# FORM 10-K 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549_________________

[X] ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year
ended December 31, 2007

OR [ ] TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition
period from _______ to ________

Commission file number
000-25927

MACATAWA BANK
CORPORATION(Exact name of registrant as specified in its charter)

|MICHIGAN
(State of other jurisdiction of 
incorporation or organization) | 38-3391345      
(I.R.S. Employer
Identification No.)
|------------------------------------------------------------------------ | -----------------------------------------------------

10753 Macatawa Drive,
Holland, Michigan 49424(Address of principal
executive offices) (Zip Code)

Registrants
telephone number, including area code: (616) 820-1444

Securities registered
pursuant to Section 12(b) of the Exchange Act: None

Securities registered
pursuant to Section 12(g) of the Exchange Act: Common Stock.

_________________

Indicate  by check mark
if the  registrant  is a  well-known  seasoned  issuer,  as defined in Rule 405 of the
Securities Act.   Yes [__]      No [ X ]

Indicate by check mark if
the  registrant  is not required to file  reports  pursuant to Section 13 or Section
15(d) of the Exchange Act.    Yes [__]    No [ X ]

Indicate by check mark whether the
issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.Yes [ X ] No [__]

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form
and no disclosure will be contained, to the best of Registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendments to this Form 10-K. [__]

1

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Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated file, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act. Large accelerated filer [__] Accelerated filer [ X ] Non-accelerated
filer [__] Smaller reporting company [__]

Indicate by check mark
 whether the  registrant  is a shell  company (as defined in Rule 12b-2 of the Exchange
Act).    Yes [__]     No [ X ]

As of June 30, 2007 the aggregate
market value of the registrants common stock held by non-affiliates of the
registrant was $251,909,616 based on the closing sale price of $15.91 as reported on the
National Association of Securities Dealers Automated Quotation System. As of March 7,
2008, there were 16,976,525 outstanding shares of Companys common stock (no par
value). Portions of the Companys Proxy Statement for the Annual Meeting of
Shareholders to be held April 24, 2008 are incorporated by reference into Part II and Part
III of the Report.

PART I

|ITEM 1: | Business
|------- | --------

As
used in this Annual Report, the terms we, us, our and
Macatawa mean Macatawa Bank Corporation and its subsidiaries, unless the
context indicates another meaning.

# General

Macatawa
Bank Corporation is a Michigan corporation and is a financial holding company and the bank
holding company for its wholly owned banking subsidiary, Macatawa Bank, as well as
Macatawa Investment Services, Inc., Macatawa Statutory Trust I and Macatawa Statutory
Trust II. Effective November 1, 2006, Macatawa Investment Services, Inc. ceased doing
business as a registered broker-dealer. On November 1, 2006 Macatawa Bank began offering
brokerage services to its customers through an arrangement with Infinex Investments, Inc.
(Infinex). Infinex is a full services investment provider, a registered
broker-dealer and a member of the National Association of Securities Dealers (NASD) and
the Securities Investor Protection Corporation (SIPC). As more fully discussed in our Form
8-K dated October 11, 2006, Macatawa Bank Corporation entered into an Agreement and Plan
of Merger with the Smith & Associates investment advisory firm based in Holland,
Michigan. The Smith & Associates acquisition became effective on January 1, 2007 and
that business is now part of Macatawa Bank. Effective January 9, 2002, Macatawa Bank
Corporation elected to become a financial holding company pursuant to Title I 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. 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. At the same time,
Grand Bank Mortgage Company was merged into Macatawa Bank Mortgage Company.

Macatawa
Bank is a Michigan chartered bank with depository accounts insured by the Federal Deposit
Insurance Corporation. The bank operates twenty-six branch offices and a lending and
operational service facility offering commercial and personal banking services, including
checking and savings accounts (including certificates of deposit), cash management, safe
deposit boxes, travelers checks, money orders, trust services and commercial, mortgage and
consumer loans in Kent County, Ottawa County, and northern Allegan County, Michigan. Other
service delivery channels we offer include ATMs, internet banking, telephone banking and
debit cards. Macatawa Bank provides various brokerage services including discount
brokerage through Infinex, personal financial planning and consultation regarding mutual
funds. Macatawa Statutory Trust I is a grantor trust that issued a pooled trust preferred
security in July, 2003. Macatawa Statutory Trust II is a grantor trust that issued a
pooled trust preferred security in March, 2004. Macatawa Bank Mortgage Company, a
subsidiary of Macatawa Bank, originates and sells residential mortgage loans into the
secondary market on a servicing released basis. As of December 31, 2007, we had total
assets of $2.13 billion, total deposits of $1.52 billion, approximately 100,000 deposit
accounts and shareholders equity of $160.6 million.

2

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Our
headquarters and administrative offices are located at 10753 Macatawa Drive, Holland,
Michigan 49424, and our telephone number is (616) 820-1444. Our internet website
address is www.macatawabank.com. We make available free of charge through this website our
annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on
Form 8-K and amendments to those reports as soon as reasonably practicable after filing
such reports with the Securities and Exchange Commission. The reference to our website
address does not constitute incorporation by reference of the information contained on the
website, and the information contained on the website is not part of this document.

# Products and Services

Deposit
Services. We offer a broad range of deposit services, including checking
accounts, savings accounts and time deposits of various types. Transaction accounts and
savings and time certificates are tailored to the principal market area at rates
competitive with those offered in the area. All deposit accounts are insured by the FDIC
up to the maximum amount permitted by law. We solicit these accounts from individuals,
businesses, associations, churches, nonprofit organizations, financial institutions and
government authorities. We may also use alternative funding sources as needed, including
short-term borrowings, advances from Federal Home Loan Banks, securities sold under
agreements to repurchase (repo borrowings) and certificates of deposit
purchased from brokers and the packaging of loans for securitization and sale.

Deposits
are gathered primarily from the communities we serve through our network of 26 branches.
We offer business and consumer checking accounts, regular and money market savings
accounts, and certificates of deposit having many options in their terms.

We
set our deposit pricing to be competitive with other banks in our market area. We
periodically purchase brokered deposits to supplement funding needs. These are time
accounts originated outside of our local market area. Brokered deposits comprised
approximately 13% of total deposits at December 31, 2007 and approximately 16% at December
31, 2006. 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.

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

|Average for the Year      
|--------------------------
|                          
|                          
|                          
|                          
|                          
|Noninterest bearing demand
|Interest bearing demand   
|Savings                   
|Time                      
|                          
|Total deposits            
|                          

The
following table summarizes time deposits in amounts of $100,000 or more by time remaining
until maturity as of December 31, 2007:

|Amount                        
|------------------------------
|                              
|Three months or less          
|Over 3 months through 6 months
|Over 6 months through 1 year  
|Over 1 year                   
|                              
|Total                         
|                              

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Lending
Activities.

Loan
Portfolio Composition.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.

|Year Ended December 31       
|-----------------------------
|                             
|                             
|                             
|                             
|                             
|Commercial real estate       
|Residential real estate      
|Other commercial             
|Consumer                     
|                             
|Total loans                  
|                             
|                             
|Less:                        
|                             
|Allowance for loan losses    
|                             
|Total  loans  receivable, net
|                             

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

|                                                    | December 31
|--------------------------------------------------- | -----------
|                                                    |            
|(Dollars in thousands)                              |            
|                                                    |            
|Nonaccrual loans                                    |            
|Loans 90 days or more delinquent and still accruing |            
|Restructured loans                                  |            
|                                                    |            
|                                                    |            
|Total nonperforming loans                           |            
|                                                    |            
|                                                    |            
|Foreclosed assets                                   |            
|Repossessed assets                                  |            
|                                                    |            
|                                                    |            
|Total nonperforming assets                          |            
|                                                    |            
|                                                    |            
|Nonperforming loans to total loans                  |            
|Nonperforming assets to total assets                |            

The increase in nonperforming loan
balances in 2007 is more fully discussed under the section Loan Portfolio and Asset Quality included
in the Management Discussion and Analysis of Results of Operations and Financial Condition.

4

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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.

|                                                                    | December 31
|------------------------------------------------------------------- | -----------
|                                                                    |            
|(Dollars in thousands)                                              |            
|                                                                    |            
|Loans:                                                              |            
|Average daily balance of loans for the year                         |            
|Amount of loans outstanding at end of period                        |            
|                                                                    |            
|Allowance for loan losses:                                          |            
|Balance at beginning of year                                        |            
|Addition to allowance charged to operations                         |            
|Loans charged-off:                                                  |            
|Commercial                                                          |            
|Residential Real Estate                                             |            
|Consumer                                                            |            
|Recoveries:                                                         |            
|Commercial                                                          |            
|Residential Real Estate                                             |            
|Consumer                                                            |            
|                                                                    |            
|                                                                    |            
|Balance at end of year                                              |            
|                                                                    |            
|                                                                    |            
|Ratios:                                                             |            
|Net charge-offs to average loans outstanding                        |            
|Allowance for loan losses to loans
         outstanding at year end |            

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.

|Year Ended December 31
|----------------------
|                      
|                      
|                      
|                      
|                      
|Commercial and        
|commercial real       
|estate                
|Real estate mortgages 
|Consumer              
|Unallocated           
|                      
|                      
|Total                 
|                      

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Maturities
and Sensitivities of Loans to Changes in Interest Rates.The following
table shows the amount of total loans outstanding as of December 31, 2007 which, based on
remaining scheduled repayments of principal, are due in the periods indicated.

|Maturing                   
|---------------------------
|                           
|                           
|                           
|Commercial real estate     
|Residential real estate    
|Other commercial           
|Consumer                   
|                           
|                           
|Totals                     
|                           
|                           
|Allowance for loan losses  
|                           
|                           
|Total loans receivable, net
|                           

Interest
Sensitivity.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, 2007.

|Fixed Rate (a)                        | Variable Rate (a) | Total
|------------------------------------- | ----------------- | -----
|                                      |                   |      
|Due within 3 months                   |                   |      
|Due after 3 months, but within 1 year |                   |      
|Due after one but within 5 years      |                   |      
|Due after 5 years                     |                   |      
|                                      |                   |      
|                                      |                   |      
|Total                                 |                   |      
|                                      |                   |      
|                                      |                   |      
|Allowance for loan losses             |                   |      
|                                      |                   |      
|                                      |                   |      
|Total loans receivable, net           |                   |      
|                                      |                   |      

(a)       
          Does not include loans on non-accrual.

