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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

Commission File Number:  000-08185

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

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 whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).            Yes    X      No       

The number of shares outstanding of the Registrant's Common Stock, $1 par value, as of May 2, 2003, was 23,689,132 shares.

INDEX

CHEMICAL FINANCIAL CORPORATION
FORM 10-Q

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 the Corporation itself. Words such as "anticipates," "believes," "estimates," "judgment," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "should," "will" and variations of such words and similar expressions are intended to identify such 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. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future even ts 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; changes in the national and local economies; and the local and global effects of the ongoing war on terrorism and other military actions, including actions in Iraq. 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.  FINANCIAL INFORMATION

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)

See accompanying notes to consolidated financial statements

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Position (In thousands)

See accompanying notes to consolidated financial statements.

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2003

NOTE A: BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Chemical Financial Corporation (the "Corporation") have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial condition and results of operations of the Corporation for the periods presented. Operating results for the three months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2002.

On December 9, 2002, the Corporation declared a 5% stock dividend that was paid January 24, 2003 to shareholders of record on January 6, 2003. All per share amounts and shares outstanding, where appropriate, have been adjusted for this stock dividend.

Certain prior year amounts have been reclassified to place them on a basis comparable with the current period's financial statements.

Earnings Per Share

All earnings per share amounts have been presented to conform to the requirements of Statement of Financial Accounting Standards No. 128, "Earnings Per Share." Basic earnings per share excludes any dilutive effect of stock options. Basic earnings per share for the Corporation is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share for the Corporation is computed by dividing net income by the sum of the weighted average number of common shares outstanding and the dilutive effect of outstanding employee stock options.

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2003

Earnings Per Share (continued)

The following table summarizes the number of shares used in the numerator and denominator of the basic and diluted earnings per share computations:

Comprehensive Income

The components of comprehensive income, net of related tax, for the three months ended March 31, 2003 and 2002 are as follows (in thousands of dollars):

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2003

Comprehensive Income (continued)

The components of accumulated other comprehensive income, net of related tax, at March 31, 2003, December 31, 2002 and March 31, 2002 are as follows (in thousands of dollars):

Operating Segment

Under the provisions of Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information," it is management's opinion that the Corporation operates in a single operating segment - commercial banking. The Corporation is a bank holding company that operated three commercial banks, a data processing company, a title insurance company and a property and casualty insurance company, each as a separate subsidiary of the Corporation, as of March 31, 2003. 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. Each of the Corporation's commercial bank subsidiaries operates within the state of Michigan. The marketing of products and services throughout the Corporati on's subsidiary banks is generally uniform, as many 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.

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2003

Goodwill

During 2002, the Corporation adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). Under SFAS 142, goodwill is no longer amortized, but is subject to annual impairment tests. The Corporation tested goodwill for impairment as of December 31, 2002. Based on these test results, the Corporation determined that there was no impairment of goodwill as of December 31, 2002. Goodwill was $27.94 million both at March 31, 2003 and 2002.

Other

The Corporation and its subsidiary banks are subject to certain legal actions arising in the ordinary course of business. In the opinion of management, after consultation 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.

NOTE B: LOANS AND NONPERFORMING ASSETS

The following summarizes loans and nonperforming assets at the dates indicated (in thousands of dollars):

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2003

NOTE C: ALLOWANCE FOR LOAN LOSSES

The following summarizes the changes in the allowance for loan losses (in thousands of dollars):

The Corporation considers all nonaccrual commercial and commercial real estate loans to be impaired loans. Impaired loans as of March 31, 2003 and 2002 were $3,938,000 and $8,091,000, respectively. The allowance for impaired loans was $1,700,000 and $1,050,000 as of March 31, 2003 and 2002, respectively.

NOTE D: ACQUIRED INTANGIBLE ASSETS

The following table sets forth the carrying amount, accumulated amortization and amortization expense of acquired intangible assets (in thousands):

Amortization expense for the:

CHEMICAL FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2003

Estimated amortization expense for the years ending December 31:

NOTE E: 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 prices of the Corporation's stock options equal the market prices of the underlying stock at the dates of grant, no compensation expense is recognized at the date of grant.

If the Corporation had elected to recognize compensation cost for options granted in the three months ended March 31, 2003 and 2002, based on the fair value of the options granted at the grant dates, net income and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share amounts):

NOTE F: FINANCIAL GUARANTEES

In the normal course of business, the Corporation is a party to financial instruments containing credit risk that are not required to be reflected in the consolidated statement of financial position. For the Corporation, these financial instruments are financial and performance standby letters of credit. The Corporation has risk management policies to identify, monitor and limit exposure to credit risk. To mitigate credit risk for these financial guarantees, the Corporation generally determines the need for specific covenant, guarantee and collateral requirements on a case-by-case basis, depending on the nature of the financial instrument and the customer's creditworthiness. At March 31, 2003, the Corporation had $19.2 million of outstanding financial and performance standby letters of credit.

