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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

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

For the quarterly period ended September 30, 2003

OR

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

For the transition period from _______ to _______

Commission file number: 000-25927

MACATAWA BANK CORPORATION
(Exact name of issuer as specified in its charter)

           Michigan          
(State of other jurisdiction of
incorporation or organization) 		   38-3391345  
(I.R.S. Employer
Identification No.)

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

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

_________________

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ___x___       No ______

Indicate by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ___x___       No ______

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 8,368,554 shares of the Company’s Common Stock (no par value) were outstanding as of November 4, 2003.



INDEX

    Page
Number(s)
Part I Financial Information:  

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

Item 2. 
Management’s Discussion and Analysis of
Financial Condition and Results of Operations 		19

Item 3.  
Quantitative and Qualitative Disclosures
About Market Risk 		26

Item 4.  
Controls and Procedures 28

Part II. Other Information  

Item 1.  
Legal Proceedings 29

Item 2.  
Changes in Securities and Use of Proceeds 29

Item 3.  
Defaults Upon Senior Securities 30

Item 4.  
Submission of Matters to a Vote of Securities Holders 30

Item 5.  
Other Information 30

Item 6.  
Exhibits and Reports on Form 8-K 30

Signatures 31


2


Part I Financial Information
Item 1.

MACATAWA BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
As of September 30, 2003 (unaudited) and December 31, 2002

   September 30,   December 31,  
(dollars in thousands except share data)  2003   2002  
  
 
 
   (unaudited)    
ASSETS 
   Cash and due from banks  $      33,415   $      47,874  
   Federal funds sold  --   --  
  
 
 
      Cash and cash equivalents  33,415   47,874  
 
   Securities available for sale  98,654   86,109  
   Securities held to maturity  2,662   4,061  
   Federal Home Loan Bank stock  7,039   5,391  
   Loans held for sale  8,490   18,726  
   Total loans  1,089,083   961,038  
   Allowance for loan losses  (15,141 ) (13,472 )
  
 
 
   1,073,942   947,566  
 
   Premises and equipment - net  36,838   25,751  
   Accrued interest receivable  4,841   4,411  
   Goodwill  23,915   23,915  
   Acquisition intangibles  2,905   3,271  
   Other assets  6,361   9,508  
  
 
 
      Total assets  $ 1,299,062   $ 1,176,583  
  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY 
 
  Deposits 
      Noninterest-bearing  $    125,763   $    103,030  
      Interest-bearing  874,183   817,843  
  
 
 
         Total  999,946   920,873  
 
  Federal funds purchased  16,459   20,000  
  Federal Home Loan Bank advances  137,898   106,897  
  Other borrowings  --   4,936  
  Long-term debt  19,871   --  
  Accrued expenses and other liabilities  4,601   9,903  
  
 
 
          Total liabilities  1,178,775   1,062,609  
 
   Shareholders' equity 
     Preferred stock, no par value, 500,000 shares 
        authorized; no shares issued and outstanding 
     Common stock, no par value, 20,000,000 shares 
        authorized; 8,367,385 shares and 7,891,502 
        issued and outstanding as of September 30, 2003 and 
        December 31, 2002, respectively  114,531   105,201  
     Retained earnings  3,329   5,931  
     Accumulated other comprehensive income  2,427   2,842  
  
 
 
        Total shareholders' equity  120,287   113,974  
  
 
 
   Total liabilities and shareholders' equity  $ 1,299,062   $ 1,176,583  
  
 
 

See accompanying notes to consolidated financial statements


3


MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three and Nine Month Periods Ended September 30, 2003 and 2002
(unaudited)

(dollars in thousands except per share data) 
 
 
 		   Three Months
Ended
September 30,
2003		   Three Months
Ended
September 30,
2002		   Nine Months
Ended
September 30,
2003 		  Nine Months
Ended
September 30,
2002 		 
 
 
 
 
 
Interest income   (unaudited)   (unaudited)   (unaudited)   (unaudited)  
   Loans, including fees  $15,228   $14,559   $44,262   $37,934  
   Securities  1,145   1,251   3,405   3,399  
 
 
 
 
 
      Total interest income  16,373   15,810   47,667   41,333  
 
Interest expense 
   Deposits  4,072   5,135   13,064   13,452  
   Other  1,365   1,201   3,772   3,435  
 
 
 
 
 
      Total interest expense  5,437   6,336   16,836   16,887  
 
Net interest income  10,936   9,474   30,831   24,446  
 
Provision for loan losses  1,040   705   2,905   2,331  
 
 
 
 
 
Net interest income after 
  provision for loan losses  9,896   8,769   27,926   22,115  
 
Noninterest income 
   Service charges on deposit accounts  648   609   1,900   1,615  
   Mortgage production revenue  1,319   684   3,278   1,327  
   Trust fees  620   621   1,806   1,365  
   Other  199   155   509   432  
 
 
 
 
 
