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FORM 10-K



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2002



OR



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

For the transition period from              to



Commission file number 000-25927



MACATAWA BANK CORPORATION

(Exact name of registrant as specified in
its charter)



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



10717
Paw Paw Drive, Holland, Michigan 49424

(Address of principal executive offices) (Zip Code)



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



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



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



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



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



Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x .



The registrants revenues for 2002 were $64,575,000. 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 $21.74 as of June 28, 2002, was $156,217,000 (common stock, no par value). As of March 10, 2003, there were outstanding 7,965,146 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 24, 2003 are incorporated by reference into Part II and Part III of this Report.



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PART I



ITEM
1:        Business



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



General



Macatawa Bank Corporation is a Michigan corporation and is a financial holding company and the bank holding
company for two wholly owned banking subsidiaries, Macatawa Bank and Grand Bank, as well as Macatawa Bank Brokerage Services. Effective January 9, 2002, Macatawa Bank Corporation elected to become a financial holding company pursuant to Title I of
the Gramm-Leach-Bliley Act. Macatawa Bank commenced operations on November 25, 1997. Grand Bank was formed in 1987 and operated from a single location in Grand Rapids, Michigan. Grand Bank became a wholly owned subsidiary effective April 1, 2002
upon the completion of the acquisition of Grand Bank Financial Corporation (GBFC), and its results are included in the consolidated statements of income since this effective date. Both Macatawa Bank and Grand Bank are Michigan chartered banks with
depository accounts insured by the Federal Deposit Insurance Corporation. The banks operate seventeen branch offices and three lending and operational service facilities offering commercial and personal banking services, including checking and
savings accounts (including certificates of deposit), safe deposit boxes, travelers checks, money orders, trust services and commercial, mortgage and consumer loans in Kent County, Ottawa County, and northern Allegan County, Michigan. Macatawa Bank
Brokerage Services was formed in October 2001 and gained approval in June 2002 from the NASD to commence operations as a broker/dealer. Macatawa Bank Brokerage Services provides various brokerage services including discount brokerage, personal
financial planning and consultation regarding mutual funds. Macatawa Bank Mortgage Company and Grand Bank Mortgage Company, subsidiaries of Macatawa Bank and Grand Bank, respectively, originate and sell residential mortgage loans into the secondary
market on a servicing released basis. As of December 31, 2002, we had total assets of $1.2 billion, total deposits of $920.9 million, approximately 64,000 deposit accounts and shareholders equity of $114.0 million.



To achieve further synergies from the Grand Bank acquisition,
we merged Grand Bank into Macatawa Bank effective January 1, 2003 with the combined bank named Macatawa Bank. At the same time, Grand Bank Mortgage Company was merged into Macatawa Bank Mortgage Company.



Our administrative office is located at 10717 Paw Paw Drive,
Holland, Michigan 49424, and our telephone number is

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



Products and Services



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



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Residential Real Estate Loans.    We originate residential mortgage loans, which are generally long-term with either fixed or variable interest rates. Our general policy, which is subject to review
by our management as a result of changing market and economic conditions and other factors, is to sell in the secondary market the majority of residential mortgage loans originated. Residential mortgage loan originations derive from a number of
sources, including advertising, direct solicitation, real estate broker referrals, existing borrowers and depositors, builders and walk-in customers. Loan applications are accepted at most of our offices. The substantial majority of these loans are
secured by properties in our market area.



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



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



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



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



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



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



Multi-family and commercial real estate loans generally present a higher level of risk than loans secured by
one- to four-family residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties and the
increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by multi-family and commercial real estate is typically dependent upon the successful operation of the related real estate project.
If cash flow from the project is reduced, the borrowers ability to repay the loan may be impaired. For example, if



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leases are not obtained or renewed, or a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease
obligations, cash flow from the project will be reduced.



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



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



Construction loans to builders of one- to four-family residences generally require the payment of interest only for up to one year with
adjustable rates. These loans may also provide for the payment of loan fees from loan proceeds. We also make loans to builders for the purpose of developing one- to four-family lots and residential condominium projects. These loans typically have
terms of two years or less with maximum loan to value ratios of 80%. These loans may provide for the payment of loan fees from loan proceeds. Loan principal is typically paid down as lots or units are sold.



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



Commercial Business Loans.    Our commercial business lending portfolio contains loans with a variety of
purposes and security, including loans to finance operations and equipment. Generally, our commercial business lending has been limited to borrowers headquartered, or doing business, in our primary market area.



