FORM 10-KSB
                       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, 1999

                                       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 333-45755

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

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

                   51 E. Main Street, Zeeland, Michigan 49464
               (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 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-B 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. [ ]

The registrant's revenues for 1999 were $21,528,697.  The aggregate market value
of the  voting  and  non-voting  common  equity  held by  non-affiliates  of the
Registrant,  based on a per share  price of  $14.125 as of March 17,  2000,  was
$40,518,961  (common  stock,  no par value).  As of March 17,  2000,  there were
outstanding  3,588,565  shares of the  Company's  common  stock (no par  value).
Portions of the Company's Proxy Statement for the Annual Meeting of Shareholders
to be held April 27, 2000 are  incorporated  by reference  into Part II and Part
III of this Report.
<PAGE>
                                     PART I

ITEM 1:   Business

General

     Macatawa  Bank  Corporation  (the  "Company")  is a  bank  holding  company
organized in 1997 under  Michigan  law. The Company owns all of the common stock
of Macatawa Bank (the "Bank").  The Bank was organized and commenced  operations
in November,  1997 as a Michigan chartered bank with depository accounts insured
by the FDIC to the extent  permitted by law.  The Bank  provides a full range of
commercial and consumer banking services primarily in the communities of Holland
and  Zeeland,  Michigan,  as well as the  surrounding  market  area  principally
located in Ottawa  County.  The Bank's  services  include  checking  and savings
accounts  (including  certificates  of deposit),  safe deposit boxes,  travelers
checks,  money  orders,  trust  services and  commercial,  mortgage and consumer
loans.  As of December 31, 1999, the Company had total assets of $334.9 million,
total deposits of $279.4  million,  approximately  27,000  deposit  accounts and
shareholders' equity of $34.5 million.

     The  Company's  main  office  is  located  at 51 E. Main  Street,  Zeeland,
Michigan 49464, and its telephone  number is (616) 820-1444.  Unless the context
clearly suggests  otherwise,  financial  information and other references to the
Company include the Bank.

Products and Services

     Deposit  Services.  The Bank  offers a broad  range  of  deposit  services,
including  checking  accounts,  savings  accounts  and time  deposits of various
types.  Transaction accounts 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. The
Bank  solicits  these  accounts  from  individuals,   businesses,  associations,
churches,   nonprofit   organizations,   financia  institutions  and  government
authorities.  The Bank  may also use  alternative  funding  sources  as  needed,
including  advances  from Federal  Home Loan Banks,  conduit  financing  and the
packaging of loans for securitization and sale.

     Real Estate Loans. The Bank originates  residential  mortgage loans,  which
are generally long-term with either fixed or variable interest rates. The Bank's
general policy, which is subject to review by management as a result of changing
market and  economic  conditions  and other  factors,  is to retain all variable
interest rate mortgage  loans in the Bank's loan portfolio and to sell all fixed
rate loans in the secondary market. The Bank also offers home equity loans.

     The retention of variable rate loans on the Bank's loan portfolio  helps to
reduce the Bank's  exposure to fluctuations  in interest  rates.  However,  such
loans  generally  pose credit risks  different  from the risks inherent in fixed
rate loans,  primarily  because as interest rates rise, the underlying  payments
from the borrowers rise, thereby increasing the potential for default.

     Personal  Loans and  Credit.  The Bank  makes  personal  loans and lines of
credit  available to  consumers  for various  purposes,  such as the purchase of
automobiles,  boats and  other  recreational  vehicles,  home  improvements  and
personal  investments.  The Bank's current policy is to retain substantially all
of such loans.

     Commercial  Loans.  Commercial  loans  are  made  primarily  to  small  and
mid-sized businesses. These loans are and will be both secured and unsecured and
are made available for general operating  purposes,  acquisition of fixed assets
including  real  estate,  purchases  of equipment  and  machinery,  financing of
inventory  and accounts  receivable,  as well as any other  purposes  considered
appropriate. The Bank generally looks to a borrower's business operations as the
principal  source  of  repayment,  but  will  also  receive,  when  appropriate,
mortgages on real estate,  security interests in inventory,  accounts receivable
and other personal property and/or personal guarantees.

     Although the Bank takes a progressive and competitive  approach to lending,
it  stresses  high  quality  in its  loans.  On a  regular  basis,  the Board of
Directors reviews selected loans. In addition,  a loan committee of the Board of

                                      -2-
<PAGE>
Directors of the Bank also reviews larger loans for prior approval when the loan
request exceeds the established  limits for the lending officers.  The Bank also
maintains a loan review  process  designed to promote  early  identification  of
credit quality problems. Any past due loans and identified problem loans will be
reviewed with the Board of Directors on a regular basis.

     Regulatory and supervisory  loan-to-value limits are established by Section
304 of  the  Federal  Deposit  Insurance  Corporation  Improvement  Act of  1991
("FDICIA").  The Bank's internal  limitations follow those limits and in certain
cases are more restrictive than those required by the regulators.

     The Bank has established  relationships with correspondent  banks and other
independent  financial  institutions to provide other services  requested by its
customers, including loan participations where the requested loan amounts exceed
the Bank's policies or legal lending limits.

     Trust Services. The Bank began offering trust services in January, 1999, to
further  provide for the financial  needs of its  customers.  As of December 31,
1999, the Trust Department had assets of approximately $183 million.

Competition

     The Company's  primary  market area is Ottawa County,  Michigan.  There are
many bank,  thrift and credit union offices located within the Company's  market
area. Most are branches of larger financial institutions. The Company also faces
competition from finance companies,  insurance  companies,  mortgage  companies,
securities  brokerage firms, money market funds and other providers of financial
services.  Most of the Company's  competitors  have been in business a number of
years,  have  established  customer  bases,  are larger and have higher  lending
limits than the Company.  The Company competes for loans principally through its
ability to communicate effectively with its customers and to understand and meet
their needs.  Management believes that the Company's personal service philosophy
enhances its ability to compete  favorably in attracting  individuals  and small
businesses. The Company actively solicits customers and competes for deposits by
offering customers personal  attention,  professional  service,  and competitive
interest rates.

Environmental Matters

     The Company does not believe that existing  environmental  regulations will
have  any  material  effect  upon  the  capital  expenditures,   earnings,   and
competitive position of the Company.

Employees

     As of  December  31,  1999,  the Bank had 117  full-time  and 59  part-time
employees.  The Company  has  assembled a staff of  experienced,  dedicated  and
highly qualified professionals whose goal is to provide outstanding service. The
majority  of the  Company's  management  team have at least 10 years of  banking
experience,  and  several  key  personnel  have  more  than 20 years of  banking
experience.  None of the  Company's  employees  are  represented  by  collective
bargaining agents.

                                      -3-
<PAGE>
                           SUPERVISION AND REGULATION

     The following is a summary of certain  statutes and  regulations  affecting
the Company and the 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 the Company, the Bank and the business of the Company and the
Bank.

General

     Financial   institutions  and  their  holding   companies  are  extensively
regulated  under  federal and state law.  Consequently,  the growth and earnings
performance  of the Company and the Bank 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 FDIC,
the Commissioner of the Michigan Financial Institutions Bureau ("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 the Company
and  the  Bank  establishes  a  comprehensive  framework  for  their  respective
operations  and is intended  primarily for the  protection of the FDIC's deposit
insurance  funds,  the  depositors  of the Bank,  and the  public,  rather  than
shareholders of the Bank or the Company.

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


Recent Legislation

     The  enactment  of the  Gramm-Leach-Bliley  Act of 1999  (the  "GLB  Act"),
represents a pivotal  point in the history of the financial  services  industry.
The GLB Act modifies many of the principal federal laws which regulate financial
institutions and sweeps away large parts of a regulatory  framework that had its
origins in the Depression Era of the 1930s.

     Effective March 11, 2000, new  opportunities  will be available for banking
organizations, other depository institutions, insurance companies and securities
firms to enter  into  combinations  that  permit  a  single  financial  services
organization to offer customers a more complete array of financial  products and
services.  Specifically,  the GLB Act provides two new vehicles  through which a
banking  organization can engage in a variety of activities which,  prior to the
Act, they were not allowed to engage in. First, a bank holding  company  meeting
certain  requirements  may elect to become a financial  holding company ("FHC").
FHCs are generally authorized to engage in all "financial activities" and, under
certain  circumstances,  to make equity  investments in other  companies  (i.e.,
merchant  banking).  In order to be  eligible  to elect to become a FHC,  a bank
holding company and all of its depositary  financial  institutions  must: (1) be
"well  capitalized";   (2)  be  "well  managed";   and  (3)  have  a  rating  of
"satisfactory"  or  better  in their  most  recent  Community  Reinvestment  Act
examination.  Both the bank holding company and all of its depositary  financial
institutions  must also  continue to satisfy these  requirements  after the bank
holding  company  elects  to  become a FHC or else the FHC  will be  subject  to
various  restrictions.  The Federal Reserve Board will be the umbrella regulator
of FHCs, but functional regulation of a FHC's separately regulated  subsidiaries
will be conducted by their primary functional regulator.

     Second,  the GLB Act also  provides that a national bank (and a state bank,
so long as otherwise  allowable under its state's law), which satisfies  certain
requirements,  may own a new type of  subsidiary  called a financial  subsidiary
("FS").  The GLB Act  authorizes  FSs to  engage  in many  (but  not all) of the
activities that FHCs are authorized to engage in. In order to be eligible to own
a FS, a bank must  satisfy the three  requirements  noted  above,  plus  several
additional requirements.

     The GLB Act also  imposes  several  rules that are  designed to protect the
privacy of the  customers of financial  institutions.  For example,  the GLB Act
requires  financial  institutions  to annually  adopt and  disseminate a privacy
policy and prohibits  financial  institutions  from disclosing  certain customer
information  to  "non-affiliated  third parties" for certain uses. All financial
institutions,  regardless  of whether  they elect to  utilize  FHCs or FSs,  are
subject to the GLB Act's privacy  provisions.  The Company and the Bank are also
subject  to  certain  state  laws  that deal  with the use and  distribution  of
non-public personal information.  In addition to its privacy provisions, the GLB
Act also contains various other provisions that apply to banking  organizations,
regardless of whether they elect to utilize FHCs or FSs.

     The  Company  believes  that  the  GLB  Act  could  significantly  increase
competition  in its business and is evaluating the  desirability  of electing to
become a FHC. The Company  believes that it is qualified to elect FHC status but
has not yet decided to do so.

The Company

     General.  The Company is a bank holding company and, as such, 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,  the Company is
subject to periodic examination by the Federal Reserve Board, and is required to
file with the Federal Reserve Board periodic  reports of its operations and such
additional information as the Federal Reserve Board may require.

     In accordance with Federal Reserve Board policy, the Company is expected to
act as a source of  financial  strength to the Bank and to commit  resources  to
support the Bank in circumstances where the Company might not do

                                      -4-
<PAGE>
so absent such policy. In addition, if the Commissioner deems the Bank's capital
to be impaired,  the Commissioner may require the Bank to restore its capital by
a special  assessment  upon the Company as the Bank's sole  shareholder.  If the
Company were to fail to pay any such assessment, the directors of the Bank would
be required, under Michigan law, to sell the shares of the Bank's stock owned by
the Company 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 the  Company  of any  voting  shares of any bank  which  would  result in the
Company's  direct or indirect  ownership or control of more than 5% of any class
of voting shares of such bank,  and any merger or  consolidation  of the Company
with  another  bank  company,  will  require the prior  written  approval of the
Federal  Reserve  Board  under the BHCA.  In  acting on such  applications,  the
Federal Reserve Board must consider various statutory  factors,  including among
others,  the effect of the  proposed  transaction  on  competition  in  relevant
geographic and product markets, and each party's financial condition, managerial
resources,  and record of  performance  under the  Community  Reinvestment  Act.
Effective  September 29, 1995, bank holding  companies may acquire banks located
in any state in the United States without regard to geographic  restrictions  or
reciprocity   requirements   imposed  by  state  law,  but  subject  to  certain
conditions,  including  limitations on the aggregate amount of deposits that may
be held by the acquiring company and all of its insured  depository  institution
affiliates.

     The merger or  consolidation  of an existing bank subsidiary of the Company
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, based upon a
consideration of statutory  factors similar to those outlined above with respect
to the BHCA. 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.

     With certain limited  exceptions,  the BHCA prohibits any bank company from
engaging,  either directly or indirectly  through a subsidiary,  in any activity
other  than  managing  or  controlling  banks  unless the  proposed  non-banking
activity is one that the Federal  Reserve Board has  determined to be so closely
related to banking or managing or controlling  banks as to be a proper  incident
thereto.  Under current  Federal  Reserve Board  regulations,  such  permissible
non-banking  activities  include  such  things as  mortgage  banking,  equipment
leasing,  securities  brokerage,  and consumer and  commercial  finance  company
operations.  As a result of recent amendments to the BHCA,  well-capitalized and
well-managed  bank  holding  companies  may engage de novo in  certain  types of
non-banking  activities  without  prior  notice to, or approval  of, the Federal
Reserve Board,  provided that written notice of the new activity is given to the
Federal  Reserve  Board within 10 business days after the activity is commenced.
If a bank  company  wishes to engage in a  non-banking  activity by  acquiring a
going concern,  prior notice and/or prior  approval will be required,  depending
upon the activities in which the company to be acquired is engaged,  the size of
the company to be acquired and the  financial  and  managerial  condition of the
acquiring bank company.

     In  evaluating  a  proposal  to  engage  (either  de  novo or  through  the
acquisition of a going concern) in a non-banking  activity,  the Federal Reserve
Board will consider  various  factors,  including among others the financial and
managerial  resources of the bank company,  and the relative public benefits and
adverse  effects  which may be expected to result  from the  performance  of the
activity by an  affiliate of the bank  company.  The Federal  Reserve  Board may
apply  different  standards to  activities  proposed to be commenced de novo and
activities commenced by acquisition, in whole or in part, of a going concern.

     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 company may, among other things,
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 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 assets of
3% for the most highly rated  companies,  with minimum  requirements of 4% to 5%
for all others. The risk-

                                      -5-
<PAGE>
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.

     The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum  requirements,  and higher  capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations.  For example,  Federal  Reserve  Board  regulations  provide that
additional  capital  may be required to take  adequate  account of,  among other
things,  interest  rate risk and the risks  posed by  concentrations  of credit,
nontraditional activities or securitie trading activities.  Further, any banking
organization  experiencing or anticipating  significant growth would be expected
to maintain capital ratios,  including  tangible capital positions (i.e., Tier 1
capital less all intangible assets),  well above the minimum levels. The Federal
Reserve Board has not advised the Company of any specific minimum Tier 1 Capital
leverage ratio applicable to it.

     Dividends.  The Company is a  corporation  separate and  distinct  from the
Bank.  Most of the  Company's  revenues  will be  received  by it in the form of
dividends,  if  any,  paid by the  Bank.  Thus,  the  Company's  ability  to pay
dividends  to  its   shareholders   will  indirectly  be  limited  by  statutory
restrictions on its ability to pay dividends.  See "Supervision and Regulation -
the Bank - Dividends."  Further,  the Federal  Reserve Board has issued a policy
statement  on the payment of cash  dividends  by ban holding  companies.  In the
policy  statement,  the Federal  Reserve  Board  expressed  its view that a bank
company experiencing earnings weaknesses should not pay cash dividends exceeding
its net  income  or which can only be  funded  in ways  that  weakened  the bank
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 o 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 the 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 the  Company  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,  such as
the Company,  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.  The Company is authorized to issue preferred stock
but it has no current plans to issue any such preferred stock.

The Bank

     General.  The  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, the 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 the
BIF.  These  agencies and the federal and state laws  applicable to the 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.

     Deposit Insurance. As an FDIC-insured institution,  the Bank is 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 nine 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")  requires the FDIC to establish
assessment  rates at levels which will maintain the Deposit  Insurance Fund at a
mandated reserve ratio of not less than 1.25% of estimated insured

                                      -6-
<PAGE>
deposits.  Accordingly,  the FDIC  established  the  schedule  of BIF  insurance
assessments for the first semi-annual assessment period of 1998, ranging from 0%
of deposits for institutions in the lowest risk category to .27% of deposits for
institutions in the highest risk category.

     The FDIC may  terminate  the deposit  insurance  of any insured  depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound  practices,  or have
violated any applicable  law,  regulation,  order,  or any condition  imposed in
writing by, or written  agreement with, the FDIC, or if the institution is in an
unsafe or unsound  condition to continue  operations.  The FDIC may also suspend
deposit  insurance  temporarily  durin  the  hearing  process  for  a  permanent
termination of insurance if the institution has no tangible capital.

     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.

     FICO  Assessments.  Pursuant to federal  legislation  enacted September 30,
1996,  the 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 in 1987 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.
Until  January 1, 2000,  the FICO  assessments  made against BIF members may not
exceed  20% of the  amount  of  FICO  assessments  made  against  SAIF  members.
Currently,  SAIF members pay FICO  assessments at a rate equal to  approximately
0.063% of deposits  while BIF members  pay FICO  assessments  at a rate equal to
approximately  0.013% of deposits.  Between  January 1, 2000 and 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

     Capital  Requirements.  The  FDIC has  established  the  following  minimum
capital standards for  state-chartered,  FDIC-insured  non-member banks, such as
the Bank: a leverage requirement consisting of a minimum ratio of Tier 1 capital
to total 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.  For example,  FDIC
regulations provide that higher capital may be required to take adequate account
of, among other things, interest rate risk and the risks posed by concentrations
of credit,  nontraditional  activities or securities  trading  activities.  As a
condition to regulatory approval of the Bank's formation,  the Bank was required
to have an  initial  capitalization  sufficient  to  provide  a ratio  of Tier 1
capital to total estimated assets of at least 8% at the end of the third year of
operation.

