Macatawa Bank Corporation Reports Third Consecutive Quarter of Profitability and Year-end Results

HOLLAND, Mich., Feb. 3, 2011 (GLOBE NEWSWIRE) -- Macatawa Bank Corporation (Nasdaq:MCBC) today announced its fourth quarter 2010 earnings, marking the Company's third consecutive quarter of profitability and continued improvements in several key capital and operational ratios. The Company's results for the fourth quarter (unaudited) included:

 
  Net income of $835,000, compared to a loss of $9.2 million in the same quarter of last year and net income of $703,000 in the third quarter of 2010
 
  Continued improvement in asset quality metrics, with nonperforming loans down 11 percent and total past due loans down 31 percent compared to third quarter 2010
 
  Net charge offs of $5.2 million, down 65.6 percent from $15.0 million in the fourth quarter 2009
 
  Year-over-year improvement in net interest margin, now at 3.38 percent
 
  Improvement in capital ratios
 
  Deposit accounts remain insured by the FDIC up to the maximum amount permitted by law

Macatawa reported net income available to common shares of $835,000, or $0.05 per diluted share, for the fourth quarter 2010, compared to a net loss available to common shares of $9.2 million, or $0.52 per diluted share, for the fourth quarter 2009 and net income of $703,000 for the third quarter 2010. For the full year 2010, the Company's net loss available to common shares totaled $17.9 million, down from a net loss of $66.5 million for the same period in 2009.

"We are pleased with our fourth quarter profit and the progress we believe we have made in 2010," said Richard L. Postma, Chairman of Macatawa Bank Corporation. "Our results continued to reflect the process improvements and disciplined approach we began to implement in 2009. The fourth quarter of 2010 represented our third consecutive quarter of profitability, along with continued improvements in several key capital and performance metrics. These are important achievements in our continued efforts to build accountability, confidence and performance in Macatawa Bank. We must continue to focus on improvement of the Bank's capital ratios, further reduction of non-performing loans and increasing sales of other-real-estate-owned. Through the collective efforts of the Board of Directors, management and our employees, we intend to continue to move the Bank toward a position of sustained profitability in order to serve West Michigan as a strong community bank."

Over the last year, under the direction of the Board of Directors and Chairman Richard Postma, the Company has navigated a difficult banking environment and critical transition period. Under this leadership, the Bank improved business and banking principles, added experienced personnel, and bolstered the Bank's risk management functions by adding key individuals in its Special Assets and Loan Review groups. The Bank added a new Chief Credit Officer and implemented new and more disciplined lending and loan risk management policies and new procedures for loan administration and loan review. The Company also added two new directors in the fourth quarter 2010. Each of these directors brings expertise in financial and accounting matters, further strengthening the Board of Directors. Macatawa continued its focus on reducing nonperforming loans during the fourth quarter 2010 by accelerating workout strategies with some of its more stressed loan customers.

Operating Results

Net interest income for the fourth quarter 2010 totaled $12.3 million, a decrease of $153,000 from the third quarter 2010 and a decrease of $1.1 million from the fourth quarter 2009. Net interest margin was 3.38 percent, up 16 basis points from 3.22 percent on a consecutive quarter basis and up 34 basis points from 3.04 percent in the fourth quarter 2009. The fourth quarter 2010 net interest margin was positively impacted by the continued payoff of higher-cost wholesale funds.

Average interest earning assets for the fourth quarter 2010 declined $92.2 million from the third quarter 2010 and declined $346.0 million from the fourth quarter 2009, negatively impacting net interest income. The decline in assets reflected the Bank's continued focus on capital ratio maintenance, liquidity improvement, and reduction in credit exposure within certain segments of its loan portfolio. While the size of the balance sheet has decreased, the underlying profitability of the earning assets has improved as evidenced by the increase in net interest margin.

Non-interest income of $4.5 million for the fourth quarter 2010 was up $782,000 from the third quarter 2010, and up $992,000 from the fourth quarter 2009. The comparative increase was primarily due to increased gains on sales of mortgage loans, a $574,000 gain in the fourth quarter 2010 on the sale of a property that had been held for branch expansion, and income recognized on leases of other-real-estate-owned.

