UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

[ ] TRANSITION REPORT UNDER 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 issuer as specified in its charter)

Michigan
(State of other jurisdiction of
incorporation or organization)

38-3391345
(I.R.S. Employer
Identification No.)

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

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

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

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

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 whether the registrant is a large accelerated filer, an accelerated file, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [__] Accelerated filer [ X ] Non-accelerated filer [__]

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

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 17,000,977 shares of the Company’s Common Stock (no par value) were outstanding as of November 7, 2007.

INDEX

	Page Number


Part I Financial Information:

Item 1.
Consolidated Financial Statements		3
Notes to Consolidated Financial Statements		9

Item 2.
Management's Discussion and Analysis of
Results of Operations and Financial Condition		22

Item 3.
Quantitative and Qualitative Disclosures
About Market Risk		31

Item 4.
Controls and Procedures		32

Part II Other Information:

Item 1.
Legal Proceedings		32

Item 1.A.
Risk Factors		34

Item 2.
Changes in Securities and Use of Proceeds		34

Item 3.
Defaults Upon Senior Securities		35

Item 4.
Submission of Matters to a Vote of Security Holders		35

Item 5.
Other Information		35

Item 6.
Exhibits		35

Signatures		36

Part I Financial Information
Item 1.

MACATAWA BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
As of September 30, 2007 (unaudited) and December 31, 2006

(dollars in thousands)	September 30, 2007			December 31, 2006


ASSETS
Cash and cash equivalents
Cash and due from banks	$	33,186		$	39,882
Federal funds sold		--			--

Total cash and cash equivalents		33,186			39,882

Securities available for sale		200,058			198,546
Securities held to maturity		1,920			2,711
Federal Home Loan Bank stock		12,275			12,275
Loans held for sale		1,241			1,547
Total loans		1,736,370			1,711,450
Allowance for loan losses		(25,916	)		(23,259	)

Net loans		1,710,454			1,688,191

Premises and equipment - net		64,054			60,731
Accrued interest receivable		11,263			11,233
Goodwill		25,919			23,915
Acquisition intangibles		3,135			1,563
Bank-owned life insurance		22,476			21,843
Other assets		16,752			12,379


Total assets	$	2,102,733		$	2,074,816


LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
Noninterest-bearing	$	170,792		$	180,032
Interest-bearing		1,351,211			1,487,525

Total deposits		1,522,003			1,667,557

Federal funds purchased		67,974			11,990
Other borrowed funds		299,093			192,018
Long-term debt		41,238			41,238
Accrued expenses and other liabilities		8,694			5,164

Total liabilities		1,939,002			1,917,967

Shareholders' equity
Preferred stock, no par value, 500,000 shares authorized;
no shares issued and outstanding
Common stock, no par value, 40,000,000 shares authorized;
16,982,794 shares and 16,254,619 issued and outstanding as of
September 30, 2007 and December 31, 2006, respectively		163,514			153,728
Retained earnings		612			4,840
Accumulated other comprehensive loss		(395	)		(1,719	)

Total shareholders' equity		163,731			156,849


Total liabilities and shareholders' equity	$	2,102,733		$	2,074,816

See accompanying notes to consolidated financial statements

MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three and Nine Month Periods Ended September 30, 2007 and 2006
(unaudited)

(dollars in thousands, except per share data)	Three Months Ended September 30, 2007		Three Months Ended September 30, 2006		Nine Months Ended September 30, 2007		Nine Months Ended September 30, 2006


Interest income
Loans, including fees	$	32,633	$	32,581	$	98,195	$	91,849
Securities		2,208		1,914		6,616		5,397
FHLB Stock		140		99		420		462
Other		410		185		774		208

Total interest income		35,391		34,779		106,005		97,916

Interest expense
Deposits		15,533		14,340		46,067		38,654
Other		4,023		3,356		11,709		8,890

Total interest expense		19,556		17,696		57,776		47,544


Net interest income		15,835		17,083		48,229		50,372

Provision for loan losses		3,640		490		5,480		1,990


Net interest income after
provision for loan losses		12,195		16,593		42,749		48,382

Noninterest income
Service charges and fees		1,309		1,256		3,757		3,642
Gain on sales of loans		255		365		1,068		1,288
Trust fees		1,263		871		3,669		2,493
Other		1,204		1,011		3,292		2,903

Total noninterest income		4,031		3,503		11,786		10,326

Noninterest expense
Salaries and benefits		6,461		6,193		18,937		18,524
Occupancy of premises		1,057		910		3,132		2,630
Furniture and equipment		983		790		2,807		2,362
Legal and professional fees		313		213		870		694
Marketing and promotion		345		319		1,008		996
Data processing fees		478		440		1,428		1,304
Other		3,095		2,392		8,943		7,166

Total noninterest expenses		12,732		11,257		37,125		33,676


Income before income tax expense		3,494		8,839		17,410		25,032

Income tax expense		1,037		2,830		5,529		8,046


Net income	$	2,457	$	6,009	$	11,881	$	16,986


Basic earnings per share	$	.14	$	.35	$	.69	$	1.00
Diluted earnings per share		.14		.35		.68		.98
Cash dividends per share		.13		.11		.38		.34

See accompanying notes to consolidated financial statements

MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Nine Month Periods Ended September 30, 2007 and 2006
(unaudited)

(dollars in thousands)	Three Months Ended September 30, 2007		Three Months Ended September 30, 2006		Nine Months Ended September 30, 2007		Nine Months Ended September 30, 2006


Net income	$	2,457	$	6,009	$	11,881	$	16,986
Other comprehensive income/(loss), net of tax:
Net change in unrealized gains/(losses) on
securities available for sale		1,690		2,022		490		437

Net change in unrealized gains/(losses) on
derivative instruments		698		759		834		129


Comprehensive income	$	4,845	$	8,790	$	13,205	$	17,552

See accompanying notes to consolidated financial statements

MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Nine Month Periods Ended September 30, 2007 and 2006
(unaudited)

(dollars in thousands, except per share data)	Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity

Balance, January 1, 2006	$	136,583		$	8,040		$	(2,879	)	$	141,744

Net income for nine months ended September 30, 2006..					16,986						16,986

Other comprehensive income/(loss), net of tax:
Net change in unrealized gain/(loss) on securities
available for sale								437			437
Net change in unrealized gain/(loss) on derivative
instruments								129			129

Comprehensive income											17,552

Issued 79,217 shares for stock option exercises (net of
4,994 shares exchanged and including $79 of tax benefit)		1,075									1,075

Issued 513,283 shares in payment of 5% stock dividend		15,127			(15,180	)					(53	)

Issued 5,401,190 shares in payment of 3-for-2 stock split

Stock compensation expense		548									548

Cash dividends at $.34 per share					(5,741	)					(5,741	)


Balance, September 30, 2006	$	153,333		$	4,105		$	(2,313	)	$	155,125


Balance, January 1, 2007	$	153,728		$	4,840		$	(1,719	)	$	156,849

Net income for nine months ended September 30, 2007					11,881						11,881

Other comprehensive income/(loss), net of tax:
Net change in unrealized gain/(loss) on securities
available for sale								490			490
Net change in unrealized gain/(loss) on derivative
instruments								834			834

Comprehensive income											13,205

Issued 38,436 shares for stock option exercises (net
of 3,833 shares exchanged and including $57 of tax benefit)		284									284

Stock compensation expense		445									445

Issued 136,936 shares for acquisition of Smith & Associates		3,150									3,150

Issued 819,223 shares in payment of 5% stock dividend		9,518			(9,536	)					(18	)

Repurchased 264,500 shares of stock		(3,611	)								(3,611	)

Cash dividends at $.38 per share					(6,573	)					(6,573	)


Balance, September 30, 2007	$	163,514		$	612		$	(395	)	$	163,731

See accompanying notes to consolidated financial statements

MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Month Periods Ended September 30, 2007 and 2006
(unaudited)

(dollars in thousands)	Nine Months Ended September 30, 2007			Nine Months Ended September 30, 2006


