<PAGE>



Exhibit 13.1

Financial Information                                                         27

Selected Consolidated Financial Data                                          28

Quarterly Financial Data                                                      29

Management's Discussion and Analysis                                          30

Report of Independent Auditors                                                44

Consolidated Financial Statements                                             45

Notes to Consolidated Financial Statements                                    50

Shareholder Information                                                       64

<PAGE>

28 Macatawa Bank Corporation

                              Selected Consolidated
                                 Financial Data

The following selected consolidated financial and other data are derived from
the Company's Financial Statements and should be read with the Consolidated
Financial Statements and Notes thereto, and Management's Discussion and Analysis
of Financial Condition and Results of Operations. The Consolidated Balance
Sheets as of December 31, 2002 and 2001, and the Consolidated Statements of
Income for the years ended December 31, 2002, 2001, and 2000, are included
elsewhere in this Annual Report.

<TABLE>
<CAPTION>
At or For the Year Ended December 31
(Dollars in thousands, except share and per share data)      2002         2001         2000         1999         1998
-------------------------------------------------------   ----------   ----------   ----------   ----------   ----------
<S>                                                       <C>          <C>          <C>          <C>          <C>
Financial Condition
   Total assets                                           $1,176,583   $  670,203   $  499,813   $  344,921   $  189,229
   Securities                                                 90,170       64,316       48,669       28,281       27,007
   Loans                                                     961,038      545,693      410,676      285,374      137,882
   Deposits                                                  920,873      526,192      398,617      279,390      166,989
   Shareholders' equity                                      113,974       66,502       38,128       34,526       19,611

Share Information
   Basic earnings/(loss) per common share                 $     1.29   $     1.08   $      .87   $      .21   $    (1.13)
   Diluted earnings/(loss) per common share                     1.27         1.07          .87          .21        (1.13)
   Book value per common share                                 14.44        12.03         9.91         8.98         7.52
   Weighted average dilutive
      shares outstanding                                   7,465,260    4,795,992    3,859,493    3,345,290    2,187,305
   Shares outstanding at end of period                     7,891,502    5,519,489    3,844,661    3,843,881    2,644,303

Operations
   Interest income                                        $   57,252   $   42,685   $   34,338   $   20,000   $    6,804
   Interest expense                                           22,902       20,927       17,739        9,428        3,190
   Net interest income                                        34,350       21,758       16,599       10,572        3,614
   Provision for loan losses                                   3,321        2,285        1,931        1,967        2,023
   Net interest income after provision for loan losses        31,029       19,473       14,668        8,605        1,591
   Total noninterest income                                    7,323        3,683        2,052        1,528          683
   Total noninterest expense                                  24,187       15,543       12,672        9,440        4,763
   Income/(loss) before tax                                   14,165        7,613        4,048          693       (2,489)
   Federal income tax                                          4,652        2,497          699           --           --
   Net income/(loss)                                      $    9,513   $    5,116   $    3,349   $      693   $   (2,489)

Performance Ratios
   Return on average equity                                     9.46%        9.58%        9.31%        2.72%      (15.15)%
   Return on average assets                                     0.95%        0.88%        0.80%        0.26%       (2.70)%
   Yield on average interest-earning assets                     6.16%        7.82%        8.85%        8.27%        7.93%
   Cost on average interest-bearing liabilities                 2.82%        4.39%        5.20%        4.51%        4.77%
   Average net interest spread                                  3.34%        3.43%        3.65%        3.76%        3.16%
   Average net interest margin                                  3.69%        3.98%        4.18%        4.37%        4.21%
   Efficiency ratio                                            58.04%       61.09%       67.95%       78.02%      110.84%

Capital Ratios
   Equity to assets                                             9.69%        9.92%        7.63%       10.01%       10.36%
   Total risk-based capital ratio                               9.89%       12.85%       10.36%       14.16%       12.40%

Credit Quality Ratios
   Allowance for loan losses to total loans                     1.40%        1.41%        1.43%        1.40%        1.47%
   Nonperforming assets to total assets                         0.28%        0.36%        0.04%        0.03%        0.00%
   Net charge-offs to average loans                             0.12%        0.09%        0.02%        0.00%        0.00%
</TABLE>

<PAGE>

                                                           2002 Annual Report 29

                            Quarterly Financial Data
                                   (Unaudited)

A summary of selected quarterly results of operations for the years ended
December 31, 2002 follows:

<TABLE>
<CAPTION>
Three Months Ended
(Dollars in thousands, except share and per share data)   March 31   June 30   September 30   December 31
-------------------------------------------------------   --------   -------   ------------   -----------
<S>                                                        <C>       <C>          <C>           <C>
2002
   Interest income                                         $10,522   $15,000      $15,810       $15,918
   Net interest income                                       6,157     8,814        9,474         9,902
   Provision for loan losses                                   705       921          705           990
   Income before tax                                         2,244     3,495        4,080         4,346
   Net income                                                1,514     2,350        2,735         2,915

   Net income per share
      Basic                                                    .28       .29          .34           .37
      Diluted                                                  .27       .29          .34           .36

2001
   Interest income                                         $10,280   $10,639      $11,108       $10,658
   Net interest income                                       4,831     5,195        5,675         6,057
   Provision for loan losses                                   522       502          565           696
   Income before tax                                         1,637     1,784        2,003         2,189
   Net income                                                1,091     1,202        1,351         1,471

   Net income per share
      Basic                                                    .29       .29          .25           .27
      Diluted                                                  .28       .29          .24           .26
</TABLE>

<PAGE>

30 Macatawa Bank Corporation

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Management's discussion and analysis of financial condition and results of
operations contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results could differ materially
from those projected in such forward-looking statements.

The following section presents additional information to assess the financial
condition and results of operations of the Company. This section should be read
in conjunction with the consolidated financial statements and the supplemental
financial data contained elsewhere in this Annual Report.

Overview

Macatawa Bank Corporation is a Michigan corporation and is the bank holding
company for two wholly owned banking subsidiaries, Macatawa Bank and Grand Bank,
as well as Macatawa Bank Brokerage Services. Effective January 9, 2002, Macatawa
Bank Corporation elected to become a financial holding company pursuant to Title
1 of the Gramm-Leach-Bliley Act. Macatawa Bank commenced operations on November
25, 1997. Grand Bank was formed in 1987 and operated from a single location in
Grand Rapids, Michigan. Grand Bank became a wholly owned subsidiary effective
April 1, 2002 upon the completion of the acquisition of Grand Bank Financial
Corporation (GBFC), and its results are included in the consolidated statements
of income since this effective date. Both Macatawa Bank and Grand Bank are
Michigan chartered banks with depository accounts insured by the Federal Deposit
Insurance Corporation. The banks operate seventeen branch offices and three
lending and operational service facilities, providing a full range of commercial
and consumer banking and trust services in Kent County, Ottawa County, and
northern Allegan County, Michigan. Macatawa Bank Brokerage Services was formed
in October 2001 and gained approval in June 2002 from the NASD to commence
operations as a broker/dealer. Macatawa Bank Brokerage Services provides various
brokerage services including discount brokerage, personal financial planning and
consultation regarding mutual funds. Macatawa Bank Mortgage Company and Grand
Bank Mortgage Company, subsidiaries of Macatawa Bank and Grand Bank,
respectively, originate and sell residential mortgage loans into the secondary
market on a servicing released basis.

To achieve further synergies from the Grand Bank acquisition, we merged Grand
Bank into Macatawa Bank effective January 1, 2003 with the combined bank named
Macatawa Bank. This is expected to create more operational efficiencies and
simplify service to customers.

While maintaining asset quality and improving profitability, we have experienced
rapid and substantial growth since opening Macatawa Bank in November 1997. We
first became profitable in 1999 with net income for that year of $693 thousand.

Net income for 2000 was $3.3 million, for 2001 was $5.1 million, and for 2002
was $9.5 million. Since our inception in 1997 we have raised approximately $60.6
million in capital through private and public common stock offerings to
facilitate our growth and progress over these years. In conjunction with the
acquisition of GBFC we issued 2,472,000 shares of stock in exchange for all of
the outstanding stock of GBFC.

The West Michigan markets within which we operate are growing markets. Because
of their growth and our ability to provide highly personalized service, these
markets have provided significant expansion opportunities for us. In addition,
acquisitions of banks within our markets by large banking institutions
headquartered outside of West Michigan have provided us additional opportunity
to gain market share. Grand Rapids is the largest market within West Michigan.
It is also where we hold the lowest percent share of the market relative to the
other markets within which we operate, and therefore presents great opportunity.
In November 2002 we opened a new branch in Grand Rapids, and in Wyoming we
opened an expanded branch allowing us to move from a small storefront office. We
will continue this expansion focus in 2003 as we expect to open at least three
new branches in other desirable locations within our market area. We have begun
construction of a new branch in Grandville replacing a storefront location and
intend to begin construction in March for a location on the northeast side of
Grand Rapids. We anticipate that we will continue to experience growth in our
balance sheet and in our earnings due to these expansion opportunities.

Financial Condition

Summary

With the acquisition effective April 1, 2002, the consolidated balance sheet as
of December 31, 2002 includes the effect of GBFC. A schedule of the significant
GBFC assets and liabilities acquired is contained in Note 2 to the Consolidated
Financial Statements.

The acquisition was accounted for using the purchase method of accounting. As a
result, certain purchase accounting adjustments were required to record the
acquired assets and liabilities at market value. The value of the purchase
accounting adjustments is being amortized over the respective lives of the
varying assets and liabilities.

Based on SFAS 142, "Goodwill and Other Intangible Assets", we have recorded
intangible assets for the estimated value of core deposit accounts and trust
customer accounts acquired in the acquisition. The intangible values represent
the present value of the estimated net revenue streams attributed to the
respective intangibles. The intangible assets acquired are valued using certain
assumptions for alternative

<PAGE>

                                                           2002 Annual Report 31

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

cost of funds, lives of respective core deposits or trust customers, discount
rates and other applicable assumptions. The total of both core deposit
intangibles and trust customer intangibles was $3.7 million, and is being
amortized on an accelerated basis over 10 years. Amortization of intangibles
during 2002 was $392 thousand on a pre-tax basis.

The balance of the acquisition price in excess of the fair market value of
assets and liabilities acquired, including intangible assets, was recorded as
goodwill and totaled $23.9 million. Under SFAS 142, goodwill is defined as an
intangible asset with an indefinite useful life, and as such, is not amortized,
but is required to be tested annually for impairment of the value. If impaired,
an impairment loss must be recorded for the value equal to the excess of the
asset's carrying value over its fair value.

The amount of goodwill recorded in this transaction compared to the smaller
amounts of identified intangible assets and lack of intangibles related to loan
and deposit customer lists reflects that the value of GBFC related primarily to
the foundation it provides to further build our presence in the Grand Rapids
market. The value of this foundation lies with the GBFC workforce, their
customer service orientation and their relationships within the community. The
amount of the core deposits intangible asset recorded is small compared to the
total purchase price because the GBFC deposit portfolio was weighted towards
higher interest rate account types.

Our total assets were $1.177 billion at December 31, 2002, an increase of $506.4
million from $670.2 million in total assets at December 31, 2001. In addition to
the $312.0 million in assets added from the GBFC acquisition, assets grew by
$194.4 million during the period. We believe the continued strong asset growth
reflects the acceptance of our community banking philosophy in the growing
communities we serve. Our asset growth consists primarily of growth in our loan
portfolio as we continue to attract new loan customers despite the strong
competition from other locally based community banks and larger regional banks.
The asset growth was primarily in earning assets of loans and securities, but
also included increased cash, premises, and equipment. The increase in total
assets was principally funded by strong deposit growth. Deposits grew by $148.6
million during 2002, a 28.0% growth rate, excluding the $246.1 million in
deposits added in the GBFC acquisition. Additional borrowings were used to a
lesser extent to supplement the funding provided from deposit growth. We
attribute the strong deposit growth to our quality customer service, the desire
of our customers to bank with a local bank, and convenient accessibility through
the expansion of our branch network.

Cash and Cash Equivalents

Our cash and cash equivalents, which include federal funds sold and short-term
investments, were $47.9 million at December 31, 2002, as compared to $34.2
million at December 31, 2001. The increase was a result of having to maintain a
higher level of bank balances right at the end of 2002. The higher balances were
required to cover uncollected funds deposited in Macatawa Bank's correspondent
bank accounts as a result of high customer deposit activity.

Securities

Our security portfolio is classified as either "available for sale" or "held to
maturity". Securities classified as "available for sale" may be sold to meet our
liquidity needs. The primary objective of our investing activities is to provide
for the safety of the principal invested. Our secondary considerations include
earnings, liquidity and decreased overall exposure to changes in interest
rates. Securities increased $25.9 million to $90.2 million at December 31, 2002
from $64.3 million at December 31, 2001. In addition to the $11.1 million in
securities added from the GBFC acquisition, securities increased by $14.8
million as the result of purchasing additional securities as a means of
strengthening our liquidity. We expect continued growth of our securities
portfolio generally consistent with the growth of our company in order to
maintain appropriate levels of liquidity.

Securities Portfolio

Year Ended December 31 (Dollars in thousands)     2002      2001      2000
---------------------------------------------   -------   -------   -------

U.S. Treasury and
U.S. Government Agencies                        $71,867   $55,287   $45,991
State and municipal bonds                        18,303     9,029     2,678

                                                $90,170   $64,316   $48,669

Excluding our holdings of the investment portfolio in U.S. Treasury and U.S.
Government Agency Securities, we had no investments in securities of any one
issuer which exceeded 10.0% of shareholders' equity.

<PAGE>

32 Macatawa Bank Corporation

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

Schedule of Maturities of Investment Securities and Weighted Average Yields

The following is a schedule of maturities and their weighted average yield of
each category of investment securities we held at December 31, 2002.

<TABLE>
<CAPTION>
                                                                                                         Investments With No
(Dollars in thousands)  Due Within One Year   One to Five Years   Five to Ten Years    After Ten Years   Contractual Maturity
----------------------  -------------------  ------------------  ------------------  ------------------  --------------------
                         Estimated           Estimated           Estimated           Estimated            Estimated
                           Market   Average    Market   Average    Market   Average    Market   Average     Market   Average
                           Value     Yield     Value     Yield     Value     Yield     Value     Yield      Value     Yield
                         ---------  -------  ---------  -------  ---------  -------  ---------  -------   ---------  -------
<S>                        <C>       <C>      <C>        <C>       <C>       <C>      <C>        <C>          <C>      <C>
U.S. Treasury and U.S.
   Government Agencies     $5,472    5.45%    $63,237    5.08%     $1,987    4.05%    $ 1,170    7.18%         --       --

Tax-exempt State
   and municipal bonds         --      --          --       --      5,796    6.55%     12,587    6.11%         --       --

Total                      $5,472    5.45%    $63,237    5.08%     $7,783    5.89%    $13,757    6.20%         --       --
</TABLE>

Loan Portfolio

Our total loan portfolio increased to $961.0 million at December 31, 2002, from
$545.7 million at December 31, 2001. We also had loans held for sale of $18.7
million at December 31, 2002, as compared to $4.6 million at December 31, 2001.
In addition to the $246.3 million in loans added from the GBFC acquisition,
loans grew by $169.0 million during 2002 continuing our consistent pattern of
growth. The majority of loans we make are to small and mid-sized businesses in
the form of commercial and commercial real estate loans. Our combined commercial
loans accounted for approximately 73.0% of our total portfolio loans at December
31, 2002, compared to 74.0% at December 31, 2001. Our residential real estate
loan portfolio, which also includes residential construction loans made to the
individual homeowners, comprised approximately 14.0% of portfolio loans.
However, our residential loan origination volume is significantly higher, with
only a small portion of residential home loans retained for our own portfolio.
We sell the majority of fixed-rate obligations and do not retain servicing. We
originated for sale $240.8 million in residential mortgages in 2002, $135.6
million in 2001, and $47.0 million in 2000. The lower overall market interest
levels experienced during 2002 and 2001 resulted in significantly higher levels
of residential refinancing and loan originations during these years as compared
to 2000. Our consumer loan portfolio includes both loans secured by personal
property, as well as home equity fixed term and line of credit loans. Home
equity loans totaled $87.9 million at December 31, 2002, compared to $45.9
million at December 31, 2001. Approximately 89.0% of our home equity loans are
underwritten at terms of a loan to value ratio of less than 90.0%, and are
considered well collateralized. The types of loans and mix of the GBFC portfolio
was very similar to our portfolio and as a result the overall mix of the
combined loan portfolio did not change significantly upon acquisition. We
anticipate further growth in the loan portfolio due to continuing opportunities
within our market area.

