Macatawa Bank Corp · SB-2 · On 2/6/98

Filed On 2/6/98   ·   SEC File 333-45755   ·   Accession Number 926044-98-19

Registration of Securities by a Small-Business Issuer   ·   Form SB-2
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SB-2        Registration of Securities by a Small-Business       167    731K 
                          Issuer                                                 
 2: EX-27       Financial Data Schedule                                2±     7K 

SB-2   ·   Registration of Securities by a Small-Business Issuer
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February 6, 1998

Securities and Exchange Commission                                              
Filing Desk, Stop 1-4                                                           
450 Fifth Street, N.W.                                                          
Washington, D.C.  20549-1004                                                    

Re:      Macatawa Bank Corporation (the "Company")            
Registration on Form SB-2 of                
1,495,000 shares of common stock            

Ladies and Gentlemen:                                                           

     Transmitted  with this letter please find a Registration  Statement on Form
SB-2  (the   "Registration   Statement")  for  the  Company,   relating  to  the
registration  of 1,495,000  shares of the Company's  common stock, no par value.
This  filing is  transmitted  electronically  through  the EDGAR  system  and is
subject  to  Regulation  S-T.  Pursuant  to  Item  309,  only  one  copy of this
electronically formatted document is transmitted.                               

     The requisite registration fee in the amount of $4,411 has been paid to the
Company's  Filing Fees Account at the Mellon Bank in  Pittsburgh,  Pennsylvania,
and has been designated as "restricted."                                        

     The  Company  has on file a  manually  signed  counterpart  of each  signed
document  that appears in  electronic  format in this  filing.  The Company will
retain such signed  documents  for a period of five years and will  furnish such
signed document to the Commission or its staff upon request.                    

     If you have any questions  regarding  this filing or require any additional
information,  please  contact  the  undersigned.  Thank you in advance  for your
assistance.                                                                     

 Very truly yours,

/s/ Donald L. Johnson 
 Donald L. Johnson
DLJ:cll                                                                         
Attachment                                                                      
::ODMA\PCDOCS\GRR\120129\1                                                      

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As filed with the Securities and Exchange Commission on February 6, 1998
                                                           Registration No. 333-
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM SB-2

REGISTRATION STATEMENT
 UNDER
THE SECURITIES ACT OF 1933

 MACATAWA BANK CORPORATION
(Name of Small Business Issuer in its Charter)
 -------

Michigan                       6712                         38-3391345  
(State or other              (Primary Standard               (I.R.S. Employer   
jurisdiction of           Industrial Classification         Identification No.) 
incorporation or               Code Number)                                     
organization                                                                    

 51 E. Main Street
 Zeeland, Michigan 49464
(616) 748-9491
 (Address, including zip code, and telephone number,
 including area code, of Registrant's principal executive offices)

 Benj. A. Smith, III
 51 E. Main Street
 Zeeland, Michigan 49464
(616) 748-9491
 (Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:
     Donald L. Johnson                               John E. Freechack
Varnum, Riddering, Schmidt & Howlett LLP            Barack Ferrazzano Kirschbaum
         Suite 1700                                    Perlman & Nagelberg
333 Bridge Street, N.W.                                 Suite 2700    
Grand Rapids, Michigan 49504                           333 W. Wacker Drive
        (616) 336-6000                                 Chicago, Illinois 60606
                                                    (312) 984-3100

     Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.            

     If this Form is filed to  register  additional  securities  for an offering
pursuant to Rule 462(b) under the  Securities  Act,  check the following box and
list the Securities Act registration  statement number of the earlier  effective
registration statement for the same offering. [ ]                               
     If this form is a  post-effective  amendment  filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ]                                                      
     If this Form is a  post-effective  amendment  filed pursuant to Rule 462(d)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering.  [ ] If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box.[ ]                        

                                                        · Enlarge/Download Table
                                          CALCULATION OF REGISTRATION FEE                                            
---------------------------------------------------------------------------------------------------------------------
     Title of Each                                  Proposed Maximum        Proposed Maximum                         
  Class of Securities         Amount to be           Offering Price        Aggregate Offering            Amount of   
   Being Registered           Registered(1)             Per Share                 Price              Registration Fee
-----------------------  ----------------------- ----------------------- -----------------------  -------------------
                                                                                                                     
Common Stock (no par                                                                                                 
value)                          1,495,000                $10.00                $14,950,000                $4,411     
---------------------------------------------------------------------------------------------------------------------

     (1) Includes  195,000  shares subject to the  Underwriter's  over-allotment
option.                                                                         

     The Registrant  hereby amends this  Registration  Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further  amendment  which  specifically  states  that  this  Registration
Statement shall  thereafter  become effective in accordance with Section 8(a) of
the  Securities  Act of 1933 or until the  Registration  Statement  shall become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.                                                                  

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Information   contained  herein  is  subject  to  completion  or  amendment.   A
registration  statement  relating  to these  securities  has been filed with the
Securities  and Exchange  Commission.  These  securities may not be sold nor may
offers to buy be accepted prior to the time the registration  statement  becomes
effective.  This  prospectus  shall  not  constitute  an  offer  to  sell or the
solicitation of an offer to buy nor shall there be any sale of these  securities
in any State in which such offer,  solicitation  or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.   

         SUBJECT TO COMPLETION DATED          , 1998

PROSPECTUS

1,300,000 Shares

MACATAWA BANK CORPORATION [logo]

Common Stock

     All of the  shares  of common  stock,  no par value  (the  "Common  Stock")
offered hereby are being sold by Macatawa Bank Corporation  (the  "Company"),  a
Michigan  corporation.  The Company owns all of the outstanding  common stock of
Macatawa Bank, a Michigan  banking  corporation with its main office in Zeeland,
Michigan (the "Bank"). Prior to this offering (the "Offering") there has been no
public  trading  market for the Common Stock.  The  Underwriter  has advised the
Company  that it  anticipates  making a market  in the  Common  Stock  following
completion of this Offering.  See "Underwriting" for a discussion of the factors
considered in determining the initial public offering price. The Company expects
that  quotations for the Common Stock will be reported on the OTC Bulletin Board
under the symbol "----."                                                        

     The Common Stock offered by this Prospectus involves a high degree of risk.
Investors should not invest any funds in this Offering unless they can afford to
lose   their   entire    investment.    See   "Risk    Factors"   on   page   6.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
 SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
 ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                                                        · Enlarge/Download Table
                                                        Underwriting Discounts   Proceeds to 
                                 Price to Public        and Commissions (1) (2)  Company (3) 
                                                                                             
Per Share. . . . . . . . . . .     $10.00                   $0.70                   $9.30    
Total (4). . . . . . . . . . .  $13,000,000             $630,000                 $12,370,000 
==============================  =====================  ========================  ============

(1)  The Underwriter has agreed with the Company that the Underwriting Discounts
     and  Commissions  will be  reduced to $0.525 per share for sales to certain
     investors  identified on a list provided to the Underwriter by the Company,
     and to $0.30 per share for sales by the  Underwriter to certain  Affiliated
     Purchasers.  There will be no Underwriting  Discounts and Commissions  with
     respect to 400,000  shares of Common  Stock  expected to be sold to persons
     who were  shareholders of the Company prior to this Offering.  The Proceeds
     to  Company  have  been  calculated  assuming  Underwriting  Discounts  and
     Commissions of $0.70 per share, except with respect to 400,000 shares to be
  sold with no Underwriting Discounts and Commissions. See "Underwriting."
(2)  The  Company  has  agreed to  indemnify  the  Underwriter  against  certain
     liabilities,  including  under the Securities Act of 1933, as amended.  See
"Underwriting."                                                       
(3)  Before  deducting  estimated  offering  expenses  payable by the Company of
$170,406.                                                             
(4)  The Company has granted the  Underwriter  a 30-day option to purchase up to
     195,000   additional   shares  of  its   Common   Stock   solely  to  cover
     over-allotments,  if any. If the Underwriter exercises such option in full,
     the total  Price to Public,  Underwriting  Discounts  and  Commissions  and
     Proceeds  to  Company  will  be  $14,950,000,   $766,500  and  $14,183,500,
respectively. See "Underwriting."                                     

     The shares of Common Stock are offered by the Underwriter  subject to prior
sale,  when, as and if delivered to and accepted by it, and subject to the right
of the Underwriter to withdraw, cancel or modify such offer and to reject orders
in whole or in part.  It is expected that delivery of the shares of Common Stock
will  be  made on or  about  __________________,  1998.                         

ROBERT W. BAIRD & CO. 
Incorporated
The date of this Prospectus is _______, 1998. 

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 [INSERT MAP OF OTTAWA COUNTY MARKET AREA]

 ---------------------

     THE SHARES OF COMMON  STOCK  OFFERED  HEREBY ARE NOT  SAVINGS  ACCOUNTS  OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE  CORPORATION,  ANY
OTHER GOVERNMENT AGENCY OR OTHERWISE.                                           

----------------------

     IN CONNECTION WITH THIS OFFERING,  THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE  COMPANY AT A LEVEL  ABOVE THAT WHICH  MIGHT  OTHERWISE  PREVAIL IN THE OPEN
MARKET.  SUCH  STABILIZING,  IF  COMMENCED,  MAY BE  DISCONTINUED  AT ANY  TIME.

----------------------

 AVAILABLE INFORMATION

     The Company is not currently a reporting company pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), but will file the reports
required to be filed  thereunder  for the Company's 1998 fiscal year and for any
other periods for which the Exchange  Act's  requirements  apply to the Company.
The  Company,  which has a December 31 fiscal  year end,  intends to furnish its
shareholders with annual reports containing  audited financial  information and,
for the first three quarters of each fiscal year,  quarterly reports  containing
unaudited financial information.                                                

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PROSPECTUS SUMMARY

     The  following  summary is qualified  in its entirety by the more  detailed
information and financial  statements  appearing  elsewhere in this  Prospectus.
Unless the context clearly suggests otherwise,  financial  information and other
references  in this  Prospectus  to the  Company  include  the  Bank.  Except as
otherwise  indicated,  all information in this Prospectus assumes no exercise of
Underwriter's over-allotment option.                                            

The Company                                                                     

     The Company is a bank holding  company  incorporated in 1997 under Michigan
law and owns all of the common  stock of the Bank.  The Bank was  organized  and
commenced  operations  in  November,  1997 as a  Michigan  chartered  bank  with
depository  accounts insured by the Federal Deposit  Insurance  Corporation (the
"FDIC").  The Bank  provides a full range of  commercial  and  consumer  banking
services, primarily in the communities of Holland and Zeeland, Michigan, as well
as the surrounding market area principally  located in Ottawa County,  Michigan.
As of December 31, 1997,  the Company had total assets of $10.7  million,  total
deposits  of $2.7  million  and  shareholders'  equity  of $8.0  million.  As of
February 28, 1998,  the Company had ____ deposit  accounts and total deposits of
$______ million.                                                                

     The Bank is a full service  bank  offering a wide range of  commercial  and
personal banking services.  These services include checking and savings accounts
(including certificates of deposit), safe deposit boxes, travelers checks, money
orders and commercial,  mortgage and consumer loans. As of January 31, 1998, the
Bank had 20 full-time and 4 part-time employees.  The Company's headquarters and
the Bank's  main  office is located at 51 E. Main Street in the City of Zeeland,
Michigan 49464 and the telephone  number is (616) 748-9491.  The Bank also has a
full  service  branch  office and a loan  production  branch  office in Holland,
Michigan.                                                                       

Reason for Starting Macatawa Bank                                               

     The  expansion  of  interstate   banking  has  contributed  to  substantial
consolidation  of the banking  industry in  Michigan,  including  the  Company's
market area. Many of the area's locally owned or managed financial  institutions
have either been acquired by large regional bank holding  companies or have been
consolidated into branches of other financial institutions. In many cases, these
acquisitions and  consolidations  have been accompanied by pricing changes,  the
dissolution of local boards of directors,  management and personnel changes and,
in the  perception  of the  Company's  management,  a  decline  in the  level of
customer service. As a recent example,  First Michigan Bank Corporation ("FMB"),
which was previously  headquartered in Holland,  Michigan, was the dominant bank
in the Holland-Zeeland market in Ottawa County, Michigan. In September 1997, FMB
was acquired by  Huntington  Bancshares  Incorporated,  a bank  holding  company
headquartered  in  Columbus,  Ohio,  and the boards of directors of FMB's former
subsidiary  banks were dissolved.  As another recent  example,  First of America
Bank Corporation,  which is headquartered in western Michigan,  has agreed to be
acquired by a large bank holding company headquartered in Cleveland, Ohio.      

     Management  believes  that the  consolidation  of the banking  industry has
created a favorable  opportunity  for a new commercial bank to offer services to
customers  who wish to conduct  business  with a locally owned and managed bank.
Management  has been and  believes  that it will  continue to be  successful  in
attracting  as customers  individuals  and small to medium sized  businesses  by
demonstrating  an active  interest  in their  business  and  personal  financial
affairs.  The Company seeks to take advantage of this opportunity by emphasizing
the Company's local  management,  and their strong ties and active commitment to
the  community.  The Bank is  currently  the only  locally  managed  independent
commercial bank with its main office in the Holland-Zeeland area.               

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Market Area                                                                     

     The Bank's market area includes the cities of Holland and Zeeland,  and the
Interstate  I-196 corridor from Holland on the west and extending  approximately
20 miles east through Zeeland,  Hudsonville and Jenison,  Michigan. Most of this
market area is located in the southern  half of Ottawa  County,  Michigan.  This
area includes several growing  communities and has a stable and diverse economic
base. The  Holland-Zeeland  area has a population of approximately  93,000,  and
Ottawa County has a population of  approximately  200,000.  The  Holland-Zeeland
area had an estimated median household income in 1997 of approximately  $43,600.
Over 300 manufacturers  have operations in the Holland- Zeeland area,  including
several  manufacturers in the office furniture and automotive supply industries.
Major Ottawa County employers include Donnelly Corporation, Herman Miller, Inc.,
Haworth,  Inc. and Johnson Controls.  Management believes that the market area's
diverse commercial base provides significant  opportunities for business banking
services as well as personal  banking  services for the owners and  employees of
the area's businesses.                                                          

Management                                                                      

     The officers and directors of the Company are  recognized  and  established
individuals in their local  communities.  The  management  team assembled by the
Company  represents a wide range of business,  banking and investment  knowledge
and  experience.  They have  established  and  maintained  significant  customer
relationships  in the Bank's  market area which they expect to draw upon for the
benefit of the Bank. The majority of the Company's  management team have a least
10 years of banking  experience,  and  several key  personnel  have more than 20
years of banking  experience.  Management  believes  that their years of banking
experience and their existing  customer contacts in this market offer the Bank a
substantial opportunity to continue to attract new relationships for the Bank.  

     The  Company's  officers  and  directors  have a shared  vision of  focused
community banking and a commitment to the future growth and success of the Bank.
The Company's  vision is to build a quality,  full-service  community  bank that
offers competitive financial products and superior customer service. Fundamental
to the  Company's  vision  is  the  building  of  long-term  relationships  with
customers.  The Company maintains its community focus by hiring local people and
placing strong emphasis on local presence and local community support.          

Strategy                                                                        

     The Company is a customer-driven financial institution focused on providing
high  value  to  clients  by  delivering  products  and  services  in  a  highly
personalized  manner.  Management believes that the Bank can attract clients who
prefer to conduct business with a locally-managed  institution that demonstrates
an active interest in their business and personal financial affairs.            

     The  Company  competes  for  loans  principally   through  its  ability  to
communicate  effectively  with its customers  and to  understand  and meet their
needs.  Management  believes  that the  Company's  personal  service  philosophy
enhances its ability to compete  favorably in attracting  individuals  and small
businesses.  The Company  actively  solicits  retail  customers and competes for
deposits by offering  customers  personal  attention,  professional  service and
competitive  interest rates.  The Bank's  experienced  staff provides a superior
level of personalized service,  which enables the Bank to generate competitively
priced loans and deposits.                                                      

     The Bank has entered into agreements with third-party  service providers to
provide  customers with products and services such as credit cards,  debit cards
and ATM  cards.  The use of  third-party  service  providers  allows the Bank to
remain at the forefront of technology while minimizing the costs of delivery.   

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The Offering

Securities offered........................1,300,000 shares of Common Stock.     

Initial offering price................... $10.00 per share of Common Stock.     

Common Stock to be                                                              
outstanding after this                                                    
   Offering...............................2,240,125 shares (assuming no exercise
                                  of the over-allotment option).

Use of proceeds by the Company............The net  proceeds to the Company  from
                                          this Offering (assuming no exercise of
                                          the    over-allotment     option)  are
                                          estimated to be  $12,199,594.  The net
                                          proceeds (including any proceeds  from
                                          an exercise of the Underwriter's over-
                                          allotment  option)  will  generally be
                                          used  to   strengthen  the   Company's
                                          capital position  in  anticipation  of
                                          future  growth  and for other  general
                                          corporate  purposes.  A portion of the
                                          net proceeds may be contributed to the
                                          Bank at a future  date  to  strengthen
                                          the Bank's capital  position, to allow
                                          the Bank to open or acquire additional
                                          branches,   or   for   other   general
                                          corporate   purposes.   Pending  their
                                          application  for  any  or  all of such
                                          purposes,  the net  proceeds  will  be
                                          invested  in United States  government
                                          securities    and   investment   grade
                                          financial  instruments.   See "Use  of
              Proceeds."

Risk factors..............................The purchase of the securities offered
                                          hereby involves a high degree of  risk
                                          and  should  be   considered  only  by
                                          persons who can afford to sustain  the
                                          total  loss of  their investment.  See
                   "Risk Factors."

                                                        · Enlarge/Download Table
                       Summary Consolidated Financial Data                                         

                               As of December 31, 1997                  As of February 28, 1998    
                         -------------------------------------  -----------------------------------
                             Actual          As Adjusted (1)          Actual         As Adjusted(1)
                         --------------    -------------------  ----------------   ----------------
Balance Sheet Data:                                                (unaudited)                     
                                                                                                   
Cash and securities....  $  9,415,520             $21,615,114                                      
Total loans............       497,704                 497,704                                      
Total assets...........    10,722,193              22,921,787                                      
Total deposits.........     2,712,223               2,712,223                                      
Total liabilities......     2,750,186               2,750,186                                      
Retained deficit.......      (165,525)               (165,525)                                     
Shareholders' equity...  $  7,972,007             $20,171,601                                      
  -----------------                                                                                

(1)      Adjusted to reflect the estimated net proceeds from the shares  offered
         hereby.  The net proceeds have been  calculated  assuming  Underwriting
         Discounts and  Commissions  of $0.70 per share,  except with respect to
         400,000  shares  to  be  sold  with  no   Underwriting   Discounts  and
Commissions. See "Use of Proceeds."                           

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RISK FACTORS

     The Common Stock offered hereby is  speculative,  involves a high degree of
risk and should be  considered  only by persons who can afford the loss of their
entire  investment.  The following  constitute some of the potential risks of an
investment in the Common Stock and should be carefully considered by prospective
investors prior to purchasing shares of Common Stock. The order of the following
is not intended to be  indicative  of the relative  importance  of any described
risk nor is the following intended to be inclusive of all risks of investment in
the Common Stock.                                                               

Limited Operating History; Significant Initial Losses Expected                  

     The Bank began  operations on November 25, 1997, and the Company became the
holding company for the Bank on February 18, 1998. The Bank and the Company have
a limited operating history. The business of the Company and the Bank is subject
to the risks inherent in the  establishment  of a new business  enterprise.  The
Company's  profitability  will depend  primarily upon the Bank's  operations and
there is no assurance that the Bank will ever operate profitably. As a result of
initial expenditures to form the Bank and establish branches,  together with the
time necessary to more fully utilize its capital and generate  operating income,
the Bank (and thus the Company) can be expected to incur  significant  operating
losses  during its initial  years of  operations.  As of December 31, 1997,  the
Company had a retained deficit of $165,525.                                     

Need for Capital                                                                

     Although the Company does not currently  anticipate the need for additional
capital in the foreseeable future to conduct its business activities, additional
capital  beyond the  Company's  present  capital and the  capital  which will be
provided by this  Offering and any amounts  likely to be generated by the Bank's
operations over the next several years may be necessary before the Company could
undertake any  significant  acquisitions  or other  expansion of its operations.
There can be no assurance that any funds necessary to finance such  acquisitions
or expansion will be available.  Regulatory  capital  requirements and borrowing
restrictions which apply to the Bank and the Company may also have the effect of
constraining  future  growth.  To the extent the Company relies upon the sale of
additional equity securities to finance future expansion, such sale could result
in significant  dilution to the interests of persons  purchasing  shares in this
Offering.                                                                       

Ability to Achieve and Profitably Manage Growth and Expansion                   

     The Company's  strategy includes  increasing its deposits,  loans and other
assets and adding  additional  branches.  The  ability to achieve and manage the
Company's  growth and expansion will depend in part on the Company's  ability to
continue to attract and retain capable management and operations  personnel.  In
addition,  upon completion of this Offering the Company will have  shareholders'
equity of approximately  $20.2 million,  which is more capital than is necessary
or required for the  Company's  present  operations  under  applicable  laws and
regulations.  A  significant  portion of the net proceeds of this  Offering will
initially  be  invested  in  United  States  government   securities  and  other
investment grade securities, which typically offer rates of return that are less
than the rates of returns earned by the Company on loans to its customers.  As a
result, the Company's  financial  performance in the near future as reflected in
financial  measures such as return on assets,  return on equity and net earnings
per share is likely to be less favorable than the financial  performance of many
of  the  Company's  competitors.   The  Company's  ability  to  more  fully  and
effectively  utilize its capital and  improve  its  financial  performance  will
depend  on the  Company's  ability  to make  additional  loans.  There can be no
assurance  that the  Company  will be able to make  enough  additional  loans to
achieve  competitive  returns for its shareholders or to effectively  manage its
growth and expansion.                                                           

Government Regulation and Monetary Policy                                       

     The  Company  and the Bank are  subject  to  extensive  state  and  federal
governmental supervision and regulation. Existing state and federal banking laws
subject the Bank to substantial  limitations with respect to loans,  purchase of
securities, payment of dividends and many other aspects of its banking business.
These limitations include a requirement that the Bank maintain a ratio of Tier 1
leverage  capital to total  assets for the first  three years of at least 8% and
maintain                                                                        

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an adequate loan loss reserve. There can be no assurance that future legislation
or  government  policy will not  adversely  affect the  banking  industry or the
operations  of the Bank.  Federal  economic and  monetary  policy may affect the
Bank's ability to attract deposits, make loans and achieve satisfactory interest
spreads. See "Supervision and Regulation."                                      

No Assurance of Dividends                                                       

     It is  anticipated  that no dividends  will be paid on the Common Stock for
the  immediately  foreseeable  future.  It is likely  that the  Company  will be
largely  dependent upon dividends paid by the Bank for funds to pay dividends on
the Common Stock,  if and when such  dividends  are declared.  The Bank does not
anticipate  paying dividends during the foreseeable  future. No assurance can be
given that  future  earnings of the Bank,  and any  resulting  dividends  to the
Company,  will be sufficient to permit the legal payment of dividends to Company
shareholders at any time in the future.  Even if the Company may legally declare
dividends,  the amount and timing of such dividends will be at the discretion of
the Company's Board of Directors.  The Board may in its sole  discretion  decide
not to declare  dividends.  For a more detailed  discussion of other  regulatory
limitations  on the payment of cash  dividends  by the  Company,  see  "Dividend
Policy."                                                                        

Competition                                                                     

     The Company and the Bank face strong  competition  for deposits,  loans and
other financial services from numerous Michigan and out-of-state banks, thrifts,
credit unions and other  financial  institutions as well as other entities which
provide  financial  services.  Some of the financial  institutions and financial
services  organizations  with which the Bank will compete are not subject to the
same degree of  regulation  as the Bank.  Many of these  financial  institutions
aggressively  compete for  business  in the Bank's  market  area.  Most of these
competitors  have been in business  for many years,  have  established  customer
bases, are larger,  have  substantially  higher lending limits than the Bank and
will be  able  to  offer  certain  services,  including  numerous  branches  and
international   banking   services,   that  the  Bank  can  offer  only  through
correspondents.  In  addition,  most of  these  entities  have  greater  capital
resources  than the Bank,  which,  among other  things,  may allow them to price
their  services at levels more  favorable to the customer and to provide  larger
credit facilities than could the Bank. The dominant  competitor in the Company's
market area is Huntington  Bancshares  Incorporated,  headquartered in Columbus,
Ohio, which acquired FMB in September 1997.  Another  significant  competitor in
the market area is First of America  which  recently  agreed to be acquired by a
large bank holding company  headquartered  in Cleveland,  Ohio. See "Business --
Market Area" and "Business -- Competition."  Additionally,  federal and Michigan
legislation  regarding  interstate  branching  and  banking  may act to increase
competition in the future from larger  out-of-state  banks. See "Supervision and
Regulation."                                                                    

Dependence on Management                                                        

     The  Company  and the Bank are,  and for the  foreseeable  future  will be,
dependent upon the services of their management team, including the President of
the Bank,  and other senior  managers  retained by the Bank.  The loss of one or
more key members of the management team could adversely affect the operations of
the Company and the Bank. See "Business -- Employees" and "Management."         

Discretion in Use of Proceeds                                                   

     The  Offering  is  intended  to raise  funds to  generally  strengthen  the
Company's  capital position in anticipation of future growth of the Bank and for
other general corporate purposes.  While management currently has no such plans,
if opportunities  arise, some of the proceeds of the Offering could also be used
to finance  acquisitions  of other  financial  institutions,  branches  of other
institutions,  or  expansion  into other  lines of business  closely  related to
banking. However, management will retain discretion in employing the proceeds of
the Offering. See "Use of Proceeds."                                            

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Lending Risks and Lending Limits                                                

     The risk of nonpayment of loans is inherent in commercial banking, and such
nonpayment,  if it occurs,  may have a material  adverse effect on the Company's
earnings  and  overall  financial  condition  as well as the value of the Common
Stock. Moreover, the Bank's focus on small-to-medium sized businesses may result
in a larger concentration of loans by the Bank to such businesses.  As a result,
the Bank may  assume  greater  lending  risks  than  banks  which  have a lesser
concentration  of such  loans  and  tend  to make  loans  to  larger  companies.
Management  attempts  to  minimize  the  Bank's  credit  exposure  by  carefully
monitoring the concentration of its loans within specific industries and through
prudent loan application and approval procedures,  but there can be no assurance
that its monitoring and procedures  will reduce such lending risks  sufficiently
to avoid material losses.                                                       

     The Bank's legal lending limit prior to this Offering is approximately $1.9
million.  The Board of Directors has  established  an  "in-house"  limit of $1.5
million.  To the extent the net proceeds of this Offering are contributed to the
Bank, the legal lending limit and "in-house" limit may change. In addition,  the
Board may from  time to time  raise or lower  the  "in-house"  limit as it deems
appropriate  to comply with safe and sound  banking  practices and to respond to
overall economic conditions.  Accordingly,  the size of the loans which the Bank
can offer to potential customers is less than the size of loans that most of the
Bank's  competitors  are able to offer.  These limits  affect to some degree the
ability of the Bank to seek relationships with the area's larger businesses. The
Bank expects to accommodate  loan volumes in excess of its lending limit through
the sale of participations in such loans to other banks.  However,  there can be
no assurance  that the Bank will be  successful  in  attracting  or  maintaining
customers  seeking  larger  loans or that the Bank will be able to engage in the
sale of participations in such loans on terms favorable to the Bank.            

Impact of Interest Rates and Economic Conditions                                

     The results of operations for financial  institutions,  including the Bank,
may be  materially  and  adversely  affected by changes in  prevailing  economic
conditions,  including  declines in real estate market values,  rapid changes in
interest rates and the monetary and fiscal  policies of the federal  government.
See "Supervision and Regulation." The Bank's profitability is in part a function
of the spread between the interest rates earned on investments and loans and the
interest rates paid on deposits and other interest-bearing  liabilities.  In the
early 1990s, many banking organizations  experienced  historically high interest
rate spreads.  More recently,  interest rate spreads have generally narrowed due
to changing market conditions and competitive pricing pressure, and there can be
no assurance  that such factors will not continue to exert such pressure or that
such high interest rate spreads will return.  Substantially all the Bank's loans
will be to businesses and individuals in western Michigan and any decline in the
economy of this area could have an adverse impact on the Bank. Like most banking
institutions,  the Bank's net  interest  spread and margin  will be  affected by
general  economic  conditions and other factors that influence  market  interest
rates and the Bank's  ability to respond to changes in such rates.  At any given
time,  the Bank's  assets and  liabilities  will be such that they are  affected
differently  by a given change in interest  rates.  As a result,  an increase or
decrease in rates,  the length of loan terms or the mix of adjustable  and fixed
rate loans in the Bank's  portfolio  could have a positive or negative effect on
the Bank's net income, capital and liquidity. There can be no assurance that the
positive  trends or  developments  discussed in this Prospectus will continue or
that negative trends or developments  will not have a material adverse effect on
the Bank. See "Supervision and Regulation."                                     

Need for Technological Change                                                   

     The  banking  industry  is  undergoing  rapid  technological  changes  with
frequent  introductions  of new  technology-  driven  products and services.  In
addition to better serving customers,  the effective use of technology increases
efficiency and enables  financial  institutions  to reduce costs.  The Company's
future  success  will  depend in part on its ability to address the needs of its
customers by using technology to provide products and services that will satisfy
customer demands for convenience as well as to create additional efficiencies in
the Bank's operations. Many of the Bank's competitors have substantially greater
resources  to invest in  technological  improvements.  There can be no assurance
that  the  Bank  will be able to  effectively  implement  new  technology-driven
products and services or be successful  in marketing  such products and services
to its customers. See "Business -- Strategy."                                   

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Year 2000 Compliance                                                            

     Because many computerized systems use only two digits to record the year in
date fields (for example, the year 1998 is recorded as 98), such systems may not
be able to  accurately  process  dates  ending in the year 2000 and  after.  The
effects of this issue will vary from system to system and may  adversely  affect
the ability of a financial  institution's  operations  as well as its ability to
prepare  financial  statements.  The Company and the Bank were organized in 1997
and the Company  recently  acquired  its  computer  equipment  and has  recently
contracted  with a leading  supplier of  information  processing  services.  The
Company has an internal task force to assess year 2000 compliance by the Company
and its vendors. In addition, the Bank asks commercial borrowers about year 2000
compliance  as part of the loan  application  and review  process.  As a result,
management believes that the Company will not be materially affected by the year
2000 issue.                                                                     

Anti-Takeover Provisions                                                        

     The Company's  articles of  incorporation  (the "Articles") and bylaws (the
"Bylaws") include provisions which may have the effect of delaying, deferring or
preventing certain types of transactions involving an actual or potential change
in control of the  Company,  including  transactions  in which the  shareholders
might  otherwise  receive a premium for their  shares over then  current  market
prices,  and may limit the ability of the  shareholders to approve  transactions
that  they  may  deem to be in  their  best  interests.  The  Michigan  Business
Corporation  Act (the "MBCA")  contains a Control  Share Act intended to protect
shareholders  and  prohibit  or  discourage  certain  types of hostile  takeover
activities. Federal law requires the approval of the Federal Reserve Board prior
to  acquisition  of  "control"  of a bank  holding  company.  Michigan  law also
requires the  approval of the State of Michigan  Financial  Institutions  Bureau
(the  "FIB")  prior to the  acquisition  of  direct  or  indirect  control  of a
Michigan-chartered  bank.  These  provisions  may have the effect of delaying or
preventing  a  change  in  control  of  the  Company   without   action  by  the
shareholders,  and  therefore  could  adversely  affect  the price of the Common
Stock. The Company's Articles and Bylaws provide for the  indemnification of its
officers and directors and insulate its officers and  directors  from  liability
for certain  breaches of the duty of care. See  "Description of Capital Stock --
Anti-Takeover Provisions."                                                      

Indemnification of Directors and Officers                                       

     The Company's  bylaws provide for the  indemnification  of its officers and
directors  and insulate its officers and  directors  from  liability for certain
breaches  of  the  duty  of  care.  It  is  possible  that  the  indemnification
obligations  imposed under these provisions could result in a charge against the
Company's  earnings and thereby affect the  availability of funds for payment of
dividends to the  Company's  shareholders.  The Bank's  bylaws  contain  similar
provisions. See "Description of Capital Stock -- Anti-Takeover Provisions."     