Cash flows from operating activities
Net income	$	11,881		$	16,986
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization		2,675			2,561
Stock compensation expense		445			548
Provision for loan losses		5,480			1,990
Origination of loans for sale		(70,169	)		(76,602	)
Proceeds from sales of loans originated for sale		71,543			77,989
Gain on sales of loans		(1,068	)		(1,288	)
Net change in:
Accrued interest receivable and other assets		1,720			(2,915	)
Bank-owned life insurance		(633	)		(744	)
Accrued expenses and other liabilities		2,145			1,305

Net cash from operating activities		24,019			19,830

Cash flows from investing activities
Loan originations and payments, net		(32,685	)		(137,481	)
Purchases of securities available for sale		(22,154	)		(37,692	)
Repurchases by FHLB of FHLB stock		---			995
Maturities and calls of securities available for sale		21,434			1,990
Maturities of securities held to maturity		715			---
Principal paydowns on securities		93			1,355
Additions to premises and equipment		(5,705	)		(7,056	)

Net cash used in investing activities		(38,302	)		(177,889	)

Cash flows from financing activities
Net increase (decrease) in deposits		(145,554	)		125,044
Net increase (decrease) in short term borrowings		55,984			(25,809	)
Proceeds from other borrowed funds		145,000			95,000
Repayments of other borrowed funds		(37,925	)		(38,106	)
Cash dividends paid		(6,591	)		(5,794	)
Repurchases of stock		(3,611	)		---
Proceeds from exercises of stock options, including tax benefit		284			996

Net cash from financing activities		7,587			151,331


Net change in cash and cash equivalents		(6,696	)		(6,728	)

Cash and cash equivalents at beginning of period		39,882			49,101


Cash and cash equivalents at end of period	$	33,186		$	42,373

See accompanying notes to consolidated financial statements

MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Nine Month Periods Ended September 30, 2007 and 2006
(unaudited)

(dollars in thousands)	Nine Months Ended September 30, 2007		Nine Months Ended September 30, 2006


Supplemental cash flow information
Interest paid	$	57,371	$	46,885
Income taxes paid		5,350		9,265

Supplemental noncash disclosures:
Transfers from loans to other real estate		4,942		2,446

Acquisition of Smith & Associates:
Acquisition intangibles recorded		3,924		--
Other liabilities assumed		774		--
Common stock issued		3,150		--

See accompanying notes to consolidated financial statements

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Macatawa Bank, and its wholly-owned subsidiary, Macatawa Bank Mortgage Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company also owns all of the common stock of Macatawa Statutory Trust I and Macatawa Statutory Trust II. These are grantor trusts that issued trust preferred securities and are not consolidated with the Company per FASB Interpretation No. 46.

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s 2006 Annual Report containing financial statements for the year ended December 31, 2006.

All per share amounts and average shares outstanding have been adjusted for all periods presented to reflect the 5% stock dividend distributed on May 30, 2007, the 5% stock dividend distributed on May 30, 2006 and the 3-for-2 stock split distributed on June 29, 2006.

Stock Compensation: Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-based Payment, using the modified prospective transition method. Accordingly, the Company has recorded stock-based compensation cost using the fair value method starting in 2006. For the three month period ended September 30, 2007, the Company recorded compensation cost for stock options of $110,000, or $99,000 after tax, representing $0.01 per share. For the nine month period ended September 30, 2007, the Company recorded compensation cost for stock options of $337,000, or $303,000 after tax, representing $0.02 per share. For the three month period ended September 30, 2006, the Company recorded compensation cost for stock options of $174,000, or $138,000 after tax, representing $0.01 per share. For the nine month period ended September 30, 2006 the Company recorded compensation cost for stock options of $548,000, or $434,000 after tax, representing $0.03 per share.

The Company’s stock compensation plan allows for the issuance of restricted stock awards. Compensation expense is based upon the market price of the Company’s stock at the date of grant and is recognized over the vesting period of the awards. The Company recorded compensation expense of $36,000 and $108,000 for restricted stock awards for the three and nine months ended September 30, 2007, respectively. There was no compensation expense recorded for restricted stock awards for the three and nine months ended September 30, 2006.

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

New Accounting Pronouncements: The Company adopted FASB Interpretation 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), as of January 1, 2007. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no affect on the Company’s financial statements.

The Company and its subsidiaries are subject to U.S. federal income tax. The Company is no longer subject to examination by taxing authorities for years before 2002. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company did not have any amounts accrued for interest and penalties at September 30, 2007.

In February 2007, the Financial Accounting Standards Board (FASB) issued Statement No. 159, The Fair Value Option for Financial Assets and Liabilities. Adoption of this statement is required for January 1, 2008. Early adoption was allowed, effective to January 1, 2007, if that election was made by April 30, 2007. This statement allows, but does not require, companies to record certain assets and liabilities at their fair value. The fair value determination is made at the instrument level, so similar assets or liabilities could be partially accounted for using the historical cost method, while other similar assets or liabilities are accounted for using the fair value method. Changes in fair value are recorded through the income statement in subsequent periods. The statement provides for a one time opportunity to transfer existing assets and liabilities to fair value at the point of adoption with a cumulative effect adjustment recorded against equity. After adoption, the election to report assets or liabilities at fair value must be made at the point of their inception. We have not yet determined which, if any, assets or liabilities we may determine to report using the fair value accounting method. As such, we have not determined the impact that the adoption of this statement may have on our financial statement.

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This Statement establishes a fair value hierarchy about the assumptions used to measure fair value and clarifies assumptions about risk and the effect of a restriction on the sale or use of an asset. The standard is effective for fiscal years beginning after November 15, 2007. The Company has not completed its evaluation of the impact of the adoption of this standard.

NOTE 2 – ACQUISITION

On January 1, 2007, the Company completed the acquisition of Benj. A. Smith & Associates, Ltd. ("Smith & Associates").

Under the terms of the transaction, Smith & Associates was merged into the Company in exchange for 143,783 shares of common stock. The Company in turn contributed the business to Macatawa Bank. The value of the common stock was based on the average closing price during the month of September 2006 ($21.91 per share). Share and per share amounts have been adjusted for the 5% stock dividend distributed on May 30, 2007.

The acquisition was accounted for under the purchase method of accounting. Accordingly, customer relationship intangibles valued at $1,920,000 are being amortized using the straight line method over its estimated useful life. The resulting goodwill was $2,004,000 which will be assessed annually for impairment, with any subsequent impairment recognized in the income statement.

Under the terms of the transaction, one $300,000 contingent payment will also be made if revenue from transferred account balances, principal additions to transferred account balances generated by Mr. Smith and new accounts generated by Mr. Smith exceeds $1,600,000 in 2007 and an additional $300,000 contingent payment will be paid if such revenue exceeds $1,700,000 in 2008. The contingent payments will be paid in the form of common stock of Macatawa Bank Corporation.

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 3 — SECURITIES

The amortized cost and fair values of securities were as follows (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Values


September 30, 2007
Available for Sale:
U.S. Treasury and federal
agency securities	$	149,522	$	482	$	(898	)	$	149,106
State and municipal bonds		49,665		532		(222	)		49,975
Other equity securities		1,000		--		(23	)		977


	$	200,187	$	1,014	$	(1,143	)	$	200,058

Held to Maturity:
State and municipal bonds	$	1,920	$	39	$	(3	)	$	1,956


December 31, 2006
Available for Sale:
U.S. Treasury and federal
agency securities	$	148,753	$	182	$	(2,025	)	$	146,910
State and municipal bonds		49,676		1,042		(63	)		50,655
Other equity securities		1,000		--		(19	)		981


	$	199,429	$	1,224	$	(2,107	)	$	198,546

Held to Maturity:
State and municipal bonds	$	2,711	$	56	$	(5	)	$	2,762

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 3 – SECURITIES (Continued)

Securities with unrealized losses at September 30, 2007 and December 31, 2006, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

	Less than 12 Months					12 Months or More					Total

Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss


September 30, 2007

U.S. Treasury and federal
agency securities	$	--	$	--		$	93,338	$	(898	)	$	93,338	$	(898	)
State and municipal bonds		10,060		(105	)		4,732		(120	)		14,792		(225	)
Other equity securities		--		--			977		(23	)		977		(23	)


Total temporarily impaired	$	10,060	$	(105	)	$	99,047	$	(1,041	)	$	109,107	$	(1,146	)

	Less than 12 Months					12 Months or More					Total

Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss


December 31, 2006

U.S. Treasury and federal
agency securities	$	5,079	$	(15	)	$	104,727	$	(2,010	)	$	109,806	$	(2,025	)
State and municipal bonds		864		--			5,561		(68	)		6,425		(68	)
Other equity securities		--		--			981		(19	)		981		(19	)


Total temporarily impaired	$	5,943	$	(15	)	$	111,269	$	(2,097	)	$	117,212	$	(2,112	)

For unrealized losses on securities, no loss has been recognized into income because management has the intent and ability to hold these securities for the foreseeable future and the declines are largely due to differences in market interest rates as compared to those of the underlying securities. The declines in fair value are considered temporary and are expected to recover as the bonds approach their maturity date.