The following table reflects the composition of our loan portfolio and the
corresponding percentage of our total loans represented by each class of loans
as of the dates indicated.

Loan Portfolio Composition

<TABLE>
<CAPTION>
Year Ended December 31 (Dollars in thousands)        2002             2001             2000
---------------------------------------------   --------------   --------------   --------------
                                                 Amount     %     Amount     %     Amount     %
                                                --------   ---   --------   ---   --------   ---
<S>                                             <C>        <C>   <C>        <C>   <C>        <C>
Commercial real estate                          $356,310    37%  $133,428    25%    79,444    19%
Residential real estate                          133,843    14%    67,655    12%    60,822    15%
Other commercial                                 341,370    36%   269,993    49%   214,098    52%
Consumer                                         129,515    13%    74,617    14%    56,312    14%

Total loans                                     $961,038   100%   545,693   100%   410,676   100%

Less:
Allowance for loan losses                        (13,472)          (7,699)          (5,854)

Total loans receivable, net                     $947,566         $537,994         $404,822
</TABLE>

<PAGE>

                                                           2002 Annual Report 33

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table shows the amount of total loans outstanding as of December
31, 2002 which, based on remaining scheduled repayments of principal, are due in
the periods indicated.

                                                 Maturing
                                                 --------
                                         After One,
                               Within    But Within     After
(Dollars in thousands)        One Year   Five Years   Five Years    Total
---------------------------   --------   ----------   ----------   --------
Commercial real estate        $ 76,313    $265,310     $ 14,680    $356,303
Residential real estate         39,480      35,778       58,643     133,901
Other commercial               199,157     136,738        5,424     341,319
Consumer                        22,111      42,226       65,178     129,515

Totals                        $337,061    $480,052     $143,925    $961,038

Allowance for loan losses                                           (13,472)

Total loans receivable, net                                        $947,566

Below is a schedule of the loan amounts maturing or repricing which are
classified according to their sensitivity to changes in interest rates at
December 31, 2002.

Interest Sensitivity

(Dollars in thousands)                  Fixed Rate   Variable Rate    Total
-------------------------------------   ----------   -------------   --------
Due within 3 months                      $ 37,588       $590,829     $628,417
Due after 3 months, but within 1 year      61,937          2,349       64,286
Due after one but within five years       205,877         26,125      232,002
Due after five years                       30,890          5,443       36,333

Total                                    $336,292       $624,746     $961,038

Allowance for loan losses                                             (13,472)

Total loans receivable, net                                          $947,566

Nonperforming Assets

Nonperforming assets are comprised of nonperforming loans and foreclosed assets.
Our nonperforming loans include loans on non-accrual, restructured loans, as
well as loans delinquent more than 90 days, but still accruing. Nonperforming
loans as of December 31, 2002 totaled $2.8 million compared to $2.4 million at
December 31, 2001. One credit comprises approximately one half of the balance in
nonperforming loans at the end of 2002. While still paying, this borrower's weak
financial condition warranted concern. Therefore, the loan was placed in
non-accrual in 2001 and remained in this status throughout 2002. Our loan
performance is reviewed regularly by an external loan review team, our own loan
officers, and our senior management. When reasonable doubt exists concerning
collectibility of interest or principal of one of our loans, that loan is placed
in non-accrual status. Any interest previously accrued but not collected at that
time is reversed and charged against current earnings. Foreclosed assets include
assets acquired in settlement of loans. As of December 31, 2002 foreclosed
assets totaled $446,000. There were no foreclosed assets at December 31, 2001.

Total nonperforming assets amounted to $3.2 million as of December 31, 2002 and
represented 0.28% of total assets, a level well below historical peer averages.

The following table shows the composition and amount of our nonperforming
assets.

December 31 (Dollars in thousands)                     2002     2001    2000
---------------------------------------------------   ------   ------   ----
Nonaccrual loans                                      $2,539   $2,084   $155
Loans 90 days or more delinquent and still accruing      259      298     41
Restructured loans                                        --       --     --
Total nonperforming loans                             $2,798    2,382    196
Foreclosed assets                                        446       --     --
Total nonperforming assets                            $3,244   $2,382   $196
Nonperforming loans to total loans                      0.29%    0.43%  0.05%
Nonperforming assets to total assets                    0.28%    0.36%  0.04%

<PAGE>

34 Macatawa Bank Corporation

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Loan Loss Experience

The following is a summary of our loan balances at the end of each period and
the daily average balances of these loans. It also includes changes in the
allowance for loan losses arising from loans charged-off and recoveries on loans
previously charged-off, and additions to the allowance which we have expensed.

<TABLE>
<CAPTION>
December 31 (Dollars in thousands)                  2002       2001       2000
-----------------------------------------------   --------   --------   --------
<S>                                               <C>        <C>        <C>
Loans:
   Average daily balance of loans for the year    $831,709   $474,318   $347,351
   Amount of loans outstanding at end of period    961,038    545,693    410,676

Allowance for loan losses:
   Balance at beginning of year                   $  7,699   $  5,854   $  3,995
   Balances from GBFC acquisition                    3,464
   Addition to allowance charged to operations       3,321      2,285      1,931

Loans charged-off:
   Commercial                                       (1,143)      (485)       (67)
   Residential Real Estate                              --         (1)        --
   Consumer                                           (128)       (27)       (20)

Recoveries:
   Commercial                                          249         63         14
   Residential Real Estate                              --          1         --
   Consumer                                             10          9          1

Balance at end of year                            $ 13,472   $  7,699   $  5,854

Ratios:
   Net charge-offs to average loans outstanding       0.12%      0.09%      0.02%
   Allowance for loan losses to loans
      outstanding at year end                         1.40%      1.41%      1.43%
</TABLE>

Allowance for Loan Losses

Our allowance for loan losses as of December 31, 2002 was $13.5 million,
representing approximately 1.40% of total portfolio loans outstanding, compared
to $7.7 million or 1.41% of total loans at December 31, 2001. Our allowance for
loan losses is maintained at a level management considers appropriate based upon
our regular, quarterly assessments of the probable estimated losses inherent in
the loan portfolio. Our methodology for measuring the appropriate level of
allowance relies on several key elements, which include specific allowances for
identified problem loans, formula allowance for graded loans, and general
allocations based on historical trends for pools of similar loan types.

Specific allowances are established in cases where senior credit management has
identified significant conditions or circumstances related to an individually
impaired credit that we believe indicates the probability that a loss has been
incurred. This amount is determined by methods prescribed by SFAS No.
114,"Accounting by Creditors for Impairment of a Loan". As of December 31, 2002
and 2001 the specific allowance was $883,000 and $539,000, respectively.

The formula allowance is calculated by applying loss factors to outstanding
loans based on the internal risk grade of such loans. We use a loan rating
method based upon an eight point system. Loans are assigned a loss allocation
factor for each loan classification category. The lower the grading assigned to
a loan category, the greater the allocation percentage that is applied. Changes
in risk grade of both performing and nonperforming loans affect the amount of
the formula allowance. Loss factors are based on our loss experience, the
banking industry's historical loan loss experience, and may be adjusted for
significant factors that, in management's judgement, affect the collectibility
of the portfolio as of the analysis date. As of December 31, 2002 and 2001 the
formula allowance was $10.1 million and $5.9 million, respectively.

Groups of homogeneous loans, such as residential real estate, open- and
closed-end consumer loans, etc., receive general allowance allocations based on
loss trends. In lieu of an established loan loss trend for Macatawa Bank, we use
historical loss trends based on industry experience and peers in determining an
adequate allowance for these pools of loans. General economic and business
conditions, credit quality trends, collateral values, seasoning of the
portfolios and recent loss experience are conditions considered in connection
with allocation factors for these similar pools of loans. Since Grand Bank's
loan portfolio is seasoned, its loan loss trends are used in determining an
adequate allowance for these pools of loans in addition to industry experience
and peer information. As of December 31, 2002 and 2001 the general allowance was
$1.5 million and $760,000, respectively.

During 2002 the allowance for loan losses increased by 30.0% excluding the
addition of $3.5 million with the acquisition of GBFC. The 30.0% increase was
due primarily to increases in the formula and general allowance allocations. The
increases in these allocations were the result of continued strong growth in
loans which increased by 31.0% excluding the addition of GBFC loans. Changes in
underlying loan performance measures were not significant and did not materially
affect the allowance for loan losses in 2002 compared to the prior year. We
believed it was prudent to continue increasing the allowance due to the
unseasoned nature of our portfolio and current soft economic conditions both on
a national basis and locally.

Net charge-offs for 2002 totaled $1.0 million compared to $440,000 for 2001.
While our net charge-off experience was higher during the current year, our
credit losses on loans continue to be low relative to comparable banks. However,
we recognize that our loan portfolios remain relatively unseasoned, and no
material trend of losses has been established. Given the newness of the
portfolios and potential economic weakness, in our judgment, we have provided
adequate reserves for loan losses, although there can be no assurance that the
allowance for losses on loans will be adequate to cover all losses. We
anticipate net charge-offs to increase as our loan portfolio grows and becomes
more seasoned. In addition, net charge-offs may increase over levels experienced
in 2002 due to the overall weakness in the economy.

<PAGE>

                                                           2002 Annual Report 35

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Allocation of the Allowance for Loan Losses

The following table shows the allocation of the allowance for loan loss at the
dates indicated to the extent specific allocations have been determined relative
to particular loans.

<TABLE>
<CAPTION>
Year Ended December 31 (Dollars in thousands)            2002                      2001                      2000
---------------------------------------------   -----------------------   -----------------------   -----------------------
                                                             % of Each                 % of Each                 % of Each
                                                Allowance   Category to   Allowance   Category to   Allowance   Category to
                                                 Amount     Total Loans    Amount     Total Loans    Amount     Total Loans
                                                ---------   -----------   ---------   -----------   ---------   -----------
<S>                                              <C>          <C>           <C>         <C>           <C>         <C>
Commercial and commercial real estate            $11,207       72.6%        $6,391       73.9%        $3,902       71.5%
Residential real estate                              326       13.9%           196       12.4%           176       14.8%
Consumer                                             950       13.5%           564       13.7%           435       13.7%
Unallocated                                          989          --           548          --         1,341          --

Total                                            $13,472      100.0%        $7,699      100.0%        $5,854      100.0%
</TABLE>

The above allocations are not intended to imply limitations on usage of the
allowance. The entire allowance is available for any loan losses without regard
to loan type. The allocated portion of the allowance amounted to $12.5 million
at December 31, 2002. Of this total, 7.0% related to specific allocations, 81.0%
related to formula allocations, and 12.0% related to general allocations.

Premises and Equipment

Premises and equipment totaled $25.8 million at December 31, 2002, an increase
of $10.9 million from December 31, 2001. The increase resulted from costs
incurred with construction underway for our new headquarters building, as well
as the completion of three new branch locations. The new headquarters location
will allow us to consolidate our administration, human resources, trust, loan
underwriting and processing, and proof and deposit operations to one location.
We expect the new headquarters facility to be completed by April of 2003. The
new branch sites allowed us to replace a leased storefront branch site in
Wyoming with a full service branch, add a full service branch in a leased
location in Byron Center, and add a new location in the Forest Hills area of
Grand Rapids. The Byron Center branch opened for service in early April. The
Wyoming and Forest Hills branches opened in November. Only $656,000 of the $10.9
million increase in premises and equipment related to the acquisition of GBFC.

Deposits

Deposits are gathered primarily from the communities we serve through our
network of 17 branches. We offer business and consumer checking accounts,
regular and money market savings accounts, and certificates of deposits having
many options in their terms.

Total deposits increased $394.7 million to $920.9 million at December 31, 2002,
as compared to $526.2 million at December 31, 2001. In addition to the $246.1
million in deposits added from the GBFC acquisition, deposits grew by $148.6
million during the year. This internal growth in deposits reflects primarily
deposits from new customers. We continue to anticipate strong deposit growth
based on our focus on quality customer service, the desire of customers to deal
with a local bank, convenient accessibility through our growing branch network
and our expanded opportunities in the Grand Rapids market as a result of the
GBFC acquisition.

Noninterest bearing demand accounts comprised approximately 11.0% of total
deposits at December 31, 2002, as compared to approximately 12.0% of total
deposits at the end of 2001. Interest bearing demand and savings accounts
comprised approximately 44.0% of total deposits at December 31, 2002, as
compared to 50.0% at the end of last year. Time accounts as a percentage of
total deposits were approximately 45.0% at December 31, 2002, and were
approximately 38.0% at December 31, 2001. The changes in mix of the portfolio
relate primarily to the differences in the mix of the GBFC deposit portfolio
compared to our mix at the time of the acquisition. The GBFC portfolio had a
higher concentration of time deposits and a lower level of noninterest bearing
deposits.

We set our deposit pricing to be competitive with other banks in our market
area. This has enabled us to increase deposits from new, as well as existing
customers, while maintaining a healthy net interest margin. We periodically
purchase brokered deposits to supplement funding needs. These are time accounts
originated outside of our local market area. Brokered deposits comprised
approximately 12.0% of total deposits at December 31, 2002 and approximately
2.0% at December 31, 2001. The GBFC deposit portfolio contained a higher level
of brokered deposits to total causing most of the increase in the ratio from the
end of 2001 to the end of 2002. We operate in a very competitive environment,
competing with other local banks similar in size and with significantly larger
regional banks. We monitor rates at other financial institutions in the area to
ascertain that our rates are competitive with the market. We also attempt to
offer a wide variety of products to meet the needs of our customers.

<PAGE>

36 Macatawa Bank Corporation

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Average Daily Deposits

The following table sets forth the average deposit balances and the weighted
average rates paid thereon.