Determination of Offering Price                                                 

     The initial  public  offering  price of $10.00 per share was  determined by
negotiations  between the Company  and Robert W. Baird & Co.  Incorporated,  the
underwriter of this Offering (the  "Underwriter").  Prior to this Offering,  the
Bank sold shares to its original  investors in a private  placement  for a price
equivalent to $8.70 per share of Common Stock. The initial public offering price
is not based upon earnings or any  significant  history of operations and should
not be construed as indicative of the present or anticipated future value of the
Common Stock. Prior to the Offering, there has been no public trading market for
the Common  Stock.  The price at which  these  shares  are being  offered to the
public may be greater than the market price for the Common Stock  following  the
Offering. See "Dilution" and "Underwriting."                                    

Dilution                                                                        

     The  purchasers of the Common Stock offered hereby will suffer an immediate
dilution of $1.00 in net tangible  book value per share of the Common Stock from
the initial  offering  price on a pro forma basis as of December 31,  1997.  See
"Dilution."                                                                     

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Control by Management                                                           

     Although the combined ownership and control over the Company's Common Stock
by the Company's officers and directors is likely to be less than 10% after this
Offering,  such  individuals  will be able to  exert a  significant  measure  of
control  over the affairs and policies of the  Company.  Such  control  could be
used,  for example,  to help  prevent an  acquisition  of the  Company,  thereby
precluding shareholders from possibly realizing any premium which may be offered
for  the  Company's  Common  Stock  by  a  potential  acquiror.  See  "Principal
Shareholders."                                                                  

No Prior Public Market; Limited Trading Market Expected                         

     Prior to this  Offering,  there has been no public  trading  market for the
Common Stock.  The initial  offering price has been  determined by  negotiations
between the Company and the Underwriter and may be greater than the market price
for the Common  Stock  following  this  Offering.  The Company  expects that the
quotations for the Common Stock will be reported on the OTC Bulletin Board under
the symbol  "----." The  Underwriter  has also  advised the Company  that,  upon
completion of this  Offering,  it intends to act as a market maker in the Common
Stock, subject to applicable laws and regulatory  requirements.  The development
of a public  trading  market  depends,  however,  upon the  existence of willing
buyers and  sellers,  the  presence  of which is not  within the  control of the
Company, the Bank or any market maker. Even with a market maker, factors such as
the limited size of this Offering,  the lack of earnings history for the Company
and the absence of a reasonable  expectation of dividends within the near future
mean that there can be no assurance of the development in the foreseeable future
of an active and liquid market for the Common Stock.  Even if a market develops,
there can be no assurance that a market will continue, or that shareholders will
be able to sell their shares at or above the initial offering price.  Purchasers
of Common Stock should carefully consider the potentially illiquid and long-term
nature of their investment in the shares being offered hereby.                  

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 USE OF PROCEEDS

     The net proceeds to the Company from the sale of 1,300,000 shares of Common
Stock  offered  hereby  are  estimated  to be  $12,199,594  ($14,013,094  if the
Underwriter's  over-allotment  option is exercised in full),  after deduction of
the estimated  underwriting discounts and commissions and offering expenses. The
net  proceeds  have  been  calculated   assuming   Underwriting   Discounts  and
Commissions of $0.70 per share, except with respect to 400,000 shares to be sold
with no  Underwriting  Discounts  and  Commissions.  The net proceeds  from this
Offering will generally be used to strengthen the Company's  capital position in
anticipation  of future  growth  and for other  general  corporate  purposes.  A
portion of the net proceeds may be  contributed  to the Bank at a future date to
strengthen the Bank's capital position,  to open or acquire additional branches,
or for other general  corporate  purposes.  Pending their application for any or
all of  such  purposes,  the net  proceeds  may be  invested  in  United  States
government securities and other investment grade financial instruments.         

 DIVIDEND POLICY

     The Company initially  expects that all Company and Bank earnings,  if any,
will be  retained  to finance the growth of the Company and the Bank and that no
cash dividends will be paid for the  foreseeable  future.  If and when dividends
are declared, the Company will be primarily dependent upon dividends paid by the
Bank for  funds to pay  dividends  on the  Common  Stock.  It is also  possible,
however,  that the  Company  will pay  dividends  in the future  generated  from
investment income and other activities, if any, of the Company.                 

     Under  Michigan  law, the Bank is  restricted  as to the maximum  amount of
dividends it may pay on its common stock.  The Bank may not pay dividends except
out of net profits after  deducting its losses and bad debts.  A Michigan  state
bank may not  declare  or pay a  dividend  unless  the bank  will have a surplus
amounting to at least 20% of its capital after the payment of the  dividend.  If
the Bank has a surplus less than the amount of its  capital,  it may not declare
or pay any dividend until an amount equal to at least 10% of net profits for the
preceding  one-half year (in the case of quarterly or semi-annual  dividends) or
full-year (in the case of annual dividends) has been transferred to surplus. The
ability of the Company and the Bank to pay dividends is also affected by various
regulatory  requirements  and  policies,  such as the  requirement  to  maintain
adequate capital above regulatory guidelines.  See "Supervision and Regulation."
Such  requirements  and  policies  may limit  the  Company's  ability  to obtain
dividends from the Bank for its cash needs,  including  funds for  acquisitions,
payment of dividends by the Company and the payment of operating expenses.      

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 RECENT DEVELOPMENTS

Formation of the Holding Company                                                

     On February 18,  1997,  the Bank became a wholly  owned  subsidiary  of the
Company  pursuant to a  Consolidation  Agreement  filed with and approved by the
Federal Reserve Board and the FIB. Pursuant to the Consolidation Agreement, each
issued and outstanding share of common stock of the Bank was converted into 1.15
shares of Common  Stock of the Company and the  shareholders  of the Bank became
the shareholders of the Company. In total, 817,500 shares of common stock of the
Bank were converted  into 940,125  shares of Common Stock of the Company,  which
are all the  issued  and  outstanding  shares  of  Common  Stock  prior  to this
Offering.  The Bank's  common  stock had been issued to its  shareholders  as of
November 25, 1997 at a price of $10.00 per share or a total of  $8,175,000.  See
"Dilution."                                                                     

Branch Openings                                                                 

     Since the Bank  opened its main office in  Zeeland,  Michigan in  November,
1997, it has  established a full service branch office at 139 E. 8th Street,  in
Holland,  Michigan on January 19, 1998.  The Bank also opened a loan  processing
office  branch at 106 E. 8th  Street  in  Holland,  Michigan.  The Bank also has
leased a branch  facility  in south  Holland  and  agreed to  purchase  a branch
facility in Jenison,  Michigan,  and intends to apply for regulatory approval to
open those two locations. See "Business--Properties" and "Plan of Operation."   

Results of Operations                                                           

     The Bank  commenced  operations on November 25, 1997. At December 31, 1997,
the Company had total assets of $10.7 million, total deposits of $2.7 million, a
retained  deficit of  $165,525  and  shareholders'  equity of $8.0  million.  At
February  28,  1998,  the Company had total  assets of $_______  million,  total
deposits of $_______  million,  a retained deficit of $_______ and shareholders'
equity of $_______.  The Bank had deposit  accounts as of February 28, 1998. See
"Plan of Operation."                                                            

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CAPITALIZATION

     The  following  table sets forth the  capitalization  of the  Company as of
December 31,  1997,  and as adjusted to reflect the sale of the shares of Common
Stock offered hereby:                                                           

                                                        · Enlarge/Download Table
                                                                                       December 31, 1997      
                                                                                   Actual       As Adjusted(1)
                                                                                                              
Long-term and short-term debt................................................... $       --     $          -- 
Shareholders' equity:                                                                                         
         Preferred stock, no par value, 500,000 shares authorized;  no shares                                 
               issued and outstanding...........................................         --                -- 
         Common stock, no par value, 9,500,000 shares authorized; 940,125                                     
               shares issued and outstanding, and 2,240,125 shares                                            
               as adjusted (2)..................................................   8,137,268       20,336,862 
         Retained deficit (3)...................................................    (165,525)        (165,525)
         Net unrealized appreciation on securities available for sale,                                        
               net of tax of $136...............................................         264              264 
                    Total shareholders' equity..................................  $7,972,007      $20,171,601 

(1)      Adjusted to reflect the estimated net proceeds from the shares  offered
         hereby  (assuming  no  exercise  of  the  Underwriter's  over-allotment
option). See "Use of Proceeds."                               
(2)      Does not include an aggregate  of 20,000  shares  issuable  pursuant to
         options  granted under the Company's  Directors  Stock Option Plan. See
"Management -- Executive Compensation."                       
(3)      The  accumulated  deficit  as  of  December  31,  1997,  was  comprised
         primarily  of  pre-opening  expenses  related  principally  to fees and
         expenses  incurred  in the  regulatory  application  process and office
         occupancy costs and supplies,  together with initial  operating  losses
         following the  commencement  of operations by the Bank. The accumulated
         deficit  is  expected  to  increase  further  as  anticipated   initial
operating losses are incurred.                                

DILUTION

     The net tangible book value (total tangible assets minus total liabilities)
of the Company as of December 31, 1997,  was  $7,972,007,  or $8.48 per share of
Common Stock outstanding on such date. Assuming the sale of the 1,300,000 shares
of Common Stock offered hereby (at the initial  public  offering price of $10.00
per share) and the application of the net proceeds  therefrom  (after  deducting
estimated  offering  expenses  and  underwriting  discounts),  the pro forma net
tangible  book value of the Company as of  December  31,  1997,  would have been
$20,171,601,  or $9.00 per share of Common Stock  outstanding on such date. This
represents an immediate  increase in pro forma net tangible book value per share
of $0.52 to existing  shareholders and an immediate  dilution of $1.00 per share
to new investors. The following table illustrates this per share dilution:      

                                                        · Enlarge/Download Table
                                                                                              
         Initial public offering price per share................................        $10.00
                  Net tangible book value per share before the Offering(1)...... $8.48        
                  Increase per share attributable to new investors..............  0.52        
         Pro forma net tangible book value per share after the Offering(1)......          9.00
                                                                                        ------
         Dilution per share to new investors....................................        $ 1.00
                                                                                        ======
--------------                                                                                

(1)      Does not include  20,000  shares of Common Stock  reserved for issuance
         upon the exercise of stock options  outstanding as of February 1, 1998,
         which have an  exercise  price  equal to the  initial  public  offering
         price,  nor does it include  shares of Common Stock  available  for the
         future grant of stock options under the  Company's  Stock  Compensation
         Plan (100,000  shares) or Directors Stock Option Plan (20,000  shares).
         See  "Management  -- Stock  Compensation  Plan and --  Directors  Stock
         Option Plan." Does not give effect to the exercise of the Underwriter's
over-allotment option.                                        

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BUSINESS

General                                                                         

     The Company is a bank holding company  organized in 1997 under Michigan law
and owns  all of the  common  stock of the  Bank.  The  Bank was  organized  and
commenced  operations  in  November,  1997 as a  Michigan  chartered  bank  with
depository  accounts  insured  by the FDIC.  The Bank  provides  a full range of
commercial and consumer banking services primarily in the communities of Holland
and  Zeeland,  Michigan,  as well as the  surrounding  market  area  principally
located in Ottawa  County.  The Bank's  services  include  checking  and savings
accounts  (including  certificates  of deposit),  safe deposit boxes,  travelers
checks, money orders and commercial, mortgage and consumer loans. As of December
31, 1997, the Company had total assets of $10.7 million,  total deposits of $2.7
million, ______ deposit accounts and shareholders' equity of $8.0 million. As of
February 28, 1998,  the Bank had ____  full-time and ____  part-time  employees,
____ deposit accounts and total deposits of $___ million.                       

Reason for Starting Macatawa Bank                                               

     The  expansion  of  interstate   banking  has  contributed  to  substantial
consolidation  of the banking  industry in  Michigan,  including  the  Company's
market area. Many of the area's locally owned or managed financial  institutions
have either been acquired by large regional bank holding  companies or have been
consolidated into branches. In many cases, these acquisitions and consolidations
have been  accompanied by pricing  changes,  the  dissolution of local boards of
directors,  management  and  personnel  changes  and, in the  perception  of the
Company's  management,  a decline in the level of customer service. For example,
FMB, which was headquartered in Holland,  Michigan, was the dominant bank in the
Holland-Zeeland  market in Ottawa County,  Michigan.  In September 1997, FMB was
acquired  by  Huntington  Bancshares   Incorporated,   a  bank  holding  company
headquartered  in  Columbus,  Ohio,  and the boards of directors of FMB's former
subsidiary  banks were dissolved.  As another recent  example,  First of America
Bank  Corporation,  which is  headquartered  in western  Michigan,  has recently
agreed  to  be  acquired  by a  large  bank  holding  company  headquartered  in
Cleveland, Ohio.                                                                

     Management  believes that the consolidation of the banking industry created
a favorable opportunity for a new commercial bank to offer services to customers
who wish to conduct  business with a locally owned and managed bank.  Management
has been and believes  that it will  continue to be  successful in attracting as
customers  individuals and small to medium sized  businesses by demonstrating an
active interest in their business and personal  financial  affairs.  The Company
seeks to take advantage of this opportunity by emphasizing in its marketing plan
the Company's local  management,  and their strong ties and active commitment to
the  community.  The Bank is  currently  the only  locally  managed  independent
commercial bank with its main office in the Holland-Zeeland area.               

Market Area                                                                     

     The Bank's market area includes the cities of Holland and Zeeland,  and the
Interstate  I-196  corridor  from the City of Holland on the west and  extending
approximately 20 miles east through Zeeland,  Hudsonville and Jenison, Michigan.
Most of this  market  area is located  in the  southern  half of Ottawa  County,
Michigan.  This area includes  several growing  communities and has a stable and
diverse   economic   base.  The   Holland-Zeeland   area  has  a  population  of
approximately  93,000  and  Ottawa  County  has a  population  of  approximately
200,000.  The  Holland-Zeeland  area had an estimated median household income in
1997 of approximately  $43,600.  Over 300  manufacturers  have operations in the
Holland-Zeeland  area,  including several  manufacturers in the office furniture
and automotive supply industries. Major Ottawa County employers include Donnelly
Corporation, Herman Miller, Inc., Haworth, Inc. and Johnson Controls. Management
believes that the market area's  diverse  commercial  base provides  significant
opportunities  for business  banking  services,  together with personal  banking
services for the owners and employees of the area's businesses.                 

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Strategy                                                                        

     The Company is a customer-driven financial institution focused on providing
high  value  to  clients  by  delivering  products  and  services  in  a  highly
personalized  manner.  Management  of the  Company  believes  that  the Bank can
attract  those  clients who prefer to conduct  business  with a  locally-managed
institution that  demonstrates an active interest in their business and personal
financial affairs.                                                              

     The officers and directors of the Company are  recognized  and  established
individuals in their local  communities.  The  management  team assembled by the
Company  represents a wide range of business,  banking and investment  knowledge
and  experience.  The  directors,   officers  and  staff  have  established  and
maintained  significant  customer  relationships  in the Bank's  market area and
expect  to draw upon  these  relationships  for the  benefit  of the  Bank.  The
majority  of the  Company's  management  team  have a least 10 years of  banking
experience, and several  key personnel have more than 20 years experience in the
financial services industry. Management believes that their years of banking and
financial  services  experience  and their  existing  customer  contacts in this
market  offer the Bank a  substantial  opportunity  to  continue  to attract new
relationships for the Bank.                                                     

     The Company's officers and directors have a shared vision and commitment to
the future growth and success of the Bank.  The  Company's  vision is to build a
quality,  full-service community bank that offers competitive financial products
and  superior  customer  service.  Fundamental  to the  Company's  vision is the
building of long-term  relationships  with customers.  The Company maintains its
community  focus by hiring  local  people and placing  strong  emphasis on local
presence and local community support.                                           

     The  Company  competes  for  loans  principally   through  its  ability  to
communicate  effectively  with its customers  and to  understand  and meet their
needs.  Management  believes  that the  Company's  personal  service  philosophy
enhances its ability to compete  favorably in attracting  individuals  and small
businesses.  The Company  actively  solicits  retail  customers and competes for
deposits by offering  customers  personal  attention,  professional  service and
competitive  interest rates.  The Bank's  experienced  staff provides a superior
level of personalized service,  which enables the Bank to generate competitively
priced loans and deposits.                                                      

     The Bank has entered into agreements with third-party  service providers to
provide  customers with products and services such as credit cards,  debit cards
and ATM  cards.  The use of  third-party  service  providers  allows the Bank to
remain at the forefront of technology while minimizing the costs of delivery.   

Products and Services                                                           

     Deposit  Services.  The Bank  offers a broad  range  of  deposit  services,
including checking accounts, NOW accounts, savings accounts and time deposits of
various types.  Transaction  accounts and time  certificates are tailored to the
principal  market area at rates  competitive with those offered in the area. All
deposit  accounts are insured by the FDIC up to the maximum amount  permitted by
law.  The  Bank   solicits   these   accounts  from   individuals,   businesses,
associations,  financial institutions and government authorities.  The Bank does
not  intend  to  accept  brokered  deposits.  The Bank may also use  alternative
funding  sources as needed,  including  advances  from  Federal Home Loan Banks,
conduit financing and the packaging of loans for securitization and sale.       

     Real Estate Loans. The Bank originates  residential  mortgage loans,  which
are generally long-term with either fixed or variable interest rates. The Bank's
general policy, which is subject to review by management as a result of changing
market and  economic  conditions  and other  factors,  is to retain all variable
interest rate mortgage  loans in the Bank's loan portfolio and to sell all fixed
rate loans in the secondary market.  The Bank also offers home equity loans. The
Bank's current policy is to retain  servicing rights with respect to residential
mortgage loans that it originates.                                              

     The retention of variable rate loans on the Bank's loan portfolio  helps to
reduce the Bank's  exposure to fluctuations  in interest  rates.  However,  such
loans  generally  pose credit risks  different  from the risks inherent in fixed
rate loans,  primarily  because as interest rates rise, the underlying  payments
from the borrowers rise, thereby increasing the potential for default.          

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     Personal Loans and Credit.  The Bank makes personal loans,  lines of credit
and credit  cards  available  to  consumers  for various  purposes,  such as the
purchase  of  automobiles,   boats  and  other   recreational   vehicles,   home
improvements  and personal  investments.  The Bank's current policy is to retain
substantially all of such loans.                                                

     Commercial  Loans.  Commercial  loans  are  made  primarily  to  small  and
mid-sized businesses. These loans are and will be both secured and unsecured and
are made available for general operating  purposes,  acquisition of fixed assets
including  real  estate,  purchases  of equipment  and  machinery,  financing of
inventory  and accounts  receivable,  as well as any other  purposes  considered
appropriate. The Bank generally looks to a borrower's business operations as the
principal  source  of  repayment,  but  will  also  receive,  when  appropriate,
mortgages on real estate,  security interests in inventory,  accounts receivable
and other personal property and/or personal guarantees.                         

     Although the Bank takes a progressive and competitive  approach to lending,
it  stresses  high  quality in its loans.  Because of the Bank's  local  nature,
management  believes  that  quality  control  should be  achievable  while still
providing  prompt  and  personal  service.  On a  monthly  basis,  the  Board of
Directors  reviews  selected loans made in the preceding  month. In addition,  a
loan  committee of the Board of Directors of the Bank also reviews  larger loans
for prior approval when the loan request exceeds the established  limits for the
senior  officers.  The Bank also  maintains a  continuous  loan  review  process
designed to promote early identification of credit quality problems.  The Bank's
credit review  administrator  will be  responsible  for  conducting a continuous
internal review which tests  compliance with the Bank's loan policy and adequate
documentation of all loans. Any past due loans and identified problem loans will
be reviewed with the Board of Directors on a monthly basis.                     

     Regulatory and supervisory  loan-to-value limits are established by Section
304 of  the  Federal  Deposit  Insurance  Corporation  Improvement  Act of  1991
("FDICIA").  The Bank's internal  limitations follow those limits and in certain
cases are more restrictive than those required by the regulators.               

     The Bank has established  relationships with correspondent  banks and other
independent  financial  institutions to provide other services  requested by its
customers, including loan participations where the requested loan amounts exceed
the Bank's policies or legal lending limits.                                    

     Other Services.  The Bank is considering  providing  additional services in
the future,  including trust services.  The Bank will need to satisfy applicable
legal  requirements  and obtain  regulatory  approval  before it may offer trust
services.  The Company does not offer personal computer based at-home banking at
the present time. The Company's  customers have not expressed strong interest in
at-home electronic banking, and management believes that the Bank's personalized
service  approach  benefits from customer  visits to the Bank.  Management  will
continue  to evaluate  the  desirability  of adding  telephone,  electronic  and
at-home  banking  services.  Should  the Bank  choose to do so,  the Bank  could
provide one or more of these  services  at a future  date using its  third-party
service provider.                                                               

Competition                                                                     

     The banking industry in the Bank's market area has experienced  substantial
consolidation  in recent  years.  Many of the  area's  locally  owned or managed
financial  institutions have either been acquired by large regional bank holding
companies  or  have  been   consolidated   into  branches  of  other   financial
institutions.  This  consolidation  has been  accompanied  by  numerous  pricing
changes, the dissolution of local boards of directors,  management and personnel
changes and, in the  perception  of the Company's  management,  a decline in the
level of customer service. With recent changes in interstate banking regulation,
this type of consolidation is expected to continue.                             

     Management believes that this competitive situation,  when coupled with the
area's growing and diversified  economy,  creates a favorable  opportunity for a
new commercial bank managed by experienced  local business people.  Management's
experience indicates that a locally managed community bank can attract customers
by providing highly professional personalized attention,  responding in a timely
manner to product and service  requests  and  exhibiting  an active  interest in
customers' business and personal financial needs. The Bank is currently the only
locally  managed  independent  commercial  bank  with  its  main  office  in the
Holland-Zeeland  area. Management is aware of one savings and loan headquartered
in the Holland-Zeeland area.                                                    

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     The Company's market area is Ottawa County,  Michigan. There are many bank,
thrift and credit union offices  located within the Company's  market area. Most
are  branches  of  larger  financial   institutions.   The  Company  also  faces
competition from finance companies,  insurance  companies,  mortgage  companies,
securities  brokerage firms, money market funds and other providers of financial
services.  Most of the Company's  competitors  have been in business a number of
years,  have  established  customer  bases,  are larger and have higher  lending
limits than the Company.  The Company competes for loans principally through its
ability to communicate effectively with its customers and to understand and meet
their needs.  Management believes that the Company's personal service philosophy
enhances its ability to compete  favorably in attracting  individuals  and small
businesses. The Company actively solicits customers and competes for deposits by
offering customers personal  attention,  professional  service,  and competitive
interest rates.                                                                 

Employees                                                                       

     As of  January  31,  1998,  the  Bank  had  20  full-time  and 4  part-time
employees,  including two commercial loan officers,  a mortgage loan officer,  a
consumer loan officer, two customer service representatives, a vice president of
operations  and the  Bank  president.  The  Company  has  assembled  a staff  of
experienced,  dedicated  professionals  whose  goal  is to  provide  outstanding
service. The majority of the Company's management team have at least 10 years of
banking experience, and several key personnel have more than 20 years of banking
experience.                                                                     

Properties                                                                      

     The Company's  headquarters  and the Bank's main office is located at 51 E.
Main  Street,  Zeeland,  Michigan  49464,  and the  telephone  number  is  (616)
748-9491. The main office consists of approximately 1,700 square feet located on
the first floor of an office building and approximately 1,500 square feet in the
basement.  This  location is in the heart of the City of Zeeland on Main Street,
which  management  believes  provides  recognition and a visible presence in the
Holland-Zeeland  community.  The main office includes three teller stations, two
customer service offices,  two administrative  offices, a vault and safe deposit
boxes and an  operations  center.  The Bank has entered  into a three year lease
with respect to its main office,  with renewal options for up to four successive
three year terms. The initial rental rate is $800.00 per month,  which increases
by 7.5% for each three year renewal  period.  The Bank is also  obligated to pay
all  costs  associated  with  taxes,  assessments,  maintenance,  utilities  and
insurance.  The Bank  estimates  that it has  spent  approximately  $544,000  on
leasehold improvements,  furniture,  fixtures and equipment for the Zeeland main
office.                                                                         

     The Bank has a full  service  branch  located  at 139  East 8th  Street  in
Holland,  Michigan.  The office consists of approximately  2,200 square feet and
includes  three teller  stations,  two  offices,  three  additional  offices for
commercial lenders,  one drive-through lane, and a vault and safe deposit boxes.
The Bank  intends to add a 24 hour ATM machine  within the next two months.  The
Bank has  entered  into a seventeen  month  lease with a renewal  option for one
additional  year. The initial rental rate is $1,700 per month which increases to
$1,800 per month during the renewal term.  The Bank  estimates that it has spent
approximately  $232,000  on  leasehold  improvements,  furniture,  fixtures  and
equipment for this Holland branch.                                              

     The Bank also has a loan  processing  branch  office  located at 106 E. 8th
Street in Holland,  Michigan.  The office consists of approximately 1,200 square
feet,  including  three  offices  and  additional  work space in an open  office
environment. The Bank has entered into a two year lease with renewal options for
up to two  additional two year terms.  The rental rate is $1,600 per month.  The
facility is  indirectly  owned by Mr.  Smith,  the Chairman and Chief  Executive
Officer of the Company. See "Certain Transactions -- Lease of Real Property."   

     The Bank has also leased a branch facility at 701 Maple Avenue,  located in
the southern part of Holland.  This facility will include four teller  stations,
four offices,  three drive-through lanes, a drive-up 24 hour ATM and a vault and
safe  deposit  boxes.  The Bank has entered  into a two year lease with  renewal
options for up to four additional  three year terms.  The initial rental rate is
$1,900 per month,  and the rental  rate for the  renewal  terms will be adjusted
upwards  to  reflect  changes  in the  Consumer  Price  Index.  The Bank is also
obligated  to pay all costs  associated  with taxes,  assessments,  maintenance,
utilities  and  insurance.  The Bank also has an option to purchase the facility
during the term of the lease,  including any renewal  periods,  at the appraised
value of the property less the book value of any improvements  made by the Bank.
The Company expects to spend approximately  $200,000 on leasehold  improvements,
furniture, fixtures and equipment to open this branch. The Bank anticipates that
this  branch  will be open for  business  within the next  three to six  months,
assuming receipt of the necessary regulatory approvals.                         

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     The Bank has agreed to purchase a branch  facility  located at 2020 Baldwin
in Jenison,  Michigan,  for a purchase  price of  approximately  $355,000.  This
facility  will include four teller  stations,  four offices,  two  drive-through
lanes,  a valut and safe  deposit  boxes and the Bank  intends to add a drive-up
ATM. The Bank expects to spend approximately $200,000 on leasehold improvements,
furniture,  fixtures and equipment at this location.  The Bank  anticipates that
this branch will also be open for business  within the next three to six months,
assuming receipt of the necessary regulatory approvals.                         

 PLAN OF OPERATION

     Assuming the successful completion of this Offering,  the Company's plan of
operation  for the next  twelve  months does not  contemplate  the need to raise
additional  capital  during that period.  Management  believes  that its current
capital  together  with the net  proceeds  from this  Offering  will provide the
Company with adequate  capital to support its expected level of deposit and loan
growth and to otherwise meet its cash and capital  requirements for at least the
next two or three years.                                                        

     The  Company's  plan has been to establish its  management  team within the
first  few  months  of its  operations.  Management  believes  that it has  been
successful in  establishing  its management  team and that it can administer the
Company's  growth for the next two to three  years,  with the addition of branch
managers, tellers and other staff personnel at any new branches that are opened.
Management  believes that it will hire approximately  eight full time equivalent
employees for each additional branch that is opened.                            

     The Bank's main office in Zeeland and its full service and loan  processing
branches  in  Holland  are  leased   facilities.   The  Company  has   completed
substantially  all of its  planned  renovations  and  equipment  purchases  with
respect to these three  facilities.  Through  January 31, 1998,  the Company had
spent a total of approximately  $816,000 on leasehold  improvements,  furniture,
fixtures and equipment for these three facilities. See "Business -- Properties."

     The  Company's  plan is to continue to seek out and consider  locations for
additional  branches  in its market  area.  Management  believes  that  multiple
branches  make the Bank more  convenient to its customers and assist the Bank in
attracting additional depositors and borrowers.  Management anticipates that the
Company  will add  three to four  branches  in 1998 in  addition  to the  Bank's
existing  locations,  although  there can be no  assurance  that  such  proposed
branches will be added.  The Bank has agreed to purchase a bank branch  facility
in Jenison,  Michigan  for  approximately  $355,000,  and  anticipates  spending
approximately  $200,000  on  leasehold  improvements,  furniture,  fixtures  and
equipment  for that  facility.  In  addition,  the Bank has leased a bank branch
facility  located  in south  Holland,  and  anticipates  spending  approximately
$200,000 on leasehold improvements,  furniture,  fixtures and equipment for that
facility.  The Bank intends to apply for branch  approval for the south  Holland
and Jenison  facilities,  and  anticipates  that these branches will be open for
business within the next three to six months,  assuming receipt of the necessary
regulatory approvals. See "Business -- Properties."                             

     The Company  will  continue to evaluate  its products and services and will
consider adding  additional  products and services as appropriate.  For example,
the Bank is considering  providing  trust  services in the future,  although the
Bank will need to satisfy  applicable legal  requirements and obtain  regulatory
approval before it may offer trust services. The Company does not offer personal
computer based at-home banking at the present time. The Company's customers have
not expressed  strong  interest in at-home  electronic  banking,  and management
believes that the Bank's  personalized  service approach  benefits from customer
visits to the Bank.  Management  will continue to evaluate the  desirability  of
adding  telephone,  electronic  and at-home  banking  services.  Should the Bank
choose to do so,  the Bank  could  provide  one or more of these  services  at a
future date using its third-party service providers.                            

     As of December  31, 1997,  the Company had a retained  deficit of $165,525,
and  as  of  February  28,  1998,   the  Company  had  a  retained   deficit  of
$_____________.  This retained  deficit was primarily the result of  pre-opening
fees and  expenses and wages paid to  employees.  Management  believes  that the
Company will  generate a net loss for 1998 as a result of  expenditures  made to
build  its  management  team and open its main  office  and  branch  facilities,
together  with the time  needed to more  effectively  utilize  its  capital  and
generate loan  interest and fee income by making  additional  loans.  Management
believes  that  the  expenditures   made  in  1997  and  1998  will  create  the
infrastructure  and lay the  foundation for future growth and  profitability  in
subsequent years.                                                               

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MANAGEMENT

Directors and Executive Officers                                                

     The  directors  and  executive  officers of the Company and the Bank are as
follows:                                                                        

                          Positions with            Positions with
Name                  Age    the Company               the Bank         
----                  ---    --------------            --------------   
Benj. A. Smith, III........54    Chairman, Chief           Chairman and Director
       Executive Officer and
Director      
Philip J. Koning...........43    Secretary, Treasurer      President and        
                    and Director              Director
G. Thomas Boylan...........75    Director                  Director             

Robert E. DenHerder........43    Director                  Director             

Brian J. Hansen............49    Director                  Director             

     The Company has a classified  board of directors,  with  directors  serving
staggered  three-year  terms which  expire at the relevant  annual  shareholders
meeting. The terms of Messrs.  DenHerder and Koning expire in 1999, the terms of
Messrs.  Smith and Boylan expire in 2000,  and the term of Mr. Hansen expires in
2001. There are no family relationships between or among any of the directors or
executive officers named above.                                                 

Committees of the Bank                                                          

     The Board of Directors  of the Bank had six meetings in 1997.  During 1997,
each of the directors attended more than 75% of the combined aggregate number of
Board meetings and meetings of Board  committees on which each served.  The Bank
also has several committees, composed as follows: Loan Committee (Messrs. Smith,
Hansen,  DenHerder,  Koning and Boylan);  Investment  Committee (Messrs.  Smith,
Boylan and Koning); and Audit Committee (Messrs. Hansen, DenHerder and Boylan). 