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



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



Our home
equity installment loans are written so that the total commitment amount, when combined with the balance of the first mortgage lien, generally will not exceed the greater of 80% of the appraised value of the property or



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80% of two times the Michigan real estate assessment value. These loans have a maximum maturity of 5 years with an amortization period of up
to 15 years, and carry fixed rates of interest.



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



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



Trust Services.    We began offering trust services in January 1999, to further provide for the financial needs of our customers. With the acquisition of Grand
Bank in April 2002 our trust assets increased by over $500 million and as of December 31, 2002, the Trust Department had assets of approximately $838.0 million. Our types of service include both personal trust and employee benefit plans.



Market Area



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



Much of our success as a retail and small to mid-sized business lender has been due to our market areas favorable population,
housing and income demographics. Population within our three county market area grew by 20.6% from 1990 to 2002. Household income levels in our market area exceed state and national levels while unemployment levels are below state and national
levels.



Competition



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



Environmental Matters



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



Employees



As of December 31, 2002, we had 229 full-time and 88 part-time employees. We have assembled a staff of experienced, dedicated and highly
qualified professionals whose goal is to provide outstanding service. The majority of our management team has at least 10 years of banking experience, and several key personnel have more than 20 years of banking experience. None of our employees is
represented by collective bargaining agreements with us.



Acquisition of Grand Bank.



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



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SUPERVISION
AND REGULATION



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



General



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



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



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



Macatawa Bank Mortgage Company, a subsidiary of Macatawa Bank, and Macatawa Bank Brokerage Services, Inc., a subsidiary of Macatawa Bank
Corporation, are subject to various state and federal regulations.



Macatawa Bank Corporation



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



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



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



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



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



Capital Requirements.    The Federal Reserve Board uses capital adequacy guidelines in its examination
and regulation of bank holding companies. If capital falls below minimum guidelines, a bank holding company may, among other 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 average assets, and (ii) a risk-based requirement expressed as a percentage of total
risk-weighted assets. The leverage capital requirement consists of a minimum ratio of Tier 1 capital (which consists principally of shareholders equity) to total average assets of 3% for the most highly rated companies, with minimum
requirements of 4% to 5% for all others. The risk-based requirement consists of a minimum ratio of total capital to total risk-weighted assets of 8%, of which at least one-half must be Tier 1 capital.



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



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



Federal Securities Regulation.    Our common stock is registered with the Securities and Exchange Commission (SEC) under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended. On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act provides for numerous changes to the reporting, accounting, corporate governance and business
practices of companies as well as financial and other professionals who have involvement with the U.S. public markets. The SEC continues to issue new and proposed rules implementing various provisions of the Sarbanes-Oxley Act.



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Macatawa Bank



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



Deposit Insurance.    As an FDIC-insured institution, we are required to pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a risk-based assessment system under which all
insured depository institutions are placed into one of 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 deposits. For several years, the BIF reserve ratio has been at or above the mandated ratio and assessments have ranged from 0% of deposits for institutions in the lowest risk category to .27% of deposits in the
highest risk category. However, there is speculation that the reserve may fall below the mandated ratio resulting in increased assessments in 2003.



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



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



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



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:



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|                               |  | Total Risk-Based Capital Ratio |  | Tier 1 Risk-Based Capital Ratio |  | Leverage Ratio                                          
|------------------------------ |  | ------------------------------ |  | ------------------------------- |  | --------------------------------------------------------
|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



As of
December 31, 2002, each of Macatawa Banks and Grand Banks ratios exceeded minimum requirements for the well capitalized category.



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



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



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



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



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



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.



10



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



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



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



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



11



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ITEM
2:         Description of Property.



We own or lease facilities located in Ottawa County, Allegan County and Kent County, Michigan. Our administrative offices are located at 160 South Waverly Road, Holland, Michigan 49423. During 2001, we
purchased approximately 17 acres of land located between Holland and Zeeland, and began construction on a three story building that will contain approximately 49,000 square feet. Upon completion in April of 2003, we will consolidate our
administration, human resources, trust, loan underwriting and processing, and proof and deposit operations in the new facility. Leased facilities in several locations will subsequently be vacated.