Contractual maturities of debt securities at September 30, 2007 were as follows (dollars in thousands):

	Held-to-Maturity Securities				Available-for-Sale Securities

	Amortized Cost		Fair Value		Amortized Cost		Fair Value


Due in one year or less	$	--	$	--	$	21,750		21,624
Due from one to five years		313		309		130,217		130,005
Due from five to ten years		238		251		25,882		26,177
Due after ten years		1,369		1,396		21,338		21,275

	$	1,920	$	1,956	$	199,187	$	199,081

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 4 – LOANS

Loans were as follows (in thousands):

	September 30, 2007			December 31, 2006


Commercial	$	427,508		$	416,135
Commercial mortgage		872,173			875,717
Residential mortgage		245,664			224,836
Consumer		191,025			194,762

		1,736,370			1,711,450
Allowance for loan losses		(25,916	)		(23,259	)

	$	1,710,454		$	1,688,191

Activity in the allowance for loan losses was as follows (in thousands):


	Three Months Ended September 30, 2007			Three Months Ended September 30, 2006			Nine Months Ended September 30, 2007			Nine Months Ended September 30, 2006


Balance at beginning of period	$	23,943		$	22,145		$	23,259		$	20,992
Provision for loan losses		3,640			490			5,480			1,990
Charge-offs		(1,704	)		(278	)		(2,999	)		(858	)
Recoveries		37			70			176			303

Balance at end of period	$	25,916		$	22,427		$	25,916		$	22,427

Impaired loans were as follows at period end (dollars in thousands):

	September 30, 2007		December 31, 2006


Loans with no allocated allowance
for loan losses	$	9,505	$	3,059
Loans with allocated allowance for
loan losses		36,263		2,718


	$	45,768	$	5,777


Amount of the allowance for loan
losses allocated	$	5,390	$	400

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 4 – LOANS (Continued)

	Nine months ended September 30, 2007		Nine months ended September 30, 2006


Average of impaired loans during the period	$	22,656	$	4,467
Interest income recognized during impairment		0		0
Cash-basis interest income recognized		0		0

Nonperforming loans were as follows at period-end (dollars in thousands):

	September 30, 2007		December 31, 2006


Loans past due over 90 days still on accrual	$	1,202	$	16,479
Nonaccrual loans		42,741		5,811
Renegotiated loans		4,760		---

	$	48,703	$	22,290

NOTE 5 – DEPOSITS

Deposits are summarized as follows (in thousands):

	September 30, 2007		December 31, 2006


Noninterest-bearing demand	$	170,792	$	180,032
Money market		377,579		459,230
NOW and Super NOW		263,068		265,679
Savings		39,902		40,160
Certificates of deposit		670,662		722,456

	$	1,522,003	$	1,667,557

Approximately $432,142,000 and $504,274,000 in time certificates of deposit were in denominations of $100,000 or more at September 30, 2007 and December 31, 2006.

Brokered deposits totaled approximately $182,834,000 and $272,896,000 at September 30, 2007 and December 31, 2006. At September 30, 2007 and December 31, 2006, brokered deposits had interest rates ranging from 3.30% to 5.20%, and 3.30% to 5.49%, respectively. At September 30, 2007, maturities ranged from one to thirty-five months.

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 6 – OTHER BORROWED FUNDS

Other borrowed funds include advances from the Federal Home Loan Bank and securities sold under agreements to repurchase, and were as follows (in thousands):

Federal Home Loan Bank Advances

Principal Terms	Advance Amount		Range of Maturities	Weighted Average Interest Rate


September 30, 2007

Single maturity fixed rate advances	$	175,000	October 2007 to May 2010		4	.80%
Putable advances		31,000	September 2009 to December 2010		5	.80%
Amortizable mortgage advances		8,093	February 2008 to July 2018		3	.82%

	$	214,093

December 31, 2006

Single maturity fixed rate advances	$	132,000	April 2007 to May 2010		4	.63%
Putable advances		31,000	September 2009 to December 2010		5	.80%
Amortizable mortgage advances		9,018	February 2008 to July 2018		3	.86%

	$	172,018

Each advance is payable at its maturity date and contains a prepayment penalty. These advances were collateralized by residential and commercial real estate loans totaling $608,489,000 and $596,829,000 under a blanket lien arrangement at September 30, 2007 and December 31, 2006. Maturities as of September 30, 2007 were as follows (in thousands):


2007	$	70,000
2008		70,523
2009		25,237
2010		41,000
2011		--
Thereafter		7,333

	$	214,093

Securities Sold Under Agreements to Repurchase

Principal Terms	Amount		Range of Maturities	Weighted Average Interest Rate


September 30, 2007

Fixed rate borrowings	$	65,000	February 2009 to March 2010		4	.83%
Floating rate borrowings		20,000	August 2009 to August 2010		5	.72%

	$	85,000


December 31, 2006

Floating rate borrowings	$	20,000	August 2009 to August 2010		5	.78%

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 6 – OTHER BORROWED FUNDS (continued)

Securities sold under agreements to repurchase (“repo borrowings”) are financing arrangements secured by U.S. federal agency securities. These borrowings were collateralized by securities that had a carrying amount of approximately $91,428,000 and $21,399,000 at September 30, 2007 and December 31, 2006. At maturity, the securities underlying the arrangements are returned to the company. Maturities as of September 30, 2007 were as follows (in thousands):


2007	$	--
2008		--
2009		45,000
2010		40,000
2011		--
Thereafter		--

	$	85,000

NOTE 7 – STOCK-BASED COMPENSATION

The Company has stock-based compensation plans for its employees (the Employees’ Plans) and directors (the Directors’ Plans). The Employees’ Plans permit the grant of stock options or the issuance of restricted stock for up to 1,917,210 shares of common stock. The Directors’ Plans permit the grant of stock options or the issuance of restricted stock for up to 473,278 shares of common stock. There were 785,269 shares under the Employees’ Plans and 175,711 shares under the Directors’ Plans available for future issuance as of September 30, 2007. All per share amounts and average shares outstanding have been adjusted for all periods presented to reflect the 5% stock dividend distributed on May 30, 2007, the 5% stock dividend distributed on May 30, 2006 and the 3-for-2 stock split distributed on June 29, 2006. The Company issues new shares under its stock-based compensation plans from its authorized but unissued shares.

Stock Options

Option awards are granted with an exercise price equal to the market price at the date of grant. Option awards have vesting periods ranging from one to three years and have ten year contractual terms.

A summary of option activity in the plans is as follows (dollars in thousands, except per option data):

Options	Number Outstanding			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life in Years		Aggregate Intrinsic Value

Outstanding at January 1, 2007		1,025,783		$	14.29
Exercised		(43,301	)		7.86
Forfeited		(6,773	)		22.77

Outstanding at September 30, 2007		975,709		$	14.51		6.18	$	1,979


Exercisable at September 30, 2007		726,580		$	12.10		4.45	$	1,979

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 7 – STOCK-BASED COMPENSATION (continued)

There were no options granted during the three and nine months ended September 30, 2007. The weighted-average fair value of the 4,710 options granted during the three and nine months ended September 30, 2006 was $5.65 per option.

The total intrinsic value of options exercised during the three months ended September 30, 2007 and 2006 was $132,000 and $169,000, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2007 and 2006 was $354,000 and $1.6 million, respectively.

There were no options vested during the three and nine months ended September 30, 2007. The total fair value of options vested during the three and nine months ended September 30, 2006 was $298,000 and $330,000, respectively.

