8-K

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

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 24, 2006

Chemical Financial Corporation
(Exact Name of Registrant as
Specified in its Charter)

Michigan
(State or Other Jurisdiction
of Incorporation) 000-08185
(Commission
File Number) 38-2022454
(IRS Employer
Identification No.)

333 E. Main Street
Midland, Michigan
(Address of Principal Executive Offices)
48640
(Zip Code)

Registrant's telephone number, including area code:  (989) 839-5350

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

                    On July 24, 2006, Chemical Financial Corporation issued the press release attached as Exhibit 99.1 to this Form 8-K, which is here incorporated by reference. This Report and the Exhibit are furnished to, and not filed with, the Commission.

Item 9.01	Financial Statements and Exhibits.
	(d)	Exhibits:
		99.1	Press Release dated July 24, 2006. This Exhibit is furnished to, and not filed with, the Commission.

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SIGNATURES

                    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:	July 24, 2006	CHEMICAL FINANCIAL CORPORATION (Registrant)
		/s/ Lori A. Gwizdala
		Lori A. Gwizdala      Executive Vice President, Chief Financial      Officer and Treasurer

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EXHIBIT INDEX

Exhibit Number	Document
99.1	Chemical Financial Corporation Press Release dated July 24, 2006. This Exhibit is furnished to, and not filed with, the Commission.

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EX-99.1

EXHIBIT 99.1

For further information:
Lori A. Gwizdala, CFO
Chemical Financial Corporation
(989) 839-5358

For Immediate Release

Chemical Financial Corporation Reports Second Quarter 2006 Earnings

          Midland, MI, July 24, 2006--- Chemical Financial Corporation's (NASDAQ: CHFC) Board of Directors today announced 2006 second quarter net income of $12.2 million, or $0.49 per diluted share, versus reported net income of $13.2 million, or $0.53 per diluted share, in the second quarter of 2005.

          Net income was $24.1 million, or $0.96 per diluted share, in the first six months of 2006, compared to net income of $26.7 million, or $1.06 per diluted share, in the first six months of 2005.

          "Rising interest rates continued to negatively impact financial results during the second quarter. Increases in noninterest income were offset by a decrease in net interest income, due primarily to higher interest paid on deposits and short-term borrowings," said David B. Ramaker, Chairman, President and Chief Executive Officer of Chemical Financial Corporation.

          "The implementation phase of our previously announced strategic restructuring plan, which we believe will position the Company to better capitalize on growth opportunities and enhance operating efficiencies, is nearing completion. During the quarter, we announced the acquisition of two branch offices in the Grand Rapids market, which is expected to be completed in the third quarter. In addition, to bolster organic growth, we initiated a system-wide sales and service training program to improve sales, cross sales and customer development and retention across our 123 branch office

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network. We continue to explore other avenues to enhance financial performance. Absent further interest rate increases, we are cautiously optimistic about the short-term financial outlook for the remainder of the year," added Ramaker.

          During the second quarter of 2006, restructuring costs of $0.17 million were incurred. Management had estimated that total costs for the restructuring would not exceed $0.8 million in 2006 and would be incurred primarily during the first half of the year. Actual restructuring costs incurred in the first six months of 2006 were $0.56 million. Management anticipates incurring the remaining $0.24 million of restructuring costs during the third quarter of 2006.

          Net interest income was $33.2 million in the second quarter of 2006, a decrease of 7.0 percent from second quarter 2005 net interest income of $35.7 million. The decrease in net interest income was attributable to decreases in both average interest-earning assets and the net interest margin, partially offset by a decrease in average interest-bearing liabilities. The net interest margin (on a tax-equivalent basis) fell from 4.10% in the second quarter of 2005 to 3.88% in the second quarter of 2006. The decline in net interest margin was primarily attributable to increases in rates paid on interest-bearing liabilities outstripping yields earned on interest-earning assets, as deposits continued to reprice more rapidly than loans in the rising interest rate environment.

          Total assets were $3.73 billion at June 30, 2006, down slightly from $3.75 billion at December 31, 2005 and up slightly from $3.72 billion at June 30, 2005. At June 30, 2006, total loans were $2.76 billion, versus $2.71 billion at December 31, 2005 and $2.65 billion at June 30, 2005. Investment securities were $646 million at June 30, 2006, down from $722 million at December 31, 2005 and $799 million at June 30, 2005. The decrease in investment securities was primarily attributable to the Company using excess liquidity from maturing investment securities to fund loan growth.