Our facilities as of February 1, 2003, were as follows:



|Location of Facility                         |  | Use                                       
|-------------------------------------------- |  | ------------------------------------------
|51 E. Main Street, Zeeland*                  |  | Main Branch                               
|125 Ottawa Avenue N.W., Grand Rapids*        |  | Trust and Mortgage Offices                
|126 Ottawa Avenue, N.W., Grand Rapids*       |  | Branch Office                             
|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                          
|41 N. State Street, Zeeland                  |  | Branch Office                             
|2020 Baldwin Street, Jenison                 |  | Branch Office                             
|6299 Lake Michigan Dr., Allendale            |  | Branch Office                             
|132 South Washington, Douglas                |  | Branch Office                             
|4758  136th Street, Hamilton*               |  | Branch Office                             
|3526 Chicago Drive, Hudsonville              |  | Branch Office                             
|20 E. Lakewood Blvd., Holland                |  | Branch Office                             
|348 South Waverly Road, Holland*             |  | Loan Center                               
|160 South Waverly Road, Holland*             |  | Administrative Offices                    
|4471 Wilson Avenue, S.W., Grandville*        |  | Branch Office                             
|250 E. 8th Street, Holland*                  |  | Operations Center                         
|8233 Byron Center Avenue S.W., Byron Center* |  | Branch Office                             
|5271 Clyde Park Avenue, S.W., Wyoming        |  | Branch Office and Loan Center             
|4590 Cascade Road, Grand Rapids              |  | Branch Office                             
|10717 Paw Paw Drive, Holland**               |  | Administrative and Loan Processing Offices



|* |  | Leased facility
|- |  | ---------------

|** |  | Under construction. We expect to complete this facility in April 2003.
|-- |  | ----------------------------------------------------------------------



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



12



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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 we or any of our subsidiaries are a party of or which
any of our properties are the subject.



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



No matters were submitted during the fourth quarter of 2002 to a vote of our shareholders.



ADDITIONAL ITEM:     Executive Officers of the
Registrant.



Certain information relating to
Executive Officers of Macatawa Bank Corporation and Macatawa Bank are as follows:



|Name                |  | Age |  | Year Elected an Executive Officer |  | Positions Held                                                                                                  
|------------------- |  | --- |  | --------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|Benj. A. Smith, III |  | 59  |  | 1997                              |  | Chairman of the Board and Chief Executive Officer of Macatawa Bank Corporation
and a director of Macatawa Bank. 
|                    |  |     |  |                                   |  |                                                                                                                 
|Kenneth Hoexum      |  | 59  |  | 2003                              |  | President and Chief Executive Officer of Macatawa Financial Services Group, Inc.                                
|                    |  |     |  |                                   |  |                                                                                                                 
|Philip J. Koning    |  | 48  |  | 1997                              |  | President and Chief Executive Officer of Macatawa Bank and Treasurer and Secretary of Macatawa Bank
Corporation.
|                    |  |     |  |                                   |  |                                                                                                                 
|Jon Swets           |  | 37  |  | 2002                              |  | Chief Financial Officer of Macatawa Bank Corporation and Macatawa Bank.                                         
|                    |  |     |  |                                   |  |                                                                                                                 
|Ray D. Tooker       |  | 59  |  | 2000                              |  | Senior Vice President Loan Administration of Macatawa Bank.                                                     
|                    |  |     |  |                                   |  |                                                                                                                 
|Thomas Wesholski    |  | 57  |  | 2003                              |  | Executive Vice President of Macatawa Bank Corporation                                                           



13



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PART II



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



Our common stock has been quoted on the Nasdaq National Market since May 17, 2001. From December 27, 1999 through May 16, 2001, our common stock was quoted on the Nasdaq SmallCap Market. From the completion of our initial public
offering in April 1998 through December 27, 1999, our common stock was quoted on the OTC Bulletin Board. High and low sales prices (as reported on the Nasdaq National Market and the Nasdaq SmallCap Market) for each quarter are included in the
following table. The information in the following table has been retroactively adjusted to reflect the effect of all stock dividends paid including the 3% dividend paid in May 2001 and the 4% dividend paid in May 2002.



|               |  | 2002   |  | 2001  
|-------------- |  | ------ |  | ------
|Quarter        |  | High   |  | Low   
|First Quarter  |  | $20.87 |  | $18.13
|Second Quarter |  | $21.74 |  | $18.46
|Third Quarter  |  | $21.50 |  | $17.00
|Fourth Quarter |  | $20.85 |  | $17.14



On
February 26, 2003, there were approximately 749 owners of record and, in addition, approximately 3,664 beneficial owners of our common stock.



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



We intend to continue to declare quarterly cash
dividends in the future. We may also consider declaring stock dividends on an annual basis. We are expecting to obtain the funds for the payment of future cash dividends from the dividends we receive from Macatawa Bank out of its earnings. However,
there can be no assurance that we will have the financial resources to continue to pay dividends in the future.