Residential
Real Estate Loans. We originate owner-occupied residential mortgage loans,
which are generally long-term with either fixed or variable interest rates. Our general
policy, which is subject to review by our management as a result of changing market and
economic conditions and other factors, is to sell the majority of our residential mortgage
loans in the secondary market. During 2007, we did, however, choose to retain a larger
portion of our residential mortgage loan volume. We retained approximately half of the
dollar volume of our loan originations, selling the remaining half in the secondary
market. Because of the relatively short duration of our assets, we viewed the improvement
in rates on residential mortgage loans in 2007 as an opportunity to hold more of these
higher quality loans in our portfolio.

6

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Our
borrowers generally qualify and are underwritten using industry standards for quality
residential mortgage loans. We do not originate loans that are considered sub-prime.
Residential mortgage loan originations derive from a number of sources, including
advertising, direct solicitation, real estate broker referrals, existing borrowers and
depositors, builders and walk-in customers. Loan applications are accepted at most of our
offices. The substantial majority of these loans are secured by properties in our market
area.

Our
adjustable rate mortgage loans are fully amortizing loans with contractual maturities of
up to 30 years. These loans generally carry interest rates which are reset to a stated
margin over an independent index, generally the one-year constant maturity treasury index
or the one year LIBOR index. Increases or decreases in the interest rate of our variable
rate mortgage loans are generally limited to 2% annually with lifetime interest rate caps
of 6% over the initial interest rate. Our variable rate mortgage loans do not contain
prepayment penalties and do not produce negative amortization. Initial interest rates
offered on our variable rate mortgage loans may be slightly below the fully indexed rate,
although borrowers are generally qualified at the fully indexed rate.

We
also offer fixed rate mortgage loans to owner occupants with maturities up to 30 years,
which conform to secondary market standards. Interest rates charged on these fixed rate
loans are priced on a daily basis according to market conditions. These loans generally do
not include prepayment penalties. We generally sell long-term, conforming fixed-rate loans
with terms of 15 years or greater in the secondary market.

We
generally originate residential mortgage loans with loan-to-value ratios not to exceed
80%. For loans with loan-to-value ratios that equal or exceed 90% at origination, we
require private mortgage insurance in an amount sufficient to reduce our exposure to 80%
or less of the lower of the appraised value or purchase price of the underlying
collateral. In underwriting one- to four-family residential real estate loans, we evaluate
both the borrowers ability to make monthly payments and the value of the property
securing the loan. Properties securing one- to four-family residential real estate loans
that we made are appraised by independent appraisers. We require borrowers to obtain title
insurance and fire, property and, if necessary, flood insurance.

Multi-Family
and Commercial Real Estate Loans. We originate permanent loans secured by
multi-family and commercial real estate. Our permanent multi-family and commercial real
estate loan portfolio includes loans secured by apartment buildings, condominiums, small
office buildings, small business facilities, medical facilities and other non-residential
building properties, substantially all of which are located within our primary market
area.

Permanent
multi-family and commercial real estate loans have a maximum maturity of 10 years with an
amortization period of up to 20 years. Most of these loans, however, have maturities of 5
years or less with amortization periods of 15 and 20 years. Multi-family loans and
commercial real estate loans are generally written in amounts of up to 80% of the lesser
of the appraised value of the property or the purchase price, and borrowers are generally
personally liable for all or part of the indebtedness.

Appraisals
on properties securing multi-family and commercial real estate loans that we originate are
primarily performed by independent appraisers who we designate at the time the loan is
made. Management reviews all appraisals on multi-family and commercial real estate loans.
In addition, our underwriting procedures generally require verification of the
borrowers credit history, income and financial statements, banking relationships,
references, and historical and projected cash flows for the property that indicate minimum
debt service coverage ratios.

Multi-family
and commercial real estate loans generally present a higher level of risk than loans
secured by owner occupied one- to four-family residences. This greater risk is due to
several factors, including the concentration of principal in a limited number of loans and
borrowers, the effects of general economic conditions on income producing properties and
the increased difficulty of evaluating and monitoring these types of loans. Furthermore,
the repayment of loans secured by multi-family and commercial real estate is typically
dependent upon the successful operation of the related real estate project. If cash flow
from the project is reduced, the borrowers ability to repay the loan may be
impaired. For example, if leases are not obtained or renewed, or a bankruptcy court
modifies a lease term, or a major tenant is unable to fulfill its lease obligations, cash
flow from the project will be reduced.

7

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Construction
and Development Loans. We make construction loans to individuals for the
construction of their residences and commercial customers for the construction of their
business facilities. Construction loans are also made to builders and developers for the
construction of one- to four-family residences and the development of one- to four-family
lots, residential subdivisions, condominium developments and other commercial
developments.

Construction
and development loans are obtained principally through continued business from commercial
customers, developers and builders who have previously borrowed from us, as well as
referrals from existing customers. As part of the application process, the applicant must
submit accurate plans, specifications and costs of the project to be constructed or
developed. These items are used as a basis to determine the appraised value of the subject
property. Loans are based on the lesser of current appraised value and/or the cost of
construction (land plus building). Construction and development loans to borrowers other
than owner-occupants involve many of the same risks discussed above regarding multi-family
and commercial real estate loans and tend to be more sensitive to general economic
conditions than many other types of loans. Further, because of the uncertainties inherent
in estimating development and construction costs and the market for the project upon
completion, it is relatively difficult to evaluate accurately the total loan funds
required to complete a project, the related loan-to-value ratios and the likelihood of
ultimate success of the project.

Construction
loans to individuals for their residences are structured to be converted to permanent
loans at the end of the construction phase, which typically runs six to nine months. These
construction loans have rates and terms which generally match one- to four-family loans
then offered by us, except that during the construction phase, the borrower pays interest
only. Residential construction loans are generally underwritten pursuant to the same
guidelines used for originating permanent, owner-occupied one-to-four family residential
real estate loans.

Construction
or development loans to builders of one- to four-family residences generally require the
payment of interest only for up to one year with adjustable rates. These loans may also
provide for the payment of loan fees from loan proceeds. We also make loans to residential
land developers for the purpose of developing one- to four-family lots and residential
condominium projects. These loans typically have terms of two years or less with maximum
loan to value ratios of 80%. These loans may provide for the payment of loan fees from
loan proceeds. Loan principal is typically paid down as lots or units are sold. During
2007, the Company experienced a significant increase in non-performing loan levels, primarily
associated with this loan segment. The increase in nonperforming loan balances in 2007 is
more fully discussed under the section Loan Portfolio and Asset Quality included in the
Management Discussion and Analysis of Results of Operations and Financial Condition.
The increase was largely associated with a decline in
general market conditions that significantly reduced the demand for new construction
one-to-four family residential real estate. Accordingly, the Company has generally
curtailed this type of lending for new customers. For current borrowing customers, we will
continue to support the projects for which we have already advanced funds in order to
facilitate success of the projects and ultimate repayment of our loans. Any new loans made
for the development of residential real estate are only to current borrowers that can
establish repayment ability from sources independent of the project itself.

Commercial
Business Loans. Our commercial business lending portfolio contains loans
with a variety of purposes and security, including loans to finance operations and
equipment. Generally, our commercial business lending has been limited to borrowers
headquartered, or doing business, in our primary market area. These credit relationships
typically require the satisfaction of appropriate loan covenants and debt formulas;
including, but not limited to, net worth, debt to net worth, and accounts receivable aging
requirements. These loan covenants and debt formulas are monitored through periodic,
required reporting of accounts receivable aging schedules and financial statements, and in
the case of larger business operations, reviews or audits by independent professional
firms.

Unlike
residential mortgage loans, which generally are made on the basis of the borrowers
ability to make repayment from his or her employment and other income, and which are
secured by real property whose value tends to be more easily ascertainable, commercial
business loans are of higher risk and typically are made on the basis of the
borrowers ability to make repayment from the cash flow of the borrowers
business. As a result, the availability of funds for the repayment of commercial business
loans may be substantially dependent on the success of the business itself. Further, the
collateral securing the loans may depreciate over time, may be difficult to appraise and
may fluctuate in value based on the success of the business.

8

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Consumer
Loans. We originate a variety of different types of consumer loans,
including automobile loans, home equity lines of credit and installment loans, home
improvement loans, deposit account loans and other loans for household and personal
purposes. Our automobile loans typically are originated at fixed interest rates with terms
up to 60 months for new and used vehicles. Loans secured by automobiles are generally
originated for up to 80% of the National Automobile Dealers Association book value of the
automobile securing the loan.

Our
home equity installment loans are written so that the total commitment amount, when
combined with the balance of the first mortgage lien, generally will not exceed the
greater of 90% of the appraised value of the property or 90% of two times the Michigan
real estate assessment value. These loans have a maximum maturity of 5 years with an
amortization period of up to 15 years, and carry fixed rates of interest.

We
also originate home equity lines of credit utilizing the same underwriting standards as
for home equity installment loans. Home equity lines of credit are revolving line of
credit loans. The majority of our existing home equity line of credit portfolio has
adjustable rates, interest only payments and a maximum maturity of ten years.

The
underwriting standards that we employ for consumer loans include a determination of the
applicants payment history on other debts and ability to meet existing obligations
and payments on the proposed loan. Although creditworthiness of the applicant is of
primary consideration, the underwriting process also includes a comparison of the value of
the security, if any, in relation to the proposed loan amount. Consumer loans may entail
greater credit risk than do residential mortgage loans, particularly in the case of
consumer loans which are unsecured or are secured by rapidly depreciable assets, such as
automobiles. In such cases, any repossessed collateral for a defaulted consumer loan may
not provide an adequate source of repayment of the outstanding loan balance as a result of
the greater likelihood of damage, loss or depreciation. In addition, consumer loan
collections are dependent on the borrowers continuing financial stability, and thus
are more likely to be affected by adverse personal circumstances. Furthermore, the
application of various federal and state laws, including bankruptcy and insolvency laws,
may limit the amount which can be recovered on such loans.

Securities.
          Our security portfolio is classified as either available for sale or
          held to maturity. Securities classified as available for
          sale may be sold prior to maturity due to changes in interest rates,
          prepayment risks, and availability of alternative investments, or 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
          the maximization of earnings, liquidity and to help decrease our overall
          exposure to changes in interest rates. The following table reflects the
          composition of our securities portfolio as of the dates indicated.

|Year Ended December 31                    
|------------------------------------------
|                                          
|                                          
|                                          
|U.S. Treasury and U.S. Government Agencies
|State and municipal bonds                 
|Other equity securities                   
|                                          
|Total                                     
|                                          

Excluding
our investment portfolio holdings in U.S. Treasury and U.S. Government Agency Securities,
we had no investments in securities of any one issuer which exceeded 10% of
shareholders equity.