     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:
<TABLE>
                                           Total                   Tier 1
                                           Risk-Based              Risk-Based
                                           Capital Ratio           Capital Ratio          Leverage Ratio
                                           -------------           -------------          --------------
<S>                                        <C>                     <C>                    <C>
Well capitalized                           10% or above            6% or above            5% or above
Adequately capitalized                      8% or above            4% or above            4% or above
Undercapitalized                           Less than 8%            Less than 4%           Less than 4%
Significantly undercapitalized             Less than 6%            Less than 3%           Less than 3%
Critically undercapitalized                          --                      --           A ratio of tangible
                                                                                          equity to total assets
                                                                                          of 2% or less
</TABLE>

                                      -7-
<PAGE>
As of December 31, 1999, the Company was "well capitalized."

     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, the Bank is  restricted as to the maximum
amount  of  dividends  it may pay on its  common  stock.  The  Bank  may not pay
dividends  except out of net profits after deducting its losses and bad debts. A
Michigan state bank may not declare or pay a dividend  unless the bank will have
a surplus  amounting  to at least 20% of its  capital  after the  payment of the
dividend.  If the Bank has a surplus less than the amount of its capital, it may
not  declare  or pay any  dividend  unti an amount  equal to at least 10% of net
profits for the preceding one-half year (in the case of quarterly or semi-annual
dividends) or full-year (in the case of annual  dividends) has been  transferred
to surplus. A Michigan state bank may, with the approval of the Commissioner, by
vote of  shareholders  owning 2/3 of the stock  eligible  to vote  increase  its
capital  stock by a  declaration  of a stock  dividend,  provided that after the
increase  the  bank's  surplus  equals at least  20% of its  capital  stock,  as
increased.  The Bank may not declare or pay any  dividend  until the  cumulative
dividends on preferred  stock (should any such stock be issued and  outstanding)
have been paid in full. The Bank's  Articles of  Incorporation  do not authorize
the  issuance  of  preferred  stock and there are no current  plans to seek such
authorization.

     Federal law generally  prohibits a depository  institution  from making any
capital distribution  (including payment of a dividend) or paying any management
fee  to  its  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 the Bank,  if such
payment is determined,  by reason of the financial  condition of the Bank, to be
an unsafe and unsound banking practice.

     Insider  Transactions.  The Bank is subject to certain restrictions imposed
by the  Federal  Reserve Act on any  extensions  of credit to the Company or its
subsidiaries,  on investments in the stock or other securities of the Company or
its  subsidiaries  and the  acceptance  of the stock or other  securities of the
Company or its  subsidiaries  as collateral for loans.  Certain  limitations and
reporting  requirements  are also placed on  extensions of credit by the Bank to
its  directors  and  officers,  to directors and officers of the Company and its
subsidiaries,  to  principal  shareholders  of  the  Company,  and  to  Arelated
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 the Company or one of its  subsidiaries  or a principal
shareholder  of the  Company  may obtain  credit  from banks with which the Bank
maintains a correspondent relationship.

     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.  In general, the guidelines prescribe the
goals to be achieved in each area, and each  institution will be responsible for
establishing its own procedures to achieve those goals. If an institution  fails
to  comply  with  any  of  the  standards  set  forth  in  the  guidelines,  the
institution's  primary federal regulator may require the institution to submit a
plan for achieving and  maintaining  compliance.  The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose failure to meet

                                      -8-
<PAGE>
one or more of the standards is of such severity that it could threaten the safe
and  sound  operation  of the  institution.  Failure  to  submit  an  acceptable
compliance  plan, or  failure  to  adhere  to a  compliance  plan that has  been
accepted by the  appropriate  regulator,  would  constitute  grounds for further
enforcement action.

     State Bank 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 the Bank.

     Consumer  Protection Laws. The Bank's business includes making a variety of
types of loans to  individuals.  In making these  loans,  the Bank is subject to
State usury and regulatory  laws and to various  federal  statutes,  such as 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 the
Bank,  including  the  maintenance  and  operation  of escrow  accounts  and the
transfer of mortgage loan servicing.  In receiving deposits, the 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 the Bank and its directors and officers.

     Branching  Authority.  Michigan banks, such as the Bank, have the authority
under  Michigan  law to  establish  branches  anywhere in the State of Michigan,
subject to receipt of all required regulatory  approvals (including the approval
of the Commissioner and the FDIC).

     Effective  June 1, 1997 (or earlier if expressly  authorized  by applicable
state law), the Riegle-Neal  Interstate Banking and Branching  Efficiency Act of
1994 (the "IBBEA") allows banks to establish  interstate branch networks through
acquisitions of other banks,  subject to certain  conditions,  including certain
limitations  on the  aggregate  amount  of  deposits  that  may be  held  by the
surviving bank and all of its insured  depository  institution  affiliates.  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  by IBBEA only if  specifically
authorized by state law. The legislation  allowed individual states to "opt-out"
of interstate branching authority by enacting  appropriate  legislation prior to
June 1, 1997.

     Michigan  did not opt out of IBBEA,  and now 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 Commissioner,
(i)  the  acquisition  of  all  or   substantially   all  of  the  assets  of  a
Michigan-chartered  bank by an FDIC-insured  bank,  savings bank, or savings and
loan  association   located  in  another  state,   (ii)  the  acquisition  by  a
Michigan-chartered  bank  of  all or  substantially  all  of  the  assets  of an
FDIC-insured  bank,  savings  bank or savings  and loan  association  located in
another state, (iii) the consolidation of one or more  Michigan-chartered  banks
and FDIC-insured banks,  savings banks or savings and loan associations  located
in other states having laws  permitting such  consolidation,  with the resulting
organization  chartered by Michigan,  (iv) the  establishment by a foreign bank,
which has not previously  designated any other state as its home state under the
International Banking Act of 1978, of branches located in Michigan,  and (v) the
establishment  or  acquisition  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  Michigan-chartered  banks to  establish
branches in such jurisdiction.  Further, the Michigan Banking Code permits, upon
written notice to the Commissioner,  (i) the acquisition by a Michigan-chartered
bank of one or more  branches (not  comprising  all or  substantially  all of th
assets) of an FDIC-insured  bank,  savings bank or savings and loan  association
located in another  state,  the  District of  Columbia,  or a U.S.  territory or
protectorate,  (ii) the  establishment by  Michigan-chartered  banks of branches
located in other  states,  the  District of  Columbia,  or U.S.  territories  or
protectorates, and (iii) the

                                      -9-
<PAGE>
consolidation of one or more  Michigan-chartered  banks and FDIC-insured  banks,
savings banks or savings and loan associations located in other states, with the
resulting organization chartered by one of such other states.

ITEM 2:   Description of Property.

     The Company's  headquarters  and the Bank's main office is located at 51 E.
Main  Street,  Zeeland,  Michigan  49464,  and the  telephone  number  is  (616)
748-9491. The main office consists of approximately 1,700 square feet located on
the first floor of an office building and approximately 1,500 square feet in the
basement.  This  location is in the heart of the City of Zeeland on Main Street,
which  management  believes  provides  recognition and a visible presence in the
Holland-Zeeland  community.  The mai office includes three teller stations,  two
customer  service  offices,  two  administrative  offices,  and a vault and safe
deposit boxes.  The Bank has entered into a three year lease with respect to its
main office,  with renewal options for up to four  successive  three year terms.
The initial rental rate is $800.00 per month,  which  increases by 7.5% for each
three  year  renewal  period.  The  Bank is  also  obligated  to pay  all  costs
associated with taxes, assessments, maintenance, utilities and insurance.

     The Company owns or leases facilities  located in Ottawa,  Allegan and Kent
County,  Michigan.  The  Company's  facilities  as of February 1, 2000,  were as
follows:
<TABLE>
     Location of Facility                             Use
     --------------------                        --------------
     <S>                                          <C>
     51 E. Main Street, Zeeland*                  Main Branch
     250 E. 8th Street, Holland*                  Operations Center
     139 E. 8th Street, Holland*                  Branch Office
     489 Butternut Dr., Holland                   Branch Office
     701 Maple Avenue, Holland                    Branch Office
     699 E. 16th Street, Holland                  Branch Office
     106 E. 8th Street, Holland*                  Trust Department
     348 Waverly Road, Holland*                   Loan Center
     41 N. State Street, Zeeland                  Branch Office
     2020 Baldwin Street, Jenison                 Branch Office
     6299 Lake Michigan  Dr., Allendale           Branch Office
     102 South Washington, Douglas                Branch Office
     4758 - 136th Street, Hamilton*               Branch Office
     5215 Cherry Avenue, Hudsonville*             Branch Office
     1760 - 44th Street, Wyoming*                 Branch Office
     20 E. Lakewood Blvd., Holland                Branch Office
</TABLE>

*Leased facility

     The Company believes its facilities are well-maintained, adequately insured
and  primarily  utilized.  Because  of the  Company's  growth,  the  Company  is
continually evaluating the need for additional space and branches.

ITEM 3:   Legal Proceedings.

     As the date hereof, there were no material pending legal proceedings, other
than  routine  litigation  incidental  to the  business  of banking to which the
Company or any of its  subsidiaries is a party of or which any of its properties
is the subject.


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

     No matters were  submitted  during the fourth  quarter of 1999 to a vote of
the Registrant's stockholders.

                                      -10-
<PAGE>
                                     PART II

ITEM 5:   Market for Common Equity and Related Stockholder Matters.

     The Company's  common stock has been quoted on the Nasdaq  SmallCap  Market
since  December 27, 1999.  From the  completion of the Company's  initial public
offering in April 1998 through December 31, 1999, the Company's common stock was
quoted on the OTC  Bulletin  Board.  High and low bid prices (as reported on the
OTC  Bulletin  Board) and high and low sales  prices (as  reported on the Nasdaq
SmallCap  Market) for each quarter since the Company's April 1998 initial public
offering through December 31, 1999, are as follows:
<TABLE>
                                           1999                                  1998
                                 --------------------------------------------------------------
         Quarter                   High               Low               High             Low
         -------                   ----               ---               ----             ---
         <S>                       <C>               <C>               <C>              <C>
         First Quarter             $17.00            $14.75              N/A              N/A

         Second Quarter            $15.50            $13.50            $15.25           $14.50

         Third Quarter             $15.50            $14.00            $16.50           $14.00

         Fourth Quarter            $16.00            $13.00            $16.75           $15.75
</TABLE>
     For the period during which the common stock was quoted on the OTC Bulletin
Board,  the quotations  reflect  inter-dealer  prices,  without retail  mark-up,
mark-down or commission  and may not represent  actual  transactions  and do not
include intra-day highs and lows. On February 28, 2000, there were approximately
727 owners of record and, in addition,  approximately 2,001 beneficial owners of
the Company's common stock.

     No cash dividends have been declared to date on the Company's common stock.
If and when dividends are declared, the Company will be dependent upon dividends
paid to it by the Bank for funds to pay dividends on the common stock.


ITEM 6:   Management's Discussion and Analysis of Financial Condition and
          Results of Operations.

     The  information  set forth in Appendix A, under the caption  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations,"  of
the  Registrant's  definitive  Proxy  Statement  dated March 20, 2000, is hereby
incorporated  by  reference  and is filed as Exhibit 13 to this Form 10-K Annual
Report.

                                      -11-
<PAGE>
ITEM 7:   Financial Statements and Supplementary Data.

     The  information  set forth in  Appendix A, under the  captions  "Report of
Independent  Auditors,"   "Consolidated  Financial  Statements"  and  "Notes  to
Consolidated   Financial  Statements"  of  the  Registrant's   definitive  Proxy
Statement dated March 20, 2000, is hereby incorporated by reference and is filed
as Exhibit 13 to this Form 10-KSB Annual Report.

ITEM 8:   Changes in and Disagreements With Accountants and Financial
          Disclosure.

     There have been no  disagreements  with the  Company's  independent  public
accountants.


                                    PART III

ITEM 9:   Directors and Executive Officers of the Registrant.

     The  information  set forth on pages 4-5,  under the  caption  "Information
About  Directors"  and on  page  10  under  the  Registrant's  definitive  Proxy
Statement dated March 20, 2000, is hereby incorporated by reference and is filed
as Exhibit 13 to this Form 10-K Annual Report.


ITEM 10:  Executive Compensation.

     Information relating to compensation of the Registrant's executive officers
and  directors  is  contained  on  Exhibit  13,  under  the  captions  "Director
Compensation" and "Executive Compensation," in the Registrant's definitive Proxy
Statement dated March 20, 2000, and is  incorporated  herein by reference and is
filed as Exhibit 13 to this Form 10-KSB Annual Report.


ITEM 11:  Security Ownership of Certain Beneficial Owners and Management.

     Information relating to security ownership of certain beneficial owners and
management  is  contained  on page 9, under the caption  "Security  Ownership of
Management" in the Registrant's definitive Proxy Statement dated March 20, 2000,
and is incorporated  herein by reference and is filed as Exhibit 13 to this Form
10-KSB Annual Report.


ITEM 12:  Certain Relationships and Related Transactions.

     Information  relating to certain  relationships and related transactions is
contained on page 10, under the caption  "Transactions  Involving Management" in
the  Registrant's  definitive  Proxy  Statement  dated  March 20,  2000,  and is
incorporated  herein by reference and is filed as Exhibit 13 to this Form 10-KSB
Annual Report.

                                      -12-
<PAGE>
ITEM 13:  Exhibits, Financial Statements, Schedules, and Reports on Form 8-K.

(a)  Financial Statements.

     1.   The following documents are filed as part of Item 7 of this report:

          Report of Independent Auditors
          Consolidated Balance Sheets as of December 31, 1999 and 1998
          Consolidated Statements of Income for the years ended December 31,
           1999, 1998 and 1997
          Consolidated Statements of  Changes  in Shareholders Equity for the
           years ended December 31, 1999, 1998 and 1997
          Consolidated Statements of Cash Flows for the year ended December 31,
           1999, 1998 and 1997
          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 of Philip J. Koning, Macatawa Bank  Corporation,
          51 E. Main Street, Zeeland, Michigan 49464.

(b)   Reports on Form 8-K

      During  the last  quarter of the period  covered  by this  report,  the
      Registrant filed no Current Reports on Form 8-K.

                                      -13-
<PAGE>
                                   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 9, 2000.

                                    MACATAWA BANK CORPORATION


                                    /s/ Benj. A. Smith, III
                                    Benj. A. Smith, III
                                    Chairman and Chief Executive Officer
                                    (Principal Executive Officer)


                                    /s/ Philip J. Koning
                                    Philip J. Koning
                                    Treasurer and Secretary
                                    (Principal Financial and Accounting Officer)


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been  signed  below on March 9,  2000,  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-KSB.



                           Signature


 /s/ Benj. A. Smith, III                                           March 9, 2000
Benj. A. Smith, III, Principal Executive
 Officer and a Director


 /s/ Philip J. Koning                                              March 9, 2000
Philip J. Koning, Principal Financial and
 Accounting Officer and a Director


 /s/ James L. Batts                                                March 9, 2000
James L. Batts, Director


 /s/ G. Thomas Boylan                                              March 9, 2000
G. Thomas Boylan, Director

                                      -14-
<PAGE>
 /s/ Jessie F. Dalman                                              March 9, 2000
Jessie F. Dalman, Director


 /s/ Robert E. DenHerder                                           March 9, 2000
Robert E. DenHerder, Director


 /s/ Wayne J. Elhart                                               March 9, 2000
Wayne J. Elhart, Director


 /s/ Brian J. Hansen                                               March 9, 2000
Brian J. Hansen, Director


 /s/ James L. Jurries                                              March 9, 2000
James L. Jurries, Director


 /s/ John F. Koetje                                                March 9, 2000
John F. Koetje, Director


::ODMA\PCDOCS\GRR\390199\2

                                      -15-
<PAGE>
                                  EXHIBIT INDEX



                                                                    Sequentially
                                                                      Numbered
                       Exhibit Number and Description                   Page
                       ------------------------------               ------------

2      Consolidation    Agreement    dated   December   10,   1997,
       incorporated  by reference to Exhibit 2 to the Macatawa Bank
       Corporation    Registration    Statement    on   Form   SB-2
       (Registration No. 333-45755).

3.1    Articles  of  Incorporation  of Macatawa  Bank  Corporation,
       incorporated  by  reference  to Exhibit 3.1 to the  Macatawa
       Bank  Corporation   Registration   Statement  on  Form  SB-2
       (Registration No. 333-45755).

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).

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 Macatawa
       Bank  Corporation   Registration   Statement  on  Form  SB-2
       (Registration No. 333-45755).

10.2   Macatawa Bank Corporation 1998 Directors' Stock Option Plan,
       incorporated  by  reference  to Exhibit 10.2 to the Macatawa
       Bank  Corporation   Registration   Statement  on  Form  SB-2
       (Registration No. 333-45755).

10.3   Lease Agreement dated July 8, 1997, for the facility located
       at 51 E. Main,  incorporated by reference to Exhibit 10.3 to
       the Macatawa Bank Corporation Registration Statement on Form
       SB-2 (Registration No. 333-45755).

10.4   Lease  Agreement  dated  January 1, 1998,  for the  facility
       located at 139 East 8th  Street,  Holland,  Michigan  49423,
       incorporated  by  reference  to Exhibit 10.4 to the Macatawa
       Bank  Corporation   Registration   Statement  on  Form  SB-2
       (Registration No. 333-45755).

                                      -16-
<PAGE>
10.5   Lease  Agreement  dated  December 22, 1997, for the facility
       located  at  106  E.8th  Street,  Holland,  Michigan  49423,
       incorporated  by  reference  to Exhibit 10.5 to the Macatawa
       Bank  Corporation   Registration   Statement  on  Form  SB-2
       (Registration No. 333-45755).

10.6   Data  Processing  Agreement  between  Rurbanc Data Services,
       Inc. and Macatawa Bank dated  October 1, 1997,  incorporated
       by  reference   to  Exhibit   10.8  to  the  Macatawa   Bank
       Corporation    Registration    Statement    on   Form   SB-2
       (Registration No. 333-45755).

