Macatawa Bank Corporation Reports Profitable Third Quarter, Continued Improvement in Key Financial Metrics

Addition of New Board Members Further Strengthens Company's Team

HOLLAND, Mich., Oct. 28, 2010 (GLOBE NEWSWIRE) -- Macatawa Bank Corporation (Nasdaq:MCBC) today announced its second consecutive quarter of profitability and improvements in several key capital and operational ratios in the third quarter 2010. The Company's results for the quarter included:

 
  Net income of $703,000, compared to a loss of $20.9 million in the same quarter of last year
 
  Improvement in asset quality metrics
  
   Non-performing loans down 13 percent compared to second quarter 2010
  
   Net charge-offs of $4.6 million, down 27 percent from second quarter 2010 ($6.3 million), down 66 percent from first quarter 2010 ($13.6 million), down 59 percent from the third quarter 2009 ($11.2 million)
  
   Provision for loan losses of $550,000, down from $21 million in third quarter 2009
 
 
  Continued year-over-year improvement in net interest margin, now at 3.22 percent
 
  Solid improvement in capital ratios – remain categorized as "adequately capitalized" under applicable regulatory capital requirements
 
  Stronger on-balance sheet liquidity
 
  Deposit accounts remain insured by the FDIC up to the maximum amount permitted by law

Macatawa reported net income available to common shares of $703,000, or $0.04 per diluted share, for the third quarter 2010, compared to a net loss available to common shares of $20.9 million, or $1.18 per diluted share, for the third quarter 2009 and net income of $1.7 million, or $0.10 per diluted share, for the second quarter 2010. For the first nine months of 2010, the Company's net loss available to common shares totaled $18.7 million, compared to a net loss of $57.3 million for the same period in 2009.

"We are pleased to have achieved two consecutive quarters of profitability and improvements in several capital and performance metrics," said Richard L. Postma, Chairman of Macatawa Bank Corporation. "These results are the product of hard and focused work by our people and the disciplined approach we continue to implement across the Company. But to be clear, two profitable quarters are only a beginning. We recognize that the results from the two most recent quarters are preceded by six consecutive quarters of high net losses. We must continue to focus our efforts to build accountability, confidence and performance in Macatawa Bank. 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 our consent order. We remain committed to doing the things necessary to achieve sustained profitability in order to serve West Michigan as a strong community bank. There is much work yet to be done."

Under the leadership of Mr. Postma and the Board of Directors, the Bank continues to implement improved business and banking principles, has added experienced personnel in both management and at the board level, has bolstered the Bank's risk management functions by adding key individuals in its Special Assets and Loan Review departments, and continues to implement new and more disciplined lending and loan risk management policies and procedures. Macatawa Bank continued its focus on improved asset quality during the third quarter by accelerating workout strategies with some of its more stressed loan customers, which resulted in significant reductions in the level of nonperforming loans at the end of the quarter.

The Company recently announced the appointment of five new Macatawa Bank Corporation Board members, further strengthening its leadership team. New directors Wayne J. Elhart, Charles C. Geenen, Birgit M. Klohs, Robert L. Herr, and Thomas P. Rosenbach each add complementary expertise to the Board of Directors.

Operating Results

Net interest income for the third quarter 2010 totaled $12.4 million, a decrease of $381,000 from the second quarter 2010 and a decrease of $757,000 from the third quarter 2009. Net interest margin was 3.22 percent, down 7 basis points from 3.29 percent on a consecutive quarter basis and up 39 basis points from 2.83 percent in the third quarter 2009. 

Average interest-earning assets for the third quarter 2010 declined $39.9 million from the second quarter 2010 and declined $355.5 million from the third quarter 2009, negatively impacting net interest income. The decline in assets continues to reflect the Bank's focus on strengthening liquidity, improving capital ratios, and reducing credit exposure within certain segments. 

Non-interest income of $3.7 million for the third quarter 2010 was up $92,000 from the third quarter 2009, but down $2.6 million from the second quarter 2010. The decrease from the second quarter 2010 was due to a one-time gain on the sale of securities in our portfolio recognized in the second quarter 2010. 

Non-interest expense was $14.9 million for the third quarter 2010, compared to $14.3 million for the second quarter 2010 and $15.7 million for the third quarter 2009.  In the most recent quarter, costs associated with the administration and disposition of problem loans and non-performing assets were $3.2 million, compared to $2.5 million in the second quarter 2010 and $3.1 million in the third quarter 2009. FDIC insurance assessments remained elevated at $1.2 million in the most recent quarter, compared to $1.2 million in the second quarter 2010 and $1.0 million in the third quarter 2009, as a result of higher assessment rates implemented by the FDIC. 