9

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Schedule
of Maturities of Investment Securities and Weighted Average Yields.The following
is a schedule of investment security maturities and their weighted average yield by
category at December 31, 2007.

|Due WithinOne Year      | One toFive Years | Five to Ten Years | AfterTen Years | Investments withNo ContractualMaturity
|----------------------- | ---------------- | ----------------- | -------------- | --------------------------------------
|                        |                  |                   |                |                                       
|                        |                  |                   |                |                                       
|                        |                  |                   |                |                                       
|U.S. Treasury and U.S.  |                  |                   |                |                                       
|Government Agencies     |                  |                   | $              | 26,189                                
|Tax-exempt state and    |                  |                  
|municipal bonds (1)     |                  |                   |                | --                                    
|                        |                  |                  
|Other equity securities |                  |                   |                | --                                    
|                        |                  |                   |                |                                       
|                        |                  |                  
|Total (1)               |                  |                   | $              | 26,189                                
|                        |                  |                   |                |                                       

(1)    
          Yields on tax-exempt securities are computed on a fully taxable-equivalent
          basis.

Trust
Services.We began offering trust services in January 1999 to
further provide for the financial needs of our customers. With the acquisition of Grand
Bank in April 2002 our trust assets increased by over $500 million, and with the
acquisition of Smith & Associates our trust asset increased by over $100 million. As
of December 31, 2007, the Trust Department had assets of approximately $1.15 billion. Our
types of service include both personal trust and retirement plan services.

Our
personal trust services include financial planning, investment management services, trust
and estate administration and custodial services. As of December 31, 2007, our personal
trust assets totaled approximately $989.2 million.

Our
retirement plan services provide all types of qualified retirement plans including profit
sharing, 401(k)s and pension plans. As of December 31, 2007, our retirement plan assets
totaled approximately $164.9 million.

# Market Area

Our
market area of Ottawa, Kent and northern Allegan Counties are located in western Michigan.
This area consists of two mid-sized cities, Grand Rapids and Holland, and rural areas.
Grand Rapids is the second largest city in Michigan and Holland is the largest city in
Ottawa County. Both cities and surrounding areas have a solid and diverse economic base,
which includes health and life sciences services, tourism, office furniture, automotive
components and assemblies, pharmaceutical, transportation, equipment, food and
construction supplies. Companies operating in the market area include the Van Andel
Institute, Steelcase, Herman Miller, Alticor, Gentex, Spectrum Health, Haworth, Johnson
Controls, General Motors, Gerber, SPX, Magna Donnelly, and Meijer.

Much
of our success as a retail and small to mid-sized business lender has been due to our
market areas favorable population, housing and income demographics. Population
growth levels have been positive year over year, but most recently population levels have
slowed and stabilized. Population within our three county market area grew 18.0% from 1990
to 2000, and 6% from 2000 to 2007. Median household income levels in our market area
exceed state and national levels while unemployment levels are generally below state
levels but above national levels.

10

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# Competition

Our
primary market area includes Ottawa County, Kent County and northern Allegan County, all
located in Western Michigan. There are many bank, thrift and credit union offices located
within our market area. Most are branches of larger financial institutions. We also face
competition from finance companies, insurance companies, mortgage companies, securities
brokerage firms, money market funds and other providers of financial services. Many of our
competitors have been in business a number of years, have established customer bases, are
larger and have higher lending limits than we do. We compete for loans, deposits and other
financial services based on our ability to communicate effectively with our customers, to
understand and meet their needs and to provide high quality customer service. Our
management believes that our personal service philosophy enhances our ability to compete
favorably in attracting individuals and small businesses. We actively solicit customers by
offering our customers personal attention, professional service, and competitive interest
rates.

# Environmental Matters

We
do not believe that existing environmental regulations will have any material effect upon
our capital expenditures, our earnings or our competitive position.

# Employees

As
of December 31, 2007, we had 377 full-time and 127 part-time employees. We have assembled
a staff of experienced, dedicated and highly qualified professionals whose goal is to meet
the financial needs of our customers while providing outstanding service. The majority of
our management team has at least 10 years of banking experience, and several key personnel
have more than 20 years of banking experience. None of our employees is represented by
collective bargaining agreements with us.

# Acquisitions

On
April 1, 2002, Grand Bank Financial Corporation was merged into Macatawa Bank Corporation.
Macatawa Bank Corporation became the holding company for Grand Bank. Effective January 1,
2003, Grand Bank was merged into Macatawa Bank.

On
January 1, 2007, the Company completed the acquisition of Smith & Associates. The
Company in turn contributed the business to Macatawa Bank.

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# SUPERVISION AND
REGULATION

The
following is a summary of certain statutes and regulations affecting Macatawa Bank
Corporation and Macatawa Bank. This summary is qualified in its entirety by such statutes
and regulations. A change in applicable laws or regulations may have a material effect on
us and our business.

# General

Financial
institutions and their holding companies are extensively regulated under federal and state
law. Consequently, our growth and earnings performance can be affected not only by
management decisions and general economic conditions, but also by the statutes
administered by, and the regulations and policies of, various governmental regulatory
authorities. Those authorities include, but are not limited to, the Board of Governors of
the Federal Reserve System (the Federal Reserve Board), the Federal Deposit
Insurance Corporation (FDIC), the Commissioner of the Michigan Office of
Financial and Insurance Services (Commissioner), the Internal Revenue Service,
and state taxing authorities. The effect of such statutes, regulations and policies can be
significant, and cannot be predicted with a high degree of certainty.

Federal
and state laws and regulations generally applicable to financial institutions and their
holding companies regulate, among other things, the scope of business, investments,
reserves against deposits, capital levels relative to operations, lending activities and
practices, the nature and amount of collateral for loans, the establishment of branches,
mergers, consolidations and dividends. The system of supervision and regulation applicable
to us and our bank establishes a comprehensive framework for our respective operations and
is intended primarily for the protection of the FDICs deposit insurance funds, our
depositors, and the public, rather than our shareholders.

Federal
law and regulations establish supervisory standards applicable to the lending activities
of our bank, including internal controls, credit underwriting, loan documentation and
loan-to-value ratios for loans secured by real property.

Macatawa
Bank Mortgage Company, a subsidiary of Macatawa Bank, is subject to various state and
federal regulations.

# Macatawa Bank Corporation

General.
          On January 9, 2002, Macatawa Bank Corporation became a financial holding
          company, within the meaning of the Gramm-Leach-Bliley Act of 1999 (GLB
          Act), and is registered with, and subject to regulation by, the Federal
          Reserve Board under the Bank Holding Company Act, as amended (the
          BHCA). Under the BHCA, we are subject to periodic examination by the
          Federal Reserve Board, and are required to file with the Federal Reserve Board
          periodic reports of our operations and such additional information as the
          Federal Reserve Board may require.

In
accordance with Federal Reserve Board policy, we are expected to act as a source of
financial strength to Macatawa Bank and to commit resources to support Macatawa Bank in
circumstances where we might not do so absent such policy. In addition, if the
Commissioner deems Macatawa Banks capital to be impaired, the Commissioner may
require Macatawa Bank to restore its capital by a special assessment upon us as the
banks sole shareholder. If we were to fail to pay any such assessment, the directors
of Macatawa Bank would be required, under Michigan law, to sell the shares of the
banks stock owned by us to the highest bidder at either a public or private auction
and use the proceeds of the sale to restore the banks capital.

Investments
and Activities. In general, any direct or indirect acquisition by us of any
voting shares of any bank which would result in our direct or indirect ownership or
control of more than 5% of any class of voting shares of such bank, and any merger or
consolidation between us and another financial holding company or bank holding company,
will require the prior written approval of the Federal Reserve Board under the BHCA. No
Federal Reserve Board approval is required for us to acquire a company, other than a bank
holding company or bank, engaged in activities that are financial in nature as determined
by the Federal Reserve Board.

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The
merger or consolidation of an existing bank subsidiary of ours with another bank, or the
acquisition by such a subsidiary of assets of another bank, or the assumption of liability
by such a subsidiary to pay any deposits in another bank, will require the prior written
approval of the responsible Federal depository institution regulatory agency under the
Bank Merger Act. In addition, in certain such cases an application to, and the prior
approval of, the Federal Reserve Board under the BHCA and/or the Commissioner under the
Michigan Banking Code, may be required.

Financial
holding companies, like us, may engage in various lending, advisory, insurance and
insurance underwriting, securities underwriting, dealing and market making, and merchant
banking activities (as well as those activities previously approved for bank holding
companies by the Federal Reserve Board) together with such other activities as may be
determined by the Federal Reserve Board (in coordination with other regulatory
authorities) to be financial in nature, incidental to any such financial activity, or
complimentary to any such financial activity, and which do not pose a substantial risk to
the safety or soundness of depository institutions or the financial system generally. In
order to maintain the benefits and flexibility of being a financial holding company, each
of our subsidiary depository institutions must continue to be well-capitalized
and well-managed under applicable regulatory standards and each subsidiary
depository institution must maintain at least a satisfactory or above Community
Reinvestment Act rating.

Capital
Requirements. The Federal Reserve Board uses capital adequacy guidelines in
its examination and regulation of bank holding companies. If capital falls below minimum
guidelines, a bank holding company may, among other items, be denied approval to acquire
or establish additional banks or non-bank businesses.

The
Federal Reserve Boards capital guidelines establish the following minimum regulatory
capital requirements for bank holding companies: (i) a leverage capital requirement
expressed as a percentage of total average assets, and (ii) a risk-based requirement
expressed as a percentage of total risk-weighted assets. The leverage capital requirement
consists of a minimum ratio of Tier 1 capital (which consists principally of
shareholders equity) to total average assets of 3% for the most highly rated
companies, with minimum requirements of 4% to 5% for all others. The risk-based
requirement consists of a minimum ratio of total capital to total risk-weighted assets of
8%, of which at least one-half must be Tier 1 capital.

