10753 Macatawa Drive
Holland, MI 49424

Macatawa Bank Corporation Reports 4th Quarter Results

Holland, Michigan, January 26, 2009 — Macatawa Bank Corporation today announced its results for the fourth quarter of 2008.

The Company’s fourth quarter results included a non-cash, after-tax impairment charge for goodwill and intangible assets of $27 million to reflect the impact of current market conditions. This impairment charge does not impact the Company’s tangible equity or regulatory capital ratios, and does not affect the Company’s liquidity position.

This impairment charge led to a net loss of $35.1 million, or $2.11 loss per share, for the fourth quarter of 2008 compared with a net loss of $2.6 million, or $0.15 loss per share, for the same period in 2007. For the full year of 2008, the Company incurred a net loss of $38.9 million, or $2.34 loss per share, compared with net income of $9.3 million for 2007. Excluding the impact of the goodwill and intangible asset impairment charge, the net loss would have been $8.0 million for the quarter and $11.8 million for the full year.

The quarterly results were also impacted by additional loan loss provisions of $14 million and expenses and lost interest associated with non-performing assets of approximately $4.9 million.

“We have found ourselves in a situation shared by many others financial institutions across the country,” said Ben Smith, Chairman and CEO. “Continued deterioration in the economy and stock market, especially among financial institutions stocks, have necessitated that we take these cash and non-cash charges during the quarter.”

“While these numbers are disappointing, our management team has worked hard to strengthen our capital position, improve asset quality and liquidity, reduce core expenses and improve operating efficiencies.”

Initiatives to improve the Company’s financial condition during 2008 included:

“Despite market challenges, we continued to grow during 2008,” Smith said. “We added new accounts, made new loans and built our brand within Ottawa, Kent and Allegan counties. Both the Company’s loan and deposit portfolios showed good growth since the prior year during these volatile market conditions.”

The injection of additional capital from the preferred stock offering further improved the Company’s liquidity and capital ratios, which were already above regulatory requirements for well-capitalized banks.

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Macatawa Bank 4Q Results / page 2 of 3

“Perhaps just as importantly, the success of the offering underscored the continued optimism that people have in the future of Macatawa and their willingness to invest in the community and community banking,” Smith said. “We are deeply gratified by the confidence demonstrated by our shareholders during such challenging financial times.”

The Company’s total risk based capital ratio increased to 11.26 percent from 10.20 percent in the prior quarter.

Fourth quarter net interest income totaled $13.5 million, a decrease of $1.2 million compared to the fourth quarter of 2007. The decrease in net interest income was primarily from a decline in the net interest margin partially offset by an increase in average earning assets. Average earning assets grew by $19.8 million from the fourth quarter of 2007 to the fourth quarter of 2008. The net interest margin was 2.74 percent for the quarter, down 24 basis points from 2.98 percent for the third quarter and 26 basis points from 3.00 percent for the fourth quarter of 2007. Approximately half of the decline for each period was from higher balances of non-performing assets with the remainder largely from the Federal funds rate cuts that began in late-2007 and pressure on the Company’s cost of deposits from intense competition within its markets.

Non-interest income was $3.9 million for the fourth quarter of 2008 compared to $4.3 million for the fourth quarter of 2007. The fourth quarter of 2007 included a $288,000 unrealized gain associated with the Company’s interest rate swaps which were terminated in the first quarter of 2008. Increases in gains on mortgage loans sold and growth in revenue from deposit services and ATM and debit card processing offset a decline in trust income. The significant decline in the stock market throughout 2008 was the primary reason for the decrease in trust income.

Non-interest expense was $43.9 million for the quarter compared to $14.0 million for the third quarter and $13.1 million for the fourth quarter of 2007. Non-interest expense for the current quarter included non-recurring charges of $27.6 million associated with the goodwill and intangible asset impairment charge. It also includes $1.4 million of legal expenses associated with the Trade Partners litigation discussed in previous announcements. This amount includes legal invoices received over the time of the litigation, which were expected to be paid by the Company’s insurance carrier, but have since been deemed non-reimbursable.

In addition, costs associated with the administration and disposition of problem loans and non-performing assets amounted to approximately $3.2 million in the current quarter, $1.6 million in the third quarter and $500,000 for the fourth quarter of 2007. When excluding these costs, non-interest expense would have been approximately $11.8 million for the quarter, down from $12.5 million for the third quarter of 2008 and $12.6 million for the fourth quarter of 2007.

“We have been working hard on expense reduction initiatives throughout the year,” Smith said. “The Company has restructured third party contracts, eliminated or outsourced certain backroom functions, accelerated electronic delivery for certain customers and significantly trimmed controllable costs. We also made the difficult decision to selectively reduce staff by approximately 10 percent,” added Smith, “and management will again forego bonuses in 2008 and all employees will forego annual merit increases in 2009.”

Total assets were $2.15 billion at December 31, 2008, an increase of $21.7 million compared to $2.13 billion at December 31, 2007. Total loans increased $23.4 million since December 31, 2007, primarily in consumer mortgages, to $1.77 billion at December 31, 2008. Within the commercial loan portfolio, there continues to be a shift in mix from commercial real estate loans to commercial and industrial loans.

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

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Macatawa Bank 4Q Results / page 3 of 3

Commercial real estate loans declined $12.5 million while commercial and industrial loans grew by $8.6 million since December 31, 2007. Loans for the development or sale of 1-4 family residential properties were $203.7 million at December 31, 2008. Of the total, approximately $27.1 million was secured by vacant land, $117.4 million was secured by developed residential land and $59.2 million was secured by 1-4 family properties held for speculative purposes.

The Company’s non-performing assets increased $16.0 million to $112.1 million since the prior quarter and represent 5.21 percent of total assets at December 31, 2008. The majority of the non-performing asset portfolio is secured by real estate, primarily residential land development. Despite the difficulty in valuing this type of collateral in the current market, management believes non-performing assets are either well collateralized or have been appropriately discounted with adequate reserves.

A breakdown of non-performing assets is shown in the table below:

Within commercial real estate, loans for the development or sale of 1-4 family residential properties that were in a non-performing status were approximately $59.9 million or 65 percent of total non-performing loans at December 31, 2008 compared to $63.5 million or 72 percent at September 30, 2008 and $57.4 million or 78 percent at December 31, 2007.

“The past several quarters have been trying, and we would all like to see better results. While it will take additional time to work through our credit challenges, we have the right people, firm resolve and a strong regulatory capital position to do so. We believe in the long-term future of Macatawa and that we will emerge from these difficult times a stronger financial institution,” concluded Mr. Smith.

Conference Call

Macatawa Bank Corporation will hold its quarterly earnings conference call on Tuesday, January 27, at 10:00 A.M. Persons who wish to access the call may do so via the Internet by visiting www.macatawabank.com and clicking on the webcast link in the Investor Information section. It may also be accessed by logging on to www.streetevents.com. A replay of the call will be available for 30 days following the call.

About Macatawa Bank

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

“CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting our operations, markets, products, services, and pricing. These statements include, among others, statements related to capital raising activities, dividends, future growth and funding sources, future profitability levels, the effects on earnings of changes in interest rates and the future level of other revenue sources. Annualized growth rates are not intended to imply future growth at those rates. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Further information concerning our business, including additional factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission.”

MACATAWA BANK CORPORATION
CONSOLIDATED FINANCIAL SUMMARY
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(Dollars in thousands except per share information)

MACATAWA BANK CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)

(Dollars in thousands except per share information)