<TABLE>
<CAPTION>
Average for the Year (Dollars in thousands)           2002                 2001                 2000
-------------------------------------------   ------------------   ------------------   ------------------
                                                         Average              Average              Average
                                               Amount     Rate      Amount     Rate      Amount     Rate
                                              --------   -------   --------   -------   --------   -------
<S>                                           <C>          <C>     <C>          <C>     <C>          <C>
Noninterest bearing demand                    $ 82,757      --     $ 52,184      --     $ 38,525      --
NOW accounts                                   118,594     1.1%      55,951     1.8%      45,246     2.6%
MMDA/savings                                   260,206     1.9%     174,933     3.3%     131,069     4.7%
Time                                           328,715     3.6%     176,983     5.8%     123,756     6.4%

Total deposits                                $790,272     2.6%    $460,051     3.7%    $338,596     4.5%
</TABLE>

Maturity Distribution of Time Deposits of $100,000 or More

The following table summarizes time deposits in amounts of $100,000 or more by
time remaining until maturity as of December 31, 2002:

(Dollars in thousands)                  Amount
------------------------------         --------
Three months or less                   $ 39,171
Over 3 months through 6 months           46,496
Over 6 months through 1 year             44,260
Over 1 year                             127,589

                                       $257,516

Borrowed Funds

Borrowed funds consist principally of advances from the Federal Home Loan Bank.
Borrowed funds also include federal funds purchased, which are utilized to
settle our daily cash letter position with our correspondent banks.
Additionally, we have a $10.0 million credit facility available for general
corporate needs including contributing capital to the subsidiary banks to enable
them to maintain regulatory capital at well-capitalized levels. Borrowed funds
totaled $131.8 million at December 31, 2002 including $106.9 million of Federal
Home Loan Bank advances, $20.0 million of federal funds purchased and $4.9
million in borrowing on the credit facility. At December 31, 2001 borrowed funds
totaled $75.6 million comprised solely of Federal Home Loan Bank advances.
Borrowed funds increased during 2002 partially due to the addition of borrowings
from the GBFC acquisition, but also due to additional borrowing needs to fund
our continued growth in assets.

Retained Earnings

We had a retained earnings balance of $5.9 million at December 31, 2002 as
compared to $3.2 million at December 31, 2001. Retained earnings is comprised of
net earnings, less dividends paid to shareholders. During 2002, we paid $2.5
million in cash dividends. A 4% stock dividend was also paid from retained
earnings during May of 2002, resulting in the transfer of $4.3 million from
retained earnings to our common stock.

Results of Operations

Summary of Results

Net income totaled $9.5 million for 2002 as compared to $5.1 million in 2001,
and $3.3 million in 2000. The increase in net income principally reflects growth
in our net interest income due to our continuing growth in interest earning
assets, but also reflects improvement in noninterest income. Earnings per share
on a diluted basis were $1.27 for 2002 compared to $1.07 for 2001 and $.87 for
2000. Diluted earnings per share increased by 19.0% for 2002 compared to 2001
despite a 45.0% increase in shares outstanding for the acquisition of GBFC in
the second quarter of 2002.

Our net income for 2002 was impacted by the net income earned by Grand Bank. For
pro forma information concerning the GBFC acquisition, please refer to Note 2 of
the Consolidated Financial Statements.

Total revenues, consisting of net interest income and noninterest income, were
$41.7 million during 2002, as compared to $25.4 million during 2001, and $18.6
million for 2000. Noninterest expense totaled $24.2 million for 2002, as
compared to $15.5 million for 2001, and $12.7 million for 2000. Our federal
income tax expense increased substantially during 2001 reflecting our fully
taxable status for all of 2001. We initially became taxable during 2000 after
utilizing all tax loss carry forwards from 1998 and 1997.

<PAGE>

                                                           2002 Annual Report 37

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Analysis of Net Interest Income

The following schedule presents, for the periods indicated, information
regarding:

..    our total dollar amount of interest income from average earning assets and
     the resultant average yields;
..    our total dollar amount of interest expense on average interest-bearing
     liabilities and the resultant average cost;
..    our net interest income;
..    our interest rate spread; and
..    our net yield on average earning assets.

<TABLE>
<CAPTION>
For the Years Ended December 31                          2002                             2001
                                           -------------------------------   -----------------------------
                                                        Interest   Average              Interest   Average
                                            Average      Earned     Yield     Average    Earned     Yield
(Dollars in thousands)                      Balance     or Paid    or Cost    Balance   or Paid    or Cost
----------------------------------------   ----------   --------   -------   --------   --------   -------
<S>                                        <C>          <C>         <C>      <C>        <C>         <C>
Assets
Taxable securities                         $   65,829   $ 3,477     5.28%    $ 49,771   $ 2,921     6.01%
Tax-exempt securities (1)                      13,315       619     7.21%       6,784       320     7.20%
Loans (2)                                     831,709    52,687     6.27%     474,318    38,904     8.12%
Federal funds sold                             10,213       175     1.67%       7,864       265     3.33%
Short-term investments                            544         5     0.94%       1,575        39     2.44%
Federal Home Loan Bank stock                    4,775       289     5.98%       3,187       236     7.30%

   Total interest earning assets           $  926,385   $57,252     6.16%    $543,499   $42,685     7.82%
Noninterest earning assets:
   Cash and due from banks                     32,770                          27,377
   Other                                       42,074                          13,148

   Total assets                            $1,001,229                        $584,024

Liabilities and Shareholders' Equity
Deposits:
   NOW and money market accounts           $  334,510   $ 5,159     1.14%    $204,863   $ 5,932     2.90%
   Savings                                     24,800       272     1.10%      14,186       200     1.41%
   IRAs                                        19,490       876     4.49%      11,834       700     5.91%
   Time deposits                              328,715    11,966     3.64%     176,983    10,177     5.75%
Short-term borrowings:
   Federal funds borrowed                       5,392       102     1.87%       1,704        81     4.67%
   Other borrowings                            96,538     4,527     4.62%      65,586     3,837     5.77%
   Total interest bearing liabilities         809,445    22,902     2.82%     475,156    20,927     4.39%
Noninterest bearing liabilities
   Noninterest bearing demand accounts         82,757                          52,184
   Other noninterest bearing liabilities        8,503                           3,259
Shareholders' equity                          100,524                          53,425
   Total liabilities and
   Shareholders' equity                    $1,001,229                        $584,024
Net interest income                                     $34,350                         $21,758
Net interest spread                                                 3.34%                           3.43%
Net interest margin                                                 3.69%                           3.98%
Ratio of interest earning assets to
   interest bearing liabilities                          114.45%                         114.38%

<CAPTION>
For the Years Ended December 31                         2000
----------------------------------------   ------------------------------
                                                      Interest   Average
                                            Average    Earned    Yield or
(Dollars in thousands)                      Balance   or Paid    or Cost
                                           --------   --------   --------
<S>                                        <C>        <C>          <C>
Assets
Taxable securities                         $ 35,459   $ 2,166      6.11%
Tax-exempt securities (1)                     1,639        86      7.56%
Loans (2)                                   347,351    31,789      9.15%
Federal funds sold                            1,616        99      6.13%
Short-term investments                          169         6      3.55%
Federal Home Loan Bank stock                  2,332       192      8.28%

   Total interest earning assets           $388,566   $34,338      8.85%
Noninterest earning assets:
   Cash and due from banks                   18,624
   Other                                      9,897

   Total assets                            $417,087

Liabilities and Shareholders' Equity
Deposits:
   NOW and money market accounts           $159,419   $ 6,656      4.17%
   Savings                                    9,222       177      1.92%
   IRAs                                       7,674       465      6.06%
   Time deposits                            123,756     7,916      6.40%
Short-term borrowings:
   Federal funds borrowed                     2,022       131      6.48%
   Other borrowings                          38,857     2,394      6.16%
   Total interest bearing liabilities       340,950    17,739      5.20%
Noninterest bearing liabilities
   Noninterest bearing demand accounts       38,525
   Other noninterest bearing liabilities      1,557
Shareholders' equity                         36,055
   Total liabilities and
   Shareholders' equity                    $417,087
Net interest income                                   $16,599
Net interest spread                                                3.65%
Net interest margin                                                4.18%
Ratio of interest earning assets to
   interest bearing liabilities                        113.97%
</TABLE>

(1)  Yields are adjusted for tax-exempt interest.
(2)  Loan fees included in interest income are not material. Nonaccrual loans
     are included in average loans outstanding.

<PAGE>

38 Macatawa Bank Corporation

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Net interest income totaled $34.4 million during 2002, compared to $21.8 million
during 2001 and $16.6 million during 2000. The 58.0% increase in net interest
income during 2002 was driven entirely by growth in our earning assets. Average
earning assets for 2002 totaled $926.4 million, as compared to $543.5 million
for 2001. The acquisition of GBFC contributed $210.2 million to this increase in
earning assets, however, the remaining $172.7 million was a result of our
continued growth. Net interest margin on earning assets was 3.69% for 2002,down
from 3.98% for 2001. The contraction in the net interest margin relates
primarily to the lower net interest margin that GBFC carried compared to
Macatawa, but also reflects a decrease in yield on earning assets resulting from
the low and declining interest rate environment during 2002. We have continued
to see strong loan growth, but customer preferences during 2002 have been for
floating rate loans that bear interest rates on average of 225 basis points
lower than fixed rate commercial loans. This preference has altered our mix of
variable versus fixed rate commercial loans and has also contributed to the
decline in net interest margin.

The 31.0% increase in net interest income during 2001 as compared to 2000 was
principally due to an increase in average earning assets. The growth in income
as a result of our continuing loan growth offset the impacts from contracting
net interest margin. Our net interest margin of 3.98% for 2001 was down from
4.18% for 2000. As in 2002, the decrease in our net interest margin during 2001
reflected the impact of the decreasing interest rate environment. Interest
rates, as measured by prime rate, fell from 9.50% at January 1, 2001, to 4.75%
at December 31, 2001.

While the year over year comparisons reflect decreases, there was a 14 basis
point increase in net interest margin from the second quarter of 2002 through
the fourth quarter. This improvement was accomplished primarily through
repositioning of certain assets and liabilities. During the latter half of
2002,approximately $5 million in noninterest earning assets were converted into
interest earning assets and lower yielding assets were converted into higher
yielding assets by investing some of our short-term investable funds into loans.
In addition, growth in noninterest bearing deposits and continued downward
repricing of higher costing time deposits contributed to margin improvement in
this time period.

Anticipated growth in earning assets is expected to continue to increase levels
of net interest income, however, net interest margin is not expected to increase
until short-term market interest rates begin to increase. Helping margin,
maturities in our time deposit portfolio continue to re-price at lower levels,
however, to a lesser extent than earlier in the year. Derivative instruments as
discussed in Note 16 to the Consolidated Financial Statements have also
mitigated some of the decline in net interest margin.

Rate/Volume Analysis of Net Interest Income

The following schedule presents the dollar amount of changes in interest income
and interest expense for major components of earning assets and interest-bearing
liabilities, distinguishing between changes related to outstanding balances and
changes due to interest rates.

<TABLE>
<CAPTION>
Year Ended December 31
(Dollars in thousands)           2002 vs 2001                  2001 vs 2000
----------------------
                          Increase (Decrease) Due to    Increase (Decrease) Due to
                         ----------------------------   --------------------------
                          Volume     Rate      Total     Volume     Rate     Total
                         -------   --------   -------   -------   -------   ------
<S>                      <C>       <C>        <C>       <C>       <C>       <C>
Interest Income
Taxable securities       $   870   $   (314)  $   556   $   755   $    --   $  755
Tax-exempt securities        304         (5)      299       270       (36)     234
Loans                     24,188    (10,405)   13,783    12,340    (5,225)   7,115
Fed funds sold                64       (154)      (90)      338      (172)     166
Short term investments       (16)       (18)      (34)       34        (1)      33
FHLB stock                   102        (49)       53        70       (26)      44

Total interest income    $25,512   $(10,945)  $14,567   $13,807   $(5,460)  $8,347

Interest Expense
NOWs and MMDAs           $ 2,745   $ (3,518)  $  (773)  $ 1,847   $(2,571)  $ (724)
Savings                      124        (52)       72        96       (73)      23
IRAs                         374       (198)      176       253       (18)     235
Time deposits              6,483     (4,694)    1,789     3,323    (1,062)   2,261
Fed funds purchased           93        (72)       21       (20)      (30)     (50)
Other borrowings           1,557       (867)      690     1,663      (220)   1,443

Total interest expense    11,376     (9,401)    1,975     7,162    (3,974)   3,188

Net interest income      $14,136   $ (1,544)  $12,592   $ 6,645   $(1,486)  $5,159
</TABLE>

<PAGE>

                                                           2002 Annual Report 39

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Composition of Average Interest Earning Assets and Interest Bearing Liabilities

Year Ended December 31
(Dollars in thousands)                   2002       2001       2000
------------------------------------   --------   --------   --------
As a Percent of Average  Interest
Earning Assets
Loans                                     89.78%     87.27%     89.39%
Other earning assets                      10.22%     12.73%     10.61%
Average interest earning assets        $926,385   $543,499   $388,566

As a Percent of Average Interest
Bearing Liabilities
Savings, MMS, IRA, and NOW accounts       46.80%     48.59%     51.71%
Time deposits                             40.61%     37.25%     36.30%
Other borrowings                          12.59%     14.16%     11.99%
Average Interest Bearing Liabilities   $809,445   $475,156   $340,950

Earning asset ratio                      114.45%    114.38%    113.97%

Provision for Loan Losses

Our provision for loan losses for 2002 was $3.3 million as compared to $2.3
million for 2001 and approximately $1.9 million for 2000. Some of the increase
in provision was due to the increase in charge-offs in 2002 compared to 2001.
However, the amount of the loan loss provision in all periods is a byproduct of
establishing our allowance for loan losses at levels deemed necessary in our
methodology for determining the adequacy of the allowance. For more information
about our allowance for loan losses and our methodology for establishing its
level, see the earlier discussion under Financial Condition. Along with other
financial institutions, management shares a concern for the possible continuing
weak economic conditions. Should the economic climate remain soft, borrowers may
experience more difficulty in making loan payments, and the level of
non-performing loans, charge-offs, and delinquencies could rise and require
further increases in the provision.

While we sustained higher loan charge-offs during 2002 as compared to prior
years, our losses as a percent of average loans totaled only 12 basis points, a
level far below historic peer averages.

Noninterest Income

Noninterest income totaled $7.3 million during 2002, as compared to $3.7 million
in 2001, and $2.1 million for 2000. The level of noninterest income for 2002 was
up 99.0% over 2001. All components of noninterest income increased compared to
2001. The increased deposit service charge income in 2002 is reflective of our
expanded customer account base. Our mortgage banking function was
well-positioned to capitalize on the favorable mortgage refinance environment
caused by low interest rates during 2002 and achieved high loan sales volume
resulting in gains of $2.4 million for the year. While mortgage interest rates
remain at low levels, it is expected that refinance activity will slow down
resulting in a possible decline in our loan sales volume during 2003. Revenues
from trust services grew to $2.1 million for 2002 compared to $659,000 for 2001.
Trust fees are, to a great extent, based on the underlying values of trust
assets managed. Despite a generally downward trend in market valuation of
securities during 2002, trust fees increased as compared to the prior year due
to our success in gaining new trust customers and the addition of Grand Bank's
trust services. We believe trust fee income will continue to increase as the
amount of trust assets under our management increases.