Dividends.
          Macatawa Bank Corporation is a corporation separate and distinct from Macatawa
          Bank. Most of our revenues are dividends paid by our bank. Thus, our ability to
          pay dividends to our shareholders is indirectly limited by statutory
          restrictions on our banks ability to pay dividends described below.
          Further, in a policy statement, the Federal Reserve Board has expressed its view
          that a bank holding company experiencing earnings weaknesses should not pay cash
          dividends exceeding its net income or which can only be funded in ways that
          weaken the bank holding companys financial health, such as by borrowing.
          Additionally, the Federal Reserve Board possesses enforcement powers over bank
          holding companies and their non-bank subsidiaries to prevent or remedy actions
          that represent unsafe or unsound practices or violations of applicable statutes
          and regulations. Among these powers is the ability to proscribe the payment of
          dividends by banks and bank holding companies. Similar enforcement powers over
          our bank are possessed by the FDIC. The prompt corrective action
          provisions of federal law and regulation authorizes the Federal Reserve Board to
          restrict the payment of dividends by us for an insured bank which fails to meet
          specified capital levels.

In
addition to the restrictions on dividends imposed by the Federal Reserve Board, the
Michigan Business Corporation Act provides that dividends may be legally declared or paid
only if after the distribution a corporation, like us, can pay its debts as they come due
in the usual course of business and its total assets equal or exceed the sum of its
liabilities plus the amount that would be needed to satisfy the preferential rights upon
dissolution of any holders of preferred stock whose preferential rights are superior to
those receiving the distribution.

Federal
Securities Regulation.Our common stock is registered with the Securities
and Exchange Commission (SEC) under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended. The Sarbanes-Oxley Act of 2002
provides for numerous changes to the reporting, accounting, corporate governance and
business practices of companies as well as financial and other professionals who have
involvement with the U.S. public markets. The SEC continues to issue new and proposed
rules implementing various provisions of the Sarbanes-Oxley Act.

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# Macatawa Bank

General.
          Macatawa Bank is a Michigan banking corporation, and its deposit accounts are
          insured by the Bank Insurance Fund (the BIF) of the FDIC. As a BIF
          insured Michigan chartered bank, Macatawa Bank is subject to the examination,
          supervision, reporting and enforcement requirements of the Commissioner, as the
          chartering authority for Michigan banks, and the FDIC, as administrator of BIF.
          These agencies and the federal and state laws applicable to our bank and its
          operations, extensively regulate various aspects of the banking business
          including, among other things, permissible types and amounts of loans,
          investments and other activities, capital adequacy, branching, interest rates on
          loans and on deposits, the maintenance of non-interest bearing reserves on
          deposit accounts, and the safety and soundness of banking practices. Grand Bank
          was also subject to the same supervision and regulation until its merger into
          Macatawa Bank effective January 1, 2003.

Deposit
Insurance. As an FDIC-insured institution, we are required to pay deposit
insurance premium assessments to the FDIC. The FDIC has adopted a risk-based assessment
system under which all insured depository institutions are placed into one of four
categories and assessed insurance premiums, based upon their respective levels of capital
and results of supervisory evaluation. Institutions classified as well-capitalized (as
defined by the FDIC) and considered healthy pay the lowest premium while institutions that
are less than adequately capitalized (as defined by the FDIC) and considered of
substantial supervisory concern pay the highest premium. Risk classification of all
insured institutions is made by the FDIC for each semi-annual assessment period.

The
Federal Deposit Insurance Act (FDIA) required the FDIC to establish assessment
rates at levels which would maintain the Deposit Insurance Fund at a mandated reserve
ratio of not less than 1.25% of estimated insured deposits. On February 8, 2006 The
Federal Deposit Insurance Reform Act of 2005 (the Reform Act) was signed into law. The
Reform Act provides for the establishment of a range of 1.15% to 1.50% within which the
FDIC Board of Directors may set the Designated Reserve Ratio (DRR). The Reform Act allows
the FDIC to manage the pace at which the reserve ratio varies within this range. On
November 2, 2006, the FDIC adopted new premium rates for 2007, stating they were needed to
offset continued strong growth in insured deposits that is lowering the Deposit Insurance
Fund ratio. Banks that had been paying zero in deposit insurance premiums for the past ten
years are now required to pay premiums of 5 to 7 basis points in 2008. Under the new rate
schedule, most well-capitalized banks pay 5 to 7 basis points annually. That rate
increases to 43 basis points for banks that pose significant supervisory concerns.

FICO
Assessments. Our bank, as a member of the BIF, is subject to assessments to
cover the payments on outstanding obligations of the Financing Corporation
(FICO). FICO was created to finance the recapitalization of the Federal
Savings and Loan Insurance Corporation, the predecessor to the FDICs Savings
Association Insurance Fund (the SAIF) which insures the deposits of thrift
institutions. From now until the maturity of the outstanding FICO obligations in 2019, BIF
members and SAIF members will share the cost of the interest on the FICO bonds on a pro
rata basis. It is estimated that FICO assessments during this period will be less than
0.025% of deposits.

Commissioner
Assessments. Michigan banks are required to pay supervisory fees to the
Commissioner to fund the operations of the Commissioner. The amount of supervisory fees
paid by a bank is based upon the banks total assets, as reported to the
Commissioner.

Capital
Requirements. The FDIC has established the following minimum capital
standards for state-chartered, FDIC insured non-member banks, such as Macatawa Bank: a
leverage requirement consisting of a minimum ratio of Tier 1 capital to total average
assets of 3% for the most highly-rated banks with minimum requirements of 4% to 5% for all
others, and a risk-based capital requirement consisting of a minimum ratio of total
capital to total risk-weighted assets of 8%, at least one-half of which must be Tier 1
capital. Tier 1 capital consists principally of shareholders equity. These capital
requirements are minimum requirements. Higher capital levels will be required if warranted
by the particular circumstances or risk profiles of individual institutions.

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Federal
law provides the federal banking regulators with broad power to take prompt corrective
action to resolve the problems of undercapitalized institutions. The extent of the
regulators powers depends on whether the institution in question is well
capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, or critically undercapitalized.
Federal regulations define these capital categories as follows:

|                               | TotalRisk-BasedCapital Ratio | Tier 1Risk-BasedCapital Ratio | Leverage Ratio
|------------------------------ | ---------------------------- | ----------------------------- | --------------
|                               |                              |                               |               
|Well capitalized               |                              |                               | 10% or above  
|Adequately capitalized         |                              |                               | 8% or above   
|Undercapitalized               |                              |                               | Less than 8%  
|Significantly undercapitalized |                              |                               | Less than 6%  
|Critically undercapitalized    |                              |                               | --            

As
of December 31, 2007, each of Macatawa Banks ratios exceeded minimum requirements
for the well capitalized category.

Depending
upon the capital category to which an institution is assigned, the regulators
corrective powers include: requiring the submission of a capital restoration plan; placing
limits on asset growth and restrictions on activities; requiring the institution to issue
additional capital stock (including additional voting stock) or to be acquired;
restricting transactions with affiliates; restricting the interest rate the institution
may pay on deposits; ordering a new election of directors of the institution; requiring
that senior executive officers or directors be dismissed; prohibiting the institution from
accepting deposits from correspondent banks; requiring the institution to divest certain
subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and
ultimately, appointing a receiver for the institution.

In
general, a depository institution may be reclassified to a lower category than is
indicated by its capital levels if the appropriate federal depository institution
regulatory agency determines the institution to be otherwise in an unsafe or unsound
condition or to be engaged in an unsafe or unsound practice. This could include a failure
by the institution, following receipt of a less-than-satisfactory rating on its most
recent examination report, to correct the deficiency.

Dividends.
          Under Michigan law, our bank is restricted as to the maximum amount of dividends
          it may pay on its common stock. Our bank may not pay dividends except out of net
          income after deducting its losses and bad debts. A Michigan state bank may not
          declare or pay a dividend unless the bank will have surplus amounting to at
          least 20% of its capital after the payment of the dividend.

Federal
law generally prohibits a depository institution from making any capital distribution
(including payment of a dividend) or paying any management fee to its holding company if
the depository institution would thereafter be undercapitalized. The FDIC may prevent an
insured bank from paying dividends if the bank is in default of payment of any assessment
due to the FDIC. In addition, the FDIC may prohibit the payment of dividends by our bank,
if such payment is determined, by reason of the financial condition of our bank, to be an
unsafe and unsound banking practice.

Insider
Transactions. Our bank is subject to certain restrictions imposed by the
Federal Reserve Act on any extensions of credit to us or our subsidiaries, on investments
in the stock or other securities of our or our subsidiaries and the acceptance of the
stock or other securities of us or our subsidiaries as collateral for loans. Certain
limitations and reporting requirements are also placed on extensions of credit by our bank
to its directors and officers, to our directors and officers, the directors and officers
of our bank, to our principal shareholders and to related interests of such
directors, officers and principal shareholders. In addition, federal law and regulations
may affect the terms upon which any person becoming a director or officer of our company
or one of its subsidiaries or a principal shareholder in our company may obtain credit
from banks with which our bank maintains a correspondent relationship.

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Safety
and Soundness Standards. The federal banking agencies have adopted
guidelines to promote the safety and soundness of federally insured depository
institutions. These guidelines establish standards for internal controls, information
systems, internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

Investments
and Other Activities. Under federal law and FDIC regulations, FDIC insured
state banks are prohibited, subject to certain exceptions, from making or retaining equity
investments of a type, or in an amount, that are not permissible for a national bank.
Federal law, as implemented by FDIC regulations, also prohibits FDIC insured state banks
and their subsidiaries, subject to certain exceptions, from engaging as principal in any
activity that is not permitted for a national bank or its subsidiary, respectively, unless
the bank meets, and continues to meet, its minimum regulatory capital requirements and the
FDIC determines the activity would not pose a significant risk to the deposit insurance
fund of which the bank is a member. Impermissible investments and activities must be
divested or discontinued within certain time frames set by the FDIC in accordance with
federal law. These restrictions are not currently expected to have a material impact on
the operations of our bank.

Consumer
Protection Laws. Our banks business includes making a variety of
types of loans to individuals. In making these loans, we are is subject to State usury and
regulatory laws and to various federal statutes, including the privacy of consumer
financial information provisions of the Gramm-Leach-Bliley Act and regulations promulgated
thereunder, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in
Lending Act, the Real Estate Settlement Procedures Act, and the Home Mortgage Disclosure
Act, and the regulations promulgated thereunder, which prohibit discrimination, specify
disclosures to be made to borrowers regarding credit and settlement costs, and regulate
the mortgage loan servicing activities of our bank, including the maintenance and
operation of escrow accounts and the transfer of mortgage loan servicing. In receiving
deposits, our bank is subject to extensive regulation under State and federal law and
regulations, including the Truth in Savings Act, the Expedited Funds Availability Act, the
Bank Secrecy Act, the Electronic Funds Transfer Act, and the Federal Deposit Insurance
Act. Violation of these laws could result in the imposition of significant damages and
fines upon our bank and its directors and officers.