Non-interest expense was $15.6 million for the fourth quarter 2010, compared to $14.9 million for the third quarter 2010 and $15.9 million for the fourth quarter 2009. In the most recent quarter, costs associated with the administration and disposition of problem loans and non-performing assets were $4.2 million, compared to $3.2 million in the third quarter 2010 and $3.7 million in the fourth quarter 2009. This increase was primarily due to further write-downs in the carrying value of other-real-estate-owned. FDIC insurance assessments remained elevated at $1.0 million in the most recent quarter compared to $1.2 million in the third quarter 2010 and $1.0 million in the fourth quarter 2009, as a result of higher assessment rates implemented by the FDIC.

When excluding nonperforming asset costs and FDIC assessments, non-interest expense was $10.3 million for the most recent quarter, down from $10.5 million in the third quarter 2010 and $11.3 million in the fourth quarter 2009. Salaries and employee benefits were down $210,000 in the fourth quarter 2010 compared to the third quarter 2010 and down $476,000 from the prior year quarter as a result of a reduction in overall staffing levels due to the Company scaling its operations to respond to the impact of the prolonged economic weakness.

Asset Quality

The provision for loan losses of $400,000 for the fourth quarter 2010 declined 27 percent from $550,000 in the third quarter 2010, and declined approximately 98 percent from $21.6 million in the fourth quarter 2009. Net charge-offs were $5.2 million compared to $4.6 million for the third quarter 2010 and $15.0 million for the fourth quarter 2009.

The allowance for loan losses of $47.4 million was 3.90 percent of total loans at December 31, 2010, compared with 4.08 percent at September 30, 2010 and 3.62 percent at December 31, 2009. The loan loss reserve coverage to nonperforming loans increased to 62.9 percent of non-performing loans at December 31, 2010, compared to 61.8 percent at September 30, 2010 and 52.6 percent at December 31, 2009.

At December 31, 2010, the Company's non-performing loans were $75.4 million, the lowest level since the fourth quarter of 2007, representing 6.19 percent of total loans. This compares to $84.4 million (6.61 percent of total loans) at September 30, 2010 and $103.9 million (6.88% of total loans) at December 31, 2009. However, other-real-estate-owned is higher at $58.0 million as of December 31, 2010 compared to $54.0 million at September 30, 2010 and $37.2 million at December 31, 2009. These balances have increased as our problem loans have migrated through the normal collection process. Sales of other-real-estate-owned continued to improve as compared to 2009, with the Bank disposing of $16.8 million in real estate during 2010, compared to $7.5 million for the same period in 2009. The total of nonperforming loans and other-real-estate-owned has decreased by $7.8 million from December 31, 2009 to December 31, 2010.

A break-down of non-performing loans is shown in the table below.

Dollars in 000s
              December 31,
    2010         September 30,
    2010         June 30,
    2010         March 31,
    2010         December 31,
    2009                                   
                                                                                                                                                                                                                     
                  Commercial Real Estate                    $ 60,186                     $ 72,310                $ 81,319                 $ 81,669                    $ 87,321                                   
               Commercial and Industrial                        12,170                          8,326                    10,418                     17,782                        12,713                                   
                 Total Commercial Loans                        72,356                         80,636                    91,737                     99,451                       100,034                                   
              Residential Mortgage Loans                         1,830                          2,702                     1,976                      1,849                         2,719                                   
                          Consumer Loans                         1,175                          1,110                     1,345                      1,248                         1,132                                   
             Total Non-Performing Loans                    $ 75,361                     $ 84,448                $ 95,058                $ 102,548                   $ 103,885                                   
                                                                                                                                                                                                                     
         Residential Developer Loans (a)                    $ 22,137                     $ 32,822                $ 37,939                 $ 36,594                    $ 50,002                                   
(a)  Represents the amount of loans to residential developers secured by single family residential 
    property which is included in non-performing commercial loans secured by real estate                              

Total non-performing assets were $133.4 million, or 8.45 percent of total assets, at December 31, 2010. A break-down of non-performing assets is shown in the table below.

Dollars in 000s
          December 31,
    2010     September 30,
    2010     June 30,
    2010     March 31,
    2010     December 31,
    2009
                                                                                                                                                        
              Non-Performing Loans                $ 75,361                 $ 84,448            $ 95,058            $ 102,548               $ 103,885
          Other Repossessed Assets                        50                        130                    81                     84                       124
           Other Real Estate Owned                    57,984                     53,982                48,672                 45,790                    37,184
      Total Non-Performing Assets               $ 133,395                $ 138,560           $ 143,811            $ 148,422               $ 141,193

Balance Sheet, Liquidity and Capital

Total assets were $1.58 billion at December 31, 2010, a decrease of $253 million from $1.83 billion at December 31, 2009. Total loans were $1.2 billion at December 31, 2010, down $294 million from $1.51 billion at December 31, 2009.