Service charges and fees increased by $768,000 during 2001 as compared to 2000
and reflected the growth in our customer base. Gain on sale of loans increased
by $710,000 over the 2000 level due to the favorable mortgage refinance
environment in 2001 compared to 2000. Trust fees increased in 2001 compared to
2000 due to the increase in the amount of trust assets under management. The
following table details major components of noninterest income for the years
2002, 2001, and 2000.

Noninterest Income

Year Ended December 31
(Dollars in thousands)                               2002       2001      2000
---------------------------                         ------     ------    ------
Deposit service charges                             $2,247     $1,912    $1,144
Net gains on sales of loans                          2,382      1,071       361
Trust fees                                           2,118        659       531
Other                                                  576         41        16

Total noninterest income                            $7,323     $3,683    $2,052

Net Gains on the Sale of Residential Real Estate Mortgage Loans

Year Ended December 31
(Dollars in thousands)                              2002       2001      2000
-----------------------------------------------   --------   --------   -------
Real estate mortgage loan originations for sale   $240,819   $135,615   $47,007
Real estate mortgage loan sales                    229,047    132,115    47,368

Net gains on the sale of real estate
   mortgage loans                                 $  2,382   $  1,071   $   361

Net gains as a percent of real estate
   mortgage loan sales                                1.04%      0.81%      .76%

We sell the majority of the fixed-rate mortgage loans we originate. We do not
retain the servicing rights for the loans we sell.

Noninterest Expense

Noninterest expense totaled $24.2 million for 2002, as compared to $15.5 million
for 2001, and $12.7 million for 2000. Salaries and benefits increased by $4.5
million for 2002 compared to the prior year and was the primary category of
increase in noninterest expense. Most of this increase related to the addition
of the Grand Bank workforce, however, our continued growth required additional
staff as compared to 2001. The staff growth reflected the expansion required to
handle the growing lending portfolios and operational personnel necessary to
support increased customer activity. Other increases included occupancy and
equipment expense, data

<PAGE>

40 Macatawa Bank Corporation

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

processing, and other support related expenses, such as courier, telephone,
postage, and outside services, all of which increased partially due to the GBFC
acquisition. All of these costs relate to customer activity and branch
infrastructure, and increased as a result of new customer activity being
generated. Total noninterest expense increased by 56.0% for 2002 whereas net
interest income and noninterest income in total grew by 64.0%. The greater
revenue growth versus expense growth resulted in an improved efficiency ratio of
58.0% for 2002 as compared to 61.1% for 2001. This improvement was a direct
result of synergies achieved in the GBFC acquisition as well as continued better
capacity usage of the branch network and operations.

During 2002 we opened two new branches and moved from a small leased location to
a new expanded branch location. These new branches are in premier locations and
have already experienced strong growth in new customer relationships. We plan to
continue this expansion focus primarily in Grand Rapids where we hold the lowest
share of the market compared to others we serve. During 2003 we plan to open at
least three new branches in strategic locations within our market area. Although
these new locations increase occupancy and equipment costs, we expect the
benefits from the customer relationship growth opportunities they offer will
outweigh the additional costs.

We integrated the systems and operations of Grand Bank into ours during the
second quarter of 2002. By utilizing the same systems at both Macatawa Bank and
Grand Bank, we realized operational efficiencies, primarily in data processing,
during the year. On January 1, 2003 we completed the final step of the
integration with the name change of Grand Bank to Macatawa Bank by merging the
two bank charters into one. This charter merger allows for more operational
efficiencies and simplifies service to our customers.

Increases in salaries and benefits during 2001 reflected the addition of new
lending staff, lending and operations support staff, as well as additional
branch staff for new locations. Other expense increases in 2001 were principally
due to supporting our expanding customer base. These included advertising, data
processing, legal and professional service fees, postage, and office supply
expenses. The following table details major components of noninterest expense
for the years of 2002, 2001, and 2000.

Noninterest Expense

Year Ended December 31 (Dollars in thousands)     2002      2001      2000
---------------------------------------------   -------   -------   -------

Salaries and employee benefits                  $12,838   $ 8,359   $ 6,865
Occupancy and equipment                           1,861     1,230     1,094
Furniture and equipment expense                   2,161     1,580     1,244
Legal and professional fees                         617       359       248
Advertising                                         722       537       366
Supplies                                            486       392       348
Data processing fees                                829       715       561
Other operating expenses                          4,673     2,371     1,946

Total noninterest expense                       $24,187   $15,543   $12,672

Liquidity and Capital Resources

Equity Capital. In conjunction with the acquisition of GBFC we issued 2,472,000
shares of stock in exchange for all of the outstanding stock of GBFC. GBFC's
regulatory capital ratios were at similar levels to ours upon acquisition and as
a result, had minimal impact on our combined ratios of regulatory capital. At
December 31,2002, our Tier I Capital as a percent of average assets was 7.6%,
and our total capital to risk-weighted assets was 9.9%, as compared to 10.1% and
12.9% respectively at December 31,2001. The decrease in these regulatory capital
ratios reflects our continued internal growth in assets. Additional capital will
be necessary within the next year if our growth continues at its current pace.
Alternative capital sources include additional common stock offerings, trust
preferred securities offerings and subordinated debt. Macatawa Bank Corporation
was categorized as "adequately capitalized" for regulatory capital purposes
while Macatawa Bank and Grand Bank were categorized as "well-capitalized" as of
December 31, 2002.

During the second quarter of 2001, we completed a common stock offering, issuing
1,610,000 additional shares of common stock, resulting in net proceeds to us of
$23.7 million after offering commissions and expenses. We used a portion of the
proceeds from the capital offering to pay off some borrowings, as well as to
contribute additional capital to Macatawa Bank to maintain regulatory capital
levels.

<PAGE>

                                                           2002 Annual Report 41

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

We declared our first cash dividend during the fourth quarter of 2000 in the
amount of $.07 per share. We subsequently paid a quarterly cash dividend of $.07
per share during 2001. During the fourth quarter of 2001, the cash dividend was
increased to $.08 per share and had continued at this level through the third
quarter of 2002. In the fourth quarter of 2002 we increased the cash dividend by
25.0% to $.10. It is anticipated that we will continue to pay quarterly cash
dividends in the future. On May 8, 2002, we distributed a 4% stock dividend to
our shareholders. This was the second consecutive annual stock dividend, and was
an increase over the 3.0% dividend paid in May of 2001.

One stock repurchase transaction in the amount of 115,000 shares took place
during the third quarter of 2002. Further stock repurchase activity is not
anticipated in the foreseeable future.

The following table shows various capital ratios as of December 31, 2002.

Capital Resources

                                     Tier I     Tier I       Total
                                    Leverage   Capital    Risk-Based
                                      Ratio     Ratio    Capital Ratio
                                    --------   -------   -------------

Minimum regulatory requirement
   for capital adequacy               4.0%       4.0%         8.0%
Well capitalized regulatory level     5.0%       6.0%        10.0%
Consolidated                          7.6%       8.6%         9.9%
Macatawa Bank                         7.7%       8.8%        10.0%
Grand Bank                            7.1%       7.8%        10.7%

Liquidity. The liquidity of a financial institution reflects its ability to
provide funds to meet loan requests, to accommodate possible outflows of
deposits and to take advantage of interest rate market opportunities. Our
sources of liquidity include loan payments by our borrowers, maturity and sales
of our securities available for sale, growth of our deposits and deposit
equivalents, federal funds sold, our borrowings from the Federal Home Loan Bank,
and our issuance of common stock. Liquidity management involves the ability to
meet the cash flow requirements of our customers. Our customers may be either
borrowers with credit needs or depositors wanting to withdraw funds. We feel our
liquidity position is sufficient to meet these needs.

Market Risk Analysis

Our primary market risk exposure is interest rate risk and, to a lesser extent,
liquidity risk. All of our transactions are denominated in U.S. dollars with no
specific foreign exchange exposure. Macatawa Bank and Grand Bank have only
limited agricultural-related loan assets, and therefore have no significant
exposure to changes in commodity prices. As a result, our market risk exposure
is mainly comprised of our sensitivity to interest rate risk. Our balance sheet
has sensitivity, in various categories of assets and liabilities, to changes in
prevailing rates in the U.S. for prime rate, mortgage rates, U.S. Treasury rates
and various money market indexes. Our asset/liability management process aids us
in providing liquidity while maintaining a balance between interest earning
assets and interest bearing liabilities.

We use two interest rate risk measurement techniques in our interest rate risk
management. The first is static gap analysis. This measures the difference
between the dollar amounts of interest sensitive assets and liabilities that
will be refinanced or repriced during a given time period. A significant
repricing gap could result in a negative impact to our net interest margin
during periods of changing market interest rates.

<PAGE>

42 Macatawa Bank Corporation

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

The following  table  illustrates  our interest rate repricing gaps for selected
maturity periods at December 31, 2002.

<TABLE>
<CAPTION>
Static Gap Analysis (Dollars in thousands)   0 to 3 Months   4 to 12 Months   1 to 5 Years   Over 5 Years     Total
------------------------------------------   -------------   --------------   ------------   ------------   ----------
<S>                                            <C>              <C>             <C>            <C>          <C>
Assets
Loans-fixed                                    $ 37,588         $ 61,937        $205,877       $ 30,890     $  336,292
Loans-variable                                  590,829            2,349          26,125          5,443        624,746
Taxable securities                                  189            5,271          63,236          3,171         71,867
Tax exempt securities                                --               --              --         18,303         18,303
Short term investments                               --               --              --             --             --
Fed funds sold                                       --               --              --             --             --
Other securities                                     --               --              --          5,391          5,391
Loan loss reserve                                    --               --              --             --        (13,472)
Cash & due from banks                                --               --              --             --         47,874
Acquisition intangibles                              --               --              --             --         27,186
Loans held for sale                                  --               --              --             --         18,726
Fixed assets                                         --               --              --             --         25,751
Other assets                                         --               --              --             --         13,919

Total assets                                   $628,606         $ 69,557        $295,238       $ 63,198     $1,176,583

Liabilities
Time deposits                                  $ 58,928         $143,926        $203,957       $  3,844     $  410,655
Savings                                          28,730               --              --             --         28,730
Other interest bearing deposits                 378,458               --              --             --        378,458
Other borrowings                                 48,936            9,454          40,429         33,014        131,833
Noninterest bearing deposits                         --               --              --             --        103,030
Other liabilities & equity                           --               --              --             --        123,877

Total liabilities & equity                     $515,052         $153,380        $244,386       $ 36,858     $1,176,583

Period gap                                     $113,554         $(83,823)       $ 50,852       $ 26,340
Cumulative gap                                 $113,554         $ 29,731        $ 80,583       $106,923
Cumulative gap/total assets                        9.65%            2.53%           6.85%          9.09%
</TABLE>

The above table shows that total assets maturing or repricing within one year
exceed liabilities maturing or repricing within one year by $29.7 million
indicating that we are asset sensitive in this time horizon. However, the
repricing and cash flows of various categories of assets and liabilities are
subject to competitive and other influences that are beyond our control. Gap
analysis also does not reflect the magnitude of interest rate changes on net
interest income as a result of the various assets and liabilities shown as
repriceable within twelve months. As a result, various assets and liabilities
indicated above as maturing or repricing within a stated period may, in
fact, mature or reprice in other periods or at different volumes.

The second interest rate risk measurement used is simulation analysis. We use a
computer-based earnings simulation model to estimate the effects of various
interest rate environments on the balance sheet structure and net interest
income. The simulation model assesses the direction and magnitude of variations
in net interest income resulting from potential changes in market interest
rates. Key assumptions in the model include repayment speeds on various loan and
investment assets, cash flows and maturities of interest-sensitive assets, cash
flows and maturities of interest-sensitive liabilities, and changes in market
conditions impacting loan and deposit pricing. We also include pricing caps and
floors on discretionary priced liability products which limit both how low
various checking and savings products could go under declining interest rates,
as well as how high they could go in a rising interest rate environment. These
caps and floors reflect our pricing philosophy in response to changing interest
rates.

In running the simulation model, we first forecast the next twelve months of net
interest income under an assumed environment of constant market interest rates.
Next, immediate and parallel interest rate shocks are constructed in the model.

<PAGE>

                                                           2002 Annual Report 43

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

These rate shocks reflect changes of equal magnitude to all market interest
rates. The next twelve months of net interest income are then forecast under
each of the rate shock scenarios. The resulting change in net interest income is
an indication of the sensitivity of our earnings to directional changes in
market interest rates. This model is based solely on parallel changes in market
rates and does not reflect the levels of interest rate risk that may arise from
other factors such as changes in the spreads between key market rates or in the
shape of the Treasury yield curve. The net interest income sensitivity is
monitored by the Asset/Liability Committee which evaluates the results in
conjunction with acceptable interest rate risk parameters. The quarterly rate
simulation results are reported to the board of directors. The simulation also
measures the change in the Economic Value of Equity. This represents the change
in the net present value of our assets and liabilities under the same parallel
shifts in interest rates, as calculated by discounting the estimated future cash
flows using a market-based discount rate. Cash flow estimates incorporate
anticipated changes in prepayment speeds of loans and securities.

The following table shows the suggested impact on net interest income over the
next twelve months and Economic Value of Equity based on our balance sheet as of
December 31,2002.

Changes in Economic Value of Equity and Net Interest Income

                           Economic Value
                             of Equity      Percent   Net Interest   Percent
(Dollars in thousands)         (EVE)         Change      Income       Change
------------------------   --------------   -------   ------------   -------
Change in Interest Rates
200 basis point rise          $112,158        1.9%      $48,944       13.6%
100 basis point rise           112,557        2.2%       45,999        6.8%
Base-rate scenario             110,093         --        43,077         --
100 basis point decline        108,504       (1.4%)      40,176       (6.7)%
200 basis point decline        110,783        0.6%       35,434      (17.7)%

The net interest income fluctuations in the above table reiterate our asset
sensitive position identified by the gap table. The acquisition of GBFC did not
significantly impact our interest rate risk profile as Grand Bank's asset and
liability make-up was similar to ours. If interest rates were to increase, this
analysis suggests that we are well positioned for improvements in net interest
income. Further, our balanced sensitivity in time horizons beyond one year
results in little fluctuation in economic value of equity in the various rate
shock scenarios.

In addition to changes in interest rates, the level of future net interest
income is also dependent on a number of other variables, including: the growth,
composition and absolute levels of loans, deposits, and other earning assets and
interest-bearing liabilities, economic and competitive conditions, potential
changes in lending, investing and deposit gathering strategies, and client
preferences.

Recent Regulatory Developments

Federal legislation (the Gramm-Leach-Bliley Act of 1999) eliminates many federal
and state law barriers to affiliations among banks and other financial services
providers. The legislation, which took effect March 11, 2000, establishes a
statutory framework pursuant to which full affiliations can occur between banks
and securities firms, insurance companies, and other financial companies. The
legislation provides some degree of flexibility in structuring these new
affiliations, although certain activities may only be conducted through a
holding company structure. The legislation preserves the role of the Board of
Governors of the Federal Reserve System as the umbrella supervisor for holding
companies, but incorporates a system of functional regulation pursuant to which
the various federal and state financial supervisors will continue to regulate
the activities traditionally within their jurisdictions. The legislation
specifies that banks may not participate in the new affiliations unless they are
well-capitalized, well-managed and maintain a rating under the Community
Reinvestment Act of 1977 of at least satisfactory among all affiliates.