ITEM 6:         Selected Financial Data.



The information set forth under the caption Selected Consolidated Financial Data in our Annual Report to Shareholders for the
year ended December 31, 2002, is incorporated by reference and is filed as part of Exhibit 13 to this form 10-K Annual Report.



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



The information set forth under
the caption Managements Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report to Shareholders for the year ended December 31, 2002, is hereby incorporated by reference and is filed as part
of Exhibit 13 to this Form 10-K Annual Report.



14



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



The information set forth under the captions Managements Discussion and Analysis of Financial Condition and Results of
Operations  Market Risk Analysis in our Annual Report to Shareholders for the year ended December 31, 2002, is hereby incorporated by reference and is filed as part of Exhibit 13 to this Form 10-K Annual Report.



ITEM 8:         Financial
Statements and Supplementary Data.



The
information set forth under the captions Quarterly Financial Data, Report of Independent Auditors, Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of
Changes in Shareholders Equity, Consolidated Statements of Cash Flow, and Notes to Consolidated Financial Statements in our Annual Report to Shareholders for the year ended December 31, 2002, is hereby
incorporated by reference and is filed as part of Exhibit 13 to this Form 10-K Annual Report.



ITEM 9:         Changes in and Disagreements With Accountants and Financial Disclosure.



There have been no disagreements with our independent public accountants.



PART III



|ITEM |  | 10:         Directors and Executive Officers of the Registrant.
|---- |  | ---------------------------------------------------------------



The information set forth on pages 3-4, under the caption
Information About Directors and on page 11 under the caption Section 16(a) Beneficial Ownership Reporting Compliance in our definitive Proxy Statement dated March 7, 2003, relating to our 2003 Annual Meeting of Shareholders
and the information within that section is incorporated by reference. Information relating to our Executive Officers is included in Part I hereof entitled Executive Officers of the Registrant. There are no family relationships between or
among the above-named executive officers. There are no arrangements or understandings between any of the above-named officers pursuant to which any of them was named an officer.



ITEM 11:         Executive Compensation.



Information relating to compensation of our executive
officers and directors is contained under the captions Director Compensation and Executive Compensation, in our definitive Proxy Statement dated March 7, 2003, relating to our 2003 Annual Meeting of Shareholders and the
information within those sections is incorporated by reference.



ITEM 12:         Security Ownership of Certain Beneficial Owners and Management.



Information relating to security ownership of certain beneficial owners and management is contained on Page 2 under the caption
Voting Securities and Principal Holders Thereof and on page 9 under the caption Security Ownership of Management in our definitive Proxy Statement dated March 7, 2003, relating to our 2003 Annual Meeting of Shareholders and
the information within that section is incorporated by reference.



15



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Equity
Compensation Plan Information



We
maintain certain equity compensation plans under which common stock is authorized for issuance to employees, consultants and directors in exchange for services, including our Stock Compensation Plan, 1998 Directors Stock Option Plan, the Grand
Bank Financial Corporation 1988 Stock Option Plan and the Grand Bank Financial Corporation Stock Option Plan of 1997.



The following table sets forth certain information regarding the above referenced equity compensation plans as of December 31, 2002.



|                                                           |  | Equity Compensation Plan Information                                                            |  |                                                                            
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------
|                                                           |  | (a)                                                                                             |  | (b)                                                                        
|Plan Category                                              |  | Number of securities to be issued upon exercise of outstanding
options, warrants and rights (1) |  | Weighted-average exercise price of outstanding options, warrants and
rights
|Equity compensation plans approved by security holders     |  | 369,851                                                                                         |  | $12.85                                                                     
|                                                           |  |                                                                                                 |  |                                                                            
|Equity compensation plans not approved by security holders |  | 0                                                                                               |  | NA                                                                         
|                                                           |  |                                                                                                 |  |                                                                            
|Total                                                      |  | 369,851                                                                                         |  | $12.85                                                                     



|(1) |  | We had not granted warrants or rights applicable to this chart.
|--- |  | ---------------------------------------------------------------



ITEM 13:         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 our definitive Proxy Statement dated March 7, 2003, relating to our 2003 Annual Meeting of Shareholders and the information within that section
is incorporated by reference.