As of September 30, 2007, there was approximately $715,000 of total unrecognized compensation cost related to nonvested stock options granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 1.7 years.

Restricted Stock Awards

A summary of nonvested stock awards activity in the plans is as follows (dollars in thousands, except per option data):

Nonvested Stock Awards	Shares			Weighted-Average Grant-Date Fair Value

Nonvested at January 1, 2007		22,491		$	19	.52
Granted		157			19	.02
Vested		---				---
Forfeited		(2,099	)		19	.52

Nonvested at September 30, 2007		20,549		$	19	.52

As of September 30, 2007, there was $310,000 of total unrecognized compensation cost related to nonvested shares granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 2.3 years. There were no shares vested during the three and nine month periods ended September 30, 2007 and 2006.

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 8 — EARNINGS PER SHARE

A reconciliation of the numerators and denominators of basic and diluted earnings per share for the three and nine month periods ended September 30, 2007 and 2006 are as follows (dollars in thousands, except per share data):

	Three Months Ended September 30, 2007		Three Months Ended September 30, 2006		Nine Months Ended September 30, 2007		Nine Months Ended September 30, 2006


Basic earnings per share
Net income	$	2,457	$	6,009	$	11,881	$	16,986

Weighted average common
shares outstanding		17,082,023		17,025,110		17,156,961		17,002,363


Basic earnings per share	$	0.14	$	0.35	$	0.69	$	1.00


Diluted earnings per share
Net income	$	2,457	$	6,009	$	11,881	$	16,986

Weighted average common
shares outstanding		17,082,023		17,025,110		17,156,961		17,002,363
Add: Dilutive effects of assumed
exercise of stock options		150,686		360,631		212,452		394,702


Weighted average common and
dilutive potential common
shares outstanding		17,232,709		17,385,741		17,369,413		17,397,065


Diluted earnings per share	$	0.14	$	0.35	$	0.68	$	0.98

Stock options and restricted stock awards for 513,705 and 240,982 shares of common stock for the three months ended September 30, 2007 and September 30, 2006, respectively were not considered in computing diluted earnings per share because they were antidilutive.

Stock options and restricted stock awards for 358,307 and 240,982 shares of common stock for the nine months ended September 30, 2007 and September 30, 2006, respectively were not considered in computing diluted earnings per share because they were antidilutive.

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 9 – CONTINGENCIES

The Company and its subsidiaries periodically become defendants in certain claims and legal actions arising in the ordinary course of business.

On July 8, 2003, the Company filed a Form 8-K (dated July 1, 2003) with the Securities and Exchange Commission reporting events related to a former trust customer, Trade Partners, Inc. (“Trade Partners”), of the former Grand Bank, which the Company acquired effective April 1, 2002. Trade Partners was involved in purchasing and selling interests in viaticals, which are interests in life insurance policies of the terminally ill or elderly. Beginning in 1996, Grand Bank served as a custodian and escrow agent with respect to viaticals purchased by Trade Partners and sold to investors. Two lawsuits were filed, one in December 2002 and another in March 2003, against Trade Partners, Grand Bank and the Company alleging that Grand Bank breached certain escrow agreements related to viatical settlement contracts. Both of these lawsuits have been dismissed although the plaintiffs reserved the right to pursue the claims in the future. A third lawsuit was filed in April 2003 by two individual investors against Grand Bank, the Company, Trade Partners and certain individuals and entities associated with Trade Partners. The claims against Grand Bank and the Company in this lawsuit have been settled and dismissed with prejudice. In May 2003 a purported class action complaint was filed against the Company. As amended, this suit alleges that Grand Bank breached escrow agreements and fiduciary duties and violated the Michigan Uniform Securities Act with respect to the investments secured by the purported class in viaticals and in interests in limited partnerships which made loans to Trade Partners secured by viaticals, and with respect to loans made by purported class members directly to Trade Partners. The Company has answered the complaint denying the material allegations and raising certain affirmative defenses. In November 2006 the court denied class certification in this case. The Company believes that the class action, if it had been approved by the court, might have involved as many as 2,000 to 3,000 individual claimants. Since that denial of class certification, nine new actions, none of which is a class action, raising substantially the same allegations as the former class action have been filed in several jurisdictions on behalf of approximately 1,300 Trade Partners investors. Management believes the Company has strong defenses and will vigorously defend the cases.

Trade Partners is now in receivership. The supervising court authorized the receiver to borrow money from Macatawa Bank to pay premiums, if needed. Macatawa Bank extended a $4 million line of credit to the receiver, conditioned upon obtaining a security interest in the viaticals. No draws were made against the line, and the line expired during the fourth quarter of 2004.

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

The legal actions involving Trade Partners have not progressed to trial and the outcome of such actions is uncertain. While we are therefore unable to determine at this time whether or to what extent these actions may impact the Company, the Company believes it has strong defenses and fully intends to defend any and all such actions vigorously.

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 10 – HEDGING ACTIVITIES

The Company’s asset/liability management policy includes guidelines for measuring and monitoring interest rate risk. Within these guidelines, parameters have been established for maximum fluctuations in net interest income. Possible fluctuations are measured and monitored using simulation analysis. The policies provide for the use of derivative instruments and hedging activities to aid in managing interest rate risk to within the policy parameters.

The Company’s assets are comprised of a large portion of loans on which the interest rates are variable. As such, the Company may periodically enter into derivative financial instruments to mitigate exposure to fluctuations in cash flows resulting from changes in interest rates. Interest rate swap arrangements may be utilized to hedge against these fluctuations in cash flows.

The Company has entered into interest rate swap arrangements (“swaps”), all of which are classified as cash flow hedges that convert the variable rate cash inflows on certain of its loans to fixed rates of interest. These swaps pay interest to the Company at a fixed rate and require interest payments from the Company at a variable rate. All of these swaps were fully effective during 2006 and the first nine months of 2007. At September 30, 2007, it is anticipated that approximately $223,000, net of tax, of net unrealized losses on these cash flow hedges will be reclassified to earnings over the next twelve months.

Summary information about interest rate swaps were as follows (dollars in thousands).

	September 30, 2007			December 31, 2006


Notional amounts	$	60,000		$	80,000
Weighted average pay rates		7.75	%		8.25	%
Weighted average receive rates		6.65	%		6.42	%
Weighted average maturity		1.8 years			2.0 years
Unrealized loss related to interest rate swaps	$	(479	)	$	(1,762	)

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 11 — REGULATORY MATTERS

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

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

At September 30, 2007 and December 31, 2006, actual capital levels and minimum required levels were (in thousands):

	Actual					Minimum Required For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio

September 30, 2007
Total capital (to risk weighted assets)
Consolidated	$	198,971		10.9	%	$	145,838		8.0	%		N/A		N/A
Bank		196,690		10.8			145,811		8.0		$	182,264		10.0
Tier 1 capital (to risk weighted assets)
Consolidated		176,184		9.7			72,919		4.0			N/A		N/A
Bank		173,907		9.5			72,906		4.0			109,358		6.0
Tier 1 capital (to average assets)
Consolidated		176,184		8.4			83,616		4.0			N/A		N/A
Bank		173,907		8.3			83,516		4.0			104,395		5.0

December 31, 2006
Total capital (to risk weighted assets)
Consolidated	$	196,256		10.9	%	$	144,677		8.0	%		N/A		N/A
Bank		189,403		10.5			144,492		8.0		$	180,615		10.0
Tier 1 capital (to risk weighted assets)
Consolidated		171,650		9.5			72,338		4.0			N/A		N/A
Bank		166,826		9.2			72,246		4.0			108,369		6.0
Tier 1 capital (to average assets)
Consolidated		171,650		8.5			80,746		4.0			N/A		N/A
Bank		166,826		8.3			80,602		4.0			100,752		5.0

The Bank was categorized as well capitalized at September 30, 2007 and December 31, 2006. There are no conditions or events since September 30, 2007 that management believes have changed its category.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Macatawa Bank Corporation is a Michigan corporation and is the holding company for a wholly owned subsidiary, Macatawa Bank and for two trusts, Macatawa Statutory Trust I and Macatawa Statutory Trust II. Macatawa Bank Corporation is a financial holding company pursuant to Title I of the Gramm-Leach-Bliley Act. Macatawa Bank is a Michigan chartered bank with depository accounts insured by the Federal Deposit Insurance Corporation. The bank operates twenty-six branch offices and a lending and operational service facility, providing a full range of commercial and consumer banking and trust and brokerage services in Kent County, Ottawa County, and northern Allegan County, Michigan. As also more fully discussed in the company’s Form 8-K dated October 11, 2006, Macatawa Bank Corporation entered into an Agreement and Plan of Merger with the Smith & Associates investment advisory firm based in Holland, Michigan. The Smith & Associates acquisition became effective on January 1, 2007 and that business is now part of Macatawa Bank. Macatawa Statutory Trusts I and II are grantor trusts and issued $20.0 million each of pooled trust preferred securities. These trusts are not consolidated in the Corporation’s financial statements. For further information regarding consolidation, see the Notes to the Consolidated Financial Statements included herein. Macatawa Bank Mortgage Company, a subsidiary of Macatawa Bank, originates and sells residential mortgage loans into the secondary market on a servicing released basis.