We have elected to become a financial holding company pursuant to Title I of the
Gramm-Leach-Bliley Act, effective January 9, 2002. At the present time, we have
no plans to engage in any of the expanded activities permitted under the new
regulations.

Forward-Looking Statements

This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We intend such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Reform Act of 1995, and are
including this statement for purposes of these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
our future plans, strategies, and expectations are generally identifiable by use
of the words believe, expect, intend, anticipate, estimate, project, may or
similar expressions. The presentation and discussion of the provision and
allowance for loan losses, statements concerning future profitability or future
growth or increases, are examples of inherently forward-looking statements in
that they involve judgements and statements of belief as to the outcome of
future events. Our ability to predict results or the actual effect of future
plans or strategies is inherently uncertain. Factors which could have a material
adverse affect on our operations and future prospects include, but are not
limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
our market area and accounting principles, policies, and guidelines. These risks
and uncertainties should be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements. Further information
concerning us and our business, including additional factors that could
materially affect our financial results, is included in our filings with the
Securities and Exchange Commission.

<PAGE>

44 Macatawa Bank Corporation

                         Report of Independent Auditors

Board of Directors and Shareholders
Macatawa Bank Corporation
Zeeland, Michigan

                               [LOGO] CROWE CHIZEK

We have audited the accompanying consolidated balance sheets of Macatawa Bank
Corporation as of December 31,2002 and 2001 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the three years in the period ended December 31, 2002. These financial
statements are the responsibility of the Company'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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Macatawa Bank
Corporation at December 31, 2002 and 2001, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 2002
in conformity with accounting principles generally accepted in the United States
of America.


                                               /s/ Crowe, Chizek and Company LLP
                                               ---------------------------------
                                               Crowe, Chizek and Company LLP

Grand Rapids, Michigan
January 24, 2003

<PAGE>

                                                           2002 Annual Report 45

                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
December 31 (Dollars in thousands)                                         2002        2001
---------------------------------------------------------------------   ----------   --------
<S>                                                                     <C>          <C>
Assets
   Cash and due from banks                                              $   47,874   $ 29,680
   Federal funds sold                                                           --      4,000
   Short term investments                                                       --        518
      Total cash and cash equivalents                                       47,874     34,198

   Securities available for sale, at fair value                             86,109     63,606
   Securities held to maturity (fair value 2002 - $4,140;2001 - $649)        4,061        710
   Federal Home Loan Bank stock                                              5,391      3,782

   Loans held for sale                                                      18,726      4,571

   Total loans                                                             961,038    545,693
   Allowance for loan losses                                               (13,472)    (7,699)
                                                                           947,566    537,994

   Premises and equipment - net                                             25,751     14,850
   Accrued interest receivable                                               4,411      3,247
   Goodwill                                                                 23,915         --
   Intangible assets                                                         3,271         --
   Other assets                                                              9,508      7,245

      Total assets                                                      $1,176,583   $670,203

Liabilities and Shareholders' Equity
   Deposits
      Noninterest-bearing                                               $  103,030   $ 60,829
      Interest-bearing                                                     817,843    465,363
            Total                                                          920,873    526,192
   Federal Home Loan Bank advances                                         106,897     75,638
   Other borrowings                                                          4,936         --
   Federal funds purchased                                                  20,000         --
   Accrued expenses and other liabilities                                    9,903      1,871
      Total liabilities                                                 $1,062,609   $603,701

   Shareholders' equity
      Preferred stock, no par value, 500,000 shares
         authorized; no shares issued and outstanding
      Common stock, no par value, 20,000,000 shares
         authorized; 7,891,502 and 5,307,201 shares
         issued and outstanding at December 31,2002
         and 2001, respectively                                            105,201      62,334
      Retained earnings                                                      5,931       3,180
      Accumulated other comprehensive income                                 2,842         988
            Total shareholders' equity                                     113,974      66,502

               Total liabilities and shareholders' equity               $1,176,583    $670,203
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

46 Macatawa Bank Corporation

                             Consolidated Statements
                                    of Income

<TABLE>
<CAPTION>
December 31 (Dollars in thousands)                     2002      2001      2000
---------------------------------------------------   -------   -------   -------
<S>                                                   <C>       <C>       <C>
Interest income
   Loans, including fees                              $52,687   $38,903   $31,787
   Securities                                           4,565     3,782     2,551
      Total interest income                            57,252    42,685    34,338

Interest expense
   Deposits                                            18,273    17,009    15,213
   Other                                                4,629     3,918     2,526
      Total interest expense                           22,902    20,927    17,739

Net interest income                                    34,350    21,758    16,599

Provision for loan losses                               3,321     2,285     1,931

Net interest income after provision for loan losses    31,029    19,473    14,668

Noninterest income
   Service charges and fees                             2,247     1,912     1,144
   Mortgage production revenue                          2,382     1,071       361
   Trust fees                                           2,118       659       531
   Other                                                  576        41        16
      Total noninterest income                          7,323     3,683     2,052

Noninterest expense
   Salaries and benefits                               12,838     8,359     6,865
   Occupancy expense of premises                        1,861     1,230     1,094
   Furniture and equipment expense                      2,161     1,580     1,244
   Legal and professional fees                            617       359       248
   Advertising                                            722       537       366
   Supplies                                               486       392       348
   Data processing fees                                   829       715       561
   Other                                                4,673     2,371     1,946
      Total noninterest expense                        24,187    15,543    12,672

Income before income tax expense                       14,165     7,613     4,048

Income tax expense                                      4,652     2,497       699

Net income                                            $ 9,513   $ 5,116   $ 3,349

Basic earnings per share                              $  1.29   $  1.08   $  0.87

Diluted earnings per share                            $  1.27   $  1.07   $  0.87
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                                                           2002 Annual Report 47

                       Consolidated Statements of Changes
                             in Shareholders' Equity

<TABLE>
<CAPTION>
                                                                                                    Accumulated
                                                                                                       Other
                                                                                        Retained   Comprehensive        Total
                                                                             Common     Earnings       Income      Shareholders'
Years Ended December 31 (Dollars in thousands)                                Stock    (Deficit)       (Loss)          Equity
-------------------------------------------------------------------------   --------   ---------   -------------   -------------
<S>                                                                         <C>         <C>           <C>             <C>
Balance, January 1, 2000                                                    $ 36,883    $(1,961)      $ (396)         $ 34,526

Net income                                                                        --      3,349           --             3,349
Other comprehensive income (loss):
   Net change in unrealized gain (loss) on securities available
      for sale, net of tax of $256                                                --         --          497               497
      Comprehensive income                                                                                               3,846
Common stock issued upon exercise of stock options (750 shares)                    7         --           --                 7
Cash dividends at $.07 per share                                                  --       (251)          --              (251)

Balance, December 31, 2000                                                    36,890      1,137          101            38,128

Net income                                                                        --      5,116           --             5,116
Other comprehensive income (loss):
   Net change in unrealized gain (loss) on securities available
      for sale, net of tax of $457                                                --         --          887               887
      Comprehensive income                                                                                               6,003
Proceeds from sale of 1,610,000 shares of common stock, net of
   offering costs                                                             23,677         --           --            23,677
Issued 107,474 shares in payment of 3% stock dividend                          1,763     (1,766)          --                (3)
Common stock issued upon exercise of stock options (412 shares)                    4         --           --                 4
Cash dividends at $.28 per share                                                  --     (1,307)          --            (1,307)

Balance, December 31, 2001                                                    62,334      3,180          988            66,502

Net income                                                                        --      9,513           --             9,513
Other comprehensive income (loss):
   Net change in unrealized gain (loss) on derivative instruments,
      net of tax of $338                                                          --         --          656               656
   Net change in unrealized gain (loss) on securities available for sale,
      net of tax of $617                                                          --         --        1,198             1,198
      Comprehensive income                                                                                              11,367
Issued 2,472,015 shares for acquisition of GBFC, adjusted for stock
   dividend                                                                   39,817         --           --            39,817
Conversion of GBFC stock options                                                 987         --           --               987
Repurchase of 115,000 shares                                                  (2,300)        --           --            (2,300)
Issued 212,355 shares in payment of 4% stock dividend                          4,270     (4,277)          --                (7)
Common stock issued upon exercise of stock options (14,931 shares)                93         --           --                93
Cash dividends at $.34 per share                                                  --     (2,485)          --            (2,485)

Balance, December 31, 2002                                                  $105,201    $ 5,931       $2,842          $113,974
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

48 Macatawa Bank Corporation

                             Consolidated Statements
                                  of Cash Flows

<TABLE>
<CAPTION>
Years Ended December 31 (Dollars in thousands)                                    2002        2001        2000
----------------------------------------------------------------------------   ---------   ---------   ---------
<S>                                                                            <C>         <C>         <C>
Cash flows from operating activities
   Net income                                                                  $   9,513   $   5,116   $   3,349
   Adjustments to reconcile net income to net cash from operating activities
      Depreciation and amortization                                                2,368       1,473       1,232
      Provision for loan losses                                                    3,321       2,285       1,931
      Origination of loans for sale                                             (240,819)   (135,615)    (47,007)
      Proceeds from sales of loans originated for sale                           229,047     132,115      47,368
      Gain on sales of loans                                                      (2,382)     (1,071)       (362)
      Net change in
         Accrued interest receivable and other assets                              1,708      (5,289)     (3,010)
         Accrued expenses and other liabilities                                    2,086        (454)        810
            Net cash from operating activities                                     4,842      (1,440)      4,311

Cash flows from investing activities
   Loan originations and payments, net                                          (166,549)   (135,457)   (125,373)
   Purchase of FHLB stock                                                           (815)     (1,232)       (238)
   Purchases of securities held to maturity                                           --        (710)         --
   Purchases of securities available for sale                                    (29,083)    (46,690)    (19,598)
   Maturities and calls of securities available for sale                          13,584      33,030          --
   Principal paydowns on investments                                               2,469          --          --
   Cash received from acquisition of GBFC                                         21,390          --          --
   Additions to premises and equipment                                           (12,109)     (3,992)     (3,534)
      Net cash from investing activities                                        (171,113)   (155,051)   (148,743)

Cash flows from financing activities
   Net increase in deposits                                                      148,621     127,575     119,227
   Net increase (decrease) in short-term borrowings                               20,000      (6,200)      6,200
   Proceeds from other borrowings                                                  4,936          --       4,000
   Repayments on other borrowings                                                     --      (4,000)         --
   Proceeds from FHLB advances                                                    29,328      35,166      56,000
   Repayments on FHLB advances                                                   (18,239)    (10,528)    (35,000)
   Fractional shares purchased                                                        (7)         (3)         --
   Cash dividends paid                                                            (2,485)     (1,307)       (251)
   Shares repurchased                                                             (2,300)         --          --
   Proceeds from sale of stock and exercises of options                               93      23,681           7
      Net cash from financing activities                                         179,947     164,384     150,183
</TABLE>

See accompanying notes to consolidated financial statements

(Continued)

<PAGE>

                                                           2002 Annual Report 49

                            Consolidated Statements
                           of Cash Flows (Continued)

<TABLE>
<CAPTION>
Years Ended December 31 (Dollars in thousands)                                   2002        2001      2000
----------------------------------------------------------------------------   ---------   -------   -------
<S>                                                                            <C>         <C>       <C>
Net change in cash and cash equivalents                                          13,676      7,893     5,751

Beginning cash and cash equivalents                                              34,198     26,305    20,554

Ending cash and cash equivalents                                               $ 47,874    $34,198   $26,305

Supplemental disclosures of cash flow information
   Cash paid during the period for
      Interest                                                                 $ 22,525    $20,984   $17,100
      Income taxes                                                                5,450      3,178     1,975

   Noncash investing and financing activities:
      GBFC acquisition:
         Securities acquired (including FHLB stock)                              11,864
         Loans acquired                                                         246,344
         Premises and equipment acquired                                            656
         Acquisition intangibles recorded                                        27,578
         Other assets acquired                                                    4,142
         Deposits assumed                                                       246,060
         Borrowings assumed                                                      20,170
         Other liabilities assumed                                                4,940
         Value of common stock issued and converted stock options                40,804
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

50 Macatawa Bank Corporation

                              Notes to Consolidated
                              Financial Statements

NOTE 1 -- Summary of Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Macatawa Bank,and its
wholly-owned subsidiary, Macatawa Bank Mortgage Company; Grand Bank, and its
wholly-owned subsidiary, Grand Bank Mortgage Company; and Macatawa Bank
Brokerage Services, after elimination of intercompany accounts and transactions.

Nature of Operations. Macatawa Bank Corporation (the "Company") became the bank
holding company for Macatawa Bank on February 23, 1998. Macatawa Bank commenced
operations on November 25, 1997. The Company completed an underwritten initial
public offering of common stock on April 7,1998,which resulted in net proceeds
to the Company of $14.1 million. On April 30,1999,the Company had another common
stock offering and sold 1,188,043 shares,raising $14.6 million. The Company
completed an additional common stock offering in July 2001 and sold 1,610,000
shares, raising $23.6 million. Grand Bank became a wholly-owned subsidiary
effective April 1, 2002 upon the completion of the acquisition of Grand Bank
Financial Corporation (GBFC), and its results are included in the consolidated
statements of income since this effective date.

Both Macatawa Bank and Grand Bank are Michigan chartered banks with depository
accounts insured by the Federal Deposit Insurance Corporation. The banks operate
seventeen branch offices and three lending and operational service facilities,
providing a full range of commercial and consumer banking and trust services in
Kent County, Ottawa County,and northern Allegan County, Michigan. Effective
January 1, 2003 Grand Bank was merged into Macatawa Bank with the combined bank
named Macatawa Bank. Macatawa Bank Mortgage Company and Grand Bank Mortgage
Company originate and sell residential mortgage loans into the secondary market
on a servicing released basis. Macatawa Bank Brokerage Services was formed in
October 2001 and gained approval in June 2002 from NASD to commence operations
as a broker/dealer. Macatawa Bank Brokerage Services provides various brokerage
services including discount brokerage, personal financial planning and
consultation regarding individual stocks and mutual funds.

The Company elected to become a financial holding company pursuant to Title I of
the Gramm-Leach-Bliley Act, effective January 9, 2002. At the present time, the
Company has no plans to engage in any of the expanded activities permitted under
the new regulations.

Use of Estimates. To prepare financial statements in conformity with accounting
principles generally accepted in the United States of America, management makes
estimates and assumptions based on available information. These estimates and
assumptions affect the amounts reported in the financial statements and the
disclosures provided,and future results could differ. The allowance for loan
losses, the fair value of intangible assets and the fair values of financial
instruments are particularly subject to change.

Concentration of Credit Risk. Loans are granted to, and deposits are obtained
from, customers primarily in the western Michigan area as described above.
Substantially all loans are secured by specific items of collateral,including
residential real estate, commercial real estate, commercial assets and consumer
assets. Other financial instruments,which potentially subject the Company to
concentrations of credit risk, include deposit accounts in other financial
institutions.