Branching
Authority. Michigan banks have the authority under Michigan law to
establish branches anywhere in the State of Michigan, subject to receipt of all required
regulatory approvals. Banks may establish interstate branch networks through acquisitions
of other banks. The establishment of de novo interstate branches or the acquisition of
individual branches of a bank in another state (rather than the acquisition of an
out-of-state bank in its entirety) is allowed only if specifically authorized by state
law.

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

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|ITEM 1A: | Risk
Factors
|-------- | ------------

You
should carefully consider the following risk factors, together with the other information
provided in this Annual Report on Form 10-K.

# Changes in economic
conditions or interest rates may negatively affect our earnings, capital and liquidity.

The
results of operations for financial institutions, including our bank, may be materially
and adversely affected by changes in prevailing local and national economic conditions,
including declines in real estate market values, rapid increases or decreases in interest
rates and changes in the monetary and fiscal policies of the federal government. Our
profitability is heavily influenced by the spread between the interest rates we earn on
investments and loans and the interest rates we pay on deposits and other interest-bearing
liabilities. Substantially all our loans are to businesses and individuals in western
Michigan and any decline in the economy of this area could adversely affect us. Like most
banking institutions, our net interest spread and margin will be affected by general
economic conditions and other factors that influence market interest rates and our ability
to respond to changes in such rates. At any given time, our assets and liabilities may be
such that they are affected differently by a given change in interest rates.

# Our credit losses
could increase and our allowance for loan losses may not be adequate to cover actual loan
 losses.

The
risk of nonpayment of loans is inherent in all lending activities and nonpayment, if it
occurs, may have a material adverse affect on our earnings and overall financial condition
as well as the value of our common stock. We make various assumptions and judgments about
the collectibility of our loan portfolio and provide an allowance for potential losses
based on a number of factors. If our assumptions are wrong, our allowance for loan and
lease losses may not be sufficient to cover our losses, thereby having an adverse affect
on our operating results, and may cause us to increase the allowance in the future. The
actual amount of future provisions for loan losses cannot now be determined and may exceed
the amounts of past provisions. Additionally, federal banking regulators, as an integral
part of their supervisory function, periodically review our allowance for credit losses.
These regulatory agencies may require us to increase our provision for credit losses or to
recognize further loan or lease charge-offs based upon their judgments, which may be
different from ours. Any increase in the allowance for credit losses could have a negative
effect on our net income, financial condition and results of operations.

# Our business is
subject to various lending risks depending on the nature of the borrowers business,
its cash flow and our collateral.

Repayment
of our commercial loans is often dependent on cash flow of the borrower, which may be
unpredictable, and collateral securing these loans may fluctuate in value.Our
commercial loans are primarily made based on the cash flow of the borrower and secondarily
on the underlying collateral provided by the borrower. Most often, this collateral is
accounts receivable, inventory, equipment or real estate. In the case of loans secured by
accounts receivable, the availability of funds for the repayment of these loans may be
substantially dependent on the ability of the borrower to collect amounts due from its
customers. Other collateral securing loans may depreciate over time, may be difficult to
appraise and may fluctuate in value based on the success of the business.

Our
commercial real estate loans involve higher principal amounts than other loans, and
repayment of these loans may be dependent on factors outside our control or the control of
our borrowers. Commercial real estate lending typically involves higher loan principal
amounts, and the repayment of these loans generally is dependent, in large part, on
sufficient income from the properties securing the loans to cover operating expenses and
debt service. Because payments on loans secured by commercial real estate often depend
upon the successful operating and management of the properties, repayment of such loans
may be affected by factors outside the borrowers control, such as adverse conditions
in the real estate market or the economy or changes in government regulation. If the cash
flow from the project is reduced, the borrowers ability to repay the loan and the
value of the security for the loan may be impaired.

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Our
construction and development loans are based upon estimates of costs to construct and
value associated with the completed project.These estimates may be inaccurate.
Because of the uncertainties inherent in estimating construction costs, as well as the
market value of the completed project, it is relatively difficult to evaluate accurately
the total funds required to complete a project and the related loan-to-value ratio. As a
result, construction loans often involve the disbursement of substantial funds with
repayment dependent, in part, upon the success of the ultimate project and the ability of
the borrower to sell or lease the property, rather than the ability of the borrower or
guarantor to repay principal and interest. Delays in completing the project may arise from
labor problems, material shortages and other unpredictable contingencies. If the estimate
of the cash of construction is inaccurate, we may be required to advance additional funds
to complete construction. If our appraisal of the value of the completed project proves to
be overstated, we may have inadequate security for the repayment of the loan upon
completion of the project.

Our
construction and development loans also include loans to residential land developers for
which repayment is generally from the sale of residential lots and/or new construction
residential one-to-four family homes. Residential development loans typically involve
higher loan principal amounts. In addition, the sale of residential lots and/or new
construction residential one-to-four family residences is contingent upon general market
conditions and the resulting impact on the demand for residential property. If the demand
for residential lots and/or new construction residential one-to-four family residences
slows, the borrowers ability to repay the loan and the value of the security for the
loan may be impaired.

Our
consumer loans generally have a higher risk of default than our other loans. Consumer
loans entail greater risk than our other loans, particularly in the case of consumer loans
that are unsecured or secured by rapidly depreciating assets. In such cases, any
repossessed collateral for a defaulted consumer loan may not provide an adequate source of
repayment of the outstanding loan balance as a result of damage, loss or depreciation. The
remaining deficiency often does not warrant further substantial collection efforts against
the borrower beyond obtaining a deficiency judgment. In addition, consumer loan
collections are dependent on the borrowers continuing financial stability, and thus,
are more likely to be adversely affected by job loss, divorce, illness or personal
bankruptcy, all of which increase when the economy is weak. Furthermore, the application
of various Federal and state laws, including Federal and state bankruptcy and insolvency
laws, may limit the amount that can be recovered on such loans.

# Litigation involving
Trade Partners may have a material adverse effect on our financial condition.

Item
3 of this Form 10-K includes information about the Trade Partners, Inc. receivership and
pending legal actions involving Trade Partners, Inc., the Macatawa Bank Corporation and
Macatawa Bank. If one or more of these legal actions is determined adversely to the
Macatawa Bank Corporation and Macatawa Bank, or if one or more of these legal actions
results in Macatawa Bank Corporation or Macatawa Bank paying a substantial settlement,
then such adverse determination or settlement may have a material adverse effect on our
financial condition.

# We may experience
difficulties in managing our growth.

To
sustain our continued growth, we require additional capital to fund our expanding lending
activities. As part of our strategy for continued growth, we intend to open additional
branches. New branches often experience a period of unprofitability due to the impact of
overhead expenses and the start-up phase of generating loans and deposits. To the extent
that we continue to open additional branches, we may experience the effects of higher
operating expenses relative to operating income from the new operations, which may have an
adverse affect on our levels of net income, return on average equity and return on average
assets.

In
addition, we may acquire banks and related businesses that we believe provide a strategic
fit with our business. To the extent that we grow through acquisitions, we cannot assure
you that we will be able to adequately or profitably manage such growth. Acquiring other
banks and businesses involves risks commonly associated with acquisitions.

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# We rely heavily on
our management and other key personnel, and the loss of any of them may adversely
effect our operations.

We
are and will continue to be dependent upon the services of our management team, including
our President and Chief Executive Officer of Macatawa Bank, our Executive Vice President
of Macatawa Bank, and our other senior managers and commercial lenders. Losing one or more
key members of the management team could adversely affect our operations. We do not
maintain key man life insurance on any of our officers or directors.

# Our future success is
dependent on our ability to compete effectively in the highly competitive banking industry.

We
face substantial competition in all phases of our operations from a variety of different
competitors. Our future growth and success will depend on our ability to compete
effectively in this highly competitive environment. We compete for deposits, loans and
other financial services with numerous Michigan-based and out-of-state banks, thrifts,
credit unions and other financial institutions as well as other entities which provide
financial services. Some of the financial institutions and financial services
organizations with which we compete are not subject to the same degree of regulation as we
are. Most of our competitors have been in business for many years, have established
customer bases, are larger, and have substantially higher lending limits than we do. The
primary competitors in our market area include Fifth Third Bancorp, Huntington Bancshares,
LaSalle Bank, and National City Corp. The financial services industry is also likely to
become more competitive as further technological advances enable more companies to provide
financial services. These technological advances may diminish the importance of depository
institutions and other financial intermediaries in the transfer of funds between parties.

# We are subject to
significant government regulation, and any regulatory changes may adversely affect us.

The
banking industry is heavily regulated under both federal and state law. These regulations
are primarily intended to protect customers, not our creditors or shareholders. As a bank
holding company, we are also subject to extensive regulation by the Federal Reserve, in
addition to other regulatory and self-regulatory organizations. Our ability to establish
new facilities or make acquisitions is conditioned upon the receipt of the required
regulatory approvals from these organizations. Regulations affecting banks and financial
services companies undergo continuous change, and we cannot predict the ultimate effect of
such changes, which could have a material adverse effect on our profitability or financial
condition.

# We continually
encounter technological change, and we may have fewer resources than our competitors to
continue to invest in technological improvements.

The
banking industry is undergoing rapid technological changes with frequent introductions of
new technology-driven products and services. In addition to better serving customers, the
effective use of technology increases efficiency and enables financial institutions to
reduce costs. Our future success will depend, in part, on our ability to address the needs
of our customers by using technology to provide products and services that will satisfy
customer demands for convenience as well as to create additional efficiencies in our
operations. Many of our competitors have substantially greater resources to invest in
technological improvements. There can be no assurance that we will be able to effectively
implement new technology-driven products and services or be successful in marketing such
products and services to our customers.

# Our articles of
incorporation and by-laws and Michigan laws contain certain provisions that could make a
takeover more difficult.

Our
articles of incorporation and by-laws, and the laws of Michigan, include provisions which
are designed to provide our board of directors with time to consider whether a hostile
takeover offer is in our best interest and the best interests of our shareholders. These
provisions, however, could discourage potential acquisition proposals and could delay or
prevent a change in control. The provisions also could diminish the opportunities for a
holder of our common stock to participate in tender offers, including tender offers at a
price above the then-current price for our common stock. These provisions could also
prevent transactions in which our shareholders might otherwise receive a premium for their
shares over then current market prices, and may limit the ability of our shareholders to
approve transactions that they may deem to be in their best interests.