          Total deposits were $2.79 billion at June 30, 2006, down slightly from $2.82 billion at December 31, 2005 and from $2.82 billion at June 30, 2005. In the second

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quarter of 2006, the Company continued to experience strong competition for deposits in the markets it serves. Other liabilities, which include Federal Home Loan Bank advances, totaled $440 million at June 30, 2006, up from $428 million at December 31, 2005 and from $403 million at June 30, 2005.

          The provision for loan losses was $400,000 in the second quarter of 2006, compared to $460,000 in the first quarter of 2006 and $730,000 in the second quarter of 2005. Net loan losses were $916,000 in the second quarter of 2006, compared to $454,000 in the first quarter of 2006 and $1,079,000 in the second quarter of 2005. Net loan losses in the second quarter of 2006 include a $0.6 million loss on a real estate commercial construction loan. The loan was deemed an impaired loan during the fourth quarter of 2005, with a $0.6 million impairment reserve. The remaining loan balance of $2.6 million was transferred to other real estate during the second quarter of 2006. The allowance for loan losses as a percentage of total loans was 1.22 percent at June 30, 2006, down from 1.27 percent at March 31, 2006 and from 1.27 percent at June 30, 2005. At June 30, 2006, nonperforming loans as a percentage of total loans were 0.99 percent, up from 0.73 percent at March 31, 2006 and up f rom 0.61 percent at June 30, 2005.

          On June 30, 2006, nonperforming assets totaled $36.9 million, up from $21.9 million at June 30, 2005 and $27.6 million at March 31, 2006. The increase in nonperforming assets from the previous quarter's end is due primarily to a $4.3 million increase in nonaccrual commercial loans and a $3.7 million increase in real estate commercial loans past due 90 days or more. While nonperforming assets have increased, management does not anticipate increased significant loss exposure as a result of this increase.

          Total noninterest income was $10.5 million in the second quarter of 2006, up $0.8 million, or 7.8 percent, from the second quarter of 2005. In the second quarter of 2006, the Company experienced increases in service charges on deposit accounts, as well as increases in other fees for customer services, compared to the second quarter of 2005.

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          Operating expenses were $25.1 million in the second quarter of 2006, up $0.3 million, or 1.3 percent, from the second quarter of 2005, and unchanged from $25.1 million in the first quarter of 2006. Excluding restructuring expenses of $0.17 million incurred in the second quarter of 2006 in conjunction with the strategic restructuring, operating expenses in the second quarter of 2006 were $24.9 million. The Company's efficiency ratio was 56.8 percent in the second quarter of 2006, down from 57.3 percent in the first quarter of 2006, although up from 54.0 percent in the second quarter of 2005. The increase in the ratio from the prior year is primarily attributable to the decrease in net interest income.

          The Company's return on average assets during the second quarter of 2006 was 1.32 percent, down from 1.41 percent in the second quarter of 2005 and up slightly from 1.28 percent in the first quarter of 2006. Shareholders' equity increased from $495 million at June 30, 2005 to $500 million at June 30, 2006. At June 30, 2006, the Company's book value stood at $20.14 per share versus $19.68 per share at June 30, 2005. The decline in return on assets combined with the increase in shareholders' equity resulted in a decline in return on average equity to 9.7 percent in the second quarter of 2006 from 10.8 percent in the second quarter of 2005.

          Chemical Financial Corporation is the fourth largest bank holding company headquartered in Michigan. The Company operates through a single subsidiary bank, Chemical Bank, with 123 banking offices spread over 32 counties in the lower peninsula of Michigan. At June 30, 2006, the Company had total assets of $3.73 billion. Chemical Financial Corporation common stock trades on The Nasdaq Stock Market, Inc. under the symbol CHFC and is one of the issues comprising The NASDAQ Global Select Market and the NASDAQ Financial 100 index.

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Forward-Looking Statements

This press release contains forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "intends," "should," "will," variations of such words and similar expressions are intended to identify forward-looking statements. These statements reflect management's current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions 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. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates and banking laws and regulations; the impact of competition from traditional or new sources; and the possibility that anticipated cost savings and revenue enhanc ements from acquisitions, restructurings and bank consolidations may not be fully realized at all or within the expected time frames. These and other factors that may emerge could cause decisions and actual results to differ materially from current expectations. Chemical Financial Corporation undertakes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

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Chemical Financial Corporation Announces Second Quarter Operating Results

Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation

(In thousands, except per share data)	June 30, 2006			December 31, 2005			June 30, 2005
Assets:
Cash due from banks	$	110,457		$	145,575		$	105,261
Federal funds sold		36,500			6,600			5,000
Interest-bearing deposits with unaffiliated banks		5,211			5,321			5,804
Investment securities - available for sale		549,532			594,491			658,594
Investment securities - held to maturity		96,518			127,806			139,934
Total Investment Securities		646,050			722,297			798,528
Other securities		25,683			21,051			21,052
Commercial loans		536,099			517,852			491,919
Real estate commercial loans		706,213			704,684			714,393
Real estate construction loans		155,463			158,376			129,144
Real estate residential loans		812,407			788,679			766,447
Consumer loans		554,492			540,623			552,100
Total Loans		2,764,674			2,710,214			2,654,003
Less: Allowance for loan losses		33,638			34,148			33,822
Net Loans		2,731,036			2,676,066			2,620,181
Premises and equipment		44,736			45,058			46,165
Intangible assets		70,229			71,496			73,031
Interest receivable and other assets		60,740			55,852			47,078
Total Assets	$	3,730,642		$	3,749,316		$	3,722,100
Liabilities:
Noninterest-bearing deposits	$	535,537		$	542,014		$	531,667
Interest-bearing deposits		2,255,816			2,277,866			2,292,512
Total Deposits		2,791,353			2,819,880			2,824,179
Interest payable and other liabilities		28,162			28,008			27,526
Securities sold under agreements to repurchase		151,267			125,598			96,781
Reverse repurchase agreements		-			10,000			10,000
Federal Home Loan Bank advances - short-term		125,000			68,000			25,000
Federal Home Loan Bank advances - long-term		135,072			196,765			243,959
Total Liabilities		3,230,854			3,248,251			3,227,445
Shareholders' Equity:
Common stock, $1 par value		24,817			25,079			25,138
Surplus		368,562			376,046			377,854
Retained earnings		116,875			106,507			93,650
Accumulated other comprehensive loss		(10,466	)		(6,567	)		(1,987	)
Total Shareholders' Equity		499,788			501,065			494,655
Total Liabilities and Shareholders' Equity	$	3,730,642		$	3,749,316		$	3,722,100

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Chemical Financial Corporation Announces Second Quarter Operating Results

Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except per share data)	2006		2005		2006		2005
Interest Income:
Interest and fees on loans	$	45,474	$	40,221	$	89,184	$	79,032
Interest on investment securities:
Taxable		6,176		7,506		12,518		15,070
Nontaxable		611		522		1,231		1,012
Total Interest on Investment Securities		6,787		8,028		13,749		16,082
Interest on other securities		348		222		689		439
Interest on federal funds sold		621		251		1,572		904
Interest on deposits with unaffiliated banks		161		290		474		515
Total Interest Income		53,391		49,012		105,668		96,972
Interest Expense:
Interest on deposits		16,496		10,478		31,570		19,671
Interest on securities sold under agreements to repurchase		1,205		414		2,264		762
Interest on reverse repurchase agreements		62		31		154		31
Interest on Federal Home Loan Bank advances - short-term		602		36		1,019		36
Interest on Federal Home Loan Bank advances - long-term		1,809		2,355		3,853		4,827
Total Interest Expense		20,174		13,314		38,860		25,327
Net Interest Income		33,217		35,698		66,808		71,645
Provision for loan losses		400		730		860		1,460
Net Interest Income after
Provision for Loan Losses		32,817		34,968		65,948		70,185
Noninterest Income:
Service charges on deposit accounts		5,356		5,014		10,453		9,730
Trust and investment services revenue		2,094		2,055		4,099		4,072
Other charges and fees for customer services		2,255		1,908		4,387		3,596
Mortgage banking revenue		490		481		913		970
Net gains on sales of investment securities		-		82		-		1,171
Other		323		213		498		394
Total Noninterest Income		10,518		9,753		20,350		19,933
Operating Expenses:
Salaries, wages and employee benefits		14,012		14,625		28,602		29,169
Occupancy and equipment		4,766		4,517		9,552		9,273
Other		6,298		5,621		12,043		11,304
Total Operating Expenses		25,076		24,763		50,197		49,746
Income Before Income Taxes		18,259		19,958		36,101		40,372
Provision for federal income taxes		6,030		6,743		11,975		13,653
Net Income	$	12,229	$	13,215	$	24,126	$	26,719
Net income per share:
Basic	$	0.49	$	0.53	$	0.96	$	1.06
Diluted		0.49		0.53		0.96		1.06
Cash dividends per share	$	0.275	$	0.265	$	0.550	$	0.530
Average shares outstanding:
Basic		24,977		25,152		25,036		25,167
Diluted		25,010		25,200		25,075		25,224