We have experienced rapid and substantial growth since opening Macatawa Bank in November of 1997. We believe that growth in core deposits is key to our long-term success and is our primary funding source for asset growth. Establishing a branching network in our markets has been of high importance in order to facilitate this core deposit growth. We have gained community awareness and acceptance in our markets through our expanding branch network and high quality service standards.

The West Michigan markets within which we operate continue to provide expansion opportunities for us. We opened our twenty-sixth branch in Cascade on the east side of the greater Grand Rapids area during the second quarter of 2007. Because of the significance of the greater Grand Rapids market and the great opportunity for market share growth, we anticipate additional branch openings in this market. We also continue to enjoy success in building new and existing relationships in both our Holland/Zeeland and Grand Haven markets. We anticipate that we will continue to experience growth in our balance sheet and in our earnings due to these expansion opportunities.

RESULTS OF OPERATIONS

Summary: Net income for the quarter ended September 30, 2007 was $2.5 million, a decrease of 59% as compared to third quarter 2006 net income of $6.0 million. Earnings per share on a diluted basis were $0.14 for the third quarter of 2007 compared to $0.35 for the same period in 2006. Net income for the nine months ended September 30, 2007 was $11.9 million, a decrease of 30% compared to the $17.0 million for the same period in the prior year. Earnings per share on a diluted basis were $0.68 for the nine months ended September 30, 2007 compared to $0.98 for the same period in the prior year.

The decreases in net income for both the three and nine months ended September 30, 2007 compared to the same periods in the prior year were primarily due to increases in the provision for loan losses and noninterest expense, a decrease in net interest income and partially offset by increases in noninterest income.

Net Interest Income: Net interest income totaled $15.8 million for the third quarter of 2007, a decrease of $1.2 million, or 7%, as compared to the third quarter of 2006. Net interest income for the first nine months of 2007 totaled $48.2 million, a decrease of $2.1 million or 4% as compared to $50.4 million for the same period in 2006. The decrease in net interest income for both the three and nine month periods was from a decline in the net interest margin partially offset by an increase in average earning assets. Average earning assets increased $93.0 million, or 5%, to $1.97 billion for the third quarter of 2007 compared to $1.87 billion for the third quarter of 2006. Average earning assets increased $145.5 million, or 8%, to $1.96 billion for the nine month period ended September 30, 2007 compared to $1.81 billion for the same period of the prior year. The net interest margin decreased 42 basis points for both the third quarter and the first nine months of 2007 to 3.20% and 3.29%, respectively, when compared to the same periods in the prior year.

The yield on earning assets decreased by 22 basis points for the three months ended September 30, 2007 and increased one basis point for the nine months ended September 30, 2007 as compared to the same periods in the prior year. The cost of funds increased 18 basis points and 45 basis points, respectively, for the three and nine months ended September 30, 2007 as compared to the same periods in the prior year. The increase in nonperforming loans that has occurred in 2007 has had a negative impact on the overall loan portfolio yield and is the primary reason for the decrease in yield on earning assets for the third quarter of 2007. Also contributing to the decrease has been the preference of our loan customers to utilize the generally lower rate fixed rate products over variable rate products during the period since June of 2006 in which long-term rates have been generally lower than short-term rates. The rise in short-term rates that occurred through June of 2006 resulted in an increase in loan yields offsetting the impact of the items noted above when comparing the nine month periods.

An increase in the rates paid on our deposit accounts, the rollover of time deposits at higher rates and a shift to higher costing sources of funds are the primary reasons for the increase in the cost of funds. The rates paid on time deposits and other rate sensitive products have reached attractive levels causing deposit customers to shift funds from transaction accounts, primarily non-interest demand and money market accounts, into these higher rate accounts. The cost of funds, however, has stablilized as the majority of time deposits have repriced within the current rate environment, and the extent of balances shifting to higher costing sources has declined.

Anticipated growth in earning assets is expected to continue at lower levels than we have experienced in the past due to the generally weak economic conditions in Michigan. The recent 50 basis point cut in the Federal funds and prime rates will have a negative impact on net interest income in the near term, although over a full twelve month period the overall impact on earnings is expected to be neutral. Our variable rate loan portfolio exceeds the level of variable rate funding, but the fixed rate funding portfolio that reprices over the next twelve months is expected to offset this excess.

The following table shows an analysis of net interest margin for the three-month periods ending September 30, 2007 and 2006.

	For the three months ended September 30,

	2007								2006

	Average Balance			Interest Earned or paid		Average Yield or cost			Average Balance			Interest Earned or paid		Average Yield or cost

	(Dollars in thousands)
Assets
Taxable securities	$	148,480		$	1,663		4.48	%	$	130,103		$	1,378		4.23	%
Tax-exempt securities (1)		51,588			545		6.50	%		50,833			536		6.49	%
Loans(2)		1,722,511			32,633		7.43	%		1,665,239			32,581		7.68	%
Federal Home Loan Bank stock		12,275			140		4.44	%		13,045			99		2.98	%
Federal funds sold		31,301			410		5.13	%		13,971			185		5.19	%

Total interest earning assets (1)		1,966,155			35,391		7.13	%		1,873,191			34,779		7.35	%

Noninterest earning assets:
Cash and due from banks		31,687								37,700
Other		118,632								99,949


Total assets	$	2,116,474							$	2,010,840


Liabilities
NOWs and MMDAs	$	747,614			6,896		3.66	%	$	681,927			6,008		3.50	%
Savings		41,082			59		0.57	%		41,385			61		0.58	%
IRAs		43,864			531		4.80	%		37,380			409		4.34	%
Time deposits		651,293			8,047		4.91	%		670,587			7,862		4.65	%
Other borrowed funds		244,039			3,102		4.98	%		192,443			2,337		4.75	%
Long-term debt		41,238			871		8.27	%		41,238			879		8.34	%
Federal funds borrowed		3,793			50		5.14	%		11,408			140		4.80	%

Total interest bearing liabilities		1,772,923			19,556		4.36	%		1,676,368			17,696		4.18	%

Noninterest bearing liabilities:
Noninterest bearing demand accounts		170,501								174,287
Other noninterest bearing liabilities..		6,854								7,038
Shareholders' equity		166,196								153,147


Total liabilities and shareholders' equity	$	2,116,474							$	2,010,840


Net interest income				$	15,835							$	17,083


Net interest spread (1)							2.77	%							3.17	%
Net interest margin (1)							3.20	%							3.62	%
Ratio of average interest earning assets to
average interest bearing liabilities		110.90	%							111.74	%

(1)

Yield adjusted to fully tax equivalent.

(2)

Includes non-accrual loans.

The following table shows an analysis of net interest margin for the nine-month periods ending September 30, 2007 and 2006.