In 2002, the Financial Accounting Standards Board issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN No. 45"), which requires additional disclosures by a guarantor about its obligations under certain guarantees that it has issued. FIN No. 45 also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The instruments impacted for the Corporation are financial and performance standby letters of credit. The accounting pronouncements of FIN No. 45 became effective for the Corporation on January 1, 2003, on a prospective basis. The impact of adoption was not material to the Corporation's consolidated results of operations, financial position or cash flows.

The following is management's discussion and analysis of certain significant factors that have affected the Corporation's financial condition and results of operations during the periods included in the consolidated financial statements included in this filing.

SUMMARY

The Corporation's net income was $14.0 million in the first quarter of 2003, up 2.2% over net income of $13.7 million during the first quarter of 2002. Earnings per share in the first quarter of 2003 were $.59, an increase of 1.7% over earnings per share of $.58 in the first quarter of 2002. The increase in net income was principally the result of higher noninterest income and lower noninterest expense. These factors were partially offset by lower net interest income.

Return on average assets in the first quarter of 2003 was 1.59%, compared to 1.57% during the first quarter of 2002. Return on average equity in the first quarter of 2003 was 13.1%, compared to 14.1% in the first quarter of 2002.

Total assets were $3.61 billion as of March 31, 2003, up $45 million, or 1.2%, from total assets of $3.57 billion as of December 31, 2002, and up $92 million, or 2.6%, from total assets of $3.52 billion as of March 31, 2002.

Total loans increased $57 million, or 2.7%, from December 31, 2002, and $46 million, or 2.2%, from March 31, 2002 to $2.13 billion as of March 31, 2003. The increase in total loans was primarily due to growth in residential real estate loans. During the first quarter of 2003, the Corporation held in its portfolio a portion of the fixed-rate residential real estate loan originations with maturities of fifteen years or greater. The Corporation's general practice is to sell these types of loans in the secondary market. The outstanding residential real estate loan portfolio balance declined in 2002 as customers took advantage of the lower interest rate environment. The increase in residential real estate loans during the first quarter of 2003 was undertaken to achieve the Corporation's desired mix of residential loans to total loans.

Shareholders' equity increased $44.8 million, or 11.4%, from March 31, 2002 to $437 million as of March 31, 2003, or $18.45 per share, representing 12.1% of total assets. The increase was primarily attributable to retained net income and an increase in accumulated other comprehensive income.

RESULTS OF OPERATIONS

Net Interest Income

The Corporation's net interest income in the first quarter of 2003 was $35.1 million, a $1.1 million, or 3.0% decrease from the $36.2 million recorded in the first quarter of 2002. The decrease was due to a lower net interest margin. Net interest margin decreased to 4.25% in the first quarter of 2003 from 4.48% in the first quarter of 2002.

Average loans decreased $35.2 million, or 1.6%, while average interest-earning assets increased $70.0 million, or 2.1%, in the first quarter of 2003, compared to the first quarter of 2002.

Provision for Loan Losses

The provision for loan losses ("provision") is the amount added to the allowance for loan losses ("allowance") to absorb loan losses in the loan portfolio. 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 is comprised of specific allowances (assessed for loans that have known credit weaknesses), general allowances based on an assigned risk rating and an unallocated allowance for imprecision in the subjective nature of the specific and general allowance methodology. 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 experienc e, 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 other 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 provision for loan losses was $295,000 in the first quarter of 2003 compared to $653,000 in the first quarter of 2002. Net loan losses were $274,000 in the first quarter of 2003 compared to $757,000 in the first quarter of 2002. The decrease in the provision for loan losses in the first quarter of 2003 compared to 2002 was primarily attributable to the decrease in net loan losses.

Noninterest Income

Noninterest income increased $643,000, or 7.4%, in the first quarter of 2003, compared to the first quarter of 2002. The increase was primarily attributable to an increase in service charges on deposit accounts of $1.3 million, or 48%. This increase was partially offset by a decrease in mortgage banking revenue of $1.0 million, or 39.5%. Residential mortgage loan volume remained strong during the first quarter of 2003. However, mortgage banking revenue was negatively impacted by higher amortization of mortgage servicing rights and by a shift by the Corporation to holding a percentage of the long-term fixed interest rate residential loans originated in its loan portfolio versus selling all of these longer-term loans in the secondary market.

Operating Expenses

Total operating expenses decreased $653,000, or 2.8%, in the first quarter of 2003, compared to the first quarter of 2002. The decrease in operating expenses was due to a decrease in employee benefits expense, professional fees, Michigan single business taxes and equipment expense, compared to the first quarter of 2002.