19

---



The
Michigan Business Corporation Act contains provisions intended to protect shareholders and
prohibit or discourage certain types of hostile takeover activities. In addition to these
provisions and the provisions of our articles of incorporation and by-laws, Federal law
requires the Federal Reserve Boards approval prior to acquisition of
control of a bank holding company. All of these provisions may have the effect
of delaying or preventing a change in control at the company level without action by our
shareholders, and therefore, could adversely affect the price of our common stock.

# Our ability to pay
dividends is limited by law and contract.

We
are a holding company and substantially all of our assets are held by our bank. Our
ability to continue to make dividend payments to our shareholders will depend primarily on
available cash resources at the holding company and dividends from our bank. Dividend
payments or extensions of credit from our bank are subject to regulatory limitations,
generally based on capital levels and current and retained earnings, imposed by regulatory
agencies with authority over our bank. The ability of our bank to pay dividends is also
subject to its profitability, financial condition, capital expenditures and other cash
flow requirements. We also are prohibited from paying dividends on our common stock if the
required payments on our subordinated debentures have not been made. We cannot assure you
that our bank will be able to pay dividends to us in the future.

# The market price for
our common stock fluctuates.

The market price for our common stock
has fluctuated, ranging between $7.56 and $20.28 for 2007. The overall market and the
price of our common stock may continue to fluctuate. There may be a significant impact on
the market price for our common stock due to, among other things:

| |  | Variations
in our anticipated or actual operating results or the results of our competitors;
| | - | --------------------------------------------------------------------------------------------

| |  | Changes
in investors' or analysts' perceptions of the risks and conditions of our business;
| | - | -------------------------------------------------------------------------------------------

| |  | The
size of the public float of our common stock;
| | - | -------------------------------------------------

| |  | Regulatory
developments;
| | - | ------------------------

| |  | Market
conditions; and
| | - | ----------------------

| |  | General
economic conditions.
| | - | ----------------------------

Additionally, the average daily
trading volume for our common stock as reported on the Nasdaq National Market was 84,767
shares during 2007, with daily volume ranging from a low of 16,306 shares to a high of
1,194,995 shares. There can be no assurance that a more active or consistent trading
market in our common stock will develop. As a result, relatively small trades could have a
significant impact on the price of our common stock.

|ITEM 1B: | Unresolved
Staff Comments.
|-------- | --------------------------

| | None.
| | -----

|ITEM 2: | Properties.
|------- | -----------

We
own or lease facilities located in Ottawa County, Allegan County and Kent County,
Michigan. Our administrative offices are located at 10753 Macatawa Drive, Holland,
Michigan 49424. Our administrative offices are approximately 49,000 square feet and
contain our administration, human resources, trust, loan underwriting and processing, and
deposit operations.

20

---



| | Our
facilities as of February 23, 2008, were as follows:
| | --------------------------------------------------------

| | Location of Facility                 
10753 Macatawa Drive, Holland               
815 E. Main Street, Zeeland                 
125 Ottawa Avenue N.W., Grand Rapids*       
126 Ottawa Avenue N.W., Grand Rapids*       
141 E. 8th Street, Holland                  
489 Butternut Dr., Holland                  
701 Maple Avenue, Holland                   
699 E. 16th Street, Holland                 
41 N. State Street, Zeeland                 
2020 Baldwin Street, Jenison                
6299 Lake Michigan Dr., Allendale           
132 South Washington, Douglas               
4758 - 136th Street, Hamilton*              
3526 Chicago Drive, Hudsonville             
20 E. Lakewood Blvd., Holland               
3191 - 44th Street, S.W., Grandville        
2261 Byron Center Avenue S.W., Byron Center 
5271 Clyde Park Avenue, S.W., Wyoming       
4590 Cascade Road, Grand Rapids             
3177 Knapp Street, N.E., Grand Rapids       
15135 Whittaker Way, Grand Haven            
12415 Riley Street, Holland                 
2750 Walker N.W., Walker                    
1575 - 68th Street S.E., Grand Rapids       
2820 - 10 Mile Road, Rockford               
520 Baldwin Street, Jenison                 
2440 Burton Street, S.E., Grand Rapids      
6330 28th Street, S.E., Grand Rapids        
* Leased facility | Use
Main Branch, Administrative, and Loan Processing Offices
Branch Office
Trust and Mortgage Offices
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office and Loan Center
Branch Office
Branch Office and Loan Center
Branch Office and Loan Center
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
Branch Office
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We
believe our facilities are well-maintained and adequately insured. Because of our growth,
we are continually evaluating the need for additional space and branches.

21

---



|Item 3. | LEGAL
PROCEEDINGS.
|------- | ------------------

Please refer to the Companys
Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, (Part II, Item 1 Legal
Proceedings) for information concerning legal proceedings related to Trade Partners, Inc.

A lawsuit was filed in April 2003 by
John and Kathryn Brand in Oklahoma state court against Grand Bank, the Company, Trade
Partners and certain individuals and entities associated with Trade Partners. The
complaint seeks damages for the asserted breach of certain escrow agreements for which
Grand Bank served as custodian and escrow agent. The claims asserted against the Company
and Grand Bank in this action have been settled and dismissed with prejudice.

In May 2003, a purported class action
complaint was filed by Forrest W. Jenkins and Russell S. Vail against the Company in the
United States District Court for the District of Western Michigan. As amended, this suit
alleges that Grand Bank breached escrow agreements and fiduciary duties and violated the
Michigan Uniform Securities Act with respect to the investments secured by the purported
class in viaticals and in interests in limited partnerships which made loans to Trade
Partners secured by viaticals, and with respect to loans made by purported class members
directly to Trade Partners. Plaintiffs motion for class certification was denied in
November 2006. The Company has answered this complaint denying the material allegations
and raising certain affirmative defenses.

Following denial of class
certification in the Jenkins case, nine new cases were filed in several different
jurisdictions. These complaints are identical in all material respects other than the
identity of the plaintiffs, and are substantially identical to the complaint in the
Jenkins litigation. None of these complaints contain class action allegations, but
the total number of named plaintiffs in all the nine cases is about 1,300. The cases are:
Ronald Ash, et. al. v. Macatawa Bank Corporation, et. al.filed November 17,
2006 in the District Court for Oklahoma County, Oklahoma, subsequently removed by the
Company to the United States District Court for the Western District of Oklahoma;
Steven M. Adamson, et. al. v. Macatawa Bank Corporation, et. al.filed
November 15, 2006 in the United States District Court for the Western District of
Oklahoma; James Lee Myers et. al. v. Macatawa Bank Corporation, et. al.filed
November 14, 2006 in the Superior Court for Los Angeles County, California, subsequently
removed by the Company to the United States District Court for the Central District of
California; Frank V. Bailey et. al. v. Macatawa Bank Corporation, et.
al.filed November 29, 2006 in the United States District Court for the Northern
District of Texas; Eddie Elkins, et. al. v. Macatawa Bank Corporationfiled
January 29, 2007 in the United States District Court for the Western District of Oklahoma;
William A. Giese, et. al. v. Macatawa Bank Corporation, et. al.filed November
17, 2006 in the Circuit Court for Kent County, Michigan; Gerald Abraham, et. al. v.
Macatawa Bank Corporation, et. al.filed November 29, 2006 in the Circuit Court
for Kent County, Michigan; Jorge Acevedo, et. al. v. Macatawa Bank Corporation, et.
al.filed December 17, 2006 in the Circuit Court for Kent County, Michigan; and
Jose Javier Acasuso, et. al. v. Macatawa Bank Corporation, et. al.filed
January 17, 2007 in the Circuit Court for Kent County, Michigan.

The Company believes it has
meritorious defenses and intends to vigorously defend these cases.

On April 15, 2003, the United States
District Court for the Western District of Michigan appointed a receiver for Trade
Partners. In order to prevent or minimize any loss to investors in the viaticals sold by
Trade Partners to investors, the court-appointed receiver has been coordinating the
payment of premiums on the approximately 1,000 outstanding viaticated insurance policies
in the Trade Partners portfolio so that the policies do not lapse. The receiver informed
the Company that nine policies with a total face value of approximately $1.4 million
lapsed for failure to pay premiums prior to the receivers coordination efforts. In
addition, the receiver unsuccessfully contested a partial lapse totaling about $700,000.
In February 2008 the receiver reported that he had discovered that an unspecified number
of group policies in an unspecified face amount had apparently lapsed prior to the
receivership for various reasons, including companies that went out of business or
employees who had been terminated.

On July 1, 2003, the United States
District Court for the Western District of Michigan authorized the receiver to borrow
money from Macatawa Bank to pay premiums, if needed. Macatawa Bank agreed to extend a $4
million line of credit to the receiver, conditioned upon obtaining a security interest in
the viaticals. No draws were made against the line, and the line expired during the fourth
quarter of 2004.

22

---



The receiver received authorization
from the Court in July 2005 to sell the entire portfolio, which the receiver said had a
face value of approximately $170 million, to Universal Settlements International, Inc., a
Canadian company, for an amount equal to 26.58% of face value. Under the terms of the
sale, payments are to be made by Universal Settlements to the receivership as policy
transfers are processed by the issuing insurance companies. The receiver has reported that
as of January 25, 2008 he had received sale payments of approximately $38.9 million and
proceeds of maturities aggregating another $31.5 million.

The receiver on July 21, 2006 filed a
proposed amended plan of distribution and related disclosure statement, contemplating a
complete liquidation of the assets of Trade Partners. The plan was approved by the Court
on January 7, 2007. The receiver reported as of February 5, 2008 that claims against the
receivership estate totaled $169,430,383.85, but that contrary to his earlier reports he
now expected that there may be one or two additional claims in unspecified
amounts that will be filed.

The receiver reported that he
commenced distributions on January 19, 2007, and that $46,940,265 had been distributed as
of October 15, 2007, of which $43,155,155 was distributed with respect to claims of
investors. There may be additional distributions, but the Company does not know when they
might be made or in what amount.