Experience of Directors and Executive Officers                                  

     The experience and  backgrounds of the directors and executive  officers of
the Company and the Bank are summarized below:                                  

     Benj. A. Smith, III is the Chairman, Chief Executive Officer and a director
of the Company and is also Chairman and a director of the Bank.  Mr. Smith is an
investment  advisor and has served from 1992 to the present as the  President of
Smith & Associates Investment Management Services, an investment management firm
located  in  Holland,  Michigan.  Prior to 1992,  Mr.  Smith  gained 21 years of
banking  experience  at FMB and  its  subsidiary  FMB-  First  Michigan  Bank of
Zeeland,  Michigan.  During his  employment  at FMB he was  responsible  for the
consolidation of the trust department and investment function under a registered
investment advisor, the development and introduction of mutual funds at FMB, the
establishment  of a broker-dealer  operation and the  implementation  of various
employee  compensation and stock ownership  plans.  From 1991 to 1992, Mr. Smith
served as Chief  Executive  Officer  of FMB-  Financial  Group,  a wholly  owned
subsidiary of FMB, which was comprised of a life insurance  subsidiary,  a trust
services bank, a registered  broker-dealer  and an investment  advisory company.
Mr.  Smith  earned a Bachelor of Science  degree from  Purdue  University  and a
Master of Business Administration,  Finance, from Indiana State University.  Mr.
Smith is a member  of the  Holland  Chamber  of  Commerce,  the  Holland  Better
Business Bureau and the Holland Country Club.                                   

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     Philip J. Koning has served as President of the Bank since its inception in
November,  1997, and serves as the Secretary and Treasurer of the Company and as
a director  of both the  Company and the Bank.  Mr.  Koning is also  employed by
Smith & Associates Investment Management Services.  Mr. Koning has over 23 years
of commercial banking experience,  most recently from 1984 to 1997 with First of
America  Bank in Holland,  where he served as a community  bank  president.  Mr.
Koning  earned a Bachelor  of  Science in  Accounting  from Grand  Valley  State
University and a Masters of Business  Administration,  Finance, from the Seidman
Graduate College at Grand Valley State University. Mr. Koning is Chairman of the
Zeeland  Board of Public  Works and a member of the Rotary Club of Holland,  the
Zeeland  Christian  School  Endowment  Committee,  HOMECOR (an agency  enhancing
neighborhoods  through  private  initiative),  the City of  Holland's  Strategic
Planning  Committee,  the Windmill  Advisory  Committee and the Holland  Country
Club.                                                                           

     G. Thomas  Boylan is a director of the Company and the Bank.  Mr. Boylan is
the President of Light Metals  Corporation,  a manufacturing  company located in
Wyoming, Michigan, where he has been employed since 1947.                       

     Robert  E.  DenHerder  is a  director  of the  Company  and the  Bank.  Mr.
DenHerder is the President of Uniform  Color Co., a company  located in Holland,
Michigan,  which  manufactures  color  concentrate  for  the  plastics  industry
focusing on  automotive  suppliers.  Mr.  DenHerder has been employed at Uniform
Color Co.  since  1981.  Mr.  DenHerder  is a member of the  Society of Plastics
Engineers, Ducks Unlimited and the Macatawa Area Coordinating Council.          

     Brian J. Hansen is a director of the  Company and the Bank.  Mr.  Hansen is
the President of Dew-El Portables, Inc., a company located in Holland, Michigan,
which sells and leases modular buildings  primarily to the school market,  where
he has been  employed  since 1992.  From 1985 to the time he sold the Company in
1994, Mr. Hansen was the president for Dew-El Corporation,  a company which sold
products to the school  market.  Mr.  Hansen is a former  member of the board of
Directors of FMB-First Michigan Bank, Zeeland,  Michigan. Mr. Hansen is a member
of the Holland  Jaycees,  the past President of the Holland  Chapter of Michigan
Steelheaders and past President and an organizing member of Wildlife  Unlimited,
where he is currently chairman of its long range planning development  committee
for its outdoor learning center.  Mr. Hansen has served on various committees at
Our  Lady  of  the  Lake  Church  and  is  presently   serving  as  the  owner's
representative  to the  architect/general  contractor for the church's  building
program.  Mr.  Hansen is a member,  and has served on the Board,  of the Holland
Country Club.                                                                   

Director Compensation                                                           

     No  salaries  or other  remuneration  have been paid by the  Company to its
directors  or  officers  except  that the Company has granted to each of Messrs.
Smith, Boylan, Den Herder, Koning and a former director of the Bank an option to
purchase 4,000 shares of Common Stock. See "-- Directors Stock Option Plan." All
of the directors of the Company are also  directors of the Bank,  and all of the
officers of the Company are also  officers of the Bank and receive  compensation
for officer positions with the Bank.                                            

     No  directors'  fees have been paid or will be paid during the Bank's first
year of operations.  It is anticipated  that after its first year of operations,
the Bank will pay each director  reasonable fees for service on the Board, which
will be comparable to fees paid by other local banks. It is not anticipated that
the Company  will pay any cash fees to  directors  for the  foreseeable  future.
However,  non-employee  directors may receive  grants of stock options under the
Directors Stock Option Plan. See "-- Directors Stock Option Plan."              

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Executive Compensation                                                          

     Executive  officers  of the  Company  who are  also  employees  of the Bank
receive no additional  compensation  for their  positions  with the Company.  No
executive  officer  of the Bank is paid an annual  salary in excess of  $80,000,
except for Mr. Koning whose annual salary is $100,000.  The following table sets
forth the  compensation  paid by the Bank to the  persons  indicated  during the
period from the Bank's organization through December 31, 1997.                  

                                                        · Enlarge/Download Table
                                                  SUMMARY COMPENSATION TABLE                                    
--------------------------------------------------------------------------------------------------------------- 
                                                                             Long Term                          
                                                                             Compensation                       
                                          Annual Compensation                Awards                             
            (a)             (b)                  (c)        (d)              (g)                    (i)         
                                                                             Securities             All Other   
         Name and                                                            Underlying             Compensation
    Principal Position      Year          Salary ($)     Bonus ($)        Options/SARs (#)       ($)            
                                                                                                                
Benj. A. Smith, III                                                                                             
Chairman                    1997          $ 0               $ 0                 4,000                 --- (1)   

Philip J. Koning                                                                                                
President                   1997          $28,075           $ 0                 4,000                  ---      

(1)   Excludes amounts paid to Smith & Associates.  See "Certain Transactions --
Pre-Opening Services."                                              

Stock Option Information                                                        

     No stock  options were granted by the Company  from its  inception  through
December 31, 1997.  As of February 1, 1998, no stock options or other awards had
been  granted  pursuant to the  Company's  Stock  Compensation  Plan.  Effective
January 25, 1998, the Company  awarded stock options to purchase 4,000 shares to
each of Messrs.  Smith, Boylan,  DenHerder,  Koning and a former director of the
Bank,  which  become  exercisable  one year after the grant  date.  These  stock
options were granted  pursuant to the 1998 Directors' Stock Option Plan, have an
exercise price of $10.00 per share, are exercisable  beginning January 25, 1999,
and expire on January 25, 2008.                                                 

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Employee Stock Compensation Plan                                                

     The Company has adopted and its  shareholders  have  approved  the Macatawa
Bank Corporation Stock  Compensation Plan (the "Plan").  The purpose of the Plan
is to promote  the  long-term  success  of the  Company  for the  benefit of its
shareholders through stock-based compensation by aligning the personal interests
of the  Company's  key  employees  with those of its  shareholders.  The Plan is
designed to allow key  employees of the Company and certain of its  subsidiaries
to  participate  in the  Company's  future,  as well as to enable the Company to
attract,  retain,  and reward such  employees.  Eligibility is determined by the
Committee.                                                                      

     Administration.  The Plan is  administered  by a committee  of the Board of
Directors  (the  "Committee").  The Committee will be composed of at least three
directors,  each of whom is not an employee of the  Company.  Each member of the
Committee is required to be a "disinterested  person" within the meaning of Rule
16b-3 of the General Rules and Regulations under the Securities and Exchange Act
of 1934, as amended,  and no member of the Committee is eligible to  participate
in the Plan.  Subject to the Company's  Articles,  Bylaws, and the provisions of
the Plan, the Committee has the authority to select key employees to whom Awards
(as defined below) may be awarded;  the type of Awards (or combination  thereof)
to be granted; the number of shares of Common Stock to be covered by each Award;
and the terms and  conditions of any Award,  such as  conditions of  forfeiture,
transfer restrictions and vesting requirements.                                 

     The Plan  provides  for the  granting of a variety of  stock-based  Awards,
described in more detail below, such as stock options, including incentive stock
options,  as defined in Section 422 of the  Internal  Revenue  Code of 1986,  as
amended  (the  "Code"),   restricted  stock,   performance   shares,  and  other
stock-based  awards. The term of the Plan is ten years; no Awards may be granted
under the Plan after January 25, 2008.                                          

     Types of Awards.  The following  types of awards  ("Awards") may be granted
under the Plan:                                                                 

     An  "Option"  is a  contractual  right to  purchase a number of shares at a
price  determined at the date the Option is granted.  Options include  incentive
stock  options,  as defined in Section 422 of the Code, as well as  nonqualified
stock options.  The exercise price included in both incentive  stock options and
nonqualified  stock options must equal at least 100% of the fair market value of
the Common Stock at the date of grant.                                          

     "Restricted Stock" are shares of Common Stock granted to an employee for no
or nominal consideration. Title to the shares passes to the employee at the time
of the grant; however, the ability to sell or otherwise dispose of the shares is
subject to restrictions and conditions determined by the Committee.             

     "Performance  Shares" are an Award of the right to receive stock or cash of
an  equivalent  value at the end of the  specified  performance  period upon the
attainment of specified performance goals.                                      

     An "Other  Stock-Based  Award" is any other Award that may be granted under
the Plan that is valued in whole or in part by  reference to or is payable in or
otherwise based on Common Stock.                                                

     Shares Subject to Plan. A total of 100,000  shares of the Company's  Common
Stock are  reserved  for use under the Plan.  The shares to be issued  under the
Plan will be authorized and unissued shares,  including shares reacquired by the
Company  which have that  status.  The number of shares that may be issued under
the Plan and the number of shares  subject to Options are subject to adjustments
in the event of a merger, reorganization, consolidation, recapitalization, stock
dividend,  stock split or other  change in  corporate  structure  affecting  the
Common  Stock.  Subject to certain  restrictions,  unexercised  Options,  lapsed
shares of  Restricted  Stock,  and shares  surrendered  in payment for exercised
Options may be reissued under the Plan.                                         

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     Termination  or  Amendment  of the Plan.  The Board may at any time  amend,
discontinue,  or  terminate  the  Plan  or any  part  thereof;  however,  unless
otherwise  required  by law,  the rights of a  participant  may not be  impaired
without the consent of such  participant.  In addition,  without the approval of
the Company's  shareholders,  no amendment may be made which would  increase the
aggregate  number of shares of Common  Stock that may be issued  under the Plan,
change the  definition of employees  eligible to receive  Awards under the Plan,
extend the maximum  option  period under the Plan,  decrease the Option price of
any  Option  to less than  100% of the fair  market  value on the date of grant,
otherwise  materially increase the benefits to participants in the Plan or cause
the  Plan  not  to  comply  with  certain  applicable  securities  and  tax  law
requirements.                                                                   

     Eligibility.  Key employees of the Company and its designated  subsidiaries
are eligible to be granted  Awards under the Plan.  Eligibility is determined by
the Committee.                                                                  

     Participation and  Assignability.  Neither the Plan nor any Award agreement
granted under the Plan entitles any  participant  or other employee to any right
to continued employment by the Company or any subsidiary.  Generally,  no Award,
Option,  or other  benefit  payable  under  the Plan may,  except  as  otherwise
specifically provided by law, be subject in any manner to assignment,  transfer,
or encumbrance.  However,  Nonqualified Stock Options may be transferred without
consideration  to: (i) an immediate family member of the optionee,  (ii) a trust
for the benefit of the  immediate  family  members of the  optionee,  or (iii) a
partnership  or limited  liability  Company  whose only  partners or members are
immediate  family  members  of the  optionee,  if the  optionee  satisfies  such
conditions to the transfer as may be required by the Committee. Upon termination
of employment,  any portion of unexercised  Options which are exercisable on the
termination  date  must  generally  be  exercised  within  three  months  of the
termination  date  for any  termination  other  than as a result  of the  death,
disability,  or retirement of the employee,  in which case the Plan provides for
longer exercise periods.                                                        

     Federal Tax Consequences.  The following summarizes the consequences of the
grant and  acquisition of Awards under the Plan for federal income tax purposes,
based on management's  understanding  of existing  federal income tax laws. This
summary is  necessarily  general in nature and does not purport to be  complete.
Also,  state and local income tax  consequences  are not  discussed and may vary
from locality to locality.                                                      

     Options. Plan participants will not recognize taxable income at the time an
Option is granted  under the Plan unless the Option has a readily  ascertainable
market  value at the time of grant.  Management  understands  that Options to be
granted  under  the Plan  will not have a readily  ascertainable  market  value;
therefore,  income will not be  recognized  by  participants  before the time of
exercise of an Option.  For nonqualified  stock options,  the difference between
the fair market value of the shares at the time an Option is  exercised  and the
Option price  generally will be treated as ordinary  income to the optionee,  in
which case the Company  will be  entitled to a deduction  equal to the amount of
the  optionee's  ordinary  income.  With  respect to  incentive  stock  options,
participants will not realize income for federal income tax purposes as a result
of the  exercise of such  Options.  In addition,  if common stock  acquired as a
result of the exercise of an incentive stock option is disposed of more than two
years after the date the Option is granted and more than one year after the date
the Option was exercised,  the entire gain, if any, realized upon disposition of
such common  stock will be treated for  federal  income tax  purposes as capital
gain. Under these  circumstances,  no deduction will be allowable to the Company
in  connection  with either the grant or exercise of an incentive  stock option.
Exceptions  to  the  general  rules  apply  in  the  case  of  a  "disqualifying
disposition."  If a  participant  disposes  of shares of common  stock  acquired
pursuant to the exercise of an incentive  stock option before the  expiration of
one year after the date of exercise  or two years  after the date of grant,  the
sale of such  stock  will be  treated  as a  "disqualifying  disposition."  As a
result, such a participant would recognize ordinary income and the Company would
be entitled to a deduction in the year in which such disposition occurred.      

     The amount of the  deduction  and the  ordinary  income  recognized  upon a
disqualifying  disposition  would  generally  be equal to the lesser of: (a) the
sale price of the shares  sold minus the Option  price,  or (b) the fair  market
value of the shares at the time of exercise and minus the Option  price.  If the
disposition  is to a related party (such as a spouse,  brother,  sister,  lineal
descendant,  or certain trusts for business entities in which the seller holds a
direct or indirect interest),  the ordinary income recognized generally is equal
to the excess of the fair  market  value of the  shares at the time of  exercise
over the exercise price.  Any additional gain  recognized upon  disposition,  in
excess                                                                          

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of the  ordinary  income,  will be taxable as capital  gain.  In  addition,  the
exercise of incentive  stock  options may result in an  alternative  minimum tax
liability.                                                                      

     Restricted  Stock.  Recipients of shares of  Restricted  Stock that are not
"transferable"  and are subject to "substantial  risk of forfeiture" at the time
of grant will not be subject to federal  income taxes until the lapse or release
of the restrictions on sale of the shares, unless the recipient files a specific
election under the Code to be taxed at the time of grant. The recipient's income
and the Company's  deduction will be equal to the excess of the then fair market
value (or sale price) of the shares less any purchase price.                    

     Performance   Shares.   Participants  are  not  taxed  upon  the  grant  of
Performance Shares. Upon receipt of the underlying shares or cash, a participant
will be taxed at  ordinary  income tax rates  (subject  to  withholding)  on the
amount of cash received  and/or the current fair market value of stock received,
and the Company will be entitled to a corresponding deduction. The participant's
basis in any Performance Shares received will be equal to the amount of ordinary
income on which he or she was taxed and, upon subsequent  disposition,  any gain
or loss will be capital gain or loss.                                           

Directors Stock Option Plan                                                     

     The Company has adopted and its  shareholders  have  approved  the Macatawa
Bank Corporation 1998 Directors' Stock Option Plan (the "Directors  Plan").  The
Directors Plan is intended to encourage stock ownership by nonemployee directors
of the Company and the Bank, and to provide those  individuals  with  additional
incentive to manage the Company and the Bank  effectively  and to  contribute to
its  success.  The  Directors  Plan  is  also  intended  to  provide  a form  of
compensation  that will  attract  and retain  highly  qualified  individuals  as
nonemployee members of the Board of Directors of the Company and the Bank.      

     Grant of Options.  Options have been granted  under the  Directors  Plan to
each of the Bank's original directors (Messrs. Boylan, Den Herder, Koning, Smith
and a former  director of the Bank) to purchase  4,000  shares of the  Company's
Common Stock at a price of $10.00 per share (the  "Organizer  Options").  In the
future  options  under the Plan may only be  granted  to  directors  who are not
employed by the Company or any  subsidiary.  The Directors  Plan  authorizes the
Board of  Directors  to  develop a formula  for  future  option  grants but that
formula has not yet been developed. All Options granted under the Directors Plan
become  exercisable  one year  after  the  date of  grant,  including  Organizer
Options.                                                                        

     The term of each option  granted under the Directors  Plan is 10 years from
the date of grant  subject  to  earlier  termination  at the end of three  years
following the director's  termination of services as a director,  except for the
Organizer Options, which continue for a full 10 years from the date granted. The
option  price for each option  must equal 100% of the fair  market  value of the
Company's Common Stock on the date the option is granted.  In general, no option
may be  exercisable  in whole or in part prior to the first  anniversary  of the
date of grant of the option.  The Directors  Plan does not obligate the Company,
its Board of Directors or its  shareholders  to retain an optionee as a director
of the Company or the Bank.                                                     

     Administration.  The Directors Plan is  administered  by a committee of the
Board  of  Directors  (the  "Directors  Plan  Committee").  The  Directors  Plan
Committee will be composed of at least three  directors,  each of whom is not an
employee of the Company. Each member of the Directors Plan Committee is required
to be a  "disinterested  person" within the meaning of Rule 16b-3 of the General
Rules and Regulations under the Securities and Exchange Act of 1934, as amended.
The  Directors  Plan  Committee's  authority  is  limited  to  interpreting  the
provisions of the Directors Plan and supervising its  administration,  including
the power to adopt procedures and regulations for administrative purposes.      

     Shares  Subject to Plan. A total of 40,000 shares of the  Company's  Common
Stock are reserved for issuance  under the Directors  Plan. The shares of Common
Stock that may be issued under the  Directors  Plan  pursuant to the exercise of
options will consist of authorized and unissued shares, which may include shares
reacquired  by the  Company.  The  Directors  Plan  provides  for  an  equitable
adjustment  in the number,  kind,  or price of shares of Common Stock covered by
options  in the event the  outstanding  shares  of Common  Stock are  increased,
decreased, changed into or exchanged for a different number or kind of shares of
the Company through stock                                                       

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dividends or similar  changes.  Shares  previously  reserved for issuance  under
unexercised  Options which  terminate,  whether by expiration or otherwise,  may
again be reserved for issuance under a subsequent Award.                        

     Termination or Amendment of the Plan. The Board of Directors of the Company
may amend or terminate the Directors  Plan with respect to shares not subject to
options at the time of amendment or  termination.  The Directors Plan may not be
amended without shareholder approval if the amendment would increase the maximum
number of shares that may be issued under the Directors Plan, extend the term of
the  options,  decrease  the price at which  options may be granted,  remove the
administration  of the Directors Plan from the Directors Plan Committee,  change
the class of persons  eligible  to receive  options  or permit the  granting  of
options  under the  Directors  Plan after  January 25, 2008.  Unless  terminated
earlier by the Board of Directors, the Directors Plan will expire on January 25,
2008.                                                                           

     Transferability  of Options and Common Stock.  Generally,  options  granted
under the  Directors  Plan may be  transferred  only by will or according to the
laws of descent and distribution.  However,  options may be transferred  without
consideration  to: (i) an immediate family member of the optionee,  (ii) a trust
for the  benefit of the  immediate  family  members of an  optionee,  or (iii) a
partnership  or limited  liability  company  whose only  partners or members are
immediate  family  members  of an  optionee,  if  the  optionee  satisfies  such
conditions to the transfer as may be required by the Directors  Plan  Committee.
Options may be exercised only by an optionee or a permitted transferee during an
optionee's  lifetime.  Upon the death of an  optionee,  all Options  held by the
decedent, or his or her permitted transferees,  and not yet exercisable,  become
fully exercisable. Before issuing any shares upon the exercise of an option, the
Company may require the  optionee or the  permitted  transferee  to represent in
writing that the shares are being  acquired for  investment  and not for resale.
The  Company  may also  delay  issuance  of the  shares  until  all  appropriate
registrations  or  qualifications  under federal and state  securities laws have
been completed.                                                                 

     Federal Tax Consequences.  The following summarizes the consequences of the
grant and exercise of options  under the Directors  Plan for federal  income tax
purposes,  based on management's  understanding  of existing  federal income tax
laws.  This summary is necessarily  general in nature and does not purport to be
complete.  Also,  state and local income tax  consequences are not discussed and
may vary from locality to locality.                                             

     Optionees  will not  recognize  taxable  income  at the time an  option  is
granted under the Directors  Plan unless the option has a readily  ascertainable
market value at the time of grant.  Management  understands that options granted
under the  Directors  Plan will not have a readily  ascertainable  market value;
therefore,  income will not be  recognized  by  participants  before the time of
exercise of an option. Because options granted under the Directors Plan will not
qualify as incentive  stock options under the Code, the  difference  between the
fair  market  value of the  shares at the time an option  is  exercised  and the
option  exercise  price  generally  will be  treated as  ordinary  income to the
optionee.  The  Company is entitled to a  corresponding  deduction  equal to the
amount of an optionee's ordinary income.                                        

     Tax  consequences  to the holder of the shares will arise again at the time
the shares of Common  Stock are sold.  In general,  if the shares have been held
for more than one year,  the gain or loss will be treated as  long-term  capital
gain or loss,  but,  under  current law, the shares must have been held for more
than 18 months for the most advantageous tax rate.  Otherwise,  the gain or loss
will be treated as  short-term  capital gain or loss.  The amount of any gain or
loss will be calculated  under the general  principles for determining  gain and
loss, and will equal the difference  between the amount realized in the sale and
the tax basis of the shares of Common Stock.  The tax basis will generally equal
the cost of the  shares  (the  option  exercise  price  paid)  plus  any  income
recognized upon exercise of the option.                                         

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CERTAIN TRANSACTIONS

Lease of Real Property                                                          

     The Bank leases its Holland office  located at 106 E. 8th Street,  Holland,
Michigan  49423,  from a corporation  wholly owned by Benj.  A. Smith,  III, the
Chairman and a director of the Company and the Bank. The terms of the lease were
negotiated  on an  arm's-length  basis.  The Company  believes that the rent and
other terms reflect fair market value. See "Business -- Properties."            

Pre-Opening Services                                                            

     Smith &  Associates,  which is wholly  owned by Benj.  A. Smith,  III,  the
Company's  Chairman and Chief Executive  Officer,  received a payment of $50,000
plus expenses for services  rendered in  connection  with the  organization  and
commencement  of operations of the Bank.  These services  included,  among other
things,  preparation of regulatory  filings and activities  associated  with the
pre-opening  organization of the Bank, including locating and hiring management,
locating and leasing  appropriate  space,  and  negotiating  and  completing the
acquisition of assets and services  utilized by the Bank.  The Company  believes
that the amount represents the fair market value of the services rendered.      

Banking Transactions                                                            

     The  directors  and  officers  of the Company and the Bank have had and are
expected to have banking and other transactions with the Company and the Bank in
the  ordinary  course of  business.  All  transactions  between  the Company and
affiliated  persons,  including  5%  shareholders,  will  be on  terms  no  less
favorable to the Company than could be obtained from independent  third parties.
Any loans and  commitments  to lend to such  affiliated  persons will be made on
substantially the same terms, including interest rates and collateral,  as those
prevailing at the time for comparable  transactions with unaffiliated parties of
similar creditworthiness.                                                       

Indemnification                                                                 

     The Articles and Bylaws of the Company provide for the  indemnification  of
directors and officers of the Company and the Bank,  including  reasonable legal
fees,  incurred by such  directors and officers while acting for or on behalf of
the  Company  or  the  Bank  as  a  director  or  officer,  subject  to  certain
limitations. See "Description of Capital Stock -- Anti-Takeover Provisions." The
Company has purchased directors' and officers' liability insurance for directors
and officers of the Company and the Bank.                                       

Formation of Bank Holding Company                                               

     On February 18,  1997,  the Bank became a wholly  owned  subsidiary  of the
Company  pursuant to a  Consolidation  Agreement  filed with and approved by the
Federal Reserve Board and the FIB. Pursuant to the Consolidation Agreement, each
issued and outstanding share of common stock of the Bank was converted into 1.15
shares of Common Stock of the Company.  Directors and executive  officers of the
Company and the Bank held an aggregate of 135,000  shares of common stock of the
Bank and received in exchange for such shares an aggregate of 155,250  shares of
Common Stock of the Company. See "Recent Developments" and "Dilution."          

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PRINCIPAL SHAREHOLDERS

     The table below sets forth,  as of January 31,  1998,  certain  information
regarding the  beneficial  ownership of the Common Stock by: (i) each person who
is known to the Company to be the beneficial owner of more than 5% of the Common
Stock,  (ii) each of the  directors of the Company and (iii) all  directors  and
executive  officers  of the  Company as a group,  both  before and after  giving
effect to this Offering.                                                        

                                                        · Enlarge/Download Table
                             Common Stock        Percent of Class     Shares expected                      
                             Beneficially        Prior to             to be Purchased      Percent of Class
Name and Address             Owned(1)            Offering             in the Offering(2)   After Offering  
----------------             ------------------  -------------------- -------------------  --------------  
                                                                                                           
Benj. A. Smith, III (3)(4)                                                                                 
167 West 11th Street                                                                                       
Holland, MI 49423...........        40,250              4.3%                17,500               2.6%      
Philip J. Koning(4)                                                                                        
51 E. Main Street                   11,500              1.2%                 5,000               0.7%      
Zeeland, MI 49464...........                                                                               
Thomas Boylan(4)                                                                                           
458 Maple Lane                                                                                             
Saugatuck, MI 49453.........        40,250              4.3%                17,500               2.6%      
Robert E. DenHerder(4)                                                                                     
10836 Riley Street                                                                                         
Holland, MI 49424...........        40,250              4.3%                17,500               2.6%      
Brian J. Hansen                                                                                            
356 Cottage Lane                                                                                           
Holland, MI 49424...........        23,000              2.5%                10,000               1.8%      
All executive officers                                                                                     
and directors as a group                                                                                   
(5 people) (3)(4)...........      155, 250             16.5%                67,500               9.9%      

----------------------                                                          

(1)      For  purposes  of  this   disclosure,   shares  are  considered  to  be
         "beneficially"  owned if the person has, or shares the power to vote or
         direct  the  voting of  shares,  the power to  dispose of or direct the
         disposition of the shares or the right to acquire beneficial  ownership
         within  60  days.  Except  as  otherwise  set  forth  in the  following
         footnotes, directors and officers have sole voting and investment power
or share voting and investment power with their wives.        

(2)      Based  upon the  number  of shares of  Common  Stock  that the  persons
         indicated  have  informed  the Company  that they intend to purchase in
this Offering.                                                

(3)      Includes 15,900 shares of Common Stock held by Mr. Smith's wife.       

(4)      Excludes  4,000  shares of Common Stock  subject to options  granted to
         each of the named directors, other than Mr. Hansen, under the Directors
         Stock  Option Plan,  but which are not  exercisable  until  January 25,
1999.                                                         

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SUPERVISION AND REGULATION

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

General                                                                         

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

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

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

The Company                                                                     

     General.  The Company is a bank holding company and, as such, is registered
with,  and subject to  regulation  by, the Federal  Reserve Board under the Bank
Holding  Company Act, as amended (the  "BHCA").  Under the BHCA,  the Company is
subject to periodic examination by the Federal Reserve Board, and is required to
file with the Federal Reserve Board periodic  reports of its operations and such
additional information as the Federal Reserve Board may require.                

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

     Investments and Activities.  In general, any direct or indirect acquisition
by the  Company  of any  voting  shares of any bank  which  would  result in the
Company's  direct or indirect  ownership or control of more than 5% of any class
of voting shares of such bank,  and any merger or  consolidation  of the Company
with  another  bank  company,  will  require the prior  written  approval of the
Federal  Reserve  Board  under the BHCA.  In  acting on such  applications,  the
Federal Reserve Board must consider various statutory  factors,  including among
others,  the effect of the  proposed  transaction  on  competition  in  relevant
geographic and product markets, and each party's financial condition, managerial
resources,  and record of  performance  under the  Community  Reinvestment  Act.
Effective  September 29, 1995, bank holding  companies may acquire banks located
in any state in the United States without regard to geographic  restrictions  or
reciprocity   requirements   imposed  by  state  law,  but  subject  to  certain
conditions,  including  limitations on the aggregate amount of deposits that may
be held by the acquiring company and all of its insured  depository  institution
affiliates.                                                                     

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

     With  certain  limited  exceptions,  the BHCA  prohibits  any bank  holding
company from engaging,  either directly or indirectly  through a subsidiary,  in
any  activity  other than  managing or  controlling  banks  unless the  proposed
non-banking  activity is one that the Federal Reserve Board has determined to be
so closely related to banking or managing or controlling banks as to be a proper
incident  thereto.  Under  current  Federal  Reserve  Board  regulations,   such
permissible  non-banking  activities  include  such things as mortgage  banking,
equipment  leasing,  securities  brokerage,  and consumer and commercial finance
company   operations.   As  a  result   of  recent   amendments   to  the  BHCA,
well-capitalized  and well-managed  bank holding companies may engage de novo in
certain types of non-banking activities without prior notice to, or approval of,
the Federal  Reserve Board,  provided that written notice of the new activity is
given to the Federal Reserve Board within 10 business days after the activity is
commenced.  If a bank  company  wishes to engage in a  non-banking  activity  by
acquiring a going concern,  prior notice and/or prior approval will be required,
depending  upon the  activities  in which the company to be acquired is engaged,
the  size of the  company  to be  acquired  and  the  financial  and  managerial
condition of the acquiring bank company.                                        

     In  evaluating  a  proposal  to  engage  (either  de  novo or  through  the
acquisition of a going concern) in a non-banking  activity,  the Federal Reserve
Board will consider  various  factors,  including among others the financial and
managerial  resources of the bank company,  and the relative public benefits and
adverse  effects  which may be expected to result  from the  performance  of the
activity by an  affiliate of the bank  company.  The Federal  Reserve  Board may
apply  different  standards to  activities  proposed to be commenced de novo and
activities commenced by acquisition, in whole or in part, of a going concern.   