10.7   MagicLine Product Services Agreement between MagicLine, Inc.
       and Macatawa  Bank dated October 1, 1997.,  incorporated  by
       reference to Exhibit 10.9 to the Macatawa  Bank  Corporation
       Registration   Statement  on  Form  SB-2  (Registration  No.
       333-45755).

10.8   FTB  Participating  Bank Agreement  between First  Tennessee
       Bank  National  Association  and Macatawa Bank dated October
       24, 1997,  incorporated by reference to Exhibit 10.10 to the
       Macatawa  Bank  Corporation  Registration  Statement on Form
       SB-2 (Registration No. 333-45755).

13     Proxy Statement to  shareholders.  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.

21     Subsidiaries of the Registrant

23     Consent of Crowe, Chizek and Company LLP, independent public
       accountants

24     Power of Attorney (included on the signature page on page 15
       of the Annual Report on Form 10-KSB)

27     Financial Data Schedule


                                      -17-
<PAGE>
EXHIBIT 13
                            MACATAWA BANK CORPORATION


                                 March 20, 2000

Dear Shareholder:

We invite you to attend the 2000  Annual  Meeting of  Shareholders.  This year's
meeting will be held on Thursday,  April 27, 2000,  at 10:00 a.m., at Ridgepoint
Community Church, 340 - 104th Avenue, Holland, Michigan 49423.

Our  audited  financial  statements  are  included  in an appendix to this Proxy
Statement and provide important information about our accomplishments in 1999.

It is important that your shares are represented at the Annual  Meeting.  Please
carefully read the Notice of Annual Meeting and Proxy Statement,  whether or not
you expect to attend the Annual  Meeting.  If you plan on  attending  the Annual
Meeting  please  return  the  postage  paid  RSVP  card  at  the  bottom  of the
invitation.

                                                       Sincerely,


                                                       /s/ Benj. A. Smith, III
                                                       Benj. A. Smith, III
                                                       Chairman of the Board and
                                                       Chief Executive Officer
<PAGE>
                            MACATAWA BANK CORPORATION

                                51 E. Main Street
                             Zeeland, Michigan 49464




                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                            TO BE HELD APRIL 27, 2000


To Our Shareholders:

     The Annual Meeting of  Shareholders  of Macatawa Bank  Corporation  will be
held at Ridgepoint Community Church, 340 104th Avenue, Holland,  Michigan 49423,
on  Thursday,  April 27,  2000 at 10:00  A.M.,  local  time,  for the  following
purposes:

     1.   To elect two directors, each to hold office for a three year term.

     2.   To transact such other business as may properly come before the
          meeting or at any adjournment thereof.

     Shareholders of record at the close of business  February 28, 2000, will be
entitled to vote at the meeting or any adjournment  thereof.  Whether or not you
expect  to be  present  in  person  at this  meeting,  you are urged to sign the
enclosed Proxy and return it promptly in the enclosed envelope. If you do attend
the  meeting  and wish to vote in  person,  you may do so even  though  you have
submitted a Proxy.

                                              By order of the Board of Directors
Dated:  March 20, 2000

Holland, Michigan                             /s/ Philip J. Koning
                                              Philip J. Koning
                                              Secretary
<PAGE>
                                                           Dated: March 13, 2000

                            MACATAWA BANK CORPORATION

                                51 E. Main Street
                             Zeeland, Michigan 49464

                               ------------------

                                 PROXY STATEMENT

                     For the Annual Meeting of Shareholders
                            to be held April 27, 2000
                               ------------------

                   SOLICITATION OF PROXIES FOR ANNUAL MEETING

     This Proxy  Statement  is furnished to the  Shareholders  of Macatawa  Bank
Corporation  (the "Company") in connection with the solicitation by the Board of
Directors of proxies to be used at the Annual Meeting of Shareholders which will
be held at Ridgepoint  Community  Church,  340 104th Avenue,  Holland,  Michigan
49423, April 27, 2000, at 10:00 A.M., local time.

     The Annual Meeting is being held for the following purposes:

     1.   To elect two directors, each to hold office for a three year term.

     2.   To transact such other business as may properly come before the
          meeting or at any adjournment thereof.

     If a proxy in the form  distributed by the Company's  Board of Directors is
properly  executed and returned to the Company,  the shares  represented  by the
proxy will be voted at the Annual Meeting of Shareholders and at any adjournment
of that meeting. Where shareholders specify a choice, the proxy will be voted as
specified.  If no choice is specified,  the shares represented by the proxy will
be voted FOR the nominees  named by the Board of Directors in the proxy.  Shares
not voted at the meeting, whether by abstention,  broker non-vote, or otherwise,
will not be treated as votes cast at the meeting.  Votes cast at the meeting and
submitted by proxy will be tabulated by the Company's  transfer agent,  Macatawa
Bank.

     A proxy may be revoked prior to its exercise by delivering a written notice
of revocation to the secretary of the Company,  executing and delivering a proxy
of a later date or attending the meeting and voting in person. Attendance at the
meeting does not automatically act to revoke a proxy.
<PAGE>
                 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

     On February 28, 2000,  the record date for  determination  of  shareholders
entitled to vote at the Annual Meeting,  there were outstanding 3,588,565 shares
of common stock of the Company. Shares cannot be voted unless the shareholder is
present at the meeting or is represented by proxy.

     As of February 28, 2000,  only one person or entity is known to  management
who may be deemed to be the beneficial  owner of more than 5.0% of the Company's
common stock. Smith & Associates  Investment Management Services has reported to
the  Company  that is has sole  voting  and  investment  power  with  respect to
1,082,454  shares of common stock and shared  voting and  investment  power with
respect to an additional  4,250 shares of common  stock,  which in the aggregate
represent  30.28% of the issued and  outstanding  common  stock of the  Company.
Benj. A. Smith,  the chief executive  officer of the Company,  is also the chief
executive officer of Smith & Associates Investment Management Services.


                              ELECTION OF DIRECTORS

     The  Company's  Articles of  Incorporation  provide for the division of the
Board of  Directors  into  three  classes of nearly  equal  size with  staggered
three-year  terms of office.  The number of directors  constituting the Board of
Directors is determined  from time to time by the Board of Directors.  The Board
is currently composed of ten members.

     The  Company's  Board of Directors  has  determined  that it is in the best
interests  of the  Company  and its  shareholders  to  restructure  the board of
directors by reducing the number of directors of the Company. In order to effect
this restructuring, James L. Jurries, James L. Batts, Wayne J. Elhart, Jessie F.
Dalman  and Brian J.  Hansen  will  resign  from the Board of  Directors  of the
Company  prior to the Annual  Meeting.  Each of these  directors  and all of the
Company's  remaining  directors  will continue as directors of Macatawa  Bank, a
subsidiary of the Company.  The Company  anticipates forming a second subsidiary
which will provide  financial  and other  services  excluding  banking  services
("Financial   Services  Company").   Once  the  Financial  Services  Company  is
organized,  certain  Macatawa  Bank  directors  will be named  to the  Financial
Services Company Board. All services  provided by the Company other than banking
will be provided through the Financial Services Company and all banking services
will be provided through Macatawa Bank. For the foreseeable  future, the Company
will function purely as a holding company.  The Board restructuring will relieve
the  directors  who are leaving  the  Company's  Board from any holding  company
responsibilities  and permit  them to focus their  attention  and efforts on the
Company's subsidiary operations.

     Two persons have been nominated for election to the Board,  each to serve a
three-year term expiring at the 2003 Annual Meeting of  Shareholders.  The Board
has  nominated  G. Thomas  Boylan and Benj.  A. Smith,  III,  each of whom is an
incumbent director.

     Holders of common stock  should  complete the  accompanying  proxy.  Unless
otherwise directed by a shareholder's  proxy, it is intended that the votes cast
upon  exercise of proxies in the form  accompanying  this  statement  will be in
favor of electing the nominees as directors for the terms indicated above.  Each
of the nominees is presently  serving as directors.  The following pages of this
Proxy Statement  contain more information about the nominees and other directors
of the Company.

                                       2
<PAGE>
     A  plurality  of the votes cast at the Annual  Meeting is required to elect
the  nominees as  directors of the Company.  As such,  the two  individuals  who
receive this number of votes cast by the holders of the  Company's  common stock
will be  elected  as  directors.  Shares  not voted at the  meeting,  whether by
abstention,  broker non-vote, or otherwise, will not be treated as votes cast at
the meeting.  Votes cast at the meeting and submitted by proxy will be tabulated
by the Company.

     Except those persons nominated by the Board of Directors,  no other persons
may be nominated for election at the 2000 Annual Meeting. The Company's Articles
of  Incorporation  require  at least 60 days prior  written  notice of any other
proposed nomination and no such notice has been received.

     If any nominee becomes  unavailable for election due to  circumstances  not
now known, the accompanying  proxy will be voted for such other person to become
a director as the Board of Directors selects.

     The Board of  Directors  recommends  a vote FOR the election of each of the
persons nominated by the Board.


                                       3
<PAGE>
                           INFORMATION ABOUT DIRECTORS

     The content of the following table is based upon information as of February
1, 2000,  furnished to the Company by the directors.  Except as described in the
notes  following  the  table,  the  following  directors  have sole  voting  and
dispositive power as to all of the shares set forth in the following table.
<TABLE>

                                                                                Amount and          Percent
                                                                  Year First     Nature of            Of
                                                                   Became a     Beneficial          Common
                    Name                               Age         Director     Ownership(1)        Stock
            ----------------------                     ---         --------     ------------        ------
<S>                                                    <C>          <C>         <C>                 <C>
Nominees for Election as Directors for Terms
Expiring in 2003

G. Thomas Boylan (a)(b)                                77           1997        117,925             3.2%

Benj. A. Smith, III (b)                                56           1997        154,567(2)          4.2%

Directors Whose Terms Expire in 2001

John F. Koetje (a)                                     64           1998         71,450             2.0%

Directors Whose Terms Expire in 2002

Robert E. Den Herder (a)(b)                            45           1997        127,200             3.5%

Philip J. Koning                                       45           1997         36,750             1.0%
------------------
</TABLE>
(a)    Member of the Audit Committee
(b)    Member of the Compensation Committee

                                      NOTES

(1)  Except as described in the following notes,  each nominee and director owns
     the shares  directly  and has sole  voting and  investment  power or shares
     voting and investment  power with his or her spouse under joint  ownership.
     Includes  shares of common stock that are issuable  under  options that are
     exercisable  or will become  exercisable  within sixty (60) days. The share
     ownership of the following  directors  includes  shares  subject to options
     that are currently  exercisable:  Mr.  DenHerder (6,00 shares),  Mr. Koning
     (12,000 shares),  Mr. Boylan (6,000 shares), Mr. Smith (31,000 shares), and
     Mr. Koetje (2,000 shares).
(2)  Includes  31,000 shares owned by Mr. Smith's  spouse;  also includes 30,000
     shares   held  in  a  trust  for  the  benefit  of  Mr.   Smith's   spouse.
     -------------------------

                                       4
<PAGE>
     Benj. A. Smith, III is the Chairman, Chief Executive Officer and a director
of the Company and is also Chairman and a director of the Bank.  Mr. Smith is an
investment  advisor and has served from 1992 to the present as the  President of
Smith & Associates Investment Management Services, an investment management firm
located  in  Holland,  Michigan.  Prior to 1992,  Mr.  Smith  gained 21 years of
banking  experience  at  First  Michigan  Bank  Corporation  and its  subsidiary
FMB-First Michigan Bank of Zeeland, Michigan.

     Philip J. Koning has served as President of the Bank since its inception in
November,  1997, and serves as the Secretary and Treasurer of the Company and as
a director of both the Company and the Bank.  Mr. Koning was employed by Smith &
Associates Investment Management Services prior to February 1998. Mr. Koning has
over 23 years of commercial banking experience,  most recently from 1992 to 1997
with First of  America  Bank in  Holland,  where he served as a  Community  Bank
President.

     G. Thomas  Boylan is a director of the  Company  and the Bank.  Mr.  Boylan
serves as the President of Light Metals  Corporation,  a  manufacturing  company
located in Wyoming, Michigan, where he has been employed since 1947.

     Robert  E.  DenHerder  is a  director  of the  Company  and the  Bank.  Mr.
DenHerder is the President of Uniform  Color Co., a company  located in Holland,
Michigan,  which  manufactures  color  concentrate  for  the  plastics  industry
focusing on automotive suppliers.

     John F. Koetje is a director of the Company and the Bank.  Mr.  Koetje is a
partner in John F. Koetje and Associates, a West Michigan builder of residential
and light  commercial  real  estate and  apartment  complexes  where he has been
employed for 35 years.

     The  Board of  Directors  had 12  meetings  in  1999.  The  Company  has no
nominating  committee.  All  directors  attended at least  three-fourths  of the
aggregate  number of meetings of the Board and Board  committees which they were
eligible to attend.

                           COMPENSATION OF DIRECTORS

     During  1998,  directors of the Company and the Bank were not paid any cash
compensation for Board of Directors meetings attended.  Directors of the Company
and the Bank were paid $150 per committee meeting attended.  Effective March 19,
1998, the Company awarded stock options to purchase 2,000 shares of common stock
to each of Messrs. Smith, Batts, Boylan, Den Herder, Elhart, Hansen, Jurries and
Koetje and Ms.  Dalman.  These stock  options were granted  pursuant to the 1998
Directors'  Stock Option Plan,  have an exercise price of $10.00 per share,  are
exercisable beginning March 19, 1999, and expire on March 19, 2008.

     During 1999,  the  directors of the Company and the Bank received an annual
retainer of $4,000 and were paid $500 per board  meeting  attended  and $250 per
committee  meeting  attended.  Directors are reimbursed for their  out-of-pocket
expenses for each meeting attended.

                                       5
<PAGE>
                             EXECUTIVE COMPENSATION

                   Committee Report on Executive Compensation

     Decisions on the compensation of the Corporation's  executive  officers are
made by the Board's Compensation  Committee.  The Compensation Committee met two
times during 1999.

     Base Salary - In general,  the Board  intends to maintain the base salaries
of the  Company's  executive  officers  and senior  managers  within  peer group
levels,  with the  ability  to make  appropriate  adjustment  to  reflect  other
relevant  factors,  which  may  include  individual   performance,   experience,
expertise and tenure.  Annually,  the Committee  establishes a base wage for the
Chief  Executive  Officer,  Mr. Smith,  and for the President,  Mr. Koning.  The
Committee's  determination  is based upon the  performance of the individual and
compensation  levels  established  by the  Company's  peers and  evaluations  by
consultants.

     The base salaries of all other officers and senior managers are established
by the Corporation's President and Chief Executive Officer.

     Long-Term  Incentives - The Company  provides  long-term  incentives in the
form of stock options. Each year the Committee recommends to the Board a list of
stock options to be granted.  These options are intended to recognize individual
contributions  and to  incentivize  employees  to  contribute  to the  long-term
objectives of the Company.  To align the interests of its executive officers and
senior  managers  with the  Company's  shareholders,  the  Board's  compensation
strategy provides for a 401(k) matching contribution.

          G. Thomas Boylan, Robert E. Den Herder and Benj. A. Smith III

                                       6
<PAGE>
                           Summary Compensation Table

     The following table sets forth the annual and long-term  compensation  paid
by the Company to its Chief  Executive  Officer and the  President  of the Bank.
(collectively  referred to as the "Named  Executives") for services  rendered to
the Company during 1999 and 1998,  the Company's  first full year of operations.
No  other  executive  officers  of the  Company  or  the  Bank  received  annual
compensation in excess of $100,000 during 1998 or 1999.
<TABLE>
                           Summary Compensation Table

                                                                                              Long Term
                                                        Annual Compensation                  Compensation
                                                   ---------------------------               ------------
                                                                             Other
                                                                             Annual         Securities      All Other
                                                                            Compen-         Underlying       Compen-
       Name and Principal Position               Year        Salary        sation($)        Options(#)      sation(1)
       ---------------------------               ----        ------        ---------        ----------      --------
<S>                                              <C>       <C>                <C>            <C>           <C>
Benj. A. Smith, III........................      1999      $ 75,000           $0                  0        $    0
     Chairman of the Board and                   1998      $ 32,500           $0             31,000        $    0
     Chief Executive Officer

Philip J. Koning...........................      1999      $150,000           $0              4,000        $3,181
     President of the Bank                       1998      $144,184           $0             12,000        $3,020
     Treasurer and Secretary
</TABLE>

(1)   Includes an automobile allowance ($2,521 in 1999 and $2,637 in 1998) and
      life insurance premiums paid by the Company for the benefit of Mr. Koning.


                                       7
<PAGE>
     Option  Grants  in 1999.  Shown  below is  information  on  grants of stock
options pursuant to the Company's Stock Compensation Plan and the Company's 1998
Directors' Stock Option Plan.
<TABLE>

                                                        Individual Grants
                                   ------------------------------------------------------                       Potential
                                                                                                               Realizable
                                                                                                                Value at
                                                                                                                Assumed
                                                                                                              Annual Rates
                                                                                                             of Stock Price
                                Number of        Percent of                                                  Appreciation
                               Securities      Total Options                                                  For Option
                               Underlying       Granted to        Exercise or                                   Term (3)
                                 Options        Employees in       Base Price      Expiration
          Name                 Granted(1)          1999          (per share)(2)       Date                 5%            10%
----------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>             <C>              <C>
Philip J. Koning..........       3,000            14.3%           $  14.50         November 18, 2009       $27,357   $69,328
</TABLE>

(1)  Indicates  number of shares  which may be  purchased  pursuant  to  options
     granted under the Company's  Stock  Compensation  Plan and 1998  Directors'
     Stock Option Plan as of December 31, 1999.  Options may not be exercised in
     full or in part prior to the expiration of one year from the date of grant.
(2)  The exercise price equals the  prevailing  market price of the Common Stock
     on the date of  grant.  The  exercise  price  may be paid in  cash,  by the
     delivery of previously  owned  shares,  through the  withholding  of shares
     otherwise issuable upon exercise or a combination thereof.
(3)  These  amounts are based on assumed rates of  appreciation  over the entire
     option period without any discount to present value.  Actual gains, if any,
     on stock option  exercises will be dependent on overall  market  conditions
     and on the future  performance of the Company's Common Stock.  There can be
     no assurance that the amounts reflected in this table will be realized.