Income Tax Expense

The Corporation's effective federal income tax rate was 33.6% during the quarter ended March 31, 2003, compared to 33.3% during the quarter ended March 31, 2002. The difference between the

BALANCE SHEET CHANGES

Asset and Deposit Changes

Total assets increased $44.6 million, or 1.2%, from December 31, 2002 and increased $91.7 million, or 2.6%, from March 31, 2002 to $3.61 billion as of March 31, 2003. Total deposits increased $56.8 million, or 2.0%, from December 31, 2002, and increased $79.9 million, or 2.8%, from March 31, 2002 to $2.90 billion as of March 31, 2003. The growth in total assets was attributable to deposit and retained net income growth.

Loans

The Corporation's philosophy is such that it will not compromise on loan quality and generally does not make loans outside its banking markets to increase its loan portfolio. In addition, the Corporation generally does not participate in syndicated loans, which is a method utilized by many financial institutions to increase the size of their loan portfolios. 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.

Total loans as of March 31, 2003 were $2.13 billion, compared to $2.08 billion as of December 31, 2002 and $2.09 billion as of March 31, 2002.

Residential real estate loans increased $43.3 million, or 6.7%, from December 31, 2002 and $.2 million, or .03%, from March 31, 2002 to $691.6 million as of March 31, 2003. Residential real estate loans represented 32.5%, 31.2% and 33.1% of the Corporation's loan portfolio as of March 31, 2003, December 31, 2002 and March 31, 2002, respectively. The Corporation's residential real estate loans primarily consist of one- to four-family residential loans with original terms of fifteen years or less. The loan-to-value ratio at time of origination is generally 80% or less. Loans with more than an 80% loan-to-value ratio generally require private mortgage insurance.

Real estate construction loans decreased $2.2 million, or 2.0%, from December 31, 2002 and $22.9 million, or 17.7%, from March 31, 2002 to $106.4 million as of March 31, 2003. Real estate construction loans represented 5.0%, 5.2% and 6.2% of the Corporation's loan portfolio as of March 31, 2003, December 31, 2002 and March 31, 2002, respectively. Construction lending is generally considered to involve a higher degree of risk than one- to four-family residential lending because of the uncertainties of construction, including the possibility of costs exceeding the initial estimates and the need to obtain a tenant or purchaser of the property if it will not be owner-occupied. The Corporation generally attempts to mitigate the risks associated with construction lending by, among other things, lending primarily in its market area, using conservative underwriting guidelines, and closely monitoring the construction process.

Commercial loans decreased $1.8 million, or .5%, from December 31, 2002, and increased $10.8 million, or 3.4%, from March 31, 2002 to $325.7 million as of March 31, 2003. Commercial loans represented 15.3%, 15.8% and 15.1% of the Corporation's loan portfolio as of March 31, 2003, December 31, 2002 and March 31, 2002, respectively.

Commercial real estate loans increased $25.2 million, or 5.2%, from December 31, 2002 and $54.3 million, or 12%, from March 31, 2002 to $506.2 million as of March 31, 2003. Commercial real estate loans represented 23.7%, 23.2% and 21.7% of the Corporation's loan portfolio as of March 31, 2003, December 31, 2002 and March 31, 2002, respectively.

Commercial lending and commercial real estate lending are generally considered to involve a higher degree of risk than one- to four-family residential lending. Such lending typically involves large loan balances concentrated in a single borrower for rental or business properties or for the operation of a business. In addition, the payment experience on loans secured by income-producing properties is typically dependent on the success of the operation of the related project and thus is typically affected by adverse conditions in the real estate market and in the economy. The Corporation generally attempts to mitigate the risks associated with commercial lending by, among other things, lending primarily in its market area and using conservative loan-to-value ratios in the underwriting process.

Consumer loans decreased $8 million, or 1.6%, from December 31, 2002, and increased $3.2 million, or .6%, from March 31, 2002 to $501.8 million as of March 31, 2003. Consumer loans represented 23.5%, 24.6% and 23.9% of total loans as of March 31, 2003, December 31, 2002 and March 31, 2002, respectively.

Consumer loans generally have shorter terms than mortgage loans but generally involve more credit risk than one- to four-family residential lending because of the type and nature of the collateral. However, consumer lending generally involves less credit risk than commercial lending. Consumer lending collections are dependent on the borrower's continuing financial stability, and thus are more likely to be adversely affected by adverse personal situations.

The Corporation's total loan to deposit ratio as of March 31, 2003, December 31, 2002 and March 31, 2002 was 73.4%, 72.9% and 73.9%, respectively.

Nonperforming loans consist of loans which are past due for principal or interest payments by 90 days or more and are still accruing interest, loans for which the accrual of interest has been discontinued, and other loans which have been restructured to less than market terms due to a serious weakening of the borrower's financial condition. Nonperforming loans were $11.2 million as of March 31, 2003, $7.3 million as of December 31, 2002 and $13.4 million as of March 31, 2002, and represented .52%, .35% and .64% of total loans, respectively. The increase in nonperforming loans since December 31, 2002 was due to an increase of $3.0 million in commercial and real estate commercial loans past due 90 days or more and still accruing interest.

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, the impairment is measured based on the fair market 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. A portion of the allowance for