Stock Options

Option awards are granted with an exercise price equal to the market price at the date of grant. Option awards have vesting periods ranging from one to three years and have ten year contractual terms. The fair value of each option award is estimated on the grant date using a closed form option valuation (Black-Scholes) model. The fair value of options granted in 2008 was determined using the following weighted-average assumptions as of grant date.

13

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

NOTE 6 – STOCK-BASED COMPENSATION (Continued)

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

The total intrinsic value of options exercised during the three months ended September 30, 2008 and 2007 was $7,000 and $132,000, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2008 and 2007 was $135,000 and $354,000 respectively. There were no options vested during the three and nine months ended September 30, 2008 or September 30, 2007.

For the three month period ended September 30, 2008, the Company recorded compensation cost for stock options of $108,000, or $96,000 after tax, representing $0.01 per share. For the nine month period ended September 30, 2008, the Company recorded compensation cost for stock options of $300,000, or $263,000 after tax, representing $0.02 per share. For the three month period ended September 30, 2007, the Company recorded compensation cost for stock options of $110,000, or $99,000 after tax, representing $0.01 per share. For the nine month period ended September 30, 2007 the Company recorded compensation cost for stock options of $337,000, or $303,000 after tax, representing $0.02 per share.

As of September 30, 2008, there was approximately $310,000 of total unrecognized compensation cost related to nonvested stock options granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 1.1 years.

Stock Options

Option awards are granted with an exercise price equal to the market price at the date of grant. Option awards have vesting periods ranging from one to three years and have ten year contractual terms. The fair value of each option award is estimated on the grant date using a closed form option valuation (Black-Scholes) model. The fair value of options granted during the three months ended March 31, 2008 was determined using the following weighted-average assumptions as of grant date.

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

The total intrinsic value of options exercised during the three months ended June 30, 2008 and 2007 was $17,000 and $45,000, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2008 and 2007 was $128,000 and $222,000 respectively.

There were no options vested during the three and six months ended June 30, 2008 or June 30, 2007.

For the three and six month periods ended June 30, 2008, the Company recorded compensation cost for stock options of $113,000, or $100,000 after tax and $192,000, or $167,000 after tax, respectively, each representing $0.01 per share. For the three and six month periods ended June 30, 2007, the Company recorded compensation cost for stock options of $110,000, or $99,000 after tax, and $227,000, or $204,000 after tax, each representing $0.01 per share.

As of June 30, 2008, there was approximately $400,000 of total unrecognized compensation cost related to nonvested stock options granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 1.4 years.

15

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

NOTE 6 – STOCK-BASED COMPENSATION (Continued)

Stock Options

Option awards are granted with an exercise price equal to the market price at the date of grant. Option awards have vesting periods ranging from one to three years and have ten year contractual terms. The fair value of each option award is estimated on the grant date using a closed form option valuation (Black-Scholes) model. The fair value of options granted during the three months ended March 31, 2008 was determined using the following weighted-average assumptions as of grant date.

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

The total intrinsic value of options exercised during the three months ended June 30, 2008 and 2007 was $17,000 and $45,000, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2008 and 2007 was $128,000 and $222,000 respectively.

There were no options vested during the three and six months ended June 30, 2008 or June 30, 2007.

For the three and six month periods ended June 30, 2008, the Company recorded compensation cost for stock options of $113,000, or $100,000 after tax and $192,000, or $167,000 after tax, respectively, each representing $0.01 per share. For the three and six month periods ended June 30, 2007, the Company recorded compensation cost for stock options of $110,000, or $99,000 after tax, and $227,000, or $204,000 after tax, each representing $0.01 per share.

As of June 30, 2008, there was approximately $400,000 of total unrecognized compensation cost related to nonvested stock options granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 1.4 years.

14

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

NOTE 6 – STOCK-BASED COMPENSATION (Continued)

Stock Options

Option awards are granted with an exercise price equal to the market price at the date of grant. Option awards have vesting periods ranging from one to three years and have ten year contractual terms. The fair value of each option award is estimated on the grant date using a closed form option valuation (Black-Scholes) model. The fair value of options granted during the three months ended March 31, 2008 was determined using the following weighted-average assumptions as of grant date. There were no options granted during the three months ended March 31, 2007.

