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CHEMICAL FINANCIAL CORPORATION ADOPTS TWO NEW ACCOUNTING STANDARDS

 MIDLAND, Mich., Feb. 5 /PRNewswire/ -- Alan W. Ott, president of Chemical Financial Corporation (NASDAQ-NMS: CHFC), stated that the corporation will adopt in the first quarter of 1993, two new accounting standards, Financial Accounting Standards Board Statements 109 and 106, mandated by the Financial Accounting Standards Board, which together will result in a first-quarter after-tax gain of approximately $2 million, or $0.38 per share.
 In 1992, the Financial Accounting Standards Board issued Statement No. 109, Accounting for Income Taxes, which required a change to the liability method of accounting for income taxes. Adoption of Statement No. 109 is mandatory in 1993. The corporation currently accounts for income taxes under the deferred method as required by APB Opinion No. 11, Accounting for Income Taxes. A fundamental aspect of the liability method is that deferred taxes are adjusted currently to recognize the effects of changes in tax law, including tax rate changes. Chemical will record an after-tax gain in the first quarter of 1993 for the cumulative effect of the adoption of Statement No. 109, of approximately $2.5 million, or $0.47 per share. The cumulative effect adjustment is primarily resulting from the accelerated recognition of unused tax benefits as permitted by the new standard.
 The after-tax gain attributable to the adoption of Statement No. 109 will be partially offset by a $700,000 pretax ($462,000 after tax or $0.09 per share) charge to 1993 first-quarter earnings for the adoption of Financial Accounting Standards Board Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. Statement 106 requires the accrual of the expected costs of retiree medical benefits over employees' years of service rather than as an expense when actual benefits are paid during retirement. The corporation has made changes to its retiree medical plan which will be in effect for employees that elect to retire after Dec. 31, 1993. Upon adoption, the accumulated obligation for accrued postretirement medical benefits will be approximately $2.5 million, including the effects of the amended plan. In anticipation of the adoption of this standard, the corporation charged earnings $350,000 annually in years 1989-1991 and $750,000 in 1992 (the total of which is $1.8 million) toward the accumulated obligation. Upon adoption, the corporation will immediately recognize the net transition obligation of $700,000 (accumulated benefit obligation less applicable accruals previously recorded). For 1993, the net postretirement medical benefit expense to be recorded pursuant to Statement 106 is expected to be approximately $300,000 on a pretax basis ($198,000 on an after-tax basis).
 The adoption of Statements 106 and 109 are not expected to have an adverse impact on the results of operations in future years.
 Chemical Financial Corporation is one of the 10 largest bank holding companies in Michigan and the corporation's nine affiliated banks operate 75 "Chemical Bank" offices in 20 counties across the mid-section of Michigan's Lower Peninsula. CFC Data Corp., Midland, is the corporation's wholly owned data processing subsidiary.
 The corporation's common shares are traded in the over-the-counter market and are quoted on the NASDAQ National Market System under the symbol CHFC.
 -0- 2/5/93
 /CONTACT: Lori Gwizdala of Chemical Financial Corporation, 517-839-5358/
 (CHFC)


CO: Chemical Financial Corporation ST: Michigan IN: FIN SU:

DH -- DE002 -- 3385 02/05/93 08:55 EST
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Publication:PR Newswire
Date:Feb 5, 1993
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