Cash Flow Reporting. Cash and cash equivalents include cash on hand, demand
deposits with other financial institutions and short-term securities (securities
with maturities of equal to or less than 90 days and federal funds sold). Cash
flows are reported net for customer loan and deposit transactions,
interest-bearing time deposits with other financial institutions and short-term
borrowings with maturities of 90 days or less.

Securities. Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities available for sale consist of those securities which
might be sold prior to maturity due to changes in interest rates, prepayment
risks, yield and availability of alternative investments, liquidity needs or
other factors. Securities classified as available for sale are reported at their
fair value and the related unrealized holding gain or loss is reported in other
comprehensive income.

Interest income includes amortization of purchase premium or discount. Gains and
losses on sales are based on the amortized cost of the security sold. Securities
are written down to fair value when a decline in fair value is not temporary.

Loans. Loans are reported at the principal balance outstanding, net of the
allowance for loan losses,and charge-offs. Loans held for sale are reported at
the lower of cost or market, on an aggregate basis. Loans are sold servicing
released, therefore no mortgage servicing right assets are established.

Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over the loan term. Interest income is not
reported when full loan repayment is in doubt, typically when the loan is
impaired or payments are past due over 90 days (180 days for residential
mortgages). Payments received on such loans are reported as principal
reductions.

All interest accrued but not received for loans placed on nonaccrual is reversed
against interest income. Interest received on such loans is accounted for on the
cash-basis or cost-recovery method, until qualifying for return to accrual.
Loans are returned to accrual status when all the principal and interest amounts
contractually due are brought current and future payments are reasonably
assured.

Allowance for Loan Losses. The allowance for loan losses is a valuation
allowance for probable incurred credit losses, increased by the provision for
loan losses and recoveries, and decreased by charge-offs. Management estimates
the allowance balance required based on known and inherent risks in the
portfolio, economic conditions and other factors. Allocations of the allowance
may be made for specific loans, but the entire allowance is available for any
loan that, in management's judgment,should be charged-off. Loan losses are
charged against the allowance when management believes the uncollectibility of a
loan balance is confirmed.

Loan impairment is reported when full payment under the loan terms is not
expected. If a loan is impaired, a portion of the allowance is allocated so that
the loan is reported,net, at the present value of estimated future cash flows
using the loan's

<PAGE>

                                                           2002 Annual Report 51

                              Notes to Consolidated
                              Financial Statements

existing rate or at the fair value of collateral if repayment is expected solely
from the collateral. Loans are evaluated for impairment when payments are
delayed, typically 90 days or more,or when the internal grading system indicates
a doubtful classification. Large groups of smaller balance homogeneous loans,
such as consumer and residential real estate loans,are collectively evaluated
for impairment, and accordingly,they are not separately identified for
impairment disclosures.

Foreclosed Assets. Assets acquired through or instead of loan foreclosure are
initially recorded at fair value when acquired,establishing a new cost basis.If
fair value declines,a valuation allowance is recorded through expense.Costs
after acquisition are expensed. The Company held $388,000 in foreclosed assets
at December 31, 2002 and $66,000 in foreclosed assets at December 31, 2001.

Premises and Equipment. Land is carried at cost. Premises and equipment are
stated at cost less accumulated depreciation. Buildings and related components
are depreciated using the straight-line method with useful lives ranging from 5
to 40 years. Furniture,fixtures and equipment are depreciated using the
straight-line (or accelerated) method with useful lives ranging from three to
five years. Maintenance, repairs and minor alterations are charged to current
operations as expenditures occur and major improvements are capitalized. These
assets are reviewed for impairment when events indicate the carrying amount may
not be recoverable.

Income Taxes. Income tax expense is the sum of the current year income tax due
or refundable and the change in deferred tax assets and liabilities. Deferred
tax assets and liabilities are the expected future tax consequences of temporary
differences between the carrying amounts and tax bases of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.

Fair Values of Financial Instruments. Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed separately. Fair value estimates involve uncertainties and matters of
significant judgment regarding interest rates, credit risk, prepayments and
other factors, especially in the absence of broad markets for particular items.
Changes in assumptions or in market conditions could significantly affect the
estimates. The fair value estimates of existing on-and off-balance sheet
financial instruments do not include the value of anticipated future business or
the values of assets and liabilities not considered financial instruments.

Earnings Per Share. Basic earnings per share is net income divided by the
weighted average number of common shares outstanding during the period. Diluted
earnings per common share include the dilutive effect of additional potential
common shares issuable under stock options. Earnings and dividends per share are
restated for all stock splits and dividends through the date of issue of the
financial statements.

Stock Compensation. Employee compensation expense under stock option plans is
reported using the intrinsic value method. No compensation cost related to stock
options was recognized during 2002, 2001 or 2000, as all options granted had an
exercise price equal to or greater than the market price of the underlying
common stock at date of grant. Had compensation cost for stock options been
measured using the fair value method, net income and basic and diluted earnings
per share would have been the pro forma amounts indicated below (dollars in
thousands except per share data). The pro forma effect may increase in the
future if more options are granted.

                                          2002     2001     2000
                                         ------   ------   ------
Net income as reported                   $9,513   $5,116   $3,349

Pro forma net income                      9,299    5,080    3,280

Basic earnings per share as reported       1.29     1.08      .87
Pro forma basic earnings per share         1.26     1.07      .86

Diluted earnings per share as reported     1.27     1.07      .87
Pro forma diluted earnings per share       1.25     1.06      .85

Weighted-average fair value of options
   granted during the period               3.48     4.84     2.38

The pro forma effects are computed using option pricing models, using the
following weighted-average assumptions as of grant date.

                                    2002      2001      2000
                                  -------   -------   -------
Risk-free interest rate              4.83%     4.78%     5.26%
Expected option life              7 years   7 years   7 years
Expected stock price volatility      7.29%    21.58%    26.87%
Dividend yield                       1.78%     1.79%     2.00%

Comprehensive Income. Comprehensive income consists of net income and other
comprehensive income. Other comprehensive income includes unrealized gains and
losses on securities available for sale and unrealized gains and losses on cash
flow hedges which are also recognized as separate components of equity.

Segment Reporting. The Company, through the branch network of the Banks,
provides a broad range of financial services to individuals and companies in
western Michigan. These services include demand, time and savings deposits,
lending, ATM processing, cash management, and trust services. While the
Company's management team monitors the revenue streams of the various Company
products and services, operations are managed and financial performance is
evaluated on a Company-wide basis. Accordingly, all of the Company's banking
operations are considered by management to be aggregated in one reportable
operating segment.

<PAGE>

52  Macatawa Bank Corporation

                              Notes to Consolidated
                              Financial Statements

Off Balance Sheet Financial Instruments. Financial instruments include
off-balance sheet credit instruments, such as commitments to make loans and
standby letters of credit, issued to meet customer financing needs. The face
amount for these items represents the exposure to loss, before considering
customer collateral or ability to repay. Such financial instruments are recorded
when they are funded.

Loss Contingencies. Loss contingencies, including claims and legal actions
arising in the ordinary course of business, are recorded as liabilities when the
likelihood of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there now are such matters that will have
a material effect on the financial statements.

Derivative Instruments and Hedging Activities. All derivative instruments are
recorded at their fair values. If derivative instruments are designated as
hedges of fair values, both the change in the fair value of the hedge and the
hedged item are included in current earnings. Fair value adjustments related to
cash flow hedges are recorded in other comprehensive income and reclassified to
earnings when the hedged transaction is reflected in earnings. Ineffective
portions of hedges are reflected in income currently.

Goodwill. Goodwill results from prior business acquisitions and represents the
excess of the purchase price over the fair value of acquired tangible assets and
liabilities and identifiable intangible assets. Goodwill is assessed at least
annually for impairment and any such impairment will be recognized in the period
identified.

Acquisition Intangibles. Acquisition intangibles consist of core deposit and
acquired customer relationship intangible assets arising from acquisitions. They
are initially measured at fair value and then are amortized on an accelerated
method over their estimated useful lives.

Newly Issued But Not Yet Effective Accounting Standards. New accounting
standards on asset retirement obligations, restructuring activities and exit
costs, operating leases, and early extinguishment of debt were issued in 2002.
Management determined that when the new accounting standards are adopted in 2003
they will not have a material impact on the Company's financial condition or
results of operations.

Dividend Restriction. Banking regulations require maintaining certain capital
levels and may limit the dividends paid by the Bank to the Company or by the
Company to shareholders.

Reclassifications. Some items in the prior year financial statements were
reclassified to conform to the current presentation.

NOTE 2 -- Acquisition

On April 1, 2002, the Company completed the acquisition of Grand Bank Financial
Corporation ("GBFC"), a commercial bank headquartered in Grand Rapids, Michigan.
Under the terms of this transaction, the Company acquired all of the outstanding
stock of GBFC in exchange for approximately 2.5 million common shares, adjusted
for the 4.0%stock dividend paid in May 2002. The value of the common shares
issued was determined using the Company's quoted market price per share at the
time the terms of the acquisition agreement were agreed to and announced.
Further, options to acquire GBFC stock were converted to options to acquire
Company stock. The value of these options for purposes of determining the total
cost to the Company for the acquisition was approximately $1.0 million.
Accordingly, the total cost of the transaction considering common stock and
converted options was approximately $40.8 million.

The acquisition was accounted for using the purchase method of accounting, and
accordingly, the purchase price was allocated to the assets purchased and the
liabilities assumed based upon the estimated fair values at the date of
acquisition. The purchase accounting fair value adjustments are being amortized
under various methods and over the lives of the corresponding assets and
liabilities. Goodwill recorded for the acquisition amounted to $23.9 million.
Intangible assets recorded for the acquisition that are subject to amortization
were as follows in thousands of dollars as of December 31, 2002:

                                      Gross    Accumulated
                                      Amount   Amortization
                                      ------   ------------
Core deposits                         $3,185      $286
Trust relationships                      478       106

The amount of goodwill recorded in this transaction relative to the smaller
amounts of identified intangible assets reflects that the value of GBFC related
primarily to the foundation it provides to further build our presence in the
Grand Rapids market. The value of this foundation lies with the GBFC workforce,
their customer service orientation and their relationships within the community.
The amount of the core deposits intangible asset recorded was small relative to
the total purchase price and reflects that the GBFC deposit portfolio was
weighted towards higher interest rate account types.

Both the core deposits and trust relationships intangibles are being amortized
on an accelerated basis over a period of ten years. Amortization expense through
December 31, 2002 was $392,000. Estimated amortization expense for the next five
years is as follows in thousands of dollars:

2003           $484
2004            440
2005            406
2006            378
2007            340

<PAGE>

                                                           2002 Annual Report 53

                              Notes to Consolidated
                              Financial Statements

In conjunction with the acquisition, the fair values of significant assets and
liabilities assumed were as follows as of April 1, 2002, stated in thousands of
dollars:

Cash and cash equivalents          $  21,390
Securities                            11,070
Loans                                246,344
Acquisition intangibles               27,578
Deposits                            (246,060)
Other borrowings                     (20,170)

The consolidated statements of income reflect the operating results of GBFC
since the effective date of the acquisition. The following table presents pro
forma information for year ended December 31 as if the acquisition of GBFC had
occurred at the beginning of both 2002 and 2001. The pro forma information
includes adjustments for the amortization of intangibles arising from the
transaction, the elimination of acquisition related expenses, and the related
income tax effects. The pro forma financial information is not necessarily
indicative of the results of operations as they would have been, had the
transactions been effected on the assumed dates.

Years Ended December 31 (Dollars in thousands)     2002      2001
Pro Forma                                        -------   -------
----------------------------------------------
Interest income                                  $60,780   $58,778
Interest expense                                  24,496    28,371
   Net interest income                            36,284    30,407
Provision for loan losses                          3,694     2,755
   Net interest income after provision            32,590    27,652
Noninterest income                                 8,336     7,149
Noninterest expense                               26,107    23,733
   Income before federal income tax               14,819    11,068
Federal income tax expense                         4,865     3,530
   Net income                                    $ 9,954   $ 7,538

Basic earnings per share                         $  1.25   $  1.04
Diluted earnings per share                       $  1.23   $  1.04

NOTE 3 -- Cash and Due from Banks

The Company was required to have $1,290,000 and $8,352,000 of cash on hand or on
deposit with the Federal Reserve Bank to meet regulatory reserve and clearing
requirements at year-end 2002 and 2001. These balances do not earn interest.

NOTE 4 -- Securities

The amortized cost and fair values of securities at year-end were as follows
(dollars in thousands):

                                                          Gross        Gross
                               Amortized   Unrealized   Unrealized    Fair
                                  Cost       Gains        Losses     Values
                               ---------   ----------   ----------   ------
Available for Sale 2002
   U.S.Treasury securities
   and obligations of U.S.
   Government agencies          $67,747      $2,752        $ (1)     $70,498
   State and municipal bonds     15,050         611         (50)      15,611

                                $82,797      $3,363        $(51)     $86,109

Held to Maturity 2002
   U.S.Treasury securities
   and obligations of U.S.
   Government agencies          $ 1,369      $   12      $   --      $ 1,381
   State and municipal bonds      2,692          79         (12)       2,759

                                $ 4,061      $   91      $  (12)     $ 4,140

Available for Sale 2001
   U.S.Treasury securities
   and obligations of U.S.
   Government agencies          $53,875      $1,412      $   --      $55,287
   State and municipal bonds      8,234         112         (27)       8,319

                                $62,109      $1,524      $  (27)     $63,606

Held to Maturity 2001
   State and municipal bonds    $   710      $   --      $  (61)     $   649

Contractual maturities of debt securities at December 31, 2002 were as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                             Held to Maturity Securities   Available for Sale Securities
                             ---------------------------   -----------------------------
                                 Amortized    Fair              Amortized     Fair
                                    Cost     Value                 Cost      Value
                                 ---------   ------             ---------   -------
<S>                                <C>       <C>                 <C>        <C>
Due in one year or less            $1,292    $1,304              $ 4,069    $ 4,168
Due from one to five years             76        78               60,513     63,159
Due from five to ten years            641       628                6,855      7,155
Due after ten years                 2,052     2,130               11,360     11,627

                                   $4,061    $4,140              $82,797    $86,109
</TABLE>

<PAGE>

54 Macatawa Bank Corporation

                             Notes to Consolidated
                              Financial Statements

There were no sales of securities for the years ended December 31, 2002, 2001
and 2000.

At December 31, 2002 and 2001, securities with a carrying value of approximately
$3,052,000 and $1,000,000 were pledged as security for public deposits and for
other purposes required or permitted by law. In addition, securities totaling
$70,768,000 and $54,233,000 at December 31, 2002 and 2001 were used as
collateral for advances from the Federal Home Loan Bank.