	For the nine months ended September 30,

	2007								2006

	Average Balance			Interest Earned or paid		Average Yield or cost			Average Balance			Interest Earned or paid		Average Yield or cost

	(Dollars in thousands)
Assets
Taxable securities	$	149,203		$	4,971		4.44	%	$	122,116		$	3,789		4.13	%
Tax-exempt securities (1)		52,023			1,645		6.48	%		50,904			1,608		6.48	%
Loans(2)		1,723,665			98,195		7.53	%		1,619,458			91,849		7.50	%
Federal Home Loan Bank stock		12,275			420		4.51	%		13,619			462		4.47	%
Federal funds sold		19,807			774		5.15	%		5,360			208		5.11	%

Total interest earning assets (1)		1,956,973			106,005		7.22	%		1,811,457			97,916		7.21	%

Noninterest earning assets:
Cash and due from banks		31,276								36,629
Other		115,206								98,056


Total assets	$	2,103,455							$	1,946,142


Liabilities
NOWs and MMDAs	$	738,514			20,190		3.65	%	$	638,227			14,987		3.14	%
Savings		41,397			179		0.58	%		41,411			179		0.58	%
IRAs		42,744			1,519		4.75	%		35,774			1,119		4.18	%
Time deposits		661,836			24,179		4.88	%		677,545			22,369		4.41	%
Other borrowed funds		236,373			8,853		4.94	%		170,294			5,761		4.46	%
Long-term debt		41,238			2,583		8.26	%		41,238			2,474		7.91	%
Federal funds borrowed		6,674			273		5.39	%		17,929			655		4.82	%

Total interest bearing liabilities		1,768,776			57,776		4.36	%		1,622,418			47,544		3.91	%

Noninterest bearing liabilities:
Noninterest bearing demand accounts		164,211								167,278
Other noninterest bearing liabilities..		6,365								7,406
Shareholders' equity		164,103								149,040


Total liabilities and shareholders' equity	$	2,103,455							$	1,946,142


Net interest income				$	48,229							$	50,372


Net interest spread (1)							2.87	%							3.30	%
Net interest margin (1)							3.29	%							3.71	%
Ratio of average interest earning assets to
average interest bearing liabilities		110.64	%							111.65	%

(1)

Yield adjusted to fully tax equivalent.

(2)

Includes non-accrual loans.

Provision for Loan Losses: The provision for loan losses for the three and nine month periods ended September 30, 2007 was $3.6 million and $5.5 million compared to $490,000 and $2.0 million for the same periods in the prior year. The provision for loan losses was up due to both higher net charge-offs and higher levels of nonperforming loans for both the three and nine month periods. The amounts of loan loss provision in both the current and prior year period were a byproduct of establishing our allowance for loan losses at levels deemed necessary in our methodology for determining the adequacy of the allowance. For more information about our allowance for loan losses and our methodology for establishing its level, see the discussion below under Portfolio Loans and Asset Quality.

Noninterest Income: Noninterest income for the three and nine month periods ended September 30, 2007 increased to $4.0 million and $11.8 million, respectively, from $3.5 million and $10.3 million for the same periods in the prior year. An increase in trust fee income of $392,000 and $1.2 million for the three and nine month periods was the primary reason for the overall increase in noninterest income. The majority of the increase in trust fees is related to the impact of customer relationships added from the Smith & Associates acquisition on January 1, 2007. The increase of $193,000 and $389,000 in other income for the three and nine month periods was primarily from increases in brokerage fees and ATM/Debit card fees associated with continued growth in those service areas. Revenue from service charges on deposits increased modestly, partially offsetting the slight declines in gains on loans sold during both the three and nine month periods. Gains on loans sold during the nine month period in the prior year included gains of $59,000 on the sale of SBA guaranteed loans.

Noninterest Expense: Noninterest expense for the three and nine month periods ended September 30, 2007 increased to $12.7 million and $37.1 million, respectively, from $11.3 million and $33.7 million for the same periods in the prior year. Increases in salaries and benefits, occupancy and furniture and equipment costs for both the three and nine month periods are primarily associated with the new Asset Management Services group and the opening of four new facilities since the beginning of the year.

The increase of $703,000 and $1.8 million in other expense for the three and nine month periods include costs associated with the new service and facility additions, carrying costs associated with nonperforming assets and increased FDIC assessments. Costs associated with nonperforming assets include legal costs, losses on disposition, property appraisals and other carrying costs. These costs increased by $250,000 and $470,000 for the three and nine month periods ended September 30, 2007 compared to the same periods in the prior year. FDIC assessments increased by $249,000 and $654,000 for three and nine month periods related to a change by the FDIC in their charges for all banks effective January 1, 2007. Although we expect noninterest expense levels to generally rise with our growth, we expect efficiency to improve by better utilizing our capacity as we grow. We believe the additional capacity within our branch network will continue to provide future growth opportunities without significant additional costs.

FINANCIAL CONDITION

Summary: Total assets were $2.10 billion at September 30, 2007, an increase of $28 million from $2.07 billion at December 31, 2006. The growth in assets was primarily from an increase of $25.0 million in total portfolio loans funded by an increase in borrowed funds.

Securities Available for Sale: Securities available for sale were $200.1 million at September 30, 2007 compared to $198.5 million at December 31, 2006. The increase was primarily from the purchase of U.S. Government Agency bonds, partially offset by calls and maturities of U.S. Government Agency bonds.

Portfolio Loans and Asset Quality: Total portfolio loans were $1.74 billion at September 30, 2007 compared to $1.71 billion at December 31, 2006. In recent quarters, residential mortgage loans have lead our loan portfolio growth. Because of the relatively short duration of our assets, we have viewed the recent improvement in rates on residential mortgage loans as an opportunity to hold more of these higher quality loans in our portfolio. Of the $25.0 million in total loan growth during the first nine months of 2007, $20.8 million was from our residential mortgage loan portfolios.

Commercial and industrial loans increased $11.4 million, commercial real estate loans declined $3.5 million and consumer loans declined $3.7 million for the first nine months of 2007. The slower loan growth in recent quarters is a reflection of the weak economic conditions in West Michigan and our interest in maintaining the quality of our loan portfolio. In particular, deterioration in residential land development has impacted both asset growth and asset quality.

Commercial and commercial real estate loans still remain our largest loan segment and accounted for approximately 75% of the total loan portfolio at both September 30, 2007 and December 31, 2006. Residential mortgage loans and consumer loans comprised 14% and 11% of total loans at September 30, 2007, and 13% and 12% at December 31, 2006.

Within the commercial portfolio we have focused more of our resources on growing our commercial and industrial loans to help diversify our overall portfolio. Our commercial and industrial portfolio was $428 million at September 30, 2007 and represented 33% of our commercial portfolio, up from 32% at December 31, 2006. A further breakdown of the composition of commercial loans is shown in the table below (in thousands):

	September 30, 2007		December 31, 2006


Construction/Land Development	$	354,897	$	360,372
Farmland and Agriculture		25,438		37,426
Nonfarm, Nonresidential		454,220		439,436
Multi-family		37,618		38,483

Total Commercial Real Estate Loans		872,173		875,717
Commercial and Industrial		427,508		416,135

Total Commercial Loans	$	1,299,681	$	1,291,852

Commercial construction and land development loan balances decreased $5.5 million during 2007 and represented approximately 41% of the commercial real estate loan portfolio. Residential land development loans totaled $260.1 million, or 30%, of the commercial real estate loan portfolio. Approximately 60% of the balance in the construction and land development category and approximately 98% of the balance in the multi-family category were comprised of non-owner occupied loans at September 30, 2007. Approximately two-thirds of the balance in the construction and land development category and the entire balance in the multi-family category were comprised of non-owner occupied loans at December 31, 2006.

Nonperforming assets are comprised of nonperforming loans, foreclosed assets and repossessed assets. Our nonperforming loans include loans on non-accrual status, restructured loans, real estate loans in redemption, as well as loans delinquent more than 90 days, but still accruing. Foreclosed and repossessed assets include assets acquired in settlement of loans.

Nonperforming loans increased to $48.7 million or 2.80% of total loans at September 30, 2007 from 1.30% at December 31, 2006. Approximately 91%, or $44.2 million, of this total relates to commercial real estate loans. Of the $44.2 million, approximately 80% are associated with residential land development. This category of loans is the primary cause for the increase in nonperforming loans. Two large credits within this category constitute approximately $23.9 million of the total nonperforming loans. The remaining balance of nonperforming loans are primarily a number of smaller balance commercial loans considered to be well collateralized or adequately reserved.