When excluding non-performing asset costs and FDIC assessments, non-interest expense was $10.5 million for the most recent quarter, down from $10.6 million in the second quarter 2010 and $11.6 million in the third quarter 2009. Salaries and employee benefits were consistent with the second quarter 2010 and down $616,000 from the third quarter of 2009.  This is the result of a reduction in overall staffing levels as the Company has scaled its operations to respond to the impact of the prolonged economic weakness.

Asset Quality

The provision for loan losses of $550,000 for the third quarter 2010 declined by $1.3 million from the second quarter 2010, and was down $21.0 million from the third quarter 2009.   Net charge-offs were $4.6 million for the third quarter 2010, compared to $6.3 million for the second quarter 2010 and $11.2 million for the third quarter 2009. 

The allowance for loan losses of $52.2 million was 4.08 percent of total loans at Sept. 30, 2010, compared with 4.12 percent at June 30, 2010 and 3.09 percent at Sept. 30, 2009. The loan loss allowance coverage of non-performing loans was 61.8 percent of non-performing loans at Sept. 30, 2010, compared to 59.2 percent at June 30, 2010 and 54.5 percent at Sept. 30, 2009.

At Sept. 30, 2010, the Company's non-performing loans were $84.4 million (6.61 percent of total loans) compared to $95.1 million (6.96 percent of total loans) at June 30, 2010 and $103.9 million (6.88 percent of total loans) at December 31, 2009. Sales of foreclosed properties continued to improve as compared to 2009, with the Bank selling nearly $16.0 million of real estate in the first nine months of 2010 compared to sales of $7.5 million for all of 2009.

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

Dollars in 000s               September 30,               June 30,               March 31,               December 31,               September 30,
                                                                     2010                   2010                    2010                       2009                        2009
                                                                                                                                                                          
                        Commercial Real Estate                     $72,310                $81,319                 $81,669                    $87,321                     $77,461
                     Commercial and Industrial                       8,326                 10,418                  17,782                     12,713                       8,477
                        Total Commercial Loans                      80,636                 91,737                  99,451                    100,034                      85,938
                    Residential Mortgage Loans                       2,702                  1,976                   1,849                      2,719                         917
                                Consumer Loans                       1,110                  1,345                   1,248                      1,132                       1,305
                    Total Non-Performing Loans                     $84,448                $95,058                $102,548                   $103,885                     $88,160
                                                                                                                                                                          
               Residential Developer Loans (a)                     $32,822                $37,939                 $36,594                    $50,002                     $43,989
                                                                                                                                                                          
(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 $138.6 million, or 8.49 percent of total assets, at September 30, 2010. A break-down of non-performing assets is shown in the table below.

Dollars in 000s     September 30,     June 30,     March 31,     December 31,     September 30,
                                             2010         2010          2010             2009              2009
                                                                                                          
            Non-Performing Loans           $84,448      $95,058      $102,548         $103,885           $88,160
        Other Repossessed Assets               130           81            84              124               224
         Other Real Estate Owned            53,982       48,672        45,790           37,184            33,419
     Total Non-Performing Assets          $138,560     $143,811      $148,422         $141,193          $121,803

Balance Sheet, Liquidity and Capital

Total assets were $1.61 billion at Sept. 30, 2010, a decrease of $219 million from $1.83 billion at Dec. 31, 2009. Total loans were $1.28 billion at Sept. 30, 2010, down $233 million from $1.51 billion at Dec. 31, 2009.

Commercial loans decreased by $199.0 million, representing the majority of the decrease since Dec. 31, 2009. The commercial real estate loan portfolio was reduced by $115.4 million as the Company continues its efforts to reduce exposure in this segment. Commercial and industrial loans declined by $83.6 million, due in part to a general decline in business activity. Of the decline in commercial real estate loans, $47.0 million of the decrease was in loans to residential developers, the portfolio that has caused the majority of stress within the Company's commercial loan portfolio.