Commercial loans decreased by $238.7 million representing the majority of the decrease in total loans since December 31, 2009. The commercial real estate portfolio was reduced by $127.1 million as the Company continued its efforts to reduce exposure in these segments. Commercial and industrial loans declined by $92.8 million due, in part, to a general decline in business activity. Of the decline in commercial real estate loans, $57.5 million of the decrease was in loans to residential developers, the portfolio that has caused the majority of stress within the Company's loan portfolio.

The composition of the commercial loan portfolio is shown in the table below:

Dollars in 000s
          December 31,
    2010     September 30,
    2010     June 30,
    2010     March 31,
    2010     December 31,
    2009
                                                                                                                                                                  
                Construction and development               $ 133,228                $ 139,579           $ 150,443            $ 156,867               $ 162,615
                Other commercial real estate                   535,960                    548,071               582,882                611,904                   640,437
     Commercial Loans Secured by Real Estate                   669,188                    687,650               733,325                768,771                   803,052
                   Commercial and Industrial                   264,680                    285,924               314,087                344,294                   369,523
                      Total Commercial Loans               $ 933,868                $ 973,574           $1,047,412            $1,113,065               $1,172,575
                                                                                                                                                                  
             Residential Developer Loans (a)                $ 95,736                $ 106,372           $ 120,344            $ 130,727               $ 153,327
(a) Represents the amount of loans to residential developers secured by single family residential 
    property which is included in commercial loans secured by real estate

The reduction in loans since year-end 2009 allowed the Company to reduce wholesale funding during 2010, including out-of-market deposits acquired through brokers, by $158.4 million and other borrowed funds by $92.7 million. Total deposits were $1.28 billion at December 31, 2010, down $139.7 million from $1.42 billion at December 31, 2009, primarily from the run-off of brokered deposits. Customer deposit accounts remain fully insured to the highest levels available under the FDIC insurance programs.

At December 31, 2010, two of the three regulatory capital ratios for Macatawa Bank, including the tier one risk-based capital ratio and the tier one leverage capital ratio, were maintained at levels in excess of those ordinarily required to be categorized as "well capitalized" under applicable regulatory capital guidelines, but the Bank did not have capital at levels required by its Consent Order. At December 31, 2010, the Bank's total risk-based capital ratio of 9.68 percent was below the 10.0 percent minimum ordinarily required to be categorized as "well capitalized" and below the 11.0 percent minimum required by the Consent Order, but this ratio has improved since March 31, 2010 when it was 8.14 percent. Because the Bank is subject to the Consent Order, it cannot be categorized as "well capitalized" regardless of actual capital levels. The Bank needed $17.2 million of additional qualifying capital to comply with the Consent Order at December 31, 2010, compared to $43.2 million at March 31, 2010.

Mr. Postma concluded, "through a combination of improving earnings, effective balance sheet management and disciplined administration of non performing assets, we have improved the Bank's total risk-based capital ratio since its low-point at March 31, 2010. The amount of additional qualifying capital needed to comply with the Consent Order has been reduced from $43.2 million at March 31, 2010 to $17.2 million at December 31, 2010. Our goal remains to return to "well-capitalized" status, and we continue to work closely with regulators in our efforts to comply with the terms of the Consent Order."

Headquartered in Holland, Michigan, Macatawa Bank Corporation is the parent company for Macatawa Bank. Through its banking subsidiary, the Company offers a full range of banking, investment and trust services to individuals, businesses, and governmental entities from a network of 26 full service branches located in communities in Kent County, Ottawa County, and northern Allegan County. Services include commercial, consumer and real estate financing, business and personal deposit services, ATM's and Internet banking services, trust and employee benefit plan services, and various investment services. The Company emphasizes its local management team and decision making, along with providing customers excellent service and superior financial products.