     Capital  Requirements.  The Federal  Reserve  Board uses  capital  adequacy
guidelines  in its  examination  and  regulation of bank holding  companies.  If
capital falls below minimum guidelines,  a bank company may, among other things,
be  denied  approval  to  acquire  or  establish  additional  banks or  non-bank
businesses.                                                                     

     The Federal  Reserve  Board's  capital  guidelines  establish the following
minimum  regulatory  capital  requirements  for bank  holding  companies:  (i) a
leverage capital requirement expressed as a percentage of total assets, and (ii)
a  risk-based  requirement  expressed  as a  percentage  of total  risk-weighted
assets. The leverage capital  requirement  consists of a minimum ratio of Tier 1
capital (which consists principally of shareholders'  equity) to total assets of
3% for the most highly rated  companies,  with minimum  requirements of 4% to 5%
for all others. The risk- based requirement consists of a minimum ratio of total
capital to total risk-weighted  assets of 8%, of which at least one-half must be
Tier 1 capital.                                                                 

     The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum  requirements,  and higher  capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations.  For example,  Federal  Reserve  Board  regulations  provide that
additional  capital  may be required to take  adequate  account of,  among other
things,  interest  rate risk and the risks  posed by  concentrations  of credit,
nontraditional activities or securities trading activities. Further, any banking
organization  experiencing or anticipating  significant growth would be expected
to maintain capital ratios,  including  tangible capital positions (i.e., Tier 1
capital less all intangible assets),  well above the minimum levels. The Federal
Reserve Board has not advised the Company of any specific minimum Tier 1 Capital
leverage ratio applicable to it.                                                

     Dividends.  The Company is a  corporation  separate and  distinct  from the
Bank.  Most of the  Company's  revenues  will be  received  by it in the form of
dividends,  if  any,  paid by the  Bank.  Thus,  the  Company's  ability  to pay
dividends  to  its   shareholders   will  indirectly  be  limited  by  statutory
restrictions  on the  Bank's  ability to pay  dividends.  See  "SUPERVISION  AND
REGUATION - the Bank - Dividends." Further, the Federal Reserve Board has issued
a policy  statement on the payment of cash dividends by bank holding  companies.
In the policy  statement,  the Federal  Reserve Board  expressed its view that a
bank company  experiencing  earnings  weaknesses  should not pay cash  dividends
exceeding  its net income or which can only be funded in ways that  weakened the
bank company's financial health, such as by borrowing. Additionally, the Federal
Reserve Board possesses enforcement powers over bank holding companies          

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and their  non-bank  subsidiaries  to prevent or remedy  actions that  represent
unsafe  or  unsound   practices  or  violations   of  applicable   statutes  and
regulations.  Among  these  powers is the  ability to  proscribe  the payment of
dividends by banks and bank holding companies.  Similar  enforcement powers over
the Bank are possessed by the FDIC. The "prompt corrective action" provisions of
federal law and regulation  authorizes the Federal Reserve Board to restrict the
payment of  dividends  by the  Company  for an insured  bank which fails to meet
specified capital levels.                                                       

     In addition to the restrictions on dividends imposed by the Federal Reserve
Board,  the Michigan  Business  Corporation  Act provides that  dividends may be
legally declared or paid only if after the  distribution a corporation,  such as
the Company,  can pay its debts as they come due in the usual course of business
and its total assets equal or exceed the sum of its liabilities  plus the amount
that would be needed to satisfy the preferential  rights upon dissolution of any
holders of  preferred  stock  whose  preferential  rights are  superior to those
receiving the  distribution.  The Company is authorized to issue preferred stock
but it has no current plans to issue any such preferred stock.                  

The Bank                                                                        

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

     Deposit Insurance. As an FDIC-insured institution,  the Bank is required to
pay deposit  insurance  premium  assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine categories and assessed insurance  premiums,  based upon
their  respective  levels of  capital  and  results of  supervisory  evaluation.
Institutions  classified  as  well-capitalized  (as  defined  by the  FDIC)  and
considered  healthy pay the lowest premium while institutions that are less than
adequately  capitalized  (as defined by the FDIC) and  considered of substantial
supervisory concern pay the highest premium.  Risk classification of all insured
institutions is made by the FDIC for each semi-annual assessment period.        

     The Federal Deposit  Insurance Act ("FDIA")  requires the FDIC to establish
assessment  rates at levels which will maintain the Deposit  Insurance Fund at a
mandated  reserve  ratio of not less than 1.25% of estimated  insured  deposits.
Accordingly,  the FDIC established the schedule of BIF insurance assessments for
the first semi-annual assessment period of 1998, ranging from 0% of deposits for
institutions in the lowest risk category to .27% of deposits for institutions in
the highest risk category.                                                      

     The FDIC may  terminate  the deposit  insurance  of any insured  depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound  practices,  or have
violated any applicable  law,  regulation,  order,  or any condition  imposed in
writing by, or written  agreement with, the FDIC, or if the institution is in an
unsafe or unsound  condition to continue  operations.  The FDIC may also suspend
deposit  insurance  temporarily  during  the  hearing  process  for a  permanent
termination of insurance if the institution has no tangible capital.            

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

     FICO  Assessments.  Pursuant to federal  legislation  enacted September 30,
1996,  the Bank, as a member of the BIF, is subject to  assessments to cover the
payments on outstanding  obligations of the Financing Corporation ("FICO"). FICO
was created in 1987 to finance the  recapitalization  of the Federal Savings and
Loan Insurance  Corporation,  the predecessor to the FDIC's Savings  Association
Insurance  Fund (the "SAIF") which insures the deposits of thrift  institutions.
Until  January 1, 2000,  the FICO  assessments  made against BIF members may not
exceed  20% of the  amount  of  FICO  assessments  made  against  SAIF  members.
Currently, SAIF members pay FICO assessments at a rate                          

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equal to approximately 0.063% of deposits while BIF members pay FICO assessments
at a rate equal to approximately 0.013% of deposits. Between January 1, 2000 and
the maturity of the outstanding  FICO  obligations in 2019, BIF members and SAIF
members  will  share the cost of the  interest  on the FICO  bonds on a pro rata
basis.  It is estimated  that FICO  assessments  during this period will be less
than 0.025% of deposits                                                         

     Capital  Requirements.  The  FDIC has  established  the  following  minimum
capital standards for  state-chartered,  FDIC-insured  non-member banks, such as
the Bank: a leverage requirement consisting of a minimum ratio of Tier 1 capital
to total assets of 3% for the most highly-rated banks with minimum  requirements
of 4% to 5% for all others, and a risk-based capital requirement consisting of a
minimum  ratio of total  capital to total  risk-weighted  assets of 8%, at least
one-half of which must be Tier 1 capital. Tier 1 capital consists principally of
shareholders'  equity.  These  capital  requirements  are minimum  requirements.
Higher   capital  levels  will  be  required  if  warranted  by  the  particular
circumstances  or risk profiles of individual  institutions.  For example,  FDIC
regulations provide that higher capital may be required to take adequate account
of, among other things, interest rate risk and the risks posed by concentrations
of credit,  nontraditional  activities or securities  trading  activities.  As a
condition to regulatory approval of the Bank's formation,  the Bank was required
to have an  initial  capitalization  sufficient  to  provide  a ratio  of Tier 1
capital to total estimated assets of at least 8% at the end of the third year of
operation.                                                                      

     Federal law provides  the federal  banking  regulators  with broad power to
take  prompt  corrective  action to resolve  the  problems  of  undercapitalized
institutions.  The extent of the  regulators'  powers  depends  on  whether  the
institution  in  question  is  "well  capitalized,"   "adequately  capitalized,"
"undercapitalized,"    "significantly    undercapitalized,"    or    "critically
undercapitalized."  Federal  regulations  define  these  capital  categories  as
follows:                                                                        

                                                                · Download Table
                                Total          Tier 1                               
                                Risk-Based     Risk-Based                           
                                Capital Ratio  Capital Ratio  Leverage Ratio        
                                                                                    
Well capitalized                10% or above   6% or above    5% or above           
Adequately capitalized            8% or above  4% or above    4% or above           
Undercapitalized                Less than 8%   Less than 4%   Less than 4%          
Significantly undercapitalized  Less than 6%   Less than 3%   Less than 3%          
Critically undercapitalized               --             --   A ratio of tangible   
                                                              equity to total assets
                                                              of 2% or less         

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

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

     Dividends.  Under  Michigan  law, the Bank is  restricted as to the maximum
amount  of  dividends  it may pay on its  common  stock.  The  Bank  may not pay
dividends  except out of net profits after deducting its losses and bad debts. A
Michigan state bank may not declare or pay a dividend  unless the bank will have
a surplus  amounting  to at least 20% of its  capital  after the  payment of the
dividend.  If the Bank has a surplus less than the amount of its capital, it may
not  declare or pay any  dividend  until an amount  equal to at least 10% of net
profits for the preceding one-half year (in the case of quarterly or semi-annual
dividends) or full-year (in the case of annual  dividends) has been  transferred
to surplus. A Michigan state bank may, with the approval of the Commissioner, by
vote of  shareholders  owning 2/3 of the stock  eligible  to vote  increase  its
capital  stock by a  declaration  of a stock  dividend,  provided that after the
increase the bank's                                                             

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surplus equals at least 20% of its capital stock, as increased. The Bank may not
declare or pay any dividend  until the cumulative  dividends on preferred  stock
(should any such stock be issued and  outstanding)  have been paid in full.  The
Bank's  Articles of  Incorporation  do not  authorize  the issuance of preferred
stock and there are no current plans to seek such authorization.                

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

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

     Safety and Soundness  Standards.  The federal banking agencies have adopted
guidelines to promote the safety and soundness of federally  insured  depository
institutions.  These  guidelines  establish  standards  for  internal  controls,
information  systems,   internal  audit  systems,  loan  documentation,   credit
underwriting,  interest  rate  exposure,  asset growth,  compensation,  fees and
benefits,  asset quality and earnings.  In general, the guidelines prescribe the
goals to be achieved in each area, and each  institution will be responsible for
establishing its own procedures to achieve those goals. If an institution  fails
to  comply  with  any  of  the  standards  set  forth  in  the  guidelines,  the
institution's  primary federal regulator may require the institution to submit a
plan for achieving and  maintaining  compliance.  The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose  failure to meet one or more of the  standards is of such severity that it
could  threaten  the safe and sound  operation  of the  institution.  Failure to
submit an acceptable  compliance plan, or failure to adhere to a compliance plan
that has been accepted by the appropriate  regulator,  would constitute  grounds
for further enforcement action.                                                 

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

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

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     Branching  Authority.  Michigan banks, such as the Bank, have the authority
under  Michigan  law to  establish  branches  anywhere in the State of Michigan,
subject to receipt of all required regulatory  approvals (including the approval
of the Commissioner and the FDIC).                                              

     Effective  June 1, 1997 (or earlier if expressly  authorized  by applicable
state law), the Riegle-Neal  Interstate Banking and Branching  Efficiency Act of
1994 (the "IBBEA") allows banks to establish  interstate branch networks through
acquisitions of other banks,  subject to certain  conditions,  including certain
limitations  on the  aggregate  amount  of  deposits  that  may be  held  by the
surviving bank and all of its insured  depository  institution  affiliates.  The
establishment  of de novo  interstate  branches or the acquisition of individual
branches  of a  bank  in  another  state  (rather  than  the  acquisition  of an
out-of-state  bank in its  entirety)  is allowed  by IBBEA only if  specifically
authorized by state law. The legislation  allowed individual states to "opt-out"
of interstate branching authority by enacting  appropriate  legislation prior to
June 1, 1997.                                                                   

     Michigan  did not opt out of IBBEA,  and now permits both U.S. and non-U.S.
banks to  establish  branch  offices in  Michigan.  The  Michigan  Banking  Code
permits, in appropriate circumstances and with the approval of the Commissioner,
(i)  the  acquisition  of  all  or   substantially   all  of  the  assets  of  a
Michigan-chartered  bank by an FDIC- insured bank,  savings bank, or savings and
loan association  located in another state,  (ii) the acquisition by a Michigan-
chartered  bank of all or  substantially  all of the  assets of an  FDIC-insured
bank,  savings bank or savings and loan  association  located in another  state,
(iii) the consolidation of one or more Michigan-chartered banks and FDIC-insured
banks,  savings banks or savings and loan  associations  located in other states
having laws  permitting  such  consolidation,  with the  resulting  organization
chartered by Michigan,  (iv) the  establishment by a foreign bank, which has not
previously  designated any other state as its home state under the International
Banking Act of 1978, of branches located in Michigan,  and (v) the establishment
or  acquisition of branches in Michigan by  FDIC-insured  banks located in other
states,  the District of Columbia or U.S.  territories or  protectorates  having
laws  permitting   Michigan-chartered   banks  to  establish  branches  in  such
jurisdiction. Further, the Michigan Banking Code permits, upon written notice to
the  Commissioner,  (i) the acquisition by a  Michigan-chartered  bank of one or
more  branches (not  comprising  all or  substantially  all of the assets) of an
FDIC-insured  bank,  savings  bank or savings  and loan  association  located in
another state,  the District of Columbia,  or a U.S.  territory or protectorate,
(ii) the establishment by Michigan-chartered  banks of branches located in other
states,  the District of Columbia,  or U.S.  territories or  protectorates,  and
(iii) the consolidation of one or more Michigan-chartered banks and FDIC-insured
banks,  savings banks or savings and loan associations  located in other states,
with the resulting organization chartered by one of such other states.          

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DESCRIPTION OF CAPITAL STOCK

     The  Company's  authorized  capital stock  consists of 9,500,000  shares of
Common Stock and 500,000 shares of preferred stock, no par value (the "Preferred
Stock"). No shares of Preferred Stock have been issued by the Company.          

     Michigan law allows the  Company's  Board of Directors to issue  additional
shares of stock up to the  total  amount of  Common  Stock and  Preferred  Stock
authorized  without obtaining the prior approval of the  shareholders.  Macatawa
Bank is the transfer agent for the Common Stock.                                

Common Stock                                                                    

     Dividend Rights.  Subject to any prior rights of holders of Preferred Stock
then outstanding,  the holders of the Common Stock will be entitled to dividends
when,  as and if  declared  by the  Company's  Board of  Directors  out of funds
legally  available  therefor.  Under  Michigan  law,  dividends  may be  legally
declared  or paid only if after the  distribution  the  corporation  can pay its
debts as they come due in the usual  course of  business  and the  corporation's
total  assets  equal or exceed the sum of its  liabilities  plus the amount that
would be needed to satisfy  the  preferential  rights  upon  dissolution  of any
holders  of  Preferred  Stock then  outstanding  whose  preferential  rights are
superior to those receiving the distribution. See "Supervision and Regulation --
The Bank -- Dividends."                                                         

     Funds for the  payment of  dividends  by the  Company  are  expected  to be
obtained  primarily from  dividends of the Bank.  There can be no assurance that
the  Company  will  have  funds  available  for  dividends,  or that if they are
available,  that dividends will be declared by the Company's Board of Directors.
As the Bank is not  expected to be  profitable  during its start up period,  the
Company does not expect to be in a position to declare  dividends at any time in
the near future.                                                                

     Voting  Rights.  Subject  to the  rights,  if any,  of holders of shares of
Preferred Stock then outstanding, all voting rights are vested in the holders of
shares of Common Stock.  Each share of Common Stock  entitles the holder thereof
to one vote on all matters, including the election of directors. Shareholders of
the Company do not have cumulative voting rights.                               

   Preemptive Rights. Holders of Common Stock do not have preemptive rights.

     Liquidation  Rights.  Subject  to any  rights of any  Preferred  Stock then
outstanding,  holders of Common  Stock are entitled to share on a pro rata basis
in the  net  assets  of the  Company  which  remain  after  satisfaction  of all
liabilities.                                                                    

     Reports to  Shareholders.  The Company will furnish its  shareholders  with
annual reports containing audited financial information and, for the first three
quarters of each fiscal year,  quarterly reports containing  unaudited financial
information. See "Available Information."                                       

     Shares  Available  for  Issuance.   The  availability  for  issuance  of  a
substantial  number  of  shares  of  Common  Stock  and  Preferred  Stock at the
discretion  of the  Board  of  Directors  will  provide  the  Company  with  the
flexibility to take advantage of  opportunities  to issue such stock in order to
obtain  capital,  as  consideration  for  possible  acquisitions  and for  other
purposes  (including,  without  limitation,  the issuance of  additional  shares
through stock splits and stock  dividends in appropriate  circumstances).  There
are, at present, no plans, understandings, agreements or arrangements concerning
the issuance of additional  shares of the Company capital stock,  except for the
shares  of  Common  Stock  reserved  for  issuance  under  the  Company's  stock
compensation and stock option plans.                                            

     Uncommitted  authorized  but unissued  shares of Common Stock may be issued
from time to time to such  persons  and for such  consideration  as the Board of
Directors  of the Company  may  determine  and  holders of the then  outstanding
shares of Common Stock may or may not be given the  opportunity to vote thereon,
depending  upon the  nature  of any such  transactions,  applicable  law and the
judgment of the Board of Directors of the Company  regarding  the  submission of
such  issuance  to  the  Company's   shareholders.   As  noted,   the  Company's
shareholders will have no preemptive rights to subscribe to newly issued shares.

     Moreover,  it will be possible that additional shares of Common Stock would
be issued for the purpose of making an  acquisition  by an unwanted  suitor of a
controlling interest in the Company more difficult, time consuming              

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or costly or would  otherwise  discourage  an attempt to acquire  control of the
Company.  Under such circumstances,  the availability of authorized and unissued
shares of Common Stock may make it more difficult for  shareholders  to obtain a
premium for their shares.  Such  authorized and unissued shares could be used to
create voting or other  impediments  or to frustrate a person  seeking to obtain
control of the  Company by means of a merger,  tender  offer,  proxy  contest or
other means.  Such shares could be privately  placed with  purchasers  who might
cooperate with the Board of Directors of the Company in opposing such an attempt
by a third party to gain control of the  Company.  The issuance of new shares of
Common  Stock  could  also be used to  dilute  ownership  of a person  or entity
seeking  to  obtain  control  of the  Company.  Although  the  Company  does not
currently  contemplate  taking any such action,  shares of Company capital stock
could be issued for the purposes and effects  described  above, and the Board of
Directors    reserves   its   rights   (if   consistent   with   its   fiduciary
responsibilities) to issue such stock for such purposes.                        

Preferred Stock                                                                 

     The Board of  Directors  of the Company is  authorized  to issue  Preferred
Stock, in one or more series,  from time to time, with such voting powers,  full
or limited,  or without voting powers, and with such  designations,  preferences
and   relative,   participating,   optional  or  other   special   rights,   and
qualifications,  limitations or restrictions  thereof, as may be provided in the
resolution or  resolutions  adopted by the Board of Directors.  The authority of
the Board of Directors  includes,  but is not limited to, the  determination  or
fixing of the  following  with  respect  to shares of such  class or any  series
thereof:  (i) the  number of shares and  designation  of such  series;  (ii) the
dividend rate and whether  dividends are to be cumulative;  (iii) whether shares
are to be  redeemable,  and, if so,  whether  redeemable  for cash,  property or
rights;  (iv) the rights to which the holders of shares shall be  entitled,  and
the preferences,  if any, over any other series; (v) whether the shares shall be
subject to the operation of a purchase,  retirement or sinking fund, and, if so,
upon what  conditions;  (vi)  whether the shares  shall be  convertible  into or
exchangeable  for shares of any other class or of any other  series of any class
of capital stock and the terms and  conditions  of such  conversion or exchange;
(vii) the voting powers, full or limited, if any, of the shares;  (viii) whether
the issuance of any  additional  shares,  or of any shares of any other  series,
shall  be  subject  to  restrictions  as  to  issuance,  or as  to  the  powers,
preferences or rights of any such other series;  and (ix) any other preferences,
privileges  and powers and  relative,  participating,  optional or other special
rights and qualifications, limitations or restrictions.                         

Anti-Takeover Provisions                                                        

     In  addition  to the  utilization  of  authorized  but  unissued  shares as
described above, the Company's  Articles and the Michigan  Business  Corporation
Act (the "MBCA") contain other  provisions which could be utilized by Company to
impede  certain  efforts to acquire  control of the  Company.  Those  provisions
include the following:                                                          

     Control  Share  Act.  The MBCA  contains  provisions  intended  to  protect
shareholders  and  prohibit  or  discourage  certain  types of hostile  takeover
activities.  These  provisions  regulate the acquisition of "control  shares" of
large public Michigan corporations (the "Control Share Act").                   

     The Control  Share Act  establishes  procedures  governing  "control  share
acquisitions."  A control  share  acquisition  is defined as an  acquisition  of
shares by an acquirer which, when combined with other shares held by that person
or entity, would give the acquirer voting power at or above any of the following
thresholds:  20%,  33-1/3% or 50%.  Under the Control Share Act, an acquirer may
not vote "control shares" unless the  corporation's  disinterested  shareholders
vote to confer  voting  rights on the  control  shares.  The  acquiring  person,
officers of the target corporation,  and directors of the target corporation who
are also employees of the  corporation are precluded from voting on the issue of
whether the control shares shall be accorded  voting  rights.  The Control Share
Act does not affect the voting  rights of shares  owned by an  acquiring  person
prior to the control share acquisition.                                         

     The Control Share Act entitles  corporations  to redeem control shares from
the acquiring  person under certain  circumstances.  In other cases, the Control
Share Act confers  dissenters'  rights upon all of a corporation's  shareholders
except the acquiring person.                                                    

     The Control Share Act applies only to an "issuing public  corporation." The
Company   falls  within  the  statutory   definition   of  an  "issuing   public
corporation." The Control Share Act automatically applies to any "issuing public
corporation" unless the corporation "opts out" of the statute by so providing in
its articles of incorporation or bylaws.  The Company has not "opted out" of the
Control Share Act.                                                              

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     Fair Price Act.  Certain  provisions  of the MBCA (the  "Fair  Price  Act")
establish  a  statutory  scheme  similar  to the  supermajority  and fair  price
provisions found in many corporate charters.  The Fair Price Act provides that a
supermajority vote of 90% of the shareholders and no less than two-thirds of the
votes of non-interested  shareholders must approve a "business combination." The
Fair  Price Act  defines a  "business  combination"  to  encompass  any  merger,
consolidation,  share exchange,  sale of assets,  stock issue,  liquidation,  or
reclassification of securities involving an "interested  shareholder" or certain
"affiliates."  An "interested  shareholder" is generally any person who owns 10%
or more of the  outstanding  voting shares of the company.  An  "affiliate" is a
person who directly or indirectly controls, is controlled by, or is under common
control with a specified person.                                                

     The  supermajority  vote  required  by the Fair Price Act does not apply to
business combinations that satisfy certain conditions. These conditions include,
among  others,  that:  (i) the  purchase  price to be paid for the shares of the
company is at least equal to the  greater of (a) the market  value of the shares
or (b) the highest per share price paid by the interested shareholder within the
preceding  two-year period or in the transaction in which the shareholder became
an  interested  shareholder,  whichever  is  higher;  and (ii) once a person has
become an  interested  shareholder,  the person  must not become the  beneficial
owner of any additional  shares of the company except as part of the transaction
which resulted in the interested  shareholder becoming an interested shareholder
or by virtue of proportionate stock splits or stock dividends.                  

     The   requirements  of  the  Fair  Price  Act  do  not  apply  to  business
combinations  with an  interested  shareholder  that the Board of Directors  has
approved or exempted from the  requirements  of the Fair Price Act by resolution
at any time prior to the time that the  interested  shareholder  first became an
interested shareholder.                                                         

     Classified  Board. The Board of Directors of the Company is classified into
three  classes,   with  each  class  serving  a  staggered,   three-year   term.
Classification  of the Board could have the effect of extending  the time during
which the existing  Board of Directors  could control the operating  policies of
Company  even though  opposed by the  holders of a majority  of the  outstanding
shares of Common Stock.                                                         

     Under  the  Company's   Articles,   all  nominations  for  directors  by  a
shareholder  must be  delivered  to the  Company in writing at least 60, but not
more than 90, days prior to the annual meeting of the shareholders. A nomination
that is not  received  within this period will not be placed on the ballot.  The
Board believes that advance notice of nominations by shareholders  will afford a
meaningful  opportunity to consider the  qualifications of the proposed nominees
and, to the extent deemed necessary or desirable by the Board of Directors, will
provide  an  opportunity  to  inform  shareholders  about  such  qualifications.
Although  this  nomination  procedure  does not give the Board of Directors  any
power to approve or disapprove of  shareholder  nominations  for the election of
directors,  this  nomination  procedure  may have the  effect  of  precluding  a
nomination  for the election of directors at a particular  annual meeting if the
proper procedures are not followed.                                             

     The  Company's  Articles  provide  that  any one or more  directors  may be
removed  at any  time,  with or  without  cause,  but  only by  either:  (i) the
affirmative vote of a majority of "Continuing Directors" and at least 80% of the
directors; or (ii) the affirmative vote, at a meeting of the shareholders called
for that  purpose,  of the  holders of at least 80% of the  voting  power of the
then-outstanding  shares  of  capital  stock  of the  Company  entitled  to vote
generally in the election of directors,  voting  together as a single  class.  A
"Continuing  Director" is generally defined in the Articles as any member of the
Board who is unaffiliated with any "interested shareholder" (generally, an owner
of 10% or more of the Company's  outstanding  voting shares) and was a member of
the Board  prior to the time an  interested  shareholder  became  an  interested
shareholder, and any successor of a Continuing Director who is unaffiliated with
an interested shareholder and is recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board.                       

     Any  vacancies  in the Board of  Directors  for any  reason,  and any newly
created  directorships  resulting  from any increase in the number of directors,
may be filled only by the Board of Directors, acting by an affirmative vote of a
majority of the Continuing Directors and an 80% majority of all of the directors
then in office,  although less than a quorum. Any directors so chosen shall hold
office until the next annual  meeting of  shareholders  at which  directors  are
elected  to the  class to which  such a  director  was  named  and  until  their
respective  successors shall be duly elected and qualified or their  resignation
or removal.  No decrease in the number of directors  may shorten the term of any
incumbent director.                                                             

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     Notice of Shareholder  Proposals.  Under the Company's  Articles,  the only
business that may be conducted at an annual or special  meeting of  shareholders
is business  that has been brought  before the meeting by or at the direction of
the  majority of the  directors  or by a  shareholder  of the  Company:  (i) who
provides  timely  notice of the  proposal  in  writing to the  secretary  of the
Company and the proposal is a proper  subject for action by  shareholders  under
Michigan law or (ii) whose proposal is included in the Company's proxy materials
in compliance with all the  requirements  set forth in the applicable  rules and
regulations  of  the  Securities  and  Exchange  Commission.  To  be  timely,  a
shareholder's notice of proposal must be delivered to, or mailed to and received
at the principal executive offices of the Company not less than 60 days prior to
the  date  of  the  originally   scheduled  annual  meeting  regardless  of  any
postponements,  deferrals or  adjournments of that meeting to a later date. With
respect to special  meetings,  notice  must be  received by the Company not more
than 10 days  after  the  Company  mails  notice  of the  special  meeting.  The
shareholder's  notice of  proposal  must set forth in  writing  each  matter the
shareholder  proposes to bring  before the meeting  including:  (i) the name and
address  of the  shareholder  submitting  the  proposal,  as it  appears  on the
Company's books and records; (ii) a representation that the shareholder:  (a) is
a holder of record of stock of the Company entitled to vote at the meeting,  (b)
will  continue to hold such stock through the date on which the meeting is held,
and (c)  intends to vote in person or by proxy at the  meeting and to submit the
proposal for shareholder vote; (iii) a brief description of the proposal desired
to be  submitted  to the  meeting  for  shareholder  vote  and the  reasons  for
conducting  such  business  at the  meeting;  and  (iv) the  description  of any
financial or other interest of the  shareholder in the proposal.  This procedure
may limit to some degree the ability of shareholders to initiate  discussions at
annual shareholders meetings. It may also preclude the conducting of business at
a particular meeting if the proposed notice procedures have not been followed.  

     Certain  Shareholder  Action.  The  Company's  Articles  require  that  any
shareholder   action  must  be  taken  at  an  annual  or  special   meeting  of
shareholders,  that any meeting of  shareholders  must be called by the Board of
Directors  or the  Chairman of the Board,  and  prohibit  shareholder  action by
written consent. Shareholders of the Company are not permitted to call a special
meeting of shareholders  or require that the Board call such a special  meeting.
The MBCA permits shareholders holding in the aggregate 10% or more of all of the
shares  entitled to vote at a meeting to request the Circuit Court of the County
in which the  Company's  principal  place of  business or  registered  office is
located to order a special meeting of shareholders for good cause shown.        

     Amendment or Repeal of Certain  Provisions of the Articles.  Under Michigan
law,  the  Board of  Directors  need not  adopt a  resolution  setting  forth an
amendment to the Articles  before the  shareholders  may vote on it.  Unless the
Articles provide  otherwise,  amendments of the Articles  generally  require the
approval of the holders of a majority of the outstanding  stock entitled to vote
thereon,  and  if the  amendment  would  increase  or  decrease  the  number  of
authorized  shares of any class or series,  or the par value of such shares,  or
would  adversely  affect the rights,  powers,  or  preferences  of such class or
series,  a majority of the outstanding  stock of such class or series also would
be required to approve the amendment.                                           

     The Company's Articles require that in order to amend,  repeal or adopt any
provision  inconsistent  with Article VIII  relating to the Board of  Directors,
Article IX  relating  to  shareholder  proposals  or  Article X with  respect to
certain  shareholder  action, the affirmative vote of at least 80% of the issued
and  outstanding  shares of Common  Stock  entitled  to vote in the  election of
directors,  voting as a single class must be received;  provided,  however, that
such  amendment or repeal or  inconsistent  provision  may be made by a majority
vote of such  shareholders  at any meeting of the  shareholders  duly called and
held where such amendment has been  recommended  for approval by at least 80% of
all  directors  then  holding  office  and  by a  majority  of  the  "continuing
directors." These amendment  provisions could render it more difficult to remove
management or for a person  seeking to effect a merger or otherwise gain control
of the Company.  These amendment  requirements could, therefore adversely affect
the potential realizable value of shareholders' investments.                    

     Board Evaluation of Certain Offers.  Article XII of the Company's  Articles
provides that the Board of Directors  shall not approve,  adopt or recommend any
offer of any  person  or entity  (other  than the  Company)  to make a tender or
exchange offer for any Common Stock,  to merge or  consolidate  the Company with
any other  entity,  or to purchase or acquire  all or  substantially  all of the
Company's  assets,  unless  and  until the  Board  has  evaluated  the offer and
determined  that it would be in compliance with all applicable laws and that the
offer is in the best interests of the Company and its shareholders. In doing so,
the Board may rely on an opinion of legal  counsel who is  independent  from the
offeror,  and/or  it may test  such  legal  compliance  in front of any court or
agency that may have appropriate jurisdiction over the matter.                  

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     In making its  determination,  the Board must consider all factors it deems
relevant,  including  but not limited to: (i) the  adequacy  and fairness of the
consideration to be received by the Company and/or its shareholders, considering
historical  trading  prices of the capital stock of the Company,  the price that
could be achieved in a negotiated  sale of the Company as a whole,  past offers,
and the future prospects of the Company;  (ii) the potential social and economic
impact  of the  proposed  transaction  on the  Company,  its  subsidiaries,  its
employees, customers and vendors; (iii) the potential social and economic impact
of the  proposed  transaction  on the  communities  in which the Company and its
subsidiaries  operate or are located;  (iv) the business and financial condition
and earnings  prospects of the proposed  acquiring person or entity; and (v) the
competence,  experience and integrity of the proposed acquiring person or entity
and its or their management.                                                    

     In order to amend, repeal, or adopt any provision that is inconsistent with
Article  XII,  at least 80% of the  shareholders,  voting  together  as a single
class,  must  approve the  change,  unless the change has been  recommended  for
approval  by at least 80% of the  directors,  in which  case a  majority  of the
voting stock could approve the action.                                          

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 SHARES ELIGIBLE FOR FUTURE SALE

     Upon completion of this Offering, the Company expects to have approximately
2,240,125  shares of its Common Stock  outstanding.  The 1,300,000 shares of the
Company's  Common Stock  purchased in this Offering (plus any additional  shares
sold upon the  Underwriter's  exercise of its  over-allotment  option) have been
registered with the Securities and Exchange  Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"), and may generally
be  resold  without  registration  under the  Securities  Act  unless  they were
acquired by directors, executive officers, or other affiliates of the Company or
the Bank (collectively,  "Affiliates").  Affiliates of the Company may generally
only sell shares of the Common Stock pursuant to the Commission's Rule 144.     

     In general, under Rule 144 as currently in effect, an affiliate (as defined
in Rule 144) of the  Company  may sell  shares of the  Common  Stock  within any
three-month  period in an amount limited to the greater of 1% of the outstanding
shares of the  Company's  Common  Stock  (22,401  shares  immediately  after the
completion  of this  Offering)  or the  average  weekly  trading  volume  in the
Company's Common Stock during the four calendar weeks preceding such sale. Sales
under Rule 144 are also  subject to certain  manner-of-sale  provisions,  notice
requirements  and the  availability  of  current  public  information  about the
Company.                                                                        

     The Company and the directors and officers of the Company and the Bank (who
are  expected to hold an aggregate of  approximately  222,750  shares after this
Offering), have agreed, or will agree, that they will not issue, offer for sale,
sell,  grant any options for the sale of or  otherwise  dispose of any shares of
Common  Stock or any  rights to  purchase  shares of Common  Stock,  in the open
market or otherwise,  without the prior written consent of the Underwriter for a
period of one year from the date of this Prospectus.  In addition,  all of those
investors  who owned  stock in the Bank before it was  acquired by the  Company,
have  agreed  not to sell any of the  Company  shares  exchanged  for their Bank
shares  prior to November 10, 1998.  Prior to this  Offering,  there has been no
public trading market for the Common Stock, and no predictions can be made as to
the effect,  if any, that sales of shares or the availability of shares for sale
will have on the prevailing market price of the Common Stock after completion of
this Offering. Nevertheless, sales of substantial amounts of Common Stock in the
public market could have an adverse effect on prevailing market prices.         