It is possible that one or more
additional legal actions may be initiated involving the custodial and escrow agent
services provided by Grand Bank in connection with Trade Partners. If any such legal
actions are commenced, the Company intends to defend them vigorously. To the extent any
pending or future claims allege errors or omissions on the part of Grand Bank or Macatawa
Bank, Management believes that some or all liability, if any is proven or established,
will be covered by errors and omissions insurance maintained by Grand Bank and Macatawa
Bank. The Company has reported the Trade Partners matter to its two insurance carriers.
Federal Insurance Company has assumed the Companys defense and has advanced a
portion of its defense costs pursuant to a reservation of rights letter asserting certain
coverage defenses, and an Interim Funding Agreement. Federal Insurance Company notified
the Company on July 21, 2006 that it has filed an Arbitration Demand with the American
Arbitration Association, seeking a declaration that based upon its asserted coverage
defenses its policy does not cover this matter. The Company and Federal Insurance Company
have agreed to defer any proceedings with respect to this Arbitration Demand. The Company
believes that Federal Insurance Company is obligated to provide coverage, and the Company
intends to vigorously pursue its rights under the insurance policy. The other carrier has
taken the position that the duty of defense rests solely with the first carrier, and
reserves its rights with respect to indemnity pursuant to a reservation letter asserting
certain coverage defenses.

As of the date hereof, except as
disclosed above, there were no material pending legal proceedings, other than routine
litigation incidental to the business of banking to which we or any of our subsidiaries
are a party of or which any of our properties are the subject.

23

---



|ITEM 4: | Submission
of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

No
matters were submitted during the fourth quarter of 2007 to a vote of our shareholders.

# ADDITIONAL ITEM:
Executive Officers of the Registrant.

The
list below identifies those persons designated as executive officers of Macatawa Bank
Corporation and Macatawa Bank.

|Name                | Age | Year Elected an Executive Officer | Positions Held
|------------------- | --- | --------------------------------- | --------------
|                    |     |                                   |               
|Benj. A. Smith, III | 64  | 1997                              |               
|                   
|Philip J. Koning    | 53  | 1997                              |               
|                   
|Ronald L. Haan      | 54  | 2005                              |               
|                   
|Jon W. Swets        | 42  | 2002                              |               

24

---



# PART II

|ITEM 5: | Market
for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
|------- | -------------------------------------------------------------------------------------------------------------

Our
common stock is quoted on the Nasdaq Global Select Market. High and low sales prices (as
reported on the Nasdaq Global Select Market) for each quarter are included in the
following table. The information in the following table has been retroactively adjusted to
reflect the effect of all stock dividends paid.

|               | 2007   | 2006  
|-------------- | ------ | ------
|               |       
|
|               |        |       
|First Quarter  | $20.28 | $17.01
|              
|Second Quarter | $17.90 | $14.70
|              
|Third Quarter  | $16.44 | $11.04
|              
|Fourth Quarter | $14.44 | $7.56 

On
February 28, 2008, there were approximately 812 owners of record and, in addition,
approximately 8,556 beneficial owners of our common stock.

The
Company declared its first cash dividend, amounting to $.03 per share, during the fourth
quarter of 2000. Quarterly cash dividends totaling $.13 were paid during 2001, and a 3%
stock dividend was declared during the second quarter of 2001. Quarterly cash dividends
totaling $.16 were paid during 2002, and a 4% stock dividend was declared during the
second quarter of 2002. Quarterly cash dividends totaling $.21 were paid during 2003, and
a 5% stock dividend was declared during the second quarter of 2003. Quarterly cash
dividends totaling $.27 were paid during 2004, and a 5% stock dividend was declared during
the second quarter of 2004. Quarterly cash dividends totaling $.37 were paid during 2005,
and a 15% stock dividend was declared during the second quarter of 2005. Quarterly cash
dividends totaling $.46 were paid during 2006, and a 5% stock dividend was declared in the
second quarter of 2006. In addition, a 3-for-2 stock split was paid during the second
quarter of 2006. Quarterly cash dividends totaling $.51 were paid during 2007, and a 5%
stock dividend was declared during the second quarter of 2007. All of these cash dividend
amounts have been retroactively adjusted to reflect the effect of the stock dividends and stock split.

We
intend to continue to declare quarterly cash dividends in the future. We may also consider
declaring further stock dividends. We expect to obtain the funds for the payment of future
cash dividends from cash currently held and from the dividends we receive from Macatawa
Bank out of its earnings. However, there can be no assurance that we will have the
financial resources to continue to pay dividends in the future.

The
information set forth under the caption Shareholder Return Performance Graph
in our Annual Report to Shareholders for the year ended December 31, 2007, is incorporated
by reference and is filed as part of Exhibit 13 to this Form 10-K Annual Report.

On
May 17, 2007, the Corporation announced a repurchase plan that authorized share
repurchases of up to $30 million of the Corporations common stock. In the fourth
quarter of 2007, the Corporation repurchased 34,000 shares of its common stock in open
market transactions under the repurchase plan. The shares were purchased at an average
price of $8.38 per share. The Corporation has remaining authority to repurchase up to
$26,103,695 of market value of its common stock under the repurchase plan.

25

---



|ISSUER PURCHASES OF EQUITY SECURITIES
|-------------------------------------
|
|                                     
|October                              
|                                     
|November                             
|                                     
|December                             
|                                     
|Total                                

|ITEM 6: | Selected
Financial Data.
|------- | ------------------------

The
information set forth under the caption Selected Consolidated Financial Data
in our Annual Report to Shareholders for the year ended December 31, 2007, is incorporated
by reference and is filed as part of Exhibit 13 to this Form 10-K Annual Report.

|ITEM 7: | Management's
Discussion and Analysis of Results of Operations and Financial Condition.
|------- | --------------------------------------------------------------------------------------

The
information set forth under the caption Managements Discussion and Analysis of
Results of Operations and Financial Condition, in our Annual Report to Shareholders
for the year ended December 31, 2007, is hereby incorporated by reference and is filed as
part of Exhibit 13 to this Form 10-K Annual Report.

|ITEM 7A: | Quantitative
and Qualitative Disclosures About Market Risk.
|-------- | -----------------------------------------------------------

The
information set forth under the captions Managements Discussion and Analysis
of Results of Operations and Financial Condition  Sensitivity to Market Risk
in our Annual Report to Shareholders for the year ended December 31, 2007, is hereby
incorporated by reference and is filed as part of Exhibit 13 to this Form 10-K Annual
Report.

|ITEM 8: | Financial
Statements and Supplementary Data.
|------- | --------------------------------------------

The
information set forth under the captions Quarterly Financial Data,
Report of Independent Registered Public Accounting Firm on Internal Control,
Consolidated Balance Sheets, Consolidated Statements
of Income, Consolidated Statements of Changes in Shareholders
Equity, Consolidated Statements of Cash Flows, and Notes to
Consolidated Financial Statements in our Annual Report to Shareholders for the year
ended December 31, 2007, is hereby incorporated by reference and is filed as part of
Exhibit 13 to this Form 10-K Annual Report.

|ITEM 9: | Changes
in and Disagreements With Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

There
have been no disagreements with our independent public accountants.

26

---



|ITEM 9A: | Controls
and Procedures.
|-------- | ------------------------

| | (a) | Evaluation
of Disclosure Controls and Procedures.
| | --- | -------------------------------------------------

The
Companys Chief Executive Officer and Chief Financial Officer, after evaluating the
effectiveness of the Companys disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this
Report, have concluded that as of the end of the period covered by this Report the
Companys disclosure controls and procedures were adequate and effective to ensure
that material information relating to the Company would be made known to them by others
within the company, particularly during the period in which this Form 10-K Annual Report
was being prepared.

| | (b) | Managements
Report on Internal Control over Financial Reporting.
| | --- | -----------------------------------------------------------------

The
management of the Company is responsible for establishing and maintaining adequate
internal control over financial reporting. The Companys internal control system was
designed to provide reasonable assurance to the Companys management and board of
directors regarding the preparation and fair presentation of published financial
statements. All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation.

Company
management assessed the effectiveness of the Companys internal control over
financial reporting as of December 31, 2007. In making this assessment, it used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control-Integrated Framework. Based on our assessment we believe that,
as of December 31, 2007, the Companys internal control over financial reporting is
effective based on those criteria.

Internal
control over financial reporting as of
December 31, 2007, has been audited by Crowe Chizek and Company LLC, an independent
registered certified public accounting firm, as stated in their report included in Exhibit
13 to this Annual Report on Form 10-K which is incorporated herein by reference.

| | (c) | Changes
in Internal Controls.
| | --- | -----------------------------

There
were no significant changes in the Companys internal controls over financial
reporting during the fourth quarter ended December 31, 2007, that have materially
affected, or are reasonably likely to materially affect, the Companys internal
control over financial reporting.

|ITEM 9B: | Other
Information.
|-------- | ------------------

| | None.
| | -----

# PART III

|ITEM 10: | Directors,
Executive Officers and Corporate Governance.
|-------- | -------------------------------------------------------

The
information set forth on pages 3-4, under the caption Information About
Directors, on page 7 under the caption Audit Committee Report, on page 6
under the caption Corporate Governance-Director Nominations, and on page 16
under the caption Section 16(a) Beneficial Ownership Reporting Compliance in
our definitive Proxy Statement dated March 7, 2008, relating to our 2008 Annual Meeting of
Shareholders and the information within that section is incorporated by reference.

Information
relating to our Executive Officers is included in Part I hereof entitled Executive
Officers of the Registrant. There are no family relationships between or among the
above-named executive officers. There are no arrangements or understandings between any of
the above-named officers pursuant to which any of them was named an officer.

27

---



We
have adopted a Senior Officer Code of Ethics. A copy of our Senior Officer Code of Ethics
is available upon request by writing to the Chief Financial Officer, Macatawa Bank
Corporation, 10753 Macatawa Drive, Holland, Michigan 49424.

|ITEM 11: | Executive
Compensation.
|-------- | -----------------------

Information
relating to compensation of our executive officers and directors is contained under the
captions Compensation of Directors, Executive Compensation,
Compensation Discussion and Analysis, Summary Compensation Table
and Potential Payments Upon Termination or Change of Control in our definitive
Proxy Statement dated March 7, 2008, relating to our 2008 Annual Meeting of Shareholders
and the information within those sections is incorporated by reference.

|ITEM 12: | Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

Information
relating to security ownership of certain beneficial owners and management is contained on
Page 2 under the caption Voting Securities and Principal Holders Thereof and
on page 15 under the caption Security Ownership of Management in our
definitive Proxy Statement dated March 7, 2008, relating to our 2008 Annual Meeting of
Shareholders and the information within that section is incorporated by reference.