                                       8
<PAGE>
     Year-End  Options  Values.  Shown  below is  information  with  respect  to
unexercised  options to purchase  shares of the  Company's  Common Stock granted
under the Option Plans to the Named  Executives and held by them at December 31,
1999. None of the Named Executives exercised any stock options during 1999.

<TABLE>
                                                Number of Shares Subject to               Value of Unexercised
                                                 Unexercised Options Held                In-the-Money Options at
                                                   at December 31, 1999                    December 31, 1999(1)
                                                ----------------------------            -------------------------
                   Name                       Exercisable        Unexercisable     Exercisable        Unexercisable
-----------------------------------------------------------------------------------------------------------------
<S>                                            <C>               <C>               <C>                  <C>
Benj. A. Smith III.....................         31,000                 0           $27,000                $ 0

Philip J. Koning.......................         12,000             3,000           $40,500                $ 0
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The value of unexercised  options  reflects the increase in market value of
     the Company's Common Stock from the date of grant through December 31, 1999
     (when the  closing  price of the  Company's  Common  Stock was  $14.50  per
     share).  Value actually realized upon exercise by the Named Executives will
     depend on the value of the Company's Common Stock at the time of exercise.

     Benefits. The Company provides group health and life insurance benefits and
supplemental unemployment benefits to its regular employees, including executive
officers. In January 1999, the Company implemented a 401(k) plan.

     Security Ownership of Management. The following table shows, as of February
1, 2000, the number of shares beneficially owned by each of the Named Executives
identified in the executive  compensation  tables of this proxy statement and by
all  Directors  and  Executive  Officers as a group.  Except as described in the
notes  following  the  table,  the  following   persons  have  sole  voting  and
dispositive power as to all of their respective shares.

<TABLE>
                                                               Amount and Nature
Name                                                             of Beneficial     Percent of
                                                                 Ownership(1)     Common Stock
--------------------------------------------------------------------------------------------------
<S>                                                              <C>                <C>
Benj. A. Smith, III.....................................         154,567             4.2%

Philip J. Koning........................................          36,750             1.0%

All Executive Officers and Directors as a Group                  507,892            14.1%
(5 persons) ............................................
--------------------------------------------------------------------------------------------------
</TABLE>
(1)  See Footnotes 1 and 2 to the Information About Directors table appearing on
     page 4 of this Proxy Statement.

                                       9
<PAGE>
                        TRANSACTIONS INVOLVING MANAGEMENT

     Directors and officers of the Company and their  associates  were customers
of, and had  transactions  with,  subsidiaries  of the  Company in the  ordinary
course of  business  during  1999.  All loans and  commitments  included in such
transactions  were made in the ordinary course of business on substantially  the
same terms, including interest rates and collateral,  as those prevailing at the
time for  comparable  transactions  with  other  persons  and do not  involve an
unusual risk of collectibility or present other unfavorable features.

     The Bank leases its Holland office  located at 106 E. 8th Street,  Holland,
Michigan  49423,  from a  corporation  wholly  owned by Benj A.  Smith,  III, an
officer and  director of the  Company.  The Bank  leases its  Wyoming,  Michigan
branch facility from a limited  liability  company co-owned by John F. Koetje, a
director  of the  Company.  The  terms of these  leases  were  negotiated  on an
arm's-length  basis,  and the  Company  believes  that the rent and other  terms
reflect fair market value.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors  and officers to file reports of ownership and changes in ownership of
shares of common stock with the Securities and Exchange  Commission.  Based upon
written representations by each director and officer, all the reports were filed
by such  persons  during the last fiscal  year,  except for one late report with
respect to one transaction by each of Messrs. Benj. A. Smith, James L. Batts and
James L. Jurries.



                                       10
<PAGE>
                      SHAREHOLDER RETURN PERFORMANCE GRAPH

     The following  graph shows the cumulative  total  shareholder  return on an
investment in the Company's  common stock compared to the Russell 2000 Index and
the Media General Group Index of Regional-Midwest  Banks. The comparison assumes
a $100  investment on April 1, 1998,  the date of the Company's  initial  public
offering, at the Company's initial public offering price of $10.00 per share.



[GRAPHIC OMITTED]



<TABLE>
                                  4/1/98     6/30/98       9/30/98     12/31/98      3/31/99      6/30/99     9/30/99      12/31/99
-----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>        <C>           <C>         <C>           <C>          <C>         <C>          <C>
Macatawa Bank Corporation         100.00     147.50        160.00      152.50        151.25       142.50      143.75       145.00
-----------------------------------------------------------------------------------------------------------------------------------
MG Group Index                    100.00      99.52         90.49      103.97         98.78       101.20       90.21        86.34
-----------------------------------------------------------------------------------------------------------------------------------
Russell 2000 Index                100.00      95.34         76.13       88.31         83.23        95.86       89.49       105.62
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
 Source: Media General Financial Services, Richmond, Virginia



                RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

     The combined  consolidated  financial  statements  of the Company have been
examined  by  Crowe,  Chizek  and  Company  LLP,  independent  certified  public
accountants. A representative of Crowe, Chizek and Company LLP is expected to be
present at the annual  meeting  with the  opportunity  to make a  statement,  if
desired,  and will be  available  to respond  to  appropriate  questions.  It is
anticipated  that the  Company's  Audit  Committee  will  select  the  Company's
auditors before the end of this calendar year.

                                       11
<PAGE>
                    SHAREHOLDER PROPOSALS-2001 ANNUAL MEETING

         Any proposal of a  shareholder  intended to be presented  for action at
the 2001 annual meeting of the Company must be received by the Company at 250 E.
8th Street,  Holland,  Michigan 49423,  not later than November 15, 2000, if the
shareholder  wishes the proposal to be included in the Company's proxy materials
for that meeting.

                       AVAILABILITY OF 10-KSB ANNUAL REPORT

     An annual report on Form 10-KSB to the Securities  and Exchange  Commission
for the year ended December 31, 1999, will be provided free to shareholders upon
written  request.  Write to  Macatawa  Bank  Corporation,  Attention:  Philip J.
Koning, 250 E. 8th Street, Holland,  Michigan 49423. The Form 10-KSB and certain
other periodic  filings are filed with the  Securities  and Exchange  Commission
(the "SEC").  The SEC maintains an Internet web site that  contains  reports and
other  information   regarding  companies  including  the  Company,   that  file
electronically. The SEC's web site address is http:\\www.sec.gov.

                                 MISCELLANEOUS

     The  management  of the  Company  is not  aware of any  other  matter to be
presented  for  action at the  meeting.  However,  if any such  other  matter is
properly  presented for action,  it is the intention of the persons named in the
accompanying  form of  proxy to vote  thereon  in  accordance  with  their  best
judgment.

     The cost of soliciting  proxies in the accompanying  forms will be borne by
the Company.  In addition to solicitation  by mail,  proxies may be solicited in
person, or by telephone or telegraph, by some regular employees of the Company.


                                             By order of the Board of Directors

March 20, 2000
                                             /s/ Philip J. Koning
                                             Philip J. Koning
                                             Secretary



                                     12
<PAGE>
                                   APPENDIX A


                                TABLE OF CONTENTS


Selected Consolidated Financial Data........................................ A-2

Quarterly Financial Data.................................................... A-3

Quarterly Stock Price Information........................................... A-4

Management's Discussion and Analysis........................................ A-5

Report of Independent Auditors............................................. A-20

Consolidated Financial Statements.......................................... A-21

Notes to Consolidated Financial Statements................................. A-25



                                       A-1
<PAGE>
                      SELECTED CONSOLIDATED FINANCIAL DATA


     The following  selected  consolidated  financial and other data are derived
from the Company's financial statements and should be read with the Consolidated
Financial  Statements  and  Notes  thereto,  and  "Management's  Discussion  and
Analysis of Financial  Condition and Results of  Operations."  The  Consolidated
Balance Sheet as of December 31, 1999 and 1998, and the  Consolidated  Statement
of Income for the years ended December 31, 1999 and 1998, are included elsewhere
in this proxy statement.
<TABLE>
                                                                                          At or For the
                                                                                           Year Ended
                                                                                           December 31
(Dollars in Thousands, Except of Per  Share Data)                               1999                    1998
                                                                                ----                    ----
<S>                                                                         <C>                     <C>
Financial Condition
   Total assets....................................................         $   344,921              $189,229
   Loans...........................................................             285,374               137,882
   Deposits........................................................             275,390               166,989
   Securities......................................................              28,281                27,007
   Shareholder's equity............................................              34,526                19,611

Share Information
   Basic earnings/(loss) per common share..........................                 .22             $   (1.22)
   Book value per common share.....................................                9.62                  8.05
   Weighted average shares outstanding.............................           3,101,908             2,041,920
   Shares outstanding at end of period.............................           3,588,565             2,435,125

Operations
   Interest income.................................................              20,000             $   6,804
   Interest expense................................................               9,428                 3,190


   Net interest income.............................................              10,572                 3,614
   Provision for loan losses(1)....................................               1,967                 2,023

   Net interest income after provision for loan losses.............               8,605                 1,591
   Total noninterest income........................................               1,528                   683
   Total noninterest Expense.......................................               9,440                 4,763

   Net income/(loss)...............................................                 693             $  (2,489)
</TABLE>
(1)  Management  has  established  the  allowance  for loan losses based on past
     industry  loan  loss  experience,  known  and  inherent  risks  in  similar
     portfolios, and economic conditions.

                                       A-2
<PAGE>
                            QUARTERLY FINANCIAL DATA
                                   (unaudited)

     A summary of selected  quarterly  results of operations for the years ended
December 31 follows:
<TABLE>
                                                                           THREE MONTHS ENDED
                                                     March 31,           June 30,      September 30,     December 31,
---------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                 <C>              <C>               <C>
1999
   Interest income.........................        $3,635,152          $4,663,222       $5,475,441        $6,226,884
   Net interest income.....................         1,883,465           2,471,316        2,925,651         3,292,131
   Provision for loan losses...............           450,000             545,000          505,000           467,000
   Income (loss) before income tax expense.           (77,110)             44,116          301,171           425,089
   Net income (loss).......................           (77,110)             44,116          301,171           425,089

   Net income per share
      Basic................................              (.03)                .02              .08               .12
      Diluted..............................              (.03)                .02              .08               .12

1998
   Interest income.........................        $  343,472          $1,174,070       $2,201,206        $3,085,357
   Net interest income.....................           205,089             726,345        1,147,189         1,535,245
   Provision for loan losses...............           200,500             702,000          620,000           500,000
   Income (loss)  before income tax expense          (525,208)           (921,251)        (653,828)         (388,264)
   Net income (loss).......................          (525,208)           (921,251)        (653,828)         (388,264)

   Net income per share
      Basic................................              (.56)               (.39)            (.27)             (.16)
      Diluted..............................              (.56)               (.39)            (.27)             (.16)
</TABLE>

                                       A-3
<PAGE>
                        QUARTERLY STOCK PRICE INFORMATION

     The Company's  common stock has been quoted on the Nasdaq  SmallCap  Market
since  December 27, 1999.  From the  completion of the Company's  initial public
offering in April 1998 through December 31, 1999, the Company's common stock was
quoted on the OTC  Bulletin  Board.  High and low bid prices (as reported on the
OTC  Bulletin  Board) and high and low sales  prices (as  reported on the Nasdaq
SmallCap  Market) for each quarter since the Company's April 1998 initial public
offering through December 31, 1999, are as follows:
<TABLE>
                                                    1999                             1998
                                          -----------------------------------------------------------
       Quarter                             High              Low             High              Low
       --------------                      ----              ---             ----              ---
       <S>                                <C>               <C>              <C>               <C>
       First Quarter                      $17.00            $14.75             N/A              N/A

       Second Quarter                     $15.50            $13.50           $15.25            $14.50

       Third Quarter                      $15.50            $14.00           $16.50            $14.00

       Fourth Quarter                     $16.00            $13.00           $16.75            $15.75
</TABLE>
     For the period during which the common stock was quoted on the OTC Bulletin
Board,  the quotations  reflect  inter-dealer  prices,  without retail  mark-up,
mark-down or commission  and may not represent  actual  transactions  and do not
include intra-day highs and lows. On February 28, 2000, there were approximately
727 owners of record and, in addition,  approximately 2,001 beneficial owners of
the Company's common stock.

     No cash dividends have been declared to date on the Company's common stock.
If and when dividends are declared, the Company will be dependent upon dividends
paid to it by the Bank for funds to pay dividends on the common stock.

                                       A-4
<PAGE>
                                   APPENDIX A

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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

Overview

     Macatawa Bank Corporation (the "Company") is a Michigan  corporation and is
the bank holding  company for Macatawa  Bank (the  "Bank").  The Bank  commenced
operations  on November 25,  1997.  The Bank is a Michigan  chartered  bank with
depository  accounts insured by the Federal Deposit Insurance  Corporation.  The
Bank  provides  a full  range  of  commercial  and  consumer  banking  services,
primarily in the  communities of Holland and Zeeland,  Michigan,  as well as the
surrounding market area primarily located in Ottawa county, Michigan.

     The Company has experienced  rapid and substantial  growth since opening in
November  1997.  At December 31,  1999,  the Bank had  thirteen  branch  banking
offices,  and two service  facilities.  The Company  completed  an  underwritten
initial  public  offering  of common  stock on April 7, 1998,  resulting  in net
proceeds of $14.1 million.  In June 1999,  the Company  completed an offering of
common stock to its shareholders resulting in net proceeds of $14.6 million.

     The Bank  established a Trust  Department in the fourth  quarter of 1998 to
further  provide for customers'  financial  needs.  The Trust  Department  began
business  on  January  3,  1999 and as of  December  31,  1999,  had  assets  of
approximately $183 million.

     The  Company's  Board of Directors  has  determined  that it is in the best
interests  of the  Company  and its  shareholders  to  restructure  the board of
directors by reducing the number of directors of the Company. In order to effect
this restructuring, James L. Jurries, James L. Batts, Wayne J. Elhart, Jessie F.
Dalman  and Brian J.  Hansen  will  resign  from the Board of  Directors  of the
Company  prior to the Annual  Meeting.  Each of these  directors  and all of the
Company's  remaining  directors  will continu as  directors of Macatawa  Bank, a
subsidiary of the Company.  The Company  anticipates forming a second subsidiary
which will provide  financial  and other  services  excluding  banking  services
("Financial  Services  Company").  Once the Financial  Services Company Board is
organized,  certain  Macatawa  Bank  directors  will be named  to the  Financial
Services Company Board. All services  provided by the Company other than banking
will be provided through the Financial Services Company and all banking services
will be provided through Macatawa Bank. For the foreseeable  future, the Company
will function purely as a holding company.  The Board restructuring will relieve
the  directors  who are leaving  the  Company's  Board from any holding  company
responsibilities  and permit  them to focus their  attention  and efforts on the
Company's subsidiary operations.

                                       A-5
<PAGE>
Financial Condition

     Summary.   Total  assets  of  the  Company  increased  by  $155,692,000  to
$344,921,000 at December 31, 1999,  from  $189,229,000 at December 31, 1998. The
increase in assets is primarily  attributable  to the Bank continuing to attract
customer  deposits and then lending and  otherwise  investing  these funds.  The
fourth quarter of 1999 was the Company's eighth full quarter of operations,  and
the number of deposit accounts increased from  approximately  14,000 at December
31, 1998,  to  approximately  27,000  accounts at December 31, 1999.  Management
attributes the strong growth in deposits to quality customer service, the desire
of customers to deal with a local bank, and convenient accessibility through the
expansion  of  branches.  The Company  anticipates  that the Bank's  assets will
continue to increase  during  2000,  which will be the Bank's third full year of
operations.  However, management does not believe that the rate of increase will
be as rapid as it was during the first two years of operation.

     Cash and Cash Equivalents. Cash and cash equivalents, which include federal
funds sold and short-term  investments,  increased  $2,600,862 to $20,554,039 at
December  31, 1999,  from  $17,953,177  at December 31, 1998.  The increase is a
result of cash reserves needed for additional branches.  The Bank also increased
cash  reserves  in  order to be  prepared  for any  large  cash  withdrawals  by
customers  concerned about Y2K.  Balances  required to cover account services at
correspondent banks were increased due to volumes.

     Securities.  Securities  are  purchased and  classified  as "available  for
sale."  The  securities  may be sold to meet the  Bank's  liquidity  needs.  The
primary  objective of the Company's  investing  activities is to provide for the
safety of the principal  invested.  Secondary  considerations  include earnings,
liquidity  and  overall  exposure  to  changes  in  interest  rates.  Securities
available for sale increased $1,274,075 to $28,281,375 at December 31, 1999 from
$27,007,300 at December 31, 1998, or 4.72%.

Securities Available for Sale Portfolio (in thousands)
<TABLE>
                                                                      Year Ended December 31
                                                                      ----------------------
                                                                   1999                    1998
                                                                   ----                    ----
<S>                                                               <C>                     <C>
U. S. Treasury and U.S. Government Agencies..................     $27,337                 $27,007
Michigan municipal bonds.....................................         944                       0
                                                                  -------                 -------
                                                                  $28,281                 $27,007
</TABLE>
     Excluding those holdings of the investment  portfolio in U.S.  Treasury and
U.S.  Government Agency  Securities,  there were no investments in securities of
any one issuer which exceeded 10% of shareholders' equity.