"CAUTIONARY STATEMENT: This press release contains forward-looking statements that are based on management's current beliefs, expectations, assumptions, estimates, plans and intentions. Forward-looking statements are identifiable by words or phrases such as "will," "believe," "continue," "ahead of us," "intend," "goal," "efforts" "proposed," "further," "toward," and other similar words or phrases. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to our ability to build accountability, confidence and performance in Macatawa Bank, our ability to comply with our Consent Order and return to "well capitalized" status and our ability to continue to move Macatawa Bank toward a position of sustained profitability. All statements with references to future time periods are forward-looking. Management's determination of the provision and allowance for loan losses, the appropriate carrying value of intangible assets (including goodwill, mortgage servicing rights and deferred tax assets) and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment) involves judgments that are inherently forward-looking. Our ability to fully comply with our Consent Order, raise additional capital, improve regulatory capital ratios, successfully implement new programs and initiatives, increase efficiencies, address regulatory issues, maintain our current level of deposits and other sources of funding, maintain liquidity, respond to declines in collateral values and credit quality, and improve profitability is not entirely within our control and is not assured. The future effect of changes in the real estate, financial and credit markets and the national and regional economy on the banking industry, generally, and Macatawa Bank Corporation, specifically, are also inherently uncertain. Failure to comply with the agreements in our Consent Order could result in further regulatory action which could have a material adverse effect on Macatawa Bank Corporation and its shareholders. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extend, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed in or implied by such forward-looking statements. Macatawa Bank Corporation does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

Risk factors include, but are not limited to, the risk factors described in "Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2009 and in "Part II, Item 1A - Risk Factors" of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

MACATAWA BANK CORPORATION
                                                                                                             CONSOLIDATED FINANCIAL SUMMARY
                                                                                                                                (Unaudited)
                                                                                                                                      
                                                                                        (Dollars in thousands except per share information)
                                                                                                                                        
                                                       Three Months Ended
    December 31               Twelve Months Ended
    December 31
                                        EARNINGS SUMMARY            2010             2009                     2010                     2009
                                   Total interest income      $ 17,084       $ 22,690               $ 76,003               $ 95,878
                                  Total interest expense          4,800           9,284                  25,436                  43,085
                                     Net interest income         12,284          13,406                  50,567                  52,793
                                 Provision for loan loss            400          21,600                  22,460                  74,340
       Net interest income after provision for loan loss         11,884         (8,194)                  28,107                (21,547)
                                                                                                                                      
                                     NON-INTEREST INCOME                                                                               
                                 Deposit service charges          1,027           1,131                   4,252                   4,776
                             Net gains on mortgage loans            538             112                   1,462                   2,388
                                              Trust fees            697             940                   3,079                   3,806
                             Net gains on security sales           --             --                    2,715                    -- 
                                                 Other           2,246           1,332                   6,515                   5,727
                               Total non-interest income          4,508           3,515                  18,023                  16,697
                                                                                                                                      
                                    NON-INTEREST EXPENSE                                                                               
                                   Salaries and benefits          5,336           5,812                  21,886                  24,349
                                               Occupancy            989           1,052                   4,056                   4,343
                                 Furniture and equipment            831             971                   3,554                   4,026
                                         FDIC assessment          1,025             987                   4,706                   4,495
        Administration and disposition of problem assets          4,196           3,670                  15,415                  11,395
                    Trade Partners litigation settlement           --             --                     --                    5,533
                                                   Other          3,180           3,423                  13,064                  13,250
                              Total non-interest expense         15,557          15,915                  62,681                  67,391
                         Income (loss) before income tax            835        (20,594)                (16,551)                (72,241)
                            Income tax expense (benefit)           --         (11,385)                   1,303                 (8,600)
                                                                                                                                      
                                       Net income (loss)         $ 835      $ (9,209)             $ (17,854)             $ (63,641)
                  Dividends declared on preferred shares                                                   --                    2,870
            Net income (loss) available to common shares         $ 835      $ (9,209)             $ (17,854)             $ (66,511)
                                                                                                                                      
                         Basic earnings per common share        $ 0.05       $ (0.52)               $ (1.01)               $ (3.81)
                       Diluted earnings per common share        $ 0.05       $ (0.52)               $ (1.01)               $ (3.81)
                              Return on average assets            0.20%           -1.95%                   -1.08%                   -3.16%
                                Return on average equity           4.93%          -38.85%                  -24.99%                  -50.60%
                                     Net interest margin           3.38%            3.04%                    3.28%                    2.82%
                                        Efficiency ratio          92.65%           94.05%                   91.39%                   96.98%
                                                                                                                                      