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

Dollars in 000s           September 30,             June 30,            March 31,           December 31,           September 30,
                                                                     2010                 2010                 2010                   2009                    2009
                                                                                                                                                             
                      Construction and development                $139,579             $150,443             $156,867               $162,615                $195,712
                      Other commercial real estate                 548,071              582,882              611,904                640,437                 638,952
           Commercial Loans Secured by Real Estate                                                                                                            
                                                                  687,650              733,325              768,771                803,052                 834,664
                         Commercial and Industrial                 285,924              314,087              344,294                369,523                 375,636
                          Total Commercial Loans                 $973,574           $1,047,412           $1,113,065             $1,172,575              $1,210,300
                                                                                                                                                             
                   Residential Developer Loans (a)                $106,372             $120,344             $130,727               $153,327                $164,852
                                                                                                                                                             
(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, including out-of-market deposits acquired through brokers, by $139.7 million and to reduce other borrowed funds by $61.7 million. Total deposits were $1.28 billion at Sept. 30, 2010, down $136.6 million from $1.42 billion at Dec. 31, 2009, primarily from the run-off of brokered deposits. Core customer deposit accounts have remained stable throughout this year and continue to be fully insured to the highest levels available under the FDIC insurance programs. 

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. Despite these ratios, the Bank was categorized as "adequately capitalized" as its total risk-based capital ratio of 9.23 percent was below the 10.0 percent minimum ordinarily required to be categorized as "well capitalized." Because the Bank is subject to a consent order, the Bank cannot be categorized as "well capitalized" regardless of its capital levels. At Sept. 30, 2010, the Bank did not have capital at levels required by its consent order. While the capital ratios were below the consent order requirements, they continued to improve in the third quarter 2010. The total risk-based capital ratio of 9.23 percent is up significantly from its lowest point of 8.14 percent at March 31, 2010.

About Macatawa Bank                                                                  

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," "continue," "return to," "yet," "focus," "goal," 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 return to "well capitalized" status and our ability to achieve 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, 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                     Nine Months Ended
                                                                              September 30                          September 30
                                        EARNINGS SUMMARY            2010               2009               2010               2009
                                   Total interest income      $ 18,444         $ 23,534         $ 58,919         $ 73,189
                                  Total interest expense          6,007            10,340            20,636            33,801
                                    Net interest income         12,437            13,194            38,283            39,388
                                 Provision for loan loss            550            21,580            22,060            52,740
      Net interest income after provision for loan loss         11,887           (8,386)            16,223          (13,352)
                                                                                                                            
                                     NON-INTEREST INCOME                                                                     
                                 Deposit service charges          1,097             1,205             3,225             3,644
                             Net gains on mortgage loans            345               153               925             2,276
                                              Trust fees            695               948             2,382             2,865
                             Net gains on security sales           --               --              2,715              -- 
                                                 Other           1,589             1,328             4,269             4,396
                              Total non-interest income          3,726             3,634            13,516            13,181
                                                                                                                            
                                    NON-INTEREST EXPENSE                                                                     
                                   Salaries and benefits          5,546             6,162            16,550            18,537
                                               Occupancy          1,026             1,078             3,067             3,290
                                 Furniture and equipment            854             1,010             2,723             3,056
                                         FDIC assessment          1,232             1,030             3,682             3,509
        Administration and disposition of problem assets          3,220             3,128            11,219             7,726
                    Trade Partners litigation settlement           --               --               --              5,533
                                                   Other          3,032             3,323             9,884             9,825
                             Total non-interest expense         14,910            15,731            47,125            51,476
                         Income (loss) before income tax            703          (20,483)          (17,386)          (51,647)
                            Income tax expense (benefit)           --              (600)             1,303             2,786
                                                                                                                            
                                       Net income (loss)         $ 703       $ (19,883)       $ (18,689)       $ (54,433)
                  Dividends declared on preferred shares             --               991              --              2,869
            Net income (loss) available to common shares         $ 703       $ (20,874)       $ (18,689)       $ (57,302)
                                                                                                                            
                         Basic earnings per common share        $ 0.04         $ (1.18)         $ (1.06)         $ (3.30)
                       Diluted earnings per common share        $ 0.04         $ (1.18)         $ (1.06)         $ (3.30)
                              Return on average assets            0.17%             -3.97%             -1.46%             -3.53%
                                Return on average equity           4.21%            -67.58%            -34.28%            -53.28%
                                     Net interest margin           3.22%              2.83%              3.24%              2.75%
                                        Efficiency ratio          92.25%             93.48%             90.98%             97.92%
                                                                                                                            
                                    BALANCE SHEET DATA                            Sept 30        December 31            Sept 30
                                                  Assets                              2010               2009               2009
                                 Cash and due from banks                        $ 36,889         $ 24,687         $ 22,441
     Federal funds sold and other short-term investments                          161,749            54,062           147,527
                           Securities available for sale                           20,128           129,090           141,825
                             Securities held to maturity                               83               414               655
                            Federal Home Loan Bank Stock                           12,275            12,275            12,275
                                     Loans held for sale                            7,751               649             2,934
                                             Total loans                        1,278,298         1,510,816         1,556,903
                            Less allowance for loan loss                           52,192            54,623            48,049
                                              Net loans                        1,226,106         1,456,193         1,508,854
                             Premises and equipment, net                           57,549            61,015            61,738
                               Bank-owned life insurance                           24,848            24,395            24,165
                                 Other real estate owned                           53,982            37,183            33,419
                                            Other assets                           10,035            30,209            25,939
                                                                                                                            
