cost information is not required.