                                    BALANCE SHEET DATA                                                                                
                                                  Assets                                    December 31
    2010     December 31
    2009
                                 Cash and due from banks                                              $ 21,274               $ 24,687
     Federal funds sold and other short-term investments                                                214,853                  54,062
                           Securities available for sale                                                  9,120                 129,090
                             Securities held to maturity                                                     83                     414
                            Federal Home Loan Bank Stock                                                 11,932                  12,275
                                     Loans held for sale                                                  2,537                     649
                                             Total loans                                              1,217,196               1,510,816
                            Less allowance for loan loss                                                 47,426                  54,623
                                               Net loans                                              1,169,770               1,456,193
                             Premises and equipment, net                                                 56,988                  61,015
                                 Acquisition intangibles                                                    322                     592
                               Bank-owned life insurance                                                 25,014                  24,395
                                 Other real estate owned                                                 57,984                  37,183
                                            Other assets                                                  8,384                  29,617
                                                                                                                                      
                                            Total Assets                                           $ 1,578,261            $ 1,830,172
                                                                                                                                      
                    Liabilities and Shareholders' Equity                                                                               
                            Noninterest-bearing deposits                                             $ 255,897              $ 221,470
                               Interest-bearing deposits                                              1,020,723               1,194,867
                                          Total deposits                                              1,276,620               1,416,337
                                    Other borrowed funds                                                185,336                 278,023
                                       Subordinated debt                                                  1,650                   1,650
                                          Long-term debt                                                 41,238                  41,238
                                       Other liabilities                                                  5,575                   4,933
                                       Total Liabilities                                              1,510,419               1,742,181
                                                                                                                                      
                                    Shareholders' equity                                                 67,842                  87,991
                                                                                                                                      
              Total Liabilities and Shareholders' Equity                                           $ 1,578,261            $ 1,830,172
                                                                                                                                      
MACATAWA BANK CORPORATION
                                                                                                                                                                    SELECTED CONSOLIDATED FINANCIAL DATA
                                                                                                                                                                                             (Unaudited)
                                                                                                                                                                                                
                                                                                                                                                     (Dollars in thousands except per share information)
                                                                                                                                                        Quarterly                          Year to Date
                                                                                                                                                                                                
                                                             4th Qtr
    2010     3rd Qtr
    2010     2nd Qtr
    2010     1st Qtr
    2010     4th Qtr
    2009               2010               2009
                                         EARNINGS SUMMARY                                                                                                                                        
                                      Net interest income           $ 12,284           $ 12,437           $ 12,818           $ 13,028           $ 13,406         $ 50,567         $ 52,793
                                  Provision for loan loss                 400                 550               1,800              19,710              21,600            22,460            74,340
                                Total non-interest income               4,508               3,726               6,322               3,468               3,515            18,023            16,697
                               Total non-interest expense              15,557              14,910              14,289              17,926              15,915            62,681            67,391
                     Federal income tax expense (benefit)                --                 --                1,303                --             (11,385)             1,303           (8,600)
                                        Net income (loss)              $ 835               $ 703              $ 1,748          $ (21,140)          $ (9,209)       $ (17,854)       $ (63,641)
                   Dividends declared on preferred shares                --                   --                  --                  --                --                 --             2,870
             Net income (loss) available to common shares              $ 835              $ 703            $ 1,748         $ (21,140)          $ (9,209)       $ (17,854)       $ (66,511)
                                                                                                                                                                                                
                          Basic earnings per common share             $ 0.05             $ 0.04             $ 0.10           $ (1.19)           $ (0.52)         $ (1.01)         $ (3.81)
                        Diluted earnings per common share             $ 0.05             $ 0.04             $ 0.10           $ (1.19)           $ (0.52)         $ (1.01)         $ (3.81)
                                                                                                                                                                                                
                                              MARKET DATA                                                                                                                                        
                              Book value per common share             $ 1.96             $ 1.91             $ 1.87             $ 1.91             $ 3.10           $ 1.96           $ 3.10
                     Tangible book value per common share             $ 1.94             $ 1.89             $ 1.85             $ 1.88             $ 3.07           $ 1.94           $ 3.07
                            Market value per common share             $ 4.12             $ 1.48             $ 1.20             $ 1.75             $ 2.09           $ 4.12           $ 2.09
                              Average basic common shares          17,679,884          17,677,284          17,692,231          17,696,922          17,699,552         17,686,362         17,449,943
                            Average diluted common shares          17,679,884          17,677,284          17,692,231          17,696,922          17,699,552         17,686,362         17,449,943
                                 Period end common shares          17,679,621          17,680,211          17,682,458          17,696,423          17,698,108        17,679,621        17,698,108
                                                                                                                                                                                                