                                       A-6
<PAGE>
Schedule of Maturities of Investment Securities and Weighted Average Yields

     The following is a schedule of maturities and their weighted  average yield
of each category of investment securities as of December 31, 1999.
<TABLE>
                                                                             Maturing
                                             -------------------------------------------------------------------------------------
                                                                            (Dollars in Thousands)
                                                                                                                  Investments With
                            Due Within              One to               Five to                After             No Contractual
                             One Year             Five Years            Ten Years             Ten Years           Maturity

                                             Estimated
                                            Market Market           Estimated             Estimated               Estimated
                       Estimated     Avg.      Value       Avg.       Market      Avg.      Market       Avg.       Market     Avg.
                         Value      Yield                  Yield      Value      Yield      Value       Yield       Value     Yield
<S>                    <C>          <C>       <C>          <C>      <C>         <C>        <C>          <C>          <C>      <C>
Available for Sale:
U.S. Treasury
and U.S.
Government
Agencies                0            0%       25,416       5.85%     1,921       6.70%          0          0%         0        0%
Tax-Exempt
MI municipal bonds      0            0%            0          0%         0          0%        944       5.24%         0        0%
                        -            --       ------       -----     -----       -----        ---       -----         -        --
Total                   0            0%       25,416       5.85%     1,921       6.70%        944       5.24%         0        0%
</TABLE>

     The Loan  Portfolio.  The majority of loans are made to  businesses  in the
form of commercial loans and real estate  mortgages.  Commercial loans increased
$105,722,570  from $95,669,151 at December 31, 1998, to $201,391,721 at December
31, 1999, an increase of 110.51%. Commercial loans account for approximately 71%
of the Bank's total loan portfolio.  In addition,  the Bank's consumer  mortgage
loan volume is  significant;  however,  only a small  portion of these loans are
retained for the Bank's own portfolio.  The Bank  originated $141 million (3,760
loans) in 1999 and $102 million (2,658 loans) in 1998.

Loan Portfolio Composition (in thousands)
<TABLE>
                                                                    Year Ended December 31
                                                                    ----------------------
                                                             1999                              1998
                                                             ----                              ----
                                                   Amount               %              Amount               %
                                                   ------               -              ------               -
<S>                                             <C>                   <C>             <C>                  <C>
Commercial Real Estate.................         $  54,160               19%           $  14,058            10%
Residential Real Estate................            44,734               15               22,529            16
Other Commercial.......................           147,232               52               81,611            60
Consumer...............................            39,248               14               19,684            14
                                                ---------                             ---------           ----
     Total Loans.......................           285,374              100%             137,882           100%
                                                                     ======                               ====

Less:
   Allowance for Loan Losses...........            (3,995)                               (2,030)
                                               ----------                              --------
Total Loans Receivable, Net............          $281,379                              $135,852
                                               ==========                              ========
</TABLE>

                                       A-7
<PAGE>
Maturities and Sensitivities of Loans to Changes in Interest Rates

     The  following  table  shows the amount of total  loans  outstanding  as of
December 31, 1999 which, based on remaining  scheduled  repayments of principal,
are due in the periods indicated.
<TABLE>

                                                         Maturing
               ----------------------------------------------------------------------------------------
                                                 (in thousands of dollars)
                                                                  After one but
                                           Within one Year      Within five years      After five years         Total
                                           ---------------      -----------------      ----------------         -----
<S>                                     <C>                     <C>                    <C>                  <C>
Commercial Real Estate ...........      $   19,504              $  31,186              $  3,470             $  54,160
Residential Real Estate...........          10,840                 18,392                15,502                44,734
Other Commercial..................          84,773                 55,901                 6,558               147,232
Consumer .........................          10,380                 22,298                 6,570                39,248
                                        ----------              ---------             ---------             ---------
      Totals......................      $  125,493               $127,777               $32,100               285,374
                                        ==========              =========             =========
Allowance for Loan Losses.........                                                                             (3,995)
                                                                                                            ---------
Total Loans Receivable, Net.......                                                                          $ 281,379
                                                                                                            =========
</TABLE>
     Below is a schedule of the loan  amounts  maturing or  repricing  which are
classified according to their sensitivity to changes in interest rates.
<TABLE>
                                                                        Interest Sensitivity
                                                              ---------------------------------------
                                                                            (in thousands of dollars)

                                                              Fixed Rate            Variable Rate          Total
                                                              ----------            -------------          -----
<S>                                                           <C>                     <C>                <C>
Due within 3 months.................................           $    5,213             $100,809           $106,022
Due after 3 months within 1 year....................               19,451                  103             19,554
Due after one but within five years.................              113,025               14,692            127,717
Due after five years................................               29,000                3,081             32,081
                                                               ----------             --------          ---------
  Total.............................................           $  166,609             $118,519            285,374
                                                               ==========             ========
Allowance for Loan Losses...........................                                                       (3,995)
                                                                                                        ---------
Total Loans Receivable, Net.........................                                                    $ 281,379
                                                                                                        =========
</TABLE>
     Nonperforming  Assets.  Nonperforming loans as of December 31, 1999 totaled
$101,000. Management believes that the allowance for loan losses is adequate for
the lending  portfolio.  Loan performance is reviewed regularly by external loan
review specialists,  loan officers, and senior management. When reasonable doubt
exists  concerning  collectibility  of interest or  principal,  the loan will be
placed in nonaccrual status.  Any interest  previously accrued but not collected
at that time will be  reversed  and  charged  against  current  earnings.  As of
December 31, 1999 there were no other  interest  bearing  assets which  required
classification.  Management  is not aware of any  recommendations  by regulatory
agencies,  which, if implemented,  would have a material impact on the Company's
liquidity, capital or operations.

                                       A-8
<PAGE>
Loan Loss Experience (in thousands)

     The  following is a summary of loan  balances at the end of each period and
their daily average balances,  changes in the allowance for possible loan losses
arising from loans charged off and recoveries on loans  previously  charged off,
and additions to the allowance which have been expensed.
<TABLE>
                                                                                    December 31
                                                                           -------------------------------
                                                                             1999                 1998
                                                                             ----                 ----
<S>                                                                        <C>                 <C>
Loans:
   Average daily balance of loans for the year.......................      $213,472             $  60,299
   Amount of loans outstanding at end of period......................       285,374               137,882

Allowance for loan losses:
   Balance at beginning of year......................................         2,030                     7

   Addition to allowance charged to operations.......................         1,967                 2,023

        Loans charged-off............................................            (6)
        Recoveries...................................................             4
Balance at end of year...............................................         3,995                 2,030

Ratios:
   Net (recoveries) charge offs to average loans outstanding.........             0                     0
   Allowance for loan losses to loans outstanding at year end........          1.40%                1.47%
</TABLE>
Allocation of the Allowance for Loan Losses

     The  allowance  for loan losses as of December  31,  1999,  was  $3,995,165
representing  approximately  1.40%  of  gross  loans  outstanding,  compared  to
$2,030,000 at December 31, 1998, or 1.47% of gross loans  outstanding.  The Bank
has not  experienced  any material  credit  losses as of December 31, 1999.  The
allowance for loan losses is maintained at a level  management feels is adequate
to  absorb  losses  inherent  in the  loan  portfolio.  Management  prepares  an
evaluation which is based upon a continuous review of the Bank's loan portfolio,
the Bank's and industry's  historical loan loss  experience,  known and inherent
risks  included  in the loan  portfolio,  composition  of  loans,  growth of the
portfolio  and current  economic  conditions.  The  allowance for loan losses is
analyzed quarterly by management.  In so doing,  management assigns a portion of
the allowance to the entire  portfolio by loan type and to specific credits that
have been  identified  as problem  loans and reviews past loss  experience.  The
local economy and particular  concentrations are considered, as well as a number
of other factors.

                                       A-9
<PAGE>
<TABLE>
                                                                              Year ended December 31
                                                                              -----------------------
                                                                         1999                          1998
                                                            -----------------------------   -------------------------
                                                                              % of each                     % of each
                                                                              category                      category
                                                             Allowance        to total      Allowance       to total
                                                              Amount          loans          Amount         loans
                                                             ---------        ---------     ---------       ---------
<S>                                                           <C>             <C>           <C>             <C>
Commercial...........................................         $2,784           70.6%        $1,422          69.4%
Real estate mortgages................................            112           15.7             57          16.3
Consumer ............................................            297           13.7            165          14.3
Unallocated..........................................            802            0.0            386           0.0
                                                              ------          ------        ------         -------

     Total...........................................         $3,995          100.00%       $2,030         100.00%
                                                              ======          =======       ======         =======
</TABLE>
     The above allocations are not intended to imply limitations on usage of the
allowance. The entire allowance is available for any future loans without regard
to loan type.

     Deposits.  Deposits  are  gathered  from the  communities  the Bank serves.
Deposits  increased to $279,389,882  at December 31, 1999, from  $166,988,675 at
December 31, 1998.  This was  primarily as a result of deposits  being  obtained
from new customers of the Bank.  Noninterest  bearing  demand  deposit  accounts
increased by $16,024,943 to $34,542,493 at December 31, 1999 from $18,517,550 at
December 31, 1998. These accounts are comprised  primarily of business  checking
accounts and represent 12.36% of total deposits at December 31, 1999.

Average Daily Deposits (in thousands)

     The  following  table  sets  forth the  average  deposit  balances  and the
weighted average rates paid thereon.
<TABLE>
                                                                          Average for the Year
                                                                          --------------------
                                                                    1999                                        1998
                                                                    ----                                        ----
                                               Amount            Average Rate             Amount            Average Rate
                                               ------            ------------             ------            -------------
<S>                                           <C>                   <C>                <C>                     <C>
Noninterest bearing demand...............     $  27,186               0%               $   8,991                 0%
NOW accounts.............................        29,721             2.6%                  10,420               3.0
MMDA/Savings.............................        97,849             4.2%                  35,743               4.7
Time.....................................        68,629             5.5%                  20,899               5.7
                                              ---------                                ---------

   Total Deposits........................      $223,385             3.9%               $  76,053               4.2%
                                              =========                                =========
</TABLE>

                                      A-10
<PAGE>
Maturity Distribution of Time Deposits of $100,000 Or More

     The following table summarizes time deposits in amounts of $100,000 or more
by time remaining until maturity as of December 31, 1999:

<TABLE>
                                                                       Amount
                                                                       ------
                  <S>                                              <C>
                  Three months or less..........................     $18,232,009
                  Over 3 months through 6 months................      12,168,988
                  Over 6 months through 1 year..................      10,014,660
                  Over 1 year...................................       9,762,878
                                                                   -------------
                                                                     $50,178,535
                                                                   =============
</TABLE>
     The Bank operates in a very competitive  environment.  Management  monitors
rates at other  financial  institutions  in the area to ascertain that its rates
are  competitive  with the  market.  Management  also  attempts  to offer a wide
variety  of  products  to meets  the  needs of its  customers.  The Bank  offers
business  and  consumer  checking  accounts,  regular and money  market  savings
accounts, and certificates having many options in their terms.

     Premises and Equipment. Bank premises and equipment increased to $9,997,566
at December 31, 1999 from $7,125,755 at December 31, 1998. The increase resulted
primarily  from the purchase of furniture and  equipment,  which  increased from
$2,553,229 at December 31, 1998 to $4,516,473 at December 31, 1999.

     Retained  Deficit.  As of  December  31,  1998,  the Company had a retained
deficit of  $2,654,076,  and as of December 31, 1999, the Company had a retained
deficit of  $1,960,810.  The retained  deficit is primarily  the result of prior
year losses,  including the impact of  provisions  for loan losses which totaled
$2,022,500 in 1998. Also contributing to the retained deficit were wages paid to
employees and costs  associated  with expanding the branch  network.  Management
believes that the expenditures made in 1997 and 1998 created the  infrastructure
and laid the foundation for future growth and profitability in subsequent years.

                                      A-11
<PAGE>
                              Results of Operations


     Summary of Results.  The Company earned a net profit in 1999, the Company's
second full year of operations. Net income for the year ended December 31, 1999,
was  $693,266  compared  to a net loss for the year ended  December  31, 1998 of
$2,488,551.  The  primary  reason  for  the  increase  in  income  is due to the
continued growth of the Company resulting in an increase of net interest income.

Performance Ratios (in thousands, except per share data).
<TABLE>
                                                             Year Ended December 31,
                                                        --------------------------------
                                                          1999                    1998
                                                          ----                    ----
<S>                                                       <C>                   <C>
Net Income (Loss)..........................               $693                  $(2,489)
  Basic earnings (loss) per share..........                .22                    (1.22)

Earnings (Loss) ratios:
  Return on average assets.................                .26                   (2.91%)
  Return on average equity.................               2.43                  (15.15%)
  Average equity to average assets.........              10.86                    19.59%
  Dividend payout ratio....................                N/A                      N/A
</TABLE>
     Net income for the year ended  December 31, 1999,  was $693,266 an increase
of $3,181,827  over net loss for the year ended December 31, 1998 of $2,488,551.
The primary reason for the increase in income is due to the continued  growth of
the company resulting in an increase of net interest income. Net interest income
for the year ended December 31, 1999 was $10,572,563 and $3,613,868 for the year
ended December 31, 1998, an increase of $6,958,695. Interest income for the year
ended  December  31,  1999  was  $20,000,699,  related  to  interest  income  on
securities,  loans and interest earning  deposits.  Interest income for the year
ended December 31, 1998 was $6,804,105.  Interest expense was $9,428,136 for the
year ended 1999, related to interest incurred on interest bearing deposits,  fed
funds purchased and Federal Home Loan Bank advances. For the year ended December
31,  1998,  interest  expense was  $3,190,237,  related to interest  incurred on
interest bearing  deposits and fed funds  purchased.  The increase in net income
can also be attributed to the Bank's growing into its infrastructure.

                                      A-12
<PAGE>
Net Interest Income. The following schedule presents the average daily balances,
interest  income and interest  expense and average rates earned and paid for the
Company's major categories of assets, liabilities,  and stockholders' equity for
the periods indicated:
<TABLE>
(in thousands)



                                 1999                                     1998
                       --------------------------             --------------------------
                                                                                                                   Change     Change
                        Average                     Average     Average                  Average      Total        Due to     Due To
  Earning Assets        Balance       Interest       Rate       Balance      Interest     Rate        Change       Volume     Rate
  --------------        -------       --------       ----       -------      --------     ----        ------       ------     ------
<S>                     <C>           <C>           <C>         <C>          <C>         <C>          <C>           <C>       <C>
Taxable Securities       21,444        1,225        5.71%       16,471         986       5.99%           239          286       (47)
Tax-exempt
  Securities                172            9        5.23%          ---         ---         ---             9            9       ---
Loans                   213,472       18,379        8.61%       60,299       5,339       8.85%        13,040       13,192      (151)
Fed Funds Sold            4,166          204        4.90%        8,421         446       5.30%          (243)        (211)      (32)
Short Term
  Investments             1,132           56        4.95%          605          32       5.29%            24           26        (2)
Federal Home
  Loan Bank
  Stock                   1,593          127        7.97%          ---         ---         ---           127          127       ---
                          -----     --------        -----          ---   ---------      ------      --------   ----------      -----
Total Earning
  Assets                241,979       20,001        8.27%       85,797       6,804       7.93%        13,197       13,429      (232)

Interest Bearing
Liabilities
NOWs and
  MMDAs                 116,914        4,548        3.89%       43,336       1,915       4.42%         2,633        2,888      (255)
Savings                   6,123          117        1.91%        2,153          43       2.00%            74           76        (2)
IRAs                      4,533          247        5.45%        1,096          64       5.84%           183          187        (4)
Time Deposits            68,629        3,787        5.52%       20,304       1,164       5.73%         2,623        2,668       (45)
Fed Funds
  Borrowed                  695           37        5.32%           78           4       5.13%            33           33       ---
Other
  Borrowings             12,126          692        5.71%          ---         ---         ---           692          692       ---
                       --------      -------        -----    ---------     -------       -----         -----       ------     ------
Total Interest
  Bearing
  Liabilities           209,020        9,428        4.51%       66,967       3,190       4.77%         6,238        6,545      (307)
                        -------      -------        -----       ------       -----       -----       -------      -------      -----
Net Interest/Spread                   10,573        3.76%                    3,614       3.16%         6,959        6,885        74
                                      ======        =====                    =====       =====       =======      =======      =====
Margin                                              4.37%                                4.21%
                                                    =====                                =====
</TABLE>

                                      A-13
<PAGE>
      Composition of Average Earning Assets and Interest Paying Liabilities
<TABLE>
                                                             Year Ended December 31
                                                             ----------------------
                                                          1999                    1998
                                                          ----                    ----
<S>                                                  <C>                    <C>
As a percent of average earning assets
  Loans.....................................                80.22%                70.28%
  Other earning assets......................                11.78%                29.72%
     Average earning assets.................         $241,978,855           $85,797,230

As a percent of average interest bearing
liabilities
  Savings and NOW accounts..................                61.03%                68.76%
  Time deposits.............................                32.83%                31.13%
  Other borrowings..........................                 6.14%                 0.11%
     Average interest bearing liabilities...          209,020,515            67,140,576

Earning asset ratio.........................                 1.16%                 1.28%
</TABLE>
     Allowance for Loan Losses.  The Company had an allowance for loan losses of
approximately  1.40% of total loans at December 31, 1999. The provision for loan
losses for the year ended  December  31,  1999 was  $1,967,000.  This amount was
provided  as a result of the  increase in the total loan  portfolio.  Management
considers it prudent  during the first years of  operations  to provide for loan
losses at a level  which is  consistent  with  levels  maintained  by banks with
similar  loan  portfolios.  Management  will  continue  to monitor its loan loss
performance and adjust its loan loss reserve to more closely align itself to its
own history of loss experience.

     Non-Interest  Income.  Non-interest  income for the year ended December 31,
1999 was $1,527,998, consisting primarily of service charges on deposit accounts
which totaled $660,920 and gain on sales of loans which totaled $623,520.  Trust
revenues of $228,588 also contributed to non-interest  income.  Trust fee income
continues  to increase  each  quarter as the amount of trust  assets  increases.
Trust  revenues   recorded  in  the  last  two  quarters  of  1999   represented
approximately  75% of the year to date trust revenues.  Non-interest  income for
the year ended December 31, 1998 was $683,382 and consisted primarily of gain on
sales of loans of $520,645 and service charges on deposit accounts which totaled
$157,109.  No trust revenues were recorded in 1998,  since the trust  department
did not begin business until January 3, 1999.