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UNDERWRITING

     Subject to the terms and conditions of the Underwriting  Agreement,  Robert
W. Baird & Co.  Incorporated,  as  Underwriter,  has agreed to purchase from the
Company an aggregate  of up to  1,300,000  shares of Common Stock at the initial
offering price less the Underwriting  Discounts and Commissions set forth on the
cover page of this Prospectus.                                                  

     The Underwriting  Agreement  provides that the Underwriter's  obligation to
pay for and accept  delivery  of the shares of Common  Stock  offered  hereby is
subject  to  certain  conditions  precedent  and  that the  Underwriter  will be
obligated  to  purchase  all  such  shares,  excluding  shares  covered  by  the
over-allotment option, if any are purchased.                                    

     The Company has been advised by the Underwriter  that the Underwriter  will
purchase the shares of Common  Stock  offered  hereunder at an initial  offering
price of $10.00 per share less  Underwriting  Discounts and Commissions of $0.70
per share.  However,  Underwriting  Discounts and Commissions will be reduced to
$0.30 per share with  respect to sales of shares to any  director  or officer of
the  Company  or  the  Bank  or  their  immediate  family  members  ("Affiliated
Purchasers"),  and will be reduced to $0.525 for potential investors whose name,
address and  telephone  number are furnished to the  Underwriter  by the Company
prior  to the  commencement  by the  Underwriter  of the  offering  process.  In
addition, with respect to a maximum of 400,000 shares of Common Stock to be sold
to persons who previously  invested in the Bank in 1997 and were shareholders of
the Company prior to this Offering,  the  Underwriter has agreed that there will
be no Underwriting Discounts or Commissions.                                    

     The Underwriter has informed the Company that it does not intend to confirm
sales of the shares of Common Stock offered hereby to any accounts over which it
exercises discretionary authority.                                              

     The Company has granted the  Underwriter an option  exercisable for 30 days
after the date of this Prospectus to purchase up to 195,000 additional shares of
Common Stock to cover over-allotments, if any, at the same price per share to be
paid by the Underwriter for the other shares of Common Stock offered hereby. The
Underwriter  may  exercise  such option  only for the  purpose of  covering  any
over-allotments of the 1,300,000 shares of Common Stock offered hereby.         

     The Company,  its directors  and  executive  officers and those of the Bank
have  agreed  with the  Underwriter,  for a period of one year after the date of
this  Prospectus,  not to issue,  sell, offer to sell, grant any options for the
sale of, or  otherwise  dispose of any  shares of Common  Stock or any rights to
purchase  shares of Common Stock,  in the open market or otherwise,  without the
prior written consent of the Underwriter.                                       

     The  Underwriting  Agreement  contains  indemnity  provisions  between  the
Underwriter and the Company and the controlling  persons thereof against certain
liabilities, including liabilities arising under the Securities Act. The Company
is generally obligated to indemnify the Underwriter in connection with losses or
claims arising out of any untrue  statement of a material fact contained in this
Prospectus or in related  documents  filed with the Commission or with any state
securities  administrator  or any omission of certain  material  facts from such
documents.                                                                      

     There has been no public trading  market for the Common Stock.  The initial
offering  price was  determined  by  negotiations  between  the  Company and the
Underwriter.  This price is not based upon earnings or any history of operations
and should not be construed as indicative of the present or  anticipated  future
value of the Common Stock.  Several  factors were  considered in determining the
initial offering price of the Common Stock, including the fact that the Bank has
commenced  operations,  the size of the  Offering,  the desire that the security
being offered be attractive to individuals and the  Underwriter's  experience in
dealing with initial public offerings for financial institutions.  Prior to this
Offering, the Bank sold shares of its common stock to its original investors for
a price equivalent to $8.70 per share of Common Stock.                          

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 LEGAL PROCEEDINGS

     Neither  the  Company  nor  the  Bank  is a  party  to  any  pending  legal
proceeding.  Management believes there is no litigation  threatened in which the
Company or the Bank faces  potential  loss or exposure or which will  materially
affect  shareholders'  equity or the Company's  business or financial  condition
upon completion of this Offering.                                               

 LEGAL MATTERS

     The  legality of the shares of Common Stock  offered  hereby will be passed
upon for the Company by Varnum, Riddering,  Schmidt & Howlett LLP, Grand Rapids,
Michigan. Barrack Ferrazzano Kirschbaum Perlman & Nagelberg,  Chicago, Illinois,
is acting as counsel  for the  Underwriter  in  connection  with  certain  legal
matters relating to the shares of Common Stock offered hereby.                  

     Members of Varnum, Riddering,  Schmidt & Howlett LLP own, in the aggregate,
11,500 shares of Common Stock.                                                  

 EXPERTS

     The financial  statements of the Company  included in this  Prospectus have
been   audited   by   _________________________________,    independent   public
accountants,  as indicated in their report with respect thereto.  Such financial
statements  are included  herein and in the  Registration  Statement in reliance
upon such reports  given upon the  authority of such firm as experts in auditing
and accounting.                                                                 

FORWARD-LOOKING STATEMENTS

     This Prospectus  contains  certain  forward-looking  statements  within the
meaning of the  Private  Securities  Litigation  Reform  Act of 1995  concerning
certain  aspects of the business of the Company.  When used in this  prospectus,
words such as "believe,"  "anticipate," "intend," "goal," "expects," and similar
expressions may identify forward-looking statements.  Forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
materially  from  those   contemplated  in  such   forward-looking   statements.
Prospective  investors  are  cautioned  not to  place  undue  reliance  on these
forward-looking statements,  which speak only as of the date of this Prospectus.
The Company  undertakes no obligation to release publicly any revisions to these
forward-looking  statements to reflect  events or  circumstances  after the date
hereof or to reflect the occurrence of unanticipated events.                    

ADDITIONAL INFORMATION

     The Company  has filed a  Registration  Statement  with the  Commission  in
accordance  with the provisions of the Securities  Act. This Prospectus does not
contain all of the information set forth in the Registration Statement,  certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information pertaining to the shares of Common Stock
offered  hereby  and to the  Company,  reference  is  made  to the  Registration
Statement,  including the Exhibits filed as a part thereof,  copies of which can
be inspected at and copied at the Public Reference  Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Northwestern  Atrium Center,  500 West Madison Street,  Suite
1400, Chicago, Illinois 606661, and Room 1400, 75 Park Place, New York, New York
10007.  Copies of such  materials  can also be obtained at  prescribed  rates by
writing to the Public  Reference  Section of the Commission at 450 Fifth Street,
N.W.,  Washington,  D.C.  20549.  In  addition  the  Company is required to file
electronic   versions  of  these  documents  with  the  Commission  through  the
Commission's  Electronic Data Gathering,  Analysis and Retrieval (EDGAR) system.
The  Commission  maintains  a World  Wide  Web site at  http://www.sec.gov  that
contains  reports,  proxy  and  information  statements  and  other  information
regarding registrants that file electronically with the Commission.             

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors,  officers and controlling  persons of the Company
pursuant to the provisions  discussed above under  "Description of Capital Stock
-- Anti-Takeover  Provisions" or otherwise, the Company has been advised that in
the opinion of the Commission such  indemnification  is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.               

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MACATAWA BANK CORPORATION 

CONSOLIDATED FINANCIAL STATEMENTS 
February 28, 1998 (Unaudited) and December 31, 1997 

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MACATAWA BANK CORPORATION 
Zeeland, Michigan 

CONSOLIDATED FINANCIAL STATEMENTS 
February 28, 1998 (Unaudited) and December 31, 1997 

CONTENTS

REPORT OF INDEPENDENT AUDITORS...............................................F-2

CONSOLIDATED FINANCIAL STATEMENTS                                               

     CONSOLIDATED BALANCE SHEETS.............................................F-3

     CONSOLIDATED STATEMENTS OF INCOME.......................................F-4

     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY..............F-5

     CONSOLIDATED STATEMENTS OF CASH FLOWS...................................F-6

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..............................F-7

                                                                             F-1

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REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders                                             
Macatawa Bank Corporation                                                       
Zeeland, Michigan                                                               

(To be filed by amendment)                                                      

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 MACATAWA BANK CORPORATION

 CONSOLIDATED BALANCE SHEETS
 February 28, 1998 (unaudited) and December 31, 1997

                                                        · Enlarge/Download Table
                                                              1998            1997   
                                                           (Unaudited)               
                                                                                     
ASSETS                                                                               
     Cash and due from banks ...........................    $            $   415,120 
     Short-term investments ............................                   7,000,000 
                                                            -----------   ---------- 
         Cash and cash equivalents .....................                   7,415,120 

     Securities available for sale, at fair value ......                   2,000,400 

     Total loans .......................................                     497,704 
     Allowance for loan losses .........................                      (7,500)
                                                                             490,204 

     Premises and equipment - net ......................                     681,807 
     Accrued interest receivable .......................                      38,532 
     Organizational costs ..............................                      66,139 
     Other assets ......................................                      29,991 
                                                           -----------   ----------- 

         Total assets ..................................   $             $10,722,193 
                                                           ===========   =========== 

LIABILITIES AND SHAREHOLDERS' EQUITY                                                 
     Deposits                                                                        
         Noninterest-bearing ...........................   $             $   245,812 
         Interest-bearing ..............................                   2,466,411 
                                                           -----------   ----------- 
              Total ....................................                   2,712,223 
     Accrued expenses and other liabilities ............                      37,963 
         Total liabilities .............................                   2,750,186 

Shareholders' equity                                                                 
     Preferred stock, no par value, 500,000 shares                                   
       authorized; no shares issued and outstanding                                  
     Common stock, no par value:  9,500,000 shares                                   
       authorized; 1998 -  and 1997 - 940,125                                        
       shares issued and outstanding ...................                   8,137,268 

     Retained deficit ..................................                    (165,525)
     Net unrealized appreciation on securities available                             
       for sale, net of tax of $136 ....................                         264 
         Total shareholders' equity ....................                   7,972,007 

              Total liabilities and shareholders' equity   $             $10,722,193 
                                                           ===========   =========== 
See accompanying notes to consolidated financial statements.                         

                                                                             F-3

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 MACATAWA BANK CORPORATION

 CONSOLIDATED STATEMENTS OF INCOME Two
 months ended February 28, 1998 (unaudited) and period
from November 25, 1997 (date of inception) through
 December 31, 1997

                                                                · Download Table
                                                        1998            1997    
                                                       (Unaudited)              
                                                                                
Interest income                                                                 
     Loans, including fees ........................   $               $   3,448 
     Securities ...................................                      72,834 
                                                      ---------       --------- 
         Total interest income ....................                      76,282 

Interest expense                                                                
     Deposits .....................................                       5,339 
     Other ........................................                         213 
         Total interest expense ...................                       5,552 

Net interest income ...............................                      70,730 

Provision for loan losses .........................                      (7,500)

Net interest income after provision for loan losses                      63,230 

Noninterest expense                                                             
     Salaries and benefits ........................                     111,341 
     Occupancy expense of premises ................                       9,226 
     Furniture and equipment expense ..............                       5,328 
     Legal and professional fees ..................                      18,437 
     Advertising ..................................                      27,698 
     Supplies .....................................                      30,729 
     Other expense ................................                      25,996 
                                                      ---------      ---------- 
         Total noninterest expenses ...............                     228,755 

Loss before federal income tax ....................                    (165,525)

Federal income tax ................................                           0 

Net loss ..........................................   $               $(165,525)
                                                      =========       ========= 

Basic loss per share ..............................   $               $    (.18)
                                                      =========       ========= 

Average shares outstanding ........................     940,125         940,125 
                                                      =========       ========= 

See accompanying notes to consolidated financial statements.                    

                                                                             F-4

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 MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Two months ended February 28, 1998 (unaudited) and period from
 November 25, 1997 (date of inception) through December 31, 1997

                                                        · Enlarge/Download Table

                                                                                       Net Unrealized               
                                                                                        Appreciation                
                                                                                        on Securities               
                                                                                         Available         Total    
                                                            Common         Retained      for Sale,     Shareholders'
                                                             Stock          Deficit     Net of Tax        Equity    
                                                                                                                    
Balance, November 25, 1997 (date of inception)              $8,137,268                                  $8,137,268  

Net loss for the period from November 25, 1997 (date                                                                
  of inception) through December 31, 1997                                 $(165,525)                      (165,525) 

Net change in unrealized appreciation on securities                                                                 
  available for sale, net of tax of $136                                               $  264                  264  
                                                            -----------   ----------   ------             --------  

Balance, December 31, 1997                                    8,137,268    (165,525)      264            7,972,007  

Net loss for two months ended February 28, 1998 (unaudited)                                                         

Net change in unrealized appreciation on securities                                                                 
  available for sale, net of tax of $ (unaudited)          -------------  -----------   ------          ----------- 

Balance, February 28, 1998 (unaudited)                     $              $             $              $            
                                                           =============  ===========   ======          =========== 

See accompanying notes to consolidated financial statements.                    

                                                                             F-5

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 MACATAWA BANK CORPORATION

 CONSOLIDATED STATEMENTS OF CASH FLOWS
Two months ended February 28, 1998 (unaudited) and period 
from November 25, 1997 (date of inception) through December 31, 1997

                                                        · Enlarge/Download Table

                                                               1998           1997       
                                                            (Unaudited)                  
                                                                                         
Cash flows from operating activities                                                     
     Net loss ............................................  $              $   (165,525) 
     Adjustments to reconcile net loss to net                                            
       cash from operating activities                                                    
         Depreciation and amortization ...................                        5,769  
         Provision for loan losses .......................                        7,500  
         Net change in                                                                   
              Organizational costs .......................                      (66,139) 
              Accrued interest receivable and other assets                      (68,523) 
              Accrued expenses and other liabilities .....                       37,827  
                                                             ------------   ------------ 
                  Net cash from operating activities .....                      (249,091)

Cash flows from investing activities                                                     
     Net increase in loans ...............................                      (497,704)
     Purchase of                                                                         
         Securities available for sale ...................                    (2,000,000)
         Premises and equipment ..........................                      (687,576)
              Net cash from investing activities .........                    (3,185,280)

Cash flows from financing activities                                                     
     Net increase in deposits ............................                     2,712,223 
     Proceeds from the issuance of 940,125 shares                                        
       of common stock ...................................                     8,137,268 
         Net cash from financing activities ..............                    10,849,491 

Net change in cash and cash equivalents ..................                     7,415,120 

Cash and cash equivalents at beginning of period .........      7,415,120              0 
                                                             ------------   ------------ 

Cash and cash equivalents at end of period ...............   $              $  7,415,120 
                                                             ============   ============ 

Supplemental disclosures of cash flow information                                        
     Cash paid during the period for                                                     
         Interest  .......................................   $              $        640 

See accompanying notes to consolidated financial statements.                    
                                                                             F-6

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Nature of Operations:  The Company became the bank holding  company for Macatawa
Bank (the "Bank") on February >, 1998, when all of the Bank's outstanding common
stock (817,500 shares) was converted into all of the outstanding common stock of
the Company  (940,125 shares) and all of the Bank's  shareholders  became all of
the Company's shareholders. The exchange ratio in the conversion was 1.15 shares
of Company  common stock for each share of Bank common stock.  The Bank's common
stock had been issued to its shareholders as of November 25, 1997 as a result of
a private  offering of the Bank's  common stock at a price of $10 per share or a
total of $8,175,000.                                                            

Macatawa Bank is a community-based financial institution, located in the Holland
and Zeeland,  Michigan  area.  The Bank's  primary  services  include  accepting
deposits and making  commercial,  mortgage and installment loans in the Michigan
counties of Ottawa and Kent. The Bank commenced its  application  process on May
21,  1997,  completed  its common  stock sale on November 7, 1997 and opened for
operations  on November 25, 1997 after several  months of work by  incorporators
and employees in preparing applications with the various regulatory agencies and
obtaining  insurance and building space.  While a portion of these costs,  those
associated with  organizational  costs ($66,139),  have been capitalized and are
being  amortized over 60 months,  the remaining  costs ($70,059) are included in
the 1997 income statement.                                                      

Use of Estimates:  To prepare financial  statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available  information.  These estimates and  assumptions  affect the amounts
reported in the financial  statements and the disclosures  provided,  and future
results  could  differ.  The  allowance  for loan  losses and the fair values of
financial instruments are particularly subject to change.                       

Cash Flow  Reporting:  Cash and cash  equivalents  include cash on hand,  demand
deposits with other financial  institutions,  short-term securities  (securities
with  maturities of equal to or less than 90 days) and federal funds sold.  Cash
flows  are   reported   net  for   customer   loan  and  deposit   transactions,
interest-bearing time deposits with other financial  institutions and short-term
borrowings with maturities of 90 days or less.                                  

Securities:  Securities  available  for sale consist of those  securities  which
might be sold prior to  maturity  due to changes in interest  rates,  prepayment
risks,  yield and  availability of alternative  investments,  liquidity needs or
other factors. Securities classified as available for sale are reported at their
fair value and the related unrealized  holding gain or loss is reported,  net of
related income tax effects,  as a separate  component of  shareholders'  equity,
until realized.  Securities held to maturity are investment securities for which
the Bank  has the  positive  intent  and  ability  to hold to  maturity  and are
reported at cost,  adjusted for premiums and  discounts  that are  recognized in
interest income using the interest method over the period to maturity.          

(Continued) 

                                                                             F-7

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)                 

Premiums and discounts on securities are recognized in interest income using the
interest method over the estimated life of the security. Gains and losses on the
sale of securities  available for sale are determined  based upon amortized cost
of the specific security sold.                                                  

Loans: Loans are reported at the principal balance outstanding,  net of deferred
loan fees and costs, the allowance for loan losses,  and  charge-offs.  Interest
income is reported  on the  interest  method and  includes  amortization  of net
deferred loan fees and costs over the loan term.                                

Allowance  for Loan  Losses:  The  allowance  for  loan  losses  is a  valuation
allowance,  increased  by the  provision  for loan  losses and  recoveries,  and
decreased by charge-offs.  Management  estimates the allowance  balance required
based on known and inherent  risks in the  portfolio,  economic  conditions  and
other factors.  Allocations of the allowance may be made for specific loans, but
the entire  allowance is available for any loan that, in management's  judgment,
should be charged-off.                                                          

Loan  impairment  is  reported  when full  payment  under the loan  terms is not
expected.  Impairment  is evaluated in aggregate  for  smaller-balance  loans of
similar nature such as residential mortgage, consumer and credit card loans, and
on an individual loan basis for other loans. If a loan is impaired, a portion of
the  allowance is  allocated  so that the loan is reported,  net, at the present
value of estimated  future cash flows using the loan's existing rate.  Loans are
evaluated for impairment  when payments are delayed,  typically 90 days or more,
or when the internal grading system indicates a doubtful  classification.  There
were no loans classified as impaired for the periods presented.                 

Premises  and  Equipment:  Premises  and  equipment  are  stated  at  cost  less
accumulated depreciation.  Depreciation is computed using both straight-line and
accelerated  methods over the estimated  useful lives of the respective  assets.
Maintenance,  repairs and minor alterations are charged to current operations as
expenditures  occur and major  improvements  are  capitalized.  These assets are
reviewed  for  impairment  under SFAS No. 121 when events  indicate the carrying
amount may not be recoverable.                                                  

Income  Taxes:  Income tax expense is the sum of the current year income tax due
or refundable  and the change in deferred tax assets and  liabilities.  Deferred
tax assets and liabilities are the expected future tax consequences of temporary
differences   between  the  carrying   amounts  and  tax  bases  of  assets  and
liabilities,  computed using enacted tax rates.  A valuation  allowance has been
established  to the extent of net deferred tax assets due to a lack of operating
performance to ensure that it is more likely than not it would be recovered.    

(Continued) 
                                                                             F-8

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)                 

Fair Values of Financial  Instruments:  Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed separately.  Fair value estimates involve uncertainties and matters of
significant  judgment  regarding  interest rates,  credit risk,  prepayments and
other factors,  especially in the absence of broad markets for particular items.
Changes in assumptions or in market  conditions could  significantly  affect the
estimates.  The fair  value  estimates  of  existing  on-and  off-balance  sheet
financial  instruments does not include the value of anticipated future business
or the values of assets and liabilities not considered financial instruments.   

Dividend  Restriction:  The Company and Bank are subject to banking  regulations
which require the  maintenance of certain capital levels and which may limit the
amount of dividends which may be paid.                                          

Basic Earnings (Loss) Per Share: Basic earnings (loss) per share is based on net
income  (loss)  divided by the  weighted  average  number of shares  outstanding
during the period.                                                              

NOTE 2 - SECURITIES                                                             

The amortized cost and fair values of securities were as follows:               

                                                        · Enlarge/Download Table
Available for Sale                                                                            
                                                           Gross          Gross               
                                       Amortized        Unrealized     Unrealized   Fair      
                                         Cost              Gains         Losses    Values     
                                                                                              
February 28, 1998 (Unaudited)                                                                 
     U.S. Treasury securities and                                                             
       obligations of U.S. Government                                                         
       corporations and agencies       $                 $                         $          
                                       ===============   ============              ===========

December 31, 1997                                                                             
     U.S. Treasury securities and                                                             
       obligations of U.S. Government                                                         
       corporations and agencies       $     2,000,000   $        400              $ 2,000,400
                                       ===============   ============              ===========

The Bank held only one security at year-end  1997 which  matures on December 18,
1998.                                                                           

There  were no sales of  securities  for two  months  ended  February  28,  1998
(unaudited)  and for the period  from  November  25,  1997  (date of  inception)
through December 31, 1997.                                                      

(Continued) 
                                                                             F-9

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 3 - LOANS                                                                  

                                                                · Download Table
Loans are as follows:                                                       
                                              February 28,    December 31,  
                                                  1998            1997      
                                              (Unaudited)                   
                                                                            
     Commercial                               $                $    130,000 
     Mortgage                                                       207,245 
     Consumer                                                       160,459 
                                              ------------     ------------ 
                                                                    497,704 
     Allowance for loan losses                                       (7,500)
                                              $                $    490,204 
                                              ============     ============ 

Activity in the allowance for loan losses is as follows:                        

                                                                · Download Table
                                                             Period from    
                                                Two          November 25,   
                                               months    (date of inception)
                                               ended           through      
                                             February 28,    December 31,   
                                                1998            1997        
                                            (Unaudited)                     
                                                                            
Balance at beginning of period              $                $          0   
    Provision charged to operating expense                          7,500   
                                            ------------     ------------   

Balance at end of period                    $                $      7,500   
                                            ============     ============   

NOTE 4 - PREMISES AND EQUIPMENT - NET                                           

Premises and equipment are as follows:                                          

                                                        · Enlarge/Download Table
                                                                          Accumulated  Carrying
                                Cost          Depreciation   Value                             
                                                                                               
February 28, 1998 (unaudited)                                                                  
     Building and improvements  $             $              $                                 
     Furniture and equipment    $             $              $                                 
December 31, 1997                                                                              
     Building and improvements  $    196,761  $     (1,055)  $    195,706                      
     Furniture and equipment         490,815        (4,714)       486,101                      
                                ------------  ------------   ------------                      
                                $    687,576  $     (5,769)  $    681,807                      
                                ============  ============   ============                      

(Continued) 
                                                                            F-10

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 5 - DEPOSITS                                                               

Deposits are summarized as follows:                                             

                                                                · Download Table
                                              February 28,    December 31,
                                                1998            1997      
                                              (Unaudited)                 
                                                                          
Noninterest-bearing demand deposit accounts  $              $   245,812   
Money market accounts                                         1,173,742   
NOW and Super NOW accounts                                      628,653   
Savings accounts                                                146,973   
Certificates of deposit                                         517,043   
                                             ----------     -----------   
                                             $              $ 2,712,223   
                                             ==========     ===========   

At period end,  maturities of certificates of deposits were as follows,  for the
next five years:                                                                

                                                                · Download Table
                                     February 28,   December 31,
                                        1998            1997    
                                     (Unaudited)                
                                                                
1998                                  $            $352,203     
1999                                                158,945     
2000                                                  4,805     
2001                                                      0     
2002                                                  1,090     
2003                                                            
                                      $            $517,043     
                                      ========     ========     

The Bank had approximately $> and $200,000 in time certificates of deposit which
were in  denominations  of $100,000 or more at February 28, 1998 (unaudited) and
December 31, 1997, respectively.                                                

(Continued) 

                                                                            F-11

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 6 - FEDERAL INCOME TAXES                                                   

The Company recorded no current or deferred benefit for income taxes as a result
of recording the valuation allowance in the amount of net deferred tax assets.  

Deferred tax assets and liabilities consist of:                                 

                                                        · Enlarge/Download Table
                                                                   February 28,     December 31,  
                                                                       1998             1997      
                                                                    (Unaudited)                   
                                                                                                  
Deferred tax assets                                                                               
    Net operating loss carryforward (expiring in 2018)            $               $        53,656 
    Provision for loan losses                                                               2,550 

Deferred tax liabilities                                                                          
    Net unrealized appreciation on securities available for sale                             (136)
                                                                  --------------  --------------  

Net deferred tax asset                                                                     56,070 
Valuation allowance for deferred tax assets                                               (56,070)

    Net deferred tax asset after valuation allowance              $               $             0 
                                                                  ==============  =============== 


As a result of the valuation  allowance,  the  Company's  effective tax rate was
reduced from the statutory rate of 34% to 0% for both periods.                  

NOTE 7 - RELATED PARTIES                                                        

In the ordinary course of business,  certain  officers,  directors and companies
with which  they are  affiliated  have loan and  deposit  transactions  with the
Company.  There were no loans to these  related  parties at  February  28,  1998
(unaudited) or December 31, 1997.  Related party deposits totaled  approximately
$611,000 at year end 1997.                                                      

(Continued) 
                                                                            F-12

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 8 - COMMITMENTS AND OFF-BALANCE-SHEET RISK                                 

Some  financial  instruments  are used to meet customer  financing  needs and to
reduce exposure to interest rate changes.  These financial  instruments  include
commitments to extend credit and standby  letters of credit.  These involve,  to
varying degrees,  credit and interest-rate risk in excess of the amount reported
in the financial statements.                                                    

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no  violation  of any  condition  established  in the  commitment,  and
generally have fixed expiration dates. Standby letters of credit are conditional
commitments to guarantee a customer's  performance to a third party. Exposure to
credit  loss  if  the  other  party  does  not  perform  is  represented  by the
contractual  amount for  commitments  to extend  credit and  standby  letters of
credit.  Collateral  or other  security  is  normally  not  obtained  for  these
financial  instruments  prior to their  use,  and  many of the  commitments  are
expected to expire without being used.                                          

A summary of the notional or contractual  amounts of financial  instruments with
off-balance-sheet risk is as follows:                                           

                                                                · Download Table
                                    February 28,    December 31, 
                                        1998            1997     
                                     (Unaudited)                 
                                                                 
Commitments to make loans          $              $     2,290,000
Commercial unused lines of credit                           2,000
Consumer unused lines of credit                           129,763

The Company has no commitments to make loans and unused lines of credit at fixed
rates. The commitments noted above are all at variable rates tied to prime.     

The Company  conducts  substantially  all of its business  operations in western
Michigan.                                                                       

The Company  leases  certain  office and branch  premises  and  equipment  under
operating  lease  agreements.  Total  rental  expense for all  operating  leases
aggregated $1,600 in 1997. Future minimum rentals under noncancelable  operating
leases as of December 31, 1997 are as follows:                                  

                                                                · Download Table
                                   
1998                       $ 72,000
1999                         60,100
2000                         30,800
                           --------
                           $162,900

(Continued) 
                                                                            F-13

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 9 - REGULATORY MATTERS                                                     

The  Company is 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  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion,   and  plans  for  capital  restoration  are  required.  The  minimum
requirements are:                                                               

                                                                · Download Table
                           Capital to Risk-                      
                            Weighted Assets      Tier 1 Capital  
                        Total           Tier 1  to Average Assets
                                                                 
Well capitalized        10%                6%          5%        
Adequately capitalized    8                 4           4        
Undercapitalized          6                 3           3        

Actual capital levels (in  thousands) and minimum  required  levels for the Bank
were:                                                                           

                                                        · Enlarge/Download Table
                                                                                       Minimum Required 
                                                                                          To Be Well    
                                                                   Minimum Required    Capitalized Under
                                                                      For Capital      Prompt Corrective
                                                    Actual         Adequacy Purposes  Action Regulations
                                              Amount       Ratio    Amount     Ratio  Amount     Ratio  
                                                                                                        
February 28, 1998 (unaudited)                                                                           
   Total capital (to risk weighted assets)  $                %      $           %     $           %     
   Tier 1 capital (to risk weighted assets)                                                             
   Tier 1 capital (to average assets)                                                                   

December 31, 1997                                                                                       
   Total capital (to risk weighted assets)  $   7,980      133.8%   $  477      8.0%  $  596     10.0%  
   Tier 1 capital (to risk weighted assets)     7,972      133.7       239      4.0      358      6.0   
   Tier 1 capital (to average assets)           7,972       83.3       383      4.0      478      5.0   

The Bank was  categorized as well  capitalized at February 28, 1998  (unaudited)
and December 31, 1997.                                                          

(Continued) 
                                                                            F-14

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 10 - FAIR VALUE OF FINANCIAL INSTRUMENTS                                   

The Company  opened for  operations  on November 25, 1997. As there have been no
significant  changes in interest  rates from  November  25, 1997 to February 28,
1998  (unaudited)  and December 31, 1997,  the values shown on the balance sheet
approximate market value at February 28, 1998 (unaudited) and December 31, 1997.
The interest  rates offered by the Company for its loan products  increased .10%
during the period while deposit rates stayed the same. Investment securities are
disclosed at fair value in Note 2                                               

While the estimates of fair value are based on management's judgment of the most
appropriate  factors,  there  is no  assurance  that  were the  Company  to have
disposed of such items,  the estimated fair values would  necessarily  have been
achieved at those  dates,  since market  values may differ  depending on various
circumstances. The estimated fair values should not necessarily be considered to
apply to subsequent dates.                                                      

In addition, other assets and liabilities of the Company that are not defined as
financial  instruments  are  not  included  in the  above  disclosures,  such as
property and equipment. Also, non-financial instruments typically not recognized
in the financial statements  nevertheless may have value but are not included in
the above disclosures.  These include, among other items, the estimated earnings
power of core deposit  accounts,  the trained work force,  customer goodwill and
similar items.                                                                  

NOTE 11 - SUBSEQUENT EVENTS                                                     

Branch Expansion                                                                

The Bank has opened a full service  branch office and a loan  production  branch
office in Holland, Michigan. In addition, the Bank has signed a lease on January
1, 1998 for a second branch to be located on the south side of Holland, Michigan
and is in the process of  acquiring  a building in Jenison,  Michigan to open an
additional  branch.  Appropriate  regulatory  approvals  are  required for these
branch locations.                                                               

Employee Stock Compensation Plan                                                

The Company has adopted and its  shareholders  have  approved the Macatawa  Bank
Corporation Stock Compensation Plan (the "Plan").  The purpose of the Plan is to
promote the long-term success of the Company for the benefit of its shareholders
through  stock-based  compensation,  by aligning the  personal  interests of the
Company's key employees with those of its shareholders.  The Plan is designed to
allow  key  employees  of  the  Company  and  certain  of  its  subsidiaries  to
participate  in the  Company's  future,  as well as to  enable  the  Company  to
attract, retain and reward such employees.                                      

(Continued) 
                                                                            F-15

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 MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 February 28, 1998 (unaudited) and December 31, 1997

NOTE 11 - SUBSEQUENT EVENTS (Continued)                                         

The Plan provides for the granting of a variety of stock-based  awards,  such as
stock options,  including  incentive stock options, as defined in Section 422 of
the Internal  Revenue Code of 1986, as amended (the "Code"),  restricted  stock,
performance  shares,  and other stock-based  awards.  The term of the Plan is 10
years; no Awards may be granted under the Plan after January 25, 2008.          