Equity
Compensation Plan Information. The Company maintains certain equity
compensation plans under which common stock is authorized for issuance to employees,
consultants and directors in exchange for services, including the 1998 Stock Compensation
Plan, the 1998 Directors Stock Option Plan, the 2006 Stock Compensation Plan, the
2006 Directors Stock Compensation Plan, the Grand Bank Financial Corporation 1998
Stock Option Plan and the Grand Bank Financial Corporation Stock Option Plan of 1997.

The
following table sets forth certain information regarding the above referenced equity
compensation plans as of December 31, 2007. The following information has been adjusted to
reflect the effect of all stock dividends and stock splits.

|                                                                 | Equity Compensation Plan Information
|---------------------------------------------------------------- | ------------------------------------
|
|Equity compensation    plans approved by    security holders     | 957,765                             
|Equity compensation    plans not approved    by security holders | 0                                   
|Total                                                            | 957,765                             

|ITEM 13: | Certain
Relationships and Related Transactions, and Director Independence.
|-------- | --------------------------------------------------------------------------

Information
relating to certain relationships and related transactions is contained on page 16 under
the caption Transactions Involving Management and on page 5 under the heading
Corporate Governance-Director Independence in our definitive Proxy Statement
dated March 7, 2008, relating to our 2008 Annual Meeting of Shareholders and the
information within that section is incorporated by reference.

28

---



|ITEM 14: | Principal
Accountant Fees and Services.
|-------- | ---------------------------------------

Information
relating to principal accountant fees and services is contained on page 17, under the
caption Principal Accounting Firm Fees in our definitive Proxy Statement dated
March 7, 2008, relating to our 2008 Annual Meeting of Shareholders and the information
within that section is incorporated by reference.

# PART IV

|ITEM 15: | Exhibits
and Financial Statement Schedules.
|-------- | -------------------------------------------

|(a) | Financial
Statements.
|--- | ---------------------

| | 1. | The
following documents are filed as part of Item 8 of this report:
| | -- | -------------------------------------------------------------------

| | Report
of Independent Registered Public Accounting Firm on Internal ControlConsolidated
Balance Sheets as of December 31, 2007 and 2006 Consolidated Statements of Income for the
years ended December 31, 2007, 2006 and 2005 Consolidated Statements of Changes in
Shareholders Equity for the years ended December 31, 2007,
2006 and 2005Consolidated
Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005 Notes to
Consolidated Financial Statements
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Schedules to the consolidated financial statements required by Article 9 of
               Regulation S-X are not required under the related instructions or are
               inapplicable, and therefore have been omitted.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | The following exhibits are filed as part of this report: Reference is made to
               the exhibit index which follows the signature page of this report.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Registrant will furnish a copy of any exhibits listed on the Exhibit Index to any
shareholder of the Registrant without charge upon written request to Chief Financial
Officer, Macatawa Bank Corporation, 10753 Macatawa Drive, Holland, Michigan 49424.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

29

---



# SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, dated March 10, 2008.

| |  | MACATAWA BANK CORPORATION/s/ Benj. A. Smith, III
Benj. A. Smith, IIIChairman and Chief Executive Officer(Principal Executive Officer)
/s/ Jon W. Swets
Jon W. SwetsSenior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed
below on March 10, 2008 by the following persons on behalf of the Registrant and in the
capacities indicated. Each director of the Registrant, whose signature appears below,
hereby appoints Benj. A. Smith, III and Philip J. Koning, and each of them severally,
as his attorney-in-fact, to sign in his name and on his behalf, as a director of the
Registrant, and to file with the Commission any and all Amendments to this Report on Form
10-K.

|Signature | 
|--------- | 

|/s/ Benj. A. Smith, III
Benj. A. Smith, III, Principal Executive Officer and a Director | March 10, 2008
|--------------------------------------------------------------------------------------------------------------------- | --------------

|/s/ Jon W. Swets
Jon W. Swets, Principal Financial and Accounting Officer | March 10, 2008
|------------------------------------------------------------------------------------------------------- | --------------

|/s/ G. Thomas Boylan
G. Thomas Boylan, Director | March 10, 2008
|----------------------------------------------------------------------------- | --------------

|/s/ Robert E. DenHerder
Robert E. DenHerder, Director | March 10, 2008
|----------------------------------------------------------------------------------- | --------------

|/s/ John F. Koetje
John F. Koetje, Director | March 10, 2008
|------------------------------------------------------------------------- | --------------

|/s/ Philip J. Koning
Philip J. Koning, Director and President | March 10, 2008
|------------------------------------------------------------------------------------------- | --------------

|/s/ Arend D. Lubbers
Arend D. Lubbers, Director | March 10, 2008
|----------------------------------------------------------------------------- | --------------

30

---



EXHIBIT INDEX

# Exhibit Number and
Description

|3.1 | Articles
of Incorporation of Macatawa Bank Corporation, as amended, incorporated by reference to
Exhibit 3.1 to the Macatawa Bank Corporation Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002, and by reference to Exhibit 3.1 to the Macatawa Bank
Corporation Form 10-Q for the quarter ended June 30, 2006.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 | Bylaws
of Macatawa Bank Corporation,  incorporated by reference to Exhibit                   3.2
to the Macatawa Bank Corporation  Registration  Statement on Form SB-2
                  (Registration No. 333-45755) together with the Amendment attached
hereto.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | Specimen
stock certificate of Macatawa Bank  Corporation,  incorporated by
                  reference  to  Exhibit 4 to the  Macatawa  Bank  Corporation
 Registration                   Statement on Form SB-2 (Registration No. 333-45755).
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1* | Macatawa
Bank Corporation Stock Compensation Plan, incorporated by reference to Exhibit 10.1 to
the Registrants Form SB-2 Registration Statement (No. 333-45755), as amended by the
First Amendment included as Appendix B to the Macatawa Bank Corporation Proxy Statement
dated March 5, 1999, for the Annual Meeting of Shareholders held April 15, 1999, as
further amended by the Second Amendment included as Appendix A to the Macatawa Bank
Corporation Proxy Statement dated March 7, 2002, for the Annual Meeting of Shareholders
held April 18, 2002, both of which amendments are incorporated herein by reference.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2* | Macatawa
Bank Corporation 1998 Directors Stock Option Plan incorporated by reference to
Exhibit 10.2 to the Registrants Form SB-2 Registration Statement (No. 333-45755),
as amended by the First Amendment included as Appendix B to the Macatawa Bank Corporation
Proxy Statement dated March 7, 2002, for the Macatawa Bank Corporation Annual Meeting of
Shareholders held April 18, 2002, which is incorporated herein by reference.
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3* | Macatawa
Bank Corporation 2006 Stock Compensation Plan incorporated by reference to Appendix A to
the Macatawa Bank Corporation Proxy Statement dated March 6, 2006.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4* | Macatawa
Bank Corporation 2006 Directors Stock Compensation Plan incorporated by reference
to Appendix B to the Macatawa Bank Corporation Proxy Statement dated March 6. 2006.
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5* | Amended
and Restated Employment Agreement between Benj. A Smith III and Macatawa Bank Corporation
dated May 9, 2007, incorporated by reference to Exhibit 10.1 to the Macatawa Bank
Corporation Quarterly Report on Form 10-Q dated May 10, 2007.
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 | Agreement
and Plan of Merger dated October 11, 2006 by and among  MacatawaBank Corporation, Benj.
A. Smith & Associates, Ltd. (Smith & Associates) and Benj. A. Smith, III,
incorporated by reference to Exhibit 10.1 to the Macatawa Bank Corporation Current Report
on Form 8-K dated October 11, 2006.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

31

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|10.7* | Noncompetition
 Agreement dated October 11, 2006, by and between  Macatawa                   Bank
 Corporation  and Benj. A. Smith,  III,  incorporated by reference to
                  Exhibit 10.2 to the Macatawa Bank  Corporation  Current Report on Form
8-K                   dated October 11, 2006.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 | Form
of Indemnity Agreement between Macatawa Bank Corporation and each of its directors,
incorporated by reference to Exhibit 10.2 to the Macatawa Bank Corporation Quarterly
Report on Form 10-Q for the quarter ended June 30, 2003.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 | Investment
Management Agreement between Macatawa Bank and Smith & Associates Investment
Management Services dated March 11, 2004, incorporated by reference to Exhibit 10.5 to
the Macatawa Bank Corporation Annual Report on Form 10-K for the year ended December 31,
2003.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10* | Form
of Stock Option Agreement, incorporated by reference to Exhibit 10.6 to the Macatawa Bank
Corporation Annual Report on Form 10-K for the year ended December 31, 2004.
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11* | Form
of Stock Option Agreement for non-qualified stock options, incorporated by reference to
Exhibit 10.3 to the Macatawa Bank Corporation Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006.
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12* | Form
of Stock Option Agreement for incentive stock options, incorporated by reference to
Exhibit 10.4 to the Macatawa Bank Corporation Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006.
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13* | Form
of Stock Option Agreement under the Directors Stock Compensation Plan, incorporated
by reference to Exhibit 10.5 to the Macatawa Bank Corporation Quarterly Report on Form
10-Q for the quarter ended June 30, 2006.
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14* | Form
of Restricted Stock Agreement, incorporated by reference to Exhibit 10.15 to the Macatawa
Bank Corporation annual Report on Form 10-K for the year ended December 31, 2006.
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13 | Annual
Report to Shareholders for the year ended December 31, 2007. This exhibit, except for
those portions expressly incorporated by reference in this filing, is furnished for the
information of the Securities and Exchange Commission and is not deemed filed as
part of this filing. This information was delivered to the Companys shareholders in
compliance with Rule 14a-3 of the Securities Exchange Act of 1934, as amended.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21 | Subsidiaries
of the Registrant
|-- | ------------------------------

|23 | Consent
of Crowe Chizek and Company  LLC,  independent  registered  public
                  accounting firm
|-- | ------------------------------------------------------------------------------------------------------------

|24 | Power
 of  Attorney  (included  on the  signature  page  on page 30 of the
                  Annual Report on Form 10-K)
|-- | ------------------------------------------------------------------------------------------------------------------------

|31.1 | Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|---- | -----------------------------------------------------------------------

|31.2 | Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|---- | -----------------------------------------------------------------------

|32.1 | Certificate
of the Chief Executive Officer and Chief Financial Officer of Macatawa Bank Corporation
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

* Management contract or compensatory
plan.

32

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