Non-interest Income (in thousands)
<TABLE>
                                                                    Year Ended December 31
                                                                    ----------------------
                                                                   1999                 1998
                                                                   ----                 ----
<S>                                                              <C>                 <C>
Service fee income .......................                       $   661             $   157

Net gains (losses) on asset sales:
  Loans...................................                           624                 521
  Securities..............................                             0                   0
  Trust Fees..............................                           228                   0
Other.....................................                            15                   5
                                                                  ------             -------

     Total noninterest income.............                        $1,528             $   683
                                                                  ======             =======
</TABLE>

                                                     A-14
<PAGE>
Net Gains on the Sale of Residential Real Estate Mortgage Loans (in thousands)
<TABLE>
                                                               Year Ended December 31
                                                            ---------------------------
                                                              1999                1998
                                                              ----                ----
<S>                                                         <C>                 <C>
Real estate mortgage loan originations....                  $54,715              $44,146

Real estate mortgage loan sales...........                  $55,339              $44,667

Net gains on the sale of real                                   624                  521
    Estate mortgage loans.................

Net gains as a percent of real                                 1.13%                1.17%
    Estate mortgage loan sales............
</TABLE>
     The Bank sells the majority of its fixed-rate  obligations.  Such loans are
sold servicing released.

     Non-Interest Expense.  Non-interest expense for the year ended December 31,
1999, was $9,440,295 compared to $4,763,301 for the year ended December 31,1998.
The main  components of  non-interest  expense were salaries and benefits  which
totaled  $5,408,024 for the year ended December 31, 1999, and $2,726,888 for the
year ended  December  31, 1998.  The  increase is primarily  due to additions in
staff for the five new branches added in 1999. Other  significant  components of
non-interest  expense  consiste  of  occupancy  and  equipment  expenses,   data
processing fees, supplies and marketing expenses.

Non-interest Expense (in thousands)
<TABLE>
                                                                              Year Ended December 31
                                                                            -------------------------
                                                                           1999                  1998
                                                                           ----                  ----
<S>                                                                       <C>                   <C>
Salaries and employee benefits............                                $5,408                $2,726
Occupancy and equipment...................                                   841                   305
Furniture and equipment expense...........                                   777                   253
Legal and professional fees...............                                   135                   199
Advertising...............................                                   267                   199
Supplies..................................                                   343                   233
Data processing fees......................                                   401                   197
Check printing fees.......................                                    98                    89
Other outside services....................                                   142                    76
Organizational expenses...................                                     0                    66
Other operating expenses..................                                 1,028                   462
                                                                          ------               -------
  Total noninterest expense...............                                $9,440                $4,763
                                                                          ======               =======
</TABLE>
                                      A-15
<PAGE>
                         Liquidity and Capital Resources

     Equity Capital. The Company obtained its initial equity capital as a result
of a private placement on behalf of the Bank to investors in November, 1997. The
Company raised  additional equity capital of $14.1 million in its initial public
offering  completed in April 1998. As a condition to regulatory  approval of the
Bank's formation, the Bank is required to maintain capitalization  sufficient to
provide a ratio of Tier 1 Capital to total assets of at least 8% through the end
of the third year of its operations. At March 31, 1999 the Bank's Tier 1 Capital
as a percent of total  assets was  8.43%.  Due to the rapid  growth of the Bank,
additional  equity capital was required.  In June 1999, the Company raised $14.6
million of equity  capital net  proceeds in an  offering  made to the  Company's
shareholders.  The Company  contributed  $10,000,000  from the  proceeds of this
offering to the Bank's capital. At June 30, 1999, the Bank's Tier 1 Capital as a
percent of total assets was 10.83%.  At December 31, 1999,  this ratio decreased
to 8.59%,  due to asset  growth.  The  Company has  approximately  $5 million in
additional funds which it could contribute to the Bank's capital if necessary.

     The following table shows various capital ratios as of December 31, 1999.
<TABLE>
                                              Capital Resources (in thousands)

                                                            Tier 1
                                                           Leverage              Tier 1            Total Risk-Based
                                                            Ratio            Capital Ratio          Capital Ratio
                                                            -----            -------------         ----------------
<S>                                                         <C>                  <C>                    <C>
Minimum regulatory requirement for
  capital adequacy.....................                      4.0%                 4.0%                    8.0%
Well capitalized regulatory level......                      5.0%                 6.0%                   10.0%
Consolidated...........................                     10.8%                12.7%                   14.2%
Bank...................................                      9.4%                10.9%                   12.4%
</TABLE>
     The following table shows the dollar amounts by which the Company's capital
(on a consolidated  basis) exceeds current  regulatory  requirements on a dollar
amount basis:
<TABLE>
                                                                                                             Total
                                                                   Tier 1               Tier 1            Risk-Based
                                                                  Leverage             Capital              Capital
                                                                             (in thousands of dollars)
<S>                                                                <C>                 <C>                  <C>
Capital balances at December 31, 1999
   Required regulatory capital.........................            $12,940             $10,994              $21,989
   Capital in excess of regulatory minimums............             21,982              23,928               16,928
                                                                   -------             -------              -------

Actual capital balances................................            $34,922             $34,922              $38,917
                                                                   =======             =======              =======
</TABLE>
     The  Company's  sources of liquidity  include loan  payments by  borrowers,
maturity  and sales of  securities  available  for sale,  growth of deposits and
deposit equivalents,  federal funds sold,  borrowings from the Federal Home Loan
Bank,  and the  issuance of common  stock.  Liquidity  management  involves  the
ability to meet the cash flow  requirements  of the Company's  customers.  These
customers may be either  borrowers  with credit needs or  depositors  wanting to
withdraw funds.

                                      A-16
<PAGE>
               Asset Liability Management and Market Risk Analysis

     Asset liability management aids the Company in maintaining  liquidity while
maintaining  a balance  between  interest  earning  assets and interest  bearing
liabilities.  Management of interest rate  sensitivity  attempts to avoid widely
varying net  interest  margins and to achieve  consistent  net  interest  income
through  periods of  changing  interest  rates.  Certain  savings  accounts  and
interest  bearing  checking  accounts  are are  shown as  repricing  other  than
contractually  due  to the  stability  of  these  products  in a  rate  changing
environment. Management monitors the Company's exposure to interest rate changes
using a GAP analysis. The following table illustrates the Company's GAP position
at various intervals (in thousands of dollars) at December 31, 1999.

<TABLE>
                                         0 to 3 Months       4 to 12 Months     1 to 5 Years      Over 5 Years      Total
                                         -------------       --------------     ------------      ------------      -----
<S>                                      <C>                 <C>                <C>               <C>               <C>
Assets:
  Loans-Fixed                            $     9,596         $   31,225         $ 103,082         $  22,704         $ 166,607
  Loans-Variable                             101,125                444            14,450             2,748           118,767
  Taxable Securities                                                               25,416             2,865            28,281
  Other Securities                                                                                    2,312             2,312
  Loan Loss Reserve                                                                                                    (3,995)
  Cash & Due From Banks                                                                                                20,554
  Fixed Assets                                                                                                          9,998
  Other Assets                                                                                                          2,397
                                         -----------         ----------         ---------         ---------         ---------
    Total Assets                         $   110,721         $   31,669         $ 142,948         $  30,629         $ 344,921

Liabilities:
  Time Deposits                          $    24,039         $   37,013         $  26,909                           $  87,961
  Savings & IRA's                              2,018                539            10,204         $     557            13,318
  Other Interest Bearing Deposits             65,792                               77,777                             143,569
  Other Borrowings                            15,000                               15,000                              30,000
  Non-Interest Bearing Deposits                                                                                        34,542
  Other Liabilities & Equity                                                                                           35,531
                                         -----------         ----------         ---------         ---------         ---------
    Total Liabilities & Equity           $   106,846         $   37,552         $ 129,890         $     557         $ 344,921

Period Gap                               $     3,872         $   (5,883)        $  13,058         $  30,072
Cumulative Gap                           $     3,872         $   (2,011)        $  11,047         $  41,119
Cumulative Gap/Total Assets                    1.12%              -0.58%            3.20%            11.97%
Period Rate Sensitive Assets/
  Rate Sensitive Liabilities                   1.04%               0.84%            1.10%            55.05%
Cumulative Rate Sensitive
  Assets/Rate Sensitive
  Liabilities                                  1.04%               0.99%            1.04%             1.15%
</TABLE>
     Based on this  analysis,  management  does not believe the Company would be
materially impacted by changes in interest rates.

                                      A-17
<PAGE>
     Other  variables  besides  interest  rate changes may have an impact on the
financial  condition of the Bank  including,  but not limited to,  growth of the
company, structure of the balance sheet, and economic and competitive factors.

                              Year 2000 Compliance

     Because many computerized systems use only two digits to record the year in
date fields (for example, the year 1998 is recorded as 98), such systems may not
be able to  accurately  process  dates  ending in the year 2000 and  after.  The
effects of the issue will vary from  system to system and may  adversely  affect
the ability of a financial  institution's  operations  as well as its ability to
prepare  financial  statements.  The Company and the Bank were organized in 1997
and the Company acquired its computer  equipment within the past eighteen months
and has contracted with a leading supplier of information  processing  services.
This equipment and these services were purchased with manufacturer assurances of
Year 2000 compliance.

     The Company has not experienced any Year 2000 problems. Although considered
unlikely,   unanticipated   problems,   including   problems   associated   with
non-compliant  third  parties,  could still occur.  The Company will continue to
manage its business and address any issues that may arise.


                         Recent Regulatory Developments

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

                                      A-17
<PAGE>
     At this time, the Company is unable to predict the impact this  legislation
may have on the Company.

     The  Company's  Board of Directors  has  determined  that it is in the best
interests  of the  Company  and its  shareholders  to  restructure  the board of
directors by reducing the number of directors of the Company. In order to effect
this restructuring, James L. Jurries, James L. Batts, Wayne J. Elhart, Jessie F.
Dalman  and Brian J.  Hansen  will  resign  from the Board of  Directors  of the
Company  prior to the Annual  Meeting.  Each of these  directors  and all of the
Company's  remaining  directors  will continue as directors of Macatawa  Bank, a
subsidiary of the Company.  The Company  anticipates forming a second subsidiary
which will provide  financial  and other  services  excluding  banking  services
("Financial  Services  Company").  Once the Financial  Services Company Board is
organized,  certain  Macatawa  Bank  directors  will be named  to the  Financial
Services Company Board. All services  provided by the Company other than banking
will be provided through the Financial Services Company and all banking services
will be e provided  through  Macatawa  Bank.  For the  foreseeable  future,  the
Company will function purely as a holding company.  The Board restructuring will
relieve  the  directors  who are leaving  the  Company's  Board from any holding
company responsibilities and permit them to focus their attention and efforts on
the Company's subsidiary operations.


                           Forward Looking Statements

     This report contains certain forward-looking  statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.   The  Company  intends  such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally  identifiable  by use  of the  words  "believe,"  "expect,"  "intend,"
"anticipate,"   "estimate,"   "project,"  "may"  or  similar  expressions.   The
presentation  and  discussion  of the  provision  and allowance for loan losses,
statements  concerning future  profitability or future growth or increases,  and
the Year 2000 readiness  discussion are examples of inherently  forward  looking
statements in that they involve  judgements  and  statements of belief as to the
outcome of future events. The Company's ability to predict results or the actual
effect of future plans or  strategies  is  inherently  uncertain.  Factors which
could have a material  adverse affect on the operations and future  prospects of
the Company and the Bank include,  but are not limited to, changes in:  interest
rates, general economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government,  including policies of the U.S. Treasury
and the  Federal  Reserve  Board,  the  quality  or  composition  of the loan or
investment  portfolios,  demand for loan products,  deposit flows,  competition,
demand for  financial  services  in the  Company's  market  area and  accounting
principles,  policies and guidelines.  These risks and  uncertainties  should be
considered in evaluating  forward-looking  statements and undue reliance  should
not be placed on such statements. Further information concerning the Company and
its business,  including  additional  factors that could  materially  affect the
Company's  financial  results,  is included in the  Company's  filings  with the
Securities and Exchange Commission.

                                      A-19
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Shareholders
Macatawa Bank Corporation
Zeeland, Michigan


We have audited the  accompanying  consolidated  balance sheets of Macatawa Bank
Corporation  as of  December  31,  1999 and 1998  and the  related  consolidated
statements  of income,  changes in  shareholders'  equity and cash flows for the
years  ended  December  31,  1999 and 1998 and for the period  from May 21, 1997
(date of inception)  through December 31, 1997.  These financial  statements are
the responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of Macatawa  Bank
Corporation at December 31, 1999 and 1998, and the results of its operations and
its cash flows for the years ended December 31, 1999 and 1998 and for the period
from May 21, 1997 (date of  inception)  through  December 31, 1997 in conformity
with generally accepted accounting principles.


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

Grand Rapids, Michigan
January 28, 2000


                                                                            A-20
<PAGE>
                            MACATAWA BANK CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1999 and 1998
<TABLE>
                                                                                     1999                 1998
                                                                                     ----                 ----
<S>                                                                             <C>                 <C>
ASSETS
     Cash and due from banks                                                    $    20,554,039     $    11,453,177
     Short-term investments                                                                               6,500,000
                                                                                ---------------     ---------------
         Cash and cash equivalents                                                   20,554,039          17,953,177

     Securities available for sale, at fair value                                    28,281,375          27,007,300
     Federal Home Loan Bank stock                                                     2,312,000

     Total loans                                                                    285,374,451         137,882,260
     Allowance for loan losses                                                       (3,995,165)         (2,030,000)
                                                                                ---------------     ---------------
                                                                                    281,379,286         135,852,260

     Premises and equipment - net                                                     9,997,566           7,125,755
     Accrued interest receivable                                                      1,904,126           1,226,199
     Other assets                                                                       492,743              63,982
                                                                                ---------------     ---------------
         Total assets                                                           $   344,921,135     $   189,228,673
                                                                                ===============     ===============

LIABILITIES AND SHAREHOLDERS' EQUITY
     Deposits
         Noninterest-bearing                                                    $    34,542,493     $    18,517,550
         Interest-bearing                                                           244,847,389         148,471,125
                                                                                ---------------     ---------------
              Total                                                                 279,389,882         166,988,675
     Federal funds purchased                                                                              2,000,000
     Federal Home Loan Bank advances                                                 30,000,000
     Accrued expenses and other liabilities                                           1,005,100             628,610
                                                                                ---------------     ---------------
         Total liabilities                                                          310,394,982         169,617,285

Shareholders' equity
     Preferred stock, no par value, 500,000 shares
       authorized; no shares issued and outstanding
     Common stock,  no par value,  9,500,000  shares  authorized;  3,588,565 and
       2,435,125 shares issued and outstanding at December 31, 1999 and 1998,
       respectively                                                                  36,882,916          22,260,646
     Retained deficit                                                                (1,960,810)         (2,654,076)
     Accumulated other comprehensive income (loss),
       net of income tax of ($203,975) and $2,482                                      (395,953)              4,818
                                                                                ---------------     ---------------
         Total shareholders' equity                                                  34,526,153          19,611,388
                                                                                ---------------     ---------------
              Total liabilities and shareholders' equity                        $   344,921,135     $   189,228,673
                                                                                ===============     ===============
</TABLE>
          See accompanying notes to consolidated financial statements.
                                                                            A-21
<PAGE>
                            MACATAWA BANK CORPORATION
                     CONSOLIDATED STATEMENTS OF INCOME Years
                ended December 31, 1999 and 1998 and period from
           May 21, 1997 (date in inception) through December 31, 1997
<TABLE>
                                                                     1999             1998                 1997
                                                                     ----             ----                 ----
<S>                                                            <C>                <C>               <C>
Interest income
     Loans, including fees                                     $   18,379,300     $    5,338,963    $         3,448
     Securities
         Taxable                                                    1,352,332            986,372              4,268
         Tax-exempt                                                     8,910
     Other                                                            260,157            478,770             68,566
                                                               --------------     --------------    ---------------
         Total interest income                                     20,000,699          6,804,105             76,282

Interest expense
     Deposits                                                       8,698,646          3,186,309              5,339
     Other                                                            729,490              3,928                213
                                                               --------------     --------------    ---------------
         Total interest expense                                     9,428,136          3,190,237              5,552
                                                               --------------     --------------    ---------------

Net interest income                                                10,572,563          3,613,868             70,730

Provision for loan losses                                          (1,967,000)        (2,022,500)            (7,500)
                                                               --------------     --------------    ---------------

Net interest income after provision for loan losses                 8,605,563          1,591,368             63,230

Noninterest income
     Service fees                                                     660,920            157,109
     Gain on sales of loans                                           623,520            520,645
     Trust fees                                                       228,588
     Other                                                             14,970              5,628
                                                               --------------     --------------
         Total noninterest income                                   1,527,998            683,382

Noninterest expense
     Salaries and benefits                                          5,408,024          2,726,885            111,341
     Occupancy expense of premises                                    841,252            305,214              9,226
     Furniture and equipment expense                                  777,249            253,074              5,328
     Legal and professional fees                                      134,993            198,890             18,437
     Advertising                                                      266,917            198,826             27,698
     Supplies                                                         342,979            232,835             30,729
     Data processing fees                                             400,591            196,665                119
     Check printing fees                                               98,302             88,596              1,218
     Other outside services                                           141,671             75,762              2,765
     Organizational expenses                                                              66,139
     Other expense                                                  1,028,317            420,415             21,894
                                                               --------------     --------------    ---------------
         Total noninterest expenses                                 9,440,295          4,763,301            228,755
                                                               --------------     --------------    ---------------

Net income (loss)                                              $      693,266     $   (2,488,551)   $      (165,525)
                                                               ==============     ==============    ===============