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Chemical Financial Corporation Announces Second Quarter Operating Results

Financial Summary (Unaudited)
Chemical Financial Corporation

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2006		2005		2006		2005
Average Balances
Total assets	$	3,715,334	$	3,760,798	$	3,742,930	$	3,791,253
Total interest-earning assets		3,480,772		3,527,087		3,508,098		3,556,211
Total loans		2,731,421		2,604,615		2,713,680		2,590,054
Total deposits		2,840,341		2,892,240		2,856,318		2,910,691
Total shareholders' equity		503,306		490,813		503,646		489,194

	Three Months Ended June 30,				Six Months Ended June 30,
	2006		2005		2006		2005
Key Ratios (annualized where applicable)
Net interest margin		3.88%		4.10%		3.89%		4.11%
Efficiency ratio		56.8%		54.0%		57.0%		54.4%
Return on average assets		1.32%		1.41%		1.30%		1.42%
Return on average shareholders' equity		9.7%		10.8%		9.7%		11.0%
Average shareholders' equity as a
percent of average assets		13.5%		13.1%		13.5%		12.9%
Tangible shareholders' equity as a
percent of total assets						11.7%		11.6%
Total risk-based capital ratio						17.8%		17.7%

	June 30, 2006		March 31, 2006		December 31, 2005		September 30, 2005		June 30, 2005
Credit Quality Statistics
Nonaccrual loans	$	17,636	$	13,902	$	14,561	$	9,913	$	8,639
Loans 90 or more days past due
and still accruing		9,618		5,773		5,136		10,364		7,426
Total nonperforming loans		27,254		19,675		19,697		20,277		16,065
Repossessed assets (RA)		9,615		7,905		6,801		6,511		5,848
Total nonperforming assets		36,869		27,580		26,498		26,788		21,913
Net loan charge-offs (year-to-date)		1,370		454		4,303		2,523		1,804
Allowance for loan losses as a
percent of total loans		1.22%		1.27%		1.26%		1.28%		1.27%
Allowance for loan losses as a
percent of nonperforming loans		123%		174%		173%		171%		211%
Nonperforming loans as a
percent of total loans		0.99%		0.73%		0.73%		0.75%		0.61%
Nonperforming assets as a
percent of total loans plus RA		1.33%		1.02%		0.98%		0.99%		0.82%
Nonperforming assets as a
percent of total assets		0.99%		0.74%		0.71%		0.70%		0.59%
Net loan charge-offs as a percent of
average loans (year-to-date, annualized)		0.10%		0.07%		0.16%		0.13%		0.14%

	June 30, 2006		March 31, 2006		December 31, 2005		September 30, 2005		June 30, 2005
Additional Data
Goodwill	$	63,293	$	63,293	$	63,293	$	63,293	$	63,293
Core deposits and other intangibles		4,743		5,246		5,780		6,306		6,797
Mortgage servicing rights (MSR)		2,193		2,283		2,423		2,595		2,941
Amortization of intangibles (quarter-to-date)		683		718		776		903		793

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Chemical Financial Corporation Announces Second Quarter Operating Results

Selected Quarterly Information (Unaudited)
Chemical Financial Corporation

(In thousands, except per share data)	2nd Qtr. 2006	1st Qtr. 2006	4th Qtr. 2005	3rd Qtr. 2005	2nd Qtr. 2005
Summary of Operations
Interest income	$53,391	$52,277	$51,912	$50,420	$49,012
Interest expense	20,174	18,686	16,852	15,274	13,314
Net interest income	33,217	33,591	35,060	35,146	35,698
Provision for loan losses	400	460	1,325	1,500	730
Net interest income after provision
for loan losses	32,817	33,131	33,735	33,646	34,968
Noninterest income	10,518	9,832	9,038	10,249	9,753
Noninterest expense	25,076	25,121	23,878	24,839	24,763
Income taxes	6,030	5,945	6,341	5,451	6,743
Net income	12,229	11,897	12,554	13,605	13,215
Per Common Share Data
Net income:
Basic	$0.49	$0.47	$0.50	$0.54	$0.53
Diluted	0.49	0.47	0.50	0.54	0.53
Cash dividends	0.275	0.275	0.265	0.265	0.265
Book value	20.14	20.10	19.98	19.82	19.68

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