Foreclosed and repossessed assets were $6.3 million at September 30, 2007 and are comprised of a number of commercial and residential properties for which carrying values are considered to be fully collectible.

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

(Dollars in thousands)	September 30, 2007			December 31, 2006


Nonaccrual loans	$	42,741		$	5,811
Renegotiated loans		4,760			-
Loans 90 days past due and still accruing		1,202			16,479

Total nonperforming loans		48,703			22,290
Foreclosed assets		6,095			3,212
Repossessed assets		158			81

Total nonperforming assets	$	54,956		$	25,583


Nonperforming loans to total loans		2.80	%		1.30	%
Nonperforming assets to total assets		2.61	%		1.23	%

Allowance for loan losses: The allowance for loan losses as of September 30, 2007 was $25.9 million or 1.49% of total portfolio loans, compared to $23.3 million or 1.36% of total portfolio loans at December 31, 2006. Net charge-offs for the nine months ended September 30, 2007 totaled $2.8 million as compared to $554,000 for the same period in 2006. The ratio of net charge-offs to average loans was 0.22% on an annualized basis for the first nine months of 2007 compared to 0.05% for the first nine months of 2006. The provision for loan losses increased $3.5 million to $5.5 million for the nine months ended September 30, 2007 compared to $2.0 million for the same period of the prior year primarily due to the increase in net charge-offs and in response to the higher levels of non-performing loans.

Our allowance for loan losses is maintained at a level considered appropriate based upon our regular, quarterly assessments of the probable estimated losses inherent in the loan portfolio. Our methodology for measuring the appropriate level of allowance is comprised of several key elements, which include specific allowances for loans considered impaired, formula allowance for graded loans, general allocations based on historical trends for pools of similar loan types, and under certain circumstances, an unallocated reserve related to current market conditions that are pertinent to certain aspects of the loan portfolio.

During the fourth quarter of 2006, regulatory authorities reached a conceptual consensus on the method for determining the allowance. In addition to reaffirming the importance of experience grounded, objectively determinable amounts, they acknowledged the appropriateness of considering other subjective factors in determining the proper level of the allowance. We believe our process conforms to this guidance.

Specific allowances are established in cases where senior credit management has identified significant conditions or circumstances related to an individually impaired credit that we believe indicates the probability that a loss has been incurred. This amount is determined by methods prescribed by SFAS No. 114, “Accounting by Creditors for Impairment of a Loan”. Impaired loans increased to $45.8 million at September 30, 2007 from $5.3 million at December 31, 2006. The specific allowance for impaired loans was $5.4 million at September 30, 2007 and $400,000 at December 31, 2006. The increase is primarily due to the growing weakness in our residential land development loans. Many of the loans identified as impaired at September 30, 2007 had been identified as potential problem loans previously and had risk grade determined allowance allocations assigned to them prior to September 30, 2007.

The allowance allocated to commercial loans that are not considered to be impaired is based upon the internal risk grade of such loans or based on similar types of loans for which a change in market conditions exists. We use a loan rating method based upon an eight point system. Loans are assigned a loss allocation factor for each loan classification category. The lower the grade assigned to a loan category, the greater the allocation percentage that is applied. Changes in risk grade of loans affect the amount of the allowance allocation. In addition, similar types of graded loans may be segregated based on collateral or purpose characteristics. An allowance for these types may be established due to a change in economic conditions and trends for that type. These factors are regularly monitored and adjusted for significant factors that, in management’s judgment, affect the collectibility of the portfolio as of the analysis date. The commercial loan allowance was $18.2 million at September 30, 2007 compared to $21.0 million at December 31, 2006 and decreased primarily in response to the migration of specific commercial loans to an impaired status.

Groups of homogeneous loans, such as residential real estate, open- and closed-end consumer loans, etc., receive allowance allocations based on loan type. As with commercial loans, the determination of the allowance allocation percentage includes consideration of historical loss trends based on industry and peer experience as well as our historical loss experience. General economic and business conditions, credit quality and delinquency trends, collateral values, and recent loss experience are considered in connection with allocation factors for these similar pools of loans. The homogeneous loan allowance was $2.3 million at September 30, 2007 compared to $1.8 million at December 31, 2006. The increase was primarily related to an increase in loans delinquent more than 30 days.

Deposits and Other Borrowings: Total deposits decreased $145.6 million to $1.52 billion at September 30, 2007 compared to $1.67 billion at December 31, 2006. Balances in the Company’s institutional money market accounts declined by $100 million since December 31, 2006. During the third quarter of 2007, one of the Company’s institutional depositors withdrew approximately $104 million. The withdrawals were associated with planned distributions and the depositor remains an excellent customer of the Company. The Company also reduced its holdings of deposits generated from out-of-market brokers during the year. Brokered deposits have declined $90.1 million since December 31, 2006. Accordingly, growth from deposits within the Company’s markets has been approximately $45 million since the beginning of the year. The increase in local deposits, combined with an increase in other borrowings at more attractive terms and pricing, allowed the Company to reduce its reliance on brokered deposits. The growth in deposits within the Company’s markets was primarily from money market accounts and certificates of deposit, as deposit customers continue to prefer such accounts within the current rate environment. With our continued focus on quality customer service, the desire of customers to deal with a local bank, and the convenience of our expanding and maturing branch network, we expect further growth in our core transaction deposits.

The increase of $56.0 million in Federal funds purchased and $107.1 million in other borrowed funds was largely related to the drop in deposits discussed above. The increase in other borrowed funds was related to an increase of $65.0 million in securities sold under agreements to repurchase (“repo borrowings”) and $42.1 million of Federal Home Loan Bank advances. Since the third quarter of 2006, the bank has utilized repo borrowings as an alternative source of funds because of the favorable pricing and structure of these instruments compared to other alternatives.

CAPITAL RESOURCES AND LIQUIDITY

Capital Resources: Total shareholders’ equity increased $6.9 million during the first nine months to $163.7 million at September 30, 2007 primarily from the retention of earnings. Also contributing to the increase was an additional $3.1 million in capital related to the issuance of common shares for the acquisition of Smith & Associates.

Net income generated during the first nine months of 2007 of $11.9 million was partially offset by cash dividends of $6.6 million, or $.38 per share. We began paying cash dividends at the end of 2000 and have increased the amount of the dividend each year since then. It is anticipated that we will continue to pay quarterly cash dividends in the future. We have also paid a stock dividend each year beginning in 2001. On May 30, 2007, a 5% stock dividend was paid to shareholders of record as of May 11, 2007, representing our seventh consecutive annual stock dividend. All per share and average share information in this report has been adjusted to reflect the effect of the dividend and the split.

The $1.3 million increase in accumulated other comprehensive income was primarily from an increase in the market value of interest rate swaps and securities available for sale as market interest rates have decreased since the beginning of the year.

During the second quarter of 2007, the Company’s Board of Directors authorized a stock repurchase program under which the Company may acquire up to $30 million of its outstanding stock. At September 30, 2007, the Company had repurchased 264,500 shares costing approximately $3.6 million. For further details regarding the stock repurchase program, refer to Part II, Item 2, Changes in Securities and Use of Proceeds.

Our total capital to risk-weighted assets was 10.9% at both September 30, 2007 and December 31, 2006. Our Tier 1 Capital as a percent of average assets was 8.4% at September 30, 2007 and 8.5% at December 31, 2006. Both ratios continue to be maintained at levels well in excess of the regulatory minimums for bank holding companies. The ratios remained flat since the beginning of the year primarily because our retained earnings have kept pace with the growth in our assets.

Liquidity: The liquidity of a financial institution reflects its ability to measure and monitor a variety of sources and uses of funds. Our Consolidated Statements of Cash Flows categorize these sources and uses into operating, investing and financing activities. We primarily focus on developing access to a variety of borrowing sources to supplement our deposit gathering activities and provide funds for growing our investment and loan portfolios. Our sources of liquidity include our borrowing capacity with the Federal Home Loan Bank, structured repo borrowings and federal funds purchased lines with our correspondent banks, loan payments by our borrowers, maturities and sales of our securities available for sale, growth of our deposits and deposit equivalents, federal funds sold, and the various capital resources discussed above. Liquidity management involves the ability to meet the cash flow requirements of our customers. Our customers may be either borrowers with credit needs or depositors wanting to withdraw funds. We feel our liquidity position is sufficient to meet these needs.