NOTE 5 -- Loans
Year-end loans were as follows (dollars in thousands):

                          2002       2001
                        --------   --------

Commercial              $341,370   $269,993
Commercial mortgage      356,310    133,428
Residential mortgage     133,843     67,655
Consumer                 129,515     74,617

                        $961,038   $545,693

Activity in the allowance for loan losses was as follows (dollars in thousands):

                                      2002     2001     2000
                                    -------   ------   ------
Beginning balance                   $ 7,699   $5,854   $3,995

   Balances from GBFC acquisition     3,464       --       --
   Provision for loan losses          3,321    2,285    1,931
   Loans charged-off                 (1,271)    (513)     (87)
   Recoveries                           259       73       15

Ending balance                      $13,472   $7,699   $5,854

Impaired loans were as follows (dollars in thousands):

                                                  2002     2001
                                                 ------   ------
Loans with no allocated allowance
for loan losses                                  $   --   $1,798

Loans with allocated allowance
for loan losses                                   2,477    1,821
                                                 $2,477   $3,619
Amount of the allowance
for loan losses allocated                        $  883   $  539

                                         2002     2001     2000
                                        ------   ------   ------
Average of impaired loans
during the period                       $2,594   $1,013     $472

Interest income recognized
during impairment                          144       51       33

Cash-basis interest income recognized      162       62       27


NOTE 6 -- Premises and Equipment -- Net
Year-end premises and equipment were as follows (dollars in thousands):

                                  2002      2001
                                -------   -------

Land                            $ 5,410   $ 3,819
Building                          9,399     6,596
Leasehold improvements            1,870     1,286
Furniture and equipment           9,857     6,668
Construction in progress          6,224       116
                                 32,760    18,485
Less accumulated depreciation    (7,009)   (3,635)

                                $25,751   $14,850


Depreciation expense was $1,872,000, $1,406,000 and $1,268,000 for each of the
years ending December 31, 2002, 2001 and 2000.

The Banks lease certain office and branch premises and equipment under operating
lease agreements. Total rental expense for all operating leases aggregated
$648,000, $311,000 and $244,000 for each of the years ending December 31, 2002,
2001 and 2000. Future minimum rentals under noncancelable operating leases as of
December 31, 2002 are as follows (dollars in thousands):

2003          $491
2004           222
2005           140
2006            11
2007            --

              $864

<PAGE>

                                                           2002 Annual Report 55

                              Notes to Consolidated
                              Financial Statements

NOTE 7 -- Deposits
Deposits at year-end were as follows (dollars in thousands):

                               2002       2001
                             --------   --------

Noninterest-bearing demand   $103,030   $ 60,829
Money market                  237,636    175,835
NOW and Super NOW             140,822     71,544
Savings                        28,730     18,397
Certificates of deposit       410,655    199,587

                             $920,873   $526,192

The following table depicts the maturity distribution of certificates of
deposits at December 31, 2002 (dollars in thousands):

2003         $202,564
2004          113,576
2005           66,999
2006            6,850
2007           20,438
Thereafter        228

             $410,655

The Banks had approximately $257,516,000 and $100,504,000 in time certificates
of deposit, which were in denominations of $100,000 or more at December 31, 2002
and 2001.

Brokered deposits totaled approximately $107,083,000 and $11,504,000 at December
31, 2002 and 2001. At December 31, 2002 and 2001, brokered deposits had interest
rates ranging from 2.10% to 7.25% and 3.0% to 7.30% respectively, and maturities
ranging from one month to three years.

NOTE 8 -- Federal Home Loan Bank Advances
At year-end, advances from the Federal Home Loan Bank were as follows (dollars
in thousands):

                                              2002      2001
                                            --------   -------

Maturities from March 2003 through
December 2010, rates from 1.80% to 6.95%,
averaging 5.19% at December 31, 2002        $106,897

Maturities from February 2002 through
December 2010, rates from 2.76% to 6.68%,
averaging 5.30% at December 31, 2001                   $75,638

Each advance was payable at its maturity date and contains a prepayment penalty.
The advances were collateralized by securities totaling $70,768,000 and
$54,233,000 and first mortgage loans totaling $95,530,000 and $65,496,000 under
a blanket lien arrangement at December 31, 2002 and 2001. Advances with put
options held by the Federal Home Loan Bank amounted to $41,000,000 at December
31, 2002 and 2001.

Maturities over the next five years are as follows (dollars in thousands):

2003         $ 33,454
2004           22,929
2005           17,500
2006               --
2007               --
Thereafter     33,014

             $106,897

NOTE 9 -- Other Borrowings
The Company has a $10,000,000 credit facility to provide liquidity for the
parent company and additional capital for the bank subsidiaries as necessary.
Maturity dates and interest rates on advances of this credit facility are as
follows (dollars in thousands):

Maturity Date    Interest Rate    2002    2001
--------------   -------------   ------   ----
April 30, 2003       2.92%       $4,500   $ --

These borrowings were secured with 235,000 shares of common stock of Macatawa
Bank.

NOTE 10 -- Related Party Transactions
Loans to principal officers, directors, and their affiliates were as follows
(dollars in thousands):

                                          2002       2001
                                        --------   --------

Beginning balance                       $ 14,215   $ 14,239
Balances from Grand Bank acquisition       1,974         --
New loans and renewals                    15,151      8,835
Repayments and renewals                  (10,681)    (8,525)
Effect of changes in related parties          --       (334)

Ending balance                          $ 20,659   $ 14,215

Deposits from principal officers, directors, and their affiliates at December
31, 2002 and 2001 were $5,758,000 and $5,482,000.

<PAGE>

56 Macatawa Bank Corporation

                              Notes to Consolidated
                              Financial Statements

NOTE 11 -- Stock Options

Options to buy stock are granted to officers and employees under the Employee
Stock Option Plan (the Employees' Plan), which provides for issue of up to
520,000 options. Options are also granted to directors under the Directors'
Stock Option Plan (the Directors' Plan), which provides for issuance of up to
146,848 options. In conjunction with the acquisition of Grand Bank Financial
Corporation during the first quarter 2002, an additional 86,040 in options were
authorized to exchange existing GBFC options outstanding. The exercise price is
the market price at the date of grant for both plans. The maximum option term is
ten years with options vesting over a one-year period for both the Employees'
Plan and the Directors' Plan.

A summary of the activity in the plans is as follows:

                                                     Weighted Average
                               Options Outstanding    Exercise Price
                               -------------------   ----------------

Balance at January 1, 2000           150,282              $12.19
Granted                               25,280               11.81
Exercised                               (803)               9.34
Forfeited                                 --                  --

Balance at December 31, 2000         174,759               12.15
Granted                               26,322               16.96
Exercised                               (428)               9.62
Forfeited                               (696)              10.91

Balance at December 31, 2001         199,957               12.80
Granted                              104,830               19.31
GBFC options exchanged                86,040                4.34
Exercised                            (15,256)               6.07
Forfeited                             (5,720)              19.68

Balance at December 31, 2002         369,851              $12.85

Options outstanding at year-end 2002 were as follows:

<TABLE>
<CAPTION>
                                           Outstanding                             Exercisable
                           ---------------------------------------------   --------------------------
                                     Weighted Average
                                        Remaining
                                     Contractual Life   Weighted Average             Weighted Average
Range of Exercise Prices   Number        in Years        Exercise Price    Number     Exercise Price
------------------------   -------   ----------------   ----------------   -------   ----------------
<S>                        <C>              <C>              <C>           <C>            <C>
$2.50 - $5.00               56,262          2.0              $ 3.16         56,262        $ 3.16
$5.01 - $10.00              85,265          5.6                9.09         85,265          9.09
$10.01 - $15.00             56,024          7.1               12.80         56,024         12.80
$15.01 - $21.00            172,300          8.7               17.90         73,188         15.96

Outstanding at year end    369,851          6.7              $12.85        270,739        $10.48
</TABLE>

<PAGE>

                                                           2002 Annual Report 57

                              Notes to Consolidated
                              Financial Statements

NOTE 12 -- Employee Benefits

The Company sponsors a 401(k) plan which covers substantially all employees.
Employees may elect to contribute to the plan from 1.0% to 15.0% of their salary
subject to statutory limitations. The Company makes matching contributions equal
to 100.0% of the first 3.0% of employee contributions. Effective July 1,2002 the
plan was amended to establish additional Company matching contributions equal to
50.0% of employee contributions in excess of 3.0% and up to 6.0%. The Company's
contribution for the years ended December 31,2002 and 2001 were approximately
$294,000 and $165,000.

The Company sponsors an employee stock purchase plan which allows employees to
defer after-tax payroll dollars and purchase Company stock on a quarterly basis.
The Company has reserved 25,000 shares of common stock to be issued and
purchased under the plan, however, the plan allows for shares to be purchased
directly from the Company or on the open market.

Grand Bank has a defined benefit pension plan covering substantially all of its
employees.This plan was curtailed in conjunction with the acquisition of Grand
Bank effective April 1, 2002. Financial information regarding the plan was as
follows subsequent to the acquisition through and as of December 31, 2002.

Benefit obligation at year-end          $(833,060)
Fair value of plan assets at year-end     805,950
Funded status                           $ (27,110)

Net benefit cost                        $  (8,567)
Employer contributions                    165,564
Benefits paid                             521,581

The weighted average discount rate used in determining the actuarial present
value of the benefit obligation was 7.0% and the weighted average expected
return on plan assets was 8.0%.

NOTE 13 -- Earnings Per Share

A reconciliation of the numerators and denominators of basic and diluted
earnings per share are as follows (dollars in thousands except per share data):

<TABLE>
<CAPTION>
                                                                2002         2001         2000
                                                             ----------   ----------   ----------
<S>                                                          <C>          <C>          <C>
Basic earnings per share
   Net income                                                $    9,513   $    5,116   $    3,349
   Weighted average common shares outstanding                 7,352,671    4,757,578    3,844,201

Basic earnings per share                                     $     1.29   $     1.08   $     0.87

Diluted earnings per share
Net income                                                   $    9,513   $    5,116   $    3,349
Weighted average common shares outstanding                    7,352,671    4,757,578    3,844,201

Add: Dilutive effects of assumed exercises of stock options     112,589       38,414       15,292
Weighted average common and dilutive potential common
   shares outstanding                                         7,465,260    4,795,992    3,859,493

Diluted earnings per share                                   $     1.27   $     1.07   $     0.87
</TABLE>

Stock options for 39,000, 24,180, and 81,411 shares of common stock were not
considered in computing diluted earnings per share for December 31, 2002, 2001
and 2000 because they were antidilutive.

<PAGE>

58 Macatawa Bank Corporation

                             Notes to Consolidated
                              Financial Statements

NOTE 14 -- Federal Income Taxes

The consolidated provision for income taxes was as follows (dollars in
thousands):

                                                 2002     2001     2000
                                                ------   ------   ------
Current                                         $5,348   $3,139   $1,889
Deferred benefit                                  (696)    (642)    (534)
Change in valuation allowance                       --       --     (656)

                                                $4,652   $2,497   $  699

The difference between the financial statement tax expense and amount computed
by applying the statutory federal tax rate of 34.0% to pretax income was
reconciled as follows (dollars in thousands):

                                                 2002     2001     2000
                                                ------   ------   ------
Statutory rate applied to income before taxes   $4,816   $2,588   $1,376
Add (deduct)
   Tax-exempt interest income                     (187)     (90      (24)
   Change in valuation allowance                    --       --     (656)
   Other                                            23       (1)       3
                                                $4,652   $2,497   $  699

The net deferred tax asset recorded included the following amounts of deferred
tax assets and liabilities (dollars in thousands):

                                                       2002      2001
                                                      -------   ------
Deferred tax asset
   Allowance for loan losses                          $ 4,364   $2,472
   Accrued expenses                                       321       38
   Organization costs                                      18       14
   Other                                                   30       21
                                                        4,733    2,545
Deferred tax liabilities
   Depreciation                                          (401)    (338)
   Purchase accounting adjustments                     (1,031)      --
   Unrealized gain on securities available for sale    (1,126)    (509)
   Unrealized gain on derivative instruments             (338)      --
   Accretion                                              (14)     (16)
   Other                                                  (20)      --
                                                       (2,930)    (863)
Net deferred tax asset                                $ 1,803   $1,682

A valuation allowance related to deferred tax assets is required when it is
considered more likely than not that all or part of the benefit related to such
assets will not be realized. Based on the levels of taxable income in the
current and prior years which would be available to absorb the benefit,
management has determined that no valuation allowance was required at December
31, 2002 or 2001.

NOTE 15 -- Commitments and Off-Balance-Sheet Risk

Some financial instruments are used to meet customer financing needs and to
reduce exposure to interest rate changes. These financial instruments include
commitments to extend credit and standby letters of credit. These involve, to
varying degrees, credit and interest-rate risk in excess of the amount reported
in the financial statements.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the commitment, and
generally have fixed expiration dates. Standby letters of credit are conditional
commitments to guarantee a customer's performance to a third party. Exposure to
credit loss if the other party does not perform is represented by the
contractual amount for commitments to extend credit and standby letters of
credit. Collateral or other security is normally not obtained for these
financial instruments prior to their use, and many of the commitments are
expected to expire without being used.

A summary of the notional or contractual amounts of financial instruments with
off-balance-sheet risk was as follows (dollars in thousands):

December 31                                      2002       2001
--------------------------------------------   --------   --------
Commitments to make loans                      $ 58,636   $ 83,272
Unused lines of credit and letters of credit    307,595    187,422

Approximately 34.0% of the Bank's commitments to make loans were at fixed rates,
offered at current market rates. The majority of the variable rate commitments
noted above were tied to prime and expire within 30 days. The majority of the
unused lines of credit were at variable rates tied to prime.

The Bank conducts substantially all of its business operations in western
Michigan.

NOTE 16 -- Hedging Activities

The Company has asset/liability management policies that include guidelines for
measuring and monitoring interest rate risk. Within these guidelines, parameters
have been established for maximum fluctuations in net interest income. Possible
fluctuations are measured and monitored using simulation modeling. The policies
provide for the use of derivative instruments and hedging activities to aid in
managing interest rate risk within the policy parameters.

The Company's assets are comprised of a large portion of loans on which the
interest rates are variable. As such, the Company may periodically enter into
derivative financial instruments to mitigate exposure to fluctuations in cash
flows resulting from changes in interest rates. Interest rate swap arrangements
may be utilized to hedge against these fluctuations in cash flows.

<PAGE>

                                                           2002 Annual Report 59

                              Notes to Consolidated
                              Financial Statements

In May 2002,the Company entered into a three-year interest rate swap arrangement
that converted the variable rate cash inflows on certain loans to fixed rates of
interest. This interest rate swap bears a notional amount of $20 million, pays
interest to the Company at a fixed rate, and requires interest payments from the
Company at a variable rate. It is anticipated that approximately $276,000,net of
tax, of unrealized gains on this cash flow hedge at December 31,2002 will be
reclassified to earnings over the next twelve months.

NOTE 17 -- Regulatory Matters

The Company and the Banks are subject to regulatory capital requirements
administered by federal banking agencies. Capital adequacy guidelines and prompt
corrective action regulations involve quantitative measures of assets,
liabilities, and certain off-balance-sheet items calculated under regulatory
accounting practices.

Capital amounts and classifications are also subject to qualitative judgments by
regulators about components, risk weightings, and other factors, and the
regulators can lower classifications in certain cases. Failure to meet various
capital requirements can initiate regulatory action that could have a direct
material effect on the financial statements.

The prompt corrective action regulations provide five classifications, including
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition. For the Banks, if only adequately
capitalized, regulatory approval is required to accept brokered deposits; and if
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required.