ITEM
14:         Controls and Procedures



| | (a) |  | Evaluation of Disclosure Controls and Procedures. The companys Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness
of the companys disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) as of a date within 90 days of the filing date of this Form 10-K Annual Report (the Evaluation Date), have concluded that
as of the Evaluation Date, the companys disclosure controls and procedures were adequate and effective to ensure that material information relating to the company would be made known to them by others within the company, particularly during
the period in which this Form 10-K Annual Report was being prepared.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Changes in Internal Controls. There were no significant changes in the companys internal controls or in other factors that could significantly
affect internal controls subsequent to the date of the most recent
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16



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evaluation, nor any significant deficiencies or material weaknesses in such internal controls requiring
corrective actions. As a result, no corrective actions were taken.



PART IV



ITEM
15:         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, 2002 and 2001

Consolidated Statements of Income for the years ended December 31, 2002, 2001 and 2000

Consolidated Statements of Changes in Shareholders Equity for the years ended December 31, 2002, 2001 and 2000

Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000

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 Jon Swets, Macatawa Bank Corporation, 348 South Waverly Road, Holland, Michigan 49423.



|(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.



17



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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 20, 2003.



MACATAWA BANK CORPORATION/s/ Benj. A. Smith, IIIBenj. A. Smith, IIIChairman and Chief Executive Officer(Principal Executive Officer)/s/ Jon SwetsJon SwetsChief Financial Officer(Principal Financial and Accounting Officer)




Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 20, 2003, by the following persons on behalf of the Registrant and in the capacities indicated. Each director of the
Registrant, whose signature appears below, hereby appoints Benj. A. Smith, III and Philip J. Koning, and each of them severally, as his attorney-in-fact, to sign in his name and on his behalf, as a director of the Registrant, and to file with the
Commission any and all Amendments to this Report on Form 10-K.



|Signature                                                                              |  |               
|-------------------------------------------------------------------------------------- |  | --------------
|/s/ Benj. A. Smith, IIIBenj. A. Smith, III, Principal Executive Officer and a Director |  | March 20, 2003
|                                                                                       |  |               
|/s/ Jon SwetsJon Swets, Principal Financial and Accounting Officer                     |  | March 20, 2003
|                                                                                       |  |               
|/s/ G. Thomas BoylanG. Thomas Boylan, Director                                         |  | March 20, 2003
|                                                                                       |  |               
|/s/ Robert E. DenHerderRobert E. DenHerder, Director                                   |  | March 20, 2003
|                                                                                       |  |               
|/s/ John F. KoetjeJohn F. Koetje, Director                                             |  | March 20, 2003
|                                                                                       |  |               
|/s/ Philip J. KoningPhilip J. Koning, Director and President                           |  | March 20, 2003





18



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CERTIFICATIONS



I, Benj. A Smith, III,
certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Macatawa Bank Corporation;
|-- |  | -----------------------------------------------------------------------------



|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

| | (b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

| | (c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

| | (b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: March 20, 2003



/s/ Benj. A. Smith,
III

Benj. A Smith, III

Chief Executive Officer



19



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I, Jon Swets, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Macatawa Bank Corporation;
|-- |  | -----------------------------------------------------------------------------



|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

| | (b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

| | (c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
| | 

| | (b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: March 20, 2003



/s/ Jon
Swets

Jon Swets

Chief Financial Officer



20



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EXHIBIT
INDEX



|Exhibit Number and Description
|------------------------------
|2                             
|                              
|3.1                           
|                              
|3.2                           
|                              
|4                             
|                              
|10.1                          
|                              
|10.2                          
|                              
|10.3                          
|                              
|10.4                          
|                              
|10.5                          



21



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|     |  | Exhibit 10.10 to the Macatawa Bank Corporation Registration Statement on Form SB-2 (Registration No.
333-45755).                                                                                                                                                                                                                                                                                                                            |  | 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 
|13   |  | Annual Report to Shareholders for the year ended December 31, 2002. This exhibit, except for those portions expressly
incorporated by reference in this filing, is furnished for the information of the Securities and Exchange Commission and is not deemed filed as part of this filing. This information was delivered to the Companys shareholders in
compliance with Rule 14a-3 of the Securities Exchange Act of 1934, as amended. |  | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 
|21   |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                              |  | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 
|23   |  | Consent of Crowe, Chizek and Company LLP, independent public accountants                                                                                                                                                                                                                                                                                                                                                                    |  | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 
|24   |  | Power of Attorney (included on the signature page on page 18 of the Annual Report on Form 10-K)                                                                                                                                                                                                                                                                                                                                             |  | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 
|99.1 |  | Certificate of the Chief Executive Officer of Macatawa Bank Corporation pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                           |  | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 
|99.2 |  | Certificate of the Chief Financial Officer of Macatawa Bank Corporation pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                           |  | 



22