                                            Total Assets                     $ 1,611,395      $ 1,830,172      $ 1,981,772
                                                                                                                            
                    Liabilities and Shareholders' Equity                                                                     
                            Noninterest-bearing deposits                       $ 249,364        $ 221,470        $ 221,967
                               Interest-bearing deposits                        1,030,346         1,194,867         1,324,344
                                         Total deposits                        1,279,710         1,416,337         1,546,311
                                    Other borrowed funds                          216,336           278,023           288,023
                                       Subordinated debt                            1,650             1,650             1,650
                                          Long-term debt                           41,238            41,238            41,238
                                       Other liabilities                            5,469             4,933             6,876
                                       Total Liabilities                        1,544,403         1,742,181         1,884,098
                                                                                                                            
                                    Shareholders' equity                           66,992            87,991            97,674
                                                                                                                            
              Total Liabilities and Shareholders' Equity                     $ 1,611,395      $ 1,830,172      $ 1,981,772
                                                                                                                                                   
                                                  MACATAWA BANK CORPORATION                                                                                                                               
                                                          SELECTED CONSOLIDATED FINANCIAL DATA                                                                                                            
                                              (Unaudited)                                                                                                                                                  
                                                                                                                                                                                                          
                                           (Dollars in thousands except per share information)                                                                                                             
                                                                                                                                             Quarterly                          Year to Date                     
                                                                                                                                                                                                          
                                                                    3rd Qtr           2nd Qtr            1st Qtr            4th Qtr            3rd Qtr                                                         
                                                                       2010              2010               2010               2009               2009               2010               2009                     
                                         EARNINGS SUMMARY                                                                                                                                                  
                                      Net interest income         $ 12,437        $ 12,818         $ 13,028         $ 13,406         $ 13,194         $ 38,283         $ 39,388                     
                                  Provision for loan loss               550            1,800            19,710            21,600            21,580            22,060            52,740                     
                                Total non-interest income             3,726            6,322             3,468             3,515             3,634            13,516            13,181                     
                               Total non-interest expense            14,910           14,289            17,926            15,915            15,731            47,125            51,476                     
                     Federal income tax expense (benefit)              --             1,303              --           (11,385)             (600)             1,303             2,786                     
                                        Net income (loss)               703            1,748          (21,140)           (9,209)          (19,883)          (18,689)          (54,433)                     
                   Dividends declared on preferred shares                --               --                --                --               991                --             2,869                     
             Net income (loss) available to common shares            $ 703         $ 1,748       $ (21,140)        $ (9,209)       $ (20,874)       $ (18,689)       $ (57,302)                     
                                                                                                                                                                                                          
                          Basic earnings per common share           $ 0.04          $ 0.10         $ (1.19)         $ (0.52)         $ (1.18)         $ (1.06)         $ (3.30)                     
                        Diluted earnings per common share           $ 0.04          $ 0.10         $ (1.19)         $ (0.52)         $ (1.18)         $ (1.06)         $ (3.30)                     
                                                                                                                                                                                                          
                                                                                                                                                                                                          
                                              MARKET DATA                                                                                                                                                  
                              Book value per common share           $ 1.91          $ 1.87           $ 1.91           $ 3.10           $ 3.64           $ 1.91           $ 3.64                     
                     Tangible book value per common share           $ 1.89          $ 1.85           $ 1.88           $ 3.07           $ 3.62           $ 1.89           $ 3.61                     
                            Market value per common share           $ 1.48          $ 1.20           $ 1.75           $ 2.09           $ 2.60           $ 1.48           $ 2.60                     
                              Average basic common shares        17,677,284       17,692,231        17,696,922        17,699,552         17,669,440         17,688,545         17,365,840                     
                            Average diluted common shares        17,677,284       17,692,231        17,696,922        17,699,552         17,669,440         17,688,545         17,365,840                     
                                 Period end common shares        17,680,211       17,682,458        17,696,423        17,698,108        17,701,817        17,680,211        17,701,817                     
                                                                                                                                                                                                          