Forward Looking Statements

This report includes “forward-looking statements” as that term is used in the securities laws. All statements regarding our expected financial position, business and strategies are forward-looking statements. In addition, the words “anticipates,” “believes,” “estimates,” “seeks,” “expects,” “plans,” “intends,” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. The presentation and discussion of the provision and allowance for loan losses, statements concerning future profitability or future growth or increases, and statements about the adequacy of our capital resources are examples of inherently forward looking statements in that they involve judgments and statements of belief as to the outcome of future events. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and our future prospects include, but are not limited to, changes in: interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in our market area and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning us and our business, including additional factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission.

Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Analysis

Our primary market risk exposure is interest rate risk and, to a lesser extent, liquidity risk. All of our transactions are denominated in U.S. dollars with no specific foreign exchange exposure. Macatawa Bank has only limited agricultural-related loan assets, and therefore has no significant exposure to changes in commodity prices.

Our balance sheet has sensitivity, in various categories of assets and liabilities, to changes in prevailing rates in the U.S. for prime rate, mortgage rates, U.S. Treasury rates and various money market indexes. Our asset/liability management process aids us in providing liquidity while maintaining a balance between interest earning assets and interest bearing liabilities.

We utilize a simulation model as our primary tool to assess the direction and magnitude of variations in net interest income and the economic value of equity (“EVE”) resulting from potential changes in market interest rates. Key assumptions in the model include contractual cash flows and maturities of interest-sensitive assets and interest-sensitive liabilities, prepayment speeds on certain assets, and changes in market conditions impacting loan and deposit pricing. We also include pricing floors on discretionary priced liability products which limit how low various checking and savings products could go under declining interest rates. These floors reflect our pricing philosophy in response to changing interest rates.

We forecast the next twelve months of net interest income under an assumed environment of gradual changes in market interest rates under various scenarios. The resulting change in net interest income is an indication of the sensitivity of our earnings to directional changes in market interest rates. The simulation also measures the change in EVE, or the net present value of our assets and liabilities, under an immediate shift, or shock, in interest rates under various scenarios, as calculated by discounting the estimated future cash flows using market-based discount rates.

The following table shows the impact of changes in interest rates on net interest income over the next twelve months and EVE based on our balance sheet as of September 30, 2007 (dollars in thousands).

Interest Rate Scenario	Economic Value of Equity		Percent Change			Net Interest Income		Percent Change


Interest rates up 200 basis points	$	156,074		(17.7	0)%	$	61,894		0.29	%
Interest rates up 100 basis points		174,053		(8.22	)		61,895		0.29
No change in interest rates		189,641		--			61,717		--
Interest rates down 100 basis points		202,066		6.55			61,430		(0.47	)
Interest rates down 200 basis points		210,453		10.97			61,062		(1.06	)

This analysis suggests that net interest income will stay within a narrow range over the next twelve months under the differing rate scenarios.

We also forecast the impact of immediate and parallel interest rate shocks on net interest income under various scenarios to measure the sensitivity of our earnings under extreme conditions.

The quarterly simulation analysis is monitored against acceptable interest rate risk parameters by the Asset/Liability Committee and reported to the Board of Directors.

In addition to changes in interest rates, the level of future net interest income is also dependent on a number of other variables, including: the growth, composition and absolute levels of loans, deposits, and other earning assets and interest-bearing liabilities; economic and competitive conditions; potential changes in lending, investing and deposit gathering strategies; and client preferences.

Item 4: CONTROLS AND PROCEDURES

(a)

Evaluation of Disclosure Controls and Procedures. The Company’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-Q Quarterly Report, have concluded that 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-Q Quarterly Report was being prepared.

(b)

Changes in Internal Controls. During the period covered by this report, there have been no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

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

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

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

On April 15, 2003, the United States District Court for the Western District of Michigan appointed a receiver for Trade Partners. In order to prevent or minimize any loss to investors in the viaticals sold by Trade Partners to investors, the court-appointed receiver has been coordinating the payment of premiums on the approximately 1,000 outstanding viaticated insurance policies in the Trade Partners portfolio so that the policies do not lapse. The receiver informed the Company that nine policies with a total face value of approximately $1.4 million lapsed for failure to pay premiums prior to the receiver’s coordination efforts. In addition, the receiver unsuccessfully contested a partial lapse totaling about $700,000.

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

The receiver received authorization from the Court in July 2005 to sell the entire portfolio, which the receiver said had a face value of approximately $170 million, to Universal Settlements International, Inc., a Canadian company, for an amount equal to 26.58% of face value. Under the terms of the sale, payments are to be made by Universal Settlements to the receivership as policy transfers are processed by the issuing insurance companies. The receiver has reported that as of October 15, 2007 he had received sale payments of approximately $37.5 million and proceeds of maturities aggregating another $31.6 million.

The receiver on July 21, 2006 filed a proposed amended plan of distribution and related disclosure statement, contemplating a complete liquidation of the assets of Trade Partners. The plan was approved by the Court on January 7, 2007. The receiver reported as of April 15, 2007 that claims against the receivership estate totaling $169,430,383.85, and that all claims have now been processed.

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

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

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

Item 1A. Risk Factors.

There have been no material changes in the risk factors applicable to the Company from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On May 17, 2007, the Corporation announced a repurchase plan that authorized share repurchases of up to $30 million of the Corporation’s common stock. In the third quarter of 2007, the Corporation repurchased 204,500 shares of its common stock in open market transactions under the repurchase plan. The shares were purchased at an average price of $13.14 per share. The Corporation has remaining authority to repurchase up to $26,388,575 of market value of its common stock under the repurchase plan.

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as a Parat of Publicly Announced Plans or Programs		Maximum Approximate Dollar Value of Shares that May yet Be Purchased Under the Approved Plan


July		---		---		---		---

August		150,000	$	13.04		150,000	$	27,119,800

September		54,500	$	13.42		54,500	$	26,388,575

Total		204,500	$	13.14		204,500	$	26,388,575

Item 3. Defaults Upon Senior Securities. None.

Item 4. Submission of Matters to a Vote of Securities Holders. None.

Item 5. Other Information.

Item 6. Exhibits.

31.1	Certificate of the Chief Executive Officer of Macatawa Bank Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certificate of the Chief Financial Officer of Macatawa Bank Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certificate of the Chief Executive Officer and 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.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, to be signed on its behalf by the undersigned, thereunto duly authorized.

MACATAWA BANK CORPORATION

/s/ Benj. A. Smith, III
——————————————
Benj. A. Smith, III
Chairman and Chief Executive Officer

/s/ Jon W. Swets
——————————————
Jon W. Swets
Chief Financial Officer
(Principal Financial and Accounting Officer)

DATE: November 7, 2007

EXHIBIT INDEX

Exhibit Description

31.1

Certificate of the Chief Executive Officer of Macatawa Bank Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certificate of the Chief Financial Officer of Macatawa Bank Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certificate of the Chief Executive Officer and 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.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

INDEX

Part I Financial InformationItem 1.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

NOTE 2 – ACQUISITION

NOTE 3 — SECURITIES

NOTE 3 – SECURITIES (Continued)

NOTE 4 – LOANS

NOTE 4 – LOANS (Continued)

NOTE 5 – DEPOSITS

NOTE 6 – OTHER BORROWED FUNDS

Securities Sold Under Agreements to Repurchase

NOTE 6 – OTHER BORROWED FUNDS (continued)

NOTE 7 – STOCK-BASED COMPENSATION

Restricted Stock Awards

NOTE 8 — EARNINGS PER SHARE

NOTE 9 – CONTINGENCIES

NOTE 10 – HEDGING ACTIVITIES

NOTE 11 — REGULATORY MATTERS

RESULTS OF OPERATIONS

FINANCIAL CONDITION

CAPITAL RESOURCES AND LIQUIDITY

Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 4: CONTROLS AND PROCEDURES

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Item 5. Other Information.

Item 6. Exhibits.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Part I Financial Information
Item 1.