      Total noninterest income  2,786   2,069   7,493   4,739  
 
Noninterest expense 
   Salaries and benefits  4,418   3,580   12,117   8,984  
   Occupancy  628   504   1,702   1,353  
   Furniture and equipment  680   595   1,915   1,571  
   Legal and professional fees  295   181   603   462  
   Advertising  270   166   752   442  
   Data processing  179   214   564   539  
   Supplies  145   125   420   347  
   Other  1,495   1,393   4,141   3,337  
 
 
 
 
 
      Total noninterest expenses  8,110   6,758   22,214   17,035  
 
Income before federal income tax  4,572   4,080   13,205   9,819  
 
Federal income tax  1,509   1,345   4,400   3,221  
 
 
 
 
 
Net income  $  3,063   $  2,735   $  8,805   $  6,598  
 
 
 
 
 
Basic earnings per share  $     .37   $     .33   $    1.05   $     .88  
Diluted earnings per share  $     .36   $     .32   $    1.04   $     .86  

See accompanying notes to consolidated financial statements

4

MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Nine Month Periods Ended September 30, 2003 and 2002
(unaudited)

(dollars in thousands)
 
 
 		   Three Months
Ended
September 30,
2003		   Three Months
Ended
September 30,
2002		   Nine Months
Ended
September 30,
2003		   Nine Months
Ended
September 30,
2002		  
    
 
 
 
 
  (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Net income  $ 3,063   $2,735   $ 8,805   $6,598  
Other comprehensive income, net of tax: 
   Unrealized gains/(losses) on securities  (1,108 ) 688   (856 ) 1,299  
   Unrealized gain on derivative instruments  436   439   441   610  
    
 
 
 
 
      Comprehensive income  $ 2,391   $3,862   $ 8,390   $8,507  
    
 
 
 
 

See accompanying notes to consolidated financial statements


5


MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Nine Month Periods Ended September 30, 2003 and 2002
(unaudited)

(dollars in thousands except per share data)
 
 
 		   Common
Stock		   Retained
Earnings		   Accumulated
Other
Comprehensive
Income		   Total
Shareholders'
Equity		  
Balance, January 1, 2002   $   62,334   $   3,180   $    988   $  66,502  
 
Net income for nine months ended 
   September 30, 2002      6,598       6,598  
 
Other comprehensive income, net of tax          1,909   1,909  
 
Issued 2,472,015 shares for acquisition of 
GBFC, adjusted for 4% stock dividend  39,817           39,817  
 
Conversion of GBFC stock options  987           987  
 
Proceeds from exercise of 11,495 stock options  61           61  
 
Repurchase of 115,000 shares  (2,300 )         (2,300 )
 
Issued 212,355 shares in payment 
   of 4% stock dividend  4,270   (4,277 )     (7 )
 
Cash dividends at $.23 per share      (1,696 )     (1,696 )
Balance, September 30, 2002  $ 105,169   $   3,805   $ 2,897   $ 111,871  
Balance, January 1, 2003  $ 105,201   $   5,931   $ 2,842   $ 113,974  
 
Net income for nine months ended 
   September 30, 2003      8,805       8,805  
 
Other comprehensive income, net of tax          (415 ) (415 )
Proceeds from exercise of 78,219 stock options  403           403  
 
Issued 397,664 shares in payment 
   of 5% stock dividend  8,927   (8,941 )     (14 )
 
Cash dividends at $.30 per share      (2,466 )     (2,466 )
Balance, September 30, 2003  $ 114,531   $   3,329   $ 2,427   $120,287  

See accompanying notes to consolidated financial statements


6


MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Month Periods Ended September 30, 2003 and 2002
(unaudited)

(dollars in thousands)
 
  		  Nine Months
Ended
September 30, 2003		   Nine Months
Ended
September 30, 2002		  
  (unaudited)   (unaudited)  
Cash flows from operating activities 
   Net income  $     8,805   $     6,598  
   Adjustments to reconcile net income to net 
      cash from operating activities: 
         Depreciation and amortization  2,166   1,737  
         Provision for loan losses  2,905   2,331  
         Gain on sale of loans  (3,278 ) (1,327 )
         Loans originated for sale  (283,075 ) (132,573 )
         Proceeds from sales of loans  296,589   124,566  
         Net change in: 
            Accrued interest receivable and other assets  2,717   3,820  
            Accrued expenses and other liabilities  (4,451 ) 2,993  
 
               Net cash from operating activities  22,378   8,145  
 
Cash flows from investing activities 
   Net increase in loans  (129,281 ) (129,448 )
   Purchase of Federal Home Loan Bank Stock  (1,648 ) (584 )
   Purchases of securities available for sale  (28,996 ) (24,505 )
   Proceeds from maturities and calls of securities
      available for sale		  14,069   10,599  
   Principal paydowns on securities  2,365   1,678  
   Cash received from acquisition of GBFC  --   21,390  
   Additions to premises and equipment  (12,737 ) (6,725 )
 
        Net cash used in investing activities  (156,228 ) (127,595