One hundred  thousand  (100,000)  shares of the  Company's  common stock are set
aside for use under the  Plan.  The  shares to be issued  under the Plan will be
authorized and unissued shares, including shares reacquired by the Company which
have that status. The number of shares that may be issued under the Plan and the
number of shares subject to options are subject to adjustments in the event of a
merger, reorganization, consolidation,  recapitalization, stock dividends, stock
splits,  or other  change in corporate  structure  affecting  the common  stock.
Subject  to  certain  restrictions,   unexercised  options,   lapsed  shares  of
restricted stock, and shares  surrendered in payment for exercising  options may
be reissued under the Plan.                                                     

1998 Directors' Stock Option Plan                                               

The Company has adopted and its  shareholders  have  approved the Macatawa  Bank
Corporation  1998 Directors' Stock Option Plan (the "Directors  Plan").  Options
have been  granted  under the  Directors'  Plan to each of the  Bank's  original
directors to purchase a total of 20,000 shares of the Company's  common stock at
a price of $10 per share ("Organizer Options").  In the future options under the
Plan may only be granted to directors who are not employed by the Company or any
subsidiary.  The Directors'  Plan authorizes the Board of Directors to develop a
formula for future option grants but that formula has not yet been developed.   

The term of each option granted under the  Directors'  Plan is 10 years from the
date of grant subject to earlier termination at the end of three years following
the  director's  termination  of services as a  director,  except for  organizer
options  which  continue for a full 10 years from the date  granted.  The option
price for each option must equal 100% of the fair market value of the  Company's
common  stock on the date the option is granted.  In  general,  no option may be
exercisable  in whole or in part  prior to the first anniversary  of the date of
grant of the option.                                                            

A total of 40,000 shares of the Company's common stock are reserved for issuance
under the  Directors'  Plan.  The shares of common  stock that may be  delivered
under the  Directors'  Plan  pursuant to the exercise of options will consist of
authorized  and unissued  shares,  which may include  shares  reacquired  by the
Company. The Directors' Plan provides for an equitable adjustment in the number,
kind or price of shares of common  stock  covered  by  options  in the event the
outstanding  shares of common stock are increased,  decreased or changed into or
exchanged for a different  number or kind of shares of the Company through stock
dividends or similar changes.                                                   

(Continued) 
                                                                            F-16

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No  dealer,  salesperson  or any  other  person  has  been  authorized  to  give
information  or make any  representation  not  contained in this  Prospectus  in
connection  with the offer made in this  Prospectus,  and if given or made, such
information or representation  must not be relied upon as having been authorized
by the Company or the Underwriter.  This Prospectus does not constitute an offer
to sell or a solicitation  by anyone in any  jurisdiction in which such offer or
solicitation  is not  authorized  or in which the  person  making  such offer or
solicitation  is not  qualified  to do so or to anyone to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any  circumstances  create any implication  that
the affairs of the Company  since the date hereof or the  information  herein is
correct as of any time subsequent to the date of this Prospectus.               

----------------

 TABLE OF CONTENTS
                                                                          Page
Prospectus Summary.......................................................... 3  
Risk Factors................................................................ 6  
Use of Proceeds.............................................................11  
Dividend Policy.............................................................11  
Recent Developments.........................................................12  
Capitalization..............................................................13  
Dilution....................................................................13  
Business....................................................................14  
Plan of Operation...........................................................18  
Management..................................................................19  
Certain Transactions........................................................26  
Principal Shareholders......................................................27  
Supervision and Regulation..................................................28  
Description of Capital Stock................................................34  
Shares Eligible for Future Sale.............................................39  
Underwriting................................................................40  
Legal Proceedings...........................................................41  
Legal Matters...............................................................41  
Experts.....................................................................41  
Forward-Looking Statements..................................................41  
Additional Information......................................................41  
Index to Financial Statements...............................................F-1 
--------------------

     Until  _______________,  1998, all dealers  effecting  transactions  in the
Common Stock, whether or not participating in this distribution, may be required
to  deliver a  Prospectus.  This  delivery  requirement  is in  addition  to the
obligation of dealers to deliver a Prospectus  when acting as  underwriters  and
with respect to their unsold allotments or subscriptions.                       

--------------------------------------------------------------------------------

1,300,000 Shares

 MACATAWA BANK
 CORPORATION

Common Stock

PROSPECTUS

 Robert W. Baird & Co.
Incorporated

____________, 1998

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 PART II

Information Not Required in Prospectus

Item 24.           Indemnification of Directors and Officers.                   

     Sections 561-571 of the Michigan Business  Corporation Act, as amended (the
"MBCA"), grant the Registrant broad powers to indemnify any person in connection
with legal  proceedings  brought  against  him by reason of his  present or past
status as an officer or director  of the  Registrant,  provided  that the person
acted in good  faith  and in a manner  he  reasonably  believed  to be in or not
opposed  to the  best  interests  of the  Registrant,  and with  respect  to any
criminal  action or proceeding,  had no reasonable  cause to believe his conduct
was unlawful.  The MBCA also gives the Registrant  broad powers to indemnify any
such person against  expenses and reasonable  settlement  payments in connection
with any action by or in the right of the Registrant,  provided the person acted
in good faith and in a manner he reasonably  believed to be in or not opposed to
the best interests of the Registrant, except that no indemnification may be made
if such person is adjudged to be liable to the Registrant unless and only to the
extent the court in which such action was brought  determines  upon  application
that,  despite such  adjudication,  but in view of all the  circumstances of the
case, the person is fairly and  reasonably  entitled to indemnity for reasonable
expenses as the court deems  proper.  In  addition,  to the extent that any such
person is successful in the defense of any such legal proceeding, the Registrant
is required by the MBCA to indemnify him against expenses,  including attorneys'
fees, that are actually and reasonably incurred by him in connection therewith. 

     The Registrant's  Articles of Incorporation  contain  provisions  entitling
directors and executive  officers of the Registrant to  indemnification  against
certain liabilities and expenses to the full extent permitted by Michigan law.  

     Under an insurance policy  maintained by the Registrant,  the directors and
officers  of the  Registrant  are  insured  within the limits and subject to the
limitations  of the policy,  against  certain  expenses in  connection  with the
defense  of  certain  claims,   actions,  suits  or  proceedings,   and  certain
liabilities which might be imposed as a result of such claims, actions, suits or
proceedings, which may be brought against them by reason of being or having been
such directors and officers.                                                    

     The Registrant has agreed to indemnify the Underwriter, and the Underwriter
has agreed to indemnify  the  Registrant,  against  certain  civil  liabilities,
including liabilities under the Securities Act, as amended. Reference is made to
the Underwriting Agreement filed as Exhibit 1 herewith.                         

Item 25.          Other Expenses of Issuance and Distribution.                  

     Expenses in connection with the issuance and distribution of the securities
being  registered  are estimated as follows,  all of which are to be paid by the
Company:                                                                        

                                                                · Download Table
                                                                             
SEC Registration Fee.......................................        $    4,411
NASD Filing Fee............................................             1,995
Printing and Mailing Expenses..............................            20,000
Accounting Fees............................................            15,000
Transfer and Registrar's Fees..............................             4,000
Legal Fees and Expenses....................................           100,000
Blue Sky Fees and Expenses.................................            20,000
Miscellaneous..............................................             5,000
                                                                    ---------
                                                                     $170,406

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Item 26.          Recent Sales of Unregistered Securities.                      

     The Company has 940,125 shares of its Common Stock issued and  outstanding.
These  shares were  issued on February  18,  1998,  in exchange  for the 817,500
outstanding shares of Common Stock of the Bank,  pursuant to a reorganization in
which the Bank became a  wholly-owned  subsidiary of the Company.  The shares of
Common Stock were not  registered  pursuant to the  Securities  Act of 1933,  as
amended  (the "1933  Act"),  pursuant  to an  exemption  claimed  under  Section
3(a)(10) of the 1933 Act. No underwriter was involved in the  reorganization and
formation of the holding company.                                               

     The shares of stock of the Bank were sold in 1997 and were not  required to
be registered under the 1933 Act pursuant to an exemption  claimed under Section
3(a)(5) of the 1933 Act. No underwriter was involved in the sale.               

Item 27.          Exhibits.                                                     

     Reference  is made to the Exhibit  Index which  appears at page II-4 of the
Registration Statement.                                                         

Item 28.          Undertakings.                                                 

     Insofar as  indemnification  for  liabilities  under the  Securities Act of
1933,  as amended (the "1933 Act") may be permitted to  directors,  officers and
controlling  persons of the Company  pursuant of the  foregoing  provisions,  or
otherwise,  the Company has been advised that, in the opinion of the  Securities
and Exchange  Commission  such  indemnification  is against the public policy as
expressed in the 1933 Act and is, therefore,  unenforceable. In the event that a
claim for  indemnification  against such liabilities  (other than the payment by
the  Registrant  of  expenses  incurred  or  paid  by  a  director,  officer  or
controlling person of the Company in the successful defense of any action,  suit
or proceeding) is asserted by such  director,  officer or controlling  person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel  the matter has been  settled by  controlling  precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.                       

     The  undersigned  Company  hereby  undertakes  that:  (1) For  purposes  of
determining  any liability  under the Securities  Act of 1933,  the  information
omitted from the form of prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and  contained in a form of  prospectus  filed by the
Company  pursuant to Rule  424(b)(1) or (4) or Rule 497(h) under the  Securities
Act shall be deemed to be part of this Registration  Statement as of the time it
was declared  effective;  and (2) For the purpose of  determining  any liability
under the Securities Act of 1933, each post-effective  amendment that contains a
form of prospectus shall be deemed to be a new registration  statement  relating
to the securities  offered therein,  and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.              

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SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing on Form  SB-2 and has duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the city of Holland, State of Michigan, on February 6 , 1997.    

                       MACATAWA BANK CORPORATION

                         By: /s/ Benj. A. Smith, III
                         Benj. A. Smith, III
                           Chairman of the Board

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below  constitutes  and appoints Benj. A. Smith,  III and Philip J. Koning,  and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all  capacities,  to sign any and all amendments  (including  post-effective
amendments)  to this  Registration  Statement,  and to file the  same,  with all
exhibits  thereto,  and  other  documents  in  connection  therewith,  with  the
Securities and Exchange  Commission,  granting unto said  attorneys-in-fact  and
agents,  and each of them,  full power and  authority to do and perform each and
every  act and  thing  requisite  and  necessary  to be done  in and  about  the
premises,  as  fully  to all  intents  and  purposes  as he might or could do in
person,  hereby  ratifying and  confirming all that said  attorneys-in-fact  and
agents or his substitute may lawfully do or cause to be done by virtue hereof.  

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.                                          

                   Signature                                              Date

/s/ Benj. A. Smith, III                                         February 6, 1998
Benj. A. Smith, III, Principal Executive Officer and a Director                 

/s/ Philip J. Koning                                            February 6, 1998
Philip J. Koning, Principal Financial and Accounting Officer                    
and a Director                                                            

G. Thomas Boylan, Director                                                      

/s/ Robert E. DenHerder                                         February 6, 1998
Robert E. DenHerder, Director                                                   

Brian J. Hansen, Director                                                       

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 EXHIBIT INDEX

                                                                    Sequentially
                                                                        Numbered
            Exhibit Number and Description                                  Page

1 *      Form of Underwriting Agreement                                         

2        Consolidation Agreement dated December 10, 1997                        

3.1      Articles of Incorporation of Macatawa Bank Corporation                 

3.2      Bylaws of Macatawa Bank Corporation                                    

4 *      Specimen stock certificate of Macatawa Bank Corporation                

5        Opinion of Varnum, Riddering, Schmidt & Howlett LLP                    

10.1     Macatawa Bank Corporation Stock Compensation Plan                      

10.2     Macatawa Bank Corporation 1998 Directors' Stock Option Plan            

10.3     Lease Agreement dated July 8, 1997, for the facility located           
at 51 E. Main Street, Zeeland, Michigan 49464                 

10.4     Lease Agreement dated January 1, 1998, for the facility                
located at 139 East 8th Street, Holland, Michigan 49423       

10.5     Lease Agreement dated December 22, 1997, for the facility              
located at 106 E. 8th Street, Holland, Michigan 49423         

10.6     Lease Agreement dated January 1, 1998, for the facility                
located at 701 Maple Street, Holland, Michigan 49424          

10.7     Real Estate Purchase/Sale Agreement dated January 23,                  
1998, for the facility located at 2020 Baldwin Street,        
Jenison, Michigan                                             

10.8     RDSI Banking Systems Data Processing Agreement with                    
Macatawa Bank dated October 1, 1997.                          

21       Subsidiaries of the Registrant                                         

23.1 *   Consent of ______________, independent public accountants              

23.2     Consent of Varnum, Riddering, Schmidt & Howlett LLP                    
(included in opinion filed as Exhibit 5)                      

24       Power of Attorney (included on the signature page on                   
page II-3 of the Registration Statement)                      

27       Financial Data Schedule                                                

*   To be filed by amendment.                                                   

::ODMA\PCDOCS\GRR\119797\6                                                      

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EXHIBIT 2                                                                       

 CONSOLIDATION AGREEMENT

     This is a  Consolidation  Agreement  dated as of the 10th day of  December,
1997, between the Macatawa Bank ("Bank") and MC BANK ("New Bank"), and joined in
by Macatawa Bank Corporation ("MBC").                                           

     The Bank is a Michigan banking corporation with its principal office in the
City of Zeeland, Michigan, with an authorized capital of $5,722,500,  consisting
of 817,500 shares of common stock,  par value $7.00 per share,  of which 817,500
shares  are  issued  and  outstanding.  The  New  Bank  is  a  Michigan  banking
corporation,  organized  under the  provisions  of Section  130 of the  Michigan
Banking Code of 1969,  as amended (the  "Banking  Code") for the sole purpose of
effecting this consolidation,  with an authorized capital of $70.00,  consisting
of ten (10) shares of common stock,  par value $7.00 per share,  which share is,
or will at the time of the consolidation be, issued and outstanding.            

     A majority of the entire  Board of  Directors  of the Bank and the New Bank
have, respectively, approved, made and executed this Consolidation Agreement and
authorized  its  execution  by the Bank and the New Bank,  and a majority of the
entire Board of Directors of MBC has approved this  Consolidation  Agreement and
the  undertakings  of MBC herein set forth and has authorized  MBC, by execution
hereof, to join in and be bound hereby.                                         

     At the time the consolidation  becomes effective,  and as and when required
by the provisions of this Consolidation  Agreement, MBC will issue shares of its
common stock which the  shareholders of the Bank shall be entitled to receive as
hereinafter provided and will carry out the other obligations required of MBC by
the terms of this Consolidation Agreement.                                      

Accordingly, the parties agree as follow:                             

     1.  Consolidation.  The New Bank and the Bank shall be consolidated  into a
single bank under the charter of the Bank in accordance  with the  provisions of
the  Banking  Code  (the  "Consolidation").  The  consolidated  organization  is
sometimes hereinafter referred to as the "Consolidated Bank."                   

     2. Charter.  The charter of the  Consolidated  Bank shall be the charter of
the  Bank  with  changes  and  amendments  as may be made by this  Consolidation
Agreement  or as may be  required  in order to  conform  such  charter  with the
provisions of this Consolidation Agreement.                                     

3. Name. The name of the Consolidated Bank shall be "Macatawa Bank."  

     4. Effect of  Consolidation.  At the  effective  date of the  Consolidation
("Consolidation  Date"),  the  corporate  existence of the New Bank and the Bank
shall be merged into and continue in the Consolidated Bank which shall be deemed
to be the same corporation as each of the  consolidating  banks,  possessing all
the rights, interests, privileges, power and franchises and being subject to all
the restric tions,  disabilities and duties of each of the consolidating  banks;
and all and singular the rights, interests, privileges and franchises of each of
the  consolidating  banks and all property,  real,  personal and mixed,  and all
debts due to either of the  consolidating  banks on whatever  account,  shall be
transferred  to and vested in the  Consolidated  Bank  without any deed or other
transfer  and  without  any  order or other  action  on the part of any court or
otherwise;  and  all  property,  rights,  privileges,   powers,  franchises  and
interests and each and every other  interest  shall be thereafter as effectually
the property of the Consolidated  Bank as they were of each of the consolidating
banks.  The title to any real estate,  whether by deed or  otherwise,  vested in
either the Bank or the New Bank,  shall not revert or be in any way  impaired by
reason  of  the   Consolidation.   The  Consolidated  Bank,  by  virtue  of  the
Consolidation, and without any order or other action on the part of any court or
otherwise, shall hold and enjoy the same and all rights of property,  franchises
and interests,  including  appointments,  designations  and  nominations and all
other rights and  interests as trustee,  executor,  administrator,  registrar of
stocks and bonds, guardian of estates, assignee,  receiver, guardian of mentally
incompetent  persons and in every other fiduciary  capacity,  in the same manner
and to the same extent as such rights,  franchises  and  interests  were held or
enjoyed by each consolidating bank at the Consolidation Date.                   

     5. Principal Office and Branches.  The principal office of the Consolidated
Bank shall be the principal banking office presently occupied by the Bank in the
City of Zeeland, Michigan, and the branches                                     

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of the  Consolidated  Bank shall be all of the branches of the Bank in operation
at the Consolidation  Date and such other branches as may be duly authorized and
established from time to time.                                                  

     6.  Capital.  The  authorized  capital  of the  Consolidated  Bank shall be
$5,722,500  consisting of 817,500  shares of common  stock,  par value $7.00 per
share.                                                                          

     7.  Directors and Officers.  The Board of Directors and the officers of the
Consolidated  Bank shall be the same persons,  holding the same offices,  as the
directors and officers of the Bank immediately prior to the Consolidation Date. 

     8. Bylaws.  The Bylaws of the Consolidated  Bank shall be the Bylaws of the
Bank in effect immediately prior to the Consolidation Date.                     

         9.  Conversion of Shares of Stock.  The manner of converting the shares
of the Bank and the New Bank shall be as follows:                               

          (a) New Bank Shares. As of the Consolidation Date, the ten (10) shares
     of $7.00 par value common stock of New Bank issued and outstanding shall be
     converted into and remain outstanding as ten (10) shares of $7.00 par value
     common  stock of the  Consolidated  Bank and the capital and surplus of the
New Bank shall become surplus of the Consolidated Bank.               

          (b)  Issuance of  Consolidated  Bank Shares.  As of the  Consolidation
     Date, the  Consolidated  Bank shall issue 817,490 shares of $7.00 par value
     common stock of the Consolidated Bank to MBC in consideration of the shares
     to  be  delivered  to  the  Bank  shareholders  under  the  terms  of  this
Consolidation Agreement.                                              

          (c) Bank Shares.  As of the  Consolidation  Date, the shares of common
     stock, par value $7.00 per share, of the Bank issued and outstanding  shall
     thereupon and without any action by the holders thereof,  be converted into
     shares of common  stock of MBC,  on the basis of 1.15  shares of the common
     stock of MBC for each one (1) share of the common  stock,  par value  $7.00
     per share,  of the Bank. Each  shareholder of the Bank,  within thirty days
     after having been notified by first class mail of the  Consolidation  Date,
     shall surrender to the cashier of the Consolidated Bank, the certificate or
     certificates  which represented shares of the Bank and shall be entitled to
     receive  therefor  one or more stock  certificates  for the full  number of
     shares of MBC  common  stock  into  which the  common  stock of the Bank so
     surrendered  shall have been  converted.  Until so  surrendered,  each such
     certificate  repre  senting  shares in the Bank  shall be  deemed,  for all
     purposes, to represent the shares of MBC into which such shares of the Bank
     shall  have  been  converted  pursuant  to  the  terms  hereof.  MBC  stock
     certificates  shall  be  delivered  by  MBC to  the  shareholders  entitled
     thereto;  provided,  however,  that MBC shall not be  required to make such
     delivery  to any holder of Bank  common  stock  unless and until his or her
     certificates  for Bank common stock have been  surrendered  for exchange as
herein required.                                                      

          (d)  Withholding  of Dividends.  MBC may, at its option,  withhold the
     payment  of any  dividends  upon  any  shares  of the  common  stock of MBC
     represented  by  a  certificate  which  prior  to  the  Consolidation  Date
     represented  common  stock  of the Bank  until  such  certificate  shall be
     surrendered  for exchange;  provided,  however,  that upon surrender of any
     such certificate there shall then be paid to the holder,  without interest,
     the aggregate amount of all dividends which have,  after the  Consolidation
     Date, become payable upon the shares of the common stock of MBC represented
by such certificate.                                                  

     10.  Further  Documentation.  The  directors  of the  Bank and the New Bank
shall,  from time to time, as and when requested by the Consolidated Bank or its
successors or assigns, execute and deliver or cause to be executed and delivered
such deeds, instruments,  assignments or assurances as the Consolidated Bank may
deem  necessary,  desirable or convenient in order to vest in and confirm to the
Consolidated Bank title                                                         

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to or  possession of any property or rights of the Bank or the New Bank acquired
or to be acquired by reason of or as a result of the Consolidation, or otherwise
to carry out the purposes of this Agreement.  Any person who, immediately before
the  Consolidation  Date, was an officer or director of the Bank or the New Bank
is hereby fully authorized, in the name of such institution,  to execute any and
all such deeds,  instruments,  assignments or assurances, or to take any and all
such action as may be requested by the Consolidated Bank.                       

     11. Employee  Pension Plans.  All pension and other employee  benefit plans
maintained by the Bank shall continue and shall be the plans of the Consolidated
Bank.                                                                           

     12. Shareholder Approval.  This Consolidation  Agreement shall be submitted
to the  shareholders  of the Bank and the New Bank at separate  meetings of such
shareholders, each duly called and held in accordance with the provisions of the
Banking Code and other applicable statutes. In order for the Consolidation to be
effective, this Consolidation Agreement must be approved by the affirmative vote
of the holders of not less than two thirds  (2/3) of the issued and  outstanding
shares of the common stock of the Bank, and of the issued and outstanding shares
of the common stock of the New Bank.                                            

     13.  Dissenters'  Shares. Any shareholder of the Bank who votes against the
Consolidation, or who has given notice in writing to the Bank at or prior to the
shareholders'   meeting  to  be  held  for  the  purpose  of  considering   this
Consolidation Agreement that he or she dissents from the Consolidation, shall be
entitled  to  receive in cash from the  Consolidated  Bank the fair value of all
shares  held by him or her, if and when the  Consolidation  is  consummated,  in
accordance with the provisions of Section 130 of the Banking Code. The shares of
such dissenting  shareholder  which are surrendered to the Consolidated Bank for
payment shall  nevertheless  be deemed to have been converted into shares of MBC
as provided in Section 9 of this Consolidation  Agreement,  and the Consolidated
Bank shall deliver the certificate or certificates  representing  such shares to
MBC to be held by MBC as treasury  shares until the  certificates  are cancelled
and the shares become authorized but unissued status.                           

     14.  Conditions  Precedent  to  Consolidation.   The  consummation  of  the
Consolidation  herein  contemplated  is  conditioned  upon each of the following
events:                                                                         

          (a) The approval of the  shareholders  of the Bank and the New Bank as
set forth above;                                                      

          (b) The approval of the  Commissioner  of the  Financial  Institutions
Bureau of the Michigan Department of Consumer and Industry Services;  

          (c)  Notification to, and lack of objection by, the Board of Governors
of the Federal Reserve System;                                        

          (d) The approval of the Federal Deposit Insurance Corporation pursuant
to the Federal Deposit Insurance Act, as amended; and                 

          (e) Receipt by the Bank of an opinion of legal counsel satisfactory to
     the  Bank   concerning   the  federal  income  tax   consequences   of  the
Consolidation.                                                        

     15.  Termination  of  Agreement.   This  Consolidation   Agreement  may  be
terminated at any time before the Consolidation Date by written notice of either
the Bank or MBC;  provided that such notice has been  authorized and approved by
the Board of Directors of the party giving such notice.  Upon such  termination,
neither the Bank, the New Bank nor MBC, nor any of their respective directors or
officers,  shall have any liability by reason of this Consolidation Agreement or
the termination thereof.                                                        

     16. Expenses. Upon consummation of the Consolidation, the Consolidated Bank
will  pay the  expenses  of the  Bank  and the New  Bank,  and MBC  will pay its
expenses incident hereto. If the Consolidation is not consummated, the Bank will
pay the expenses of itself, the New Bank and MBC.                               

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     17. Effective Date of Consolidation.  The Consolidation  shall be effective
on such date as may be designated by the  Financial  Institutions  Bureau of the
Michigan Department of Consumer and Industry Services.                          

     IN  WITNESS   WHEREOF,   the  Bank  and  the  New  Bank  have  caused  this
Consolidation  Agreement to be executed in counterparts by their duly authorized
officers and their corporate  seals to be hereunto  affixed as of the date first
above written,  and directors  constituting a majority of the Board of Directors
of each such bank have hereunto subscribed their names.                         

                     MACATAWA BANK

Attest: /s/ Colette S. Neumann              By: /s/ Philip J. Koning            
Colette S. Neumann, Secretary           Philip J. Koning        
                         President

/s/ Benj. A. Smith, III                         /s/ Philip J. Koning            
Benj. A. Smith, III                             Philip J. Koning                

/s/ Robert E. DenHerder                        /s/ G. Thomas Boylan           
Robert E. DenHerder                             G. Thomas Boylan                

/s/ Edward H. Marsilje                                                          
Edward H. Marsilje                                                              

A Majority of the Directors of
 Macatawa Bank

               MC BANK

Attest: /s/ Colette S. Neumann              By: /s/ Philip J. Koning            
   Colette S. Neumann, Secretary           Philip J. Koning, President

/s/ Benj. A. Smith, III                        /s/ Philip J. Koning           
Benj. A. Smith, III                             Philip J. Koning                

/s/ Paulette J. Belile                          /s/ Colette S. Neumann          
Paulette J. Belile                              Colette S. Neumann              

/s/ Alan K. Yamaoka                                                             
Alan K. Yamaoka                                                                 

A Majority of the Directors of
 MC Bank

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     Macatawa  Bank  Corporation  hereby  joins in the  foregoing  Consolidation
Agreement and  undertakes  that it will be bound thereby and that it will do and
perform all acts and things therein referred to or provided to be done by it.   

     IN WITNESS  WHEREOF,  Macatawa Bank Corporation has caused this undertaking
to be executed in counterparts by its duly authorized officers and its corporate
seal to be hereto affixed as of the date first above written.                   

                                             MACATAWA BANK CORPORATION

Attest: /s/ Philip J. Koning                      By: /s/ Benj. A. Smith, III   
        Philip J. Koning, Secretary               Benj. A. Smith, III, President

::ODMA\PCDOCS\GRR\92819\1                                                       

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EXHIBIT 3.1                                                                     

RESTATED ARTICLES OF INCORPORATION

OF

 MACATAWA BANK CORPORATION

     The  following  Restated  Articles  of  Incorporation  are  executed by the
undersigned Corporation pursuant to the provisions of Sections 641-643, Act 284,
Public Acts of 1972, as amended.                                                

1. The present name of the Corporation is Macatawa Bank Corporation.  

2. The identification number assigned by the Bureau is 502-582.       

3. All former names of the Corporation are: None.                     

     4. The  date of  filing  of the  original  Articles  of  Incorporation  was
November 20, 1997.                                                    

     The following Articles of Incorporation are executed by the undersigned for
the purpose of forming a profit  corporation  pursuant to the  provisions of Act
284, Public Acts of 1972, as amended:                                           

 ARTICLE I

The name of the Corporation is Macatawa Bank Corporation.             

ARTICLE II

     The purpose,  or  purposes,  for which the  Corporation  is organized is to
engage in the business of a bank holding company to be registered under the Bank
Holding Company Act of 1956, being 12 U.S.C.  sections 1841 to 1850 and, without
in any way being limited by the  foregoing  specific  purpose,  to engage in any
activity within the purposes for which  corporations  may be organized under the
Business Corporation Act of Michigan.                                           

 ARTICLE III

     The total  number  of shares of all  classes  of  capital  stock  which the
Corporation  shall  have the  authority  to issue  is ten  million  (10,000,000)
shares, of which nine million five hundred thousand  (9,500,000) shares shall be
common  stock  and five  hundred  thousand  (500,000)  shares  shall  be  series
preferred stock.                                                                

     The  authorized  shares of common  stock  are all of one class  with  equal
voting power, and each share shall be equal to every other share.               

     The shares of preferred stock may be divided into and issued in one or more
series. The Board of Directors is hereby authorized to cause the preferred stock
to be issued from time to time                                                  

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in one or  more  series,  with  such  designations  and  such  relative  voting,
dividend,  liquidation and other rights, preferences and limitations as shall be
stated and expressed in the resolution or resolutions providing for the issue of
such preferred  stock adopted by the Board of Directors.  The Board of Directors
by vote of a majority of the whole Board is expressly  authorized  to adopt such
resolutions or resolutions and issue such stock from time to time as it may deem
desirable.                                                                      

ARTICLE IV

     The address of the  registered  office and mailing  address is 106 East 8th
Street,  Holland,  Michigan  49423.  The name of the resident  agent is Benj. A.
Smith, III.                                                                     

 ARTICLE V

     When a  compromise  or  arrangement,  or a plan  of  reorganization  of the
Corporation, is proposed between the Corporation and its creditors, or any class
of them, or between the Corporation and its shareholders,  or any class of them,
a  court  of  equity  jurisdiction  within  the  state,  on  application  of the
Corporation,  a creditor or shareholder thereof, or a receiver appointed for the
Corporation,  may order a meeting of the creditors, or class of creditors, or of
the  shareholders,  or class of  shareholders,  to be affected  by the  proposed
compromise, arrangement, or reorganization, to be summoned in such manner as the
court directs.  If a majority in number  representing  three-fourths in value of
the creditors or class of creditors,  or of the  shareholders  to be affected by
the proposed compromise,  arrangement, or reorganization,  agree to a compromise
or arrangement or to a reorganization of the Corporation as a consequence of the
compromise or arrangement, the compromise or arrangement and the reorganization,
if  sanctioned  by the court to which the  application  has been made,  shall be
binding on all the creditors or class of creditors,  or on all the  shareholders
or class of shareholders, and also on the Corporation.                          

ARTICLE VI

     No  director  of  the  Corporation   shall  be  personally  liable  to  the
Corporation  or any of its  shareholders  for  monetary  damages for a breach of
fiduciary  duty as a director.  However,  this Article VI shall not eliminate or
limit the  liability of a director  for any breach of duty,  act or omission for
which the  elimination  or  limitation  of  liability  is not  permitted  by the
Michigan  Business  Corporation Act, as amended from time to time. No amendment,
alteration,  modification, repeal or adoption of any provision in these Articles
of  Incorporation  inconsistent  with this  Article  VI shall have any effect to
increase the  liability of any director of the  Corporation  with respect to any
act or omission of such director occurring prior to such amendment,  alteration,
modification, repeal or adoption.                                               

 ARTICLE VII

     Directors and executive officers of the Corporation shall be indemnified as
of right to the fullest  extent now or hereafter  permitted by law in connection
with any actual or threatened civil,  criminal,  administrative or investigative
action,  suit  or  proceeding  (whether  brought  by  or  in  the  name  of  the
Corporation, a subsidiary or otherwise) in which a director or executive officer
is a witness or which is brought against a director or executive  officer in his
or her  capacity as a director,  officer,  employee,  agent or  fiduciary of the
Corporation or of any corporation, partnership, joint venture,                  

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trust, employee benefit plan or other enterprise which the director or executive
officer  was  serving at the  request of the  Corporation.  Persons  who are not
directors or executive officers of the Corporation may be similarly  indemnified
in respect of such service to the extent  authorized at any time by the Board of
Directors  of  the  Corporation.  The  Corporation  may  purchase  and  maintain
insurance to protect  itself and any such director,  executive  officer or other
person against any liability  asserted against him or her and incurred by him or
her in respect of such  service  whether or not the  Corporation  would have the
power to  indemnify  him or her  against  such  liability  by law or  under  the
provisions of this Article.  The  provisions of this Article shall be applicable
to actions, suits or proceedings, arising from acts or omissions occurring after
the filing of these Articles of Incorporation with the Corporation,  Securities,
and Land Development Bureau of the Michigan  Department of Consumer and Industry
Services, and to directors, executive officers and other persons who have ceased
to render such service,  and shall inure to the benefit of the heirs,  executors
and  administrators  of the  directors,  executive  officers  and other  persons
referred to in this Article.  The right of indemnity  provided  pursuant to this
Article shall not be exclusive and the Corporation  may provide  indemnification
to any person,  by agreement or otherwise,  on such terms and  conditions as the
Board of  Directors  may approve  that are not  inconsistent  with the  Michigan
Business   Corporation   Act  (or  other  law).   Any   amendment,   alteration,
modification,   repeal  or  adoption  of  any   provision  in  the  Articles  of
Incorporation  inconsistent with this Article VII shall not adversely affect any
indemnification  right or protection  of a director or executive  officer of the
Corporation  existing at the time of such amendment,  alteration,  modification,
repeal or adoption.                                                             

ARTICLE VIII

     Section 1.  Authority  and Size of Board.  The  business and affairs of the
corporation  shall  be  managed  by or  under  the  direction  of the  Board  of
Directors.  The number of directors of the corporation that shall constitute the
Board of Directors shall be determined  from time to time by resolution  adopted
by the affirmative vote of:                                                     

A. At least eighty percent (80%) of the Board of Directors, and       

B. A majority of the Continuing Directors (as hereinafter defined).   

     Section 2.  Classification  of Board and Filling of  Vacancies.  Subject to
applicable  law, the  directors  shall be divided  into three (3) classes,  each
class to be as nearly  equal in number as  possible.  At each annual  meeting of
shareholders,  the  successors  to the class of directors  whose term shall then
expire  shall  be  elected  to hold  office  for a term  expiring  at the  third
succeeding  annual meeting and until their  successors shall be duly elected and
qualified  or their  resignation  or  removal.  Any  vacancies  in the  Board of
Directors for any reason, and any newly created directorships resulting from any
increase  in the  number  of  directors,  may be  filled  only by the  Board  of
Directors,  acting  by an  affirmative  vote  of a  majority  of the  Continuing
Directors (as  hereinafter  defined) and an eighty percent (80%) majority of all
of the directors then in office,  although less than a quorum,  and any director
so chosen shall hold office  until the next  election of the class for which the
director was chosen and until his successor  shall be duly elected and qualified
or his  resignation  or removal.  No decrease in the number of  directors  shall
shorten the term of any incumbent director.                                     