                                       PERFORMANCE RATIOS                                                                                                                                        
                                 Return on average assets                0.20%                0.17%                0.41%               -4.74%               -1.95%             -1.08%             -3.16%
                                 Return on average equity                4.93%                4.21%               10.32%             -101.04%              -38.85%            -24.99%            -50.60%
           Net interest margin (fully taxable equivalent)                3.38%                3.22%                3.29%                3.22%                3.04%              3.28%              2.82%
                                         Efficiency ratio               92.65%               92.25%               74.66%              108.67%               94.05%             91.39%             96.98%
              Full-time equivalent employees (period end)                  382                  387                  391                  375                  380                382                380
                                                                                                                                                                                                
                                            ASSET QUALITY                                                                                                                                        
                                        Gross charge-offs            $ 5,637            $ 5,114            $ 6,851           $ 14,235           $ 15,563         $ 31,838         $ 59,942
                                          Net charge-offs            $ 5,167            $ 4,644            $ 6,296           $ 13,550           $ 15,026         $ 29,657         $ 57,979
            Net charge-offs to average loans (annualized)                1.66%                1.41%                1.79%                3.68%                3.91%              2.18%              3.54%
                                      Nonperforming loans           $ 75,361           $ 84,448           $ 95,058          $ 102,548          $ 103,885         $ 75,361        $ 103,885
                 Other real estate and repossessed assets           $ 58,034           $ 54,112           $ 48,753           $ 45,874           $ 37,308         $ 58,034         $ 37,308
                       Nonperforming loans to total loans                6.19%                6.61%                6.96%                7.13%                6.88%              6.19%              6.88%
                     Nonperforming assets to total assets                8.45%                8.49%                8.72%                8.64%                7.71%              8.45%              7.71%
                                  Allowance for loan loss           $ 47,426           $ 52,192           $ 56,286           $ 60,782           $ 54,623         $ 47,426         $ 54,623
                   Allowance for loan loss to total loans                3.90%                4.08%                4.12%                4.23%                3.62%              3.90%              3.62%
           Allowance for loan loss to nonperforming loans               62.93%               61.80%               59.21%               59.27%               52.58%             62.93%             52.58%
                                                                                                                                                                                                
                                      CAPITAL & LIQUIDITY                                                                                                                                        
                         Average equity to average assets                4.14%                4.09%                4.02%                4.69%                5.01%              4.30%              6.24%
          Tier 1 capital to average assets (Consolidated)                5.82%                5.42%                5.25%                4.80%                6.01%              5.82%              6.01%
     Total capital to risk-weighted assets (Consolidated)                9.65%                9.30%                8.81%                8.27%                9.23%              9.65%              9.23%
                  Tier 1 capital to average assets (Bank)                7.10%                6.55%                6.31%                5.83%                6.58%              7.10%              6.58%
             Total capital to risk-weighted assets (Bank)                9.68%                9.23%                8.70%                8.14%                9.07%              9.68%              9.07%
                                                                                                                                                                                                
                                   END OF PERIOD BALANCES                                                                                                                                        
                                    Total portfolio loans        $ 1,217,196        $ 1,278,298        $ 1,364,881        $ 1,438,107        $ 1,510,816      $ 1,217,196      $ 1,510,816
                                           Earning assets           1,453,041           1,480,046           1,517,318           1,589,670           1,702,227         1,453,041         1,702,227
                                             Total assets           1,578,261           1,611,395           1,649,747           1,718,429           1,830,172         1,578,261         1,830,172
                                                 Deposits           1,276,620           1,279,710           1,312,701           1,370,767           1,416,337         1,276,620         1,416,337
                               Total shareholders' equity              67,842              66,992              66,241              66,917              87,991            67,842            87,991
                                                                                                                                                                                                
                                         AVERAGE BALANCES                                                                                                                                        
                                    Total portfolio loans        $ 1,244,148        $ 1,319,029        $ 1,408,672        $ 1,473,337        $ 1,538,038      $ 1,360,548      $ 1,637,143
                                           Earning assets           1,423,287           1,515,501           1,555,372           1,649,121           1,769,242         1,535,146         1,884,431
                                             Total assets           1,634,249           1,634,249           1,686,311           1,785,286           1,893,275         1,660,910         2,016,879
                                                 Deposits           1,224,156           1,297,498           1,341,243           1,394,701           1,467,497         1,313,886         1,563,466
                               Total shareholders' equity              67,735              66,860              67,733              83,692              94,819            71,445           125,776
CONTACT: Macatawa Bank Corporation
         Jon Swets, SVP and CFO
         616.494.7645
Source: Macatawa Bank Corporation