                                                                                                                                                                                                          
                                       PERFORMANCE RATIOS                                                                                                                                                  
                                 Return on average assets              0.17%             0.41%             -4.74%             -1.95%             -3.97%             -1.46%             -3.53%                     
                                 Return on average equity              4.21%            10.32%           -101.04%            -38.85%            -67.58%            -34.28%            -53.28%                     
           Net interest margin (fully taxable equivalent)              3.22%             3.29%              3.22%              3.04%              2.83%              3.24%              2.75%                     
                                         Efficiency ratio             92.25%            74.66%            108.67%             94.05%             93.48%             90.98%             97.92%                     
              Full-time equivalent employees (period end)                387               391                375                380                395                387                395                     
                                                                                                                                                                                                          
                                            ASSET QUALITY                                                                                                                                                  
                                        Gross charge-offs          $ 5,114         $ 6,851         $ 14,235         $ 15,563         $ 11,758         $ 26,201         $ 32,622                     
                                          Net charge-offs          $ 4,644         $ 6,296         $ 13,550         $ 15,026         $ 11,152         $ 24,491         $ 42,953                     
            Net charge-offs to average loans (annualized)              1.41%             1.79%              3.68%              3.91%              2.79%              2.33%              3.43%                     
                                      Nonperforming loans         $ 84,448        $ 95,058        $ 102,548        $ 103,885         $ 88,160         $ 84,448         $ 88,160                     
                 Other real estate and repossessed assets         $ 54,112        $ 48,753         $ 45,874         $ 37,308         $ 33,643         $ 52,436         $ 33,643                     
                       Nonperforming loans to total loans              6.61%             6.96%              7.13%              6.88%              5.66%              6.61%              5.66%                     
                     Nonperforming assets to total assets              8.49%             8.72%              8.64%              7.71%              6.15%              8.49%              6.15%                     
                                  Allowance for loan loss         $ 52,192        $ 56,286         $ 60,782         $ 54,623         $ 48,049         $ 52,192         $ 48,049                     
                   Allowance for loan loss to total loans              4.08%             4.12%              4.23%              3.62%              3.09%              4.08%              3.09%                     
           Allowance for loan loss to nonperforming loans             61.80%            59.21%             59.27%             52.58%             54.50%             61.80%             54.50%                     
                                                                                                                                                                                                          
                                      CAPITAL & LIQUIDITY                                                                                                                                                  
          Average equity to average assets (Consolidated)              4.09%             4.02%              4.69%              5.01%              5.94%              4.27%              6.62%                     
          Tier 1 capital to average assets (Consolidated)              5.42%             5.25%              4.80%              6.01%              6.30%              5.42%              6.30%                     
     Total capital to risk-weighted assets (Consolidated)              9.30%             8.81%              8.27%              9.23%              9.46%              9.30%              9.46%                     
                  Tier 1 capital to average assets (Bank)              6.55%             6.31%              5.83%              6.58%              6.70%              6.55%              6.70%                     
             Total capital to risk-weighted assets (Bank)              9.23%             8.70%              8.14%              9.07%              9.32%              9.23%              9.32%                     
                                                                                                                                                                                                          
                                   END OF PERIOD BALANCES                                                                                                                                                  
                                    Total portfolio loans      $ 1,278,298      $ 1,364,881      $ 1,438,107      $ 1,510,816      $ 1,556,903      $ 1,278,298      $ 1,556,903                     
                                  Interest earning assets         1,480,046        1,517,318         1,589,670         1,702,227         1,857,467         1,480,046         1,857,467                     
                                             Total assets         1,611,395        1,649,747         1,718,429         1,830,172         1,981,772         1,611,395         1,981,772                     
                                                 Deposits         1,279,710        1,312,701         1,370,767         1,416,337         1,546,311         1,279,710         1,546,311              
                               Total shareholders' equity            66,992           66,241            66,917            87,991            97,674            66,992            97,674              
                                                                                                                                                                                                          
                                                                                                                                                                                                          
                                         AVERAGE BALANCES                                                                                                                                           
                                    Total portfolio loans      $ 1,319,029      $ 1,408,672      $ 1,473,337      $ 1,538,038      $ 1,598,743      $ 1,399,781      $ 1,670,541              
                                  Interest earning assets         1,515,501        1,555,372         1,649,121         1,769,242         1,870,995         1,572,842         1,923,249              
                                             Total assets         1,634,249        1,686,311         1,785,286         1,893,275         2,001,415         1,701,391         2,055,703              
                                                 Deposits         1,297,498        1,341,243         1,394,701         1,467,497         1,554,127         1,344,125         1,595,808              
                               Total shareholders' equity            66,860           67,733            83,692            94,819           117,687            72,695           136,209
CONTACT:  Macatawa Bank Corporation
          Jon Swets, SVP and CFO
          616.494.7645