At December 31, 2002 and 2001, actual capital levels (dollars in thousands) and
minimum required levels were:

<TABLE>
<CAPTION>
                                                             Minimum Required     To Be Well Capitalized
                                                                For Capital      Under Prompt Corrective
                                                Actual       Adequacy Purposes      Action Regulations
                                           ---------------   -----------------   -----------------------
                                           Amount    Ratio    Amount    Ratio        Amount    Ratio
                                           -------   -----    -------   -----        -------   -----
<S>                                        <C>       <C>      <C>        <C>         <C>       <C>
December 31, 2002
Total capital (to risk weighted assets)
   Consolidated                            $97,449    9.9%    $78,860    8.0%        $98,576   10.0%
   Macatawa Bank                            71,618   10.0      57,197    8.0          71,496   10.0
   Grand Bank                               28,879   10.7      21,628    8.0          27,035   10.0
Tier 1 capital (to risk weighted assets)
   Consolidated                             85,127    8.6      39,430    4.0          59,145    6.0
   Macatawa Bank                            62,681    8.8      28,599    4.0          42,898    6.0
   Grand Bank                               21,000    7.8      10,814    4.0          16,221    6.0
Tier 1 capital (to average assets)
   Consolidated                             85,127    7.6      44,657    4.0          55,821    5.0
   Macatawa Bank                            62,681    7.7      32,628    4.0          40,785    5.0
   Grand Bank                               21,000    7.1      11,879    4.0          14,849    5.0

December 31, 2001
Total capital (to risk weighted assets)
   Consolidated                            $72,573   12.9%    $45,175    8.0%        $56,468   10.0%
   Macatawa Bank                            58,264   10.3      45,159    8.0          56,449   10.0
Tier 1 capital (to risk weighted assets)
   Consolidated                             65,514   11.6      22,587    4.0          33,881    6.0
   Macatawa Bank                            51,208    9.1      22,579    4.0          33,869    6.0
Tier 1 capital (to average assets)
   Consolidated                             65,514   10.1      25,838    4.0          32,297    5.0
   Macatawa Bank                            51,208    7.9      25,830    4.0          32,287    5.0
</TABLE>

The Banks were categorized as well capitalized at December 31, 2002 and 2001.

Banking regulations limit capital distributions. Generally, capital
distributions are limited to undistributed net income for the current and prior
two years. At December 31, 2002 and 2001, approximately $10,947,000 and
$1,815,000 was available to pay dividends to the holding company.

<PAGE>

60 Macatawa Bank Corporation

                              Notes to Consolidated
                              Financial Statements

NOTE 18 -- Fair Values of Financial Instruments
Carrying amount and estimated fair values of financial instruments were as
follows at year-end (dollars in thousands):

<TABLE>
<CAPTION>
                                              2002                    2001
                                     ---------------------   ---------------------
                                     Carrying      Fair      Carrying      Fair
                                      Amount       Value      Amount       Value
                                     ---------   ---------   ---------   ---------
<S>                                  <C>         <C>         <C>         <C>
Financial assets
   Cash and cash equivalents         $  47,874   $  47,874   $  34,198   $  34,198
   Securities available for sale        86,109      86,109      63,606      63,606
   Securities held to maturity           4,061       4,140         710         649
   Federal Home Loan Bank stock          5,391       5,391       3,782       3,782
   Loans held for sale                  18,726      18,781       4,571       4,571
   Loans, net                          947,566     958,531     537,994     542,169
   Accrued interest receivable           4,411       4,411       3,247       3,247

Financial liabilities
   Deposits                           (920,873)   (928,180)   (526,192)   (528,249)
   Other borrowings                     (4,936)     (4,936)         --          --
   Federal funds purchased             (20,000)    (20,000)         --          --
   Federal Home Loan Bank advances    (106,897)   (119,110)    (75,638)    (82,432)
   Accrued interest payable             (2,858)     (2,858)     (1,266)     (1,266)

Interest rate swaps                        993         993          --          --
</TABLE>

The methods and assumptions used to estimate fair value are described as
follows:

Carrying amount is the estimated fair value for cash and cash equivalents,
short-term borrowings, Federal Home Loan Bank stock, accrued interest receivable
and payable, demand deposits, short-term debt, and variable rate loans or
deposits that reprice frequently and fully. Security fair values are based on
market prices or dealer quotes, and if no such information is available, on the
rate and term of the security and information about the issuer. For fixed rate
loans or deposits and for variable rate loans or deposits with infrequent
repricing or repricing limits, fair value is based on discounted cash flows
using current market rates applied to the estimated life and credit risk. Fair
values for impaired loans are estimated using discounted cash flow analysis or
underlying collateral values. Fair value of loans held for sale is based on
market quotes. Fair value of debt is based on current rates for similar
financing. The fair value of interest rate swaps is based on market prices or
dealer quotes.

<PAGE>

                                                           2002 Annual Report 61

                              Notes to Consolidated
                              Financial Statements

NOTE 19 -- Condensed Financial Statements (Parent Company Only)
Following are condensed parent company only financial statements (dollars in
thousands):

Condensed Balance Sheets                                2002       2001
                                                      --------   -------
Assets
Cash and cash equivalents                             $    910   $14,011
Investment in subsidiaries                             112,996    52,296
Total loans                                              4,500        --
Other assets                                               105       196
   Total assets                                       $118,511   $66,503

Liabilities and Shareholders' Equity
Other borrowings                                      $  4,500   $    --
Other liabilities                                           37         1
Total liabilities                                        4,537         1
Shareholders' equity
   Common stock                                        105,201    62,334
   Retained earnings                                     5,931     3,180
   Accumulated other comprehensive income                2,842       988
      Total shareholders' equity                       113,974    66,502

         Total liabilities and shareholders' equity   $118,511   $66,503

Condensed Statements of Income          2002      2001      2000
                                       ------    ------    ------
Income
   Interest income                     $  121    $   --    $   --
   Dividends from subsidiaries          1,000       625        --
      Total income                      1,121       625        --

Expense
   Interest expense                       120        --        --
   Other expense                          435       387       231
      Total expense                       555       387       231

Income (loss) before income tax
   and equity in undistributed
   net income of subsidiaries             566       238      (231)

Equity in undistributed
   net income of subsidiaries           8,799     4,746     3,434

Income before income tax                9,365     4,984     3,203

Federal income tax expense (benefit)     (148)     (132)     (146)

Net income                             $9,513    $5,116    $3,349

<PAGE>

62 Macatawa Bank Corporation

                              Notes to Consolidated
                              Financial Statements
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows (Dollars in thousands)       2002      2001      2000
-----------------------------------------------------------   --------   -------   -------
<S>                                                           <C>        <C>       <C>
Cash flows from operating activities
   Net income                                                 $  9,513   $ 5,116   $ 3,349
   Adjustments to reconcile net income to net cash provided
      by (used in) operating activities:
      Equity in undistributed earnings of subsidiaries          (8,799)   (4,746)   (3,434)
      (Increase) decrease in other assets                           91       (51)     (146)
      Increase (decrease) in other liabilities                      36        (2)        3
         Net cash from operating activities                        841       317      (228)

Cash flows from investing activities
   Origination of loan to subsidiary                            (4,500)       --        --
   Investment in subsidiaries                                   (9,243)   (5,100)   (8,000)
      Net cash from investing activities                       (13,743)   (5,100)   (8,000)

Cash flows from financing activities
   Other borrowings                                              4,500    (4,000)    4,000
   Proceeds from issuance of common stock                           93    23,681         7
   Fractional shares purchased                                      (7)       (3)       --
   Shares repurchased                                           (2,300)
   Cash dividends paid                                          (2,485)   (1,307)     (251)
   Net cash from financing activities                             (199)   18,371     3,756

Net change in cash and cash equivalents                        (13,101)   13,588    (4,472)

Cash and cash equivalents at beginning of year                  14,011       423     4,895

Cash and cash equivalents at end of year                      $    910   $14,011   $   423
</TABLE>

NOTE 20 -- Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                                                  Earnings Per Share
                                                                                  ------------------
                                               Interest   Net Interest     Net               Fully
(Dollars in thousands except per share data)    Income       Income      Income     Basic   Diluted
--------------------------------------------   --------   ------------   ------     -----   -------
<S>                                             <C>          <C>         <C>        <C>      <C>
2002
First quarter                                   $10,522      $6,157      $1,514     $0.28    $0.27
Second quarter                                   15,000       8,814       2,350      0.29     0.29
Third quarter                                    15,810       9,474       2,735      0.34     0.34
Fourth quarter                                   15,918       9,902       2,915      0.37     0.36

2001
First quarter                                   $10,280      $4,831      $1,091     $0.29    $0.28
Second quarter                                   10,639       5,195       1,202      0.29     0.29
Third quarter                                    11,108       5,675       1,351      0.25     0.24
Fourth quarter                                   10,658       6,057       1,472      0.27     0.26
</TABLE>

<PAGE>

                                                           2002 Annual Report 63

                               Board of Directors
                               and Management Team

Board of Directors of Macatawa Bank

Benj.A. Smith III*   Chairman/CEO - Macatawa Bank Corporation
                     President - Smith & Associates
Philip J. Koning*    President/CEO - Macatawa Bank
James L. Batts       Vice Chairman - Belfry Development Corporation
G.Thomas Boylan*     President - Light Metals Corporation
Jessie F. Dalman     Former Representative Michigan - House of Representatives
Robert Den Herder*   President - Premovation Audio
Wayne J. Elhart      President - Elhart Pontiac GMC Jeep;
                     Vice President - Elhart Dodge Nissan
James L. Jurries     President - Jurries Capital Management, Inc.
John F. Koetje*      Partner - John F.Koetje and Associates

*    Also serve as director of Macatawa Bank Corporation

Board of Directors of Grand Bank

Thomas Wesholski     Chairman/CEO - Grand Bank
Henry Bouma          Chairman - Lumbermen's, Inc.
Lawrence Leigh       President - Leigh's of Western Michigan, Inc.
Gary Vos             Chairman - Dan Vos Construction
Bill Hardiman        Mayor - City of Kentwood
Douglas F.Meijer     Co-Chairman - Meijer, Inc.
J.C.Huizenga         Chairman - Westwater Group
Owen Pyle Jr.        President - Concord Enterprises, Inc.
Birgit M. Klohs      President - The Right Place Program
Dana E. Sommers      President - The Grotenhuis Group
Harvey J. Koning     President - Grand Oldsmobile
Gordon L. Stauffer   President - Northland Corporation

Bank Management Team

Philip J. Koning     President/CEO - Macatawa Bank
Thomas Wesholski     Chairman/CEO - Grand Bank
Kenneth J. Hoexum    President/COO - Grand Bank
Jon Swets            Senior Vice President/Chief Financial
                     Officer - Macatawa Bank
Ray D. Tooker        Senior Vice President Loan Administration - Macatawa Bank
Jill A. Walcott      Senior Vice President Branch Administration - Macatawa Bank
Richard D. Wieringa  Senior Vice President Commercial Loans - Macatawa Bank
Brian Downs          Senior Vice President Trust - Grand Bank
Vicki K. DenBoer     Vice President Consumer Loans - Macatawa Bank
Linda Elenbaas       Vice President Operations and Technology - Macatawa Bank
Steven L. Germond    Vice President/Financial Officer - Grand Bank
Colette S. Neumann   Vice President Controller - Macatawa Bank
Judith A. Swanson    Vice President Human Resources - Macatawa Bank
Sandy Tanis          Vice President Trust Operations - Macatawa Bank

Macatawa Bank Branch Locations

Allendale            6299 Lake Michigan Drive - 616.895.9892
Byron Center         8233 Byron Center Avenue, Suite Q - 616.583.2244
Douglas              132 South Washington - 269.857.8398
Grand Rapids         4590 Cascade Road, SE - 616.942.3710
Grandville           4471 Wilson Avenue, SW - 616.531.2209
Hamilton             4758 136th Avenue - 269.751.2505
Holland              139 East 8th Street - 616.820.1320
                     701 Maple Avenue - 616.820.1330
                     489 Butternut Drive - 616.786.9555
                     699 East 16th Street - 616.393.8527
                     20 E.Lakewood Boulevard - 616.594.2100
Hudsonville          3526 Chicago Drive - 616.379.1375
Jenison              2020 Baldwin Street - 616.662.5419
Wyoming              5271 Clyde Park Avenue, SW - 616.531.0051
Zeeland              51 East Main - 616.748.9491
                     41 North State Street - 616.748.9847

Grand Bank Location

Grand Rapids         126 Ottawa Avenue, NW - 616.235.7000

Administrative Offices
160 South Waverly Road, Holland - 616.820.1444

Trust Department
106 East 8th Street, Holland - 616.820.1350
126 Ottawa Avenue, NW, Grand Rapids - 616.235.7000

Commercial Lending Center
348 South Waverly Road, 2-D, Holland - 616.820.1438

Retail Lending Center
348 South Waverly Road, 2-A, Holland - 616.393.0583

<PAGE>

64 Macatawa Bank Corporation

                                 Corporate Data

Quarterly Stock Price Information

The Company's common stock has been quoted on the Nasdaq National Market since
May 17, 2001. Previous to that, the stock was traded on the Nasdaq SmallCap
Market. High and low sales prices (as reported on the Nasdaq National Market)
for each quarter for the years ended December 31, 2002 and 2001, are set forth
in the table below. This information has been restated for the 3% stock dividend
paid in May 2001 and the 4% stock dividend paid in May 2002.

                      2002              2001
                 ---------------   ---------------
                  High     Low      High     Low
                 ------   ------   ------   ------
Quarter
First Quarter    $20.87   $18.13   $14.00   $12.60
Second Quarter   $21.74   $18.46   $17.31   $13.53
Third Quarter    $21.50   $17.00   $17.55   $15.32
Fourth Quarter   $20.85   $17.14   $18.51   $15.14

On February 26, 2003 there were approximately 749 owners of record and, in
addition, approximately 0000 beneficial owners of the Company's common stock.

The Company declared its first cash dividend, amounting to $.07 per share,
during the fourth quarter of 2000. Quarterly cash dividends totaling $.28 were
paid during 2001, and a 3% stock dividend was declared during the second quarter
of 2001. Quarterly cash dividends totaling $.34 were paid during 2002, and a 4%
stock dividend was declared during the second quarter of 2002.

Shareholder Information

Administrative Offices    10717 Paw Paw Drive, Holland, MI 49424 - 616.820.1444

Annual Meeting            Ridgepoint Community Church, 340 - 104th Avenue
                          Holland, MI 49423
                          Date: April 24, 2003
                          Time: 10:00 a.m.

Investor Relations and Form 10-K

Questions regarding corporate earnings releases, financial information, and
other investor data should be addressed to:

                          Macatawa Bank
                          10717 Paw Paw Drive
                          Holland, MI 49424
                          616.820.1435

Forms 10-K, 10-Q and others can be accessed through our website at
www.macatawabank.com.

Transfer Agent            Registrar and Transfer Company
                          10 Commerce Drive,
                          Cranford, New Jersey 07016-3572
                          1.800.368.5948
                          E-mail Info@RTCo.com
                          Internet www.RTCO.com

General Counsel           Varnum, Riddering, Schmidt & Howlett LLP

Independent Auditor       Crowe, Chizek and Company LLP

Online Information

For the most current news releases and Macatawa Bank Corporation financial
reports and product information, visit our website at www.macatawabank.com.