Basic  and diluted earnings (loss) per share                   $          .22     $        (1.22)   $          (.18)
                                                               ==============     ==============    ===============
</TABLE>
          See accompanying notes to consolidated financial statements.
                                                                            A-22
<PAGE>
                            MACATAWA BANK CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
             Years ended December 31, 1999 and 1998 and period from
           May 21, 1997 (date in inception) through December 31, 1997

<TABLE>
                                                                                                       Accumulated
                                                                                                          Other
                                                                                                      Comprehensive         Total
                                                                        Common          Retained      Income (Loss),   Shareholders'
                                                                        Stock            Deficit       Net of Tax         Equity
                                                                        -----            -------       ----------         ------
<S>                                                                   <C>               <C>           <C>              <C>
Balance, May 21, 1997                                                 $        0        $        0      $       0       $        0

Proceeds from sale of stock on November 7, 1997, 940,125 shares        8,137,268                                         8,137,268

Net loss for the period from May 21, 1997 (date
  of inception) through December 31, 1997                                                 (165,525)                       (165,525)

Other comprehensive income (loss):
     Net change in unrealized appreciation on securities
       available for sale, net of tax of $136                                                                 264              264
                                                                                                                               ---
         Comprehensive loss                                                                                               (165,261)
                                                                      ----------         ----------         -----        ---------
Balance, December 31, 1997                                             8,137,268          (165,525)           264        7,972,007

Proceeds from sale of stock on April 7, 1998, 1,495,000 shares        14,123,378                                        14,123,378

Net loss                                                                                (2,488,551)                     (2,488,551)

Other comprehensive income (loss):
     Net change in unrealized appreciation on securities
       available for sale, net of tax of $2,346                                                             4,554            4,554
                                                                                                                             -----
         Comprehensive loss                                                                                             (2,483,997)
                                                                      ----------        ----------          -----       -----------
Balance, December 31, 1998                                            22,260,646        (2,654,076)         4,818       19,611,388

Proceeds from sale of stock on June 4, 1999, 1,153,440 shares         14,622,270                                        14,622,270

Net income                                                                                 693,266                         693,266

Other comprehensive income (loss):
     Net change in unrealized depreciation on securities
       available for sale, net of tax of ($206,457)                                                      (400,771)        (400,771)
                                                                                                                          ---------
         Comprehensive income                                                                                              292,495
                                                                    ------------     -------------     -----------        --------
Balance, December 31, 1999                                          $ 36,882,916     $  (1,960,810)    $ (395,953)     $34,526,153
                                                                    ============     =============     ===========     ===========
</TABLE>
          See accompanying notes to consolidated financial statements.
                                                                            A-23
<PAGE>
                            MACATAWA BANK CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
             Years ended December 31, 1999 and 1998 and period from
           May 21, 1997 (date in inception) through December 31, 1997
<TABLE>
                                                                 1999                1998                 1997
                                                                 ----                ----                 ----
<S>                                                         <C>                 <C>                   <C>
Cash flows from operating activities
     Net income (loss)                                      $       693,266     $    (2,488,551)      $    (165,525)
     Adjustments to reconcile net income (loss)
       to net cash from operating activities
         Depreciation and amortization                              736,691             271,458               5,769
         Provision for loan losses                                1,967,000           2,022,500               7,500
         Origination of loans for sale                          (54,714,982)        (44,146,300)
         Proceeds from sales of loans
           originated for sale                                   55,338,502          44,666,945
         Gain on sales of loans                                    (623,520)           (520,645)
         Net change in
              Organizational costs                                                       66,139             (66,139)
              Accrued interest receivable and
                other assets                                     (1,106,688)         (1,221,658)            (68,523)
              Accrued expenses and other liabilities                582,948             588,301              37,827
                                                            ---------------     ---------------       -------------
                  Net cash from operating activities              2,873,217            (761,811)           (249,091)

Cash flows from investing activities
     Loan originations and payments, net                       (147,494,026)       (137,384,556)           (497,704)
     Purchase of FHLB stock                                      (2,312,000)
     Activity in securities available for sale
         Purchase                                               (16,879,381)        (29,000,000)         (2,000,000)
         Maturities                                              15,000,000           4,000,000
     Additions to premises and equipment                         (3,610,425)         (6,715,406)           (687,576)
                                                            ---------------     ---------------       -------------
         Net cash from investing activities                    (155,295,832)       (169,099,962)         (3,185,280)

Cash flows from financing activities
     Net increase (decrease) in federal funds
       purchased                                                 (2,000,000)         2,000,000
     Proceeds from FHLB                                          51,000,000
     Repayments on FHLB advances                                (21,000,000)
     Net increase in deposits                                   112,401,207         164,276,452           2,712,223
     Proceeds from the issuance of common stock                  14,622,270          14,123,378           8,137,268
                                                            ---------------     ---------------       -------------
         Net cash from financing activities                     155,023,477         180,399,830          10,849,491
                                                            ---------------     ---------------       -------------
Net change in cash and cash equivalents                           2,600,862          10,538,057           7,415,120

Beginning cash and cash equivalents                              17,953,177           7,415,120
                                                            ---------------     ---------------       -------------

Ending cash and cash equivalents                            $    20,554,039     $    17,953,177       $   7,415,120
                                                            ===============     ===============       =============

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                           $     9,212,595     $     2,725,880       $         640
</TABLE>
          See accompanying notes to consolidated financial statements.
                                                                            A-24
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations:  The Company became the bank holding  company for Macatawa
Bank (the  "Bank") on  February  23,  1998,  when all of the Bank's  outstanding
common stock (817,500  shares) was converted into all of the outstanding  common
stock of the Company (940,125 shares) and all of the Bank's  shareholders became
all of the Company's shareholders. The exchange ratio in the conversion was 1.15
shares of Company  common stock for each share of Bank common stock.  The Bank's
common  stock had been  issued to it  shareholders  as of  November 7, 1997 as a
result of a private  offering of the Bank's  common  stock at a price of $10 per
share  or  a  total  of  $8,175,000.   As  this  was   essentially  an  internal
reorganization, the consolidated financial statements are presented by including
operations of the Company and Bank for all periods presented.  Further share and
per share data has been  adjusted  for the  conversion  ratio of 1.15  shares of
Company stock for one share of Bank stock.

Macatawa Bank Corporation is a regional,  community-based financial institution,
located in Zeeland,  Michigan.  The Bank's primary  services  include  accepting
deposits and making  commercial,  mortgage and installment loans in the Michigan
counties of Allegan,  Ottawa and Kent. The Bank also operates a trust department
which  provides  fiduciary,  investment  and other  related  services.  The Bank
commenced its  application  process on May 21, 1997,  completed its common stock
sale on November 7, 1997 and opened for  operations  on November  25, 1997 after
several months of work by incorporators and employees in preparing  applications
with the various regulatory agencies and obtaining insurance and building space.
The costs  associated  with the  organization of the Company are included in the
1998 income statement.

The Company completed an underwritten initial public offering of common stock on
April 7, 1998, which resulted in net proceeds to the Company of $14,123,378.  On
April 30, 1999, the Company had another common stock offering and sold 1,153,440
shares, raising $14,622,270.

Principles of Consolidation:  The consolidated  financial statements include the
accounts of the Company and its  wholly-owned  subsidiary,  Macatawa Bank, after
elimination of intercompany accounts and transactions.

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

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

                                   (Continued)
                                                                            A-25
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

Securities:  Securities  available  for sale consist of those  securities  which
might be sold prior to  maturity  due to changes in interest  rates,  prepayment
risks,  yield and  availability of alternative  investments,  liquidity needs or
other factors. Securities classified as available for sale are reported at their
fair value and the related unrealized  holding gain or loss is reported,  net of
related income tax effects,  as a separate  component of  shareholders'  equity,
until realized.

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

Loans:  Loans are  reported at the  principal  balance  outstanding,  net of the
allowance for loan losses, and charge-offs.  Loans held for sale are reported at
the lower of cost or market, on an aggregate basis.  While the Company does sell
loans on the secondary market, there were no loans held for sale at December 31,
1999 or 1998. Interest income is reported on the interest method.

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

Loan  impairment  is  reported  when full  payment  under the loan  terms is not
expected.  Impairment  is evaluated in aggregate  for  smaller-balance  loans of
similar  nature such as  residential  mortgage  and  consumer  loans,  and on an
individual loan basis for other loans.  If a loan is impaired,  a portion of the
allowance is allocated so that the loan is reported,  net, at the present  value
of  estimated  future  cash flows  using the  loan's  existing  rate.  Loans are
evaluated for impairment  when payments are delayed,  typically 90 days or more,
or when the internal grading system indicates a doubtful  classification.  There
were no loans classified as impaired as of December 31, 1999 and 1998 or for the
years ended December 31, 1999 and 1998 or for the period from May 21, 1997 (date
of inception) through December 31, 1997.

                                   (Continued)
                                                                            A-26
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreclosed  Assets:  Assets acquired  through or instead of loan foreclosure are
initially  recorded at fair value when acquired,  establishing a new cost basis.
If fair value declines, a valuation allowance is recorded through expense. Costs
after  acquisition are expensed.  The Bank held no foreclosed assets at December
31, 1999 or 1998.

Premises  and  Equipment:  Premises  and  equipment  are  stated  at  cost  less
accumulated depreciation.  Depreciation is computed using both straight-line and
accelerated  methods over the estimated  useful lives of the respective  assets.
Maintenance,  repairs and minor alterations are charged to current operations as
expenditures  occur and major  improvements  are  capitalized.  These assets are
reviewed  for  impairment  under SFAS No. 121 when events  indicate the carrying
amount may not be recoverable.

Stock Compensation:  Employee  compensation  expense under stock option plans is
reported if options  are granted  below  market  price at grant date.  Pro forma
disclosures  of net income and earnings per share are shown using the fair value
method of SFAS No. 123 to measure expense for options  granted,  using an option
pricing model to estimate fair value.

Income  Taxes:  Income tax expense is the sum of the current year income tax due
or refundable  and the change in deferred tax assets and  liabilities.  Deferred
tax assets and liabilities are the expected future tax consequences of temporary
differences   between  the  carrying   amounts  and  tax  bases  of  assets  and
liabilities,  computed using enacted tax rates.  Deferred tax assets are reduced
by a valuation allowance due to a lack of historical operating performance.

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

Earnings (Loss) Per Share:  Basic earnings (loss) per share is net income (loss)
divided by the weighted average number of common shares  outstanding  during the
period.  Diluted  earnings  per common share  includes  the  dilutive  effect of
additional potential common shares issuable under stock options.

                                   (Continued)
                                                                            A-27
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income (Loss):  Comprehensive income (loss) consists of net income
(loss) and unrealized gains and losses on securities  available for sale, net of
tax, which are also recognized as separate components of equity.

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

Dividend  Restriction:   The  Company  and  the  Bank  are  subject  to  banking
regulations which require the maintenance of certain capital levels and positive
retained  earnings,  which will  prevent  payment of  dividends  until  positive
retained earnings are achieved and may limit the amount of dividends thereafter.

Reclassifications:  Certain amounts on the 1998 and 1997 consolidated  financial
statements have been reclassified to conform with the 1999 presentation.


NOTE 2 - CASH AND DUE FROM BANKS

The Company was required to have  $2,597,000  and $803,000 of cash on hand or on
deposit with the Federal  Reserve Bank to meet  regulatory  reserve and clearing
requirements at year end 1999 and 1998. These balances do not earn interest.

                                   (Continued)
                                                                            A-28
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

NOTE 3 - SECURITIES

The amortized cost and fair values of securities at year-end were as follows:
<TABLE>
Available for Sale
                                                                     Gross            Gross
                                                  Amortized       Unrealized        Unrealized           Fair
                                                    Cost             Gains            Losses            Values
                                                    ----             -----            ------            ------
<S>                                            <C>                <C>              <C>              <C>
1999
----
     U.S. Treasury securities and
       obligations of U.S. Government
       corporations and agencies               $    27,925,926                     $   (589,036)   $     27,336,890
     State and municipal bonds                         955,377    $        852          (11,744)            944,485
                                               ---------------    ------------     ------------    ----------------
                                               $    28,881,303    $        852     $   (600,780)   $     28,281,375
                                               ===============    ============     ============    ================
1998
----
     U.S. Treasury securities and
       obligations of U.S. Government
       corporations and agencies               $    27,000,000    $     35,700     $    (28,400)   $     27,007,300
                                               ===============    ============     ============    ================
</TABLE>
Contractual maturities of debt securities at year end 1999 were as follows:
<TABLE>
                                                                                         Available for Sale
                                                                                    Amortized             Fair
                                                                                     Cost                Value
                                                                                     ----                -----
    <S>                                                                         <C>                 <C>
     Due from one to five years                                                 $    25,984,552     $    25,415,550
     Due from five to ten years                                                       1,941,374           1,921,340
     Due after ten years                                                                955,377             944,485
                                                                                ---------------    ----------------
                                                                                $    28,881,303    $     28,281,375
                                                                                ===============    ================
</TABLE>
There were no sales of securities for the years ended December 31, 1999 and 1998
and for the period from May 21, 1997 (date of  inception)  through  December 31,
1997.

                                   (Continued)
                                                                            A-29
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 4 - LOANS

Year-end loans are as follows:
<TABLE>
                                                                                     1999                1998
                                                                                     ----                ----
     <S>                                                                        <C>                <C>
     Commercial                                                                 $   201,391,721    $     95,669,151
     Mortgage                                                                        44,734,529          22,528,687
     Consumer                                                                        39,248,201          19,684,422
                                                                                ---------------    ----------------
                                                                                    285,374,451         137,882,260
     Allowance for loan losses                                                       (3,995,165)         (2,030,000)
                                                                                ---------------    ----------------
                                                                                $   281,379,286    $    135,852,260
                                                                                ===============    ================
</TABLE>
Activity in the allowance for loan losses is as follows:
<TABLE>
                                                                 1999                1998                1997
                                                                 ----                ----                ----
     <S>                                                    <C>                 <C>                  <C>
     Beginning balance                                      $     2,030,000     $         7,500
         Provision charged to operating expense                   1,967,000           2,022,500      $        7,500
         Loans charged-off                                           (5,538)
         Recoveries                                                   3,703
                                                            ---------------     ---------------      --------------
     Ending balance                                         $     3,995,165     $     2,030,000      $        7,500
                                                            ===============     ===============      ==============
</TABLE>

NOTE 5 - PREMISES AND EQUIPMENT - NET

Year-end premises and equipment are as follows:
<TABLE>
                                                                                     1999                1998
                                                                                     ----                ----
     <S>                                                                        <C>                <C>
     Land                                                                       $     1,574,218    $      1,177,184
     Building and improvements                                                        4,915,252           3,661,701
     Furniture and equipment                                                          4,516,473           2,553,229
                                                                                ---------------    ----------------
                                                                                     11,005,943           7,392,114
     Less accumulated depreciation                                                   (1,008,377)           (266,359)
                                                                                ---------------    ----------------
                                                                                $     9,997,566    $      7,125,755
                                                                                ===============    ================
</TABLE>
                                   (Continued)
                                                                            A-30
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 6 - DEPOSITS

Deposits at year-end are summarized as follows:
<TABLE>
                                                                                     1999                1998
                                                                                     ----                ----
     <S>                                                                        <C>                <C>
     Noninterest-bearing demand                                                 $    34,542,493    $     18,517,550
     Money market                                                                   100,642,349          71,091,206
     NOW and Super NOW                                                               43,237,004          22,425,439
     Savings                                                                          7,411,691           5,812,028
     Certificates of deposit                                                         93,556,345          49,142,452
                                                                                ---------------    ----------------
                                                                                $   279,389,882    $    166,988,675
                                                                                ===============    ================
</TABLE>
At year-end 1999,  maturities of certificates  of deposits were as follows,  for
the next five years:
<TABLE>
                  <S>                                                           <C>
                  2000                                                          $    62,303,040
                  2001                                                               24,513,974
                  2002                                                                6,674,262
                  2003                                                                   64,058
                  2004                                                                        0
                  2005 and thereafter                                                     1,011
                                                                                ---------------
                                                                                $    93,556,345
                                                                                ===============
</TABLE>
The Bank had  approximately  $50,179,000 and $27,090,000 in time certificates of
deposit which were in denominations of $100,000 or more at December 31, 1999 and
1998.


NOTE 7 - FEDERAL HOME LOAN BANK ADVANCES

At year-end, advances from the Federal Home Loan Bank were as follows.
<TABLE>
                                                                                   1999                1998
                                                                                   ----                ----
     <S>                                                                   <C>                   <C>
     Maturities from April 2002 through September 2009,
     fixed rate from 5.63% to 5.84%, averaging 5.76%                       $    15,000,000       $           -

     Maturities from March 2000 through June 2000,
     variable rates of 4.05%                                                    15,000,000                   -
                                                                           ---------------       -------------
                                                                           $    30,000,000       $           -
                                                                           ===============       =============
</TABLE>
Each advance is payable at its maturity  date,  with a prepayment  penalty.  The
advances were  collateralized  by securities  totaling  $27,000,000 and at least
$21,000,000 of first mortgage loans under a blanket lien arrangement at year-end
1999.

                                   (Continued)
                                                                            A-31
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 7 - FEDERAL HOME LOAN BANK ADVANCES (Continued)

Maturities over the next five years are:
<TABLE>
                  <S>                                                           <C>
                  2000                                                          $    15,000,000
                  2001                                                                        -
                  2002                                                                3,000,000
                  2003                                                                3,000,000
                  2004                                                                4,000,000
                  2005 and after                                                      5,000,000
                                                                                ---------------
                                                                                $    30,000,000
                                                                                ===============
</TABLE>

NOTE 8 - RELATED PARTY TRANSACTIONS

Loans to principal  officers,  directors,  and their  affiliates in 1999 were as
follows.
<TABLE>
         <S>                                                                      <C>
         Beginning balance                                                        $     4,396,895
         New loans                                                                      8,582,752
         Repayments                                                                    (3,512,984)
                                                                                  ---------------
              Ending balance                                                      $     9,466,663
                                                                                  ===============
</TABLE>
Deposits from principal  officers,  directors,  and their affiliates at year-end
1999 and 1998 were $3,183,000 and $2,825,834.