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     Section 3. Removal of Directors.  Notwithstanding  any other  provisions of
these  Articles  of   Incorporation  or  the  Bylaws  of  the  corporation  (and
notwithstanding  the fact that some lesser percentage may be specified by law or
by these Articles of Incorporation or the Bylaws of the corporation), any one or
more directors of the  corporation  may be removed at any time,  with or without
cause,  but  only by  either  (i) the  affirmative  vote  of a  majority  of the
Continuing Directors and at least eighty percent (80%) of the Board of Directors
or (ii) the affirmative  vote, at a meeting of the shareholders  called for that
purpose,  of the holders of at least eighty percent (80%) of the voting power of
the then outstanding shares of capital stock of the corporation entitled to vote
generally in the election of directors (the "Voting Stock") voting together as a
single class.                                                                   

Section 4. Certain Definitions. For the purposes of this Article VIII:

          A. A "person" shall mean any  individual,  firm,  corporation or other
entity.                                                               

          B.  "Interested  Shareholder"  shall mean any  person,  other than the
corporation or any Subsidiary, who or which:                          

               (i) is the  beneficial  owner,  directly  or  indirectly,  of ten
          percent  (10%) or more of the voting power of the  outstanding  Voting
Stock; or                                                   

               (ii) is an  Affiliate of the  corporation  and at any time within
          the two (2) year period  immediately prior to the date in question was
          the beneficial owner, directly or indirectly,  of ten percent (10%) or
     more of the voting power of the then outstanding Voting Stock; or

               (iii) is an assignee of or has otherwise  succeeded to any shares
          of Voting  Stock which were at any time within the two (2) year period
          immediately  prior to the date in question  beneficially  owned by any
          Interested  Shareholder,  if such assignment or succession  shall have
          occurred in the course of a transaction or series of transactions  not
          involving a public  offering  within the meaning of the Securities Act
of 1933.                                                    

  C. A person shall be a "beneficial owner" of any Voting Stock:

               (i) which such person or any of its  Affiliates or Associates (as
      hereinafter defined) beneficially owns, directly or indirectly; or

               (ii) which such person or any of its Affiliates or Associates has
          (a)  the  right  to  acquire   (whether  such  right  is   exercisable
          immediately  or only  after  the  passage  of time),  pursuant  to any
          agreement,  arrangement  or  understanding  or upon  the  exercise  of
          conversion rights, exchange rights, warrants or options, or otherwise,
          or (b) the right to vote  pursuant to any  agreement,  arrangement  or
understanding; or                                           

               (iii) which are beneficially  owned,  directly or indirectly,  by
          any other  person with which such person or any of its  Affiliates  or
Associates has any                                          

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          agreement,  arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock. 

          D. For the purposes of  determining  whether a person is an Interested
     Shareholder pursuant to paragraph B of this Section 4, the number of shares
     of Voting Stock deemed to be outstanding  shall include shares deemed owned
     through  application of paragraph C of this Section 4 but shall not include
     any other  shares of Voting  Stock  which may be  issuable  pursuant to any
     agreement,  arrangement  or  understanding,  or upon exercise of conversion
rights, warrants or options, or otherwise.                            

          E.  "Affiliate"  or  "Associate"  shall have the  respective  meanings
     ascribed to such terms in Rule 12b-2 of the General  Rules and  Regulations
     under the  Securities  Exchange Act of 1934,  as in effect on the date this
     Article of the  Articles  of  Incorporation  is filed with the  Corporation
Division of the Michigan Department of Commerce.                      

          F. "Subsidiary" means any corporation of which a majority of any class
     of equity security is owned,  directly or indirectly,  by the  corporation;
     provided,  however,  that for the purposes of the  definition of Interested
     Shareholder  set  forth  in  paragraph  B  of  this  Section  4,  the  term
     "Subsidiary"  shall mean only a  corporation  of which a  majority  of each
     class  of  equity  security  is  owned,  directly  or  indirectly,  by  the
corporation.                                                          

          G. "Continuing Director" means any member of the Board of Directors of
     the  corporation  (the  "Board") who is  unaffiliated  with the  Interested
     Shareholder  and was a member  of the  Board  prior  to the  time  that the
     Interested Shareholder became an Interested Shareholder,  and any successor
     of  a  Continuing   Director  who  is  unaffiliated   with  the  Interested
     Shareholder  and is  recommended  to  succeed a  Continuing  Director  by a
majority of Continuing Directors then on the Board.                   

     Section 5. Powers of  Continuing  Directors.  A majority of the  Continuing
Directors of the corporation shall have the power and duty to determine,  on the
basis of information known to them after reasonable inquiry, all facts necessary
to determine compliance with this Article VIII, including without limitation (i)
whether  a person is an  Interested  Shareholder,  (ii) the  number of shares of
Voting Stock  beneficially  owned by any person and (iii) whether a person is an
Affiliate  or  Associate  of  another;  and the good  faith  determination  of a
majority of the  Continuing  Directors on such matters shall be  conclusive  and
binding for all the purposes of this Article VIII.                              

     Section 6. Nominations for Board. Nominations for the election of directors
may be made by the Board of  Directors or by a  shareholder  entitled to vote in
the election of  directors.  A  shareholder  entitled to vote in the election of
directors,  however,  may make such a nomination  only if written notice of such
shareholder's  intent to do so has been given, either by personal delivery or by
United States mail,  postage  prepaid,  and received by the Corporation (a) with
respect to an  election  to be held at an annual  meeting of  shareholders,  not
later  than  sixty  (60) nor more  than  ninety  (90)  days  prior to the  first
anniversary  of the  preceding  year's  annual  meeting  (or, if the date of the
annual  meeting is changed by more than twenty  (20) days from such  anniversary
date,  within ten (10) days after the date the  Corporation  mails or  otherwise
gives                                                                           

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notice of the date of such  meeting),  and (b) with respect to an election to be
held at a special  meeting of  shareholders  called for that purpose,  not later
than the close of business on the tenth (10th) day  following  the date on which
notice of the  special  meeting  was first  mailed  to the  shareholders  by the
Corporation.                                                                    

     Each  shareholder's  notice of intent to make a nomination shall set forth:
(i) the  name(s)  and  address(es)  of the  shareholder  who intends to make the
nomination and of the person or persons to be nominated;  (ii) a  representation
that the  shareholder  (a) is a holder  of  record  of stock of the  Corporation
entitled to vote at such  meeting,  (b) will continue to hold such stock through
the date on which the meeting is held, and (c) intends to appear in person or by
proxy at the meeting to nominate the person or persons  specified in the notice;
(iii)  a  description  of  all  arrangements  or   understandings   between  the
shareholder and each nominee and any other person or persons (naming such person
or persons)  pursuant to which the nomination is to be made by the  shareholder;
(iv) such other information  regarding each nominee proposed by such shareholder
as would be  required  to be included  in a proxy  statement  filed  pursuant to
Regulation 14A  promulgated  under Section 14 of the Securities  Exchange Act of
1934, as amended, as now in effect or hereafter modified; and (v) the consent of
each  nominee to serve as a  director  of the  Corporation  if so  elected.  The
Corporation may require any proposed  nominee to furnish such other  information
as may reasonably be required by the Corporation to determine the qualifications
of such proposed nominee to serve as a director.                                

     No person shall be eligible for election as a director unless nominated (i)
by a shareholder in accordance with the foregoing procedure or (ii) by the Board
of Directors.                                                                   

ARTICLE IX

     The Board of Directors of the  Corporation  shall submit for  consideration
and vote by the shareholders,  at any meetings of the  shareholders,  only those
proposals  that are first  brought  before the meeting by or at the direction of
the Board of Directors,  or by any shareholder  entitled to vote at such meeting
(a) who submits to the  Corporation  a timely  Notice of Proposal in  accordance
with the  requirements  of this Article IX and the proposal is a proper  subject
for action by shareholders under Michigan law, or (b) whose proposal is included
in the Corporation's proxy materials in compliance with all the requirements set
forth in the  applicable  rules and  regulations  in the Securities and Exchange
Commission.                                                                     

Each shareholder's Notice of Proposal shall set forth:                

          (a) The name and address of the  shareholder  submitting the proposal,
as they appear on the Corporation's books and records;                

          (b) A representation that the shareholder (i) is a holder of record of
     stock  of the  Corporation  entitled  to vote at such  meeting,  (ii)  will
     continue to hold such stock  through the date on which the meeting is held,
     and (iii)  intends to appear in person or by proxy at the meeting to submit
the proposal for shareholder vote;                                    

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          (c) A brief description of the proposal desired to be submitted to the
     meeting for  shareholder  vote and the reasons for conducting such business
at the meeting; and                                                   

          (d)  A  description  of  any  financial  or  other  interest  of  such
shareholder in the proposal.                                          

     A Notice of  Proposal  must be given,  either by  personal  delivery  or by
United States mail,  postage  prepaid,  and received by the Corporation (a) with
respect to a proposal to be presented at an annual meeting of shareholders,  not
later  than  sixty  (60) nor more  than  ninety  (90)  days  prior to the  first
anniversary  of the  preceding  year's  annual  meeting  (or, if the date of the
annual  meeting is changed by more than twenty  (20) days from such  anniversary
date,  within ten (10) days after the date the  Corporation  mails or  otherwise
gives notice of the date of such meeting), and (b) with respect to a proposal to
be presented at a special meeting of  shareholders,  not later than the close of
business  on the tenth  (10th)  day  following  the date on which  notice of the
special meeting was first mailed to the shareholders by the Corporation.        

     The  secretary of the  Corporation  shall notify a  shareholder  in writing
whether his or her Notice of Proposal has been made in  accordance  with all the
requirements  of this  Article  IX. The  chairman  of the  meeting may refuse to
acknowledge the proposal of any shareholder not made in compliance with all such
requirements.                                                                   

 ARTICLE X

     Except as otherwise required by law, any action required or permitted to be
taken on or after February 18, 1998 by any  shareholders of the Corporation must
be effected at a duly called annual or special meeting of such  shareholders and
may not be effected by any  consent in writing by such  shareholders.  Except as
may be  otherwise  required  by law,  special  meetings of  shareholders  of the
Corporation  may be called only by the Board of Directors or the Chairman of the
Board.                                                                          

ARTICLE XI

     Notwithstanding  anything  contained in these Articles of  Incorporation to
the contrary,  the affirmative vote of at least 80% of the outstanding shares of
voting stock of the corporation,  voting as a single class, shall be required to
amend or repeal  Article  VIII,  Article  IX,  Article X, or Article XI of these
Articles of  Incorporation  or to adopt any  provision  inconsistent  therewith,
unless, such amendment or repeal or inconsistent  provision has been recommended
for  approval  by at least 80% of all  directors  then  holding  office and by a
majority of the Continuing Directors. The term "Continuing Directors" is defined
in Article VIII.                                                                

 ARTICLE XII

     Section  1.  Matters  to be  Evaluated.  The  Board  of  Directors  of this
corporation  shall not approve,  adopt or  recommend  any offer of any person or
entity,  other than the corporation,  to make a tender or exchange offer for any
capital stock of the corporation, to merge or consolidate                       

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the corporation with any other entity or to purchase or otherwise acquire all or
substantially all of the assets or business of the corporation  unless and until
the Board of Directors  shall have first evaluated the offer and determined that
the offer would be in compliance  with all applicable laws and that the offer is
in the best interests of the  corporation  and its  shareholders.  In connection
with its evaluation as to compliance  with laws, the Board of Directors may seek
and rely upon an opinion of legal  counsel  independent  from the offeror and it
may test such  compliance  with laws in any state or federal court or before any
state or federal administrative agency which may have appropriate  jurisdiction.
In connection  with its evaluation as to the best  interests of the  corporation
and its shareholders, the Board of Directors shall consider all factors which it
deems relevant,  including without limitation:  (i) the adequacy and fairness of
the  consideration  to be received by the  corporation  and/or its  shareholders
under the  offer  considering  historical  trading  prices of the  corporation's
stock,  the price that might be achieved in a negotiated sale of the corporation
as a whole,  premiums  over trading  prices which have been  proposed or offered
with respect to the securities of other companies in the past in connection with
similar offers and the future  prospects for this  corporation and its business;
(ii) the potential  social and economic impact of the offer and its consummation
on this  corporation,  and its  subsidiaries  and  their  respective  employees,
depositors  and other  customers  and vendors;  (iii) the  potential  social and
economic  impact of the offer and its  consummation  on the communities in which
the corporation and any subsidiaries  operate or are located;  (iv) the business
and  financial  condition  and earnings  prospects  of the proposed  acquiror or
acquirors;  and (v) the  competence,  experience  and  integrity of the proposed
acquiror or acquirors and its or their management.                              

     Section 2. Amendment,  Repeal, etc.  Notwithstanding any other provision of
these Articles of Incorporation or the Bylaws of the corporation to the contrary
(and  notwithstanding the fact that a lesser percentage may be specified by law,
these  Articles  of  Incorporation  or  the  Bylaws  of  the  corporation),  the
affirmative  vote  of the  holders  of  eighty  percent  (80%)  or  more  of the
outstanding  shares  of  capital  stock  entitled  to vote for the  election  of
directors, voting together as a single class, shall be required to amend, repeal
or adopt any provision  inconsistent with this Article XII;  provided,  however,
that this Article XII shall be of no force or effect if the proposed  amendment,
repeal or other  action has been  recommended  for  approval by at least  eighty
percent (80%) of all directors then holding office.                             

     These Restated Articles of Incorporation  were duly adopted on the 26th day
of January,  1998, in accordance  with the  provisions of Section 642 of the Act
and were duly  adopted by written  consent of all the  shareholders  entitled to
vote in accordance with Section 407(2) of the Act.                              

Signed this 26th day of January, 1998.                                

                  By /s/ Benj. A. Smith, III
                 Benj. A. Smith, III
       President

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EXHIBIT 3.2                                                                     
 B Y L A W S

OF

 MACATAWA BANK CORPORATION

A Michigan corporation

 ARTICLE I
 OFFICES

     1.1 Registered  Office.  The registered  office of the corporation shall be
located at the address  specified  in the Articles of  Incorporation  or at such
other place as may be determined by the Board of Directors if notice  thereof is
filed with the State of Michigan.                                               

     1.2 Other  Offices.  The business of the  corporation  may be transacted at
such locations other than the registered office,  within or outside the State of
Michigan,  as the Board of Directors  may from time to time  determine or as the
business of the corporation may require.                                        

ARTICLE II
CAPITAL SHARES

     2.1 Share Certificates. Certificates representing shares of the corporation
shall be in such form as is  approved  by the Board of  Directors.  Certificates
shall be signed in the name of the  corporation  by the Chairman of the Board of
Directors,  the President or a Vice President, and may also be signed by another
officer  of  the  corporation,  and  shall  be  sealed  with  the  seal  of  the
corporation,  if one is  adopted.  If an officer  who has  signed a  certificate
ceases to be such officer before the certificate is issued,  it may be issued by
the  corporation  with the same effect as if he or she were such  officer at the
date of issue.                                                                  

     2.2 Replacement of Lost or Destroyed  Certificates.  If a share certificate
is lost or destroyed,  no new certificate shall be issued in place thereof until
the corporation has received such assurances,  representations,  warranties,  or
guarantees  from the  registered  holder as the Board of Directors,  in its sole
discretion,   deems   advisable   and  until  the   corporation   receives  such
indemnification  against  any claim  that may be made on  account of the lost or
destroyed certificate,  or the issuance of any new certificate in place thereof,
including an indemnity  bond in such amount and with such  sureties,  if any, as
the  Board  of  Directors,  in its sole  discretion,  deems  advisable.  Any new
certificate  issued  in  place  of any lost or  destroyed  certificate  shall be
plainly marked "duplicate" upon its face.                                       

     2.3  Transfer  of  Shares;  Shareholder  Records.  Capital  shares  of  the
corporation  shall be transferable  only upon the books of the corporation.  The
old  certificates  shall be  surrendered  to the  corporation by delivery to the
person in charge of the  transfer  books of the  corporation,  or to such  other
person as the Board of Directors may designate,  properly  endorsed for transfer
and the old certificates  shall be cancelled before a new certificate is issued.
The  corporation  shall keep records  containing  the names and addresses of all
shareholders, the number, class, and series of shares held by each, and the date
when they  respectively  became  holders  of record  thereof  at its  registered
office.  The corporation shall be entitled to treat the person in whose name any
share,  right,  or option is  registered  as the owner thereof for all purposes,
including  voting  and  dividends,  and  shall  not be  bound to  recognize  any
equitable or other claim,  regardless  of any notice  thereof,  except as may be
specifically required by the laws of the State of Michigan.                     

     2.4 Rules Governing Share  Certificates.  The Board of Directors shall have
the power and  authority  to make such  rules and  regulations  as they may deem
expedient   concerning  the  issue,   transfer,   and   registration   of  share
certificates.                                                                   

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     2.5 Record Date for Share Rights. The Board of Directors may fix in advance
a date not  exceeding  sixty  (60) days  preceding  the date of  payment  of any
dividend or other distribution,  or the date for the allotment of rights, or the
date when any change or conversion  or exchange of capital  shares shall go into
effect, as a record date for the  determination of the shareholders  entitled to
receive  payment  of any  such  dividend  or  other  distribution,  or any  such
allotment  of rights,  or to exercise  rights with  respect to any such  change,
conversion,  or exchange of capital shares and, in such case, only  shareholders
of record on the date so fixed  shall be  entitled  to  receive  payment of such
dividend or other distribution, or allotment of rights, or exercise such rights,
as the case may be,  notwithstanding  the transfer of any shares on the books of
the corporation  after such record date. If the Board of Directors shall fail to
fix a record date,  the record date for the purposes  specified  herein shall be
the  close of  business  on the date on which  the  resolution  of the  Board of
Directors relating thereto is adopted.                                          

     2.6 Dividends. The Board of Directors, in its discretion,  may from time to
time declare and direct  payment of dividends  or other  distributions  upon the
corporation's  outstanding  shares  out of  funds  legally  available  for  such
purposes which may be payable in cash or other property permitted by law.       

     In addition to the declaration of dividends or other distributions provided
in the preceding  paragraph of this Section 2.6, the Board of Directors,  in its
discretion,  may from time to time  declare and direct  payment of a dividend in
shares of this corporation,  upon its outstanding shares, in accordance with and
subject to the provisions of the Business Corporation Act of Michigan.          

     2.8  Redemption of Control  Shares.  Control  shares  acquired in a control
share acquisition,  with respect to which no acquiring person statement has been
filed with the corporation,  shall, at any time during the period ending 60 days
after the last acquisition of control shares or the power to direct the exercise
of voting  power of  control  shares by the  acquiring  person,  be  subject  to
redemption  by the  Corporation.  After an acquiring  person  statement has been
filed with the  Corporation  and after the meeting at which the voting rights of
the control shares acquired in a control shares acquisition are submitted to the
shareholders,  the  shares  shall be subject to  redemption  by the  Corporation
unless  the  shares are  accorded  full  voting  rights by the  shareholders  as
provided in Section 798 of the Michigan Business Corporation Act. Redemptions of
shares  pursuant to this bylaw shall be at the fair value of the shares pursuant
to procedures adopted by the Board of Directors of the Corporation.             

     The terms "control shares", "control share acquisition",  "acquiring person
statement",  "acquiring  person" and "fair  value" as used in this bylaw,  shall
have the meanings  ascribed to them,  respectively,  in Chapter 7B (known as the
Stacey,  Bennett,  and Randall  Shareholder Equity Act) of the Michigan Business
Corporation Act.                                                                

 ARTICLE III
SHAREHOLDERS

     3.1  Place  of  Meetings.  Meetings  of  shareholders  shall be held at the
registered  office of the corporation or at such other place,  within or outside
the State of Michigan,  as may be  determined  from time to time by the Board of
Directors;  provided, however, that if a shareholders meeting is to be held at a
place  other  than the  registered  office,  the  notice  of the  meeting  shall
designate such place.                                                           

     3.2 Annual  Meeting.  Annual  meetings  of  shareholders  for  election  of
directors  and for such other  business as may come before the meeting  shall be
held on the  third  Monday  of  March in each  year,  but if such day is a legal
holiday, then the meeting shall be held on the first business day following,  at
such time as may be fixed by the Board of  Directors,  or at such other date and
time within the four (4) months  next  succeeding  the end of the  corporation's
fiscal year as may be  designated  by the Board of  Directors  and stated in the
notice of the meeting.  If the annual meeting is not held on the date specified,
the Board of Directors  shall cause the meeting to be held as soon thereafter as
convenient.                                                                     

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     3.3 Special Meetings. Special meetings of shareholders may be called by the
Chairman of the Board,  the  President,  or the Secretary and shall be called by
one of them pursuant to resolution  therefor by the Board of Directors,  or upon
receipt of a request in writing,  stating the purpose or purposes  thereof,  and
signed by shareholders of record owning a majority of the issued and outstanding
voting shares of the corporation.                                               

     3.4  Record  Date for Notice and Vote.  The Board of  Directors  may fix in
advance a date not more than sixty  (60) nor less than ten (10) days  before the
date of a shareholders meeting as the record date for the purpose of determining
shareholders  entitled to notice of and to vote at the  meeting or  adjournments
thereof or to express  consent or to dissent from a proposal  without a meeting.
If the Board of Directors fails to fix a record date as provided in this Section
3.4, the record date for determination of shareholders  entitled to notice of or
to vote at a  shareholders  meeting shall be the close of business on the day on
which notice is given or, if no notice is given,  the day next preceding the day
on which the meeting is held, and the record date for  determining  shareholders
entitled  to express  consent or to  dissent  from a proposal  without a meeting
shall be the close of business on the day on which the  resolution  of the Board
of Directors relating to the proposal is adopted.                               

     3.5 Notice of Meetings.  Written notice of the time,  place, and purpose of
any shareholders meeting shall be given to shareholders entitled to vote thereat
not less than ten (10) nor more than  sixty  (60)  days  before  the date of the
meeting.  Such notice may be given either by delivery in person to  shareholders
or by mailing such notice to  shareholders at their addresses as the same appear
in the records of the cor  poration;  provided,  however,  that  attendance of a
person at a shareholders meeting, in person or by proxy, constitutes a waiver of
notice of the meeting,  except when the shareholder  attends the meeting for the
express  purpose  of  objecting,  at  the  beginning  of  the  meeting,  to  the
transaction  of any  business  because  the  meeting is not  lawfully  called or
convened.                                                                       

     3.6 Voting Lists. The  corporation's  officer or the agent having charge of
its share  transfer  books  shall  prepare  and  certify a complete  list of the
shareholders  entitled  to vote at a  shareholders  meeting  or any  adjournment
thereof,  which  list shall be  arranged  alphabetically  within  each class and
series  and shall  show the  address  of,  and  number of shares  held by,  each
shareholder.  The  list  shall  be  produced  at  the  time  and  place  of  the
shareholders  meeting  and be subject to  inspection,  but not  copying,  by any
shareholder at any time during the meeting for the purpose of determining who is
entitled to vote at the meeting. If for any reason the requirements with respect
to the  shareholder  list  specified in this Section 3.6 have not been  complied
with,  any  shareholder,  either  in  person  or by  proxy,  who in  good  faith
challenges the existence of sufficient votes to carry any action at the meeting,
may demand that the meeting be adjourned  and the same shall be ad journed until
the requirements are complied with;  provided,  however,  that failure to comply
with such  requirements  does not affect the validity of any action taken at the
meeting before such demand is made.                                             

     3.7  Voting.  Except  as may be  otherwise  provided  in  the  Articles  of
Incorporation,  each shareholder entitled to vote at a shareholders  meeting, or
to express consent or dissent without a meeting,  shall be entitled to one vote,
in person or by  written  proxy,  for each share  entitled  to vote held by such
share holder;  provided,  however,  that no proxy shall be voted after three (3)
years from its date unless the proxy provides for a longer period. A vote may be
cast  either  orally or in  writing  as  announced  or  directed  by the  person
presiding at the meeting  prior to the taking of the vote.  When an action other
than the election of directors  is to be taken by vote of the  shareholders,  it
shall be  authorized  by a majority  of the votes cast by the  holders of shares
entitled to vote thereon,  unless a greater plurality is required by the express
provisions  of  the  Michigan  Business  Corporation  Act  or  the  Articles  of
Incorporation.  Except  as  otherwise  expressly  required  by the  Articles  of
Incorporation, directors shall be elected by a plurality of the votes cast at an
election.                                                                       

     3.8  Quorum.  Except  as may be  otherwise  provided  in  the  Articles  of
Incorporation,  shares  equaling a majority  of all of the voting  shares of the
corporation  issued and  outstanding,  represented in person or by proxy,  shall
constitute  a quorum  at a  meeting.  Meetings  at which  less  than a quorum is
represented  may be adjourned by a vote of a majority of the shares present to a
future date without further notice other than                                   

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the  announcement  at such meeting and, when a quorum shall be present upon such
adjourned date, any business may be transacted  which might have been transacted
at the meeting as originally called.  Shareholders present in person or by proxy
at any  shareholders  meeting may  continue to do  business  until  adjournment,
notwithstanding the withdrawal of shareholders to leave less than a quorum.     

     3.9  Conduct of  Meetings.  The  officer  who is to preside at  meetings of
shareholders  pursuant  to Article V of these  Bylaws,  or his or her  designee,
shall  determine the agenda and the order in which  business  shall be conducted
unless  the  agenda  and the order of  business  have been fixed by the Board of
Directors. Such officer or designee shall call meetings of shareholders to order
and shall  preside  unless  otherwise  determined by the  affirmative  vote of a
majority of all the voting shares of the corporation issued and outstanding. The
secretary  of  the  corporation  shall  act as  secretary  of  all  meetings  of
shareholders,  but in the absence of the secretary at any shareholders  meeting,
or his or her  inability or refusal to act as secretary,  the presiding  officer
may appoint any person to act as secretary of the meeting.                      

     3.10  Inspector of Elections.  The Board of Directors  may, in advance of a
shareholders  meeting,  appoint one or more  inspectors to act at the meeting or
any adjournment  thereof.  In the event  inspectors are not so appointed,  or an
appointed  inspector  fails  to  appear  or act,  the  person  presiding  at the
shareholders  meeting  may,  and on request of a  shareholder  entitled  to vote
thereat, shall, appoint one or more persons to fill such vacancy or vacancies or
to act as  inspector.  The  inspector(s)  shall  determine  the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots, or consents, hear and determine challenges and questions arising
in connection with the right to vote,  count,  and tabulate votes,  ballots,  or
consents,  determine the results,  and do such acts as are proper to conduct the
election or vote with fairness to all share holders.                            

ARTICLE IV
 DIRECTORS

     4.1 Board of Directors. Except as may otherwise be provided in the Articles
of  Incorporation  or these Bylaws,  the business and affairs of the corporation
shall be managed by a Board of Directors.  The Board of Directors  shall consist
of that number of  directors  specified in  compliance  with Article VIII of the
Articles of  Incorporation.  The Board of Directors  shall be divided into three
(3) classes, each class to be as nearly equal in number as possible. The term of
office of  directors  of the first class shall  expire at the annual  meeting of
shareholders to be held in 1998 and until their  respective  successors are duly
elected and  qualified or their  resignation  or removal.  The term of office of
directors of the second class shall expire at the annual meeting of shareholders
to be held in 1999 and until their  respective  successors  are duly elected and
qualified or their  resignation  or removal.  The term of office of directors of
the third class shall expire at the annual meeting of shareholders to be held in
2000 and until their resignation or removal.  Subject to the foregoing,  at each
annual meeting of  shareholders,  commencing at the annual meeting to be held in
1998, a number of directors  equal to the number of the class whose term expires
at the time of the  meeting  shall be  elected  to hold  office  until the third
succeeding  annual meeting.  Directors shall serve until their  respective terms
expire and their  successors  are elected and  qualified or until their  earlier
resignation or removal.                                                         

     4.2 Resignation and Removal. A director may resign by written notice to the
corporation,  which resignation is effective upon its receipt by the corporation
or at a subsequent time as set forth in the notice.                             

     Notwithstanding  any other  provisions  of these  Bylaws or the Articles of
Incorporation of the Corporation (and  notwithstanding the fact that some lesser
percentage  may be  specified  by law or by these  Bylaws or by the  Articles of
Incorporation of the Corporation),  any one or more directors of the Corporation
may be removed at any time,  with or without  cause,  but only by either (I) the
affirmative  vote of a majority of the  Continuing  Directors (as defined in the
Articles of  Incorporation of the Corporation) and at least eighty percent (80%)
of the Board of  Directors  or (ii) the  affirmative  vote,  at a meeting of the
shareholders  called for that purpose, of the holders of at least eighty percent
(80%) of the voting power of the then outstanding shares                        

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of capital stock of the  Corporation  entitled to vote generally in the election
of directors voting together as a single class.                                 

     4.3  Vacancies  and  Increase  in  Number.  Any  vacancies  in the Board of
Directors for any reason, and any newly created directorships resulting from any
increase  in the  number  of  directors,  may be  filled  only by the  Board  of
Directors,  acting  by an  affirmative  vote  of a  majority  of the  Continuing
Directors (as defined in the Articles of  Incorporation  of the Corporation) and
an  eighty  percent  (80%)  majority  of all of the  directors  then in  office,
although less than a quorum,  and any director so chosen shall hold office until
the next  election of the class for which the  director was chosen and until his
successor shall be duly elected and qualified or his resignation or removal.  No
decrease in the number of  directors  shall  shorten  the term of any  incumbent
director.                                                                       

     4.4 Place of Meetings and Records.  The directors shall hold their meetings
and maintain the minutes of the  proceedings  of meetings of  shareholders,  the
Board of Directors,  and committees of the Board of Directors,  if any, and keep
the books and  records of account for the  corporation  in such place or places,
within or outside the State of Michigan, as the Board of Directors may from time
to time determine.                                                              

     4.5 Annual Meetings.  The annual meeting of the Board of Directors shall be
held,  without  notice  other  than  this  Section  4.5,  at the same  place and
immediately  after the annual  shareholders  meeting.  If such meeting is not so
held, whether because a quorum is not present or for any other reason, or if the
directors were elected by written consent without a meeting,  the annual meeting
of the Board of  Directors  shall be called  in the same  manner as  hereinafter
provided for special meetings of the Board of Directors.                        