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

The total intrinsic value of options exercised during the three months ended March 31, 2008 and 2007 was $111,000 and $177,000, respectively.

There were no options vested during the three months ended March 31, 2008 and March 31, 2007.

For the three month period ended March 31, 2008, the Company recorded compensation cost for stock options of $79,000 or $67,000 after tax, representing less than $0.01 per share. For the three month period ended March 31, 2007, the Company recorded compensation cost for stock options of $117,000 or $106,000 after tax, representing $0.01 per share.

As of March 31, 2008, there was approximately $513,000 of total unrecognized compensation cost related to nonvested stock options granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 1.6 years.

14

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

NOTE 6 – STOCK-BASED COMPENSATION (Continued)

Stock Options

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

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

16

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

NOTE 7 – STOCK-BASED COMPENSATION (continued)

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

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

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

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

Stock Options

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

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

15

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

NOTE 7 – STOCK-BASED COMPENSATION (continued)

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

The total intrinsic value of options exercised during the three months ended June 30, 2007 and 2006 was $45,000 and $248,000, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2007 and 2006 was $222,000 and $1.5 million, respectively.

There were no options vested during the three and six months ended June 30, 2007. The total fair value of options vested during the three and six months ended June 30, 2006 was $8,417 and $32,276, respectively.

As of June 30, 2007, there was approximately $826,000 of total unrecognized compensation cost related to nonvested stock options granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 1.9 years.

Stock Options

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

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

15

MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 7 – STOCK-BASED COMPENSATION (continued)

There were no options granted during the three months ended March 31, 2007 and March 31, 2006.

The total intrinsic value of options exercised during the three months ended March 31, 2007 and 2006 was $177,000 and $1.3 million, respectively.

There were no options vested during the three months ended March 31, 2007. The total fair value of options vested during the three months ended March 31, 2006 was $23,860.

As of March 31, 2007, there was approximately $946,000 of total unrecognized compensation cost related to nonvested stock options granted under the Company’s stock-based compensation plans. The cost is expected to be recognized over a weighted-average period of 2.2 years.

NOTE 7 — STOCK OPTIONS

Options to buy stock are granted to officers and employees under Employee Stock Option Plans (the Employees’ Plans), which provide for issue of up to 1,825,890 options. Options are also granted to directors under Directors’ Stock Option Plans (the Directors’ Plans), which provide for issuance of up to 450,741 options. The exercise price is the market price at the date of grant for all plans. The maximum option term is ten years. The vesting schedule is over a one-year period for both the Employees’ Plans and the Directors’ Plans for all grants through the third quarter of 2005. Beginning with grants in the fourth quarter of 2005, the vesting schedule was increased to three years. Upon exercise of stock options, the Company issues new shares from its authorized but unissued shares. The amount of options available for future grant at September 30, 2006 is 1,027,231. All per share amounts and average shares outstanding have been adjusted for all periods presented to reflect the 5% stock dividend distributed on May 30, 2006, the 3-for-2 stock split distributed on June 29, 2006, and the 15% stock dividend distributed on May 27, 2005.

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

There were no options granted during the three months ended September 30, 2006. The weighted-average fair value of the 4,487 options granted during the nine months ended September 30, 2006 was $5.93 per option. The weighted-average fair value of the 55,123 and 62,368 options granted during the three and nine months ended September 30, 2005 was $5.40 and $5.29 per option, respectively.

The total intrinsic value of options exercised during the three months and nine months ended September 30, 2006 was $169,000 and $1.6 million, respectively. The total intrinsic value of options exercised during the three and nine months ended September 30, 2005 was $462,000 and $1.4 million, respectively.

The total fair value of options vested during the three and nine months ended September 30, 2006 was $298,000 and $330,000 respectively. The total fair value of options vested during the three and nine months ended September 30, 2005 was $8,000 for both periods.

15

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