                                   (Continued)
                                                                            A-32
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 9 - STOCK OPTIONS

Options to buy stock are granted to officers  and  employees  under the Employee
Stock  Option Plan (the  Employees'  Plan),  which  provides  for issue of up to
200,000  options.  Options are also  granted to directors  under the  Directors'
Stock  Option Plan (the  Directors'  Plan),  which  provides  for issue of up to
40,000 options. Exercise price is the market price at the date of grant for both
plans. The maximum option term is ten years with options vesting over a one-year
period for both the Employees' Plan and the Directors' Plan.

A summary of the activity in the plans is as follows.
<TABLE>
                                                                                                       Weighted
                                                                                                        Average
                                                                                       Options         Exercise
                                                                                     Outstanding         Price
                                                                                     ----------          -----
     <S>                                                                             <C>               <C>
     Balance at December 31, 1997                                                              0       $   0.00
     Granted                                                                             123,600          12.92
     Exercised
     Forfeited                                                                              (100)         10.00
                                                                                    ------------       --------
     Balance at December 31, 1998                                                        123,500          12.83
     Granted                                                                              21,000          14.16
     Exercised
     Forfeited                                                                            (4,200)         14.46
                                                                                    ------------       --------
     Balance at December 31, 1999                                                        140,300       $  13.06
                                                                                    ============       ========
</TABLE>
For the options  outstanding at December 31, 1999, the range of exercise  prices
was $10.00 to $16.50 per share with a  weighted  average  remaining  contractual
life of 8.7 years. At December 31, 1999,  119,300 options were  exercisable at a
weighted  average  price of $12.87 per share.  No options  were  exercisable  at
December 31, 1998.

                                   (Continued)
                                                                            A-33
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 9 - STOCK OPTIONS (Continued)

No compensation  cost was recognized  during 1999 or 1998. Had compensation cost
for stock options been measured  using FASB Statement No. 123, net income (loss)
and basic  income  (loss)  per  share  would  have  been the pro  forma  amounts
indicated below. The pro forma effect may increase in the future if more options
are granted.
<TABLE>
                                                                                        1999            1998
                                                                                        ----            ----
     <S>                                                                             <C>             <C>
     Net income (loss) as reported                                                   $  693,266      $   (2,488,551)
     Pro forma net income (loss)                                                        345,987          (2,752,080)

     Basic earnings (loss) per share as reported                                            .22               (1.22)
     Pro forma basic earnings (loss) per share                                              .11               (1.35)

     Diluted earnings (loss) per share as reported                                          .22               (1.22)
     Pro forma diluted earnings (loss) per share                                            .11               (1.35)

     Weighted-average fair value of options
       granted during the year                                                             5.19                4.74
</TABLE>

The pro forma  effects are  computed  using  option  pricing  models,  using the
following weighted-average assumptions as of grant date.
<TABLE>
                                                                                           1999               1998
     <S>                                                                                 <C>                <C>
     Risk-free interest rate                                                               6.55%              4.72%
     Expected option life                                                                7 years            7 years
     Expected stock price volatility                                                      17.29%              8.46%
     Dividend yield                                                                        0.00%              0.00%
</TABLE>

NOTE 10 - EMPLOYEE BENEFITS

The Company established a 401(k) plan in January 1999 covering substantially all
employees. Employees may elect to contribute to the plan from 1% to 15% of their
salary   subject  to  statutory   limitations.   The  Company   makes   matching
contributions  equal to 100% of the  first  3% of  employee  contributions.  The
Company's  contribution  for the year ended December 31, 1999 was  approximately
$114,000.

                                   (Continued)
                                                                            A-34
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 11 - EARNINGS PER SHARE

A  reconciliation  of the  numerators  and  denominators  of basic  and  diluted
earnings per share for the years ended December 31, 1999 and 1998 and the period
from May 21, 1997 (date in inception) through December 31, 1997 are as follows:
<TABLE>
                                                                     1999             1998              1997
                                                                     ----             ----              ----
<S>                                                              <C>            <C>                 <C>
Basic earnings (loss) per share
     Net income (loss)                                           $ 693,266      $ (2,488,551)      $ (165,525)
     Weighted average common shares                              - -------      - -----------      - ---------
       outstanding                                               3,101,908         2,041,920          940,125
                                                                 ---------         ---------          -------
Basic earnings (loss) per share                                  $     .22      $      (1.22)      $     (.18)
                                                                 =     ===      =      ======      =     =====
Diluted earnings (loss) per share
     Net income (loss)                                           $ 693,266      $ (2,488,551)      $ (165,525)
     Weighted average common shares                              - -------      - -----------      - ---------
       outstanding                                               3,101,908         2,041,920          940,125
     Add: Dilutive effects of assumed
       exercises of stock options                                   21,029
     Weighted average common and dilutive                           ------         ---------          -------
       potential common shares outstanding                       3,122,937         2,041,920          940,125
                                                                 ---------         ---------          -------
Diluted earnings (loss) per share                                $     .22      $      (1.22)       $    (.18)
                                                                 =     ===      =      ======       =    =====
</TABLE>

Stock options for 57,000 and 123,500  shares of common stock were not considered
in computing  diluted earnings (loss) per common share for 1999 and 1998 because
they were antidilutive.

                                   (Continued)
                                                                            A-35
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 12 - FEDERAL INCOME TAXES

The consolidated provision for income taxes is as follows:
<TABLE>
                                                                                       1999               1998
                                                                                       ----               ----
     <S>                                                                          <C>               <C>
     Current                                                                      $      415,439
     Deferred benefit                                                                   (173,533)   $      (841,530)
     Change in valuation allowance                                                      (241,906)           841,530
                                                                                        --------           --------
                                                                                  $            0    $             0
                                                                                  =            =    =             =
</TABLE>
The  recorded  consolidated  income tax  provision in both 1999 and 1998 differs
from that computed by multiplying pre-tax income by the statutory federal income
tax  rates  due to the  valuation  allowance,  tax-exempt  interest  income  and
nondeductible expenses.

The net deferred tax asset  (liability)  recorded includes the following amounts
of deferred tax assets and liabilities as of December 31, 1999 and 1998:
<TABLE>
                                                                                       1999               1998
                                                                                       ----               ----
<S>                                                                               <C>               <C>
     Deferred tax asset
         Allowance for loan losses                                                $    1,241,645    $       572,865
         Net operating loss carryforward                                                                    363,822
         Unrealized loss on securities available for sale                                203,975
         Organization costs                                                               34,098             45,604
         Other                                                                             3,798
                                                                                           -----            -------
                                                                                       1,483,516            982,291
     Deferred tax liabilities
         Depreciation                                                                   (208,272)           (84,555)
         Unrealized gain on securities available for sale                                                    (2,482)
                                                                                        --------             ------
                                                                                        (208,272)           (87,037)
                                                                                        --------            -------
     Net deferred tax asset before valuation allowance                                 1,275,244            895,254

     Valuation allowance                                                                (655,830)          (897,736)
                                                                                        --------           --------

     Net deferred tax asset (liability) after valuation allowance                 $      619,414    $        (2,482)
                                                                                  =      =======    =        ======
</TABLE>
A  valuation  allowance  related to deferred  tax assets is required  when it is
considered  more likely than not that all or part of the benefit related to such
assets  will  not be  realized.  Management  has  determined  that  a  valuation
allowance  of $655,830 is required  for 1999 and that a valuation  allowance  of
$897,736 is required for 1998.

                                   (Continued)
                                                                            A-36
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 13 - COMMITMENTS AND OFF-BALANCE-SHEET RISK

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

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

A summary of the notional or contractual  amounts of financial  instruments with
off-balance-sheet risk at year-end follows:
<TABLE>
                                                                                       1999              1998
                                                                                       ----              ----
     <S>                                                                        <C>                 <C>
     Commitments to make loans                                                  $    14,973,000     $    17,876,000
     Unused lines of credit                                                         102,763,000          65,699,000
</TABLE>
Approximately  50% of the Bank's  commitments  to make loans are at fixed rates,
offered at current market rates.  The majority of the variable rate  commitments
noted  above are tied to prime and expire  within 30 days.  The  majority of the
unused lines of credit are at variable rates tied to prime.

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

The Bank leases certain office and branch premises and equipment under operating
lease  agreements.  Total rental  expense for all  operating  leases  aggregated
$305,516 in 1999,  $117,886 in 1998 and $1,600 in 1997.  Future minimum  rentals
under noncancelable operating leases as of December 31, 1999 are as follows:
<TABLE>
                  <S>                                                           <C>
                  2000                                                          $    184,102
                  2001                                                                78,663
                  2002                                                                57,213
                  2003                                                                47,750
                  2004                                                                17,250
                  2005 and thereafter                                           ------------
                                                                                $    384,978
                                                                                =    =======
</TABLE>
                                   (Continued)
                                                                            A-37
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 14 - REGULATORY MATTERS

The  Company  and the  Bank  are  subject  to  regulatory  capital  requirements
administered by federal banking agencies. Capital adequacy guidelines and prompt
corrective  action  regulations   involve   quantitative   measures  of  assets,
liabilities,  and certain  off-balance-sheet  items  calculated under regulatory
accounting  practices.  Capital amounts and  classifications are also subject to
qualitative judgments by regulators about components, risk weightings, and other
factors, and the regulators can lower  classifications in certain cases. Failure
to meet various capital  requirements can initiate  regulatory action that could
have a direct material effect on the financial statements.

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

At year-end,  actual capital levels (in thousands) and minimum  required  levels
for the Bank were:
<TABLE>
                                                                                                    To Be Well
                                                                         Minimum Required        Capitalized Under
                                                                            For Capital          Prompt Corrective
                                                       Actual            Adequacy Purposes      Action Regulations
                                                 Amount      Ratio      Amount       Ratio       Amount      Ratio
                                                 ------      -----      ------       -----       ------      -----
<S>                                            <C>            <C>      <C>           <C>       <C>            <C>
1999
----
   Total capital (to risk weighted assets)
     Consolidated                              $  38,358      14.0%    $   21,989    8.0%      $   27,489     10.0%
     Bank                                         33,463      12.2         21,992    8.0           27,491     10.0
   Tier 1 capital (to risk weighted assets)
     Consolidated                                 34,922      12.7         10,994    4.0           16,491      6.0
     Bank                                         30,027      10.9         10,996    4.0           16,494      6.0
   Tier 1 capital (to average assets)
     Consolidated                                 34,922      10.8         12,940    4.0           16,175      5.0
     Bank                                         30,027       9.4         12,811    4.0           16,014      5.0

1998
----
   Total capital (to risk weighted assets)
     Consolidated                              $  21,637      12.4%    $   13,923    8.0%      $   17,403     10.0%
     Bank                                         20,722      11.9         13,923    8.0           17,403     10.0
   Tier 1 capital (to risk weighted assets)
     Consolidated                                 19,607      11.3          6,961    4.0           10,442      6.0
     Bank                                         18,692      10.7          6,961    4.0           10,442      6.0
   Tier 1 capital (to average assets)
     Consolidated                                 19,607      11.8          6,676    4.0            8,345      5.0
     Bank                                         18,692      11.2          6,676    4.0            8,345      5.0
</TABLE>
The Company and the Bank were  categorized as well  capitalized at year-end 1999
and 1998.

                                   (Continued)
                                                                            A-38
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS

Carrying  amount and  estimated  fair values of  financial  instruments  were as
follows at year-end.
<TABLE>
                                                        1 9 9 9                            1 9 9 8
                                               Carrying            Fair           Carrying            Fair
                                                Amount             Value           Amount             Value
                                                ------             -----           ------             -----
     <S>                                     <C>               <C>              <C>                   <C>
     Financial assets
          Cash and cash equivalents          $   20,554,039    $   20,554,039   $    17,953,177       $  17,953,177
          Securities available for sale          28,281,375        28,281,375        27,007,300          27,007,300
          Federal Home Loan Bank stock            2,312,000         2,312,000
          Loans, net                            281,379,286       279,901,275       135,852,260         136,086,762
          Accrued interest receivable             1,904,126         1,904,126         1,226,199           1,226,199
     Financial liabilities
          Deposits                             (279,389,882)     (279,506,286)     (166,988,675)       (167,496,412)
          Federal funds purchased                                                    (2,000,000)         (2,000,000)
          Federal Home Loan Bank advances       (30,000,000)      (29,910,492)
          Accrued interest payable                 (684,803)         (684,803)         (469,264)           (469,264)
</TABLE>
The  methods  and  assumptions  used to  estimate  fair value are  described  as
follows.

Carrying  amount is the  estimated  fair  value  for cash and cash  equivalents,
Federal Home Loan Bank stock, short-term borrowings, accrued interest receivable
and payable,  demand  deposits,  short-term  debt,  and  variable  rate loans or
deposits that reprice  frequently  and fully.  Security fair values are based on
market prices or dealer quotes, and if no such information is available,  on the
rate and term of the security and information  about the issuer.  For fixed rate
loans,  deposits,  and  borrowings  and for variable rate loans,  deposits,  and
borrowings with infrequent repricing or repricing limits, fair value is based on
discounted  cash flows using current  market rates applied to the estimated life
and  credit  risk.  The fair  value of  off-balance-sheet  items is based on the
current  fees or cost that  would be charged  to enter  into or  terminate  such
arrangements.

                                   (Continued)
                                                                            A-39
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 16 - CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY)

Following are condensed parent company only financial statements:
<TABLE>
                            CONDENSED BALANCE SHEETS
                                                                                          December 31,
                                                                                     1999                1998
                                                                                     ----                ----
         <S>                                                                    <C>                <C>
                                                         ASSETS
         Cash and cash equivalents                                              $     4,894,668    $        914,643
         Investment in subsidiary                                                    29,631,485          18,696,745
                                                                                ---------------    ----------------
              Total assets                                                      $    34,526,153    $     19,611,388
                                                                                ===============    ================

                                          LIABILITIES AND SHAREHOLDERS' EQUITY
                                                  Shareholders' equity
         Common stock                                                           $    36,882,916    $     22,260,646
         Retained deficit                                                            (1,960,810)         (2,654,076)
                                          Accumulated other comprehensive income,
           net of income tax of ($203,975) and 2,482                                   (395,953)              4,818
                                                                                ---------------    ----------------
              Total shareholders' equity                                             34,526,153          19,611,388
                                                                                ---------------    ----------------
                  Total liabilities and shareholders' equity                    $    34,526,153    $     19,611,388
                                                                                ===============    ================
</TABLE>
<TABLE>
                         CONDENSED STATEMENTS OF INCOME

                                                                                                      Period from
                                                                                                   February 23, 1998
                                                                                                  (date of inception)
                                                                                  Year ended            through
                                                                                 December 31,        December 31,
                                                                                     1999                1998
                                                                                     ----                ----
     <S>                                                                        <C>                <C>
     Expenses
         Other operating expenses                                               $       142,245    $         54,840
                                                                                ---------------    ----------------

     Loss before equity in undistributed
       net income (loss) of subsidiaries                                               (142,245)            (54,840)

     Equity in undistributed net income (loss) of subsidiary                            835,511          (2,185,393)
                                                                                ---------------    ----------------
     Net income (loss)                                                          $       693,266    $     (2,240,233)
                                                                                ===============    ================
</TABLE>
                                   (Continued)
                                                                            A-40
<PAGE>
                            MACATAWA BANK CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 16 - CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY)
  (Continued)
<TABLE>
                       CONDENSED STATEMENTS OF CASH FLOWS
                                                                                                     Period from
                                                                                                   February 23, 1998
                                                                                                  (date of inception)
                                                                                  Year ended            through
                                                                                 December 31,        December 31,
                                                                                     1999                1998
                                                                                     ----                ----
<S>                                                                             <C>                 <C>
   Cash flows from operating activities
         Net income (loss)                                                      $      693,266      $   (2,240,233)
         Adjustments to reconcile net income (loss) to net
           cash provided by (used in) operating activities:
             Equity in undistributed net (income) loss of
               subsidiary                                                             (835,511)          2,185,393
                                                                                --------------      --------------
                  Net cash from operating activities                                  (142,245)            (54,840)

   Cash flows from investing activities
     Investment in subsidiary                                                      (10,500,000)        (13,153,895)
                                                                                --------------      --------------
       Net cash from investing activities                                          (10,500,000)        (13,153,895)

   Cash flows from financing activities
     Proceeds from issuance of common stock                                         14,622,270          14,123,378
                                                                                --------------      --------------
       Net cash from financing activities                                           14,622,270          14,123,378
                                                                                --------------      --------------
   Net change in cash and cash equivalents                                           3,980,025             914,643

   Cash and cash equivalents at beginning of period                                    914,643
                                                                                --------------      --------------
   Cash and cash equivalents at end of period                                   $    4,894,668      $      914,643
                                                                                ==============      ==============
   Noncash transaction related to origination of
     holding company in 1998
       Investment in subsidiary                                                                     $   (7,723,689)
       Common stock                                                                                      8,137,268
       Retained deficit                                                                                   (413,843)
       Accumulated other comprehensive income                                                                  264
</TABLE>
                                                                            A-41
<PAGE>
Exhibit 21 - Subsidiaries of Registrant

         Macatawa Bank - 100% owned
         Incorporated as a Michigan Banking Corporation
         51 E. Main Street
         Zeeland, Michigan 49464
<PAGE>
EXHIBIT 23


                       CONSENT OF INDEPENDENT ACCOUNTANTS



We consent to the  incorporation by reference in the registration  statements on
Form S-8 (File No. 333-53593 and File No. 333-53595) of our report dated January
28, 2000, on our audits of the consolidated  financial statements as of December
31, 1999 and 1998,  and for the years ended  December 31, 1999 and 1998, and for
the period from May 21, 1997 (date of  inception)  through  December  31,  1997,
which report is included in this Annual Report on Form 10-KSB.



                                               /s/ CROWE, CHIZEK and COMPANY LLP
Grand Rapids, Michigan
March 17, 2000