     4.6 Regular  Meetings.  Regular  meetings of the Board of Directors  may be
held  without  notice  at such  time and  place as  shall  from  time to time be
determined by the Board.  Any notice given of a regular meeting need not specify
the business to be transacted or the purpose of the meeting.                    

     4.7 Special  Meetings.  Special  meetings of the Board of Directors  may be
called by the Chairman of the Board or the  president and shall be called by one
of them on the written request of any five (5) directors,  upon at least two (2)
days written notice to each director,  or twenty-four  (24) hours notice,  given
personally or by telephone or telegram.  The notice does not need to specify the
business to be transacted or the purpose of the special meeting. Attendance of a
director at a special  meeting  constitutes  a waiver of notice of the  meeting,
except where a director attends the meeting for the express purpose of objecting
at the beginning of the meeting to the  transaction of any business  because the
meeting is not lawfully called or convened.                                     

     4.8 Quorum and Vote.  A majority of the members of the Board then in office
constitutes a quorum for the  transaction of business and the vote of a majority
of the members  present at any meeting at which a quorum is present  constitutes
the  action of the Board of  Directors,  unless  the vote of a larger  number is
specifically  required by the Articles of  Incorporation  or these Bylaws.  If a
quorum is not present,  the members present may adjourn the meeting from time to
time and to  another  place,  without  notice  other  than  announcement  at the
meeting, until a quorum is present.                                             

     4.9 Action Without a Meeting.  Any action required or permitted to be taken
pursuant to authorization  voted at a meeting of the Board of Directors,  or any
committee  thereof,  may be taken  without  a  meeting  if,  before or after the
action,  all  members  of the  Board  of  Directors,  then  in  office,  or such
committee,  consent thereto in writing.  The written consent shall be filed with
the minutes of the  proceedings  of the Board of Directors or committee  and the
consent  shall  have the same  effect  as a vote of the  Board of  Directors  or
committee for all purposes.                                                     

     4.10 Report to Shareholders. The Board of Directors shall cause a financial
report  of the  corporation  for  the  preceding  fiscal  year  to be  made  and
distributed to each shareholder  within four months after the end of each fiscal
year.  The report  shall  include the  corporation's  statement  of income,  its
year-end balance sheet,  and, if prepared by the  corporation,  its statement of
source and application of funds.                                                

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     4.11  Corporate  Seal.  The Board of  Directors  may  authorize  a suitable
corporate  seal,  which seal shall be kept in the custody of the  Secretary  and
used by the Secretary.                                                          

     4.12  Compensation  of Directors.  By resolution of the Board of Directors,
the directors may be paid their  expenses,  if any, of attendance at meetings of
the Board or of any committee of which they are a member. In addition thereto or
in lieu thereof,  as  determined  by  resolution  of the Board of  Directors,  a
director may be paid a fixed sum for attendance at each meeting of the Board, or
of a committee thereof, or may be paid a stated salary for serving as a director
as well as an  additional  stated  salary for  serving on any  committee  of the
Board.                                                                          

     4.13  Committees.  The Board of Directors  may, by  resolution  passed by a
majority of the whole Board,  designate an executive committee consisting of one
or more of the  directors of the  corporation.  At all meetings of the executive
committee,  a majority of the members of the committee shall constitute a quorum
and the act of a majority  of the  members  present at any  executive  committee
meeting at which  there is a quorum  present  shall be the act of the  executive
committee. The executive committee, to the extent provided in said resolution or
in these  Bylaws,  shall  have  and may  exercise  the  powers  of the  Board of
Directors in the management of the business and affairs of the  corporation  and
may authorize the seal of the  corporation to be affixed to all papers which may
require it. The Board may  designate  one or more other  committees  which shall
have such powers and duties as may be  determined by the Board.  All  committees
shall keep  regular  minutes of their  proceedings  and report to the Board when
required.  No committee  shall have the power or authority to amend the Articles
of Incorporation,  adopt an agreement of merger or  consolidation,  recommend to
the shareholders the sale, lease, or exchange of all or substantially all of the
corporation's  property and assets,  recommend to the shareholders a dissolution
of the corporation or a revocation of a dissolution, fill vacancies in the Board
of Directors, fix compensation of the directors for serving on the Board or on a
committee,  amend these Bylaws,  or declare a dividend or authorize the issuance
of shares unless the power to declare a dividend or to authorize the issuance of
shares is granted  to such  committee  by  specific  resolution  of the Board of
Directors.                                                                      

     4.14 Meeting  Participation by Use of Communication  Equipment.  Members of
the  Board of  Directors,  or of any  committee  designated  by the  Board,  may
participate  in a meeting  of the Board or  commit  tee,  as the case may be, by
using a  conference  telephone or similar  communications  equipment by means of
which all persons  participating in the meeting can communicate with each other.
Participation  in a meeting  pursuant  to this  Section  4.14  shall  constitute
presence at the meeting.                                                        

 ARTICLE V
OFFICERS

     5.1  Officers.  The officers of the  corporation  shall be a  president,  a
treasurer,  and a  secretary,  all of whom  shall  be  elected  by the  Board of
Directors.  In addition,  the Board of Directors may elect a chairman and one or
more vice  presidents who shall also be officers of the  corporation if elected.
Each  officer  shall hold  office  until his or her  successor  is  elected  and
qualified  or until  his or her  earlier  resignation  or  removal.  None of the
officers of the  corporation,  other than the chairman,  need be directors.  The
officers  shall be elected at the first meeting of the Board of Directors  after
each annual shareholders meeting. Any two (2) or more offices may be held by the
same  person,  but an  officer  shall not  execute,  acknowledge,  or verify any
instrument in more than one capacity if the  instrument is required by law to be
executed, acknowledged, or verified by two (2) or more officers.                

     5.2 Other  Officers  and Agents.  The Board of  Directors  may appoint such
other officers and agents as it may deem advisable, who shall hold their offices
for such terms and shall  exercise  such powers and perform such duties as shall
be  determined  from time to time by the Board of  Directors.  The Board may, by
specific  resolution,  empower the  chairman,  the  president,  or the executive
committee, if such a committee has been designated by the Board, to appoint such
subordinate officers or agents and to determine their powers and duties.        

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     5.3 Removal. The chairman,  president,  any vice president,  secretary, and
treasurer  may be removed at any time,  with or without  cause,  but only by the
affirmative  vote of a majority of the whole Board of  Directors.  Any assistant
secretary or assistant  treasurer,  or  subordinate  officer or agent  appointed
pursuant to Section 5.2, may be removed at any time,  with or without cause,  by
action  of the  Board of  Directors  or by the  committee  or  officer,  if any,
empowered  to  appoint  such  assistant  secretary  or  assistant  treasurer  or
subordinate officer or agent.                                                   

     5.4  Compensation  of  Officers.  Compensation  of  officers  for  services
rendered to the corporation shall be established by the Board of Directors.     

     5.5 Chairman.  The Chairman of the Board of  Directors,  if one be elected,
shall be elected by the  directors  from among the directors  then serving.  The
Chairman of the Board shall preside at all meetings of the  shareholders  and at
all  meetings of the Board of Directors  and shall  perform such other duties as
may be  determined by  resolution  of the Board of Directors  including,  if the
Board  shall  so  determine,  acting  as  the  chief  executive  officer  of the
corporation,  in  which  case  the  Chairman  shall  have  general  supervision,
direction,  and control of the  business of the  corporation  and shall have the
general  powers and duties of  management  usually  vested in or incident to the
office of the chief executive officer of a corporation.                         

     5.6 President.  Unless the Board shall determine  otherwise,  the President
shall be the chief executive  officer as well as the chief operating  officer of
the corporation and shall have general  supervision,  direction,  and control of
the  business  of the  corporation  as well as the  duty and  responsibility  to
implement and accomplish the  objectives of the  corporation.  In the absence or
nonelection  of a  chairman,  the  president  shall  preside at all  meetings of
shareholders and at all meetings of the Board of Directors.  The president shall
perform such other duties as may be assigned by the Board of Directors.         

     5.7 Vice  Presidents.  Each vice president  shall have such power and shall
perform  such  duties as may be assigned  by the Board of  Directors  and may be
designated by such special titles as the Board of Directors shall approve.      

     5.8 Treasurer.  The treasurer shall have custody of the corporate funds and
securities   and  shall  keep  full  and   accurate   account  of  receipts  and
disbursements in books belonging to the corporation. The treasurer shall deposit
all money and other  valuables in the name and to the credit of the  corporation
in such depositories as may be selected by the Board of Directors. The treasurer
shall  disburse the funds of the  corporation  as may be ordered by the Board of
Directors,  or the chief  executive  officer,  taking  proper  vouchers for such
disbursements.  In general,  the treasurer  shall perform all duties incident to
the office of treasurer and such other duties as may be assigned by the Board of
Directors.                                                                      

     5.9 Secretary.  The secretary shall give or cause to be given notice of all
meetings of shareholders  and directors and all other notices required by law or
by these Bylaws; provided, however, that in the case of the secretary's absence,
or refusal  or  neglect to do so, any such  notice may be given by any person so
directed  by  the  chief  executive  officer  or by  the  directors,  or by  the
shareholders  upon whose requisition the meeting is called, as provided in these
Bylaws.   The  secretary  shall  record  all  the  proceedings  of  meetings  of
shareholders and of the directors in one or more books provided for that purpose
and shall perform all duties  incident to the office of secretary and such other
duties as may be assigned by the Board of Directors.                            

     5.10 Assistant Treasurers and Assistant  Secretaries.  Assistant treasurers
and assistant secretaries, if any shall be appointed, shall have such powers and
shall perform such duties as shall be assigned to them by the Board of Directors
or by the officer or committee who shall have appointed such assistant treasurer
or assistant secretary.                                                         

     5.11 Bonds.  If the Board of Directors  shall require,  the treasurer,  any
assistant treasurer, or any other officer or agent of the corporation shall give
bond to the corporation in such amount and with such surety                     

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as the Board of Directors  may deem  sufficient,  conditioned  upon the faithful
performance of his or her respective duties and offices.                        

ARTICLE VI
CONTRACTS, LOANS, CHECKS, AND DEPOSITS

     6.1  Contracts.  The Board of  Directors  may  authorize  any  officer,  or
officers, or agent, or agents, to enter into any contract or execute and deliver
any  instrument  in the  name  of and on  behalf  of the  corporation  and  such
authority may be general or confined to specific instances.                     

     6.2 Loans. No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness  shall be issued in its name,  unless  authorized by a
resolution  of the Board of  Directors.  Such  authorization  may be  general or
confined to specific instances.                                                 

     6.3 Checks.  All checks,  drafts, or other orders for the payment of money,
notes, or other evidences of indebtedness  issued in the name of the corporation
shall be signed by such  officer,  or  officers,  or agent,  or  agents,  of the
corporation  and in such  manner  as shall  from time to time be  determined  by
resolution of the Board of Directors.                                           

     6.4 Deposits. All funds of the corporation,  not otherwise employed,  shall
be deposited to the credit of the corporation in such banks, trust companies, or
other depositories as the Board of Directors may select.                        

 ARTICLE VII
 MISCELLANEOUS

     7.1 Fiscal  Year.  The fiscal  year of this  corporation  shall be fixed by
resolution of the Board of Directors.                                           

     7.2 Notices.  Whenever any written notice is required to be given under the
provisions of any law, the Articles of  Incorporation,  or by these  Bylaws,  it
shall not be construed or interpreted to mean personal notice,  unless expressly
so stated,  and any notice so required shall be deemed to be sufficient if given
in  writing  by mail,  by  depositing  the same in a Post  Office  box,  postage
prepaid,  addressed to the person  entitled  thereto at his or her address as it
appears in the records of the  corporation.  Such notice shall be deemed to have
been given at the time and on the day of such mailing. Shareholders not entitled
to vote shall not be  entitled  to  receive  notice of any  meetings,  except as
otherwise provided by law or these Bylaws.                                      

     7.3 Waiver of Notice. Whenever any notice is required to be given under the
provisions of any law, the Articles of Incorporation,  or these Bylaws, a waiver
thereof in writing,  signed by the person or persons  entitled  to said  notice,
whether  before or after the time  stated  therein,  shall be deemed  equivalent
thereto.                                                                        

     7.4 Voting of  Securities.  Securities of another  corporation,  foreign or
domestic,  standing in the name of this corporation,  which are entitled to vote
may be voted,  in person or by proxy,  by the chairman or the  president of this
corporation  or by such other or additional  persons as may be designated by the
Board of Directors.                                                             

     7.5  Inconsistencies  with Articles of  Incorporation.  In the event of any
inconsistency  between any  provision of these  Bylaws and any  provision of the
corporation's  Articles of  Incorporation,  the Articles of Incorporation  shall
control.                                                                        

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ARTICLE VIII
 INDEMNIFICATION

     Indemnification  of  directors,  officers  and others  shall be made by the
corporation as provided in the Articles of Incorporation.                       

ARTICLE IX
AMENDMENTS

     These Bylaws may be amended or repealed or new Bylaws adopted by a majority
vote of the Board of Directors at any regular or special meeting,  without prior
notice  of  intent  to do so, or by vote of the  holders  of a  majority  of the
outstanding voting shares of the corporation at any annual or special meeting if
notice of the proposed amendment, repeal, or adoption is contained in the notice
of the meeting.                                                                 

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EXHIBIT 5                                                                       
February 6, 1998

Macatawa Bank Corporation                                                       
51 E. Main Street                                                               
Zeeland, Michigan 49464                                                         

Ladies and Gentlemen:                                                           

     This opinion is rendered in connection  with the proposed issue and sale by
Macatawa  Bank  Corporation,  a Michigan  corporation  (the  "Company") of up to
1,495,000  shares of the  Company's  common  stock,  no par value  (the  "Common
Stock"),  upon the terms and conditions set forth in the Company's  Registration
Statement on Form SB-2 (the "Registration  Statement") filed by the Company with
the Securities and Exchange  Commission  pursuant to the Securities Act of 1933,
as  amended.  We have acted as counsel for the  Company in  connection  with the
issuance and sale of Common Stock by the Company.                               

     In  rendering  the opinion  contained  herein,  we have relied in part upon
examination of the Company's  corporate  records,  documents,  certificates  and
other  instruments  and  the  examination  of such  questions  of law as we have
considered necessary or appropriate for the purpose of rendering this opinion.  

     Based upon the foregoing, we advise you that, in our opinion, the shares of
Common Stock of the Company, in an amount up to 1,495,000 shares to be issued by
the Company as described in the  Registration  Statement in accordance  with the
terms stated in the Registration Statement,  including receipt by the Company of
payment  for such  shares  of  Common  Stock as  described  in the  Registration
Statement,  at the time the Registration  Statement becomes  effective,  will be
duly and legally authorized,  issued and outstanding, and will be fully paid and
nonassessable.                                                                  

     We hereby  consent  to the  filing of this  opinion  as an  Exhibit  to the
Registration  Statement and the  reference to our firm under the caption  "Legal
Matters" in the  Prospectus  forming a part of the  Registration  Statement.  In
giving this consent,  we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as  amended,  or the  rules  and  regulations  of the  Securities  and  Exchange
Commission relating thereto.                                                    

 Very truly yours,

VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP

/s/ Varnum, Riddering, Schmidt & Howlett LLP

::ODMA\PCDOCS\GRR\120126\1                                                      

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EXHIBIT 10.1                                                                    

 MACATAWA BANK CORPORATION
 STOCK COMPENSATION PLAN

 ARTICLE 1
 ESTABLISHMENT AND PURPOSE OF THE PLAN

     1.1  Establishment  of the Plan.  MACATAWA  BANK  CORPORATION,  a  Michigan
corporation (the "Company"),  hereby establishes a stock compensation plan to be
known as the "Macatawa Bank Corporation Stock  Compensation  Plan" (the "Plan"),
as set forth in this  document.  The Plan permits the granting of stock options,
restricted stock, and other  stock-based  awards to key employees of the Company
and its subsidiaries.                                                           

     1.2  Purpose  of the  Plan.  The  purpose  of the  Plan is to  promote  the
long-term success of the Company for the benefit of the Company's  shareholders,
through  stock-based  compensation,  by aligning the  personal  interests of the
Company's  key  employees  with  those  of its  shareholders.  The  Plan is also
designed to allow key employees to participate in the Company's  future, as well
as  to  enable  the  Company  to  attract,  retain  and  award  such  employees.
Compensation  related to Awards under the Plan is generally  intended to qualify
as "performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code").                                              

     1.3 Term of Plan.  No Awards  shall be granted  pursuant  to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"), provided
that Awards granted prior to the Termination Date may extend beyond that date.  

 ARTICLE 2
 DEFINITIONS

     For purposes of this Plan, the following  terms shall have the meanings set
forth below:                                                                    

     2.1 Award means any award under this Plan of any Options, Restricted Stock,
Performance Shares or Other Stock-Based Award.                                  

     2.2 Award  Agreement  means an agreement  evidencing  the grant of an Award
under this Plan.  Awards under the Plan shall be  evidenced by Award  Agreements
that set forth the  details,  conditions  and  limitations  for each  Award,  as
established by the Committee and shall be subject to the terms and conditions of
the Plan.                                                                       

     2.3 Award Date  means the date that an Award is made,  as  specified  in an
Award Agreement.                                                                

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2.4 Board means the Board of Directors of the Company.                

2.5 Change in Control is defined in Article 12.                       

2.6 Code means the Internal Revenue Code of 1986, as amended.         

     2.7 Committee means the Committee,  as specified in Article 3, appointed by
the Board to  administer  the Plan,  no members of which  shall be  eligible  to
receive an Award pursuant to the Plan.                                          

     2.8 Common  Stock means the Common  Stock,  no par value per share,  of the
Company.                                                                        

     2.9 Disability means permanent and total disability as determined under the
rules and guidelines established by the Committee for purposes of the Plan.     

2.10 Effective Date means January 26, 1998.                           

     2.11 Employee means a salaried employee  (including  officers and directors
who are also employees) of the Company or a Subsidiary.                         

     2.12 Fair Market Value  means,  as long as the Common Stock is not actively
traded in any recognized  market, the average price per share at which shares of
Common  Stock were  bought and sold  during  the three (3)  preceding  months in
transactions  known to  management  of the Company  involving 100 or more shares
between  purchasers  and sellers  none of whom are  directors or officers of the
Company or any Subsidiary.  If the shares of Common Stock are actively traded on
the National Association of Securities Dealers Automated Quotation System or any
successor  system then in use  ("NASDAQ"),  then Fair Market Value means,  as to
Incentive Stock Options, the closing sale price per share of the Common Stock on
the relevant  valuation date on the NASDAQ. If no sale of shares of Common Stock
is reflected on the NASDAQ on a date, "Fair Market Value" shall be determined on
the next  preceding  day on which  there was a sale of  shares  of Common  Stock
reflected on NASDAQ.  Fair Market Value means, as to Nonqualified Stock Options,
the average  NASDAQ closing sale prices per share of the Common Stock during the
calendar month immediately preceding the relevant valuation date.               

     2.13  Incentive  Stock Option or ISO means an option to purchase  shares of
Common Stock granted under Article 6, which is designated as an Incentive  Stock
Option and is intended to meet the requirements of Section 422 of the Code.     

     2.14 Non-Employee Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission.  

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     2.15  Nonqualified  Stock Option or NQSO means an option to purchase shares
of Common  Stock,  granted  under  Article  6, which is not an  Incentive  Stock
Option.                                                                         

     2.16 Option means an Incentive Stock Option or a Nonqualified Stock Option.

     2.17 Option  Price means the price at which a share of Common  Stock may be
purchased  by a  Participant  pursuant  to  an  Option,  as  determined  by  the
Committee.                                                                      

     2.18 Other  Stock-Based  Award means an Award under  Article 9 of this Plan
that is  valued  in  whole  or in part by  reference  to,  or is  payable  in or
otherwise based on, Common Stock.                                               

     2.19 Participant means an Employee of the Company or a Subsidiary who holds
an outstanding Award granted under the Plan.                                    

     2.20 Permitted Transferee means (i) the spouse, a child, or a grandchild of
a  Participant  (each  an  "Immediate  Family  Member"),  (ii) a  trust  for the
exclusive benefit of a Participant  and/or one or more Immediate Family Members,
or (iii) a  partnership  or limited  liability  company  whose only  partners or
members are a Participant and/or one or more Immediate Family Members.          

     2.21 Performance Shares means an Award granted under Article 8 of this Plan
evidencing the right to receive  Common Stock or cash of an equivalent  value at
the end of a specified  performance  period and upon  achievement  of  specified
performance goals or objectives.                                                

     2.22 Retirement  (including Normal, Early and Disability  Retirement) means
the termination of a  Participant's  employment with the Company or a Subsidiary
with eligibility for normal,  early or disability  retirement benefits under the
terms of the Company's profit sharing plan, as amended and in effect at the time
of such termination of employment.                                              

     2.23 Restricted Stock means an Award granted to a Participant under Article
7 of this Plan.                                                                 

     2.24 Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission  under the  Securities  Exchange Act of 1934 (the "Act"),  as amended
from time to time or any successor rule.                                        

     2.25  Subsidiary  means any corporation in which the Company owns directly,
or indirectly  through  subsidiaries,  at least fifty percent (50%) of the total
combined voting power of all classes of stock,  or any other entity  (including,
but not limited to, partnerships                                                

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and joint  ventures) in which the Company owns at least fifty  percent  (50%) of
the combined equity thereof.                                                    

     2.26  Termination of Employment  means the  termination of a  Participant's
employment  with the  Company  or a  Subsidiary.  A  Participant  employed  by a
Subsidiary  shall also be deemed to incur a  Termination  of  Employment  if the
Subsidiary  ceases to be a Subsidiary and the  Participant  does not immediately
thereafter become an Employee of the Company or another Subsidiary.             

 ARTICLE 3
ADMINISTRATION

     3.1 The Committee. The Plan shall be administered by a Committee designated
by the Board  consisting  of not less  than  three  (3)  directors  who shall be
appointed  from  time to time by the  Board,  each of whom  shall  qualify  as a
Non-Employee Director.  Initially,  the Committee shall consist of all directors
of the Company who are Non-Employee Directors.                                  

     3.2   Committee   Authority.   Subject  to  the   Company's   Articles   of
Incorporation,  Bylaws and the provisions of this Plan, the Committee shall have
full  authority to grant Awards to key Employees of the Company or a Subsidiary.
Awards may be granted singly, in combination, or in tandem. The authority of the
Committee shall include the following:                                          

          (a) To select the key Employees of the Company or a Subsidiary to whom
Awards may be granted under the Plan;                                 

          (b) To determine whether and to what extent Options, Restricted Stock,
     Performance Shares and Other Stock-Based Awards, or any combination thereof
are to be granted under the Plan;                                     

          (c) To determine the number of shares of Common Stock to be covered by
each Award;                                                           

          (d) To  determine  the terms and  conditions  of any Award  Agreement,
     including, but not limited to, the Option Price, any vesting restriction or
     limitation, any vesting schedule or acceleration thereof, or any forfeiture
     restrictions or waiver  thereof,  regarding any Award and the shares Common
     Stock  relating  thereto,  based on such  factors  as the  Committee  shall
determine in its sole discretion;                                     

          (e) To determine whether,  to what extent and under what circumstances
     grants of Awards  are to operate on a tandem  basis  and/or in  conjunction
     with or apart  from  other cash  compensation  arrangement  made by Company
other than under the terms of this Plan;                              

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          (f) To determine under what  circumstances  an Award may be settled in
cash, Common Stock, or a combination thereof; and                     

          (g) To determine to what extent and under what circumstances shares of
     Common  Stock and other  amounts  payable with respect to an Award shall be
deferred.                                                             

     The  Committee  shall have the  authority  to adopt,  alter and repeal such
administrative  rules,  guidelines and practices governing the Plan as it shall,
from time to time, deem advisable,  to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award  Agreement) and to
otherwise supervise the administration of the Plan. However, the Committee shall
take no action which will impair any Award previously  granted under the Plan or
cause  the Plan or the  Award  not to meet the  requirements  of Rule  16b-3.  A
majority of the Committee shall constitute a quorum,  and the acts of a majority
of a quorum at any  meeting,  or acts  reduced  to or  approved  in writing by a
majority  of the  members  of the  Committee,  shall  be the  valid  acts of the
Committee.   The  interpretation  and  construction  by  the  Committee  of  any
provisions  of the Plan or any Award  granted  under the Plan shall be final and
binding upon the Company, the Board and Participants, including their respective
heirs,  executors and assigns.  No member of the Board or the Committee shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or an Award granted hereunder.                                             

 ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN

     Subject to adjustment as provided in Section  12.1,  the maximum  aggregate
number of shares of Common  Stock which may be issued  under this Plan shall not
exceed 100,000  shares,  which may be either  unauthorized  and unissued  Common
Stock  or  issued  Common  Stock  reacquired  by the  Company  ("Plan  Shares").
Determinations  as to the  number  of Plan  Shares  that  remain  available  for
issuance  under  the Plan  shall  be made in  accordance  with  such  rules  and
procedures as the Committee  shall  determine from time to time,  which shall be
consistent with the requirements of Rule 16b-3 and such interpretations thereof.
If an Award expires unexercised or is forfeited, canceled, terminated or settled
in cash  in  lieu of  Common  Stock,  the  shares  of  Common  Stock  that  were
theretofore  subject  (or  potentially  subject) to such Award may again be made
subject to an Award Agreement;  provided,  however, that any such shares subject
to a  forfeited  or canceled  Award shall not again be made  subject to an Award
Agreement to any  Participant who received,  directly or indirectly,  any of the
benefits of ownership of the  securities  underlying  such Award,  excluding the
right to vote such shares.                                                      

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 ARTICLE 5
 ELIGIBILITY

     The persons who shall be eligible to receive Awards under the Plan shall be
such key  Employees as the  Committee  shall select from time to time. In making
such  selections,  the Committee shall consider such factors as the Committee in
its discretion  shall deem relevant.  Participants may hold more than one Award,
but only on the terms and subject to the  restrictions set forth in the Plan and
their respective Award Agreements.                                              

 ARTICLE 6
 STOCK OPTIONS

     6.1  Options.  Options may be granted  alone or in addition to other Awards
granted under this Plan.  Each Option granted under this Plan shall be either an
Incentive Stock Option ("ISO") or a Nonqualified Stock Option ("NQSO").         

     6.2  Grants.  The  Committee  shall  have  the  authority  to  grant to any
Participant one or more Incentive Stock Options,  Nonqualified Stock Options, or
both types of  Options.  To the extent  that any Option  does not  qualify as an
Incentive Stock Option (whether  because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.                  

     6.3  Incentive  Stock  Options.  Anything  in  the  Plan  to  the  contrary
notwithstanding,  no term of this Plan relating to Incentive Stock Options shall
be  interpreted,  amended or  altered,  nor shall any  discretion  or  authority
granted  under the Plan be so  exercised,  so as to  disqualify  the Plan  under
Section 422 of the Code, or, without the consent of the  Participants  affected,
to disqualify  any  Incentive  Stock Option under such Section 422. An Incentive
Stock  Option shall not be granted to an  individual  who, on the date of grant,
owns stock  possessing  more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company.  The aggregate  Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987,  that are exercisable for the first time by
a Participant during any calendar year shall not exceed the $100,000  limitation
imposed by Section 422(d) of the Code.                                          

     6.4 Terms of Options.  Options granted under the Plan shall be evidenced by
Award Agreements in such form as the Committee shall, from time to time approve,
which  Agreement  shall  comply with and be subject to the  following  terms and
conditions:                                                                     

          (a)  Option  Price.  The  Option  Price  per  share  of  Common  Stock
     purchasable  under an Option shall be  determined  by the  Committee at the
time of                                                               

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     grant  but shall be not less than one  hundred  percent  (100%) of the Fair
Market Value of the Common Stock at the Award Date.                   

          (b)  Option  Term.  The  term of each  Option  shall  be  fixed by the
     Committee,  but no Option  shall be  exercisable  more than ten (10)  years
after the date the Option is granted.                                 

          (c)  Exercisability.  Except as  provided in Section  12.2,  no Option
     shall be  exercisable  in  either  in whole or in part  prior to the  first
     anniversary of the Award Date.  Thereafter,  an Option shall be exercisable
     at such time or times and subject to such terms and  conditions as shall be
     determined by the Committee  and set forth in the Award  Agreement.  If the
     Committee provides that any Option is exercisable only in installments, the
     Committee may at any time waive such installment  exercise  provisions,  in
 whole or in part, based on such factors as the Committee may determine.

          (d) Method of Exercise.  Subject to whatever  installment exercise and
     waiting period provisions apply under subsection (c) above,  Options may be
     exercised in whole or in part at any time during the term of the Option, by
     giving written  notice of exercise to the Company  specifying the number of
     shares to be purchased. Such notice shall be accompanied by payment in full
     of  the  purchase   price  in  such  form  as  the  Committee  may  accept.
     Notwithstanding  the  foregoing,  an Option shall not be  exercisable  with
     respect to less than 100 shares of Common Stock unless the remaining shares
     covered  by an  Option  are fewer  than 100  shares.  If and to the  extent
     determined  by the  Committee  in its sole  discretion  at or after  grant,
     payment  in full or in part may also be made in the  form of  Common  Stock
     owned  for at least  six  months  by the  Participant  (and for  which  the
     Participant has good title free and clear of any liens and encumbrances) or
     Restricted  Stock,  or by reduction in the number of shares  issuable  upon
     such exercise  based,  in each case, on the Fair Market Value of the Common
     Stock on the last  trading  date  preceding  payment as  determined  by the
     Committee  (without  regard to any  forfeiture  restrictions  applicable to
     Restricted  Stock).  No shares of stock shall be issued  until  payment has
     been made. A Participant  shall  generally  have the rights to dividends or
     other rights of a shareholder  with respect to shares subject to the Option
     when the optionee has given written  notice of exercise,  has paid for such
     shares as provided herein, and, if requested,  has given the representation
     described in Section 13.1 of the Plan.  Notwithstanding  the foregoing,  if
     payment in full or in part has been made in the form of  Restricted  Stock,
     an  equivalent  number of shares of Common  Stock issued on exercise of the
     Option shall be subject to the same restrictions and conditions, and during
     the  remainder of the  Restriction  Period (as defined in Section  7.3(a)),
applicable to the shares of Restricted Stock surrendered therefor.    

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          (e) Nontransferability of Options. No Option may be sold, transferred,
     pledged,  assigned,  or otherwise alienated or hypothecated,  other than by
     will or by the laws of  descent  and  distribution,  provided,  however,  a
     Nonqualified Stock Option may be transferred,  without consideration,  to a
     Permitted  Transferee if the  Participant  satisfies such conditions to the
     transfer as may be required by the Committee.  A Permitted Transferee shall
     succeed to all rights and benefits (except any right to further transfer of
     the Option) and be subject to all obligations and limitations applicable to
     the original  Participant.  However,  such rights and benefits  (except any
     right to further  transfer of the Option),  and obligations and limitations
     shall be  determined as if the original  Participant  continued to hold the
     Option,  whereby  provisions  of this  Plan  dealing  with  termination  of
     employment,  retirement, disability or death of a Participant will continue
     to refer to the original  Participant  regardless of whether a Nonqualified
     Stock Option has been  transferred to a Permitted  Transferee.  The Company
     shall  have  no  obligation  to  notify  a  Permitted   Transferee  of  the
     termination  of  employment,   retirement,   disability,   or  death  of  a
     Participant.   Further,  all  Options  shall  be  exercisable,  during  the
     Participant's  lifetime,  only by such  Participant,  or,  in the case of a
     Nonqualified Stock Option, by a Participant or a Permitted  Transferee,  as
     the case may be. The designation of a person entitled to exercise an Option
after a person's death will not be deemed a transfer.                 

          (f)  Termination  of  Employment  for Reasons  other than  Retirement,
     Disability,  or Death.  Upon Termination of Employment for any reason other
     than  Retirement or on account of Disability or death,  each Option held by
     the  Participant  shall, to the extent rights to purchase shares under such
     Option have accrued at the date of such Termination of Employment and shall
     not have been fully exercised, be exercisable,  in whole or in part, at any
     time  within  a  period  of  three  (3)  months  following  Termination  of
     Employment,  subject,  however,  to  prior  expiration  of the term of such
     Options and any other limitat